[Recorded by Electronic Apparatus]
Thursday, May 4, 1995
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[English]
The Chair: Could we come to order? The finance committee is continuing its reference into Bill C-76, with Harvey Weiner, deputy secretary general of the Canadian Teachers' Federation; and Marie Pierce, executive director of the Canadian School Boards Association.
Thank you both very much for being with us. We look forward to your presentations.
[Translation]
Mr. Harvey Weiner (Deputy Secretary General, Canadian Teachers' Federation): The Canadian Teachers' Federation is the national voice of the teaching profession in promoting educational excellence, the status of members of the profession and equal access to public education. The CTF co-ordinates and facilitates the sharing of ideas, knowledge and skills among the 13 provincial and territorial organizations that are affiliated with it and that represent in total over 240,000 teachers. Marie will describe the CSBA.
[English]
Ms Marie Pierce (Executive Director, Canadian School Boards Association): The Canadian School Boards Association is the national voice of school boards and school trustees. As such, we represent the local level of government. CSBA comprises 10 provincial and territorial school board associations, representing over 5,000 trustees who administer over 500 school boards serving more than 3 million elementary and secondary students.
CSBA promotes educational excellence, gives leadership on issues with national implications, and fosters the maintenance of the principles of local autonomy in education.
Both ourselves and the Canadian Teachers' Federation will limit our comments to the concerns we have about the proposed Canada health and social transfer plan as outlined in the 1995 federal budget and Bill C-76.
School board and teacher representation before the Standing Committee on Finance with regard to the proposed Canada health and social transfer is a natural outgrowth of our activities and concerns related to the whole social security reform process. Both of our associations made submissions and presentations concerning social security reform, specifically as it related to the impact on the children and youth we serve in our schools.
We have copies of both of our association's submissions to that reform process, and we'd be pleased to hand them out at the end of our presentation.
In the reform process, our central focus was on fairness and equity and accessibility to social programs through the development of clear national standards and support within those standards for provincial flexibility in developing innovative approaches that respond to local needs.
Specifically, we have seven areas we wish to highlight, and I will ask Harvey Weiner to comment briefly on them.
Mr. Weiner: Thank you, Chair. I propose to highlight very briefly the issues that are of concern to us, and we certainly would welcome the opportunity to engage in discussion with you and to try to reply to the best of our ability to the questions you have for us.
The first concern is what we feel is the need for a broad discussion and debate on the implications of this transfer, how this transfer will play out in the daily lives of the individuals who will be affected by it. We are therefore very strongly supporting the extension of these hearings to provide opportunities for Canadians to be heard in the various regions of Canada.
On the issue of national standards, both of our organizations strongly support the notion that there must be agreement between the provinces and the federal government on some basic standards or principles - call them what you may - that will in fact ensure that all Canadians, regardless of which part of this great country we live in, have an opportunity to access the social services and health services that would be covered by this particular transfer, as Marie put it, on a fair and equitable basis. This is not to say that we do not recognize the need for some flexibility provincially, locally, in terms of delivery of services, but we believe that flexibility must be within the parameters of these standards or principles, which will ensure that all Canadians, regardless of what area of the country they live in, have access to the services.
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I have covered the issue of fairness to some extent, but there is a tremendous concern that, when coupled with the reduced funding that is implied by this transfer, a number of individuals are really going to be affected, individuals who do require assistance, who are not necessarily at the very bottom of the economic scale, that these people are going to be excluded, and that we're going to end up with an increased gap between those who have and those who have not. This is a further argument for the need for standards at the national level.
We believe accountability is another critical issue that should be addressed, and we have a lot of difficulty in trying to understand how accountability is going to be ensured under a system that is likely to result in fewer and fewer federal dollars being provided for the purposes that are outlined in the Canadian health and social transfer.
On the issue of economic stabilization - and we point out that we're sure the members of the committee are well aware of this - under the CAP plan, federal transfers in fact have acted in the past as, what we call, a semi-automatic economic stabilizer. This particular function is going to be lost, because regardless of the state of the economy as we look down the road, the transfers, as they are projected from the federal government to the provinces, are likely to decrease.
On the issue of deficit reduction - and I point out here that both organizations are in agreement with the need for deficit reduction - we are tremendously concerned that the kind of analysis and evaluation of what the CHST will mean in the area of deficit reduction has not been looked at as closely and as carefully as it should have been, and that there are a number factors that must be examined in much more detail. In other words, we're not really convinced that this is a move that is going to result in deficit reduction; it may very well result in simply shifting the burden in different ways. The average Canadian, and particularly those with less than average means, will find themselves paying more. Whether it is taxes or paying out of one's pocket, it is disposable income. I think the real issue for Canadians, particularly those who are less fortunate than others, is the amount of disposable income they will have in order to ensure that these basic services they need are going to be offered.
Certainly last but not least in this overview, the issue of child poverty is of tremendous concern to us as people working in the education sector, and there is certainly tremendous research available that indicates that child poverty has an adverse influence on children's capacity and readiness to learn and their ultimate success in school.
We are well aware that the present government has indicated in the social policy review that child poverty is a priority and a fundamental issue, but we see some terrific contradictions between this proposal and how the needs of the children in those situations will be addressed.
The recommendations that we put forward to the committee are on page 5 of the brief. They are, in the first instance, that the opportunity for more Canadians to be heard and to be heard in every section of this country be provided.
The second recommendation is that an impact study on the potential effects of the CHST on other government expenditures, as well as potential tax revenues, be done. We believe there are perhaps a lot of unintended consequences of this block transfer that have not really been examined fully.
The third recommendation is that the federal government continue to maintain and retain primary responsibility for income security for families with children, just as it does for senior citizens.
Marie will provide the last two recommendations.
Ms Pierce: In light of the comments we've made on the proposed Canada health and social transfer, we are recommending that the provisions pertaining to the transfer be deleted at this time from Bill C-76.
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Finally, we're also recommending that a new bill be introduced on the Canada health and social transfer-related provisions when a negotiated agreement is reached between the federal government and the provinces that establishes national standards for all health and social assistance programs.
We'd be very pleased to answer questions on our submission at this time.
The Chair: You haven't mentioned the deficit. Is it a problem to you?
Mr. Weiner: Yes, it is. We did mention the deficit, questioning whether in fact this -
The Chair: Do you have other ways that we could handle it? Do you think if we leave the payments the way they are now, renegotiate all brand-new ones with national standards, that will have a positive impact on the deficit without cutting transfer payments at all?
Mr. Weiner: It's certainly our view that the federal government has not made an effective case, that these measures are in fact going to reduce the deficit as far as how Canadians are going to be impacted by it. We talk about disposable income and I think that's what Canadians are concerned about. How much money -
The Chair: No, that's not my question to you. I'm talking about the federal deficit. If you think Canadians don't appreciate our deficit reduction measure, that's one thing.
Mr. Weiner: We're not in disagreement with deficit reduction measures. It's the means by which these measures are to be achieved with which we have some difficulty.
The Chair: Do you think there are cuts that we could make in other areas or taxes that we could raise?
Mr. Weiner: Yes.
The Chair: Which taxes should we raise?
Mr. Weiner: We certainly believe that a case has been made and it has been put forward by a number of people that we are suffering from personal, individual tax overload.
The Chair: Could I ask you which taxes we could increase?
Mr. Weiner: Personal income taxes. There are other services that could be looked at, offered more efficiently.
The Chair: Which ones?
Mr. Weiner: But when we're talking about the basic services that Canadians need -
The Chair: No, I want to know which taxes we can increase. We can increase personal taxes.
Mr. Weiner: Personal taxes definitely can be increased.
The Chair: Thank you.
[Translation]
Mr. Loubier (Saint-Hyacinthe - Bagot): Thank you, Mr. Chair. Mr. Weiner, Ms Pierce, I greatly appreciated your recommendations 4 and 5. If I had to amend this bill, I would introduce these two recommendations to delete the part concerning the Canada Social Transfer in order to eliminate any ambiguity that could have arisen since the tabling of the bill.
Concering your fifth recommendation, I would like to ask that the provinces and the federal government start by sitting down together in order to reach some kind of agreement or consensus and that, if the social transfer under the CAP for post-secondary education and health care must be redefined, it be done through consultation and not imposed, as the bill suggests.
I have a question for you. You were speaking earlier about the need for national standards. Your main reason was that having national standards for health care only, and not for the other transfers made by the federal government in connection with the new Canada Social Transfer, would reduce the budgets allocated to other social programs. Do you feel that the national standards appply only to the obligation to use public funds for the purposes for which they were released by the federal government?
Mr. Weiner: Yes, you're right. We want to ensure that there are basic services in each of these areas covered by the Transfer and that this does not vary because the current legislation says that no one can be prevented from moving from one province to another, from having the advantages taht one province offers. It is not necessary to establish a place of residence for six months, for one year or whatever. So there is in fact some fear that services are starting to be reduced.
Some people may move because of greater benefits in one province than in another, and this will put other pressures on these provinces, which will make more and more cuts. It is a downward spiral. We don't want to have a society like the United States in which there is a vast difference between rich and poor and in which there are not even any basic services. There are disadvantaged people in the street who don't have access to any services. We are gradually starting to see things like that, even in our society , and we feel that not enough thought has been given to the potential effects of this transfer. We are not convinced that it will reduce the deficit. On the contrary, we feel that it will cost just as much, if not more.
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Mr. Loubier: Sir, we are talking here about a national standard. It is my understanding that where national standards are concerned there is a requirement to use federal public funds for the purposes for which they were released. But a number of other things enter into this. Concerning national standards and guidelines. There is also some talk of modifying programs like income security in the various provinces, for example, to make them comparable in terms of benefits or eligibility for these benefits.
Would you agree that these standards do not apply only to the obligation regarding the use of funds? If so, you have not said anything about post-secondary education. Would you also be in favour of national standards or guidelines which would apply to the entire post-secondary education system across Canada, including Quebec, and which would ensure that the same programs would exist in every province or would you be in favour of Ottawa overseeing provincial post-secondary education programs?
Mr. Weiner: This is a very difficult question in that there are also a number of constitutional implications, given that there are currently no standards in these areas. Speaking on behalf of my organization, we would not be opposed to having standards governing what is taking place in post-secondary education, but not to the point of preventing each province from spending or from doing things that other provinces may not be doing.
Mr. Loubier: Would you agree, Mr. Weiner, that the spirit of this bill, pending any amendments, is a bit provocative, since it is telling the provinces that if they do not follow the national standards - and we do not know how these will be determined, since there is no requirement that there be unanimous agreement between the provincial and federal governments - there will be cuts in federal funding, in federal transfers? Would you not agree that this is no way to improve relations between the federal and provincial governments?
Mr. Weiner: In fact, we would like there to be an agreement between the provincial and federal governments and for this agreement to contain certain national obligations that would have to be respected by the provinces.
Mr. Loubier: Unanimous agreements, veto power for the provinces with respect to education, for example.
Mr. Weiner: As I mentioned, our position on education is more complex, but not in the other areas. Our position on education is much more complex because of the constitutional provisions.
Mr. Loubier: Thank you.
The Chair: Thank you, Mr. Loubier.
[English]
Who's going to speak for the Reform today? Mr. Grubel.
Mr. Grubel (Capilano - Howe Sound): Clearly, the core of your presentation concerns national standards, and I'd like to come from a different angle. I'd like to quote where you said ``Provinces and territories would therefore be free to provide whatever kinds of social programs they choose''. I'd like to change that sentence a little bit.
What it is saying is that the provincial and territorial governments, the creatures of duly and democratically elected Parliaments, would therefore be free to do what they choose. You deplore this. Some people would say that in fact it is about time that the heavy hand of an intellectual, bureaucratic elite in remote Ottawa lose some of its power and that in fact the removal of those standards is a strike for democracy and freedom and that it would be highly welcomed.
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Mr. Weiner: My response to that would be the following. This is a country. It is not 10 provinces and 2 territories; it is more than that. There's a country called Canada, and in that country called Canada we have tried to achieve the best balance we can of collective and individual rights. The kinds of rights we're talking about in terms of the CHST are, in the estimation of our members, collective rights. Every citizen of this country has a right to decent health services, social assistance, and education services, and those are services that should be guaranteed by government.
Mr. Grubel: Where do these rights come from and why should they be guaranteed by government? Where does it say so?
Mr. Weiner: Where does it say so? It is a tradition that we have built, it is something that I think we have respected for generations, and it is something that we and our members fear we are beginning to lose, that we are sliding down a slippery slope to where we will not have one country but 10 or 12 countries.
Mr. Grubel: Are you saying to me that before these principles were adopted there was no Canada, there was no country? Are you telling me that other countries of the world, like Switzerland, that do not have national standards cannot be considered to be countries? Isn't Switzerland a country?
Mr. Weiner: No, I'm not suggesting that at all, and I understand that countries have evolved and developed differently. But I also understand that Canada is a country that has received recognition worldwide for the kinds of basic principles and standards that it has established for those who are the most unfortunate in society. I feel we are gradually beginning to lose that, and this is of terrific concern to our members. We want to find ways to preserve what is essential, what is different, about Canada in terms of how it treats the less fortunate in society.
Mr. Grubel: I beg your pardon, but shouldn't it be up to the people who are paying the bill to decide how they take care of the less fortunate? We are not talking about not caring for the less fortunate; we're only asking for the right of the people of British Columbia to decide how they do it on their own. Are you telling me that the people of British Columbia do not care for their poor, that the Government of British Columbia, duly elected, is not taking care of the poor and the rich in a way in which, in its own compassion, it thinks is correct, that British Columbia needs your advice on what to do and in fact it needs the heavy hand of the federal government to tell them what to do?
Ms Pierce: I would argue that we're not saying that. I think what we're trying to do is provide a balance between the federal and the provincial provisions in delivery of programs. I think what we're arguing quite strongly for is the whole question of equity and fairness across the country, so that an individual, whether he lives in British Columbia, New Brunswick or Newfoundland, can still be assured that there are national standards or guidelines within which social security programs will be delivered and that he will have equity in access to those programs.
In fact, we are trying to argue that, within those national guidelines, national principles, national standards, or whatever you want to call them, there will be flexibility for provinces to design programs that meet their needs. But without the national guidelines or standards, I think we're not ensuring equity, we're not ensuring fairness, in delivery of programs.
So we're not saying that British Columbia doesn't want to take care of its citizens with compassion - we think it will - but I think we have to ensure that there are national approaches so that there is the equity and fairness.
Mr. Grubel: You're just repeating what was said. The point is that we already have equalization payments in order to have, as close as possible, an opportunity for each region, whether it is poor or not, to have the opportunity to do so. What is at stake is a very fundamental issue in Canada, namely, whether the heavy hand of the elite - the sort that you represent - should be dictating to remote parts of Canada on how they should spend their money. Why can't they be relied upon in a democratic process to do what's best for their people?
Mr. Weiner: The logical conclusion of your argument is that there should not be a Canada.
Mr. Grubel: That is not correct.
Mr. Weiner: Yes.
Mr. Grubel: Was there no Canada before 1960?
Mr. Weiner: Is there an elite who elected you to the House of Commons? Are those who are elected federally serving an elite or are they serving the entire population of Canada? What is the Government of Canada responsible for? What should the Government of Canada be dealing with? Those are the issues that we are raising.
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It seems to me with those issues, the kinds of issues that we're talking about now, we have a strong tradition of federal government involvement in those issues to ensure that all Canadians, whatever region they live in, do have that kind of fairness and equity available to them. That's what we're discussing, not the right of the individual British Columbian to make decisions within their own province. But there is a balance, and we're saying that the federal government has a very important role to play in achieving that balance.
Mr. Grubel: I have just one last question.
There's no doubt that the tradition existed for at least 25 years. What I'm hearing from my constituents is that it's now time to re-examine this tradition. I'm giving you the other side and I want it to be on the record.
Mr. Weiner: I understand the other side and we can agree to disagree, but when we're talking about constituents - my financial status, your financial status - my voice is much louder than a lot of people in this country and I'm sure yours is as well. It's those voices that have to be heard as well because they don't have the financial means in many cases or the extensive financial means that we do to access those services in other ways. You and I do have that luxury.
Mr. Grubel: Every four years they have a chance to have the most powerful voice there is and throw out people they don't want.
The Chair: I hate to interrupt this because this is probably one of the liveliest exchanges we've had in a while.
Mr. Weiner: Great. I'm enjoying it.
The Chair: Do you mind if I move on?
Mr. Grubel: Certainly not.
The Chair: Thanks, Mr. Grubel. Mrs. Brushett.
Mrs. Brushett (Cumberland - Colchester): Thank you, Mr. Chairman, and I would like to thank the two witnesses for coming here this morning. It is indeed spirited.
I would take you to the third recommendation on page 5. There are many people who believe that we have thrown considerable amounts of money at the problem of child poverty and we really haven't solved the problem. In the instances of which I'm fully aware, coming from municipal politics in the province of Nova Scotia, the more money there is, the more actual exploitation in effect in some cases occurs and the greater the severity of malnutrition amongst the children and less interest in education and less likelihood of that family to ever get out of that poverty trap.
There are those who believe that money isn't the answer. You're suggesting here that maybe we should have a guaranteed income for people with small children, as we do with seniors. I guess I'm looking for some elaboration there. If you did bring in, for example, a guaranteed income or guarantees of sorts across this country, is that any indication that we would solve the problem?
Mr. Weiner: You may be reading a little bit too much into what we're saying. We certainly share the view that money is not the answer. What we need in this country when we're addressing child poverty is a much more integrated and comprehensive approach that addresses all of the aspects that are related to the poverty issue. It may well mean that in developing that kind of process and implementing it at a community level - and it seems to me that's where some of that is going to happen - we can in fact address a lot of those issues much more effectively. We certainly believe that at the federation, and I believe the CSPA believes that as well.
But in order to do that, we come back to the standard issue. There has to be a commitment at the level of the country that in doing this we are going to assure that people who are in fact in those circumstances, below certain income levels, will in fact have access to the kind of range of services by whatever means they need to lift themselves out of those circumstances and help raise their children in a much better way.
Mrs. Brushett: Don't you think - again, there is the value of time here - that there is this opportunity, through elected municipal persons, through provincially elected people, that we do have the process, and through our elected school boards we have a great variety of very community-minded people who will ensure that they can, if they're closer to the program, meet those needs?
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Mr. Weiner: We can't abdicate at the national level - I think we have to build the principles and the overall parameters for this to happen. We don't have to dictate exactly how it's going to be done in each community. But if we let that go and if there is the sense that the federal government is just simply offloading its problems onto the provinces and the municipalities, it's not going to happen to the extent that I'm sure you and I would like it to happen. So we feel we need that balance.
Parameters, guidelines, or standards will not necessarily mean that everybody does it the same way, but it does mean that there is the commitment, federally, to ensure that there are adequate funds that are going to be provided in order for the provinces and the municipalities to do the kinds of things that I think both you and I would like to see done.
Mrs. Brushett: Thank you.
The Acting Chair (Mr. St. Denis): If there are no further questions, I'll just ask my question, since the chair had to absent himself for a few minutes.
On the question of national standards, I read a poll recently - and I'm sorry I can't quote the name of the pollster, but it was a reputable firm - that suggested that something like 88% of Canadians supported national standards in the area of post-secondary education. I see the Paul Martin budget as the beginning of a process of empowering provinces in the areas of health, post-secondary education and welfare, and further empowering individuals, even in a context where there have to be fewer resources.
I take it from you that there would be a willingness to look at some appropriate national standards, and I applaud you for your eloquent comments in support of that. Do you have some examples? Is there a national standard possible for literacy and numeracy? Are those the kinds of things that would be appropriate for a country such as ours, or are there some other ideas? I believe it goes to the heart of this whole issue of empowering the provinces.
Mr. Weiner: In the area of student mobility and the ability to access and move from college to college and university to university in different areas of the country, there are a number of things that could be looked at to help facilitate that so that we don't have the kinds of situations that sometimes occur, where recognition from one university to another, in different provinces, becomes a difficulty or a problem for the student and for the institution, given the different kinds of requirements that are there.
So there are things we're prepared to examine. I can't state at the moment that it is precisely this or that that we think could perhaps be done in a way that would be reasonably comfortable, although as a Quebecker I do understand the perspective that the Province of Quebec has traditionally had on this, whether it be a Parti québécois government or a Liberal government. It is a sensitive issue and it's an issue in which we traditionally have not had this. As you point out, most Canadians, and I think Quebeckers, when you talk about it, do like to see this kind of thing and do want this kind of thing to begin to develop. It's something we're open to, would like to examine on its merits and feel we could address at least in some ways.
The Acting Chair (Mr. St. Denis): A short supplementary, Mr. Loubier.
[Translation]
Mr. Loubier: Mr. Grubel and I are not on the same wavelength on this. You have just given us a key. You say that there are not yet any standards in the area of education. However, we all know people in our communities who studied in Quebec and who then went on to study at Queen's University or elsewhere, even at the University of British Columbia, without any problem because the standards, probably through the law of the marketplace - and this is the only thing Mr. Grubel and I see eye to eye on - evolved on their own. The same thing happens in the other direction also. We all know college or university students from outside Quebec who study at McGill University, l'Université de Montréal or l'Université du Québec and who had the type of background expected by Quebec universities. Why is it that today we need to have national standards when we never needed them before and may have been much better off?
[English]
Mr. Grubel: Some people are slow learners.
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[Translation]
Mr. Weiner: That may be. I know that Ms. Pierce has something to say about that. We know there is some room for improvement. Most of the time, when there are problems, they can be resolved. But sometimes they can't. I feel that shouldn't stop us from getting together to discuss real problems, whether they be serious ones or minor ones. How can we organize ourselves? Do we need standards for certain things? Maybe not, but for other things it may be necessary. We are open to that.
We know that the will of the vast majority of Canadians has been expressed, and we are looking at that. I feel that Quebeckers want their children, if they want to go elsewhere, to have access to programs at Queen's University, as you said, at UBC or at any other university. Why can this matter not be dealt with in such as way as to resolve some of these problems? The answer may not lie in standards but in principles. We have to at least look at this.
[English]
The Acting Chair (Mr. St. Denis): Ms Pierce, do you have a fast comment?
Ms Pierce: I would like to make one comment on that. Although some individuals have no difficulty going from province to province, a lot of individuals do. I think it has been clearly indicated that there's a need to look at the whole issue of portability and the ability to have access from province to province at the post-secondary level of education, and at the secondary level, where we have a lot of concerns as well.
Our organization represents trustees who a lot of times have difficulty trying to argue the local approach to issues. Although we quite strongly advocate the need for local development of solutions and delivery, we also support the need for the development of national approaches and guidelines. So we can reiterate once again, although it caused a lot of discussion, the issue of fairness and equity.
The Acting Chair (Mr. St. Denis): On that note, thank you both for appearing. You've added quite a bit to the discussion and we appreciate that.
Our next witnesses are from the Canadian Hospital Association: Laurent Isabelle and Carol Clemenhagen.
Welcome, Mr. Isabelle and Ms Clemenhagen. We've had Ms Clemenhagen before this committee on a couple of matters, I think the pre-budget consultations last fall and the GST about a year ago.
Which of you will lead the discussion?
Mr. Laurent Isabelle (Vice-Chairman and Board Member, Canadian Hospital Association): I will.
The Acting Chair (Mr. St. Denis): Mr. Isabelle, please proceed.
Mr. Isabelle: Thank you. By way of short introduction, the Canadian Hospital Association is a federation of eleven provincial and territorial health associations and our membership represents approximately a thousand health facilities and agencies in the country.
CHA sees itself as well and is recognized as the voice for health in Canada.
Our mission as an association, very simply, is to promote health service delivery in Canada through policy development, advocacy, leadership, and of course association services.
Should you want more information about the association and its mission and services, we'd be very glad to provide that.
With respect to my presentation,
[Translation]
The Canadian Hospital Association applauds the decision to recognize the importance of the visibility of ``health'' in the Canadian Health and Social Transfer, or the Canada Social Transfer as it was called in the initial document.
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Nonetheless, with the implementation of Bill C-76, the Budget Implementation Act, 1995, the Canadian Hospital Association is urging the federal government to:
(a) establish a minimum threshold for guaranteed funding and equal transfers per capita for health care, using a formula that will provide for an appropriate growth mechanism to be introduced as soon as the signs of a sustainable economic recovery are confirmed and Canada's financial situation becomes more healthy;
(b) (obviously, you are expecting the Association to ask this, but I am going to anyway) - commit to allocating transfers of stable, adequate and predictable federal funding specifically for health care, the amount of which would not be lower than - we hope - that of current transfers for health services, which total close to $7 billion;
(c) promote health care reform intended to maintain the worthwhile elements of our system and to change what should be changed in the best interests of consumers and taxpayers.
The health services community is not seeking an increase in its budgets. On the contrary, not only is our sector committed to working within the limitations of reduced funding for health but it is also actively seeking increased efficiency while ensuring quality of services.
By way of example, I would like to give you two things to think about. The Ontario Hospital Association knows that there are currently 53 hospital integration projects under way in Ontario. Some of these 53 integration projects involve mission changes for hospitals; and even hospital closures. Fifty-three transformation projects in Ontario out of a total of 200 hospitals - that is significant. That is an example of what is happening at the provincial level.
I also have a local example. In Ottawa-Carleton there are at present 10 hospitals. The District Health Council is currently studying a restructuring proposal and recently, in the context of my duties as chair of a committee of chairs of the boards of directors of 10 hospitals in Ottawa-Carleton, I had an opportunity to submit a proposal to reduce the number of hospitals in Ottawa from ten to four. These are two examples to demonstrate my belief that we are proactive in this area.
The Canadian Hospital Association believes that the federal government will be in favour of renewing the health care system if it:
- confirms that it will link transfers of stable and adequate funding allocated specifically to health care to the agreed-upon national principles which govern public health insurance and which are the cornerstone of the Canadian health care system, which has an international reputation for excellence;
- acknowledges that the debate on the portion of the tax points taken for reference as the federal contribution to health care is a fruitless debate which can only support the perception of lack of interest and gradual withdrawal by the federal government from the health care field (tax points are considered to be provincial revenues collected by the provinces);
- clarifies the definition of the term ``medically necessary'' as a starting point in the dynamic process intended to determine the range of basic services provided by the government and consequently the appropriate ratio of public and private health care spending within the Canadian health care system;
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- asks the National Forum on Health, chaired by the Prime Minister, to focus its efforts on funding and accountability and to act as a catalyst in stimulating in the field cost-cutting initiatives in the most costly areas; and
- finally, invites consumers, the Canadian Hospital Association and fellow health care organizations to participate in all federal-provincial negotiation processes aimed at clarifying the underlying principles and objectives of the Canada Health and Social Transfer.
Although they do not pertain directly to Bill C-76, the Canadian Hospital Association invites the federal government to give due consideration to the following elements which have a considerable financial impact on health care facilities and organizations in Canada and are thus relevant to the implementation of the budget. Here I would like to make two main points:
(a) The exclusion of diagnostic specimens and biomedical waste from the requirements of the Hazardous Products Act should be confirmed. If this exclusion is not feasible from a legislative standpoint, Bill C-62, the Regulatory Efficiency Act, should be enacted, and we should accept the proposal of the Canadian Hospital Association to use this innovative legislation to eliminate the unnecessarily costly regulatory burden of the Workplace Hazardous Materials Information System (the WHMIS) on diagnostic specimens and biomedical waste in the health care field. The safe practice of the current universal precautions concerning blood products and body fluids implemented in workplaces already surpass the safety objectives aimed at by the WHMIS and constitute a more effective way of reaching its regulatory objectives; and
(b) the tax burden on health care organizations should be reduced as much as possible because of the federal sales tax. This involves a commitment to hospitals, and a corresponding commitment to non-profit health services administrations, that these charitable institutions will not have to bear - through replacement of the GST (the Goods and Services Tax), which is also a federal tax - a heavier tax burden than under the previous tax systems. If the purpose of a national value-added tax is to simplify tax administration, then regional health care authorities, hospitals and non-profit long-term care facilities and organizations should be granted exemptions. Accordingly, these organizations would not collect tax on the sale of products and services but could, for their purchases, claim input tax credits. This seems strange, but there it is. The effect would be to eliminate the current administrative burden inherent to the GST, to simplify compliance procedures and, in light of the fact that health service organizations are essentially isolated from the marketing and production areas, avoid any distortions in the new tax system. If a rebate structure was provided for in connection with the federal VAT, regional authorities, hospitals and non-profit long-term care facilities should be granted rebates of no less than 86 per cent. Before introducing any changes to the tax system, the potential impact of such changes, including transition costs, should be thoroughly analysed in conjunction with the Canadian Hospital Association acting on behalf of the regional authorities, hospitals, long-term care facilities and non-profit health organizations affiliated with the federation of the Canadian Hospital Association in order to ensure that financial and administrative burdens would not increase as a result of the proposed changes.
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The impact of the 1995 federal budget on consumers of health care services is significant, both in terms of public trust in the federal commitment to medicare and in terms of the cumulative impact of the $29 billion in cuts that have already been made to transfers for health care (between 1986-87 and 1995-96) and the additional $7 billion in cuts projected for 1996-97 and 1997-98. Less does in fact mean less: longer delays, reduced staff and a decrease in community services. Billions in dollars in resources cannot be taken from the publicly funded health care system without causing the pressure cooker to blow. The interest expressed by some provincial governments and health policy analysts in favour of participation by the private sector, likely in order to ease the strain on the public system, is the direct result of cumulative federal cuts in transfers for health care.
The federal government must not abdicate its critical support role. Its commitment to ensure a strong presence in meeting health care needs must be very clearly reiterated, then explained and discussed during an open public debate so that all Canadians understand and support the federal government's positive role in health care, including the efforts made to improve the co-ordination of tax policy and health care policy.
On this note, Mr. Chair, I thank you.
[English]
The Acting Chair (Mr. St. Denis): We'll turn to questions. Mr. Loubier, are you prepared to go ahead?
[Translation]
Mr. Loubier: Yes. Thank you, Mr. Isabelle and Ms Clemenhagen. Hello.
Mr. Isabelle and Ms Clemenhagen, the main purpose of your brief is to communicate the following message to the federal government. In recent years, the health care system has been subject to some fairly drastic cuts. We are talking about as much as $27 billion from 1984 to 1995 and $7 billion over the next two years. We are asking - and I think Quebeckers and other Canadians are asking for this too - for some reassurance in this area.
The health care system is something essential. I would say to you that it is one of the most precious forms of public property, if the surveys are to be believed. So why was the suggestion not made that the federal contribution to health care take place solely through tax points to be given to the provinces? This approach would lead to more stable funding or would at least ensure that the current level of stability is maintained. Once it is given, or once it is obtained, the federal government can no longer take it away. It can no longer do what it did under the Conservatives and which is continuing under the Liberals, that is, slash with impunity a system which is among the most effective in the world. I feel this must be said.
If we compare ourselves with the United States... Mr. Grubel really likes comparisions with the United States. In the United States, health care costs one and a half times more than it does here in Canada.
I would like to hear your comments on this.
Mr. Isabelle: I would like to ask Ms Clemenhagen to respond.
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Ms Carol Clemenhagen (President, Canadian Hospital Association): That is a very interesting point, but the Canadian Hospital Association may be looking at the other side of the coin by placing greater emphasis on the need to maintain the federal government's cash transfers to the provinces in order to establish a realistic and practical link between national standards and the principles negotiated with the provinces and imposed by the federal government. Our Association feels that we need this link in order for the public to be assured of the authenticity of these standards. It is felt that without cash transfers, these national standards, which the public seems to greatly appreciate, cannot really be promoted and maintained.
Mr. Loubier: You are telling me that the level of national cohesion from coast to coast is such that, without some form of cash transfers from the federal government, we cannot reach a national consensus on health or any other matters. Is that what you're telling me? Are you telling me that cash transfers are essential since without them the federal government could not threaten provinces that do not wish to apply the national standards or guidelines? That's very serious. If that is how we make a federation work and if we have gotten to that point, it may be time for a change.
Ms Clemenhagen: I feel there is a consensus in terms of the values and principles that we as Canadians and as Quebeckers hold. The moral consensus is perfectly clear. We aren't talking about that kind of consensus. We are discussing the smooth operation of a very complicated system which is based on transfers and which operates in terms of incentives. The federal government, with its cash transfers, has organized a system of incentives, a system that is on the verge of becoming a system of disincentives.
We feel that this system of incentives should be maintained. The system functions very well. It has enabled us to build a health care system which functions very well for the public. These systems operate on a financial basis. That is clear. It's a fact. But it does not prevent a moral consensus from existing also.
Mr. Loubier: Ms Clemenhagen, the consensus is there; it is undeniable. The health care system is among the best in the world. It is a good health care system. We are strongly attached to it. That much is clear, and we are not questioning that.
You presented some very revealing statistics a while ago. You said that since 1984 there have been $27 billion in cuts and then another $7 billion. That makes $34 billion in cuts to cash transfers for health care from Ottawa. If this trend continues (to use a common expression), within the next few years, if we look at public finances, the federal government's reflex will be to make even further cuts to cash transfers. However, if you remove these cash transfers and change them into tax points given to the provinces, you solve your security problems.
Concerning the matter of national standards, that is another question. Note that I did not ask you that question. There may be other ways of proceeding. But in terms of the security and stability of transfers, it might be appropriate to explore the approach proposed to the federal government about 15 months ago. In other words, one does not exclude the other, but one makes funding more secure.
Ms Clemenhagen: That is true.
Mr. Loubier: Thank you.
Ms Clemenhagen: Thank you.
[English]
The Chair: Go ahead, Mr. Grubel.
Mr. Grubel: Thank you, Mr. Chairman.
You have presented a case that is not totally unexpected, with all due respect. It's not very helpful. We are hearing from everyone who comes here, ``Don't cut us''. What we need is help on where to cut, how to cut. I think it is no secret at all, and shouldn't be to you, that our health care costs have risen too rapidly for too long and it is not sustainable. You have seen the projections on how quickly in the next century 100% of national income will go to health care. It cannot go on. I'm very disappointed that you did not even mention one idea, one new idea, on how we could restrain the growth of health care.
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Mr. Isabelle: We suggested flatlining.
Mr. Grubel: What is that?
Mr. Isabelle: By flatlining we meant that there would be no further reductions, and we're simply assuming that once the Canadian economy is back on its feet, there would be no increases to the current allocations. In other words, there would be no further expenditures in health that are now already provided in 1995. We suggested flatlining as an approach.
On the basis of experience, that would be a novel idea, from our point of view, because this has never been done in Canadian history.
Mr. Grubel: If I may say something, all you're really saying is, well, we're going to be nice to you; we're going to ask for a little bit less. That's all you're doing. I'm talking about systemic changes that would recognize that the current system is in trouble, because however good it is for the consumers and however much the ideologues on the left like it, it cannot continue.
He's been attacking me all the time, so I'm attacking him back.
The reality is it cannot continue like this. For example, health economists. Whenever this issue is raised, the first thing almost all of my constituents want to see is the introduction of user fees, if you want to put it that way. I would put it as deductibles and co-insurers. There are innovative ways to make sure there will be no inequities of people who can't afford it.
What's wrong with approaches like these? Why are you not coming up with those, instead of just telling us all the time, you must maintain; we're willing to take x% cut, but you must maintain? It is not helpful to us.
Ms Clemenhagen: Mr. Chairman, I'd like to take exception to some of the points that have been made. With $29 billion in cuts over the past ten years, plus a further projection of $7 billion more, I would suggest that health care is certainly doing its part and more for deficit reduction in the country.
On the point of costs being out of control, I think it's time we stop using that rhetoric. It perhaps was true and useful at one point. At this point, all the levers in health care have been duly pulled and we're seeing that costs in certainly the hospital sector are not increasing and are certainly not out of control.
I think it's important...you make a very good point of maintaining that control and we must indeed apply ourselves very assiduously to make sure that costs don't balloon out of control.
Many economists, and you as an economist will be familiar with this, make the point that the reason why health care costs seemed to go out of control in the 1980s was in fact due to the poor performance of our economy overall and not necessarily because of the costs within the health care system. You make the point, and it's a point well taken, that health care is more inflationary than normal inflation. Health care costs money. There's big technology. We have an aging population. As Canadians we expect a lot of services. That does cost. That's why we pay taxes. That's why we want a federal and provincial interrelated system that works well to protect that system, not to give it more money.
Our board member has made that point very clearly. We're not asking for more money. We're flagging, as practitioners, people in the field, that there is a limit to how much health care can contribute to deficit reduction. We've gone over that limit with $29 billion out and $7 billion more to come out.
Mr. Grubel: I have to come in on this. What is the percentage of national income devoted to medicare?
Ms Clemenhagen: I'm told the figure in 1991 was about 10%.
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The new figure from Health Canada has not been released yet. Rumours suggest that it has indeed come down to somewhere around 9%.
Mr. Grubel: That's because of economic growth.
Ms Clemenhagen: No, that's because of health care, bed closures, cut-backs - and economic growth, I'm sure, has been a factor. Health care has done its part.
Mr. Grubel: We have had record growth of 4.5% and that automatically reduces the size. The point is -
Ms Clemenhagen: A lot of hospital budgets have been reduced; beds have been closed. That money has been going back into provincial ministry pockets.
Mr. Grubel: I beg your pardon, but that is a very narrow perspective. You cannot judge the amount of money that is going to health care on the basis of the evidence that a few hospitals had to be closed or that your money has gone down. The problem that Canada faces is that the percentage of national income claimed by health care has risen continuously and has reached 10%.
Even the Prime Minister, who nobody can say is not dedicated to this, has said that growth must stop. We must bring it up by at least one percentage point of GDP. That's where I think it would be in your interest to come to us with ideas on how this can be achieved while preserving the fundamental characteristics of this, not to insist that you get more or that it stays at a certain level.
Thank you very much, Mr. Chairman. I think I've taken enough time. I think we know what -
The Acting Chair (Mr. St. Denis): Your consistency is noted.
Mrs. Brushett: I would like to pick up on the comment that health costs have not risen. Perhaps they have levelled in the immediate past few years, but I would suggest that they have risen substantially. Some of the reasons that we have gone beyond the parameters, the five pillars of the Canada Health Act.... For example, in the province of Nova Scotia we have brought dental care into the health care. For any child up to the age of 16, dental care is completely free under the Canada Health Act.
We have brought in dozens of other things under the umbrella of good and proper health care. In the province of Ontario you have psychology services and cosmetic surgery under health care. These are the fundamental differences from province to province to province, whether they have been through political innovations or through consumers suggesting the need was there. There has been a tremendous variance and a tremendous increase in the demand for whatever so-called health care services might be marketed by the professionals in this field. I think we have come a long way there.
If we let the provinces decide, under the umbrella of the parameters, what is necessary, fundamental, excellent, basic health care, don't you think that's a little better approach than letting everyone flounder off in every direction?
Ms Clemenhagen: Yes. In fact, one of our recommendations is that we start in on that challenging process of defining ``medically necessary''. You're right, there are no natural limits to health care. As a society we can keep defining more useful and probably, to some extent, beneficial services that we can offer to ourselves. The issue is the marginal benefit and increase. At a certain point we could use all the economy and provide health and social services.
Mrs. Brushett: Absolutely.
Ms Clemenhagen: This would not be a reasonable thing to do.
Defining medically necessary services, which then will suggest what services should be publicly insured, is going to be a very challenging task. It sounds like such a nice idea, and, yes, we should get on with it. We are going to have to apply ourselves very carefully to that. It is going to require a great deal of effort by medical professionals, consumers and funders to arrive at that magic sense of how do we define those core benefits and make sure that we're not impeding access to a service that could in fact improve the health of the population.
Mrs. Brushett: You have made a comment that the Regulatory Efficiency Act, Bill C-62, in your estimation would be superior to the current Hazardous Products Act in transporting dangerous body fluids and biological material. I am wondering how you see that there would be greater cost savings or greater efficiency in the hospital situations throughout this country from one to the other.
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Ms Clemenhagen: It's a question of regulatory burden. The workplace hazardous materials information system, which is proposing to be placed on diagnostic specimens and biomedical waste, would see individual labels attached to every diagnostic specimen container that's used in this country. There's something like 200 million of these things out and about across the health care facilities in the country.
In terms of additional labour costs, the burden will be astronomical. Health care -
Mrs. Brushett: Can I interrupt you for a moment? Is that projected to be interprovincial and international travel of so-called biological specimens or within the -
Ms Clemenhagen: It's within the hospital environment and between hospitals. So it has an enormous burden -
Mrs. Brushett: Labour impact.
Ms Clemenhagen: Labour concept.
As you know, within health care settings there are already safe workplace practices, usually called universal precautions, which are intended to reduce risk of exposure to potentially infectious bodily substance and fluids. Those systems are well implemented in health settings across the country. We feel they more than surpass the regulatory objectives of this putting a sticky label on every single blood container tube within the hospital environment.
Mrs. Brushett: Have you made that recommendation accordingly to the appropriate people?
Ms Clemenhagen: I don't know how many times we've made it. The labour departments in the provinces and the women's secretariat at Health Canada are regulators.
What do regulators do? Regulators regulate. It's very difficult to suggest to them perhaps ways to achieve regulatory objectives without the very narrow focus of the regulation. So CHA is planning to propose that the Regulatory Efficiency Act be applied in this instance. We're hopeful that will be a way to achieve safety and health objectives without the financial burden this regulation will impose on health settings.
Mrs. Brushett: May I say, Mr. Chairman, if you need assistance, I know the values of transportation of hazardous biological waste.
Ms Clemenhagen: Thank you very much. That's very much appreciated.
The Acting Chair (Mr. St. Denis): Thank you, Mrs. Brushett.
Mr. Peterson (Willowdale):): I'm sorry, I might have missed this. Do you think the federal government should define unilaterally what medically necessary is?
Ms Clemenhagen: No, not at all. That process of definition really requires -
Mr. Peterson: A lot of consultation.
Ms Clemenhagen: - a lot of consultation. I would say actually it's the provinces who have the lead role in that. The federal government must be in place. The health care community, as well as consumers, have to find a way to be involved.
Mr. Peterson: Then everything medically necessary would be under the public jurisdiction. The rest of it could be privatized.
Ms Clemenhagen: Yes.
Mr. Peterson: Thank you.
The Acting Chair (Mr. St. Denis): Thank you to our two witnesses. As always, the association has added greatly to the discussion.
We're going to take a short break. Our next witnesses, at 11 a.m., are the Ontario Federation of Labour.
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PAUSE
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The Chair: Can we come to order? We're continuing our hearings on Bill C-76. We have with us now, from the Ontario Federation of Labour, Gordon F. Wilson, president; Ken Signdretti, executive vice-president; Duncan MacDonald, programs coordinator. We've been looking forward to your presentation, gentlemen. Thank you for being with us.
Mr. Gordon F. Wilson (President, Ontario Federation of Labour): Thank you, Mr. Peterson. We're happy to be here. You've introduced who we are, so I can dispense with that. I do understand, however, that there has been some sort of a mix-up in that perhaps members of the committee think we're here to talk about western transportation. We're here to make a more general presentation. If that's acceptable to you, we'd like to proceed.
The Chair: Oh, goodness, we thought you were here about the Crow's Nest Pass. Maybe you could come back next week or something.
Mr. Wilson: I certainly can. I thank you for the offer. I'll be glad to share your room until that time.
The Chair: That's what I was hoping you'd say, except that you wouldn't say it publicly, Gordon.
Mr. Wilson: And on the record as well.
I have a few remarks from a text and then hopefully we'll leave sufficient time for some dialogue with members of the committee.
On behalf of the Ontario Federation of Labour, I would like to thank all of you for the opportunity of presenting our views to this House of Commons Standing Committee on Finance regarding Bill C-76, an act to implement certain provisions of the budget, tabled in Parliament on February 27, 1995.
I understand, Mr. Chairman, that you have copies of our submission. My remarks will be drawn from that, but not verbatim.
The 650,000 members of the OF of L are drawn from over 50 unions and constitute the largest provincial federation of labour in Canada. Our members live and work across Ontario in all economic sectors and regions, from Kenora to Cornwall and from Moosonee to Windsor.
Part of our responsibility is to ensure that the concerns of working people from this province are heard in this debate. We believe this could be done without becoming parochial, so we also attempt to understand and be supportive of positive initiatives from a broader national perspective. The OF of L is supportive of the brief to be presented to this committee in the near future by the Canadian Labour Congress, the CLC.
We are also in broad general agreement with representatives from the few other labour and social organizations that have been given the opportunity of appearing before this committee. We are extremely disappointed that the committee did not see the wisdom and necessity of providing Canadians with an opportunity, through extensive cross-Canada hearings, to be heard on such an important development in their lives as this federal budget.
Given the position taken by the committee, the role of the individual members of Parliament becomes even more important. We hope that as a matter of principle members of Parliament will speak out forcefully against what we concede to be the negative impact of this federal budget and the negative impact it will have upon their constituents and upon our country.
As Canadians, there is much in this federal budget that disturbs us. However, we will limit our comments to a number of themes. There are the philosophical underpinnings of the budget, the approach taken to spending cuts and the social programs in particular, the proposed single transfer - the Canada social transfer - and unemployment insurance. There are the impacts of the federal budget upon the people of the province of Ontario, and there are viable alternatives, which the finance minister chose to ignore during the development of his budget.
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We concur with the view expressed in the October 14, 1994 statement, ``Paying for Canada: Perspectives on Public Finance and National Programs'', which was prepared by the Child Poverty Action Group, Citizens for Public Justice, and the Social Planning Council of Metropolitan Toronto. I quote:
- The real fight in the country is about public responsibility, the public role around shaping
economic development. It is a fight about the kind of social security we want and about what
kind of economy we want.
This agenda, whenever possible, attempts to lessen the role of the federal government, thereby eroding the concept of a Canada-wide standard for services. And whenever possible, responsibility without adequate resources is downloaded to other levels of government.
The implementation of this agenda does not mean that programs disappear overnight. Rather, what happens is that coverage and adequacy of the programs are cut back more and more over a period of time. Excellent coverage, we all know, exists only in high-income areas and ``have'' provinces.
Their hope is that the broad political support for such programs will erode as more and more Canadians find that our current programs do not serve their needs. It then becomes easier and easier to review these programs and the cut-back as part of the restraint program to deal with the deficit. It becomes more difficult to implement any new national programs because of the need for restraint in order to deal with the deficit.
Another aspect of the agenda is the externalization of debt as more and more Canadian debt is held outside the country. The focus of policy becomes more and more geared to pleasing the holders of this debt. If they are not satisfied - meaning those who hold the debt - they will lose confidence in Canada. There's a shared world view among debt holders outside the country and the corporate sector within Canada.
This situation is politically useful because it can be used to force a government to deal not with the concerns of the Canadian people but with the issue exclusively of debt and deficit.
Evidence of this agenda may be seen in the April 1995 issue of Monitor, a publication of the Canadian Centre for Policy Alternatives, which details the move to deliberately foster economic stagnation, beginning in the early 1980s, to roll back undesirable gains. The undesirable gains appear to be stronger unions, higher wages, a growing public sector, improved social programs, full employment, and stronger economic growth than in the previous 30 years. These points are illustrated in the following tables, taken by the Monitor.
I want to point out for the committee - it's quite interesting, but I'm not sure what page it is on in the brief you have before you - that if you were to take two periods between 1950 and 1980 as one grouping of experience and the second -
The Chair: It's at the bottom of page 5.
Mr. Wilson: - the experience of 1981 to 1994, you'll see that the real short-term interest rates in the period from 1950 to 1980 were 1.1% and that from 1981 to 1994 they went to 6.1%. At the same time real interest on the federal debt went from 3.9% to 7.7%, unemployment grew from 5.3% to 9.8%, the economic growth rate went from 5% down to less than half of that, to 2.4%, and the annual change in real wages and the distribution of income to people across our country went from 2.4% down to a minus 0.8%. But I think the most telling figure is the share of capital in GDP, which went from 11% to 13.8%, almost 14%.
This federal budget sets a goal of bringing the deficit down to 3% of GDP by 1996-97. Through a series of actions it calls for cuts in spending by $4.1 billion in 1995-96, by $9.3 billion in 1996-97, and by $11.9 billion in 1997-98. Combined with small tax increases, these spending cuts enable the government to meet its deficit targets for the next year and in 1996-97.
.1110
The Toronto Star reported on March 4, 1995 that Intergovernmental Affairs Minister Marcel Massé boasted that the federal budget would reduce government spending on programs, everything except the interest of the debt, for the first time in 45 years.
A policy statement endorsed at the 1994 Canadian Labour Congress convention was appropriately entitled ``In the Public Interest: Quality Public Services''. The statement outlines current labour thinking on this important matter, and if I can I would like to quote from the document:
- The provision of public services by public authorities is the most effective, equitable and
accountable way to ensure the rights of all citizens to services vital to their economic, social and
political security.
There is another aspect often overlooked by those who call for the firing of public sector workers. These workers are also taxpayers and consumers who, through their pay cheques, contribute to the strength of their communities. The loss of these pay cheques will have serious economic ramifications for many communities within Ontario and in Canada, the most obvious of which will be here in the national capital region.
Social programs are attacked in a variety of ways in the federal budget. For example, the budget called for changes in unemployment insurance. It is illustrative to examine the results of earlier reform of the unemployment insurance system. Up until about 1990, when the first round of cuts began to be felt, over 85% of unemployed workers were UI beneficiaries. The Premier of Ontario now uses the figure that in Ontario that figure is only 40% of unemployed workers in the province of Ontario, and there is no reason to doubt his research. The figure we have for across Canada is that 53% of unemployed workers can qualify and have received unemployment insurance benefits.
The most sinister development, as we see it, in the federal budget is that beginning in 1996-97 a single transfer, the Canada social transfer, will replace the federally established program funding, transfers for health and post-secondary education and the Canada Assistance Plan, CAP. The single transfer approach will encourage a race to the bottom mentality as pressure will increase on provinces to cut back on social programs under the guise of innovation and the search for competitive advantage in the environment created by the trade deals and ``the deficit is the only issue'' mentality that seems to overarch every political line of thought.
Across Ontario in recent years we have experienced massive job losses and social disruption as a result of the free trade agreements, followed by a severe recession. This is illustrated by the following observations as related by the Ontario Minister of Finance in his May 1994 budget:
- The 1992 recession had a severe effect on employment. Ontario counted for nearly 70% of all
job losses across Canada. Government revenues in the province of Ontario were severely
affected by the recession, declining over $2 billion in 1991-92, and tax revenues are not
expected to exceed their 1990-91 level until 1995-96. As a result of the recession, the social
assistance caseload increased and costs rose by 40% in the two years ending 1991-92.
The 1995 federal budget carries on this tradition of unfairness. The total loss to Ontario after cuts announced or reconfirmed in the 1995 federal budget is $3.6 billion, with $1.4 billion in 1996-97 and $2.2 billion in 1997-98. The spending cuts could cost Ontario nearly 90,000 jobsby 1997.
The particulars of what constitutes a fair share for Ontario can be worked out between the two governments. Members of Parliament from Ontario - and there are five I see here on the committee - especially those who are members of the Liberal Party, will no doubt want to be involved to ensure their province and their constituents are given their fair share. The same process is equally valid in other provinces and other territories.
A budget provides a government with an opportunity to present its philosophy, priorities and implementation strategy. The OF of L disagrees with both the philosophy and the proposed actions found in this federal budget. We believe that there are alternatives that, if implemented, would serve the Canadian people better now and in the future.
.1115
In February 1995 the OF of L, along with the Ontario Coalition for Social Justice, released a document entitled ``Unfair Shares: Corporation and Taxation in Canada'', an interesting resource document dealing with an important sector in the Canadian economy - the business sector - that strongly supports the policy thrust of this budget.
Mr. Peterson, before this is over I'll leave you a copy of this. I didn't autograph it, but I will if you wish.
The Chair: Thank you. I'd appreciate that. My wife would like one too.
Mr. Wilson: I'll scour Ottawa for a copy.
During the pre-budget period, the OF of L, along with a wide variety of individuals and organizations from across Canada, was involved with the Canadian Centre for Policy Alternatives in the process of developing the 1995 alternative federal budget. This was not the development of a wish list, but rather a process that accepted the Minister of Finance's goal of bringing the deficit down to 3% of GDP by 1996-97. The critical difference was the principles that underpin the process of the alternative budget.
The OF of L disagrees with the policy direction found in this budget and in Bill C-76, and there are a number of points central to our concerns. There must be a strong commitment by the federal government to the critical importance of job creation and job maintenance. We support a Canada-wide full employment strategy with clear targets for job creation and unemployment reduction. If you ask those who are unemployed in our province - and there are literally thousands upon thousands - they'll tell you that unemployment isn't working. Millions are available, as I said, to attest to this simple fact.
There must be a strong commitment by the federal government to the importance of social programs in the lives of Canadians and in their communities. The purpose of reforming social programs is to ensure that the programs are responsive to the changing needs of Canadians. Any reform process must be inclusive and allow real input from Canadians at every level of the process.
This federal government has shown a lack of interest in exploring other options to cut-backs as a means of dealing with the deficit. For example, the federal government is more willing to target recipients of social programs rather than lowering real interest rates, increasing revenue through a full employment strategy and reforms on a taxation system based on fairness. There must be a policy developed and implemented, aimed at giving Canadians greater control over their existing debt. This means returning debt from outside our borders to inside our borders. This will give us a greater degree of control over this question than we have at present. To put it another way, the Bank of Canada should be directed to act on behalf of Canadians and not the investment community.
We believe that part of the political agenda has been to punish the province of Ontario. This is as a result of both partisan politics and the lack of recognition by the federal government of the negative impact of the free trade agreements and severe recession upon Canadians living within the province of Ontario. This is surprising, given the high number of government members who are members of Parliament from Ontario ridings. Ontario, like any other province, deserves the opportunity to play a full role, with a fair share of the resources to deal with the problems facing its citizens. The OF of L intends to continue to work closely with other organizations and individuals who share this vision of the kind of society and economy that we want in this country and in our province.
Let me conclude by thanking the Standing Committee on Finance and its members for this opportunity to present our views on Bill C-76. We are prepared to respond to any questions you may have. Thank you.
The Chair: Thank you, Mr. Wilson. Were you suggesting that the previous Government of Ontario had a better working relationship with the federal government?
Mr. Wilson: You'd have to ask the previous government, if you could find its members. They're scattered to the four winds, I understand.
[Translation]
Mr. Loubier: It's discouraging when the only alternative in Ontario is the Liberal Party. That is a real problem.
Mr. Wilson, Mr. MacDonald and Mr. Signdretti, you see what kind of hands you're in with the federal Liberals.
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What will things be like at the provincial level in the near future? Things will be terrible, if the Liberals must be there too. I wouldn't like to be in your place, to have to deal with the Liberals at Ottawa and at Queen's Park, where you will have problems later on.
The Chair: - [Inaudible - Editor] -
Mr. Loubier: Welcome to the Finance Committee. I have just one question to ask you. When the Liberal government was elected - about 17 months ago - it promised to do something about employment. They talked about «jobs, jobs, jobs», but we have noticed that for the past month or so the federal government has no longer been talking about this or about the Red Book.
Do you feel that the current government has respected its social commitments, its job creation commitments? If necessary, would you suggest that this government get back on track because it has too great a tendency to go along with the Reform Party, which hounds it day after day to make further cuts to social programs and job creation programs? It did this in the last budget, when it cut $200 million from the federal infrastructure program, the only employment program it had established.
[English]
Mr. Wilson: My first observation is it's comforting to know that partisan politics is alive and well in Ottawa.
A voice: As it should be.
Mr. Wilson: As it should be.
I agree there is not much evidence - other than anecdotal - of job creation in the province of Ontario. In focusing upon the question of the debt and attempting to address the debt as the threshold question to be dealt with, with an ancillary promise that once the debt is dealt with there will be economic activity sufficient enough to allow people to work, the government has fallen into the trap that has consumed virtually every other western industrialized government.
Let me just make two quick points, if I can.
Over here, on this side of that question, we must begin to have a serious national discussion on whether or not there will be sufficient work for everyone who wants to work. When one looks at the application of technologies, there isn't a single CEO I have talked to in Ontario, in either the resource sector or the manufacturing sector, who does not tell me they expect more production with fewer workers next year, the year after and the year after, as the application of technology becomes greater and greater.
Secondly, I don't think we can get to jobs until we deal with getting the monkey off our back, Moody's and others, which we tried to address as one of the major central points in our presentation. Every time they decide they want to manipulate interest rates in this country by evaluating what an economy or an enterprise is worth, we see more and more money going from people in the lower- and middle-income groups to pay the investors. It's no different from high interest rates.
So I categorically admit that the government has some serious restraints in addressing the question of job creation until it addresses the question of how we deal with that section of our debt that is foreign owned. Unless the government is prepared to deal with this -
Mrs. Stewart (Brant): That's nice to have on the record.
Mr. Wilson: Yes, but it's also true.
Until the government is prepared to deal with this, which is the evidence that's lacking at the moment, and is prepared to serve at the altar of the investment community, as the government is currently doing at the moment, then you will not see job creation in this country in any serious way.
Let me give you this anecdotal piece, which I think really makes the point about the necessity of the Canadian government addressing the question from that angle. There is not a western industrialized country whose government professes anything than not having any money. Everybody's broke. Everybody's arguing they have to cut social programs and expenditures that serve people.
I could understand that, as could my colleagues, if we were talking about two or three countries in the world. Capital moves around, as we all know. But if everybody's broke, the question to be asked is, who the hell has the money? Once we recognize who has the money, and we all know who that is, what is the government prepared to do to address that question?
Today, I've seen actually no evidence that you're prepared to address that question.
The whole philosophy of attempting to address Canada's deficit by cutting social programs - If you cut every social program expenditure in this country, which accounts for about 2% of our deficit, you will not affect in any serious manner, other than marginally, the amount of the deficit in this country, which will continue to accelerate far beyond the cuts.
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Cutting is no god-damned - darned answer; pardon me. I get wound up about this one, Jim, I'm sorry. Cutting is no answer to Canada's deficit problem.
[Translation]
Mr. Loubier: Mr. Wilson, first of all I have one comment to make. It is not by eliminating Moody's that we will solve our problems. The federal debt is here; it is currently $548 billion. If we add the debts of the provinces, that brings us up to nearly $800 billion.
Governments in Canada, particularly the federal government, have real financial problems. Don't ever forget that 40% of the debt is foreign owned. As you just mentioned, we are experiencing a serious problem of lack of control over a portion of Canadian securities.
That being said, if the federal and provincial governments wish to find a funding source other than on domestic markets - because savings are insufficient - at a given point in time, the financial situation must be improved. Even if we got rid of Moody's, someone else would step in to advise foreign investors on Canada's solvency or the risks inherent in holding Canadian securities.
However, it is not by cutting right and left, by attacking social programs and unemployment insurance - to which the federal government no longer contributes - almost exclusively that we are going to solve the problem.
On the contrary, if we take the projections of Paul Martin's last budget, in four years we will have a federal debt of around $780 billion. So we haven't actually accomplished anything, but we have done harm by fiddling around.
Would you agree with the Official Opposition that as long as there is no true reform of the Canadian tax system we will never see our way out of this? And we are not the only ones saying this. Many tax experts are now saying this, the Canadian Labour Congress is saying this, and so is the Ontario Federation of Labour, as you noted this morning. As long as there is no reform of the tax system, the problem won't be solved. There are loopholes in the tax system and there is a lack of political will to reform it. I would emphasize that among senior public officials there are people who do not look after their own business and who feel they have been granted undue authority.
Deputy Finance Minister Dodge suggested to the government the day before yesterday - imagine, a duly appointed Deputy Minister suggesting that the federal government cut taxes for those with high incomes, those earning $200,000 a year.
So, as long as we have this kind of advisor and the attentive ear of the Finance Minister or the Liberal government in relation to reforming the tax system, we will end up in ten years with the same kind of problem we have now.
Contrary to what Mr. Dodge said two days ago, do you feel that tax reform is a way to plug the loopholes in the tax system, to improve public finances and to in fact protect federal transfers to social programs, the transfers made to the provinces?
[English]
Mr. Wilson: If filtered down works, I've yet to see it. The reality is that when you cut taxes for those people in upper-income groups, it doesn't show up in jobs.
What we're really troubled about is that we seem to be attacking those people who are the weakest and most vulnerable. In my province, as I've indicated, people who are unemployed - only 40% of them now have access to unemployment insurance benefits. We've gone through a terrible time in terms of the recession, a great deal of it precipitated by the restructuring of industry as a result of the trade agreement.
When you talk about fiscal reform, I'd like to say fiscal and monetary reform, which is what's required.
If I could put a little flesh on that, our numbers are that in approximately 1974 the chartered banks - one of the requirements for operating in Canada was that they had to have on deposit with the Bank of Canada about 20% of their deposits. The banks have been successful in ratcheting down that level now to about 6%. The Bank of Canada to us seems to be continually acting on behalf of a response to what are the requirements of the investment community.
I draw this example. If the Bank of Canada was still requiring that investment level of 20% - In this year we have estimated I think about $85 billion worth of Canada's deficit, as we understand it, comes due. If the 40% is relevant as foreign held, the Bank of Canada could intervene with those deposits and have an impact on securing that amount of foreign debt, which is currently held outside of this country.
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Another avenue, rather than -
The Chair: On a point of clarification, does this mean that the 40% of our debt that is -
Mr. Wilson: That's a general figure, Jim.
The Chair: - it's approximate, which is fine - held abroad could simply be bought by the Bank of Canada?
Mr. Wilson: Why couldn't they buy the lion's share of that and the rest of it be pursued...? I mean, there are all sorts of avenues internal to the country that could be used to -
The Chair: So the bank would just issue currency or money to monetize that debt?
Mr. Wilson: The bank would capture that.
The Chair: Okay, but they would have to issue money to do it. I assume they would have to print money to do it.
Mr. Wilson: Why? It has deposits on hand in the banking system. It would use those deposits. If the Bank of Canada isn't secure in this country, who is? I mean, Allan Taylor may get nervous about that, but I won't.
The Chair: I just wanted to know what you are saying.
Mr. Wilson: The other area that amazes me on the question that taxes on the $200,000 threshold somehow be reduced for people with upper incomes...it will help the rest of us.... I guess from a personal standpoint as well as from an organizational one, I get quite annoyed that the people of this country continue to pay a business transaction tax. Every time I go to Canadian Tire and buy an item, I pay a goods and services tax, which effectively is a business transaction tax. But somehow those people who buy and sell currency and those people who buy and sell stocks, which are commodities, are not required in any form to pay a tax.
I guess I get a little upset when my next-door neighbour goes and buys some nails at Canadian Tire and has to pay tax on them, whereas Conrad Black, to use an example - and Conrad is not the only person who is guilty of this - can buy stock and not pay a darned nickel on it to the people of Canada. It's still a business transaction.
Our estimates are that the federal government, were that tax to be applied at three-tenths of one percent over this current year, 1995, would raise in the neighbourhood of $85 billion worth of revenue.
Now, you can't get them all; I understand that. There's a degree of honesty or certainly a monitoring system that would have to be pursued, but there are some clear indications that it could be tracked. Buy-sell on currencies would have a dampening influence on those people who want to try to manipulate our currency level. As well, the question of buy-sell on stocks is easy to handle in terms of putting in place a business transaction tax. It has some faults, but nobody has made an effort to address them.
I want to say to you that the people I represent believe they pay too much in taxes. I believe they're not too significantly different from other Canadians. Part of the aggravation in their belief they pay too much in taxes is that they see everyday people in our society who don't pay their taxes.
Mr. Duncan MacDonald (Programs Coordinator, Ontario Federation of Labour): I have two points, following up on what you said. One was that some political parties don't always do what they said they were going to do once they get into office.
I think that's a problem for the whole system, because as Canadians we should expect that any political party that says before the election it is going to do this and this is how it is going to do it will try to carry it out as best as possible afterwards.
The problem I think we're seeing at all levels is a kind of rising alienation or cynicism...saying it doesn't really matter who gets in, because they're not going to do what they say they're going to do. I think that's a real danger for democracy, and I think that's a real danger for any political party in any jurisdiction.
The other point that I think is important to bring up is that people realize there are problems with the deficit and the debt, but they also want to see a measure of fairness in the budget and in what government is doing.
Just looking at the budget...I'm thinking of my own personal experience. At Easter I did my mother's income tax. She's 84 years old. She was a nurse for 50 years. She gives a little bit of money to the church. She owns her own house. Because she came through the Depression she keeps money in the bank for a rainy day. She ended up paying taxes.
We published this, called Unfair Shares. On page after page there are corporations that made profits but didn't pay very much in taxes. If you go to those corporations and ask if they're doing something illegal, they'll probably come back and say the system allows them to do this. That's the problem. There's a problem of unfairness there.
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I think the system is out of whack when an 84-year-old woman has to pay taxes and there are profitable corporations in Canada that don't pay taxes. Maybe there's a magic-wand solution; maybe that can be handled very quickly; maybe it's more detailed - but that's just a small instance of the type of unfairness we hear from our members. Everyone's willing to carry their share of the load, but when people start to perceive that it's they who are carrying more of the load and other people seem to be getting away, then that causes problems, which results in growing alienation. That's bad for the whole system.
The Chair: I thank you, Mr. Loubier.
David Walker, please.
Mr. Walker (Winnipeg North Centre): First of all, thank you for coming in. Many of the points you've raised about the Bank of Canada and how it treats foreign debts are very important questions. They're widely discussed. We got them in pre-budget consultations and so forth.
Mr. Thiessen's going to be in front of us tomorrow morning. We're going to try to use the opportunity to have the bank explain why it disagrees with some of these analyses and get it on the public record so that you can see your questions being transformed that way, and so forth.
Mr. Wilson: You wouldn't agree to put some public members on the committee for the morning, would you?
Mr. Walker: If you sit behind us, you can slip us the questions and we'll pass them on.
The Chair: If you said you were going to stay with me tonight, you could come tomorrow morning, Gordon.
Some hon. members: Oh, oh!
Mr. Walker: On the question of corporate taxes, one of the things we saw coming out of the late 1980s and early 1990s was the tremendous shift onto average family income. I think somebody would have to be into silly self-denial to say that it hasn't created tremendous anxiety amongst Canadians that they're not paying their fair share. I think we've at least begun to address that.
I'm not sure what year your data are from, but we threw the capital tax.... We've put a minimum tax on large corporations. When the long lists are given, there are a lot of small companies that probably for a number of, as you say, accounting reasons do escape the taxation. But on the larger corporations, by using the capital tax it effectively operates as a minimum tax.
When we see data from I guess 1994-95, I hope you'll begin to see some changes in that. We've seen so far in the year that the increase in corporate profitability will be matched by an increase in corporate taxes paid. I hope Canadians will begin to see a shift in the burden away from the family income tax basis and more into the corporate side.
As I said, I'm not going to start pretending this is not a problem; it's a very real problem. I hope you'll see some shift that's of significance to your membership.
Mr. Wilson: If I could, Mr. Walker, Canadian profits in corporations have shown an upward trend for I think the last two years, and we haven't noticed corporations coming to people and offering them an opportunity to share in those increases. I mean, that isn't done voluntarily by corporations. That is in reverse, I think, the other driving factor of what they pursue when you hear business leaders speaking about the necessity to remove from their equation of competitiveness payroll tax costs and other costs that have been attached to social programs. It's the same argument that takes place in public policy, that takes place more specifically on issues around, for example, the bargaining table.
So this process continues unless someone intervenes. We've always argued that the intervener has to be government. Government has to be the leveller, regardless of which political stripe. It has to act on behalf of its constituents.
We know that what we see happening in our country is a trend line. Our country collectively - all of us in this room - is a movement toward the same type of society that has developed south of the border. I don't want to say we said that in 1986, 1987 and 1988, but we did. I said it with a lot of Liberals, I might want to remind people, around the trade agreement issue. The United States today has the largest gap between rich and poor that it's had since the 1930s. We're heading the same way. The trend line in Canada is exactly that of the United States'. It's not yet as exaggerated as it is there, but it is nevertheless the same.
Let me make one other point while I have the Moody's thing out. I guess people tend to look at economics as something that happens by market forces alone. I don't happen to believe that. Who the heck are the subscribers to Moody's? They are investors looking for an analysis of a company or a country, and we know what happens in this country when they decide they want to play games with us. Every time they play games to the extent of 1% of an increase in our interest rates demanded by those investors as others lay that groundwork before that demand is made, it costs us $2.5 billion.
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On the other side, attached to that question, as we also know, every time we can put people back to work and reduce unemployment levels in this country by 1%, it is $1.7 billion. So in terms of the deficit, a simple increase of 1% on one scale and a decrease in the other is over $4 billion. That's a lot of social programs we're talking about.
But we have got ourselves into this box, and that's why we believe it is so crucial to the survival of this country to continue to develop a path that is significantly different from that which currently exists in the United States, and that is the manner in which we approach the question of foreign debt. If we can't deal with that question of indebtedness, all the rest of it is just window dressing, because inevitably you wind up in the same place as what happened south of the border.
I would like to make one further point. I made this point to one of the ministers of government that I had a chance to speak to earlier in the week in Toronto. We are noticing in our city, as I have noticed in other parts of the province, that people are getting quite ugly out there. They believe they are abused by government. They believe they're overtaxed. They feel they're disenfranchised. They feel they're not part of the process.
They look over their shoulders and see others doing quite well, thank you very much, but most people are getting hammered, and they are saying to themselves, what the heck is going on? What's gone wrong with this country? Before we used to have arguments about degree as a country and now we see this whole exodus of capital leaving the country, which is putting tremendous pressure on those programs that are so vitally important to people, not only in bad times but also in good times. It is something this government will have to deal with.
Mr. Ken Signdretti (Executive Vice-President, Ontario Federation of Labour): I would like to make a comment, Mr. Peterson. I remember so many of us in the trade union movement were on the Hill a couple of years ago - I think it was 100,000 - and as you were floating around the Hill just before the 1993 election, there was a level of comfort with a great many people that in fact there would be a change and the Liberal government was coming in. They were bragging about the red book and what they were going to do in terms of job creation.
The disenchantment now is that in fact you are just continuing, Mr. Walker, the policies of the previous government. As a matter of fact, you have the opportunity...because basically you have an opposition party that says, we agree with you but you're not going far enough. I'm not excluding the Bloc, but I'm talking about the Reform Party. That's basically what's really happened.
Given what has happened, I congratulate the Liberal Party on the public relations job they did on the Canadian people in terms of selling this thing. I often think that Mr. Martin was probably saying to himself, gee, maybe we should have gone the whole way, because if we had done that...well, who knows where we would be now?
I want to follow up on what Gordon said. We really have to look at what is happening to our system when a 28-year-old trader can bankrupt a 200-year-old financial institution. It's just not good, and that's part of the problem we have to look at. It's not just a monetary thing; it's a moral thing. I think we have to look at those kinds of things because we're really going down the road in a very serious way to....
I sure as hell don't want to go with what's happening in the United States. I really don't. We have talked of ourselves as a kinder, gentler society, but I'm afraid things are changing very drastically now.
Mr. Grubel: I had to go out and give my opinion on something that might be of great interest to you. The help wanted index has just been released. It's dropped by 2%.
I would like to correct something that you're saying. This emphasis on foreign debt holdings is really a red herring. The problem is that all investors - it's Canadians who are much more aware of what is going on and are sitting there - already have taken money out, as you have suggested, and investment advisers are telling me they're getting phone calls every day: is it time to take my money out yet?
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So by doing something and isolating ourselves from the rest of the world, we won't solve this problem, unless we're prepared to tell everyone that they must keep their money in Canada. I think you would get a lot of resistance to that, especially from your own union members whose pension funds are at stake. I'm really concerned about that.
I will raise one other question about the corporate tax thing. Mr. Peterson ran on the promise that he would fix those shortcomings you have noted, and he appointed a blue ribbon commission, which was not necessarily loaded with right-wingers. They found out there was very little that could be done about it because many of those corporations that don't pay taxes at one level are holding companies that have paid their taxes at another level. I wonder why this hasn't happened.
Finally, a quick question. On page 5 - and it may be unfair - it says there has been an increase in the share of capital in GDP. I'm very surprised about that. I see that it is defined as after-tax corporate profits plus interest and investment income. If it includes interest paid by governments in Canada, it's no wonder that has increased, but what that has to do with corporate share in national income...I don't understand.
Mr. Wilson: It doesn't.
Mr. Grubel: You mean 90% of all of the government debt is held by pension funds?
Mr. Wilson: No.
Mr. Grubel: Who's holding corporate debt? Who's holding the interest, pension funds, and other kinds of trust funds owned by your own union?
Mr. Wilson: You specified pensions, but you're trying to draw a pretty long bow here. I have great difficulty with that. When you said Mr. Peterson, weren't you talking about Mr. Rae?
Mr. Grubel: Mr. Rae, I'm so sorry.
The Chair: It's nice to have that type of confusion in this country.
Mr. Wilson: It's nice to be current when you're sitting on a federal committee, so you can understand the question too.
The Chair: Did you realize David Peterson was acquitted of spanking his child in public in London, Ontario, just last week?
Some hon. members: Oh, oh!
Mr. Wilson: I agree with you. There are a number of union pension funds that have investments outside of the country. That's a question you can help address, Mr. Grubel, as a federal member of the House of Commons, by decreasing the percentage of pension funds in particular that can be invested outside of the country, rather than increasing it, as did the previous government in this country.
With regard to saying all Canadians have to hold their investment, of course not, although it's curious to note that exchange controls are interesting levers that can be applied by governments in times of war. Although we're not at war with another nation, there certainly is a different sort of social struggle taking place in our country, where somebody could stretch that definition a little bit perhaps to fit the situation.
Mr. Grubel: What percentage do you think would be right to fund -
Mr. Wilson: I'm not going to quibble with you about specifics. I'm talking about general policy directions, none of which we've seen evident in the current House. I'm trying to respond to your question. I think obviously foreign debt does have a tremendous effect on our ability to deal with the income and outgo situation.
You keep shaking your head, but when you look at the income taken in by this government through tax revenues currently and the cost of the administration of this government - its social programs and services - those costs are less than what we take in. So there's a tremendous outflow of capital somewhere. When you measure where that outflow is taking place, a lot of it gets recirculated back in Canada, but that's a form of concentration of wealth that causes a greater disparity and a tremendous amount of social pressure through the system.
Secondly, you're bleeding out. Ruth Getter said there was $500 billion worth of capital that roams this world over which no government can have any effect by regulation.
Mr. Grubel: Five trillion dollars.
Mr. Wilson: I see you know your numbers even better than I do. I guess I sometimes dispute banks. I don't trust them as much as you do.
The fact is, if it's $5 trillion, then where did that come from? It got sucked out of virtually every western industrialized nation in this world. We're now paying the price for that. That's the point I made earlier. Everybody says they haven't got any money. Then it had to go somewhere, and you just told us where it went. So where's the problem? It's there. Now you have to address that problem if you're going to get your ship floating straight again. So you've got to focus in on that.
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I don't know how to say this other than the way I said it before. If this government didn't spend another nickel on social programs, there would still be demands through the investment community to increase their share of the capital available to government through tax revenues. It would not subside one iota, and you would see yourself go further and further into debt. When they have all your money and you still owe it to them, what are you going to do then? What's your answer?
Mr. Grubel: I don't accept your premise.
Mr. Wilson: I've never seen an investor give it back to a government yet.
Mr. Grubel: The problem we have in Canada today is the interest rates are too high. They are too high because capital, both in Canada and in the United States, is prepared to move -
Mr. Signdretti: But the social programs aren't causing the interest rates -
Mr. Grubel: One argument at a time.
The problem is we live in a world where capital markets are integrated. Unless you're willing to step off that and close yourself off, like the Soviet Union and China tried to do, then you are stuck with being a member of the global capital market. Japan has a huge net ownership of foreign assets. They are subject to the same discipline we are. They are being rocked by those $5 billion all the time. You can't solve that problem.
Mr. Wilson: I disagree with your premise. You're trying to tie -
The Chair: I can see there's no quick answer to this debate.
Mr. Wilson: - capital formation to nationalities. There is no relation between the loyalty to capital and nations - none whatsoever.
Mr. Grubel: I fully agree.
The Chair: As always, we will give the last word to our guests and to the chairperson.
I would suggest that perhaps, Gordie, you can stay with Herb tonight and continue this debate.
Mr. Wilson: It would be a tough night for one of us.
The Chair: I know that only one of you would emerge.
I would like to say this, and you may hate this, but members of my family have worked with Mr. Wilson in the past and, anecdotally, he has a reputation of being an extremely hard, effective labour leader but one who sees the bigger picture.
Mr. Wilson: Come to my convention. I'm going to need all the help I can get.
The Chair: It's always a pleasure to see you. Thank you very much for being with us.
Mr. Wilson: Thank you, Mr. Peterson.
The Chair: Our next witnesses are from the Canadian AIDS Society, Russell Armstrong and Gregory Williams. Thank you very much for being with us. We look forward to your presentation.
Mr. Russell Armstrong (Manager, National Programs, Canadian AIDS Society): Good morning, everyone, and thank you for the opportunity to be here. My name is Russell Armstrong and I'm here this morning representing the Canadian AIDS Society through the board chair, Brian Huskins and my own executive director, David Garmaise.
I'm joined by my colleague Greg Williams, and we're here this morning to tell you a bit about the Canadian AIDS Society and who the people are that we serve, and then to present from their perspective some reflections on those aspects of Bill C-76 that we believe touch very profoundly on the lives of our constituents.
We've just circulated in front of you our speaking notes. I apologize for the fact that they're in English only. That is an oversight on our part.
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The Canadian AIDS Society currently has a national membership of 104 community-based AIDS organizations. These organizations represent what I believe is the front line of health service delivery to people living with HIV and AIDS across Canada. Current estimates are we have over 40,000 people in Canada living with HIV and a smaller proportion of that who actually live with the syndrome known as AIDS, the very severe form of HIV infection.
The variety of services these community-based organizations provide is quite substantial. As is listed in our materials, it includes things such as psychosocial support, education on transmission routes of HIV/AIDS, legal advocacy, counselling on treatment options and advocacy around access to treatment.
Most importantly, for the subject we're looking at today, these organizations also provide what we call a ``parallel social security system''. What that means is many of these organizations have emergency relief funds that basically give cash pay-outs to people living with HIV to cover the extraordinary costs of their illness, such as medication, and increasingly the cost of things like food and housing, which, when you combine the costs of medication, etc., are out of the financial reach of many people who live with this disease.
What we're here to do this morning is to convey to you the experience of these organizations over the last several years serving this client base, and to offer that to you as a perspective on the proposed changes to the financing of health and social security in Canada. As we're going to stress to you, we think, obviously, this constituency we represent is an important partner in looking at the proposed changes. We have a wealth of experience we think should be taken advantage of and considered in looking at the directions of social policy in Canada.
Mr. Gregory Williams (Project Director, Income Security Project, Canadian AIDS Society): I manage the Income Security Project for the Canadian AIDS Society. I've been working on issues over the past year around the impact of income on care and health outcomes for people with HIV and AIDS. The society has been doing work in this area for more than two years now.
In our research over the last year, we've discovered what often was the anecdotal experience of people living with HIV and AIDS has been borne out by research in the general community and researchers working specifically on HIV and AIDS.
The health of an individual is dependent on more than the health system. For example, it has been demonstrated that the prosperity of a country and its degree of income equity are related to the health and well-being of its population. Gradients in income can be linked to gradients in health in both the general population and amongst specific disease groups.
For example, a detailed analysis of administrative data on 500,000 individuals from the Canadian Pension Plan demonstrated a positive relationship between having higher pre-retirement earnings and lower rates of mortality. We also know there is a positive association between income and survival rates among counts of cancer populations. Among the HIV-affected population in Canada, we have learned those patients with lower income at diagnosis experience weight loss earlier and a more rapid disease progression towards death.
Income is the link in all of these scenarios. For people living with HIV and AIDS, income level is a measure of their ability to buy medication, to access appropriate housing and to purchase adequate food and nutrition. An analysis of the needs assessments in utilization data from financial relief programs administered by the organizations Mr. Armstrong spoke of reveals the need for these three basic items is not being met.
The very existence of these programs is a measure of the inadequacy of the social services available for people living with HIV and AIDS. They arose out of need. Nor does the combination of the public income security programs and the private financial relief programs administered by community-based AIDS organizations adequately address the need as it exists today.
HIV infection has a profoundly negative impact on many individuals and their families. The impact has been described as ``downward drift''. The relationship between disease progression and a slide into extreme poverty has been documented by several studies in Canada, in addition to the daily testimony of people living with HIV and AIDS and requiring the services from CAS member organizations.
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These findings are borne out by similar experience and similar studies in the United States.
Concurrent with these phenomena are rising rates of infection among an already poor and marginalized population. For example, we know that newly infected gay men tend to be younger, poorer and less well educated than their sero-negative counterparts. In Quebec, HIV-positive women giving birth to children tend to live in postal code areas where the income level is below that of the provincial median.
The debilitating effects of HIV erode the ability of individuals to continue to live independently and to provide financially for their own needs and the needs of their families. At the same time, the complex disabling effects of HIV disease create extra costs and an additional financial burden.
While people living with HIV/AIDS are living longer after diagnosis than they were at the beginning of the epidemic, they're also becoming poorer. Accordingly, the care and support needs of people living with HIV and AIDS have gone beyond the acute, end-stage palliative care. People with HIV/AIDS now have a complex long-term requirement for sophisticated medical services in addition to a web of specialized social services.
Inadequacies in basic income support and more specialized health and social supports, such as comprehensive coverage of treatment and therapies, in this population means simply that people will be less healthy, progress through disease more rapidly, and die faster.
I'd like to make a note here - this isn't in my brief - that there's a cost-effective dimension to this as well. For example, we've demonstrated in Canada, and again it is supported by research in the United States, that people with HIV/AIDS who do not have stable housing use acute-care facilities substantially more often than those who do have stable housing. So if you think about what it costs in Canada to put a decent roof over someone's head, which provides access to the care they need, and you compare that with the $800 to $900 a day it costs to look after someone with HIV infection, and most other acute infections, in a Canadian hospital, there definitely is a cost-effective component to providing a stable socio-economic environment for people living with HIV/AIDS.
On another social note, economists have noted that mortality because of AIDS has already had a substantial impact on the future wealth production of this country.
To refer to the legislation, under ``Objectives, Principles and Standards'', in name, the Canadian health and social transfer seems to reflect this linkage between socio-economic factors and health for the individual and for the larger population. However, Bill C-76 does not provide the legislative architecture necessary to support the innovative use of Canada's resources in such a way that the relationship between social policy and social programming and health outcomes is respected. The integration of the Canada Assistance Plan and Established Programs Financing revenues without appropriate standards and guidelines for social spending comparable to those of the Canada Health Act undermines Canada's social security system and thereby also the health of the nation and its citizens.
It is the experience of the Canadian AIDS Society that there is a need for flexibility in the design and delivery of health and social programming. We applaud Minister Axworthy's recent announcement of policy changes to the disability component of the Canada Pension Plan, which offered new flexibility in recognition of the needs of Canadians with cyclical and degenerative disabilities such as multiple sclerosis and HIV/AIDS. Such innovation in this case is both humane and cost-effective.
As most of you are aware, the changes are really incremental policy changes, but what they do is to make it easier for people with disabilities to move off disability and back into the workforce when they're so able. If you look at some of the statistics available on people in Canada with disabilities, that picture reflects much more the reality of disability in Canada than some of our old notions, encapsulated in terms such as ``permanently disabled''.
While we support the need to innovate, it is also our experience that there is a need for standards in health and social services as well as a means for enforcing them. We believe flexibility is possible within a framework of basic entitlements or standards that every Canadian citizen can expect, wherever they happen to live within the country.
Practically speaking, for people living with HIV/AIDS there must be some guarantee that access to uninsured health services, appropriate housing and adequate food and nutrition will not be impeded by financial barriers or jurisdictional barriers between provinces and between the provincial and federal governments. The alternative is sentencing people to poverty, sickness and early death.
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On the matter of enforcement, we note that if the federal government continues its current practice of only partly indexing cash transfers under the Canadian health and social transfer, these cash transfers to the provinces will disappear. In this scenario enforcement of any standards would be difficult.
While the Canada Assistance Plan offered little in the way of firm standards, it did provide incentives for provincial governments to invest in programming to cover certain key areas such as uninsured health services and non-income-related supports for the disabled among others, which are specifically named in the CAP legislation.
The definition of ``health care services'' in the Canada Assistance Plan as amended in 1984 meant medical, surgical, obstetrical, optical, dental and nursing services, including drugs, dressings, prosthetic appliances and any other item or health services necessary to or commonly associated with the provision of any specified service that does not include insured health services within the meaning of the Canada Health Act, or any other hospital care services. Provision for these types of supports exists in Canada in varying degrees as a result of the incentives created by cost-sharing.
The Canada health and social transfer as it is currently described contains no such incentives. Disabled persons across Canada rely heavily on income support programs and the provision of non-income supports, medication, home care, prosthesis, etc., the existence of which is no longer supported by the leadership of the federal government.
Another important condition of the Canada Assistance Plan was the provision that provinces provide an appeal system for Canadians attempting to access social assistance. It is the experience of our organizations that the right to appeal decisions is crucial.
As an example, cyclical and degenerative disabilities such as HIV and AIDS often challenge criteria of disability that are used by provincial income support programs formally cost-shared under the Canada Assistance Plan agreement. The appeal system has often proven judicious for people living with HIV and AIDS because it affords them the opportunity to educate decision-makers about what is a complex and often misunderstood health condition.
While the Canada Assistance Plan did provide incentives, it did not provide adequate standards for the provision of items such as uninsured health services. The result is a great disparity in the quality and comprehensiveness of such programming across Canada. For example, the cost of HIV/AIDS therapies are incompletely covered by provincial medicare and welfare programs, with substantial variation from province to province.
The lack of comprehensiveness of such drug coverage undermines the health of people living with HIV and AIDS and people living with other disabilities. It also undermines the stated primary objective of Canadian health care policy: to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers. That is from the Canada Health Act.
It will not be possible to respect this objective, which informs the standards of the Canada Health Act, without parallel and appropriate standards for the provision of social services.
The one firm standard on social assistance in Bill C-76, that provincial governments cannot make minimum residency requirements a criterion for social assistance, is necessary. On its own, however, it is not enough. The commitment in Bill C-76 that ``The Minister of Human Resources Development shall invite representatives of all provinces to consult and work together to develop, through mutual consent, a set of shared principles and objectives that could underlie the Canada Health and Social Transfer'' is vague.
First, principles and objectives are important, but they must be supported by standards. Second, the description of the consultation process and what it is expected to produce are too vague. Note that these are principles and objectives that could underlie the Canadian health and social transfer. The commitment lacks any imperative that reflects the necessity and urgency of establishing a just framework for the allocation of resources for social programming.
Third, the minister representing...the federal government and provinces together constitute only two of three parties that must be formally involved and committed to this process if it is to produce meaningful principles and objectives and appropriate standards. The third party is Canadians themselves and the organizations that represent them: churches, voluntary health organizations, organizations for the disabled, etc.
Along with many other Canadians, the Canadian AIDS Society participated in the recently abandoned social security review.
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A renewed commitment to completing this process in a meaningful way would be one way of capitalizing on a substantial investment already made by this government and by Canadians at large, who are all committed to bringing our social security system into the 21st century.
Towards the conclusion I'd like to address some options that weren't explored in this legislation. For example, the current disability tax credit is not refundable and is therefore of no value to the poorest Canadians living with disabilities, including people living with HIV and AIDS who have no taxable income. We urge this government to consider making this tax credit fully refundable as a means of offsetting the extraordinary costs of disability associated with HIV and AIDS. It has been calculated that the total cost of making this tax credit refundable for 1994 would have been just under $100 million.
Also of value to persons living with HIV and AIDS would be the recognition of same-sex partnerships for the purposes of the Income Tax Act, so that tax credits could be transferred to a partner and care-giver where appropriate. To understand these issues more comprehensively so we may assist the Minister of Finance in this department, the Canadian AIDS Society is preparing a review of the Income Tax Act as part of its income security project. If it's appropriate, we shall be pleased to present this material to this committee at your convenience.
Mr. Armstrong: Why have we come before you today? Basically, I think why we're here is just to represent as best we can...it's almost like a plea, asking you where's the voice for the constituency we represent, which we feel is a vulnerable constituency in this process of what is really very fundamental change.
You can understand from what we've said to you today we're not against the issue of needing more flexibility, the issue of renewal, the issue of cost-effectiveness, when we're discussing changes to the transfer system and effects that may have on health and social policy. But what we're concerned about is the fact that at this point there's no stable framework. For instance, we don't have a commonly articulated set of entitlements or basic needs we believe every Canadian, no matter where they live, should have access to.
One of the biggest elements of this process that concerns us is we have experience in the past of leaving the issue of HIV/AIDS up to the political process, especially at the provincial level, with a very inconsistent result across Canada. Somehow, somewhere, what we want from this process is an assurance that no matter where people are, no matter what provincial regime they function under, we're all going to have a common set of expectations and result.
You may ask the question, why a special case for HIV/AIDS? What's at stake here? Too often we've heard the refrain that we can't afford things; we can afford changes, we can't afford enhancements. In saying that I think what we're doing is only looking at one side of the financial equation. In our speaking notes, you see referenced there a study done by a Canadian economist, Robin Hanvelt, out of the B.C. Centre for Excellence, which estimates the future production losses associated with current levels of HIV/AIDS mortality. You see there a figure of $2.11 billion U.S. I think that speaks for itself in terms of what the impact is of not addressing the needs of this constituency carefully and not thinking carefully about what we're doing.
Finally, what we've left you with is a quote from the Canadian Institute of Advanced Research that I think issues a bit of a warning to us in this process. It says that nations that fail to understand the determinants of economic growth and the economy's relationship to the health and well-being of their populations are likely to become societies in decline.
As we've said, I think that's probably the most direct answer to this issue of, we can't afford things, we can't afford things. Obviously there's something very seriously at stake. That's what we're here to try to represent to you.
[Translation]
Mrs. Lalonde (Mercier): Thank you very much for your presentation. The quote you gave us toward the end reminds me of an extremely interesting presentation we had from Dr. Prichard, in Toronto, for the Human Resources Development Committee.
You gave a very convincing presentation on the relationship between general health and the economy, and the Standing Finance Committee should hear it.
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I have a brief comment to make. Your presentation was excellent and educational. I am not critical on the subject of health care, but I am extremely concerned about the subject you were speaking about.
As far as AIDS is concerned, you focussed on the absence of specific standards. You focussed more on this than on the very substantial decrease in resources, particularly for the poorest provinces, which we can expect not for this year, but starting in 1997-98 and a part of next year, due to the combined effect of the ceiling and the government cuts.
In general, we in Quebec do not want national standards. Actually, we do want standards, but we differ on the question of which nation they should be imposed on. Because I have travelled across Canada with the Human Resources Development Committee, I know that this request for strong national standards is extremely widespread.
First, do you not feel that the most dramatic part about Bill C-76 is the significant cuts that the provinces will have to make, particularly to social assistance, given the fact that basic standards in health care are maintained? But these cuts to social assistance may increase the number of cases and the seriousness of the symptoms of immune deficiency and of AIDS.
[English]
Mr. Williams: I think the comment is well taken. I prepared the presentation and it is something to which I've certainly given a lot of thought.
The cut-backs are significant. My comment about the cost-effective implications of not providing stable housing environments and the effect that has on the acute care system I think bears out your comments about the fact that cut-backs in social services are going to be borne out in increased costs in other places, which, in most cases, doesn't make good financial sense.
We are concerned about the actual cut-backs. We did mention that we're concerned about the partial indexing of cash transfers to the provinces, which is gradually eroding the level of the cash transfers.
I think I speak for myself and for Russell when I say that, at the same time, we're cognizant of the fact that we're working within a framework of fiscal limitations and that requires a creative response. I think the reason I've chosen to focus on standards in the framework is that if innovation is going to happen, it should happen within a framework where certain basic needs or entitlements have already been acknowledged.
It seems we have a tendency to make everything very dichotomous. On one hand there are standards and on the other hand there is flexibility. The two don't need to be incommensurate. I think what we have to go through is a process of establishing a framework that will allow for flexibility and innovation, particularly at the service delivery end of it, and allow us to make better use of the resources we have.
We haven't prepared an in-depth critique of the actual numbers in the budget partially because, to be honest, that's out of the area of our expertise and there are other groups, such as the National Anti-Poverty Organization and the Caledon Institute of Social Policy in Montreal, who are very good at doing that and we support their work in a lot of areas. I hope that helps. I think that reflects my choice, which is to focus on standards as opposed to the actual numbers.
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[Translation]
Mrs. Lalonde: You have, no heard doubt our general comments, or at least my comments, which I wanted to add here in connection with Bill C-76. The government has been speaking out of both sides of its mouth on this.
I called it the two-faced budget, despite the amendments announced by Mr. Martin on Tuesday. In a rather spectacular gesture, before denouncing us for not making sense, he himself had to announce the amendments in a way I would not exactly consider Parliamentary, based on my brief experience in Parliament.
This bill talks about both a desire for flexibility and the possibility of strengthening standards, to which Quebec is strongly opposed, first on principle and second, because of the extremely large decrease in funding.
From one point of view, those who carefully read the comments from both sides could say that the same could also be said of the government.
In any case, we all have one reason to protest, and that is the significant decrease in funding. This will lead to higher social costs. And it will look like the provinces will be the ones taking on these social costs, but it will actually be all Quebeckers and Canadian society that will be taking them on.
The Chair: I get the feeling this isn't a question.
Mrs. Lalonde: They are free to comment on my comments. They are very good at this.
The Chair: Yes, they are.
Mr. Armstrong: That was very well said. Thank you.
The Chair: Thank you, Mrs. Lalonde.
[English]
Mrs. Stewart: I would like to thank Mr. Armstrong and Mr. Williams for bringing the issue of income security, particularly on behalf of the HIV/AIDS population, but more generally in terms of disabled Canadians. Essentially the message that you bring on behalf of your constituency is it can be broadened very effectively, I think.
I too was thrilled when the minister made his changes to the operation of our CPP disability process, because it has a huge impact on a very broad community. I understand that our underestimations of the size of the accounts in the CPP have in fact resulted from a significant increase in disability pensions being paid to Canadians, which is extremely unfortunate, but it draws to our attention yet again the importance of the presentation that you make to us today.
I am particularly interested...you talk about disability and on page 4 in your brief the need for innovation and flexibility. I wonder, as we talk about the results that we have had with the current structure and the way the transfer payments are made, and the failings in those, the inability for provinces to be as innovative and creative as sometimes they would like to be, the inability to really have national standards despite our best controls.... With this change, Mr. Williams, as you talk about the dichotomy between national standards and flexibility - and we get stuck on that and I agree, I hate that - and the need to build a framework, I'm wondering if in fact this legislation provides us an opportunity to build a very effective and efficient framework in terms of dealing with flexibility by bringing it to the provinces, where they are responsible and now accountable, to develop programs that can interrelate between health, between the need for assistance, between housing, and among those things in a more creative way than can be done with strict and directing guidelines.
Certainly - and I believe Madam Lalonde would agree - some of the representations that you had at the HRD committee indicated that the provinces felt hamstrung by these things and were unable to proceed. I know in Quebec there were examples of programs that could have been implemented.
I'm interested also to hear my colleague Madam Lalonde say that she is supportive of national standards. That gives me great hope. I think as we provide the flexibility to the provinces - and if Quebec and the Bloquistes are saying that they are interested in developing national standards, perhaps with the flexibility to work within the context and confines of the province they are still willing to come together as a Canadian federation and develop national.... Maybe we have the hope for the future that the federal government can play a significant role, different from what we had in the past, a facilitative role, to take us to the next generation of requirements in terms of social servicing and support from a social perspective for Canadians.
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Mr. Williams: I'll respond first and then maybe Mr. Armstrong would like to add a comment.
I think I agree with comments about the Canada Assistance Plan providing a strait-jacket, in some sense, for innovation, but the mechanism by which it did that wasn't the standards that were in the Canada Assistance Plan. There are actually very few standards in the Canada Assistance Plan and they refer to things like assessment based on need. I realize there is a controversial economic and ethical issue attached to need versus income testing as well, but the need component was a standard; the right to appeal was a standard. I think the hamstringing took place because CAP allowed the federal government to move into social planning and programming by virtue of its willingness to spend in certain areas. CAP explicitly identifies specific areas of social programs that it will cost share. Having been in both the position of a funder and somebody who is trying to meet funding criteria, I think that creates problems. In my personal view, that's a model to be avoided. In my mind, that's where the flexibility comes in around programming.
Standards still involve things like the right to appeal, whether we are still going to have a system based on need, and the residency requirement, which I think is an important standard and so far it's the only one in this legislation. I think those standards have to be addressed. Again, in my mind, the legislation mentions principles and objectives.
As to the principles and objectives, the Canada Health Act is a model. If you look at the Canada Health Act, the principles and objectives are there, and I quoted them in my presentation. The standards of comprehensiveness, universality, and portability are merely the means or the vehicle by which we can impose conditions that maintain those standards.
As a caveat to all of this, I didn't say that arriving at a consensus on national standards for our social programming was going to be easy. But what we'd like to see is a commitment on the part of the federal government to lead that process, which is more than the commitment that is articulated in this legislation. To be honest, I don't think that disabled people, by and large, are going to do well. They may do well with their provincial governments, but they may not. This government, with the disability act, before it was replaced by the Canada Assistance Plan, has provided valued leadership to protect disabled Canadians as its citizens. As most of us do, I work in relation to 10 provincial governments and 2 territorial governments, and I don't want to see a situation where disabled people are entirely reliant on the provincial government for protection of their basic entitlements as Canadian citizens.
Mr. Fewchuk (Selkirk - Red River): [Inaudible - Editor]
Mr. Williams: The provincial government is there to facilitate the delivery of essential services. Why do we have a socio-economic union if we're not going to have agreed objectives and principles?
[Translation]
Mrs. Lalonde: I simply wanted to point out that my comments were misunderstood. I wholeheartedly agree with national standards, but I have always maintained that Quebec should set its own standards.
I have also said, time and time again, I have heard and have written that, from what I understood, the rest of Canada also wanted standards.
If you are willing to recognize that Quebeckers are a people and a nation, then maybe we could make some progress.
[English]
Mr. Walker: I have a very quick question on the role of the federal government. In these policies, are you looking for a balance of interest between the provincial and federal governments? Is that what your concern is, that the provinces have nobody overseeing them and that they will do the wrong thing? What do you want from the federal government on this, in real terms? We don't deliver services; we finance them. So the question is, under what conditions are they financed?
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Mr. Williams: I realize that, but I think as guardians of the public trust you have a direct relationship with the citizens who provide the taxes that fund those services, and I believe it's the federal government's responsibility to articulate the framework in which those resources would be spent.
Mrs. Stewart: Articulate or...?
Mr. Williams: In this case, given the legislative framework we've been given, I think the role of the federal government is to take leadership in consulting with the provinces and with other organizations. Whether that means resuming the social security review or not is a matter somewhat of logistics and also, I think, cost effectiveness, considering the amount of resources that have already been invested in it. But I think the key issue we're looking for, for our community, is leadership at this point.
Mr. Walker: I'm not picking a fight. How to work this is something that's very interesting to me.
Some things we do very easily and very well. We can change the Canada Pension Plan and facilitate the disability pension - change the criteria for that and make sure it's properly financed. We can use the tax system for child care, but we can't provide child care. Do you see what I mean?
So as we try to define this, the provinces in some respects, in almost every case, are very sophisticated sets of public services themselves. It's not like back in the 1930s when you were dealing with.... Alberta and the western provinces were almost bankrupt, let alone mature organizations.
I wonder if we shouldn't be prepared now to say that these organizations have reached a stage where they can handle these things and this is what we can do. We can work through the tax system with a great deal of ease. What we can't do is some of these direct services, and it costs us a lot of money to -
An hon. member: [Inaudible - Editor]
Mr. Walker: As I said, it's just a theoretical point.
Mr. Williams: The comment is well taken, and if you look at the issue of medication costs, which fall under uninsured health services under the amendment to CAP through the Canada Health Act, Ontario has taken the lead and has come up with a catastrophic medication program with a $500 deductible.
So I'm not saying that the provinces aren't capable of sophisticated social programming. Our organization believes - and we're a national organization and we've heard from our constituents - that the federation is a socio-economic union, and our members feel they still need...call it the protection of basic entitlements offered by the federal government and federal legislation. It's a relationship between the federal government and its citizens.
That's the one thing that CAP did afford through the need. There was a direct relationship there between the federal government and the citizens of Canada. This legislation - the framework as it's described now doesn't contain that.
I'm going to go out a little bit on a limb here. I'm not making a commitment on behalf of the organization I work for, because I'm not an elected representative.
Having done some work around issues like the disability tax credit and looking at the Income Tax Act, I think there is a logic at this point for our organization and other organizations like ours to begin to discuss with the federal government alternatives in this relationship with individual Canadians, such as using direct tax credits to individuals so that they can purchase - I'm sorry I'm sounding ideological here - the services they need or the supports they need.
To be honest, I think that would take more than making the disability tax credit purely refundable; that's $800 a year for the poorest Canadians. But I do think, having gone through the Income Tax Act and worked at it, there are things that can be done there, and I agree that it's within your jurisdiction.
We're very pleased with the response of Minister Axworthy, with the changes that have been made to the Canada Pension Plan. They're very exciting, they're very positive, and, to acknowledge our hon. member from Quebec, they reflect in many ways what's been the practice in Quebec for the last number of years in some cases. So there is a harmonization going on there.
But I do recognize that if there's a problem, we're willing to look at creative solutions to address it.
Mr. Campbell (St. Paul's): The chairman has asked me to thank you on behalf of the committee. You've made some very compelling points, very cogent arguments, and a very impressive presentation, expressing some things and leaving some questions with us that I know some of us will ponder for a long time, particularly about the nature of the social and economic union, as you described it.
As a long-serving board member of the Canadian Foundation for AIDS Research, I'm particularly interested to hear your comments about the economic costs associated with HIV and AIDS. That's an argument that over the years has been better understood, and I commend you for raising it again today.
Lastly, I'd like to say, Mr. Chairman, that I would welcome seeing the income tax analysis that you've suggested is under way. I did not know of that. I think it's an excellent idea and I look forward to seeing it. Thank you very much for being with us today.
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Mr. Williams: Thank you for inviting us.
The Chair: Apart from your excellent presentation, I think there's an added benefit in having had you here, and I think it's a continuing process of bringing AIDS out from behind closed doors and recognizing it as a disease that can hit any one of us. So thank you very much for that thought too.
The next witnesses are from the National Farmers Union, NFU, Wendy Manson, Peter Dowling. Welcome.
Ms Wendy Manson (Transportation Committee (Saskatchewan) National Farmers Union): Thank you.
The Chair: Is there anything in our budget that you do like?
Mr. Peter Dowling (Region 3 Coordinator (Ontario) National Farmers Union): We might like some of it. The dollars going into training could be a big plus.
Ms Manson: I'm from Saskatchewan and I have to tell you that since last fall I've spent a tremendous amount of time on the WGTA, so maybe I won't answer that question at this time.
The Chair: Well, we're looking forward to your presentation. Go ahead, please.
Ms Manson: Thank you for the opportunity of speaking on one of the most important budgets in agricultural history.
The National Farmers Union is a voluntary direct membership organization of farm families involved in the non-partisan development of economic and social policies that will sustain and maintain the family farm as a basic food-producing unit in Canada.
It is generally recognized that the 1995 federal budget will have an unprecedented impact on Canada's agricultural sector. In this submission we will argue that the budget will make farmers less competitive in the international marketplace and in the long run act to increase the deficit.
I don't intend to read from the presentation -
The Chair: Good.
Ms Manson: - but that seemed the best way to say what we're going to do.
What we want to talk about here a bit today are the east and west transportation issues, with particular attention to the WGTA. We want to spend a bit of time on the dairy subsidy, less on research funding and food inspection.
I just want to have you note in the brief that what would be page 11 we have a summary of recommendations. Behind that we have some suggested amendments, and following that we just have some brief notes on railroad control and ownership.
When the WGTA was eliminated, there were some reasons given, just generally, and we detail them here. They were to comply with trade to create a lower-cost, more efficient system, apparently through deregulation, to eliminate rate discrimination against diversification and value-adding and so on, and to reduce expenditures. What I'd like to do is deal with these one by one. We have numbers and so on, but I don't intend to do that. I'll speak more generally.
On the trade rules issue, for some time we've thought that it would be possible to just simply add the domestic movements to B.C. and Churchill into the WGTA and that this would solve the trade problem. The minister told us he had a legal opinion that that wasn't appropriate, and we would like to see that.
Our sense of this issue is that infrastructure is green and the WGTA can be used to do that. We would also remind the government members that the red book emphasized infrastructure.
The WGTA addressed the cost of long distances to port, and if there's anything I want to remind this committee of, it is this: you just don't get any further from port anywhere in the world if you're producing grain than in Saskatchewan; you just don't. We've designed a system that allows us some equity getting to port without affecting the price we ask at the port, and we just think it's the best we can do there.
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But I want to talk for a minute about trade realities. Let's look for a minute at what the Americans are doing. They're expanding EEP. In 1994 it was $800 million and they're expanding it to $959 million in 1996, and that's the maximum allowable. They're spending money on rail and ports. For example, they're spending $1.4 billion on the west coast port upgrade. The EU has stated that it intends to have maximum allowable subsidies, and I have the numbers. If you look at the OECD, you see clearly that this is what it's doing. Its tax transfers to farmers are going up. In Canada we're well below our limit.
We make recommendations throughout this document, but in light of this, we recommend that the federal government do a comparative analysis, looking at the U.S. and the EU transportation and marketing, and then think about what we're doing in transportation.
The second reason for getting rid of the WGTA was that it would somehow be a better system through deregulation or that we would be getting ourselves a more efficient system and a cheaper system. One of the things we can do here is to compare ourselves to what really happens in a deregulated system, and that's what the Americans have. Their freight rates are much higher.
The Chair: More than twice as high as they will be under our revised system.
Ms Manson: One of the unknowns is what our revised system will produce after the year 2000.
The Chair: Prairie Pools told us about $24 or $25 a tonne. That's $54 American.
Ms Manson: Yes. When we get to the year 2000 and we don't have maximum tariffs and so on, as the full effect of deregulation is felt, we have some reason to believe that we won't know what those rates will be.
The Chair: The future is very difficult to predict for all of us.
Ms Manson: Yes.
The Chair: Especially my political future.
Ms Manson: The American system.... Having compared our rates, I want to say that the systems are different. We have an orderly marketing system and they don't. Our systems have some different elements to them. But there are some things that can be said as well. Our system has elements in it that make it more complicated because of some of the things that we have to do here. Given that, our car turnaround times are comparable to theirs and our system is operating at capacity at the port and their system doesn't have to do that. They have more in-system storage than we do.
If you look at Montana, where it's deregulated, they have few or no branch lines, and all of the places where they load cars are about 52-car loading spots, so it's a very consolidated system.
So if you go back to the pricing issue, what they have there is a system that is already consolidated and still much more expensive than ours. In fact, they don't work to capacity in their system.
If you look at the freight rate deregulation issue, one of the things that we worry about in terms of the rates is that there is no reason for the railways to pass a saving on to captive shippers. They have reason to improve their bottom line. They're going to do what comes naturally to a business, and we would expect them to do that. If there isn't a maximum tariff, they will simply proceed to charge whatever they can get out of us. The problem with that is that we are captive shippers, so they can get out of us whatever they want.
The WGTA had as part of it a costing review, which again was a way of making the system fair in its costing, because it related what we were charged to a costing formula and that price could go up or down. It might go down if they increased their efficiencies, but it might go up because of inflation. So there was a relationship between their cost and our price.
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The performance guarantees that the NTA does not have and the WGTA did have forced the railway to be responsive. It seems to us that particularly when we have maximum tariffs in place until 2000 - and we support maximum tariffs - you have a situation where if you have no performance guarantees making them haul grain and you have a maximum tariff that controls what they can charge, they may simply take their grain cars and do something else with them. So we may have tremendous shortages, and that becomes a worry in a system that doesn't have surplus cars to begin with.
As a result of that whole combination of things I've listed there, we would make a series of recommendations. I won't read them to you, but they are recommendations two through five. They essentially talk about inserting the opportunity for us to capture benefit from any efficiencies, protecting us from the captive shippers, and forcing the railways to behave appropriately in terms of hauling our grain.
The car allocation piece is a complicated issue, but car allocation fits the Canadian system of transportation and marketing - my earlier reference about the American system being different. This is made in Canada in some ways. It works very well.
It's third party; there's a third-party allocation. It accommodates what we call a ship to sales system. It coordinates rail capacity and sales, and it allows for the efficiencies you gain through single coordination of these complex factors.
I'm trying to build for you here a picture of a system that behaves in a singular way to produce the result that it exports - it supplies to its customer an incredible volume of grain from many, many places. Until we can stack farmland beside a main line, this seems to us to be key.
The second thing about the car allocation system that we think matters, and it is important to remember when you're thinking about it, is that it does indeed quickly respond to the power or to the market share of individual shippers. It responds. It's responsive to - and that's been a criticism. It hasn't been responsive to someone having more market share and their share of cars reflecting it.
So we recommend that that system be maintained. We have serious worries about a market allocation system.
We want to speak briefly about the ownership of the government cars. It seems to us that it clearly has moderated shortages at times, and secondly, if you had a market system, it would moderate the ability of the players to create shortages. I might point out though that there's an inconsistency in having a car allocation system and then keeping the government cars because you're going to moderate the market forces. Our recommendation is don't have a market system; let's stay in business the way we are here. Certainly that's the role of government cars, and it's our sense that these cars need to be retained in the fleet.
I want to talk about branch lines now, as part, again, of the whole efficiency equation. There are a few numbers here we have to keep in mind. The citizens of Canada paid $891 million in upgrading on those branch lines. If you got rid of all of the branch lines, every mile, you might save something like 10%. This is one of those consequences where it's hard to model how much it will cost - and there are some numbers in there - but the resulting lower volumes due to not having branch lines may actually increase the fixed cost on the system. This system is designed to spread cost over volume, and when you lose volume it raises the cost of what's left.
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I want to take a moment here to tell you where I live. I live on a farm near a little town, and there are about 150 farmers there.
The Chair: Which town?
Ms Manson: Dinsmore is my community, in Saskatchewan.
I think these numbers are interesting for people who don't live in the west. In that community we produce 2.5 million bushels of wheat, Durum, barley, canola, and lentils. I think our numbers are much like the average in the province. That's about 68,000 tonnes and it involves 750 rail cars a year. We live on a branch line and that branch line is average, although that point is probably a little bit above average, but that's the volume we're talking about - more than two railway cars every day out of a little town with maybe 150 farmers. The loss of income in that community is $1.3 million annually.
We are really concerned about the loss of those lines. We don't know how that's going to work and we don't know what the alternatives would be. There is discussion about short lines, but we think the parameters for short lines are very narrow. We've invested there. We're just really puzzled.
What we want to urge the government to do is not abandon those lines until the full cost to farmers, the rural communities, and the entire transportation system has been demonstrated to be lower than the cost of branch-line retention. We know this is a complex equation. We know that. But think about that number that I've given you; it's just astonishing.
We want to talk a bit about the NTA versus the WGTA. The WGTA was cost based, it was distance related in terms of tariff, and it produced for producers a price transparency on our costs. The NTA allows for confidential contracts, so even if we're going to become crafty consumers of freight rates, it's all going to be a secret anyway. This is a worry for us, that the new system doesn't have that kind of transparency.
Secondly, the WGTA had an opportunity for producer input; it was built in. One of the things, from the point of view of our organization, for example, that was extremely useful was that we had an opportunity to be seen as stakeholders and to participate in technical discussions about this issue. Under the NTA, we will not have that opportunity. We recommend that there be a mechanism for true producer input because it's key.
I want to move to the subject of diversification and the WGTA's effect on diversification. There are just a couple of notes here. In Saskatchewan and Alberta we had a program that the provincial governments ran that supposedly offset the costs of the WGTA. It allowed those who would consume that product, instead of it being shipped, to not experience a cost disadvantage. Those programs both ended. But it seems to us that there was marginal benefit in those programs.
If you look at the numbers, I think it is also clear that diversification was taking place across the west. There has been diversification, and we see it in my community. I really see this...and I think any of you who have been west know that people are talking about this and doing this. But diversification has a context, and one of the key pieces here is that there are rotations required for canola, for example. There is an environmental limit to what you can do here.
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I would also note that with the loss of the WGTA, the alfalfa dehyd industry is going to be in trouble. That's part of rotation, number one, and just the loss of it itself decreases diversification. So those things are problematic.
I also want to point out one other little anomaly in the diversification discussion. The northeast of Saskatchewan is a highly diversified region. Their soil lends itself to that. Unhappily, they are far from the main line, farther than we are. They live in an area that's going to have a high likelihood of losing its branch lines and they have few transportation options because of where they are. We just want to point out that this scenario actually jeopardizes the productive capacity of one of the most diversified regions of the province. It's an interesting unintended consequence, I guess.
I want to deal now with the impact on the deficit. I've already told you how much money it's going to cost farmers in my community, and we have some numbers in here that show that at times it can be equal to our net farm income in Saskatchewan, for example.
Our report to the western economic diversification group showed that the potential of grain diversion to the United States could cost about 2,200 railroad and port jobs. I just point out that as the caps go off our freight rates by the year 2000 and our rates creep up, and I believe they will, that will make the American transportation cost more competitive and so we may in fact find that this moves that way.
I was in the estimates this morning, and I know the minister pointed out that quality is an important Canadian selling point. We're very worried about that kind of diversion south. We are very content with the Canadian system that ends up with a Canadian product put on a ship at a Canadian point. It means a lot to us. We think it matters in our marketing plan.
The minister noted this morning that this is an era of change unprecedented in Canadian agriculture, and we agree. We think this is a restructuring and we don't think it's what you want to do, given what you said you wanted to do.
The Crow's Nest rate in 1897 was really a purchase of infrastructure. It was economic development. It guaranteed or frameworked affordable rates, and therefore it mitigated against the monopoly power of the railways. This is what is required as objectives to achieve in any compensation. Do these things still matter?
We recommend further that the government should study infrastructure options before any irreversible changes are undertaken, such as a producer buyout of CN or public ownership of the road-bed, that we carefully examine some options to see that what we do is what we intend to do, that it will have results that we intend.
I just want to very briefly discuss the feed freight assistance issue and the Maritime Freight Rate Assistance Act and Atlantic Region Freight Rate Assistance Act. We've got some notes there and I'm going to let you at your liberty look at those, but I want to make the case on feed freights. It's a small amount of money, it seems to us; it's a small program. But it brings again the Canadian development issue, we think, to the front.
We think it was symbiotic regional development, and when you look at where the feed was transferred from, from central Canada and the prairies to the east...so we sold the product inside of Canada to Canadians who value-added by producing livestock.... We just want to worry again about what will happen when you don't have that and there will immediately be pressure. We will have feed surplus in one place and we will have a tremendous pressure to buy feed from the United States and in other places, and it unravels.
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As to the Maritime Freight Rate Assistance Act and the Atlantic Region Freight Rate Assistance Act, it seems to us that there's a need to encourage intra-Canada trade and that that is what these did. We think that needs to be examined carefully. We want to know whether the alternatives will do what you wanted them to do.
We make a recommendation under our proposed amendments that simply says to keep these programs until implications for farmers, the agricultural industry, and the competitiveness of our export industry have been fully assessed and where appropriate transition programs have been put in place. We want it to be much more carefully looked at.
I'm going to turn it over to Peter. He's going to talk about dairy subsidies, research funding, and food inspection, and then I'll take it back.
Mr. Dowling: Wendy has just covered what we call in the NFU the grains and trains. She lives and breathes grains and trains and I spend seven days a week milking cows.
With the dairy subsidy, the concern to us is that when the subsidy is cut we actually end up with the cost of that subsidy being passed on to the consumer. I guess the real concern there is that the government is committed to supply management, which includes the cost of production. We're confused by the language that the government is using on supply management. We see in the background paper that it's called orderly marketing. Orderly marketing to us on the farms means a marketing system like the Canadian Wheat Board or the Ontario Pork Producers Marketing Board, where it's single-desk and does not include the other pillars that are included in supply management. When we talk about dairy, we talk about supply management. When we talk about poultry, we talk about supply management, rather than calling it orderly marketing.
When you start calling it orderly marketing, you start to loosen up what you call supply management. Does it still include the cost of production? We see that in the task force on orderly marketing that ran in the last year or so they referred to fair returns rather than to cost of production. Does fair returns include cost of production or something less than that?
In the background paper the words ``supply management system'' are used in an historic sense rather than in the sense that we hope to see it continuing to exist for the foreseeable future.
Another thing that concerns us is that these budget changes talk about international competitiveness and the global marketplace. I think internationally countries that do produce dairy products see it as a domestic industry, generally, and do not want other people dumping their products into a domestic industry and do not want to dump their products into other countries. The other thing is that our production costs in Canada are such that there are very few export markets in which we can afford to participate. So just how globally competitive are we going to be able to be?
I guess if this consumer subsidy, as we call it in the farm community, is cut and the cost of production is not passed on to the consumer, then we're going to end up paying the cost. If it is passed on, we're going to end up paying a bit of the cost too. If you know the supply-demand curve, you know that as the price goes up, the demand goes down, so our market could shrink.
As to research, I guess our concern here is mainly that when public funds are used for research then that should be reflected in the cost of the products of research, such as, for instance, seed. When it comes to the development of varieties of seeds, with plant breeders' rights we're seeing a 10% or a 15% increase in our seed costs, for instance. If there is public money going into these developments, then that should be reflected in our output, and we're recommending that the developments in research remain in the public domain.
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We're also concerned about the number of jobs and the amount of expertise that will be lost when 900 positions are cut from the research branch of Agriculture and Agri-Food Canada.
In the food inspection area, a concern is that when we start paying fees in order to export our products, are we erecting self-imposed trade barriers by increasing our costs of exporting? The job losses in the inspection branch could end up decreasing our shipping efficiencies because of port delays and packing plant closures. The privatization of inspection services could jeopardize our reputation, and, as Mr. Goodale said this morning in committee, Canadian inspection standards are the best in the world. So we're not prepared to see our standards jeopardized.
In order to have some time for questions, we'll wrap this up.
Ms Manson: I want to conclude by saying that we feel as though at this stage we're unilaterally disarming, and we don't think we should do that. We think we should think again about it, and we're very pleased to have had this opportunity. Thank you.
The Chair: We thank you very much. We have, by my watch, seven minutes for questions.
[Translation]
Mrs. Lalonde: Thank you.
Thank you very much for your presentation. I would like to be a specialist in this area, because I found it very interesting.
You have given a very clear presentation on the West's problems. You understand that, for farm producers in the East, this budget proposal gives great cause for concern because it brings back the fears that were around before the Crow Nest Agreements; that is, that subsidies in the West could give rise to unfair competition for Eastern farmers. Did you note that also?
[English]
Ms Manson: Unfair competition...?
[Translation]
Mrs. Lalonde: Because the Crow Nest Agreements were replaced with a $1.6 billion subsidy and because this subsidy is not shared in any way with Eastern farmers; farmers, poultry producers, pork producers and so on are afraid that there may be unfair competition.
[English]
Ms Manson: Our sense of the $1.6 billion in terms of an opportunity to diversify is that, for one thing, it's paid to the landowners, so it focuses backward. It's also our sense that it is a very, very small amount of money, so the impact of it in that way will be negligible.
Regarding the livestock sector - and I made this case earlier and I don't want to make wide, sweeping comments. There are provincial differences. There may be some small expansion of livestock in Manitoba, but generally our sense of it is that there's not going to be a big impact.
I would point out, for example, that the new president of the Cattlemen's Association thinks there will be no impact. So we think it won't make a lot of difference.
The diversification we're doing has been proceeding along in an orderly way for some long time; there were other factors there. Does that answer?
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[Translation]
Mrs. Lalonde: For you, the most important thing is the other side of the argument. You have clearly presented your point of view and I thank you.
The Chair: Thank you, Mrs. Lalonde.
Mrs. Lalonde: I must go, please excuse me.
The Chair: Thank you for coming. Until this afternoon.
[English]
Mr. Pillitteri, did you have anything you wanted to add? Mr. Fewchuk?
Mr. Pillitteri (Niagara Falls): I already have, Mr. Chairman. I was in the agriculture committee this morning for your presentation with the minister.
Mr. Fewchuk: I share some of your concerns about the railway. I wonder sometimes what we are doing. Why are we selling CN? If the branch lines are costing us money, let them go. Thank you.
Mrs. Brushett: We had a short-line owner before us here just a few days ago -
Ms Manson: Thomas Payne?
Mrs. Brushett: Yes, and in fact we have had the sale of some short lines in the east. But in his comments pertaining to the hauling of grains specifically across the western provinces, CN wasn't really doing a very effective job, and the short-line operators maybe can keep those rural communities going a little more effectively if we make a few adjustments in the freight rate. I'd like your comments on that.
Ms Manson: The short-line discussion is very interesting. I speak with Paul Beingessner regularly, who is the other short-line person in western Canada. I think it's interesting that the WGTA allowed for short lines. It allowed an opportunity, and we had very few. What you will hear from the short-line fellows is that the new situation is not friendly to them. So I think the first thing you have to look at is that you may have deregulated them out of possibilities.
The second thing is that a short line is not viable if we have to buy the branch line, $40,000 to $80,000 a mile, and that's the one that we put the $891 million in to begin with, so that's a real problem. Then you have to have some rules because you essentially have a little guy trying to dance with a big guy, and that's going to be problematic, unless the little guy has a big friend with some rules. So there would need to be some regulatory things that think about the short lines.
I think it's fair to say that as an organization the Farmers Union has examined this and we think the protocol or the parameters that a short line could fit into are narrow enough. There are few enough specific circumstances that many of the branch lines that were abandoned would not be short-line material.
The Chair: Thank you, Madam Brushett.
May I thank you for a very comprehensive report, and it's always illuminating and interesting for us to hear these things, as most of us are non-agricultural experts.
One of the things that comes through loud and clear from your report and from other farm groups who have appeared before us is that no prairie farmer is thrilled about the removal of the freight rate subsidy, there is not a lot of faith that there will be true competition between the two railways, and the government should have an ongoing role in that area.
So on behalf of all of us, may I thank you very much for a very strong and forceful and eloquent presentation.
Ms Manson: Thank you for hearing us.
The Chair: We will adjourn until 3:30 p.m., same room.