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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, October 23, 2003

0935

The Chair (Mrs. Sue Barnes (London West, Lib.))

Mr. François Lacroix (President, Cement Association of Canada)

0940

The Chair

Mr. Marc Renaud (President, Social Sciences and Humanities Research Council of Canada)

0945

The Chair

Mr. Gerald Brown (President, Association of Canadian Community Colleges)

0950

0955

The Chair

Mr. Kenneth Georgetti (President, Canadian Labour Congress)

1000

The Chair

Mr. John Murphy (Chair, National Council of Welfare)

1005

1010

The Chair

Mr. Monte Solberg (Medicine Hat, Canadian Alliance)

The Chair

Mr. Kenneth Georgetti

1015

Mr. Monte Solberg

The Chair

Mr. Kenneth Georgetti

The Chair

Mr. Pierre Paquette (Joliette, BQ)

Mr. Kenneth Georgetti

Mr. Pierre Paquette

Mr. Marc Renaud

1045

Mr. Pierre Paquette

The Chair

Mr. John Murphy

Mr. Pierre Paquette

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

1050

The Chair

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

1055

The Chair

Mr. Gerald Brown

The Chair

Mr. Marc Renaud

Mr. Bryon Wilfert

Mr. Marc Renaud

The Chair

Mr. Kenneth Georgetti

The Chair

Mr. Scott Brison (Kings—Hants, PC)

1100

The Chair

Mr. François Lacroix

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

Mr. Kenneth Georgetti

The Vice-Chair (Mr. Nick Discepola)

Mr. John Murphy

The Vice-Chair (Mr. Nick Discepola)

1105

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Mr. Kenneth Georgetti

Ms. Judy Wasylycia-Leis

Mr. Marc Renaud

Ms. Judy Wasylycia-Leis

Mr. Marc Renaud

Mr. David Welch (Member, National Council of Welfare)

Ms. Judy Wasylycia-Leis

1110

The Vice-Chair (Mr. Nick Discepola)

Mr. Kenneth Georgetti

The Vice-Chair (Mr. Nick Discepola)

Mr. Roy Cullen (Etobicoke North, Lib.)

Mr. Marc Renaud

Mr. Roy Cullen

1115

The Chair

Mr. Andrew Jackson (Senior Economist, Social and Economic Policy, Canadian Labour Congress)

The Chair

Mr. Roy Cullen

The Chair

Ms. Katherine McDonald (Executive Director, Action Canada for Population and Development)

Mrs. Johanne Fillion (Director of Communications, Action Canada for Population and Development)

1125

Ms. Katherine McDonald

1130

The Chair

Mr. Walter Robinson (Federal Director, Canadian Taxpayers' Federation)

1135

1140

The Chair

Mr. Jim Thomson (President, Canadian Home Builders' Association)

1145

The Chair

Chief Phil Fontaine (National Chief, Assembly of First Nations)

1150

1155

The Chair

Mr. Monte Solberg

Chief Phil Fontaine

1200

Mr. Monte Solberg

Chief Phil Fontaine

The Chair

Mr. Monte Solberg

The Chair

Mr. Walter Robinson

The Chair

Mr. Pierre Paquette

1205

Mr. Walter Robinson

Mr. Pierre Paquette

Mrs. Johanne Fillion

1210

Mr. Pierre Paquette

The Chair

Mr. Pierre Paquette

The Chair

Mr. Bryon Wilfert

1215

The Acting Chair (Shawn Murphy (Hillsborough, Lib.))

Mr. Bryon Wilfert

Mr. Jim Thomson

Mr. Joe Valela (Chair of CHBA Executive Board and President of the Greater Toronto Home Builders' Association, Canadian Home Builders' Association)

Mr. Jim Thomson

1220

The Chair

Ms. Mary Lawson (Incoming President, Canadian Home Builders' Association)

The Chair

Mr. Scott Brison

Mr. Walter Robinson

1225

Mr. Scott Brison

Mr. Walter Robinson

The Chair

Mr. Jim Thomson

The Chair

Mr. Roy Cullen

1230

The Chair

Mr. Walter Robinson

Mr. Roy Cullen

Mr. Walter Robinson

1235

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

Ms. Katherine McDonald

Mr. Roy Cullen

Ms. Katherine McDonald

Mr. Roy Cullen

The Chair

Ms. Sophia Leung

1240

The Chair

Chief Phil Fontaine

1245

The Chair

Chief Phil Fontaine

The Chair

Mr. Walter Robinson

The Chair

Ms. Mary Lawson

The Chair

Ms. Judy Wasylycia-Leis

1250

The Chair

Mr. Walter Robinson

Chief Phil Fontaine

1255

The Chair

CANADA

Standing Committee on Finance

NUMBER 085

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, October 23, 2003

[Recorded by Electronic Apparatus]

¿ (0935)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): I'll call the order of the day. This is pre-budget consultations continued.

We have with us some excellent witnesses again today. From the Cement Association of Canada we have François Lacroix, président--bienvenue, monsieur--and Patricia Devine, the director of public affairs. Welcome to you.

From the Social Sciences and Humanities Research Council of Canada we have Marc Renaud, president. Merci.

From the Association of Canadian Community Colleges, Gerald Brown, the president, is here. Welcome again, sir.

From the Canadian Labour Congress we have Kenneth Georgetti, president, and Andrew Jackson, who is the senior economist and social and economic policy adviser. Welcome to you both.

From the National Council of Welfare we have John Murphy, who is the chair, and David Welch and Greg deGroot-Maggetti as members. Welcome to all of you.

I'm going to open the floor for your presentations of up to seven minutes. I will give you a non-verbal cue when it's about time for you to wrap up, and if I've said thank you it means your microphone is going to go off. I'm sure all of you know the time constraints on this committee.

As we have votes, we will begin immediately. I will go to you, Mr. Lacroix, from the Cement Association of Canada. The floor is yours.

[Translation]

Mr. François Lacroix (President, Cement Association of Canada): Madam Chair, committee members, thank you for the opportunity you have given us of appearing before you today. We believe that the work of your committee is of vital importance for the budget process and we support you in your efforts.

[English]

The Cement Association of Canada represents the country's entire cement-producing industry. Our members produce 13 million tonnes of cement annually, about 35% of which is exported to the United States. Together the cement and concrete industries generate annual revenues of more than $4 billion and provide jobs for approximately 22,000 Canadians.

As the key ingredient in concrete, cement is fundamental to municipal infrastructure, roads, bridges, airports, seaports, office buildings, homes, and when considering life-cycle assessment concrete offers significant social, economic, and environmental advantages. It is energy-efficient, durable, versatile, cost-effective, and fire-resistant.

At this time I think you should have a copy of the Cement Association's written brief in front of you, if it's been distributed. Rather than read through the submission, which I'm sure you'd prefer to do on your own, I'll speak briefly about our main messages to the federal government.

We will be talking about infrastructure—mainly municipal infrastructure—and highways. In both areas we would like to see national policies that describe Canada's vision for infrastructure in general and for our national highway system. In both areas we'd like the principle of sustainable development to guide these polices.

The Cement Association makes ongoing contributions to the infrastructure policy debate. In 2001 we sponsored a survey conducted by the Public Policy Forum to examine the status of Canada's infrastructure, where the priorities lie, and how new infrastructure should be funded. More recently, the association participated in the development of the civil infrastructure system technology road map, known as CIS-TRM. I'll refer to it as TRM. The TRM is a blueprint for the renewal and enhancement of Canada's civil infrastructure system.

As an active member of the Canadian Society for Civil Engineering, which led the TRM exercise, we fully endorse the TRM's objectives and recommendations. In particular, we would like to underline the life-cycle cost-benefit analyses objective. The term we use is “life cycle assessment”, or LCA, which includes not just the upfront construction costs but the total economic, environmental, and social costs over the lifespan of the infrastructure project.

The Cement Association recognizes the federal government's increased focus on infrastructure over the last few years, and in particular the establishment of Infrastructure Canada as a separate department. However, we submit that what is lacking is a strategic national vision for the renewal and maintenance of our municipal infrastructure to a standard that will safely and efficiently meet the needs of Canadians today and in future generations.

We urge the federal government to show leadership by developing a national infrastructure policy and, with the cooperation of the provinces and municipalities, to implement a strategy through a national infrastructure program. Furthermore, the Cement Association recommends that “life cycle assessment” be a key component of national infrastructure policy.

This national infrastructure program should have a reliable, stable source of funding. A stable source of funding would give the assurance required by the construction industry to make large capital investments in equipment and allow our industry to create jobs, develop and maintain a more skilled workforce, and develop new, innovative technologies.

Yes, the federal government has increased infrastructure funding in recent budgets, but we observe that the allocations are meagre relative to need. You have all heard the arguments regarding the size of municipal infrastructure deficits and the importance of municipal infrastructure to Canada's quality of life, so I will not dwell on them.

Let me mention, however, that we participated this week with other stakeholders in a gas tax symposium where we discussed the possibility of using dedicated taxes to fund infrastructure. While we realize there are jurisdictional problems and issues and other implications to be discussed among three levels of government, we urge the Government of Canada to strongly consider the proposal put forward by the Federation of Canadian Municipalities to dedicate a portion of the federal fuel excise tax to fund municipal infrastructure.

In these discussions about infrastructure, we must not lose sight of the importance of highways. You have heard from other stakeholders about the importance of the highway system to our economy and quality of life, and about the need to bring the system up to competitive standards. Canada is one of the few countries in the OECD without a national highway policy.

Study after study over the past ten years has identified the need to revitalize the system and the need for federal leadership. It's now time for action; therefore the Cement Association of Canada recommends that the Government of Canada act immediately on the findings of numerous studies and establish a national highway policy and commit to a national highway program. This program should be guided by the principle of sustainability, and particularly life-cycle assessment. Other jurisdictions already employ this approach.

¿ (0940)

[Translation]

The Quebec ministry of Transport, for example, carries out a multi-criteria analysis when choosing the type of paving for its roadways. This analysis takes into account the economic, environmental and social cost of the paving during its entire life cycle.

[English]

Again, such a program should have a dedicated and sustainable funding source. Therefore we recommend that the Government of Canada act on the recommendation put forward by the provincial transportation ministers and dedicate two cents of the federal fuel excise tax for reinvestment in a national highway program and include life-cycle assessment as part of the selection criteria for a highway project within the program.

In conclusion, Madam Chair, the Cement Association of Canada and its members look forward to continuing our partnership with the federal government to build a sustainable Canada.

I look forward to answering any questions you may have. Thank you.

The Chair: Thank you very much.

Now we'll go to Dr. Renaud, who is the president of the Social Sciences and Humanities Research Council of Canada.

[Translation]

Mr. Marc Renaud (President, Social Sciences and Humanities Research Council of Canada): Good morning, ladies and gentlemen.

Madam Chair, I would like to begin by telling you how much your committee's recommendation last year warmed our hearts.

[English]

You recommended in the report of your committee that the Government of Canada provide a fair share to the Social Sciences and Humanities Research Council, and this has resulted in the creation in the last budget of the Canada graduate scholarship program. So we've given out 850 masters scholarships this year. That's the first time in Canadian history. It had a huge impact on the pride of those kids who got those scholarships, on their will to finish their studies and to make it quickly, and also on their will to stay in Canada once they're through studying.

So I would like to begin by thanking you. This was extremely important. It is making a huge difference in Canada. Of course, it's not palpable tomorrow morning, but I can assure you that in three, four, or five years, it's going to be extremely palpable.

I'm going to talk about the Social Sciences and Humanities Research Council again today. You have some paperwork in front of you, and let me say what it is. This is our annual report. You probably received it through some other means, but we're so proud of it, it has very nice pictures.... If you have it, give it to somebody else. It really shows well what we're doing.

You also have in your kit a document called “From Granting Council to Knowledge Council”. This is a document that we're currently using to get a debate throughout Canada in all of its 90 campuses as to where we're going in the social sciences and humanities in this country. Then you have the typical Ottawa deck, which I'm going to talk about.

I can talk for two minutes, five minutes, or two hours, so I'm going start by my conclusion, so that when you make the sign, I can cut it there.

Please turn to slide number 18. It's on page 9 at the bottom. This is really the key message I'd like to provide you with.

We're walking into a new world. We have rising student enrolment. We have a huge change in faculties in Canada, with 18,000 hires over the next ten years just in the human sciences. There's a little renaissance of the human sciences. Now I'm using the term “human sciences”, although it is not common in English. In French we always talk about sciences humaines to talk about business school research, social science, humanities, education research. Since in English we have this incredible mouthful of an acronym, social sciences and humanities, we've decided we're going to call it, as the French do, human science. And anyway, we have German on our side, we have the Scandinavian languages on our side, although the humanities people don't like it. I'm just saying this because there's a huge renaissance of all those fields, whatever angle you look at it from.

In this context, we hope the Government of Canada will continue to support us. Of course, we need more money than we have now. We're underfunded compared to the other council, but we're also suggesting to you that you support us in what we're trying to accomplish now, which is to engage in a transformation exercise quite similar to what the Medical Research Council undertook three years ago. We're saying to ourselves, SSHRC is an incredibly good granting agency, in terms of peer review, in terms of control of finances, in terms of making sure the best and brightest are selected, but we're not necessarily doing our job to the fullest. There are things we should do that we don't to connect people better and to make sure that the knowledge has the impact it needs.

Therefore, we're now undertaking a transformation exercise, asking how should we be structured at SSHRC to lead into the future? So our demand to you above all is to support us in this transformation exercise, and we need money. But we feel that if we get the doubling of the budget that we will need five years down the road and we don't transform, the money will not be invested well. So the key demand is please help us in this transformation, and also, please understand that we're faced with an incredible increase in demand.

At SSHRC, we're visualizing year in, year out a 10% increase of applications. This is because of these new faculties. These new faculties are walking into Canadian academia literally with a different mindset about what the university professor's role is. So when I was hired in my own university, I was told, you have a good PhD from a good university, give your classes, go to the library, write your books. I didn't have a clue I would have to run for grants, I would have to find ways to finance my graduate students, I would have to engage in research teams, I would have to engage in international networks. But the new people walking into universities now, that's how they view the world. They know they have to work across disciplinary lines. They know they have to get grants.

So we're saying this is the baseline on which we have actually to reconsider the way we're doing things.

¿ (0945)

Now you're going to say, what's going to be the difference at the end of the day? We have several ideas. Partnership has to be restructured more on targeted initiatives. We already have a prototype for what we do in the new economy to help Canada reap the benefits of a new economy, where we have $100 million just targeted on this with a lot of finance people and education people helping us out, and with knowledge that's going to get out much more focused than in the past. We're saying we have to do this much more often, we have to do this vis-à-vis the question of aboriginal people, we have to do this with the question of cities. We have to do this on the question of the democratic deficit, and on the environment. So that's one of the restructurings we're considering.

SSHRC also has to become more of a clearinghouse; it has to become more of an agency that helps you people identify who is the expert who knows something about anything in this country. I keep saying, and it's easy to see when you're from Quebec, that Canada is a crazy country; it's a will against its geography. We don't have any Paris or any New York or London where intellectual traffic occurs normally. So an organization such as SSHRC is the best convenor in Ottawa; we know the country extremely well because we reach out to the 90 campuses. Do we fulfill this role well? I'm not sure.

You were there, Madame Barnes, in another committee, when John Godfrey asked, “Can you help us?” Now we're told that with the new Prime Minister there's going to be a power switch from the bureaucracy to Parliament for policy-making. In that context, we need to provide you help; we need to identify the experts; we need to organize the panels that help debate the right issues.

Maybe I've already used my five to seven minutes. Not yet?

Basically, thank you again for what you did last year. We need your support. If you could provide your support through the campuses in which these debates are going to take place, that would be very much appreciated. But we also need your support because down the road, when this whole place is going to be reorganized, we need some kind of appointed task force that the Prime Minister would name to help close the discussion and get us going somewhere.

Merci beaucoup.

[Translation]

The Chair: Thank you very much.

We will now hear the representative of the Association of Canadian Community Colleges, Mr. Brown.

Mr. Gerald Brown (President, Association of Canadian Community Colleges): Thank you, Madam Chair.

The Association of Canadian Community Colleges is very pleased to be here this morning to make its presentation.

[English]

You have a copy of our presentation in front of you. I'll give you the luxury of taking a later time to look at it and read it. Maybe what I'll do with the short time available to me is speak to you a little about who we are and why we are here this morning and address some of our key recommendations.

The Association of Canadian Community Colleges regroups Canada's community colleges, CEGEPs, technical institutes, and university colleges across Canada. I would submit to the committee that it's probably one of Canada's best-kept secrets. We serve 150 institutions in 900 communities, serving two and a half million students. As we talk this morning, two and a half million students are walking through our doors today. That's a sizable organization and a sizable network. In fact, I suspect that all of you have one of us somewhere in your riding, and I would encourage you to get to know these institutions better.

Their primary mandate is to provide for and contribute to the economic and social development of the community they serve. I think in that context we share a lot of common concerns with some of the agendas the federal government is concerned with, because you as well are concerned about the health and development and economic prosperity of these communities. We take this opportunity to say that this network of 150 institutions in 900 communities is poised to be a strategic partner to the federal government as you move forward in your agenda.

There are a lot of challenges facing our institutions, and we focus our attention this morning on where we think the federal government can help. One of the challenges we always have when we talk about colleges, of course, is that we say, “That's education; therefore it's provincial.” I want to correct that myth. While there are elements that are the responsibility of the provincial government, there are some very key areas in which we believe the federal government can help. The two areas we'd like to focus on this morning are ensuring access to post-secondary education and strengthening the innovation capacity of the communities we serve.

If you go to our recommendations, on page three, we have four, which we would like to speak to briefly. In the first one I'm talking about enhancing and strengthening the capacity to gain access to our institutions at the post-secondary level.

We think it's important that the federal government consider and work closely with the association in creating and supporting what we are calling, for now at least, the college and institute access centres. These would be there to provide ongoing and multifaceted learner support services and tools to help support the delivery of learning and training to designated groups within our communities: aboriginals, new immigrants, single parents, older displaced workers, unemployed workers, and at-risk workers. These services would help to support learner success in areas such as essential skills, apprenticeship, post-secondary courses, certificates, degrees.

In other words, a lot of folks out there need a lot of help to get into our institutions. While many of our students have access to our institutions through the normal process, there are nevertheless important areas out there in our community that have not had an opportunity to gain access to our institutions.

The colleges have demonstrated their ability to address some of these challenges, and I submit to you that this is not an education issue; it is really about opportunities for Canadians. I think the provinces would welcome federal help in this area.

The second area is the increasing of the social transfer payment. It's always a danger when you bring this up. They say here we go again; they're whining for more money. It's not my objective to do that this morning. What I am going to submit to you, though, is that since the cutbacks in 1994, while it would be nice to have all that back, and we could make the arguments around it—I'm sure you've heard them not only from us in the past, but from our sister organization, AUCC—the reality is in the last decade there have been exponential demands on our institutions: demands from the point of view of a much more sophisticated learner; demands in the area of infrastructure and capacity; and demands in the way of equipment.

We are the largest skill trainers in Canada. One important part of that function is the availability of sophisticated equipment. There are challenges for our institutions when budgets are limited. We need to move now. We join ourselves with some of the comments our sister organization AUCC made, that the time for a renewal of post-secondary education is now very much at hand.

The third thing we'd recommend—again, always thinking about access to post-secondary education—is expanding the Canada study grants. The association has had a task force on this, and we would be glad to submit to the committee some of the studies we did.

There are a number of recommendations, you can appreciate, that would come out from a task force. But one that I hear constantly as I travel through my institutions is the notion of moving much of our loans into a grant formula. We have a society that's graduating with huge debts. That is going to have an impact on where we go as a nation. If we can move some of that debt into grants, I think we would certainly begin to address some of the issues around student debt.

¿ (0950)

Last, the Canadian Millennium Foundation was created on the theme of access, yet one of its recommendations negates any opportunity for first-year students to have access to any kinds of grants. You have to have completed the first year before having access to any of the Canadian Millennium Foundation grants.

In our institutions, which are two-year and sometimes three-year institutions, we are disenfranchising 50% of our institutions before we begin. Anybody who has done any research or any study on any of the research from the point of view of retention at post-secondary education knows that financing, especially in that first year, is very important. We would ask that the federal government reconsider and ask the Canadian Millennium Foundation to open up or explore new ways in which we can include those first-year students.

The second theme on which we'd speak to you this morning is around the whole issue of strengthening the innovation capacity of our communities. I mentioned before that we're in 900 communities, and in these communities we are anchors in many cases. Outside of the large urban centres, we're the only presence of post-secondary education. Of the challenges we are facing now, we think that the big challenge we are facing as a country is the commercialization of a lot of what we do in our regions.

Again, we would submit that we would like to work with the federal government on the creation of a national alliance of college-institute regional innovation and technology commercialization centres. If Mark thought that was a mouthful, this is a mouthful. Really the buzzwords, the key words, in that recommendation are “commercialization”, “regional”, and “alliance”. We would like to work with the federal government on developing these centres across the country of which key function would be to include market intelligence, applied research, business development, skill development, knowledge transfer to employees and to communities—again, the hub we are in.

We would like to think it is important now and that the time has also come for the federal government to recognize the role of colleges in research. Many of our colleges and institutes are significantly larger than some of the smaller universities in Canada, and the relationship that we've had with industry has moved now from not only a training institution but to a research institution with these small and medium-sized businesses. It is important to think about the way to do that.

Finally, Madam Chair, we would like to work with the federal government on the creation of a college-institute chair. We patterned this model along the research chair that you have granted to the universities. HRDC has said that 72% of all the future jobs are going to require some post-secondary education. That speaks to the role colleges play in the communities. We need to keep up with the rapid change. We need to work our own skill development shortages and we need to increase the demand of the “D” in the “R and D”. We think these research chairs would play a role.

We'd welcome any response.

¿ (0955)

The Chair: Thank you very much.

Now we turn to the Canadian Labour Congress. Mr. Georgetti, please go ahead.

Mr. Kenneth Georgetti (President, Canadian Labour Congress): Thank you, Madam Chair.

On behalf of the 2.5 million members of the Canadian Labour Congress, I come to present the view that the next budget of the Government of Canada should reflect the priorities and aspirations of working citizens of this country.

Our membership represents $100 billion a year in wages, about $22 billion a year directly in federal taxes, about 40¢ of every dollar collected in this country. If you multiply that by the total unionized workforce in Canada, it amounts to almost $200 billion a year in payroll wages.

The Canadian Labour Congress represents workers in all sectors of the Canadian economy, in all occupations, in all parts of Canada. On their behalf I'm calling on this committee to focus boldly on improving the quality of life of working families and enhancing for our children and our grandchildren the infrastructure they will need to build for themselves the quality of life that is better than our own.

Canadian working families want this committee to pay attention to a broader section of the Canadian population than just a few of the business elite. People should get all the attention in this budget. This is the duty of the committee. This is the expectation of the working citizens of this country.

The last federal budget marked, we might add, a very modest but welcome change in direction. After the deficit was eliminated, the government's real priorities became debt reduction and income tax cuts tilted to the most affluent and large corporations. Spending on social programs and public services continued to fall as a share of the economy. However, the last federal budget finally allocated a significant share of the surplus to health care, child benefits, and other priorities. This reflected the priorities of working Canadians, who have consistently supported rebuilding the social programs and public services, which were so drastically cut in favour of eliminating the deficit.

Our concern today is that if it's not built upon, the 2003 budget will simply represent a one-time blip in a dismal long-term trend to a shrinking federal government. Canada still has enormous unmet social needs in order to maintain and improve our quality of life. We need to make a real commitment to the modernization of the employment insurance program, to training for workers, and to the renewal of public infrastructure in our cities, to a national early childhood education plan, and of course to the maintenance and improvement of our national public medicare system. In health care the injection of funds last year fell far short of what is needed to support current services, let alone a major extension of the public system to home care and pharma care.

We need to modernize the employment insurance system in this country. The EI program is grossly inadequate and covers now only a minority of workers who actually become unemployed. Thus, it has accumulated a surplus at an enormous cost in terms of income and security for working families, and we say this cannot go on.

We need to address head-on the issues of skills training and education for today's workforce. The Canadian Labour Congress reiterates its strong support for a training benefit under EI based on the example of EI income support for the classroom part of apprenticeship training that exists today.

For all of the government and business rhetoric on the need for investment in human capital and in a knowledge-based economy, remarkably little has been done to improve access to lifelong learning for the ordinary average working citizen. We know that workers with the lowest levels of formal education tend to be excluded from employer training programs. We also know that the potential of many workers, particularly recent immigrants, is being wasted because of a lack of opportunities for training and education to build on foreign experience and credentials.

The Canadian Labour Congress has delivered a firm plan to the government on how such a policy can be piloted and developed where there is a clear prospect for emerging skill shortages. It will be two years soon, and the government has not yet replied.

We need to address the long-term challenges of fairness between generations. The best legacy of today's baby boomers can be to leave future generations equality, social and physical infrastructure, and a much more energy efficient economy, all of which will require much higher levels of public investment. Just as our parents struggled to pass on to us a country where the standard of living was the envy of the world, we have a moral duty to pass on to the next generation a quality of life that is as high as or, I would challenge, even higher than what we enjoy today. Anything less, in our view, is selfish and irresponsible. And in the absence of a true employment policy in this country, we need to do this in the federal budget, in terms of its effect on jobs and job creation.

À (1000)

Has this committee taken notice, for instance, that a disproportionate number of older workers are choosing to remain in or in fact and indeed return to the workforce? Has the committee noticed the growing gap in income between born Canadian and new immigrants, or between white and aboriginal and coloured workers? Is the committee willing to address these issues?

Job creation has more or less ground to a halt this year. We have an 8% national unemployment rate, which, in my view, is a national disgrace. Private sector payrolls are up by just 3,000 this year, and we've lost 103,000 manufacturing jobs just since November, and 77,000 in the year 2003. The overvalued Canadian dollar is killing industrial jobs. Unless we cut the almost two-percentage-point gap between Canada and U.S. interest rates, good jobs will continue to be lost in our country.

It's long past the time that jobs and the living standards of working families were made central goals of our economic and social policy. The average worker in this country has not seen a real wage increase since this government was first elected in 1993. Inequalities are increasing; poverty is increasing; and corporate profits have soared.

The committee must emphatically reject the self-serving calls of big business for more debt reduction and more tax cuts for themselves. They've had their tax cuts—and, in our view, they've had enough. Business and corporations are designed to buy and sell goods and services and to make profits for their shareholders and owners. The committee would be prudent to remember that their bottom line is profit, not the public interest; our bottom line is good jobs that pay good wages. I wish in my lifetime to see a report of this committee stating unequivocally that good wages and good family-supporting jobs are good for the economy. That, with respect, should be your bottom line.

You will find details of the policies we've proposed in the brief we've submitted in our report.

Thank you.

The Chair: Thank you very much.

We will now go to the National Council of Welfare. Mr. Murphy, go ahead, sir.

Mr. John Murphy (Chair, National Council of Welfare): Thank you, Madame Chair, for giving us time to address your committee.

My name is John Murphy, and I am here today from Canning, Nova Scotia, as the chair of the National Council of Welfare. With me today is Professor David Welch, a council member from Ontario; Greg deGroot-Maggetti, from Kitchener, who is also a member of our council; and two of our researchers, Diane Richard and Sarah Wells.

The National Council of Welfare, as most of you know, is a citizens advisory body to the Minister of Human Resources Development. Its mandate is to advise the minister on issues of concern to low-income Canadians. Those are the issues we'd like to underline this morning.

The council would like to bring two issues to your attention. First is the importance of building a national child care program; the second is the creation of a Canada health transfer and a Canada social transfer in a way ensuring that all Canadians get a fair chance at good public service supporting their well-being and the well-being of Canadian society.

The National Council of Welfare believes that a good national child care system is the backbone of solid social policy. We know this message has been heard by the federal government, as we have had major investments in child care. We also thank the finance committee for its contribution in its report last year in upholding this standard for child care. The council commends this effort, and strongly recommends that the federal, provincial, and territorial governments take the final step and create a national system of early childhood education—and I underline the word “system”.

Child care is a fact of life in the 21st century, in spite of lingering opposition. Most mothers of young children have paid jobs; in 2000, 69.5% of mothers with children under 16 had paid jobs. Families rely on the incomes of women to make ends meet. In fact, if Canadian mothers did not have paid jobs, poverty rates for families with dependent children would be approximately four times higher.

Child care, ladies and gentlemen, is an essential ingredient for the participation of parents, especially mothers, in the workforce. Child care is the key to making it possible for parents to finish their education and to get and keep good jobs that allow them the dignity and independence to raise their children above the poverty line. The evidence is overwhelming that good quality child care, child care that provides good early education and, at the same time, frees parents to finish school and get good jobs, makes a significant difference to child development.

A national system of regulated child care is essential to make our other social programs work as they should. No one would seriously contemplate allowing a free-for-all, unregulated elementary school system or health care system, and neither should we continue to allow such a thing with child care. Good regulations make sure that quality child care gives children and families what they need.

Let us learn from successes, especially those in Quebec, and develop a reliable system of regulated child care, one that respects specific and territorial needs and responsibilities, and assures that a real pan-Canadian program exists.

It continues to astonish our council that so few children and parents can find good quality, affordable, regulated child care. The most recent data shows that in 2001, only 12.1% of Canadian children had regulated child care. Yes, a good child care system is expensive, but a good investment in child care will reap massive dividends.

In 2001, the provincial and territorial governments dedicated an estimated $4 billion to child care, early childhood education, and kindergarten. Federal, provincial, and territorial governments spent this money with little policy directive. A national child care program must not only ensure adequate funding, but it must also establish a strong policy framework and direction.

The council recommends that over the next five years, the federal government invest a minimum of $250 million in the first year, as opposed to the $25 million that was put forward; $500 million in the second year; $1 billion in the third year; and $2 billion in the next year. This money must support a clear policy framework for child care and early childhood education.

À (1005)

Now, this brings me, Madam Chair, to the second issue, the creation of a Canada health transfer and Canada social transfer. The council commends the government on its decision to separate these transfer programs. The council has long recommended that there should be separate block funding for health, education, and social services. The council strongly believes that the federal government has an obligation to promote the well-being of Canadians, regardless of where they live, and we believe that each of these three program areas requires strong federal support. We believe this arrangement can and must be negotiated with the provinces and territories.

The government has taken the first step by creating block funding for health. Now we ask the same be done for education and social services. We have seen how vulnerable social services are to changing winds of the provincial and territorial politics. The council is extremely concerned that social services, and welfare in particular, be protected so that the most vulnerable Canadians can get the services they need. Creating a new CST is to be more than an accounting exercise, and I have given you a document that we presented to the social council earlier in the week that outlines the recommendations we see enhancing the social and economic well-being of Canadians.

I'll try to go quickly. The following principles should be a part of any block-funding arrangement for social services.

One is accessibility: income support should be available to all low-income Canadians with no means of support. Provincial and territorial governments should not be permitted to exclude certain categories of people from their social assistance programs.

Second is adequacy: income assistance should be sufficient to cover basic expenses.

Third is accountability: provincial and territorial governments should provide federal government with full accounting of their spending.

In closing, the council recommends an investment in the common good of all Canadians. Child care benefits parents and families, but it also betters Canada's work force participation, our economy, and our society as a whole. Transparent and accountable funding for our education and social services ensures services and resources for all Canadians on a more equitable basis.

Thank you, Madam Chair.

À (1010)

The Chair: Thank you very much, and thank you to all of you.

We have a 15-minute bell. I'm going to start with five-minute rounds. I have eight people on my list; we'll do five minutes to maximize the time, and then come back. We will let everybody get their five minutes in with this panel.

So go ahead, Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Canadian Alliance): Thank you very much, Madam Chair, and thank you to the presenters.

I want to start by first of all acknowledging a letter that Mr. Georgetti sent around with respect to how this panel is structured.

Frankly, I agree with you. I think the way it's structured probably isn't the best. It would make more sense to me to have people with common interests together to have a bit more of a debate about some of these issues. But now I want to follow up with Mr. Georgetti on something else he said.

First of all, I agree that an 8% unemployment rate is a national disgrace. But it seems to me if we're going to get the unemployment rate lower, we have to attract investment so that we can have more businesses to hire more people. You stopped short, I guess, of perhaps speaking disparagingly of profits, but you came pretty close, I thought. I just wanted to remind you and challenge you a bit on that.

To me it seems pretty important that we ensure we have profitable corporations, because at the end of the day these corporations employ a lot of people, and the profits that are made by them end up in pension funds, including pension funds that provide income for people who come out of your organization.

I just wanted to challenge you a little bit on that and suggest that maybe what we need to do, in fact, is continue to have more tax cuts for corporations. I don't think tax cuts for corporations are mutually exclusive of providing more benefits and better jobs for the workers you represent.

The Chair: Mr. Georgetti.

Mr. Kenneth Georgetti: Thank you.

If you'd paid attention to my remarks, you'd know I did not speak disparagingly of profits. I commented that I understand very clearly, and so should you, the nature of corporate Canada, and that is that their primary and sole goal is to make good profits for their shareholders. That's what they do. In fact, half the shareholders in this country are the pension plans--that is, we own half the assets of the Toronto Stock Exchange. So it's not a foreign word to me.

The fact of the matter is I understand what corporations are. But I also understand what they aren't. And if I can express it in a term that I was taught--and you would be well served to remember this--it's that corporations have neither the heart to bleed nor the bottom to kick. That's the responsibility of government. Just like it's not your responsibility to sign members into unions, it's not your responsibility to make profits for corporations.

It is our responsibility, however, to make sure corporations behave and act in a way that society accepts, and I think this government and governments before you have paid too much attention to the interests of corporations and taken for granted that if it's in the interest of the corporations, it's in the interest of Canadians. And sometimes those are diverging issues.

What this committee has to do is take some bold steps to say that where corporations fail by the nature of their own structure, you have to step in. I don't have any problem with investment coming to Canada. I think it should. But if you look at the number one consideration that investors make, it's not the tax rate. It's not the rate of social spending. It's the quality and education of the workforce. That's their number one consideration. Yet it's the single least-considered issue in financial and budget planning of this government. It should be the number one issue, and that would attract investment.

So if you took the advice of the Canadian Labour Congress, frankly, you would see more business investment because you would be investing in the skills and education of the workforce.

À (1015)

Mr. Monte Solberg: I appreciate that, and obviously education is part of the mix, but I think it's also a fact that the ability of companies to make profit is very important.

And the tax rate is important, I would argue, especially in the situation we're in today in Canada. You have companies that typically have come to Canada because they saw it as a gateway to the United States, the richest market in the world. They were attracted by the ability to move across that border easily and because the cost of doing business in Canada is relatively low. That's starting to change. It's more difficult to get across that border now. I think we have to find new levers to attract investment to Canada.

Again, I'm not arguing that we shouldn't invest in our people--human capital is very important. But I do think it's very important for labour to be seen to be pro-business. I disagree with your characterization, how you spoke about profits. I think it is important for you to send the right message about wanting to attract business to Canada, and again, I think it's in the interest of your workers ultimately to see more business come to Canada.

The Chair: Thank you.

That's all the time we have. We're needed in the House for a vote. We'll suspend for about ten minutes, and as soon as we get three back in the room, we'll start, because I don't want to delay the other panel.

Thank you.

À (1018)

À (1040)

The Chair: We'll resume with our pre-budget hearings.

Mr. Georgetti, I think you had a brief comment in response to Mr. Solberg.

Mr. Kenneth Georgetti: Madam Chair, I'm in your hands. Should I wait until Mr. Solberg comes back? No, just put it on the record?

I must say that the first mistake Mr. Solberg makes is that these are not my workers. In fact, I am their worker, just as I think he should be. I would remind him that he works for those people too.

I know of no workers we represent who don't want their company to succeed. The question here for the committee is how important it is for you for those workers to succeed.

Corporate tax rates have been cut below those of the U.S. We have the richest R and D tax credits now in the world, and report after report tells us that we have not had investments we need in the high-value-added industries that create those jobs.

We have to push our legislators to drop this tax-cut panacea as a mantra. I would invite the rest of the committee, as well, to listen to my co-presenters today. It seems to me they were all saying the same thing.

The Chair: Thank you very much.

Now we'll go to the Bloc Québécois for a round of questioning.

[Translation]

Go ahead, please, Mr. Paquette.

Mr. Pierre Paquette (Joliette, BQ): Thank you, Madam Chair.

My apologies to the witnesses for having missed a good portion of their presentations. I did nevertheless have the opportunity to flip through their documents. I furthermore know quite a few of you and the organizations rather well.

My first question is for Mr. Georgetti. The CLC did a remarkable study on the negative impact of the employment insurance reform undertaken by the Liberals. You are aware that the Finance Department undertook consultations on the contribution rate-setting mechanism. As you are aware, employment insurance premiums have been used for all sorts of things other than those intended.

In your view, is it enough to hold consultations on the rate-setting mechanism? Would it not be appropriate to review the whole spirit of employment insurance and the overall usage made of the employment insurance fund? It seems to me that one cannot discuss the contribution rate without talking about coverage and the role of the employment insurance fund.

What adjustments to the employment insurance fund would the CLC like to see?

[English]

Mr. Kenneth Georgetti: Thank you.

I think the first question was do we think sufficient consultation on the rate has been carried out. The answer, quickly, is no. We think there needs to be a complete review of the employment insurance program.

The one thing we would argue, with support with the government, is that it would be good to have an employment insurance program that would be proactive, but in order to be proactive it has to spend proactively. We think a complete review of the EI fund has to be undertaken, including the governance of the EI fund. We feel it's too tempting for governments to strip surpluses away from the EI fund that frankly don't belong in the general tax base.

In terms of monitoring, the fund should be administered by a joint committee of business and labour. The fund's goals and aspirations should be set by the legislation and by Parliament. But it should be run in an arm's-length manner from the government so that politicians aren't tempted to take what are EI premiums away from workers and use them for other purposes that taxes should be used for.

[Translation]

Mr. Pierre Paquette: Thank you, Mr. Georgetti.

Mr. Renaud, I quickly familiarized myself with all of the documentation. I would like you to go through the main conclusions that the committee should draw from the presentation made by the Social Sciences and Humanities Research Council of Canada.

Mr. Marc Renaud: As I explained in English earlier, there are in essence two conclusions.

First of all, we are going through incredible changes. There are a great many more new young professors arriving on the scene in universities. There is an incredibly higher number of graduate students and there is also tremendous external demand for human sciences expertise. This is why SSHRCC's budget is insufficient.

We have a 40% success rate with our ordinary grants, whereas NSERC has a success rate of 80%. There is there an imbalance that makes no sense and that is harmful to the country.

However, the second conclusion we are coming to is that our organization will probably have to restructure itself in order to be better prepared to face the music. We are one of the best granting councils in the world with regard to peer review, etc., but we are experiencing tremendous difficulty ensuring that the knowledge acquisition that we fund has an impact and tremendous difficulty, given Canada's geography, ensuring that people do the necessary networking.

These, basically, are the two conclusions I developed, and I am asking the committee to support us as it did last year, resulting in the Canada graduate scholarship program.

À (1045)

Mr. Pierre Paquette: Thank you.

The National Council of Welfare makes a recommendation that I have difficulty accepting. Pancanadian organizations often make a similar recommendation. You state that provincial and territorial governments should provide the federal government with a full accounting of their spending on social services and detailed statistical data on beneficiaries at least once a year, etc. In my view, this creates a problem for democracy. According to the Canadian Constitution, health comes under the jurisdiction of the provinces. Therefore, the provinces are accountable to their population for the quality and quantity of the health services provided.

You are suggesting that the provinces report to the federal government. In the interest of democracy, I do not believe that such a transfer would be justified and beneficial for health services overall, especially given that the federal government has disengaged itself from funding health care. You know as well as I do that at present it provides barely 16 cents out of every dollar spent on health, whereas the Romanow Report recommended that it fund 25 cents out of every dollar spent. I wonder at the appropriateness of such a recommendation, given especially that we already have the Canada Health Act.

[English]

The Chair: Mr. Murphy.

Mr. John Murphy: Specifically with the CST, we do believe that the accountability should be there. I think what our accountability emphasizes is that people get the services they require. If money is given from the federal government to the provinces for the CST, and an enhanced CST that we would describe, then those moneys need to flow in such a way that it gets to the people who need it the most. The only way to do that is to have some kind of an accountability system that tells you.

[Translation]

Mr. Pierre Paquette: But the federal government...

[English]

The Chair: C'est tout. A minute over, actually.

Mr. Wilfert, five minutes please.

Mr. Bryon Wilfert (Oak Ridges, Lib.): I would like to thank everyone for their presentations.

I would like to thank the Social Sciences and Humanities Research Council of Canada for your positive comments and also to indicate that I think the end you're trying to achieve is a very important one. Obviously it's the tools that are needed to get there. I think we're going to have to take some time to look at what it is that you presented in some depth and look at how we can.... Obviously it's not going to occur overnight, but I think it is important.

To the Association of Canadian Community Colleges, it is not a well-kept secret, really, because in speaking with Vietnamese counterparts last year in Vietnam, they were praising the Canadian community college system in this country and how important it is and how we need to do more exporting of that.

As far as the Canadian Labour Congress is concerned, although I wasn't here for your brief, I read it and I have to say that I certainly support the notion of the apprenticeship training and EI. As you know, sir, there was set up by the minister an in-depth review of EI. He is looking to restructure the whole thing by 2005. We obviously want to make it more in line with what it should be. But in terms of how we do this, I think it's important, and many of the labour unions in this country have the expertise in terms of training. I know that whether it's drywallers or whoever it happens to be, they're there; they have the facility set up.

We need to do more. As you know, in Ontario we did not sign a labour market agreement with the previous Ontario government, for pretty obvious reasons. Where we signed them in the past, we need to be reviewing them, because clearly there are cracks people are falling through. We need to address that, I think, more effectively.

As far as the Cement Association is concerned, I'm a broken record on this. Would you use the word “leverage” in the future? The Federation of Canadian Municipalities, which I was president of, I have to tell you, always talked about leveraging, and they still talk about leveraging.

The fact is it was this government that brought in the national infrastructure program, which laid dormant for ten years when it was first proposed in 1983, and it was this government that set up a department within Industry Canada to deal with infrastructure. We want to not only put people to work on infrastructure programs, but we also need to have—and I agree and that's why we set up a ten-year program with an initial down payment—the provinces and the municipal governments actively involved.

As president of the FCM, I never supported the gas tax solution, because I never believed, and I still don't believe, that unless there's an effective mechanism to get the money to the municipal governments.... If the provinces want us to write a cheque, forget it, it will not work. So I think we need a leveraging, because it's the other orders of government and the private sector.

Just generally on the issue of the CHST, I would like to have it all broken out for accountability of all Canadians, so that post-secondary education in fact will be recognized and social services will be recognized and there's an accounting system.

For some reason, people think that we want the provinces to be accountable. If you're going to give money to somebody, I don't care if it's your 15-year-old son or whether it's the province of whatever, I would suggest you'd like some accountability and I think Canadians want that accountability.

If anybody wants to comment on anything on that, that's fine. With only five minutes, I thought I'd get my comments out. But use the word “leveraging” please.

À (1050)

The Chair: Go ahead. Who would like to start?

Perhaps then we'll just leave that.

Ms. Leung, go ahead with a question, please.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you all for your fine presentations.

I think I want to congratulate Dr. Renaud for your effort in establishing a knowledge council. I think it's obvious that your call for help has been heard, and we support it.

Dr. Brown, I think your adult education training is excellent, and we all know this is so important. I just wonder how you are doing in that. In terms of community education, it has a very important role in the retraining of our adult community.

Mr. Georgetti, from Vancouver, welcome. I think you mentioned your concern for those with foreign training or credentials. You know that our federal government, especially the immigration minister, has taken the initiative and organized an effort trying to bring the provincial governments together, because it's not just the federal government that can do this. I'm just wondering if perhaps your organization should also play an important role.

It's very complicated. We have all the intentions of getting this changed, especially now. Our focus is that we really want to bring more skilled workers to Canada, but this creates a lot of problems. They are educated, but in the meantime their education and training are not applicable here, or they cannot find appropriate jobs.

So I think your group has a very important role to play; you can do that. I want you to think about any comments on this.

In the meantime, Mr. Murphy, I welcome what you said. As a matter of fact, in our caucus we all discuss and very strongly support an early education development program. You suggested that we have a separate CST from the CHST. It's a good suggestion, but in the meantime, I think we're already on the road to give a five-year plan; we've already put $1 billion in. I think we're talking about coming.... It's the same thing. We have to develop a very comprehensive system, and child care facilities are one of the very essences of our system, but I was just wondering about how this is feasible.

I support my friend. We're already talking about the CHST, and perhaps the education component can be separate, because we want accountability from the provincial governments if we intend to provide funding for certain purposes. But we are not sure how the money is being utilized. So you can comment on that.

À (1055)

The Chair: I'm going to start with Mr. Brown on this.

Go ahead, sir.

Mr. Gerald Brown: Thank you very much.

Thank you for your comments. I have a couple of reactions or comments. First of all, from the point of view of the social transfer, we concur absolutely; we need to have that transparency as we move through. We'd be willing and are intending to play a major role in trying to move that one forward.

Community colleges are in fact at the frontier of adult learning and lifelong learning. You asked us how well we are doing in that, so just to give you some statistics, I think 2.5 million students going through our doors today speaks to the success we're having in that area. Many of them, of course, are part-timers, and that's important.

The other fact about our colleges that people don't know about is that the average age of our students is approximately 27 years old. So we have students going into our institutions who are very committed and very motivated, and what they're really looking for is an opportunity to have a job.

We concur with some of the comments my colleague, Mr. Georgetti, made, because we do think that in this country we are facing a significant issue around skill shortages.

The Chair: Dr. Renaud, just a final minute on this.

Mr. Marc Renaud: You very gently offered your help in what we're trying to undertake, and Mr. Wilfert basically asked the same question.

Let me try to give you a very concrete idea of how you could help on the short-term.

If I understand well, you people are all going on vacation sooner or later, because—

Mr. Bryon Wilfert: No, we'll be working at different locations.

Mr. Marc Renaud: That's exactly my point, that you're going back to your own communities.

We are asking every university president to organize a consultation process on each campus. It's very important that it not only be a debate among academics. If you have time to go there and chat with people in the humanities and social sciences and the business school, you could bring a vision that they don't have right now.

This is just a suggestion.

The Chair: Thanks.

Mr. Georgetti, you have a last comment on this.

Mr. Kenneth Georgetti: Thank you.

You raised a very important point on prior learning assessment. In fact, I was in Winnipeg earlier this week speaking to the association of learning. We're very involved in that. I do want to acknowledge that the government did put aside $100 million in the Canadian learning initiative, in which we are very involved. We think it's a very important program.

There was an article in The Toronto Star the other day after the Chinese put their first spacecraft into orbit. One of the leading scientists working on that has emigrated to Canada and works selling cinnamon buns in a subway stop in Metro Toronto.

It's very important that we acknowledge prior learning skills. If we don't do something by the year 2012, the workforce and the population of Canada will not grow without immigration. Immigrants will need to come to a country that recognizes their skills. That is why we have put forward to government a pilot project under the EI fund in the area of health care, where a lot of immigrants have qualifications not yet recognized and are underemployed. I will in fact send a copy to you again to look at. It's a very good pilot project that would cost very little money and have huge upside benefits for the workers and the health care system in Canada.

The Chair: Thank you very much.

Colleagues, because of the vote we lost time. A lot of our next panel is here, so I will still give the four remaining people their five minutes. We'll start the next panel twenty minutes later. Please, colleagues, perhaps you could stay around for the full presentation. I know some of you have planes to catch, but I think this is important.

Please go ahead, Mr. Brison, a short question.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Madam Chair.

In the interests of efficiency, I'll list the questions and you can respond after I've completed them.

Thank you very much to all of you for your presentations.

The first question is to the Cement Association, on infrastructure. I would appreciate your feedback on the idea of federal tax-free or federal tax-advantaged municipal bonds such as exist in the U.S. Effectively, it's an indirect transfer from the federal government to municipal governments to raise money for needed infrastructure. It gives the municipal governments the power and the authority to raise the money they need for the projects. It's an indirect transfer because of the tax advantage of either federal tax-free or tax-advantaged bonds. At the end of the day, through the markets, there will be a bond rating process that will determine the rates of these bonds. It has worked extremely well in the U.S., and has provided a great vehicle through which to raise money for municipal infrastructure. I would appreciate your views on that.

Second, on EI reform, I would appreciate your feedback on the idea of individual EI accounts to address not only unemployment, but the growing issue of underemployment in Canada, and the ability for Canadians who pay into EI for perhaps ten years qualifying them to be able to withdraw funds from their own individual EI accounts. They could either withdraw funds to upgrade their skills or, alternatively, if they don't draw frequently and as they build up money within that account, they could roll it into their RRSPs upon retirement. It would act as both a reward system, if they hadn't drawn frequently, but also a vehicle through which they could upgrade their skills and perhaps go to community colleges, as an example, to upgrade their skills and go from being underemployed to more fully employed.

I want to welcome John Murphy here. John, you made a very good presentation. I have a question on the tax system. There is a real welfare trap for people who are on social assistance who try to go from that to working. Sometimes it's part-time work that they start off doing, but we claw back so much, it is such a huge disincentive for people to take these jobs and to try to upgrade themselves. I would appreciate your view on an earned income tax credit that would allow people to go from social assistance to working even part-time without having it clawed back. In addition, on the clawback of the child tax benefit that results in almost a 90% marginal tax rate for people, for instance, who go from say $30,000 to $35,000 with two kids, they lose their child tax benefit and they are taxed at a higher marginal tax rate. It seems to me we have to spread out that clawback and make it more gradual, because a family with two kids in Toronto, or anywhere in Canada, making $35,000 is not rich.

Those are my questions. Thank you.

Á (1100)

The Chair: I will accord one-minute answers to each of you, because we'll go overtime otherwise.

Please go ahead, sir, from the Cement Association.

Mr. François Lacroix: The idea of a tax-free municipal bond has been floated around and it's probably a very good idea. But it's not our role to determine how financing should be done; I think it's up to members of Parliament. However, our message is clear: we need a reliable and continuous source of funding.

For example, if it's not continuous, if the industry cannot count on the fact that municipalities or highway programs will go on from year to year, then it can't invest in equipment, because equipment is depreciated over a period of years. It can't train staff, because the following year there's no work and the staff goes away and works at something else. So what is basic is to have a reliable and continuous source of funding. Municipal bonds have been floated around as a possibility, and that is a good idea.

[Translation]

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): Thank you very much, Mr. Lacroix.

I now give the floor to Mr. Georgetti.

[English]

Just a one-minute intervention, please.

Mr. Kenneth Georgetti: I only wanted to mention that the fundamental premise of pooling the risk of unemployment is still very near and dear to us. We're not attracted by that individual account argument.

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

Mr. Murphy.

Mr. John Murphy: Thank you.

That whole issue of clawback--and that term is often used with regard to the clawback of the child tax benefit from people on welfare--to us, of course, is taking from the poorest of the poor. Some provinces have stopped it, but a lot of provinces have not stopped it and in fact should. It's a moral disgrace that you take away from the poorest of the poor.

I think we need a number of things in terms of bridging, if you will, to get people from welfare to work, child care being one, of course, but training, and people allowed to keep their pharma cards if they're on welfare for a period of time. It's a gradual moving back into self-sufficiency, and if you want people to do that, then you're going to have to find ways and means, through the tax system as well, to allow them to retain more income in the beginning so as to get themselves settled. If people are scared to death to go back to work because they're going back to a marginal job, going back to a job that's only paying minimum wage that may or may not, obviously, get them to even the poverty line, then why would they take the risk?

I think we have to take the risk that people who want to go back to work will go back to work, but we have to give them the bridges and the incentives to do so.

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

I'll now turn to Ms. Wasylycia-Leis and remind you that you have five minutes, which includes the answers.

Á (1105)

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Mr. Chairperson.

I appreciate everyone's presentations today.

I want to begin with the representatives from the CLC because you started your presentation by talking about the need for a change in approach to the budget. You commend the government for taking a step in that direction in the last budget, but ask for a significant change toward a more people-oriented budget and policy framework.

Given the fact that Paul Martin in the last little while has talked about some of the same old things that have caused the problems we're facing--the focus on debt reduction, cuts in the first 100 days when he becomes Prime Minister, a continuation of tax cuts--I want to know what kind of hope you have about that new direction and what message you can send today to the finance committee about how to change those priorities so that we once and for all address the concerns people have for security and prosperity.

Mr. Kenneth Georgetti: As I said in my report, I think the simple answer is to listen to the people. Public opinion that is now moving up regularly is that the public is disenchanted by their own experience with a tax-cut regime. The people of Ontario expressed that very loudly only a couple of days ago. It's time that the voices of this committee and of advocates like us at this table started to amplify and put forward other arguments that are equally as salient and more people-friendly.

It's our experience--and we've been around a long time--that we don't stop, we just change our angle from time to time, and we'll continue to push as long as there's a need. So that will be our task generally.

Ms. Judy Wasylycia-Leis: To some of the other panellists who have made the same point, especially the Social Sciences and Humanities Research Council, Council of Welfare, the community colleges, shouldn't we be saying loudly and clearly to the government that we've had an imbalance in terms of the surplus, and now it's time, especially given the $7 billion announcement yesterday, to put that surplus money, all of it, into programs and into meeting the needs of Canadians, as opposed to putting all of it into debt reduction and considering more tax cuts that benefit a small number in our society? Don't you have to be saying this loudly and clearly? Don't we all have to be driving this message home? So perhaps the council and the social welfare....

Mr. Marc Renaud: Certainly there's this theory now that societies that succeed both in terms of wealth creation and in terms of well-being are societies that invest in three things. The first is technology, commercialization and everything, and the second is to be talent attracting. Canada has done some of this, but one of the previous speakers alluded to the absolute need to have a very well-educated workforce, because without that, entrepreneurship and foreign investment don't take place.

The third element is tolerance. Canada has accepted a huge number of immigrants. We have been one of the most tolerant societies on the planet. The question now is, will this mood survive? I'm certainly one of those persons who think the government has to provide money to make sure those traits of Canada remain there.

Ms. Judy Wasylycia-Leis: I guess I'm trying to go a little further and say that given the needs that you've identified, after a 90:10 split, in terms of 90% of the surplus going to debt relief and tax cuts versus 10% going to public programs and people's needs, are you ready to say we should reverse that, balance it out by reversing it in this budget year?

Mr. Marc Renaud: That's a good point.

Mr. David Welch (Member, National Council of Welfare): Yes, you're absolutely right. At some point you have to say enough is enough. I think we're realizing that there are only two ways you can do it: you either increase taxes or you won't have the money, or you stop cutting taxes and you put the money and the surplus into where it should go, into the social sector.

We've been saying that at the council, that more money has to be put into these various sectors. Whereas we have a $7-billion surplus, on one hand, we're saying that money, a good chunk of it, should be put into some of the things that have been raised here today, whether that's day care or what have you.

Ms. Judy Wasylycia-Leis: For my very last question, I'll go back to the CLC. Were you surprised yesterday with the Governor of the Bank of Canada's address not making any reference to unemployment or addressing the interest rate issue, given the fact that we've lost so many jobs since the dollar has hit such an all-time high?

Á (1110)

The Vice-Chair (Mr. Nick Discepola): You have five seconds.

Mr. Kenneth Georgetti: Yes, we were surprised very much that the governor omitted those two major economic problems that face us in Canada.

I just want to finish by saying we're very surprised as well at the behaviour of the government, which says we're running so lean and in such tight tolerances, and then it tells Canadians, after it's decided not to give them back through social programs the money they deserve from their taxes.... To post such an obscene surplus while people have suffered so badly in this country is pretty pathetic bookkeeping, quite frankly.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Georgetti, for those comments.

Mr. Cullen, you have five minutes.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chair, and thank you to the presenters.

Welcome back, Mr. Murphy.

I have many questions. I can't get to all of them. I too feel constrained with the five minutes, but that's the world we live in. I'm going to limit my questions to Mr. Renaud and to the CLC.

Mr. Renaud, you've put a challenge to the federal government to assist you in the transformation from a granting council to a knowledge council. How do we do that?

I think you've partially answered that, but secondly, you talk about the need for more funding. In a pragmatic sense, what kinds of funding levels are you looking for?

Mr. Marc Renaud: On the money side, it's pretty simple. When we look at all the growth curves, we're certain that if we want to maintain what we do now in terms of supporting people, we have to double SSHRC's budget over the next five years. SSHRC budget is $200 million; it has to move towards $400 million. That's because of all these new faculties that view the world so differently; it's because the need for human and science knowledge is there. For the numbers, that's where we are at now.

On the question of our transformation, we've been asking the government three things. The first is for money to help us do this transformation. We know where the money is. I just need the signature below on the cheque, basically. It's our money, but it has to be transferred from grants to operations. People are a bit hesitant because of the fluctuation in political leadership.

The second demand is to have an appointed task force, either by the ministers responsible for us or by the Prime Minister. That's not feasible now. We wanted to have a mandate. We wanted to be asked to do this by the government, as opposed to having a self-driven thing. But again, in the current context, it's not feasible.

So our target now is to arrive with a very concrete project in May, when everybody is going to be back here, and then we can move along with an appointed task force.

Mr. Roy Cullen: Thank you.

Mr. Georgetti, I can't agree with your characterization of our tax cuts federally. I don't want to waste a lot of time right now, because we have only five minutes, but I think characterizing them as tax cuts for large corporations and high-income Canadians simply isn't consistent with the facts.

I'd like to get into another question that does concern me a lot, and it has to do with the rapid appreciation of the Canadian dollar vis-à-vis the U.S. dollar.

Mr. Jackson, you and I talked briefly before the meeting. A concern I have--and I certainly hear it from a lot of companies in Canada--is that the pace of the change is causing some huge challenges for them, because basically it's going to their bottom line. We put the question yesterday to David Dodge, the Governor of theBank of Canada. He didn't share the same concern, and he mentioned a few factors.

I wonder, Mr. Jackson, if you could comment with your perspective on the appreciating Canadian dollar and how it's going to affect jobs in Canada.

Mr. Dodge talked about the spread between the U.S. rates and Canadian rates not being generally out of line, given historical trends. There's a slight difference on long rates versus short rates, but he said generally the gap is not that inconsistent with our recent history.

He also said the Bank of Canada monitors capital flows, and there's been no huge influx of capital to take advantage of the gap. He also said that rates in Canada in terms of the developing world are roughly in the middle of the pack. He said there's no evidence to suggest that the rates, given that they're very low, are really affecting the rapid appreciation of the Canadian dollar, or that they will.

I don't know if I paraphrased him completely--it will be in the transcript--but I think that's the gist of what he said, that we shouldn't be overly concerned with the appreciating dollar in the short or medium run.

Á (1115)

The Chair: Thank you.

Mr. Jackson, go ahead.

Mr. Andrew Jackson (Senior Economist, Social and Economic Policy, Canadian Labour Congress): We put out a short paper the other day on the implications of the appreciating dollar, which I'll send to you.

I guess what I find a bit strange right now, if you read the monetary policy report the other day, is that Mr. Dodge is saying our economic growth prospects are pretty good because the American economy is growing strongly. He expects that to continue on our side of the border. He's also saying inflation in Canada is under control; he sees inflation being in the midpoint or the lower part of the range.

It really does beg the question, if the U.S. is growing so strongly, if our inflation is under control and running at about the same level as theirs, why do we have interest rates that are almost two percentage points higher than those in the United States?

I think he's certainly correct to say there are two sides to every exchange rate, and it's not just events on our side of the border that are driving the increase in the dollar. I do think a cut in interest rates would dampen the appreciation. I certainly think it would be appropriate to send a very strong signal that the exchange rate appreciation has gone too far.

I'm getting to the point where I've been around for a long time. I remember back in 1989, when we had a 20% appreciation in the dollar, the same as is taking place now. We lost a lot of jobs in the manufacturing sector before the recession spread to the rest of the economy. We lost 400,000 jobs then. We've lost 100,000 already this year. I'm very concerned that the impacts on the manufacturing sector are just going to be brutal over the next few months.

It has balanced off a bit. It's true that people can import machinery more cheaply; it's not just all one way. But I think the net effect for anybody in Canada exporting to the U.S. is just going to be very brutal during this period of time. I guess we're very concerned about it.

The Chair: Thank you.

Mr. Roy Cullen: Could we get a copy of the paper?

The Chair: If you send it to the clerk, we'll circulate it to all the members of the committee.

That will be the last question for this panel.

I thank you very much for your presentations, the time and effort you've put into your reports, and I appreciate your patience while we were in voting.

I would ask this panel to have their conversations outside the room so our next panel can come up. We will give the twenty minutes that we lost because of the vote to the next panel.

We are suspended.

Á (1117)

Á (1121)

The Chair: In accordance with Standing Order 83(1), the pre-budget consultations will continue this morning with our second excellent panel. We have been blessed today with some wonderful testimony, and we're looking forward to hearing your reports.

From Action Canada for Population and Development, we have Katherine McDonald, executive director, together with Johanne Fillion, director of communications. Bienvenue.

From the Canadian Taxpayers Federation, we have Walter Robinson, federal director, together with Bruce Winchester, research director. Welcome to you both again.

From the Canadian Home Builders' Association, we have Jim Thomson, president, Mary Lawson, incoming president, and Joel Valela, who is the chair of the CHBA executive board and president of the Greater Toronto Home Builders' Association. I think we heard from your association last year in Toronto on those hearings. Welcome to all of you.

From the Conference Board of Canada, I do not see Mr. Barrett, but perhaps he'll be joining us later.

We have with us—and we are very pleased that you are here, and congratulations to you on your recent election or re-election—National Chief Phil Fontaine, together with Manny Jules, chief of staff. Welcome to you both. We're very pleased that you're here.

Now I will go in order of the agenda. Your briefs have been distributed to the full committee already. You could speak to those briefs or to your seven minutes, whatever. The seven minutes is yours to use as you wish.

We will start with Action Canada for Population and Development. Ms. McDonald, please go ahead. Don't worry about the microphones. I'll take care of them for you.

Ms. Katherine McDonald (Executive Director, Action Canada for Population and Development): Okay. Good morning.

I'd like to begin with a short introduction. My name is Katherine McDonald and I'm the executive director of Action Canada for Population and Development. My colleague is Johanne Fillion, the director of communications for ACPD. She will deliver part of our presentation in French and answer any of your questions in French as well.

Let me take a minute to tell you about ACPD. We are a fairly new, non-governmental organization, formed in 1997. We work to ensure the full implementation of the UN Conference on Population and Development that was held in Cairo in 1994.

One hundred and seventy-nine countries, including Canada, agreed in Cairo to fund programs that address the sexual and reproductive health needs of women and their families throughout the world. ACPD works to advance these issues at the international level, and encourages Canada to incorporate sexual and reproductive health and rights into its foreign aid policies and programs.

We are here today to ask you to make strong recommendations to the government concerning its official development assistance, and to take particular care to meet the needs of women, men, and children around the world by funding the sexual and reproductive health programs promised at the Cairo conference.

My colleague, Johanne Fillion, will begin.

[Translation]

Mrs. Johanne Fillion (Director of Communications, Action Canada for Population and Development): Good day.

Mrs. McDonald will talk to you about numbers and percentages and targets and timelines, but before she does, I want to point out why it is so important for Canada to keep its foreign aid promises.

At least 1.2 billion people around the world—mostly women and children—live in absolute poverty on less than $1 a day. Action Canada for Population and Development advocates specifically in the area of sexual and reproductive health internationally and we are all too aware of the implications of Canada not keeping its promises in this area. Lack of access to comprehensive reproductive health services means that millions of men and women are unable to make key decisions about their lives, such as whether to have children, when, and how often to do so. Being able to make such decisions is essential to poverty eradication efforts. It can have a substantial impact on family income and, in some cases, it can make the difference between a household being above the poverty line or being below it.

Reproductive illnesses and death—due to inadequate access to family planning, care in pregnancy and child birth and lack of access to the information, education and services needed to prevent HIV/AIDS and other sexually transmitted infections—affect women and men in their most productive years, undermining the economic future of nations and their families.

Many young people around the world are simply not receiving the information, skills and services they need to protect their sexual and reproductive health. It is very clear: comprehensive information provided at the appropriate age contributes to delay sexual activity by young people and encourages them to opt for responsible behaviours.

I will now give the floor to my colleague Katherine McDonald.

Á (1125)

[English]

Ms. Katherine McDonald: We know that industrialized nations, including Canada, throughout the world are not doing enough. But before I begin my critique of Canada's foreign aid, I'd like to point out that over the last year or so, Canada has made important progress with respect to the money it allocates to foreign aid.

In the last federal budget, Canada promised to increase aid by 8% for each of the coming years in the foreseeable future. This increase is projected to double Canada's aid level by 2010. This, of course, is a welcome development. We hope that after a decade of substantial cuts in Canadian development assistance that this is the beginning of a recovery by Canada in its foreign aid spending.

However, we must put these recent increases in context. We cannot lose sight of the fact that Canada still lags behind many other donor countries. Canada ranks a very mediocre twelfth place among 21 donor countries with respect to its level of development assistance as a percentage of its gross national income.

In your packages there's a map that quite clearly shows where Canada ranks in terms of its aid spending within the OECD.

The Canadian Council for International Cooperation estimates that Canadian aid will have to grow by 10% to 13% over the next 13 years if Canada is to meet its millennium declaration commitments that it made in 2000. In other words, the 8% annual increase and promise by Canada is simply not enough.

We're greatly encouraged by recent statements of Mr. Paul Martin, our soon-to-be Prime Minister. Mr. Martin said he believes in the need for a substantial flow of foreign aid to the world's poorest countries. He also said he believes the Canadian government needs to devote more resources to foreign affairs, including a deepening of our commitment to foreign aid.

This is very encouraging news. If Canada, along with other donor nations, was to honour its commitment to allocate 0.7% of its gross national income to ODA, this would yield $200 billion each year by 2005.

I'd like to quote from Stephen Lewis:

...by anycalculation, we would have enough money to staunch the fatallacerations of AIDS, to provide free universal primary education,and to deal with nutrition, potable water and sanitation. The resultwould be the virtual eradication of poverty by 2015; the MilleniumDevelopment Goals would be exceeded.

ACPD's message is simple and it's consistent with our past recommendations to this committee. We ask that the Canadian government keep its promises--keep its promise to do its fair share to meet the millennium development goals and keep its pledge to allocate 0.7% of GNI to ODA.

For Canada to do its share in achieving the MDG alone, this will require an increase in aid by about 10% to 13% a year from the current commitment to increase aid by only 8% per year. In addition, Canada, like its European counterparts, must set out a defined timetable over the next several years for meeting the UN commitment to allocate 0.7% of GNI to ODA. Canada should also encourage other donor countries that have yet to do so to do the same.

Finally, in addition to increasing the aid that is given, Canada must ensure the aid that is given is of the highest quality. Canada must look closely at its administrative costs, its tying of aid, how aid is distributed, and ensure that the money that is allocated is spent wisely and will do the most good. Importantly, poverty eradication must be the guiding framework for our aid.

Canada's recent increases in foreign aid and spending are a good beginning. However, it is clear, as Mr. Paul Martin recently pointed out, that we're not doing nearly well enough to fight poverty. “Now is the time”, to quote Paul Martin, “to deepen our commitment to aid and provide substantial flows of aid to the world's poorest countries.” In short, our message is simple: we ask Canada to keep its foreign aid promises.

Thank you.

Á (1130)

The Chair: Thank you.

Now we'll go to Mr. Robinson, please.

Mr. Walter Robinson (Federal Director, Canadian Taxpayers' Federation): Thank you, Madam Chair. It's once again a pleasure to appear before you this morning to forward our 2004 budget priorities on behalf of our 61,000-member Canadian Taxpayers' Federation.

I'm joined by our research director, Mr. Bruce Winchester, who will assist me during our discussion and question period.

[Translation]

As usual, my presentation will be in English only. However, afterwards, I will be able to answer your questions in your preferred official language.

[English]

The CTF was founded in 1990 and has grown to become Canada's largest and most effective taxpayer organization. We are non-partisan--although definitely not non-political--not for profit, and do not receive financial assistance from any level of government. During their employ with the CTF, all directors, staff, and board members are forbidden from contributing to political parties or holding political party memberships.

When I appeared before you last November in Montreal, the economic environment was somewhat uncertain. We cautioned at that time that the government's throne speech commitments could spell the end of fiscal discipline and spoil many of our hard-won battles. While your summary report and recommendations to the government struck a balanced tone--we never agree with all of them, but you try to reflect the plethora of opinions in your consultations--sadly, fiscal caution was thrown to the wind in the last federal budget.

In the last four years alone, program spending has increased by 34%. If we examine the period from the time the budget was balanced in 1997-98 through to the end of the 2004-05 fiscal year, overall government expenditures will have increased by 46%. This is twice the rate of inflation and population growth over that same period and it also outstrips GDP growth in the last seven years. Simply put, the current spending track on which the government is headed is unsustainable without major tax increases in the near future or severe spending cut decisions.

Of course, it won't surprise you that we are dead set against the imposition of new taxes. Therefore, I urge you, the members of this committee, whose influential work is appreciated by our organization--and I commend you for your seven- and eight-hour sessions you seem to be running day in and day out, plus your House duties--to remind the present finance minister, and likely a new minister early next year, in your summary report next month that the government's fiscal strategy must continue to be built on three pillars: legislated debt reduction; continued tax relief buttressed by fair and competitive taxation; and limited and controlled growth of spending by constant redefinition of the role of government to ensure program initiatives are warranted, meet the needs of Canadians, and achieve positive and measurable public policy outcomes.

Yesterday Minister Manley announced a record sixth consecutive balanced budget and another $7 billion surplus--a surplus of overtaxation, mind you--that will be used to reduce our national debt. As welcome as this news is, allow me to point out that the approach the government has used to achieve fiscal progress consists primarily of overtaxing workers and employers through excessive employment insurance premiums to the tune of some $45 billion and counting. As for cutting non-priority programs and reallocating expenditures within departmental budget envelopes, save for Mr. Manley's $1 billion reallocation exercise over the past year, such discipline, in our opinion, has been non-existent.

And while the CTF commends the government for embarking upon a five-year tax reduction plan in the year 2000, we continue to urge government members to avoid the falsehood birthed by Paul Martin and now nurtured by Minister Manley with respect to the magnitude of the so-called $100 billion tax cut plan.

To start, almost $21 billion of foregone tax revenue was due to cancelling bracket creep. It was not a tax cut for Canadians; it was future revenue the government had foregone. Another $28 billion is a result of increases in the Canada Pension Plan, and a further $6 billion is due to increases in the Canada child tax benefit, which should be rightly defined as an expenditure, not a tax relief measure.

You do the math--and I'm from Ontario, so I count on the big toe and carry the one. The government's five-year personal, business, and EI tax reduction plan is $47 billion. Is this welcome? Absolutely. Is it $100 billion of tax relief? Absolutely not. More to the point, your tax relief schedule--and I speak to the government members on the committee at this point in time--ends next year, in 2004. We believe it is time to embark upon a new path. Indeed, the incoming Prime Minister has signalled his intention to look at new tax relief measures.

Our analysis reveals that private sector bank economists are predicting modest growth in the years ahead. And our enviable position of carrying a budget and trade surplus--we admit, the only G-7 nation to do so this year--yields an evident capacity for further tax relief. As well, figures released from the OECD yesterday reveal that Canadians still languish in the top five in personal income tax burden and still rank number one in the G-7 on this measure. This makes tax relief, in our opinion, a necessity. Statistics Canada reports that our single largest household expenditure, 21 cents out of each dollar, goes to pay personal income taxes--more than we pay on transportation, shelter, or food.

Re-indexing the tax system to inflation, thereby eliminating bracket creep in 2000, represented the ideal marriage of good fiscal and great social policy.

Á (1135)

It's time for the federal government to once again pursue these two mutually reinforcing policy objectives by adopting our plan to raise the basic personal exemption to $15,000 over the next five years. It can and should be done. Doing so would completely remove 2.1 million low-income and working-poor Canadians from the tax rolls entirely.

For each $1,000 hike in the basic personal exemption, which should also be named for what it really is, a basic standard of living credit, the potential impact on the treasury is admittedly $3.14 billion. However, by redesigning GST refundable credits and Canada child tax benefit provisions to acknowledge that working families now have more money in their pockets and on their paycheques on a daily and weekly basis, this impact can be reduced—not to mention the economic activity that will result due to increased consumer spending, which will positively impact corporate income tax and GST revenue collections for the government. Tax relief to low-income individuals is the fastest way to plow it back into the economy.

This proposal forms the backbone of our submission to you today. The major expenditure reduction we propose is the elimination of corporate welfare and business subsidy programs, which account for $4 billion in annual expenditures.

The folly of this 19th century approach to industrial policy and national economic competitiveness can be found in the government's flagship program, Technology Partnerships Canada, TPC for short. Access to information documents reveal that in the 25-year period from 1996 through to 2020, TPC officials plan to loan out $6.4 billion to some of Canada's most profitable and successful companies—small companies; you may have never heard of them: IBM, Bombardier, Pratt and Whitney. However, at best the Crown intends to recoup, in best estimates, less than one-third of this money, $2.14 billion. It is unconscionable for a government to plan to lose $4 billion over two decades, $200 million a year.

Since my time is running short, other recommendations in our submission include a legislated debt reduction schedule, an end to $750 million in EI and CPP over-contributions, and limiting program spending growth to inflation plus population. And hopefully we can discuss our municipal roadway trust that would put $2.2 billion of gas tax revenues back into Canada's cities where they are needed for infrastructure.

Á (1140)

[Translation]

Thank you for your attention. I am looking forward to answering your questions and to having a discussion with you.

The Chair: Thank you very much.

[English]

Canadian Home Builders' Association, Mr. Thomson, please go ahead, sir.

Mr. Jim Thomson (President, Canadian Home Builders' Association): Madam Chair, thank you very much for the opportunity to present to you today. It's a pleasure to be here with my colleagues, Joe Valela and Mary Lawson, both members of our national executive.

The housing industry is currently experiencing one of the best periods in many years. Low interest rates, strong employment growth, and rising disposable incomes have driven housing activity to its highest level in many years. With the turmoil in the stock market over the past few years, home ownership has become even more important to Canadians. We're enjoying the benefits of low interest rates, high employment, and high consumer confidence, and we're having record levels of starts.

We're experiencing strong activity, but that doesn't necessarily translate into a strong industry. In fact, we're a troubled industry and we're a very vulnerable industry. We have short-term and long-term concerns. Immediately, we're concerned about the rising dollar and its impact on jobs and on consumer confidence. In the long term, we're concerned about housing affordability.

Low interest rates and high activity, high employment, have masked a number of our underlying concerns. There have been myriad costs, levies, fees, taxes by all levels of government imposed on housing. If and when interest rates go up, there's going to be a rude awakening for Canadians. The fact that interest rates are so low is making housing very affordable.

Some of the concerns we have are liability issues. More and more liability is being downloaded onto the backs of builders. Insurance, as we all know, is a big issue in Canada right now. Our premiums are going up ten and twelvefold. There are a number of exclusions now in our insurance policies and a number of warranties being placed on builders in the event there is a claim.

We have a number of concerns with GST. When the GST was introduced in 1991, there was a commitment from the federal government that it would be reviewed every two years and indexed. This hasn't happened. We're really pushing very hard that the government live up to the commitment it made.

We also propose that everybody in the industry be forced to register for GST. Right now there's an exemption for anybody that claims they do less than $30,000 a year of work. We're finding this is a huge loophole that's enticing and luring people into the underground economy. It's a threat to our legitimate builders.

We need a redefinition of what “substantial renovation” is. In order to qualify for substantial renovation, it virtually means tearing down the house and restarting right from scratch.

We have a number of concerns with CCRA, primarily with their compulsory contract payment reporting system. They're forcing legitimate builders into a bureaucracy of paperwork in an attempt to get at the underground economy. Anybody in Canada knows that if you're going to operate in the underground economy, the first rule of thumb is that you don't have a paper trail. So we're very frustrated with this initiative. It hasn't proven to be successful and it hasn't achieved the goals it set out to achieve.

There's a lot of talk about infrastructure. It's very important to us that municipalities have predictable and sustainable sources of financing as well as accountability with respect to infrastructure funding. We take our hats off to the federal government for its fiscal prudence in getting its financial house in order. However, the time has come that all three levels of government get back into infrastructure funding. We're very concerned about the definition of what infrastructure spending goes to. Infrastructure funding to us is issues, and maybe not so sexy issues, but things like sewer, water, transportation—not art galleries, not health issues, not social housing. It's the basics required to accommodate growth. When we have growth in our communities, everybody in the community benefits. The burden of growth should not be placed just on the backs of new homebuyers.

We have an issue with skilled labour shortages in Canada. I'm sure it's not only us. I've listened to other presenters here today. There has to be a national cohesive strategy developed to deal with this issue, so that workers can be trained with skills that are recognized in one area of the country as well as right across the country.

Á (1145)

We've given you our pre-budget submission. This is just a brief overview of some of the issues. We'd be happy to answer any questions you may have.

The Chair: Thank you very much.

Now I'll go to the Assembly of First Nations, National Chief, Mr. Fontaine.

Chief Phil Fontaine (National Chief, Assembly of First Nations): Thank you Madam Chair. I'm joined here by Manny Jules, who is chief of staff for the national chief's office.

I want to thank the committee for giving us an opportunity to appear before you here today. I might point out that this is our fifth appearance before this committee. Though faces have changed over the years, nonetheless we're very pleased that we can be here again.

I want to make two points before I proceed with my submission. One, the Assembly of First Nations is the legitimate political organization for first nation governance. We don't represent a special interest group. We're unique in the country. We believe very strongly, as you know, that we are a distinct order of government. With regard to our appearance here today, while we're part of all the various and diverse interest groups, we feel the relationship we need to have has to be different and one that currently makes our presence here possible. Section 35 of Canada's Constitution recognizes our inherent aboriginal and treaty rights. Our treaties speak to the government, to government relationship with the Canadian state. We are not third parties; we are first nations.

I say that at the outset because the submission I'm making today is not simply about how we allocate federal dollars. It is about setting a new agenda that will move all of us forward. It is about first nations rebuilding their communities and their nations and taking their rightful place in the Canadian federation. It is about strengthening first nations citizens and first nations economies in a way that benefits all Canadians. It is a choice between the status quo, which is not working, and a new vision for a new relationship.

There are compelling reasons to move forward in a new relationship. As elected members of Parliament, you have a duty to uphold the fiduciary duty, the trust-like relationship between first nations and the Crown, but beyond that, demographics are a compelling reason for change. Canada is getting older, but the first nations population is young and dynamic. More than half of our people are under the age of 25. They are the workforce of tomorrow. They are the driving force of Canada's economy. During the next 20 years, 1 in 10 new teenagers will be first nations citizens. We all want to ensure that our young people have the same access and opportunities as the Canadian teenager. Our strategy is about reducing poverty and building hope.

I want to begin with our vision. We have some of the same expectations as all Canadians. We believe government should be accountable, encourage economic growth, and provide high-quality, accessible, and cost-effective services. This is directly related to implementing the treaties. This is directly related to recognizing aboriginal title.

Aboriginal and treaty rights and aboriginal title must be defined in the currency of jurisdiction through an adequate land base and access to revenues and resources. There must be a clear division of powers between first nations, provincial, and federal governments. That is our vision.

Part of that vision means taking a hard look at current realities. These are realities facing our people in reserves, in towns, and urban centres. We must ensure our people have clean drinking water, safe roads, and sewer systems. We need to improve the quality of education for our people, raise housing standards, and make social services and health care more effective and efficient.

It is unacceptable to maintain third world conditions in the backyard of a G-8 country. First nation poverty is the reason that Canada has fallen from one to three, now to number eight, referring to the human development index of the United Nations.

We need to challenge ourselves to eradicate social and economic inequities. We want all citizens to have confidence in first nations governments and institutions. We see a country where all governments are accountable for the services they provide.

What we want and where we are, however, are far apart. The current system of government is failing our people. It exhibits all the characteristics of a centrally planned system that is out of control. The costs of doing business on our lands are too high. It discourages investment when we need it most. There's no quality control over our services. There's no accountability for poor services.

Á (1150)

The Auditor General has stated that the focus is on where the money goes, when we should be looking at whether or not it's making a difference. Over the last 10 years, the Auditor General has completed reports on first nations housing, education, infrastructure, funding arrangements, reporting requirements, social services, land claims, and economic institutions. The conclusions are always the same: we are receiving substandard services; program and service objectives are not being achieved; and no one can be held to account.

It is too easy and too lazy to tack the blame onto first nation governments. Again, Canada's Auditor General stated that first nations were meeting their reporting requirements, as many as three reports a week, to account for every penny of funding we receive from government. But those reports only deal with how money is spent; they don't answer the question, are people's lives improving?

In the last year, this country has come together and we have supported one another during crisis after crisis. It's been a tough year, with SARS, mad cow, forest fires, the blackout, Hurricane Juan, and now floods on the west coast. The federal government has been there for Canadians during their time of need.

The first nation situation is also a crisis—a national crisis. Our crisis is ongoing and well documented. It is a result of government policies, and the costs are not one-time only. Canada has to decide if it wants to continue to provide crisis relief forever or if it wants to fix the foundation and build a new reality.

I was just in northern Ontario. I went to this beautiful school in Thunder Bay, named after Dennis Cromarty, a former leader in northern Ontario. They have been in operation now for four years. There are 250 first nation students in this high school, taught by a blended teaching staff. The school is going to be graduating its fourth class this year and has won an award two years in a row for the best maintained, best-kept school in Thunder Bay. This is after it met with stiff resistance against being established—that real estate values were going to go down, and all of the usual arguments why there shouldn't be this school in the middle of this urban area. But that's only one side of the picture of this beautiful school, with high energy, good energy.

Here's the other side. We met with the principal of that school. She told us very clearly that she's very concerned about education in our communities. I asked her what the problem was. She said they had tested their grade 10 students—and this is in the northern part of Ontario—and that only 2% of them met provincial standards. This represents an incredible challenge. We are doing a terrible disservice to our young people, and in turn a disservice to this country. We are shortchanging our young people and our future.

This is evident in the horrific suicide rates in our communities. Suicide is the ultimate act of despair and desperation. In the NAN territory in northern Ontario, we have seen 250 suicides in the last few years, mostly young people and mostly young men. In my own community, Sagkeeng, an hour and a half from Winnipeg, we've had eight suicides in the last year alone, and seven of those were young men. I give you these statistics with full respect for the fact that behind each number there's a grieving family and a community in pain. Suicide in my community is a new experience. I never ever heard of suicides when I was growing up, but it's become a common experience for my community and for many, many first nation communities in the country.

These are the issues we have to deal with as first nation communities. This is our crisis. It's also our collective challenge, and every challenge represents an opportunity. So I say to you, my friends, let's seize that opportunity.

We believe we have a strategy to deal with these many challenges. We call it the “Getting Results” agenda, and it's about raising our standards of life. Our quality of life is in Canada's interest; it is not only the right thing to do, but it is also the advantageous thing to do.

Á (1155)

As you know, we have presented an ambitious plan for getting results to the federal government. We have requested an additional $1.7 billion in funding on behalf of first nations. These are not resources that we are asking you to provide to the Assembly of First Nations; this is a plan that involves first nation communities, individuals, regional organizations, and treaty groups working with government to create real change.

Thank you.

The Chair: Thank you very much.

We'll now go to questions. I propose to start with Mr. Solberg, for up to seven minutes. Thank you.

Mr. Monte Solberg: Thank you very much, Madam Chair.

I appreciate the presentations today. There were some provocative things said.

There is a bit of a common theme or at least one point that I think all the presenters hold in common, which is a desire for good outcomes when it comes to government spending. Chief Fontaine just touched on this, Walter Robinson also mentioned it, and I think it applies to all the presenters. If the government provides funding, then rather obviously we want to get the outcomes. It's not good enough just to say we want an increase in spending; we have to see how it works out on the other end.

I'm asking this just in general, and I would invite anyone to speak to it, but let me start with Mr. Fontaine, because he has talked about getting results. I think we are morally obliged to get results on Indian reserves in Canada today. I agree with him that it's a disgrace, the sort of third world situation we have on too many Indian reserves in the country today.

I'm unclear as to where you're arguing the problem is. Are you saying the problem is in not enough funding? Are you saying the problem is that the federal government--you touched on this--is not monitoring the outcomes well enough? That, in and of itself, of course, doesn't create the problem. Why are we not seeing suicide rates go down and employment go up, and all these other social pathologies fixed after all these years? I don't understand where the bulk of the problems lie.

Chief Phil Fontaine: Thank you.

This is, as you well appreciate, a very complex matter. There's no easy answer. There isn't one answer, but clearly what we need to do is invest in our young people.

I'll use this one statistic to speak to this point. In 1969 we had about--and I may be overstating this--100 first nations students in post-secondary institutions. I'm talking about universities. That figure has jumped to approximately 30,000 now. That's a significant achievement. That's an achievement that belongs to our community, but one that we share with the entire country. There has been a significant return on investment for every penny spent in education.

The real difference that occurred, the positive change that occurred, was when first nations were given an opportunity to take effective control of education at the community level. This occurred in 1972. Up until that point, government delivered the service. Government decided how education was going to be delivered, what was going to be taught our kids, and who were going to teach our kids. There was a policy introduced then that first nations would provide that service more directly.

So the difference we've seen is because first nations were given an opportunity to take effective control over this program, to deliver the service themselves, to design to the best of our ability the programs and services that were going to be delivered to our community, keeping in mind that we still have to deal with government in this case and we still have to contend with the imposition of government.

So I'm saying to you here that the real difference that occurred, and the difference we want to make, and the only way we can achieve the kind of success that we've been able to demonstrate with education is to have first nations themselves take greater control, and to take control now. To be able to control our own institutions, to effect the kind of change that needs to take place, first nations have to be the driving force. It can't be government. It can't be government imposing its will on first nations.

In terms of the issue of accountability and transparency, we have no problem with that. We embrace those principles. Our issue is how that is expressed. It has to be first nations directing this process, not what we've been offered up to now. It just doesn't work.

Â (1200)

Mr. Monte Solberg: We don't have too much time, so I just want to follow up on that. If others want to jump in, that's fine.

You've given me an example of where the outcomes have been good, but on balance, I don't know if we can argue that the outcomes have been good. You've mentioned suicide rates going up, and we've all seen on television the examples of terrible drug use or substance abuse. Davis Inlet comes to mind, and that kind of thing.

Why, given the amount of money going into Indian Affairs and Northern Development, do we see those problems persist? It is $6 billion, at least. If there's accountability, who do we hold to account for the problems that are occurring? Are you suggesting it is the federal government, or is it individual band councils? Where does the problem lie? I'm trying to get an understanding of that.

Chief Phil Fontaine: When I made reference to taking effective control, the point I was trying to make, but maybe not as clearly as I should, was to talk about jurisdictional control.

The situation we now have is that what we deliver to our communities, in terms of programs and services, are government-designed, government-controlled programs and services. If we're going to be held accountable and expected to be transparent in the business, we have to be able to take effective control in the same way that governments now are expected to uphold their responsibilities to their citizen in an accountable, transparent, and responsible way. We're no different. This is what we are seeking.

The Chair: Do you want to ask one more short question?

Mr. Monte Solberg: I think Walter wants to weigh in.

The Chair: Mr. Robinson.

Mr. Walter Robinson: Through you, Madam Chair, to Mr. Solberg, it's an important issue, and I'd like to pick up on Chief Fontaine's point.

Our Centre for Aboriginal Policy Change points out, through access to information to Indian Affairs and Northern Development, that almost one-third of bands across the country are in co-management or third-party receiver status. I could point out, though, that one-third of hospitals in the province of Ontario are in a deficit situation as well, so I don't think you can heap all of the blame on band councils or government. I agree it is a complex issue.

But it does come to managing for results. What we have to do is to ensure that as citizens and voters we hold you accountable at an election. We will have an election in six or seven months, and every party is going to come out with a menu of spending options.

Through you, Madam Chair, to Mr. Solberg, I would contend that in the last election there was this much difference between the Canadian Alliance and NDP policies on health care—more money, full stop. Where does that money go? What does it buy? That's what this committee needs to recommend in its report this year and its program review, or its line-by-line review of government expenditures. If we are spending money in areas that are getting better results—which is a good, positive policy outcome—do more of that if it makes sense.

To get back to the aboriginal policy file and your question to Chief Fontaine, we had a government that wanted to put broadband infrastructure on every reserve. I think that's a great idea, but we might want to start with proper water and sanitation and a variety of other things in those communities that need them first and foremost, and walk before we can run. That was just a misguided government initiative.

[Translation]

The Chair: It is now your turn, Mr. Paquette.

Mr. Pierre Paquette: Thank you, Madam Chair. Thank you to all the presenters. My first question is for Mr. Robinson.

The mandate of your association is to ensure that our tax dollars are being well spent. I do not agree with all of your recommendations. However, in order to have this debate on the proper use of public funds, should we not first of all have a better idea of the fiscal situation of the government?

Yesterday, Mr. Manley announced a $7 billion surplus, while only a few months ago, he forecasted $3 billion. Over the last several years, ministers of Finance, whether they were Mr. Martin or Mr. Manley, did not produce better forecasts. For example, in 2000-01, the degree of error was 328 percent; it was 533 percent in 2001-02 and 230 percent in 2002-03. I cannot believe that the department of Finance is unable to provide us a better picture of the state of our public finances.

I therefore would like to know if you would agree that we should in our report recommend something be done to make the budget more truthful and transparent. Only then will the people of Canada and Quebec be able to make proper choices.

Â (1205)

Mr. Walter Robinson: I can understand why this is so difficult for the federal government. During the mandate of Mr. Mulroney, Mr. Mazankowski or Mr. Wilson forecasted revenues of 100 billion dollars but, at the end of the year, only 95 or 82 billion had been collected.

Now we have the reverse problem. Mr. Martin or Mr. Manley anticipate 3 percent growth in the economy and by the end of the year it turns out to have been 7 percent. The impact on revenues is incredible. I believe the government is playing around somewhat with the figures. It is not a transparent situation or an example for other industrial countries.

[English]

We used to joke that the Brian Mulroney government was in the ninth year of its three-year balanced budget plan, in terms of how it did its budgeting.

[Translation]

I understand the problem well and I agree with you that this committee should recommend greater transparency. We are now in the 21st century and it is clear that we have a consensus among economists and major banks as to the economic prospects for this year and next. They are on page 5 of our report. I did not provide the forecast of the National Bank, the sixth largest, because my accounts and mortgage are with them. The government plays around with the figures in order to reduce the growth prospects by 50% and we have a problem at the end of every year.

Mr. Pierre Paquette: Mrs. Fillion, I am looking at your two recommendations: that the government keep its promise to do its fair share to meet the millennium development goals and keep its pledge to allocate 0.7% of GDP to official development aid.

Yesterday or the day before, we heard a presentation from the Canadian Council for International Cooperation who suggests increasing Canadian foreign aid yearly by 12 to 15% until 2015 which would lead us gradually to the 0.7 % of GDP goal. I wonder if you support this proposal. I know that your second recommendation is not going to be implemented tomorrow. It would not be very realistic to hope meeting this objective of 0.7 %, especially with the federal government now in place and the next one coming in. So we need to set a timeline to reach this goal.

The Council also had two other priorities, the targeting of key sectors for poverty eradication, one aspect of which you discussed, and strengthening partnerships between civil society in Canada and its counterparts abroad. I wonder if your organization supports these recommendations.

Mrs. Johanne Fillion: I will try to answer all your questions in the short time I have because they are very relevant.

First of all, following up on the question you just asked my colleague, let me say that we are fully in support of greater budget transparency. In the area of foreign aid, quality and precision are important, as we state in our report. We did not specifically mention implementing a mechanism but we would welcome such a recommendation on top of the two we present this morning.

As for yesterday's presentation of the Canadian Council for International Cooperation, CCCI, Action Canada for Population and Development is a member of the Canadian Council for International Cooperation. These figures are very recent. When we wrote our report, we based it on data for 2002. They did their fiscal calculations based on the present economic performance of Canada. Obviously, since we are not doing our fair share, the catch-up required increases over time. Therefore, we not only need a percentage of 10% to 13%, but of 12% to 15%. Yes, we fully support the recommendation of CCCI. Our own figures need to be adjusted because CCCI's percentages are based on current figures.

In the area of North-South cooperation, we discuss the issue of tied aid as practiced by Canadian organizations. Goods and services provided to recipient countries have to be procured in Canada. This does not work very well. It is very cumbersome and it is very difficulty to evaluate real needs in those countries with our northern mindset. It is very difficult to provide cost-effective services when they need to be delivered thousands of kilometers away.

We also must respect the basic rights of the people who need our assistance. As Mr. Fontaine mentioned when he talked about the education of his people, the education in a community needs to be directed by the community itself.

We often forget South-South linkages. There have been many conferences organized by CIDA in cooperation with the Canadian Council for International Cooperation in order to evaluate this aspect of cooperation that we often neglect and which is a way around the heavy-handedness of us Northerners. This does not quite answer your question but it is a matter of trusting people to establish together systems for transparency and equity in a way that is respectful of human rights.

Â (1210)

Mr. Pierre Paquette: Thank you. Do I have some time left?

[English]

The Chair: No, you're over your time.

[Translation]

Mr. Pierre Paquette: I believe that time is shorter for me than for the others.

[English]

The Chair: Yes, it's eight minutes and ten seconds.

Okay, thank you.

Mr. Wilfert, go ahead.

Mr. Bryon Wilfert: Thank you, Madam Chairman, and I thank everyone for coming today.

Obviously, engaged in public policy as members of Parliament are, it's a very difficult thing to do what people often perceive as doing the right thing. And obviously there are a lot of very challenging issues that are before us today.

I wanted, first of all, to point out to Chief Fontaine that when I was president of the Federation for Canadian Municipalities, we established the Centre for Municipal-Aboriginal Relations in Ottawa, which since then has gone under, unfortunately. It was really looking at best practices. It was also about promoting understanding and sharing of what is the best that both aboriginals and municipal governments could do in this country. And for funding and other reasons it went under. I'm taking that as one simple example of something that I really believe we need to go back to. I think it's important. I point that out to you. You've raised many issues, which I don't have time to go through. But to me, many of the difficulties that we've seen with urban communities and aboriginal peoples were in many cases dealt with in this centre in terms of sharing. It didn't solve everything, but I thought it was a great idea and I was very proud to be part of it. I was sorry it went under. Maybe you have a comment on it later. I'd certainly appreciate that.

Mr. Robinson, I agree with much of what you say. I want to really question you about the $15,000 issue. But I wanted to point out to you, on the OECD question, you talked about the revenue statistics review. They did point out that last year one of the steepest drops in taxation was in Canada. They did point out that it fell, in terms of the GDP, 1.6 points, so from 35.l to 33.5.

Lower taxes, in my view, encourage investment and promote employment. Yes, our taxes are higher than taxes are in the United States, but then there are also things in the United States that I don't think we want here, such as the fact that 44 million Americans don't have health coverage. I think that's something that has to be looked at.

As far as reallocation is concerned, this minister reallocated, did the exercise, which I was part of, of that $1 billion. Can we do more? Absolutely. Should we do more? There's no question about it.

Debt reduction. I look at the $7 billion, and a lot of it has to do with the fact that because of the nature of accrual accounting this year there were certain things that came on that we normally wouldn't see. It's not going to be $7 billion next year, trust me. But the fact is that every time we put money on the national debt, we save at least $3 billion, probably close to $4 billion, in interest. That can help many of the social issues we're hearing here. We need to continue to do that aggressively, and the next prime minister has certainly signalled that.

Our tax burden is certainly less than that of many G-7 states, other than Japan. It can do more. I think we've been more aggressive in the corporate area than we have maybe in the personal area. I wanted to go back to your $15,000. I personally think that's a very important initiative, which we've talked about, although we haven't done much about it.

I am obviously concerned about the $3.14 billion issue. I would like to get more information--and I'm sure you may have sat down with Finance officials--as to how we would model that out. Clearly it's important if we could take two million low-income, working poor Canadians off the tax roll. If you can provide that information, I would appreciate that.

I'll now get my other comment in and get any reaction. On the construction, again, as a former FCM president, I agree with you on the basic infrastructure: water, sewer, bridges. But we need to leverage that money, and we need to do that with all orders of government and the private sector involved. We seem to forget that. It was this government that brought in the national infrastructure program and continues to promote it. It has a department within Industry Canada to do that. It's good for employment; it's also good for Canadians.

I'm tired of hearing my colleagues at city council talk about tax freezes. I'd like to have a tax freeze too--freeze taxes and get somebody else to pay for everything else I want. So we have to push them to say, let's also be responsible.

Could you also comment on the high burden of the debt people have in terms of...? You talk about interest rates being low, but we also have an issue with regard to housing and taxation.

Â (1215)

The Acting Chair (Shawn Murphy (Hillsborough, Lib.)): You're almost out of time, Bryon.

Mr. Bryon Wilfert: You see, you get a new chairman in here and he's trying to exercise his authority.

Anyway, fire away.

Mr. Jim Thomson: Through the chair, we want to commend the federal government for their initiatives in starting to fund infrastructure again. However, we need long-term, predictable, and sustainable levels. As much as we're happy to see the federal government get into it, it's not nearly to the extent that we think needs to be done. It should be going back to where all three levels of government contribute.

On a theme that was talked about a lot today, this whole notion of accountability and transparency on where the money goes, too often we're seeing the money being used by municipal councils to create a legacy for themselves, whether it's a statue in front of a city hall, a new hockey rink, or a curling rink. That's not what infrastructure funding is about.

My colleague, Joe Valela, can give you some specific circumstances with respect to land in Toronto and the pressures that are mounting there.

Mr. Joe Valela (Chair of CHBA Executive Board and President of the Greater Toronto Home Builders' Association, Canadian Home Builders' Association): Yes, there are more and more boundaries going up around where we can actually go and do development. That's constraining the market. Land prices are going up and up. The only way we can get around this is to invest in the infrastructure. We have to get back to that investment that's been talked about around here--it seems to be the theme--and it has to go to those targeted areas. We have to hit the areas where it's really needed, which is in the roads, in transportation, transit; those are the key areas. Those areas have not been invested in for a long time, and we need to get back to that. That's the key, and I really believe if we invest in the infrastructure, that will keep homes more affordable.

Mr. Jim Thomson: On your point about the debt load, certainly that's a concern, and it's one of our underlying concerns about the future. As I said earlier, right now we're experiencing very high activity levels. That does not necessarily translate, though, into a strong foundation for our industry. There are a number of concerns coming up, that being one of them. Young people are not buying homes as young as they used to be; they're waiting longer. They're coming out of school with a higher debt load, whether it's for their education or whatever else. These are some of the concerns we have.

The amount of liability that's been pushed onto the backs of home builders is going to prove, in the future, an issue that's going to constrict supply. Municipalities are taking measures to restrict their liability. It's understandable, but we're becoming a repository for liability in this country, and the business risk and return are not marrying up. So there are some potential problems for the future.

Mary, would you like to touch on the shortage as far as skilled labour is concerned? That's a huge issue.

Â (1220)

The Chair: A very quick wrap then.

Ms. Mary Lawson (Incoming President, Canadian Home Builders' Association): Very quickly, clearly everyone is hearing about the shortage of skilled trades in this country, and it isn't just our industry; it's young people going into careers that relate to trades right across the board. I think it's very important that there be a very clear investment in our educational system and that we have a clear direction as to how young people find their way into trades, not only housing-related but trades in general. This theme of investing in young people and showing them a clear direction is certainly one that's being shared, I'm sure, by other groups.

The trade shortage is getting worse. Our workers are getting older; they're retiring from the industry. The immigration policies have not been as supportive as we would like them to be; although there were certainly improvements, they haven't been as supportive as we need them to be. We need that kind of support and direction in order to get the houses built. Thank you.

The Chair: Thank you very much. With the indulgence of Mr. Cullen, I'm going to go out of order and take Mr. Brison for seven minutes.

Mr. Scott Brison: Thank you, Madam Chair. Thank you to all of you for appearing before the committee this morning.

I have a question for Mr. Robinson on tax reform and the ability, in a revenue neutral sense, to dramatically change our tax system to encourage growth, prosperity, and investment.

You referred to corporate welfare, and it comes in a wide range of forms, whether you look at what is spent directly in terms of investment in companies through Industry Canada or HRDC, or through the hodgepodge of regional development programs. In my part of Canada, ACOA's budget, for example, is $447 million per year. Total federal corporate taxes for Atlantic Canada are $380 million per year. So without costing the federal treasury any money, it's possible to actually eliminate federal corporate taxes in that region, which would leave you with provincial corporate tax rates in the 12% range, which, coincidentally, is the same as Ireland's. Basically, it would give you corporate tax rates in the realm of Ireland's.

If you ask yourself the question, which would create greater levels of economic growth and prosperity in Atlantic Canada, bureaucrats and politicians picking winners from losers or the most competitive corporate tax rate in North America and one of the most competitive in the world, I think the answer is pretty self-evident.

My question is, have you evaluated how much money is spent on corporate welfare through HRDC, Industry Canada, and these regional development programs across Canada and compared that with federal corporate taxes? I'd appreciate your view on the notion of actually replacing, or broadly reducing, effective corporate tax rates and eliminating across the board the corporate welfare. Specifically, have you done the comparison of what the numbers are nationally?

Mr. Walter Robinson: The annual figure of $4 billion that we get includes the Industry Canada budget, the regional development agencies, and the transfers to industry as identified in the public accounts that come from those other agencies, specifically HRDC and, to a smaller extent, Agriculture Canada.

The reports we've put out over seven years have looked at about $52 billion in corporate welfare assistance at a variety of those agencies over the last 14 years.

I just want to go back to the TPC point, because I was wrapping up. That one-third figure that TPC may or may not collect is a gross estimate. In seven years, on a loan portfolio of $1.5 billion, the taxpayers recouped less than 3%, about $43 million, on those investments. Now we're funding second- and third-generation investments in those companies. We're not getting the money back. It's like Christmas. It's a Christmas bonanza for those companies.

I would take your question and make it larger than to Atlantic Canada. I mean, people pick on the regional development, ACOA, but there's northern Ontario, there's western diversification, there's Canada economic development for the region of Quebec, and they all do things. As parliamentarians you should be fundamentally concerned, because those regional development agencies lots of times funnel money into community economic development corporations or community future development corporations that are partly public and partly private, but since they are incorporated privately, they are outside the arms of Parliament. The Information Commissioner cannot go there and get information on how our tax dollars are spent in those agencies.

As parliamentarians, whether you agree with those agencies or not, you should be fundamentally concerned about that because it's an issue of tax dollars.

We haven't done a specific study, through you, Madam Chair, to Mr. Brison, with respect to what the trade-off and mix would be, but I would point to the Irish example that reduced corporate taxes from 40% to 10%. Over that same period, EU subsidies also declined. I must point out that there's better management-labour peace in Ireland than we have in this country, an example that organized labour, Mr. Georgetti and his friends before us and those in the boardrooms of this nation, could follow. Foreign direct investment increased by 250% over that same period, and Ireland, for the first time in 150 years, has had three years of successive brain gain, something we may want to think about in terms of keeping our Canadians at home.

Â (1225)

Mr. Scott Brison: I have a question on tax policy as it relates to infrastructure investment. I'd appreciate your views, Mr. Thomson and Mr. Robinson, on the idea of federal tax-free municipal bonds or even federal tax-advantaged municipal bonds, which would give Canadian municipalities the same vehicle--and in a sense an indirect federal transfer because of the tax-free nature of the bonds--to raise money that American municipalities have. They have been quite successful in raising money to pay for needed infrastructure.

At the end of the day, instead of having a federal-provincial-municipal cooperation and discussion and in some ways federal political partisanship and politicizing of infrastructure programs, the power would be with the municipalities to evaluate how much they need and what they're going to spend it on, and ultimately through bond rating systems they're rewarded based on their prudence in terms of their management of that vehicle.

Mr. Walter Robinson: Very briefly, because it's more Mr. Thomson's expertise than ours, we think our municipal roadway trust and our proposal to, first and foremost, put $2.2 billion annually into a three-year renewable program audited by the federal Auditor General and the municipalities is the best way to go, because if the feds are going to continue to collect those tax dollars, the federal government needs to be responsible for the administration and expenditure of those dollars.

Second, we think cities across the country--and we argue this before city councils--need to get their priorities straight.

But we're not averse to debt financing for infrastructure in that respect. There are a variety of vehicles, and tax-exempt municipal bonds may be one of them.

Our rule is we believe in pay as you go as a concept. As a community grows, if it needs a community centre, you put money in the reserves and you build it in municipal financing--and I wish Mr. Wilfert were here. For example, for a water treatment plant for a new community, you can't build it as they grow. You need to build it first for the capacity you're going to see over the next 20 or 25 years.

In that respect, that may be a credible municipal financing vehicle that may help our cities, large and small, meet their key infrastructure needs, which they've neglected partly because of funding, but partly because of political choices for the last 30 years.

The Chair: Mr. Thomson.

Mr. Jim Thomson: The CHBA has advocated...first of all, we take the position that all levels of government benefit from growth. We're opposed to things like DCCs because we think a lot of infrastructure costs are unjustly put on the backs of just new homebuyers as opposed to the general population.

However, we have recommended to the federal government that they consider things like financing for municipalities through municipal bonds. We've prepared a whole paper, and part of it is contained in our submission, about alternate methods of funding infrastructure, and certainly this is something we support.

The Chair: Thank you very much.

Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair.

Thank you to all the presenters.

I have a number of questions, but not enough time. I'd like to start with Mr. Robinson.

The increase to the basic personal exemption of $15,000 has a couple of disadvantages. One that Mr. Wilfert highlighted is the cost. There's another one, and that is that it's not very targeted. Everybody gets the advantage of the $15,000 basic personal exemption. If you wanted to target high-income Canadians, or middle-income Canadians, or low-income Canadians, you're going to reach them all.

That's my first question. Maybe you could just jot down a couple of notes, so I can go to a couple of others.

On the federal program spending in relation to GDP, we went to a point where we had, I think, a fifty-year low. Then in the last couple of years, you're right, the spending has “blipped” upwards.

Are there any comparisons? If we were going to, moving forward, look at federal program spending in relation to GDP, are there any benchmarks or best practices recognizing that our government is a federal system? It's hard, I guess, to make those kinds of comparisons, but moving forward, what would be the best practice in terms of federal program spending in relation to GDP?

My third question has to do with corporate subsidies. I'm going to be the devil's advocate and say that if you look at a company like Bombardier...I must say, my intuitive reaction to corporate subsidies is not very positive. It is a company that is now probably the third largest aerospace company in the world, competing against companies like Embraer and the airbus industries, which are hugely subsidized. Yes, they are making a profit; every corporation makes a profit. Isn't it also the case that if we didn't support companies like that in a very competitive international industry, these companies might be left out in the cold? Isn't that the reality?

I'd like to comment also that there are many small companies—I have about four or five in my riding—that are taking advantage of TPC. You're right, whether they'll ever have to pay any of it back is a moot point, but an important point nonetheless.

Anyway, I only throw out those three or four questions for you.

Â (1230)

The Chair: Mr. Robinson.

Mr. Walter Robinson: With respect to targeting, you're right, it's a very blunt instrument. We believe in blunt instruments and tax relief. Long gone are the days when governments can say they're going to target this income group in favour of that one. It builds envy. You may win elections that way and build political coalitions that way, but you don't do your best bit for the economy in that respect. We think with this proposal, as much as it is across the income scale, different income groups will use the relief differently.

First and foremost, it's still, in the language of targeting, for the most part, for lower-income Canadians. As you move the exemption...it's $7,756 today and it's supposed to go to $7,927 next year. I must remind you, though, that Mr. Martin committed to put it to $8,000 by the year 2004. You may wish to encourage the finance people to “bust out” another $73 to live up to Mr. Martin's commitment. The 16% of $73 makes a difference for somebody who's working poor. What you're looking at here is that this relief will be minimized up the income scale, if you keep the brackets the same as they are right now.

What it does do is there's a bimodal distribution where the highest marginal tax rates kick in, around $64,000 in moving from the 22% to 26% tax bracket, and it needs government assistance to work. Right now, there's a disincentive in the tax system where somebody collects more on social entitlement benefits. Even if they have the will to work, when they get into work, the tax system penalizes them. There's a bimodal distribution of those punitive tax rates. This thing takes that away and gives Canadians the dignity of work. It's a great social program. I truly believe that those who want to work, can work, and will.

With respect to GDP, we still think population growth should be limited to population growth plus inflation, at a maximum. With GDP, then you're looking at the equation and asking what the productive capacity of our economy is to fund government programs. Whether the GDP is high or low, the question should be, what is it that we want, what have Canadians demanded of us, and what programs should we deliver?

Mr. Roy Cullen: Can I just interject on that point?

When you talk about population/inflation, there's a certain starting-off point. In other words, do we say that right now we're at the right level of federal program expending, and then just expand it by GDP and population?

Mr. Walter Robinson: No. I think you need to go back through another program review exercise, or what Ms. Barnes and Mr. Bevilacqua were championing, the productivity covenant or prosperity covenant, and then you go from there.

With respect to your third question, first of all, yes, Bombardier is the third largest aerospace company on the face of the planet, behind Airbus, the European consortium, and Boeing. We can't win a subsidy war against Brazil. We're not talking about competing in a subsidy war against Boeing or the Europeans. It's Bombardier, to their credit, who dragged this federal government kicking and screaming to the WTO table to fight a battle against those sorts of subsidies.

Every time we put out a corporate welfare report, my phone rings off the hook. Well, it doesn't ring off the hook; I usually get snarky letters from CEOs who say, “Mr. Robinson, you don't understand, your federation doesn't understand. If we had an even playing field, we could compete.” Well, let's have the government work with industry to get to that even playing field. It won't happen overnight, but it could be a four- or five-year period in terms of those multilateral agreements. Yes, acknowledge the fact that our friends, the Americans, will couch a lot of this under their defence budget, separate from WTO agreements. Just because it's difficult doesn't mean it's an objective not worth working for.

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Mr. Roy Cullen: Okay.

Do I have any more time, Ms. Barnes?

The Chair: You do. You have two minutes less one second.

Mr. Roy Cullen: Thank you.

Ms. McDonald, I don't know if I'll have time, but on the question of tied aid, would I have interpreted your remarks as suggesting that you don't support tied aid? Would that be fair enough? Just answer that yes or no, and then I can ask my question.

Ms. Katherine McDonald: No, we don't support tied aid.

Mr. Roy Cullen: Okay. Now, in Canada's context, I see CIDA Inc. as kind of Canada's tied aid--and I know there's a big debate amongst a bunch of people.

When I talk to missions abroad and if you look at our multicultural society, the CIDA Inc. projects tend to be more SME-driven, where they're working often with cultural communities in Canada that can bring their knowledge of the economy, their knowledge of the culture.

I can't agree. Maybe it's a good debate internationally and it's a question around tied aid that needs to be addressed, but I have difficulty thinking that in Canada's context CIDA Inc. is something we should scrap. I don't necessarily buy the argument, but I wonder if you could elaborate.

Ms. Katherine McDonald: Yes. On the notion of tied aid, really what you have to do is look at the figures. I think they reveal that CIDA, and perhaps more for CIDA Inc., keeps about 65¢ of every dollar in Canada. So for every dollar of aid that goes out, 65¢ goes to a Canadian. So whether we're looking at technical assistance, whether we're looking at project managers in Canada, administrative costs of organizations within Canada, the actual dollar that gets into the developing country is lower.

If, however, we'd look at a true community development approach and have the communities at the local level in developing countries determine what their technical assistance requirements are, they could ask that Canada provide technical assistance as part of the project or the program they're undertaking, but that would be their choice, determined in cooperation with their Canadian partners, not something that is required by CIDA.

What we want to see is high-quality aid getting to the people who need it, when they need it, how they need it, and how they determine it--very similar to the position Mr. Fontaine is taking, I would say.

Mr. Roy Cullen: Okay. Well, we could debate it, I'm sure.

The Chair: Thank you very much.

Ms. Leung and Ms. Judy Wasylycia-Leis, and then Mr. Murphy, if he wishes.

Ms. Sophia Leung: Thank you, Madam Chair.

I want to thank all the presenters for their very interesting remarks.

First I want to welcome Chief Fontaine and Chief Jules. I think we all know that the future and the well-being of the first nations is very important to all of us, and it is a pretty high priority in this nation.

You mentioned investment in youth and education. I think that's definitely the best route to take, but in the meantime, we know it's a very complex situation and the social problem is very acute.

There are so many immigrants who have come with very few material things, as well as a lack of education. Many times a lot of other Canadians ask me and point out that if we can restore some of the identity, the pride in people, no matter what race or culture, maybe it's very essential and important to have some basic sense of goals and objectives. Of course, I'm simplifying it, but this question is asked of me many times.

You find that there's a great deal of achievement in certain cultural groups. In the first nations, I know there are many examples, some of them highly achieved.

This is always a puzzle for me. I'm from B.C., and there are a few good examples of very accomplished people, and others with such devastating social and familial problems. I wonder if you could comment on that.

Then I have a question or comment to direct to Mr. Robinson. I agree with your three pillars approach. That's very good. Most of us probably think the same. In the meantime, though, I'm sure you're aware of our social needs in this country--health care and the infrastructure.... We've heard about those, as well as the concerns of the first nations. How do you find a balance between the revenue and the social spending? You didn't mention much on that.

Also, I agree with your criticism of TPC. We need to re-examine some of those programs and how to use them wisely. But again, though, I think the government has the duty to support, to invest in our knowledge-based industries and high-tech. So we have to have a balance.

In the meantime, I agree that foreign aid is very essential, very important, and we've heard many, many times that the most needy individuals don't get it. Perhaps their government is corrupt and they don't benefit. How are we going to control that?

Then I go back to the building association. I think you mentioned the shortage of skilled labour. I think this government is fully aware that we have to increase the number of skilled workers. With programs now, we are trying to expand our skilled worker sector through immigration. I think you, as a business association, can help to identify this, because we know we bring highly skilled workers to this country, but then they're not placed in their appropriate jobs.There's a mismatch there. Would you like to comment on that?

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The Chair: I'm going to start with Chief Fontaine and then ask for a brief comment from all of you, even though I can understand the complexity of those questions.

Chief Phil Fontaine: Thank you.

I want to respond to her question specifically, but I didn't have an opportunity to respond to Mr. Wilfert's question.

First, of course, we believe in partnerships and building good relationships. The example you spoke about, the Canadian municipal associations, the first nations undertaking, that was something that I thought served a very useful purpose and should have been supported. It speaks to the issue of the kinds of relationships we need to establish, the kinds of partnerships we need to have with all sectors and all interests in the country.

Second, there is a response here about the debt load of first nations communities, that one third are under third-party management. That speaks to the issue of the housing crisis in first nations communities that the Auditor General spoke about. That's a large part of the debt load. If we could come to grips with the housing crisis, we'd address that issue, I think, in a significant and positive way.

Third, we of course appreciate the time constraints this particular committee has. We'd like to extend an invitation. With your support, Madam Chair, we would like to host a meeting with parliamentarians who make up this committee to meet with the Assembly of First Nations so that we can engage in the kind of discussion that we actually need to have.

There are so many issues we need to discuss. There's so much to talk about. There are so many questions that need to be answered, and we want to be able to provide those answers. Otherwise, we're shortchanging each other. At some point very soon we would like to extend--

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The Chair: I will certainly put that forward.

Chief Phil Fontaine: On the issue of identity, as we all know--at least those people who understand the history of this country--there is a denial of first nations, the fact that we were an important part of the country. We've had the residential school experience, we've had the abusive political relationship, and we've had so many unfortunate and ill-thought-out government policies that have resulted in the fact that we've had to virtually reconstruct and rebuild our communities and, more importantly, our cultures, our languages. We have 55 indigenous languages spoken in the country. At least 52 of those are in various stages of disappearing. We believe in cultural integrity, but it's something we need to build together in a significant way. We urge people such as yourselves to support first nations in our efforts to save our languages, for example.

The Chair: Thank you.

Mr. Robinson, go ahead.

Mr. Walter Robinson: Through you, Madam Chair, to Ms. Leung, the question was, how do we find balance? In one sense, that's what your committee's deliberations are about. I represent an organization that has a specific point of view. Chief Fontaine mentioned special interests; we might argue that we argue for the “common” interest of taxpayers. But that's a debatable point.

You mentioned that we need to invest in that knowledge-based economy. That's a maxim for the 21st century. I see that on the other side of the equation. I see it in a private citizen capacity as the vice-chair of the Regional Cancer Centre Foundation here and the treasurer of our physical rehabilitation centre. I see the need on the other side, on the social spending side.

The question of investing or finding that knowledge base is not in fattening the bottom line of Bombardier. That's development. That's not research.

Research is in some of the things the government has done. We're not blind to some of the good things they've done: the Canada research chairs for universities, the establishment of a Harvard University--each and every year in Canada, that funding through provincial transfers is important; the establishment of the Canadian Institutes of Health Research, taking the old medical research council that's Montreal-based and establishing 13 multidisciplinary institutes, not silos but sharing a lot of information.

I met with the chair of the Institute of Neurosciences, Mental Health and Addiction, about a week and a half ago to get a sense of their work. That's how you invest in the knowledge base, in those things that are pure educational efforts that spawn commercialization efforts, not in fattening the bottom line of a company. That's not a public good. That's a private market pursuit. A public good is university education. That's where you find the balance in your policy choices.

The Chair: Thank you very much. I'm afraid we're out of time for that round.

Ms. Lawson, I will give you one comment because that was a direct question.

Ms. Mary Lawson: I think the answer to the question is very clear. We need an action plan to deploy Canada's education and training sector in support of careers in skilled trades. That's one area. We are getting assistance through Canada Mortgage and Housing in that direction, and we're very pleased with that. Needless to say, it must happen quickly, and that is a concern.

In terms of the immigrant labour, there is difficulty still, obviously, with placing people, as you've drawn to our attention. There are also restrictions from province to province in how people can move across the country to follow the workload or to fill in opportunities that are there. That's a concern.

The one other point I would like to make still goes back to the issue of GST and, as an industry, our huge concern about the underground economy, how it is growing and how professional it is becoming. Again, that issue of the $30,000 threshold and making every company, no matter how small, register for the GST clearly will contribute more to the tax base and will give us a better understanding of the needs of the workers out there.

The Chair: Thank you.

Ms. Judy Wasylycia-Leis, please.

Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.

It's hard not to focus almost entirely on the issues of the first nations communities at a time like this, because the problems are so great, the crisis is real, and there is such a need for us to address that crisis as members of the finance committee. Do I will ask Chief Fontaine some questions.

Leading up to that, it begs the question of all of you—and maybe since I often focus my attention on Walter, I'll do it to Walter again. It seems to me that the old way of doing things is really what you are suggesting. The continuation of focus on debt reduction, tax cuts and shrinking of government is the antithesis of what's needed in terms of first nations community. We've had 10 years of trying that, and all the while we've seen the problems get worse. Canada has gone from first place, in terms of the human development index, to eighth, and there is every reason to believe we're simply going to get more of the same. I would suggest, Walter, that in fact your scenario doesn't help deal with the crisis in the first nations community. That is one question to you.

This is my question to you, Phil.

I really appreciated your presence here today and your suggestion that we as a committee actually meet with the assembly to have a longer, in-depth discussion.

It seems to me that there are two parts to the problem. One is governance. There is no question, we have to deal with devolution of power and move toward self-government. That is probably our only way to achieve better results--I don't argue with that at all--but I also think there is a money issue here and the fair share for the aboriginal community of the nation's wealth.

It is nowhere said better than in the Auditor General's report on the third world conditions of housing on reserves. Governance is one issue, but she said the government has basically not increased the budget in real terms for housing on reserves for over 10 years, yet the population is growing and housing is deteriorating.

You need to say something about this other approach that we're in danger of repeating around fiscal policy, around the debt, around $7 billion in surplus going against the debt when you have that kind of crisis on reserves. I'm sorry, this is a long convoluted question, but I believe between Walter and Phil we'll--

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The Chair: Mr. Robinson, and then I'll go to Chief Fontaine.

Mr. Walter Robinson: Madam Chair, I always appreciate Ms. Wasylycia-Leis' questions. We've had our fights at procedure and House affairs and other things, but that's democratic debate.

I don't consider the old ways. I want to take on something that Chief Fontaine pointed out with respect to aboriginal policy. The main reason for our precipitous decline in our standing is intractable issues in terms of first nations communities, and we all well know those statistics. I travel to western Canada a bit, and I see it in places like Regina or between some of those cities where you have real urban-aboriginal populations, a kind of Wawa east, that the central Canadians and the central Canadian media don't see. He spoke of central planning.

Central planning in our health care system has been one of the big reasons for our precipitous decline. Even though we've jacked up more money into our health care system, we haven't put a dent in our diagnostic imaging waiting list. We still have people waiting 18 to 24 months for hip and knee replacement surgery. In terms of the profusion of medical technologies for diagnostic imaging or the things that we can do, we lag behind places such as Turkey and Syria in the number of MRIs per capita. That's a misallocation of needed resources.

It's not a question of the old ways don't work, because the issue here is, if we have a trillion-dollar economy, if our effective tax rate is 50% across the board in terms of all levels of government, that gives us $500 billion for government expenditures to those public goods and services that we agree government has a role to play. If we grow the economy to $2 trillion and we reduce our tax rate to 40%, we grow the pie, and we now have $800 billion in collective resources to address health care issues, to address research education in universities, to address targeting and ensuring the money goes and there are outcomes. It's a question of growing the economic pie, because you cannot redistribute wealth unless you create it in the first place.

That's where you and I have a fundamental difference of the role of government. The stats are very clear. For every dollar of government spending, we get a dollar of investment and creation in the private sector. For every dollar of “private sector not for government spending” we leverage $4 to $6, depending on where that spending is, to grow the pie, to tax the activity to meet the resources. It's not an either/or. You can have both.

Chief Phil Fontaine: Thank you.

I want to make one point here before I attempt to answer your question. We're on the horns of a dilemma every time we come to a committee such as this one—indeed when we go out and speak about first nations issues—and that is whether we ought to talk about the different crises that exist: housing, health, education, and so on, and all of the negativity around those issues. Or do we speak about success and achievement and accomplishments? Quite often we don't know what is better. Maybe what is better is balance.

I didn't come here to suggest that everything that has been attempted has brought about negative results. In fact, there are some things that work. The things that work best are when first nations themselves are in control, when first nations themselves are delivering the services our communities need. In order to do that more effectively, more fairly, we need to have the resources that are being allocated to be allocated in a different way. They need to become the responsibility of first nations governments in a real way, not what we've experienced up to now, which has been government imposing its will in different ways. So that's one thing.

The other is that we want the same things, and I've tried to make that point. We want the same things that all Canadians want: we want a future for our kids; we want better, safer, healthier communities; we want better access to health care; we want to have our communities and our kids better educated. All of those things that are taken for granted on the outside, we want those for ourselves. But in order to achieve those things, as I said earlier, those processes must be driven by first nations. The responsibility must be on our shoulders. The mistakes that are made must be ours. The way it's done now, it just doesn't work. It does not work.

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The Chair: I understand the complexity. These are huge problems for all of us. Thank you very much, all of you. I appreciate the diversity of your viewpoints, providing the true priority balance that as a government and as Canadians we face.

We are adjourned until we meet again on Monday in Vancouver.

Thank you.