FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, June 6, 2001

• 1539

[English]

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

This afternoon we have the pleasure to hold yet another round table on the economy, and this time it's with labour leaders. Basically, the finance committee has decided to call people in to get a sense of the state of the economy and what the general outlook is on the Canadian economy, given your own perspective and the perspective of your organizations.

We have the pleasure to have with us representatives from Confédération des syndicats nationaux, the Canadian Auto Workers Union, the Canadian Labour Congress, the Public Service Alliance of Canada, Fédération des travailleurs and travailleuses du Québec, and the Canadian Federation of Nurses Unions.

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Many of you have appeared in front of the committee, so you know how this operates. You have approximately five to seven minutes to make your presentation. Thereafter we engage in a question and answer session.

[Translation]

Yes, Mr. Loubier.

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): On a point of order, Mr. Chairman.

Could it be that Liberal members are not interested in employment insurance and in the other topics of interests to Canadians? Could that be the reason why there are so few Liberal members opposite, whereas five opposition members are present? Attendance and lack of interest seem to be a problem. Could it be that they are afraid of contradicting the findings of the report tabled by the Human Resources Development Committee on employment insurance? Is that the problem here today? I'm deeply disappointed to see only one Liberal member in attendance. It's ridiculous.

Please continue, Mr. Chairman. I don't know if there's any way to fix things, but this is outrageous, in my view.

[English]

The Chair: You'll probably find that other members will be coming. As chair of the committee, I tend not to comment on the presence or absence of members of Parliament, simply because that's protocol. But I'm actually really interested in what you have to say, because that's the reason I called this meeting. I think the perspective of labour is extremely important to the Canadian economy. I'd rather just get on with the program, if we can say that, and hear from the members of the panel what their major issues are. I think your point was more of a comment than a question.

We'll begin with the president of Confédération des syndicats nationaux, Marc Laviolette.

[Translation]

Mr. Marc Laviolette (President, Confédération des syndicats nationaux): Thank you, Mr. Chairman.

In the opinion of the CSN, the recent Economic Update confirms yet again that the Liberal government never really had any intention of allocating 50 per cent of its budget surplus to program spending.

According to the May 17 statement, a minimum of $15 billion will be allocated to debt reduction whereas the amount announced in the October 18 budget was $10 billion. It's clear that debt reduction, not program spending, will account for 50 per cent of the available surplus in 2000-2001. The rest of the surplus will be divided almost equally: $7.7 billion will go to lowering taxes while $7 billion will be allocated to program spending.

The CSN feels that the percentage of the surplus allocated to debt reduction is disproportionate to the public's need for government services, social programs and infrastructure investments.

The CSN objects to earmarking too much of the surplus for debt repayment while the federal government fails to assume its fair share of provincial social program funding in areas such as health, post-secondary education and social assistance and until such time as employment insurance funding levels have been restored.

Although recent budgets have provided for reinvestment in program spending, the amounts forecast represent a mere 11.4 per cent of GDP in 2000-2001 compared to 16 per cent a decade earlier in 1990-1991. Despite the September 2000 federal-provincial agreement which provided for an increase in the Canadian Social Transfer, federal funding remains below 1994-1995 levels.

As far as Quebec is concerned, Ottawa currently funds only 14 per cent of provincial programs and social services, compared to 19 per cent in 1994-1995. This gap represents a shortfall of $1.2 billion for 2001-2002.

In terms of core federal funding, the CSN is curious as to when the federal government will restore a level of spending in keeping with Quebec's population. It should be remembered that Quebec is the recipient of 20 per cent of R & D spending, 21.5 per cent of spending on goods and services and 16.5 per cent of business transfer payments.

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With respect to employment insurance, given the surpluses generated by the EI account in the past several years, it's obvious that funds are being diverted from the account, a move of which the CSN has long-been critical. We have gone to court to challenge the legality of diverting EI account surpluses.

Human Resources Development Canada projected an accumulated surplus of $34.6 billion as of March 31, 2001, which is considerably more than the $10 to $15 billion surplus required to ensure some stability in premium rates over the economic cycle. Moreover, the Auditor General of Canada stated recently that he was hard-pressed to admit the spirit of the Employment Insurance Act was being upheld.

The CSN is calling for an increase in the rate of coverage and in the income replacement rate, as well as an increase in the duration of benefits. It is calling for a balance to be gradually restored between incomes and EI spending by adjusting spending to current EI account revenues, not by resorting to a right-wing policy where revenues would be adjusted to spending levels, given the significant cuts made to the EI program.

In the opinion of the CSN, the government must stop making the position of workers increasingly tenuous in an effort to increase labour market flexibility and it must stop diverting EI account surpluses to other policy initiatives.

On a related subject, the CSN is deeply disappointed that the Liberal government has chosen to object to the Quebec government's proposal to establish its own parental leave insurance regime, particularly as the Employment Insurance Act provides for such an initiative. May I remind members that very recently, the members of the National Assembly unanimously adopted legislation establishing a parental leave insurance regime for Quebec. A consensus has emerged in Quebec that parental leave provisions should be managed separately from the EI program.

Quebec's regime calls for an income replacement rate of 75 per cent for a period of 43 weeks of leave upon the birth of a child and extends coverage to self-employed workers. As far as Quebeckers are concerned, this regime is superior to the one currently offered under the federal EI program.

As far as reducing the tax burden is concerned, the CSN believes that the primary role of government is to fund and implement quality and universally accessible public services and social programs. Once the government has achieved this fundamental goal, then it can turn its attention to using any residual surpluses to fund other initiatives.

Moreover, the announced tax cut scheme is rather regressive. One third of taxpayers with the lowest incomes will benefit from a mere 4 per cent of overall tax savings, while two thirds will get 13 per cent. A full 83 per cent of the tax savings will go to the wealthiest one third of taxpayers.

By opting to reduce the personal tax burden by reducing the importance of the single graduated tax, whereas it could have chosen to reduce the GST, the government has de facto reduced the overall progressive nature of the tax system.

Furthermore, the CSN doesn't see how lower EI premiums represent a benefit to taxpayers. This merely means that it will be impossible to reinstate a more generous system at some point down the road.

Thank you.

[English]

The Chair: Thank you, Mr. Laviolette.

We'll now hear from the Canadian Auto Workers Union, Bill Murnigham.

Mr. Bill Murnigham (National Representative, Research Department, Canadian Auto Workers Union): Thank you very much, Mr. Chair. Thanks for inviting us here today to bring our perspective to the important work of this committee. Unfortunately, the president of our union, Buzz Hargrove, could not attend today, and he does send his regrets.

We have some fairly large questions in front of us from the committee. Seeing that we only have a few minutes, I'll just touch on a few issues, particularly along the lines you introduced, Mr. Bevilacqua, an update on what's going on and what's happening in our sector of the economy.

Like so many labour unions today, we are increasingly diverse. The CAW, with a quarter of a million members, has people in the auto industry, fast food workers, mining, retail, aerospace, shipbuilding, airlines, and much more.

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So it's really quite difficult to encapsulate for you what's going on in all of them at once. Rather, I thought I would take this opportunity to provide some comments on the auto industry, seeing how fitting that is given the dramatic events that have unfolded during the last six months, and conclude with a few broader comments.

To refresh a few memories here, the auto industry is not only central to our union, but it's a critical part of our economy, and as we're thinking about the financial picture for the country, we should pay attention to that sector. It is responsible for 185,000 direct manufacturing jobs and a huge spin-off—it is estimated that one in six jobs in Ontario is created by the auto industry, one in eleven in Canada. It is responsible for a $17 billion trade surplus for this country. The entire merchandise trade surplus of this country rests on the auto industry, and the linkages throughout the economy are very critical, as it is a consumer of steel, rubber, plastics, chemicals, and so on, let alone the consumer spending generated. In fact, Ontario is set to eclipse Michigan as the greatest producer of automobiles in North America—that hasn't happened yet. So I think few would need convincing that the auto industry is important to the Canadian economy.

It's quite a coincidence that the committee is asking us what's changed since last October. That was precisely the time things started to unravel, as the slowdown in consumer spending hit the U.S. economy. Those with crystal balls can explain a little better than I could why this happened, a mix of bad stock markets, consumer spending bottoming out, perhaps too many interest hikes earlier in the year, or perhaps a simple overload in an increasingly speculative economy south of the border. So there are a lot of factors involved, but the auto industry, like many others, was caught with piles of inventory and systems that were producing too many vehicles. An industry that had been having record sales year in and year out, a never-ending demand, found it had to act and act fast, and that's like trying to turn around a very large ship very quickly.

As to what's happened to the major players in the Canadian auto industry, General Motors and Ford took an “as it comes” approach to dealing with this. However, DaimlerChrysler, for a variety of reasons, undertook an entirely wholesale restructuring. The outcome across the industry has been corporate losses in the short term, quite clearly, and job cuts in many sectors. Upwards of 1,500 people have lost their jobs through the elimination of a single shift in a Bramalea facility. As well, thousands more across the auto assembly sector are losing their jobs. We'd like to be proud of our record. As their union, we have negotiated very good ways to minimize the impact of those job losses through early retirements, and I can't underscore enough that those jobs are in fact gone from the economy, whether or not there will be as many people laid off at the end of the day. We've seen similar impacts through the auto parts sector.

In the interest of time, I won't go through precisely what happened in every sector of the auto industry, but focus on where we're at today.

Auto sales were initially expected to drop about 10% this year. So far the economy has done a lot better than what we were seeing in January and February, sales dropping by about 7% in the U.S. and less in Canada. Even if that 10% drop does happen in auto sales, we're still on course for the third best year on record. But as we're seeing increasingly in our economy, the contradictions of our times say that in what look like good times there are many underlying factors that point to troubles for the long-term future of the industry. In a fundamental way, in a nutshell, the dynamic of the industry has shifted dramatically in the last five years on a couple of fronts, and these will come into play down the road.

Let me review a couple of those. First, there is global overcapacity. The auto industry around the world now has the machinery in place to produce 77 million vehicles, but only sells 54 million. This is creating a great excess of competition in the industry and leading many of the players to seek mergers and alliances, to change the whole corporate structure. If anyone had said, looking at the auto industry five years ago, that we'd be in the situation we are today, where half of the Japanese auto production is foreign-controlled, one of the American majors in the industry, Chrysler, is controlled out of Stuttgart, and European brands are been snatched up, they would have thought you were crazy. But that's exactly where we are today.

Closer to home, the issue of trade is again front and centre. Figures show that Canada, as we speak, is being targeted for excess imports. In a declining market, auto sales from import vehicles are up 11%, compared to just 3% for the United States. Again, you have to wonder why markets so similar to each would have different outcomes. I think we understand that the U.S. has a much stronger presence internationally and can hold off imports, whereas Canada cannot.

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This is being spurred by weakness ongoing in Asia and in the European Union. Importantly, what we're seeing now is the presence of the strong U.S. dollar, and even the strong Canadian dollar, leading to incredible price competition. The U.S. dollar has gained in value over the euro, the yen, and South Korean currencies, incredibly.

Today, the market share of domestically produced big three vehicles in Canada and the U.S. has dropped about 6% over the last decade, and it's declining even further. That is equivalent to about 1.1 million vehicles, or about six auto plants. We also face, closer to home, the evolution of the Mexican auto industry—an incredible rise. It's almost the size of the Canadian industry today. Just this past April, Mexico surpassed Canada as the largest exporter of parts to the United States.

It's against the backdrop of all these incredible changes that we find ourselves now with no trade rules or industrial policy geared toward the auto industry. The WTO ruling eliminated the Auto Pact, and we find ourselves in an environment without rules, with all these changes going on.

We could face the situation of having great sales from year to year and producing less and less of them in Canada. So it's critical to find ways to support industry and regulate trade. It's not a crisis now, but certainly the direction is seen in the developments today.

While there are threats on the horizon, there are also opportunities. Canada still enjoys an excellent record and position of auto investment, in terms of quality, production, and skills; higher productivity than the United States; and a very skilled workforce. But down the road, I think we will have to face the situation of having to invest more in our core industries and in innovation—something this government likes to speak about quite regularly.

It's interesting at this juncture that past investments in industry have focused solely on things like high technology—the so-called new economy. As the NASDAQ has crashed about 200% from its high, maybe the government and others should look more at the old economy, in areas that employ significant numbers of Canadians, who provide the backbone of our economy.

In terms of government record, I echo the points being made already that investing does not seem to be the priority of this government. Investing cannot mean spending every penny on debt reduction and tax cuts. Since the budget was balanced in 1997, the government has been running huge surpluses, at the expense of the EI fund, spending nearly eight out of every ten of its surplus dollars on debt reduction, and the other two on tax giveaways to the wealthy. Again, as a colleague mentioned, the 50-50 plan seems to have been chucked out the window fairly early on.

The idea of focusing on debt reduction, at a time when debt is only 53% of one year's gross domestic product, seems a little out of whack. To get an idea of how big that is, it would mean the average Canadian full-time worker would have a mortgage of only about $19,000. So if you think debt reduction with that sort of debt load is the key priority, that can't be the priority as we go forward, in terms of investing.

In conclusion, we need to find ways to invest in our centres of growth, innovation, and excellence in areas like auto, aerospace, and critically right now, in shipbuilding. There's an initiative in front of the government's own task force to support that industry in new ways. There's also skills development. The government currently needs to pay attention and put its hand to the wheel of our economy, because global forces are not going to ensure an outcome favourable for all Canadians.

Finally, you asked a question about long-term impact and issues coming down the road for a decade. I'd like to reflect on a study released just a few weeks ago from Statistics Canada on total wealth in this country. It's the first time a study like that has been done since 1984. It reveals that the top 10% of Canadians own 53% of the wealth in this country, and the bottom half have just 6%.

This question of growing inequality speaks to the need to invest from another angle: invest in rebuilding our social programs, health care, education, housing, and industry.

As history looks back on this period, it will be very clear we're at a defining moment of whether we will abandon many of the goals that made Canada unique or reinvigorate and rebuild our economy for the future.

Thank you very much.

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

We'll now hear from the Canadian Labour Congress, Mr. Ken Georgetti.

Mr. Ken Georgetti (President, Canadian Labour Congress): Thank you.

Chair and members of the Standing Committee on Finance, I want to begin by thanking you for the opportunity to present the views of the 2.5 million working members of the Canadian Labour Congress on the near and mid-term economic prospects for our membership.

I also want to say how pleased I am that representatives of the Canadian Labour Congress' affiliated unions are here as well to talk about the economic situation in their sectors. As you've requested, I will have some recommendations to make that will reflect my concerns about the current and future state of the economy.

My central recommendation is that the most important change required is a complete shift in the way the government and Parliament make decisions about working people and their families. Working people and improved living standards for working people and their families must be at the centre of all economic decision-making, and you have to make sure it's seen to be so. That means when policy is developed and debated, the question should be, “How does this benefit working Canadians?”

The working families represented by our unions cannot support an economic or fiscal plan unless it holds some prospect for improving the standard of living for all Canadians. But before turning directly to this recommendation and to the current and future state of the economy, it's important to say a few words on the context for my comments.

Economic growth through the decade of the 1990s was slower than any decade since the 1930s. The 1990s were also the second decade in a row where average wages and salaries did not grow at all in relation to inflation. Wages and salaries did not even keep pace with the modest productivity gains of the decade. At the same time, there was little overall growth in our economy. So the total picture of what was happening in the economy for working people included the following—and this is our list of how we lived: inequality between earned income and total income increased; work became more precarious, more intense, and more stressful; and successive cuts to unemployment insurance and social assistance reduced the protection against the disruptive effects of economic change and seasonal industries, for both individual workers and, worse, the economy as a whole.

Note, too, that the federal program spending now represents a smaller share of national income than at any time since World War II. Unfortunately, the difficulties faced by Canadian workers have tended to be shared by citizens in other countries, often in a more extreme form. But the policy-neutral prospects for the near and mid-term futures are not encouraging for the people we represent.

In the near term, the Canadian economy is expected to grow slowly for some months to come. It's expected, and just hoped, that growth may peak near the end of 2001. But the more rapid rates of growth that are hoped for are far below those of the decades following World War II. It's not clear at all that they will be strong enough to get unemployment rates down to what we would consider to be reasonable levels still today in this economy.

In order to offer real hope of improved living standards to Canadian workers in the near and mid-term futures, there has to be a major shift in the emphasis of the economic policy of this government. As I said earlier, the most important change that's required is more a philosophical one than a policy or program change.

Improved living standards for working people have to be put back at the centre of economic decision-making. When I say “improved living standards for working people”, I mean all working people, including those who have been marginalized in the past.

In recent years, improved living standards for working people have not been treated at all as the object of the economic policy exercise of the government. If anything, it appears to us that this issue has been treated as a threat to either competitiveness or price stability by business and government.

At a somewhat less general level, there has to be a willingness to reconstruct our public sector, which has been damaged to a great degree by the budget-shrinking exercises of recent years. Several parts of the public sector deserve particular attention—and I might add, as an aside, they deserve the same wage increase you're going to vote for yourselves in the next couple of days. But I digress.

On health care, the federal government must be willing to invest sufficient funds in the existing medicare program to guarantee its universal national character; to extend medicare's coverage to pharmaceuticals and home care; and, I might add, to continue to use medicare as one of the principal competitive advantages that Canadian industry enjoys today.

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On employment insurance, EI benefits must be restored and modernized, not only because recent cuts have put too much onus on blameless individuals to look after themselves during a period of unemployment, who are still very much working in seasonal industries in this country, which I call the normal economy, not the old economy, but also because the economy of this country is now much more vulnerable to economic downturns.

More important than all is training. A variety of forces, including technological change and, importantly, the aging of the workforce, are increasing the importance of training at a time when the federal government has been reducing its financial commitment and its legislative authority over the issue of workplace training. A variety of considerations, including intergenerational fairness, would argue for public infrastructure spending and environmental initiatives as well.

But let me turn to the medium and longer term. The aging population that is widely acknowledged, and being finally realized by all, will be accompanied by a decline in population growth to virtually nothing. As a result, virtually all our economic growth has to be accounted for only by productivity increases. Therefore, it will also be important to make it as easy as possible for all Canadians who want to work, to do so, and more importantly, to equip Canadians with the needed skills and technology.

We know now that there will be a need for one million trained apprentices just in the construction trades in Canada in the next ten years. I'm sure Kathleen Connors will tell you about the shortage of nurses in this country, and others. But this means increasing access now to post-secondary education, to investments in research, child care, programs to facilitate the economic integration of immigrants, and programs to increase the labour market participation of aboriginal people and people with disabilities.

Finally, the integrated nature of the modern world in which we now live and trade makes it imperative that Canada make its contribution and take the lead toward narrowing world equality and increase its overseas development aid and debt relief commitments.

Also—this is important—Canada needs to do everything it can to promote worldwide support for the ILO declaration on fundamental principles and rights at work. If anything, give workers in the third world a chance to lift themselves out of poverty and impoverishment and create a market that we can actually sell our goods into.

Again, I appreciate having the opportunity to appear before you today. I hope you'll not get so bogged down in specifics that you will forget the basic point. There is no reason at all for people I represent in this country to line up behind an economic and fiscal plan unless that plan holds some prospect to improve their standard of living. It's that simple. Improving the living standards of working people has to be returned to the centre of this economic policy agenda, and I will guarantee you, without equivocation, that the economy will stimulate itself immediately.

Thank you.

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

We'll now hear from the Public Service Alliance of Canada, Nycole Turmel, the national president.

Welcome.

[Translation]

Ms. Nycole Turmel (National President, Public Service Alliance of Canada): Thank you. I should like first of all to thank the Finance Committee for inviting me to participate in this roundtable on the economy.

Members of Parliament are in the process of voting themselves a significant wage increase in the 20 per cent range for backbench MPs. This increase follows closely on the heels of a House of Commons vote to increase federally-appointed judges' salaries by 11.2 per cent and a government decision to increase compensation for public sector executives by 8.7 per cent.

In all three cases, the government and various commissions have argued that increases are necessary as a result of a legislated wage freeze, increases in the cost of living and market comparisons.

What has been missing in the analysis advanced by the government is any acknowledgment that these same conditions apply to all federal public sector workers. This fact has not been lost on Canadians. Informal surveys conducted by major newspapers and radio call-in shows have consistently heard the refrain “what about ordinary wage earners?”. In short, Canadians are asking why the double standard.

Why should the elites in government receive significant wage increases when ordinary workers are being forcibly held below inflation and what is being negotiated elsewhere in the economy? I say forcibly, because the government has set a negotiating mandate in the 2 to 2.25 per cent range, and appears poised, once again, to enforce it by legislation.

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[English]

I am here to tell you today that the 120,000 PSAC members who work directly for the federal government and for the Canada Customs and Revenue Agency are not prepared to accept wage increases that conform to the government's inadequate and inflexible mandate. Both groups have voted to take strike action, and as the ad we ran in this week's Hill Times says, “Stop the double standard or we'll see you in September.”

Unlike 1991 and 1999 when our members returned to work after having their strikes ended by legislation, there is no guarantee that we'll respect similar legislation this year. It's a matter of respect. We recognize that the government is entering each successive round of negotiations with an insufficient mandate and with the assurance that its legislative power will prevail. Those days are over.

All members of Parliament are as aware as I am that the financial condition of the federal government has dramatically improved over the past decade. Where our 1991 strike took place in the context of a $40-billion annual deficit, any strike action taken during this tenth anniversary year of that historical strike will take place in the context of significant annual surpluses.

So, for example, increasing the government's wage offer from its current 2% to 5% for the 120,000 PSAC members employed by the federal government and the CCRA will cost around $144 million, or less than 1% of the projected surplus for fiscal year 2000-2001.

With the fiscal 2000-2001 surplus estimated at being in the $15-billion range, and projected future surpluses estimated in the $6.5 billion to $7 billion range over the next two years, the government can easily provide its workforce with wage increases that restore some, if not all, of the purchasing power lost to inflation over the past 10 years.

Hence, the government has choices. It can choose to fund health care, child care, and social infrastructure for Canadians, or it can cut taxes. It can choose to facilitate the preventive reassignment of pregnant women, or it can put them at risk. One of those choices is how it compensates its workforce. On behalf of our members, who deliver needed services to all Canadians, I would urge you to make the right choice. Change the government's mandate and provide federal public sector workers with increases that reflect the current state of government finances, the current inflation rate, and wage settlements in other areas of the economy.

[Translation]

Before closing, let me briefly comment on the longer term and your question “do institutions need to be reformed significantly?”. Members of the Finance Committee, and I suspect all Members of Parliament, are aware that the government is undertaking a review of federal public sector employment practices and labour legislation. This review is an opportunity for the government to get it right, and provide its own workforce with the same rights as apply in most other Canadian jurisdictions.

I suspect that this initiative will result in legislation that will be before Parliament some time in 2002. I would say, however, that it is important for all Members of Parliament to address the issues prior to the introduction of legislation.

In order to assist you in this regard, the leadership of the Public Service Alliance of Canada has put together an outline of its priorities for federal public sector reform. PSAC's ten point program addresses such critically important issues as the collective bargaining process, the negotiation and adjudication of staffing, classification and pension reform and whistle blowing.

In my opinion, the next two years are important from the perspective of federal labour relations. Either it's done right, and bargaining will resolve long-standing compensation problems, or it's done wrong, and the Canadian public will be subjected to strike action. Either public service reform is done right, and the bargaining process will more closely mirror the system elsewhere in the economy, or it will continue the deep-seated frustration that federal public sector workers face in the current paternalistic context.

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The choice is yours and that of all Members of Parliament.

Thank you.

The Chair: Thank you.

[English]

Now we'll hear from the FTQ—the president, Henri Massé. Welcome.

[Translation]

Mr. Henri Massé (President, Fédération des travailleurs et travailleuses du Québec (FTQ): I should like to begin by thanking the members of the Finance Committee for giving the FTQ the opportunity to express its views on matters that are important to its members. I also want to voice my support for the recommendations put forward by the Canadian Labour Congress and the Public Service Alliance of Canada.

May I also say right away that it is much more enjoyable to appear before the Finance Committee when things are going relatively well and when there is genuine work to do. This hasn't always been the case. The economy is relatively healthy. Despite a downturn in the U.S. economy, we are faring quite well and there is still talk of growth. Certainly there are indicators that do not lie. For instance, there wasn't a great public outcry when Members of Parliament voted to increase their own salaries. Let me state for the record that I feel this increase is well deserved, since the government has done well for its citizens in recent years.

However, having said this, I would also argue that federal government workers are in a similar situation. And, as the saying goes, what's sauce for the goose is sauce for the gander. Let me give you a word of advice: in your negotiations with federal public servants, don't waste too much time discussing the optional clause. Every group, without exception, is going to invoke it.

The purpose of this roundtable is to discuss the economy. As I see it, the salaries of federal public servants are a matter of economics. The same holds true for provincial public sector workers.

Over the past decade, exports have been the primary engine of economic growth. Currently, the U.S. economy is experiencing a downturn and this will surely have an impact on our economy. Domestic demand is barely beginning to account for a significant share of economic growth. In my opinion, it's time to pick up the pace and let domestic demand play a much bigger role. The timing is right: inflation is low, major productivity gains have been achieved. A move in this direction is unlikely to create major inflation problems.

It should be remembered that over the past decade, the Canadian government has made policy decisions resulting in economic growth. However, the salaries of ordinary workers have stagnated during the same period. Real salaries of public sector workers have increased by zero per cent.

There's a reason why 60,000 workers took to the street in Quebec City in 2001. While major economic development policies have spurred substantial economic growth, ordinary workers find themselves without a penny more in the pockets. It's time to rectify that situation. It's time to start giving workers real wage increases. The federal government is a major employer in Canada and should be setting an example. Although it should proceed with caution, the federal government must start awarding real wage increases to its employees.

Another topic I wanted to discuss - and one that my friend Ken Georgetti has talked about at length - is the whole issue of reinvesting in health and education. Marc Laviolette of the CSN also alluded to this issue. I'd like to see an end to the bickering between the federal and provincial governments.

Considering how things are going in these two sectors, the situation is becoming a little dramatic, to say the least. School boards are starting to let companies like McDonald's, Pepsi and Coke gain a foothold in the schools. We have a big problem on our hands when school boards let private sector companies advertise in schools in order to get needed revenues to buy books and operate libraries.

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Regarding professional training and development, we've made up some ground in terms of productivity over the past two years compared to the US economy. However, this is partly due to our weak Canadian dollar. Others have addressed this issue. The federal government needs to turn its attention to this matter and allow the provinces to allocate a much bigger percentage of their budgets to this area.

Health care in all Canadian provinces is in somewhat of a crisis situation. We hear about the drama unfolding every day on television, we read about it in the newspaper and hear the reports on the radio. I think it's beginning to adversely affect the mental health of many Canadians. People are stressed. The elderly are starting to wonder if they will receive adequate care. Young people wonder if the health care system will survive the onslaught.

Since the federal government does have some room to maneuver, it needs to reinvest on a large scale in these sectors. The situation is getting a little ridiculous.

I'd also like to comment on infrastructures. There are those who would argue that roads, bridges and water supply systems are merely concrete structures. However, I would beg to differ. They represent a public health issue as well. It is no secret that our water supply systems are in a deplorable state in a number of cities, in Quebec as well as in the rest of Canada. This has sparked some major health concerns. We need to improve the quality of our water.

In the United States, where belt-tightening has been the norm in recent years, just as we have seen here in Canada, the federal government recently decided to invest $100 billion in infrastructure projects, in addition to investments at the state level.

A Quebec coalition of union, business and other such representatives is demanding that the government reinvest in infrastructure. The cost would be shared three ways by the provinces, municipalities and the federal government. The last federal program was inadequate and unsatisfactory. A program with a far greater impetus is needed to rebuild our infrastructures.

If all the government is capable of is a weak program, then it's better to scrap the plan altogether, because often, a bad program has a negative impact. Municipalities that are experiencing financial problems count on the provincial and federal governments to come through with decent proposals to rebuild infrastructures. When all they are offered by way of a solution is an inadequate program, work never gets off the ground.

While some activities could be undertaken, given the gravity of the situation, we are still waiting for a program. The last one put forward at the federal and provincial levels was clearly inadequate.

As far as the automobile industry is concerned, I support my CAW colleague. Need I remind you that there is but one automobile manufacturing plant in Quebec, namely the GM plant in Sainte- Thérèse which has been threatening to leave the province for the past six years. That move would affect many residents of the Laurentian region and negatively impact Quebec's economy. The automobile industry is an important sector of our economy.

In conclusion, I'd like to talk about employment insurance. In our opinion, the government should implement the recommendations contained in the parliamentary report. There appears to be a consensus on this point. While we felt the report did not go far enough, we do believe that for now, the government should act quickly to implement the recommendations.

Earlier, I made a point of saying that your salary increases were, in my opinion, well deserved. However, if you fail this spring to pass legislation to improve conditions for unemployed workers, then I'll return to state publicly that you did not deserve these increases. If there is an urgent need for action on one issue, it's clearly on the EI issue.

The government and the various political parties made clear election promises to rectify the situation and to initiate reforms without delay. I'm not sure if these are technical considerations, because I don't quite understand all of this, but it seems to me that immediate action is warranted. It would help alleviate some of the concerns and cynicism felt by the poorest and most disadvantaged members of our society.

• 1625

Finally, I'd like to say a few words about premium levels. Even if things were to improve and the government initiated the reforms proposed by the parliamentary committee, premium levels would still be too high. We're not asking that premiums be lowered. It's important, in our estimation, to have some room to maneuver in the future. We're likely to have more periods of recession and we wouldn't want the government to be forced into slashing employment insurance, as it did in recent years. It's important to maintain some healthy reserves. If, in spite of everything, premium levels are still too high, then perhaps they could be reduced.

The real inequity is that middle class workers, that is people earning $25,000, $30,000, $35,000 or $40,000 a year, are the ones shouldering the burden of deficit and debt reduction. What's the government doing with the surplus in the EI account? It's using it to pay down the debt. And what about people who earn $100,000, $125,000, $150,000, $200,000 or even $300,000 a year, people who have no EI coverage? A good portion of their income is not covered by EI. Hence, they are not paying their share of deficit and program spending.

We're no longer talking about an insurance premium, but rather about an unfair tax on workers, because it's paid by lower income earners. We would very much like to see corrected this situation which we have been decrying for some time now.

There was a time when the government was in dire financial straits and was faced with some very difficult choices. We endured, but times have changed and today, the government needs to resolve these inequities as quickly as possible.

Thank you.

[English]

The Chair: Thank you very much, monsieur Massé.

We'll now hear from the Canadian Federation of Nurses Unions, Ms. Kathleen Connors. Welcome.

Ms. Kathleen Connors (President, Canadian Federation of Nurses Unions): Thank you. I'm pleased to be here representing the 118,000 nurses, registered nurses, licensed practical nurses, and registered psychiatric nurses, who we represent. Our members work in hospitals and long-term care facilities, in our communities and in our homes.

Not unlike the health care profession, when we talk economic policy, we get into some of the abstractions. I really hope that as we have the dialogue this afternoon, we do not get into such senses of abstraction that we forget that behind the monetary and fiscal talk are people, people who have feelings and families and friends and co-workers. I hope we can remember that. Just as nurses and doctors in the health care system hear discussions about health care issues, when we talk about the economy, we have to remember that the foundation of the economy is people, and healthy economies require healthy people.

The prognosis for nurses in the short to medium term in our economy is that we can't be too optimistic, because of our declining ability to prevent and treat disease. Like other workers, nurses worry about their jobs and their families. Right now our jobs aren't particularly great ones. They're having definite negative impacts on our families. To an increasing extent, the health of Canadians and our country is being affected by this. We're experiencing in this country an excruciating nursing shortage that, if not addressed quickly, will become a nursing crisis by the decade's end. Right now Canada is short to the tune of 20,000 nurses, and it will be five times worse at the end of the decade. I want to put it in perspective for you.

Nurses provide 80% of the hands-on professional care in the system. There are about 228,000 nurses in the system currently in Canada. Our average age is 48. Our average retirement age is 56. So by the year 2011, Canada will be short 113,000 nurses.

For nurses on the job right now, work means mandatory overtime. Mandatory overtime means you can be disciplined if you refuse to stay and work. That places an undue burden on nurses and their families, and it puts patient care in jeopardy when nurses have to work one shift after another, day after day.

• 1630

And I say to you, it doesn't end there. Nurses feel they are undervalued by administrators in the systems in which we work. Why is that? There's a short list. Pay is low relative to responsibility. Many doctors and administrators are deaf to nurses' suggestions, even when life is at stake. You only need to look at the Sinclair commission report in Manitoba on that issue. We have inflexible work rules, an inability to schedule regular hours, and consequently family life and vacations, and lack of support for continuing education and skills upgrading. We certainly share the concerns of other working people in this country.

These realities translate into a nursing workforce where the morale is low. We are the sickest group of workers in the country, and we work in the health care system. In some quarters nurses just aren't going to take it any more. Nurses in B.C. this afternoon released their strike rejection of a contract of 96%, saying no to the last offer. Nurses in Ontario are strategizing about what will happen next in their negotiations. Nurses are clearly saying enough is enough.

By our nature, we're caregivers, not activists. What's happened in the last decade to the system in which we work has changed all that. We truly are in the winter of nurses' discontent, and we feel there won't be a thaw soon. We've seen erosion of our medicare system, and we worry that our not-for-profit, publicly delivered system of health care is being taken away from us. We are coming reluctantly to the conclusion that governments are refusing to fix the system that has served our country so well.

In the 1980s and 1990s we heard people like Chrysler chairperson Lee Iacocca rail against the cost to business of private health care in the U.S. Lee said it cost Chrysler more for health care than for steel. He also remarked that there was no such burden in Canada. That's looking at private, for-profit health care at the business level. At the level of the individual, it's even more disturbing. I can put that human face on health care, because in the last 18 months, as an individual, I have seen the health care system from the patient's side of the bed. I was treated for bowel and uterine cancer and I got good care, but I saw a system and people who work in the system under tremendous strain.

But I know that in this country, if I get another catastrophic illness, I will get care again, unlike my neighbours to the south. I will receive no call from some silver-tongued insurance agent saying, Ms. Connors, hearty congratulations on your recovery, it's been really great to have you as a customer, but unfortunately, you no longer have any benefits with our company: hasta la vista, baby. We can all rest assured that we won't get that call in this country because of our medicare system, at least for now. But that's not a particularly comforting thought, is it?

I'm raising the issue of the nursing shortage and the erosion of medicare in a finance committee meeting because both issues have their roots in the budget cuts. The 1990s started the budget cuts. In 1992 Canada spent 10.2% of its gross domestic product on health care, but in that year concerns about reining in the deficit caused the federal and provincial governments to cut spending on health care. So from 1992 to 1997 per person spending on health care decreased across the country. Since that time, spending has begun to rebound, but we are still only at 1994 levels of per capita spending.

Meanwhile we've seen our economy grow, but our spending on health care not, despite the September 2000 agreement between federal and provincial governments. Today we are only spending 9.2% of the value of our gross domestic product on health care. That's down a full percentage point from 1992. In other words, the economy grew, but health care spending did not keep pace, and today our neighbours to the south spend 50% more per capita on health care than we do. So why all the talk about health care spending being out of control?

• 1635

Our brief contains a quote from Gord Guyatt of McMaster University Medical School, because he tackled it recently. He wrote:

The Ontario government's health spending rose from $17.7 billion in 1995 to $18.4 billion in 1999, a 3.8 per cent rise. However, after correcting for inflation and population growth, real spending per person fell by 6.7 per cent. Alarmists note that Ontario is spending 40 per cent of the provincial budget on health care. But that is not surprising: Queen's Park has chopped welfare payments, environmental protection, and education. Indeed as a proportion of provincial GDP, government expenditures have dropped from 16 per cent to 12 per cent since 1992. Meanwhile, the population has aged and is demanding more intensive health services.

The cutbacks have turned some premiers into reluctant pruners of the medicare tree, but for others, like Mike Harris and Ralph Klein, this gave them an excuse to begin hacking at medicare's trunk, while blaming it solely on the governing federal party. They also began crowing about private, for-profit medicine, even though there is no proof that private medicine is more cost-effective.

So we hear no one in government calling for the restoration of all the money cut from medicare. You might think the reason is that Canadians believe the agreement made last September restored all the money. You and I know different, don't we? Yet no government-delivered program is dearer to Canadians than medicare, and none is more central to our physical well-being.

I don't think we can continue to hear this assertion that we can't afford to spend more money on health care. We need to share with you, as nurses, some recent polling we did that said clearly that Canadians are prepared to forego tax increases to increase the number of nurses. They would cut direct aid and tax breaks to business to increase the number of nurses on the job. That is what I'm talking about, people as the face of what's happening in the economy.

The alternatives aren't very satisfying for us: longer waiting lines, delisting of services, more private clinics, like eye clinics and day surgery and cancer treatment clinics, and having groups like Aetna and Liberty Health and Humana and their private bills become part of our daily lives. We're not ready for that.

The brief we provide for you talks about other cutbacks, and as a nurse, I know about the social determinants of health. If you don't have a healthy environment, if you don't regulate what's going on in the environment, you're going to have sick people and you're going to spend at the back end of the system, instead of on the prevention. That is the same thing I call people programs, our social programs. You can't continue to cut vital social or people programs, housing, early childhood nutrition, care and education, that ensure many Canadians don't become ill early or become the catastrophic patients in our health care system. If you don't spend on prevention, you are going to spend on illness, and we just can't keep going down this road. Little bodies that don't get enough nutrition regularly grow sick. People without housing get sick and need expensive medical care. Children and adults without preventative health education and other health maintenance programs need the system more, and that is a shame. It's a burden for them, and it's a loss for our society.

So while we put billions of dollars on the debt, we are ignoring environmental and social programs, and we may be doing nothing more than shifting the costs and hiding the bill—and that's potentially a much larger bill, bigger in many ways. This is a shift that's bad for kids and their parents, and it gives all of us as a nation the sense that mean-spiritedness is what Canada in the 1990s and the new century is all about. I heard a teenager recently say to me, we used to care, but we don't seem to care any more. Is that our vision of Parliament? Is that your legacy to our children? I don't think so.

As I conclude, I would like to leave the three most important points I have to make.

First, fully restore the funding cuts from our health care system made in the 1990s. With the possible exception of spending to meet the rapidly rising costs of pharmaceuticals—and I repeat it, pharmaceuticals—there is no spending crisis in health care.

Restoring funding is not enough. To improve medicare, restored funds must be accompanied by a large dose of accountability. We've got to tie some strings to ensure that funds are spent to sustain health care providers, the system in which we work, and to truly improve patient care.

• 1640

Finally, many environmental and social programs are health maintenance and disease prevention programs. Cutbacks made to them in the 1990s didn't save taxpayers money; they simply delayed and shifted the bill. We have fought as Canadians to make our country healthier through medicare, social, environmental, and other government-initiated actions. Now we must fight to restore and improve them. I would suggest to you that our parents and our children deserve no less.

Thank you.

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

[Translation]

Mr. Marc Laviolette: Mr. Chairman, on a point of order. I see that there are some empty chairs around the table. We represent organized labour in Canada, the workers who generate the country's wealth. We've come here to discuss the Canadian economy and some members have, if you'll pardon the expression, “buggered off”. This shows a total lack of respect for workers. I think I should pick up my things and go home. We came here to discuss issues with elected officials, the people responsible for this country's economic policies, and we are facing empty chairs, as empty as government policies. That's how I feel about the absence of Liberal members. It's completely unacceptable.

[English]

The Chair: Well, there is actually a member here from the government side....

Monsieur Loubier.

[Translation]

Mr. Yvan Loubier: Mr. Chairman, I too am disheartened to see people representing millions of Quebec and Canadian workers come here to speak on behalf of their members and the unemployed and to see not one government member remain for the entire presentation. I notice that Ms. Bennett just happened to arrive. It's shameful.

I realize it's hard to listen to someone tell you the truth to your face, to tell you that the federal government hasn't invested enough in training and helping unemployed workers. However, the government must accept responsibility for its actions. In the last election, 173 Liberal MPs were elected to represent Canadians, not to hide when confronted with the truth.

Since we seem to have a consensus of sorts here today, I'd like to move immediately to table the following motion:

That the federal government introduce in the House of Commons before the adjournment of this session of Parliament a bill acting on the main recommendations presented by the Committee on Human Resources Development respecting the employment insurance regime.

I also request a vote on the motion immediately.

[English]

The Chair: Unfortunately, you can't deal with the motion because you lack quorum.

[Translation]

Mr. Marc Laviolette: And furthermore, we need a quorum. We should leave if there is no quorum. I traveled all the way from Montreal and I didn't come here to talk to the walls.

[English]

The Chair: Mr. Laviolette, with all due respect, I think you have made your point, but when it comes to running the finance committee, we do have certain motions we've passed that speak to hearing witnesses. To hear witnesses, we do have quorum. Unfortunately, we don't have quorum for a motion and I think Mr. Loubier knows that.

[Translation]

Mr. Yvan Loubier: Don't you find the lack of Liberal members somewhat shameful, Mr. Chairman? After all, there are 173 of you. Surely you could find enough members to put in an appearance to listen to such important witnesses.

Then we have to listen to all kinds of inane pronouncements in the House of Commons, precisely because your members are not well informed. They say just about anything and claim that the Finance Minister is justified in acting the way he is. You listen as if you were doormats and we wonder why you're not well informed. The reason is that you don't show up when the real debates are taking place.

These witnesses have come here today to tell you that there are other priorities aside from debt repayment. That's one consideration, but the needs of workers and of the unemployed mustn't be discounted. They must also be a government priority.

The health care system is crumbling owing to the shortage of workers. Over the next decade, we will be facing a frightening shortage of health care workers. As an MP, you have a responsibility. You rub shoulders with the Minister of Finance and with other decision-makers in Cabinet every day. Liberal members can exercise a tremendous amount of influence and they don't even bother to show up to listen to the concerns of those who represent millions of Canadian workers.

It's disgusting, Mr. Chairman. I can find no other word to describe the situation. And this isn't the first time that this has happened. But, it's not your fault. Opposition members are more often in attendance than government members. It's crazy.

[English]

The Chair: As I told you, Mr. Loubier, I can't comment on the attendance of members because it's improper for me as chair to comment on the attendance of members. I can say there are people who are present or absent at any given time from both sides of the House.

• 1645

To prolong this particular issue is really not the reason why I called the round table. I did that because I was very interested as a committee member to hear what labour had to say. Perhaps we can move towards the substantive issues of addressing the key concerns you cited by asking questions. I'd like to proceed to the question and answer session.

We'll begin with Mr. Peschisolido.

Mr. Joe Peschisolido (Richmond, Canadian Alliance): How much time do I have, Mr. Chair?

The Chair: Five minutes.

Mr. Joe Peschisolido: Thank you.

I'd like to welcome the witnesses and thank them for being here today. I'd like to begin with a question for Kathleen Connors.

I met two weeks ago with a group of nurses in my riding of Richmond who have come from the Philippines. They came over with a certain immigration class as nannies and they're having difficulties practising their trade—nursing.

What can be done to facilitate the chance to practise for these nurses, but also to maintain the standards all Canadians want for nursing?

Ms. Kathleen Connors: It's certainly an issue I am acutely aware of, and I'd like to make a couple of points.

With respect to meeting the health human resource needs of this country and addressing the nursing shortage, a country as rich as Canada, as one of the G-8 countries, should be addressing its health human resource issues in this country. We need to be able to entice people into all the skilled professions across the...and integrate all of the various nations from which Canadians come.

It is morally and ethically wrong that this country goes to third world countries, developing countries, and rapes these countries of valuable human resources. Nurses in the Philippines are primary health care providers. What kind of service are we doing to these countries by enticing their nurses to Canada in order to meet our needs? Having said that, individuals who choose Canada as a country they want to live and work in should be able to do so in the manner in which they have been educated.

We understand that under the current immigration legislation, there is a provision.... It isn't recognized that we are encountering a shortage of nurses. Philippine nurses who have come to work in live-in care provision of services...as nannies, because they have come in those positions, have no opportunities to be integrated into the system, unless they get agreement from HRDC and from provincial governments that their services are required.

It is incumbent on the country to make the kind of support available that would allow these nurses to pass the national licensing standard examination required of all Canadian nurses in order to practise, incumbent upon us to provide the kind of cultural support that would allow them to integrate into this country.

There are a number of ways we can get at it. But we as a country have to address the health human resource issue in Canada. Why can we not put in place the kind of training and support and educational programs to educate people in this country? That's a question for this and for provincial governments.

Mr. Joe Peschisolido: Ms. Connors, thank you.

The Chair: I've just been informed that we're going to have to go and vote around 5:10 p.m.—if that's correct.

Can we do rapid-fire questioning so we can get everyone to answer? If everyone can ask their questions, we'll go to the panel and seek answers. How's that? Is that okay?

[Translation]

Mr. Joe Peschisolido: There's one other thing. I agree with Mr. Massé that the government is confronted with some very real choices when it comes to training, education and health. In your opinion, what should the government's role be in our federal system, given provincial jurisdictions, in such areas as health, occupational training and education?

Mr. Henri Massé: Do you want me to respond immediately?

[English]

The Chair: Let's ask all the questions first.

[Translation]

Mr. Yvan Loubier: I'd like to congratulate you on your presentation and to apologize once again for this situation. However, as I said, this isn't the first time this has happened. I hope it won't stop you from coming back to see us. We do listen to your concerns and it is a pleasure, and indeed our duty, to convey them to the House of Commons.

• 1650

My congratulations on your analysis. Having listened to your presentation, I would like to share with you two of my concerns. Every riding is experiencing a critical labour shortage in all sectors, the high tech sector in particular, and Paul's riding is no different. We can't seem to find a lasting solution to this problem.

In my own riding in particular, we've been able to satisfy a mere 40 per cent of the demand for skilled and semi-skilled workers, despite a large scale advertising campaign. I'm concerned about that. What options would you suggest we consider?

I was somewhat surprised by the figure quoted by the CSN representative, that is by their projected surplus. You can easily double the amount of the projected federal surplus over the next few years. You've simply quoted the projected figures but taking into account the amounts Mr. Martin has neglected to include, you could double that estimate. Next year, even if we take the worst case scenario of an economic slowdown, the projected surplus is $17 or $18 billion. That's the real figure that you should be quoting.

[English]

The Chair: Mr. Crête.

[Translation]

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Thank you, Mr. Chairman.

First off, I'd like to congratulate the union movement on their actions at the Quebec Summit. I think you were successful in influencing governments' official position. You showed how peaceful protest can hopefully influence political action.

I'd like to respond to Mr. Massé's comments. Amending the Employment Insurance Act isn't a problem, technically speaking. It's a matter of political will. The government simply has to decide to implement the committee's unanimous recommendations. I agree that these recommendations are not a panacea, but they would represent a step in the right direction.

As you know, the government is set to debate premium levels in September or thereabouts. This is a very important issue because if this debate takes place without our knowing beforehand how the government plans to improve the regime, the temptation will be very strong to simply lower premiums based on the actual cost of the system. In order for the system to be self-funding, premium levels should be $1.85 for every $100 of earnings, whereas the current premium is $2.25 for every $100 of earnings.

However, we need to know what kind of improvements the government has in mind. I'd like to ask you if you would be open to the idea of taking, along with management everywhere in Canada, a joint stand on this issue, as we have seen happen in the past in Quebec for a number of issues on which a consensus has been reached. This way, all contributors to the scheme, whether employers or employees, could present a united front.

Do you think the parties would be open to this kind of idea? Ultimately we could end up with an acceptable premium rate? I'd like to hear your views on the subject.

[English]

The Chair: Mr. Nystrom.

Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): I also want to welcome the labour leaders here this afternoon,

[Translation]

and thank you very much for coming here

[English]

to give us your presentations.

Mr. Georgetti, in his presentation, talked about the 1990s being the worst decade since the 1930s, and he talked about the need to have better working conditions for working people in this country. I know he has a special interest in the investment of our pension funds, and just yesterday we were at the same book launch; the steel workers hosted a book launch for a book called Working Capital, about workers' pension funds. I wonder if you could, as well as anybody else, comment as to what policies might facilitate the investment of workers funds and union pension funds.

I know the bit about Quebec and the Solidarité, the funds you have there, but what kinds of policies might be useful, in terms of the federal government, to facilitate greater investment of workers' funds in areas that might produce more jobs and create a better standard of living? I think also, Mr. Georgetti and others, about the ethical funds and ethical screening. We proposed amendments to the CPP, for example, that the investment fund should go through an ethical screening, and there should be workers on the board of the Canada Pension Plan investment fund as well.

So, Mr. Chair, I would like some comments on those areas from whoever is interested in giving us some advice.

The Chair: Thank you, Mr. Nystrom.

I'm going to also ask a very quick question. I'm very happy to see that the issue of productivity is becoming much more—

Mr. Yvan Loubier: Are you speaking as a Liberal or as a chairman?

The Chair: I'm an independent chairman, as you know, Mr. Loubier. By the way, I thank you for voting for me; I really appreciated that.

• 1655

Mr. Georgetti, first of all, there's the issue of productivity, which is extremely important. I think it's pretty self-evident. I also like the fact that you're shifting language here. In presentations we always talk about quality of life and that, which is important, of course, but there seems to be a shift to standard of living. Is that intentional, or do you view an increase in the standard of living as in fact the way to improve the quality of life? That's my question, but of course we have a number of questions, so we'll start.

Mr. Laviolette, would you like to start?

[Translation]

Mr. Marc Laviolette: Yes. First of all, on the subject of semi-skilled labour, whether we like it or not, we are now reaping the results of past policies. Occupational and technical training have long been neglected areas. Today, recruiting people to work in these field is a problem.

One way to promote recruitment and to ensure that young people study in fields where the shortage is great is to enhance the profile of jobs in these sectors and to pay incumbents well. This would automatically spark an interest in young people.

In passing, the fact that employees in these sectors are unionized greatly enhances the quality of these jobs. Economic development and unionization are not contradictory goals.

Regarding the projected surplus, we've taken note of your comments and I must say that I'm not at all surprised.

Mr. Yvan Loubier: It's been five years.

Mr. Marc Laviolette: You know how it is. If our projections are too high, people will say that we're exaggerating. Therefore, we tend to be conservative when it comes to estimating the surplus.

Mr. Yvan Loubier: [Editor's note: Inaudible]

Mr. Marc Laviolette: That's right.

On the matter of adopting a joint position on improvements to the EI system, I have no objections to doing so in principle. However, it's rather odd that no attempt was made to arrive at a joint decision on the use of the surplus to pay down the debt. Everyone seems to be opposed to that idea. The general consensus seems to be that this is merely a hidden tax. Yet, the Liberal government forged ahead with its plan, even though this was not the program's intended aim.

In terms of investing pension funds in sectors with strong job creation potential, Quebec has quite a history in this area. Unions use vehicles such as the Fonds d'action and the Fonds de solidarité. Furthermore, the Caisse de dépôt et placement du Québec invests QPP funds and Quebeckers' savings in various economic sectors, always with the goal of creating, sustaining or developing jobs, as well, of course, of securing a return on these pension fund investments.

The debate on the subject of ethical investment practices is also heating up. The International Confederation of Free Trade Union to which both the CSN and the CLC are affiliated, has launched a campaign to ensure that pension fund investments do not result in the creation of jobs in which workers or children are exploited. However, that debate will have to wait until later.

As far as Quebec is concerned, this type of investment, which dates back to the early 1960s and the burgeoning Quebec economy, was the result of these policy decisions. A tremendous number of new jobs were created in the process.

You might say that this situation is unique to Quebec. That's true. However, I dislike speaking to empty chairs. Therefore, even though union want to negotiate, it is the party in power, not the opposition, that calls the shots. But we can't address government members, because they aren't here. Basically, that's all I wanted to say on this subject.

• 1700

[English]

The Chair: Mr. Laviolette, you should never underestimate the importance of members of Parliament on the other side, because they contribute to the finance committee quite a bit.

[Translation]

Mr. Marc Laviolette: I'm not underestimating them, but we know where government members are.

[English]

The Chair: Mr. Georgetti.

[Translation]

Mr. Marc Laviolette: No. They're busy voting themselves a pay increase.

[English]

The Chair: Go ahead, Mr. Georgetti.

Mr. Ken Georgetti: I just want to thank the Liberals very much for at least removing the member who was sleeping over there. That was a good start.

But I do want to thank the people here who listened, and I'd like to answer a few of the questions that were asked of me.

I'd like to start with yours, because I don't think there is a shift in what we're saying. In my view, quality of life and standard of living are one and the same thing. Our productivity is not something we're not proud of. We're very proud of the fact that we know from all statistics available in Canada that union workers are in fact more productive than non-union workers, and I would suggest they are because they have a better standard of living and more security in their work.

But seriously, though, our productivity is more determined by the quality and quantity of the investments that are made in the jobs we do, and the quality and quantity of the investments in the jobs we do are much predicated on the attitude the employer has with our members, the kinds of education and training they receive both before they work and while they work, and the kinds of job opportunities they have to get to. None of those are mutually exclusive. But I do think there is a package of needs that have to be there if you want to insist and ensure that productivity is a mutual goal, and at the end of that process the gains of that productivity have to be seen as evidenced to be shared in a fair way by people like that. So in some ways there's a shift, but in other ways I think it's the same thing.

I'd like to answer Mr. Nystrom's question—and my friend Henri and I share the same passion. But I think a large pool of capital exists out there in the form of pension funds. As an interesting statistic, 85% of all pension plans that exist in Canada today are negotiated at a bargaining table. Only 33% of the workforce is organized, and 85% of all pension funds are negotiated collectively. Of all pension plans that exist in Canada today, 50% are negotiated by public sector unions, clearly a large pool of capital.

I think the federal government can do a lot there. They should insist that money managers consult the owners of those pension plans in terms of how and when they make their policies and that the investment decisions reflect the moral and ethical standards of the owners of that fund. I think that's natural justice in business.

The federal government, to their credit, starting with the Quebec government as the lead, established employee-sponsored venture capital funds that now comprise the largest single pool of venture capital in Canada, controlled and organized by the labour movement. It's no surprise that we have ethical screens on those funds.

When we set ours up in British Columbia, we were told by experts that you couldn't make any money with those kinds of restrictions on your fund. After our first year, they said it was too early to tell. After three years, they say you can't measure it. Well, it's seven years old now, and it has only averaged 19% simple interest on the investment, compounded every year. If you take the tax credits into consideration, they've returned about 35% to the investors who put their money into high-risk capital and used part of that program to educate workers about venture capital and the need for seed capital.

I think that program has been a win for everyone in this country, and the government needs to be applauded for it. But they can do a lot more. I think it's time Canadians took responsibility not just for the work they do and the taxes they pay, but also the corporations they happen to own through their deferred wages.

Frankly, when you see companies like Nortel, which are owned by every Canadian who has a pension plan, lose 75% of the value of their company and reward their CEO with a $120-million bonus and $90 million in salary for laying off 25,000 Canadian workers...there's something wrong with our pension investments, letting CEOs do that.

The Chair: Madame Turmel.

[Translation]

Ms. Nycole Turmel: I'd like to comment on two things. You mentioned labour requirements. The federal public service is facing the same problem, particularly in technical and operational sectors.

In addition to the salary issue, the federal public service must contend with such problems as training and public service renewal. We don't have the budgets to train employees.

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Another consideration is that the average age of public servants today is 48 years. Moreover, at least 30 per cent of federal public servants are casual or term employees. Mr. Georgetti mentioned job stability and quality of life. What happens when the federal public service fails to set a good example?

Those are my comments. I think the government needs to focus on training and stability within the federal workforce.

[English]

The Chair: Ms. Connors.

Ms. Kathleen Connors: Well, certainly nurses would echo many of the issues around skills and training. We only need to look at what is happening in this country with respect to the American recruiters coming to this country and recruiting nurses who are educated in a post-secondary education system that is subsidized ultimately by the federal government and the transfer payments.

They're coming here; they're offering nurses the opportunity to continue their education, paid for by the employer. They're making an investment in their workers. Time and time again in this country.... It was only in Alberta in the last collective agreement that Alberta nurses achieved two days' paid leave for opportunities to continue their education and five days if you were working on any kind of a degree. That is a travesty. How are we ever going to attract Canadian nurses home again if we as a country cannot compete with the kinds of educational opportunities that are being made available?

We, as a federation working in conjunction with the Canadian Labour Congress, have begun work on a proposal to pilot a project under Human Resources Development Canada so that some of the EI dollars be made available to people in the health care sector for ongoing continuing education. If you enrol in continuing education in the post-secondary arena, you're not eligible to collect EI. We have to get at this, and there's the surplus in EI that could be invested in skills and knowledge, in valuing the work, and building on the skills the people in the sector already have.

On the issue of being able to attract people into the health care profession, let's be like the Republic of Ireland, for God's sake. They offered free tuition to people going into nursing. They said, we'll offer you free tuition if you come into the profession, and they've had young people choose that as a profession because of that kind of a break.

I know the Liberal Party has offered individual learning accounts. Why not look at free tuition in the areas where there are skills shortages? Make that kind of investment in the people who will work in the system and will be committed to stay, if they're valued, as they work in that throughout a career. Make it a career, not a job, and value that.

The Chair: Thank you.

Mr. Murnigham.

Mr. Bill Murnigham: Quickly, I have two points. Again, an issue that's facing everyone is this question of skill shortages throughout industry, in the public sector, construction, manufacturing, and everywhere. One point I'd like to make is that the dynamic of training should be turned on its head. We're looking towards private corporations to share the burden of that. They see, in their own interests, that people become skilled and they leave. That becomes a problem.

I think what we need to do is recognize that this is one of those issues that's an absolute market failure. The market cannot provide this kind of training on its own. It can be encouraged to do it, but I think we need to restore base funding for post-secondary education and the EI funding for training in industries that are restructuring, for apprenticeships, and other things. So again, I think the point is that the dynamic has to be changed very quickly.

On the second point that was raised by the chair on the question of productivity, I would like to offer the comment that working people hear an awful lot about productivity. It's very true. The points were made by Mr. Georgetti about investment. Investment is the key to raising productivity. Just to offer the point about changing thinking and changing language, we talk about the public sector and investment. I think maybe we can use the language of productivity. If we want to raise productivity in the public sector, we need to invest in the public sector. And we can bring that kind of thinking towards the things that are being underfunded, like health care, education, housing, and the public service in general.

The Chair: Monsieur Massé.

[Translation]

Mr. Henri Massé: Speaking about real choices, we've often come before these committees to present alternative solutions to government decisions. We did so at a time when the deficit was enormous. I do believe it was important to tackle the deficit problem. Canadians and public servants were asked to make some major sacrifices, but perhaps there was no other alternative. However, now that the government has some room to maneuver, we need to give these matters more serious consideration. To my mind, the disturbing things is that it always turns into a dispute between the federal and provincial governments.

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The federal government has earmarked funds for education, but not necessarily for the initiatives the provinces had in mind. The same holds true for health funding. We need to move beyond this bickering, admit that we have a real problem on our hands and look for ways to resolve the situation.

In conclusion, I'd like to comment briefly on productivity and training. In terms of productivity, we are still trailing the US, although we have made some gains. It will be difficult to catch up, with our dollar hovering at 80 cents. High tech equipment is imported primarily from the US or from countries where we are required to pay in US currency. Therefore, we are seeing fewer technological changes than we should be seeing and the situation will continue as long as the value of our dollar remains low.

The one advantage we do have is training opportunities which are superior to those offered by other countries. This is one area in which we should be investing heavily. Even if we lag a little behind on the technology side, if we make up ground on training, we can keep pace with the US in terms of productivity. Again, it's a question of investing money and again, we're confronted with disputes between the provinces and the federal government.

A manpower training agreement was signed with Quebec, but the current budget does not allow for occupational training. There are no funds allocated for on-the-job training, even though we all know that big changes are in the offing. The government needs to invest in the training required and needs to sign agreements with the provinces, given that most already oversee training issues themselves.

[English]

The Chair: Thank you. On behalf of the committee, I would like to thank you very much. Unfortunately, we have to go and vote, and there will be no bells. It will be at 5:15.

I do want to express to you my sincerest gratitude for your presentations. As you know, I personally feel that the views of labour are extremely important if we are to address the issue that I think is first and foremost in Canadians' minds—namely, developing an agenda that speaks to raising the standard of living for all Canadians. We've touched upon the issue of productivity. I of course appreciate your perspective on that. It's been a very interesting panel.

Before we go, I do have a very quick announcement that has to do with our finance committee. Pat Steenberg has been with us for the past two and a half years doing an excellent job as clerk. She's going to be moving on to a new job that I think she will be very passionate about. She's going to be with the Canadian Churches for Justice and Peace.

It's a great cause, of course, Pat. Needless to say, we're going to miss you. On behalf of the committee, I'd like to express to you my warmest and sincerest gratitude for an excellent job during the past two and a half years. Thank you.

On that note, the meeting is adjourned.