EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, May 17, 1995

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[English]

The Chair: Order. We're continuing our study of Bill C-76.

With us today from the Prince Edward Island Health Coalition is Marie Boyd. Thank you for rearranging your time and for being with us. We look forward to your presentation.

Ms Marie Boyd (Prince Edward Island Health Coalition): Thank you, Mr. Chairperson and members of the committee.

The Prince Edward Island Health Coalition was founded in 1979 as a response to physician extra billing and other challenges to our public-funded, universal health care system. The coalition is composed of labour and church groups, primary producers, health care workers, teachers, postal workers, and anti-poverty groups. Its goal is to uphold and strengthen the five principles of medicare: universal coverage; accessibility; portability; comprehensive coverage; and non-profit public administration. These are principles that place people first and assure certain levels of equality in this country.

The P.E.I. Health Coalition is grateful for the opportunity to appear today before the Standing Committee on Finance to express our concern and indeed our opposition to Bill C-76, the Canada health and social transfer. We urge the committee to travel across the country and hear why Canadians fear and oppose this bill.

This coalition opposes Bill C-76 not only for its impact on health care in this country but also because of what it will do to post-secondary education, welfare, child care, and the social safety net in general. We also oppose other budget cuts, especially the loss of 45,000 civil service jobs, cuts in unemployment insurance and UI administrative offices, and elimination of the Crow rate and the Atlantic freight subsidy, which will further penalize large segments of the population, especially those who can least afford such cuts. Further cuts to UI and pensions would solve nothing and would continue the blame-the-victim syndrome already rampant in our country.

These same victims are overwhelmed that Bill C-76 will reduce government spending as a percentage of GDP to its lowest level since 1950 and fundamentally change the federal government's role in providing social programs. National social programs will certainly be weakened and eliminated through gradual withdrawal of federal funds.

I'm going to describe why we have concerns on Prince Edward Island. There are many reasons. In monetary terms the province would lose $16.9 million, or 14% of the overall health and services budget, in the first year, 1996-97. If transfer payments are divided equally, it could lose a further $12.9 million in 1997-98 for a total of $29.4 million or a cut of 34% in two years. There would be huge cuts every year after that until the year 2006-07.

Many examples could be used to illustrate what this cut could mean, such as drastic cuts in hospitals and hospital beds, many of them affecting services in key rural areas. It could mean huge cuts in dollars to pay health workers or cuts in funds for essential equipment.

Health care on Prince Edward Island has already been in crisis for a number of years, and the last thing we need is further funding cuts. In 1995, for example, the P.E.I. budget cut $10 million more from the health and social services budget. Each cut has serious consequences.

The main theme of the meeting of the provincial health boards this past weekend was deinstitutionalization. While this is a good idea where it is possible and only with appropriate supports, such as nurses and well-trained home care personnel, the fact is that on P.E.I. there is a shortage of home care nurses. The sad irony is that while home care seems to be promoted as an alternative for the care of seniors and as an alternative to hospital care, the budget for home care is already being cut. So manors and hospitals are to be replaced by a service that is also undergoing a budget cut. The reason given for all changes is bottom line deficit-cutting rather than service and care.

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P.E.I. has the highest percentage of seniors in Canada, due partly to a 17% unemployment rate that remains even over the years and that forces younger people to leave. Across P.E.I. there is a long waiting list of these elderly people who want to move into manors. Some never make it. The waiting list goes on, and they die. It will be impossible to empty these manors anyway, because of long waiting lists, but while people wait and hope, many needs are not being fulfilled in the homes. The largest manor, the Sacred Heart Home in Charlottetown, is closing due to lack of funds, and some manor beds have been closed in the Summerside area.

In acute care there is a much higher turnover of patients within the hospitals and much more stress and strain on nurses and LNAs. Fast turnovers greatly increase administrative work in admission and discharge. Doctors have to make choices: do they discharge someone who is not ready to make room for someone who is sicker, or do they try to take care of the patient at home? Acute-care beds are filled, and patients who need to be admitted are held in emergency rooms.

There are also long waiting lists for surgery and specialists, and many services are unavailable on Prince Edward Island. For example, people have very long waits for cataract and hip surgery. We have one radiation specialist who wants to retire in June, but there is no replacement for this person. The one neurologist we had has already gone. There is no gerontologist, and seniors are asking for this service. There's one dermatologist. There's a new plastic surgeon who has been here for five months and who already has a seven-months waiting list. He wonders what it will be like in one year from now.

There are hints that there will be only two acute-care services on the island after certain changes are made. These would be in Charlottetown and Summerside. This will cause a lot of hardship for people in the rural areas and will, in fact, be a two-tiered system already.

In addition, there are hints and trial balloons that seniors should undergo a means test to qualify for the drug assistance program. Seniors' drugs are already very expensive. If someone goes overseas from Prince Edward Island, visits to the provincial Department of Health, inoculations, and many things like that have to paid for. There are already user fees for all of that.

Some of us were talking to a 71-year-old woman on May 1 as she was filing her income tax. She showed us her drug bill, which was for $2,000. She said she had no help with that at all.

The province says it will offer better services, but all we see at the moment is cuts. There is no support for things such as homoeopathy and other very important wellness programs.

What Prince Edward Island needs for its health care system is stability, not further cuts. Institutions that are needed should not be cast as the enemy with home care as the saviour for bottom-line reasons. We need a balanced, integrated flow between home and institution, a plan for improved health and patient care, not a budget-cutting exercise that requires its own bureaucracy.

In P.E.I. we have a large bureaucracy with the introduction of the new health and social services agency, which speaks of increased home care. Again, if we are going to increase home care, we have to expect to increase our resources, at least in the short term. The service needs to be built before changes can be made to the existing system, and this creates great problems because reform is taking place as people try to see what they really need. So we do need this period of stability for three years, maybe, with no cuts to allow time to make changes that will improve health care.

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In P.E.I., doctors, nurses, and other professional staff are pushed to the brink. They are not being consulted about changes, and neither is the public. Instead, we have appointed health boards, which points out to us the need for more democracy, accountability and responsibility in our health care system.

A visiting nurse from Alberta noticed an ad for a skilled person to train unskilled health and hospital workers. She said that this will replace nurses and drive down wages if it goes through. This is exactly what is happening in Alberta.

We should be proud that we do have a high level of skills in our hospitals at this point, and we need to maintain those people in our health care system. It's very important.

By contrast, I have an example of an elderly man - and this can be generalized - who lives alone. He had surgery and was discharged early. He was given a day helper at $35 an hour. He was told that he needed just a few things and that she could take care of that. She found that he needed a lot of care. He was left alone on weekends. So if that's the kind of bottom line standard we have, and these things are happening now, you can well imagine what the situation is going to be like with the cut-backs under Bill C-76.

The P.E.I. Health Coalition believes Bill C-76 will make it impossible to maintain national standards. We could end up with each province going in a different direction. This worries us, because in P.E.I. we still have catching up to do. Islanders can't afford to leave the province for health care if the services are not there. Ambulance services are paid to the border of P.E.I., and after that the patient is responsible. Without national standards this inequality will increase. Money will be directed to politically expedient places, and the average person will have no way to trace that money.

The Canada Health Act must be kept in place as federal legislation under federal jurisdiction with the power to penalize provinces for violations.

If you hold public consultations - and the P.E.I. Health Coalition urges you to do so - you will find that Canadians want protection through the Canada Health Act against extra billing and user fees in favour of a health system that is strong.

P.E.I.'s health standards will erode seriously with Bill C-76 because a small, poor province can't manage without cash transfers, and we realize the larger, more wealthy provinces can't manage either. Provinces simply do not have the means to increase their revenue to that extent. Cash transfers are also the lever for getting the provinces to uphold the underlying principles of the health care act. Money needs to be targeted for health care, post-secondary education, and welfare. We don't need to play these programs off against each other. We can't manage without federal cash transfers in the provinces.

Canada spent only 7% of its GDP on health care last year, not 10%, as we hear from time to time. While OECD countries spend 6% of GDP on health care, they spend more on social services, 15% as compared with Canada's 12%. European countries within the OECD have a 5% health, 17% social programs ratio to GDP.

This increased spending on social programs cuts health care costs because good social programs keep people healthy. These countries obviously put the value on the person ahead of the values of the corporate, big business profit-first lobby, which seems to have taken over the agenda of our federal government in much the same way as it took over the Mulroney government's agenda. People are catching on. Debt reduction is driven more by an ideology that wants to downsize government and promote privatization, including for-profit health care.

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Policies that keep people healthy, such as full employment, a strong social safety net, adequate wages and good working conditions, as well as adequate housing, nutrition and a clean environment, all bring down the costs of health care.

I saw that for myself when I was invited to visit a group of people in a rural area who were on social assistance. This was a group of about 17. They were relatively young people, being in their twenties and thirties, and just about every one of those people had major health problems. Most of them had had major surgery. I was struck by the fact that the poor nutrition from low incomes - they were on social services - would do so much damage to their health and therefore create great cost on the health care end.

Yesterday I was talking to someone on social assistance, a diabetic, who said that her welfare cheque was already gone. For supper last night she had borrowed two hamburger patties from a neighbour. Her son receives $167 a month and part of his rent, and she has $250 and some rent for personal, for drugs - she's a diabetic - for food, clothes, and transport. She has cataracts. She's one of the people on the waiting list. She can't afford dark glasses, and her eyes hurt.

She told me of her neighbour, who had a knee operation. Besides rent, he and his wife together receive $350, and they have to have a phone because of their health. So his wife goes to the sisters at the convents and to other places to beg for food. The husband is not able to get compensation, and yet people told me the compensation board was actually bragging that it lowered its costs this past year because of cut-backs on benefits.

These are real problems. These are not isolated cases.

If you look at education and at the proposals that were being made to stop the federal cash transfers for institutions of higher learning, and to give the money to the students, the president of the University of Prince Edward Island said that all of these changes would increase tuition by about 150%, and it would probably mean the closing of UPEI. It would be just as cheap for island students to seek their education elsewhere.

I also wanted to say that Prince Edward Island spends the lowest amount, per capita, on primary school education of any province in Canada. It's lower than any state in the United States.

What is true for the Canada Health Act is also true for CAP. People in this country have certain rights by virtue of their citizenship. With the end of CAP, many of these rights will disappear. It is totally unacceptable that citizens of this country will lose the right to income when in need, lose the right to an amount of income that takes into account budgetary requirements - and I've just given examples where this is already happening - lose the right to appeal, lose their right not to have to work for welfare, and lose their right to income assistance regardless of the province from which the person comes.

Although the polls indicate strong support for this government, I must say that is changing. I just looked at a poll the Canadian Centre for Policy Alternatives put out. It said the alternative budget presented is far more popular with the people than the Martin budget. That was the experience of a number of people, members of the Action Canada Network, who distributed leaflets outside of the Revenue Canada office in Charlottetown on May 1, which was the last day on which to file income tax returns.

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More than 1,000 people were approached, and 95% were annoyed at the federal budget. Most of them were very annoyed, and many stated that they could give 30 reasons for their anger. This negative percentage is similar to the percentage that opposed the GST and cuts made to medicare by the former government.

People thought they were voting for an alternative to the slash-and-burn policies of the past government. They even thought NAFTA would be renegotiated. Now they are listening in dismay, because they're not hearing the promises made in the red book.

The authors of Bill C-76 need to get in touch with the reality of this country. This committee owes it to Canadians from coast to coast to get a feeling of what is going on in the minds and hearts of people out there. Things have been bad enough for a number of years, but this is not understood well enough by authors of some of these bills.

For the federal government to gradually withdraw financing from social programs, thereby dismantling them through restrictive legislation such as Bill C-76, without cross-country consultations, is a serious blow to democracy in this country.

The public portion of health care spending as a percentage of GDP will be approximately 5.8% in 1995 - below Canada's 1987 spending on medicare. Increased costs in Canada are coming from the private, for-profit portion of health care, not from public costs.

Such fundamental changes to the program that best defines our values as Canadians should not be done by a committee that is not able to go out across the country to consult the people.

There are many alternatives. I mentioned the alternative budget. Many other alternatives have been put forward. When the Axworthy hearing went across the country, many groups proposed alternatives. I know they have been put before this committee in various ways: a full employment strategy, for instance; taxing wealthy individuals and corporations; charging interest on the approximately $40 billion corporations owe in deferred taxes, and making them pay their tax bills; taxing non-resident bond holders and international speculators; and increasing the Bank of Canada's share of the debt to 30% from 7% and so on.

Many alternatives have been offered that could make these services affordable. There are ways.

We can see more tensions building in the community as people get poorer and they fear more cut-backs, but there are ways to build a kinder and gentler society in Canada with regional equality and reach out at the same time to our neighbours around the world who suffer from dire poverty, because there were also cut-backs in ODA in this last budget and previous to that.

Instead of creating more poor, I'll take the liberty to remind you as politicians of how I understand the role of a politician, or how I and many people define a politician: that the role of politics and politicians is to safeguard the common good and to intervene while the various interests in society struggle for what is rightfully theirs, which is a very high calling, as we all know and a very privileged position to be in, to safeguard these rights in the cause of justice.

I remember what Archbishop Romero said - and his words still live in our ears - that the poor touch the very heart of God. We don't want to see an increase of poor in this country. We already have too many. Those of us who believe in justice want a decrease in poverty.

I hope the cries and the fears of the poor will touch my heart and touch your heart to hear those people and to say there is a better way than Bill C-76.

Thank you.

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The Chair: Thank you, Ms Boyd. Mr. Easter said he wished he could be here with you. He's from Prince Edward Island. He said, ``Because she is from P.E.I., you'd better treat her properly.''

To do that, we will commence with the Bloc.

[Translation]

Mr. Brien.

Mr. Brien (Témiscamingue): Welcome to the Finance Committee. I only have one question, since your testimony was very clear.

You talked about the fears which are legitimately growing among those who know the existence of the bill and of this new Canadian Social Transfer vision. You alluded to it but I would like you to state it more directly: do you think it would be possible for provinces such as yours to abide by the standards which are set in the Canada Health Act given the level of funding which will be available to them?

[English]

Ms Boyd: No, I don't. Part of the point I was making was that we're having a lot of trouble doing that right now. We've suffered cut-backs in the region of $125 million over the last decade. That may not seem like a lot of money for a big province, but you have to remember that Prince Edward Island is a small province with a small population.

So the answer is no. We're already struggling, and these additional cuts will be devastating. I would hate to look into the future and think of a province like Prince Edward Island with no cash coming from the federal government or any kind of drastic deductions or any deductions.

In fact, we should have increases. The alternative budget said it was possible to actually put an extra $1 billion into health care this year rather than have any cut-backs, and to continue to do this.

So, no, we cannot, and second, we shouldn't have to, because there are alternatives.

[Translation]

Mr. Brien: Thank you.

[English]

Mr. Pillitteri (Niagara Falls): Did I hear you say you met someone last night or last week who received $167 per month? Is that all the assistance they received as a single person?

Ms Boyd: Yes, and part of his rent as well.

Mr. Pillitteri: Just for the record, Mr. Chairman, last night this brief was presented by the Social Planning Council of Metropolitan Toronto. It had all the provinces' allocations for money and also for allowances for residency.

The first one is Ontario, putting out for a single person benefits of $7,935 per year. In Newfoundland it was $4,372. I see in Prince Edward Island here it was the highest, at $7,956. That's for the record. It goes on. As a matter of fact, it is much less for a single parent with one child. In a comparison, it drops down to $11,052.

It's not that I want to contradict you, but it's for the record. Maybe those figures would be entered.

Ms Boyd: It's very hard to follow some of the statistics for Prince Edward Island. The actual stories that people tell, and the statistics....

For instance, Prince Edward Island looks as if it's one of the least-poor provinces in Canada, according to those statistics, but in fact, we have the second-lowest per capita wages. We have one of the highest unemployment rates. We have a lot of seasonal work. We have a lot of people on social assistance.

Who makes up those statistics? I don't know.

I talked to a gentleman last week who said he was getting about $500 on social assistance and it was cut back to about $200. I know this woman's son gets part of the rent, and $167. That is a fact. He is a single unemployed person living at home with his mother.

Now, it may be his age, because I think single men who are unemployed and who lose their UI benefits certainly have drastic reductions in their benefits. You have to hear the stories of the people; that's the point we'd like to make. Come across the country. We'll have these people come and sit before you and tell their story, because that's the way you'll really hear and know what the reality is out there. I know we all have to deal with statistics, but in fact sometimes they are misleading.

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Mrs. Brushett (Cumberland - Colchester): May I say how happy we are to have Marie Boyd here today representing Prince Edward Island.

I'd like to bring up a couple of the points that you have touched on. One is the education at UPEI, the facility, where they've indicated to you - as one of the suggestions in the green paper was - that we would fund the student and let them make a university of their choice, take a loan accordingly, and so on, rather than fund the institution.

You've indicated that they said they would virtually have to close down or increase fees so high that nobody would come. Why would they not have enough curriculum and advantages in a beautiful rural province that young people would still rush to get in their doors?

Ms Boyd: Well, it's not happening. As you know, there are a lot of educational institutions in that radius, and not so many people come from outside the island to UPEI. It's that the tuition would be driven up higher on Prince Edward Island.

Now, I didn't hear all of Dr. Eliot's reasons for saying that, but the tuition would increase at a rate that would be uncompetitive, and he could actually foresee something like that happening.

Mrs. Brushett: I come back to the point that, for example, Mount Allison University is considered tops in the country, and they don't have those same fears. Some of the other Atlantic universities have indicated they will find a way to be competitive, because everybody can't do chemistry any more or can't do repetition throughout all the schools. We have to be selective and to allow restructuring so that they can have the quality education we're known for. They feel it's something we have to sell to young people across this country. It is another option - not that it will come to pass - when looking at alternatives to deal with these issues.

Ms Boyd: According to Dr. Eliott, tuition would skyrocket at the University of Prince Edward Island. This is one of the main reasons it would be uncompetitive. Even with the Atlantic Veterinary College, which is the only one in the region, it would create great difficulty.

Mrs. Brushett: I have another point I would like to bring up. In terms of social assistance, many of us have done a lot of town hall meetings and fire house meetings throughout our constituencies simply to hear the views of rural constituents and to go to them so that we can hear them. As you know, it is costly for a committee like this to travel. There is a great deal of legislation before us in the House, so everyone has to be selective as to how to use their time and their resources.

So we've been holding a lot of these small meetings. The questions that come before me quite often have to do with the fact that someone who is working is not as well off as the person who is staying home drawing social assistance. They have great complaints about this. By the time they pay transportation, by the time they buy some clothes and go through the process of getting themselves up and out to work in the morning, when they come home at the end of the week, they have less money to spend and seem less well off than the person who stays home to draw social assistance.

Many people in my riding are advocating that we should help them to get back to work, in that sense, and get them off the system so that they can come into the work force and be a full partner in society, productive in that way, rather than putting in more money, more cash, to prop up the system the way it is.

Ms Boyd: I think what you have are two groups of people below the poverty line: the people on social assistance and these people who are working. If they're not as well off as people on social assistance, then for their whole work week they are under the poverty line. I don't think they realize, either, how hard it is to find a job. Many days in Charlottetown there might be one job posted at the regional unemployment office. There's a high unemployment rate.

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In Prince Edward Island a great deal of the work is seasonal, and seasonal work affects all sectors of society. Of the people who draw UI on PEI, 83% are seasonal workers.

I think sometimes at those meetings people don't stop to think about the consequences of saying everybody should be out working.

The other thing that I think is really sad is that I've been told by people that they have gone on some of those programs where people come off of social assistance for six months and work somewhere and then go back on it. One woman said she has been doing that since I think 1983 or 1984, and no one has ever offered her a permanent job.

So we have to come to grips with the high rate of unemployment. That's why I think all of our groups are urging the federal government to make job creation a main policy, and the main policy for fighting the deficit, not seasonal or part-time work or minimum-wage jobs, but jobs that have decent working conditions, decent pay, and jobs that will give the dignity neither of those groups you mentioned are enjoying right now.

Mrs. Brushett: Ms Boyd, I think that is the objective of this government, to provide to attempt to create jobs so that people can become full partners in the economy and our young people will have something to look towards. It's not always as simple as we'd like it to be.

That is the goal. It's to provide employment and to let those people participate fully.

Ms Boyd: It's a goal that can't be fulfilled soon enough.

Mrs. Brushett: We realize that.

The Chair: You've presented us with many concrete examples of Canadians who are suffering right now under the present system, without making cuts to it, or changes. As members of Parliament, we see many cases of great hardship among individuals in our own ridings. That is part of our job.

So your suggestion that we should be travelling the country to meet more of these people.... This is part of our job, all of us, including the member opposite. We confront these on a daily basis. We're very much aware of this. I'll tell you this, we're not very excited about the idea of having to cut.

In terms of your suggestions for alternatives, tax measures that could be brought, we looked at every one of those measures in the fall. We will be undertaking pre-budget consultations again this fall and I urge you to bring us details on which of those measures you want us to pursue and how to do it. We are looking for that pot of gold. We are looking for those areas where we can raise the funds, because cutting programs is not the favourite pastime of politicians on any side of this House.

I thank you on behalf of all of us for a very eloquent presentation reminding us of our responsibility to those who are most in need. Thank you very much, Ms Boyd.

Ms Boyd: Thank you very much. I'll have to thank Wayne Easter personally for asking you to be kind to me.

The Chair: Ms Boyd, it was easy.

Ms Boyd: I want to put on record that Wayne Easter is a very respected member of Parliament in Prince Edward Island. We're very pleased he's representing us.

The Chair: We can't understand that, Ms Boyd.

Some hon. members: Oh, oh.

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The Chair: We agree with you.

We have with us, from the Child Poverty Action Group, Ottawa-Carleton Chapter, Helen Saravanamuttoo, past chair; Harriet Lang, chair; and Lynn Sherwood, member.

We're looking forward to your presentation.

Ms Helen Saravanamuttoo (Past Chair, Ottawa-Carleton Chapter, Child Poverty Action Group): Thank you, Mr. Chairman. I have our presentation in point form, with hand-outs for you.

We welcome the opportunity to be here today. We did present to you last fall, when the standing committee was hearing the pre-budget presentations. We presented a brief at that time.

My name is Helen Saravanamuttoo, and this is Lynn Sherwood. We have given you a little bit of information about our group. In fact, it's on the last page of our submission. We have a pamphlet on our group, too.

As you'll see, we are a public interest advocacy group. We receive no government funding at all. We represent, in Ottawa-Carleton, over 18,000 poor children; that's children who go to school hungry, and who live under conditions of great stress. We would like to draw that to your attention. In fact, the child poverty numbers have gone up over Canada as a whole. They now stand at I think nearly 1.4 million, which is an incredible number of poor children. I believe it's something around 21%.

We would like to talk about the proposed changes to the Canada Assistance Plan. We're really very concerned that these changes will increase child poverty. To explain this we'd like to give you a bit of background on how we see it.

First, the Canada Assistance Plan changes Canada fundamentally. It's a whole new approach to social services, and there has been no political discussion about this. Really, during the Mulroney government a number of people talked about reform by stealth. I'm afraid this is following the Conservative example, which I wouldn't think the Liberal government would want to emulate.

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The Chair: Do you think that's probably the worst insult you could make against any political party?

Ms Saravanamuttoo: It might be; who knows?

We are really worried that there are no safeguards under the proposed legislation. I know Bill C-76 says agreements will be made with the provinces, but we are really skeptical that this can be achieved. The old Canada Assistance Plan had the four rights, three of which are no longer going to be under the new legislation: the right to social assistance on the basis of need; the right of appeal; and the right not to have to engage in workfare. We find that the idea of no social assistance on the basis of need will just destroy the whole idea of social assistance.

The right of appeal is another one. What happens if it's denied? We hear already in the community of people who are having to fight to appeal changes in their social assistance. Things are going to get even worse.

There is also the right not to engage in workfare. I don't know why anyone would bring in workfare in this day and age when there are waiting lists for training. In some instances, you cannot even get on the waiting list, let alone start to get into training. When people are doing as much volunteer work as they possibly can it just doesn't make sense at all. Workfare has proved, in the past, to be hazardous and very exploitative. We hope this won't be brought in again.

In all our briefs - we presented a brief to the human resources committee just after we presented one to you - we believe very strongly that you need adequacy of benefits. I'll go on to explain why. We are asking you to consider putting in adequacy of benefit, and have some criteria to mention it, as a condition for the new legislation.

At the current time what has happened, and we see it time and time again, is that cut-backs in UI have led to more people on social assistance. The social assistance numbers have just escalated. This is, in effect, downloading to the provinces. We really don't think this has been helpful to anyone.

We haven't had any public discussion about this fundamental change, and we really hope you will consider putting in a process whereby the implications of this legislation can be discussed in a much wider forum.

I'd like to move on now to the idea that there be no requirement to fund social services. We've talked about social assistance up to now, but social services are also important. We refer to child care, to child welfare services, and children's mental health services. Without these services children in the community become very much at risk.

At the present time in Ottawa-Carleton, and I know my colleagues will talk about it a bit more, it's really difficult to get service from the Children's Aid. Only the cases of very clear abuse are being investigated. Children are already slipping through the cracks.

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There is also the funding of welfare incomes. The idea of having some kind of standard of adequacy is that we should not have a patchwork of services across the country. At present it's bad enough. We get welfare incomes ranging from way below the poverty line, sometimes way below half of the poverty line in some single instances, to Ontario, which is I think about 80% to 85% of the poverty line. But the depth of poverty in which some children are being brought up is quite extreme.

There are also these wide variations across the country. As you probably know, in Alberta there have been great cut-backs. There has been a 29% decrease in numbers of people on social assistance in Alberta. But don't think this is a success story, because what you find is that there has been something like a 9% increase in B.C., the province just to the west, and in the province to the east, in Saskatchewan, there's been an 18.8% increase.

As well, in Ontario, there have been news stories - I'm sure you're aware - on fact that the Alberta government is paying bus fares of people to Ontario. I think the Ontario figures show a 5% or 6% increase.

Overall, there has been something like a 4.2% increase across Canada in numbers on social assistance, at the same time as a decrease of 29% in Alberta, and I think a 6% or 7% decrease in New Brunswick. Already we're losing the fact that we are a united Canada. We're losing the fact that we have programs we have stood up for.

When the Canada Assistance Plan was brought in, it was brought in with a vision, a vision of trying to help the disadvantaged to take their place in society. What we are doing by cutting back too much is presenting barriers to these people to take their place in society.

The process of bringing in legislation without any conditions is going to intensify the gap between the rich and poor, and it will increase family and child poverty.

I draw your attention to the report card. We have a 1994 report card, so we have 1992 figures. The child poverty figure in 1992 was 1,265,000, which is 18.9%. The National Council of Welfare figures since then show that it's gone up over 20%, to 1.4 million.

The differential across the country is shown on the other side of this chart. We have figures for the various provinces. The last column is Newfoundland, P.E.I., etc., the percentage change in welfare incomes. There are great differences across the country.

Some research that's coming out shows the effect of the disparity in income. Now, I've drawn your attention to that. The gap between the rich and the poor is becoming evident. That is the real difficulty. So we have to address the distribution of income. I'll tell you a little bit about that too.

But if you look on the other side of your report card, the poor get a smaller size of the income pie. That's the second half down below, and you'll see how these have gone down. The upper-income groups, the richest quintile, now get 39.7% of income, as against in 1989 when they got 39.3%. All the time, the distribution of income is getting wider.

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A very important study has just come out. I can give you the reference. It's called Unfair Shares, and it's by Richard G. Wilkinson. This is a study of what has happened in the U.K. over the time of the great distribution of income changes in the U.K.

They have found that there is a less safe society, and that means increase in violent crime, particularly. In fact, in the U.K. over this period they found increase in crime generally, but increase in violent crime, especially among the young; increased depression and suicide, and particularly among young people. The suicide rate among young people is very high.

They found that families function much less well. There's much more family break-up, more addictions, and more difficulty with kids. Kids are expelled from school more. They get into difficulties more. Another thing that really should concern us in this day and age, when we have to educate people for new technological jobs, is that school performance goes down.

It's not only the people in those poor groups living in relative poverty that are affected; it's everybody.

Not only are there increased health costs and increased social services costs and increased school costs, but life expectancy also goes down for up to half the population, which is just an amazing finding. They're finding the life expectancy goes down not only for those poor groups, but as I said, the life expectancy goes down for at least half the population.

They're finding that although some of the poor groups found they had more refrigerators and more washing machines - so they were actually better off - it was the income disparity that made the difference.

So we really have to address that. If we want to keep our Canadian society where we've had a very peaceful society, where we've had people work together and not try to win at the expense of everyone else, we have to look to these things.

In New Zealand, for instance, we hear the story of the New Zealand miracle. In fact, over the period of what I would like to call ``structural adjustment'', we find that violent crime increased so dramatically it is now the country with the highest violent crime of all the developed world. This is a country that was extremely peaceful before these measures came in. We also find, incidentally, that the debt has almost quadrupled.

So these ways of cutting the deficit and debt do not work. We find that altogether, the lack of ease with the society and the lack of commitment to society, of young people particularly, goes down.

I heard briefly the person before us talking about job creation. In fact, we stressed that in our brief to you before the budget. We cannot emphasize enough the importance of a job, for young people particularly.

There are some figures coming out I think saying there's a 20% unemployment rate for young males. In fact, some of the figures are showing that's a functional rate of 30%. Nearly one in three young males is not able to get a job. We are losing a generation here, besides the social problems we are building up.

Lynn is going to talk for a little bit about the consequences of growing up poor. Harriet will talk about the cut-backs in services. Then we'd like to get to our recommendations.

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The Chair: Before you do, may I apologize to Mrs. Lang for having started before your arrival. It was not your fault, it was ours. We're glad you are here.

Ms Harriet Lang (Chair, Ottawa-Carleton Chapter, Child Poverty Action Group): Thank you very much. I understood it was to be 4:15 p.m.

The Chair: It was. It's our fault. We changed it, and you were here at 4:10. You also missed a good presentation by your colleague.

Ms Lang: Well, one can't complain about being ahead of schedule.

Ms Lynn Sherwood (Member, Ottawa-Carleton Chapter, Child Poverty Action Group): I've been working with children and their parents for about 25 years now. I want to try and express, for the children, what are the consequences of poverty for these kids who really cannot speak for themselves.

When I first started working with single moms and their children in a child welfare and children's mental health setting I couldn't understand why they never had any teeth. Gradually, after checking things out and investigating, I realized that most of these young single moms couldn't afford proper nutrition while they were pregnant. As a result, the calcium in their teeth is absorbed into their bodies in order to nourish their babies. Most of these women, or a high number of them, by the time they're 25 have no teeth. Not having any teeth means you can't eat very much good food, and your general nutrition is further jeopardized. It also means you don't look very good when you're going for job interviews.

A number of the people I have worked with never leave the housing projects where they raise their children. They stay there. The world outside those projects is an unknown mystery to them. Their children are raised in settings of desperation, depression, despair and violence. They don't enter the world we live in. These children growing up watching Melrose Place and Beverly Hills 90210 on TV, and they think that's what the world is like, and that there's something really wrong with them because they're not like that. They call us rich people - and we are.

I think in this kind of society the measure of the quality of our civilization is how we treat the most vulnerable members of our society. These children are far and away the most vulnerable, the most hidden and the most despairing members of society. I plead with the committee not to forget them, because it's really easy. They don't make a fuss until they're 18 and they can kill people. Then we blame them for being violent.

If you look into the histories of these children we see in the newspapers who are shooting old ladies and whatnot you'll find out why. You'll find out the services that weren't there. You'll find out the day care centres that identified them when they were four but couldn't get the proper kind of therapy for them. You'll find the mothers who couldn't raise their children properly. You'll find huge projects with hundreds of desperate women living in poverty and trying to raise their children in situations the rest of us wouldn't tolerate for 15 minutes.

I don't know what else I can say to try to communicate how critical it is for us not to forget these people, because they can't speak for themselves. They don't vote. But they are there, and they need to be heard. I'm convinced, after my work, that if we could eliminate the kind of poverty the underclass in Canada is experiencing, which isn't impossible, we could eliminate the major part of the social problems we're dealing with in this daily world. We could eliminate crime. We could eliminate the major part of mental illness and alcoholism.

Ms Lang: I have been working in the field of inner-city education for the past 20 years, first with pre-schoolers and then as a school board trustee and as a director of the Canadian Council for Inner City Education. If we are concerned about the future well-being of Canadian society we must start at a very young age to enhance the well-being of our children and youths so that they may become productive citizens.

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The Child Poverty Action Group is greatly concerned that there be adequate supports to families living in poverty. Statistics show that a much higher proportion of students who are poor economically are also unsuccessful in school, are more likely to drop out before graduating, and eventually become a burden to society and a drain on the Treasury.

Poverty creates stress, anger and frustration in the home, providing an insecure environment for children to develop and learn. Poor children are frequently hungry, have inadequate clothing, few books and no sports equipment. As a result, poor children suffer more ill health, poor school attendance, low self-esteem, and have little hope of success.

Additional supports are needed at school and in the community. Some provinces provide support for school breakfast and/or lunch programs. Such programs should be universally available where there is a need. Improved nutrition has shown to promote improved learning performance. School boards with a concentration of poverty in their jurisdictions provide additional resources to the schools in their most disadvantaged areas, particularly in nutrition, language development and enrichment.

In order to help poor children and youth succeed we must help to improve the family environment. Many families need two wage earners to stay out of poverty, which requires the subsidizing of reliable child care. Additional spaces are urgently needed at the pre-school and elementary levels. Increased subsidized spaces were promised but have not materialized.

Head Start is one aspect of child care that will save money in the long run. If we invest now in programs of prevention, research shows the benefits of Head Start pre-school programs in preparing young children to enter the regular school at a more equal footing with their more affluent classmates. It has been shown in long-term studies that $1 spent in prevention saves $7 in remediation later on. These long-term studies also showed improved parenting skills as these children became adults and had their own families.

Preparing the next generation to take its place in society is very important to our country's future. We must help provide disadvantaged parents in their task by providing the necessary support, such as subsidized child care, to the family. To this end, national standards are essential. Otherwise, from one part of the country to another the services provided could be quite different. It is to support families living in poverty and for the children's future that our recommendations are presented, to enable poor children to become productive citizens.

Thank you.

Ms Saravanamuttoo: Our recommendations are written down on the second page of our submission.

First, with respect to the Canada transfer, since there has been a steady increase in unemployment and/or social assistance caseloads throughout Canada; since this increase has translated into growing child poverty; since some provinces have already cut back drastically on social assistance transfers; since child poverty has such severe consequences for individual children, their families and for society; and since child poverty is family poverty, which can only increase unless there are standards for adequacy of benefits, we recommend that: the Canada Assistance Plan not be repealed until public consultation can be completed, and enforceable safeguards and standards can be agreed to between the provinces and the federal government.

Second, with respect to the child tax credit, since the welfare of children is the concern of all Canadians; since child poverty is the most important predictor of poor life chances; and since the child tax credit is the only remaining federal social program directed at alleviating child poverty, we recommend that: the standing committee direct the Department of Finance to study ways to strengthen this program.

The Chair: Thank you very much.

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[Translation]

Mr. Brien: In the last part of your presentation, you mentioned national standards. Talk of national standards irritates a lot of people in Quebec.

Don't you think it would be better for the nine provinces excepting Quebec to agree among themselves on their own national standards and to let Quebec decide on its own standards?

I will give you examples. There are Canadian federations of students or college or university teachers, but there are also Quebec groups. They recognize that there are different realities. Don't you think it would be better to have the same approach towards national standards, that is letting Quebec have its own standards?

[English]

Ms Saravanamuttoo: I think we've misunderstood the word ``standards.'' By standards we mean principles, as it were. We mean principles with which I don't think anyone in Quebec would have difficulty. We don't mean that cultural differences should be made the issue. We look on standards of adequacy, that people should have enough to live on, that there should not be the need to go to food banks, for instance. I don't think that's a culturally different standard.

I think what we're looking at maybe is principles, and I think all social services should be, at this point in time, designed locally. I don't think the provinces should do it either. I think it should be done at the community level. But at the same time, we need standards, or principles if you want, for how they should work. They should help children fulfil their potential, for instance, and should ensure that the children can grow up undamaged by extreme poverty, and things like that.

[Translation]

Mr. Brien: I see what you mean. It's often easier to agree on general or vague principles but it's not the same thing when you start being more specific.

From now on, the federal government will be setting the overall principles while withdrawing from program funding.

In Ontario, you will have one MP and one MPP. The MP will say: Yes, we will defend those principles, and the MPP replies: Yes, but we'll have to get by as best as we can and we will find it hard to meet those principles, we will have a serious problem. You cannot always play the good guy and let the other one play the bad guy. Don't you think this will create a problem at some point?

[English]

Ms Saravanamuttoo: That's exactly the issue. You have really hit the nail on the head. This is why we're asking you to hold off repealing the Canada Assistance Plan. That is just the problem. Under the new social transfer it will not be possible to enforce anything, we don't believe.

Ms Sherwood: I think the issue we're really concerned about may be accountability. We have been working in the field too long. We know what happens. If nobody is in charge, nothing happens. Our clients can't raise a fuss. They can't march on Parliament Hill, and they won't. They'll just suffer a lot more. There has to be accountability and I think it's a federal responsibility to ensure that the accountability is there. The provinces can't afford it, they pass it to the municipalities and the municipalities decide they're not going to fund a certain group, or they know somebody who's been living in the bush for 40 years and they're not going to fund them at all because they drink.

We have to have accountability. It has to proceed from the federal level down through to the local level.

Ms Saravanamuttoo: We are in fact asking for a role for the federal government with respect to the development of children.

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Since family allowance was started, in I think 1946, the federal government has shown that it is concerned about the development of children, that bringing up children is a function that is shared, and it benefits the community, and therefore, the community and the nation need to put resources into this.

As we can see from some of the material we've presented today, and even from some of the material in the report cards, some of the provinces do that and some don't. What we're really concerned about is that all children in Canada should have a fair chance. We do not believe it's right to encourage inequity among children.

Mr. Brien: Merci.

Mr. Discepola (Vaudreuil): I don't share the same viewpoint as my colleague from Quebec about national standards. On this whole debate about national standards - maybe it's my background in municipal politics - I find that politicians and the elitists of Quebec want to retain control of national standards for Quebec.

Damn it all, if it's good for nine other provinces, whether you're black, whether you're white, whether you're francophone, whether you're anglophone, poverty is poverty. If a national standard can exist for the rest of the country, then I'm convinced as a Quebecker that it could exist for Quebec, as well.

Unfortunately, these politicians get into the act. They debate on which powers - not ``standards''; they interpret them as ``powers'' - their province or their municipality would have.

I recall a saying once that you can give a fisherman a fish and you will allow him to eat once, but if you teach him to fish you'll allow him to eat for life. No matter how many fish we give the social groups, or to poverty, we don't seem to solve the problem. I wish we could teach the people to fish as opposed to throwing fish after fish.

I want to comment on Ms Sherwood's comment dealing with accountability. I rate accountability and the establishment of social standards as a pair. I think if this whole debate should focus on establishing proper standards...but on the accountability aspect of it, the person who delivers the service is best held accountable.

I had that experience. When you had snow removal problems, you called your local mayor. It got solved. Today as an MP I'm so removed from that level they don't even call me any more.

Don't you think if we can get the service down to the lowest level, which probably should be, as you said, at the community level, that we can hold them accountable. Why that skepticism, that no, no, the provinces aren't going to do their share, or they're going to slough it off on the municipalities, etc.? Could you elaborate on both those points?

Ms Saravanamuttoo: First, on your teaching to fish, I think that's a very important point, but let's understand that poor children do not learn in the same way. They come to school hungry, they can't concentrate, they miss more school because maybe the house is cold, they don't have breakfast, they get more sickness, more colds, etc. They don't have the same opportunity to learn. That's the first barrier.

So if we say we should teach people to fish, we have to also provide the conditions under which they can learn to fish, so to speak.

I do agree with you, and I think we also have to provide the jobs, as we've said before, so that once they've learned to fish they can go out there and fish. As far as proper standards are concerned, yes, community-based standards and people held accountable at the community level are very good.

Why the skepticism about the provinces? Perhaps it's the fact that the provinces are not based locally either. I would think they're as far removed, in a way, as you find yourself now.

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So why devolve to the provinces particularly? Why not devolve to the community level absolutely? But the issue of standards...if that's a word we don't like, I would go with principles. The principles are human principles of ensuring that a child can develop adequately, that they have the building blocks so their bodies can grow enough so they can learn sufficiently. That's what we're talking about. That's not happening in all cases at present.

Ms Sherwood: We're talking about situations where children in need of psychiatric services have to wait four to six months at the children's hospital before they can receive service. Basic services should be an entitlement to children we want to teach how to fish. These are not available at this time and no one seems to be responsible for any of this. People in social services, people delivering services, are exhausted, burned out, feeling fed up, do not feel they are doing their job any longer. These things have to be attended to.

Ms Saravanamuttoo: Quite frankly, we feel more confident that there should be a federal role in this in view of the history of what has happened generally in the provinces. We think the federal government has provided real leadership in the past and we would like to see that continue. We would like to see the federal government retain some power.

Mr. Discepola: I just wanted to commend you on your first opening remarks. You said that you serve 18,000 children in the Ottawa region without any federal or provincial funding. That should be commended.

As a legislator, I cannot bring myself to understand and believe that when we throw these fish out, when we give funding after funding, we're really going to solve the problem. Are we really only solving the problem for that one child who receives that extra plate of food on his or her table on that one day, or that one year, or that one month? Then the next government comes in and says they're going to change something. Will we ever eliminate the poverty? Maybe we should be taking a look at the fundamental issue. As I said before, we should be trying to tackle the problem at that level, as opposed to just throwing funding after funding. I don't think we're getting the proper value for it.

Ms Saravanamuttoo: But until you can create the opportunity in the community for people to work, we have no alternative.

Mr. Discepola: Then you're saying that as long as unemployment exists there will always be poverty. How can we attempt to eliminate it, as you so vividly suggest?

Ms Saravanamuttoo: What we are saying, in our recommendation to you, is not to abolish the Canada Assistance Plan before you look at the implications of it. What we're saying is that as long as this poverty exists, if you cut people down too much, then you are taking away the opportunity from these children forever to be able to compete on an equal basis.

Mr. Discepola: I don't want to monopolize the conversation, but I would ask you to look at CAP. Under the existing CAP, especially in Quebec, the cash portion will be eliminated within four or five years. Your concern that the provinces will have total jurisdiction over what they want to do still exists under the current system.

Ms Saravanamuttoo: No. Canada Assistance Plan at present, apart from Ontario, Alberta and British Columbia, is a 50-50 sharing.

Mr. Discepola: Only for welfare, yes.

Ms Saravanamuttoo: And for services, 50, 30, 20, I believe it is. That's one of the issues that we're concerned about too.

Mr. Discepola: You're concerned that the provinces will not have the full commitment.

Ms Saravanamuttoo: Yes, because as you put it extremely well, they are removed also from the situation and there has not been a strong tradition of serving people, looking after the needs of children, in the same way as there has been in the federal government.

Ms Sherwood: We're already seeing an attrition of services for children, even in Ottawa. It's quite alarming. Services are going. There are fewer now than there were ten years ago.

Mr. Discepola: Thank you, Mr. Chairman.

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Ms Lang: We are concerned with children across the country. We know the provinces do not take the same commitment or responsibility for the welfare of children. We are concerned that if the federal government opts out of responsibility, there will be areas of the country where the services are not being provided.

Mrs. Brushett: May I come back to a few points you raised earlier. This government is extremely concerned about child poverty in this country. As you've indicated here, a large portion of it seems to originate with the single-parent mother. That is escalating. It has gone from 30% to 41%.

We see this everywhere throughout this country. The child who lives in the isolated old apartment somewhere with a single parent, who isn't properly fed and goes to school only part of the time is an unhappy child, gets sick, drops out of school, and the cycle repeats itself. We've also known for some time that the higher the education of the mother of the family, whether it's a single-parent family or a traditional family, the more likely that child will stay in school, be properly educated in some route or pathway to find employment, and find a successful career, a successful life.

I believe we come back to the numbers. When we're looking at standards or whatever we want to call it, people are putting a magic number, a dollar sign, beside that. It has almost nothing to do with dollars. We need some accountability.

When you talk about bringing it to the community, where you know who people are...people in the community tend to care a little more for each other and take a responsibility.

I've argued this in Nova Scotia for almost 20 years. As a woman, by firing more money at this problem, I do a disservice to women. I'm annoyed that we do a real disservice to women. If we really want to solve that problem and help that helpless child to help himself, then we would insist that a young girl who is 15 or 16 does not go isolated into an old apartment house somewhere. She's only a child herself, raising a child. She has no support. More babies mean more money. That's all she can see.

We have to solve the problem. For instance, I believe if you could keep that girl in some kind of a family support system and let her go back to school, and then help that family with some money so the older person in the family could provide the proper nutrition or whatever, maybe you could get better results.

Ms Saravanamuttoo: Don't forget that family break-up happens more often as a result of poverty. These statistics show it for children of families where there's poverty. It's actually documented that as the income disparity went up, more families broke up. The stress in a family on a low income is just enormous.

I really challenge you on this disservice to women. I agree with you we should provide the services for people so they can help the young kids who are looking after their babies.

Mrs. Brushett: My point is that the status quo isn't working.

Ms Saravanamuttoo: Absolutely.

Mrs. Brushett: Poverty is increasing, and we're putting more money in all the time. We must look for another solution.

Ms Saravanamuttoo: We're not putting in more money all the time. We are cutting back all the time.

Mrs. Brushett: Over the past 10 years we have increased the money tremendously.

Ms Saravanamuttoo: Because the numbers on social assistance are increasing. That is directly because of the lack of jobs.

Mrs. Brushett: But we're encouraging young women to drop out of high school. We're encouraging that.

Ms Saravanamuttoo: No, we're not. When you go into the community and see.... If you would be interested, we could take you around and show you the waiting lists for people needing training, and take you into the community and show you some of the things that are happening. All the efforts to keep people in school.... In the Ottawa Board of Education, for instance, they have all sorts of programs to try to keep people in school.

In fact, Harriet is a former trustee with the Ottawa Board of Education. Perhaps she could tell them.

Ms Lang: We have at least three high school programs; and probably we'll have another one before long. These are for teenage parents, with child care provided in the building for their young children.

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We find this is encouraging these students to continue on; we've had very good success with these students going on to post-secondary education. We feel we are giving the young children an excellent start. We are doing this in a number of areas, and our success has been very good. I feel we are encouraging young parents to get on with their lives and to improve their educational attainment.

Mrs. Brushett: Wouldn't we do better at the outset if we encouraged that 15-year-old girl to stay at home where, there are people who care about helping her? A lot of my constituents are saying that we as politicians are the ones who've been at fault because we have actually encouraged this through the last 20 years by allowing young people to go off, isolated in an apartment without support. With a young child coming on, it doubles the problem. It only can take endless bundles of money that we just don't have, and we still don't solve the problem.

Ms Sherwood: I think there are two things happening here. One is, yes, I know there are young kids who are leaving home and going on welfare. That's wrong and we shouldn't be allowing it. That requires better regulation at the welfare department level and supervision. It means lower caseloads for welfare workers. It means more welfare workers. That's one issue.

It means more money into the welfare system so they're not supervising 150 cases. They would be supervising 25 and could make sure that isn't the situation - that they're not getting drawn into a fight in a functional family where the teenager wants to go off on her own.

The other issue is that a lot of these kids don't have families. I worked with a lot of them where the mother is 35, the child's 15, and she has her baby. It goes from one generation to the next. The only place you stop it is by pouring a lot of energy into stopping it where they can still change and learn.

Mrs. Brushett: So you believe the status quo is acceptable and more money will solve it.

Ms Sherwood: No, absolutely not. I've spent my entire life trying to change the status quo.

Ms Saravanamuttoo: That's why we're here today. We don't believe the status quo is working. But we do think the changes to the Canada Assistance Plan, cutting for the provinces, will make it work even worse.

We think there are a number of things you have to do. We're very much in support of regulation of services at the community level. I think you can get the support you need in that case, and you can really make sure the services work. I think Mr. Discepola is quite right when he says accountability needs to be there.

The other thing that is quite clear now...I think something like 95% of the street kids have been sexually abused or come from very violent homes and have been very much physically abused. I don't think anyone would want to keep those children in those homes.

It's not simple. We're trying to say to you this is a very complicated issue. What is the rush to abolish something that has at least provided some safeguards and that has worked in some cases? There are some excellent programs that have worked. There are programs with single parents. There's the Zonta Club in Ottawa-Carleton, which works with young single parents. They have provided support to these young people. They're doing some marvellous work. There's the child care, funded by the Canada Assistance Plan, that is being provided in the schools.

There are programs that work. If you abolish CAP without putting in any conditions, the chances are that the baby will be thrown out with the bath water. Let's bring in some accountability.

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Please, we encourage you to do that and to bring in services that work; and let's make the Canada Assistance Plan more flexible. We agree with that, fully. But do not abolish these few remaining safeguards without putting any in their place; that's what we're saying.

The Chair: Thank you, Ms Brushett.

I think all of us were profoundly touched by your testimony today and by the examples you've given us when talking about the people with whom you're working on a daily basis and who have such a claim on our collective support. Thank you both for your presentation and for the work you are carrying out, which is so critical to so many individuals and to the future of all of us. We appreciate it very much.

Members, do you want to go right through or do you want to take a break?

Pause

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The Chair: From the Family Service Association of Metropolitan Toronto we have Maggie Fietz.

We welcome you and thank you very much for being with us.

Ms Maggie Fietz (Executive Director, Family Service Association of Metropolitan Toronto): I'm actually here to represent Family Service Canada. Family Service of Metropolitan Toronto is involved in another presentation a bit later, so they asked if I would come to speak to you.

Family Service Canada is a national voluntary organization that is committed to improving the well-being of families in Canada. We welcome this opportunity to make a presentation before you to express our concerns and ideas around the Canada Assistance Plan and the Established Program Funding.

We recognize the importance of the federal budget and the need for Canada to control expenditures and reduce the national debt. We realize that the families and individuals we represent across Canada are taxpayers too, and they are very concerned about the future of Canada financially, socially, and in some cases spiritually.

However, the proposed changes to the Established Program Funding and the Canada Assistance Plan have fundamental implications for families in Canada. I know this isn't the first time you've heard this today. At some point I'd like to respond to some of the questions you asked the previous presenters.

Federal support and cost-sharing for health services, social security and post-secondary education has enabled provinces, and in turn municipalities, to provide services and ensure universal access and minimum standards of support.

The proposed changes will place the never-popular social services systems in direct competition with the very powerful health and education sectors, adding competition not just for existing dollars but for reduced federal dollars.

The popular view of social services has always been that they are not really essential. After all, if people wanted to, they could earn a living, stand on their own two feet...and we could add phrases and phrases after that about the popular perception of the welfare system.

Health services, on the other hand, are seen as an inalienable right for Canadians. We should be able to get health services through not only one doctor but five or six doctors if we don't like the advice given by the first one. Any time we, as a society, formally sanction competition for resources between health and social services, health will gain and social services will lose.

In the opinion of Family Service Canada, the Canada Assistance Plan was an enlightened piece of legislation, probably before its time when it first came into being. It is also a piece of legislation that has served Canadians well. It enabled provinces, and thus municipalities, to provide social services and programs for people in need that would otherwise not have been available in every province in Canada.

Certainly in the Ottawa-Carleton area in eastern Ontario we had very evident examples of municipalities in Ontario and eastern Ontario that provided no supplementary services to their citizens, while at the same time the Municipality of Ottawa-Carleton did provide them. When the Canada Assistance Plan came into effect, the outlying municipalities were able to take part in providing programs and services they otherwise would never have been able to provide. The standards for services - and I know you've heard a lot about standards today and other days - and the accountability measures that were an integral part of that legislation, and therefore enforceable, were very important.

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Both the Established Program Funding and the Canada Assistance Plan ensured that services would be available to Canadians in need rather than only to Canadians with financial resources. The proposed legislation, without the authority to ensure standards of service and accessibility, will create a two-tiered health and social services system.

The impact for families who need support from our welfare systems, on either a temporary or long-term basis will be great and negative. The stigma of welfare will definitely return with assumptions of laziness and free ride taking precedence. Support and empowerment programs, often termed ``soft'' social services, will disappear as the competition for funding escalates. Child care and day care subsidies, already inadequate, will be more inadequate.

It has been our experience - the experience of over 100 family-serving community agencies across Canada that form the Family Service network - that when families and individuals are supported in times of need they have the skills and strength to function through difficult times. Health and social assistance benefits are essential at various times throughout an individual's or family's life span. Until now our health, education and social service systems in Canada have enabled a flow in and out of these systems without forcing people to move to other provinces, give up their homes for essential health care, or pay back the cost of achieving post-secondary education throughout their life spans.

Our agencies work with families every day. Family Service Canada is a national organization that supports the network of agencies that are delivering services. We're not an advocacy organization; we are a service-delivery organization.

Our agencies work with families struggling with the devastating effects of unemployment, and families where two parents work at low-paying shift work jobs, which is disruptive to child care and does not promote the kind of nurturing atmosphere that enables children to grow and develop in the way we know they need to. We also see the stress of economic conditions really contributing to separation and divorce.

For those of you who are not familiar with family service agencies, there are approximately 120 agencies across Canada, in every province and territory. Some are called ``family service'' centres or associations. Some don't have the name ``family service'' as part of their title, but they are family-serving agencies. They provide services and programs to individuals and families of all ages. Some run day care centres; some run seniors programs. All provide counselling, family life education and social issues work. They assist primarily with relationships, but some deliver direct help, such as running food banks and supporting meals-on-wheels.

There's a great variety of services, depending on the community and what is needed in that particular community. Services range from crisis services to problem-solving, teaching and prevention-focused services. One of our agencies in Calgary runs an extensive program for teenage mothers; and this was an issue that was raised in the earlier presentation. That program has received some funding from the federal government through the Brighter Futures, Better Beginnings program.

The program supports teenage mothers returning to school. There is a day care within the physical facility of the adult education school. It's not a day care where the mothers just leave their children and go to the classroom. The mothers go back during their breaks and at noon to feed their children and interact with the staff, who model better ways of parenting. They deal with their after-hours issues of problems with housing and emotional stress. That program is extremely effective in enabling those very young parents to have a brighter future for themselves as well as for their children.

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At present, funding for many of the services provided to families through the family-serving agencies derives from the Established Program Funding stream and the Canada Assistance Plan arrangements. Many of the agencies have purchase of service arrangements for counselling through their local municipalities, cost-shared 80:20 through the province and in turn 50:50 through the Canada Assistance Plan to the provinces. Many provide programs for family violence and childhood sexual abuse survivors through provincial funding which is obtained through the Canada Assistance Plan. Many are also providing services for effective parenting and anti-poverty programs through Health Canada funding.

With the reductions contained in the federal budget and those anticipated if the Canada Health and Social Transfer goes into effect in 1996, many of these programs will just not be available. Our network of agencies has seen the positive impact of these services and programs. Such services daily touch and improve people's lives. There is evidence that it really does work.

I want to add, because I didn't put it in the presentation, that the agencies also receive funding from their local United Way for many of the programs they provide. s you are probably also aware, all United Way campaigns in Canada are really struggling to raise the same amounts of money as they have raised in other years.

For example, in Ottawa-Carleton this year, Ottawa-Carleton is certainly extremely concerned about what's going to happen in their campaign as the federal service in Ottawa faces more downsizing and our major university is working on a forced early retirement program. Many more people are going to be out of the workforce rather than in the workforce in Ottawa-Carleton. The Ottawa-Carleton region, for the first time in its history, has had a higher than average rate of unemployment in Canada. So I'm just using this as an example of how this will affect the funding base for agencies.

I also believe...and I did not put it in the written submission, but I know from having been the director of a local family-service agency for eight years that we take the seed money dollars that are given to us through funding such as the Canada Assistance Plan, through our municipalities, and we double the worth of those dollars in the volunteer service we bring to that money. But without that base funding, without some money to get things rolling, it's very difficult to start a program and to find and recruit your volunteers and get people involved in order to provide that service. So I do believe the dollars that have been provided in this fashion have really more than doubled their worth.

One of our member agencies, the Family Service Association of Metropolitan Toronto, has recently completed a research project on young families called The Outsiders: The Prospects for Young Families. Their findings have particular relevance for this committee's deliberations. This research study concluded - among other things, because I've only quoted a couple of the facts from their study - that:

Young families, with heads under age 35, are at particularly serious risk of permanent marginalization. They are more likely to be poor than previous generations, more likely to be unemployed, more likely, if employed, to be low wage earners and have jobs in the `bad-job' category and to have part-time jobs only.

Households headed by a young person are disproportionately represented among recipients of government income support programs: They were 5 x more likely than older family heads to receive income from social assistance and twice as likely to receive unemployment insurance.

Yet these are the people who are raising children now.

This research has concluded that even with our present level of funding of social assistance, social services and health services, we are not supporting our young families. I would agree with the comments that were made earlier that we need to improve what we are doing. The status quo is not enough.

The proposals through Bill C-76 and the Canada Health and Social Transfer will not accommodate the needs of young families.

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The interrelationship between work, family, community and country needs to be recognized and emphasized as we develop ways to be fiscally and socially responsible and healthy. The concept is cyclical and circular: a healthy economy equals healthy communities made up of healthy individuals and families, and vice-versa. We therefore urge the Standing Committee on Finance to consider ways to restructure our social programs and the labour market to support and improve young families' situations and opportunities.

The future of Canada's well-being is contained in Bill C-76. That future is too important to be decided as part of an omnibus bill. Therefore we are requesting that the Standing Committee of Finance delay decisions related to Established Program Funding and the Canada Assistance Plan, to take more time to study the impact of any changes and to examine thoroughly creative ways of being fiscally and socially responsible on behalf of all families in Canada.

The Chair: Thank you, Ms Fietz.

Mr. Discepola: In your concluding remarks you say you want us to consider ways of restructuring the programs.

Sitting on this committee and hearing day after day after day...the biggest problem I have is how people like yourselves, and other groups like yourselves, fear what we're doing. I'd like you to clarify the situation, or maybe shed some light on the matter, because all we have done in Bill C-76, as a government, is given the provinces - as per their request - a year or two of notice before we do anything major. We have told them that instead of the traditional funding methods we have used over the past decades we're now going to give them one lump sum, and the only minimal restrictions that we're putting on them right now are that they must respect the conditions of the health care act...and only one restriction on mobility on welfare payments.

That's all we've done in Bill C-76. Yet everybody's interpreting the black picture that this will entail. I don't understand why you believe that.

You're saying also we haven't consulted. But that's the whole process that was initiated with Mr. Martin's budget.

Ms Fietz: I believe there has been a great deal of consultation, and I think the fears that are evident are because of the fact that we are now in competition with health and education by Bill C-76 saying it's all lumped together...over to you, the provinces, and you should decide how you are going to spend that money. In theory, we all see decentralization as probably a good thing, and the closer you can get to meeting people's needs on a regional-provincial basis, without a lot of parameters or central government saying how it shall be done...in theory, sounds fine.

But we know from past practices that until there were strict rules - and a way of enforcing them - about saying there would be equal access to services, welfare would be available to individuals, and not on a determination of who was deserving and who wasn't deserving, in fact, people did go without anything.

So that's where the fears come from. They come from our own history.

Mr. Discepola: But it's existing under the same system as we have now.

Ms Fietz: If it is, it's not clear.

Mr. Discepola: We'll give you examples. As the federal government, all we do is match dollar for dollar on welfare. We don't have any say as to how a program evolves in one province versus another. The current agreement says if the province spends $1 on welfare, we have to match it.

Ms Fietz: But the present agreement also says the provinces must prove to the federal government that the people who are on welfare are in need, and they do have to fill out a means test and be means tested. If that means-testing qualification disappears, then the province can decide what their own means-testing standard will be, or if they will set some different criteria for who is eligible for welfare. Right now, means testing is part of that process.

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Mr. Discepola: There are other indications. We've done studies to that effect. They show one province will spend a substantial amount on education, while another province to deliver the same service, spends relatively little of their own money. It all comes from the federal government.

So we don't have that much of a say, yet everybody is saying CAP is good, let's keep it, it's better than what we're potentially going to negotiate. What I'm getting at is let's give it a chance. We seem to be saying no, it's not going to work, before we're even starting to negotiate with the provinces.

Ms Fietz: You're hearing from groups like Family Service Canada because we have seen, especially, as I said, in the area of social services, that the voice that wins out is always the one that says you must be ``deserving'', you're not helping yourself, a hand-out is all we're doing, and the present standards within the Canada Assistance Plan really help to give an appeal process which allows the community to say we will not stand for that, and then allows some power for that to be adhered to.

It's not evident that it's in the bill that the same power and authority come through from the federal government, to say we're not going to give you the money.

Health care in Alberta is a very important lesson to us. There's no question, we know Alberta is going to go to private clinics -

Mr. Fewchuk (Selkirk - Red River): Don't trust the local politician. I hear what you're saying.

Ms Fietz: We know user fees around health care.... Look at what has been tried already, even before Bill C-76. That's the history we're bringing.

This is an opportunity for groups such as Family Service Canada to say why we are concerned. We're willing to work and to try to make things work once they happen. We're not just going to give up.

Mr. Discepola: We have to sit down, all levels -

Ms Fietz: Yes, absolutely.

Mr. Discepola: - and negotiate proper delivery of service and proper accountability.

I have a problem when I hear groups say to us that x% should be spent on medicare, on health services, another y% should be spent on social services. They're saying they want the federal government to remain very actively involved in the establishment of national standards. Yet you then want us, ``the federal government'', to go with the provinces and say not only are we cutting back the $7 billion over two years but now we're going to dictate how you should spend it. I don't think the provinces would be very receptive to that.

A program that's good for Newfoundland is not necessarily good for my province of Quebec. We have to give them the flexibility. How do you build in that flexibility if we're going to dictate to them more than what I feel should be basic national standards?

Ms Fietz: But there are different ways of dictating. If what is being dictated is a standard and not a dollar amount, then there's something to work with.

Mr. Discepola: That's the case. They know their dollar amount.

Ms Fietz: It's not evident.

Mr. Discepola: Yes, they do. The dollar amount is approximately $20 billion, reduced by $7 billion.

Ms Fietz: I understand that the global dollar amount is evident, but what I'm saying is that Family Service Canada is not promoting that social services must have 50% of that share or 10% of that share.

Mr. Discepola: But that's your worry.

Ms Fietz: No. That's part of our worry, but our real worry is around what happens when the standards are not there. Residency requirements.... Again you see it now, there are standards and principles. The federal government can say this is how the money must be used. It must meet these principles. If those principles aren't met, the money isn't there.

Mr. Fewchuk: I hear you. You want us to keep the pot of gold and -

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Ms Fietz: Keep the pot of gold?

Mr. Fewchuk: Yes; and then we have some strength to tell the provinces what to do with it, basically.

Ms Fietz: Yes.

Mr. Pillitteri: You made a remark here about having a national standard. I have some figures here. How can you not have faith in a province? My colleague mentioned that we spend dollar for dollar in provinces, with the dollar is being matched by the federal government. As a matter of fact we have a case, with Ontario, where it's not dollar for dollar. In Ontario, for every $1 spent, the federal government only puts in 29 cents in assistance. A cap was put on because the federal government of the day felt it was spending too much money.

We're losing this trust in the provincial governments, yet the province of Ontario spends the highest amount in welfare payments. How can we lose faith in a province that is receiving much less than the other provinces in Canada, which are being matched dollar for dollar...?

I could go on to say that for a single person in Prince Edward Island benefits are $7,900 and something, and in New Brunswick, which is the lowest, it is $3,060, and in Quebec it is $5,900, almost $6,000. Yet in Ontario it's almost $8,000. When you consider a single parent with a child, Ontario tops the list with $14,700. And here the federal government is capping at 29 cents per dollar. So how can we say that we don't have this trust in the provincial government? Here we already have a clear example that for the past six years the province of Ontario has received so much less and yet provided the service it feels it can do?

So when we have presentations, time after time, not trusting the provinces, I think it is putting the cart before the horse. Here's a prime example. It's not what we feared it was going to be doing, it is what it has done already.

Ms Fietz: I think if Premier Rae were sitting in this chair today, he would say that has to stop for the provinces as well, because it is only adding to the provinces' deficits. We're certainly all aware of what the Province of Ontario has said about what is happening with its deficit and where it is going. We also know we have an election in Ontario, which is coming very soon, and there's no commitment that that will continue to be the case.

Mr. Pillitteri: On the other hand, Mr. Rae and all the other provinces like to have this opportunity to have open block funding. I haven't heard them say, we don't want the block funding. If anything, they're saying, yes, we're being short-changed, and yes, we're getting less money, and yes, the federal government is short changing us, and all the provinces are coming up with facts and figures on how much they're being short-changed. But none of the provincial governments is saying, we don't like block funding.

Ms Fietz: And if I were representing the province of Ontario, I'd say I wanted block funding, too. But unfortunately I would be making this same presentation to the Province of Ontario, because the social services area is going to be short-shrifted by the provinces as well and through the municipalities, and we know that as well.

There is no question that if you take away the straight financial payment for welfare assistance and then you look at where the money is going to support families, and to support day care and child care, we have another situation to look at. That was what I was talking about when I talked about soft services.

Mr. Pillitteri: But let's not forget that the provinces as well as the federal government would like to have some accountability for how money is being spent. When you have a program which is funded by both, in equal matching, I don't think at the moment anyone would take the responsibility of spending the money, because they're spending only 50-cent dollars.

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Therefore I think it is not only to the feds but to the provinces that the people should be lobbying and asking where and how this money is going to be spent.

I think you have a perfect opportunity right now to bring this up, especially in the province of Ontario, where there is an election going on.

Ms Fietz: Believe me, that is being done. But speaking on behalf of a national organization, we feel very strongly we need to have national standards in order to keep this country together and if we don't have something that makes Canada Canadian, then we will all fall apart or we'll have a very strange system.

Mr. Pillitteri: I have one last question, one I was asking last night. How do you feel about this? In the province of Ontario we are, I'd say, one of the three wealthiest provinces in Canada.

About the amount of money being spent on social assistance, we have somewhere around 38% of the population of Canada in Ontario, yet some 46% of the people who are on social assistance draw in the province of Ontario. Do you think it is related to how much the benefits are? Is it that there's no work or more need in the province of Ontario? Or is it related to the highest social assistance in the country?

Ms Fietz: My own belief is that it's really related to the fact that the economic recession hit Ontario the latest. It took longer for the economic recession to hit the province of Ontario than many other provinces in Canada. That's one of the reasons why you see that statistic sitting there today.

[Translation]

Mr. Brien: Before I ask my question, I have something to say. It has to do with a concern I just heard. We don't exactly know how the new Canada Health and Social Transfer will be split and we don't know exactly who will be affected the most.

You mentioned something important, that is the competition that there will be between health, medication and the social welfare for the distribution of that envelope.

Mr. Discepola said earlier that all the money was put in one pot and that only two criteria would apply, but we must not forget that $7 billion were cut over two years. Therefore, there is less money and we know for a fact that the interest groups will fight among themselves. All those people are at the full front, they are part of the social security net. How will we be able to manage with the competition and with the choices that the provinces will have to make? Are they going to be able to offer satisfactory services with the financial means they will have for health, education and social welfare, or will we have to face a crisis?

The Chair: I'm sorry, but we have to interrupt.

[English]

Excuse me for interrupting. We are having a vote in the House. I will stay, and Pierre, you will stay.

Could we have one more person stay? It's on a private member's bill on the funding of provincial parties.

Thank you. That way we can keep a quorum for hearing witnesses.

[Translation]

Mr. Brien: Even if we still have national standards, we won't be better off. The principles will be there, but we won't be able to respect them given our financial means. Therefore, national standards are not necessarily the perfect solution to your needs.

[English]

Ms Fietz: It's only a partial solution, but I think if that fundamental framework of national standards is there, it allows us to work together; the province with the family-serving organizations, with the municipalities. It allows them to work together and not be fighting about the base standards, so the energies can all be put into creating and the creativity of finding programs that work, and using fewer dollars and being much more efficient and effective in the programs that are put on.

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But if the standards aren't there, then I think a lot of energies, especially in the social services area because of the welfare stigma and all those other things we've talked about, will be diverted into the standards instead of into using the dollars that are available in an effective way to help people. That's my concern: that we use our energies in the most effective way.

[Translation]

Mr. Brien: Let me give you the example of Quebec. It seems to me it is the other way round in our province. If there were to be national standards, we would fight forever about those standards.

I am sure that the public would put pressure on the provincial government if they were to define their own standards. People care about the social security net and they will put enough pressure so that it won't be necessary for the two levels of government to come to an agreement.

I have the feeling that this debate won't be so evident in Quebec and that we will be able to put the pressure on the provincial government, no matter what the future holds, so that they establish standards that meet our needs. I fear that if national standards have to be set for the whole of Canada, all the energies will be spent on that. We will fight to set those standards, nobody will know who is to be held responsible, we will get lost in endless discussions and no action will be taken.

[English]

Ms Fietz: I think, though, when we talk about standards, we're not talking about quotas or saying this much money must be set aside.

The debate around standards is really being very clear about what the basic right of an individual in Canada to a service is, and what they have to do in order to get that service. If those standards aren't clearly articulated and if there isn't some way of enforcing them...if the federal government has those standards for the money it gives, it cannot control the money the province or municipality obtains through its own auspices or its own tax structure, but it can say you will use our dollars, which will then at least have a base standard there for people to work on and then develop the further standards.

It's not an easy question, but I think that's our real concern. It's because of the history we've lived through, both in this province and in other provinces of Canada, where the fight for any kind of universal access to social services has been very difficult.

The Chair: You have raised very clearly one of the tremendously difficult issues of what our country is and the issue of governance, the relationship of the federal government to the provinces. Because my leader has said we will never again talk about the Constitution, I won't, but you along with many other groups and witnesses have very clearly indicated to us you want to see standards of some sort.

Whether we can get them through agreement and by sitting down with the provinces, I don't know. I don't think that's totally foreseeable.

If we attempt to find standards through the negotiating process and can't, then perhaps we will have to act unilaterally to impose some. Certainly you and many others have indicated there must be standards of some sort.

And you have made a very forceful and cogent presentation. We thank you for your presentation, but also for the work that you do on a daily basis.

Ms Fietz: Thank you very much. If we can be of any assistance in the process, we'd be glad to help.

The Chair: Keep informed and keep in touch.

The next witnesses are from Project Genesis: Yetta Kleinman, Nadia Rotter, Abba Brodt, and Denyse Lacelle.

[Translation]

Good afternoon. What is Project Genesis?

[English]

Ms Yetta Kleinman (Volunteer, Project Genesis): We'll be happy to explain that in the first part of our brief.

[Translation]

The Chair: All right.

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I have lived in Côte-des-Neiges and I look forward to your presentation.

Ms Denyse Lacelle (Community Organizer, Project Genesis): We're happy to be here. First, let me introduce my colleagues to you. I have with me Mr. Abba Brodt, who work as a volunteer for Project Genesis offering individual services, Ms Yetta Kleinman, who is also a volunteer, Ms Nadia Rotter and myself, Denyse Lacelle, Community Organizer.

Before we start reading our brief, we wish to thank you for having invited us. We are convinced that the very down-to-earth point of view of a small organization well establish in its community has its place in the debate surrounding Bill C-76. If it is passed as is, that bill will have a very strong and dramatic impact on the population of our neighbourhood.

According to Statistics Canada, in 1991, 40% of all the families and 55% of all single people in our neighbourhood lived below the poverty level and 52% of the population was neither British nor French, therefore made up of all or nearly arrived immigrants. It is a neighbourhood plagued with all sorts of social problems.

Our mandate being to advocate the rights of those people, we find it important to take a stand on different issues, including the abolition of the Canada Assistance Plan.

First, we will tell you about Project Genesis. Second, we will tell you what we think the impact of the abolition of CAP will be on social welfare. Third, we will talk about the effects it will have on the Canadian health assistance and, finally, we will make a few suggestions about what the government should do instead of what it is doing now.

I will now hand you over to Ms Kleinman who will explain Project Genesis.

[English]

Ms Kleinman: Project Genesis's history and progress.

Project Genesis is a community-based grass-roots organization founded in June 1977 after research by the School of Social Work at McGill University on the needs of the Jewish poor in Côte-des-Neiges. While this research identified and dramatized the living conditions of the Jewish poor in the area, it was recognized that the findings could be generalized to the Côte-des-Neiges population at large.

Since then, Project Genesis has not only worked in the community but has worked with local residents to improve their quality of life and to empower them to address community problems.

Located in a storefront at 5940 Victoria Avenue, Montreal, Project Genesis is accessible to the public it serves. Our over 100 regular volunteers reflect the community in which they work. Our programs address, essentially, both residents of the community and the broader Montreal community. We believe people can, with minimal support, identify and find solutions to both individual and community problems.

Storefront services of information, referral and advocacy are the backbone of Project Genesis and provide trained volunteer advisers to assist over 2,000 people a year on a work-in or call-in basis with problems related to pensions, welfare, unemployment, immigration, health and social services, housing, homelessness, etc. These services are available in 14 languages, including Creole, English, French, Hungarian, Polish, Russian, Spanish, Tamil, Yiddish and Vietnamese.

Storefront services ensure that individuals have access to the services and benefits to which they are entitled and have sufficient information to exercise their rights. Going well beyond an information and referral service, our trained volunteer advisers offer advocacy and help people advocate on their own behalf.

Those who use our storefront services are truly disadvantaged because of their poverty, their status as recent immigrants, their advanced age or their lack of formal education. Over 40 volunteers offer their services to the community in the storefront either as receptionists or as advisers. People of 46 different countries of origin benefited from the storefront services in 1993-94.

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Services also include a yearly income tax clinic, which assists about 300 low-income families and senior citizens through accountants who volunteer their time. Twenty four accountants offered their services in our storefront last year.

The Home Advocacy for Seniors program is a recent extension of storefront services which targets shut-in seniors and the physically challenged who can no longer come into Project Genesis but are in need of these same services.

Over 21% of the population of Côte-des-Neiges is over 65 years of age, as opposed to the Quebec average of 10%, and 10% of the population is over 75 years of age. It was therefore essential to adapt our services to meet the changing needs of the community.

The Home Advocacy for Seniors program is offered by a team of 15 volunteers, most of whom are themselves senior citizens.

The Project Genesis Legal Service is offered one evening per week by volunteer lawyers and five days a week by law students. Twelve law students and nine lawyers offered their services to the community. Legal information and advice were offered to over 1,570 clients in the past year. Low-income clients were assisted with problems related to divorce and family matters, immigration, poverty issues, debt and bankruptcy and landlord-tenants rights.

The Outreach Program ensures that we reach the most isolated members of the community. A team of volunteers knock on doors in the area identified as having high percentages of the poor, new immigrants, the elderly, or single-parent families. They inform residents of our services, refer to other community and government services, offer immediate help in situations of crisis, and identify community needs, which together with their neighbours they can then address. Over 3,000 families were reached through this program last year.

Outreach serves not only to identify needs but to involve those affected by a situation in improving their quality of life. It was through Outreach that Project Genesis has successfully involved residents in working on issues that they identify. For example, tenants' committees have been formed to respond to problems of unsafe housing and security through the development of a sense of community. Despite differences, local residents have been involved in larger social issues as well, such as welfare reform and promoting social housing.

Our community organizing program is the means by which we work with those who live in the community to improve their quality of life, to renew or improve services...support groups, improvement of living conditions, public sensitization and social change. It is also the program through which Project Genesis works with other community organizations and public establishments to find solutions to broader problems.

To name some of our recent efforts, we successfully lobbied to ensure the recognition of the right of the homeless to welfare, worked to found and support the Côte-des-Neiges/Snowdon Community Council, and have developed an annual sensitization campaign against discrimination in housing which is now citywide. We have established Multi Caf and worked to ensure its independence. We have invested energy in the development of community recreational resources: a pool and gymnasium. We're involved in the development and now the consolidation of the CDEC, or Corporation de développement économique communautaire, and have established specialized services to help seniors maintain their autonomy; and so on. As an organization, our work has also consistently addressed issues of social policy with community residents, as well as through our sustained and active involvement in a number of coalitions.

[Translation]

Mr. Abba Brodt (Volunteer, Project Genesis): This part of our brief is called «Impact du projet de loi C-76 sur les programmes de sécurité du revenu».

One of the main parts of this bill deals with the Canada Assistance Plan which is to be abolished on April 1st, 1996. Until now, Canadians have been able to count on government help for welfare, children's welfare, health care, hospital care, rehabilitation, etc.

The Budget speech, given by Minister Paul Martin last February, includes the abolition of CAP and the merging of the cash contributions to welfare, health and education within a single Canada Health and Social Transfer.

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There are three matters related to that announcement that concern us a great deal because of their significant impact on residents in our neighbourhood, as well as on all low and middle-income Canadians. First of all, the CAP guarantees a number of rights that we feel are fundamental. If it is abolished, only social assistance will be maintained, without any thought being given to the province of origin. Everything else will disappear: guaranteed income when the need arises, a subsidy that reflects an individual's material needs, the right to appeal and the right to not be forced to work in exchange for benefits. The consequences of the disappearance of CAP can be disastrous. Provinces may decide to completely abolish social assistance for some segments of society, as was done in some American states, or they may even impose strict limits on the amount of the benefits.

Every day we meet people who are desperately looking for work and are unable to pay their rent and food, and who must rely on food banks and shelters. Such poverty is unacceptable. Society must act to make sure their situation doesn't worsen. Without the aforementioned rights, a province could also decide to withdraw the right to appeal a ruling that is deemed unfair or erroneous. Our welfare system is a nightmare and we know that the officers make a tremendous number of mistakes, so withdrawing that right to appeal is unconscionable.

Every year, more that 20,000 people participate in Project Genesis. The percentage of participants experiencing problems with social assistance, such as being in the wrong category, unfair cuts, errors of all types, increased 136% between 1992 and 1993-94.

Without those rights, a province could also decide to force people to partake in employability development measures, training courses or workfare, which is really volunteer work in exchange for benefits.

There are two aspects of that that worry us. That seems to be the way the Quebec government is headed for welfare recipients who are capable of working. Also, the Finance Minister said he wanted to overhaul the unemployment system to make it an active, rather than passive, support system. We believe the federal government is also going to impose those criteria.

We would like to take a few minutes to tell you why we object to workfare and explain how important it is to us that this never be implemented.

For over six years now, Quebec has had income security legislation under which recipients could participate in various employability development measures. There was, however, a penalty if recipients refused to do so and these past six years have clearly shown that such a system is inane.

What is the point in dragooning those people into programs that don't lead to any job anyway? A study was carried out by the Quebec Department of Income Security on the impact those measures had on job access and the duration of employment; the report concluded that the program participants found a job more quickly than non-participants, namely two weeks quicker, and that they kept their job longer, 0.8 months longer, to be precise.

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Why claim they're training people when they have no idea what skills the job market needs? Why give people hope they can get out of their lot only to have them feel even more desperate afterwards?

Let's be clear. We have nothing against training programs as long as they really do provide some skill, which means people must be willing to invest a significant amount of time and money. We have nothing against the idea of developing employability either, as long as measures are taken to make sure there are real jobs at the end of the road.

We also feel volunteer work is worthwhile; in fact, a great deal of the Project Genesis is done by volunteers. But volunteer work must remain just that, free, and not be turned into some sort of community work sentence that is imposed on those considered guilty because they are without work, as if they were responsible for the continually high unemployment rate of 10% over the past few years, as if they were responsible for the massive layoffs we keep seeing, both in the private sector, and as was the case with the 10,000 Bell Canada jobs, or in the public sector.

Ten thousand jobs in Quebec health's system are going to be cut in Montreal alone, and the bill we are referring to today also provides for the elimination of at least 45,000 jobs. That is why, in our view, paragraph 15(3)(a) of the CAP must be kept.

We also have some doubts about block funding. How will the federal government be able to ensure all Canadians enjoy the same rights and opportunities? How will it be able to impose the same standards in all provinces?

Finally, we are vehemently opposed to the planned cuts for the next three years. Social assistance, health and education are already underfinanced. The government must not reduce our deficit on the back of the poor. The effect of the announced cuts will be to make the cheques even smaller for the 808,000 Quebeckers who rely on them for survival, when they already only receive between 40 and 55% of the poverty income threshold. The cuts would also mean that health services would suffer, some services may no longer be covered, some may be privatized, and it would also speed up the creation of a two-tiered health system, one for the rich, and one for the poor. The cuts would also mean even further restrictions to the rights to education, compromising the future of young people who are constantly being reminded of how important it is to be skilled. I do not think Canada can afford such political choices, choices that will marginalized even greater segments of society.

[English]

Ms Nadia Rotter (Volunteer, Project Genesis): Impact of Bill C-76 on the health care system.

Devolution of the Canada Assistance Plan (CAP) effectively signals the end of a health care system which is universal and accessible to all. To argue otherwise is simply to deny the Canadian public the right to an honest and open discussion.

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Health care standards cannot be enforced simply by harsh words or recommendations. Once the federal cash contributions are gone, so are the five principles of the Canada Health Act: universality, accessibility, comprehensiveness, portability, and public administration. Cash contributions are the only remaining tool that can be used by the federal government to ensure national standards are being met.

We now know after several experiences with the federal government, most notably the Axworthy reform and consultations which followed, that the term ``reform'' usually refers to cut-backs, cut-backs which are targeted at the poorest Canadians. What Canadians were not willing to accept as the Axworthy reform is no more palatable as a budget, with very limited opportunities for consultation or information offered.

Canadians have already been forced to endure severe cuts to health care and the system is unable to meet the current needs of the citizens we see in our storefront each day. People are forced to pay or go without needed medications that are no longer covered by medicare. Senior citizens are in need of home care services, which have been cut so severely they are forced to hire homemakers or go without any services. As a consequence, seniors must often be rehospitalized.

Seniors with reduced mobility who must go to medical appointments call us regularly for help with transportation, which we cannot provide, and which volunteers, who are often seniors themselves, cannot come close to meeting the need for, in even a small section of the community, much less the entire area. Yet it is clearly more cost-effective for the government to provide adequate home care services than it is to institutionalize a senior whose main problems are that she can no longer clean her home, do the laundry work, or cook.

In Montreal, as a consequence of provincial government cuts to health care, 1,200 hospital beds and 9 hospitals will be closed. The budget allocated to home care as compensation is $21 million, less than half the amount the regional board estimated would be necessary to meet actual home care needs before the move to one-day surgery and the cut-backs in hospital services were announced. Hospitals are being closed within the next eight months, while there are still no concrete provisions for additional home care. What can seniors and those who are ill expect when the CAP transfer payments take effect in 1996?

Canadians have heard so much about our deficit, our debt, and the burden our health and social programs create for our economy. Considerable effort has been made to ensure that all Canadians believe we can no longer afford our health care system.

Yet the impression our costs are out of control is not based on facts. Health care costs average $1,500 per person in Quebec versus $2,000 per person in France. Canada's health care system is less expensive than that of the United States, despite the fact that over 37 million Americans have no health insurance. The United States, with which our government consistently compares itself, is one of the richest countries in the world, with one of the worst records in almost every international measure of social standards. Is this what we want to use as a model?

We are here to say that Canadians don't want an American lifestyle. We do not believe we have no choice. Our health care costs are not skyrocketing. In Quebec, health care costs have not increased more than GDP growth has for many years. More generally, our social programs have contributed only 6% to the growth of the debt since 1975.

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True reforms are needed, but this is not synonymous with cuts. It means reforms to improve our system, to reduce waste, to ensure adequate home care services for seniors, to develop alternatives and fund them, so that expensive hospital care is less necessary, and to invest in prevention instead of eliminating all but crisis intervention.

Health care for Canadians is the responsibility of both levels of government. The federal government has an additional critical role to play in ensuring that national standards are developed and implemented. Abdicating from this responsibility by allowing the provinces to control all federal contributions is tantamount to telling the Canadian people they no longer feel that these standards are a priority for the country.

Canada's international reputation is largely defined by decent social programs, accessible health care, and education, and now we have put them on the chopping-block. We are being asked to accept more than mere cut-backs. We are faced with a changing vision of responsibility and a dumping of government responsibility onto the community. There is no consensus on this government vision, which means increased responsibility and changed mandates for the voluntary sector, increased responsibility for families and particularly women, to help those in need: the poor, the ill. Perhaps governments have not noticed the significant changes in community and family models in the last 50 years, and that these solutions cannot work.

Poverty and poor health go hand in hand. By cutting financial support for our social programs the federal government is both creating more poverty and ensuring a larger strain on our health care system in the near future. Will the answer then be simply to cut even further?

Our work involving community residents in discussions on the budget has proven that most Canadians are not aware of how the budget cuts will directly affect them. Terms such as ``Canada Assistance Plan'', ``tax points'', and ``transfers to provinces'' do not mean anything to most citizens.

We urge you, our representatives, to speak openly about what is in the works. Instead of a new social transfer, let the people respond to the shifting of responsibility from the federal to the provincial governments by telling them precisely what it means. If we are going to dismantle our national health care policy, then will you at least allow the public an honest opportunity for some input?

[Translation]

Mrs. Lacelle: Finally, living within our means. There is no doubt in our mind that the government does not really intend to modernize our social programs, to use Mr. Axworthy's euphemism. What it really wants to do is to cut the funding of programs which help the poorest among us, by pretending that we don't have a choice. We believe this statement is totally misleading. There are alternatives.

[English]

If the government is serious about attacking the deficit, we feel there is much to be accomplished in other areas. In our opinion, the principal causes of the deficit have been the drop-off in governments' revenues, in part because of deficiencies in the tax system, as well as our interest rates.

[Translation]

Allow us to question the dubious decision of the Bank of Canada who come on by pretending that it was trying to control we don't know what inflation, maintained inordinately high interest rates and thus contributed to increase the interet we have to pay on our debt. Allow us also to ask why such a high portion of the debt held by the Bank of Canada, on the one hand, and by individuals, on the other, has been transferred to chartered banks, who are getting rich in the process, and to foreign markets. As far as we are concerned, it seems that such a short-sighted policy is rather expensive.

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Also, we believe it would have been possible for the government to replenish its coffers by abolishing, completely rather than partially, the capital gains tax exemption last year immediately, rather than gradually over several years. Similarly, we are rather puzzled by the fact that rich individuals holding family trust have been granted a reprieve until the abolition in 1999. We could give you dozens of examples along the same lines, most of them coming from the auditor general's annual reports and showing how outrageous the government's dispositions are when it leaves aside the revenue it could get from the large corporations and the richest individuals, while it does not hesitate to cut deeply social programs which help everybody, particularly low or middle-income people.

Thank you.

The Chair: Thank you very much. Mr. Loubier, please.

Mr. Loubier (St-Hyacinthe - Bagot): Welcome, ladies and gentleman, to the Finance Committee.

I don't have a particular question to ask, I simply want to make a comment about what I heard. I totally agree with your point of view. There are other ways to look after public finances and to control them in the long term. I don't want to be partisan today, but I must say that we have been saying to the government over and over for a year and a half that there are alternatives to deal with the country's financial situation, including an in-depth review of the federal tax system.

It's unbelievable that, given our present needs and the underground economy which is emerging, we are the developed country with the less reviewed and less modernized fiscal system. I can tell you that we have been on the government's back about this ever since we arrived here.

The other interesting aspect of your presentation is the comment you made about loopholes and family trusts. It's rather hypocritical, I'm sure you'll agree, to say that these measures have been taken in response to the critics formulated by the opposition and the general public asking for theses trusts to be abolished, while waiting until 1999 to do so. It's like telling a robber two years in advance that the police is going to come.

So, let me tell you that I absolutely support your point of view as well as the alternatives you propose. I would even encourage you to tell the government a little louder that it might be in order to review all this instead of asking the most in need, the ill and the elderly to pay. There might be people in Quebec and in Canada who do not pay their fair share of tax and who should do so.

These are the comments I wanted to make, Mr. Chairman.

The Chair: Thank you very much.

[English]

The Chair: Mr. Pillitteri, do you want to add anything?

Mr. Pillitteri: Yes. Instead of asking Mr. Loubier, I would like to ask the members making the presentation.

In this block transfer proposed in Bill C-76 the only change is in the social assistance, that no residency be required. The five points of the health act are still there. If there is any of the beef of the cuts within Quebec it is strictly...you know what that is: so many cuts to such a depth. That is not because of the cuts of the transfer. It is because the Government of Quebec chose to cut even deeper than the transfer proposes.

In your presentation you make use of cuts that have already existed, not the ones that are going to be coming. This bill deals only with the ones that are coming. You're making reference to what has happened in the past. I wonder if the people of Quebec chose Ottawa to make a political...but it chose another venue, a yes vote at any cost.

I wonder if any of those provisions which are within the health act now represent anything to the people of Quebec. That's not for you to answer. That's something you possibly have to live under. How can you say that those changes would be so devastating at the moment?

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There's very little change. There's nothing within the transfer of post-secondary education and nothing in social assistance. Certainly the five points of the health act are maintained. There's nothing really in changes except giving the provinces, especially Quebec, control of their own future. They've especially been given more possibility to do whatever they want within social assistance and post-secondary education. I understand none of the provinces have really been saying they don't want the changes. The provinces actually want those changes.

How would you respond to that?

Ms Lacelle: I would like to answer on a few points.

[Translation]

First, you are saying that what we are talking about in our presentation is due to decisions made by the Quebec government. What we wanted to show is that, given the present situation, the $7.5 billion cuts which are going to be made over the next several years are going to have a dramatic impact on people. The situation is already bad. Each cent which is going to be cut will increase poverty and all kinds of social problems. That's what we wanted to show.

The question is not whether Quebec would be better off alone, with its own taxes. That's not what we wanted to focus on. We simply wanted to say that the cuts which are going to be made and those which have already been made through the recent budgets of the federal government, both those of the Liberal government and the previous Conservative government, in the area of unemployment insurance and in social programs as a whole, had a negative impact in Quebec as well as in Canada. We believe that the situation is such that any other cut would bring us down to a level which we should not be allowed to fall under.

Second, you say that in Bill C-76, there is very little change. This is not true. Two of those changes can be found in the Budget speech given by Mr. Paul Martin last February. About the Canada Health and Social Transfer, Mr. Martin assured us that the five principles of the Canadian Health Act would be maintained. We agree they should.

The Chairman: That's true.

Mrs. Lacelle: However, to the extent that the federal government intends to continuously reduce its financial contribution to the provinces, how will it be in a position to ensure that these five principles are going to be maintained? We believe that without a direct financial contribution, this is wishful thinking.

Regarding the income security programs, Mr. Martin claimed that the obligation not to impose the residency criteria in the CAP would be maintained; however, the other criteria are going to be eliminated, such as the notion of a needs based income, no workshare, as it is called, ensuring that people have a right to an income, regardless of their needs, etc. These principles were included in the CAP and are going to be eliminated, only one out of five is going to be kept, and we find this alarming.

[English]

Ms Rotter: I want to add that we are afraid of the block funding because the sum given to the provinces is getting smaller. Each province will have the right to dispose of their sums the way they think is right. We will not have an equal system in every province. That is very dangerous, because the Canada Health Plan was supposed to ensure equal access for all provinces. But if the provinces get the block sum each of them will be able to dispose of the money whichever way they will want. This a dangerous precedent.

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Mr. Pillitteri: Today, under the present conditions, you don't have a standard throughout Canada on social assistance. It varies from province to province. As a matter of fact, it changes from region to region. So that is also the pressure of the people of Quebec, or whatever parts of Canada we might be in... also to put pressure on the system; on that government of the day.

We see here in Ontario, as a prime example, that within social assistance the federal government has provided only 29¢ of every dollar, yet it is the highest within the country. That means the province cared to put in more on social assistance than any other province in Canada. It is not because the standards are high.

New Brunswick, if you're looking for matched dollar for dollar in social assistance, is the lowest in the country with only about $3,000 for a single person, whereas in Prince Edward Island it is the highest in the country. So there's no national standard there as it is right now.

That block funding... as I said, the Province of Ontario does act almost as if there were block funding. I can't see that it will have that much of a negative impact. I don't fear as much as you fear from the provinces - unless you fear the political atmosphere in that province.

Ms Rotter: We have examples such as Alberta.

Ms Lacelle: You're right about saying that currently it's not all the same from one province to another. We wanted to point out that at least basic rights are provided by the CAP that are still there from coast to coast; basic rights to ensure you will have a minimum income, whatever the reason is for the need. You will have the right to get this income without being forced into any kind of work or study or programs which we can see from our experience just don't help anyway.

These are basic rights independent of the fact that the benefits might be lower or higher from one province to another. We want to make clear that these basic rights are important to us.

Mr. Pillitteri: It is the same with post-secondary education. They have transfer payments, but they don't have to spend the money there. We have proven cases. As a matter of fact, I could say the only province which is more honest, in a sense, in spending within post-secondary education is the Province of Quebec. Other provinces are not spending the money within the area of post-secondary education, as it is earmarked for. At the moment, with the exception of health care, it's the only one which is really meeting the five conditions; and it is similar to a block transfer.

Ms Rotter: We are concerned about health care, about medicare, because as long as the government was paying for medicare, it could withdraw some if the province did not conform to the five principles. But if they give a bulk sum, they don't have the power to withdraw the money from medicare because they don't know where that money is.

We have the Province of Alberta which is already trying to have a two-tier system where there are people who can go to a private clinic, for example. This is against -

Mr. Pillitteri: They're trying. It's not there yet. They're trying.

Ms Rotter: They're trying. There is already something there.

Mr. Pillitteri: Under the Canada Health Act it's still protected; and it will continue to be protected under this bill.

Ms Rotter: To our mind, this is dangerous.

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

[Translation]

We share your concern about the federal government not having much money available.

[English]

We have already announced that we feel the government must always maintain a cash portion sufficient to ensure the standards you've talked about. So I don't think you have to worry about that as far as we're concerned.

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The only thing in your whole report where I think we could benefit from a great deal of enlarging is your alternatives. You said the portion of our debt held by the Bank of Canada should be increased. How do we do this? Could you explain that?

Ms Lacelle: I don't know how we do that. We already wrote to Mr. Martin to ask him why this part -

[Translation]

The Chair: I can explain that. We can print money. We can use it to buy back our debts, just like old developing countries did 20 years ago, including Argentina and Brazil, where inflation soared. If it was so easy to eliminate national debts, every country in the world would print money and erase all its debts.

You very eloquently described your action in favour of people within your community. You also described very well the problem arising from the cuts and the impact they will have on people you have to serve. We all really appreciate the work you are doing. Thank you for coming and good luck.

We are now going to suspend the meeting for a short while.

Pause

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[English]

The Chair: Our next group is from Campaign 2000 and we have Rosemarie Pophan, the coordinator; Mary Pat MacKinnon of the Child Poverty Action Group; and Kristin Underwood of the Canadian Institute of Child Health.

I'm sorry for delaying your testimony but we look forward to it very much. Thank you very much.

Don't you dare tell them about anything that happened, between you and me, when we were in high school together.

Ms Rosemarie Pophan (Coordinator, Campaign 2000): I promise.

The Chair: Or even worse...something that didn't happen.

Ms Pophan: I promise.

I understand that Campaign 2000 is the last to speak. Is that correct?

The Chair: No, we're going through until after 10 tonight.

Ms Pophan: We will certainly stay within the timeframe. The three of us have presented to different committees over the past four years, around child poverty, and I personally have never felt so much was at stake. We recognize the complexity of the task before you and the seriousness of the fiscal deficit and are here today to plead with you that the federal government not give up leadership around child poverty.

Campaign 2000, as many of you know, is a non-partisan organization of 50 organizational partners; we're across Canada; and we're committed to ensuring the implementation of the 1989 all-party resolution to seek to achieve elimination of child poverty by the year 2000. Since each of you was elected, Campaign 2000 has been reminding you of that commitment and has provided each of you with its annual report card and a copy of our Investing in the Next Generation: Policy Perspectives on Children and Nationhood, which is our blueprint for what we think needs to be in place federally to support families with children.

I would like to go back to a year ago today, when we were very heartened by the Liberal government's commitment that ``one of the key objectives of government, in undertaking social security reform, is to reduce child poverty''. The supplementary paper to Mr. Axworthy's green paper listed a few of the impacts of child poverty: the infant death rate is twice as high in poor neighbourhoods as it is in non-poor neighbourhoods; poor children are more likely to die from injuries than other children, and this is a life-and-death matter; poor children are more likely to have chronic health problems; and poor children are more likely to have psychiatric disorders, poor school performance, and poor social skills.

The list goes on. The consequences go further and deeper. We've brought you copies of a report card on 1994, in case you've lost the ones we gave you earlier, which provides a well-documented, deeply disturbing picture of 1.5 million poor children, an increase of 53% since 1989.

Today it's evident that this committee in fact is responsible for social security reform in Canada. If it is still the goal of the government to ``reduce child poverty'' then this committee will need to struggle with five questions we want to put before you. If it's no longer the goal of this government to end child poverty or ``to reduce child poverty'', then Canadians have to know that.

We believe there are five questions the finance committee must ask on behalf of Canada's children as you deliberate on Bill C-76: (1) are children a federal priority; (2) how will this bill affect families and children, especially those in low- and modest-income families; (3) do Canadians want the Canadian government to take leadership in tackling child poverty; (4) what can the federal government do to tackle child poverty; and (5) what can the finance committee do for low- and modest-income families with children?

Starting with (1), are children a federal priority, we can measure a nation's priorities by looking at how it spends. The 1993 UN report on human development ranked Canada number two in human development. That was great. But when Canada's rate of child poverty was factored in, we plummeted to seventh place. The reason was simple: we spent less than other industrialized countries on social security and programs for families and children.

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In a study of 20 countries in 1994, Canada ranked 16 out of 20 in income security spending as a percentage of GDP. Then when we saw in the 1995 budget the commitment to reduce public expenditures to 1951 levels relative to GDP, we were extremely concerned.

A preoccupation with the fiscal deficit has now distracted us from an already shaky commitment to invest in families and children. As Mary Pat and I will illustrate in our presentation and Kristin, when she joins us, in responding to your questions, the Canada Health and Social Transfer wipes out all of the evidence that children have been a priority at all for the federal government, by giving the fiscal deficit the only priority in Canada.

Ms Mary Pat MacKinnon (Child Poverty Action Group, Campaign 2000): The second question is: How will Bill C-76 affect families with children, especially those in low- and modest-income families? We believe Bill C-76 indeed signals a retreat of federal leadership in caring for children.

Child poverty and family insecurity are national problems requiring national solutions. The federal government should have the primary public responsibility to contribute to the income security of families with children as it does indeed for senior citizens. However, Bill C-76 eliminates most of the major strategies for national support for families with children.

The Canada Health and Social Transfer goes in exactly the opposite direction to that which Campaign 2000 has been calling for; that is, it withdraws its support for modest- and low-income families rather than taking more responsibility for income security for families with children.

Two programs that clearly benefit families with children are the Child Tax Benefit and child care. The 1995 budget deals a death blow to child care and makes no mention of the Child Tax Benefit. Dismantling CAP is further evidence of the erosion of federal responsibility for Canada's children. CAP has played an essential role in income distribution, redistribution, poverty prevention, and provision of social services for disadvantaged families, ensuring all children were entitled to some basic financial and social support.

While we are the first to admit that there are problems with the Canada Assistance Plan, its great strength has been that it upheld principles which had to be met for all children and it ensured some basic level of service for Canada's children, regardless of their address. CAP was a signal that Canada cared for its children, wherever they lived, whoever their parents and whatever their economic status.

Bill C-76 will increase the depth of poverty for children who are already poor. Dismantling CAP and reduction of expenditures will mean less money for children in poverty. Two-thirds of poor children depend on social assistance funded through CAP. Children in poor families live, on average, about $8,000 below the poverty line. They're not right up at the poverty line; they are about $8,000 below.

Dismantling CAP means fewer social services and less support for low- and modest-income families; and by ``modest-income'' families we're talking about families in the $30,000 to $40,000 range. The importance of child care to Canada's children has been expertly and extensively documented. However, we often give short shrift to the other services that are funded by CAP. We're talking about child welfare, counselling, homemaking, shelters for assaulted women and children. Let there be no mistake, the vacuum created by the withdrawal of federal support for social services will not result in a groundswell of charitable giving. It will mean fewer and reduced services for low- and modest-income children, who need them the most.

Bill C-76 sounds the death-knell for the concept of collective responsibility of Canadians for Canada's children. We think all Canadians have a responsibility to contribute to the care of children and elected officials have a responsibility to honour our country's commitment to children.

The United Nations Summit for Children in 1990 affirmed the principle that children have a first call on a nation's resources in bad times as well as in good times. But the 1995 budget reverses the history of our country's support for children and in fact drives a wedge between those who will continue to live in relative comfort and those who will suffer. This strategy is divisive and ultimately counter-productive, both economically and socially.

Repeated reports by groups such as the World Bank and OECD have reflected or talked about the relationship between increase in income disparity and decreasing productivity. As one of our colleagues bitterly remarked following the budget, it's a good thing the Liberals are increasing spending for law and order in this budget; we are going to need it.

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Our discouraged colleague was referring to the deeply troubling findings of the 1989 Senate committee report on child poverty, which very clearly established the link between the multiple risk factors associated with child poverty and the development of adult social problems that may require costly remedial solutions and interventions.

The Government of New Zealand ignored similar findings and embarked in the 1980s on a route of dramatic social program cuts. Today New Zealand has the highest rate of teen suicide and the highest rate of teen violent crime in the industrialized world. Likewise, the U.S. experience of targeting and punitive welfare policies has resulted in a permanent under-class. Yet Canada seems to have set a course with the CHST that leads us to repeat the mistakes of New Zealand and the United States.

Bill C-76 widens the gap between poor and non-poor children and between children in different provinces. The withdrawal of the historic federal cost-shared incentives now available through CAP combined with the new competition for funding of health and post-secondary education, on top of a dramatic withdrawal of federal funds, is a prescription for greater polarization.

All children will not suffer equally as a result of the CHST. Well-off families will continue to avail themselves of private social services, private schools, private recreation and private culture by going to the marketplace. The children of those of us sitting around this table will not likely go wanting.

Welfare incomes do indeed vary widely now among provinces. The income of single-parent families with one child ranges from about $195 a week in New Brunswick to about $323 a week in Ontario. Eliminating federal responsibility for social assistance will undoubtedly result in even greater disparities between children in different provinces. The welfare reform platforms of two parties in the Ontario election underline the race to the lowest common provincial denominator.

Bill C-76 in fact will create a downward spiral for the health and well-being of children, especially poor children. As noted earlier, declining funding for social assistance will result in higher rates of poverty. Poor children have higher rates of chronic health problems; they visit emergency rooms more frequently; and they are admitted to hospital more often than non-poor children.

The increased level of health problems for poor children will put increased pressure on the health care system. The increased pressure of more health problems for low-income children combined with fewer dollars could also lead to longer waiting lists for services. If the parents of children are able to pay for services they will certainly skip the waiting period. On the other hand, low- and modest-income children will wait longer for services they need urgently. Although it is not the stated intention of Bill C-76, it does seem inevitable that a two-tiered system of health care for children will result.

Poor children now are twice as likely as their non-poor friends to drop out of school. While the CHST does not immediately impact on primary and secondary education, it is clear that with the provinces receiving significantly less funding they will have to reach deeper into their provincial treasuries, and education spending will be affected.

Horrendous tales of cuts to education already point to an emerging two-tier system in education for children. About a month ago 400 teaching assistants, social workers and psychologists were laid off from the Toronto school board. Non-poor parents could hire tutors or go to private social workers or psychologists. Low-income parents and their children will likely just go without. We are already seeing evidence of this with the introduction of Alberta's policy of fees for kindergarten.

Ms Pophan: Question 3 asks whether Canadians want the federal government to take leadership in tackling child poverty. The public is clearly worried about poor children. What's more, Canadians do assign responsibility to the federal government for the care of poor children.

A July 1994 Decima survey indicated that fully 89% of Canadians felt child poverty must be a priority the federal government must address. An Ekos survey in February 1995 clearly revealed and emphasized the importance Canadians assigned to child poverty. On a list of 25 ``priorities for the federal government'' child poverty placed third, behind only the deficit and unemployment. Canadians care about poor children and they believe the federal government should take responsibility.

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It is apparent that few of us have really thought through the implications of the budget bill for families with children. It is manifest that Canadians do not understand that Bill C-76 means the end of federal government leadership around child poverty.

A final, more random poll was one we conducted with Campaign 2000 and Body Shop Canada during the federal election. Over 50,000 Canadians signed postcards urging the federal government - whichever party was elected - to take responsibility for eliminating child poverty.

Canadians have clearly indicated they want the federal government to take leadership. We cannot understand how the government can continue to commit itself to tackling child poverty while considering legislation that will virtually eliminate the federal government's role. We believe Canadians will have the same questions for you as we are asking you today once the impact of the CHST is understood.

Question 4 asks what the federal government can do to tackle child poverty. First, the federal government should develop a child tax benefit program as the centrepiece of federal income security for families and children. Every industrialized country has some way of recognizing the risks and responsibilities parents take in raising children.

The program in Canada is called the Child Tax Credit. Through this program Canada actually, compared with other countries, provides the lowest benefit to median-income families. Poor families have not done much better. In a commitment to targeting, changes were made to the child tax benefit system over the last decade. As a result, poor families are now receiving less in 1994 than they would have if the 1984 benefits had simply been indexed to inflation.

Campaign 2000 was really disturbed that in this budget there is no restoration of indexation for the child tax benefit, let alone any increase. We believe this must be done if the federal government is responsibly to utilize the one mechanism it still has left to address child poverty, i.e. the child tax benefit, and support modest-income families.

Second, the federal government can honour its election promise to create more child care spaces. We're very concerned about the disappearance of child care from the federal agenda. The federal withdrawal from yet another critical area of support for families with children sends an undeniable message about the priority this government accords to children.

The provincial records are very uneven. Without a federal presence through cost-sharing through CAP the provinces will be even less likely to initiate any new child care spaces. The federal government must honour its red book commitment.

Third, the federal government must establish a social investment fund for families with children. Let me tell you what we mean by that. Bill C-76 drives home the fact that we have to protect children from fiscal deficit reduction. As much as it is important, it cannot be at the expense of poor children and low- and modest-income families. We must restore a collective responsibility for children and we must protect them from the deficit reduction.

To achieve this, Campaign 2000 proposes an ear-marked fund for families with children, which we would call the ``social investment fund''. Revenues would be generated by a three-part funding arrangement involving citizens, corporations and governments through existing programs funded for families with children. More detailed information about the social investment fund is available in our July 1994 document called Investing in the Next Generation. A copy of this was delivered to each MP on Canada Day, July 1, 1994.

Ms MacKinnon: A final question is what the finance committee can do for low- and modest-income families with children.

Campaign 2000 believes legislation is required that would establish a guaranteed level of federal support for social programs. I know we're not the first to ask for this.

As drafted, the CHST with an entitlement formula based on a combination of tax points and cash transfers will result in the elimination of federal funding for social assistance-related social services, post-secondary education and health care as early as 2000 for Quebec, and by the end of the first decade for the remaining nine provinces. Your committee has heard from leading expert witnesses who have elaborated upon the technical details of this reality and eloquently argued for a continuing federal cash commitment.

.1900

The Chair: We agree with you and we've announced it.

Ms MacKinnon: That's good to hear.

Whatever route the government chooses for calculating aspects of the CHST, whether it's new legislation or proceeding with Bill C-76, it is imperative that the current Established Programs Financing entitlement formula be replaced with a formula that guarantees a level of federal funding for social assistance and related social services.

Campaign 2000 urges the finance committee to do three things. First, take the CHST out of Bill C-76, and establish a committee of eminent persons to review it. Second, by the year 2000, ensure that an enhanced child tax benefit becomes the cornerstone of income security for families with children. Third, recommend the creation of a social investment fund for families with children.

In summary, poor children are the most vulnerable of the vulnerable. With the proposed CHST, their vulnerability worsens. We ask that the finance committee members remember this simple but critical fact as you answer the five questions we have put to you. As this committee itself has stated in its pre-budget consultation report to the House: ``In addressing our fiscal problems, we must not replace national fiscal debt with national social debt''. It is not too late to give meaning to those words.

Ms Pophan: This government committed to reduce child poverty 15 months ago. Today, we beg you tell us how this can be accomplished if Bill C-76 proceeds as is.

The Chair: Is that your presentation?

Ms Pophan: Those are our questions, too.

Mr. Walker (Winnipeg North Centre): Thank you for coming in. You can tell by the number of witnesses who have showed up that the social transfer has struck a delicate chord amongst Canadians, amongst interest groups like yourselves. We're listening very carefully.

As a point of clarification before my question on the cash transfer issue, the chair has already expressed the point that we on this committee have said publicly, through the chair that we are concerned about the issue of cash transfers.

I just want to point out that in this particular piece of legislation, there is nothing that goes beyond the next two years. There is no clause or preamble to this bill, no intent expressed, directly or indirectly, for us to be out of the cash contributions. From my own work as a social policy critic, I know this has been a long-standing concern of groups, that the federal government wanted out of this situation. I don't see it that way.

The venture we're on is the extent to which the provinces can be seen to be doing the right thing, and how many conditions should we attach to it. We started out by saying the only conditions we would attach to it would be the eligibility and mobility issues. We've dropped three other issues.

The cash issue aside, my question to you is, in the structure of the delivery of social services, are you concerned that the provinces will not do the right thing? Explain to me some of your considerations. The other witnesses can correct me if I'm wrong, but since CAP's inception in 1966, I don't think the federal government once has had to withhold funds because the provinces have not done the right thing. I just want you to elaborate on that.

Don't misunderstand and think I'm discounting the issue. I understand its importance. But I want to get it clear from the witnesses, as they come in front of us, what it is that scares them about the provinces.

Ms Pophan: I think it's really important to provide the context of why we're frightened. It isn't a matter of a leap of faith about what the provinces would do. The hard fact is that whatever they do, they're going to do with significantly reduced revenues. We're extremely concerned about that. I think we have to state that again and again.

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About the specific concerns we have about the provinces, Mr. Walker, although you report there's been no need to withhold cash, there certainly is evidence that already the provinces are beginning to reduce their commitment to provide adequate levels of social assistance, that some provinces already are denying social assistance to -

Mr. Walker: That's under the existing regime, though.

Ms Pophan: That's right. Even with the principles in place, they're doing that. But there have been no repercussions. The advantage of having the principles in place is that there could be repercussions if the federal government chose to exercise them.

The Chair: So you're advocating that we do establish principles in consultation with the provinces for the alleviation of child poverty -

Ms Pophan: Yes.

The Chair: - ones which do not exist now.

Ms Pophan: I don't think we would advocate replacing the ones that exist now. The ones that exist now certainly are a good starting place. But we have not been advocating removal of the existing principles under the Canada Assistance Plan.

The Chair: Could I put it to you hypothetically that a number of groups have said we should try to strengthen them and we should do it in consultation. The fall-back position is, if we can't achieve a strengthening of the standards through consultation and by mutual assent, then we will have to impose them unilaterally.

Ms Pophan: When we were listening to other witnesses and one of you responded to the concern by suggesting the federal government might impose standards unilaterally, that was the first time I'd heard any reference to that. That was very reassuring. I would certainly like to hear more about that.

It has been our understanding that any principles or objectives would only be put in place if the provinces agreed to them.

Mrs. Stewart (Brant): On that, it was the federal government that started this originally and was encouraging the provinces to make changes through its programming. We've become used to the CAP. It's not been perfect. You and I agree it's certainly been better than what we had before. But it was the federal government at one point that said let's do more.

I find it hard to understand why you would think perhaps at another time that wouldn't be available. You make comments about the withdrawal of federal support; the death-knell of the collective responsibility; the elimination of federal responsibility; it means the end of federal participation; it virtually eliminates the federal government role. Then, when I look at your recommendations, one of them is that CST be opened up for review. But as we talk, it seems the one concern is whether there would be a cash component. There has been nothing specifically in the budget that says there won't be, although I can see where you come to that conclusion.

An enhancement of the child tax benefit - well, we still have that. You want it to be more, but that's not being changed. In fact, we have said we have to do something with it. Minister Axworthy wants to talk with the provinces about maybe amalgamating that.

The issue of the social investment fund - that's a new strategy. You're saying the federal government, presumably at some point in its mandate or lifetime, can come up with different strategies. I just don't understand these strong comments about the removal of federal control, given your own recommendation subsequently.

Ms MacKinnon: Could I go back to the issue of the dwindling cash? It really is a critical issue. The leading experts in this area from the Caledon Institute of Social Policy. Keith, Professor Banting and Beaudoin have clearly studied this. When you look at the legislation, it is very difficult to understand what else might be intended, other than the implicit assumption that it is going to be using the EPF formula. That's not just making an assumption; that's pretty well there. This vacuum after that - what then?

It isn't just a technical, financial, fiscal federalism issue. It's a real issue around what role the federal government continues to give itself in the one program we had that provided for people a program of last resort where people could go when everything else failed. Unemployment wasn't there.

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It's the one place they could go. It was a very important program when it was introduced in the 1960s. Removing it is not a minor issue. So you have to understand, of course, where there's great concern because we're not hearing.... This is the first I hear it today that this committee is saying it would like to find something else.

We'd like to hear what you are thinking. What is the escalator clause to be used for federal transfers? Are you using GDP, provincial population growth? What is it you're thinking about? We'd like to put it back to you and say what is it you're talking about that would give us some level of security that the federal government will continue to be involved with providing income security for families with children on an ongoing basis, such that it won't be gone. There's no evidence we can see to gives us any sense of security on this.

It's a $7 million cut as well. I have been speaking with senior officials within the Ontario government who have been doing social assistance reform since the 1980s. What this official put to me was that when CHST goes through, he's at the table with health and with education and his social assistance reform that they've been trying to do will become an axe. They will have to cut. It's that simple. They'll be cutting their benefits.

The gentleman who was here before was asking the question about how it is that what Ontario spends on social assistance has increased at the same time as the cap on CAP. What was not said and should be said was that Ontario had embarked on social assistance reform that would take children off social assistance and create, if you will, the equivalent of the child tax benefit for Ontario, and that would explore merging it with the federal government. That was killed because of the cap on CAP. They did not have the financial resources to go ahead with it.

Mrs. Stewart: Thank you.

The Chair: You've made a very eloquent plea before us for the people who need our help. I don't think anything can touch our heart-strings more than kids. You've put a real challenge to us: how, in the midst of budget cuts, critical to balancing a budget eventually, working down the deficit, which in itself is an incredible threat to all of our social programs, when $40 billion is going to go up to $50 billion a year just to pay the interest on the debt before we can turn it around, at the rate we're going.... You make an incredibly strong and eloquent plea to us to protect the kids. I hope we can come out with something that will leave that door open and that leaders from all levels of government will be able to work together to deal with this issue brought before us.

On behalf of all members, may I thank you very much for just an excellent presentation.

Ms Pophan: Would it be possible to get back to one of the questions that was raised?

The Chair: Sure.

Ms Pophan: The question was are we concerned that the provincial governments won't do the right thing. We're here presenting to you because you have responsibility for what the federal government does, and that's what our concern is. As I said earlier, it was very reassuring to hear there was a possibility that the federal government might unilaterally impose standards if negotiations with the provinces don't work. Is there someone who would speak a little to that and tell us how that might work or if there is a plan in place and who is responsible?

The Chair: There's no plan in place that I know of. I think the only thing I can say to you fairly is that Mr. Axworthy has been charged with sitting down with his provincial counterparts and working through each of these programs. It's right in the legislation.

Ms Pophan: We're aware of that. We've met.

The Chair: I think it will be critical for you to make your views known to Mr. Axworthy and to his provincial counterparts. If we can act as facilitators there, we will, and we will also be prepared to say to Mr. Axworthy that we think you have some very important and critical things to say to him.

Ms Pophan: That's a wonderful offer, because for people on the finance committee to act as facilitators around social policy would be an epiphany. I would like to follow up on that and see if there is....

This is obviously one of the problems. This committee is writing social policy. Mr. Axworthy is well aware of our concerns and has told us it will be up to the provinces whether or not there are principles and objectives. So I would really like -

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The Chair: Just because our name is ``Finance'' doesn't mean we don't have a heart. It's doesn't mean we're in politics because we don't care about the people who need our help the most.

Ms Pophan: I didn't mean to imply that. I wanted to take you up on the offer of if there was some way that you could facilitate -

The Chair: Absolutely. I'll be delighted to. All of us will.

Mr. Walker: One of the other issues that we could use some input on is the question of how you allocate the transfer between the per capita and the historical notional allocations that end up in the provinces, and the definition of need that causes that. I would say that's very much an open book right now in the government; how to do it.

Ms Pophan: We would be pleased to come back and discuss that further.

Mr. Walker: Thank you.

Mrs. Stewart: Just one final thing clarified for me, as this discussion goes along, in part of my response to you. We are the finance committee. A framework is being struck here that is a budgetary, financial framework. But it's not the end; it's the beginning.

We haven't had a program that has worked effectively. It sure as heck has been better than what we had before the 1960s. But my golly, it has to be better. There has to be a new way of doing business that is of mutual consent and that does bring us together.

I think my frustration is with the words you use suggesting that this is a final hammer. I think we have to challenge ourselves to look at this as the new beginning, and to build a new kind of programming. It sounds frustrating, perhaps, and worrisome, but there is a window there.

Ms MacKinnon: With due respect, I think part of the problem is that all of us went through the social security reform process.

Mrs. Stewart: Don't think that information isn't still part of this government.

Ms MacKinnon: Yes. But you know we went through that process. So we're here now, and after a budget which I think you will all acknowledge was a pretty darn tough budget -

Mrs. Stewart: Absolutely.

Ms MacKinnon: - with $7 billion taken out of an envelope. These are the realities.

So you can still say, sure, we can all agree that social programs could be better, and there are lots of things to work through, and there's lots of room. But you're left at the end of the day with some very stark realities coming out of that budget.

I guess why we're here today is to try to influence your thinking around what you say when you report to the House.

The Chair: You have. I can assure you of that.

On behalf of all members, I thank you.

We adjourn until 8 p.m.

PAUSE

.2000

[English]

The Chair: I call the meeting to order. We're continuing our reference into Bill C-76, an act to implement certain provisions of the budget tabled in Parliament on February 27, 1995.

Before us this evening is the Maritime Fishermen's Union, with executive secretary Michael Belliveau, and Graeme Gawn, the secretary-treasurer. Thank you for being with us, gentlemen. We look forward to your presentation.

Mr. Michael Belliveau (Executive Secretary, Maritime Fishermen's Union): Thank you for having us, Mr. Chairman. In a sense, it came out of left field. We've appeared before Commons committees but this is our first time before finance, so we're actually quite nervous. We'll try to do our best in a short time.

The Chair: If you think you're nervous, this is the first time we've had your union before us, and we're really nervous.

Mr. Belliveau: Good. I'm glad to hear it.

Our written presentation was put together hurriedly, and we won't read it verbatim. We will cover the main points.

To start with, I'm sure members of the finance committee aren't very familiar with the Maritime Fishermen's Union. We're a union by name and by historical affiliation. We represent the inshore fishermen in the maritime provinces. Our membership encompasses about 2,000 inshore fishing operations.

In some ways, we are distinct from the Newfoundland situation. Our members are not really dependent on groundfish, whereas the whole nation knows of the collapse that's happened in that groundfish sector.

We represent what are known as inshore vessels. We will make some attempts to address Bill C-76 as it applies to the coastal communities and coastal society. I'm sure you'll want to question Graeme Gawn, who is with me. He is a fisherman from southwest Nova Scotia and is an executive member of the Maritime Fishermen's Union.

Even though our members are not very directly dependent on groundfish for their livelihoods, the groundfish sector collapse has, as you might guess, thrown the entire Atlantic fishery into upheaval. It's generated a lot of changes within the Department of Fisheries and Oceans. What we've come to see is that one of the consequences of the loss of the cod is a kind of breakdown in the confidence between fishermen and the managers and public servants in the department.

That breakdown in confidence has led to two distinct responses from the federal department. One seems to be a sort of inertia, where they continue to do exactly what they did throughout the fifteen years leading up to the collapse. In fact, they extend the same type of management system into more micro-areas. The second response is to almost divest themselves of their historical mandate, which was to manage the fisheries. This response is put in the context of downsizing in their department, of program review and of cutting their budget.

In fact, we question whether as a government department they're losing their nerve to maintain their role as government manager of a most important resource in Canada. That's one point we wanted to make.

.2005

What we put in our paper, and I'm sure you've heard it before in the various departments, is one of the outcomes of what's going on here is that they're talking about partnerships with the industry. We don't know exactly what that means for us, but we're quite nervous about it. We see one line of partnerships being made with what we would call the corporate sector in the fishery, and the corporate sector is represented by the Fisheries Council of Canada. I don't know whether you've heard from them in your hearings on this. In any case, they tend to represent the fish companies that are more vertically integrated and so on, so the companies have put forward a vision of the Atlantic fishery, and we're not clear yet whether the department is adopting their vision, or quite a different vision that's being put forward by the fishermen and their organizations across the country.

We recently put together a document with the British Columbia fishermen's union, the Newfoundland fishermen's union, ourselves and some of the other fishermen's organizations. It's called Creating New Wealth from the Sea. For all members of the finance committee, we'd like to draw your attention to the document. We'd like to table it for your committee.

I know you have a lot of wide deliberations and considerations, but given that the title is Creating New Wealth from the Sea, we see the fishery in Atlantic Canada from quite a different perspective than the Fisheries Council of Canada, who, we find, play into this idea that somehow the fishery is sort of a drain on the Canadian economy. In fact, it's one of the cornerstones of the national economy.

We know it's in one region and so on, but if you look at the document, you'll see that even some of the most established economists would agree that the fishery is contributing something direct, and indirect, to the national economy of about $4 billion to $5 billion a year, that it generates jobs, direct or indirect, far beyond Atlantic Canada, that it's generating at least 100,000 jobs that are indirectly generated in central Canada from the fishery in Atlantic Canada. These are the estimates of the economist we used as a consultant for part of this study.

This is a little bit of a different perspective from what we're often given. We're often depicted as being a net cost to the Canadian government and the Canadian economy. If you look at this, you'll see the opposite. The fishery is a net addition to the economy in large terms. I don't have the exact figures off the top, about $425 million.

The Chair: We are very cognizant of the incredible role that your industry plays in our overall economy. We're just very upset that some of it has had to be closed down, but we'll work with you.

Mr. Belliveau: I appreciate the comment.

In any case, I wanted to create this picture because you've got a vision here coming from the fishermen, the ones who are producing the fish. You have another vision coming from the corporate sector and we don't know which is prevailing in the Department of Fisheries and Oceans. I think, in fact, the outcome is not clear of where we're going as a national government in relation to the fishery.

The other general point we would make about this is that Fisheries and Oceans has historically tried to manage the resource for socio-economic reasons as well as for conservation reasons. They seem to be moving away completely from the issues of access and fairness and socio-economic considerations to emphasis on protection and conservation of the resource only. As for the rest, they seem to be moving out of that side of it. That is what the companies want, but that's not what the fishermen want.

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Just to summarize briefly, we are concerned about the amount of cutbacks going on under this budget with reference to Fisheries and Oceans. We don't necessarily support all of their policies or their understanding of what should be done in the Atlantic fishery, but in terms of the kinds of expenditure cuts that are involved here, they project that they're going to be 40% less in absolute spending terms five years from now, compared to, as I understand it, about 10% for government spending as a whole.

The Chair: Have you talked to Mr. MacDonald, who is the chairman of the fisheries committee? He's from Halifax. Have you met with him?

Mr. Belliveau: We haven't met with him about this particular subject.

The Chair: I think it would be incredibly important if we helped you meet with him and with maybe people from Mr. Tobin's office.

Mr. Belliveau: We meet with him regularly.

The Chair: You've already met with people from Mr. Tobin's office, the minister's office. Maybe we could facilitate your meeting with people from the fisheries committee.

Mr. Belliveau: In terms of the standing committee on fisheries, we would welcome that.

The Chair: Okay, we'll undertake to do that.

Mr. Belliveau: I'm going to stop and allow Graeme to make some comments, but we would welcome that. It's going to be a long time getting through this transition. Whatever is going on with Fisheries is going to take some time.

I would want to throw a bit of a compliment for the record. I don't know whether it interests you people that much, but there are some positive things from time to time that we find the government does do, such as Minister Tobin and his department's efforts to deal with a very, very explosive, controversial thing, the crab fishery in Atlantic Canada, and to make some changes there that actually go into a bastion of highly concentrated privilege and make some changes that might benefit a wide sector of inshore fishermen.

They've tried something this year that we're commending them for, and we're right in the middle of it and very preoccupied with it at the moment. I know the fisherman's alliance in Quebec is very supportive of it and very involved in it, and I know Newfoundland's inshore fishermen are very involved in it. It's an attempt to work at the distribution problem within the fishery, where you have so many people who are working on a margin and a few concentrated who have high-level privilege.

Anyway, we've given that compliment and -

The Chair: We love compliments. Keep going.

Mr. Belliveau: What else can we tell you that's good here? Okay, we'll give you one more compliment.

We have a lot of trouble with the consultation process around the whole program review, whether it be the way that Bob White said to your committee or the way we see it within Fisheries itself. But when the working group that was struck on seasonal work and unemployment insurance, headed up by Aldéa Landry, made their report to Minister Axworthy, we found that to be a thoughtful, useful and productive way to consult.

They went and consulted at the base, in the coastal communities and in the rural areas of Canada, and they came up with a report that makes a lot of common sense. They got rid of that idea of some kind of two-tier system in unemployment insurance. So we give them full marks for that particular piece of work.

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To wrap up, we have a reference to a broad area here that we have a lot of trouble with. Graeme will perhaps address that in more detail, but the Fisheries people are not only downsizing their department and making these cutbacks, but they're also going to the fishery at this particular time with a cost recovery program.

They're not the only ones. The coast guard is going there too. The coast guard is cutting back on us at the same time. They're coming in with a certain amount of cost recovery, but not in the same way as Fisheries. Fisheries is going to try to extract in this year alone something like six times the amount of income from licence fees that they've ever gotten before.

It comes like a second hit. On the one hand they're cutting back as the Government of Canada on services to people, and on services to the fisheries industry in this case. On the other hand, you're going into a fishery that's reeling from a catastrophe and you're trying to recover another $50 million from that industry in cost recovery fees. We have a lot of problems with that, and I think that will be heard a lot more before we're finished.

One thing I'd like to qualify, Mr. Chairman, is that we're - how much time do we actually have?

The Chair: Another 14 minutes.

Mr. Belliveau: I'll wrap up in a couple of minutes. Then if you have questions and if Graeme wants to make some comments, we could do it that way.

I'm getting the main points out. They're in the paper, but I'm not following the exact order.

The Chair: You're making them loud and clear.

Mr. Belliveau: The other point you might be interested in as a standing committee is the moneys that are being spent on harvesting adjustment boards.

I don't know if you are familiar with that kind of detail or not, but they've allocated $300 million to restructuring the Atlantic fishery. I'm not talking about the tax program and I'm not talking about the income support to individuals, but the $300 million that's available to take capacity out of the fishery.

I think we're reflecting our membership and a lot of other people in Atlantic Canada. There's quite a bit of concern, not with the intent of the program but with the fact that we don't think it's going to do the job, and the problem is something you won't be able to deal with as the finance committee because again it's a policy question.

We think if the way the fish has been allocated in Atlantic Canada is not looked at, you can spend another $300 million and another, and you won't deal with the problem. You have an allocation process that has evolved over 20 years in which, really, most of the resources are still concentrated in the hands of a very few integrated operations and a very few types of vessels that can really kill fish. As long as they hold onto those allocations, even when recovery comes you're going to run into the same problem.

So we have difficulty with the harvesting adjustment boards being sent out there and asked to take out capacity, but the most fundamental question, the most fundamental issue of allocation is not being dealt with. So we want to put that on the record as well.

In closing my own comments, I would like to say that we follow other people's concerns a little bit in terms of this budget, in terms of where the Government of Canada is going. We are concerned about the social programs and the effect this budget will have in rural areas - and I'm moving away from fisheries here; I'm speaking in general. We're concerned with the potential in the block funding for a lack of national standards in terms of health care and that sort of thing.

.2020

Our sense, without doing a heavy analysis of this, is that the rural areas of Canada are going to be hit harder by this type of approach to both budget cutting and block funding. We would like to be on record expressing concern about that. There are probably people far more competent than we are who can go into detail with you about this. I made note of the fact that Mr. White was before your committee, and we share some of the concerns of the Canadian Labour Congress in terms of the impact on society and on national life.

If I can indulge for half a second, I personally have a lot of problems with what I call deficit hysteria. There's a whole body of thought coming up in terms of how we got into that deficit. Maybe it isn't just government spending that's the problem. Our own Department of Fisheries has been going through government spending cuts since 1985. The citizens of Canada know that government spending, outside of servicing the debt, is under control. I have problems with what happened in terms of monetary policy and where we're going as a nation on this business of the deficit and the debt. There must be solutions other than slashing the public sector, public services and public presence.

In the villages where we have fishermen, bit by bit we're losing harbours through this rationalization program. We're losing offices of the Department of Fisheries and Oceans. Even in that sector we're losing a national presence. When you add that to every other sector, we have a growing problem on our hands in being able to hold on to a country. I say that with some feeling and emotion. I don't know all the solutions but I want to have it tabled. That's going off from DFO as such, and on to a more person opinion. That's it for my thoughts.

Mr. Graeme Gawn (Secretary-Treasurer, Maritime Fisherman's Union): Thank you, Mr. Chairman.

My comments will be about the fishery and the direction the fishery management is going in in terms of what it means to the economy. It's related to finance because a lot of what's driving it is budget cuts and this obsession with the deficit.

In our region the number one problem is the economy. The reason for problems in the economy is employment, jobs. We're afraid that people away from the Maritimes think the fishery is a basket case and should be phased out because there is nothing that can save it. Perhaps people in this room don't feel that way, but that's a perception that some people have in this country.

The fishermen have put together a document Creating New Wealth from the Sea, which outlines the ways in which we can create jobs with the fish we have. We have tens of thousands of people out of work in the fishery who never needed to lose their jobs in the first place. The fishery didn't need to be destroyed. If we can put people to work throughout the country, then we'll do something for the economy. Cutting expenditures and passing out user fees and cost recovery to people isn't going to solve the problem. That's going to put more people out of work in the long run.

The licence fee that Mike mentioned was a six-fold increase. Basically, the way DFO is going about it, they are looking for people who have the high gross landings of fish, and they are going to charge them as much as 2,600% increase in their licence fees. Today, for a $30 licence for Bay of Fundy scallops, they are proposing to charge $8,600, based on the gross landings, with absolutely no consideration for what the costs and net revenue of that fishery are.

That's a fishery that's fairly labour intensive. There are up to 10 men on a boat plus an equal number of people on shore. Those are real jobs. In the obsession to recover costs - and we don't know what costs they are trying to recover. We don't see where that fishery is a cost; that's a benefit to our society. Those 20 jobs are a definite benefit to our region. We don't see it as a cost.

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If the views of the independent harvesters had been followed 20 years ago, we wouldn't be where we are in the fishery today, and we wouldn't be where we are, in terms of the economy, in Atlantic Canada. I'm quite sure of that.

It's one thing to say we have to recover the cost, but what is cost? In the harvesters' view, the cost of the fishery management has been the cost of subsidizing inefficient corporations that have killed the fish. That amount of fish could have put those 30,000 people back on the water.

As Mike mentioned, we still haven't addressed the allocation of fish and the technology of how fish are being caught. The cost recoveries, the licence fees and so on that are being proposed aren't going to stop the destruction of the fish stocks. They are going to drive the least destructive people out of business. Then where are we going to be? We won't have any return in the coastal communities. The welfare costs will be a lot higher than the unemployment insurance costs.

If you look at the economic study, you'll see the harvesting sector is producing a positive generation of revenue for the government. I don't know what more I can add to what Mike has said, other than to say that we're not saying the deficit and the economic realities should be ignored. We're saying that the approach to deal with them should be carefully examined in terms of the fishery.

The Chair: Thank you, Mr. Gawn and Mr. Belliveau.

Perhaps I could suggest, if I give you my phone number, my office will try to arrange some meetings for you with the fisheries committee tomorrow. Some of the major issues that you point out, the relationship between the department, the relationship between some of the big companies and the union, as you quite rightly point out, are major policy issues that I think are right within the fisheries.

In terms of the things you pointed out to us dealing with our budget, you're right, it's a very difficult thing for us to make these cuts. It's going to affect a lot of the people who live right across this country. We would look forward to working with you in the future when we have discussions on alternatives to the budget. If we can try to find the revenues elsewhere, we'd be delighted to work with you and hear your suggestions.

On behalf of all members, I thank you for your appearance before us tonight. Let me assure you that I don't think there is one member here who doesn't appreciate the fact that our fishery has been one of the driving forces in building this rich country that we have. Our hearts go out to you when you are in this temporary difficulty, and we hope it won't last too long. Thank you very much for being with us.

Mr. Gawn: Thank you, Mr. Chairman.

The Chair: I'll give you my phone number. Just ask my staff and I'll tell them, too. Thanks again.

Mr. Belliveau: I was hoping there would be some.... see we made a mistake here; we should have said five minutes and got some feedback. We're leaving here and I don't have a sense of why this committee has asked us to be here, to tell you the truth. We tried to cram in a short period of time an awful lot of organizational experience, but I have absolutely no idea why you people asked us here. Is it sort of a courtesy to get us on the record? I appreciate that, if that's what it is.

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[Translation]

The Chair: The witness just asked why the Committee had invited them to appear.

Mr. Loubier: We wanted to have your opinion on Bill C-76.

[English]

We'd like to have more precision on your point of view about Bill C-76. Last year your representative came to discuss the pre-budget consultations. Your representative had a preoccupation about the future of your industry and the security of revenue. Two weeks ago I thought that it was a good idea for the committee to have your comments, and right now I think it's a good idea, too.

Mr. Belliveau: We appreciate that part.

Mr. Loubier: I support the chairman's suggestion to meet the fishery committee. I think that's a good idea, too.

The Chair: Thanks very much. We look forward to working with you. It's good to get to know you.

Mr. Belliveau: Are you people coming to the region?

The Chair: Probably we'll be down next fall.

Mr. Belliveau: We had a meeting in Moncton with the Banque Nationale the other day. They were protesting that your committee wasn't coming to have hearings in the Maritimes.

The president of the Banque Nationale had some pretty strong statements to make about seasonal people and regional people in Canada - that if they can't take it they should get out of the kitchen and into central Canada. Our own organization banks with the Banque Nationale, and I can assure you that if they don't do something about their president we're pulling out from that particular bank. That kind of attitude from a national leader is just not on. It's so far out of missing the point.

The Chair: We agree with you on that.

[Translation]

We will now be hearing the ``Union des producteurs agricoles''. Welcome, gentlemen. I have good news for you. I have to tell you frankly that it is not necessary for you to appear before our Committee tonight, since your former colleague and employee has told us all about your business, about your problems and has suggested solutions. Thank you for having made the effort, but it wasn't necessary.

Mr. Laurent Pellerin (Chief Officer, Union des producteurs agricoles): Mr. Loubier left us many many years ago, and that is why I want to make sure that I am the one to voice our concerns.

The Chair: He did a good job on your behalf here at the Committee and in Parliament.

Mr. Loubier: It worries me that I should be receiving so many congratulations from the Liberals. It is high time that we went on to something else.

The Chair: Yes, you should be careful.

Welcome Mr. Pellerin and Mr. Lebeau. Which one of you will be speaking?

Mr. Pellerin: May I first say a few words about the UPA. UPA is presently a farm organization for producers in Quebec and represents 50,000 producers. We are a confederation of 16 regional federations and 20 specialized federations or unions. We therefore have 36 affiliates. UPA celebrated its 70th birthday last year. You can see that we are very firmly established in Quebec.

Our presence before the Committee is the direct result of our economic concerns deriving from Bill C-76 and from the Budget. First of all, I would like to thank you for giving me this opportunity to meet with you and to present the concerns of the Union des producteurs agricoles this evening.

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The opinions that you will be hearing througout the course of this presentation are, of course, those of the UPA. However, these opinions were formulated further to consultations held with three of our partners, namely, the Quebec ministries of Agriculture, Fisheries and Food, the Association professionnelle des meuniers du Québec and the Coopérative fédérée de Québec.

The purpose of this brief is to comment on the Martin Budget as well as certain provisions contained in Bill C-76, particularly the provision to repeal the Western Grain Transportation Act and the Atlantic Region Freight Assistance Act. I would also like to take this opportunity to tell you how we feel about the situation and to indicate our expectations further to the various press releases issued by the federal government to explain the transition and adaptation measures that it intends to take to compensate for the elimination of the various transportation programs that affect the agricultural sector.

In the days that followed the Budget speech, the UPA underscored the severity of this Budget, which dealt a severe blow to the agricultural sector. Today, after a slightly more in-depth analysis of the Budget and with the tabling of Bill C-76 on March 20 of this year and the various press releases issued to annouce the adaptation and transition funds, the UPA has concluded that the agricultural sector has been hard hit, unduly hard hit, in fact.

We fully understand that Mr. Martin was put in a situation where he had no other choice but to make some major cuts. We were willing to do our bit. We feel, however, that he is asking the agri-food sector to cut back more than it deserves, given its importance to the economy, its contribution to the country's trade balance, the surplus in the balance on exported goods, and also its importance to the vitality of the rural regions and the role it plays in occupying the territory.

Indeed, the budget documents tabled on February 27 show that the expenditures for Agriculture and Agri-Food Canada, which include the...

The Chair: Pardon me, Mr. Pellerin. Could I ask you to slow down just a little bit? The interpretation is quite difficult. Thank you.

Mr. Pellerin: Very well.

In the budget documents tabled on February 27, we can see that the expenditures for Agriculture and Agri-Food Canada, which include the Western Grain Transportation Act subsidy, are almost in a free fall. Indeed, between 1987-88 and 1994-95, expenditures have been reduced by 33 per cent. In 1997-98, they will be reduced by 58% according to the Martin Budget estimate. If we were to express these expenditures as a percentage of total government spending, we would see that this reduction is even more sizeable, going from 3.5% of the government's total budget in 1987-88, to 1.6% in 1994-95, dropping to 1.2% in 1997-98. Hence, the portion relative to the agri-food sector in the total Canadian budget is shrinking at an alarming rate.

The budget documents indicate that the cutbacks affecting Agriculture and Agri-Food Canada, for the period covered by this Budget (from 1994-95 to 1997-98), represent 21.5% compared to an average of 19% for the other departments whose programs who are also under review. Nevertheless, if we were to include in this agriculture budget the cutbacks related to the elimination of the Western Grain Transportation Program and the Atlantic Region Freight Assistance Program, we would see that the federal government expenditures for the agri-food sector have been reduced by 40 per cent.

This tells us that the provisions in this Budget are hitting the rural regions in general, including, obviously, those found in Quebec, in a truly disproportionate fashion.

First of all, I would like to remind you that the prurpose of the three transportation programs that have been eliminated was to compensate for the disadvantages experienced by certain regions because of their remoteness. Indeed, we must not forget that agriculture is, after all, the main source of employment and income in rural regions and provides the basis for occupying the territory. Let us take a look at these programs and try to assess the impact of thier elimination on Eastern Canada and, in particular, on Quebec.

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Let's begin with the Western Grain Freight Assistance Program. The elimination of this program will lead to a drop in price for feed in the Prairie Provinces of, according to the experts, 8 to 15 dollars per metric ton, thereby destroying the competitive balance between the East and the West.

The elimination of a second program, namely the Feed Freight Assistance Program, will drive up the price of feed in the East, at least in the regions where this subsidy is available: the Maritimes and the peripheral regions of Quebec.

Finally, the elimination of a third program, namely the Atlantic Region Freight Assistance Program, will inevitably have an impact on the production costs of farms located in the regions that were eligible for this program. The agricultural sectors and private wood lots in Quebec have been hit with the 10 million dollar cutback because the subsidy is no longer being offered.

The ability of dairy producers and livestock farmers in these regions to compete with their Western counterparts will therefore be dealt two severe blows simply by new market realities resulting from these budget decisions. Livestock farming constitutes the basis of the agricultural economy in Quebec; it represents mainly 80% of the gross income generated by the province's farms.

But there's more to it than this. First of all, there is the compensation totalling 1.6 billion dollars that will be paid to Western producers and, then, there is the 300 million dollar adaptation fund that will be paid to the agricultural sector of the Prairies. If this 1.6 billion dollar compensation is awarded to owners of arable land, without really targetting producers of export grain, the Western livestock producers will have another competitive advantage over those living in the East.

We're also very concerned by the use of the 300 million dollar adaptation fund. In our opinion, the federal government must respect our first fundamental principle, namely, that taxes paid by taxpayers living in Eastern Canada should never, at any point, be used to subsidize projects in the West that may very well compete with agriculture in the East. In other words, funds allotted through this program should be used first and foremost to improve the transportation of grain and not, as it was announced, to finance the purchase of equipment or the building of infrastructure without specifying what they are, nor to finance diversification projects which could compete with the operations in which we have been investing, in Quebec, for the past 25 years.

The second principle which this current government should concern itself with is that any reform which it plans must be equitable. This is reflected by two fundamental objectives, namely, the establishment of an equitable competitive environment, which has already been discussed, and equity in federal government expenditures made in the agricultural sector throughout the various regions of Canada. In other words, it is clear to us that the elimination of subsidies in Western Canada will be offset by the federal government through transition and adaptation measures. However, it does not appear that sufficient consideration is given to the impact that this destroyed competitive balance would have on the East.

We are talking about an adaptation program worth 60 million dollars, of which two thirds has already been earmarked for national agricultural management programs, agricultural income review or farm income security review and the rest is earmarked for other national initiatives.

In our opinion, most, if not almost all, of the money should go to Eastern producers just like money is going to Western producers. Indeed, it is essential that Quebec receive an amount proportionate to the amount going to the west. This will allow us to adapt to the new economic environment which farming finds itself in today. According to studies done by experts, the money due to Quebec to compensate for the elimination of the Western Grain Transportation Program should be between 24 million dollars and 64 million dollars a year over the next four years.

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To conclude on the issue of fairness for the East and the West, we expect to receive compensatory programs like those for Western producers in terms of tax treatment and the lump sums they receive. You are probably aware that the Western owners of arable land will receive an ex gratia capital payment of 1.6 billion dollars, which will be paid in two instalments. In fact, this amount equals 2.2 billion dollars if you take the tax exemption they will receive into account. We therefore expect to get our fair share of the transition and adaptation programs targeted for western producers in compensation for the withdrawal of government support.

Let us now move on to measures to compensate for the elimination of the Feed Freight Assistance Program. When the end of the program was announced, a compensation fund of 62 million dollars over ten years was created. First, we demand that the 13 million dollars necessary to extend the program until December 31, 1995 not be taken from the envelope containing the rural development and general rehabilitation fund, but from elsewhere. Second, we demand our historic share, which we were given over the last ten years under this program.

Third, a transitional fund of 326 million dollars to be spent over six years was created to compensate for the elimination of the Atlantic Freight Assistance Program. Given the objectives of the program, which are to «provide, within the rates, certain advantages to persons and industries in the provinces and regions affected by the program», we believe that the fund should help shippers adapt to the new cost structure in this transportation sector. As well, as I mentioned earlier, Quebec's share of the agri-food and forest industries was about 10 million dollars, which it received each year under the program. It is important to note that Quebec's agri-food and forest industries demand nothing less than their historic share. Lastly, it is essential, in our view, that any intervention should ensure that a province does not engage in production activities under the program which would create a market imbalance.

At the moment, it is difficult to predict how fast Canada's agri-food business will change, and how much it will change, as a consequence of the budget. It is obvious that there will be changes. However, they might not be beneficial for the entire sector, particularly in the East, which is mostly based on animal production. Therefore, the federal government should do all it can to ease the transition eastern provinces, including Quebec, will face following the elimination of those farm programs.

What should happen next?

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In view of the budget, we wonder whether Mr. Martin has forgotten that even a country which has certain problems and a heavy debt needs to invest in its agri-food sector and that, if it is forced to eliminate certain farm programs, this should not happen at the expense of certain regions, specifically Quebec. Therefore, the Canadian government should consider the following points before passing Bill C-76:

-maintain and improve the competitiveness of the sector in a way that would allow the public to buy food at cheap prices. Canadians are privileged in this area and they must remain so. (Included in our brief is a table with figures compiled by the USDA, as an illustration of this).

-maintain income security for farm producers, despite weather hazards and market fluctuations which they are exposed to and which will continue.

Even before the budget was tabled, Canada's agri-food sector had to face major challenges, including that of adapting to the new international trade situation which came about after the last trade negotiations, and which opened up markets at increased competitive pressure. It seems that other governments are not willing to withdraw their support to their farmers as radically as the Canadian government has.

Given these observations, we expect the Canadian government:

-to review its budget figures for the next three years in order to find several million dollars to help the agri-food sector, instead of implementing the counterproductive measures announced by the Minister of Finance in last February's budget.

-to target, as much as possible, compensation payments made because of the obligation of the WGTA to grain producers who will have to adapt to the radical increase in grain transportation costs. We do not want the transportation subsidies to be replaced by a diversification program.

-to establish for Eastern producers a compensation program similar to the one offered Western producers in terms of tax treatment and lump sum payments. They should apply to every program being repealed.

-to spend the money contained in the rural development and general rehabilitation fund to make up for the competitive advantage of the West when the price of grain falls. As well, some experts say that Quebec should receive payments in the order of 24 to 46 million dollars a year over the next four years in order to meet the competition from the West.

-to create a 62 million dollar compensation fund to make up for the elimination of the Feed Freight Assistance Program. This amount should be paid in total on top of the money necessary to extend the program until December 31 1995, and at the very least, Quebec must receive the historic share it has held over the last ten years.

-to use the rehabilitation fund created to compensate for the repeal of Atlantic Region Freight Assistance Programs to help shippers adapt to the new transportation costs structure and to give Quebec's private agri-food and forest sectors nothing less than their historic share.

Our presentation focusses on the Martin budget and provisions affecting transportation programs.

There is no doubt that this budget will also have an impact on research and the income security program, a subject which we have not been able to consider in depth this evening.

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In conclusion, I would like to reiterate the position which we have held for the past 15 years, namely that the federal government should treat the Quebec agricultural sector equitably, so as to ensure that the agri-food sector and rural regions, particularly those in Eastern Canada, are not unfairly treated in this budget. I would like to thank you for your attention.

The Vice-Chair (Mr. Campbell): Thank you. We will begin with Mr. Loubier.

Mr. Loubier: Thank you Mr. Vice-Chair. I see that you have become the acting chair.

Mr. Pellerin, I would like to commend you on your brief. I am very pleased to see you here because I realize that the situation has changed since 1991. This is an opportunity for me to really appreciate the current situation of the Quebec agri-food sector, particularly as regards federal policy.

Mr. Chairman, I very much regret the absence of members of the Reform Party. I do not know what has been happening over the last two weeks, but Reform members have not been present here to debate or listen to witnesses, despite the fact that Bill C-76 is of very particular concern to them since they represent Western producers.

If they were here this evening, I think that they would understand what we mean when we say there is an imbalance between the East and the West in the area of livestock and grain production. Perhaps they would stop making comments about Quebec's demands, as was the case this afternoon when we looked at the dairy policy. That is my first point.

Second, I would like to ask our witnesses a question. Does the Coalition pour la survie de l'agroalimentaire (Coalition for the survival of the agri-food sector) still exists? If so, will you try to involve them so as to explain to the government that this type of policy, that is eliminating the Crow benefit without offering any compensation for the resulting imbalance in East-West competitiveness, makes no sense and that the government must reverse its decision to give compensation only to Western producers?

Mr. Pellerin: The brief we presented this evening represents the position of the UPA, but this position was also reviewed with the traditional partners of the Quebec coalition which considered the whole question of the removal of Western grain transportation subsidies.

Over the past 15 years the situation has evolved. The position of Quebec's partners has also evolved. Historically, one of our major objections was indeed the direct payment of money to producers.

We decided to support the option of making payments to producers, but on certain conditions. We changed our position when the last panel of experts considered Western grain transportation. The report stated that the subsidy could be eliminated over a period of five to seven years, with compensation being provided for any distorting effects to Quebec and other provinces concerned. We did endorse the panel's report to some extent, although there were some parts we did not like very much.

What is different about the proposal in Mr. Martin's budget, is that the compensation considered by the panel would cover a far shorter time period. I would like to state here, and I hope that you will communicate this to Mr. Martin and all his colleagues, that this subsidy which is being eliminated has been in existence for 100 years. You could say that initially it was almost one of the reasons why the 10 provinces joined together.

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The decision in Mr. Martin's budget to eliminate the Western Grain Transportation Subsidy has historic consequences. The elimination of this subsidy will certainly change the market, but not just for the next two or three years. The removal of the subsidy, which has been in effect for 100 years, could well have an impact for the next 15 years.

Do not be surprised to see me come back on this issue because we will be closely monitering the impact of this decision to remove the subsidy on livestock and grain production in Quebec.

There is no doubt that the Maritime provinces and Ontario will follow this issue as vigilantly as we do. We are not talking about a minor change here but rather 100 years of history. We would like to return to a market situation which has been in effect for 100 years.

All through those 100 years, trading practices have certainly been established and they will have to change. It would be somewhat unrealistic to think that this will take place quickly, that is in one or two years. I think that there will be a medium term impact.

I am not sure that the Martin budget foresees the medium impact because the period of time covered by the adjustment measure is too short. This is what we very much regret this evening.

Mr. Loubier: For the benefit of my colleagues, I think it will be helpful to explain that the purpose of this subsidy was to develop the agricultural economy of the West. When we talk about development, we are referring to developing that economy in 1897, that is at the end of the last century.

Eastern producers did not complain about the establishment of the Crow's Nest preferential rate structure for the development and exporting of grain, because they thought at that time that it would be possible to establish a balance between the East and the West, between Western grain production and Eastern livestock production.

Suddenly, this balance has been broken, and that is a very serious matter. Without being partisan, I can say that I have been involved in this issue since 1982. I was not working for the UPA then, but rather for the federal government. It could be seen then that the elimination of the Crow rate would have an impact on the structure of East-West production.

If we were talking only about eliminating the rate, we could accept that there will be structural changes over the next few years and that we shall try to adapt to them. However, in addition to this decision to eliminate the rate, which is pushing down grain prices and stimulating livestock production in Western Canada, probably to the detriment of Eastern production, producers are now being directly compensated for the elimination of the Crow's Nest benefit.

Instead of compensating only those producers who will be affected by the elimination for a given period of time, the government is giving the subsidy to all owners of arable land, regardless of whether they exported or not beforehand or whether they were affected or not by the elimination of the Crow's Nest benefit.

The UPA mentions that there is no clear focus in the subsidies being given. Money is not being given only to those producers who exported and are therefore suffering from the elimination of the rail transportation subsidy, but rather to anyone who might develop livestock production, to the detriment of the Eastern provinces and using federal money which comes not only from Western but also from Eastern producers. Over time that could have quite a significant impact.

I should also point out to you, and I think I should mention this if not in the House then at one of the meetings of other committees, that Mr. André Ouellet, who is now one of your illustrious Ministers, was in 1982 the Minister responsible for implementing the new policy of the old government. I am not referring here to current policy but rather to the one in effect in 1982, the first vintage as they say. It seems that wines improve with aging, and since the same people are still here today.

In 1982 Mr. Ouellet was responsible for the Crow's Nest and you will remember that on a number of occasions...

No, but since we have time and it is for your benefit...

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The Vice-Chair (Mr. Campbell): Someone wants to ask a question.

Mr. Loubier: It bothers you, doesn't it? Just a moment.

In 1982, Mr. Ouellet had many meetings with producers and high officials. After nearly one year of debate, he realized that our analysis was right. You can ask Mr. Ouellet if he recalls this debate.

The Vice-Chair (Mr. Campbell): For someone who is now working with you on the committee, Mr. Loubier, I'm wondering whether you miss him.

Mr. Loubier: Of course, agriculture is an interesting sector.

Mr. Pellerin: It was very hard to replace him, but with the comment he made on our text this evening, we were finally able to do so.

The Vice-Chair (Mr. Campbell): Fine. I now give the floor to Mr. St. Denis.

[English]

Mr. St. Denis (Algoma): I appreciate your being here tonight. I understand Yvan spent some time with UPA. You trained him well. He's doing a good job as a deputé, even though we don't agree on everything. I'm not an expert on these issues, as are you, Yvan, and others, and possibly Jane, on 100 years ago. Now, we can agree that the world is much, much different.

I understand one of the negative consequences of the Crow and the maritime Feed Freight Assistance Program is that there was downward pressure to prevent the development of secondary and tertiary industries in those regions, because it was easy to move goods in and out. So why bother with developing secondary and tertiary industries if you can grow lots of product and ship it out cheaply?

One of the benefits, at least some would suggest, is that we will see the development in the east and the west of secondary and tertiary industries.

If I remember the debate correctly, in the old days, 10 or 15 years ago when this was an issue, Quebec producers objected strongly to the dropping of the Crow because of that very fact, that it would be a development for further processing in the west. Do I remember that right? Is that correct?

Mr. Pellerin: Yes.

Mr. St. Denis: If that is still true, why is the reaction much calmer now? Are people accepting that the world has changed and that because we have the Asia-Pacific trade, which we didn't have 100 years ago - in the east we've got the eastern U.S.A., and so on - trade is a lot more north-south and across the oceans than it might have been some years ago? Allowing that there will be some adjustment difficulties, can you agree or disagree that in the long run, say, 5 to 10 or 50 years, we'll be better off as a country and as regions for doing this?

[Translation]

Mr. Pellerin: First, I am not an expert, I am only a farm producer, a hog producer from Quebec. We have been monitoring hog production very closely throughout Canada these last ten years.

When we say that eliminating the subsidy will provoke increases in the livestock and processing industries in Western Canada, it is not based on projections or hypothesis for the future, but on observations made during the last few years.

Thanks to the famous Alberta Crow Benefit Offset Program, Alberta has known substantial livestock production increases for many years, as much as 10% a year, which is quite a lot. These are not hypotheses for the future: this is what has been happening already in one region of western Canada.

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If the Western Grain Transportation Program disappears completely, we should see the same thing in Saskatchewan and Manitoba, where both provincial governments have just announced their intention to double pork production.

Following elimination of this program, it is easy to conclude, and this is not hypothetical because we have just had political announcements to this effect, that there will be short and medium term impacts on agriculture elsewhere in the country. Could we be better off following elimination of this program in five, ten or 15 years? I doubt it.

Of course, you seem to be betting that we will be, but we seriously doubt that the trends we have seen in the last 100 years will continue after this program is eliminated. It has had a significant effect on the place of Canada on the grain export market. Abandonment of the program should change that and also change the way agriculture is going throughout Canada.

Will this benefit the producers, dealers, processors and multinational companies which we are already seeing in livestock production in Canada? Perhaps, but I doubt that it will benefit Canadian producers.

Mr. St. Denis: Thank you, Mr. Chairman.

The Vice-Chair (Mr. Campbell): I have just one small question. Do you still have a job for Mr. Loubier?

Mr. Pellerin: Unfortunately, we have replaced him. He has a mandate for several years here, in Ottawa.

The Vice-Chair (Mr. Campbell): Yes, here in Ottawa!

Mr. Pellerin: Some are saying that the future looks very sure.

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

[English]

Thank you very much for being with us and for providing us with the benefit of your expertise. Thank you for giving us an opportunity to witness all of Mr. Loubier's expertise in this area as well.

[Translation]

Thank you very much.

We shall now take a short break while we wait for our next witnesses to arrive.

Pause

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[English]

The Chair: Could we again come to order, please.

Our last witness this evening and our last witness on Bill C-76 is the Somerset West Community Health Centre, represented by Jim Dooley, Diana Ralph, and Jean Trickey.

Ms Sue MacLatchie (Community Developer, Somerset West Community Health Centre): I'm replacing Jean, who couldn't make it.

The Chair: We welcome you in her stead. We appreciate your being with us, and we look forward to your presentation.

Ms MacLatchie: We'd like to thank you very much for this opportunity to address your finance committee about our concerns. We'd also like to thank Mac Harb, our member of Parliament, who assisted us in setting up this presentation.

After introductions I will tell you why the Somerset West Community Health Centre is interested in this topic, and I will give you a few examples of people in our area.

Dr. Diana Ralph is the author of ``What's Wrong with Bill C-76'', which has been distributed to you, I hope. Diana is here tonight as a board member from Somerset West. She's also a professor at Carleton University School of Social Work.

Jim Dooley is the program manager of Somerset West.

I work at Somerset West as the community developer.

Our health centre grew out of a community group that identified the need for accessible health and social services 26 years ago. The Dalhousie section of this community has one of the lowest incomes in the Ottawa-Carleton area. In fact, 46% of the families are below the low-income cut-off, and the average employment income is $11,682. A high proportion of the people we serve are new Canadians, seniors, young mothers, and youth. We provide services in nine languages, and daily we see people from the community who are experiencing the impact of poverty.

While some may believe that health is based on doctors and hospitals, at Somerset West we are aware that the factors that contribute to health are broader. We believe that having a job means a person is healthier, that having an education means a person is healthier, and that having friends means a person is healthier. We believe that the security of social programs such as CAP and medicare has a great effect on how healthy people are.

Our centre is concerned about social justice because it has an enormous impact on health. This means that we are committed to working with our community so that adequate income, education, jobs, food, and housing are available to all residents.

Over 12,000 people come to our health centre for services every year. Many of these people are living on the margins, and less service will cause hardship and illness.

I'd like to tell you about two people from our community who might suffer more hardship if Bill C-76 is implemented in its present form.

Xuan is a young woman who reported to our welfare officer that she would be starting a job, so her provincial benefits were stopped. Instead of starting her job, Xuan fell ill and was hospitalized in a psychiatric hospital. When she was released, she was refused welfare on the basis that she was employed. Also, Xuan was not able to get her medications. It's most important that an appeal procedure be in place for these kinds of situations, and that's what CAP ensures now.

The second situation is about Ken, a 58-year-old construction worker who visited our centre to ask for help in finding a job. Ken doesn't read very well, and he has a recent diagnosis of heart problems that prevents him from continuing in construction work. However, he can do light work.

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If single, employable men were ineligible for welfare, Ken would be one of the people cut off welfare. Ken might be forced into a workfare program, but his health problems might cause him to drop out. Without a basic right to assistance in the legislation, Ken may be living on the streets.

We see people who are experiencing these difficulties every day. On their behalf, we want to urge you to delete parts I, IV, and V from Bill C-76.

Professor Diana Ralph (Member of the Board, Somerset West Community Health Centre): Thank you very much for waiting for us.

We have several concerns about the bill, which Sue has alluded to. The first, which I'm sure you've heard many times, is that eliminating the Canada Assistance Plan will affect everybody in Canada.

As you know, the Canada Assistance Plan Act incorporated the principle that everybody deserves a basic protection, a basic floor below which nobody will starve. It is the principle of adequate benefits. There never have been adequate benefits, but the presence of the Canada Assistance Plan Act has in fact been a huge deterrent.

When I worked in Saskatchewan doing welfare rights work, we were able to use the four-cornered agreements and the act to prevent arbitrary workfare proposals from coming in under the Devine government and to get the government to reverse cutting off welfare for thousands of people who had missed minor requirements of the workfare law they had put in.

At this point, welfare touches one in four Canadians in our lifetimes. With higher unemployment levels, it's likely to be one in three. That means it directly touches a large proportion of us. It touches us because the people forced to be on assistance are our parents, our children, our friends, our other relatives, our students, or people desperate for money panhandling on the street. In those ways, welfare touches all of us directly.

Protection from that kind of destitution is especially crucial now when unemployment is so high. Already, more than one worker in four is forced to draw UI each year, and one in three of those exhaust UI benefits before finding another job. In fact, all of the statistics are showing that the ``just-in-time'' labour force is going to increase that kind of proportion.

Besides helping those currently in need, CAP indirectly helps all of us, especially working-class people. Welfare serves as the unofficial minimum wage. It's the wage that even the most exploitive employers must meet to attract workers.

By cutting standards, transfer levels, and the requirement that tax points be spent on welfare, Bill C-76 will result in much lower welfare rates in many provinces, and perhaps in all of them. It will be up to the discretion of whatever party is in power.

When welfare rates fall as a result of Bill C-76, we can expect wages for all working people to also fall, especially for those earning near the minimum wage. Lower welfare rates and fewer rights will make it harder for workers to dare to protest unsafe or illegal working conditions, for women to leave abusive relationships, and for oppressed people to hold out for less exploitive jobs.

CAP is the linchpin of Canada's social programs. Without CAP, all the other programs can go, because people are much more vulnerable. An attack on CAP is a direct attack on the rights and well-being of all Canadians.

For the C.D. Howe Institute, and for the Business Council on National Issues, this seems to be the goal. In fact, it's explicitly repeated over and over in their literature. But they represent the richest businesses, less than 1% of the population. They are a special interest group most likely to benefit from undercutting the bargaining power of the entire labour force.

We ask that you take a more principled stand, a stand for the vast majority of Canadians, your constituents.

Our second concern is about block funding eliminating national standards.

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Bill C-76 replaces open-ended cost sharing of health and social assistance with tax points and declining cash transfers. It attempts to justify this on the basis of granting provinces more flexibility. However, provinces already have a completely free hand to experiment with creative ways to provide services. The only flexibility they don't now have is the right to violate national standards, and the main point of Bill C-76 seems to be to eliminate national standards.

Block funding will eliminate all standards enshrined in CAP's guaranteed basic standards for assistance: the right to receive adequate welfare based only on need, not on deservedness, unlike in the United States where you have to be blind or a single parent in order to get welfare; the right to appeal decisions; protection from workfare; and no residency requirements. Bill C-76 eliminates all but the last, overtly, but without the right to appeal, even the no residency standard is hard to enforce.

By phasing out federal health dollars, the government is giving away its ability to protect national standards of medicare. This appears intentional. Already the health minister has waffled on whether she will enforce protection against user fees and privatization in Alberta, and the Prime Minister is on record claiming, incorrectly, that medicare was never intended to cover basic health services permanently.

Our third concern is that Bill C-76 will slash the level of money spent on health and social assistance. Block funding levels will be substantially lower than current transfer payments and tax points. That's right in the budget. As for the future, once you have a block grant, it's very hard to base the grant on per capita needs as it is now.

The Canada Health and Social Transfer essentially caps both health and social assistance dollars at current levels, eliminating flexibility for provinces to accommodate periods of high unemployment or rising health care costs.

There are no guarantees that the level of block funding will remain even this high over the years, as we saw with the elimination of funding through tax credits in 1977. Until 1991 CAP benefits had been open-ended, based on the actual level of need of individuals. Under the Conservatives, Bill C-32 imposed a punitive ceiling on recipients who happened to live in the three provinces that weren't getting cash transfers in 1991. Through block funding, Bill C-76 caps welfare expenditures for all provinces, regardless of number of people in need or the level of their need.

Our fourth concern is that it attacks public service workers. Low-income and working-class people rely on good public services. In fact, middle-class people do too. Already, 20 years of public service cuts have eroded the ability of Canadians to get the routine and emergency services to which they are entitled. This attack on public service workers is the largest single cut since the national social welfare programs were put in place.

The victims will be not only the dedicated workers who are losing their jobs, but also the small businesses that depend on spin-off contracts and on the multiplier dollars of public service workers. Consumer spending will also lose. But the biggest losers will be the vast majority of Canadians, especially the most vulnerable, the people who use our centre, who rely on the services provided by these workers.

Our biggest underlying concern is that Bill C-76 forces the poorest to shoulder the heaviest burden of the deficit. Bill C-76 asks the poor to pay the costs of the debt created overwhelmingly by corporations and the rich. Over 90% of the deficit is caused by interest rates artificially inflated by the Bank of Canada, by high unemployment rates resulting from those inflated interest rates and other federal policies, such as the failure to regulate international capital speculation, and by failure to tax corporations and the richest Canadians.

Only 4.5% of the debt is caused by welfare programs, and yet you're cutting them. Over $100 billion a year is lost in tax revenues from unemployment. If unemployment were only 7%, which we know was unacceptably high just a few years ago, tax revenues would rise enough to wipe out the entire operating deficit.

The Chair: We'd love to get it down to 7%, or even lower.

Prof. Ralph: I believe you would, except that the interest rates, which were way below 2% or 3% for years, have artificially been set higher, just by the current....

The Chair: Are you sure that they're set artificially?

Prof. Ralph: Yes.

The Chair: Are they not set by international markets?

Prof. Ralph: Yes, I'm sure. Read Shooting the Hippo by Linda McQuaig or The Deficit Made Me Do It. There are other people whom I can cite if you'd like.

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The Chair: Cameron?

Prof. Ralph: Yes.

The Chair: Yes, we've read them.

Prof. Ralph: I'm sure you've heard from them too.

Cutting expenditures for public service workers and for basic needs of all Canadians is more likely to increase rather than reduce the deficit because it will produce higher unemployment, greater social costs of poverty-related illness and crime, and inefficiencies from an eroded public service. We've seen this result both in New Zealand and in provinces such as Saskatchewan under Grant Devine. I can tell you from living there, that's what happened. There had been no deficit until these kinds of policies were brought in; all of a sudden there was an overwhelming deficit that was artificially created by eliminating the kinds of sources of revenue that the government used to rely on.

It is clear that the real agenda is not to cut the deficit but rather to complete the Draconian agenda of the Mulroney government: a long-term strategy to strip away the protection of the welfare state and to forcibly put Canadian working people at the mercy of the market, as was done to English workers in 1834 with the so-called reform of the poor laws.

Bill C-76 sacrifices the people we serve on the altar of the deficit. These people did not cause the deficit; they are its casualties. Why is the government not focusing its deficit guns at the top 1,000 Canadian corporations, which raked in 19.8% profits last year, or CEOs such as Magna chief Frank Stronach, who earned $40.7 million last year, much of it tax free? Every year, $20 billion in corporate profits go completely tax free.

Basically, Bill C-76 is a choice for the richest few and a choice against the poorest many.

Canadians spend close to the lowest proportion of GNP on social programs. Canada spends only 12.8% of its GNP on social welfare and social security compared with 18% to 30% in Germany, France, Austria, Belgium, the Netherlands, Denmark, Sweden, and Norway. The U.S. is about the only one that spends less than us; it spends 11.5%.

Corporate tax was 19% of total Canadian revenues in 1969-70. Now it's been reduced to just 7%. Canada and Australia are the only major developed countries that don't have some form of tax on wealth. A 1% wealth tax on assets over $1 million would have yielded $4 billion just in Ontario in 1989.

We clearly can afford our social programs. What Bill C-76 asks you to do is to choose to prioritize the greed of the richest over the needs of all Canadians during a time when they most need help.

What will Bill C-76 do? The poor people will suffer. Wages will drop for all. Health care will become two-tiered with only the rich having access to quality care. Unemployment rates will rise as public services are cut. The fiscal deficit will rise if only in hidden form, transferred on to the provinces and municipalities. The social deficit - crime, illness, enemies, cynicism, despair - will mount exponentially. And banks and employers will get richer.

On behalf of the 12,000 people we serve, we respectfully urge you to delete parts I, IV, and V from Bill C-76. CAP and medicare are essential services defining the best of what it means to be Canadian. They aren't outdated and they are not broken. They are completely affordable. Those we serve need good public services and the workers who provide them.

You are in a key position to stand up courageously for the vast majority of your constituents. Please have the courage to defend Canadians from this dangerous bill.

The Chair: Is that the end of your presentation? Thank you very much.

[Translation]

We will start questions with Mr. Loubier.

Mr. Loubier: Ladies and gentlemen, thank you for your excellent presentation. I can tell you personally and on behalf of my party that we support most of your analyses and recommendations. In fact, ever since we have been elected 15 months ago to this Parliament, quite apart from the constitutional debate, we have been the only ones to defend the real constituents, the ordinary citizens who sent us here and not the big corporations and the big contributors to the old parties.

Let me also tell you that in the next few weeks, when the time comes to bring amendments to Bill C-76, we will denounce the wrong targets and the measures that appear to us to be unfair, such as the fact that you just mentioned, namely that 1,000 profitable corporations did not pay any income tax at all. In 1991 there were 77,000 of them.

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Given all that and the fact that the government is not manly enough to do a fiscal reform that will benefit real citizens, we will echo your positions and your analysis during the next few weeks.

Thank you for your excellent presentation.

[English]

Prof. Ralph: Thank you.

The Chair: Thank you, Mr. Loubier.

Mr. St. Denis.

Mr. St. Denis: I was looking at the cartoons. Those are very helpful. I was looking at the four of them and wondered whether they were in fact a totally accurate representation of the federal budget.

Mr. Martin made it clear that shared principles would be arrived at with respect to national standards. Take, for example, number two, the right to income when in need. Is it imaginable to you that provinces would actually interpret changes to the CAP in such a way that it would lead to the scenario that you paint here? I am very sympathetic to the constituency that you represent. But nonetheless, is it possible in your view that the provinces would take such a retrograde step as to diminish to the extent suggested here the availability of benefits to those in need?

Prof. Ralph: There are provinces already that have cut off thousands of people from welfare for very minor things. When I lived in Saskatchewan, they were cutting people off for showing up late three times to a workfare placement. About 10,000 people were cut off assistance completely, illegally. It would be legal after Bill C-76.

In Quebec thousands of people have been cut off already. In Alberta and New Brunswick many people have been cut off already. I'm not sure I agree with the particular scenario in this cartoon, although it could happen. I think the issue is that they could set up categories of people, as they've done in the United States.... I know you heard yesterday from the NAPO brief that in Massachusetts they have cut off employable single people from welfare assistance. Single-parent mothers, after two years, in many of the southern states are not able to get welfare. There are whole jurisdictions where people cannot get welfare simply because there is no money available for it.

The bill basically allows each province to decide if it's going to spend the money. We know there are all kinds of stigma attached to the poorest, that they get blamed for their own poverty. You could have a Ralph Klein say that those people just need to get off their duffs and get to work and that they don't deserve any welfare. Yes, it could happen. It's happening now.

Mr. Campbell (St. Paul's): This will be a quick point, because it's been a long day for all of us. I appreciate your coming to see us. It's late and the end of your day. We've also been at it long and hard today.

Your comments about taxation require some response. It is a litany of complaints that we hear from time to time. It is certainly familiar to us. Since we hear it so often, I've done a little bit of digging into some of it. This is for the record, so that I can put the other side on the table.

As for corporate income tax becoming less and less a share of overall tax, if you look at the statistics, as I have, you will see that is a function not of rates having been reduced but, on the contrary, of profits having been hit so hard in the 1990-93 taxation years.

In fact, if you look at effective total tax rates, they have gone up in that period, not down. The total tax receipts as a percentage of overall tax collections have gone down.

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The other point about taxation - I've looked at this as well with respect to taxation of the individual - is that currently the top 10% of tax filers pay half the total income tax.

Somebody in fact did a work-up on this. If we confiscated all income over $60,000, which might appeal to some, and substantially increased the corporate tax without regard to what impact it would have on our competitiveness as a country in the world, and scooped up somehow - hopefully not on a one-time-only basis, because that would be self-defeating - many billions of dollars, we would still need to find many billions of dollars to even begin to eliminate the deficit. I don't want people to be left with the sense from that testimony that there's a panacea, which is is taxing wealthy Canadians or corporations more without our having to do anything else.

Prof. Ralph: I agree with you that taxing the rich won't do it. The biggest problem we have is high unemployment rates, and that's why the cost of social programs has gone up and why there's such a drain on tax revenues. Such high unemployment is largely due to the high inflation rates, the lack of investment in the infrastructure, the lack of investment in a national child-care program, etc.

The tax rates for the richest Canadians have gone up about 4%, and over the same period, I think it is 20 years, the tax rates for the poorest Canadians have gone up 394%. Tax rates have gone up, but the share of the taxes paid by middle- and low-income earners has gone up dramatically. That's a fact. I agree with you that the top 10% pay more than 50% of the total income tax, but what percentage of the wealth in the country do the top 10% have? It's over 80%.

Mr. Campbell: Are you proposing taxing income or wealth?

Prof. Ralph: It can be both, but wealth.... We need a wealth tax. We also need a tax on financial speculation.

Mr. Campbell: That I presume would have some impact on the employment issue that is topmost in your mind.

Prof. Ralph: Yes, I think it would, because most of that speculation has very little to do with creating jobs. It mostly has to do with laundering money at the highest rates. It's a shell game.

The Chair: On that point, what types of financial transactions do you feel we should tax?

Prof. Ralph: I'm not a tax expert, but the sources that I've looked at say a trillion dollars circulates. James Tobin is going to be coming in and talking about taxing international money speculation; that's one piece.

The Chair: If you're talking about the Tobin tax, I know what you're talking about.

Prof. Ralph: Yes, that's the Tobin tax.

Mr. Campbell: That's internationally, not in Canada.

Prof. Ralph: Yes, I understand. Some portion of it comes through Canada.

There's also a wealth tax. Neil Brooks has laid out a bunch of stuff for you, I'm sure.

The Chair: We've had Mr. Brooks before us on two occasions at least, and we've listened to him and we've looked very hard at a lot of his proposals.

Prof. Ralph: I'm delighted.

The Chair: We didn't accept a lot of them, though. Just because we consult extensively on these things doesn't mean that we find them workable after looking into them. We're looking for that pot of gold.

If we could find it, we wouldn't be going through this terribly painful and difficult cutting.

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Prof. Ralph: We disagree on the cause of the deficit and on the remedy.

Can you explain to me how slashing CAP, slashing UI, slashing pensions, and slashing people's housing is going to reduce the deficit?

The Chair: It will reduce it by $7 billion over two years.

Now, you can very legitimately say you're hitting the wrong people.

Prof. Ralph: Yes.

The Chair: To me, you have great credibility when you come before us and say: ``Don't hurt these people whom we work with. We know their real need, and we know they're not ripping you off. If you take the last remaining support away from them, they'll become even more of a drag on you and they'll never have a hope of getting out of poverty.'' You have tremendous credibility when you come before us and say that.

I think when you come before us and accuse the Bank of Canada of wanting to artificially keep interest rates high, because they want us to suffer and pay higher interest rates, be less competitive, and have higher deficits...you're not alone. If we thought all you had to do is lower interest rates or print money - as Duncan Cameron told us the other night - to pay off the debt, my God, it would be wonderful. We wouldn't have a problem in the world. It would be marvellous. Not only that, we could eliminate poverty throughout the world, because every country that's in debt would do it.

Prof. Ralph: How does it happen, if the deficit is so important, that the priority is not on starting with the biggest pots of money and that the priority is not on actually putting Canadians back to work, for example, rather than just setting up these minuscule job training programs and destroying universities in the process?

The Chair: If you know ways to create jobs, we'd love to hear about them. Please help us and tell us how much it will cost.

Prof. Ralph: A national day care program will create a whole bunch of jobs.

The Chair: What will it cost us per job? And who will pay it?

Prof. Ralph: Taxes will probably finance most of it.

The Chair: How much do you want me to give per job in day care from the government?

Prof. Ralph: I'd like you to give people what would be a fair salary.

The Chair: Is that $20,000?

Prof. Ralph: It's probably more like $30,000.

The Chair: If we put out $30,000 as the government - provincial, federal or municipal - for a child care program, you say the taxes on that income will more than pay for it.

Prof. Ralph: They won't more than pay for it. It will cost you some money. But there is money to be taxed elsewhere.

The Chair: But you told me that the taxes on it would more than pay for it.

Mr. Jim Dooley (Member, Somerset West Community Health Centre): I would suggest that all those dollars of a $30,000 income go back into the economy.

The Chair: So it's a multiplier effect of having more money circulating.

Mr. Dooley: I'm not talking about people who put their money away, whereby the money gets removed from the economy.

The Chair: On that basis, we should give every person $30,000, including the poor people. Instead of just giving them the measly stuff under the CAP, we should give them that $30,000. The money would be circulating and we'd all be richer. There are some economists who have suggested this.

[Translation]

Mr. Loubier.

Mr. Loubier: That is not what the witnesses have told us, Mr. Chairman. I was listening earlier to the technical arguments made by Mr. Campbell, his attempts to pull our witnesses' leg and the somewhat fallacious arguments that you have just presented, as if the witnesses' arguments were not credible, and I find all this deplorable.

I would like to come back on Mr. Campbell's argument who contends that the figures regarding the proportion of the federal government's revenues coming from corporations and individuals are not credible. In my view, quite the opposite is true. When Mr. Campbell says that because of the economic downturn, the profits raked in by corporations as well as the proportion of tax revenues that they pay have decreased since 1990, I am sorry, but since 1990, not only corporations have been hit by the recession, but individuals have seen their income decrease as well.

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Since they were more unemployed, less taxes were paid. Normally, the impact of this recession would have been compensated by tax revenues. In fact, 50 years ago 50% of the government's revenues were generated by corporations and 50% by individuals. Today and since the mid-1980's, between 16 and 19% of revenues are generated by companies and the rest by individuals; there's obviously a structural problem.

This is a good indicator of how we should change taxation; our tax system is obviously full of holes. There are obviously people in Canada, whether they are companies or high-wage earners, even very high-wage earners, who are not contributing equitably to the tax base. Perhaps when they finally pay their share will we have enough money for a childcare system. The solution is not to give everybody $30,000 in order to keep the economy going; that's not what our witnesses said.

Secondly, there's the issue of interest rates. It's much too easy to say we have no control over that. If we have no control over interest rates, we should get rid of the Bank of Canada. Aside from buying and selling federal government's securities, what does it do? It definitely has control over the interest rates, but since 1988, it chosed to apply drastic measures consisting of a five point difference between the Canadian and American interest rate. This led to a recession in Canada 18 months before anywhere else in the world, before it happened in the United States or in Europe. If we had no control over interest rates, how come our interest rate was 5% higher than the American interest rate in circumstances when this shouldn't have happened normally. You have to be careful about the way you talk about these things.

Thirdly, Mr. St. Denis said something very interesting. He said: ``Do you think that the provinces are reactionary to the point of cutting social programs?'' Well, listen! There's one thing that you must keep in mind: It's the federal government that made reactionary decisions in its last two budgets. It cut 2.5 billion dollars from the unemployment insurance fund when it doesn't even contribute a cent to it; 2.5 billion dollars this year; 2.5 billion dollars next year; and 7.5 billion dollars in cuts to transfers to the provinces.

Don't forget that. Don't blame the provinces. It is the federal government that off-loaded its deficit problems onto the provinces and he targeted the poor. That is something we must not forget, something that cannot be pushed aside.

That is all I have to say, Mr. Chairman. Once again, I deplore the fact that some people try by splitting hairs and by resorting to technical arguments to ridicule the witnesses from the social classes. I cannot accept that and I don't intend to accept in the future. Thank you.

[English]

Mr. Campbell: Mr. Chairman, I would say that in making reference to some of the information, data, research I've done, Ms Ralph was kind enough to share some of her data. I didn't regard it as a put-down, but as an alternative perspective. She responded from the information that she had.

That's all I have to say, Mr. Chair.

The Chair: I think we have to keep searching for other ways to raise revenue fairly. We will carry on that search, and we will have pre-budget consultations next fall in which we will continue to look for them. We will continue to test whether the monetary policies of the Bank of Canada and the government can be improved upon, because we'd love to have lower interest rates.

Prof. Ralph: May I ask one more question?

The Chair: Sure.

Prof. Ralph: I really think you need to be held.... You have nit-picked with us about alternative sources of money. It isn't my responsibility to come up with what the alternative sources of money are. Is it my responsibility -

The Chair: Excuse me, Diana Ralph, could I interfere? It's not your responsibility, and I wish you hadn't undertaken to suggest where it could come from. But because you raised it and because you assume that responsibility in public before us, I felt I had to comment.

We will continue to look for new sources. Let me say this. You are an expert. You are expert on the people you're dealing with, the people who do have a claim on our conscience, and it's quite fair for you to say: ``My God, there are a lot of richer people and groups out there. Can't you go after them? We may not know the best way to do it, but it's only fair and right that the people who do have the wealth, who do have the means, or who do have the higher income pay more, because these people at the bottom have nothing to pay and need our help.''

I think you've made that case very, very impressively before us tonight.

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I thank you for the work you're doing and for the presentation you made to us tonight on behalf of all members. Thank you very much.

We will return to this room tomorrow at 9:30 a.m.

The meeting is adjourned.