FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 30, 2001

• 0934

[English]

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

As you know, the finance committee is pursuing its pre-budget consultation. We've travelled across the country, and now we're back in Ottawa for our final two or three days. Thereafter we begin to write the report we'll table in the House of Commons, a report that will, I'm sure, be read by the Minister of Finance as he prepares to write his budget in the month of December.

• 0935

We'd like to welcome the following witnesses, who I'm sure will provide us with insight this committee needs on a number of issues. We have a member of Parliament who's going to begin, Ghislain Fournier. Then from the Canadian Wireless Telecommunications Association we have Mr. Peter Barnes, president and chief executive officer, and David Farnes, vice-president of regulatory affairs. From the Humanities and Social Sciences Federation of Canada we have Dr. Patricia Clements, president, and Denise Pelletier, vice-president for external communications. From the Canadian Council on Social Development we have Marcel Lauzière and Lori Harrop, directrice des affaires publiques. From the Coalition for Canadian Astronomy we have Peter Janson, chair and also the chief executive officer of AMEC Inc., and Dr. Russell Taylor, professor of astrophysics and president of the Canadian Astronomical Society. We're also waiting for Mr. Harvey Weiner, who will be speaking on behalf of the National Children's Alliance.

You have approximately five to seven minutes to give us the highlights of the major points you'd like to address, and thereafter we'll engage in a question and answer session. We will proceed in the order in which the names and organizations appear on the agenda, which means we will first give five minutes to the member of Parliament, Ghislain Fournier. Welcome.

Mr. Fournier, you're up first.

[Translation]

Mr. Ghislain Fournier (Manicouagan, BQ): Thank you, Mr. Chairman.

First of all, I would like to thank the committee for inviting me to appear today, particularly my colleague Yvan Loubier who is responsible for my appearance here this morning. He's a very hard working member and he does some excellent work. I thank him sincerely.

My appearance here this morning as member of Parliament for Manicouagan provides me with an opportunity to give you an overview of the economic situation that we are faced with on the North Shore.

As you know, the North Shore area is the second largest territory in Quebec, after Abitibi, where Nunavik and Nunavut have been amalgamated.

The economic crisis that we are currently experiencing on the North Shore is unprecedented. Of course, it is caused by the worldwide crisis, the decreasing price of iron in the world and the events of September 11, but also by some other things that are strictly under the federal responsibility, for example the 19% surtax that had an extraordinary impact in my riding.

On the North Shore, we have three main industries, and even four with tourism.

We have specifically the forest sector. We have huge tracts of forests. Had production not decreased, we would have produced 50 million tons of iron ore and we would have been the first producer in the world, but since production has been reduced by 20 million tons, our iron ore production has slipped to 30 million tons.

In the western part of my riding, in Baie-Trinité, there is a sawmill that is in trouble, that has been forced to shut down for months and that is now functioning at a lower rate of production. They are working only one shift out of three, during the day, and it was just announced that they will close yet again for another two weeks.

In Rivière-Pentecôte, the situation is the same. We have a sawmill in Rivière-Pentecôte. There is only one shift per day and there were 60 layoffs. You will understand that 60 layoffs in a small village of 900 people almost wipes out employment. So 90% of the people become unemployed. That is significant.

• 0940

I was saying in the very beginning that in the winter time, the tourism industry is dead on the North Shore. The same can be said of fishing. In the winter, the processing plants are all closed. So the people are bracing for a most difficult winter.

In Port-Cartier, there is Uniforêt, another sawmill. We were told that it was the most performant and sophisticated and that it had state-of-the-art technology. They have just announced yet another two-week shutdown.

There is the Quebec Cartier Mining company, that was producing at the rate of 17 million tons of iron and whose production will be reduced to 12 million tons. It is still shutdown at this time and they have announced another one-month long shutdown during the Christmas season, which means that 300 workers will be laid off because of the loss of production.

In the grain elevators, there is also a significant decrease and layoffs are being announced.

Then there is Wabush Mines, an iron company whose major shareholder, with 15% of the shares, has declared bankruptcy. He was buying 15% of the production, and the production is going down from 6.5 to 4.2 million tons this year. There are three production lines in the factory but this year, only two of them will be operated. Moreover, they have announced that production will be completely stopped and the factory will be shutdown for almost two months.

Then there is IOC, whose situation is the same. They were producing 17 million tons of ore and were forecasting a production of 22 million tons with the iron pellets factory, but the modernization of the latter was stopped. So they will only produce 12 or 13 million tons of iron pellets, which means that these people are also hit very hard.

There are as well all the forestry workers; currently, the forest sector is not operating and they have nothing.

For example, we have a lot of exploration projects on the table. In this case, I believe that all the companies that were doing exploration are not very upbeat concerning the worldwide crisis. It is very costly. In the exploration industry, you first try to find some ore deposit and then, once you do find it, you need more exploration activities to determine the quantity, the concentration, the richness and also to do market research in order to determine whether there is a chance that the new mine could eventually be put into production.

A geologist from Sept-Îles, Serge Perreault, told us that in the year 2000, investment was increasing in the exploration sector: it went from $472,000 in 1999 to $1.8 million in 2000. This year, it will be limited to $900,000. I could give you tons of examples of exploration projects further north, but since you are telling me that I only have two minutes left, I will try to summarize.

Between Port-Cartier and Sept-Îles, around Knife Lake, there has been extraordinary finds of new mineral deposits. For example, at Knife Lake, the Mazarin mining company is about to put into production a graphite mine. It is the largest and richest graphite deposit in the world.

Marum Resources and Ressources Appalaches have discovered copper, cobalt and nickel between Port-Cartier and Pentecôte, as well as between Schefferville and Ungava.

The North Shore is rich in minerals. It is rich in forests and in fisheries. We do not have any other potential. I talked earlier about tourism and the fisheries in the summer. We do not have any crop land. Thus, at this time, I would need some help from your committee to implement some meaningful initiatives, namely a North Shore natural resources development corporation. Of course, if we want that corporation to be effective and efficient, we must put money into it and I believe that I came to the right place to ask for money.

• 0945

During the electoral campaign, a new development agency had been promised. The party that is now in power had promised such a development agency and they were saying back then that they wanted it to be effective. If we look at other such corporations, we can see that they have around 400 or 500 million dollars.

For the North Shore, I believe that we would need to invest 100 million dollars in a corporation whose mandate would be to do some development and promotion work in the areas of exploration, development of new markets and the processing of the resources that we do have.

I believe that it would be a very significant incentive for the North Shore. We need help at this time because unemployment in the first quarter was 15%. Considering what I have just mentioned, unemployment will climb to 20 or 25%. So we are heading for a terrible winter on the North Shore, a very difficult winter. We need some hope. We need people who will work towards the economic recovery.

The chairman is indicating that my time is up. I would have a lot more to say, but—

Thank you.

[English]

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

You can rest assured that the committee will read your entire brief, which is very well documented, on the situation your area is facing. We'll of course take that very seriously.

Now we'll hear from the Canadian Wireless Telecommunications Association with the president and chief executive officer, Mr. Peter Barnes. Welcome.

Mr. Peter Barnes (President and Chief Executive Officer, Canadian Wireless Telecommunications Association): Thank you, Mr. Chairman.

Good morning, members of the committee.

[Translation]

Good morning, ladies and gentlemen.

[English]

I'm delighted to be here on behalf of Canada's wireless industry today. I'm honoured to be part of your consultation and am looking forward to discussion, if time permits and if you have questions further to our brief. I certainly want to thank you for this important opportunity to appear before you.

With me is David Farnes, who is the vice-president of regulatory and industry affairs at the association. Along with me he has been participating in preparing this and will of course help me, as appropriate, to answer any questions.

Now, I'd like to share three points with you today. One is how a strong government and industry partnership fostered the development of a competitive and innovative wireless industry in Canada. Two is the growing importance of wireless technology to Canada's new economy. Three is what our industry needs to see in the next federal budget.

To begin, let me recap the achievements of our partnership with government. Today Canadians benefit from high-quality yet affordable wireless services. For example, more than 94% of Canadians have access to wireless communications networks, most of which are fully digital. Prices for wireless services in Canada have dropped 80% since 1996, more than double the global average.

[Translation]

Our industry is expanding rapidly. In the last 12 months, two million Canadian men and women have been added to the customer base of mobile wireless communications services. Three years from now, this customer base that today comprises 10 million users will extend to over half the population of this country. Several studies undertaken by CWTA have shown that Canadians value the convenience, quality and affordability of wireless services enormously.

In my opinion, most of this success is due to the fact that the government and the industry have cooperated in order to create a very competitive and innovative industry.

[English]

This partnership between government and industry included effective licensing and radio spectrum allocation and continues today with excellent cooperation between Industry Canada and the Canadian wireless industry.

[Translation]

I also believe that, because of this cooperation, mobile telecommunications have become a vital part of the Canadian economy in the Internet era.

[English]

All Canada's major wireless carriers now offer services that allow customers to use mobile devices to reliably connect to the Internet and to corporate intranets over Canada's wireless networks. Canadian wireless companies also offer Canadians a wide array of mobile commerce—or “m-com”—services, as well as a growing choice of wireless information and interactive services.

In the very near future, the wireless Internet will be even better, bringing the advantages of Internet communications to more Canadians at higher speeds.

• 0950

New broadband wireless networks are now being deployed across the country rapidly and at considerably less cost than wired networks. This is especially true in areas where it's not economically or technically feasible to build wired networks. In fact, a major telephone company is using fixed wireless networks to eliminate multi-party lines and bring advanced services to customers living in more remote or rural regions.

[Translation]

In a nutshell, wireless Internet and wireless networks offer a quicker and relatively less costly method of putting into place a highspeed and broadband Internet infrastructure. We believe that it is the key solution to create a thoroughly connected Canada.

As well, it will be a cornerstone of Canadian competitivity in this era of globalization and an essential tool to reach the goals that are stated in the report from the national task force on broadband services.

However, the wireless industry must overcome many challenges and only a productive and ongoing partnership with the government will allow it to meet these challenges.

[English]

Among the challenges the industry faces in achieving its full potential is the current financial burden. For example, Canadian wireless companies paid $1.4 billion for additional spectrum during recent PCS spectrum auctions. In and of itself this new licensing cost is significant. However, when combined with the precipitous drop in the stock valuations of many communications and technology companies, its impact is even greater.

Capital markets have become fiercely competitive and risk averse. There is little money available for wireless companies to invest in infrastructure, services, and research and development. Other regulatory obligations, such as contributing to a subsidy fund to support local telephone service, are hampering investment and growth. Here in Canada, for example, the contribution costs of Canada's wireless carriers rose by more than 1,200% in 2001.

To address these challenges and thereby capitalize on the promise of wireless Internet communications, Canada's wireless industry believes the next federal government budget must first continue to reduce the financial burden on Canadians and Canadian corporations by reducing personal, corporate, and payroll taxes.

Second, accelerate the elimination of the national debt to continue to nurture an environment of low interest and inflation rates. This will ease the access to capital markets that is so essential to the growth of the wireless companies.

Third, continue to strategically invest in research and development. Through the Canada Foundation for Innovation, the National Research Council, and the Communications Research Centre, the federal government has successfully fostered the development of new wireless communications technologies. These investments, coupled with more incentives for corporate R and D investment, are essential to maintaining Canada's world leadership in communications.

Fourth, the government must reduce the regulatory burden, which is currently slowing the growth of Canada's wireless industry.

Building a broadband communications infrastructure for all Canadians has been called Canada's new national dream.

[Translation]

In the 21st Century, the building of a broadband communications infrastructure will be just as important for the future of our country as the building of the transcontinental railway and, later, of the road network, has been in the previous centuries. This will define our national identity on the economic, social and cultural levels. The challenges are huge, but the potential benefits are just as enormous, if not even more so.

A dynamic and flourishing industry can help Canada to acquire more quickly the infrastructure that will enable us to achieve our vision for the future.

[English]

I trust that through our renewed and continued partnership we can pave the way forward for Canada's new national dream. I hope the next federal budget will mark an important step forward in that direction.

Thank you.

[Translation]

Thank you very much.

[English]

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

We'll now hear from the Humanities and Social Sciences Federation of Canada with the president, Dr. Patricia Clements.

[Translation]

Dr. Patricia Clements (President, Humanities and Social Sciences Federation of Canada): Thank you very much, Mr. Chairman.

First of all, I would like to thank you for giving us this opportunity to address the committee this morning on an issue that is of the upmost importance, namely research and teaching in Canadian universities.

[English]

The Humanities and Social Sciences Federation wants to thank you warmly for inviting us to be part of your deliberations this morning.

We promote teaching, research, and scholarship in Canadian universities in the areas of the social sciences and the humanities. We think of ourselves as the voice of the liberal arts in Canada.

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I have with me this morning, as you already know, Madame Denise Pelletier, who is from the Université du Québec à Montréal, who is our vice-president; and Mr. Paul Ledwell and Mr. Douglas Lauriault, who are with the federation in Ottawa. I teach at the University of Alberta.

As president of the federation, I am representing more than 24,000 researchers in 67 learned societies and 69 universities and colleges across this country.

Mr. Chairman, the brief the federation submitted to you a while back was written in August. When we wrote it, issues like terrorism and security were a long way from our minds. Now they are certainly at the forefront for all of us, both individually and as a country, and they have dramatically reshaped some of our priorities. We understand how urgently they will be preoccupying your thinking.

It's also remarkable for us to see how our daily social reality is reshaping around those events and previously very low-profile issues. The TV clips and the headlines deriving from the events of September are very considerably defining the world we live in at the moment—not only those shocking images of September 11, but all of the news stories about the long lines of Canadian trucks at the border, the layoffs in the airline, communications and automotive sectors, and Canadian sailors setting out to sea.

Today I want to address another public issue, although this one is unlikely to be quite so prolific in sound bites as some of the others. It was on the agenda before September 11 and it's still on the agenda. That issue is research and education: how to ensure that young Canadians are going to have the skills and the education they need to participate fully in our society and allow this country to maintain its leading place in the world economy; and how to ensure that our universities will have the balanced research capacity that's necessary both for our country to meet its economic and social objectives and for the up-to-date and excellent education of Canadians.

The Humanities and Social Sciences Federation believes there are major issues to be addressed in the management of Canada's systems of post-secondary education and research. These have to do with the framing of innovation policy, the funding of research, and the education of Canadians.

To date, Canadian innovation policy has focused largely on a small subset of the sciences, including biomedical, engineering, and some natural sciences. To those areas, it has provided absolutely outstanding support and has done a great deal of good.

I wish to be clear that the Humanities and Social Sciences Federation of Canada applauds the government's key and critical initiatives in support of R and D in this country. But at the same time, it is becoming clear that narrowly focused research support in Canada has some outcomes that need our attention urgently.

It has divided our campuses and created a class system among our areas of knowledge—the disciplines. While money has poured into targeted areas, it has drained out of other important areas, to the extent that the vice-president academic of the university at which I teach told me a few months ago that for him, the problem now was finding a way to ensure the survival of the whole system.

One knock-on impact of narrowly focused research support, as the president of the Association of Universities and Colleges of Canada has said, is that it has forced drastic cuts in the teaching budgets. That's one knock-on effect of narrowly focused research support.

More than half of Canada's university students work in the areas of the social sciences and humanities, but the needs of this majority of students are at present quite marginal to government innovation policy, even though that policy is centrally preoccupied with the training of highly qualified personnel.

The question is, can we afford to go on marginalizing these disciplines? The answer is, certainly not. The first reason why is because graduates of those programs provide the ideas, the knowledge, and the intellectual labour that run many sides of our economy and society. They are more necessary, rather than less, in the new knowledge economy.

Second, innovation, discovery, and creativity are increasingly understood to emerge from an interplay of diverse perspectives. We can't afford to leave whole territories of knowledge and brain power out of the innovation chain or to split technological research from its economic and social impacts.

Third, the issues social science and humanities research deals with don't go away just because we marginalize them in our policies. On the contrary, the new economy, the new technologies, and the globalized culture are all aspects of major social and cultural transition. These intensify the need for human social and cultural research of high quality.

• 1000

We are all becoming aware that we are approaching a critical moment in the life of Canadian universities. Over half of Canadian university researchers are in the social sciences and humanities. They are supported by about 12% of the research budget. In these circumstances, the Social Sciences and Humanities Research Council cannot meet current needs. But even more seriously demanding our attention is the next chapter in the emerging demographic drama, in which a mass exodus from faculty positions coincides with both projected substantial enrolment increases and the fact that our need for Ph.Ds in Canada will exceed our production.

We need to strike a balance when it comes to innovation policy in Canada. The Humanities and Social Sciences Federation of Canada strongly recommends that the upcoming budget specifically address these issues, and that it treat as matters of priority the following three things: the budget of the Social Sciences and Humanities Research Council; the request of the universities for the funding of indirect costs; and the looming issue of recruitment and retention of new professors, particularly in the social sciences and humanities.

In August, our federation submitted a proposal to the Prime Minister for the establishment of a program for graduate research fellowships. This proposal is available on our website. We strongly urge the Government of Canada to move forward aggressively in its imaginative and creative innovation policy, but to broaden the focus of that policy.

In concluding, I would like to mention two things. I would like to come back to the subject of September 11 and ask this question: when Canadian media needed to have analysts to understand the culture, the climate, the history, and the religions of these circumstances in which we find ourselves today, where did they go? They went, of course, to those specialists in Canadian universities who had, over the long haul, developed that expertise.

I think the tragic events of September 11 have reminded us what we need always be reminded of: that the issues we need to deal with are profoundly rooted in the social and the cultural, and those things are the subjects of research in the human sciences.

Thank you.

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

We will now hear from the Canadian Council on Social Development, Marcel Lauzière.

[Translation]

Mr. Marcel Lauzière (Executive Director, Canadian Council on Social Development): Thank you, Mr. Chairman. I will do my presentation in English, but I will be pleased thereafter to answer any question in both French or English. I would like to introduce my colleague Lori Harrop, who is director of public affairs at the Council.

[English]

The Canadian Council on Social Development was prepared last year to appear before this committee to present solid arguments as to why this government should take action to address some of the fundamental needs of Canadians. Although committee hearings were not held, the CCSD prepared a brief outlining our suggested priorities for action.

Coming out of an economic boom with a healthy surplus, we felt the time was ripe for this government to reinvest in Canadians, their children's well-being, their food and shelter, their health care, their skills, and their community supports. In boom times, why should such supports be needed?

The evidence has been mounting. Even as incomes were rapidly rising in the late 1990s, poverty, rather than falling, was becoming more entrenched. The same holds true today. The economic recovery alone has not been enough to arrest the widening gap between poor families with children and the rest of society. It has not reduced the need for better health services for an aging population or programs for youth at risk. It has not built affordable housing, and it hasn't made the lives of those struggling to make ends meet any more bearable.

Last year, the council asked the federal government to enhance the national children's agenda and work to eliminate child poverty; to support the full integration of persons with disabilities into the labour force; to help the working poor by increasing the basic tax exemption in child benefits; and to invest in a national affordable housing strategy.

Instead, unfortunately, the government essentially chose to put its priorities on substantial tax breaks rather than on social investment. Although we acknowledge and congratulate this government on the progress made with the early childhood development initiative, for example, much more needs to be done in terms of social investment.

Just before I continue with this presentation, I'd like to emphasize that I think those who choose to portray economic development and social development as mutually exclusive goals do so in the face of a wealth of research pointing to the opposite conclusion. Social and economic progress go hand in hand. People in fairer and more inclusive societies have the chance to be more productive citizens, but in order for this social progress to occur, governments must help create an equal playing field.

This year we know that the economic landscape has changed. We realize that. Moreover, life after September 11 is all about funding security measures, intelligence services, border crossings, and airlines. We know the events of September 11 and economic trends will of course have a profound impact on this committee's deliberations. However, it is important that the government not allow these events to distract us entirely from the benefits to be derived from investment in major social programs that will have a profound impact on the lives of Canada's most vulnerable. This, too, is about security. Much may have changed on September 11, but one thing that has not changed is the plight of the poor in Canada.

• 1005

That is why we come to you today with a proposal, one that would not only assist the nearly 20% of our citizens whose income is so low that they very often cannot cover their families' most basic needs, but would also, we believe, stimulate the economy and create jobs—lots of jobs.

The council, as do other organizations, calls upon this government to make a key investment of $1 billion in a capital investment fund for affordable housing. The current government has already started to move in the right direction with an announcement by Minister Gagliano in August of funding for housing.

We applaud this—we applauded it at the time—but we feel it really is the time to go even further. This fund should be created through the surplus that will have been accumulated in this year. Of course, should this year's surplus be much lower than anticipated by many analysts, we would expect our recommendation to be modified accordingly.

That said, in the end, we are looking for a strong investment now that will in fact help the economy by boosting construction and at the same time help the poor.

Mr. Chair, temporary community shelters are no longer temporary. They are becoming permanent homes for families who see no way out. They are evolving exactly the way food banks did, becoming a community staple rather than a stop-gap measure. At one time Canada was held as a world leader in social housing. We believe it is time to reclaim a modest part of this heritage.

Our presentation today isn't simply a desperate cry for our society's most marginalized. We mean it as a timely reminder to this government, which on the one hand has brought in important improvements, such as investments in early childhood development and child benefits for working poor families, but on the other hand seems little concerned about the erosion of what has been achieved.

A child growing up in an overcrowded, dilapidated motel room or apartment is at risk of ill health, poor learning, abuse, and so many of the social ills we are trying to address through other forms of social investment. A country's values are reflected in the ways it takes care of its citizens and in the way it strengthens its civil society. In these times of trouble, during this war on terrorism we have engaged in, we will, I think more than ever, need to strengthen our civil support structure, and this includes proper housing. This, too, is about security.

What we need in December is a budget that does something to maintain and create jobs and acts to improve the lives of the marginalized. Moreover, in the current economic situation, we believe the government needs to think about stimulating the Canadian economy.

So how do we achieve all of this?

We believe the time has come for investment in affordable housing. The allocation we request could make a huge difference, not only for the poor in Canada but for the Canadian economy generally.

Mr. Chair, this is worth doing. After all, we must all ask ourselves what kind of country we are trying so hard to secure.

Merci.

The Chair: Thank you, Mr. Lauzière.

We'll now hear from the Coalition for Canadian Astronomy, Peter Janson and Dr. Russell Taylor.

Welcome.

Dr. Russell Taylor (Professor of Astrophysics; President, Canadian Astronomical Society; Coalition for Canadian Astronomy): Thank you, Mr. Chairman. Good morning. Thank you for inviting us to present our national vision for the future of Canadian astronomy.

My name is Russ Taylor. I'm the president of the Canadian Astronomical Society and a co-chair of the Coalition for Canadian Astronomy. With me is Mr. Peter Janson, who is the chair and CEO of AMEC Inc., Canada's foremost engineering firm, and another of our coalition co-chairs.

I was very pleased this morning to encounter a group of high school students who have come to this meeting with the hope that there will be a future for astronomy in Canada.

The Coalition for Canadian Astronomy is well aware that the recent tragic events of September 11 have altered the priorities of this committee and of the federal government. However, we believe it is critical that the government continue its focus on the vision for innovation. To do so will be an important part of restoring the confidence of Canadians in our collective society, and would also be important as an investment in the long term for the Canadian economy.

The government has stated it wants to be among the most innovative countries in the world. It wants to increase its level of research and development investment so that we move from our current 15th place in the world to fifth or above. Canada's long-range plan for astronomy, the LRP, is one cost-effective way of moving in that direction. In fact, we are already there, and we will lose it if we don't do it.

The LRP is a 10-year national plan for astronomy developed by an expert panel of Canadian and international scientists. It builds upon Canada's strong global position in astronomy and will help ensure we do not slip from our current third place in the world. For a relatively modest investment, this plan provides opportunities for Canada in high technology, engineering, and science. It will provide a training ground for scientists and technologists working in new technologies and innovations at the frontier of human knowledge for years to come. I would like to provide you with a very brief overview of the LRP and explain why it's important for this country's future.

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The next generation of astronomical observatories, the tools we use to observe the universe, are megaprojects so complex and advanced technologically that no single country can build one on its own. Groups of developed countries are working together to build the next generation of observatories, and Canada is an important player in these international efforts.

We are key players because Canada—Canadian astronomers, Canadian engineers—are among the most productive and advanced in the world. Canada ranks third in the world in astronomy, and among all scientific disciplines in Canada, astronomy is first in terms of its impact on international research.

We've accomplished great things in Canada through an investment of $22 million per year, which is a per capita investment of 98 cents. This investment is seven times less than the U.S. investment per capita, and it's five times smaller than in equivalent GDP countries in Europe.

We've provided some appendices to my talk, Mr. Chairman. In addition to the accomplishments listed in appendix 1, one of the most important factors in contributing to Canada's high standing is the effective working relationship between the university sector and the National Research Council of Canada.

In keeping with its parliamentary mandate, the NRC negotiates international agreements to jointly develop new telescopes and maintains domestic telescopes and laboratories where advanced technologies are developed and young Canadians are trained. The NRC is also a partner in three major offshore facilities, and Canadian engineering has literally been at the foundation of these impressive observatories.

The total cost of the long-range plan is $264 million. The Canadian Space Agency will contribute $100 million over the next 10 years for the part of the plan that involves putting telescopes in space. The coalition is seeking investment of the $164 remaining—$16.4 million per year over 10 years—for the land-based components of the plan.

This total may be less if our application to the Canada Foundation for Innovation for a component of the plan is successful. It'll reduce it by $24 million.

Canada's investment in the long-range plan buys the opportunity for Canadians to participate in developing technology and software, designing, building, and maintaining these facilities. It also provides Canadians access to these new telescopes. The world observatories will help Canada stay at the forefront as we unravel the secrets of the universe over the next 10 years.

In the case of the Atacama large millimetre array project, which is the first major international observatory, Canada will invest approximately $50 million to a $1 billion project. Canada will become a partner with the United States to form a North American bloc and sign international agreements with Europe and Japan.

For Canadian scientists, this investment of $50 million, which is less than 1% of the capital cost, will provide us with access to over 30% of the time on the telescope—competitive access.

Peter Janson's company, AMEC, is an excellent example of the impact astronomy investment can have on the Canadian economy. I would now like to ask him to share some of his experiences and observations with you.

Mr. Peter Janson (Chair and Chief Executive Officer, AMEC Inc.; Coalition for Canadian Astronomy): Thank you, Russ.

Dr. Taylor has outlined many of the reasons, from a scientific perspective, an investment in the LRP makes sense. I want to speak to you about the business case.

In many respects, we're facing the same kind of critical crossroads that Canada faced in 1989-90, when Canada's participation in the Gemini telescopes was decided. At that time, the Canadian government invested $38 million to buy its partnership in the Gemini twin 8-meter telescopes. My company, AMEC Dynamic Structures, formerly known as AGRA Coast, won against international competition to build the Gemini domes. Our contract for the construction alone was worth $44 million. Our ongoing work on telescopes has now resulted in gross revenues of $150 million over the last 10 years.

More than 80 high-tech and engineering companies across Canada involved in astronomy projects would not have been eligible to compete for the work if Canada had not chosen to participate in Gemini. The Gemini telescopes clearly demonstrate the excellent value Canada received through this focused investment.

Because of AMEC's experience in astronomy structures, we are now placed at the forefront of another sector, the multibillion dollar international amusement industry. AMEC has become the contractor of choice for the popular and technically very complex virtual reality rides. We provide turnkey solutions to some of North America's largest amusement park companies and international theme park builders.

• 1015

Economic activity generated from the construction and operation of major astronomical facilities has a broad impact. Even a very conservative reckoning would show that for every dollar Canada invests in astronomy projects, Canadians are getting more than double their money back through the spin-offs and work that Canadians are uniquely positioned to do.

By fully implementing the long-range plan, not only will we preserve Canada's leadership position in world astronomy, but also our designs will influence and form the foundation for other countries to follow. With Gemini, we bid to construct structures to specifications. Implementing the LRP will mean that Canada will actually write the specifications that others will have to bid to. It can be everything—developed in Canada, by Canadians, for the world.

One thing is certain. If we do not invest in the new round of projects outlined in the LRP, Canadian technology will not be a part of them. These international agreements stipulate that only companies from signatory countries may bid for contracts on these projects. Therefore, if Canada does not fund the LRP, Canadian companies will not be able to compete for the more than $4 billion worth of work outlined in the LRP. More importantly, our students and scientists will not have access to these facilities.

Let's make no mistake: these projects will be built with or without Canadian participation. We've been at this particular process for over two years. The industry, science and technology committee unanimously passed a resolution calling on the minister to fund the plan. The time is fast approaching for Canada to commit funds to fulfill our part. If we are not soon at the table, Canada's potential to shape the projects outlined in the plan will diminish, and Canadian technology and expertise will be sidelined by other countries that are ready to proceed.

As part of the North American contingent, our partner, the United States, intends to move forward by the end of this year. The U.S. has just passed a bill committing to their share of the first project of the LRP—that's $150 million U.S. This means the international agreements to move forward will be signed in February. These agreements will go forward, whether or not we're a partner.

The business members of the coalition want to participate in these projects. We want the opportunity to compete for these contracts and win, so Canada can win on both the scientific and economic fronts. We ask you to share in this vision and recommend that the LRP be funded in the upcoming budget.

Russ.

Dr. Russell Taylor: Thank you, Peter.

In addition to the story you heard from Peter Janson of the economic benefit to his company, there are many spin-offs from astronomical research. I don't want to belabour that, but I will point out that the Internet, video cards for computers—many people may know of the Matrox company for video cards that came from developments in Quebec to process images from astronomy—and the precursors of the detectors that are used to scan baggage at the airport were developed by astronomical research. What new products will be derived from the imaginations of Canadian scientists, technologists, and engineers through astronomy remain to be seen, but if we don't invest, we won't see. We do know there will be real benefits and lasting benefits.

In summary, I'd like to point out that the LRP has two overarching goals. The first is to ensure that Canada remains a leader in this area internationally. The second is that we reap the scientific and economic benefit of the new developments in astronomy and being part of that development.

It's all about innovation, leverage, and keeping our creative people in Canada. The LRP will further develop the expertise that gives us the competitive advantage in high technology and return the investment manyfold, as AMEC's story has pointed out.

The long-range plan for astronomy is coherent. It has a broad base of support among astronomers, academia, industry, and educators in astronomy. Its goals are both affordable and achievable.

The Canadian astronomical community has achieved great things in the past. We want to continue the tradition of Canadian excellence. We urge the Standing Committee on Finance to join with their colleagues on the Standing Committee on Industry, Science and Technology, who have already passed a resolution endorsing the plan and calling on the government to make this investment. It is right for Canada. Thank you.

The Chair: Thank you very much, Dr. Taylor and Mr. Janson.

We'll now proceed and listen to the National Children's Alliance, Mr. Harvey Weiner. Welcome.

Mr. Harvey Weiner (National Children's Alliance): Thank you, Chair. It is both a pleasure and a privilege to present this brief to you on behalf of the 37 national organizations in the voluntary and NGO sector that are members of the National Children's Alliance. You have a list of those organizations, preceding the text of the brief. One of the members, seated directly across from me, is the Canadian Council on Social Development, represented by my colleagues, Marcel Lauzière and Lori Harrop.

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We believe, as an alliance, that despite the difficult days we have lived over the past few months, it is absolutely critical for the federal government, in partnership with the provinces, to renew and strengthen its commitment to long-term, financially sustainable plans that will address the very fundamental needs of children and youth in Canada across this land.

We talk about the threats externally to national security. We have been faced for many decades with internal threats to many of the basic needs of children and youth in this country that will enable them to live their lives with a reasonable quality and have access to equitable and quality public services that will ultimately provide them with the capacity to become fully contributing citizens and taxpayers who give to their communities rather than becoming burdens to their communities and the country. Both dimensions are important.

It is paradoxical that the external threats, which are very complex and difficult to control, will receive emergency attention in these days—understandably so, they must—and yet the internal threats, where viable approaches and solutions that have been validated for decades by credible research, both in Canada and across the world, are ignored at our peril.

The National Children's Alliance represents many professionals and workers—hundreds of thousands, for that matter, with day-to-day expertise in the various issues that affect the health and well-being of children and youth. We believe the three-part plan we're putting forward in our brief is a plan that can ensure that over the medium and long terms our children, youth, and families will be given every opportunity to make this a greater country and a greater nation than it already is.

Those three dimensions include ensuring a standard of living for the well-being of children and families; developing a socio-economic environment that will help prepare the next generation for the emerging new economy; and the active promotion of citizen engagement, active citizenship and accountability, insofar as children and youth developmental services and issues are concerned.

On the standard of living for the well-being of children and families, we propose that the federal government continue to work with provincial and territorial governments to expand the national child benefit to all low-income families. It should review specifically the impact of tax policies on families who are raising children with special needs, and try to address those specific needs in more effective ways. It should immediately increase parental leave from 55% to 75% of earnings, as well as eliminate the waiting period. We believe this is a measure that will improve the lives of families and children in those particular circumstances.

On the socio-economic environment for the new economy, I think we all recognize that income security measures alone cannot and will not promote optimal outcomes for children. Families need access to a comprehensive range of services and community supports, to ensure the healthy development of children and youth, including those who may be at risk of not reaching their potential.

We have defined some of the deficiencies through the work we do on the ground with families, children, and youth. They include the lack of coordination of health and social services, as well as the lack of stability of funding for key programs and services.

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We recognize and welcome the importance of the social union framework agreement, the SUFA. For the first time, all levels of government recognize the need to work together to provide funding and a supportive infrastructure for integrated service delivery systems responsive to community needs.

We believe it is now critical that we find sustainable mechanisms of collaboration among federal, provincial, and territorial governments and civil society. Our organization, the National Children's Alliance, which is broadly representative of many sectors of civil society, must be integrally involved in the processes and tables that discuss and develop these mechanisms of collaboration in order for the programs and services to truly meet the needs of Canada's children and youth.

We propose, within the brief, a series of actions that would expand the early childhood development initiative. We commend the federal government for showing leadership on that particular dimension. It must be strengthened and expanded to address the urgent needs of children and youth from ages six to eighteen, in a multiplicity of programs, which we list on page 6 of our brief.

Our colleagues from the Canadian Council on Social Development mentioned the pressing need for housing for many families who are living in poverty. As a coalition of national organizations, we reinforce that situation. The private sector alone has been unable to provide the solutions for the families that are in desperate need of these housing accommodations. The federal government's four-year capital grants initiative with the provinces and territories is a welcome and good start, but the current level of resources is still far short of the requirements for new rental housing.

I will conclude by stating and reinforcing the notion of citizen engagement and accountability, and our desire, willingness, and offer to work together with government to address all of these issues more effectively.

I would ask the finance committee to include in its recommendations a very strong recommendation to provide the adequate means for the National Children's Alliance to take a more active role, in partnership with the federal government and the provincial government, in ensuring that the citizen engagement aspect flourishes and flowers.

Thank you, Chair.

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

We'll now proceed to the question and answer session. Let's keep our questions tight, so we can get as many of them in as possible.

It's going to be a five-minute round beginning with Mr. Epp.

Mr. Ken Epp (Elk Island, Canadian Alliance): Thank you very much, Mr. Chairman. Thank you to the presenters. I appreciate your insights and your presentations.

I would like to start with my colleague, the member of Parliament. What he is experiencing in his riding is multiplied over and over in most of the ridings. So I need to first of all congratulate him for taking the initiative to show up here and make this presentation, since he is the first member of Parliament to do so.

How do we, as a finance committee, balance the needs of your riding with those of the many other ridings in a similar situation?

[Translation]

Mr. Ghislain Fournier: Thank you for your question. I believe that we are presently experiencing the worst crisis, such as no other region is prepared to go through presently. North Shore and the Manicouagan region have never asked anything from the government, be it federal or provincial, although the Quebec government has been doing and still does a lot for these regions.

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Minister Ralph Goodale said that the federal government was trying to allay the concerns of the mining industry. That is the reason of my presentation. We have a mining industry and a forest industry. Mr. Goodale indicated that the Minister of Finance was holding a series of discussions with the executives of companies in these sectors in order to find a viable solution for all, and he stated: "So these are some of the measures that must be put forward urgently by a responsible government".

We believe that if this government is responsible, it must intervene at this time in the North Shore area, because we have only two main sources of employment, since the fisheries and tourism sectors are seasonal. Then we only have two industries left, albeit two very important ones, namely mining and forestry. We have tackled this problem squarely and, as you know, we have not found any alternative.

As I was saying earlier, we do not have any crop land, any arable land that could be used for farming. We depend entirely on our natural resources. We are not complaining. It is quite a potential, but it has to be developed. To do so, the federal government must create a natural resources development corporation that would be present in the whole country, but mainly, at this time, in my riding which is hit very hard. We believe that such a corporation, to be effective, would need an infusion of at least $400 million.

As my riding is the second largest iron producer in the world and that it will become the largest when the economy will recover, we must invest at least $100 million in such a corporation in my riding.

[English]

Mr. Ken Epp: Okay, thank you. I would like to discuss this more, but I want to move on to some of the others as well in my short time.

To the Canadian Wireless Telecommunications Association, one of the things you indicated was that your contribution to the subsidy fund is up 1,200%, which is a huge increase. Now, if you were paying 5¢ before, you're now paying 65¢. In terms of your multimillion dollar corporations, 65¢ is no big deal.

What are the actual numbers? A percentage increase is always huge if you start with a small number. That's why, for example, our political party racked up a huge percentage increase in Quebec last time because we started from a very small base. So please explain the magnitude of those subsidies and why it is so onerous. Why should that show up in the budget?

Mr. Peter Barnes: Thank you.

Your point is very well taken. Percentages can be misleading. In this case, I think you'll find the absolute numbers equally compelling.

Prior to the CRTC's decision, the wireless industry was paying in the order of $14 million a year to help offset the cost difference between local and long-distance services. That amount was increased over $200 million. Now this is for an industry whose total revenues are in the order of $5 billion—obviously, a large amount—but this tax is a 4.5% tax on wireless telecommunications revenues.

The CRTC decided it wanted to spread a burden, which had heretofore only been imposed on long-distance companies and on wireless companies in their long-distance traffic, on all telecommunications companies.

The problem is—apart from the obvious difficulty of paying that kind of money—wireless companies already have obligations to develop service in specific areas, to roll out their services within timelines, and to invest in research and development. The compounding difficulty is that you have two agencies of government involved: Industry Canada, which imposes research and development and service deployment obligations, and the CRTC, which superimposes a 4.5% tax.

The plea we would make is that the buck has to stop somewhere, and you can't have agencies ratcheting over each other to effectively tax, and overtax, an industry. This is an industry that is losing on that $5 billion a year, losing this year about $750 million. The capital investment every year is many hundreds of millions of dollars, almost a billion dollars. So this is a very highly capital-intensive industry, still losing money and expecting to lose money for some time. To have taxes come out of the blue from a regulatory agency is, frankly, very difficult to deal with.

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Mr. Ken Epp: Thank you. Mr. Chairman, I'd like to come back—I have more questions for the other groups. So if there's time....

The Chair: Yes. I'll take that into consideration.

[Translation]

Mr. Loubier.

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): Thank you, Mr. Chairman.

I will first of all put a question to Mr. Lauzière. You mentioned earlier the urgent needs in the area of social housing. What is your assessment of the current needs that appear to be quite urgent for some groups?

Mr. Marcel Lauzière: In our presentation this morning, we indicated that the CCSD, which is essentially a research organization, fully realizes the importance of housing for children and for handicapped persons. We have made some research for the Canadian Mortgage and Housing Corporation, for example.

However, there are at least four major coalitions who have stated their position and drafted a strategy on this issue, including the FRAPRU in Quebec, as well as the Federation of Canadian Municipalities and the Canadian Association for Housing and Urban Renovation, and they would be in a better position to answer that question regarding the needs, in terms of the number of units or some other measure.

The CCSD wants to put forward the fact that there is a critical need, which in fact has been demonstrated and recognized by the federal government and the provinces at their meeting in August. They will meet again in November to pursue their work on this issue.

What we wanted to underline here is that this is urgently needed and that we need funding. We recommended one billion dollars when we believed that there would be a significant surplus, and we still hope that it will be the case. If not, we would have to review that amount. Still, the need is pressing and I believe this is recognized by all.

I could provide you with the figures that have been submitted by these coalitions.

Mr. Yvan Loubier: I would advise you to keep up the pressure because there will be a surplus at the end of the year, despite the recent events and the slowdown that we have been experiencing, particularly in the past six months. The surplus could amount to $13 billion at the end of the year.

My second question is for my colleague Ghislain Fournier. I have made up a list of layoffs in the past eight months or so in your riding and I arrive at some 9,000 of them. That is unprecedented. I believe that we have never seen such massive layoffs on the North Shore in the resource sector, that has been hit very hard not only by the general economic conditions, but also by the slump in mining exploration.

I would like you to tell us where the idea of the corporation you talked about earlier comes from, the idea of creating a natural resource development corporation. That concept was not made up out of the blue; it had been proposed to you before. I would like you to tell us more about it. We are talking about a corporation that would deal with all the resource regions of Quebec and Canada, that could promote new market opportunities and production opportunities, particularly in the mining sector.

Mr. Ghislain Fournier: You are quite right. At the present time, I could give you a list of 10 companies, 10 interesting sites. For example, Western Mining, a major Australian company that is the third nickel producer in the world, will invest $4.2 million north of Schefferville in 2001. That company was granted an operating licence covering an area of 13,000 square kilometers by the Department of Natural Resources.

But there are others as well. There are about a dozen more. There is indeed some potential in the exploration area. That is why such a development corporation could help. At the present time, the only assistance that these companies receive for exploration comes from the Quebec government. These companies are wondering why they should invest such significant amounts of money in the present situation of economic crisis, and they are telling us that they would need help in these exploration activities. Exploration is terribly costly. It is far up in the north.

Mr. Yvan Loubier: Am I mistaken or did the federal candidates in the last federal elections promise that a natural resources development corporation would be established?

Mr. Ghislain Fournier: They promised a development agency. If they want to call it "agency", I can live with that. In my brief, I have used the phrase "development corporation". They had promised a development agency with a general mandate, but for the far north of Quebec, of which my riding is a part, some amounts of money had been mentioned. Some people mentioned $350 or $400 million.

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For my part, I was saying that at least some $100 million could be allocated to the Manicouagan riding, which is part of Quebec's far North, given its potential and the great amount of natural resources that can be found in the area.

Therefore, I was in agreement with the announcement of that new development corporation. It is imperative, in the present situation, to establish a corporation and to set aside some funding in the next budget that will be introduced in December.

Mr. Yvan Loubier: My last question is for Mr. Janson.

How much money would the federal government have to invest in order for us to become a partner in the new generation of telescopes, as we had done at least a dozen years ago with the Hubble project? What is the approximate amount that would be needed?

Mr. Russell Taylor: The Canadians have not invested any money.

Mr. Yvan Loubier: No, but to become a partner in the new generation of telescopes, in 2010 and the following years, how much would be needed in terms of a contribution from the National Research Council or from the federal government in general? What would be the approximate amount of the contribution that would be needed?

Mr. Peter Janson: We would probably need, at this time, an investment of $164 million over 10 years. That amount could be funded in part by the CFI. It could be about $90 million for 10 years. That would go mostly to research. One side benefit of this is the opportunity given our companies to bid for contracts. It is really an efficient use of money.

Mr. Yvan Loubier: Thank you, Mr. Chairman.

[English]

The Chair: Thank you, Mr. Loubier.

We have 10 minutes, but we have three members on this side, Mr. Cullen, Mr. Murphy, and Ms. Bennett. So share those 10 minutes.

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

Thank you to all the presenters. These are good presentations, but not enough time.

I would like to go to Dr. Taylor and Mr. Janson.

Last year, I think it was, Parliament changed the rules for the CFI to allow international projects. It was, I think, based largely on the case made by your particular sector. I'm hoping it is helping, or will help, and I notice that you have a CFI application in.

My question is more broad than this—if you want to comment on that it would be helpful as well. If you look at the competing demands on the federal treasury, for R and D and many other investments, you talk about the spinoff effects for astronomy. As a committee, can you identify, let's say, investments in astronomy versus investments in other sciences or humanities that would differentiate your proposal? What are the benefits to Canadians? I notice in your appendices that you talk about how we are leaders in this field. But what is it going to do for Canadians to be on the leading edge of astronomy? What are the tangible benefits that we're going to realize?

Dr. Russell Taylor: The tangible benefits are manyfold. They are the technological benefits involving ourselves in the high-technology research and development required to build these telescopes. I can't emphasize enough that this is cutting-edge technology. We have to develop new ways of doing things to build these telescopes. Canadian companies develop that expertise, which in turn makes them more competitive in the international community of research and development. Mr. Janson spoke to that.

The second thing is that we are, as a country, leaders in the world already because of the hard technological expertise and our scientific expertise. The world will go on without us if we don't come to the table, and we will lose a generation of our best and brightest scientists. That's without question. Our graduate students, our next generation of scientists, will not be able to participate in these facilities, will not have access to them. We will be locked out. We are now third in the world. We could become a third-world country with respect to astronomy. I don't think we can afford to do that.

Besides the direct technical benefits that companies like AMEC and others around the country develop, there are unforeseen technological developments. As I mentioned, many companies in Canada are generated from astronomy. The company producing video cards for computers, Matrox, was generated from Quebec. The company Softimage, which does visual image manipulation, was developed from astronomy in Canada. There are many of these kinds of examples. We can't afford not to invest in this kind of community in Canada.

Mr. Roy Cullen: Thank you.

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[Translation]

Mr. Fournier, I am somewhat puzzled by your presentation. In my view, we have a federal minister, Mr. Cauchon, who is responsible for the Economic Development Agency of Canada for the regions of Quebec. Have you discussed with him the particular challenges that your region is faced with? Did he give you an answer or not?

Mr. Ghislain Fournier: I have spoken with the director of the Economic Development Agency of Canada in Sept-Îles. At the present time, the criteria are so stringent, so difficult that large corporations are not interested. Moreover, the budgets are not high enough.

So we went through small business, small budgets for SMEs. As for large corporations, I was told by the regional director that the regulation or the legislation would have to be rewritten to allow significant amounts. That's because you're talking big money when you talk about iron pellets factories or processing factories. You're talking about half a billion dollars or one billion dollars.

For that reason, we would need a specific organization whose mission would be strictly to develop natural resources, and not a department whose mandate is broad and whose action is scattered among a host of products or companies. That is why the mission of such an entity would be strictly focused on development. And that is precisely the issue that had been raised during the electoral campaign; it was with a view to promoting the development in the far North, the natural resources in the far North. Because natural resources are mostly found in the far North of Quebec.

[English]

The Chair: Thank you very much, Mr. Cullen. I'm sure you have many other questions for the other witnesses, but unfortunately time is of the essence here.

Mr. Murphy, and then Dr. Bennett.

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

I have a question for Mr. Lauzière—and perhaps Mr. Weiner may want to comment—in the whole area of affordable housing, and the need for affordable housing, especially in our large urban centres.

Right now we have interest rates at an all-time low. In the last year, I believe they've dropped close to 350 basis points. Now I know this doesn't reflect itself in long-term rates, but long-term rates have decreased dramatically. I realize the private sector is not responding to the needs of affordable housing. Is there anything the government can do to stimulate the private sector? From my vantage point, it's better if the private sector responded to the need. Whether there's some supplemental government assistance.... When I do my calculations, the drop in interest rates should amount to at least $200, $300, $400 per apartment unit on a rental basis. What can we do to get the private sector back to developing affordable housing, especially in our urban areas?

Mr. Harvey Weiner: Well, I certainly don't pretend to be an expert on what could be done with the private sector. I know there are a number of initiatives that have taken place in the private sector, which have obviously not produced the desired results. I'm really not sure that the private sector as such is interested in specifically addressing the problem of those who are having that particular difficulty—finding affordable housing. This is why we're suggesting there has to be a federal government role in that. This may involve—and I think it inevitably would in some way—the private sector. Obviously there have to be incentives, it would seem to me, that would help the people in most need of housing to get that housing on an affordable basis.

Perhaps my colleague, Marcel Lauzière, might have something to add to that.

Mr. Marcel Lauzière: Just to support what Harvey Weiner is saying.... You recognize that the private sector has not come on board as they should have. I think there was an expectation over the last 10 years that the private sector would come on board and take over the role the federal and provincial governments used to play. This hasn't happened and I think everyone realizes that.

That being said, it's not just the federal government. There certainly is a role for the private sector. It really is a holistic strategy that most coalitions are looking at right now, with discussions among the federal government, the provincial governments, the municipalities, private sector, and also voluntary sector organizations, organizations working on the ground. So there are ways.

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I could send you, if you're interested, some of the proposals that are being put forward on interest rates and those types of issues.

The Chair: Thank you, sir.

Ms. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): Mr. Chair, I have a question for the National Children's Alliance. In the “Citizen Engagement and Accountability” section of your document there were three things, “Monitoring Expenditures”, “Engaging the community in public policy”, and“Research and public policy”. I was wondering how much money you think that is and how far along would the National Children's Alliance be in developing a report card they would see as being appropriate. Have you considered putting things like accessibility to affordable housing in such a report card, seeing that—at least from my point of view—the percentage of families spending more than 50% of their income on rent would be part of a children's agenda. How is the National Children's Alliance doing in pushing the stakeholders to the table in developing these report cards?

Mr. Harvey Weiner: Thank you very much for the question.

It's certainly an area of the report we want to emphasize, and I think you've given us the opportunity. I don't think it would be all that costly. What we as a voluntary NGO sector are looking for would be some support in enabling us to fulfill that responsibility. Certainly, housing would be a part of what we would be looking at.

There are a number of dimensions—for example, monitoring the current expenditures that are being made by the provinces. But there's also the important aspect of coming together on a set of positive indicators that will demonstrate over a period of time the progress we are making on some of these issues as a result of certain initiatives that have begun. There have been some considerable difficulties in terms of the federal government and the provinces getting together on indicators.

The mechanism for reporting is rather nebulous and allows pretty well total latitude to the provinces as to how they report on a baseline. We're not quite sure how that's going to work, but we do have considerable expertise within the Children's Alliance. We would like to work on these issues, and we would like to work directly with governments in order to develop these mechanisms. We do think this can be done and that it can be done effectively at a fairly minimal cost.

Marcel, I don't know whether there's anything you would want to add to that.

Mr. Marcel Lauzière: Just to support Harvey, I might say there is a lot of expertise around the table. There are a number of research organizations—the Canadian Institute of Child Health, the Vanier Institute, and the CCSD—that do indicator work and that have a number of indicator projects on children. What we're looking for is an opportunity to make a contribution in working with the government on this.

Ms. Carolyn Bennett: Thank you.

The Chair: Thank you, Ms. Bennett.

Mr. Nystrom.

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

I'll go back to Mr. Weiner again. Can you give us some indication of how we stand in terms of children's poverty as compared to many of the other developed countries around the world? I'm thinking of the Scandinavian countries. What have they done that we have not done, and what can we learn from them? They have a different system of government in Scandinavia; they're unitary states while we're a federation with the sharing of powers. They have done things we haven't done in this country, and perhaps we can learn from them.

Can you give us some comparisons and examples? It might help us focus a bit on the agenda in terms of children's poverty. We passed a resolution in Parliament back in 1989 to eradicate children's poverty by the end of the millennium. We didn't do that, and perhaps we can get some ideas from you.

Mr. Harvey Weiner: There's a fair amount of documentation that's available. From my perspective, Mr. Nystrom, I would say that through the culture that has been built in Scandinavian countries, particularly as it has over many generations, there is a clear recognition of the importance of nurturing children literally from birth. Their system provides supports and services as a fundamental government responsibility, and this has been responsible for what are very significant differences in terms of the percentage of the population benefiting from a lot of initiatives. In other countries, including Canada, this is not as well embedded within our culture.

As I mentioned in my opening comments, when one looks at the September 11 crisis, we have to respond to it. Obviously, there are things we have to do, and it has changed the context. We're responding to something that is very ephemeral, difficult to get a grasp on, with threats from whom and as to how we don't always know. We are prepared to invest huge sums of money to do that, and rightly so. We have to protect ourselves from those external threats.

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But internally we have all these issues on children, youth, and families we are wresting with. Many don't have access to the kinds of services they need. That is really an internal threat to our own society and the development of our society. There we do have the research, the information, and we do have ways of doing things that would help lift many of these people out of their misery and make them fully contributing, engaged members of society. Yet, at our peril, we don't invest to the extent we should in those particular issues.

Coming back to Scandinavia, I would say that certainly in terms of literacy rates, health factors, and so on they are considerably in advance of where we're at. I can only attribute that to a strong culture that recognizes that families and children are critically important and to the consequent investment the government has made in their daily lives.

Mr. Lorne Nystrom: Have you done much work in terms of the conditions of first nations children on Indian reserves? I come from Saskatchewan, and I have 12 Indian reserves in my riding. I have an inner city in my riding with lots of aboriginal people. There is extreme poverty, a very high crime rate, lots of despair, and a high prostitution rate. We unfortunately have the highest murder rate in Canada in the city of Regina, the highest violent assault rates, and so on. Much of that takes place within the really poor part of the city, which is predominantly aboriginal.

Can you give us any advice as to how you would deal with some of the problems that are particular to the first nations and Métis communities in our country? Regina is not unique. We have similar problems in Saskatoon, Edmonton, and Winnipeg, to name three other cities, and also throughout northern Ontario and other parts of the country. What advice can you give the committee as to how we should deal with some of these problems that are particular to one part of our society?

The Chair: Mr. Weiner, can you respond to this question?

Mr. Harvey Weiner: I'll give you a two-part answer on that one, the first from the perspective of my own federation, the Canadian Teachers' Federation. We have a committee that has been working on precisely those issues and that involves teachers of aboriginal origin in trying to address those problems. We have a host of recommendations on this I would be more than happy to share with you as pertains to the school and the roles of the school and the community on those particular issues.

As for the National Children's Alliance, which I'm representing this morning in at least the first session, we recognize that in terms of the early childhood development agreement there has been a division that has been made by the federal government. There is an aboriginal strand we're not addressing specifically but are trying to work on in collaboration with aboriginal organizations. I'm really not in the best position to comment on what these aboriginal organizations are recommending with regard to that separate strand on the early childhood development initiative.

Again, perhaps some of my colleagues around the table would like to—

Dr. Patricia Clements: Thanks very much.

I wanted to come in on this because of a particular research project I have in mind, but I want to make the general remark that these issues that are under debate here in the committee and that Mr. Weiner and Monsieur Lauzière have been addressing are the very issues, the very substance, of social science research and are the very reason we need it.

On the particular issue you raise, Mr. Nystrom, the question of the young aboriginal, I want to take one second to tell you about a research project that demonstrates the whole package. There is a research project undertaken at the University of Alberta by a linguist and the Cold Lake nation. It is about preserving aboriginal languages, preventing them from becoming extinct. What its social outcomes will be are directly related to your question. It aims primarily to lower the school dropout rate among the aboriginal young. It demonstrates, in my opinion, the real need for careful social science research and also for careful research in cultures. We're talking about the preservation of languages and education in languages and cultures. It is directly applicable to your question, I believe.

The Chair: Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC/DR): Thank you, Mr. Chairman.

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Thank you to all of you for your valuable interventions this morning.

The first questions are for Mr. Fournier. I commend his initiative, on behalf of his constituents, coming here today. As he's aware, I have a great deal of respect for his doing that, and I also have respect for a previous member from that riding who played a role, I believe, in creating greater levels of economic opportunity, not just for his constituents, but for all Canadians.

I have some concerns about the effectiveness of regional development agencies. If you look at Atlantic Canada—and as an Atlantic Canadian, I can speak with some authority on this—whether in northern New Brunswick, Cape Breton, or throughout Atlantic Canada, regional development agencies sometimes result in fiefdoms that don't necessarily lead to the desired benefits for the constituents served. Sometimes tax-driven strategies can be more effective. One that I would expect would have a great impact on his riding would be flow-through shares, the provisions for the tax treatment of flow-through shares and its impact on the mining industry.

He didn't mention in his presentation the fact that the current rules for investments in flow-through shares through tax measures expire in 2004. I'd appreciate his feedback on how that provision has helped in his riding, and whether he would recommend to the committee that we recommend to the government the expiration of this current provision not take place in 2004 and be extended on a more permanent basis.

[Translation]

Mr. Ghislain Fournier: Thank you very much for your good words.

As for your concerns, I would say that in my riding, it is urgent to act. It is urgent to do something for the North Shore. At the present time, it is somewhat like a sick man that has to be treated at once. You do not wait for the patient to get worse or to die. We must not wait for a disaster to happen on the North Shore. It is urgent to act and to do so now.

As for flow-through shares, I can make a note of your question because I am not very familiar with these flow-through shares that you are talking about. All I know is that these big companies presently have private shareholders. Are they listed on the stock exchange? I do not know. There is the Quebec Cartier Mining and IOC. The company that owns Fer et Titane, in Havre-Saint-Pierre, is currently the same company that owns IOC, because it bought all shares of IOC, which was a private company.

Once again, I strongly insist that we must create a corporation having the specific mandate of developing natural resources in the far North and of helping the people in this region.

[English]

Mr. Scott Brison: If you'd like, Mr. Fournier, we could talk about the flow-through shares issue later, because I think it would have a big impact on your riding if that provision were to be eliminated.

I have questions for both the wireless association and the astronomy association.

In a general sense, I have real concerns about our environment in Canada for commercialization, particularly compared to that of the U.S. We live north of the U.S. capital markets, which, from their breadth and depth, we find very difficult to compete with. Part of the difficulty in Canada is that our taxes on capital, whether on capital gains, or more specifically capital taxes, have a significantly negative impact on investment and sometimes lead to a locking up of capital that would be more likely to find its way into emerging technologies and opportunities if it were not for these taxes.

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In neither of your presentations did I see a reference to capital taxes specifically. Now, Mr. Barnes mentioned some profit-insensitive taxes—I think the payroll tax was one—but my thought is we ought to be addressing capital taxes specifically.

Currently, capital taxes in Canada bring in about $1.5 billion per year, and there's no more expensive tax in terms of its impact on the economy. Every dollar gained by the government from capital taxes costs about $1.50 from an efficiency and productivity perspective.

I would appreciate your views on what the elimination of capital taxes and other tax-driven measures could do to achieve a more vigorous venture capital and capital market environment in Canada.

Mr. Peter Barnes: Thank you.

In pulling together this and last year's presentations, we polled our members and worked from the ground up. I expect capital taxes are there as an issue in some of their balance sheets, but frankly, at the top level, they have not come through as being a key irritant. The issues I did raise were the ones that have come through.

It's certainly an issue I'd like to look into for you, but it has not been one of the top three or four issues our members have pointed to.

Mr. Scott Brison: I think you'd find a general consensus on this among the companies that finance the wireless companies in Canada, whether it's on the VC side or on the investment banking side. Of course, that has an impact on your science ultimately, in a sense, so I'd love to talk to you about that.

Mr. Peter Barnes: Okay.

Mr. Scott Brison: Mr. Janson.

Mr. Peter Janson: I'll just comment on it from our side. We haven't really been looking at the tax aspect. In the case of one of my companies that has activities in this area, capital is not the issue.

I think the whole point of our presentation today is that there is an opportunity to allow Canadian scientists to continue to be at the world-class level in a very interesting and vibrant area in astronomy, and to allow Canadian companies an opportunity to go out and compete. That window is going to close about the end of this year if we don't decide we're going to fund the long-range plan.

Taxes don't mean a damn thing if we don't have a business. So give us the chance to get in there and play; we'll be happy to pay the taxes.

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

Are there any further comments?

On behalf of the committee, I'd like to thank you very much.

I do want to report to the panellists as well as the committee members that there's no question throughout the hearings—not just here in Ottawa but throughout the country—certain themes have emerged. For example, Canadians want us to strongly support a national security package; they don't want to go back into a deficit position; and they want us to honour the commitment made in the October 2000 statement of honouring the transfers to the provinces for health care and education, as well as the $100 billion tax cut. That's the base.

But also, of course, as we listen to many of the witnesses, even today, we hear other demands, which we are going to attempt to meet. And some, as the Coalition for Canadian Astronomy pointed out, are time sensitive, because they may not be able to participate in the international coalition that is created around astronomy if the government doesn't act quickly. We will be mindful of those issues.

As well, Mr. Barnes, you talked about the issue of regulation. I think in the area of regulations, even during an economic slowdown, governments can actually dedicate a lot more time to this issue, and that is the reason this committee has advocated for a red tape commission to review the regulatory environment here in Canada.

It's in this spirit that we will continue to make recommendations to the Minister of Finance and the government that while a slowdown may be occurring, there are certain areas we can work on, including some of the issues Dr. Bennett raised in reference to accountability in the health care fields and many others.

The challenges are many, but you can rest assured we're up to the task.

Thank you very much for your contribution.

We'll suspend for approximately two minutes.

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The Chair: I'd like to call the meeting to order. It looks like we're going to have a round table panel today on education. It's one of the most interesting ones we hold during pre-budget consultation hearings. I'm sure today will be no different.

We have the following organizations represented: the Canadian Association of University Teachers; the Canadian School Boards Association; the Canadian Teachers' Federation; the Canadian Federation of Students; the Association of Canadian Community Colleges; and the Canadian Alliance of Student Associations.

We will begin in the order in which they appear on the agenda, namely, we'll go with the Canadian Association of University Teachers first. I believe the speakers will be David Robinson, director of public policy and communications, and James L. Turk, executive director. As you know, you have five to seven minutes to make your presentation.

Thank you. Welcome.

Mr. James L. Turk (Executive Director, Canadian Association of University Teachers): Thank you, Mr. Chair.

On behalf of the Canadian Association of University Teachers and the 30,000 academic staff we represent at universities across Canada, we're happy to be here today.

I'd like to call on my colleague, David Robinson, who is our associate executive director for policy and our chief economist, to make a presentation on our behalf.

Mr. David Robinson (Associate Executive Director, Public Policy and Communications, Canadian Association of University Teachers): Thank you, Jim.

Since CAUT submitted our brief in August, obviously things have changed quite dramatically. The terrorist attacks in the United States have further soured the outlook for the Canadian economy. Most economists now are expecting GDP growth to grind to a halt for the remainder of the year. I'd want to highlight the job market as being particularly adversely affected. An already weak job market has now been hit with tens of thousands of new layoffs that were announced in recent weeks.

Nevertheless, I still think it's important and worth emphasizing the economy was in trouble before September 11. We have to address those fundamental issues, as well as recognizing that the fallout from September 11 had a more adverse impact than people expected. What should be done about the current slowdown, downturn, or, dare we say, recession?

Judging from recent news reports, the dominant thinking in Ottawa seems to be that there's little the federal government can do or even should do. There are declining revenues and increased security expenditures, as the Minister of Finance recently said. The government has little fiscal manoeuvring room to stimulate the economy or to address other priority areas without incurring a deficit.

This is a bit odd. I seem to recall the finance minister saying on many occasions in the past that deficit elimination was never intended to be an end in itself. It was meant to give government the ability to provide for the things Canadians want most and cherish most. Yet here we are again being told we can't afford it. We can't afford to provide for economic and social security. We can't afford to repair the damage done to health care and education. We can't afford to do the things governments are supposed to do.

We at CAUT take a different view. We believe it's more important than ever for government to act now. In fact, government is more able to act than it has been in the past now that we've eliminated structural deficits. In the short term, measures are needed to stimulate the economy and ensure the current downtown remains mild and short. In the longer term, we still need to make the steps today to secure the future well-being and standard of living of all Canadians.

These measures may indeed require the government to post a deficit in the current fiscal year. Although I would argue the government's finances aren't as bad as we're being told, let's remember, in any case, it's sound fiscal policy for governments to balance their budgets over the course of a business cycle. By this measure, the government is extremely well-placed. Even if Ottawa was to record a whopping $10 billion deficit this year—this is not on the radar screen, but if it did—it would still have under its belt a cumulative surplus of nearly $26 billion since 1997.

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In short, our advice to the committee would be not necessarily a deficit, but a deficit if necessary.

In the last year, with a large budgetary surplus available to the government, CAUT had projected the surplus would come in at about $15 billion. We were off by $2 billion. The finance minister was off by $17 billion. CAUT recommended priority be given to reinvesting in social programs. In our brief of this year, which you have, again we argue the government should do so.

In particular, we believe post-secondary education needs to be a national priority. If the federal government agrees education is key to promoting social development and economic growth, then it's time we ensure Canada's colleges and universities are fully accessible, fully affordable, and of the highest quality. Political leadership is required to enhance core operating funding through mechanisms that are transparent, accountable, and ensure federal dollars are spent as intended.

The key message we've conveyed to this committee for several years is the problems that face our institutions today, the problems of rising fees, higher student debt load, fewer faculty, and deteriorating infrastructure, all have their origin in the decline of core operating grants from governments. It is these revenues that fund the core teaching and non-sponsored research mission of the university. Programs and initiatives we've had in the past don't address this fundamental problem and simply tinker around the edges.

It's true provincial governments must bear a lot of the blame for this. Another major factor in the funding cuts is the reduced level of cash transfers from the federal government to the provinces. Even with the recent increases in the Canada health and social transfer, cash transfers on a per capita basis remain well below previous levels. In fact, the extra CHST cash funding has not spilled over into increased provincial expenditures.

In the last year, real per capita provincial spending on post-secondary education fell by 3%. The result is students and their families are forced to pay an increasing share of post-secondary education costs. The basic problem, as we outline in our brief, is that the CHST is a flawed way for Ottawa to support post-secondary education. There's no accountability and no transparency as to how funds are spent even if they are spent. We believe there's a need to consider not just the level of funding required, but also the mechanism and rules by which federal and provincial governments provide support for colleges and universities.

The evidence both in Canada and abroad clearly demonstrates that increasing access to education provides clear benefits, enriching both individuals and society at large. Our failure to remove the barriers that prevent any person from obtaining the education to enable him or her to participate fully in our social and economic life is the equivalent of burying a financial fortune. We simply cannot afford to leave this treasure in the ground, more so today than ever before.

Thank you.

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

We'll now hear from the president of the Canadian School Boards Association, Mr. Gary Shaddock.

Welcome.

Mr. Gary Shaddock (President, Canadian School Boards Association): Good morning, and thank you.

Thank you very much, Mr. Chair, members of the committee, for this opportunity to speak to you today on behalf of the Canadian School Boards Association. My association is the national voice of school boards made up of elected trustees across Canada. Together, the nine provincial associations that make up CSBA represent over 400 school boards serving more than 4 million elementary and secondary students across the country.

The world has changed considerably since CSBA sent its brief to the standing committee last August. In the wake of the events on September 11, Canada's spending priorities are being adjusted to reflect the new realities of a world in which our country needs to increase its domestic security measures, equip our armed forces, and provide aid to other countries in need.

We recognize a large part of any money spent this year, and in the next few years, will be devoted to addressing these needs. We also recognize it is essential to ensure the economic stability of our country as the world economy shifts towards a possible recession.

However, in the words of Prime Minister Chrétien in reply to the January 2000 Speech from the Throne, it took a generation working together to reduce the incidence of poverty amongst seniors. We can and must make similar progress with children. We must ensure our children are our national priority.

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The current world situation notwithstanding, the three goals set out in the committee's pre-budget report remain valid. We'd like to make the following suggestions.

The federal government must recognize that Canada cannot be a player in the global economy without providing the social infrastructure to ensure that all Canadians have a chance to realize their full potential. To that end, CSBA recommends, first and foremost, that the order of the goals to be addressed be reversed. The goal of creating a socio-economic environment where all Canadians can enjoy the best quality of life and standard of living must be the first priority.

CSBA commends the federal government on the national child benefit and is pleased that a commitment has been made to continue to increase the government's contribution over the next four years.

CSBA also applauds the federal government and the provinces and territories for having come to an agreement on an action plan for an early childhood development initiative. However, while governments and political leaders have been negotiating and debating next policy steps and agreements on implementation, Canadian children and youth remain in need. It is now time to put action and budgets behind the words in order to actualize the national children's agenda.

In the Speech from the Throne in January 2001, the government highlighted a need to create a more inclusive society where children get the right start in life. Such a statement recognizes that Canada's current economic prosperity is not being enjoyed by all. A staggering number of Canadian children and youth are living in poverty. That number has increased exponentially over the last decade, and with the current downturn in the economy, the number of Canadian youth facing economic hardship will increase further.

The federal government's leadership role is absolutely crucial to ensure that initiatives include a strong and meaningful financial commitment in the upcoming budget. Increases in the Canada health and social transfer payments, even if these increases are nominal given the current constraints, would reaffirm the federal government's intention to move ahead on renewing Canada's social infrastructure.

CSBA also commends the federal government's effort in helping to make Canada one of the most connected countries in the world. The federal government has shown strong leadership with Industry Canada's SchoolNet and Computers for Schools programs. The National Broadband Task Force has provided the government with some options for achieving the critical goal of making broadband access widely available to all communities by 2004. However, the rapid pace of technological change makes it difficult to provide all students with high-speed access at an affordable price using current equipment and up-to-date software. As well, providing quality Canadian multimedia content on the Internet that reflects Canadian values and culture remains a challenge.

Finally, there's a glaring inconsistency in federal policy. While one arm promotes the use of technology in education and increased connectivity, the Copyright Act currently makes much of what students and teachers do on the Internet illegal. Potential changes to the Copyright Act dealing with digital issues could make costs to school boards prohibitive and thus reduce possible usage of the Internet as a resource.

CSBA urges the federal government to work with the provinces and territories and school boards to establish a Canada-wide program on technological and vocational education in order to provide all students with the skills and knowledge necessary to compete in the global economy.

CSBA also urges the federal government to work with the provinces and territories and school boards, as well as with the private sector, to develop a coherent strategy for making broadband access widely available to all communities, including public educational institutions, by 2004.

In closing, CSBA strongly urges the committee making recommendations to the federal government for the upcoming budget to recognize that children and youth are a high priority. Canada cannot be a player in a global economy without providing a well-developed social infrastructure to ensure that prosperity is not limited to the few but is shared by all, where every child and youth gets the right start in life and where all Canadians have the chance to realize their full potential. This will ensure that Canada remains a major player in the new economy.

Canada's youth are our future. If we shortchange our children now, we shortchange ourselves in the future.

Thank you, Mr. Chairman.

The Chair: Thank you very much Mr. Shaddock.

We'll now hear from the Canadian Teachers' Federation, Harvey Weiner and John Staple. Welcome again.

Mr. Harvey Weiner (Deputy Secretary General, Canadian Teachers' Federation): Thank you, Mr. Chair. It's always a pleasure to be here.

My colleague John Staple is the Canadian Teachers' Federation director of economic services.

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[Translation]

The Canadian Teachers Federation is the national voice of teachers in promoting high quality education, the status of teachers and equality of opportunity through public education.

The federation coordinates and facilitates the sharing of ideas, knowledge and skills among its 14 provincial/territorial member organizations which collectively represent over 240,000 teachers in primary and secondary schools across Canada.

In this morning's presentation, we will deal with three issues that have a high priority. The first is investment in children and youth. It was much discussed in the presentation by the National Children's Alliance. We want to stress the fact that the first priority is to invest in children and youth. All Canadians share the responsibility for ensuring that Canada's children and youth are properly cared for and educated. Their success is our success.

The federation believes that we need to develop a new sphere of thought in Canada. For us, Canada's children should no longer be considered as simply your children or my children. They are our children and the collective responsibility of Canadian society.

[English]

There are two other issues we want to address, one that is becoming a growing problem, and in fact in some cases reaching potential crisis proportions, and that is the issue of teacher supply and demand; and there are a number of tax-related professional issues.

As the federation representing the elementary and secondary school teachers across Canada, we cannot stress strongly enough the need for governments at all levels to work together to ensure that public education services are adequately resourced.

We believe we are facing a teacher shortage of potentially crisis proportions. We feel that the federal government, in partnership with the provinces and territories, has a responsibility to work together with them, with us, and with all other interested parties to convince the best and brightest students to consider teaching as a career and to develop and implement measures that would increase the retention of practising teachers. Our statistics indicate—and these have been reinforced by Statistics Canada—that more than 25% of Canada's teachers leave the profession within their first five years of employment. We believe this signals a serious problem.

I make the point that the federal government has had a long tradition of intervening to help address fundamental national labour market issues and problems. This rising situation falls into that category.

Most recently, the federal government has intervened in the farming and technology sectors. Surely at a time when innovation and high-end skills development and learning is being promoted and is in the forefront of Canada's agenda, it would be inconsistent for the federal government not to give priority to ensuring that the image of the teaching profession is enhanced and that teaching is promoted as a profession of choice.

I will pause there. We have some specific proposals on how to advance on each and every one of those issues. John Staple will be addressing a number of tax-related issues that our teachers have asked us to raise at committee with regard to various professional expenses and other expenses they incur in the day-to-day exercise of their profession, for which no recognition is currently available in terms of our tax system.

The Chair: Thank you, Mr. Weiner.

Mr. Staple.

Mr. John Staple (Director of Economic Services, Canadian Teachers' Federation): I would add briefly to Mr. Weiner's comments that the two key issues related to tax that we have been attempting to address for some time concern, first of all, the issues related to employment-related expenses of teachers and the tax treatment of those expenses.

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We have conducted surveys amongst our teachers across Canada and have recently determined, supported by other similar types of research, that the average annual expenditure of teachers for materials related to classroom supplies and their work in the classroom is nearly $600. It represents approximately $142 million in contributions by primary and secondary school teachers to help fund the education systems they're working in.

In addition to that, we have long had some difficulty with the treatment of expenditures of professional educators on matters related to professional development. Those issues are also outlined in our brief. We also feel that the tax treatment afforded employees, specifically professional educators, with regard to expenditures from their own pockets relative to professional development is not the same as it is for similar types of expenditures by employers.

The final item, and I'll just conclude on this, is the issues related to RRSPs and RPPs. For a number of years we have been bringing this issue forward. I've been working very closely with a group called the Retirement Income Coalition, of which you are aware and who I think will be appearing before the committee later this week, in putting forward arguments to increase the limits for RRSP contributions and the maximum limits on RPP defined benefit limits. Those issues have been described in some detail before this committee on previous occasions. I'll be happy to answer questions the committee members may have with regard to that following the presentations.

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

We'll now hear from Ian Boyko, the chair of the Canadian Federation of Students. Welcome.

Mr. Ian Boyko (Chair, Canadian Federation of Students): Good morning. I would like to start by thanking the committee for having the opportunity today to present on behalf of over 425,000 post-secondary education students from 61 student unions across Canada.

As you can see in our brief, the federation is proposing several recommendations to address the serious challenges facing Canada's post-secondary education system. But given the limited time today, I will only highlight our thoughts on the skills agenda, the Bankruptcy and Insolvency Act, and innovation and research. If the committee members require further clarification on the proposals in the brief, I'll be happy to address them during the question and answer period.

When the HRDC national round table on skills and learning convened last March in Edmonton, participants, including the federation, firmly agreed on two principles: first, that the federal government has a leading role to play in financing and administering a national strategy, but, second, universal access must figure prominently in forming the basis of adequate skills training.

As the federal government has recognized, the current approach is a hodgepodge of different programs and is in dire need of reform. The granting of vouchers to be redeemed at both public and private institutions has only led to the proliferation of expensive and substandard career colleges, and with the abject failure of the millennium scholarships, very little has been done to reduce student debt.

Even more disturbing are the reports that the white paper on innovation and skills will contain a version of Britain's Registered Individual Learning Accounts. The fact that the British Education Secretary, Estelle Morris, announced last week that the learning accounts program will be scrapped, she provided a clue about the chances of their success here. In fact, given the laughable standards for private college accreditation in Canada, the introduction of learning accounts will only exacerbate the chaos caused by a piecemeal approach to lifelong learning. Clearly, private providers are the sole beneficiaries of this very expensive program.

Instead of replicating all of the inequities associated with the registered education savings plans, the federal government should resume purchasing bulk seats in public institutions for retraining. In addition we concur wholeheartedly with the Canadian Labour Congress' call for paid training leave through employment insurance, as is done in Europe.

If learning accounts and RESPs exclude the poorest Canadians, then the 1998 changes to the Bankruptcy and Insolvency Act seek them out. The Canadian Federation of Students is still waiting to hear a coherent justification for the discriminatory changes that strip students with crushing debt loads of their very last protection under the law. It is also mind-boggling to witness the speed at which all of the regressive policies from the 1998 budget were implemented, while at the same time students are still waiting for debt reduction on Canada student loans to be introduced.

Lastly, our submission to the committee contains a recommendation to remove the requirement for applicants to the Canada Foundation for Innovation to have matching funds from the private sector. Quite simply, backing researchers from all fields into a corner where they must prove their research has relevance to the private sector stifles innovation. It does not foster it. This inherently excludes social sciences and humanities research, as well as basic curiosity-driven scientific research. Thus the CFI is a fundamental threat to the mandate of public research universities to operate for the greater public good.

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There is no better example of this threat than the case of Dr. Nancy Olivieri. CAUT has been excellent in pushing this into the public spotlight for a couple of years now, and I strongly recommend that all members of this committee read the report of the committee of inquiry into the case involving Dr. Nancy Olivieri, Sick Kids Hospital, the University of Toronto, and Apotex Inc.

In closing, it is remarkable to the Canadian Federation of Students that given the economic implications of September 11, every possible regressive measure, from frozen social spending to deficits, has been discussed, but there has not been any mention made of delaying or reversing the reckless tax cuts that have hindered the ability of this government to soften the impact of an economic downturn. The federal government must not be reluctant to fulfill its role in properly funding core social programs in this country.

Thank you very much, and I look forward to your questions afterwards.

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

We'll now hear from the Association of Canadian Community Colleges, Gerald Brown, president and chief executive officer. Welcome.

[Translation]

Mr. Gerald Brown (President and Chief executive officer, Association of Canadian Community Colleges): Thank you very much, Mr. Chairman, for inviting me to be with you this morning.

[English]

The Association of Canadian Community Colleges is a national and international voice of Canada's 150 publicly funded community colleges, institutes of technology, university colleges, and CEGEPs located in 900 communities throughout 10 provinces and three territories. ACCC appreciates the opportunity to participate in the consultations in preparation for the upcoming budget.

We also recognize, as do many of our colleagues, the very present and urgent need created by the events of September 11. The nation's security, our commitment to a global alliance against terrorism, the importance of avoiding a return to debt, and the need to stimulate our nation's economy are all immediate priorities in the minds of our political decision-makers. We all know, however, that we will eventually return to some form of normal life, whatever that new definition of normal will be. We urge the federal government not to lose sight of the priorities prior to September 11, which are as important now as they were on September 10.

A unique feature of Canadian colleges and institutes is their linkages with business and industry and a network of community-based institutions across Canada, and hence their integration into economic development. As part of their primary function, Canada's colleges and institutes respond to the educational needs of learners, business, industry, the entrepreneurial community, public sectors, as well as the professional sector. With their roots deeply embedded in 900 communities, colleges and institutes are the main vehicle providing access to post-secondary education, adult education, community skills upgrading, university transfer, and non-formal education. Capitalizing on such a vital socio-economic role allows these institutions to contribute to Canada's prosperity. Canada's colleges and institutes are deeply committed to this role but need support to continue to strengthen the future prosperity of Canadians in a dynamic knowledge-based economy.

While the government is to be applauded for its efforts in implementing programs, policies, and actions that have contributed to Canada's status as a competitive, knowledge-based society, there continue to be missed opportunities in terms of assisting Canada's colleges and institutes to provide affordable and accessible education and training.

As input to the planning process for this upcoming budget, we wish to address the following areas, which are of critical importance to colleges and institutes. The need to invest in a skilled workforce must remain a critical priority. The skills, knowledge, and innovation of the individual will become the most powerful drivers behind Canada's economic and social prosperity. Encouraging Canadians to develop their skills and increase their knowledge through lifelong learning is critical to building a strong workforce that can meet the challenges of our evolving economy.

While the learning needs of our community constantly change, it is critical that we focus on upgrading the current workforce, accelerating the provision of skilled trades training, facilitating the application of new technologies, and addressing the skills inclusion of those without secondary education. With almost 2.5 million full-time and part-time students, Canada's colleges and institutes are the country's largest supplier of post-secondary education, adult education, and training. Clearly, these institutions must be at the forefront, working closely with the federal government in developing training strategies that will address skill shortages, meet the changing needs of Canada's businesses, and contribute to Canada's economic growth as a nation.

We must also identify mechanisms that will enable Canada's colleges and technical institutes to contribute more fully to a strong and innovative Canadian economy. With international competition driving the knowledge-based economy in the new millennium, Canada will need to invest wisely in research and innovation and development. In particular, Canadian small and medium-sized businesses and industries have identified the need for support in transforming existing technologies into a tangible product for the marketplace.

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As community-based institutions, colleges and institutes have developed expertise in the area of industrial support at the level of technology transfer, product development, and commercialization. Colleges and institutes have become the applied research and testing ground of Canada's small and medium-sized businesses.

Despite the key role colleges and institutes play in meeting the training and technical needs of industry, governments have failed to recognize the breadth, depth, and economic impact of the applied research emanating from the college system. To fully actualize our national innovative agenda, all contributors must be recognized and the federal government must review its current funding patterns. The innovation capacity of colleges and institutes represents a major investment in facilities, equipment, and personnel that must be utilized to the maximum of its competitiveness.

The third area is to enhance the capacity of colleges and institutes to adapt, develop, and implement technology-based learning. Canada's colleges and institutes have been the vanguard of providing learning opportunities through a variety of modes over the last 20 years. These institutes are recognized around the world for their early leadership in distance education and program delivery.

The opportunities and challenges facing our institutions were echoed in the recently released report of the advisory committee on online education. Massive commitments have been made by institutions to a technologically enhanced offline and online learning. Colleges and institutes are poised to capitalize even further on these technologies. We believe it's essential that priority be placed on significantly enhancing Canada's colleges and institutes to adapt, develop, and implement technology-based learning.

Finally, there is the urgency to expand educational and economic opportunities to rural and remote communities. Rural and remote communities are severely challenged by the rapid and overwhelming challenge in a national and global society. For many rural Canadians, their quality of life and prospect for a better future are threatened by low education and training levels, high unemployment, slow growth and decreasing opportunities, urban migration, and lack of technological resources.

Rural and remote colleges and institutes are uniquely positioned to be catalysts for increasing economic and educational opportunities in their community. Colleges and institutes have a longstanding, proven capacity to monitor economic shifts, prepare their students, and use the various sensors to determine development opportunities. But these institutions cannot do it alone. Ensuring the success in economic and social health of our rural and remote communities can only be realized through a concerted effort between well-motivated learners, well-informed politicians and decision-makers, economic development planners, and educators.

In light of my timeframe, I'll stop there, except to mention that there are concerns around the infrastructure with accumulated deferred maintenance, as others have mentioned; the importance of supporting a greater mobility of Canadian students, both nationally and internationally; and the need to revisit the issues around student debt.

Thank you very much.

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

So that everybody knows, whenever you present a brief to this committee and table it with us, the brief is taken in its entirety. So all the points you've raised will be taken into consideration by the committee.

We'll now move to the Canadian Alliance of Student Associations, the national director, Liam Arbuckle. Welcome.

Mr. Liam Arbuckle (National Director, Canadian Alliance of Student Associations): Thank you.

Good morning, and thank you all for the opportunity to present here today.

I am the national director of the Canadian Alliance of Student Associations, or CASA. We represent over 310,000 university and college students—in other words, one in every 100 Canadians. CASA is a non-partisan organization comprised of 23 student governments from across the country. We strive to effect positive change in our country's post-secondary education system through practical policy proposals and reasoned discussions with key decision-makers.

The events of September 11 and their aftermath are having a profoundly negative effect on Canada's economy. Trade with the U.S. is slower, key industries are suffering, new security measures are being implemented, and government revenue protections are being lowered.

At the same time, our world and our economy are changing in another very important way. For years we have heard that the knowledge economy is coming. In fact, the knowledge economy is here, and if our economy is to grow and Canada's productivity level is to rise, we must take fiscal steps that recognize the realities of the knowledge economy.

According to Human Resources Development Minister Jane Stewart, by 2004, one in four jobs is going require a university education. This is up from one in six in just 1998, a nearly 10% growth in the number of jobs requiring a university degree. This represents a major change in the nature of our workforce in just a six-year time span.

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Clearly, education helps individual Canadians achieve higher incomes and a more prosperous future, but it is important to note that benefits extend more broadly to our society as a whole. According to Building Momentum, a 1998 Industry Canada report on science and technology:

A large and growing body of evidence supports the proposition that a nation's economic prospects and the quality of life of its citizens are critically dependent on the knowledge and skills of its people.

This committee deserves credit for recognizing this fact in its Budget 2000 report, which reads:

In our knowledge-based economy, productivity gains are a function of the development of human capital, which in turn is the engine for technological advance. But economists have come to realize that the rate of innovation is determined endogenously in the economy. Putting in place the right economic incentives and conditions can increase the rate of technological change and, hence, productivity levels.

I'm here today because CASA believes its ideas can help put the right incentives and conditions in place for post-secondary education to play its necessary role in this development of human capital. In particular, I want to talk about the key issues for students in post-secondary institutions: affordability and quality.

CASA's initial brief to the finance committee was obviously written prior to September 11. The recommendations contained within the brief were bold but reasonable, based on government projections from the May economic update. Circumstances have changed since that time, but the fundamentals of these proposals remain strong. As soon as the government is in a position to understand its ability to commit to new long-term funding commitments, these proposals deserve very serious consideration. But before I go into describing these proposals, I would like to talk about a timely idea that was not included in our initial brief.

The idea has to do with the issue of affordability, which is a growing concern for many students. Perhaps more importantly for this committee, the issue of affordability may be keeping many potential students from participating in the post-secondary education system, and if Canada is to compete in the global economy, our participation numbers need to increase. Remember how I mentioned earlier that by 2004, one in four jobs will require a university degree? Well, the problem is that, according to Statistics Canada, in 1998 only one in five people aged 18 to 24 were attending university full time.

Some preliminary data from a yet-to-be-released report from the Canada Millennium Scholarship Foundation has interesting responses on the reasons why some high school students choose not to go to college or university. The largest reason for not going on to post-secondary education was cost: 22.5% of respondents nationwide cited cost as the biggest factor in not furthering their education. These numbers were lowest in Quebec, at 13.2% of respondents, and highest in B.C. at 32.4%. The Canada Millennium Scholarship Foundation attained these results from 1991 and 1995 Statistics Canada data. It is more than likely that cost has increased as a barrier since then because of rises in tuition.

Let's now look at some of the numbers around tuition. All the following numbers are from Statistics Canada. To start with, between 1990-91 and 2000-01, tuition fees for an undergraduate arts degree rose 126.2%, or six times faster than the 20.6% increase in inflation as measured by the consumer price index. That is obviously quite an increase. The average undergraduate arts degree now costs $3,452 a year in tuition alone. Unfortunately, parents' savings have not kept pace with this growth in tuition fees.

It is noted that 87% of parents want a higher education for their children, but only 41% of children have savings put aside for their education. The median value of these savings is approximately $3,000; this of course does not even cover one year's tuition, let alone books and living expenses.

The inability of students to cover costs of their education through savings, in-study earnings, and grants inevitably leads to greater student loan debt. Unfortunately, CASA has not found an up-to-date, reputable number on the average student loan debt upon graduation. We do know that the aggregate amount of outstanding student loans was 6.2 times higher in 1999 than in 1984. More than 1.4 million family units reported student loan debts in 1999, up from 490,000 in 1984. The median student loan debt rose from $3,400 to $7,300. It must be noted that this number, $7,300, is the level of student loan debt in various stages of repayment; the average student loan debt upon graduation is certainly well over $10,000.

The federal government obviously has a concern with the debt level of students, because it introduced both the Canada Millennium Scholarship Endowment Fund and a debt reduction in repayment measure in the 1998 budget. Regrettably, debt reduction in repayment has not worked nearly as well as students or the government hoped. The Canada student loans program estimates that 75% of borrowers who exhaust the 54 months of interest relief the federal government provides are ineligible for debt reduction in repayment. The primary reason for this lack of eligibility is that debt reduction and interest relief use two different eligibility tables. These tables determine a borrower's eligibility for assistance based on income and debt load.

CASA believes the federal government needs a debt remission program that is at least as accessible as the interest relief program. After all, the borrowers who will be applying for debt remission will already have been earning a barely subsistent income for five years and will have amortized their loans from 10 to 15 years of repayment.

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With all this, the existing program will still only make a one-time payment to lower debt to a maximum of half the borrower's debt load, or $10,000. Obviously very few borrowers will be in a position to require such relief. But there are those whose education left them saddled with a large and unmanageable debt. CASA says, let's give them more of a break.

We recommend a revamped federal debt remission program that has the same eligibility criteria as interest relief. Once the borrower has exhausted that program, this remission program should have no maximum for the amount of remission available. Instead of making a one-time payment, the program should remit a portion of the borrower's debt on every payment based on their previous year's income.

As I mentioned earlier in my presentation, a post-secondary education can significantly increase an individual's income, but unfortunately this is not the case for everyone who chooses to pursue a diploma or degree. Hopefully, by improving the federal debt remission program and effectively communicating those changes, the federal government can encourage more people to take up studies knowing that their risks of being saddled with an unmanageable debt load are significantly reduced.

Due to the time restraints, the other four suggestions that were outlined in our brief can be gone over by the committee, hopefully, in time.

In closing, I'd like to end with a quote from Stéphane Garelli, the director of the internationally respected World Competitiveness Project:

The most convincing support for the argument that there is competition among nations can be seen in the areas of education and know-how. In a modern economy, nations do not rely only on products and services, they also compete with brains.

Knowledge is perhaps the most critical competitiveness factor. As countries move up the economic scale, the more they thrive on knowledge to ensure their prosperity and to compete in world markets. How that knowledge is acquired and managed is each nation's responsibility. Indeed, nations do compete.

Thank you.

The Chair: Thank you very much, Mr. Arbuckle. Thanks to all the witnesses.

We're going to have five minutes for Mr. Epp and five minutes for Mr. Kenney.

Mr. Ken Epp: Let's start with Mr. Kenney.

The Chair: Mr. Kenney, and then we'll proceed to whoever wants to ask questions on the government side.

Mr. Jason Kenney (Calgary Southeast, Canadian Alliance): Thank you, Mr. Chairman. Thanks to all of our witnesses.

We have two student organizations here. I think, CASA, you represent 23 student associations. How many does the CFS represent?

Mr. Ian Boyko: Sixty-one.

Mr. Jason Kenney: All are accredited universities?

Mr. Ian Boyko: The federation represents public colleges and public universities, both graduate and undergraduate students.

Mr. Jason Kenney: First of all, I have a question for the Canadian Association of University Teachers. In the presentation you've given us I want to commend you for providing a lot of data and so on, which sometimes is absent from submissions. This is helpful.

On page 4 of your submission, you try to present your projections. I notice the CFS makes reference to your estimated five-year cumulative planning surplus of $34.6 billion.

Can you tell me when you did this? If you're familiar with the recent economic projections and fiscal projections, things have changed pretty dramatically. As opposed to the kind of revenue growth you project over the next two fiscal years, we're looking probably at something close to a flat revenue picture, which sharply changes the surplus totals.

Mr. David Robinson: Yes. This was obviously done before September 11. It was still based on a fairly low forecast for the current fiscal year.

I think the underlying balance for 2001 isn't going to be much off what you see there. It'll probably come in closer to $8 billion—$7.5 billion to $8 billion. It's in 2002 that we really see the problems developing. We probably see an underlying balance there of only $5 billion. So really there'll be no planning surplus in 2002.

The government of course has the option of saying let's dip into the reserves and money we put away for prudence, or let's run a small deficit if we think that's going to help us get over the hump.

Mr. Jason Kenney: Of course, for us as policy-makers we have to look at the range of projections. Are you projecting a $5-billion planning or underlying surplus next year?

Mr. David Robinson: Next year it would be pretty close to zero of planning surplus.

Mr. Jason Kenney: Of planning surplus. Of course the Bank of Nova Scotia is projecting a $5 billion deficit next year. Wood Gundy is projecting a zero underlying balance. So it's a very tight situation, as I'm sure you're aware.

You talked about the cash transfers and CHST. It said that they are in fact below what they had been. I believe you're referencing 1995 levels in per capita terms. Is that real or nominal per capita terms?

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Mr. David Robinson: That's adjusted for inflation—1993 levels.

Mr. Jason Kenney: Versus 1993. Is that presented here on a chart?

Mr. David Robinson: Yes, it is.

Mr. Jason Kenney: It's not a test here. I'd just like to see that.

Mr. David Robinson: If you look at page 7, you'll see it in our graph.

Mr. Jason Kenney: And you also said you were concerned that whatever increases we've seen recently in CHST have not been reflected in provincial increases in post-secondary education funding. Is that consistent for every province or is that an all-province average?

Mr. David Robinson: That's an all-province average. It's largely in the big provinces, such as Alberta and Ontario, where you see continuing reductions, even though CHST transfers have increased. So obviously the money is not going into post-secondary education. Where it's going is anybody's guess.

Mr. Jason Kenney: So why ask the federal government to increase CHST cash transfers, of which notionally a portion goes to education, when in fact there's no guarantee at all it will go to your chosen priority, and in fact evidence suggests it may not go there?

Mr. David Robinson: No, this isn't a new problem. In the province where I'm from, British Columbia, there was a joke in the mid-eighties that the highways of British Columbia were paved with EPF transfers. Block funding creates a fundamental problem in that there's no accountability or transparency.

So what we're arguing in our submission, and what we've argued for the past couple of years, is that it's not just the question of how much money the federal government sends the way of the provinces, it's also a question of the mechanism and accountability to ensure the money gets to where it's intended. As a taxpayer, you would only assume that your federal taxes would have some accountability mechanism built into it, but right now we have politicians saying, we don't know where it goes, go ask the provinces. I think that's a major political problem.

Mr. Jason Kenney: I have a question for Mr. Boyko. You said that the Canada Millennium Scholarship Foundation has been a failure or disaster, or words to that effect. Could you elaborate on that briefly? Why is that your view?

Mr. Ian Boyko: There are a number of reasons why the Canada Millennium Scholarship Foundation has done very little to be encouraging to students because of debt reduction. I think the problems stem from the fact that structurally it's a crown corporation at arm's length from both the federal government and the provinces, so it essentially has to rely on the goodwill of provinces to abide by the agreement they signed to distribute the millennium scholarship money in the right place. Starting off from almost a doomed-to-fail perspective that they have to rely on an already complicated provincial-federal relationship, the foundation, first of all, doesn't have the endowment to make any significant impact on student debt.

But getting back to the structural problem, there is the fact that Canada's largest and most populous province, Ontario, and then behind them Nova Scotia, essentially absconded with the money that was given to them from the endowment. The case in Nova Scotia is much clearer: there was no benefit to students, zero, in Nova Scotia because what they effectively did is use that money to eliminate the loan remission program in Nova Scotia. And in Ontario, only after the public embarrassment that the federation helped spur, did the provincial government in Ontario start directing money in the general direction of post-secondary education, but by no means were they spending it on comprehensive measures to reduce student debt and increase access in the provinces.

Mr. Jason Kenney: Does CASA share that view? That's my last question. Are you critical of the millennium scholarship administration?

Mr. Liam Arbuckle: We're critical in terms of wanting them to do the best they can, but we don't think it's the foundation's fault that provinces cancelled their own loan remission programs. The fault would lie with the provinces, in our minds, so we're not as critical of the foundation.

Mr. Ian Boyko: May I add something?

The Chair: Sorry, Mr. Boyko, we have to move along to the next questioner.

Mr. Epp.

Mr. Ken Epp: Thank you, Mr. Chairman.

I want to follow up on one quick thing here. If you can't keep federal politicians accountable, you say, on the Canada Millennium Scholarship Endowment Fund, why can't you keep your provincial politicians accountable? Do the students show up at the provincial legislatures and say to the MLAs there, “This money came from the feds, we want to see it”? Have you done that?

Mr. Ian Boyko: Absolutely. We have a provincial infrastructure in most of the provinces, including Ontario, and that's exactly what they've done. But it's a pass-the-buck mechanism. The money is there from the federal government, and the provincial government is saying it's spending it where it sees its priorities, which we think is a misuse of federal dollars. We have said that in Ontario and Nova Scotia on numerous occasions. Unfortunately, there is not the political will in those provinces to address student aid with that endowment from the federal government.

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Mr. Ken Epp: Okay.

I have a question for probably everybody at the table. In my view, the fact that students graduate from university with a huge debt load has a huge impact on our economy. Instead of having those students upon graduation getting out there and setting up their businesses—for example, buying their dentistry stuff, if they're a new dentist—they are burdened with this debt load that severely hampers their credit availability and is, I think, very debilitating to their personal well-being. They're not buying homes. They're not doing a whole bunch of things.

I would like to see students come out of university without a debt, as we did in our generation. That's many years ago, of course, but when I went to school, I had greater earnings every summer than what I needed for my whole year of living. It was wonderful. I'm sorry that isn't available now.

Have you, in your various groups, done some brainstorming about how we can do this in our present generation so we can fund post-secondary education without saddling the students with these huge debts? What creative ways have you thought of to solve that problem?

The Chair: That's your final question, Mr. Epp.

Mr. Brown, then we'll go to Mr. Arbuckle, Mr. Boyko, Mr. Turk, and anyone else who wants to join in.

Mr. Gerald Brown: At the college level, we put together a task force of our institutions across Canada to take a look at the student debt issue. We came out with a report on a number of issues that we would be glad to share with the committee.

But to quickly respond to your question, there are two things that come to mind. One is we need to move from a loan system to a grant system. I think that would begin to address some of those issues. I think we need to look at a shared role of responsibilities, both at the institutional level and at the government level.

One of the things we discovered when we did this task force was that there was a huge gap in research knowledge. I think that's one of the things. We're talking about a system designed in the 1960s being applied in 2001. I think the world has changed. I, too, had the same opportunity to graduate without a debt load. But the world has changed for these students. There's a new world out there, and we have to start looking at that model.

We saw all kinds of things. There are a lot of students out there who are.... What is the real cause of the default system? We really don't know. There are a lot of families who would be called debt aversive, and we don't know the impact of that either. Then, as you said, there are long-term implications, economic and social, for this generation as far as their debt is concerned.

We would encourage the federal government to take a look at some of the research gaps, because I think that would help us design the kind of system we need to have. We would be glad to share our results with the committee.

The Chair: Thank you, Mr. Brown.

Mr. Arbuckle.

Mr. Liam Arbuckle: First off, I would like to thank you and welcome you to the fight we deal with every day, what students have to face when they're going for post-secondary education—the fact that they're unable to pay for it, the rise in tuition.

We think it stems from a lot of different things. There seems to be collective agreement among Canadians that education is important, yet we don't seem to have a national strategy on education because we get the pass-the-buck routine. Regardless of whether it's right or wrong, we get it. We get it every time we're at HRDC—people asking why we're not at the legislature in the provinces. Well, if education is so important to the fundamentals of a nation and how it can grow in its economy, then they themselves have to have a national strategy.

In terms of creative things we've done, we've designed a program like a pan-Canadian accord on education, very much styled after the Canada Health Act, in which provinces and the federal government work together to help fund the core budgets of universities. That's a big reason tuition goes up.

The universities have very few ways of generating revenue. They get it from the governments, from private donations, and from their easiest access, students' tuition. So when a bill comes in and they don't have enough to pay for it, the first and easiest place to look is at the students. That's the problem. We can see the rise in tuition relative to the funding from federal government for core budgets going down in this country.

The Chair: Thank you.

Mr. Boyko.

Mr. Ian Boyko: Actually, it's quite simple—well no, it's not.

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There are a few things. The first is that there have to be increased transfer payments, and we support the CAUT's call for some sort of post-secondary education act that goes back to the system of directly financing post-secondary education through transfer payments. That will bring tuition down. The tuition is already too high. “Grants, not loans”, as Mr. Brown was suggesting, was actually a founding campaign of the federation back in 1981. In order to bring down debt, there have to be grants, not loans. It's outlined in our brief, although not in as much detail as last year.

One of the ideas the Canadian Federation of Students is proposing is a grants program, and it would be, I think, well financed if we diverted some funds from the RESPs and the Millennium Scholarship Foundation. It is a grant system that could be administered through the Canada student loans program, which would avoid all the things I was saying about the Millennium Scholarship Foundation, the complications of provincial-federal arrangements, because the CSLP is a program that is already 25 or 30 years old and is an already-in-place agreement with existing needs assessments. The provinces already agree on it, and I think it would be an adequate way to fund students and financial aid.

The Chair: Thank you, Mr. Boyko.

Mr. Turk.

Mr. James Turk: Mr. Epp, I thank you for your question. My experience was the same as yours.

I think the starting point is very clear. It's a matter of political will. In the 1920s in this country, governments across Canada faced the same issue with regard to secondary school education. In the 1920s, secondary education was deemed sufficiently important that we decided to make it free and universal. Arguably, and I think almost everyone who's appeared before this committee would probably support this, a college or university education today is as important as a high school education was 80 years ago. Yet we're going in the exact opposite direction, making it less available, less accessible, by making it more expensive.

So the starting point is, can we collectively, the politicians and the people in our country, make the political decision that accessibility to college and university education is a good we want to make universal, as we did 80 years ago for high school? If we make that decision, there are ways to do it, and some have been proposed. Moving from the huge amount of money that's put into a loan system to a grant system would help.

The other aspect of it is the introduction, we think, of moving away from block transfers to a Canada post-secondary education act and fund.

The reality is the federal government puts a lot of money into post-secondary education, but there's a disincentive for it to invest heavily to meet the need because its contributions disappear into a black hole. I think that's why the federal government has increasingly put more money into specialized programs like the Canada Millennium Scholarship Endowment Fund and the Canada Foundation for Innovation, to try to have some way in which the significant contribution the federal government makes can be recognized.

As we said in our presentation, the fundamental problems of what's happening on the ground in universities, with libraries declining, faculty being cut back, class sizes becoming bigger, and tuition going up, are not going to be solved until there can be significant contribution to the core operating expenses. And until we have a Canada post-secondary act that has national guidelines and accountability so the federal government can confidently put its money there, we're not going to find a solution to this problem.

The Chair: Thank you very much, Mr. Turk. Thank you, Mr. Epp.

Mr. Murphy.

Mr. Shawn Murphy: Thank you, Mr. Chairman. I want to throw out another question to all the panellists. We've heard here this morning—and this is basically a post-secondary education panel—that the demands on the system are tremendous, they're immense, and I think everyone realizes that the fiscal situation is going to be somewhat tight.

If I can summarize, one, there's more demand for research. There has been an increase in research, but that has led to other requests that the government fund the indirect costs of research.

The second would be the request for sustaining operations.

The third request, which is tremendous, especially in the small universities, is in regard to the deferred maintenance we've had over the last 15 or 20 years.

The fourth, which we were just talking about, is student debt and financial aid.

Assuming the government wanted to prioritize, could look at only one of the issues because of tight fiscal circumstances, which of the four would you look at first?

Mr. James Turk: The four are not discrete and separable. The pressure, for example, for indirect funding of research comes largely because there hasn't been adequate core funding. Universities have seen a way of meeting some of the needs of maintaining their libraries, which are essential for research, or maintaining labs, to get indirect costs.

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I would suggest if there were adequate funding of the core operating expenses of universities the pressure on you for funding indirect costs of research would diminish. The reason we have crumbling capital infrastructure is because of inadequate core funding. And one of the reasons we have spiralling student debt is the response by universities of increasing tuition in the absence of adequate core funding.

I really think what we need to do is look back to what Louis St. Laurent did many years ago, in the 1950s, which really set the basis for our university system today. Basically, the federal government stepped in and recognized that unless and until the federal government plays a major role we're going to have massive inequities in the nature of our university system.

I think we have the capability of doing it. If we deal with the core funding issue, then these others will be addressed as well.

The Chair: Mr. Brown.

Mr. Gerald Brown: In response to your question, I think an awful lot of that is encompassed inside what I consider to be a national skills agenda. I think there are elements to it, and it's the umbrella under which all of it falls. None of them can be seen separately. I think if we had a common national skills agenda, we could incorporate inside it a number of issues. Then we would be talking about the importance, for instance, of training and upgrading our skills.

The difference for our country in the global economy is going to be in the level of our skilled workforce. It's not going to be the money, or the natural resources; it's going to be how competitive our skilled workforce is. That's why we're looking at this.

Inside of it we can incorporate student debt and research. My argument is not the university's argument. My argument is for including the colleges in the research agenda. All the money that has come out for research to date has gone to one end of the spectrum. I think research runs the full spectrum, both from the pure to the applied, and our institutions are very much involved in the applied area.

So I think the priority should be put on a national skills agenda, where I think there is a sub-set of issues.

The Chair: No further questions?

I'll go with Mr. Nystrom and Mr. Brison.

Mr. Lorne Nystrom: I'd like to thank all the witnesses this morning.

I just want to ask one quick question of Mr. Boyko.

I was surprised you didn't mention tuition fees in your opening statement. That's the first time I've heard a student leader not do that. It seems to me if you want to have access to education on a universal basis you start there. Is there any reason for that?

Mr. Ian Boyko: Well, I think it was tough. I think we're pretty clear about that in our messaging. It was indirectly touched on in a few different things. But, yes, certainly tuition, as other members have suggested, is one of the most important issues we're facing today. We're not even seeing hints of any strategy to start bringing down tuition fees, from the federal government anyway.

We've seen some outstanding commitments from provinces, even under the tightest of times, to commit to tuition fee freezes. But that's a very difficult decision to make, and it takes some really complicated commitments in other sectors to make room for it. I think, for example, the tuition fee freezes in British Columbia yielded some pretty positive conclusions about what they can do for access in the province and for accommodating people from all sorts of backgrounds.

It's been said enough around the table that in many ways the federal government and this committee should not look at education as a cost, as an expense on that side of the ledger. I think it's been demonstrated quite well by Robert Allen, an economist at UBC, that education is an investment. He estimates that for every dollar invested in education in this country we can expect to see about four dollars back in tax revenue later. So it should be seen as an investment, just like any other sort of long-term planning goal.

Mr. Lorne Nystrom: I'd like to ask a question of Mr. Turk.

I like your idea of the post-secondary funding act you're talking about. I think that's the way we have to go in terms of tying funding to where the money is supposed to go, to the universities and so on in the provinces.

Have you sounded out the idea with some of the provinces? How do you think it would be accepted by some of the provinces? I'm thinking of the quaint federalism we have in this country, of education being a provincial jurisdiction. The federal government of course has the power to do funding in that area through the spending power, but how do you think the provinces would react? I certainly support your idea.

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My second question, Mr. Chair, would be this: what is the reaction of the other panellists to what Jim is saying about having a tied system of funding, where the federal money actually goes where it is supposed to go?

The Chair: Mr. Turk, followed by Mr. Shaddock, and then we'll go to Mr. Brown.

Mr. James Turk: We've actually developed a model act to try to deal with those questions and have been in discussions with provinces as well. To be clear, what we're proposing is an act that says, “Out of this post-secondary education fund, here's money to be transferred.” Certain national guidelines would have to be complied with to assure that the money goes in a general sense in the way the federal government wants—guidelines of a sort that would be broadly acceptable.

We also recognize in all federal-provincial relations the uniqueness of Quebec and how the federal government has an obligation there. We understand asymmetrical federalism, and those kinds of discussions have to go on. I would point out that our counterpart organization in Quebec, the FQPPU, has also supported our proposal. We've met with the finance minister and the human resources development minister and the presidents of our various organizations in Quebec and here to discuss it.

No one would suggest any federal-provincial relations are simple, but the general direction of the guidelines I think is broadly acceptable. It's in working out the details that one would have to spend a fair bit of time, but we don't feel there is an alternative. We've seen the failure of block transfers to achieve the objective. In the absence of it being suitable, we really, after years of looking at this and discussing it with our provincial organizations and provincial governments, believe there is not an alternative to this act.

We'll be happy to send a copy of the draft act to each of the members of the committee so you can have a look at it, and we would be happy to answer questions about its detail.

Mr. Lorne Nystrom: Before the other panellists respond, is there anything you want to add in terms of how you would deal with the first nations? We now have more and more first nations people going on to post-secondary institutions, and there's a special obligation already there for the first nations under our Constitution. Is there any advice you might have for us in that area?

Mr. James Turk: In our act we did not deal with the first nations issue in the sense of proposing that they be swept into this. The federal government has a variety of obligations to first nations directly that I think have to be respected, so—

Mr. Lorne Nystrom: In terms of federalism, too, perhaps as to how we deal with—

Mr. James Turk: That's right.

Mr. Gary Shaddock: Thank you.

In response to Mr. Nystrom's question about funding of education and his reference to it as a provincial responsibility, for the most part this morning we've been talking about post-secondary, and I guess I have to stress the importance of the K to 12 funding as well. We have some legislation to do with the national children's agenda. I think it's important that money be allocated to it so we can ensure our students have the basics so they can move on to post-secondary education.

As well, you mentioned aboriginals. In many of our provinces we have the case where a majority of the students in the next few years will be aboriginal. I am from Saskatchewan, so I'm fully aware of that. We have to make sure these issues are dealt with through the national children's agenda and that moneys are sent to the provinces on a non-conditional basis, but find some method of accountability so we can ensure the money is actually going where it's supposed to go.

The Chair: Thank you. Mr. Brown.

Mr. Gerald Brown: I find the notion of a Canada post-secondary act quite intriguing. We've been looking at it ourselves. If I look back at some of the presentations we've made before this committee in the past, we would always argue, along with our sister organization, AUCC, that we should have an increase in the block transfers.

You'll notice we're not saying that any more, because the reality is that the federal government did increase the transfer block, but very little if any of it reached post-secondary education. You can appreciate from a college perspective that we feel the money comes in and somehow disappears inside the provinces. If it does go to education, it tends to go to the universities. It rarely works its way down to the community colleges and/or school boards. So we would be interested in looking at this. That's why our proposal is talking about targeted activities, targeted projects, that allow us to see the paper trail.

Regarding your question on aboriginals, we have 150 institutions, and pretty close to 90 of them have a significant population from aboriginal communities. So it is a very important vehicle to respond to.

The Chair: Thank you.

Very briefly, Mr. Weiner.

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Mr. Harvey Weiner: Mr. Nystrom's question touches on provincial and federal jurisdiction, etc. I think it really is a serious problem we're facing. It seems to me to be a problem and an issue we should have been addressing many years ago, if not decades ago. As has been mentioned in a previous context, the world has changed dramatically.

I think the provinces and the federal government recognize the importance of ensuring our children grow up healthy and well-adjusted. They recognize the importance of education, whether they call it learning, skills development, training, or being able to compete on an international basis. It seems to me on those issues there's fundamental agreement.

Why can't we make it work? Why can't we get the people elected to represent us, both federally and provincially, to find new modalities and new mechanisms to ensure it happens?

We're constantly being blocked at various levels with their responsibility versus your responsibility when the issues, and the substance of the issues, override the jurisdictional responsibilities.

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

Thank you, Mr. Nystrom.

Mr. Brison.

Mr. Scott Brison: Thank you, Mr. Chairman. I thank all the witnesses for their interventions today.

My first question is to the two student organizations, CASA and CFS, as to their views on the following policy being advanced by the e-business round table. It is a policy whereby, over a ten-year period of time after graduation, a student would have a tax deduction based on principal repayment. It's opposed to simply the tax deductibility of interest that is currently the case.

This would provide some incentive for graduates to eliminate debt more quickly. It would also provide some incentive to keep students here. Of course, if you're not employed in Canada, you don't have a tax benefit. The e-business round table sees it as one way to address some of the brain-drain pressures faced by graduates in their specific areas of e-business and IT.

I'd appreciate your brief feedback on the policy initiative.

Mr. Ian Boyko: I'll preface my remarks by saying we invest very little in the notion of a brain drain. In fact, we think there is conflicting data about this so-called brain drain. I'm not going to take the tack that there's a panic to keep well-educated people in Canada.

I think this government has made it one of its priorities to look at measures through the tax system for addressing student debt and the cost of post-secondary education in Canada. By and large, they haven't really hit the spot. They haven't made the cost of an education up front more attractive to students from middle- and low-income backgrounds.

At the same time, we would never suggest interest relief and debt reduction be scrapped. We would suggest the back-end measures and tinkering with the tax system don't really do anything for students who could be debt averse. It's money better spent on the front end in bringing the cost down, rather than students requiring a money manager to calculate, ten years down the line, whether or not they'll be in a better position than they were before entering the system.

Mr. Scott Brison: Mr. Arbuckle.

Mr. Liam Arbuckle: I really don't need to repeat what Ian said. We're at pretty much the same standpoint with this conflicting data on the actual brain drain.

Ross Finnie, who is with HRDC, has commented several times that Canada may in fact have it backwards. Grants should come before loans. You want to get people into the system and keep them there, versus having them come in with loans and getting grants at the very end.

Mr. Scott Brison: My next question is on the millennium scholarships. I believe Mr. Boyko referred to it as a colossal failure.

Mr. Ian Boyko: It was an abject failure.

Mr. Scott Brison: First of all, Mr. Arbuckle, would you agree with the statement that the millennium scholarships have been an abject and/or a colossal failure?

Mr. Liam Arbuckle: I would have to say no. We don't agree with the statement in whole. Have there been problems with the foundation? Of course, there have. It's an obvious fact. It's exactly what Nova Scotia did with the introduction.

We don't blame it on the foundation or say it's the fault of the foundation. We worked very closely with the foundation. In the first model, they wanted 50% merit with a 50% needs basis for the scholarships. Of course, we didn't agree with this whatsoever. We went with the model where, if you're going to do it, it should be as fair as 95% with 5%. It's the model they did take.

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The fact is there is $2.5 billion directed at students. In our estimation, I don't think it can ever be a bad day when you're actually trying to address it. It's a blunt instrument at best. We'll have to see the data to know if it has actually improved its mission of access. Down the road, it will be questioned as to whether or not it has actually improved access. We're going to have to see the data on it.

Mr. Scott Brison: I want to talk to you about tuition caps.

I represent the riding of Kings—Hants. Of course, Acadia University is in my riding. Acadia has been rated by various studies very highly as an undergraduate university. It's one of the most innovative undergraduate universities in the country and, from an overall perspective, one of the best. It also has the highest tuition fees in Canada and has had greater increases in tuition fees than most other universities. At the same time, enrolment has been increasing steadily over the last several years.

Isn't it wrong to cap fees when in fact some universities are extraordinarily successful in providing excellence in education and in targeting the market seeking it?

Mr. Liam Arbuckle: This is true. You would have to look at the participation levels of the socio-economic background of the university. Which students are attending the university? Is it now becoming only for the elite with one's ability to pay the high tuition?

Mr. Scott Brison: Why should Acadia be denied the opportunity to pursue that particular direction?

Mr. Liam Arbuckle: It's basically prohibiting students who want to attend a university based on its very innovative ways, such as an Advantage program with laptops. If it continues in such a way, only the upper echelon will be able to attend that university.

Mr. Scott Brison: Harvard and Princeton should be capped as well in the U.S. as a matter of public policy?

Mr. Liam Arbuckle: It's actually totally different. I don't think it's relevant to our situation in Canada.

The Chair: Thank you, Mr. Brison.

We'll have two final, very brief comments from Mr. Boyko and Mr. Turk.

Mr. Ian Boyko: I have some really brief comments on the Acadia issue.

You asked why shouldn't Acadia have the right to keep increasing tuition. I would turn it around. Why shouldn't students in the surrounding area and across the country deserve an accessible user fee for the institution? It's absurd to think that somehow institutions don't have a right to serve their public mandate of educating all Canadians. It's a non-starter.

The Chair: Mr. Turk.

Mr. James Turk: Acadia is a wonderful university. It's also a public university. As a result of the high tuition fees it charges, there will be a lot of residents in your constituency in Kentville and other communities who can't afford to go there.

Why should a public university, by pricing itself so high, be able to say you're welcome to come here if your family is rich enough or you're prepared to go into debt?

In this country, our model for education is to have consistently good quality in public universities. They should be accessible to everyone so the students who are able to benefit from the education have an opportunity to do so. Increasingly, as a result of what's happening at Acadia, we're moving to a system where a better predictor of who can go there is not ability but is family wealth. It's the problem that has to be addressed.

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

Do you have a question?

Mrs. Sue Barnes (London West, Lib.): Yes. I have a question for our student reps. I'd like their input.

Sometimes it's not the tuition fees across the board at a university; it's tuition fees on a faculty. Often business faculties, medical faculties, and law faculties have a higher cost than the average tuition.

Have either of your organizations started any data tracing whether this is impacting admissions from rural and urban Canada? Have you been tracking whether it's directly related to the wealth of the student's family, as opposed to an ability to do the study?

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Mr. Liam Arbuckle: In fact, when we participated in the PC round tables on education, we brought facts from Statistics Canada on the University of Western Ontario, which is now—

Mrs. Sue Barnes: My university.

Mr. Liam Arbuckle: Your university.

Mrs. Sue Barnes: That's why I'm asking.

Mr. Liam Arbuckle: Yes. And it's staggering to see the median net family worth of the people who are going now to that medical school after deregulation, compared with just three years ago. Tuition has risen. I don't have the exact numbers in front of me, but it's basically gone from about $3,000 or so up to about $10,000 to $11,000. With this raise, it happens that you are now sending a very select few Canadians to that institute to become doctors. We're selecting our doctors from a smaller and smaller percentage of the population—not based on skill or whether or not they make good doctors, but whether or not Mom and Dad or whoever can pay the bill for them. I think that's a sad way to be selecting our professionals in this country. Just because you have money doesn't mean you'll be good at something.

Mrs. Sue Barnes: Thank you.

The Chair: Thank you very much.

I just want to make a very brief comment in reference to a quote I read in one of the briefs today. I think it really clearly embodies the values that this committee believes in. It's from a speech delivered by the Prime Minister to the Canadian Chamber of Commerce at the 69th annual meeting. He says, “The future belongs to societies whose economies are sound, whose population is healthy, whose children are well prepared and who invest in knowledge, innovation and education.”

I must say that as I review the recommendations made by this committee over the years, these values are also the values embodied by this committee. And I can tell you that nothing has happened over the last five years to change our mind. We're still very committed to this, and I am sure the Prime Minister is as well.

Having said that, like many of you, we are also challenged by some of the limited resources—at times the scarcity of resources—which is really the number one issue in economics, as you know. How do you allocate existing resources to draw the most benefit from them? I must say that's the challenge we face, particularly in these very difficult times post-September 11.

Don't lose hope, though. We are certainly going to remain true to the values as outlined by the Prime Minister. And you can rest assured many of your thoughts will be reflected in the final report that will be tabled in the House of Commons and that will be carefully analyzed by the Minister of Finance. Thank you once again. This is always a very interesting panel.

The meeting is adjourned to the call of the chair.