EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 16, 1995

.1530

[English]

The Chair: Order.

The finance committee is continuing its investigation of Bill C-76.

With us this afternoon is the Public Service Alliance of Canada: Daryl Bean, national president.

Welcome, Mr. Bean. Before you begin your presentation, please introduce those who are with you.

Mr. Daryl T. Bean (National President, Public Service Alliance of Canada): Thank you, Mr. Chair.

I have with me Susan Giampietri, who is an executive vice-president of the Public Service Alliance of Canada. John Baglow is an executive vice-president of the Public Service Alliance of Canada, and Stephen Jelly is an executive assistant to the alliance executive committee.

Let me start by raising a concern. I was just informed that, different from past practices, our brief will not be contained in the minutes. Normally I would have taken the position ``If that's the way it's going to be, then I will read the brief'', but -

The Chair: It's very expensive for us to reproduce all of this. In the interest of economy we feel that every other presenter has been able to put his or her issues on the record and allow ample time for questions and answers.

Mr. Bean: I understand that, although I would think that in a matter as important as this one might want to -

The Chair: We consider you to be special, Mr. Bean, but we consider all witnesses before us to be special.

Mr. Bean: I wasn't suggesting we are special witnesses; I was suggesting the issues involved are pretty significant.

The Chair: We believe that all issues before us are significant. We've been cutting back to try to save money. We no longer have coffee provided for every meeting. We're trying to cut back in every way we can, sir.

Mr. Bean: No doubt somewhere along the line I'll be in a position to make another submission to you as to where you can cut money, and not necessarily cut it out of the witnesses who appear before the committee.

The Chair: We would welcome that.

Mr. Bean: Good. I thought I had before, but... I think the record will clearly show that we disagree with the approach.

I should indicate to you also that the opening statement itself is considerably modified from what we had originally planned to do, as a result of Mr. Eggleton's announcements here yesterday. Obviously we had significantly to alter the approach we had intended to put forward.

On behalf of the members of the Public Service Alliance of Canada, I would like to thank the committee for giving us an opportunity to appear during your study of Bill C-76. We have prepared an extensive written submission of our views on this legislation and we are proposing a number of amendments and changes to Bill C-76 that we ask the committee to consider. All of the amendments, changes and deletions we are proposing have merit, and if there are any specific questions the committee would like to ask we will certainly be pleased to attempt to respond.

First, I would like to highlight a couple of major concerns and recommendations, which we believe are essential to your committee's deliberation on Bill C-76.

In our view Bill C-76 is an undemocratic piece of legislation that strips away the legal rights of workers and their collective agreements. This unilateral removal of provisions of a signed collective agreement should be of concern to all Canadians. It should especially be of concern to those elected to govern.

One of the basic rights of working people is to join together to bargain as one with their employers. In a democratic society those same workers have every reason to expect that those rights will not be taken away from them. They can also reasonably expect that those who are elected to govern will protect those rights. If you were a worker in the federal public service who expected those rights and that protection from both the law and the law-makers, you would be sadly disappointed.

.1535

I should point out to you that it isn't just the PSAC that believes Bill C-76 is undemocratic. Just last month the International Labour Organization found the Bill C-113 amendments to the Public Sector Compensation Restraint Act to ``go beyond permissible restrictions on collective bargaining''. In short, the Canadian government has been told that the Public Sector Compensation Restraint Act, the act that Bill C-76 seeks to amend and extend, is unacceptable to the international community. It has been told that the legislation violates the principles of freedom of association and is an affront to democracy.

If Bill C-76 is adopted, the PSAC will launch a further complaint to the ILO. Given the ILO's previous decisions, we have every reason to expect another ruling that favours workers and condemns the Canadian government.

Bill C-76 is an unfair piece of legislation. It is unfair because it unilaterally reopens a signed collective agreement. It is unfair because it provides the mechanism to get rid of 45,000 jobs. It is unfair because it provides for a differing set of rights and benefits for employees depending on which departments or agencies they work for.

Very early in our discussions with the employer we proposed a series of alternatives to the downsizing mechanisms contained in Bill C-76. We offered suggestions for both revenue generation and expenditure reductions that would allow the government to meet its financial objectives. Members of this committee will be aware of some of these suggestions as they were contained in our November 17, 1994 presentation to this committee.

When most of these suggested alternatives to severing expenditure cuts were rejected, first by your committee and subsequently in the February 1995 budget, the PSAC turned its attention to making the 45,000 employment reductions fair. We advanced specific recommendations to government that were designed to make the administration of the workforce reductions as humane and as fiscally responsible as possible.

The primary proposal we made in this regard was that the early retirement and early departure incentive programs be voluntary and offered across the board in the federal public service. We were pleased to learn yesterday that the President of the Treasury Board announced he would be issuing guidelines that would allow for the use of alternates in the downsizing process.

Since February 27, 1995, PSAC members from coast to coast to coast have been meeting, lobbying and writing their members of Parliament in an attempt to have the package more fairly applied across the board in the federal service. The reports we have received show that members of all political parties have offered their support to this position, both privately and publicly. Many, including Liberal members of Parliament, have written to the President of the Treasury Board to express their views.

We welcome this initiative by the President of the Treasury Board, and I would like to take this opportunity publicly to thank those members of Parliament for their support on this issue. I would also like publicly to acknowledge the individuals and collective action of thousands of alliance members who spent their own time and energy to make this process as fair as possible, not just for themselves but for all public service workers.

We will be working tirelessly with the employer to ensure that the alternate process is implemented fully throughout the Public Service.

.1540

Today we'll be advising PSAC members who wish to utilize the alternate system to write to their departments to request consideration. We will also be recommending that a vigorous monitoring system be established through national-regional joint adjustment committees soon to be established.

In order to make this process as effective as possible, sufficient time must be allocated to both employees and departments. As a result, we will be recommending to the government that all departments and agencies be allowed an additional 90 days to establish and implement the alternate program prior to issuing any surplus notice. This will allow departments to manage the workforce reduction effectively and ensure a measure of fairness for affected employees.

We hope that the committee will offer its support to not only the alternate initiative but also the 90-day extension necessary to make the process work.

We will never agree with the necessity to implement a 45,000-job cut in the federal public service and the resultant loss of public services to Canadians, but we will work with the government to ensure that the cuts are made as humanely as possible.

As I stated earlier, Bill C-76 is an undemocratic piece of legislation - not just because it tramples on the rights of workers, but because other portions of this legislation will have a dramatic and drastic impact on our country and our cherished social programs. Yet, apart from this committee room, there is little opportunity for public comment, feedback or suggestions; and there are very few Canadians who have the ability or the resources to make their views known to this committee.

Because of the impact of this legislation on workers, families and their communities and on Canada's valued social programs, such as medicare, we urge the committee to reconsider its decision to limit these hearings to Ottawa and to national organizations.

We would also like to add our voice to the proposal put forward by the Canadian Labour Congress in its presentations to the committee last week to have a special commission of eminent persons to weigh and measure the changes proposed by Bill C-76. We urge the committee to open up this process in order to make it democratic. Surely in a democratic society the citizens are entitled to have their say before basic changes are made on such crucial issues as their health care or their social programs.

Thank you very much. We'll be pleased to respond to questions.

The Chair: Thank you for a very concise presentation.

[Translation]

We shall begin questions with Mr. Brien.

Mr. Brien (Témiscamingue): Thank you.

My questions will deal essentially with the first of your document. Those who have to do with transfers to provinces were raised with other witnesses. They shall be again.

We will therefore be focussing on job cuts in the public service. You maintain that a good number of job cuts could be made on a voluntary basis. When the things are done as they are at present, or differently, would we be able to come up with an important number of job cuts in the public service, working on a voluntary basis alone?

[English]

Mr. Bean: First, let me say that I can't be precise about the number of job cuts we could get on a voluntary basis. But, certainly, as we indicated from the hearings and meetings with our membership, with the substitution or alternate provision a significant number of people are willing to leave on the basis that other individuals, who otherwise would be laid off, could be substituted or alternate with them. So I believe that certainly with the early departure incentives, a significant number of public service employees would take those incentives provided there was substitution for like-classified positions and that in fact there would be no necessity for reneging on the signed collective agreements we have with the government at this time.

.1545

[Translation]

Mr. Brien: In paragraph 67 following recommendation number 1, you state that the whole legislative framework which is being put forward will make it possible for the government to cut over and above 45,000 positions if it so wishes in the future. Do you think then that the legislative framework which is being put into place will in fact be used in a second wave of cuts to come in the Public Service?

[English]

Mr. Bean: Certainly, it's quite open to do that without any requirement to report back to Parliament. The Governor in Council can implement a program and add various departments at any given time. We made a list of items, which the Governor in Council can implement without reporting to Parliament or without any discussion in Parliament, again by simply adding a department as mostly affected.

There are a number of other issues on page 32 in the English version. In paragraph 123 there is a list of items the Governor in Council has exclusive authority over and can amend without reporting to Parliament. So, yes, I do believe it would be quite possible to go beyond the 45,000 and not honour the signed collective agreements we have with the government.

[Translation]

Mr. Brien: It cannot be said that 45,000 people will go and that this will have no impact on the level of services. This is in fact what you are saying, I believe. It is sort of misleading to say that we will maintain the same level of services with less people. Will there be more pressure to go towards contracting out? This is an issue which has cropped up on occasion. Will the government not now be tempted to contract out more work and to do so in all kind of situations?

[English]

Mr. Bean: There's no question, as was demonstrated by the previous Conservative government when it made cutbacks of some 13,000 positions, that in fact contracting out doubled. There is no question that since this government came into power contracting out has increased. Our estimate now is that it is $7.7 billion annually. There's no question in our minds, at least, that if this is carried out we will see an increase in contracting out, even to the extent we now see with the National Capital Commission, which is suggesting that workers would have the right to bid for their own jobs through contracting out. So it's pretty clear that's the direction in which we're going.

Of even more concern to me is the fact you raised that there is a substantive reduction in services and there is a substantive risk to the Canadian public. It's interesting to note that just last week, because of the fact that the weather forecasting systems used at the airport were a factor contributing to an air crash in which nine people lost their lives.... There will be more of those, because the automatic weather forecasting system being implemented is totally unreliable. The government knows that.

This system was used in the United States and it didn't work there.

The government has already had some examples of where it didn't work. In Edmonton, although the automatic weather forecasting system indicated that the weather was just fine, there was a blizzard going on. When Canadian Airlines landed with 100-some people aboard, it was fortunate that they didn't have an accident.

Now there certainly is a clear indication that since the airports reduced the number of firefighters, and in some cases eliminated firefighters, if there is a crash the risk of people being burned in the airplane increases.

Food inspection is another area.

There are all kinds of areas that we have indicated, and we have been accused of fearmongering about the automatic weather forecasting systems.

.1550

Now we have absolute proof from an independent inquiry into a plane crash that in fact it was a major contributing factor.

[Translation]

Mr. Brien: I have one last question. In your recommendation 12, you signal the possible discriminatory nature of the cuts. In your view, with regard to young people or women in the Public Service, do you already have, without the benefit of in-depth analysis, a broad indication of the trend which we could see following these cuts?

[English]

Mr. Bean: Again, we can only go by past experiences, and perhaps Susan Giampietri will be able to add to it.

Past experience has shown that the cuts have traditionally taken place in the lower level classifications in the Public Service. Traditionally, that has involved the majority, being women.

We're also concerned that in a number of situations there has been an abuse of the use of term employment, of those who are not protected by the workforce adjustment at all. In those cases, it's pretty clear that a lot of the aboriginal people, those with disabilities and visible minorities who have been placed in term positions will in fact be cut. That's one of the reasons why we've suggested in recommendation 11 that there should be a gender analysis impact assessment of the program before it's implemented. We're absolutely convinced that it will happen again, as it has happened in the past.

Susan, you might want to add to that.

Ms Susan Giampietri (Executive Vice-President, Public Service Alliance of Canada): The statistics that we've had concerning layoffs and surpluses in the last number of years indicate that the greatest numbers are in the administrative category. It's not surprising, since those are the categories where you've had a lot of introduction of technological change. Those are the categories that don't benefit from the training that should be available to enhance their mobility, both within the federal government and with the para-public sector and the private sector.

So if you look at the statistics of who have been declared surplus over the last decade and who have lost their job, the numbers are very high where the administrative category is concerned. That means clerks, secretaries and data processors. If you look at the number of women in those occupational groups, it is around 83%. So proportionately they're suffering more from the changes within the employer's establishment.

In addition to that, if you look at the number of part-time workers - the more vulnerable workers - and, as Daryl mentioned, term employment, that is where the employer has been able to indicate they are doing something about employment equity. But when you look at the levels in the operation where decisions are made, middle management or senior management, you find that the number of women in those categories, where the decision-making power rests, is very low. The numbers of equity group members are even lower. So all of the evidence, both in this area and in all other areas where you're looking at the workforce, is that it's groups that are disadvantaged, like women, aboriginals, people with disabilities and the visible minorities, who are going to continue to suffer.

Mr. Campbell (St. Paul's): Mr. Bean, you spoke about the process of discussions or negotiations with the federal government, in particular with the President of the Treasury Board and his officials. Is it the case that 14 out of 15 unions representing public sector workers agreed to a workforce adjustment program, the exception being the union you represent? Could you comment on that?

Mr. Bean: Yes, I sure can. I'm certainly pleased you asked the question.

The fact of the matter is that only one other union agreed. The other unions said they were prepared to make the submission to their board of directors, as I did with our board of directors.

.1555

When PSAC rejected it, the other unions never did make the submission to their boards. It was determined when PSAC rejected it that in fact it wasn't going to happen anyway. Therefore the nice myth out there about every other union except the PSAC having agreed is just that - a myth.

I should point out to you that since we represent 75% of the workers who will be hit hardest by this program, even if that was true I would make no apologies for our decision to reject.

Mr. Campbell: I wasn't seeking any apology, simply a clarification.

I believe, Mr. Chairman, that we've had testimony before this committee from other unions that they were prepared to accept the deal that had been hammered out between unions and the government. I could be wrong on that, but that's my recollection.

The Chair: That's true.

Mr. Bean: The Professional Institute did accept it. All of the others except one had agreed that they would go to their board. The other one had agreed that they would go to their membership, although they didn't recommend it. They would go to their membership on a vote, and they indicated that they thought their members would probably accept it anyway, even though they didn't agree with it. Those are the facts.

Mrs. Stewart (Brant): You made reference to the fact that you had to scramble in response to the minister's presentation yesterday to the committee. What were the particular aspects of his presentation that made you decide to scramble?

Mr. Bean: We've been asking since February for a substitution program to be implemented, and that it be across departmental lines. Yesterday, when the minister announced here that he was agreeing to it, although calling it alternates -

Mrs. Stewart: Semantics.

Mr. Bean: - that seems to be the same thing from what I can gather - obviously I wanted to include in our opening statement that we agree with that program. I have some concerns that by waiting until May instead of making that decision in February, when we proposed it, if this committee recommends - and I assume it might, since there's a majority of Liberals - that this legislation be adopted, we may well see it being adopted without sufficient time to put in place a system that the PSAC offered to put in place back in February, where individuals who would be interested in taking the early retirement or the early departure incentive could be identified.

The minister said in his statement that it had to happen prior to one being declared surplus. If it was allowed after people were declared surplus, then it would build some time in. But he has indicated that any alternate system or substitution system has to be put in place prior to the individual being declared surplus.

That's why we've said we haven't been consulted. We don't know what these guidelines are that are imminently going to be issued. We don't know who's going to oversee these guidelines. If it's left strictly to departments, what is the communication system that's going to be developed between departments so they'll know that Jane Smith in department X is willing to take an early retirement incentive or early departure and Jane Doe in department Y is going to be declared surplus, so that they can switch jobs? That system needs to be put in place.

Mrs. Stewart: There's no question that it does. I think we've been finding from the testimony that we've been hearing, and certainly in conversations with different unions representing the Public Service, that some of those systems have been developing in and of themselves. Certainly the flexibility and the application of the legislation is already taking on a life of its own. But I appreciate the comments you're making.

In effect, then, you're glad to hear -

Mr. Bean: Absolutely.

Mrs. Stewart: - the minister's response yesterday. I believe the majority of the people who work in the Public Service are in agreement with it as well.

Mr. Bean: I would certainly think so. Certainly that's all the indication.

Mrs. Stewart: So your next satisfaction.... The minister has talked at length over the course of this debate - and with you personally, I'm sure - about setting up worker-management committees and making sure that the structure is well in place. So I don't believe I've got a concern that it's going to be a single-minded strategy. He said time and again that he will work with management worker committees in the course of the whole program.

.1600

Mr. Bean: Again, that's very commendable and certainly something we support. My difficulty with this and the reason I've raised it with this committee - and that's why I said we had to scramble to see how we're going to deal with it - is that I would hope those committees would be charged with the responsibility of monitoring that, but since it has not been discussed with us or raised with us, we don't know that yet. Those committees have not yet been formed. They are in the process of being formed. In fact, Sister Giampietri here is the PSAC representative who will be sitting on the national committee. Again, that's not finalized at this date.

So my concern is the time frame we are locked into. Will it give us sufficient time -

Mrs. Stewart: But you will feel comfortable with that national committee, if that's the possible strategy, and working as the overseer with feed-ups through at the policy level.

Mr. Bean: Absolutely. In fact, we'd strongly recommend that the national committee as well as the regional committees be fully involved with that process. The difficulty that we have now is somehow we've got to alert Public Service workers, and I've started as best as I could.

Mrs. Stewart: I have a feeling they know.

Mr. Bean: Well, no, they don't know. The problem is that they've been told up until yesterday that there was to be no substitution across departmental lines, so they don't know. There is no list of people who are willing to take early retirement or early departure to compare to people who have already been declared affected. There is no list.

While it might be fine in a small community, it may well be very easy to identify individuals within a small community with a limited number of employees. I can tell you that I'm sure there are a substantive number of people in larger communities who would substitute, first of all, who don't know that they can as of yet. Secondly, whom do they contact? My advice at this stage, as of today, is that they put it into the department and they also notify our applicable component so that we can start putting the process in place. That's my only concern about it.

Mrs. Stewart: Fair enough.

Mrs. Brushett (Cumberland - Colchester): One of the comments you made, Mr. Bean, was that you felt public servants did not have an opportunity to come and express their views to government. You said, ``Very few Canadians have the ability to make their views known''. Well, I met with two unions last Saturday morning in my riding in Nova Scotia and they expressed their views very eloquently to me regarding what we were doing with this Bill C-76, and I heard them with great interest and expressed their concerns to the committee. As well, I offered my support to John McEwen in New Brunswick and so on throughout the Atlantic region. So the opportunity does exist and I must disagree with you and say that they have the ability to express their views very eloquently.

Mr. Bean: Let me first say, with due respect to you, that while you may have met with a few people, that hardly necessarily represents over 200,000 Public Service employees. I don't pretend to try to represent every individual PSAC member. I do the best I can. Some people won't always agree with the views I express.

In terms of the social programs and the impact, I'm very doubtful if John McEwen told you that you were doing a good thing. I know John McEwen fairly well. I don't think he told you that the program you're bringing in, which endangers medicare and the various social programs, is a good thing in Bill C-76.

.1605

Mrs. Brushett: The point was that they had the opportunity to express their views and a vehicle: a member who is out there listening. I suggest that members of Parliament play a very valuable role in this exercise and that listening to constituents, whether they're public servants or it's the newspaper boy on the street, may be more important. But they have the opportunity to express those views without this committee travelling the country and spending a lot more money so that we are hearing input.

Mr. Bean: Certainly I wouldn't disagree that it's important that they have input to their members of Parliament. If I ever had any doubt of the importance of that, the input that our members had to finally get the minister to agree to substitution has certainly proven that's a pretty valuable approach.

I think there's also something beyond that. You have a committee that is sitting - although, I have to admit, there are not too many members here -

The Chair: Quality, sir, quality.

Mr. Bean: I think it's important that the members have a chance to talk to all committee members as best they can, if they're here. I would suggest that might be appropriate.

The Chair: Mr. Bean, we have a higher percentage of our committee here than you do of your union in this room today.

Mr. Bean: That's quite possible, but if you really want to see if we can come up with that, I can make arrangements for that.

The Chair: Oh, I've met a lot of them.

Mr. Bean: I can certainly make arrangements. We could get a lot more here in a very short time, and you may not appreciate it.

The Chair: I'd probably like them at my house.

Mr. Bean: Okay, we'll arrange to have some at your house.

The Chair: Thanks.

Mr. Bean: I think it's Eugenia Repetur now.

Ms Eugenia Repetur Moreno (Executive Director, Canadian Association of Social Workers): I can't let that go, because the comments are not fair. To say that every Canadian has access to the member of Parliament is partially true. But we're talking about a bill that is implementing decisions announced in a budget, and to my recollection this is only the second time that we've had an omnibus bill that has covered so many important issues. While Canadians may have access to the members of Parliament, too many Canadians who are impacted on by the decisions in this budget don't have the resources to provide meaningful input to allow influence on decisions that are being made.

Where does an unemployed person get the resources to analyse the impact that changes to unemployment insurance will have on them? Where are the single mothers who are barely surviving and living under the poverty line going to get the resources to help put an analysis together to tell you how the changes that you're proposing in transfers to the provinces are ultimately going to affect them?

So, with respect, I think it's great that members of Parliament are available to listen to their constituency, but when you're talking about providing input and analysis into the decision-makers of this country, I don't think it's enough to say you're in your constituency office and they can come and talk to you. It's just not enough.

The Chair: Thank you.

Mrs. Brushett: In regard to that, I think you fail to recognize that on Saturday mornings our offices are flooded with constituents, who very eloquently express their views and their great needs from government, from society, and the problems. I think you're shortchanging the citizens out there. They are certainly very capable of letting us know exactly.... Most of us have toll-free 800 numbers. They're there. They have groups representing them at the community level and so on.

I hear, in very short order, from my constituents as to their views. Of course, as Mr. Bean indicated, we don't always agree. But it's not that they don't have the opportunity to have great conversation and exchange of communication and ideas as to what might be a better approach in more efficiently delivering programs with tax dollars.

.1610

Mr. John Baglow (Executive Vice-President, Public Service Alliance of Canada): We're dealing with a committee process that is funnelling into the decisions that ultimately are going to be made about Bill C-76.

It's not enough for people to say, ``My constituency offices are open''. We were asked - sir, I'm off the record - by a Miss Stewart, what we would suggest. What we have suggested is that the committee should go on the road, as a committee, and take testimony from people within regions as to how their regions and their local economies are going to be affected by the provisions of Bill C-76. That's a far more efficacious process of bringing information into a committee, which, after all, has a tremendous amount to say about the decisions that will be made, than to have a few people going on a Saturday morning to talk to their members of Parliament.

We're really talking about apples and oranges. We aren't talking about the availability or non-availability of MPs to their constituents. We are talking about a committee process, and we're talking about input to that committee process.

The Chair: Mrs. Stewart, did you want to add something?

Mrs. Stewart: No, thank you. Mr. Baglow responded quite effectively.

The Chair: Could I say this. We as members of Parliament, more than the public, see incredible back-up in the work that the Public Service does for us, and your union represents 75% of them, as you said.

My experience over a few years in politics has been that we are incredibly well served by our public servants. I've had mainly very favourable dealings with them. That is a credit to them, and to their union leadership, and maybe to management in certain cases too.

I know that you cut a deal whereby you take wage freezes in return for job security, and that deal is no longer in existence. It is not with any great relish at all that any of us sit here to preside over the dismissal of 45,000 public servants. It's with a very heavy heart that we do it. When I read on page 39 of your brief that, ``Many PSAC members are scared, and rightly so, that the 45,000-person employment cut will result in situations where they personally find themselves in need of social assistance'', I think members of this committee can empathize with that. We are darned concerned.

I'm pleased that the minister yesterday announced alternative ways of working with you, to achieve and effect substitution so a lot of this can be done through voluntary departure.

In order to ensure that this voluntary departure and substitution, or alternate, proposal works, would you be prepared to work in close concertation with the Treasury Board to make sure that surplus notices are issued fairly, to make sure that the substitutions have been made in accordance with the guidelines and that there hasn't been favouritism that isn't based on merit?

Mr. Bean: Yes. When I say yes, I don't know what the guidelines are yet. If we can get some guidelines we can agree with, then absolutely.

The Chair: And you would be willing to have input as to what those guidelines might be in working with Treasury Board?

Mr. Bean: Absolutely. We would more than welcome the opportunity to do so.

The Chair: Members on this committee would really have loved to see a totally negotiated solution. In the absence of that, we don't want to see able civil servants being hoisted from positions just because of autocratic guidelines or department lines. If we could do this on voluntary leaving, it would be of great satisfaction to every one of us. In your working with us to achieve these goals, we stand a much better chance of adjusting to individual cases of fairness.

Mr. Bean: We'll certainly be pleased to do so. While we obviously don't agree with the 45,000 cuts, we're not -

The Chair: We don't like it.

Mr. Bean: Let me finish and I think you'll be okay. We're not here to argue against the 45,000 cuts. I've told the President of the Treasury Board that directly. I am taking that that is going to happen, but I don't have to like it.

.1615

I am here to talk about fairness. That should take place by using the early retirement and early departure for those individuals who, because of their age or their pension or whatever, can take the departure and leave, while individuals who otherwise would be laid off are substituted into like-minded classifications. That's what we want to do. That's what we want to work on.

The Chair: Based on what Mr. Eggleton announced yesterday, I'm not sure just how far it goes in the details, and maybe none of us will be until we see the guidelines, but your cooperation in working out those guidelines and seeing to their implementation will be of tremendous help to all of us.

On behalf of all members, I thank you very much, not only for your presentation today but also for your contribution to our country.

Mr. Bean: Thank you very much.

[Translation]

The Chairman: We will now continue with Mr. Serge Morin and Mrs. Michèle Giguère from the Consultative Body.

Is it true that your member of Parliament is Mr. Dubé?

A witness: Yes.

The Chairman: Is he a good member?

Mr. Antoine Dubé (Lévis): [Inaudible]

The Chairman: It's true. [Inaudible]

Mr. Morin, please begin.

Mr. Serge Morin (Consultative Body): My name is Serge Morin. I am 28 years old and unemployed. I have not finished university. I have completed half of a bachelors degree and I have $10,000 worth of student loans to pay back.

I have been working for two years with senior citizens and I have noticed a serious shortage of homes, private homes, household help and everything our society's senior citizens need.

I have been looking for a job for nearly two years now. I would like to open a home for senior citizens, but I would need between $30,000 and $40,0000 to buy a house. Where will I find that money, which would enable me to help society?

I decided to start dreaming about something else. I am now trying to cope as best I can. I try to make both ends meet with a monthly salary of $700 and rent of $400 to $450. I have not gone grocery shopping for two months now and I eat at friend's houses, at my relatives, etc. I am anxious to be able to live decently.

I may not look like someone who has not gone grocery shopping, but the reality is quite different. Many people are helping me get through this. I am now thinking about starting a community project to help 18 to 30 year olds who, like myself, are experiencing financial and emotional difficulties. There is no doubt whatsoever that when someone starts being poor, they often become depressed.

I am an optimist by nature.

.1620

There are people around me who love me and keep me motivated. I can still laugh a little. But many lonely people get depressed very quickly, since their lives are very sad and all the other problems arise: mental health problems, spousal violence, fights with friends, etc.

They look for jobs. They slip from one job to another. They lose patience. When they do find a new job, they have to start at square one yet again. They are constantly being displaced both on an emotional and personal level.

I tried to read the draft reform, etc. I would like to ask you one question: When will there be documents available in layman's terms so that normal people, those who are not too highly educated, can understand all this jargon, all this political economic lingo?

Perhaps you'll ask me questions on a given section, but I do not understand anything. All weekend I tried to sift through it and read it all. I decided to give it my all, tell you about everything I have experienced and that is what I am just doing.

Cuts will not necessarily change or help society. That can only be achieved through better distribution of funds. That really struck me today, because for the price you would have paid to help someone come here, two of us managed to get here for the same price. I therefore think it is possible to help two people instead of one by sharing costs, for instance.

Just last week, when I was having trouble getting by or making both ends meet, a number of my friends, in the same situation as I am, and I - perhaps this is not the right time to bring it up, but I will do it anyway - saw Mr. Chrétien going to Europe to attend the festivities for the 50th anniversary of the end of the War, etc. If you keep celebrating things of the past instead of looking to the future, money can certainly disappear quickly. It is really annoying to watch all the expenses add up over several days. I prefer not to think about it.

I agree that a given day should be remembered because it was a crucial time for society, but to celebrate it for days on end...

I also had an interesting experience when I went to an employment centre a while ago. I wanted information on a program called Section 25 Job Creation, which, by the way, will be cut and I will not be able to benefit from.

I asked for information on Section 25. ``Sir, there is no one here who can give you information. They are all at a meeting.'' So, I said: With the number of employees in this office, surely there must be someone who can help me. I will not leave until I have information on section 25. ``Sir, no one can help you.'' I said: I'll wait. There is no one behind me and I will wait here.

The employee turned to one of his co-workers and said: Mrs. Leblanc might be able to... They called Mrs. Leblanc. She was absent. I waited. A second person: no. A third: no. Then there was a fourth: no. No one could give me any information on the program. Finally, the fourth person was able to give me information on the section 25 program. If I had given up and left right away, even though they provided the service and could give me the information, I would not have gotten it had I not held firm. It is difficult for someone who is having a hard time getting motivated to look for work to ask for information and to get turned away.

The last thing I would like to say is that if you have any questions, I would be pleased to answer them. In your decisions... I don't know... I sometimes have the feeling we've reached a turning point. Try to put a face on the legislation you want to implement or on any changes you may want to make... If any changes are to be made to social services, I think more funds will have to be allocated to crime prevention, police forces and peacekeeping forces, since depression and violence are going to increase. Increased violence also takes its toll on health, an area that is also targeted for cuts.

So, perhaps it would be better to work directly with the people, improve their quality of life and their dignity, if you want to prevent those problems, rather than worry about numbers and all the things that most often benefit the most fortunate in society. Thank you.

.1625

The Vice-Chairman (Mr. Campbell): Thank you.

We will start the questions. Mr. Dubé.

Mr. Dubé: Yesterday, I found out a man and a woman from my riding had asked to appear today before the Finance Committee. I know them, since they are in my riding. I would like them to tell us about the Consultative Body, which helps young people from the ages of 18 to 30.

In fact, your experience speaks for itself and in your presentation, you clearly expressed the helplessness many youths feel when they are unemployed, or faced with possible reduced social programs.

I would like you to tell who you represent. I know that already, but I'd like you to do so for the other members of the committee.

Mr. Morin: Certainly. We are part of a consultative group that tries to get 18-to 30-year-olds together, an age group that is often ignored or cannot establish itself.

Fortunately, things have gone well over the past few years. There are several programs for 12-to-18 year olds, such as home for youths and other assistance programs to help them before they become adults. Once they turn 18, suddenly those services are no longer available to them. They no longer get any help and have no one to turn to.

Our group tries to find solutions. Compared to other urban ridings, we live in a semi-rural or a semi-urban area and therefore have the same problems associated with poverty as there would be in less accessible areas, such as lack of public transportation.

We therefore try to have a café or a meeting place so that young people do not feel as isolated. During the day, instead of staying at home doing nothing, they can be invited to spend time there. Often, just by breaking the solitude, by meeting other people who are in the same situation as themselves, they feel less lonely and come up with ideas for projects.

For instance, if people want to set up a business together or just need a source of information on existing services, we would like to help develop those plans. When people stay home, they cannot meet other people. Some find it intimidating to leave their home, go to a local community service center, ask for relief assistance services or go to special places, or even go somewhere where friends might recognize them, perhaps just while they're walking on the street to pick up their food vouchers, or at a check-out in a grocery store when they're using their Centraide vouchers.

We want to help them overcome this feeling of degradation, of being looked at that way, by providing a meeting place that is open to everyone, a café that anyone can go to. They can buy low-cost meals, because they are given a special rate or they take some special interest in the local. For instance, at noon they could buy a coffee or soup for $1.50 if they show us a card we recognize, for instance, rather than paying $3 or $4, which would be the price in a standard restaurant. All this is to help them have a social life that is comparable to that of other people.

That is one of our projects. We also try to bring out hidden artistic and cultural talents. It is often artists or the somewhat marginalized people in society who end up with the most uncertain lives. Here, they would have a place to express themselves, to show their talents and to get known. Their human dignity would thereby be enhanced.

Does that answer your question? Michèle could also say a few words about it.

Mr. Dubé: Yes.

Mrs. Michèle Giguère (Consultative Body): Our group was formed under the auspices of the Local Community Service Center. One of the workers there realized that segment of the population suffered from isolation and lack of services. He got us together.

Our task is to try to find a solution to that situation to respond to that need, by establishing a café, a type of resource center.

.1630

We would help people by teaching them how to find a job, to become resourceful, to motivate themselves, to reintegrate the workforce and to feel they belong to a community, because people lose that sense of belonging when they lose their sense of self-esteem following a job loss. That's what we want to do.

Mr. Morin: Yes, and with the idea that young people can help other young people get out of their doldrums, and not necessarily by going to adults or government employees... We still need all the subsidies, all the help we can get from government officials, for our projects and undertakings.

But when young people want to have an intermediary between the two, when they meet with other young people who can help them make the step between the team of officials who help us and the team of young people who arrive, when they no longer know where to turn, we act as a liaison between the two.

Mr. Dubé: There are all sorts of youth programs, both federal and provincial. I counted about 101. The exact number is somewhere between 103 and 108; there are more than a hundred programs.

However, it seems the federal government often focuses on programs for unemployment insurance recipients. The provincial government tends to focus on programs for welfare recipients. But there are other people who, at some point in their life, fall into another category. I would like to know if my observation is correct. There are a number of people referred to as checkless, in other words, between the two. I am sure you have heard of those people. What is your view on that? There is a section in Bill C-76 on standards, in other words, the possibility of changing national standards.

Now, there are two viewpoints on that: Quebec's viewpoint, which is that the federal government imposes too many national standards, and the rest of Canada, that tends to favour more restrictions on the provinces. Could you tell us about the problems the so-called checkless people experience.

Mrs. Giguère: Sometimes they do not have access... For instance, someone working part-time at minimum wage could be as poor as someone on welfare, but will not have the same benefits and will have more trouble getting services and assistance.

For example, a welfare recipient can go to the local help centre and get food vouchers, but a working individual cannot do so. As you say, it is more difficult for checkless people.

Mr. Morin: I have not been collecting UI for very long because I work in a home, as I said earlier. However, I mentioned that the owner of the home has a good job working as part of a road crew, repaving roads; he works for companies that make asphalt and build roads.

His unemployment stamps are so high he can take my job away from me, collect his unemployment insurance, pocket my miserable $6 an hour pay, and I end up without a job because he - besides his unemployment insurance - can earn up to $200.00 a week, whereas for me, that $200.00 would enable me to live decently.

But as a worker, and according to the act, he can earn up to $300 or $250 a week and collect an unemployment insurance cheque as well. So, he takes away my job and gets a double salary during that time. That is unfair, but he is entitled to do so by law.

If any changes were to be made, those people would also be penalized after getting a second job, when they collect unemployment insurance because of such high stamps.

Mrs. Giguère: Big «unemployment».

Mr. Morin: Big «unemployment» that means I cannot have a job because he...

Mr. Dubé: Perhaps I will let the Liberal Party ask a question and then, time permitting, I may...

The Vice-Chair (Mr. Campbell): Mrs. Brushett.

[English]

Mrs. Brushett: May I thank Mr. Dubé for asking for details about your organization. I really appreciated that, because I wasn't familiar with your group.

.1635

May I also say how pleased I am to hear your presentation this afternoon. I believe each one of us in this country as members of Parliament is very concerned with the age group that you, Serge and Michèle, represent, 20- to 30-year-olds, the young people who are trying to get into the workforce, some who have higher education than others but still don't seem to have the opportunity to get their foot in the door.

When you have your coffee-house approach and hear people's sad stories, and you try to give encouragement and direction, can you go to your UI office or to the next step and channel these people in some work pathway, or give them some direction for employment?

Mrs. Giguère: Yes, we're there partly to refer people to different groups. Sometimes that's appropriate and sometimes it's not. I think sometimes people aren't ready to make those steps. When somebody has been out of the workforce for a long time, they're really de-motivated, and they're not up to just jumping back in. They need to have their self-esteem built up again. They need a safe space where they can have little victories and start to move forward slowly before they can go in. We can't just take them and refer them here and there. They need an in-between.

Mrs. Brushett: Do they spend long periods of time coming to the coffee shop?

Mrs. Giguère: We haven't opened the café yet. We're working; we're waiting for grants.

Mrs. Brushett: Okay, for funding.

Mrs. Giguère: Yes. We're waiting for answers.

Mrs. Brushett: On your application? Okay.

As a member of Parliament, I tend to hold townhall meetings quite often in my riding. One of the problems that comes up quite often, as you alluded to, is that people, particularly young people who are taking minimum-wage jobs, have less money in their pocket to pay their bills and to live on than someone who is receiving social assistance. By some of our policies we actually encourage our youth and people to go the social assistance route rather than take a job. You've mentioned that you hear young people saying that as well, that there are some advantages to being on social assistance because of some of the things you get.

Do you have recommendations there, suggestions on how we can really solve that problem so that everyone gets up and goes to a job, where there one?

Mr. Morin: I'll try to answer. I myself am living on $700 a month. At the end I have nothing left. I am always missing $50 to $80. I was thinking of just going on social assistance. I don't know if I would have a lot more or a lot less. Is it worth it to work and work and work and not have money at the end?

I've done my income tax papers and at the end I had to pay $70 more. I was so depressed. Maybe it was right that I had to pay, but it was almost like $800 at the end. In Quebec they gave me back $600, and I had to pay $800 at the federal level. I was missing $70 and I had to send a cheque at the end of the month. It was like: come on, why? I earned $10,000 during my year and I still have to pay. It's very hard on people. I was feeling as if I wanted just to give up.

Mrs. Brushett: What can we do as a finance committee, as members of a government? What do you think we could do to make it easier for people who are living just on the margin?

Mrs. Giguère: There's definitely a serious need for re-evaluation of unemployment insurance and social welfare.

.1640

However, that should not be in the direction it's going in right now, but in the other direction - not to cut but to make it more efficient and to help people.

We're talking about people who don't have cheques, but even people who are on unemployment insurance. I know people who really cannot make ends meet and they can't go on welfare because they have to be on unemployment benefits. If they work too much, they will lose their unemployment benefits. They can't work enough to make a living and they can't get off unemployment insurance. They just don't know what to do and they're really poor. That's just terrible. That's what needs to be addressed, not cuts.

Mrs. Brushett: We are looking at social reform such as the availability of work while you still collect your UI or social assistance so you can work and not be cut back.

Ms Giguère: And not be penalized.

Mrs. Brushett: Yes, and there's the incentive to get you to a point where you can sustain yourself with work -

Ms Giguère: To start yourself off.

Mrs. Brushett: - and then be free of the dependency system, if possible. Do you think that would be in that direction?

Ms Giguère: Well, it would help. People who are poor build up debts because from month to month they just never have enough. Every month they have to borrow. Everyone I know borrows money every month, because we just can't make it.

Even when you get to the end where maybe you could take a job, you owe money to the government for your student loans. You owe hydro money. Everyone wants to pounce on you as soon as you start to work. It's impossible.

[Translation]

Mr. Peterson (Willowdale): In my opinion, you should say these things to the members of the Human Resources Development Committee. Did you appear before that committee?

Mrs. Giguère: No.

Mr. Dubé: The committee held a meeting in Lévis.

Mr. Peterson: I think we should hear your problems and the solutions you have proposed. May I ask you another question? It is about the debt my generation has imposed on yours. First of all, do you think we have to do something about the debt or is it possible to ignore it altogether? Secondly, don't you think it is unfair that we used that money and left for your generation to pay the bill?

Mr. Morin: Should we ignore it? May be not. As I said previously, it would be like ignoring a war that has lasted 50 years. It is part of our history and it belongs to us. Moreover, I'm the sort of person who thinks that I'm also responsible for my community and for this.

Is it fair? No, it is not. I find it especially unfair when I see that in the federal budget the government is not asking money from large corporations to pay the debt but will instead cut in what we, the simple folks, need. Obviously, the government is not seeking to lighten our burden. One of my friends, a single mother, had a baby last year. When the baby was crying and she did not know why, I used to tell her she was crying out of concern because she already had a $20,000 debt. We have to live with it.

So, it is our debt, but you have to seek solutions where the money is and not where there is no money. As long as we let these people keep the money to themselves, we will have that debt. If we try to draw money from people who don't have any, the debt will never be paid. It just makes sense.

To say that it is unfair, well, I think history is unfair from beginning to end.

.1645

I'm ready to assume it, but where necessary.

[English]

Mr. Peterson: Your solution is a little bit like the bank robber who was asked by the judge why he robbed banks and answered, ``Because that's where the money is''.

[Translation]

I'd like to thank you for having come before us and for the work you're doing for youth and the unemployed. Thank you very much.

The Vice-Chairman (Mr. Campbell): We still have a few minutes left. If you have any other questions, Mr. Dubé...

Mr. Dubé: Judging by his questions, our chairman has a lot of experience. And that has allowed you to deliver the substance of your message today. The question was a very good one in helping summarize that message. I'll play the devil's advocate and say that some people of my generation - I was 48 yesterday - get the impression that our young people don't necessarily use all the means available to get out of their situation. Others say that one of the means used, back in the 1968-70 era, in France or elsewhere, was that young people banded together in unbelievable mass movements even though the debt and the economy weren't what they are today. Today it's a lot harder and you yourself say that, in a way, it's even very unfair. How come our young people have so many problems in getting together these days? How can you explain that?

Mr. Morin: I think that we're living in a society that preaches solitude and every man for himself. You only have two or four people sitting down at the same table to eat these days whereas back then it was six or eight and before that it was 12 or 15. You were used to having people around you, handing down your boots to your brother and so forth but that's just isn't done any more. It's the same thing in life. We have problems but we don't think to ask our neighbour for help. It's just not done as naturally as before. And if you dare do it, if somebody on welfare dares to do it and is discovered then you cut off the welfare. So everybody stays at home and costs are doubled to get as much as possible but that certainly isn't the solution. There may also be the absence of the ``dreaming of a better life'' and that's often depressing. Maybe TV programs weren't as good in those days, I don't know. That's also a question that I have. But this idea of cutting yourself off from others and not looking for help elsewhere is very strong because we're not used to living as a community or using our neighbours' resources.

Mrs. Giguère: I also think that in that group people suffer enormously from all kinds of mental health problems, depression, anxiety and the rest. These are light mental health problems but it's still serious because people aren't living normally. And solitude doesn't help anything.

Mr. Dubé: That brings me to another question. In the area you come from in Quebec, the Chaudière-Appalaches, you probably know the suicide rate is the highest in Quebec. We're already aware that Quebec has the second highest suicide rate in the world. It's awful!

.1650

Setting aside any partisanship, you have made a very good presentation of your generation's experiences and of the problems of your young people in the same situation and I congratulate you. But you did say at the outset that if we could help, it would be by sharing. So, keeping in mind simple solutions like that one, do you see anything else governments could do to help our young people more and give them some hope? Hope is important and that is a great concern to me even more so because we're soon going to change century and millenium so we do have to ask ourselves what could lead to hope.

Mrs. Giguère: I think it's absolutely imperative to set aside more money and give priority to services offered to young people. You have to do prevention work with teenagers to help them deal with the future. You have to offer better services to that group of people who should be able to call upon welfare or unemployment insurance offices more easily. We absolutely have to improve how those services work.

Mr. Dubé: What could we change? Because right now we're in a context of decreasing human resources and budget problems. What would have to change in how government offices work?

Mrs. Giguère: Services are harder and harder to get. When you go to an office, it's normal to have to wait an hour before having anyone to speak to. Also, officials are stressed out because they have too much work and they're becoming aggressive. So it's a stressful situation for everyone. If staffing goes down even more, it's going to be catastrophic.

Mr. Dubé: To wrap it up, I'd like to congratulate you for your determination once again. I would also like to remind that those young people came from Lévis on their own, not at my behest, to tell about their problems and difficulties.

The Chairman: Even if it had been at your behest, it was useful. Thank you, Mr. Dubé.

The Vice-Chairman: Mr. Dubé has just told us he's 48 and I'm 45. When I was 18, there was a saying you should never trust anyone over 30. Is that still being said?

Mrs. Giguère: Well, I'm getting there...

The Chairman: Oh! Oh!

Mr. Morin: Maybe it's still being said, but I'm trying to instill trust in others.

[English]

Mrs. Brushett: We're not going to tell our ages, are we? Surely not.

The Vice-Chair (Mr. Campbell): It was a very interesting and helpful presentation, and you made a very big impression on us. I want to thank you for taking the time and for, as Mr. Dubé said, the initiative and the energy to be here. I wish you well in your work, and in the grant for the coffee house in particular.

[Translation]

The Vice-Chairman: Thank you very much. We'll be seeing you!

Mrs. Giguère: Thank you very much.

.1655

[English]

The Vice-Chair (Mr. Campbell): I think we can take a five-minute break.

.1656

PAUSE

.1705

The Chair: Order.

We continue our hearings on Bill C-76.

From the Canadian Association of Social Workers we have people who are no strangers to us, Julie M. Foley, president, and Eugenia Moreno, executive director.

Ms Julie M. Foley (President, Canadian Association of Social Workers): I want to start by apologizing for not having our brief to you sooner. For this kind of work our organization depends on volunteer labour, and those of us who have a job that involves 50 or 60 hours a week do this on the side.

I also want to apologize for the fact that it's in English only. We will be translating this brief for our own members, and we would be happy to provide the translated copy to you, rather than having you do that duplicate work.

The Chair: Thank you. Don't worry, not too many people have it in ahead of time these days. You're not alone.

Ms Foley: Thank you.

The Canadian Association of Social Workers is a federation of ten provincial member organizations representing about 14,000 social workers across Canada. CASW is committed to maintaining national leadership in strengthening and advocating for the profession of social work in Canada. The association strongly supports excellence in social work practice and seeks to develop, promote, support and maintain national standards of practice. Through its commitment to social policy review and development, social action advocacy and research, CASW strives to ensure social justice and well-being for all Canadian residents.

CASW represents the Canadian social work community in the International Association of Social Workers, in which we are quite active.

Our comments today are limited to the practical implications of the Canada Health and Social Transfer and to the dramatic shift in federal policy this represents. It is our belief that the 1995 budget is not simply a financial plan to meet a previously agreed-upon social contract. Rather, implementation of the 1995 budget represents a significant alteration to a long-established social contract without any public consultation or impact analysis.

Canadian social workers work in more than a dozen fields of practice, including child welfare, education, private practice, industrial counselling, and corrections. Many of our members practise in health, but the largest single number are employed in what is generally referred to as social services, working with individuals and families who struggle with the fall-out from domestic violence, victimization, poverty, unemployment, and other factors that serve to lessen both personal potential and community contribution.

Some of the tragedies we see daily are purely happenstance, but many others are a product of the system and culture of Canada in the 1990s. It is these that we believe government has a responsibility to address.

Social workers work not only at the front line with individual Canadians and/or their families but also in policy development and implementation. Thus, this submission is offered in light of that firsthand knowledge of problems, the understanding of the origins of many of those problems, and also the experience in the subtleties and complexities of policy development.

The first major subject we wish to address is social policy versus economic policy. There has often been a debate about whether social policy objectives should set the stage for economic policy or whether economics should drive social programs. Regardless, I think that in the end there is agreement that these two policies are inextricably linked.

We recognize that we do not live in a vacuum. We know that many factors in Canada are influenced by what occurs elsewhere in the world. The same thinking must apply to the social policy-economic policy relationship. Social policy objectives should provide a vision of what economic policy ought to achieve with realistic limitations set by our financial circumstances.

However, the direction set out in the budget of 1995, particularly the CHST, indicates that a specific economic policy is driving the social policy agenda: deficit reduction at all costs. It accepts the current thinking of money markets, thinking that goes virtually unchallenged in the mainstream debate of the media, the House of Commons, or corporate Canada.

.1710

We do have a debt and deficit problem that requires serious attention. However, if we focus exclusively on our economic deficit with total disregard for our already burgeoning social deficit, we risk losing the economic gains because of the consequences of increased societal discord.

The social deficit is manifest in persistently high rates of unemployment and underemployment, in increasing child poverty and in vastly diminishing opportunities for younger families. The latter is particularly worrisome, as, without hope that the future will be different, potential itself is further eroded. The resulting despair creates a resentment directed at disadvantaged groups as if they were the problem.

Our challenge to you hon. members is that there are choices in fundamental values and objectives and in the process of how you go about raising and discussing those values and objectives with Canadians. The values implicitly challenged in the budget of 1995 are about the social fabric of Canada.

The proposed Canada Health and Social Transfer will combine three major areas of public funding: health, social services and post-secondary education. These sectors will now be competing with each other as never before as they vie for a slice of the diminishing economic pie. When viewed in relationship to each other, it quickly becomes apparent that the three will not share the same opportunities. Increasingly, they do not share the same place in the hearts and minds of Canadians. However, as with economic policy and social policy, all three are related, and a change in one will most assuredly lead to a change in the others.

Of the three, probably health care is most valued by Canadians. It is partly what defines us and what makes us different from Americans. It is also universal in a way the other two are not. We all use or can imagine using the health care system, and we want it to be accessible and in good shape when we need it. What is less well understood by Canadians is that health has more to do with education, employment and poverty than with hospitals or treatment.

In the government's own document of last year, it is recognized that the determinants of the overall health of a population include income, social supports, education, employment, physical environment, healthy child development, coping skills, biology, and genetic endowment. These are all covered in Strategies for Population Health.

It is well recognized that the components of our expensive and very technical - many would say overly technical - health care system have very little to do with health. Rather, they have become necessary to combat and treat the consequences of our failure to pay attention to the determinants of health. Nevertheless, when compared to health care, even post-secondary education will be a lower priority, because many of us will not have used the post-secondary education, although we may very well aspire that our children will do so.

If health and education rank first and second among the cousins, social services rank a very distant third. Social services are frequently synonymous with welfare or abuse. Social services, and particularly social assistance, are not something most Canadians without experience could ever imagine using. What is equally not understood is that the myriad social services contribute to the improvement in one or more of the determinants of health. If we are to profit from this understanding, we will ensure that support on those fronts will be preserved first or increased, rather than allowing the gutting that will eventually occur as a result of Bill C-76.

We also know that services that do not tug at our heart-strings - and welfare is surely in that category - problems that do not have ready solutions, and services we cannot all envision using are not well supported by the general public. We believe that the differential valuing of these three cousins by the general public was well understood and seized upon by Mr. Martin and those who crafted the 1995 budget.

.1715

It is no mere coincidence that Bill C-76 attempts to preserve the fundamental principles of the Canada Health Act while reducing to only one the criteria for social assistance.

We vigorously support the federal government's attempt to preserve medicare as we have known it. However, the differential treatment of social assistance makes a service that is designed for the most vulnerable open to further erosion. It has already suffered in the three ``have'' provinces: Ontario, British Columbia and Alberta. Those provinces have been almost rendered out of their so-called ``have'' status by the effect of the cap on CAP. For example, the average federal share per social assistance recipient in 1993-94 in Ontario was only $1,900. In provinces other than Ontario it was $3,200. Given the Liberal government's espoused commitment to fairness, this inequity calls out for redress rather than the further embedding that will occur by Bill C-76.

Without specific funding attached to social assistance, it will undoubtedly get lost in the endeavour to preserve medicare, because in the current way of thinking there is just not enough money to go around. So we will choose based on blind sentiment and some prejudice.

The users of social assistance have little voice and no influence in the halls of power. Those who speak on their behalf are denigrated as special interest groups, as if the chambers of commerce, the banks and corporate Canada are not also special interest groups. All of these groups have something of value to contribute to the debate, but none more so than others.

At a time when integration of the service systems of health, social services, and education is being recognized as a means of providing better service and stretching limited dollars, Bill C-76 intervenes to strengthen traditional barriers between the sectors. This is unacceptable. It sets up unconscionable competition between hungry kids and the sick elderly. The current innovations, which are beginning to appear across the country and often involve cross-sectoral collaboration, will be the first to be cut, because they are less established and often are not operated by the élites.

With reference to national standards, from our perspective it is critical to consider the concept of these, why we have had them and whether they continue to hold a place of value for us as Canadians in a Canada of the 21st century. National social service programs grew gradually out of a national consensus that never again ought families to suffer the desperation and indignity they endured during the depression of the 1930s. That national consensus was extended to benefits for the elderly and to health care.

The times have changed enormously. The vehicles we developed over time from those origins are in need of review and updating. Many Canadians are not old enough to remember why these programs were initiated, but the desperation of unemployment, current or anticipated - and we believe the second is as onerous as the first - and the indignity of being unable to feed one's family are exactly the same today as in 1935, with about as much individual control over whether one is in this situation as in 1935.

Whether it is in the fishing villages of Newfoundland or the devastated industrial heartland of Ontario, Canada is facing a major economic upheaval. Structural changes demand that we should think clearly, challenge conventional opinion and act in the interests of all Canadians.

.1720

We must think clearly about the values upon which we will predicate new or changed systems; we must challenge conventional opinion, which attributes blame to social programs or their users; and we must act so that especially vulnerable Canadians are not in further jeopardy. Otherwise, the collective cost is enormous: lost contributions to the community; increased poverty; growing public fear about personal safety - all resulting in costly barricades that will be erected to protect those who are relatively advantaged.

Apart from the moral obligation of a national government to ensure equal treatment for all of its citizens, there is also a legal obligation. As the Citizens for Public Justice pointed out in its submission to this committee, there is a constitutional responsibility set out in section 36.1 of the Constitution, and I will read that:

Parliament and the legislatures, together with the Government of Canada and the provincial governments, are committed to promoting equal opportunities for the well-being of Canadians, furthering economic development to reduce disparity in opportunites and providing essential public service of reasonable quality to all Canadians.

We are convinced that Bill C-76 signals an end to the commitment to national standards for any and all of health care, post-secondary eduction and social assistance. Notwithstanding the intention of preserving the five principles of the Canada Health Act, it is wishful thinking and politically naive to believe that when cash transfers to the province end any clout remains to enforce national standards, either instrumentally or legally.

There is already plenty of evidence that some provinces would happily abandon some of the standards of the Canada Health Act. Do we need more evidence or costly court challenges to tell us what we already know? The story could only be worse for social assistance.

The 14,000 members of the Canadian Association of Social Workers believe that national standards are important for the 21st century. They help to define our identity as Canadians; they minimize competition among the provinces; but, most importantly, they preserve equal treatment for all Canadians for essential services.

The 1995 budget and Bill C-76 represent a dramatic departure from well-established values and cost-sharing arrangements for health, post-secondary education and social services in Canada.

The Mulroney government started us on the rocky road back to the past through its practice of social policy by stealth. Canadians believed, and we believe, the expressed intentions of the government of the day to do otherwise. If those intentions are to be respected, we must have broad public consultation to review old values before they are carelessly replaced by new ones.

This public consultation must occur in a manner that allows all Canadians to understand the implications of the current proposals. They do not, and I can only underline that. Most Canadians saw only the increase at the gasoline pumps as a result of the 1995 budget, and they have no idea that there is more to it than that. They do not know that it is not merely a financial plan but also a blueprint for a Canada very different from that to which we have ascribed in the past.

The generalized support for the budget represents, we believe, a rather uninformed buy-in to barely spoken and uninformed assumptions.

There are times when the government leads and times when it follows. The Saskatchewan government of Mr. Tommy Douglas led with the introduction of medicare. The federal Liberal government of Lester Pearson followed with the introduction of the Canada Health Act. Both were important and we benefited from each.

.1725

Now is the time for the federal government to lead, as it intended with the review of the social security system.

We wonder what happened to Mr. Axworthy's Standing Committee on Human Resources Development. Its aim was to reform social security, while ensuring a healthy fiscal climate. Has this goal been sacrificed to the god of deficit reduction at all costs?

The goal should be to promote understanding and to obtain informed consensus from Canadians regarding progressive social policy that in the end will benefit all of us, and revenue generation that will adequately fund sustainable economic and social development.

The Canadian Association of Social Workers is not a conservative force advocating the retention of the status quo. Our members are already engaged in effecting systemic change on many fronts: health care, ethnocultural sensitivity, community development. But we are advocating well-thought-out reform that does not encourage wider disparities among Canadians, reform that represents just and responsible alternatives.

To this end we have two specific recommendations.

The first is that the federal government should exert its leadership responsibilities by holding a national consultation on the fundamental value changes it is proposing. It is not too late to do that. In fact, this is far too important not to have such a consultation. Democratic process and tradition calls for public participation before such enormous changes are wrought, rather arbitrarily, by a government that has not been given the mandate to do so.

The second is that any review of the fiscal options for the funding of health, social services and education should include not only the issues of fundamental values but also the whole range of revenue options available.

Thank you.

The Chair: Thank you, Ms Foley.

[Translation]

Mr. Dubé, would you like to begin.

Mr. Dubé: Thank you, Mr. Chairman. Thank you for wanting to eventually translate your brief. Personally, I manage to read English, but I have more trouble understanding. That is why I am going to speak French.

You are quite right in saying that the public has not necessarily understood all the implications of the budget. Though you have spoken of a national order, what comes mainly to my mind - and I want to know if I understood correctly - is that you are worried of the repercussions on social programs of the cuts in transfers to provinces. You concluded by saying that since you represent social services, you deplored the competition and feared that among the three cousins, the area of social services would be particularly affected. Could you explain why you fear that that area, more so than the other two, will be affected?

[English]

Ms Foley: First, I would like to underline that we don't believe it should be the other way around. We do not believe that health and post-secondary education should be cut for the benefit of social services. But the reason we believe that social services will be the third cousin is that there is a public buy-in and public sentiment attached to medicare that will preclude its cut first. It is a more universal service that all of us will use; post-secondary education, a little less so.

Not everyone of my generation went to post-secondary education, but I think all of us aspire that our children will, whereas social services are removed from the mainstream utilization.

.1730

The middle class have exposure to both the health care and the post-secondary education or aspirations, whereas there is a revulsion against social assistance, a belief sometimes, a false belief, that most people on social assistance somehow are there because of their own fault. It is that attitude towards social assistance that will allow the erosion of services, and the attitude toward health and education is very different.

Does that answer your question?

[Translation]

Mr. Dubé: Yes. On page 7 of your brief, first paragraph, it says that CAP payments for Ontario were down at $1,900 whereas in the other provinces it was $3,200. If I'm not mistaken, the CAP program was based on a 50% matching federal contribution up to a certain ceiling of services, beyond which the federal government stopped contributing. When you say that in Ontario the federal contribution is lower than the national average, does that mean that Ontario would have reduced its own share in the program, which would explain the gap? There is something I do not understand. From what I know of Ontario, the level of social services is higher in that province than the average.

[English]

Ms Foley: I realize in reading this that the reference to $3,200 for provinces other than Ontario is an average. It's not the same in every other province. That's an average in other provinces. It is the federal share per recipient.

Ontario has the highest rates in the country, so Ontario picks up a much higher share per person than other provinces do. The reason is that in Ontario, particularly in the industrial and manufacturing sectors, the recession of the early 1990s took a huge toll. So the increase in the number of people on welfare in Ontario was larger than in any other province. At a time when Ontario's numbers of people on social assistance were rising, the federal share was capped. When you have a greater number with a cap, it means that the average per person is less. The federal share is much less per person on average.

The cap on CAP could not have come at a worse time for Ontario. It was quite specifically at the beginning of a recession.

Is that...?

[Translation]

Mr. Dubé: Yes. If I understood what you said, the number of recipients of social assistance at that time was greater proportionally in Ontario. Is it still the case this year?

[English]

Ms Foley: Today in the Globe and Mail there was an interesting article that spoke about the fact that Ontario has a larger percentage of its population on welfare today than any other province has. That is related to two items, the largest being the rate of unemployment or underemployment and the second being the changes in unemployment insurance benefits whereby more people who in the past could have collected unemployment insurance are not able to do so today and have to go on welfare. It is a surprising statistic, because we don't expect that.

[Translation]

Mr. Dubé: I will come back later.

The Chairman: You can carry on.

Mr. Dubé: I will leave the floor to my colleagues. If we hear another witness or if we have spare time, I will carry on.

.1735

[English]

Mrs. Brushett: You have indicated that social services would be the third cousin and probably would take the most suffering when it comes to the spreading of dollars by the provinces. Having said that, since you're working in the field with hands-on experience daily, do you feel that the status quo is acceptable? It seems to me that we've been putting more money into social services every year and that we almost encourage people - for example, some of the groups that we had earlier today - to think that sometimes you have more benefits on social assistance than you do if you take a job at a lower wage.

I have held hearings throughout my riding on social reform and on these very issues. It has repeatedly been said to me that people would rather work, that the status quo or the current system is not working. So when you defend it, are you substantially endorsing, for example, the current system of isolating single women with babies in old apartment houses? If so, we don't do them any favours. They are asking for some other forms of assistance; money isn't always the answer.

Ms Foley: You're quite right about that. Certainly on the last page it's clear that we're not looking at the status quo.

We need to do two things.

I think programs that were developed in the context of other times are desperately in need of review. We think that at times there has not been sufficient analysis of the impact of differential pieces. You're quite right that it is not enough simply to throw more money at certain problems, that we need to come at it from a different angle.

Mrs. Brushett: Absolutely.

Ms Foley: We need to take a look at motivation, at what really contributes to self-esteem. There are some programs that are evaluated and clearly have some impact and others that have not been well evaluated but need to be. There's no question that we haven't been good enough at times at figuring out how to solicit the greatest potential all of the times.

On the other hand, we also have to realize that it is not possible, whether it's in a family of four people or a multi-million-dollar operation with 10,000 employees, to develop a structure or a system that will meet everyone's needs 100% of the time. It is a matter of taking a look at what sorts of risks we wish to take. If we have a system that is generous and provides for the needs of many people, there will be some abuse. On the other hand, if what we focus on is that abuse only, then we're in jeopardy of maybe cutting out the abuse, but also of cutting out many people who might benefit. So it's a matter of assessing where your risks are and what the impact of any particular program is.

We would be the first to say to you that some of the ways in which things have been done are not the best way.

[Translation]

Mr. Dubé: Thank you for coming. I think you are right when you assume that people are not sufficiently informed.

I sit on the Committee on Human Resources Development. There was a so-called broad consultation on the occasion of the Axworthy reform. However, according to you, there has not been enough consultation. I still do not understand, in view of the fact that more than 1,200 groups submitted briefs during that consultation. I know that this is the Committe on Finance but nevertheless you said that there should be more consultation. Could you elaborate on that?

[English]

Ms Foley: I would like to make two comments in that regard. One is that the Axworthy committee heard from a quite wide range of individuals and groups across the country. But it appears as though it has gone nowhere. We haven't seen action taken from the work of that committee. So it feels as if it's been put on hold and that instead the process is being driven by another, totally different, kind of agenda.

The only objection we had to the Axworthy committee was that it didn't take a large enough slice. It looked only at one part of reforming the system. As well, it didn't review all of the possibilities for revenue generation, and it also didn't take into account some of the services for seniors. But it was a very good start and heard excellent testimony from a variety of sources.

.1740

The Chair: As you've asked us to consider a wide range of revenue options, I encourage you to come forward to us with those revenue options. It would be wonderful if we had more money.

I disagree with one major point you've made. On page 7 in your paper you state:

The users of social assistance have little voice and no influence in the halls of power. Those who speak on their behalf are denigrated as ``special interest groups''....

This committee does not feel that way at all. As we make these important decisions, we feel it is important to have groups such as yours that know what it is like on the streets with these people to come before us and give us a view on their behalf. This morning we said this to the National Anti-Poverty Organization.

One of the defects in our system is we do not have enough people lobbying on behalf of those who are the poorest. So I thank you very much, not only for the role that you play in the daily lives of so many Canadians but also for your very important and ongoing role before this finance committee.

.1742

PAUSE

.1744

The Vice-Chair (Mr. Campbell): Let the record show that we started on time and under budget as we continue our consideration of Bill C-76.

Mr. Duncan Cameron (President, Canadian Centre for Policy Alternatives): First, I would like to welcome members of the committee to a luncheon that the Centre for Policy Alternatives is hosting on May 29. Our invited speaker will be Professor James Tobin, the Nobel Prize winner in economics. You should have an invitation to that, and we'll be pleased to see you.

The Vice-Chair (Mr. Campbell): It's a very timely affair.

.1745

[Translation]

Mr. Cameron: Mr. Chairman, as a copy of the notes I've prepared in English has been distributed, I will do my presentation in French.

I intend to bring up three points today. First of all, I'd like to comment on the tax implications of Bill C-76. Secondly, I'd like to discuss the very important matter of interest rates and, thirdly, I'd like to make a suggestion concerning your agenda for the next few months.

To begin with, my organization, Canadian Centre for Policy Alternatives, has accepted that the macroeconomic policy priority is to fight unemployment. In the current context, there are two important aspects: lowering real interest rates and a fair tax system. Obviously, if we had both, public debt would increase less. As to that priority, business groups often say that we absolutely must cut current expenses for government programs because the increase in our debt is so substantial that it is public enemy number one.

When you cut spending for programs, as will be the case with Bill C-76, there's no doubt that the result will be an increase in unemployment, a slowing down of the growth of the economy, reduced government revenues and an even greater deficit. That deficit is already unbearable.

Of course, if program spending was tied to an automatic drop in interest rates, that might compensate for the decreased economic activity. But if the Bank of Canada decides to increase interest rates at the same time as spending is cut, the result will be a recession and this, even if there isn't a recession in the United States.

Your Budget, unless there is a lowering of interest rates, will therefore hurt all the poorest of Canadians. If you'll allow me, that is why I want to come back to monetary policy.

Concerning tax policy, Canadian transfers will put an end to the Canadian Assistance Plan. That is our last shared cost program with the provinces. It means that government spending will be tied to increases in the gross domestic product. Therefore, when the economy falls into a recession - and that's inevitable - , there will be less money to put in the pockets of the poor at precisely the time they need it most.

In other words, you've withdrawn the counter-cyclical aspect of our social assistance plan. Moreover, you'll obviously no longer have spending levers to influence national priorities in postsecondary education and health care. Everyone knows that.

You'll force the provinces to choose their own priorities. Because of the elimination of the Canadian Assistance Plan, provinces will no longer be able to spend more than 50 cents on the dollar to fight poverty. Perhaps they'll choose to spend on medical expenses which, in turn, will increase because there will be more poor people and unemployed... and therefore, more sick people in society.

I'll spare you comments on the social results of Bill C-76. I just want to say that during the next recession in Canada, we expect to see an increase in the homeless, suicides, alcoholics, violence against women, child abuse, crime and family dislocation.

.1750

I'm in a bit of an ironic situation. Those who are against the deficit and are for the policy of spending cuts will speed up the coming of the next recession. Those who above all want to fight unemployment have a strategy that would bring public spending under control without cutting tax - paid collective services.

In the public debate, people like us who argue in favour of fighting unemployment seem to draw less attention than those who advocate what it would be appropriate to call deficit terrorism.

To my mind, when groups such as the C.D. Howe Institute or Tom d'Aquino's speak out against the deficit, against spending on programs, it's mainly a pretext because that's what they want anyway.

They want a society in which market forces are given free rein, where our representatives, our MP's, have less of a say in society, are less able to vote for public services.

They use and try to find matters such as inflation, international competition and deficit, which allow them to call for exactly the same thing every time; cuts in government's spending.

You don't have to have read Voltaire's Bastards, by John Ralston Saul, to see the fault in this kind of logic. It is what is known in French as la pensée unique. No matter the problem, the solution is always the same.

The consensus amongst businesses as to the need to change the government's role in free trade, privatization, regulation, is a project from the 1980's and there are people amongst the economists who have developed a theory to support this idea.

It is not just business ideologies or the new establishment in economics which are at stake in this budget. There are also the public servants of the Department of Finance - I'm a former public servant myself - who've analyzed the economic impact of changes in taxation and who've assessed the economic conditions of the money market, the securities and bonds market.

When I read the Martin budget I must admit that the reaction I had was that the government is not serious in its fight against the deficit because had it been, it would have gotten rid of some of the tax loopholes.

On that topic, I'd refer you to our alternative federal budget for 1995, which was prepared in collaboration with a group from Manitoba, under professor John Loxley from the Economics Department of the University of Manitoba. I won't dwell on it.

What I would like to touch on with you is the impact of the cuts in government programs on interest rates. I was astonished to read testimony before this committee at the beginning of April, in which the assistant deputy minister of the Finance Department said the following: «If there is an increase in the Canadian debt load, there will automatically be an increase in the servicing of the debt». It's as if interest rates did not exist.

In actual fact, the Canadian debt could double tomorrow morning and, if interest rates were cut in half, the servicing of the debt would remain the same. The Finance Department and the Investment Dealers Association of Canada have finally acknowledged what we've been saying for five years, which is that the increase in the federal government's deficit is 100% due to Canadian interest rates and the servicing of the debt, period.

.1755

As long as real interest rates in Canada are higher than the growth rate of the gross domestic product, the debt will increase. You can cut government programs as much as you like, you'll never really affect the deficit. Never!

So Canada's financial problem is that short and long-term interest rates are too high. It's not government spending. And yet the Finance Department says that only government spending cuts will allow us to finally lower long-term interest rates. Others, such as Pierre Fortin and ourselves, say that the Bank of Canada should have the ability to lower short-term interest rates and that the lowering of those interest rates will mean that investors' portfolio choices will tend towards long-term bonds, which would in turn reduce long-term interest rates.

It is possible to identify those two financial strategies, but it seems that the government has panicked and thinks there's only one. These two strategies are, first of all, supporting Canadian currency and, secondly, supporting the securities market. The strategy that results from the Budget in Bill C-76 is to try and draw foreign money into short-term Canadian bonds, in Canadian dollars, so that it will be easier to finance the Canadian debt.

Obviously, at the beginning of the 1990s, given that our short-term interest rates were five points higher - and sometimes more - than American rates, foreigners bought a lot of Canadian securities. When the gap between Canadian and American short-term interest rates was narrowed, the dollar dropped and the Canadian economy started to recover. The Finance Department now wants to say to foreign bond holders that the dollar is no longer dropping, that the value of their portfolios will remain the same and that government program cuts will reduce borrowing.

The government can't play on both sides at once. When the dollar drops, the Bank of Canada increases short-term interest rates. Every time it does so, it increases long-term interest rates because the long-term securities market will also drop.

To prop up the Canadian dollar's value, the Bank of Canada has to borrow American dollars and buy Canadian dollars on the market, which is costly because you have to pay back the loans with interest. If the Bank of Canada and the government's strategy goes as planned, we'll find ourselves in a situation where a higher percentage of our debt will be held abroad, which will give us even less leeway in decreasing interest rates.

If, rather than trying to prop up the Canadian dollar's value and reassure international markets, the Canadian government decided to support the Canadian bond market - if it bought, let's say, Canadian bonds and treasury bonds for itself rather than trying to persuade foreigners to buy securities - interest rates would drop and probably the Canadian dollar as well.

.1800

However, the government would come out ahead, because interest rates and debt repayment costs would be reduced, as would its need to borrow. That was the original objective, was it not?

When interest rates in Canada are reduced by a direct intervention by the Bank of Canada, regarding interest rates, the cost is lower than when this is done by an intervention on the currency market. The Bank of Canada itself can borrow in order to buy bonds. I would add that in 1975, the Bank of Canada held 20% of government of Canada securities, whereas today it holds about 7%.

Let's talk about the real problem. Canada's debt is held in Canada, chiefly by our financial institutions and chartered banks. The problem is that the Department of Finance is afraid that our banks will sell Canadian securities and move toward other currencies.

I would suggest that Minister Martin invite the bankers of Canada to attend a meeting at which he would explain to them that they have been among the leading profit-makers and that the time has come for them to stop being at the top of the list. Rather than trying to buy the support of financial markets and reassure them, the government should have tighter regulations on the securities market and debts.

I know that a strategy of this type would mean that the government would have to target the rich and powerful in our society. The government has made its choice. It prefers to target the weak and the poor, and that, ladies and gentlemen, is the real significance of the government's financial strategy as set out in Bill C-76.

For me and for you, the main issue regarding the government's financial situation is to ensure that the debt servicing costs do not mean that spending for programs we need will be eliminated.

I have studied these issues for 30 years and I think that with the complicity of the Department of Finance, the government's financial situation was more or less taken over by the Bank of Canada. Rather than acting as Parliament's servant, the Bank has become its master. This is unacceptable in a democracy in which the people we elect, not appointed officials, are supposed to be governing us.

In conclusion, Mr. Chairman, I would like to make a suggestion. I think you should add to the subjects you will be studying this year a major study on interest rates policies in Canada.

You should have Finance Department and Bank of Canada officials appear before you to tell the people of Canada how they see the situation. You should also invite participants in the securities markets and bankers to put forward their views, and ask some economists and even some journalists who write in the business pages, and those are the conduits of these ideas, to appear before the Finance Committee.

You should also look at what has happened in other countries, where interest rates are lower than they are in Canada. The Canadian Centre for Policy Alternatives would be pleased to assist you in your work. Thank you for your attention.

[English]

The Vice-Chair (Mr. Campbell): Thank you, Mr. Cameron.

Just by way of clarification, we quite recently had the Governor of the Bank of Canada before us, and he'll be making periodic appearances before us in conjunction with the publication of a semi-annual report on their policies. On numerous occasions, including the pre-budget consultations last fall, we also have consulted experts on all sides of this question of interest rates and the other issues you have brought up. I don't want anyone to be left with the suggestion that we have not canvassed those questions fully in the 18 months that this committee has been constituted. We will continue to do so, and we welcome your intervention and testimony on those points this evening.

.1805

Mr. Cameron: If I could just respond to that, of course I read the proceedings and have read them for years. They are the richest source of material on our financial system. I would find it very sad if the Parliament of Canada were to discontinue publishing transcripts of these.

My point is not that you haven't had expertise, but simply that if you were to ask a group of economists how interest rates are determined - I can give you an answer; I think I know how they are determined - you're going to get different answers. This requires an in-depth piece of work with research studies being commissioned from outside. So I'm not implying in any way that you haven't gone out and canvassed widely - I've been before this committee at least twelve times - I'm just suggesting that this should be a focus, a major inquiry. Perhaps you should travel and talk to people in Tokyo. The interest rate is 1.75% in Tokyo. If you could find out how we could get that in Canada, I think it would be worth the trip to Japan.

Mr. Peterson: Productivity.

The Vice-Chair (Mr. Campbell): Maybe I could ask you to intervene to help us acquire the budget to do that travel. I think it's unlikely with our fiscal constraints, but I take the point. Thank you.

We're going to begin with Mr. Dubé.

[Translation]

Mr. Dubé: On this side of the table, you have an Official Opposition representative from Quebec. The work of the opposition is made easier when we hear opinions such as yours.

My objective here is not to engage in partisan politics. I've listened to your presentation with interest. This is the first time I've heard you speak, but I must say that your reputation has preceeded you. I would like to ask you a few questions to clarify some points before moving to other topics.

I liked the fact that you stressed the famous issue of interest rates. You mentioned the Japanese example, which shows very concretely that there are different interest rate policies in other countries, and they produce very different results. I would like an explanation for the benefit of my colleagues. Do you have any figures on the impact cuts in public spending have on employment?

Mr. Cameron: It's very early to start assessing the Budget. For example, I get questions from Statistics Canada. They tell me that in the last four or five months, some 4,000 jobs have been created in Canada. When I look at the Budget presented earlier this year, I see that employment was expected to increase by 3%, or approximately 400,000 jobs. If we created 4,000 jobs in the first three or four months of the year, I wonder how we will create 396,000 more in the next eight months.

I think employment creates jobs. The more jobs you create, the better the chances of creating more. The Budget eliminated 45,000 federal government jobs. So we can say that there will definitely be 45,000 other Canadians, somewhere in the country, who will lose their jobs.

When the government saves one dollar in salaries, it does not really save one dollar, because 25 cents of this dollar would have come back to it in income tax revenue. So there will be an actual reduction in revenue. Second, the government has to pay unemployment insurance and social assistance benefits to people who lose their jobs. This will cost another 25 cents or 35 cents In the end, the government actually saves 35 cents by reducing its salary expenditures by one dollar.

.1810

Moreover, the 35 cents that the government thinks it is saving would have gone to my eye doctor, for example, whose business is down a great deal, or to a corner store or to a home owner. So if the government saves a dollar this year, it loses it next year. I'm not inventing this - it's just economics.

The only case in which the opposite would be true would be if all these reductions in expenditures were to result in reduced interest rates which would encourage people to spend more, or get Americans to buy more of our products. If this were to happen, the impact of such reductions would be reduced. But since no other such factor has come into play, I'm telling you officially that the government sector in Canada has been in a recession at all levels for a year.

Mr. Dubé: I don't remember exactly when the French Prime Minister, Balladur, came to power. He somewhat followed your suggestion about reducing the impact of foreign investment on the financial situation of France. He appealed to the people of France to buy Treasury bonds. Nevertheless, recent figures I saw on the unemployment rate in France show that, particularly among young people, the unemployment rate is higher than it is here in Canada. I am being the devil's advocate here, but I am trying to test your theory.

Mr. Cameron: I think there's been a lack of effort and imagination on the part of the Finance Department. This is hard to understand. It plans to borrow $26 billion this year, in addition to all the debt recycling costs. That's quite a job. I'm not underestimating the importance of doing this and doing it well.

So why don't they introduce a 30 or 60-day government of Canada bond that would be renewed automatically? Why is the government not taking aggressive action to set up a securities market for government bonds? No business in the world waits for markets to appear. You have to create markets. We must therefore create a much broader market with the public.

Canada's debt is an asset. I would like to have two or three times the Canadian debt in my pocket. It brings in interest. It is security for people's future. The debt should be spread around much more among the people of Canada and much less among big guys, particularly abroad. It simply doesn't make sense. When Balladur set up a bond program, he was allowing the French to invest in the future.

I'm looking at the Rae government in Ontario, for example. It divided its expenditures into two parts. One part is for current expenditures, what Mr. Parizeau calls grocery money. The operating budget, the grocery budget, should, in my view, be balanced according to the business cycle. There is a whole series of expenditures that do not show a return for 20 years. For example, investing in the education of a student will bring in a return for the rest of the student's life. If we don't invest money in educating our young people, if we don't help people get out of poverty, we are making a negative investment. If people invest in society and if we borrow to pay our bills today, Canadians themselves will benefit through a reasonable interest rate and a fairer distribution of the debt.

Mr. Dubé: Thank you.

[English]

The Vice-Chair (Mr. Campbell): Mrs. Brushett.

Mrs. Brushett: Thank you, Mr. Chairman. Thank you, Mr. Cameron, for being here today. I must confess my lack of knowledge in not being as experienced as le député Dubé in having your reputation precede you. I've only been on this committee a few months.

So if you would, I would ask just what the Canadian Centre for Policy Alternatives does in our society. Where do you get your funding and whom do you serve?

.1815

Mr. Cameron: I'm an academic and I teach political economy at the University of Ottawa. I serve the Canadian Centre for Policy Alternatives as a volunteer, and I am the president.

The organization was founded in 1980. Its statement of purpose says clearly that we want to promote economic policies leading to full employment and equality of opportunity for men, women and less fortunate Canadians, who may suffer from handicaps, as well as fortunate Canadians. We have been called left-leaning so many times we should be on the ground by now. We've been called a pro-labour think tank, which is not inaccurate.

Our funding comes from many individuals. The Premier of Ontario is a member and has been since the inception. We have a number of Liberal members of Parliament who are members. There is an individual membership. There is an organizational membership. We have the Sandy Hill Community Health Centre as a member, and many local unions and various union organizations are members. We have such a small budget that finances are not a major issue.

Mrs. Brushett: Does your membership fund your budget 100%?

Mr. Cameron: We do quite well in the marketplace. We sell our publications. We outsell the C.D. Howe Institute, which gives publications away. We sell about $50,000 to $75,000 worth of our materials to the public each year. We receive individual memberships. We organize lunches like the one with Mr. Tobin. I've doubled the budget since I've been president. We have a budget of about $300,000.

Mrs. Brushett: Do you receive any taxpayer money?

Mr. Cameron: Yes, indirectly, because we benefit from a tax deduction as a registered charity. On three occasions we have received government contracts. Currently, we have a contract from the Department of Human Resources Development to investigate job creation prospects in the third sector, the sector that is neither business nor government. We had a contract from the British Columbia government to look at the implications of the free trade agreement for British Columbia. We had a very brief arrangement with the Ontario NDP government.

We are the only national research institute in Canada whose core funding doesn't come from business or government. All the others get it, including the business-funded ones. Now with the demise of the Economic Council, there's the Institute for Research and Public Policy. We got business money originally. We're the only one that doesn't get government funding.

Mrs. Brushett: It seems to me, in terms of your presentation, that interest rates are the be-all and end-all and will answer all questions. Having been in business, I find it doesn't seem quite that simple most days when you try to face your banker, meet the payroll, get the products out the door, find a consumer to buy them, and meet the competition. There are a few more problems that complicate the whole agenda rather than just interest rates.

Mr. Cameron: I have a simple point on that one. You can do everything right. What's a good increase in your income in business this year? If you made an 8% increase in sales, that'd be pretty good, wouldn't it?

Mrs. Brushett: It'd help keep the door open.

Mr. Cameron: If you're paying 12% on your business loan, you just lost 4%.

Mrs. Brushett: What do you think would happen if we reduced interest rates?

Mr. Cameron: If interest rates were 4%, you'd have made 4%, which is a reasonable rate of return. For most Canadians, interest rates are the determining factor in whether they succeed or fail.

Mrs. Brushett: I have a question on that point. What happens to the other things like inflation, competition, and the people to buy those bonds if you don't have attractive interest on them? Who's going to buy them? Who's out there in the marketplace to be the consumer if you're going to flood the Canadian market with bonds at 4% interest rates?

Mr. Cameron: Of course, that was an example. What I'm talking about is....

Mrs. Brushett: In reality, who is there, in the real day-to-day business world?

Mr. Cameron: From 1930 to 1982, the average real rate of return on financial instruments was about 1.7%. What is it now?

Mrs. Brushett: I don't know. Is it 5%, 6% or 7%?

Mr. Cameron: It's around 7% to 8%.

.1820

That, Madam, is usury. When I worked for the Department of Finance, the Bank Act said that no person in Canada may lend money at above 6% interest. To introduce competition in the system, we took the interest rate ceiling off. Why not think about re-introducing it?

Monetary policy in this country is created by people who quite frankly don't know what they're doing. I say that after having thought about it for thirty years. The model they have is the city of London of the 19th century where one had warehouses all over the place with goods, spices and textiles. If they moved the rate of interest by 0.5% or 1%, these merchants lowered their prices and sold their goods so they didn't have to pay the carrying costs.

Transport this to the Canadian economy. What does the Canadian economy look like? It's a series of huge capital projects, railroads, airplanes, buildings, mines and small businesses who carry capital costs. When the Bank of Canada moves interest rates - as it's moved them - it destroys the capital value of those assets.

It creates unemployment when it does this. We measured the cost of unemployment in a study, which I'll be pleased to send you, by I think the two most serious economists in Canada, Diane Bellemare and Lise Poulin-Simon, who after studying the question of employment for ten years, estimated the cost of unemployment in Canada over the last two years of the Conservative government's policies and the cost, Madam, was $100 billion. The principal payer of that cost was government. It cost government $47 billion to have this level of unemployment. It only makes sense that the more people are working, the more people are paying taxes.

Mrs. Brushett: I appreciate you taking the time and you can send it to me. That's fine for me, Mr. Chairman.

Mr. Peterson: All of us want lower interest rates. All of us want lower unemployment.

Can you give me one example in history of a country that has been able to monetize its debt, substantially decrease its interest rates by so doing, and not suffer double-digit inflation?

Mr. Cameron: That would be Canada, 1939 to 1945. The Bank of Canada held 80% of the debt that was created to fight the war that we've been celebrating the end of this year. At the end of the period, we had a debt-to-GDP ratio that was roughly double what it is today. We went into the period, Mr. Peterson - if I can call you that -

Mr. Peterson: Mr. Cameron, you can call me Jim if you want.

Mr. Cameron: We went into the period you and I grew up in, which was the greatest period of prosperity in Canadian history or the history of the western world.

Mr. Peterson: Didn't it make any difference that we had a war then, that there was rationing, that people couldn't buy goods, that everything was directed into the war effort?

Mr. Cameron: I think it made a considerable difference. We wouldn't want to replicate wartime conditions with strict wage and price controls and all the rest of it, but I just want to -

Mr. Peterson: Are there any other examples?

Mr. Cameron: I think the Canadian one is the most relevant.

Mr. Peterson: If that's the one example, a wartime Canada, I think in wartime we might be able to print money just to try to get out of it.

Mr. Cameron: We print money all the time.

Mr. Peterson: Just a second.

Mr. Cameron: No. We print money all the time.

Mr. Peterson: Mr. Cameron, may I have the floor. Do you mind?

Mr. Cameron: Not at all.

Mr. Peterson: You can have as much time as you want.

So what you're suggesting here very simply is that we can print money, buy back our debt and hold it. I think if that wouldn't cause dramatic inflation, if that would lower the interest rates, our central banker is absolutely insane not to do it. He must be stupid when the answer is so simple.

That's all he has to do is print money, buy up the government debt, particularly the foreign debt, and we will have lower interest rates, lower debt and we'll all be better off. I quite frankly don't know why every government in the world that has debts doesn't do that.

To me it's so beautiful in its simplicity. We can't lose and there's no pain. I think it's wonderful. So I think the next time we have the Governor of the Bank of Canada here, I would like you to give us some written questions that we can put to him. I'm going to put this to him again and say ``Governor, there's an easy way out of this; we're putting Canadians through a lot of pain''. Anyway, that's my comment.

Thank you very much, Mr. Chairman.

.1825

The Vice-Chair (Mr. Campbell): Mr. Cameron, do you want to respond?

Mr. Cameron: What has to be done is reduce the cost of our debt. There are a number of ways of doing that. What we're talking about is not a movement from a policy in which the majority of our money is printed by the chartered banking system, which is the case today. The chartered banks print money when they make loans. They have the money creation.

I would love to do a seminar on this for members of Parliament because this Parliament has chartered banks and given them a licence to print money and they print it.

One of the things the chartered banks have done under the new regulations of the Bank for International Settlements is they have purchased government debt. If you asked the banks how much government debt they hold on which they pay interest...they hold a super quantity and their holdings have just gone up like this. They print money to buy that debt and we pay them 8%, 9%, to do it.

What I'm arguing is that the Bank of Canada doesn't buy all the debt that's held by the chartered banks, but it holds a larger percentage than 7%, that it moves from 7% to say, 8%, to say, 9%, to say, 10%. I'm not arguing for an overnight monetization of the debt by the Bank of Canada. I'm arguing for a position, for instance, where you might re-implement the very long standing policy of prudence in this country, of having the chartered banks leave reserves on deposit with the Bank of Canada, on which the bank doesn't pay interest, and that we regulate that -

Mr. Peterson: I understand all that does is increase the costs that the banks impose on all their other customers. If they don't get interest on the money they have with the central bank, then they'll just take that money out of the hides of individual borrowers.

Mr. Cameron: What it does is encourages them, to help them out of the mess they got into by lending unsecured loans to the Reichmanns without even having a loan sheet in front of them, or by investing in Latin America as they've done, or by buying Third World currencies.

Mr. Peterson: If they have to have reserves, if they have to put aside money that they don't get interest on, how does this stop them from investing in Third World currencies?

Mr. Cameron: My view on this is a pretty straightforward one. Banks should be treated like public utilities, and we want water, we want credit, we want telephone lines. They should be regulated and allowed - I would like to have a much more active investment banking sector. The Tories were -

Mr. Peterson: Just a second. Excuse me. I don't see how increasing the expenses of banks by not giving them interest on money they have to deposit as reserves with the central bank will stop them from taking stupid, risky investments such as in real estate or third world debt.

Mr. Cameron: You may be right; it may not do it. So we should find another way of doing it.

Mr. Peterson: Oh, thanks.

The Vice-Chair (Mr. Campbell): Mr. Dubé has a quick question just before we wrap up.

We're almost out of time, Mr. Dubé.

Mr. Cameron: Just to finish this -

The Vice-Chair (Mr. Campbell): Mr. Cameron, I think we're almost out of time. Mr. Dubé has been very patient and I'd like to give him a chance to ask his question.

[Translation]

Mr. Dubé: I asked most of my questions earlier. I would like to ask a general one.

You talked about the situation of other institutes, other research groups in the economic and social areas who have a lot of influence. You deplored that influence.

You gave the example of the Lisbon Club which starts saying that the limits of global free trade and competition are going to create a levelling at the base which could lead quite far. The trend towards the lowest salaries can bring other effects.

Even if we disagree with some of the things you said, how do you explain that an institute like yours doesn't have more influence on the development of Canadian policies? On the political level, we have the members of the Reform Party, the Liberals who are in the centre and us, who are more on the left. How do you explain your small influence on the development of Canadian policies?

Mr. Cameron: Our influence was greater when the Liberals were in the opposition. This is the reality.

Personally, I am a political economist by trade. The definition of the word ``politics'' was created by Aristotle in the fifth century B.C. Politics is the struggle between the rich and the poor. Those who are on the side of the poor have at least, I think, the satisfaction to know that they are on the good side. They also accept to lose often. It is not without good reason that the rich are rich. They have more power.

.1830

I noticed the comment made by the Quebec minister on media control. I find it pathetic that there wasn't a single article in the papers I read on the work of your committee.

We give to understand that the intent of Bill C-76 is to improve the condition of the poor in Canada, which is absolutely not true, since were such a legislation passed, we wouldn't have any protection left against poverty in Canada.

I bet that if we asked the question to dozens of journalists, here in Ottawa, they wouldn't be able to answer it because they don't attend the sittings of your committee.

So we create a big problem with the media and I think that by controlling the communication media, we reduce our space as citizens.

Mr. Dubé: Thank you.

[English]

The Vice-Chair (Mr. Campbell): Excuse me, Mr. Cameron. If you'd been here earlier when union representatives were here, and again yesterday.... We seem to have no lack of media when unions - who are your organizaitonal members - come here to present. They're just maybe not covering your presentation.

Mr. Cameron: I haven't seen any reports. I read the Citizen, The Globe and Mail, and Le Devoir every day. I haven't seen a report.

The Vice-Chair (Mr. Campbell): They were here in force earlier today and yesterday when we had union presentations. They seem to have no lack of knowledge and ability to be here for those presentations. I don't know if there are any here today, but certainly there has been no lack of coverage from their perspective...and they've advanced many of the same arguments that you've advanced this afternoon.

We are out of time, Mr. Dubé.

Mr. Cameron, it remains for me simply to say thank you for your presentation today, which is always interesting. I'm happy to see you again before the committee.

We're going to take a short break, as other witnesses come to the table. We'll resume in a few minutes. Thank you very much.

.1832

PAUSE

.1846

[Translation]

The Chair: Mr. Dubé, thank you very much for your contribution to our discussion of this afternoon.

Mr. Dubé: We are always present.

The Chair: The witnesses who came from your constituency were good.

Mr. Dubé: Thank you.

The Chairman: Mrs. Lalonde, it will be interesting. We are now going to start talking about the programs of the new left.

Mrs. Lalonde (Mercier): I hope so.

[English]

The Chair: We're set to go, Mr. Walker.

Mr. Walker (Winnipeg North Centre): Could I present to the committee formally almost all of the amendments that will be discussed -

Mrs. Lalonde: Oh, oui.

[Translation]

Mr. Walker: Mr. Loubier is always the first and then comes the rest of the committee.

[English]

These are the amendments for consideration, and they'll be copied and given to committee members in the next while.

The Chair: Wonderful. These are government amendments?

Mr. Walker: These are the government amendments.

[Translation]

Mrs. Lalonde, I think there will be another change. It is in the area of agriculture and transport.

Mrs. Lalonde: It is agriculture and transport?

Mr. Walker: Yes, maybe Thursday morning.

The Chair: Wonderful. Thank you very much, Mr. Walker. They will be distributed this evening.

[English]

We're continuing our hearings into Bill C-76, and now we have, from the Social Planning Council of Metropolitan Toronto, Armine Yalnizyan. We welcome you and we look forward to your presentation.

Ms Armine Yalnizyan (Social Planning Council of Metropolitan Toronto): Thank you very much.

The Chair: You've been a major voice in these discussions and we recognize it; we welcome you here.

Ms Yalnizyan: I very much appreciate your welcoming tones, and I very much appreciate the opportunity to present before this committee. You're very tired, I'm sure, at this point in the day, and you've been doing this for a number of weeks....

The Chair: Not at all.

Ms Yalnizyan: I'd also like to take the opportunity to thank the clerk of the committee for her patience in rescheduling my appearance before the committee.

I'm not going to try your patience with overall comments about the legislation. I would like, first of all, for people around this table who don't know what the Social Planning Council of Metropolitan Toronto is, to explain our organization.

I believe Mrs. Brushett had some questions about the CCP, and I'd just like to put on the record that the Social Planning Council of Metropolitan Toronto, like other social planning councils across the country, is primarily financed by United Way funding. At Metro Toronto what we provide is our research and policy analysis and local needs assessment and other planning tools for United Way's agencies that are financed in the community, as well as other metro bodies. We receive a small amount of financing from the metro level of government, and no other financing from other levels of government, short of having fee-for-service contracts.

.1850

We also of course receive money from our publications and memberships as Mr. Cameron's agency. That's who we are and those are the types of organizations we service. We have been making commentary on national programs since the effects of the 1989 budget were put into place in 1990. National budgets have effectively been rewriting what has been available to citizens of Metropolitan Toronto for a number of years.

The comments I want to make on behalf of the council are in the spirit of friendly amendments to Bill C-76 and in particular the focus is on the CHST, the Canada health and social transfer. I do want to mention that your government has basically achieved an accounting coup. The budget you inherited when you inherited the crown, when you took over in 1993, had a $4 billion operating deficit in it. Three years into your mandate you've converted that into a $29 billion operating surplus.

There's a certain maddening quality to the budget this year in the way you've achieved a combination of fiscal squeeze introduced into the economy, as well as the user fees. It has a certain circularity to it. The combination of cuts and potentially inflationary aspects of the user fee structural change, privatization and commercialization are most likely to lead to systemic increases in prices and that combination is likely to lead to increases in interest rates, which means we're going to have increases in debt charges. That means again we have this phenomenon where the operating surplus, no matter how impressive it is, will not be sufficient to meet your deficit targets and we will go through another round of severe cuts. I believe that is what Mr. Martin's budget speech and what other speeches to the private sector have been about.

We have a certain concern at the social planning council that we haven't begun to see the pain that is going to be distributed by budgetary decisions. We feel we have a certain number of comments to make on the CHST that might avoid writing off basically a generation of Canadians and disenfranchising them from the entitlements that you and I around this table were brought up with, cut our teeth on and in fact flourished under. I think it is very much in jeopardy.

There are four basic comments made in our presentation: First, to divide Bill C-76 and examine the Canada health and social transfer on its own merits, as you do for other pieces of legislation that come before Parliament; second, to embed principles that are in CAP, a piece of legislation that will be repealed by Bill C-76, on an equivalent footing to the principles that are in the Canada Health Act, as you have done in Bill C-76; third, to include nominal allocations, in fact earmark funds for the three different program areas that are in the CHST; fourth, to ensure that the cash does not disappear out of the system, which it is more than likely to do under the current architecture, even though this is an interim piece of legislation for a transfer and the bigger piece of legislation is to come. What this legislation does is basically nail down the architecture of EPF financing, which we believe is a problem.

I will limit my comments so we can have a back and forth. First, the call to divide Bill C-76 stems from our understanding that the federal government had no mandate to introduce the Canada health and social transfer as a budgetary measure. In fact, the federal budget, we believe, confuses your clear political mandate for deficit reduction with an absolute lack of political mandate, to rewrite its contract with Canada.

This social contract is expressed, at least in part, through these key social programs featured in the CHST. Your government did not signal its intention to gradually withdraw from these critical arenas of public provision during the pre-election, nor the pre-budget periods of either public dialogue or public consultation. The people of Canada did not elect you on the twin platforms of deficit reduction and reduced provisions for social security; rather you were elected on the basis of your campaigning for sustainable job growth as the means to deficit reduction.

Studies have repeatedly shown - I refer you to the Ekos Research study that came out the day of the budget - that Canadians do not wish to have their social protections and assurances eroded. I think there's a real dysfunction between the way our leadership at the federal level, whether it's through civil servants or through elected politicians, are translating the public's desire. Yes, there are contradictions in the public desire to do something about the deficit, but it is quite clear that the public has said it wants protection of essential services such as medicare.

.1855

Second, through the CHST, Bill C-76 interrupts due process. For example, the social security review was launched with public input. It was a highly political and publicized process. Its legislation is due in the fall, and essentially the budget does an end-run around what this legislation can offer us. It establishes a certain framework, a fiscal strait-jacket, within which the Minister of Human Resources Development and the social security itself can engage in the process of rewriting social programs for the next generation of Canadians.

Again, I recall to you, it is not your generation that will be suffering the impact of whatever changes. It is the next generation of Canadians that we are redesigning social programs for.

Without amendment, Bill C-76 is going to lock in an unconditional approach to financing social programs, which was an approach that has been rejected in the past by Canadian governments as an appropriate method of financing social programs. In particular, in the discussion paper on social security it was raised as a possibility, but the question mark was very clearly there as to whether or not this was an appropriate approach for financing key social programs; in other words, providing unconditional money in a block for provinces to basically determine as they will how to allocate those moneys and what kind of provisions to provide their citizenship.

If the social security review could have, as your government mentioned at the beginning of the process, offered any kind of stabilization, modernization, or rewriting of social programs that was in fact addressing current social deficits, this budget has basically pre-empted that possibility. You have the fiscal deficit trumping any other concerns and public policy.

We are being told, of course, that this is inevitable because of the fiscal reality we are in. I would remind you that in the pre-budget period our organization, along with many other organizations, indicated there were a number of different recipes for deficit reduction. We all accepted the fiscal need for putting our house in order in reducing the deficit and that expenditure cuts were, by far, not the only option available to this government. We were deeply disappointed that when the budget did come in, those calls for a different way of dealing with deficit reduction targets were not considered seriously.

We are suggesting that by dividing Bill C-76 you will essentially establish a civic authority for the CHST. We're not saying there should not be a Canada health and social transfer, but that it requires time and that it is as worthy of your attention as a Parliament as any other piece of legislation.

In reviewing this bill, it presents you with a wide range of issues, from consular cost-recovery to the Crow rate, public utilities income tax transfers and veterans' programs. There's a smorgasbord of issues that come before you in terms of the budget bill.

On the other hand, there are other issues, such as gun control, where you treat the issue in and of itself in the parliamentary process. For example, one of the bills you folks have worked on in this session has been an act to implement the convention of migratory birds in Canada and the U.S., which was worthy of the entire Parliament's consideration. Basically, I'm asking you if you think the CHST should not be equivalently worthy of such consideration. Take it out of the budget bill and grant it the same stature as a budget bill, which you've obviously felt was worthy of consideration.

The second issue on principles and standards refers to what happened around the Canada Health Act. When the budget papers came out, there were no assurances in the budget papers or the budget speech that there were any guidelines. However, when Bill C-76 came out, the principles of the Canada Health Act were assured right in the legislation. At the same time, CAP, which provides some principles around the provision of social assistance and social services, was repealed with one exception, the right of residency. We can get into this if people are not familiar with this. I can't imagine that by now you have not been made familiar with what these different principles are.

You are, of course, familiar with the fact that CAP legislation has been there and provided cost-sharing for social assistance on the basis of assuring certain minimal standards and rights to Canadian citizens since 1966. That has not eliminated provincial flexibility and ability to innovate outside the context of CAP. It just limits what the federal government will cost-share.

In repealing this section, you basically lose all those rights - they are listed on page 3 of the brief - such as the right to have income when in need, regardless of the cost. Implicit in that is the right not to have work or train for this assistance as a condition of receiving it. Also implicit is the right to a level of assistance that takes into account basic requirements, primarily for food and shelter. Fourth, there is the right to appeal, and, fifth, the right to income assistance regardless of the province you're from. This is what the residency requirement is, of course.

.1900

So that's dropped and the residency requirement is maintained in this legislation. It is also said the process by which we will protect Canadians in the realm now of social assistance is a negotiated process where the provinces are free to come to the table to negotiate common standards. Actually, they're called principles or objectives.

I would ask you to put yourself in the position of the provinces that will be coming together to negotiate these mutually consented upon principles and objectives when they've had an enormous amount of cash as well as entitlements withdrawn from them. I'm sure they're going to be having the political fights of their lives in explaining to their electorate how they're going to maintain certain services.

One can only imagine that in that kind of a post-budget climate the major topic of discussion at those provincial-federal tables is going to be how to allocate what's left among the provinces, rather than what could be possible mutual standards across the countries. Again, the losers in this process are not going to be the governments, per se, but Canadian citizens.

The second recommendation made by the Social Planning Council is to embed the principles of the Canada Assistance Plan with equal presence as the principles of the Canada Health Act within the CHST.

Third, there is the nominal allocations issue. The people around this table more than most are acutely aware of the feeling among Canadians that they're paying more for less, especially with regard to the public system. You experienced taxpayers' revolts in spades just before the budget.

One dimension of the taxpayers' revolt is not just that people don't want to pay more, but that people want to know what their money is going for. They feel they are paying more and getting less.

In the context of that kind of general disenchantment, when you move to transfer money blindly from one level of government to the other and attach no strings to it, instead of making the process of government more transparent, you make it more impenetrable for the average person. The average person knows they pay x amount of money through their tax dollars and they expect to receive a certain level of medical care. Now they will not be able to trace that money from the federal level of government down to the delivery of services as easily as they were able to before.

Your job as a federal government, especially in these troubled times, is to make the system more transparent to people. In fact, that seems to be the mandate that you will be trying to pursue. A block fund does exactly the opposite of making the system more accountable and transparent. This is what leads to the recommendation for earmarked funds.

If you put all the money in one pot - albeit that the pot in year one appears to be bigger - you are now financing three programs instead of just two with a little bit more money, and that money starts to disappear over time. You offer no nominal protections for any one of those program areas. It becomes impossible for the electorate to put any public pressure, any countervailing pressure, on the protection of all three of those program areas.

It comes down to simple political calculus. If you give the money to the provinces, they have to make do with less. It's the old ``squeaky wheel gets the oil'' story. We know that in the case of these three program areas, the squeaky wheel that's going to get the most oil is medicare. When you've got less money, you are going to be raiding certain programs to be able to shore up medicare. That's simple, obvious political calculus.

In the process of devising the CHST, what Canadians were not asked was, do you wish to pay more to preserve these services? It was just assumed that people did not want to pay more. Whereas again, when I refer you back to the Ekos Research, there is a deep contradiction between Canadians wanting fiscal responsibility being taken by the government, but not eroding the things they consider to be the treasures of public life in Canada.

The simple question, would you be willing to pay a national premium for the preservation and perhaps even the expansion of health care, not being asked and then lumping these other programs together assures an erosion of public entitlements rather than an expansion, which is potentially possible. We've never asked the question of the Canadian population.

.1905

Also, when you put these three programs in a pot, the clear loser is going to be welfare services in every instance and in every province, and I think it doesn't take too much imagination to figure out how that works.

We have been told to have faith in the political process and in provincial flexibility and the provinces will do what's best for the citizens' interests. But I can only point out to you two different examples in the very recent past.

First of all, what's happening in Alberta is the premier of that province explicitly has had a mandate to remove single employables off welfare rolls and through a series of cut-backs has managed to effectively reduce their case-load by almost half, and so of course the obvious question is where do those people who are no longer receiving social assistance go? We don't exactly know. It may be total coincidence, but in the same timeframe where those 97 cases disappeared off Alberta's roles, an additional 90 new cases appeared in both British Columbia and Saskatchewan. It looks suspiciously as though, in the pursuit of provincial interests, one can try to export one's poor as a solution to the deficit.

At the same time in Ontario we're having a leadership race and the Progressive Conservative contenders for the leadership have made a public pledge to cut welfare benefits to 10% above the average of the other nine provinces. It sounds generous to most layperson's ears. Should it come to pass, it would mean that a single person on social assistance would have their maximum annual payment just slightly over $6,000, a cut of $1,500 from present levels, and a single mother with a child would lose almost $3,000 from current levels. This would leave the single person without a dependent with a total of $5.55 a day to meet all other needs other than their shelter costs and a single mother with a child would have $8.20 a day to meet all other needs other than their shelter costs.

We are engaging in a race to the bottom by unleashing the CHST and letting provinces pursue their provincial interests. Ten provincial interests does not add up to one national interest.

So I would ask you to very seriously consider the possibility of introducing earmarks and notional allocations within the CHST so that you don't have a single block fund. Clearly this is exactly the opposite of what a block fund is about. Block funds are about creating one sack of money, and we're saying this is not an appropriate way to finance these types of programs. You do not want to permit or facilitate the process of horse-trading legitimate public needs at any level of government. You don't want to be the architect of that, presumably.

Finally, under the current funding structure of the CHST, as you know, the funding model that underlies it is the EPF, the formula for the Established Programs Financing, which, because of the changes made in the legislation in 1986 and 1989, now has, instead of an escalator, a decelerator in the way financing occurs, which means that cash disappears very rapidly under the current system.

As you know, there is a different kind of vanishing point for every province. Quebec is the first one to bite the bullet with no cash transfers, and that occurs very soon from now, in the year 2003 or 2004, according to most estimates. That assumes no further cuts in the CHST cash allocation in terms of the estimate that places it at 2003 or 2004, which is not clear, given what Mr. Martin has pledged, in terms of further social programs and general expenditure cuts. As early as eight years from now there will be no enforcement mechanism to be able to bring intransigent provinces into line with the principles that this government has said it will uphold with respect at least to the minimal principles of the Canada Health Act.

So how do you maintain a federal presence and public assurances in this climate? Well, you can't do it without cash. A very simple mechanism of restoring a cash commitment - and I'm not talking about the status quo; I'm talking about maintaining a system wherein the cash does not just go ``poof'' at some point in the story - is by reintroducing the escalator, the way this financing program was originally designed. It was not designed to be GDP minus 2%, GDP minus 3%. It was designed to be indexed to the rate of growth of the economy, and in particular the per capita production of wealth, and the rate of growth of the population.

Don't forget, folks, that in ten years, the same phase of time where the money is going to go ``poof'' in the system, you're going to have a colossal demographic demand for health care services in this country as our population ages.

.1910

So you're going to have a collision between a financing model, which is perfectly avoidable - you have the opportunity right now to avoid this - and public demands for decent health care, as the system is going to require more and more cash.

I'm not going to read from this text, but all I'm saying is that there are mechanisms in place that are transparent and incredibly easy to put back into place that will guarantee that the cash presence does not evaporate during your lifetime or the next lifetime.

I want to go back to that, because I guess the purpose of these four recommendations - to reinstate the original escalator; to introduce nominal allocations; to embed the principles of CAP; to divide the bill to permit all of these things to take place.... These recommendations are made to you in the spirit of making amendments to the legislation in order that this phase of deficit reduction does not become something irreversible in the lives of Canadians; that when we get through the woods, as presumably we all hope we are eventually going to do, the system of social assurances won't be so completely redesigned in terms of federal-provincial cooperation and in terms of what is offered at the public level that you cannot turn back the clock.

I think there are ways of preserving the system so that in fact you could enhance it again, and there are ways of preserving the system so that you don't write off an entire generation in the process.

I'm pleading to you not just as keepers of the public ledger books, which you all are as members of the finance committee, but also as stewards of public life, which you are as elected representatives of the people. I hope we will be able to discuss the process of stewardship in our dialogue.

The Chair: An excellent presentation. I think I can speak with a fair amount of confidence that the members on this side of the House recognize what you said about no cash, no clout; that we have to have a cash component.

[Translation]

Mrs. Lalonde.

Mrs. Lalonde: Thank you for this excellent presentation.

You understand that being from the Bloc québécois and coming from Quebec, I understand part of the things that you are saying when I take into account the needs of Canada, needs that can't be suitable to me as a Quebecker. However, I think it is extremely important that you stress this view.

We're coming back to the debate that we, as members of the Committee on Human Resources Development, have held across Canada. If I set aside agriculture and the budget itself, we are talking about the capacity of Canada to maintain social programs that fit to its needs. In a way, it is a bit what we are saying, that we should at least have this debate for itself because otherwise it will be totally ignored.

In the budget, with the Part IV and V, with the decision on block funding, we are totally ignoring the debate on social programs and of the worst fashion at that since the provinces themselves will have to make decisions with the little money that they will have.

I'm going to ask you right away the question that others will ask you. If we do that, where are we going to take the money?

[English]

Ms Yalnizyan: You will notice that in the notional allocations....

[Translation]

I'm sorry, Mrs. Lalonde, but I'm much too tired to speak French tonight.

Mrs. Lalonde: Yes, you seem very tired. I will be glad to listen to you in your own language.

[English]

Ms Yalnizyan: You will notice in the commentary I'm referring in particular to the nominal allocations, which would be the big-ticket item, which would determine exactly how much below $26.9 billion you go to in this bill. Of course, this bill only speaks to the first year; it only speaks to 1996-97. It is silent beyond that.

I am not referring to a notional allocation in terms of dollar figures. My understanding is that those numbers would have to be negotiated, and there are many ways of determining those nominal allocations.

For example, we have in fact equal per capita entitlements for health care and post-secondary education under EPF. We do not have equal per capita entitlements under welfare. We have quite a disparity across the provinces.

.1915

Would the federal government be willing to put some kind of a basic, equal per capita entitlement with respect to social services and perhaps an equal per user entitlement, rather than a per capita entitlement, which would integrate a stablilizing component that exists now with CAP and cannot exist under a block fund?

Those things are matters outside of the parameters that I can address. I don't know what those negotiations will look like.

My first attempt in speaking to you is to say that this is not the appropriate forum for articulating either how much money will be in year two or what the architecture for that funding mechanism shall be. I think this piece of legislation nails down an architecture for this transfer that is almost irreversible with respect to vanishing cash, with respect to public accountability and with respect to the protections of citizens' rights. Those are my primary concerns.

When we talk about the vanishing of cash, we're talking about in 8, 9, 10 years. This still meets this government's need for deficit reduction. What we are hoping is to introduce a level of discussion so that one does not keep perpetuating deficit reduction on the back of this particular program area. It's the single largest item in terms of the budget. In terms of transfer payments, $7 billion over three years is one of the biggest hits.

[Translation]

Mrs. Lalonde: Have you noticed that there is in the budget a forecast relating to the use of unemployment insurance and to a new reform of the unemployment insurance system, the effect of which will be that the central government and the programs it administers will be protected during the next recession? As a matter of fact, the government will even end up with a surplus and, through the Human Resources Investment Fund, will be able to increase its intervention.

So, at the time when the central government chatters itself, it deprives provinces of major funds, and in a different manner, depending on the fact that they are rich or poor. So, the central government will get more involved in provincial matters. What do you think of this scenario relating to the consequences of the provisions in the Budget?

[English]

Ms Yalnizyan: Again, Madam Lalonde, I do wish to maintain the focus of this intervention on the CHST.

There's so much to lament in this budget. There's a lot to lament: the fact that the CHST is again destabilizing rather than offering stabilizating influences on the economy; that the UI is going to be cut, probably on the eve of the next downturn of the business cycle. All these destabilizing influences, along with the fiscal squeeze in the system, are alarming to us at the council, but evidently it is not alarming to other people.

So all we can hope to achieve I think in presenting to this committee is what space there is to carve out some more humane space for discussion, some time to discuss a more appropriate articulation of what a Canada health and social transfer can be, and again, I'm limiting myself specifically to that. I could speak extensively about the UI changes, for example. Again, it's like a pig in a poke. We don't know exactly what's coming down the pike, just like we don't know what's coming down the pike on the CHST in year two.

[Translation]

Mrs. Lalonde: What we know is that this major cut will have a huge impact on some people, and that the provinces will have to make choices between social assistance and education, since health will be more protected.

[English]

Ms Yalnizyan: This isn't precisely in response to your question, but I think what happened when Quebec delivered its budget the other day, and there was a certain amount of outrage on the part of Ottawa and Quebec as to whether this was in fact holding the voters of Quebec hostage by saying that you'll have to pay more if you stay in Canada.... I think, frankly, it's disingenuous to say that's the only condition under which you'll pay more.

.1920

What Quebec did was clarify that if you stay in Canada and you want those public services, you have to pay for them because the money is not going to come from ``nowhere''. That's in fact what the rest of Canadians need to consider: if we wish to maintain that quality of life to which we've become accustomed, we're going to have to find a way of paying for it, one way or another. The Paying for Canada Coalition, the Social Planning Council being one member, made a series of recommendations as to how one does pay for these things. These were issues that were not seriously considered by this committee or this government. You make the presentations and they kind of evaporate.

[Translation]

Mrs. Lalonde: We do our best.

Mrs. Yalnizyan: Exactly.

The Chairman: Thank you, Mrs. Lalonde.

[English]

Mrs. Stewart.

Mrs. Stewart: I won't take very long because I know our time is short. I did want to say that it was an excellent presentation and thank you for being here. I know you're tired but it was worth your while.

I have one thing I want to clarify. You made the comment that your budgetary recommendations were not considered seriously and I have to take exception to that because we did consider options presented to us at length. Because we didn't select them doesn't mean we didn't consider them seriously.

Ms Yalnizyan: Fair enough.

Mrs. Stewart: It was just a kind of stab in the heart.

Ms Yalnizyan: For us too.

Mrs. Stewart: As to the comment you made that we don't want to have 10 provincial programs, we have 10 provincial programs now and they aren't appropriate. You've just itemized how inappropriate some of them are. So the process that we have now obviously can't be acceptable to you; it's not acceptable to us.

On the issue of having vanishing cash, one of the strategies behind the block funding was precisely so that we could extend the value and the life of the cash framework. It may not be perfect but it has given us some life.

As the chair mentioned, I think you would find complete unanimity that we have to maintain a cash portion beyond the two years, for sure, and that there is that role to be played on behalf of the federal government in terms of contributing to the long-standing direction of social policy.

On the issue of public accountability, though, why do you lose pressure with a block fund? If people want social services, the people vote. Why, with a block fund, just with notional allocations... we know some are notionally allocated now and not spent in the way you want. Why do you believe so strongly that the block fund takes away your ability to pressure for change?

Ms Yalnizyan: I believe you presented three questions to me and the first is, if we have 10 systems now and they're not appropriate, why wouldn't we want to change the system? Indeed, we want to change the system. We are in a very strange position these days - and have been for a number of years - of appearing to be defending the status quo. The Social Planning Council has been around for 50 years, arguing for progressive change. In the last 5 years, we have found that rights that were hard won have evaporated overnight because of budgetary considerations. So now when we hear the word ``change''...we know traditionally what has been happening in the last five years is that we have been losing entitlements, not getting progressive change.

Yes, there are 10 systems now, systems that are incredibly poor. But I'll tell you that under CAP certain provisions are still enforceable, although in the last couple of years less enforcement has been made.

Let me tell you a story about Winnipeg. Winnipeg, unlike Ontario, has an infant food supplement. It comes in, in Winnipeg, at $170 a month for infants of single mothers on social assistance. They had a budgetary crisis in Winnipeg and they got some kind of academic research saying that in fact the nutritional requirements for an infant could be translated in dollars and cents to really mean $75 a month and not $170 a month and that in fact the supplement should be reduced because of that. That was appealed because of the CAP provisions and it was won.

You destroy CAP and you destroy the ability to be able to save arbitrary decisions like that from being made, and that isn't a question of public pressure. People don't know which way to turn right now, Mrs. Stewart, because there are so many pressures facing them. You say, well, you don't lose public pressure by throwing everything into a block fund, but indeed you do. When you put everything into a block fund and you lop $7 billion off the top, you are guaranteeing that somebody is going to have to make a very tough decision unless you are raising revenues someplace. This is what Quebec was talking about. You and I know that the appetite for raising revenues is not great amongst elected officials these days. So let's presume that most jurisdictions will not raise revenues to match that difference in what they're going to lose in terms of a federal transfer.

.1925

If you are dealing with less money, some choices have to be made as to what you're going to cut. Frankly, medicare trumps everything. Medicare comes in first. This is not magic. This is not an algorithm; this is not arithmetic. You know it and I know it. You know that welfare ranks at the bottom of those three program areas. If something is going to get traded off, what's going to get traded off? Poor people on welfare, because after all they're bums, right? They're not doing anything for their money. That's just the climate we live in these days.

The reason I put in my presentation the Alberta story and the Ontario story is that very clearly when you get rid of the CAP provisions - the principles that exist right now are crummy and I'd love to see them improved - it's a race to the bottom. It's a free-for-all. Who can get to the bottom first? We have no money left. You just can't raise the citizenship to say, oh gee, we really should protect single moms and get rid of medicare. Do you know what I mean? It's not very complicated. I'm not trying to be disingenuous. There's nothing carved in stone that it's going to work out that way. It just seems to be pretty obvious for the calculus.

I was speaking to one of the members of caucus who said it's a measure of democracy how we treat our minorities. When we start exposing our minorities to these kinds of pressures, it doesn't speak very well of us. For the sake of $7 billion that could have been raised in other mechanisms - and I'm not even talking about the $7 billion, but I think there were ways of saving that $7 billion or raising it through other mechanisms.

You've heard from the Canada Medical Association and HEAL. Over 10 years we have now had $30 billion siphoned out of EPF from different changes that have been made. Since 1990, in the arena of social programs alone, we've had $25 billion cut out of social programs to service the debt war. There's a limit on how much you can cut. The food banks are not going to make the difference.

Can I tell you a story about the food banks? I just heard this the other day and I couldn't believe it.

I was working with the people at Daily Bread Food Bank and they were saying that 80% of the people who come to the Daily Bread Food Bank every month are now going hungry. Twenty-five percent of the people who are using the Daily Bread Food Bank who are children are going hungry. It used to be that the parents would go without food at the end of the month to be able to feed their kids. Their kids are now going hungry. Seventy-five percent of the people using the Daily Bread Food Bank are walking because they can't afford public transit. Twenty-five percent of them don't have phones any more; they can't afford a phone.

We're talking about the tax fighter in Ontario saying I want to reduce your taxes by 30% on top of these reductions in transfers. I've explained to you that if he does what he says he's going to do, it will mean $5.55 a day to survive for one person as a single employable. Where are you going to spend it all?

There are better ways of doing this than the way we're doing it. I really seriously believe there are some recommendations here that can preserve the integrity of what your party has put into place over 30 years. You don't need to unpack it in one bloody budget.

The Chair: Mr. Fewchuck, do you have a question?

Mr. Fewchuk (Selkirk - Red River): I have a simple question for this lady.

In a municipal government, as a reeve or mayor, one of our priorities was that we never saw anybody starve. They came to us. For you to suggest it's a very low priority and nobody is concerned...I take offence to that. That was really near to my heart to make sure...and I had babies come to me in paper boxes. We gave them money, a place to live, and made sure they had milk, bread and butter. I remember those days.

A voice: Did you deliver babies?

Mr. Fewchuk: Just about.

But for you to come here and say that local government is not concerned....

The other thing is that as the municipal government we looked after welfare. If money was there, we trusted the province for medicare. We felt at least that was their responsibility. We were looking after welfare, and we put up the taxes on the local taxpayer. There is land and so forth to support this welfare. Then the medicare was the responsibility of the provinces, and the federal government was sending the money there. As soon as an election came along, the province would build another hospital. It wasn't our fault. We didn't ask for it. We'd go back and fight them: why did you put it there? There was no need. Now we have to staff it. This is the way the system is operating out there.

.1930

It's not the federal government's fault. The money is going there. It's the people in the province. I wish somebody else would come here, like your group and other groups, and spell that out. I've been there for 30 years and this has been going on in my lifetime. I haven't heard anyone come to Ottawa and explain that.

Ms Yalnizyan: The question being...?

Mr. Fewchuk: It's not Ottawa's fault. The money has always been going there. It's what the provinces do with this cash. I haven't heard one group come here and explain that. Why shouldn't the province be doing this? One group has never said that.

The Chair: Would you like to answer briefly, Ms Yalnizyan?

Ms Yalnizyan: I am trying to wrap my head around the question, which is that it is not in fact the federal government's fault....

Mr. Fewchuk: The province is to blame. The federal money is going there. Spell it out.

Ms Yalnizyan: That's precisely what I'm saying. If you leave it up to the pursuit of individual provinces and you haven't got national norms and an ability to enforce those norms, it is going to get worse, not better.

Mr. Fewchuk: There's not one line in your booklet that says it is not the federal government's fault. We understand the money's going from Ottawa to the province and we know the provinces are not doing the correct things with the money.

Ms Yalnizyan: Then you need to improve public accountability, not remove it.

The Chair: Thanks, Mr. Fewchuk. Mr. Pillitteri, lastly, before we cut off.

Mr. Pillitteri (Niagara Falls): Thank you, Mr. Chairman. It was a nice presentation you made and I commend you.

You supplied us with some figures here. You say we have 10 different governments. Certainly everyone will be fighting to see how fast they can get to the bottom of the ladder, who can least support people on assistance.

You have a figure here showing the people on assistance in each province. In Ontario and the other provinces...I find it odd that the total beneficiaries in the last column is over 2,800,000 who benefit. Do you think it also has an effect on the ones rising to the top, who could provide the most in social assistance...that they have more on social assistance? Do you think there is any relation to that?

In Ontario we have a population of roughly 28% of the Canadian population and yet those receiving social assistance would work out to about 45%. Do you think that being in a province that is considered one of the richer provinces in Canada...? Some provinces are trying to raise it to the top, providing more of a benefit?

Ms Yalnizyan: I think in fact in the case of Ontario, if we had had - the temptation must have been very strong under the years of CAP to reduce benefits. I think it was almost heroic that those benefits were not reduced in that period, given that the case-load did increase so much and federal financing, the cost-sharing end of it, reduced so much.

I think there's a limit to how many years you can play that out. I think those benefits were maintained because there was the thought that eventually, as the regimes changed, there would be some kind of equity restored to the system. One would return to the principle of cost sharing.

I think where you see literally provinces exporting their poor - for example, the case-load rising by 75,000 people in British Columbia at the same time that Alberta's declined by 97,000. That's not an accident.

Mr. Pillitteri: You're saying that if there had been no CAP here in the province of Ontario, it would have been much higher than this because the other provinces are exporting their poor into Ontario. As we can see already, we have -

Ms Yalnizyan: People are not infinitely movable.

Mr. Pillitteri: They are. In today's society, we're moving a lot more than we were moving 10 years -

Ms Yalnizyan: Especially if you can get a bus pass, which you can get in Alberta. That's makes them a lot more movable.

Mr. Pillitteri: There is clear evidence here that by having 38% of the population in Ontario, we have 45% on social assistance because it is the highest. Had a cap not been put on to the amount that could be given to the province of Ontario, don't you think those figures could even have been much higher, possibly 50% of the nation, which would have been on welfare just in the province of Ontario?

Ms Yalnizyan: Possibly, but I would ask you to consider the fact that welfare, even in Ontario, is not particularly generous. Our rates may be higher, but so is our cost of living. In fact, what ends up being in the welfare recipient's pocket is not exactly like mad money.

.1935

Mr. Pillitteri: I do understand, but let's also recognize the fact that since it is changing within regions, it is the highest you would find.... If we broke it down by region, we would also find that the highest percent would be around Metropolitan Toronto because of the higher element of....

Ms Yalnizyan: Let me respond to precisely this. When B.C. faced a staggering increase in their case-load of 75,000 people, their government got together and said they couldn't handle that kind of increase and they would have to reduce rates. Saskatchewan, relatively speaking, had about 20,000 more people on their case-loads. They watched what happened in B.C., and it was a decision of that cabinet that they would not make those numbers public so those welfare rates would not go down. But that's not sustainable in the long run.

Mr. Pillitteri: No, but I would like to say that as much as presentations are being made here about Bill C-76, I don't see the provinces really breaking down the walls. They argue the point about the cuts that we're making under this bill, but nobody's breaking down the doors and saying they don't want block transfer. I haven't really seen too many presentations on their behalf. We have ten different governments; I think they're willing to maintain that hold on those ten different governments.

Ms Yalnizyan: I agree with you, and I think that's where the disjunction comes between where the winners and losers come in the system. I think provinces now want more flexibility, because every level of government seems to be completely preoccupied with their deficits. So they want ultimate flexibility in being able to deal with their deficit. You give them a block fund and then they can deal with their deficit in whatever way they want.

But this leaves out of the equation the interests of the citizenship in the process. We are all serving the public ledger books rather than serving public needs. That's why I was trying to - I don't know - stir some kind of heartstrings of yours. You're more than just the stewards of the public ledger books. It's public life we're talking about. Yes, I can understand why provinces want that flexibility to deal with their deficits. But that isn't the be-all and end-all of public life.

Mr. Pillitteri: Thank you.

The Chair: Thank you. We have had a number of groups representing the most disadvantaged in our society come before us. You are certainly among the most forceful and credible of any advocates that we've had in this entire process.

Ms Yalnizyan: Thank you very much.

The Chair: Yes, we do have a dual responsibility - the deficit, where $40 billion every year is going to not do these things that we used to have out there to do.... You've suggested that there might be some alternatives. We've explored many of the alternatives that the council put forward.

We're going to have another round of pre-budget consultations, starting early next fall. We want to explore those alternatives because it hurts us when we can't find the money in a way that's practical and doable. We've heard some very hairbrained schemes and we've heard some that might be doable. With your credibility, if we could have that approach again in the fall from you, I think it would be very useful to us as we enter into a new round. In terms of what you said to us tonight, you've made a great impression. I want to thank you on behalf of everybody.

Ms Yalnizyan: I do want to sincerely tell you how I appreciate - especially Christine - your permitting me to reschedule and appear before the committee. Thank you again for your time.

The Chair: Thank you.

[Translation]

Where is Francine Lalonde? We could perhaps wait for her to come back because we do not have a quorum for the time being.

.1939

PAUSE

.1941

The Chairman: We will now be hearing the representatives of Centrale de l'enseignement du Québec and they are Daniel Lachance, vice-president, and Richard Langlois, an economist. Welcome to the Committee. We've been looking forward to hearing your presentation.

Mr. Daniel Lachance Vice-President, Centrale de l'enseignement du Québec): Good evening.

I would first like to point out that Mr. Richard Langlois, who is accompanying me, is an economist for the Centrale de l'enseignement du Québec; as for me, I'm vice-president of the same organization.

I would like to thank you for having us here tonight to share our views on Bill C-76, an important piece of legislation. If this bill were to be passed with its present parameters intact, it would imperil some of our social programs while seriously destabilizing Quebec's public finances. The very appearance of the country could be profoundly changed. We are here to try to ring the alarm bells before it's too late. However, before getting down to brass tacks, we will present an overview of our organization together with a few reminders.

In the world of Quebec unions, the CEQ, as you probably know, represents more specifically people working in the field of education: teachers, educators, professionals and support staff. We also have people from the communications sector and daycare workers. In total, the CEQ represents over 125,000 members.

I would like to specify at the outset that we will address only the proposed review of transfers to provinces which would eventually translate into the creation of the Canada Social Transfer. As Bill C-76 flows from Minister Axworthy's social programs reform and Mr. Martin's last budget, we think it's important to point out here that during consultations undertaken by the Standing Committee on Human Resources Development, we declared ourselves, together with the CSN and FTQ, in favour of a review of our social policies with a view, more specifically, of fighting the unacceptable increase of poverty and social injustice found in Quebec and also in the rest of Canada.

Unfortunately, we have seen that the present Canadian government, on the contrary, is pursuing the work of its predecessor, despite having denounced it, by slashing social programs and decreasing the field of its public responsibilities. That is why, overall, we are opposed to the premises submitted in the working paper entitled Improving Social Security in Canada. Being organizations in favour of Quebec's sovereignty, we also reiterated our conviction that only by taking back full and entire control of all economic, social and cultural levers will the government of Quebec be able to create an environment favourable to the full development of all of Quebec's potential.

More recently, when the minister, Mr. Martin, tabled his second budget, we deplored the federal government's shelving of employment, a priority that rapidly disappeared in the wake of fighting the deficit. We also pointed out our opposition to any strategy for fighting the deficit which puts too much emphasis on the decrease of public expenditure and, more particularly, on social expenditure.

We think that the creation of the Canada Social Transfer is an initiative which is likely to lead to new federal interference in the business of the provinces.

.1945

Let's remember that the very next day after the Martin budget was published, most commentators considered, in the creation of the Canada social transfer, that the federal government showed an openness to a more decentralized vision of the Canadian federation. With this project, the federal government was to pull the rug out from under the feet of Quebec sovereignists by showing new flexibility, at least according to many commentators at the time. Even then, we said it was an illusion. One had only to wait for the tabling of the bill, giving the concrete details of the budget proposals, to understand that it had only been wishful thinking for a lot of them because nothing in this bill shows any federal will to steer towards more flexible federalism. On the contrary, it seems clear that Ottawa is trying to maintain all its present powers and even increasing them by interfering even more in areas of provincial jurisdiction.

In actual fact, Bill C-76 maintains national health standards while leaving the field wide open to the introduction of new national standards in the areas of post-secondary education and social aid, which are clearly provincial jurisdictions. Mr. Martin may well state that his government doesn't intend imposing new controls on provinces, but then why provide for them in his bill? What would happen if provinces were to disagree with the new national standards established? Will Ottawa have the power to impose those standards without their unanimous consent? And can it impose sanctions on whoever is resisting?

Those questions and many others concern us tremendously. In this bill, post-secondary education is made out to be a ``social program'' and that will allow the federal government to invade even further this sector which is a key to Quebec's future and, for that, there can be no rejoicing. We believe the Quebec government must remain the sole master of education and that bill C-76 must be very clear on the subject.

Furthermore, by opening the door to incursions into other areas such as social aid or daycare, the federal government does not seem to be overly concerned by any sense of urgency in putting an end to the overlapping that more and more observers find scandalously inefficient and costly. Moreover, establishing new uniform national principles from coast to coast would go against the expectations of a majority of Quebec men and women who would like the determination of orientations and the development of measures and programs in those nevralgic sectors to remain the sole responsibility of the Quebec government. When you see the amount of waste in the area of professional training and Ottawa's hard-headedness in remaining where it has no business being, we shudder at the thought that this way of doing things might soon paralyze other areas of social policy. In his budget speech, the Minister of Finance had already announced the creation of a human resources investment fund to set up, amongst others, services in the areas of professional guidance, literacy, basic education and training in the workplace. In that same vein, we have the merger in the Canada social transfer of all those transfers made to provinces under the headings of health, social services and post-secondary education and this leads us to fear the worst. Even more unbelievable is that this excess of interference is happening at the very same time when Ottawa is feverishly backing away from funding those activities!

This backing out of the federal government in the area of transfers to provinces didn't begin yesterday only. Far from it. Actually, it dates back to the beginning of the eighties and has been going on at such a speed that the cumulative deficit for Quebec in this area has already reached several billion dollars. The Quebec Minister of Finance has put it at 14 billion dollars during the period from 1982 to 1995. You'll agree with us that those are considerable cutbacks whose effects were very destabilizing for Quebec public finances. Consequently, successive governments in Quebec, just like other provincial governments, had no other choice but to increase their own deficit, increase their taxes or cut expenditures. And, as always, it's the population, the ordinary people, the workers, the jobless who had to suffer the slings and arrows of these policies born of austerity.

.1950

As compared to the sums expected from the federal government with the EPF and the CAP, we're told that the total level of Canada Social Transfer will be down by $2.5 billion in 1996-1997 and $4.5 billion in 1997-1998. Federal transfers were already decreasing at dizzying rates before the Martin budget. With bill C-76, they're melting like butter in the sun! One can easily imagine the erosion of social programs that will flow from this withdrawal. In Quebec, we are witnessing first hand the damage done by these short-sighted policies: highest poverty rate in the country, endemic unemployment despite economic growth, hospital closings in an atmosphere bordering on panic. One can only worry about the effects of this new wave of cutbacks, even more so as Bill C-76 provides that in 1996-1997, Quebec will be cut back by $650 million and that, should the Canada Social Transfer be prorated between the provinces according to the population, Quebec's shortfall in 1997-1998 would reach $1.9 billion. In that case, Quebec would be taking 42% of total cutbacks and that is unacceptable. The minister, Mr. Martin, has told us that the distribution formula will be determined after consultation with the provinces. This means consulting us to ask us how many arms and legs we'd like to have cut!

In any case, we already know that even if the criteria used to share-out the Canada Social Transfer is the share of total EPF and CAP rights under the present system, Quebec would still be deprived of $1.2 billion in 1997-1998. This is still enormous in a context where public services and social programs are already being choked off because of a lack of funding. If we go by the Quebec Finance Department's estimates, the accumulative cutbacks in federal transfers to Quebec will have reached $24 billion from 1982-1983 to 1997-1998 including, of course, the effects of Bill C-76. So we are evidentally witnessing an operation where the federal deficit is being dumped onto the provinces who will have the odious task of bearing the political costs for this huge financial withdrawal. For too long now, Quebec has been bearing the brunt of this strategy and this has been shown more particularly through an ongoing decrease in the area of federal transfers to Quebec whose income in that area has gone from 28.9% in 1983-1984 to 20.7% in 1994-1995 and a progressive decrease in federal participation in the area of social program funding in Quebec.

In our opinion, Quebec can no longer afford to be passive and simply watch the federal government pull the plug on what's left of social programs in this country while sending the bill to the provinces and submitting them to the dictat of standards that prevent them from being in control in areas under their jurisdiction.

We do not pretend to be speaking for the men and women of other provinces which, in many cases, may wish for a strong federal presence in the areas of health, post-secondary education and social aid. We respect that view while remaining convinced that it does not represent a viable option for Quebec. We have too often witnessed the pernicious effects of the endless fighting between the two levels of government flinging shot and shell at one another to no avail while taxpayers and beneficiaries are taking it in the teeth.

So we think it's urgent for Quebec to repatriate all the resources that go to health, postsecondary education and social aid. By immediately handing over to Quebec what is left of financial transfers in the form of tax credits, the government could do something useful by allowing Quebec to finally manage its programs as it wants. In any case, we believe that we'll get to that point sooner or later. Quebec will take back all the economic, social and cultural levers that are essential for its full development. So why not take advantage of this present debate to take a few steps in the right direction?

In conclusion, it's good form to present the budget strategies underlying Bill C-76 as our inescapable fate. Our federal State is over-extended, there's nowhere left to go tax-wise and the government absolutely must cut back its expenditures or run the risk of having its policies dictated by the International Monetary Fund. That's the tune our government tenors are singing as they reprise the chorus and especially the policies that failed lamentably during the 80s in this country as well as elsewhere.

.1955

A simple reminder will suffice: from 1984 to 1990, the federal debt more than doubled despite the recurrent cutbacks in expenditures applied by the Conservatives. I think Mr. Cameron has come here to talk to you about monetary policy.

The Chairman: Excuse me. Do you agree with Mr. Cameron's monetary policy?

Mr. Lachance: I have not seen Mr. Cameron's text.

The Chairman: Ah, so! You have not examined Mr. Cameron's monetary policy?

Mr. Lachance: No, I haven't studied his monetary policy.

The Chairman: I'm sorry. As you mentioned it, I thought you might perhaps have some thoughts about it.

Mr. Lachance: On the other hand, what I'm sure of is that we generally share Mr. Cameron's position on the impact of high interest rates on the federal debt and on the increase of that debt that they're trying to make us pay for today through the use of the Canada Social Transfer, amongst other things.

The policy of excessively high interest rates and the collapse of budgetary income have dug a chasm between expenditures and revenue. That is why we are saying to the members of the Standing Committee on Finance that it's time to try something else to get out of the budgetary dead end.

Of course, we admit to the seriousness of the federal budget situation and we're open to better management of expenditures. The now well-known Quebec-Ottawa quarrel in the area of professional training, in our opinion, has to be an outstanding example of inefficiency and nothing justifies federal immobility on this question any more. We could give multiple examples of costly overlapping and, of course, we have to deal with it. However, it is misleading to say that the debt stems from an explosion in expenditures just as it is an illusion to believe that we'll get it down by blindly cutting back.

In this respect, only an equitable strategy for fighting the deficit could be efficient and enjoy the backing of the majority of the population. With this in view, we should broaden the debate to include other dimensions of the budgetary equation, in other terms, income, jobs, monetary policy, the debt management and so on.

In the area of income, no matter what we say, Canada occupies the 14th rank in the area of total tax burden when we look at the 24 countries making up the OECD. In this same group of countries, Canadian business is the least taxed of all. So, please stop telling us we're overtaxed! We are badly taxed and only an in-depth tax reform might lead to re-establishing some balance while providing additional income for our country. In this respect, we believe that there should be a real emergency clean-up in the area of our tax expenditures.

As for jobs, should we have to remind the federal government about its election promises? We are convinced that the reorganization of our public finances goes hand in hand with the job situation and it's useless to dream about a ``zero deficit'' as long as we have unemployed people by the millions.

Flexibility in our monetary policy also appears to be an essential condition to rebalancing our public finances. The reason is simple: as long as gains made in the area of program expenditures are cancelled out and even drowned out by an increase in interest charges, we'll keep on going one step forward and two steps backwards.

Some avenues in federal debt management should also be contemplated with a view to decreasing our dependency on foreign interests. We could speculatively mention, as we did during the hearings on Mr. Axworthy's Green Paper, the question of ``deficit bonds'' or even increased reliance on our pension plans to fund our debt. By being invested more and more outside our country, these debts serve to finance jobs and debts of foreign countries rather than our own. At that time, we had mentioned nationalizing our debt.

In brief, by using, amongst others, the levers previously mentioned, we believe that fighting the deficit would have more of a chance of success if we did not have to sacrifice our social infrastructures to do so, which unfortunately is not the case with the bill that has been submitted.

Mr. Chairman, after the public hearings on Mr. Axworthy's Green Paper, we had thought a particular document had disappeared from circulation together with the speculations it contained, but when we saw the Martin budget, we understood that a closet door had been opened and a ghost was turning into a skeleton.

.2000

As we were opposed to the whole package of measures contained in that Green Paper, without however being closed to open discussions on a review of social programs, we are now in a position to see that what we have before us is the flushing out of part of that Green Paper. So we can only be opposed to the substance of what is in this Canada Social Transfer. We think that your suggestions, in terms of income, might allow the Quebec population as well as the rest of the Canadian population to protect the substance of our social programs, amongst others, which is a funadamental element for Quebec and Canada. I thank you for your attention.

The Chairman: Thank you, Mr. Lachance. Mrs. Lalonde.

Mrs. Lalonde: I'll put the same question to you as I did before to Mrs. Yalnizyan. Don't you find it strange that in Bill C-76 we have nothing about the Human Resources Investment Fund and that, on the other hand, throughout the Budget, we have an increase of the unemployment insurance accumulated surplus? On top of that, there's an accumulation of $13 billion over a three-year period, including a cushion of at least $5 billion. Doesn't that strike you?

That means that, as far as unemployment insurance goes, which allows the federal government to accumulate funds, no choice is being given workers or employers but in the case of the Canada Social Transfer, they chose to cut and slash the very architecture of the Canadian social fabric, and above all of Quebec's fabric because Quebec is going to suffer more without having any choice in the matter because of it.

Mr. Lachance: When the Martin Budget was tabled, we very quickly pointed out that Mr. Martin was choosing a strategic approach in defining these reforms. They were not announced. We knew that there would be elements in the Canada Social Transfer, that unemployment insurance would be adressed at at another stage and the Canada Pension Plan at yet another. This scattered way of looking at all our social programs, with the impact it could have on the provinces, allowed the rug to be pulled out from under the feet of an organized reaction in some large areas of the population faced with these restrictive policies.

We pointed it out and, in any case, we can see what's coming even if there's no bill. In the area of unemployment insurance, we totally expect the unemployed to be paying and be made responsible once again for training, for example, while, paradoxically, the federal government has withdrawn from funding the Unemployment Insurance Plan. We're surprised but, at the same time, we're not, because this scenario was predictable in the way Mr. Martin announced the future outcome of things. Maybe Richard has something to add.

The Chairman: Thank you, Mrs. Lalonde. Any other questions?

Mr. St. Denis.

[English]

Mr. St. Denis (Algoma): Thank you for coming today.

I have two questions.

Earlier in your presentation you suggested, if I understood you correctly, that maybe one of the hidden motivations of the federal government with respect to standards - I think you used post-secondary standards in your comments - was that maybe the federal government was trying to find a way to impose educational standards on the provinces. But it is clear that Mr. Martin said that any standards, be they in the social assistance area or education - although he didn't mention education - would be in cooperation, in consultation, with the provinces.

.2005

That said, we've had many witnesses who have actually called for the federal government to be involved with federal standards in education. We had a witness today from the Canadian Association of Community Colleges, which includes the CEGEPs in Quebec, saying there are international standards that are already evolving. In some respects, we're being left behind.

So even though the provinces are responsible for post-secondary education, is there not some sense in agreeing on some national standards so that Canada, vis-à-vis the rest of the world, can properly maintain its place and maybe improve its position in the world as competition increases?

[Translation]

Mr. Lachance: There is a clear consensus by all partners in Quebec, and I'm not just talking about the unions but also about business as well as other big associations, including colleges, school boards or universities. It's clear for everyone in Quebec that primary, secondary and post-secondary education must fall under exclusive provincial jurisdiction and that there's absolutely no question of having national standards dictating to Quebec how to proceed in that area.

Even if Quebec colleges are members of the Canadian Association of Community Colleges, I would be very surprised to hear that the Quebec Federation of Colleges shares this point of view. It's an association which, like others, believes that such questions of professional and manpower training should come under provincial jurisdiction. I would remind you that last year, there was a meeting of Ministers of Education in Montreal.

[English]

Mr. St. Denis: I agree with you. I agree that education is a provincial mandate. But does that mean provinces can't agree to have a national standard in cooperation with the federal government? If they agree to have standards, wouldn't it make sense to work towards standards in cooperation with all the provinces and the federal government?

I accept that the provinces are responsible for education.

[Translation]

Mr. Lachance: Beyond the fact that this is a question of provincial jurisdiction, I think that Quebec organizations and the government of Quebec itself have emphasized more than once that there was no way there should be national standards.

[English]

Mr. Fewchuk: I want to follow up on that, if I may. Do you mean to say the guy from Quebec can't go to Manitoba? We shouldn't have a standard because his licence for refrigeration is not the same? Do you agree with that? Don't you think we should have a standard that you can go from Quebec to Manitoba to go to work with the same certificate?

[Translation]

Mr. Richard Langlois (Economist, Centrale de l'enseignement du Québec): The problem consists only in defining national standards. We're in favour of national standards as long as they're defined in Quebec by the Quebec government. Can you understand that? It doesn't mean that those national standards can't be harmonized afterwords with those of other states or levels of government. To our mind, national standards are Quebec national standards defined by Quebec together with Quebec's partners. Now that doesn't exempt us from having to harmonize with other states. We certainly live in an open world.

Mr. Lachance: I would add that, within the context of NAFTA, Quebec, on the basis of its own national standards, would have to work towards an even broader harmonization than a simple harmonization with Canada.

.2010

Quebec universities have already held discussions with other universities in Canada, as well as American and Mexican ones. It's not a matter of saying that the standards should be completely different but rather that these national standards should be set by Quebec.

The Chairman: You noted that Canadian businesses were not sufficiently taxed. Would you be willing to have a surtax imposed on all Canadian businesses, including pharmaceutical companies in Quebec?

Mr. Lachance: First of all, I don't understand the meaning of your question.

The Chairman: You say on page 7 of your brief that the corporate taxation rate in Canada is the lowest in the OECD and I assume you mean that Canadian corporations are insufficiently taxed. Would you be willing to have a surtax imposed on Canadian businesses, including the pharmaceutical industry in Quebec?

Mr. Lachance: I wouldn't make any exception for pharmaceutical companies in Quebec but let me give you some figures for a better understanding of these comparisons. The argument most commonly heard is that any increase in the corporate tax burden in Canada or in Quebec would be a disadvantage to our international competitiveness. There are figures that clearly show what the relative tax situation is in Canada.

The Chairman: Yes. But would you be willing to increase Canadian corporate taxes, yes or no?

Mr. Lachance: Well, as part of a future tax reform, we can consider the overall situation and we will be able to carry out a tax reform taking into account the various economic sectors.

When you talk about tax reform in Quebec, we know that there will be a different treatment for small and medium-sized businesses as opposed to large corporations. That means that the pharmaceutical industry will be considered like other industries, such as the banks or insurance companies, within the framework of an overall tax reform.

For the time being, I cannot tell you how the pharmaceutical sector will be taxed in relation to other sectors. All I can say is that there is room in Canada for tax reform that will increase the corporate tax burden without affecting the competitiveness of Canadian enterprise so that we are able to support social programs of quality and make them available to the population.

The Chairman: I'd be happy to find lots of new money and that's why I'm asking you for your ideas and suggestions. But you've said nothing about increasing taxes for Canadian businesses even though you've mentioned that their present tax rate is insufficient. We will have to make concrete decisions. Should we impose a surtax, yes or no?

Mr. Lachance. Yes.

The Chairman: When I asked you this question, you said that you were unable to give me a clear answer because it was part of a wider study but you are convinced that Canadian businesses do not pay enough taxes. However, we cannot go about making decisions in quite the same manner. We must come with a balanced system that does not jeopardize competitiveness and provides enough money for social programs. Whenever you have any concrete ideas, I'd be quite happy to hear about them.

Mr. Lachance: There are a certain number of concrete ideas on which Richard could elaborate. For example, the return to a more progressive income tax grid would result in billions of additional dollars for the federal government. Let me give you an example. If the marginal tax rates, that are now at 17 percent, 26 percent and 29 percent, were increased to 19 percent, 29 percent and 33 percent, the government's tax revenue would increase by 13 billion dollars a year. That's only one example.

The Chairman: Are you suggesting an increase in personal income tax?

Mr. Lachance: We believe that tax should be progressive.

.2015

The Chairman: I'm asking you whether you and your members are suggesting an increase in personal taxation in Canada at the present time, yes or no.

Mr. Langlois: Mr. Chairman, we cannot answer this question by a yes or no this evening. Unfortunately it isn't quite as simple as that. I think that we must take a more general point of view and consider the whole context. The problem with bill C-76 and the Martin budget is that, for every dollar of revenue collected, there has been a cut of seven dollars in expenditure, in other words Mr. Martin has been doing too much cutting on the expenditure side. The main focus of the Martin budget has been the fight against the deficit and the debt and that emphasis is apparent in this bill just as it will be in the case in other bills. We are saying that there are different ways of tackling the deficit and some of them are fairer than others.

The Chairman: You are talking about ideas but we don't have years...

Mr. Langlois: If you let me finish, I'll give you some suggestions but don't expect any miraculous solution.

The Chairman: What are your suggestions?

Mr. Langlois: We simply wanted to show you how imbalanced the Canadian tax system is and how important it is to open this matter up for debate to have an overall picture of the fiscal situation in Canada. We cannot only look at the expenditure side, we must also consider revenue.

The Chairman: You're advocating a debate rather than making suggestions.

Mr. Langlois: We believe that as a result of this process, it will become clear that Canadian corporations are not contributing their fair share. We are convinced of it. But for greater certainty and precision, the matter will have to be studied in depth.

The Chairman: So you do not have any concrete suggestions on how we can increase our resources. I'd like to invite you to take part in our pre-budget discussions in the fall. They took place last year and we shall continue the practice.

I'd like to thank you for your presentation, it was quite thorough and interesting. Thank you.

Our next witness is Mr. Bruce Porter.

[English]

from the Charter Committee on Poverty Issues.

Mr. Bruce Porter (Charter Committee on Poverty Issues): I have distributed two documents to the committee members, and I apologize that they're only available in English. One is the notes of my presentation, which I will just summarize for you briefly. The other is a copy of a letter from the Committee on Economic, Social and Cultural Rights in Geneva to the Canadian ambassador to which I refer in the presentation, which I believe was discussed earlier today during the presentation of Professor Craig Scott from the University of Toronto.

I'm representing the Charter Committee on Poverty Issues, which some of you may know is kind of the litigation voice of the poor in Canada. Our normal forums are before courts and tribunals or before UN bodies on human rights. Normally, the political side of things is handled by the National Anti-Poverty Organization, our sister organization.

.2020

We have come to you this evening to urge you to reconsider the revoking of very fundamental human rights of poor people, which is set out in Bill C-76.

As the committee is well aware, Bill C-76 essentially revokes the Canada Assistance Plan Act and all of the rights that have traditionally been contained within it. The four fundamental human rights of poor people, which will no longer exist after April 1996, are the right to receive financial assistance when in need, the right to a level of financial assistance that takes into account budgetary requirements, the right to appeal a denial of financial assistance, and the right not to be forced to work against one's choice for welfare. Under CAP these rights were built into cost-sharing agreements.

A number of people will see CAP as a fiscal agreement or a piece of social policy legislation. For poor people, however, these components of CAP were far more than national standards or social policy. They embedded fundamental human rights on which poor people rely. They are in a sense quasi-constitutional rights for poor people in that these are rights that bind governments. These are rights that allow poor people to go to courts when their interests or rights are violated and say ``Our governments are not living up to these fundamental entitlements that are embedded in the Canada Assistance Plan Act''. That's what was established in the Finlay case when the Supreme Court of Canada confirmed that a person on social assistance does have standing to challenge a provincial social assistance program that fails to meet the CAP standards.

Why do poor people need human rights? It's worth reminding ourselves that the committee will have heard from a number of presenters who are saying that we don't need federal encroachment into areas of provincial jurisdiction. I think it's important, however, that we distinguish between jurisdictional questions and questions of fundamental human rights that are recognized in all areas of human rights law, including international law.

Human rights are fundamental to making democracy work for all citizens. Without human rights protections, the needs and interests of the most vulnerable and disadvantaged members of society are likely to be ignored or misunderstood, in large part because members of those groups are unlikely to be in positions of power. So human rights, as we understand them, act as a corrective to this tendency in democracies to privilege the views and interests of the majority and ensure that the voices of marginalized groups are heard more forcefully within the democratic process.

A number of courts in Canada have recognized that poor people face the kind of historical discrimination and disadvantagement, which means that human rights are required in order to ensure their voice is adequately heard within the democratic system.

Poor people increasingly face discriminatory attitudes that are very much analogous to the most invidious forms of discrimination on the basis, for example, of race, sex or disability. Poor people face widespread discrimination, prejudice, and hear all too frequently that they have too many children, that they should be sterilized, even, God forbid, that they are genetically inferior.

In recessionary times, when there are more poor people and where poor people are more vulnerable to negative economic forces, unfortunately polls show that these hostile and prejudicial attitudes increase. Precisely when we think people would be more sympathetic to poor people, when clearly jobs are not available and poverty is being created by economic forces beyond an individual's control, that's precisely when social attitudes of hostility harden towards poor people.

Polls showed that during the recent recession the public became much less sympathetic to poor people than they had been previously.

So within this context, what are Canada's human rights obligations to protect poor people? The right to an adequate standard of living is perhaps the fundamental core human right on which poor people rely, and it has been a core human right all through the evolution of human rights in the post-war period.

.2025

The right to an adequate standard of living was protected in the Universal Declaration of Human Rights adopted by the United Nations in 1948 and was then further elaborated in the Covenant on Economic, Social and Cultural Rights, which is a legally binding treaty that Canada ratified in 1976.

What is very clear in international law is that the human right to an adequate standard of living does not simply impose an obligation on Canada to progressively ameliorate poverty, which is one very important component of the obligation and one which Canada has unfortunately failed to realize; there is also an obligation to make this right enforceable within Canadian law. That's why when Canada appeared before the UN Committee on Economic, Social and Cultural Rights every five years since the covenant was ratified, they have, on every occasion, pointed the committee to the Canada Assistance Plan as an essential component to the protection of social and economic rights within Canada. To revoke those rights at this point is a very serious move, probably unprecedented historically, in terms of a dramatic retrogressive step. Within international human rights law, the obligation is to move forward.

There's a particular scrutiny that is called for when a country takes away rights that have been embedded in its law for any period of time. The right to an adequate standard of living, as embedded in CAP, has been a part of our legal structure for a generation, for almost 30 years and to remove those rights in Bill C-76 without replacing them with any other mechanism of enforceability is I think an unprecedented retrogressive step.

What you have in the document I have distributed - the letter from Professor Philip Alston, chairperson of the Committee on Economic, Social and Cultural Rights - is a very diplomatic hint to the Government of Canada, and I think to this committee, that the issue of Bill C-76 and its compatibility with international human rights law should be given very serious consideration, and that amendments need to be considered in order to ensure that there aren't very important and fundamental violations of international human rights that result from this.

Primarily what was of concern to the committee is that basic rights to an adequate standard of living and the right to freely choose one's work have been taken out of Canadian law.

Our organization was one of the organizations that presented to the UN committee in 1993 when Canada was being reviewed for its compliance with international law, particularly with the right to an adequate standard of living. We noticed a very important difference between the way these issues were looked at internationally by people from other countries and the way Canadians looked at them. Canadians seemed to feel that it was somewhat ludicrous for a United Nations committee to find fault with Canada on issues of poverty. Surely we think poverty is much more severe in most other countries and Canada's doing relatively well on this score.

Yet, when we were at the UN committee, what struck us was that in fact it was the members of the committee from developing countries who were most distressed to find that hunger and homelessness existed in Canada, albeit in a much less extreme form in their own countries. The fact that in a country with the affluence of Canada, really the most affluent major country to have ratified the covenant - because the United States, which is the only country that's more affluent than we are, has not ratified the covenant - would continue to have the level of poverty and hunger that we have in Canada appeared to the committee to be a complete disgrace.

In this letter, the committee has sent out a very friendly suggestion for constructive dialogue. They were aware that the previous government's reaction to the strong criticism of Canada issued by the committee was simply to dismiss and to ignore what the committee had to say. This is really the first time Canada, on the international stage, has shown an uncharacteristic disrespect for international human rights - when they end up being somewhat critical of what's happening within Canada.

The committee, in our view, is putting out somewhat of an olive branch here, saying let's have the kind of constructive dialogue that we used to have with Canada in which we will note our concerns and Canada will take them seriously and try to do something about them. We would urge the committee to approach this issue in precisely that constructive way. These concerns the committee has are serious; the concerns that poor people in Canada have about their rights are serious and they deserve your very serious attention.

.2030

To conclude, I wanted to mention that not only does Bill C-76 revoke very important human rights of poor people, but it seems, to us, to discriminate against the poor. Why would it thankfully preserve universal standards regarding health care while taking the rights of a very vulnerable group and removing them? When you remove the rights and entitlements of poor people and at the same time adopt a block funding mechanism in which poor people have to compete with health and education for very scarce dollars, it seems to us that poor people are being set up to lose. It's very clear that the majority interests are going to have a greater concern for education and health care than for the standard of living of those who rely on social assistance.

The long-term consequences of this bill could be very severe. We need enhanced social rights in our new economy. We can't afford to have provinces in Canada competing with each other by removing social rights that have been in place for a generation. We can't have one province telling investors, ``Come to our province because we have lower taxes and a lower minimum wage and we don't pay much to people on social assistance. We're disentitling a lot of them so this is a great place for capital''. That forces other provinces to then reduce to the lowest common denominator in order somehow to compete for investment.

Similarly, we can't have one province violating the rights of poor people by failing to provide an adequate standard of living through social assistance and other measures, perhaps forcing them to move to another province where levels are more adequate in order to survive. In that case you again have this downward levelling.

Surely in this kind of economic situation we need stronger social protections and rights in order to ensure that with freer-flowing capital we have basic rules that are common in all areas of Canada. Otherwise, it is our submission that in the name of curing our financial deficit we will leave to the next generation a social deficit that will be far more tragic in proportion, and ultimately far more costly.

The Acting Chair (Mr. St. Denis): Thank you, Mr. Porter. I appreciate that.

[Translation]

Mrs. Lalonde: Mr. Porter, thank you for coming. Allow me to make a short comment.

I will say three things. First, I was under the impression that under CAP, no province was forced to offer a social assistance program. All CAP established was the 50% share of the federal in the financing. Let's take an example. A province could have decided under CAP not to offer any social assistance program and that would have been it. This is a disclaimer about what you are telling us about entitlement. For those provinces who did have a program, the federal government offered 50% of the cost and therefore could impose some rules.

However, you know about the particular situation in Quebec. I agree with you and I recognize the rights of the poor. During the campaign, my party, the Bloc, and myself have said that we were going to fight for the protection of those rights in Quebec but that we were not going to put a fight so that they be protected in the rest of Canada. That was my second point.

Third, if I were from Toronto or New Brunswick, my arguments would be the same as yours. Actually, through CAP, those who work with the poorest have been able to protect some minimum rights.

.2035

I have said it repeatedly. I will add that as a member of the Human Resources Development Committee, I have emphasized the great need of those strong national standards in Canada. I wanted to tell you that I do understand your point of view but that, as a member of the Bloc québécois, I do not agree with you on the means used to reach the same objectives.

Thank you very much for your testimony.

[English]

Mr. Porter: Thank you very much for your comments. With regard to the first point, you're correct that CAP doesn't oblige a province to have a social assistance program. But at that extreme end, with the province providing absolutely nothing for persons in need, we would certainly get within the ambit of section 7 or the Charter of Rights, for example. So I think on a larger level it really accomplishes what I was suggesting: it imposes certain basic rights for citizens across Canada.

I'm not sure whether I'm able to respond very adequately to the questions you raised about Quebec, other than to say we have certainly noted that Quebec decisions, more than any other recent judicial decisions in Canada, have paid the kind of respect to international law that we've been urging courts in other jurisdictions to pay.

We aren't necessarily saying we have to maintain CAP as it is; that may not be a winning proposition at this point. In fact, there were problems with CAP in terms of the rights-based issues I'm talking about. The Finlay remedy to challenging violations of certain rights within CAP was somewhat indirect. We would prefer a clearer right so if the province has a level of social assistance that is inadequate to meet budgetary requirements, an individual would simply be able to challenge the inadequacy and receive a remedy rather than having the funding to the entire program threatened - basically have these rights enforced more directly. So there's lots of room for improvement.

I was suggesting at the end of our presentation that's the direction we should be looking at now toward new ways of improvement. It seems to me if we conceive and articulate these issues as issues of fundamental rights rather than issues of jurisdiction, then some of the problems to which you refer will be a little bit less thorny.

In our experience, the one thing we can agree upon with organizations from Quebec and across Canada is the status of these as fundamental rights in international law in the charter. The more this committee is willing to frame these as fundamental human rights issues, the more we might find ourselves making some headway on the jurisdictional impasses.

Mr. Walker: The issues you raise are ones we have heard several times and, I think it's fair to say, concern members of this committee from all three parties to ensure that in this dramatic change we're making in social policy we are doing the right thing. Your concerns are very much in our minds.

We've heard about the UN report several times, and I'm wondering, with the indulgence of the chair, if I can take just one minute to read in the formal response of the government. Then I'd like to pursue some specific questions in your report.

Canada is committed to meeting its obligations under the UN covenant on social, economic and cultural rights. In the past Canada has always cooperated fully with all UN committees and has been commended as a model for others. Canada has always taken these obligations very seriously and will continue to do so.

Under the Canada Health and Social Transfer proposed under this bill, the provinces will have increased flexibility to innovate and improve their social programs so they can better address the needs of people and meet Canada's obligations under the UN covenant. We'll be working together under the Minister of Human Resources Development to undertake a process to develop, through mutual consent, a set of shared principles. During this process, all the Canadian governments will be able to reaffirm their commitment to the social well-being of their citizens in compliance with the UN covenant.

.2040

Because I used to do research in this area, my point to questioning on this, the one I want to be sure of your opinions on, is whether it is automatic in your minds that this change decreases the four rights, as you've explained it, given the history of case law and the history of the Charter of Rights and the Supreme Court rulings. Is it fair to say that these four rights disappear on us entirely?

Mr. Porter: Yes, in one very important sense. I would make a distinction between two kinds of situations, or questions really. As soon as CAP is no longer in effect after April 1996, regardless of what the provinces do, what changes they make within their programs, even if they continue everything as it is under CAP, the difference is that a person has lost an ability to go to court and challenge something that they think violates these rights.

So I would say that it's analogous to the situation of an equality seeker in a province that decided to remove the human rights legislation. That person, even before they faced any discrimination, would feel very different. They would feel robbed of a certain amount of citizenship, because they would be vulnerable. They'd simply know that if someone violated their right, they couldn't do anything about it.

So the first stage of the violation, which I think would be very much of concern to the committee and is of concern to us, is the loss of the right itself - the ability to go to court and challenge and to hold our governments accountable to certain rights. That would be lost. The governments, in their benevolence, might become great providers. We don't know. It's unlikely, given the amount of money they're going to be getting. But the fact that we can't go to court when we feel our rights are violated means that poor people have been largely disenfranchised.

It's very difficult to imagine how that can be reinserted into principles.

Mr. Walker: We vacate a space, and we say CAP disappears, and we have a transfer, just as in 1956, at the time the federal government took the initiative and created these rights. Theoretically, what is there to stop the province from simply taking the introductory paragraphs of CAP and call them the Quebec Assistance Plan, the Ontario Assistance Plan and the Manitoba Assistance Plan and continuing the same principles?

Mr. Porter: If it were embedded in every piece of human rights legislation, and in the Quebec charter, that the rights under the Canada Assistance Plan were now rights within provincial human rights legislation and bind provincial governments.... Even that is a question, because some of the remedies available to a court under the Canada Assistance Plan Act may not be available to tribunals under human rights legislation. But if there were some kind of provincial legislation that embedded these as rights that trump any other right - in other words, that bind government - then we would go a direction to maintaining the protection.

If we embedded these rights in the Charter of Rights and Freedoms and said the right to an adequate standard of living and the right freely to choose one's work are components of our charter, then that would be a similar kind of protection.

But in the absence of those protections, the rights in CAP were really ``it'' for poor people.

I think it is a very important question, and I'm not suggesting that we've done it perfectly. It's the kind of thing that could be quite exciting to review. What we're suggesting is that if we want to revisit how we achieved the protection of these social rights within Canadian law, it should be reviewed in a constructive way, not thrown before the finance committee - with a whole bunch of budgetary measures that have some urgency and completely transform the legal structure of protections, from being denied basic necessities in Canada - in this kind of Draconian fashion. It's simply inappropriate.

So the kinds of questions you're raising are precisely the kinds of questions that I think need some very thorough review.

.2045

Mr. Walker: I think it's fair to say the committee has informally brought it to the attention of the ministers involved and probably will do so more formally when this is finished, because these are issues that I think almost every group has brought to our attention and has confirmed their concerns about, as well as people we've worked with in the past. We think we're giving it greater flexibility.

I understand, from the academic world, the argument against malicious provincial governments and the need for a balance of power. I'm not as convinced as some - you haven't said it by any means, but some of the other reports have - that by definition the source of evil is in American states being rightist, and that the movement among provincial rightists.... I'm not sure if I would characterize it all as being small ``c'' conservative, as the history of the movement has been in the States. I could be challenged on that, but that's the step forward that's making everybody feel very concerned right now. That's the territory we're going into. And how we maintain that balance of concern I think is an issue that is still unresolved by this government.

Mr. Peterson: Would it be difficult for us to reinsert in the bill, say, the right to receive financial assistance when in need and the right to have an appeal, to put some conditions back in unilaterally?

Mr. Porter: I don't think it would be difficult. I think it's a glaring omission - that clearly certain entitlements are there in the area of health and they're glaringly absent in the area of the rights of the vulnerable group relying on social assistance. Our perspective, from the Charter Committee on Poverty Issues, is the one that I was outlining about the role of human rights within a democratic society, that we have to have a structure where poor people can identify the violations of rights that are occurring and have some access to a fair -

Mr. Peterson: Well, you'd like an amendment to the Charter of Rights, which would be the ideal.

Mr. Porter: To some extent, except the charter is kind of up here and we wouldn't want to have to go it on every issue of adequacy. It's actually better if you have a sort of umbrella right similar to the universal declaration in the international covenant, and then what is referred to as implementing legislation, so that you have more specific specifications of the kinds of standards that have to be met in order to ensure that right is realized. And then you can have your social assistance review boards and tribunals and so on; you're not having to go to court with a charter challenge on every issue.

Mr. Peterson: Can I put it to you, first, that really the conditions attached to CAP now are extremely minimal. Secondly, part of the mandate of Mr. Axworthy is to go out and negotiate with the provinces a much more comprehensive set of standards. Because we are only one of the contributors to this, we need provincial consent. But at present this is a good starting-point to try to get tougher standards to help more people, even though the amount of money might be somewhat less.

Mr. Porter: We're very frightened about the potential outcome of those sorts of negotiations. One of the things we discovered in the discussions that led up to the Charlottetown Accord was that there was no consensus among politicans in Canada, even though polls suggested there was a strong consensus in the public, about things like an adequate standard of living being a fundamental human right. The public was very supportive of a social charter that was actually enforceable, but what we ended up with when all of the politicians finished their negotiations was a statement of quite the opposite in the Charlottetown Accord that said these aren't rights; these are mere policy objectives.

.2050

You'll note that in the concluding observations of the UN committee in 1993 they made specific mention of their concern about the fact that in the constitutional negotiations Canadian politicians seemed to have downgraded what were fundamental human rights to policy objectives.

There's a huge difference for us between principles that are negotiated between two levels of government and rights that give us a way of identifying violations and going to court and getting a remedy, and that to us is very fundamental to making the democratic system work for those who will otherwise have their interests ignored. So poor people need rights just like other disadvantaged groups do, and they need rights that they can enforce. They don't just need principles that are negotiated by levels of government.

Mr. Peterson: So you want the rights to be given by the federal government unilaterally, and those are the only ones that would satisfy you.

Mr. Porter: What the federal government has in terms of leverage is what it used in CAP and it can continue to use, which is that as a condition of receiving funding certain basic rights have to be respected and if those rights are violated, then the agreement has been breached and cannot be enforced.

Mr. Peterson: So you want CAP to keep its present form.

Mr. Porter: Not necessarily, just that the enforcement mechanism has to be the same.

Mr. Peterson: A shared cost.

Mr. Porter: As a condition of the CHST.

Mr. Peterson: You want CAP retained with its four conditions on a shared-cost basis. Is that right?

Mr. Porter: Well, that's certainly preferable to the CHST, yes; but whatever new arrangement is derived, what we're really suggesting is that basic rights have to be in place and that the social assistance part of the pie shouldn't be in a free-for-all competition with the other aspects.

Mr. Peterson: And the basic rights set by the federal government.

Mr. Porter: They can be whatever the process -

Mr. Peterson: You don't want them negotiated with the provinces. You think they have to be set by the federal government.

Mr. Porter: Well, they could be negotiated to an extent, but at a certain point they have to become conditions for the funding.

Mr. Peterson: I understand. Okay. You want a federal tool to enforce them.

Mr. Porter: Yes.

Mr. Walker: There are a lot of cases in which the federal government has challenged the provincial government on its administration of medicare and threatened to withhold funds. But I was trying to think through if, at least in the last 15 years, there have been many threats where the federal government has had to threaten to withdraw funds to ensure the conditions of CAP.

Mr. Porter: No, the only one I'm aware of is Finlay.

Mr. Walker: That was an individual case, right - and a constituent, I must add.

Mr. Porter: But the remedy was that he was challenging the funding. It seems to me that it's possible. I'm not an expert in this, but it should be possible to design it so there's a remedy set out for the individual much more clearly so that there wouldn't be the kind of legal uncertainty that there was under CAP of whether or not somebody like Finlay has standing to challenge the violations of certain rights. You could set it up so part of the structure of the fiscal agreement is that these rights become enforceable in law.

Mr. Peterson: If that were enforceable, you have a right to appeal or denial. Right?

Mr. Porter: The part that I'm talking about being enforceable is if a province didn't have an adequate appeal system or if a province set the levels inadequately.

Mr. Peterson: Sorry.

Mr. Pillitteri: Mr. Porter, this is a somewhat different presentation than we've been accustomed to, at least that I have. This presentation felt to me as if in some way you were using the poor people of Canada for your own benefit of advancement in human rights. In many of the sentences here you completely separate all parts of Canadians into males, females, sex, religion, everything that you possibly can, and try to use this argument towards your presentation of strictly human rights, but I think that it's not advancing the cause of protecting them. I think more than anything else it would be that you use them.

.2055

That's my feeling from your presentation. I don't know how the other committee members feel. And possibly, if I were one of those individuals within that group, you would not have advanced my position within Canada. I feel it was a put-down for the poor people of Canada, rather than advancing the case of human rights.

I feel almost as if you put us before an international court, saying that we are abusing the poor people of this country in implementing this budget and this Bill C-76. I think you should have made more of a point of law, rather than a point of using the poor people of Canada. I think that consciously, on this side of the table, we feel that we have a social conscience and feeling towards Canadians.

Having said that - and of course some of the questions I was going to ask were answered - do you feel that within this Bill C-76 we're removing all the rights of the poor people, poor Canadians?

Mr. Porter: Yes, you're removing very fundamental rights. You're not removing all of them, but you are removing those that are the most fundamental, those that revolve around an adequate standard of living. It may be that some of those rights are protected under the Charter of Rights, under security of the person - we certainly hope so - but these are the only ones we were sure of.

In response to your earlier comments, I'm sorry that was the way you experienced it or heard it. That may be the fault of the way in which it was presented. The Charter Committee on Poverty Issues is a group made up of poor people. I am an advocate. I don't live in poverty.

Mr. Pillitteri: I can see that.

Mr. Porter: For example, when we went to the United Nations committee, a low-income person presented along with me. In all of our litigation, we have what are called project teams, with the team made up of a majority of poor people. All of the decisions about the litigation and how the arguments are to be made are made by poor people.

I think some of the awkwardness around these kinds of quality issues linking with poverty issues is things that have evolved within the Charter Committee on Poverty Issues, so we speak more and more freely about poor people being a vulnerable and disadvantaged group, an equality-seeking group, analogous to other groups that face discrimination. Sometimes, I think that can be heard the first time around as if it's a bit insulting or demeaning to poor people.

Mr. Pillitteri: You see, sir, if you made that presentation within Canada, and to Canadians, I could understand that. But once you put us toward an international court, as in the other presentation you made, it's almost as if I, as a Canadian, am being put on trial outside Canada for depriving Canadians. This is what I felt. I don't think many people would contradict what I'm saying. You did not put it in the scope of Canada. You put it outside of Canada.

Mr. Porter: We felt the need to move towards international forums because sometimes the discussion within Canada can start to turn in on itself. Getting outside and looking at more universal human rights standards can force us to look at things in a different way.

Personally, I found being at the UN in 1993 very moving. When I saw the reactions of members of the committee from poorer countries to the situation in Canada, I myself ended up feeling kind of ashamed of what we are allowing to happen.

I was shocked when we did the research to compare the resources Canada had available to those of the other countries that go before the committee. I was shocked to find that Canada was the most affluent country of all the major countries that have ratified the covenant. Canada was more affluent than Japan and Germany. I wasn't aware of that. I should've been, but I wasn't.

I ended up coming out of that dialogue on that international level actually reinvigorated, and thinking that we can do something about poverty in Canada. It's a problem we can solve. We just need to think about how much we have available to solve it with and get the will to do it.

.2100

I certainly wouldn't have wanted at all the international thing to seem demeaning to poor people. I think the experience of poor people involved with that was quite empowering.

Mr. Pillitteri: I think it would have been much more positive, in the presentation to this committee, to express the concerns of Canada and make Canadians feel good, rather than give the feelings you made in the presentation.

The Acting Chair (Mr. St. Denis): On behalf of all of us, Mr. Porter, thank you for your presentation. Nobody could argue that you were not an eloquent spokesman on behalf of your organization and your constituency.

The meeting stands adjourned.