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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Monday, November 4, 2002

1330

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.))

Mr. Richard Harris (Prince George—Bulkley Valley, Canadian Alliance)

The Vice-Chair (Mr. Nick Discepola)

Ms. Jennifer Orum (National Board Member, Canadian Association of Student Financial Aid Administrators)

1335

1340

The Vice-Chair (Mr. Nick Discepola)

Mr. Jim Fulton (Executive Director, David Suzuki Foundation)

1345

Mr. Gerry Scott (Climate Change Director, David Suzuki Foundation)

1350

Mr. Dermot Foley (Research Analyst, David Suzuki Foundation)

The Vice-Chair (Mr. Nick Discepola)

Mr. R.V. Wilds (Managing Director, Greater Vancouver Gateway Council)

1355

The Vice-Chair (Mr. Nick Discepola)

Mrs. Necole Anderson (Steering Committee Member, Parents for Child Care)

1400

1405

The Vice-Chair (Mr. Nick Discepola)

Mr. Richard Harris

The Vice-Chair (Mr. Nick Discepola)

Mr. Gerry Scott

1410

Mr. Richard Harris

Mr. Gerry Scott

Mr. Richard Harris

The Vice-Chair (Mr. Nick Discepola)

Mr. R.V. Wilds

Mr. Brad Eshelman (Member, Greater Vancouver Gateway Council)

Mr. Richard Harris

1415

Mr. Brad Eshelman

Mr. Richard Harris

Mr. Brad Eshelman

Mr. Richard Harris

The Vice-Chair (Mr. Nick Discepola)

Mr. Roy Cullen (Etobicoke North, Lib.)

Mr. R.V. Wilds

Mr. Roy Cullen

Mr. R.V. Wilds

Mr. Roy Cullen

Mr. Brad Eshelman

Mr. Roy Cullen

Mr. Brad Eshelman

Mr. Roy Cullen

Mr. Brad Eshelman

Mr. Roy Cullen

Mr. Jim Fulton

Mr. Roy Cullen

Mr. Jim Fulton

1420

Mr. Gerry Scott

Mr. Roy Cullen

Mr. Gerry Scott

Mr. Dermot Foley

1425

The Vice-Chair (Mr. Nick Discepola)

Mr. Svend Robinson (Burnaby—Douglas, NDP)

The Vice-Chair (Mr. Nick Discepola)

Mr. Svend Robinson

The Vice-Chair (Mr. Nick Discepola)

Ms. Jennifer Orum

Mr. Svend Robinson

Mr. Gerry Scott

1430

Mr. Svend Robinson

Mr. R.V. Wilds

Mr. Svend Robinson

Mr. R.V. Wilds

Mr. Svend Robinson

Mrs. Necole Anderson

1435

Mr. Svend Robinson

Le vice-président (M. Nick Discepola)

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

Ms. Jennifer Orum

Ms. Sophia Leung

Mr. Jim Fulton

Mr. Dermot Foley

1440

Ms. Sophia Leung

Ms. Necole Anderson

Ms. Sophia Leung

Ms. Necole Anderson

Ms. Sophia Leung

Ms. Necole Anderson

Ms. Sophia Leung

Ms. Necole Anderson

Ms. Sophia Leung

Mr. R.V. Wilds

1445

The Vice-Chair (Mr. Nick Discepola)

Mr. Shawn Murphy (Hillsborough, Lib.)

Ms. Necole Anderson

The Vice-Chair (Mr. Nick Discepola)

Mr. R.V. Wilds

1450

The Vice-Chair (Mr. Nick Discepola)

Mr. Gerry Scott

The Vice-Chair (Mr. Nick Discepola)

1455

Mr. Gerry Scott

The Vice-Chair (Mr. Nick Discepola)

Mr. Dermot Foley

The Vice-Chair (Mr. Nick Discepola)

1505

The Vice-Chair (Mr. Nick Discepola)

Mr. Ron Britton (President and CEO, Fuel Cells Canada)

1510

1515

The Vice-Chair (Mr. Nick Discepola)

Chief Clarence (Manny) Jules (Chair, Indian Taxation Advisory Board)

1520

The Vice-Chair (Mr. Nick Discepola)

Dr. John Nightingale (President, Vancouver Aquarium Marine Science Centre)

1525

1530

The Vice-Chair (Mr. Nick Discepola)

Ms. Janette Pantry (Director, Vancouver Board of Trade)

1535

1540

The Vice-Chair (Mr. Nick Discepola)

Mr. Richard Harris

1545

Mr. Ron Britton

1550

Mr. Richard Harris

Mr. Ron Britton

The Vice-Chair (Mr. Nick Discepola)

Chief Clarence (Manny) Jules

The Vice-Chair (Mr. Nick Discepola)

Ms. Sophia Leung

1555

Dr. John Nightingale

Ms. Sophia Leung

Mr. Christopher Curtis (Vice-President, Fuel Cells Canada)

Ms. Sophia Leung

Chief Clarence (Manny) Jules

1600

Ms. Sophia Leung

The Vice-Chair (Mr. Nick Discepola)

Mr. Roy Cullen

1605

Mr. Ron Britton

Mr. Roy Cullen

Mr. Ron Britton

Mr. Roy Cullen

Mr. Ron Britton

Mr. Roy Cullen

Mr. Dave Park (Assistant Managing Director and Chief Economist, Vancouver Board of Trade)

1610

Mr. Roy Cullen

Mr. Dave Park

Mr. Roy Cullen

Mr. Dave Park

Mr. Roy Cullen

Ms. Janette Pantry

The Vice-Chair (Mr. Nick Discepola)

Mr. Shawn Murphy

1615

Chief Clarence (Manny) Jules

Mr. Shawn Murphy

Chief Clarence (Manny) Jules

Mr. Shawn Murphy

Chief Clarence (Manny) Jules

Mr. Shawn Murphy

1620

Mr. Ron Britton

Mr. Christopher Curtis

Mr. Shawn Murphy

Ms. Janette Pantry

1625

Mr. Dave Park

Mr. Shawn Murphy

Ms. Janette Pantry

Mr. Shawn Murphy

Dr. John Nightingale

The Vice-Chair (Mr. Nick Discepola)

Ms. Janette Pantry

The Vice-Chair (Mr. Nick Discepola)

Mr. Ron Britton

The Vice-Chair (Mr. Nick Discepola)

Mr. Christopher Curtis

1630

The Vice-Chair (Mr. Nick Discepola)

Mr. Ron Britton

The Vice-Chair (Mr. Nick Discepola)

CANADA

Standing Committee on Finance

NUMBER 014

2nd SESSION

37th PARLIAMENT

EVIDENCE

Monday, November 4, 2002

[Recorded by Electronic Apparatus]

· (1330)

[English]

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): Pursuant to Standing Order 83(1), we are continuing our pre-budget discussions. I'd like to welcome our guests today. Half of the committee is going out west this week, and the chair, Sue Barnes, is heading the committee in the east. That is to facilitate all the requests we've had from people to present to the committee.

I'd like to start immediately, because we have a very heavy schedule, and introduce Ms. Jennifer Orum from the Canadian Association of Student FInancial Aid Administrators. She is a national board member, financial aid awards, University of Victoria. From the David Suzuki Foundation we have Mr. Jim Fulton, who is executive director, Mr. Gerry Scott, climate change director, and Mr. Dermot Foley, policy analyst, climate change and energy. From the Greater Vancouver Gateway Council we have Mr. Brad Eshelman, president of the B.C. Wharf Operators Association, vice-president of finance, Western Stevedoring, and member of the board of the Vancouver Gateway Council. From Parents for Child Care we have Heather Northrup, a steering committee member. And we're also expecting someone from the Tenants Rights Action Coalition; when they arrive, we'll ask them to join us.

We'll start with Ms. Orum. Please make your presentation. For those of you who are new to the committee, we have about a seven-or eight-minute presentation. I'd like to leave ample room for members of Parliament to ask questions, so if you could watch me, when you have about one minute left, I'll give you the right finger.

Mr. Harris.

Mr. Richard Harris (Prince George—Bulkley Valley, Canadian Alliance): I think you missed Mr. Wilds from the fishermen's group.

The Vice-Chair (Mr. Nick Discepola): That's true. He is with the Greater Vancouver Gateway Council. I apologize.

We will start right away with Ms. Orum.

Ms. Jennifer Orum (National Board Member, Canadian Association of Student Financial Aid Administrators): Thank you, Mr. Chair and members of the committee.

I am with the national board of the Canadian Association of Student Financial Aid Administrators, which consists of administrators at the universities and colleges across the country who administer both need-based and merit-based types of assistance, including both federal and provincial assistance. Although I would like to think I might be from the University of Victoria, I'm actually from the British Columbia Institute of Technology here in Burnaby, British Columbia, in the financial aid and awards department.

CASFAA has identified three major themes that relate to ensuring that Canadians, particularly those facing financial challenges, can take advantage of educational and lifelong learning opportunities. The first is the widening gap between student need and the availability of government student assistance, which is commonly referred to as unmet need.

In recent years, increasing costs, particularly tuition, have left more and more students with growing levels of unmet need. According to a recent actuarial report of the Canada student loan program, it is estimated that in 2025, 77% of students will have need beyond the maximum limit of government student assistance, if the loans ceilings of that assistance are maintained at the current levels. As well, the report estimates that tuition will rise from $4,100 to $13,200 during the same period. It is thus clear that accessibility to post-secondary education will be compromised in years to come if measures are not taken to increase funding to students and to prevent further erosion of the Canada student loan program.

CASFAA recommends a multi-faceted approach toward the meeting of the full assessed need of all students. The first five recommendations, which I will list in a moment, relate to this theme. The final recommendations deal with two additional issues important to Canadians who contribute to national prosperity by completing post-secondary education. The sixth recommendation relates to the problem of inappropriately high interest rates being charged to students repaying their Canada student loans. The final recommendation proposes a change to the Income Tax Act relating to the annual exemption for students who receive scholarships, bursaries, and other awards.

The first item is Canada student loan weekly loan maximums. The weekly limit on Canada student loans of $165 has not been increased since 1994, while the cost of post-secondary education has risen significantly. The anticipated increases in tuition costs in the next decade will increase student need and further erode the effectiveness of the program. Recommendation one is therefore that the weekly borrowing limit of the Canada student loan program be increased, and reviewed every five years thereafter.

The second item is to increase student-in-study income exemptions. Part of the Canada student loan need assessment calculation takes into account the student's income during their school year or term. Most students who have more than $600 in income face a reduction in the amount of student assistance available to them. Many experts agree that 15 hours of part-time work per week is appropriate and should not adversely affect their academic performance. Students working 15 hours per week, paid at the minimum wage, would earn approximately $100. Recommendation two is therefore that the in-study work exemption, as part of the Canada student loan program, be increased to $100 a week.

The third item is institutional need-based awards. Many universities and colleges award need-based bursaries to students with expenses that are not covered in government programs--for example, computers and other study-related costs. Such aid can offset expected parental contributions that parents, in many cases, are unable to contribute to their sons and daughters. Institutional assistance is often vital to the academic success of the student. Our third recommendation is therefore that all need-based awards administered by universities and colleges in Canada be exempt in the Canada student loan need assessment calculation.

The fourth area is the federal work-study program. Some provinces and many institutions have created work-study programs to increase on-campus employment opportunities for students with need. Such programs are highly beneficial, in that they provide students with an important source of revenue, often through jobs that are related to future career interests, and in a convenient environment dedicated to student success. Our fourth recommendation is therefore that the federal government establish the Canada work study program.

· (1335)

The fifth area is an unsubsidized parental loan program. Often parents are unable, not unwilling, to provide the level of financial contribution that is calculated in the Canada student loans need assessment analysis. Many have not accumulated the savings required to sustain support of their child through the program of study. To assist parents in this situation, an alternate means to provide the expected parental contribution would be useful. Our fifth recommendation is therefore that the federal government consider the establishment of an unsubsidized parental loan program for post-secondary study.

The sixth area is Canada student loans interest rates. Canadians commencing repayment of Canada student loans currently have the choice of two interest rates: prime plus 2.5%, which is a variable rate; and prime plus 5%, which is a fixed rate. Students who are required to take out loans to complete their education should be treated as preferential customers. Their loans are not for consumer purposes, but rather the human capital that reflects both an individual investment and one that is a necessary key to Canada's future economic development.

Now that the Canada student loans program involves direct loans from the federal government to students, there should be lower administrative cost than was the case during the first 35 years of the Canada student loans program, when guaranteed or risk-shared loans were funded by and delivered through banks and other types of financial institutions. Such savings should be passed on to students.

The federal government recognizes the role of war veterans by making low-interest loans available. Canadians who contribute to national prosperity by pursuing post-secondary education should be similarly recognized. In some cases, the rates charged for provincial student loans are significantly lower than the Canada student loan rates. Ontario and Manitoba, for example, charge only 1% above prime for the floating rate, and Quebec charges plus 0.5%.

Therefore, our sixth recommendation is that the federal government reduce the interest rates charged to students repaying Canada student loans to prime plus 0.5% floating, and prime plus 3% fixed.

Finally, the seventh area is income tax change. In the year 2000 budget, the Income Tax Act was changed to increase the annual exemption for scholarships, bursaries, and fellowships from $500 to $3,000. This was a very welcome change, one that was a long time overdue. As an alternative to ad hoc changes in this exemption level, it would appear far more effective to establish an indexing formula that results in automatic increases based on some objective external standard.

Our final recommendation is therefore that an indexing formula be established such that future increases in the annual exemption level for scholarships, bursaries, and fellowships are tied to the average tuition increases in public universities and colleges in Canada.

CASFAA believes these seven proposals, if implemented as part of the upcoming budget, will contribute significantly to the federal government's objective of assuring greater levels of economic prosperity widely shared by all Canadians.

As a last note, our president, Judy Stymest, from McGill University in Montreal, was unable to make the presentation to your eastern committee. I am therefore bringing our message to you on her behalf.

Thank you very much.

· (1340)

The Vice-Chair (Mr. Nick Discepola): Thank you.

We'll go to the David Suzuki Foundation, please. Who will make the presentation?

Mr. Jim Fulton (Executive Director, David Suzuki Foundation): Thank you very much, Mr. Chairman.

The David Suzuki Foundation appreciates this opportunity to address the Standing Committee on Finance.

Following the Prime Minister's September 2 announcement that the government will ratify the Kyoto protocol before the end of the year after a parliamentary debate and vote, the issues of energy use, clean energy production, and greenhouse gas emission reductions are very germane to the coming federal budget. It is those policy areas that we address in this brief. We also wish, through this committee, to extend our support for the Prime Minister's statement and urge the committee to view Kyoto implementation as an opportunity to demonstrate responsible leadership in the reduction of energy costs and the pollution associated with energy use and production.

We believe Canada can and should be a critical participant in the world's efforts to curb dangerous interference with the climate system. As a wealthy country with well developed infrastructure and advanced technological capabilities, we can provide leadership on this issue. We can also stimulate our own economy by ensuring that key sectors, such as clean, renewable energy production, are given an opportunity to develop and that our energy consumption is at least as efficient as comparable European countries.

For the sake of current and future generations, we must make the transition away from a fossil fuel economy and towards one based on sustainable energy practices. This will help not only to stabilize the climate, but also to strengthen our economy through innovation and efficiency. We also believe that such actions and approaches directly support the recent throne speech, which referred to economic innovation, contributing solutions to global problems, competitive cities and healthy communities, and improved public health.

While some may urge further delay, we wish to remind the committee members of the time and effort that has been applied to addressing climate change. It's now 15 years since the first significant international conference on climate change was held in Toronto, over 10 years since the 1992 United Nations framework treaty on climate change was signed, and it's the same period of time since the Standing Committee on Environment spent several million dollars looking at a Canadian plan in the atmosphere series I sat on. Paul Martin and Sheila Copps were then members of the opposition and sat on that committee. I remind committee members that at that time we called for 20% reductions from 1990 levels by 2005. Canada would have been far better off starting the reductions many years ago.

It's almost exactly five years since the Kyoto protocol was negotiated, and we really can't tolerate any further delay. Canada must move forward, and we urge that these issues be seen as top priorities in your deliberations and recommendations and that you particularly focus on the flexibility of Kyoto. It's an enormously flexible opportunity. It's certainly not the straitjacket some people suggest.

I'll pass it to Mr. Scott, who will do some of the financial proposals.

· (1345)

Mr. Gerry Scott (Climate Change Director, David Suzuki Foundation): I'll introduce that by throwing out the concept of what we call the costs of doing nothing. With the economic debate I'm sure most committee members have participated in to a degree and are familiar with, we are very concerned that in analysing an action plan and budgetary measures that go with an action plan consideration be paid to the costs of the status quo and not moving forward.

If we look at Canada and the important natural resource sectors within our country, we see real vulnerabilities. If it's salmon in British Columbia, there's a high degree of sensitivity to temperature. With forestry in British Columbia it's the same thing. This summer we have seen over and over again the reports of the pine beetle infestation in the northern and central interior, which is directly related to temperature regimes and was predicted in almost every credible climate model. Likewise, tourism and agriculture are vulnerable to climatic change, and parts of our energy system, such as hydro, are also vulnerable to these uncertainties.

So as we raise the question of the costs and the benefits of action, it is important to put into that equation the costs we face--and they're legion--not just in the natural resource sectors, but also from extreme weather generally, and the social upheaval particularly faced by first nations from climate change. There are many social and economic factors that are not included in many of the models. You can see in our brief the high degree of vulnerability these sectors face and the associated costs, as well as the health considerations. Higher temperatures mean smog is worse and the health impact's greater.

Last spring, in the context of that, we contracted with the Tellus Institute, which is an American energy policy and planning group working internationally--they've worked with the World Bank, many multinational corporations, and U.S. government agencies--a very respected organization, to look at some of the steps we could take, and our associate Dermot Foley will touch on that. In the results of that modelling--and they're included in the kit we've provided to the clerk--we see that we have a net economic gain to the actions we are recommending to you today. While other models often produce negative results, we believe these assumptions in the modelling done by Tellus are legitimate and very credible and, most importantly, match the experience we've had to date with energy conservation.

Without a real plan for energy conservation, since the 1970s Canadians have saved almost $9 billion in reduced energy. That's businesses, hospitals, individual homeowners, individual motorists. We believe that if we have a plan that takes us to the Kyoto targets, those kinds of savings can be deeper and more permanent. It gives us an idea of what has been achieved without a real national plan.

The option paper the federal government provided to Canadians in May modelled, again, many of those things, with results not dissimilar to the Tellus study. It showed a very slight negative, where ours was slightly positive, but we see sustained economic growth to the year 2012, over 30% in all provinces and all sectors. I would urge committee members to look at the federal modelling for guidance with these same measures.

We know from much energy conservation work that there is a positive experience in the private sector with leading companies. British Petroleum, Shell, Suncor, Toyota, IBM, many of the largest multinationals that have embraced that have experienced positive financial returns as a result.

With that, I'll ask Dermot Foley, our research analyst, to run over some of the specific steps we're offering to the committee.

· (1350)

Mr. Dermot Foley (Research Analyst, David Suzuki Foundation): In general, we're looking at building and appliance efficiency, retrofits for existing buildings, new standards for new buildings, new standards for new appliances, passenger transportation, corporate average fuel efficiency standards, enhanced transit services, tax-exempt transit passes, and other things the committee can review through our brief.

We'd like to see improved training for drivers of heavy vehicles to enhance fuel efficient driving practices, reduced idling, preventive maintenance for heavy-duty trucks, landfill methane capture in municipalities. Other policies include economic incentives for large emitters, moving more freight more efficiently by rail instead of road, accelerated capital cost allowances developed for technologies used in co-generation for heat and electric power to large and medium-sized industries.

The $9 billion in savings Mr. Scott referred to is every year. Every year Canadians are saving $9 billion from energy efficiency improvements that have already been made and will continue to grow. It's a permanent tax cut they will always have. As long as they are consuming energy, they'll be saving that money.

In conclusion, by designing budgets and funding priorities to promote sustainable renewable energy and energy efficiency, we can ensure that Canada does its part to prevent climate change. Addressing the threat of climate change will provide numerous co-benefits, reduced air pollution and acid rain arising from fossil fuel emissions, stable or reduced energy costs with efficiency improvements, improved public health, and protection of water resources. In addition, by encouraging the development of non-fossil fuel energy sources in Canada, we can drive innovation and diversify our economy, while taking advantage of global trends in this area.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you. You'll have ample time, hopefully, to elaborate during the question session.

From the Greater Vancouver Gateway Council, Mr. Wilds.

Mr. R.V. Wilds (Managing Director, Greater Vancouver Gateway Council): Mr. Chairman, on behalf of the Greater Vancouver Gateway Council, it's our pleasure to thank you for the opportunity to appear before you today to present our recommendations for your consideration in the upcoming budget. Our council represents the collective will of the major transportation interests in this region. We've provided you with a list of our voting and resource members and a copy of our “Vision for the Future of the Greater Vancouver Gateway” document.

Our vision is to become the gateway of choice for North America. To realize that vision, we must maintain our existing customer base and compete effectively for new business in the face of competition from subsidized U.S. west coast gateways in Seattle, Tacoma, Portland, San Francisco, and Los Angeles. In spite of the severe competitive disadvantages with the U.S., resulting from higher investment costs, higher local taxation, and a lack of investment in transportation infrastructure, the economic contribution of this gateway to the local, provincial, and national economies has been documented to be in excess of $8 billion per year. However, massive U.S. investments in their transportation systems, through their Transportation Equity Act's TEA-21 program, remains unanswered by Canada. Over time, the Canadian infrastructure deficit will further erode our competitive position if nothing is done.

As a council, we've directed our efforts toward those issues that we believe must be addressed in order for us to compete effectively for new business against U.S. west coast gateways. We believe Canada is beginning to recognize the need to address the infrastructure deficit. The growth and increasing importance of urban regions has been highlighted in the interim report of the Prime Minister's Caucus Task Force on Urban Issues. Key findings indicate that 80% of Canada's population lives in urban centres, and that 50% of the population growth is taking place in four major urban regions: Toronto–Golden Horseshoe; Montreal and environs; Calgary–Edmonton; and Vancouver–Lower Mainland. These major urban areas are also the major contributors to GDP in their respective provinces.

The Gateway Council is pleased to note that the growth in economic importance of the Vancouver–Lower Mainland region to the national economy was recognized in that report. The report indicated that rapid population growth is creating serious challenges for the social and economic fabric of those four major urban centres. That includes poverty, pollution, and deteriorating infrastructure, to name a few.

We endorse the need to enhance quality of life and to strengthen the economic competitiveness of our urban centres in the 21st century. The Vancouver–Lower Mainland region is the major gateway to and from the Asia–Pacific region for Canadian importers, exporters, and air passengers. It is also a major centre for the international cruise industry and a major tourist destination in its own right. By way of example, the direct economic impact of the Vancouver International Airport and the Vancouver Port Authority represents approximately $5.5 billion in economic output and $3 billion in GDP. However, the tremendous growth of our seaports and airports has contributed to congestion problems on our major road systems.

Unlike some other urban centres, the consequences associated with congestion in this region impact all who rely on the movement of goods and services to and from the Pacific marketplace. The prairie farmers, petro-chemical industries, retail outlets, and natural resource industries are dependent upon a cost-effective and reliable transportation system. Gridlock in this region has been estimated to cost between $700 million and $1.3 billion per year. Greenhouse gas emissions that are negatively impacting the environment are a byproduct of the serious congestion that already exists. These problems result from a lack of investment in infrastructure over many years.

Our council has been working with many partners in this region to develop a long-term plan to address these concerns that will not only benefit the region, but also those relying on the region for their livelihood. Should this gateway transportation system become uncompetitive, shippers and importers will be required to depend on the United States for movement of their goods. We do not see that as an acceptable or desirable alternative. We believe the following recommendations will assist in preventing that from happening and will allow us to keep this gateway competitive for the benefit of Canada.

We recommend and believe it is essential that a dedicated stream of revenue be established for capital investments and strategic infrastructure initiatives. This should be a long-term commitment, with clearly defined parameters for assessing how the moneys will be spent. This could be accomplished by dedicating a portion of the per litre fuel tax to the infrastructure fund. Transportation is critical to the economic health of our country and must be treated in that light. Without a strong economic base, the fabric of our social programs, such as our health and educational systems, are at risk.

Secondly, we recommend that the airport and seaport authorities be permitted to issue general purpose revenue bonds that would be repaid from their operating revenues. This would provide our gateway ports with the same financing arrangements that are currently available to our competitors in the U.S. Pacific Northwest. We further recommend that the authorities be permitted to issue special obligation revenue bonds on a tax-exempt basis. These would be repaid directly by terminal operators and lessees, with no liability to the authority. The financial lease agreements would be structured in such a way that terminal operators would guarantee to pay rentals over the term of the lease, sufficient to retire the principal and interest of the special revenue bonds.

· (1355)

Lastly, we recommend that there be no municipal tax obligation for port authorities. If there is a need to make payments to municipalities, we believe such payments should be the responsibility of the federal government, since these facilities are in the national interest and that is consistent with how taxation is paid on other federal facilities.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you.

From the Parents for Child Care, I'd like to invite Necole Anderson to please make her presentation.

Mrs. Necole Anderson (Steering Committee Member, Parents for Child Care): Thank you for allowing our group to make submissions to this committee, and for your continued interest in this issue.

Parents for Child Care is a group of parents concerned about the alarming shortage of affordable, quality child care spaces in Canada for children between the ages of six months and five years, but especially spaces for those six months to three years--the infant-toddler spaces.

What do we know about child care in Canada? We know that Canada lags far behind other developed nations in providing our children with quality early childhood experiences. An article in the The Globe and Mail dated October 25, 2002, had this to say:

“The anti-poverty group Campaign 2000 found that 82% of the 2.1 million children under the age of six have no access to regulated child-care, nursery schools and junior kindergarten, even though most of their mothers are holding down jobs. Among Canadian three-year-olds, only 14% receive early-childhood education and care, compared with 95 per cent of children in France, 85 per cent in Denmark, 100% in Belgium and 89% in the United States, according to the Organization for Economic Cooperation and Development.”

The bottom line is that the majority of countries recognize that early childhood education is a good thing for public investment. Why has Canada fallen so far behind? Simply put, it's due to lack of political will. Canadian politicians at all levels of government understand the importance of supporting a child care strategy. The Canadian public supports the creation of a child care strategy.

If a child care system were cheap, it would probably be in place already. But child care is not cheap. In fact, it's very expensive, as the majority of families paying for it will attest. We must ask the question, what's the cost if we don't make a commitment to create comprehensive child care programs for all Canadian children?

Who's paying for child care now? The Canadian family is shouldering the greatest portion of child care expenses. Let's look at a family of three with two incomes totalling $60,000 and a child under three, keeping in mind that the average family of four makes $40,000 in Canada. Their net income would be $3,000 per month, with housing cost of $1,000, transit costs of $250, student loans of $500, child care costs of $900, and food and all remaining other needs of $350. None of the above expenses are frivolous or unnecessary. How do families survive?

A member of our group estimates that by the time his child care bill is paid, his family will be $50,000 deeper in debt. I know parents who pay their child care bill on their credit card or take loans from the bank. In order to accommodate child care needs, 40% of parents work opposite shifts, leaving little family time that includes both mom and dad.

If an investment in child care were to be made, what benefits could be gained? There's a plethora of information regarding the impact of child care on children's development, the well-being of the family, and society as a whole. Here are a few interesting facts pulled from the Vancouver Board of Trade task force on early childhood development and child care, “Investing in Our Children is Good Public Policy”.

Most of the critical periods for brain development are over or waning by age six. There is a two-to-one economic payback for investment in children ages zero to six years. Poor early childhood experiences impact long-term physical and mental health. Of two-parent working families, 37% earn less than $40,000 per year.

Family real take-home pay has declined over the last five years, and 73% of two-parent families with children aged six and under have both parents working. The largest private poll on family life in Canada, Angus Reid 1999, found that 78% of Canadians support inexpensive quality child care for all who want it, and 65% said they would be willing to pay more taxes for this.

The Speech from the Throne on September 30 this year promised an increased investment in child care, targeted to the poorest Canadian families. Parents for Child Care cautions the government against targeting child care. Families of all income levels are struggling to access quality care. Modest middle-class and upper-income families have no greater success in accessing quality care than their poorer counterparts. The difference is that when a middle-class family is confronted with the inability to access quality child care, the choice they often make is that one parent leaves the workforce.

These parents are the professionals and skilled workers who are driving the engine of our economy. Businesses are crying for skilled workers, yet 30% of parents cite lack of child care as interfering with their ability to work or study.

As a further argument to support universality, it must be noted that vulnerability in children transcends income levels of parents. Some developmental problems like speech delays occur uniformly across all income levels, and the majority of developmentally vulnerable children are in the middle class.

Do we want to restrict 90% of children from accessing quality child care settings that can help them reach their full potential?

¸ (1400)

Canada's birthrate has fallen to just over one child per family, and it's no wonder. Waiting lists are endless for licensed child care centres. Private preschools are priced beyond the reach of all but the wealthiest members of society, and the cost of child care for infant toddlers is more than tuition for private school. Children are becoming a luxury few families can afford.

Our query to government is why do we accept responsibility for our children's well-being and education when they turn five years of age by providing them with public education, yet abandon them before then, at a time in their lives that early-years academic research indicates is critical to their development?

That brings us to the ECDI dollars and whether they are assisting Canadian children as they should. Since our submission last year to this committee, the number of child care spaces in B.C. has fallen. If centres are closing, where are the federal dollars going?

Meanwhile, waiting lists at B.C. child care centres recognized for providing quality care are increasing. At a centre that the daughter of one of our members attended, in 1997 the waiting list was 300. Her daughter waited three years to get in. In 2002, her eight-week-old son is number 1,500 on the waiting list. We figure he'll get in when he's in first-year university.

Some parents are so desperate that they'll pay for a space six months in advance at $900 per month. This centre generates funding to operate through parent fees and a variety of municipal and provincial subsidies that keep the fees below the market rate, which is $1,500 a month. This subsidy is at risk, meaning the $900-a-month space could soon cost $1,500. What middle-class family can afford that? For these reasons, there must be accountability linked to the ECDI dollars.

In summary, Canada's current approach to child care simply defies common sense. That our children should fall victim to partisan politics is unacceptable, especially in light of the growing body of research demonstrating the incredible benefit of early childhood education and care. We hope Canada can demonstrate the visionary leadership to provide all our future taxpayers and leading citizens with the best possible start in life.

Thank you.

¸ (1405)

The Vice-Chair (Mr. Nick Discepola): Thank you very much, Ms. Anderson.

Colleagues, we have about 45 minutes or so. We'll take maybe nine minutes each and try to get everybody in, in this session.

We'll start with Mr. Harris, from the Canadian Alliance.

Mr. Richard Harris: Thank you, Mr. Chairman, and thank you, presenters, for your informative hard copy and your presentations. I've got a question for each one--I hope I have time.

To the presenters from the Suzuki Foundation, let me say, that I don't think there's anybody in the House of Commons, and you'll probably have to go and look long and hard to find anyone in Canada, who doesn't want clean air and clean water for our generation and for generations to come. The argument appears to be how you're going to get there. But in your brief you say “the federal government also completed and released the analysis of the costs and benefits of meeting the Kyoto treaty”. You must have some numbers I don't have and many don't have, because our party and people who have been doing some work on this for us are having a hard time finding some numbers that would result from Kyoto ratification and implementation, so that we can do an effective cost-benefit analysis.

The bottom line is that the government has indicated that the consumer is ultimately going to end up paying for it. It's suggested that possibly every good or service that's even remotely related to the Kyoto plan could end up with an increase in its base price, and if that's the way it goes, that's the way it's going to go. But the questions haven't been answered yet. How much is gasoline going to cost? How much is natural gas going to cost the consumer? How much are our environmentally friendly automobile modifications going to cost? Those numbers are just not public, if they exist. So if you've got some numbers the government isn't giving us, I'd sure like to get them.

To the gentleman from the Gateway Council, is the municipal tax obligation for port authorities comparable to U.S. west coast ports in particular? Also, could you explain the bond issue? I'm interested in that.

And to Ms. Anderson, a federally funded child care program, I suppose, would have to be, at the end of the day, administered on a provincial basis. Is that how you see it? Okay.

I think that probably will use up my nine minutes. Thank you.

The Vice-Chair (Mr. Nick Discepola): Maybe we'll start with the Suzuki Foundation.

Mr. Gerry Scott: I will start by referring to the May discussion paper of government.

In recent months, with the debate, I think it has often been forgotten that this actually occurred. After three years of what was called the national climate change process, which is a federal-provincial process that involved over 400 stakeholders in various sectoral tables, the government summed up what what came out of that in a federal discussion paper in May. I would refer to the appendix of that, where in fact there's a good summary of a lot of the impacts the question refers to. It looks at employment and at energy prices with reasonable assumptions, because it's modelling different assumptions, but if we take what we call a sort of middle course on this, it has very, very modest impacts on the economy, and this is one of many.

In our brief, which I believe was in the kit circulated by the clerk, we note that this was also done by modelling firms in the 1990s as part of a federal-provincial process, pre-Kyoto, and the conclusions were almost identical then, that there is virtually no impact on the economy. You're moving expenditures on energy to other parts of the economy. There are literally dozens of these modelling exercises that have occurred in Canada and elsewhere.

We do think the economic information is there. There isn't a precise analysis of each and every program, but as a whole, that captures it. In the kit that was circulated, we also provided the study I referred to, by the Tellus Institute. So I hope that answers some of your questions.

¸ (1410)

Mr. Richard Harris: What I'm trying to do is answer the questions of my constituents, who are hearing some numbers out there like gasoline is going to increase to well over a dollar a litre, their natural gas costs are going to double or triple, and all these other warning numbers that have been sent out. I really don't have any hard numbers to give them. I can say no, don't worry about it, it's not going to go over a dollar a litre, but I don't have any proof of that. I can say don't worry, your natural gas isn't going to double or triple, but I don't have any proof of that.

This whole thing seems to be targeted at fossil fuels, which is probably a legitimate target. But I can't answer their questions because I don't have the numbers, and I've looked for them. If you've got something that says that gasoline prices aren't going to go over a dollar a litre, I'd like to see it. If you've got something that refers to natural gas, I'd like to see it. And I'm talking at the consumer level--never mind the offsetting impact overall. I understand that--the benefits overall--but I'm talking at the consumer level. We're out of time, but if you have those numbers, I'd love to have you send them to me.

Mr. Gerry Scott: They're on page 41 of the May options paper, where we see gasoline actually going down by 1%, natural gas increasing over ten years by 0.9%, and electricity over ten years increasing 3.8%, which is the most difficult piece because of the intensity of coal-fired electricity in several provinces.

Mr. Richard Harris: Thank you for that.

The Vice-Chair (Mr. Nick Discepola): Let's go to the Greater Vancouver Gateway Council for your response.

Mr. R.V. Wilds: Let me address the municipal tax obligation.

In the United States, in most cases, U.S. port authorities are taxing authorities; they do not pay tax, they actually tax the residents. Seattle and Tacoma tax their residents, whereas in the port of Vancouver they pay grants in lieu of taxes to the municipalities they operate in--all eight municipalities. So we actually have ports that pay taxes; in the U.S. they do not.

On the bond issue, maybe I'll let my cohort, Brad Eshelman, answer that.

Mr. Brad Eshelman (Member, Greater Vancouver Gateway Council): On the bond issue, there are two items here. One is the general purpose revenue bond, which the U.S. port authorities have the ability to issue and pay back over a longer timeframe, approximately 30 years, whereas our local port authorities don't have that opportunity; they have to do their borrowing from banks.

Also, on the special obligation revenue bonds, those are secured through specific projects in the U.S. and they also are on a tax-exempt basis. Again, the local port authorities here don't have that ability to borrow on a tax-exempt basis and issue those types of bonds for specific purposes to specific terminals; they have to borrow from the banks, which puts them at a disadvantage of raising capital in the marketplace and also paying for more expensive capital for investment.

Mr. Richard Harris: I suppose port authorities are not eligible to issue shares.

¸ (1415)

Mr. Brad Eshelman: Yes. They can't issue bonds, shares, or anything. They have to go to commercial borrowing, just like....

Mr. Richard Harris: This sounds like a good way to raise money.

Mr. Brad Eshelman: Yes. There are a whole number of issues with respect to competitiveness with U.S. ports, this being one of them that's under the federal jurisdiction. There are a number under provincial jurisdiction that are being addressed right now. But the ability to raise capital is a serious impediment for the ports, and B.C.'s particularly, and their ability to get investment for infrastructure, which they dearly need.

Mr. Richard Harris: Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Harris. If time permits, we'll come back for a few more short questions.

I'd like to turn now to government member Mr. Roy Cullen, please.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you to all those presenters.

On the Gateway Council, just picking up on that for a moment, it seems to me that the Greater Toronto Airport Authority, which is near where I live, issues bonds. They've issued bonds for their capital construction program. Am I misunderstanding the situation?

Mr. R.V. Wilds: You may be understanding it, but we're not aware that this is the case. We certainly haven't been able to get anyone to agree that we could do that here.

Mr. Roy Cullen: Oh.

Mr. R.V. Wilds: We'll certainly look into that.

Mr. Roy Cullen: Yes. I'm pretty sure they've issued bonds.

The tax-exempt bonds that the U.S. ports can get hold of would seem to me to constitute some kind of subsidy. Are there any tools you could use to take the equivalent of a countervailing action against the United States for subsidizing their ports, or is there any such tool in the kit?

Mr. Brad Eshelman: Actually, we have done some work on taking a look at all the competitive issues with respect to U.S. ports. With respect to that one and NAFTA, it doesn't fall under the terms of that agreement with respect to subsidization of ports, and transportation infrastructure doesn't fall under that agreement.

Mr. Roy Cullen: They don't? I guess that tells us we need to revisit it or something.

Mr. Brad Eshelman: Yes, I believe we do.

Mr. Roy Cullen: It seems to me that's as much a subsidy as the allegations on stumpage on softwood lumber.

Mr. Brad Eshelman: If I may, I would take that further. I would say the ability of ports to tax their residents would be a further subsidy that also provides a big subsidy. For example, the Port of Seattle collects $35.6 million U.S. from their residents to subsidize port development.

Mr. Roy Cullen: Well, I guess you've done all the homework on it, but if there were a way to deal with that, I'd be happy to assist. I think too often the Americans, on softwood lumber, attack our policies, and yet we know that companies can go to the U.S. and put up sawmills at about one-third of the price because of all the little gimmicks they can provide to companies at the state and local government levels.

Mr. Fulton, it's good to see you back again.

Mr. Jim Fulton: Thank you. It's nice to see you, as well.

Mr. Roy Cullen: On Kyoto, I certainly believe we need to do something, but I'll just rattle off a couple of concerns, and maybe you can expand on what you've given us here.

On the U.S. failure to ratify Kyoto, we know there are a lot of things going on at the U.S. state level, but it seems to me we could be putting companies exporting to the U.S. in a position of competitive disadvantage. It's fine for the Europeans to talk about Kyoto, but a lot of them have converted their coal plants to gas, so the targets for them are not quite as stretched as they are for us.

On this idea of the old economy and new economy, I've always been perplexed by that, because it seems to me there will be some innovation. Clearly, there will be some growth in environmental initiatives and technologies, but some of those we have to import.

Secondly, we need to be careful about making too many broad assumptions here, because we could build a business case on something that isn't there. We hope it's there, and I'm sure some of it will be there.

I was looking at your analysis. You're talking about putting a lot of emphasis on energy efficiency, but let's look at the transportation sector, where about 28% of the greenhouse gases are coming from. A lot of that is from trucks and cars. How are we going to get greater energy efficiency there unless we drive less, or unless we hurry up technologies to get more fuel efficiency? How is that going to happen in the timeframe we're talking about?

Mr. Jim Fulton: Please, I'm going to ask Dermot Foley to do the energy efficiency question and Gerry Scott to do the competitive advantage one. I just want to bring up a couple of things from my experience before doing that.

I sat on the environment committee in the House back in the late seventies, through the eighties, and into the nineties. In 1981 the House itself passed the CFE standards, the commercial fleet efficiency standards. All parties voted for it and it went out of the House, but it's never actually gone over to the Governor General's. It's never actually been given royal assent, and that's something from more than 20 years ago.

The U.S. has fleet efficiency standards in California and has implemented them throughout the United States economy, and in many areas they get a competitive advantage over us because we haven't gone where they have on that efficiency issue.

In the 1990s the Parliament that sat between 1988-93 while Mr. Mulroney was Prime Minister recommended 20% cuts from 1990 levels by 2005. We didn't do anything with that.

I think we now have to look at reality, and it touches on one of the earlier questions, which is that the scientific community now agree we need 80% cuts to stabilize the atmosphere--not 6%, not 10%, not 20%, and not 30%. This is really the challenge we're trying to throw to this committee, and I urge you to get your researchers, such as June, working on it.

There's a big difference between the kinds of economic initiatives we're talking about here, which are to get us to our Kyoto commitment of 6% cuts...but we could make much better longer-term strategic investments in terms of building efficiency, vehicle efficiency, industrial efficiencies, fuel switching, renewables, and all kinds of tax opportunities, things we should do in Canada anyway. Mr. Foley pointed out that we have saved more than $8 billion a year by energy efficiency decisions we made back during the oil shocks in the seventies, and I think we need to click ourselves into that reality.

When I was born in 1950, the concentration of carbon dioxide in the atmosphere here in Vancouver, in Ottawa, and in Mauna Loa was 310 parts per million. It's over 370 parts per million today and is climbing almost half a percent a year. At some point we have to look our grandchildren and great-grandchildren in the face. We can't continue to raise the concentrations of greenhouse gases in the atmosphere at the rate they're going, and we have to get on track with our scientific community.

Let me quickly throw the competitive advantage issue to Gerry and the energy efficiency one to Dermot, because I think those are the two key ones a lot of Canadians are focused on.

¸ (1420)

Mr. Gerry Scott: I'll just make a couple of quick comments.

I referred in my opening remarks to leading companies that have taken action. I stress the words “leading companies” because many corporations haven't yet embraced this with any real enthusiasm. That's unfortunate, but that's the real world. If we look at those leading companies, their experience, and the people who have taken this seriously, you see cost reductions, time after time. I would refer you to the Pew Center on Global Climate Change, which is a business-oriented research centre that has documented much of this, as have many others.

British Petroleum, for example, has met the Kyoto target in its internal operations. I believe they set 10% below 1990 levels. They did that with a financial gain of $1 billion. Now that's an oil company.

In the report we circulated to you, in the executive summary, beyond Kyoto, we look at 50% reductions. The preface is by Ray Anderson, who is the CEO of Interface, the world's largest flooring manufacturing firm, with operations on four continents.Their Belleville, Ontario, plant reduced emissions by two-thirds. That's interesting, wonderful, and exciting, but what's even more interesting is that they saved a ton of money doing so. They doubled production and doubled exports to the United States, because it's more efficient and there's growing consumer awareness of the more sustainable businesses. There is actually a market because of that.

So you can look at firm after firm where this has been done, and in this report we have given a few snapshots of case studies.

Mr. Roy Cullen: What about the transportation sector, where 28% of our greenhouse gases reside?

Mr. Gerry Scott: Dermot will comment on the vehicle question.

Mr. Dermot Foley: For starters, we can look at things like the new hybrid vehicles that are coming out today. We have a Honda Civic, a Honda Insight, a Toyota Prius, which are competing with.... Well, the Toyota Corolla is the best-selling car in the world. The Toyota Prius, which will be a direct competitor with that car, uses 40% less energy. It's just a question of getting those technologies into the marketplace.

In the United States, which has rejected Kyoto, they're paying consumers $2,000 U.S. each in a rebate to buy the Toyota Prius. You know, they are kind of playing it from both sides, in the sense of they are actually taking action that is reducing energy use and reducing greenhouse gas emissions, and they're doing it in a pretty vigorous way in many states. The hybrid is one answer.

As to the Europeans getting off coal, you're correct. In the U.K., coal use for electricity generation dropped 37% in the 1990s. They switched to natural gas. Why won't Canada do that? Alberta is the largest consumer of coal in Canada, yet they have the most natural gas. They put a higher value on selling that gas to our neighbours in the south, who want clean air, and burning coal in Alberta.

We think we have to start giving incentives to utilities to get away from coal and into the cleaner-burning Canadian natural gas.

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The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Foley.

We'll now turn to Mr. Robinson, please.

Mr. Svend Robinson (Burnaby—Douglas, NDP): Thank you.

I want to welcome all the witnesses. In particular, of course, I welcome back my old colleague from the House, Jim Fulton. We sat together from 1979 to 1993, I believe it was, in the House, and Jim did get a great job, particularly on environmental issues during that time.

If we've only got seven or eight minutes, I think I've got just a very brief question for each of the presenters, perhaps in the order they presented.

To Ms. Orum from BCIT, I wanted to ask a question around the whole issue of the impact of changes in federal bankruptcy law on students. I know that my colleague Libby Davies has raised serious concerns about this, and the Canadian Federation of Students have pinpointed this as an area of concern. I don't believe you mentioned it in your presentation to us. I don't know if CASFAA has a position on this, but I'd like to hear, since you're on the front lines, what the impact of these changes has been on students, many of whom are struggling with huge debt loads and having trouble finding work.

On Kyoto, I agree--

The Vice-Chair (Mr. Nick Discepola): We're going to take each question one at a time.

Mr. Svend Robinson: Oh, okay.

The Vice-Chair (Mr. Nick Discepola): Yes. Go ahead, Ms. Orum.

Ms. Jennifer Orum: Thank you. It's correct. We have not made a policy statement on the issue.

What Mr. Robinson is referring to is a change in legislation that prevents students, or ex-students, who are in a financial situation where they are required to go into bankruptcy, from including their student loan. It is a protected debt to the crown, and it therefore means that--I believe for a period of ten years now....

There certainly have been a great number of concerns expressed because of the differential treatment given to students and to certain other debtors in our culture. We have not made a statement on that. Certainly we are aware of the impact on students. It is not a good situation. We have chosen, at this point, to address other policy issues.

Mr. Svend Robinson: I would respectfully ask that perhaps you talk to your colleagues in the association, because you're a respected organization that works with students who are in many cases reeling under the impact of some of these changes. It would be perhaps helpful to have some representations from the organization on this issue.

On Kyoto, I think you're well aware of the fact that Alexa McDonough as leader of the party and my caucus colleagues have strongly supported ratification. We've been urging this for some time, and I thank you for the work the Suzuki Foundation has done on the issue. It's been great.

I'm just wondering if you had any comments on the recently tabled document the government tabled a little over a week ago--the implementation plan, if you will--that's been heavily criticized by some of the provinces. You didn't mention it specifically in your recommendations. You made reference to the May document. I'd be interested to hear your comments on the document that was recently tabled.

Mr. Gerry Scott: Essentially, the last federal plan is further development of one of the options that were tabled in May, and it's not our favourite option of the four tabled in May. We think there perhaps is a better mix, but it's certainly, I think, a very fundamental starting point. Many of the measures that are in both the May options and the one tabled in late October are absolutely essential.

So it is a starting point. We're concerned that in one variant it included the assumption that Canada would win this cleaner-energy credit that was up for discussion at the UN conference last week. It's clearly not going to happen, nor should it happen. But in all the options there are many basic programs that are the starting point. In that sense it's a useful step forward.

We do believe the domestic emission trading within it is slanted toward carbon-intensive industries in a way that requires fundamental change. The forest industry and mining industry have spoken out on this because they've taken action to de-carbonize. We believe that the trading regime that's in the October document is a step backward and does not recognize fully the value of low-carbon energy forms, including efficiency.

So we have a number of specific concerns, and think option number 3 in the May document is superior in that respect.

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Mr. Svend Robinson: Perhaps just going across the table to the folks from Gateway, as a member of Parliament representing Burnaby--Douglas, one of the eight communities that you suggested should generously give up its grant in lieu of taxes from the port authority, I do have to tell you that you're going to run into some difficulty--from Burnaby on, that is--as I'm sure you're well aware. Representing that community, I have to say I certainly share their concerns.

I wonder if you could just comment on the extent to which the Gateway Council is actually advocating a significant increase in funding for rapid transit and passenger rail transportation. Essentially you've made reference to greenhouse gas emissions. These are some areas in which there could be some significant impact in reducing those greenhouse gases. I didn't see any reference specifically to either rapid transit or passenger rail transportation.

I'm also interested in knowing why VIA Rail isn't a member of your group.

Mr. R.V. Wilds: First, let me address your first issue, on Burnaby giving up their taxes. We never suggested they give it up; we suggest that the federal government pay it in lieu of the port authority, as they do in other federal properties. That's what the recommendation is. We're not suggesting that Burnaby give it up; we're suggesting they get it from a different source and it not be the port authority.

Mr. Svend Robinson: Okay.

Mr. R. V. Wilds: On the rail issue, we are very supportive of the rapid transit that's being proposed from Richmond, from the airport, to downtown. We're working with the Greater Vancouver Transportation Authority on how we can better use rail, moving people around the Lower Mainland, as a contribution to getting people off the road.

We've started a rail committee; they're working. We're also dealing with how we can move people by water around the Lower Mainland more effectively than we can by road.

We have a major study going on right now, called “A Major Commercial Transportation System for the Greater Vancouver Region”, that will hopefully, at the end of the day, look at all of those three areas of moving not only people but more goods around this region by rail, as well as by road. We're trying to get as much in the more effective transportation modes as we can, with less impact on the environment.

I forget the last part.

Mr. Svend Robinson: I'm just curious why VIA Rail, which is a pretty significant partner in this area, isn't in--

Mr. R.V. Wilds: Basically, as regards membership in the Greater Vancouver Gateway Council, they really don't have a presence here that I'm aware of, other than that they bring their rail passengers in and out. There's no particular reason they've never participated and joined. But I will find out why they aren't members, and maybe we'll get them in.

Mr. Svend Robinson: Thanks very much.

I have a very brief question to Necole. In terms of your recommendations to the federal government, one of the very positive areas in terms of child care in Canada has been the $5 Quebec child care plan. Have you had a chance to look at that? Is there any way in which perhaps the federal government might be in a position to provide some incentives in this area?

Our task is to make recommendations to the Minister of Finance.

Mrs. Necole Anderson: We have looked at the $5 model, and I think the Quebec model was as successful as you can get, as the parents came out of the woodwork in droves and just swamped the system. I think Quebec was a little taken aback by the demand that immediately wanted to access this wonderful system.

My recommendation would be that the provincial governments get the money and be able to use the money however they need to, because child care in various provinces throughout Canada is in various states of development. In Newfoundland, for example, they're just regulating child care right now. They had no regulation until very recently. B.C. is a leader in quality and regulation in child care--thank goodness, because that's where my son goes to day care.

But because of the diversity and disparity between the regions, it would have to be a federal initiative, with money earmarked specifically for child care. It would have to be defined as child care, because what the provinces like to do with early childhood development money is take it and use it for anything else. At kiosks where you go to find out about child care spaces that aren't available, they tell you there are five centres and the waiting list is 10,000 long. Well, that doesn't help a parent trying to access care so they can work.

I think that's the frustration that parents are facing, that there's no real initiative on the part of governments to fix the system, to put the capital costs in, to build the centres, to sustain the centres and keep the operating dollars there so that the centres continue to exist from generation to generation. I can't build a child care centre for myself any more than as a car owner I can build the highway. The government has to do that and help sustain and keep that.

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Mr. Svend Robinson: Thank you very much.

Le vice-président (M. Nick Discepola): Thank you, Mr. Robinson.

I'd like to turn now to Sophia Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair, and thank you all for your very interesting, fine presentations.

I'll start with Jennifer Orum. In one of your four recommendations, you talked about the student work study program, which was very, very interesting. You said some of the provinces and institutions are already doing that. Can you expand a little bit on what we, the federal government, can recommend doing to help with that?

Ms. Jennifer Orum: Our work study programs should be distinguished from other types of student employment. This is not a summer program for students between terms, it is a program for students while they are in school. Normally either through on-campus jobs or off-campus jobs relating to programs that are in the universities and colleges, the students do work that not only produces income for them but is normally in areas where the work adds to the training or education they are receiving.

There has been a national work study program in the United States for a couple of decades, and the problem we have in Canada is that it depends on which province or territory you're in as to whether or not students have work study opportunities. The provinces of Ontario and Quebec have work study programs. The first province in Canada to have work study, way out ahead of all the others, was British Columbia. Regretfully, that is one of the programs that was cut this year, so that's no longer available to many students in British Columbia.

Our proposal is for the federal government to look at establishing a federal program that would equitably provide opportunity throughout the provinces and the territories for students to earn money to assist them to go on to the post-secondary level and would at the same time facilitate their learning through jobs related to their programs.

Ms. Sophia Leung: Thank you.

For the David Suzuki Foundation...and I'm very interested when you say we can save $9 billion if we reduce the consumption of energy.

I don't know if you talked about it, but what's your position or thinking as to developing the fuel cell and using it for transportation? Would you want to comment on that.

Mr. Jim Fulton: I'll start with this, and then I'll turn the fuel cell question over to Mr. Foley.

The $9 billion we've been referring to is in relation to savings that are already occurring. These are from efficiency and conservation decisions we took in this country more than 20 years ago, and we're now reaping those benefits.

In terms of the fuel cell, the foundation has been very keen about fuel cell technology for a decade. We've certainly been encouraging the federal government to be interested in Ballard and other opportunities right across the country, but I think I'll throw the general fuel cell question over to Mr. Foley because he's a real expert in this area.

Mr. Dermot Foley: Thank you, and thanks for the question.

The analysis we've completed on the fuel cell suggests that using natural gas as a source for hydrogen provides the best opportunities for reducing greenhouse gas emissions. Rather than using hydroelectricity or electricity generated from nuclear to make hydrogen, it makes much more sense to make hydrogen from natural gas because in many areas of Canada we already have natural gas distribution infrastructure.

One of the areas we should be looking at is how do we take advantage of that infrastructure and that resource we already have to ensure that we actually get emission reductions throughout the economy?

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Ms. Sophia Leung: Thank you.

For Necole Anderson, certainly we at the federal government feel very strongly that a child care facility is very important for the working parent. I didn't realize the waiting list is so long. I just wonder, what about the provincial governments? Are they helping sufficiently? This seems worse than I realized. Do you suggest some kind of possible solution to remedy all this?

Ms. Necole Anderson: I would say in this province, certainly, child care is not moving forward. It's de-evolving, which is unfortunate. We've lost quite a few child care spaces in recent months because of changes in funding.

As a parent, to be on a waiting list and be thinking about going back to work and not to have a spot for your child is terrifying. My husband and I have faced it several times where we had the “Okay, who's going to quit their job?” discussion months before the deadline--that kind of thing. It makes it difficult to plan. We have actually decided not to have a second child as a result of that stress.

Ms. Sophia Leung: So it wasn't the lack of a facility....

Ms. Necole Anderson: Lack of facilities?

Ms. Sophia Leung: Yes.

Ms. Necole Anderson: In our case, both my husband and I have good jobs and we can afford the fees. Many families can't. And $900 a month is a huge chunk out of your budget.

My husband's cousin has three children. His child care bill is $2,000 a month. They're a middle-class family. They have decent jobs, but they're living in an apartment. They'll never have a home; they don't have any savings; they're driving beater cars, because they're trying to pay their student loans and stay out of debt. It's difficult. It really is hard.

I think the only way it's going to get better is that the federal government has to be the leader. I think they have to force the provinces to make the commitment, because it is such a huge expenditure. It is very expensive, but the long-term gains.... You have to look far down the road. Twenty years down the road we're going to have kids who are not going to be on welfare, who will finish high school, who will go on to college. We're going to have a better workforce as a result, twenty years from now.

Ms. Sophia Leung: According to all the work the federal government already put into child care, especially for early childhood--

Ms. Necole Anderson: But the money is not being used--

Ms. Sophia Leung: If you spend $6 billion.... This is why my question is about lack of facilities.

Ms. Necole Anderson: Campaign 2000 just did a report on that money, and to try to get the provinces to identify where that money went...$114 million in Ontario just disappeared. It did not go into child care, as the coalition of advocates in Ontario can tell you. The same thing happened in B.C. We don't know where the money went. The province isn't telling us, and as far as we can tell, they're not telling anyone what they did with the early childhood development money. That's a real problem.

Ms. Sophia Leung: I have a quick question for the Greater Vancouver Gateway Council. It's very interesting, your recommendation on the issues, the revenue bonds, and all that. Then you also mentioned our competitor, the U.S. Pacific Northwest; they are doing it. Can you give some examples as to how they are doing so well.

My impression is also that the port of Vancouver is doing quite well. They seem to be making a profit, etc. Many times we feel there is a deficiency in funding.

Mr. R.V. Wilds: We are doing quite well, fortunately, because of the value of the Canadian dollar. We're also doing quite well, recently particularly, because of some labour problems on the U.S. west coast, which has contributed significantly. But I think the difference between our port authorities and the port authorities on the U.S. west coast is that we handle in many cases high-volume, low-dollar-value export cargoes in bulk commodities: coal, sulphur, grain, potash, and phosphate rock. We do not handle the high-dollar-value cargo as U.S. west coast ports do in many cases.

As far as the bond issues down there go, they have issued bonds in Portland, where they've taken some of the potash from Saskatchewan. They had significant financial assistance down there on the rail side in order to put in infrastructure to accommodate the movement of that good into Portland. Despite that fact and again because of the advantage of the Canadian dollar, we continue to be successful, but there is a limit to what the Canadian dollar can do for us.

We're getting continually more congested in this region, and it's going to result in diversions of additional cargo. I think the last thing we want as Canadians--if we want to stay Canadian--is to defer improving our transportation system and to rely on the United States, who will handle it as long as they have capacity, but after that we're on our own.

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The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Wilds.

I'd like to turn now to Mr. Murphy, please, for the final set of questions.

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

Some of the issues I want to bring up have been covered by my colleagues, but I would like to ask all panellists a philosophical question on tax policy and program expenditure in Canada and how they relate to the federal-provincial jurisdictions. Ms. Anderson and my colleague Sophia had a dialogue on this a couple of minutes ago.

Three of your presentations here this afternoon, as far as I can see, involve areas that are primarily in federal jurisdiction: student funding, early childhood education, and some of the issues surrounding cities. These issues are very real, and there are a lot of recurring themes that come along here in this committee.

The federal government has to a certain, albeit limited, extent attempted to respond to these needs: the millennium scholarship--there was money put into the thing--then the infrastructure program in the cities. I'm not suggesting this spending is the be-all and the end-all. Another issue, too, is affordable housing, and that relates to your presentation. But it's becoming increasingly difficult, when you have ten provinces and three territories, to decide how this money gets spent. There's no worse example than the affordable housing initiative. That was supposed to be shared 50-50. There was only one province in Canada that took it seriously and was prepared to put the money in.

Again, the cities.... This has been talked about, and it's related to your presentation. It's a very real need. Mr. Martin has talked about it; it's in the throne speech. But a city and the infrastructure that surrounds the city are creatures of provincial legislatures, and how a city gets its tax authority is set by the provincial legislatures. But, again, it's a real need.

So here is my question to anyone who wants to answer it. Sometimes I think we'd be better off if we didn't fund early childhood education. Then you could go to the provinces and you'd be dealing with one party. I have a feeling that when you go to them now, they're telling you they're not getting enough money from the federal government, or your associations are not getting enough money from the federal government. Does anyone have any comment on where, taking a philosophical approach, we should be going: getting out of some of these areas, or making our programs much more rigid, like the infrastructure program? I would appreciate any thoughts.

Ms. Necole Anderson: I can talk to that one, regarding the child care part of it, anyway. The provinces are telling us simply that they don't have the money; that it's something important--“Yes, we're going do it sometime, some day”, somewhere over the rainbow. It isn't today and it's not tomorrow and it's not a year from now or ten years from now.

When I was trying to write my paper, I saw there was a bill that Brian Mulroney introduced in 1984, just before the election, relating to child care, and it died in the Senate. It's not new information; it's money. Nobody wants to make the investment. They want to put a little bit of money in there and say, “Okay, that's good enough.” But it's not fixing the problem.

My career is in property management, and we call it “deferred maintenance”. That's what the government does, in my opinion: “We'll put a little bit of money into repairs, but we're not going to fix it.” We believe in a philosophy of preventive maintenance. That's what I'm advocating for: put up the money you need upfront, to set up a program such that twenty years from now your roof isn't going to fall down on you. We're not willing to put that money up. We're doing deferred maintenance, and one day the roof is going to come down--especially with kids.

The Vice-Chair (Mr. Nick Discepola): Is there someone else? Mr. Wilds, please.

Mr. R.V. Wilds: I certainly think there is a continuing role to be played by the federal government in transportation because of its significance to the national economy. We have to be very careful about port facilities located in a particular municipality. We already have situations in the Lower Mainland in which they have the taxing authority on the operators within those areas—not on the port authority, but on the actual terminal operators. We have cases in which it's a disincentive to invest in additional facilities because the tax burden paid over a 20-year period is more than the cost of the facility. The new rates and the assessed value of the land based on highest value and best use are serious problems that, if deferred to the lowest level of government, are going to have serious implications for the whole transportation infrastructure. I think the same would apply to airlines.

You have to have certain facilities and certain things under the national umbrella, so I think there is a real need for dedicated moneys for infrastructure. If you're going to collect fuel taxes, then there ought to be some dedication of those taxes back to where they belong, whether it's to improve transit, roads, port facilities, or do whatever. They should go back into the areas they came from. There is a real need for that. It certainly occurs south of the border. What they incur and collect in revenues from fuel goes back into their system. That's why they have a $218 billion Transportation Equity Act. But you don't do that.

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The Vice-Chair (Mr. Nick Discepola): Mr. Scott.

Mr. Gerry Scott: I don't think there's one easy answer to your question. In our area of policy recommendations, I would make a couple of points that may assist you in formulating recommendations.

We think there's a natural sectoral approach that works on the issue of climate change and air pollution. It's an approach in which we look at transportation, buildings, certainly heavy industry, and utilities. Within that approach, there are expenditures required. We think many of them should be cost-shared, such as things like transit. Right now, Canada is the only OECD country without significant federal funding for rapid transit and mass transit. That's something that has to be cost-shared, we believe, and the federal government has to come back into that.

If we look at it sectorally, we would say a mix of negotiated, cost-shared agreements are required. We also believe there's a lot of room for federal-provincial cooperation on standards that don't cost governments any significant money other than negotiations and administration, which, in the scheme of things, are quite small costs.

Jim Fulton mentioned the whole question of vehicle efficiency standards. In July, California brought in new legislation in this area, and regulations will be developed in the next three years. We believe Canada should be working directly with California and with the provinces to get national standards that put into play the best technology, as Mr. Foley mentioned.

There is a requirement for spending, and we recognize the federal government has increased spending in some of the climate protection measures. But there's a great deal of room for standards and incentives that are not huge expenditures. In areas like buildings, there's certainly room for innovative, revolving financing, as the City of Toronto has done. It is quite low-cost financing that is high in job creation.

If we go sector by sector, we need the federal government to move quickly into negotiations with provinces now and nail some of this down. We've analyzed this for five years since Kyoto, and we did a five-year process before Kyoto. The analysis is there, and we're almost feeling a bit of paralysis by analysis. We think sectoral negotiations are the way to get out of that. We know the list of measures, so we have to get provinces into the barrel for really hard-nosed negotiations on things like transit, ethanol standards, vehicle efficiency standards, and building retrofit financing.

I hope that helps.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Murphy. Do you have anything else? No? Thank you.

I'd like to ask something of Mr. Scott, since we have him here.

One of the dilemmas that we have as a government is to make sure the effects of Kyoto are, in the best way possible, spread throughout the regions of the country. Do you have any suggestions on how the government may look at that in order to minimize the impact on one particular region in the country?

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Mr. Gerry Scott: We have certainly agreed with the federal commitment that was made right after Kyoto that it wouldn't fall unreasonably or unfairly on any one region. We've worked with trade unions, for example, in calling for transition programs for communities and for workers impacted by this, because there will be change.

In this question, it's important to note that employment in the fossil fuel industries is dropping all the time. Despite massively increased production, there are fewer and fewer jobs. So when we hear, with respect, from the oil firms, the Government of Alberta and others, about their concern over jobs in the petroleum sector, we're losing jobs constantly, particularly when you look at the situation per unit of production. There's no plan for those folks, there's no transition, but there should be. Whether it's through Human Resources Canada or the EI surplus and what not, we believe the government has to enter into serious negotiations with the provinces, with the labour movement, and with the industry associations, to get a really good transition program.

But how do we avoid the impact on one region? First of all, it has to be a gradual change. We can't advocate—and have never advocated—a sudden turning off of the petroleum tap and off we go. We believe that in provinces like Saskatchewan and Alberta there's a lot of potential for renewable energy. We know that in building retrofits, for example, and in many other energy conservation programs, there are more jobs per dollar invested in efficiency than there are in conventional energy megaprojects.

So those are some of the ways in which we believe a transition can be done in a way that allows continued employment. There's a lot of growth in the clean fuel sector, in the efficiency sector.

I'll ask Dermot to make a comment on this as well.

The Vice-Chair (Mr. Nick Discepola): Very briefly.

Mr. Dermot Foley: Very briefly, I'd say that since the Prime Minster made his announcement, the provinces have finally started to take the issue seriously. They've been at the table, with their deputy ministers, for 10 years, but until Prime Minister Chrétien said the federal government is bringing a motion for ratification, they never really took it seriously. They're taking it seriously now, and I believe the negotiations between provinces are going on as we speak.

One thing the federal government can help to do is bridge the gap between provinces on electricity trade. Right now, the vast majority of electricity trade in Canada is north-south. We can actually use some federal initiatives to start seeing interprovincial trade, so that provinces that are low-carbon can easily get electricity into provinces that are high-carbon, and we can then start to see that curve decrease.

The Vice-Chair (Mr. Nick Discepola): Thank you very much. I'd like to thank all the panellists for their tremendous input into our budget preparations, and for their tremendous discipline. We're right on time.

I'd like to suspend for a few minutes to allow our next witnesses to set up. Thank you.

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The Vice-Chair (Mr. Nick Discepola): Pursuant to Standing Order 83(1), we will now continue our pre-budget discussion. Our second panel this afternoon is composed of the following representatives.

From Fuel Cells Canada, we have with us this afternoon Mr. Ron Britton, president and CEO, as well as Mr. Christopher Curtis, its vice-president. Welcome. From the Indian Taxation Advisory Board, we have Chief Clarence (Manny) Jules as chair. From the Vancouver Aquarium Marine Science Centre, we have Dr. John Nightingale, president. From the Vancouver Board of Trade, we have Janette Pantry, director, as well as Mr. Dave Park, assistant managing director and chief economist.

Just to remind you, you don't have to control your microphones. We have great technology; somehow they miraculously sense your voice and they get turned on and off for you.

We will allow you approximately eight minutes of presentation in order to leave enough room for the members of Parliament to ask questions.

So I'll start with the same order. From Fuel Cells Canada, who will be presenting? Mr. Britton? Welcome.

Mr. Ron Britton (President and CEO, Fuel Cells Canada): We thank you, honourable members of the Standing Committee on Finance, for allowing us to present today. You've been provided with a briefing document, and I'm happy to include key points from it in our presentation this afternoon. I hope it will generate in you some of the passion we feel for this industry and an appreciation of the significant benefits to our society and our environment. I also want to leave you with a clear view of the actions that must be undertaken by all stakeholders to realize the benefits of this new technology.

Fuel cells are electrochemical devices that convert energy and fuels into electricity much more efficiently and cleanly than conventional combustion processes. The potential for fuel cells to play a major role in electricity generation is limited only by the cost of fuels and fuel cells and our imagination in applying the technology. In fact, we like to think of the fuel cell industry as being the energy replacement for any application that currently uses either electricity or an internal combustion engine for its energy source.

The breadth of this statement is what makes the potential so huge and, at the same time, so challenging. Obviously, the skills and resources necessary to bring micro-fuel cells to market as replacements for batteries in everyday tools like cell phones and laptop computers is far different from the complex, integrated effort required to replace the internal combustion engine in a modern automobile. Our members are active across all this spectrum.

Still, the myriad potential applications share several common broader policy objectives that match those of the Canadian government: first, in keeping with the spirt of the Kyoto accord and sustainable development, a substantial commitment to the reduction of greenhouse gas emissions by our energy and transportation industries; second, a significant reduction in urban pollutant emissions, resulting in reduced health care costs and improved quality of life in our major cities; third, a commitment to enhance innovative capability and capacity in our country and a resulting growth in knowledge-based jobs; and finally, a platform for growth in high-value exports and ultimately, as a result, a major impact on enhancing the Canadian economy, while at the same time reducing global greenhouse gas emissions and global pollution. This is the promise of the fuel cell industry, but how do we deliver on that promise?

The conclusion of a PricewaterhouseCoopers study commissioned by Fuel Cells Canada earlier this year is that this industry can grow from its current demonstration phase to full-fledged commercialization on a global scale of $46 billion per year by 2011 and possibly become a trillion dollar industry by 2021. By contrast, it currently employs only 1,800 Canadians and has a very high $100,000 per employee R and D expenditure. This alone ranks it as a critical element in the Canadian innovation agenda.

At this early stage revenues are growing rapidly, but so are development costs, so the industry is not yet self-sustaining. The need for growth capital, research and development dollars, and demonstration project support will continue to outpace cash generation for several more years. Within that context, Canada has world-leading capabilities in most areas of development, not in small part due to earlier federal and provincial government investments. Our leading capabilities include research and development expertise, fuel cell stack and system development expertise, application development and systems integration, parts and material production, fuel and fuel infrastructure development, along with expertise in financial, engineering, and consulting services.

Fuel Cells Canada is the prime source of services and support to the corporations, educational institutions, and business alliances, and has been active in promoting the developing clusters of activity in British Columbia, Alberta, Ontario and Quebec. In less than two years our membership has grown to 51 companies across Canada.

The $46 billion market predicted for 2011 will feature stationary, portable, and transportation segments playing roughly equal parts. The stationary and portable sectors will be the first to commercialize, given less challenging cost targets, but after 2011, the transportation and mainstream power generation markets are expected to dominate growth.

To achieve these revenue targets, however, the industry faces some tough challenges: continued reduction in product costs, which will require scale of operation--read “sales”--and continued technology breakthroughs; coincident development of new fuelling infrastructure, particularly for hydrogen; education and training of a skilled workforce of professional scientists and technicians with new manufacturing and service skills; much improved public awareness and support to stimulate market demand; and development of a nationally and internationally consistent set of codes, standards, and regulations to accelerate implementation and market acceptance and reduce start-up costs.

These cannot be solved by the industry operating on its own. Only a strong strategic collaboration between industrial, governmental, and other stakeholders can provide the momentum to overcome these barriers to success. Other jurisdictions have realized this and are spending or preparing to spend billions of dollars to accelerate the commercialization pathway. For example, the U.S. FreedomCAR program, a major part of the President's Energy Bill, provides roughly $150 million U.S. per year earmarked for this technology. Japan has already embarked on a $2.4 billion U.S. program over 28 years, and they're well into program as I speak.

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Only a couple of weeks ago the European Parliament, citing a more urgent need to commercialize the technology, announced 2.1 billion euro in new expenditure over the next four years to stimulate the rapid development of primarily hydrogen and fuel cell capabilities. Roughly, this means European, Japanese and U.S. governments will be spending around $700 million a year over the next few years to stimulate this global industry.

That is both a major vote of confidence in the technology and its importance and a very significant threat to Canada's continued leadership. We simply will not be able to keep pace or retain these companies in Canada without a major Canadian step up in support. Specifically, the industry is requesting an urgent partnership with government to develop a national strategy that will leverage our current leading capabilities and to agree on a multi-year commitment, including the necessary resources to implement that strategy. This commitment will take the form of increased funding for critical research and development at public and private organizations and institutions; a government commitment to shared funding of a national demonstration program; government support for early stage commercialization through a first purchaser procurement policy; implementation of tax incentives and subsidies that support and encourage private first purchasers and investors in the technology; and government support for skills and training development, international codes and standards development, and the significant export potential.

Industry, for its part, is committed to continuing its participation by increasing its current level of R and D investment, which is at $200 million a year, and sharing in the costs of all of these other activities. Our members also recognize and are ready to commit themselves to multi-party collaboration mechanisms for pre-competitive R and D with the National Research Council and other government agencies. Through such mechanisms, Canadian companies can uniquely leverage each other's experience in solving common problems and accelerating the commercialization of the technology for the benefit of all.

In summary, I would like to leave you with the following key messages. We need to develop a real sense of urgency and do much more now if we want to stay with the leaders and benefit from the results. There is an urgent need for commitment by the federal government, throughout its many departments, to move ahead with resources, including financial resources, that will allow Canada to realize the potential and retain a leadership position. The value of a major commitment to this industry will be measured by enormous improvements in greenhouse gas emissions, urban pollutant reduction, creation of a great many highly skilled knowledge-based jobs, and a major contribution to the innovative capability of the country, a major impact on future dollar value of exports and goods and technology. And finally, the value of those advances will be measured in dollars and in real improvements in global warming and the quality of life of all Canadians, and indeed all life.

Thank you on behalf of all of our 51 members and all the other dedicated businessmen and scientists working in this exciting development across Canada.

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The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Britton.

Now we go to the Indian Taxation Advisory Board, Mr. Jules.

Chief Clarence (Manny) Jules (Chair, Indian Taxation Advisory Board): Thank you.

When I arrived here, I was shown the seat that was occupied by Jim Fulton. Of course, he was the Indian affairs critic when I first started working on this legislative initiative—which eventually was passed in 1988—dealing with the real property tax on reserves, so it is a pleasant surprise to see him here and to renew his acquaintance.

This is the third time I've made a presentation to the finance standing committee, and I feel it's a very important committee looking at the overall policy and fiscal framework of this country. Of course, that is very important for first nations, because I believe that, in the long term, we have to begin to address first nations issues not from a social policy perspective, but within the main stream fiscal framework of this country.

When I first started coming here, I was making presentations on the successor to the Indian Taxation Advisory Board. It's called the First Nations Tax Commission. This summer, on August 15, Minister Nault and I made an announcement on moving toward the development of a first nations fiscal and statistical management act, which includes three components, three institutions.

The first institution is the successor to the Indian Taxation Advisory Board. The First Nations Tax Commission will deal with real property tax matters on first nations lands. There are some 97 communities involved in real property tax across the country, collecting some $40 million on an annual basis and ensuring that they have some independent sources of revenue.

Coupled with that is the development of the First Nations Finance Authority, so that we'll be able to lever by using bonds and debentures in our own real property tax stream of revenue and obtain long-term public debt financing. We'll then be the same as any other level of government in this country, in that we'll be able to put in badly needed infrastructure in our communities that are so sorely lacking because a lot of the resources committed to the Department of Indian Affairs go to social policy areas as opposed to economic development. We'll be able to put in that badly needed infrastructure on our own.

The third component is the development of a statistical institute so that we can begin to tell our own story, using our own data. We'll again be in a position to build institutions in the future, as well as, in my opinion, releasing and beginning to use our imaginations for future development, particularly in the economic development area.

Finally, there's the development of the First Nations Financial Management Board to deal with issues like accountability and transparency, so that we can provide the business community with certainty in terms of who they're doing business with, as well as developing the proper capacity within first nations communities.

My understanding is that we could be looking at the introduction of this particular piece of legislation sometime as early as this month.

I think the Standing Committee on Finance is the proper area to begin to talk about developing a new fiscal relationship between first nations and Canada. As I mentioned previously, it's the area that takes us out of just dealing with first nations as a social policy issue. It's one that I feel is critically important for the development of other fiscal institutions that have to be developed in the future, and in the very near future.

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One of the things I have realized over the last number of years is that being a ward of the federal government hasn't been that good for us. It has created a situation of dependency. It has created situations in which we don't have the tools at our hand and at our disposal that every other government in this country takes for granted. If there's a dispute within my community, we have to go to another government to deal with it in Ottawa. When people think about first nation governments, they think about the Department of Indian Affairs just as much as they think of my community. That bond, if you will, with us as wards of the federal government, definitely has to change. I feel what we're proposing takes us down the road toward beginning those changes, in a constructive approach that will ultimately be viewed as the way to begin to deal with a whole myriad of problems that first nations have.

There are a number of areas that we feel are going to be addressed through the legislation. One of them, of course, is how the legislation obviously will affect taxpayers on reserves. We're establishing a number of mechanisms in the legislation to be able to deal with that, and are again putting the tools at first nations' disposal.

The other thing I've learned in my life, not only as a former chief of my community but as chair of the Indian Taxation Advisory Board, is to dream big, start small, and grow quickly with success. I believe the institutions I've outlined very quickly for you are going to be geared toward that end. I look forward to working with you in the future to pursue something that I feel is very important not only for first nations right across the country, but for the betterment of all Canadians in this country.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Chief Jules.

We'll now hear from Dr. John Nightingale, from the Vancouver Aquarium Marine Science Centre, please.

Dr. John Nightingale (President, Vancouver Aquarium Marine Science Centre): Thank you. I welcome the chance to talk to the standing committee. I'd like to start by talking a little bit about the Vancouver Aquarium's vision, because I think it parallels that of the Government of Canada; focus just a little bit on our partnerships, including some of the emerging ones with federal agencies and departments; and finally, say a bit about the planning for the future, in which we see thriving institutions like the aquarium contributing to the societal structure in Canada in new ways.

Like the Government of Canada's emerging vision around prosperity and quality of life, the Vancouver Aquarium has a vision, too. We believe both economic prosperity and the quality of life can best be enhanced by finding some new ways of working together to both use and sustain our ocean and freshwater environments.

Vancouver Aquarium is recognized by the Government of Canada as Canada's Pacific national aquarium, and it is virtually the only institution of its kind in Canada. Our mission is an important one, because this country is blessed with an incredible abundance of aquatic natural resources. We have the longest coastline in the world. In fact, if you take a map out to the edge of our territorial seas, our country is fully one-third bigger than the map school children are used to working on. Our vision for the future is one in which Canadians both take pride and take part personally in understanding, managing, and preserving that heritage.

The aquarium has about 300 staff, 600 volunteers, and 15,000 membership households. All of us are dedicated to using our increasing visibility and our visible position in British Columbia, throughout Canada, and around the world, to put people directly together with the issues, programs, and activities, in order to produce some new results.

The aquarium is almost 50 years old. It was given life in 1956 by a relatively small commitment of $100,000 each from each of the three levels of government. Since then, more than 30 million visitors have made the aquarium the most visited attraction in western Canada. Since then, the aquarium has become a truly unique non-profit cultural institution. Because it's self-supporting, it doesn't receive operating funds from any level of government. Today, while our programs grow and spread, the aquarium does face significant physical renewal issues to ensure its next half-century.

The aquarium's entrepreneurial culture is something I wanted to touch on for a moment, because it has allowed us to accomplish many things. We've created educational programs that are admired and used by institutions throughout the world. We've created aquatic research programs that provide major breakthroughs, both directly benefiting species at risk and benefiting the economy. Most importantly, we're able to use that innate connection that all humans feel for animals and with nature to promote the interest and involvement of several million Canadians annually, first in Stanley Park, in schoolrooms across the province and into Alberta, and through innovative outreach programs using new technology.

Our expertise is communicating to the public. It's our greatest strength, and it ranges from school children in the classroom to helping a parent explain to a child the real story behind the evening news. Our communications expertise has allowed us to make millions of connections. We're working now with Heritage Canada, through Parks Canada, to establish and communicate the importance and necessity for marine conservation areas and the new, soon-to-be-proclaimed Gulf Islands National Park. We work with Environment Canada on many levels, including promoting species at risk programs and climate change initiatives. Very importantly, we work closely with the Department of Fisheries and Oceans in directly addressing the need to monitor and conserve the most important asset for life on earth, our oceans. The partnership is the one with the greatest potential, but it's often hamstrung by budgetary restrictions.

Let me talk a little about working together. We responded to Fisheries and Oceans' need by organizing the return of Springer, the orphaned killer whale, from U.S. waters and back to Canada and its family this summer. DFO was unable to provide any funding, but we found a way to succeed by working together, thanks to the generosity and support of Canadian citizens. Working together, we can utilize DFO's expert scientists, staff, and research programs such as those at the West Vancouver Laboratory, to improve how research is translated into action and how it's communicated to ordinary people.

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Our partnerships also include corporations that recognize the importance of education and conservation. Local and national companies, such as B.C. Hydro, Alcan, and RBC Financial, realize that education and public understanding are the greatest tools we have in establishing a new way of life that can work in concert with our environment, without economic ruin or bringing it to the brink of extinction before we act.

The aquarium's mission has led us to begin reaching beyond Stanley Park, through outreach programs that deliver new and unique opportunities for Canadians, particularly for youth, to participate in activities in their own communities. Our goal is to empower them to become personally involved, to raise awareness of Canada's rich aquatic history and culture, and to promote overall health and environmental quality.

For example, Canada's largest outdoor environmental classroom, the B.C. Hydro salmon stream in Stanley Park, began flowing with its first water in 2000, and is now a fully functioning salmon stream in the heart of Canada's greatest urban park. Each year, four million people now have a chance to walk along the stream and learn the fascinating story of salmon, but most importantly, they begin to make the connections that will directly affect conservation of both salmon and habitats in the future.

Aquavan is our travelling classroom on wheels. Over 40% of the school children east of Hope, which is just about 100 kilometres from here, have never seen the ocean. In a seaside province, that's a pretty amazing statistic. They've never stuck their fingers in and tasted seawater. Aquavan takes the ocean to communities large and small all over B.C. Now, thanks to demand, it spends six weeks a year in Alberta. We could take educational programs into every province. There is a need, and there's certainly a demand.

The great Canadian shoreline cleanup is an interesting program because it's a fast-growing program that's poised for much greater national profile. Each September, groups of Canadians from coast to coast join together to clean up our shoreline. We coordinate this ever-growing grassroots program that saw 10,000 volunteers clean up more than 250 sites this year. We expect that program to go to 50,000 participants next year, and to double again in 2004.

Funding does not exist from the government for public communications and educational programs in the area of environment and natural history, as it does in cultural institutions. There's no Canada council for the environment. To ensure public awareness and support that will give us the environmental stability we all want for our communities, it's necessary for government to recognize and support institutions, such as the aquarium.

The aquarium plays a large role in the identity of a city, a province, and even this country. What we need is a bit more program funding for key government agencies; funding that can be shared in working collaborations with organizations such as ours. Program funding from government partner-agencies can and should serve as the jump-start for new programs and activities, and can almost always leverage additional outside dollars.

In 2006, the aquarium will celebrate its 50th birthday. We know you share our belief that Canadians understand the vital role of our ocean and aquatic resources, and understand the importance of both to our economy and to our quality of life. We know they're interested and willing to become involved. They place a high priority on education and conservation, and they think we should be working together.

We're almost 50 years old, we're financially self-supporting, and we have a forward-looking national perspective, but we can't do it all and we can't do it alone. We'll need strategic assistance at times, and the goals we all want can best be achieved by working together for a vibrant and sustainable future. The best way to accomplish that is to get our citizens involved directly and get them helping.

Thank you. I'd be happy to answer questions when appropriate, and offer you all a tour of the aquarium, in the event you've never been there. It would be my pleasure.

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The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Nightingale.

From the Vancouver Board of Trade, who will be making the presentation?

Welcome, Ms. Pantry.

Ms. Janette Pantry (Director, Vancouver Board of Trade): Thank you for taking the time this afternoon to listen to the views of the Vancouver Board of Trade on the upcoming federal budget.

If you've followed the positions of the Vancouver Board of Trade over the past year, you'll know that for five years we've been consistent. The surplus should be allocated to debt reduction and tax reduction, real per capita spending should be held constant, which would mean spending increases of no more than 3% per year. Our view continues unchanged. We've been generally pleased with the direction of the federal government.

With respect to debt reduction, there has been significant repayment of the national debt, but our debt remains high compared to other G-7 nations, $536 billion. Interest payments of $37 billion per year are the largest single expenditure of the government: 22% of our taxes go to interest payments. We like to think about what $37 billion could be used for elsewhere in the budget, and continue to encourage the federal government to repay the federal debt. We are happy to see that the $3 billion contingency reserve has been put back into the economic statement numbers.

With regard to taxation, we've handed out an additional package today. There are a couple of graphs in there that you have not seen from us before. It is the view of the Vancouver Board of Trade that continued tax reduction is necessary. The tax reductions that have been announced should be implemented and, to the extent they are affordable, further tax reductions should be implemented. The graph in your package shows that taxes on income and profits in Canada are the highest among G-7 nations.

With respect to the tax reduction package going forward, the announced numbers say there will be $100 billion worth of tax reductions. We note that of this amount $30 billion goes toward indexing of tax brackets. That's not a tax reduction; it's simply saying we're not going to charge you more just because your income goes up with inflation.

Taxes in Canada are high by historical levels. In 2000 taxes represented 37.5% of GDP, in 1980 they were 29% of GDP. High taxes discourage investment, working, and saving, and that leads to a falling standard of living. In 1990 the standard of living in Canada was the fourth highest of OECD nations; in 2000 it has fallen to eighth.

We encourage the federal government to implement further personal income tax reductions, particularly at the higher levels, where we are still out of sync with our competitors, in particular the U.S., where the highest tax rate doesn't apply till a much higher level of income than in Canada.

That's our long-term recommendation. What are we looking for in this budget? We are looking for the corporation capital tax to be eliminated in full. Why are we looking for the corporation capital tax to be eliminated? This is a tax that applies on investment. It applies when a company makes an investment in property, plant, or equipment in Canada. We've had a representative from the fuel cell industry in Canada here today. One of our big companies in the Lower Mainland is Ballard Power. Ballard Power raises money and invests it in new plants, the federal government taxes Ballard Power on that, not on the profit from that plant but on the fact that it made an investment. This is a tax that kills jobs, discourages investment, and affects productivity. It must be eliminated as soon as possible.

The Vancouver Board of Trade has joined a coalition organized by Ernst & Young to put forward this recommendation of eliminating the capital tax. It is our understanding that the capital tax brings approximately $1 billion in revenues per year, less than 1% of the total budget. The federal government's own studies show that for every dollar of capital tax collected, $7 of harm is inflicted on the economy. We strongly encourage the federal government to eliminate this capital tax this budget.

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Are these types of recommendations affordable? I ask you to turn to your next chart. There seems to be a perception in Canada that our relatively strong fiscal position results from incredible spending restraint on the part of the federal government. In 1997, when the budget was balanced for the first time in 30 years, federal government spending was just under $110 billion. It's now projected, for 2003, to be $140 billion. That's a $30 billion increase, almost a 30% increase, in federal government spending.

With respect to spending, the Board of Trade is advocating a program review. We're happy to see that Minister Manley has announced that he will undertake a program review. We believe it is critical that the government re-evaluate its priorities. We're seeing areas emerging that are clearly very high priorities for Canadians, defence, health care, and cities being some examples. In undertaking its program review, the federal government should be ensuring that Canadians are receiving full value for the tax dollars spent. We turn to health care as an example. Health care spending in Canada, on a per capita basis, is the fifth highest of all OECD nations. It's an area where we see that our spending is high compared to other countries, and yet we are not happy with the results. The OECD, in its economic survey of Canada, indicated that although some increases may be warranted, they should not be implemented until the system is reviewed for efficiencies and possible improvements.

Finally, we encourage the federal government to stop its practice of retroactive spending at the end of the year. We are happy with the federal government's process with respect to the budget, in particular the role of this standing committee and our ability to come here today, and do not believe federal government funds should be spent retroactively at budget time without going through this due process.

In summary, we are looking for continued debt reduction, continued implementation of tax reduction, the full elimination of the corporation capital tax, and spending to be held constant on a real per capita basis.

Thank you.

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The Vice-Chair (Mr. Nick Discepola): Thank you very much for your recommendations.

We have roughly 40 minutes, so we'll go with ten-minute rounds.

Mr. Harris.

Mr. Richard Harris: Thank you, presenters, for your input.

Ms. Pantry, this is the fourth PBC I've been on over the last nine years, and some of the things you're talking about have been requested before, specifically the capital tax issue, the increase in RRSP contributions, and tax reductions. I love reading your stuff.

It's interesting. You talk about end-of-year supplementary estimates, another $5.8 billion this year, I think. There are some interesting spending areas in that $5.8 billion, things I'm sure you and I--and even, I'm sure, members of this panel here today--would not consider as high-priority items. You mention the EI surplus, about $40 billion to date. Of course, there's no money there. There's an IOU from past-Finance Minister Martin and now Mr. Manley.

I would say, keep fighting. On behalf of our party, I can say that we'll keep fighting for you, and I know there are members on this panel who know about the capital tax, about RRSPs, about being fiscally prudent, and about how we spend taxpayers' money. Thanks again for the reminder.

Ms. Janette Pantry: Thank you.

The Vice-Chair (Mr. Nick Discepola): Is there a question coming?

Mr. Richard Harris: No, it's a comment. I'm cheerleading her presentation.

Mr. Britton, I appreciated your presentation. I'm a layman in this, as most Canadians are. Our vision of fuel cells is that they're going to run our cars and our buses, mainly transportation. We all know that the federal government has made significant investment in R and D. The question is, in layman's terms, where are the vehicles and when can we expect them?

The other thing I wanted to ask you about concerned something I read recently, that one of the major automakers had cancelled a project. I don't know whether it was Ford or DaimlerChrysler, but it cancelled a fuel cell car project or an electric car project there had been a considerable amount of money spent on. I'm wondering if you might be able to just help me out on the reasons behind that cancellation, considering that most of the communications thrust we the general public get appears to be geared toward running our cars and buses and things like that in a way that will clean up the environment.

I'll just leave that question with you, and I'll just ask one short one of Mr. Jules.

I appreciated your presentation. I live in Prince George, and of course there are some economic development activities going on up in my area. There's an aboriginal economic opportunities program up there, and I support what you're trying to do.

One of the problems I've seen, one you have throughout the first nations communities, is that every year the Auditor General has a big problem with the accountability aspect of other funding that's going into the first nations. I think that it has been spoken about in every AG's report I've read, in reply to which the government has said that they recognize this, they're working with the stakeholders, they're going to improve it, and they've taken steps to improve it, yet the next year it's in the AG's report again.

I think that if you want to get Canadians to buy into what you're trying to do, there's a big PR problem. I don't have the answer for how to clean it up, but it revolves around the word “accountability” and what it will take to get the Attorney General to stop complaining about it every year. The way you do that, I guess, is to fix it. I hope you have a vision of how that's going to work, because it's going to help what you're trying to do.

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Mr. Ron Britton: I think the federal and provincial governments have spent somewhere around $200 million over the past 20 years on this technology, and that's really brought us to the favourable position we have, or had, which was as the leader in the world. The numbers I was reporting are future spending plans of $600 million, $700 million, $800 million U.S. a year--call it $1 billion Canadian--which will push this technology over the hump, one certainly believes. Those orders of magnitude are much higher than $200 million over 20 years, which is an average of $10 million a year. Currently, the total from Canadian federal and provincial governments is around $10 million Canadian a year, not enough to maintain a leadership position or to push the technology to fruition.

The when and where question is an excellent one, and it's one of the questions we keep asking our members. One of the answers to that will be right here in Vancouver next June when we have the first Canadian fuel cells and hydrogen conference at the Bayshore Inn. We hope that will also be a trade exposition, so we'll have real hardware and real product to show to Canadians. It has been a long time coming; 20 years is a long time to bring your product to market. I guess that's an example of the complexity of these applications. There are many kinds of fuel cell available; they might look like this or they might look like a big box, but they're not very exciting, because they just sit there. It's the application that's exciting, and we're starting to see some of that happen with the demonstration funding we put in place last year.

Your question on Ford is an excellent one for legislators to think about looking forward. The U.S. demanded zero-emission vehicles. The automobile companies responded with, basically, battery-powered cars. The difficulty with a battery-powered car, of course, is that it can only run as long as the batteries stay charged, so one needed an expensive infrastructure of charging facilities and some way to actually charge people for charging. In the prairies today in the winter you can plug your car in and keep your block warm, and I'm not sure how people collect for that; I presume it's in your parking fees. If you think about yourself driving around town to the shopping market and so on, just plugging in and stealing somebody else's electricity, there's a big problem there, so the infrastructure didn't develop. The car companies have reluctantly abandoned those programs. The vehicles didn't go very far between recharges, so they imposed a limitation on the buying public that is insurmountable. If you tell all of us, no matter how engaged we are with climate change and sustainability, our cars can only go 80 miles and then we have to recharge them or whatever it is, we tend not to buy those vehicles. Despite the regulation, the market wasn't there.

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Mr. Richard Harris: I guess I didn't phrase my question properly. Rather than cancelling the project, I wonder why it wasn't maybe switched over to a fuel cell project. Was it because getting that fuel cell is so far away?

Mr. Ron Britton: I think the specific one you're referring to was the Ford project, and it has indeed been transferred over to their fuel cell project. That wasn't as well publicized as the cancellation.

Finally, the applications are much broader than cars and transportation. That is obviously an area where people dream of a future where we're not creating greenhouse gases or urban pollutants, and the most obvious example is always a vehicle. Where we're likely to see these first is in much more mundane applications than vehicles and buses, where the value proposition, the cost of use, is much more competitive with today's equipment. That would be mainly in battery-powered vehicles, things like little tugs that are used at airports or in industrial applications, and that way the technology gets refined and refined until it can be affordable to the average person.

The Vice-Chair (Mr. Nick Discepola): We're really going to challenge Chief Jules. Do you remember the question?

Chief Clarence (Manny) Jules: This is the very reason I'm promoting the development of the First Nations Management Board, so that we can take control of the accountability agenda, so that we can develop, for our needs, public institutions all of you take for granted, so that when there's a dispute, there's an institution you can turn to to resolve those issues of uncertainty, of overlap of jurisdictions. What I'm proposing in this suite of legislation is that we develop a management board that will deal with accountability directly at the community level, so that they will be accountable and transparent to not only their own citizens, but also the various funding services, in particular the federal government. Through that, we hope to create an atmosphere of certainty, so that we can get investment in our communities, so that we can cut the reliance we have on the federal government.

Right now first nations communities across the country are 97% reliant on the federal government. You can't have that scenario continually in the future. With the aging population, with the dependency ratio that's going to increase within the next 10 to 15 years, Canada can't afford it, we can't afford it. So we can't continue with the mechanism that's been in place now for about the last 100 years, which is this whole notion that we're a ward of the federal government and we have to turn to somebody else to help resolve these problems. Only through the development of our public institutions will we finally be able to have the tools at hand to deal with issues like accountability. That's what we're proposing in this suite of legislation, and I'm glad to hear you're supportive of that approach.

The Vice-Chair (Mr. Nick Discepola): Thank you.

We'll now go to Sophia Leung, ten minutes.

Ms. Sophia Leung: Thank you, Mr. Chair. I want to thank you all for your very fine presentations.

I'll start with Mr. Nightingale. As a Vancouverite I am very proud of the Vancouver Aquarium because it's really a showcase and a landmark in B.C. I know you have provided very excellent educational programs for young people, like the Aquavan. It's excellent.

It's remarkable you're able to be self-sufficient without any funding. Have you ever applied for any funding from the provincial or federal government? If so, what was the result? I would like to know.

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Dr. John Nightingale: Throughout its 50 years, the aquarium has occasionally had an infusion of capital funding. The last one was through the last B.C. federal-provincial infrastructure grant program.

We don't have any direct operating funds from government in terms of annual operating, but we do have some partnership programs that are developing. That's what I was trying to address today. It would strike me as the most productive way for some federal dollars to actually multiply themselves. In our case, it would be a working agreement with Fisheries and Oceans.

Fisheries and Oceans is a very large federal bureaucracy. It has amazing content inside of it. It's full of scientists, it's full of people taking care of our oceans, yet the general public doesn't get to know much about it and doesn't value it particularly. Most of the news DFO employees read about themselves in the newspaper is bad, yet every single employee I know is out there trying very hard. We have therefore put together a bit of a partnership to try to extract from DFO some of what you might call its top-level good news, stuff that doesn't involve policy or isn't controversial at all. In turn, they're providing some funding that we have leveraged many times over by going to technology companies and by using the expertise in the aquarium.

From time to time, we have had the occasional project like that. But as the federal budgets have been contracted—particularly that of Fisheries and Oceans—what we're seeing as a need now or as new issues come on the table—species at risk, the Oceans Act, Canada's ocean strategy, the Marine Conservation Areas Act—is that the federal government doesn't have the capacity to do it all alone. We certainly don't have that capacity either. Therefore, we're increasingly looking at working collaboratively. You're not legally allowed to call that a partnership by all the various lawyers involved, but it's really very much like any other relationship. In a personal relationship, it's co-management, it's trust, it's give and take, so we're working in those directions.

Ms. Sophia Leung: Mr. Britton and Mr. Curtis, we're all very excited to hear about and know the great benefits of and market potential for the fuel cell. We've heard from you before, and the federal government will always be very supportive. Can you tell me how we have positioned ourselves in the global market? Is Canada competing? In placements one through five, what place are we in? Are we number one? We have to be aware of that competition, so how are we doing in the rankings?

Mr. Christopher Curtis (Vice-President, Fuel Cells Canada): Essentially, we're in the top three. We lead in our broad spectrum of technologies, applications, and research and development. The danger is the large expenditures and the increased interest shown by other governments in other jurisdictions. Some of them, such as Michigan, are clearly out to buy our companies and our expertise and move them south or move them wherever.

What we're urging is a partnership with government whereby we can maintain our leadership and in fact grow an industry equivalent to the wind power industry, which is primarily centred in Denmark, where they have 65,000 very highly paid, highly skilled workers supplying wind power products to the rest of the world, with a little bit of add-on in California and some odd balance of plants. That's the kind of opportunity we have here in Canada, as we are a significant leader. As I've said, this area in Vancouver is actually the largest centre of fuel cell expertise anywhere in the world.

Ms. Sophia Leung: Chief Jules, you mentioned the first nations fiscal institutions. I just wonder what kind of partnership or structural input you anticipate from the federal government. How would you produce and proceed with a source of fiscal revenue to run all this?

Thank you.

Chief Clarence (Manny) Jules: What we're asking for and have received from the Minister of Indian Affairs is his support for the development of the first nations-led legislation. Of course, it has to be introduced into the House, and we're anticipating and hoping that this will happen this month, although it may be a little bit later, depending on how the politics operate in Ottawa.

Obviously, we're hoping for the support to pass the legislation, so that we can have the tools at our disposal to create wealth and create economic opportunities for our people on the reserves. Right now, we don't have access to capital, which means that other than at the behest of the federal government, we can't finance capital infrastructure on reserve lands.

The development of the finance authority will allow us to be able to go to the marketplace, if you will, for the development of bonds and debentures, much like municipalities right across this country. It will allow us to develop a statistical basis so that we can hold accountable not only ourselves, but other governments that provide services to us. Like any other level of government, we can be in a position to have services provided based on the data that we all agree to. It will allow us to be able to have a management board—which will deal with the question I responded to earlier—and we will be able to develop accountability mechanisms that truly reflect the needs of our community. We will also be accountable and transparent to other levels of government and funding institutes.

Obviously, what we're hoping is that the finance standing committee is the vehicle that will be used, as opposed to the Standing Committee on Aboriginal Affairs. Again, I feel the rationale for this is that the finance standing committee is the vehicle because it deals with fiscal matters. If we're going to be dealing with this—something that I think is a fundamental issue important to the future development of this country—when we're faced with the uncertainty here in this province and right across this country over all of the disputes related to resources, etc., we need to develop a new fiscal relationship. It has to be based on clarity of jurisdictions, and also on the development of public institutions.

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Ms. Sophia Leung: I'm very interested in what you mentioned about the capital gains tax. I think this committee actually recommended reduction last year, and I think we already discussed it. Also, recently I did have an informative discussion with the minister. We probably think very similarly.

On the debt, the government is very conscious about that. We want to reduce it as much as we can, because of the burden of paying very high interest. We have recently paid down about $8.9 billion, a very good performance. You agree that this is excellent.

You did mention your concern about spending. We are very conscious of this, all the MPs are very sharp on that, and I want to reassure you that we are trying to avoid waste. This is very important for us. I just want to correct the record. I think this government is probably most conscious about trying to restrain spending. I was a former member of your board, and on the whole, I believe we think very similarly.

Thank you for your presentation.

Thank you, Mr. Chair.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Mr. Cullen.

Mr. Roy Cullen: Thank you, Mr. Chairman.

The Board of Trade is getting off lightly today. I'll come back to you.

On fuel cells, I want to pick up on Mr. Harris's question. We set some pretty ambitious targets if we sign Kyoto, 6% below 1990 levels between 2008 and 2012. What will it take for fuel cells to make a contribution to that? Is there a way of measuring it? I know it's an uncertain world, but what is it going to take for fuel cells to make a difference in reaching that target?

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Mr. Ron Britton: I'd answer that in two ways. First, inside the country, what can we do? The development of this technology will see commercialization maybe, with some applications, next year already, but within the next two to five years at a modest level, in modest applications, which won't have gigantic impacts on greenhouse gas emissions. All of that, though, will be reinforcing confidence in the technology and its ultimate objective, which is transportation and mainstream power generation. Transportation and mainstream power generation account for somewhere around 65% of greenhouse gas emissions in our country, and by and large, a similar kind of percentage world-wide. Reducing those emissions by 30% or 40% over a long period of time is one of the few ways we're going to find to actually make a significant impact on greenhouse gas emissions.

So point one is, it's going to be a long time coming. It won't happen by 2011, not to the extent necessary, but we could be well along a path of commercialization that will lead to that kind of result over the next two decades.

The other side of it, though, and one we're trying to preach very strongly, is this. We've heard a lot of shrill voices from the right and left hand side of this--without meaning right and left in a political sense--and not very many people talk about our potential to export solutions to the rest of the world. It's our view that if Canada just stopped using all carbon fuels today, we'd have a 2.5% or 3% impact, depending on the reference, on greenhouse emissions. That's it; that's all Canada does internally. However, if we're setting the standard and playing the leader's role and we make the best impact we can, we'll be in the catbird seat to export this technology to developing countries and other annex 1 countries. Through that mechanism, we can have a much larger impact on the world's greenhouse gas emissions. I think that's the only hope we have, as Canadians, of making a major impact on greenhouse gas world-wide. It has tremendous spinoff benefits in creating an industry such as Mr. Curtis was talking about with a lot of high-value-added, high-knowledge jobs and a large revenue potential for exports of goods and services overseas.

Mr. Roy Cullen: I appreciate that, and I think it's a technology we should definitely be supporting, but if we sign the Kyoto accord, we're committing ourselves to some very specific targets. What I hear you saying is that with fuel cell technology, there's not much we will be able to contribute in that timeframe to meeting those targets. Is that a fair assessment?

Mr. Ron Britton: I shouldn't leave you with that impression. I guess it depends how much we're willing to put into it.

Mr. Roy Cullen: That was my question.

Mr. Ron Britton: I think we can truly accelerate the development if we're prepared to get into a Manhattan Project kind of atmosphere in the country, where we truly combine the best resources of government and industry to get there faster.

Mr. Roy Cullen: That sounds like big bucks to me.

Mr. Ron Britton: It is big bucks.

Mr. Roy Cullen: Okay. Thank you. Maybe it would be useful to know how many big bucks at some point, if you have those numbers.

I'd like to come back to Ms. Pantry and not let you off the hook too easily here. First, with the capital tax, this committee has been pretty clear on that and some provinces have made some moves. We should have more fertile soil, hopefully, to get rid of a pretty retrograde tax.

In your chart you show the G-7 comparisons on taxes on income and profits. I presume your bar chart there--the sins of averages--includes corporate and personal income taxes in the one bar.

Ms. Janette Pantry: Yes.

Mr. Roy Cullen: On the corporate tax side, we've been making some pretty significant progress and we're in pretty good shape. On personal income taxes we're still sort of hanging out there.

Notwithstanding the $100 billion tax cut, the biggest in Canada's history if it gets implemented, we've heard from other witnesses there is a case to be made for continuing to push the envelope on the corporate tax side--the Ireland model--whereas we do know personal income taxes are still out of line. Where do you come down on that? Where should we be putting our emphasis?

Mr. Dave Park (Assistant Managing Director and Chief Economist, Vancouver Board of Trade): You're probably aware that Jack Mintz, a noted authority on taxes in Canada, produced a report. It might have been for the federal government, I'm not sure.

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Mr. Roy Cullen: It was.

Mr. Dave Park: That was two or three years ago. He pointed out that reduction of the corporate business tax produces the biggest impact per dollar that's given up. I think that is really the answer there, that while we may be still sticking out like a sore thumb on the personal tax side, if you're looking for impacts, the business tax is the fruitful ground.

Mr. Roy Cullen: One of the things that concerns me, and maybe you could comment, is in this area of tax competition. I know the OECD countries are actually trying to get together. It's mostly related to offshore, tax havens, etc. In Europe they do have some agreements on tax competition, and they try to keep the rush to the bottom from occurring. We're right next to the United States. If we lower our corporate taxes really aggressively, isn't that going to get their attention, aren't they going to respond?

Mr. Dave Park: As you know, the United States operates relatively independently in so many different things. I don't think they're going to keep watching what Canada is doing. Our biggest problem is being competitive with respect to all the various measures of taxation that affect both individuals and businesses. One of the reasons the individual taxes are so important is that to retain and to attract management and scientific and other professional talent to Canada, we have to have a competitive tax regime. Between the tax reductions the federal government has implemented in the last few years and those that have been implemented here in British Columbia, we're now seeing signs that the playing field is becoming level, which is most encouraging.

Mr. Roy Cullen: In fact, compared to most U.S. major states, we're going to be four or five points lower, but I agree with you that this is something we should look at. Maybe we need to become even more aggressive, and that raises a number of questions.

I'd like to come back to spending. While it is true that there have been a few blips in the last year or two, our program spending in relation to GDP is still at its lowest level since the mid-1950s. Can we do better? Probably yes, but if you look at the areas where we've increased spending, the vast majority of it is in health care, post-secondary education. I agree that with new pressures on spending, we need to revisit programs, what we're doing and why.

I had a question in relation to our health care system. Strictly from a corporate viewpoint, we hear often that it's an advantage, but while we can increase the efficiency of the health care system, and I think we should, it's going to take more money. How much more, that's under debate, but it's going to take more money. I'm wondering how important that is to you, putting on your corporate hats for a moment, for the future in Canada?

Ms. Janette Pantry: With respect to the spending, there has been spending allocated to health care in previous years, and we acknowledge that. But there has been spending that should be of concern to almost all Canadians, and that's the type of spending we're trying to get at when we say to slow down the growth and stop retroactive spending. I'm referring to the Millennium Scholarship Endowment Fund. We haven't heard anything about that since then. Is it working? Is it accomplishing the goals the government set out to accomplish? I don't even know what the goals were, so I don't know if it's working. We had the home heating oil grant, where prisoners were getting cheques. We have employment insurance being loosened up so seasonal workers can collect. This is the kind of spending we're concerned about.

Let's turn back to health care. Of course health care is a concern of all Canadians, and if we don't get our system working, we're going to start going around the system. We'll have a two-tier system without acknowledging we have a two-tier. To a certain extent, we do already. There has been increased spending to health care, $23 billion allocated. We need to make sure that it leads to results, and we need to look at what is going to lead to results in health care spending. We're not so much opposed to the spending in health care, it's the spending that doesn't lead to results we're concerned about.

We need an analysis of what the spending is going to do and how we measure to make sure that it is doing it. Are the waiting lists going down? What are some of the measures?

The Vice-Chair (Mr. Nick Discepola): Mr. Murphy, please.

Mr. Shawn Murphy: Thank you, Mr. Chair.

The first issue I want to probe a little deeper into is with you, Chief Jules. I read your paper and heard your presentation, and I think they were excellent. Can you bring us up to date on the level of opposition to this proposal in the first nations leadership now?

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Chief Clarence (Manny) Jules: The opposition is primarily focused on the fact that we've been asking for federal legislation. There's a group in the country that feels that because of section 35 and the recognition of our inherent rights, we shouldn't be asking anyone for permission to get into this area, that it should be done only on the basis of local government powers, if you will. It's a philosophical divide, if you will, among first nations. The fact of the matter is, if you have 97 communities involved in rural property taxation...you have the B.C. Summit supporting. You have five reserves from the Assembly of First Nations supporting the development of these institutions. It seems that this isn't enough, that we have to go to yet another vote to gauge the support for these initiatives.

I boil it down to the simple fact that there's a philosophical divide that in many cases isn't going to be bridged because there's a population or a faction, if you will, that is adamantly opposed to any federal legislation dealing with these matters. The fact of the matter is that when you look at a situation all of us should be familiar with, and that's Burnt Church, you had a Supreme Court of Canada decision that recognized the inherent right of Mr. Marshall to access to the fishery resources. But the fact of the matter is that those communities didn't have the regulatory basis on which to deal with the fisheries items, so you had a lot of chaos for a number of years in dealing with that.

Again, looking south of the border, you had the Boldt decision in the 1970s, where the tribes of the State of Washington were given access to the fisheries yet didn't have the wherewithal at the time or the regulatory mechanisms to implement this. Then there's the gaming situation in the United States as well.

All these point to the fact that what we need is to develop a partnership, if you will, within the Canadian federation. I'm a strong supporter of strengthening the federation we all belong to. If we don't fundamentally deal with that, you're going to be having problems later on.

Mr. Shawn Murphy: Point taken.

Are you basically in favour of all components of Mr. Nault's legislation coming before the House?

Chief Clarence (Manny) Jules: Well, obviously they all have to be dealt with. When you're dealing with governments, those issues have to be dealt in a very fundamental way. When you deal with fiscal matters, they have to be dealt with as well. Again, the point is that ultimately it boils down to the philosophical approach to resolving issues.

Mr. Shawn Murphy: My next question is, how can we as a finance committee help you and the people for whom you speak? I take it you want a certain aspect to be taken over by the finance committee instead of given to Indian Affairs and Northern Development. Is there anything else you're looking for to come from us? You're not looking for a lot of money here. You're dealing more with policy than finance.

Chief Clarence (Manny) Jules: That's right.

Mr. Shawn Murphy: So my question is, specifically, what are you looking for from us?

Chief Clarence (Manny) Jules: I think the bottom line is that I want to take the development of a fiscal relationship between first nations and Canada out of the social policy aspects, meaning the human resource aspects that first nations have. Obviously we all have to deal with that, but if we're looking forward to creating a new economy that involves first nations people, that has to be at this committee level. It can't be at the aboriginal standing committee, where you're dealing with the social policy aspects of the first nations. If we're going to be creating an economy that includes first nations, that obviously has to be at the Standing Committee on Finance.

So the support I'm looking for is, yes, that's the approach we should be looking at.

Mr. Shawn Murphy: My next question is to Mr. Britton.

Thank you very much for your presentation and the tremendous research and development that's needed to build that base. I'm familiar with the windmill technology--which I think we as a country lost maybe earlier on; we could have developed that, but it all went to Denmark, and they're now the world leader--and the fuel cell industry.

As you know, there has been a tremendous increase in a lot of the research and development given to the four or five granting councils. Has the fuel industry been able to access some of those funds, and to what extent?

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Mr. Ron Britton: I'll rely a little bit on Chris for this.

In the last year, the industry has received two pieces of prime funding that I'm aware of. Money came through western economic development, in partnership with the Province of B.C. That was gratefully received and utilized, but unfortunately, because it's part of the wheat agreement for B.C., it's a B.C. program. We're a national industry, and almost half of our members are now in Ontario, Alberta, and Quebec. They don't feel very included when we have all of our demonstration programs in B.C., for example. Second, I think Dupont of Canada was successful in acquiring $19 million over a number of years from TPC for their program in Kingston, Ontario.

Within Fuel Cells Canada, I think we're trying to be a vehicle that can coordinate with government how funds are generated and dispersed. As you may be aware, some of the government funding mechanisms that might have appeared obvious, such as the sustainable development fund, haven't really been very accessible. Our members were given a week or so last spring to submit requests before it closed. Some of them did, but I have no idea the status of those requests today, whether any of them were approved or not.

So we've been working very closely with Industry Canada, Natural Resources Canada, and western development, to try to make sure there's an integrated approach and a longer-term vision of what the industry can do, what the government can do, and how those things will partner together to bring the whole thing on--not one little bit here and another little bit there, never knowing what's going on.

Mr. Christopher Curtis: To answer your question on the granting agencies, we certainly work in very close collaboration with the National Research Council, with their programming and research and development across the country.

In terms of NSERC, some of the money was allotted to chairs in the fuel cell industry—very little of that; it's a very large program and we're just one part of it—but one of the problems is that the funding for those chairs is shared with industry. Most of the companies in our industry are not yet making profits, so it's very difficult for them to pay out money on one side, and there's only a small cohort of the core technology developers to work with.

As you know, when universities have potential funding available, there's a rather large call on that funding that the smaller industries sometimes can't meet. Because the research and development has largely been led by the private sector in this industry, the private sectors is actually bringing the universities and academia up the learning curve in many cases. So that's a difficult and interesting aspect.

Certainly, as Ron has mentioned, the federal government has been a key supporter of this industry overall. Now is the time to actually invest the money that allows us, as an economy, to accrue the benefits of growing the industry and creating the jobs, the economic development, leadership, climate change, and pollution controls that the industry has to offer.

Mr. Shawn Murphy: Ms. Pantry, thank you very much for your presentation.

I want to perhaps put you on the spot a bit here. As has been pointed out, a lot of the recommendations have been made before, and we support them—certainly the one on capital taxes and the one on RRSP limits. But there are a number of recommendations that you've made, all of which are valid, on the RRSP limits, capital taxes, defence spending, and EI, and you've talked about reallocation and cutting spending. Do you have in mind any particular area or areas that you think we, as the finance committee, should zero in on? I know it's a political decision and I know that's perhaps an unfair question, but anything....

Ms. Janette Pantry: I've already mentioned that employment insurance benefits for seasonal workers are too generous. The insurance program is being turned into a social program and is discouraging mobility, which in turn encourages more unemployment. Employment insurance is definitely an area in which we would like to see some reduced spending.

There's the whole problem at HRDC with some of the grants to business, so we'd like to see some reductions there. And then there are the reports of the Auditor General and a lot of little things that concern us, like the $15 million on asking why people are fat and the public works spending on reports when we don't know if we ever got those reports or what they were. Those are some of the key areas for me.

Are there any that I missed, Dave?

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Mr. Dave Park: No, but I would just re-emphasize the fact that of course the Auditor General annually provides a list of things that, with her expertise and knowledge, we would suggest are fertile ground.

Mr. Shawn Murphy: Yes, but to challenge you on that, the Auditor General.... I'm on the public accounts committee, so I read every report. A lot of those things are small write-ins. I'm looking for the big picture here, the $15 million and that. That's fine, but that means nothing in the whole scheme of things.

I appreciate your answer on EI. These are the areas in which reallocations can be made in the broader picture.

Ms. Janette Pantry: We think it needs to be done in the context of a larger vision for the government. It has been almost ten years since there has been a program review, so it should be undertaken in the context of what today's priorities are and what the vision going forward is.

Mr. Shawn Murphy: My last question, Mr. Chairman, has nothing to do with this committee.

Springer got a lot of media attention. Is she happy? Is she healthy? Is she alive?

Dr. John Nightingale: She was last seen when the whales left Vancouver Island and headed north to feed for the winter. We won't see them again until next July.

She was with her grand-mom, what you might call a second aunt, and another orphaned cousin. So the answer is yes, it appears that maybe we were able to use human help to reach in, give nature a helping hand, and then take our hand back and let nature carry on.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Murphy.

Ms. Pantry, I'd like to ask one direct question. You made your recommendation that we should review the high personal tax rate. I presume you want to lower that one. Politically speaking, I have a hard time with that. With the added pressures that we have on health care and other spending areas, it would be very difficult for us, as a committee, to recommend that we just touch that one marginal tax rate. What's your justification for that?

Ms. Janette Pantry: I got involved in the Vancouver Board of Trade about five years ago because Minister Martin made a speech after the first time the budget had been balanced in 30 years. It was the first time in my entire lifetime the budget had been balanced. He had increased spending in that year, with the Millennium Scholarship Fund. I was a bit concerned because it seemed to me we had this problem in Canada. We had a lot of educated people, but they were all leaving the country. I certainly had a lot of friends who were in that circumstance. So I stood up and expressed my concerns to him. Here I was, educated and employed, but paying the highest marginal tax rate of 54%, at that time in B.C. I asked whether he was concerned that the people he was trying to attract to Canada were not being helped in that budget.

He said to me, “We need to start at the lower end. Don't you think it's fair to start with the people who aren't earning very much money, and give them a bit of a break first?” I thought that was fair. So the federal government has done that. They have given people a break at all income levels.

We're saying we need to continue to move forward. We aren't in line with our competitors yet, particularly at the upper end. In the U.S., the top marginal tax rate doesn't kick in until an income level of approximately $260,000 U.S. In Canada, we're at $100,000. There is a lot of room there for Canada to become more competitive. That's what we're asking for.

The Vice-Chair (Mr. Nick Discepola): Thank you.

To the Fuel Cells people, you mentioned you had 40 or 50 members.

Mr. Ron Britton: [Editor's note: Inaudible].

The Vice-Chair (Mr. Nick Discepola): Are they all company members, or are they associations? How many companies are in the industry directly?

Mr. Christopher Curtis: It depends on how you count them. There are approximately 95 companies and institutions in our capabilities guide, such as the Hydrogen Research Institute in Trois-Rivières, Quebec, and the National Research Council. Most of them are corporate members, but they run the gamut of all stakeholders. They include corporations involved in research and technology, engineering services, banks, and the main consulting companies that provide services to the industry. They also include venture capital companies, such as Ventures West and Chrysalix. The latter company is here in Vancouver, and is devoted to supporting fuel cell investment at the angel and venture capital level. So they cover the whole gamut of stakeholders, as we call them.

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The Vice-Chair (Mr. Nick Discepola): I don't know. I view that industry much as I view the Avro Arrow. If we miss our golden opportunity, we're going to regret it for the next generation to come.

But rather than wait for a U.S. firm to snap up each individual small company, don't you think it would behoove the top four or five of you to get together, and wouldn't that accelerate your commercialization even faster, as opposed to doing it all individually?

Mr. Ron Britton: We're looking to encourage some of our top members to do exactly that, particularly on some of the technology barriers that still exist, what you might call pre-competitive or generic technology issues, and to cooperate particularly with the National Research Council in accelerating the pace of that kind of development and breakthrough.

As to your comment on how many companies...we have at any point in time about ten companies that are considering joining. We're trailing in the number of companies active but only just, and I see that as a very solid and positive sign for the industry. There are companies being formed in this sector probably at the rate of at least one a month in Canada, and that's good to see at this early stage.

The final comment I would make is that many times we talk broadly about support or technology development, but it really gets down to the individual company: what they're doing and how many people they have in the particular area they're working on. We've been very fortunate to attract all the leading companies in this sector and the leading service providers. The fact that service providers are looking at our association is an indication that they believe the technology will succeed, and they want to be in at the front end. Then when these companies start to select accounting firms, consulting firms, headhunters, or venture capitalists, they're there for them.

We have a tremendously supportive environment for start-up companies, probably the best in the world, and we have a reasonable base, although my colleagues from the Vancouver Board of Trade would like to see it further improved for large companies to sustain themselves.

There seems to be a gap in policy for start-up companies, pre-revenue companies, between the time they start and when they first start to make money. The ambition of many start-up company owners I've observed is to sell their company to somebody else as soon as it's viable. They make money personally and they go away. Well, that's okay, except that if the environment isn't conducive in the country for the purchaser to be another Canadian company, then we'll lose those companies. That's what I'd be afraid of.

The Vice-Chair (Mr. Nick Discepola): I wish you luck, because I think your success will be Canada's success.

And to the other panellists, thank you very much.

Colleagues, we're adjourned until nine o'clock tomorrow morning, same place, same station.