EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 22, 1995

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[English]

The Chair: Order, please. The finance committee resumes its sittings. We're looking into the next budget.

We're very honoured to have with us tonight a lot of very important witnesses related somewhat to the agrifood business of Canada as well as to other areas.

We have with us today Yvon Proulx from the Union des producteurs agricoles, Sally Rutherford and Lloyd Sandercock from the Fédération canadienne de l'Agriculture, Rosalie Daly Todd and Marnie McCall from the Consumers' Association of Canada, Rick Phillips from the Dairy Farmers of Canada, Kenneth Edie from the Prairie Pools, and Debra Ward from the Tourism Industry Association of Canada.

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Welcome. We thank you for being with us. We look forward to your brief opening comments.

[Translation]

Mr. Proulx, would you begin, please?

[English]

Ms Sally Rutherford (Executive Director, Canadian Federation of Agriculture): Sorry. Can we interchange? All of the primary agriculture organizations are members of CFA. They've have asked CFA to go first, if the chair -

The Chair: That's fine. That means you'll be beginning, Ms Rutherford and -

Ms Rutherford: Mr. Sandercock.

The Chair: Mr. Sandercock.

Thank you, Mr. Sandercock. We look forward to your presentation.

We've just been joined by Mr. David McMillan from the Hotel Association of Canada, accompanied by Anthony Pollard. Thank you, gentlemen.

Mr. Sandercock.

Mr. Lloyd Sandercock (Member of the Executive Committee, Canadian Federation of Agriculture): Mr. Chairman, thank you for this opportunity. I'll say a few words about the CFA.

The Canadian Federation of Agriculture is an umbrella organization representing more than 200,000 farm families across Canada. These farm families operate small businesses and are important contributors to the Canadian economy.

The agricultural associations here today are the Dairy Farmers of Canada, the Prairie Pools and the Union des producteurs agricoles. We are all members of CFA.

In relation to the first question posed by the committee concerning balance, our view is that it's difficult at the moment to determine what the balance presently is, but we are concerned with the shift away from public responsibility in a number of areas. It is difficult to address specifically in terms of recent activity, though, as several changes introduced in the 1995 budget, which will have a major impact on primary producers, will not be fully implemented before 1997.

Changes like the phasing out of the Western Grain Transportation Act, the Feed Freight Assistance Act and cuts to research and development as well as the implementation of cost recovery have certainly altered the status quo. We believe that before further changes, government must reflect on what the balance should be for the financial, social and environmental health of the country.

On the second question in relation to government managing activities in the primary agriculture sector, the first response is that government should not be managing activity at all. Its public responsibility should be to facilitate the best possible operation of the industry, not to manage it.

To compete successfully internationally Canadian agriculture must not be put at a disadvantage compared to our trading partners. From this point of view we believe that the cost recovery policy and the policy surrounding research and development need to be reviewed to ensure they are not damaging the ability of the industry to function in a global market.

We are also concerned about the many program and policy decisions that do not take into account the impact of rural versus urban Canada.

Specific measures we would like to bring to the committee's attention include the maintaining of the $500,000 capital gains exemption, which reflects the differing retirement needs of small owners and farmers.

As for investment tax credits or investment tax exemptions aimed at increasing the level of investment by small and medium-sized businesses, we understand that a proposal on a 20% tax exemption on the reinvestment of profits back into the business has been presented to the Department of Finance by Mr. Murray Calder. We believe this would create a positive business environment for smaller communities, especially as funds would have to be reinvested in the business generating the profits, keeping the economic benefit in that area.

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Stabilization programs have faced reduced expenditures annually for the past eight years. In the 1995 budget a schedule of expenditures was put forward that included a further reduction of $50 million for 1997-98 from the 1996-97 amount. The whole farm income program discussed in the red book still has not been put into place. We are working with a figure that is $250 million less than that available in 1994. Yet we request that the $600 million envelope not be further reduced and that the surplus dollars be carried over into subsequent years.

Transportation program adjustment payments for the WGTA and the FFA have caused difficulties for farmers and those they do business with across the country. The issue with the WGTA is essentially a matter of method of payment, which is not within the purview of this committee. The CFA has expressed its concern over the complexity of the system devised and the perceived lack of fairness involved to the Minister of Agriculture and Agri-Food.

The FFA decision is within your area of influence, though. We find it difficult to believe that in being able to make the WGTA payment of $1.6 billion over two years, it's necessary for reasons of fiscal responsibility to make the $72.8 million of the FFA payment over ten years. The CFA is an active participant in the FFA task force that is attempting to address this issue. Farmers and their suppliers and their customers are relying on you to ensure that their ability to adjust to new fiscal realities is reasonable and productive.

There are other issues raised in our brief that we would be pleased to address with the committee during your question period. Thank you.

The Chair: Thanks, Mr. Sandercock.

We will go on to you, Ms Todd.

Ms Rosalie Daly Todd (Executive Director and Legal Counsel, Consumers' Association of Canada): Thank you, Mr. Chairman. On behalf of the Consumers' Association of Canada, thank you for including us tonight.

Because of the composition of the group, as you said, the emphasis tonight is on agrifood issues. As I believe you know well, that is only one of the Consumers' Association's concerns. We hope to have the opportunity to address others in another forum.

The Chair: Please don't feel restricted in your comments on any topics you want to bring before us. We know this budget is an extremely complex, all-encompassing type of approach. We welcome your presence here not only on the agrifood issue, but also on the gamut of issues that are important to you.

Ms Daly Todd: Thank you, Mr. Chairman.

As you know well, the Consumers' Association is a not-for-profit organization of volunteers. We will be 50 years old in 1997. We have been active in agrifood issues since the beginning. Our views, for example, on supply management are well known. We supported a move to tariffication over a fair period of time. However, we were extremely disappointed with the result of GATT in that we felt the tariffs were too high and over too long a time period to remove them. Obviously, CAC would be supportive of any movement in this process, whether it comes from bilateral U.S. negotiations or elsewhere.

On the issue of sector emphasis, we have felt for some time in the past that the Department of Agriculture and Agri-Food has emphasized the producing sector over the consumer. CAC in general supports the removal of barriers to competition and competitiveness where health and safety are not endangered. We've been very active, particularly on the removal of internal trade barriers. You may know that for the last four or five years it's been one of our top issues at our annual general meeting. We've worked hard for this.

We are concerned in some cases that harmonization can lead to an unacceptably low standard from the consumer viewpoint. Another issue that often concerns us is whose standard will prevail, the U.S. standard or the world standard. At times this is an issue for the agrifood community. One example right now is the ongoing review of nutrient content and nutrient claim labelling, and the consumers' fear that a lesser U.S. standard, specifically U.S. rounding rules, may prevail.

We're also concerned in general about Bill C-62. We're concerned because of its sweeping nature and because the process last proposed lacked transparency and did not mandate consumer involvement, although as I said before, we support deregulation where appropriate. We recognize that inappropriate regulations can and do become a trade barrier.

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On some of the broader issues, I want to stress that for the last four years we have made a presentation to the Minister of Finance on the federal budget. We have stressed the fact that the average consumer, the average family, is in a terrible financial squeeze. There is little room in the average budget for discretionary spending. In past years we've actually done the numbers for you and we hope to do it again this year. I don't have them tonight.

The Chair: When might you have those figures available?

Ms Daly Todd: Normally we do this during December, so you can have them as soon as possible, Mr. Chairman.

The Chair: Perhaps you'd be good enough to pass those on to us, Ms Todd.

Ms Daly Todd: I would be pleased to do that. From the standpoint of the average consumer, this financial squeeze on the family pocketbook, the fear of job loss, and the fear that health care benefits will be eroded, in our estimation are probably the three biggest fears for the average consumer.

We also want to stress that there are equity issues on the taxation side. We feel that the Canadian consumer is overtaxed, and we pay a higher share proportionally than business if you compare us to other nations.

We are also still in support of GST reform, and our position on that has been well recorded.

Our concerns for health care reform will be expressed tomorrow. We are going to be appearing as part of the HEAL, Health Action Lobby, coalition.

I want to make a couple of quick additional points. We feel there is a need for more consumer involvement in the regulatory process, and I'm going to give you two examples. One is the fact that under the Broadcasting Act there is no intervener funding as there is under the Telecommunications Act. For example, Canada looked at the issue of convergence of communications this year with almost no organized consumer involvement. In other words, the consumer was left out of the debate, and that will be an issue for the future in Canada.

Secondly, we feel there should be greater consumer involvement in the biotechnology regulatory process.

Finally, we're concerned that the federal government is withdrawing its financial support from consumer groups, and we're concerned that in the future groups like ours will not be here able to participate in the process.

Thank you, Mr. Chairman.

The Chair: Thanks, Ms Todd.

Mr. Phillips, please.

Mr. Rick Phillips (Director, Policy and Government Relations, Dairy Farmers of Canada): Thank you, Mr. Chairman.

On behalf of Canadian dairy producers I'd like to thank the committee for taking the time to hear our views on issues facing the industry. DFC is the national policy and lobby organization representing Canada's 26,000 dairy producers.

The organization represents views of dairy farmers on various issues and also fulfils the role of increasing consumption of dairy products through producers' investments in product promotion and marketing.

The Canadian dairy industry, as you know, is one of the most viable agricultural sectors of the Canadian economy, and provides substantial benefits to government, stakeholders and consumers. Not only does the industry provide direct employment for well over 85,000 Canadians, it plays an essential role in maintaining local economic infrastructures of rural communities across the country.

All totalled, the dairy industry contributes more than $7 billion annually to Canada's economy. Canadian dairy farmers are cognizant of the fiscal restraint required to ensure long-term economic viability and are prepared to work with government in sustaining an economic environment that leads to growth.

In response to the first question posed by the committee, current dairy policy is a good deal for Canadian consumers and the industry stakeholders. It is under the auspices of a supply management system that Canadians have benefited from a stable supply of high-quality dairy products at reasonable prices, and the producers have been able to receive adequate returns.

A continuance of the effective operation of this system will ensure that producers can continue to provide, in the future, some of the highest-quality products in the world.

Price increases for dairy products have tended to be less than the general rate of inflation in Canada. Over the period of 1984 to 1994 the retail price for dairy products increased by 23.2%. This was lower than the general rate of inflation, which was at 41.5% over that period. It was a lower rate than for commodities such as beef at 29.9%, bread at 31.3%, and pork at 34.4%, which are all now produced under supply management.

This also applies to the price received by producers. It was lower than the rate of inflation as well, and only increased by 17.1%.

You might note that this contrasts with the U.S., where in recent times the price of dairy products has risen more rapidly than in Canada, even though producer prices tend to be lower. Evidence of this lies in the fact that when comparing an entire basket of dairy products, an updated Agriculture and Agri-Food Canada study shows U.S. consumers in border cities are paying about 7% more than are Canadian consumers for the same basket of dairy products.

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Canadian producers have also introduced programs that are intended to make downstream players, such as further processors and bakers, more competitive.

I will now address the question of the role of government. The basic premise of supply management has always been that producers should receive adequate returns from the marketplace. Government has supported the industry in the past mainly by providing the legislative and regulatory framework to support supply management in dairy.

Government also has the responsibility to provide the industry with tools it needs and to safeguard the elements necessary to maintain an effective supply management system in Canada. This will not only encourage sustainability in the producer sector but also provide opportunities for viable growth.

As for international markets, the 1994 GATT did not provide specific access opportunities for Canadian dairy producers, nor did it result in creating a level playing field for competition between us and our international competitors. But it did provide us with the border protection needed to ensure stability in the domestic market.

I would like to remind members of the committee that the concept of tariffication was introduced at the time of the GATT discussions as a way to deal with various types of non-tariff measures that had proven to be very unmanageable. High tariff equivalents do not mean high domestic prices. They are based on a European formulation that was approved by the U.S. at the time of the negotiations. Prices are set in the domestic context in Canada based on cost of production.

I will now address the final and most difficult questions concerning fiscal measures. Last year producers sat before this committee and asked the government to maintain the direct payments and the GATT green programs such as those found in research, genetic evaluation and milk reporting. We asked that cuts be made to eliminate duplication in the Department of Agriculture and Agri-Food Canada, and we asked that those cuts be made to produce government savings.

DFC argued that reductions in government expenditures should not be accomplished through ``across-the-board cuts'', but rather through a careful priorization of industry needs.

As we know, the government made significant cuts in areas of interest to the dairy industry. The direct payment was cut by 30% over the periods of 1995-96 and 1996-97. When considering the elimination of the direct payment, one must remember this payment was primarily instituted to reduce the cost of certain dairy products to consumers. Last year we identified the potential for a significant market disruption should the direct payment be totally eliminated.

It's too early to tell what the market effects of the last budget reduction to the direct payment were. As DFC pointed out, where Canadians could expect to gain as taxpayers by eliminating the direct payment, they more than lost through economic disruption and through reduced consumption of products that are well recognized for contribution to the population's nutritional needs.

Now I'd like to turn your attention to dairy programs. In the last year government services in dairy, genetics and milk reporting have been privatized. Expenditures on research such as those under the matching investment and incentive initiative have only been partially successful in attracting industry financing because of an initial lack of flexibility in the application of those programs. Things are improving there, however.

Producers continue to support government investment in agricultural research. Studies have shown that agricultural research provides a cost-to-benefit ratio of up to 1:40. Every dollar invested yields $40 in benefits to Canadian consumers and taxpayers.

In the dairy industry, management, nutrition and breeding technologies are but a few areas where research is required to maintain productivity gains that have been characteristic to the Canadian dairy industry under supply management. These gains, I would like to remind the committee, are passed on to consumers through our cost of production-based pricing methodology.

Thank you.

The Chair: Thank you, Mr. Phillips.

Mr. McMillan.

Mr. David I. McMillan (Chairman, Hotel Association of Canada): Thank you, Mr. Chairman.

My name is David McMillan. I'm chairman of the board of the Hotel Association of Canada. It's an elected position. With me is Mr. Tony Pollard, who is the president of our association.

I bring you greetings from an $8.1 billion industry employing pretty close to a quarter of a million Canadians. I bring you greetings from every one of them.

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I came with a prepared address and I've decided to set it aside to focus on the accomplishments we've made over the past couple of years. I think we should enjoy them together because these accomplishments were achieved together.

The establishment of the Canadian Tourism Commission continues to receive accolades from the tourism industry and we congratulate the federal government for its clever move to capitalize on the growth industry of tourism.

Canada slipped from tenth position on the world tourism charts to number ten from 1980 to 1993, which was a disastrous slip. The Canadian Tourism Commission is challenged with taking it back from number ten to a position much higher on the charts, and they're well on their way to achieving what they may do in the first year. One of our first accomplishments is the establishment of the Canadian Tourism Commission.

The second of five issues is open skies. Open skies will bring to Canada 7 million seats in addition to those seats that previously came to our country. In the tourism industry we will capitalize and attempt to fill those seats. That's a major accomplishment and we should relish that together.

You elected to increase the tourism promotion budget from $13 million to $50 million, a very, very smart move that we in the industry are going to make sure increases in future years. We will measure our successes and you will see the benefits of that investment. The measurement of our tourism promotion successes is an extremely important component of the commission in future years.

Very recently we completed a human resources study, with your support. The results of that human resources study are going to be announced at next week's B.C. and Yukon Hotels Association convention. We're very proud of the results that study will be presenting.

The Asia-Pacific market is a tremendous potential for us in the future. The Japanese have told us they could increase their production to Canada from 500,000 tourists a year to 2 million. All we need to do is five things. We're in the process of doing those five things, and the Hotel Association of Canada in conjunction with the Asia Pacific Foundation has produced one of the most comprehensive packages for servicing the Japanese market that the world has yet seen.

Finally, in the area of accomplishments, we have established a program to assist in the servicing of the handicapped. It started as Access Alberta. It was developed and refined and expanded into Access Canada, and earlier this month we introduced the concept to the International Hotel Association, which accepted it unanimously as the standard by which handicapped programs should be judged in our industry. Access Canada will be going out onto the world stage over the next year.

These accomplishments we have achieved together. We will need your continued support, particularly in the areas of tourism promotion and human resources.

The major challenge we face in our industry - and this is not the first group you've heard this from - is taxation. Taxation in our industry represents pretty close to 50% of our gross revenues.

I think of our industry as an employment machine, and that's exactly what it is. Today we employ something in the area of 250,000 employees, but we are an employment machine. If the level of business goes down, the first thing we cut is a job. If the level of business goes up, the first thing we create is a job. What I would ask is that we work on a study together, a study of the taxation levels at the federal, provincial, and municipal levels to see how we can turn this machine back into the employment machine that it really is.

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We can help you reduce the deficit and we can help you create jobs; taxation levels, however, have to be adjusted. We're suggesting not that they necessarily be adjusted down, but that we look at ways in which our employment machine can be turned into just that, a machine that can create jobs. Currently, investors in our industry get $1,000 per available room on average in our major city centres. That is in comparison to the $4,000 that goes in property taxes.

The investor needs eight times what he's getting to get a return on his investment. It doesn't work. What we need to do is study what's going wrong and turn our industry back into the employment machine that it is.

Ladies and gentlemen, thank you very much for the opportunity to address you. I look forward to participating in the debate.

The Chair: Thank you.

Mr. Edie.

Mr. Kenneth Edie (Vice-Chairman; Prairie Pools Inc.): Thank you very much,Mr. Chairman. I am the vice-chairman of Prairie Pools Inc., and as was mentioned, we are members of Canadian Federation of Agriculture. We are in agreement with the brief that they have submitted and the comments that Mr. Sandercock made. However, I would like to put forth a couple of points that are peculiar perhaps to the grains industry and would be of interest.

For the benefit of people who aren't aware of what Prairie Pools is, it's the national affairs arm of the Manitoba Wheat Pool, the Saskatchewan Wheat Pool, and the Alberta Wheat Pool. Those three prairie pools handle approximately 54% of the grain that is presented to licensed facilities in the three prairie provinces. Besides that we have considerable investments in oilseed crushing, livestock marketing, oat mills, malt and barley mills, and other activities.

The first thing I'd like to address is the cost offloading that is occurring, particularly by the federal government. For example, Agriculture Canada is anticipating being able to almost double the amount of retained revenues it generates through charges to industry for services provided to a total of about $87 million in fiscal 1997-98. These revenues are in addition to those generated by Agriculture Canada, which are credited to the consolidated revenue fund. Ultimately, all these extra costs get passed back to primary producers. Some of these changes have or will have the effect of making Canadian exporters less competitive vis-à-vis our major competitors.

The best or worst, depending on which end of the telescope you're looking through, example of this will be the proposed marine services fee that the Canadian Coast Guard service is proposing levying on commercial shipping to offset the cost of some of its services, primarily ice-breaking and navigational aids. As we understand the proposals, these fees could add in excess of a dollar per tonne over three years to the cost of exporting grain through Thunder Bay

We believe the impact of this fee could be reduced if the coast guard were willing to work with shippers in order to determine how much of their services are actually required and when they are required. What is being proposed now, however, is that shippers will have to accept the services in the manner that they are offered.

In taxation, we find that Canada's two major railways pay more than $640 million in fuel, sales and property taxes, while U.S. railways receive tax incentives to maintain rail service. Since the freight rates paid by prairie producers are calculated from a formula that covers railway costs, the full amount of this tax burden is borne by producers.

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In 1993, the property taxes paid by terminal elevator owners at the port of Vancouver were on average five to six times higher than for similar-sized facilities at the U.S. port of Seattle. Property taxes on terminals in Thunder Bay are more than twenty-five times those paid by similar facilities in the port of Duluth.

While these taxes are levied by municipal governments, we believe that if the federal government is interested in the competitiveness of Canadian industry it should undertake whatever process it can to determine how to correct the distortions created by these taxes.

Governments in the U.S. subsidize the costs associated with the maintenance and improvements of ports and harbours while industry is required to pay these costs in Canada. Over $1.8 million in lease fees are paid to the Vancouver Port Corporation by pool terminals each year. A similar amount is paid by the Prince Rupert Port Corporation. A significant portion of these levies is paid back for use in financing less viable ports elsewhere in Canada. As with other charges, the costs of these fees are ultimately paid for by primary producers. These fees must be significantly reduced if Canadian ports are to remain competitive relative to U.S. ports.

Labour: One other component of the grain handling and transportation system over which farmers and other industry participants have little control is the cost of labour. Canada has fallen behind some of its major competitors in terms of labour efficiency; that is, the labour productivity of Canadian railways is 60% of U.S. railways. Any gains that could be made in efficiencies will be passed on to farmers in higher net returns.

The federal Minister of Labour, Madame Robillard, has initiated two reviews of the labour situation in Canada: first, a review of the labour situation on the west coast ports; and second, a review of part I of the Canada Labour Code. We commend the government for initiating these reviews. The recommendations that flow from them must be acted upon expeditiously.

Those are the further comments that I'd make, Mr. Chairman, and I appreciate the opportunity to make these further points to your committee.

The Chair: I look forward to that, Mr. Edie.

Last, Ms Ward, please.

Ms Debra Ward (Chairman, Tourism Industry Association of Canada): Thank you, Mr. Chairman.

The Tourism Industry Association of Canada is the national umbrella organization that represents all sectors within tourism. With my confrères in accommodation here, we also represent transportation, destinations, attractions, events and travel trade.

Tourism is a $30 billion industry, and $10 billion of that is in foreign exchange. That makes tourism one of the top four or five export industries in the country. We represent 5% of the Canadian labour force. For governments of Canada we have proven over and over that we are an excellent source of revenue. For every $1 billion we earn in Canada, $230 million is generated to the federal government, $160 million to the provincial governments and $60 million to municipal governments. I think that demonstrates very well the economic impact that tourism has right across Canada, in every community across Canada.

In keeping very much with what my confrère was saying earlier, we compliment and congratulate the government on developing the tourism industry strategically, in cooperation with us, the industry, to ensure that the right programs are in place and that the barriers are being eliminated to any kind of tourism growth. Mr. McMillan mentioned some earlier, and they have certainly gone a very long way in allowing Canada to compete internationally with the products, service and people we know we can bring to the table; and we know very well that we can compete with anything the world has to offer.

I'd like to also include a couple of other things that the government has helped us with, especially in our small business sector, which I believe will lead to even stronger tourism growth in the future; these are the changes to the SBLA and the new mandate for the Business Development Bank of Canada. I think by allowing the small business side even greater access to financing we are taking the first step down a path to solving a very big problem within tourism.

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When you look at the results, which is what counts in all of this, your strategy is working; your strategy that supports tourism and uses it strategically for jobs and growth is working. As well, our travel trade deficit, which was standing at $8.8 billion a couple of years ago, is now about $5.5 billion. Revenues are up, sales are up, and more people are travelling in Canada, both Canadians and foreigners, and we are very proud in this industry to have been able to play a part in an economic resurgence in the country.

When you asked us how government should manage the activity, I think the answer is - and this is the way we've done it so far - that government should not manage the process. I think the way we've worked together in the last year or so is a model, with government-industry partnership, where the marketplace interventions are industry interventions, with the support and participation of government at whatever level required.

One nice bit of news is that a survey of Canadians that we came across shows that your government's support for tourism is appreciated. This was an independent survey. It was not taken by the tourism industry or for the tourism industry. It polled 1,200 Canadians and asked where the government could best invest its money to promote jobs and economic growth, and 36% of those polled said tourism. The next ranking industry was at 13%, and something like fishing was at 4%. It was a Compas poll. Agriculture was at 13%. I think this is a clear indication - because it wasn't ours - that you're doing something right, and we're doing something right together.

The only caution I have is that tourism is a fragile industry and is easily shaken even by perceived threats to the economy - changes in disposable income through higher taxes, or through inflation. When anything disrupts normal spending patterns, one of the first things to go is travel, and that includes business travel and personal travel. Any impact that has a negative effect on people's pockets will hurt our industry tremendously. Having made such a good start, we urge you not to take any action that will stem the growth that started so well.

The Chair: Thanks, Ms Ward.

I understand that I made a mistake.

[Translation]

We'll continue with Mr. Proulx.

Mr. Yvon Proulx (Senior Economist, Union des producteurs agricoles du Québec): Oh, it's not an important mistake. What's important is that I can speak now.

The Chairman: It will be a pleasure, Mr. Proulx. We have kept the best for last.

Mr. Proulx: Thank you. I appreciate this opportunity to come share our views with you during this round table on budgetary policy.

I'll just spend some three to five minutes on the first question you raised, regarding the balance you wish to maintain between support for the primary production sector, processors, consumers and taxpayers.

First, however, I should say that I support all comments on tax measures made by the Canadian Federation of Agriculture.

You may already know that the Union des producteurs agricoles du Québec is an organization representing some 40,000 agricultural producers in Quebec. It is a federation, made up of some 16 or 17 federations of producers specializing in various products, and also comprising some 16 or 17 regional federations. The Union thus represents all agricultural producers in Quebec.

Before commenting on the question of balance, let me point out that the agri-food sector was very hard hit by the budget tabled in February 1995. We hope that the 1996 budget will be a little easier on us.

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The agri-food sector was very hard hit, even though Canada's currently disastrous deficit can be attributed neither to the agricultural sector nor to the agri-food sector.

It would be very easy to show that, during the ten years between 1987-88 to 1996-97, when the measures announced in the last budget will draw to an end, the agri-food sector will have had its budget cut by 2.5 billion dollars. In 1987-88, the budget was on the order of 3.8 to 3.9 billion dollars. By the end of 1996-97, when all measures announced last spring have been implemented, it will be 1.6 billion dollars.

It is also easy to show that, in relation to total government expenditure, spending in the agri-food sector fell by 3% in the same period. In 1987-1988, agri-food represented approximately 3.5% of the total federal budget. By the end of 1996-97, once all measures announced in the spring have been implemented, it will represent only 1.2% of the budget.

Thus, the agri-food sector is not responsible for contributing in any major way to the deficit, which the government is seeking to reduce through constraints imposed in the last budget, and which will no doubt be continued in the next budget.

In fact, when we include the elimination of the Western Grain Transportation Program, which came under the Department of Transport but which was really an agricultural program, we can show that cuts to the agri-food sector are on the order of 38%, when average cuts in other departments are on the order of 19%. This means that the agri-food sector was hit about twice as hard as others, on the average.

So, the agri-food sector was very very hard hit and we hope that you will spare it in your next budget.

Rural areas were profoundly affected by the last budget. Natural Resources Canada had its budget cut by 39%. This is a very important sector for rural areas. Natural resources are found in rural areas.

As for transportation, three important programs have been cut. These were programs designed to make things easier in the regions, where producers are far from their markets. Thus, as a result of cuts to those programs and to feed grain transportation assistance, the regions have been very hard hit.

Now I'd like to say a little bit about the issue of balance in the primary sectors - processors, consumers and taxpayers.

I don't have a real answer to this, because it really is a very difficult issue. That's obvious. We should start by trying to come up with some idea of what a balance between these sectors might mean. What balance are we talking about here? It's very difficult to assess, especially since the measures implemented with the last budget will have had even greater impact by the end of the next two or three years.

We should be aware of the mistake some people make in considering that investment in the primary sector is not important. On the contrary, in my view investment in the primary sector is extremely important, the most important investment of all.

The government must continue to provide financial support for the primary agricultural sector, since agriculture is the first link in the chain. Without production, there is no processing. If there is no production within Canada, consumers are obliged to buy products made elsewhere. That may be fine in the short term, but it is not fine in the long term, especially since the quality of products purchased outside Canada is demonstrably lower than the quality of Canadian products.

Support for the primary sector is therefore extremely important. The primary sector is the first link in the chain, it is part of the job creation process. Such support is also in line with an objective of Agriculture and Agri-Food Canada: boosting exports. Let me give you an example in support of my remarks. I'm trying to say that investing in and supporting the primary production sector is an exceedingly important development measure.

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The example I'm going to give you is the common agricultural policy established some 45 years ago in the European Union. Some of you may remember that, 45 years ago, the European Union had an agri-food production deficit. The common agricultural policy was created; it was probably the best policy ever created anywhere in the world for the primary sector. The policy was above all a means of developing production capacity.

Today, 45 years later, the European community no longer has an agri-food deficit but an agri-food surplus. It is a major exporter. It is against the European Community that we're trying to defend ourselves during trade negotiations. In fact, the subsidy war started by the United States some years ago was caused by the fact that the European Community was taking their part of the market.

So this policy, which was implemented in European Community countries 45 years ago, had extremely positive results. It generated activity, it created jobs and it generated export activity. It is therefore extremely important that support for the primary sector be maintained. In maintaining support for the primary sector, we maintain jobs - particularly in processing, and of course there is a benefit for consumers. Even taxpayers probably get something out of it, since activity and more government revenue is being generated.

I'll stop here because I think my five minutes are up.

The Chairman: Well, it was well worth it. Thank you very much.

Mr. Loubier.

Mr. Loubier (Saint-Hyacinthe - Bagot): Welcome to the Standing Committee on Finance.

Let me start by referring to the brief submitted by the Canadian Federation of Agriculture. On page 2, it says

- the $500,000 capital gains exemption should be maintained in order to take into account the different needs of small business owners and agricultural producers where pension funds are concerned.

I would like Mr. Sandercock, or any other member of the Canadian Federation of Agriculture, to answer my two questions.

First, by what process have you arrived at the conclusion that the $500,000 capital gains exemption replaces pension funds for agricultural producers in Canada?

Second, if the federal government decided to abolish the lifetime capital gains exemption of $500,000, what would be the effect? I don't know whether you've done any evaluations of this. I'm putting the question to you.

[English]

Ms Rutherford: To start with your second question first, as we state here, the minister did write to us in May that it was his intention to maintain the capital gains exemption unless other mechanisms could be found. To this point in time, we haven't heard that he has found any other mechanisms, and any correspondence or conversation we have had has led us to believe that this is still part of the game plan.

From that point of view, therefore, - relating to your first question - we haven't examined other mechanisms because we believe this is the one that works best. It exists now and we prefer that this be the one that continues.

[Translation]

Mr. Loubier: So you haven't done any assessment of the impact of abolishing the $500,000 exemption for capital gains. I don't know whether you are aware of this but it's been on the table for two years now. It was set aside last year in Mr. Martin's budget but the threat was present right up until the last moment. It would be a good idea for you to do some assessment of this in order to defend your position.

Mr. Proulx: We haven't done any evaluation to determine what the impact of the abolition of this exemption would be for farm producers but I suspect it would have a very significant impact.

.1950

It is obvious from the increased value of farm property that capital gains will occur at the time of resale since farm producers are constantly reinvesting their profits in their operation.

This means that their farm property constitutes their retirement fund, so to speak. If capital gains are taxed at the full rate at the time of sale, it could prove to be extremely painful. But we can do an assessment to determine what this abolition would mean for them.

[English]

Ms Rutherford: According to the Department of Finance, the value of the lifetime capital gains exemption for small business is approximately $585 million overall, so the removal of that would have a fairly significant impact on the ability -

[Translation]

Mr. Loubier: What would that amount to, roughly speaking, if we take the average Canadian farm?

Mr. Proulx: It would amount to 585 million dollars.

Mr. Loubier: There are about 200,000 farms in Canada, are there?

Mr. Proulx: Approximately 200,000.

Mr. Loubier: How many jobs are there in the farm and agri-food sector in Quebec and in Canada?

[English]

Ms Rutherford: Thousands and thousands. We do have, and I'd be happy to leave with the chair.... Certainly the importance of the food and beverage industry, in which overall employment totals approximately 1.8 million people. That is the agriculture and agrifood industry, and that includes primary agriculture, processing and all the way through.

[Translation]

The Chairman: Thank you, Mr. Loubier.

[English]

Mrs. Brushett (Cumberland - Colchester): I have two questions directed to the agriculture sector, and then I will deal with the hospitality sector.

The trend in agriculture has been toward fewer farmers controlling larger farms with higher productivity and a higher yield per acre. So we are forcing our land to produce more continuously. How does this trend affect rural Canada? The impact on rural Canada is much greater, and fewer farmers are sustaining that food supply with larger acreage. So can we sustain this? That's my first question.

The second point is with regard to the federal feed freight assistance, which was terminated in the last budget. How do you think the transition funds given to producers should be utilized? We've had various positions brought forward in our caucuses.

Ms Rutherford: To start with your first question, it's true that there are fewer farmers producing more. We are proud of that fact because it shows that farmers are bright, efficient and technologically adept people. Farmers are no longer walking behind the horse and plow, and that message very seldom gets out to the public.

The effect on rural Canada, however, is fairly significant. As Yvon mentioned, many of the budget cuts affected the natural resource industries, which are all rural-based. Agriculture represents approximately 30% to 35%. It varies from region to region and even within a province, but that's only approximately one-third of the economic activity within rural areas.

We know that the health of the agriculture industry has a major impact on rural areas, but it's not alone, and one of our major concerns is ensuring that there is a real and positive rural policy within this government. We've been lobbying heavily for that for two years. We met with the Prime Minister last February to try to convince him that we needed a concerted rural development policy to deal with issues around forestry, mining, and agriculture to ensure that there are telecommunication, transportation, health, and education services to the extent that the federal government can have some impact, so rural Canada can continue to exist and continue to generate both the income and the jobs that come downstream from all the natural resource industries. So we consider that it is a problem.

.1955

One of the other issues, I guess, is that, if you do look at the statistics, farms are sort of separating. There are more larger farms and many more smaller farms. A lot of those smaller farms are now there by choice, as these people are getting a large part of their income from other sources.

Those people need jobs. We also need them in agriculture, and we need them in rural areas to maintain an infrastructure so there are enough people in order to have schools and health services in viable communities.

Another problem certainly is that the average age of farmers is climbing significantly. It's a real problem. One of the problems it's indicative of is the rather low net return to agriculture. It's not the kind of industry at this point in time that actually encourages people to make investments.

Your second question was in terms of feed freight assistance. Yvon and I have come back this afternoon, just in time for this meeting, from a feed freight assistance task force meeting in Halifax.

While there are some variations in terms of how farmers want the payments made in the different provinces, within each province there is a consensus. The overall point, though, that everyone agreed to is that the ten-year period originally set out is absolutely not acceptable. We've been told that it could now be five years, with some hope of it being a shorter period of time.

The $78 million that's spread out across the country in that way to accomplish the kind of adjustment that is being expected, while it sounds like a big number, really doesn't divide up into pools of money that are that large. To spread it out very far means that the kinds of investment in research, development, and infrastructure creation that the government had asked the industry to look at makes it nearly impossible. So we are looking at shortening the timeframe and trying to maximize the benefit of the funds that will be made available.

Mrs. Brushett: This is a supplementary. When we do cut - we did cut the western grain subsidies and the Atlantic feed freight subsidies - there's a domino effect that happens in this country. Do you think you could go out in the marketplace to look for cheaper grain? Where would you go? Would you go to Ohio, for example ? Would you maybe bring it into the port of Halifax and distribute it through eastern Canada and into Quebec? Are these viable options when you look at how to budget financially and find alternatives in the short term?

Ms Rutherford: There are all kinds of obstacles to a lot of the alternatives. We had a presentation today, for example, on changes to the coastal shipping act.

We're told that one of our major problems in trying to access foreign ships, for example, is an immigration problem. We were advised that trying to address immigration issues at this point to deal with the problem we were trying to deal with was not going to be terribly productive, and that we should try to look around for some other opportunities. One of those that was suggested was for us to maybe sell some grain into the U.S. and then sort of ship it around to get by the regulations. We didn't think this was a terribly productive suggestion.

But there are possibilities of accessing grain in the U.S. It is one of the few countries from which we can access it that meets our phytosanitary regulations. Nobody has an interest in trying to abrogate or dilute those regulations. We feel that they are very important to the health of our industry overall.

But we are looking for some serious assistance on the part of the government toward streamlining the regulatory system that exists and that will provide feed grains potentially - we don't expect it to happen, obviously, in the next 12 or 14 months or 5 years even - with a situation whereby farmers will have better access to market-priced feed grains in feed-deficit areas.

.2000

Mrs. Brushett: Thank you very much. I just want to quickly pose one question, if I may, Mr. Chairman, to the Hotel Association of Canada.

I'm very pleased to hear you enunciate loud and clear that you are doing much more for accessibility for handicapped people in the tourist and travel industry. I think this is one sector here in Canada, particularly Atlantic Canada, which is where I'm from, in which we haven't begun to touch our resources or tap into our great potential.

One of the questions that has come before me many times, as I have served in many tourism councils over the past years, is that we aren't professional enough in serving our clients who come to this country in terms of their expectations.

My questions is how can we, as a government, access and train seasonal workers, possibly - it could be done through HRD - so that in their off time, maybe they could become more professional or licensed for a certain standard of the hospitality sector?

I'll give you a case in point, presented to me by a lady. This was in a restaurant in Nova Scotia last summer. Five people came into this small restaurant, but there were only tables for two. So this lady asked the young waiter whether he minded if they put some tables together. He said to go ahead. But he should have stopped to do it for her to present a proper arrangement that was workable within the restaurant. Instead, he takes off to the kitchen after telling them to do whatever it was they wanted.

This is a lack of professionalism. What can we do in HRD, which is Human Resources Development? Do we have enough to offer in Canada without dealing with that sense of training people? As a government, could we better use some of our dollars maybe in creating those jobs?

Mr. McMillan: That's a superb question. You're quite right that we are competing internationally in our industry. Canada today is not just competing with cross-border destinations or with Florida or with Hawaii. We are in competition today for the tourist dollar around the world.

Europeans have a choice of coming to the Americas, going to Africa, or going to Asia. The choices are worldwide. We have to ready our workforce to be able to compete on the international stage.

Your question is right to the point. We as an industry have been backward in training. We are not retaining those who come into our industry. We lose many of those who come into the industry because we've managed them badly. We do not provide for them the yellow brick road or the course that they can take from an entry-level position up to management. There are many ways for us to increase the level of professionalism in our business.

I'll ask our president, Mr. Pollard, to comment in a moment.

Our association has been working extensively over the past couple of years to study the opportunities in terms of training. How can we better serve our public in the future?

I made a very brief reference to the Human Resources study. You will find this in a package that we are distributing to you this evening. This is just the start of what we have to do in our industry to prepare ourselves for the successes that the tourism commission will bring us.

We've got a long way to go. We're turning over too fast. We're not attracting enough good people. We in management and in the private sector aren't taking enough responsibility for doing the training ourselves.

Tony, maybe I can pass it over to you.

Mr. Anthony P. Pollard (President, Hotel Association of Canada): One of the most important things we've undertaken in the last four or five years is our standards and certification program across the country for people at various levels within, not only in the hotel industry but in the tourism industry.

.2005

In fact, next week in Vancouver when we release the recommendations contained in this study, one of our hotel chains is making a very major financial commitment to certify each and every one of its employees to a certain level. What we're doing is benchmarking; we're saying everybody has to be at this level and if you aren't there, you go back and start over.

Also, we're doing our own training programs. Early in the new year my association, for example, is introducing CD-ROM-based training for hotel staff. One of the biggest problems we have is that you can't take somebody off the floor and go train them. They're either working or they aren't working. It's not like a nine-to-five job where you can say, take a couple of days and go out and study. So these are some of the initiatives.

We're very pleased to say that we work very closely with Mr. Axworthy and the Department of Human Resources Development. The department is supportive. They understand that we employ literally hundreds of thousands of people, and we're one of the very few industries actually growing in this country today. We're quite excited about the whole thing. Certainly we have room for improvement, but I think we're making a step in the right direction.

Mr. McMillan: There is one thing I might add. Something we have been discussing within our industry for the past couple of years is a means by which we could exchange hotel workers between Canada and some key source areas.

I'll take the example of Japan. The Japanese are asking for Japanese-speaking people in our hotels to assist them with some of their needs. We need to expose our Canadian hotel people to the expectations and some of the traditions and the culture and the service expectations that Asians are used to in the Far East.

The Europeans very successfully implemented a worker exchange program, a 1-for-1 or 1,000-for-1,000 program...whereby the equivalent of Canadians would exchange for Japanese for a period of time. It could be for six months, it could be for a year, it could be for a season, it could be for two seasons. If we were able to introduce a worker exchange program, this would allow young Canadians the opportunity to see the opportunities that are available internationally in tourism. It would also allow us to cater to the potential increase in Japanese tourism. It's a very good point.

Ms Ward: I would like to add one more comment in terms of your question on what government can do. Mr. Pollard and Mr. McMillan both alluded to some of it as well.

HRD has a three-year commitment to job creation training programs within tourism. It's a $192 million project within HRD. I think it was revolutionary on Mr. Axworthy's part and the department's part to recognize the potential of tourism. That wasn't new moneys; it was apportioned moneys. So it was just spending the money that you had wisely in an industry that is showing real and vibrant growth right across Canada.

We have a national sector council that is developing job standards and certification programs and career pathways for everything from camp guides and outfitters to taxi drivers to hotel management. Dozens, literally dozens, of careers have been identified and are now career-pathed in that way.

We have, as Mr. McMillan said, made mistakes in the past with our labour force, but in the last few years there has been a concerted effort, on both the industry's part and the government's part, to rectify that and retain the best and brightest within tourism.

The Chair: Mr. Fewchuk.

Mr. Fewchuk (Selkirk - Red River): To follow up, Mr. McMillan, with regard to your employees, how many full-time employees and how many part-time employees do you employ?

Mr. McMillan: It depends on the year. These last three years the number of full-time employees and part-time employees has decreased. At the moment our numbers are in the area of 170,000 full-time and about 50,000 to 60,000 part-time.

Mr. Fewchuk: When you speak of full-time, is that eight-hour shifts versus four-hour shifts?

Mr. McMillan: No, we're talking about a forty-hour week as opposed to -

.2010

Mr. Fewchuk: As you know, the trend of some firms nowadays is to cut back to 4-hour shifts a day. I was just wondering in what direction you were going.

Mr. McMillan: I'm not sure that there's a trend, other than the trend in the part-time employees - many of them have several part-time jobs, not just one.

Mr. Fewchuk: Thank you.

I have a question on agriculture to Kenneth. We have some of our members calling us in regards to Bill C-101, on subclause 27(2). What is your feeling towards that subclause? Should it be removed completely or is there some wording that can be done to satisfy the western farmers?

Mr. Edie: Mr. Fewchuk, just for people who aren't quite as familiar as we are with your question, when the Western Grain Transportation Act was changed we were told by the government that we would go to what was called NTA 1987, which all other shippers were in. But that is in the process of being reformed also. The concern that Mr. Fewchuk is raising is, there was a process under NTA 1987 where a shipper could apply to NTA, present their case, the railways present their case, and the agency would rule on whether they should have relief in their freight rates or not. And yes, our concern on that particular clause is that the words that are used say that the shipper has to show they would suffer significant prejudice before they can make their way to having a hearing with the agency.

``Significant prejudice'' is quite a subjective statement, and what we're afraid of is that we'll have railway lawyers arguing with other lawyers literally for years as to what significant prejudice means. So we wish to have that part of the Canada Transportation Act, Bill C-101, deleted from the legislation that's being proposed.

The railways have been making good financial profits in the west and in movement of grain because in grain there was a formula to guarantee their costs, which it is now suggested may be extended for ten years or maybe five, depending on another issue. We feel, though, that without being barred from the Canada Transportation Act for relief under ``captive shipper'', if you're a captive shipper, this would be very unfortunate for bulk shippers of all kinds, and we are consistent with the Western Canadian Shippers' Coalition on this. We met with them on Thursday and we have been making comments on this.

Mr. Fewchuk: Thank you very much.

The Chair: Thank you, Mr. Fewchuk. We'll come back to you, Mr. St. Denis, in just a moment.

Mr. Loubier.

[Translation]

Mr. Loubier: It's often said that agriculture is over-subsidized and represents a heavy cost for both the state and society. I'd be interested in seeing the comparative data that you may have with respect to Canadian support for agriculture as compared to support provided elsewhere in the world.

Secondly, because of the cuts made in recent years - I think your figures were quite eloquent Mr. Proulx, there were reductions of 38% in the farm sector last year as a result of Mr. Martin's budget - have we not reached the critical point?

Any further cuts in our support to Canadian agriculture will endanger the competitiveness of this sector and certain segments of Canadian farm and agri-food production at a time when there would probably be an even greater opening up of the Canadian market to foreign competition.

Mr. Proulx: It is important for us to address this question. We are obviously in a situation of more open markets and greater trade among countries. It is clear that in Canada we have given up on this fight. When the last negotiations were concluded with the Common Market, the 20% level of reduction for internal support that was being imposed had already been reached.

That is not the case in every country. In Europe they had to cut back. It's obvious that governments in other countries are also facing problems because of such cuts. But here in Canada we've given in to a considerable extent. If we went any further, this could put us at a disadvantage in relation to other countries that may decide to move more slowly.

.2015

It's clear that the level in some countries is higher and in others lower. The OECD has done an estimate of global support measures but I don't have the figures with me. There's no doubt that in Japan the level of protection or support is much higher. In other countries, it's not quite as high. If memory serves, in the United States it may be slightly lower than what it is here but it's within the same general range. I believe that in Europe it is somewhat higher than here. The OECD produced these data before the cuts were announced in the last budget.

We've probably gone as far as we can if we don't want to put the agri-food sector at a disadvantage in relation to other countries where public funding still plays a role. In the United States and the European Community, a large amount of public funding is still used to subsidize exports and this puts us in a difficult competitive situation.

So any further reduction to our level could prove to be dangerous for the maintenance of our production and the expansion of our exports.

The Chairman: Thank you, Mr. Loubier.

[English]

Mr. St. Denis, please.

Mr. St. Denis (Algoma): Thank you, Mr. Chairman.

Thank you all for being here. The subject matter, albeit diverse, of course is very important to the country.

Mr. Phillips, I have some dairy producers in my riding of Algoma in northern Ontario, surprisingly. There are some producers on Manitoulin Island and the north shore in the Algoma area. I've asked a number of producers what happened to them after tariffication.

I know this may not relate directly to our budget considerations, but when we look ahead to what the finance minister may have to consider as he prepares for the budget, it's important. Did tariffication lead to a drop in quota values, a stabilization of quota values or an increase? Possibly the Consumers' Association might have something to say, too, about what tariffication means to their membership.

Mr. Phillips, I know quotas are set provincially, but you must be familiar with what has happened in that area.

Mr. Phillips: Well, quota values have been strong. I imagine you're aware of that.

With respect to the impact of tariff equivalents, I'm not sure what the relationship is exactly, but in fact tariff equivalents were set at levels that basically allowed Canada to replace its quantitative import quotas. That was the intention of imposing those tariff equivalents at that level.

So in the short term, I guess the situation is that the border measures are as effective now as they have been in the past.

Mr. St. Denis: The point I wanted to put on the record is that the move to tariffication didn't destabilize the dairy community and didn't destabilize the interest for investment in quota. Those people who are buying quota felt the tariffication would in fact provide the protection needed to maintain the dairy industry. There must be a relationship that way.

Mr. Phillips: I know the quota values are strong, but I really haven't had a look at the reasons behind that at this point, so I couldn't answer your question directly.

Mr. St. Denis: I think there is a relationship.

I wonder if the Consumers' Association might have a comment.

Ms Daly Todd: I would agree with Mr. Phillips that there's been no impact. Because we have a basic disagreement about the consumer benefit, or lack thereof, of the supply management system, we would say that, as predicted, they were set too high and they're coming down over too long a time period, and therefore, unfortunately, there's very little impact on the consumer and the marketplace. We would argue that we need price relief.

.2020

Mr. St. Denis: I have a question related to tourism. Ms Ward, in your opening remarks you mentioned the public support for the tourism sector. In Mr. Martin's last budget he announced the funding for the federal participation in the CTC, the Canadian Tourism Commission. I wonder if you could tell us whether that project or that partnership involving the federal government, the provinces and the industry has proven even in the short term - I know it's still new - to be helpful and productive.

Ms Ward: Absolutely, it's probably the most important gain we've made and the one that will show the greatest promise for growth in our industry in the future. It's a $50 million budget that the federal government is providing, and in the first year private sector moneys are at least at $30 million in matching, the last I heard, and may be higher, to $35 million or $40 million, by now. So certainly the goodwill that's around that table and the willingness to roll up the shirt sleeves and work together is there.

This is a very new organization. It only started on January 31 of this year and it is already looking ahead to its three-year plans and to developing a number of programs, both internationally and - very important to us, Mr. St. Denis - domestically to encourage Canadians to travel in their own country. We are very pleased with the start and we see great opportunities for future growth as we go on.

Mr. St. Denis: In conclusion, Mr. Chairman, the model used with the Canadian Tourism Commission is very much like the infrastructure...it was federal, provincial...in the case of tourism it was the industry, in the case of the infrastructure it was municipal. For the record, that partnership model certainly seemed to be an effective model that maybe could be expanded into other areas.

Ms Ward: In a number of areas I think tourism's relationship with government that we developed over the last one or two years can serve as a model for many other industries. We have the CTC as an example. We have some of the programs that the hotel association spoke about. All of these bring a great deal of specialized expertise that government has on one side that is unique to government, and that industry has on the other side that is unique to industry. We demonstrated the effectiveness of these programs not because we think we did well, but because our tourism industry is growing. We can show the numbers that show the growth in revenues and the growth in jobs. We are more than happy to discuss these models with any other industry to further develop the economy.

The Chair: Mr. Pollard, you wanted to add something.

Mr. Pollard: It's always nice as Canadians to note that the Americans now are emulating our Canadian model of the Canadian Tourism Commission as they struggle to find out how to be able to develop their product more effectively south of the border. So I think we can all pat ourselves on the back.

The Chair: Should we help them along or should we just say, eat your hearts out?

Mr. Pollard: No, not at all.

Some hon. members: Oh, oh!

[Translation]

Mr. Loubier: I have one last question. Perhaps I didn't understand the exchange between Brent St. Denis and Ms. Todd but I wondered why the Consumers' Association of Canada would be interested in the value of dairy quotas. I didn't understand the relation between defending the interests of Canadian consumers and the evolution in the value of dairy quotas in Canada.

What exactly is their concern in this respect?

[English]

Ms Daly Todd: Why are we interested? Because we have been saying for 20 years that the supply management system means higher prices for Canadian consumers, so that's a basic point we debate. Secondly, in some areas, particularly poultry, it has meant shortages of supplies in some provinces.

[Translation]

Mr. Loubier: Yes, but why does the evolution of the value of the quotas interest you in particular?

[English]

Ms Daly Todd: No, I was not responding to that. I was talking about the level of tariffication and whether or not it had any impact on protectionism in the industry. My point was that the tariffs were set too high and they're going to come down too slowly. Therefore, there's been virtually no impact on the marketplace. We were hoping to have lower levels of tariffs and we thought a faster period for removing them would be appropriate. That's what I was responding to.

.2025

[Translation]

Mr. Loubier: I see. I had got the impression that you thought the increase in the value of the quotas was reflected in the price of dairy products whereas this is not at all the case. The value of the quotas has no relationship at all to production costs. I asked you the question so that you could clarify your position on this matter.

I've often heard the Consumers' Association of Canada attack the increased value of quotas. The claim was that this had an effect on prices but that is simply not true. There is no relationship between the two.

[English]

Ms Daly Todd: To my knowledge, the point we've made about the cost-of-production formula is that it rewards the average farmer and penalizes the more productive farmer. We have attacked it on that basis. Unfortunately I'm not an agriculture economist and I don't have someone with me who could give a better response. But I don't believe we've....

[Translation]

Mr. Loubier: Insofar as the price determination formulas in the dairy sector are based on samples from the most productive producers in Canada, your criticism has no basis at all. The sample is taken from the most efficient and most technologically advanced producers, producers who are in the running and who are likely to stay there for the next 15 years. So there's no basis at all to such criticism.

[English]

Ms Daly Todd: Again, I wish I had someone with me who could get into the nitty-gritty of that. My understanding is that we refute that assessment of how the formula is devised. We say that it is more towards the average producer than the most productive, and it inhibits the more productive farmer. That's been our argument. I'm sorry I can't get into the nitty-gritty of the cost-of-production formula.

The Chair: Thanks, Mr. Loubier.

I'd like to welcome Peter Adams to the formal committee. We welcome someone with your knowledge.

[Translation]

Mr. Loubier: Mr. Chairman, Mr. Sandercock wanted to say something on the same point.

The Chairman: Excuse me.

[English]

Mr. Sandercock.

Mr. Sandercock: Thank you, Mr. Chairman. Although I'm here tonight as one of the executive of the CFA, I'm also the chairman of the Canadian Chicken Marketing Agency. I would like to tell you that some of the comments I've heard recently disturb me.

We in the poultry industry, as recently as in the last two years, have changed the way we're doing business to better reflect the market needs of consumers in Canada. We've changed our allocation system from an old structured system to a very market-responsive system, which provides the method of letting the demand side determine how much product is needed in Canada so that we do not short the market. We have increased production in Canada some 14% over the last two years. Consumers are being well served with quality product now in Canada, and there's lots of product available. We're very proud of the accomplishments we've been able to make. It's a growth industry in Canada and the retail sales of poultry in Canada are in excess of $2 billion today.

So we're very proud of it and we would like to say there's plenty of product in Canada right now. It's quality and it's reasonably priced.

The Chair: I like that.

Could we come back to this issue of supply management - its effect on the farmer, its effect on supply and its effect on the consumer - later in the closing arguments? This of course is a very important issue and a part of our economy, but it maybe doesn't have a lot to do with what we're doing in our pre-budget consultations, although it does interest me greatly.

Mr. Adams.

Mr. Adams (Peterborough): Mr. Chair, I apologize to the presenters for arriving so late. I was at another event.

As you have gathered from the chair, I'm not a normal member of this committee. I'm actually an associate member of the agriculture and agrifood committee. I came to ask a specific question mainly of the CFA, the Union des producteurs agricoles and the Dairy Farmers. But because it affects, I think, the cheapness and quality of food in Canada, it might be of interest to the Consumers' Association as well.

.2030

I am personally very concerned that research is at risk in the cuts that I believe we have to make in the federal system. I think research is particularly at risk because it often appears to have few short-term benefits. It seems to me - and that's why I mention the agriculture groups - that agriculture is one of the areas in which the federal presence in research....

Let me back off. We are affecting research both by cuts to our own system and by cuts in transfers to the provinces, which I believe are necessary because that affects the universities. I would like to ask the agriculture groups, perhaps starting with the CFA - if it has not already been done, Mr. Chair - to comment on their thoughts about research. This would be both the obviously applied agricultural research, which we all know about, but also the much less applied pure research that goes on in agriculture in the federal ministries and in the universities, which has direct effect on agriculture and, I would say to the Consumers' Association, on food.

I wonder, Mr. Chair, if someone could comment on that.

Ms Rutherford: I'd be happy to start. It is one of the issues we bring up in our brief. It is an issue of significant importance to us and relates, I think, to the question Mr. Loubier asked most recently in terms of levels of subsidies between countries, for example.

One of our real concerns is that the level of funding for agricultural research at all levels has declined significantly. The government has not done all it could to facilitate the industry in pooling its funds to create funds for research. There is a piece of legislation, an addendum to the farm products act, that would allow the creation of check-off agencies for research and promotion. It doesn't work now. We've been working for three years to try to get it amended, without any success. It really is a significant problem.

The issue of basic research is probably the biggest problem because that's not the kind of research that industry, outside of primary agriculture producers, is going to fund. It underlies the future of our industry, and we know for a fact that other countries are not cutting back on that kind of spending.

As Mr. Proulx mentioned earlier, by the time we'd finished our GATT negotiations, Canada was well below its commitment levels. Where we've continued to cut back is in those areas we did not have to cut according to the GATT rules. We've cut in a lot of areas that are GATT green, including research. It was just putting us at a disadvantage to our partners. We know that in Europe, for example, their spending on green programs has actually increased this year. They're increasing their funding to research and they're increasing their funding to environmental-type programs related to agriculture, whereas Canada continues to let those systems erode.

It is something we have to try to work on together. The program that was put together by Agriculture and Agri-Food Canada, the matching investment initiative, was certainly a step in the right direction in terms of research further down the road, not the really basic stuff. There are some problems with the rules around that, which we gather are being addressed now, but it still is not flexible enough to provide the industry with the opportunities to be able to actually partner with government in order to do that and make the strides ahead that they need to and that they're certainly willing to invest in.

We're looking to your committee to try to ensure that further cuts are not made in those areas, and that the appropriate arrangements can be made to facilitate further investment in research in the agrifood industry overall.

The Chair: Mr. Discepola, please. You've been very patient all night.

[Translation]

Mr. Discepola (Vaudreuil): My first comments are addressed to Mr. Proulx and I'd also like to put a question to him. Let me reassure you, Mr. Proulx, by saying that the committee has no intention of recommending to the Minister of Finance any type of abolition of the $500,000 capital gains exemption.

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In Quebec, if myths are repeated often enough, they often become reality. So let me dispel this myth that we are going to be doing away with the $500,000 capital gains exemption because it would not only affect farm producers but all small and medium-sized businesses in Canada. I personally could never defend such a position.

Now my first question for Mr. Proulx: under the new agreement with the World Trade Organization which has replaced GATT, is it not true that in ten years, five years or seven years, we will be required to do away with most of these subsidies?

Is it not true that we have only five or six years before your industry will have to adapt to the world situation?

Mr. Proulx: No, I don't think so. As part of the last agreement with the World Trade Organization we agreed to reduce internal support by 20%. At the next negotiation, and we've already started to think about it, we'll probably agree to continue with the reduction of internal support but certainly not do away with it.

Since many countries have had to cut back in areas as strategic as research because of budgetary constraints and thus jeopardize their own development, I would not be surprised to see, at the next negotiations, an agreement to reduce internal supports by less than 20% as was agreed the last time.

At the last negotiation an attempt was made to impose greater discipline. Some countries were providing excessive subsidies and that is why some discipline was required. It was decided to ask countries to reduce their internal subsidies by 20% and make an even greater effort with respect to export subsidies where the need was even greater. Those subsidies were creating more serious market distortions than internal support measures.

At the next negotiation I'm sure that a lower reduction will be agreed upon because cuts have already been made.

Mr. Discepola: In your opinion, would it be possible for us to make further cuts without being disadvantaged in the world market?

Mr. Proulx: In the agri-food sector? I prefer not to answer that question because it might be interpreted as giving a blessing to measures that we would not agree with.

[English]

Mr. Discepola: Okay. That leads me to my final question, Mr. Chairman.

For the second year in a row, we've embarked on a historical process of consulting Canadians prior to the preparation of the budget. Last year, for example, we consulted from one coast to the other. As the chairman said this week, we had over 600 people presenting in front of us, and if I quote you correctly - if I misquote you, correct me right away - I think you said two people made concrete proposals as to where they were prepared to reduce or cut.

This week alone we've had one group, the business community, come to our committee and tell us we're not cutting fast enough. We have to go beyond the 3% GDP target and we have to go to a balanced budget. One person even said we'd also better start attacking the debt as soon as possible.

The next day we had another group telling us we shouldn't cut their sector but we should go after the corporations and the business community.

I'd like to ask each one of the presenters here today if there is anything in their sphere, whether it's the way they've transacted with a department or the way they've related to a minister or ministry, for example, as to how we could make or save some money in those areas.

I would like to start with Ms Rutherford, who last year - and I have the transcript from last year's meeting on October 27 - was asked the same question, and I quote her answer: ``We're definitely not going to provide you a list that's going to add up to''...whatever cuts we were expecting at that time.

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If we're going to make this process meaningful, where you will have direct input into what's prepared in the budget as opposed to it being downloaded on you by the Minister of Finance, you will have to come to this committee so that we can make those recommendations on your behalf, on behalf of the Canadians you represent, to the minister.

So I would prefer if you'd come to this committee and tell us, well, in my experience I think this area could better be adapted and we could save x hundreds of dollars or x millions of dollars. That would help us a lot more than for us to hear, day after day, one group saying, ``Yes, cut - but not in my backyard.'' That makes our job an awful lot easier. We might as well not have these consultation processes and just tell you what we're going to do.

Is there anybody - maybe Ms Rutherford - prepared this year to make us some recommendations?

Ms Rutherford: I'll make the same recommendation we made last year, essentially that there needs to be significant government streamlining. We think the GST needs to be harmonized, and the cost recovery process needs to be addressed in a real and serious way. Nobody has any problems with paying fees for service, but what we're asked to do at this point is not pay fees for service but just pay the fees.

Now, there are savings to be made there. We know there are. But nobody appears -

Mr. Discepola: Can you give us some specific areas?

Ms Rutherford: A lot of the regulatory systems that exist within AgCanada now.

Hopefully we're making progress with the administrative penalties act. There is some hope that it will save some money in terms of administration and actually create a better system. That's the kind of thing we would like to see addressed.

But, no, I'm sorry, we're not going to give you a list of items that are going to tally up to the bottom line.

Mr. Discepola: So you're saying there's still too much fat in the administrative and the overhead, and we should look there first.

Ms Rutherford: I wouldn't necessarily call it ``fat''. What I'm saying is I think more fundamental than that. A lot of the changes that are being made right now are not being thought through well enough. Consumers overall, as well as industry, are going to suffer. The kind of systems being put in place to recover fees, for example, are at this point back-door tax grabs.

As I said, nobody has a problem with paying fees for service, but the way a lot of those fees have been imposed in the agriculture and agrifood sectors to this point in time, it has not been done with.... We know there has been zero analysis in many cases as to how much money it would even raise, let alone on the impact on the industry.

So we're being asked to develop a list of the cuts at the same time that we're being told, okay, here are all the other things you're going to start paying for now; we're going to take away all the stuff you've had, in some cases, 100 years. The whole industry is based on a certain set of parameters. At the same time we're being told, yes, we're going to start charging you for all of these things, we're being told, no, we don't know what impact it's going to have on your industry and what the impact is going to be on the downstream and the upstream. It's, ``Gee, you just have to pay; isn't that too bad.''

What we're saying is, we're not willing to take both at the same time, at least not without some good reasons and some good analysis.

The Chair: I think Mr. Edie would like to add something to that.

Mr. Edie: I can understand your concern and how it would be nice if people would offer up this, that and the other thing. However, as Mr. Proulx pointed out, there has been a large percentage of significant cuts in a great number of ways. A lot of agriculture is already paying.

For instance, the Canadian Wheat Board is totally paid for by the growers of wheat and barley. There has been a subsidy-like component in, I think, three times in sixty years. If you put it into a percentage, you'd have to go to about three decimal points to find it. Other than that, it is totally paid for by the growers. The Canadian Grain Commission is totally paid for by the grain growers of Canada. Beyond that, 50% of the Grain Research Laboratory is funded by grain growers. The other 50% is funded by the people of Canada.

In my presentation I made comments about the coast guard. I attended a transport committee hearing, on marine services, in June in Winnipeg. When we talked about the coast guard and how it should assess its fees, the comment we got was that the coast guard doesn't know what their costs are, so how can we assess their fees?

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For instance, in Thunder Bay and in the St. Lawrence the coast guard has ice-breaking capabilities. The coast guard in the St. Lawrence does ice-breaking for flood control. They do ice-breaking in the high Arctic for reasons of national sovereignty, for showing the flag. There are some mines up there that, if they didn't get free ice-breaking by the coast guard, would close down. That's a social thing Canada has decided, whether it's in the common good for those mines to have free ice-breaking there.

What we're asking is come and work with us. Yes, maybe Thunder Bay is not running to capacity. Maybe if we didn't have ice-breaking in the spring for two weeks, and if in the fall we closed two weeks earlier, we could do without coast guard service, but if we're doing that, then make sure you reduce the costs of the coast guard if they don't need as much equipment because we don't ask for the service.

The navigational aids are maintained by the coast guard. There are two components to it, recreational and commercial, and they don't know which is which because it's done in one pot. This is because it hasn't been necessary before. The coast guard is trying to get that particular house in order so we can sit down and deal with it.

It's a two-sided thing we are willing to participate in. User fees that are necessary, that we actually are using, we don't have any particular problem with, but we're not sure, for instance, that the maintenance of navigational aids or the inspection of buoys in the lake.... This is something that probably could be done over a period of time by people who aren't in the coast guard. There may be other ways of doing it much more reasonably. Those costs, then, would have to be reduced in the coast guard if that's a fact.

I don't like to pick on the coast guard, but it's coming to be an issue again. I shouldn't say ``again''; the results of the hearings Transport Canada held this year are going to come before you as a government. We'll participate in it and help make it operate more efficiently.

The Chair: Thank you, Mr. Edie, for that intervention. I fear only that the coast guard will want equal time.

You want to respond to that too, Mr. Pollard.

Mr. Pollard: Yes, I do.

The Chair: Is it about the coast guard?

Some hon. members: Oh, oh!

Mr. Pollard: No, sir, it's not. We're in the hospitality industry. We want to be hospitable. We're your guests here. So we're going to respond to your question very succinctly.

There are three different areas that you could go out and cut or increase revenue on. It's much like in the hotel industry; you can do it either way but it will impact the bottom line. One of the areas is passport fees. You could certainly increase passport fees.

Mr. Discepola: They just have. Just a week or two ago they went up to $65 from $35.

Mr. Pollard: Increase them more. You go out and get your passport for, what, five years?

The second area is education. One of the things we found out - and we talked earlier this evening about this study we've done - is that there are over 600 different courses on tourism in schools across this country. I don't know how many courses there are in medical school. I know how many there are in law school from my days there, but there sure as hell weren't 600 different courses.

When you consider the transfer payments that the feds make to go out and pay for all of these programs, I would venture to say that they could probably be reduced by half if not more. Streamline it somewhat and get people better trained for what we need in our industry. Everybody benefits - or at least most people would.

I won't get into the coast guard on this one, Mr. Edie, but there's certainly a heck of a lot of money when you look at what the feds pay in transfer payments in education.

The third one is our tourism promotion area. Certainly across the country a lot of areas are still competing against one another. The new Canadian Tourism Commission was established to avoid this duplication. We're working towards it.

One of the analogies I used years ago was that in midtown Manhattan you had 22 different organizations all promoting Canada within a 6-block radius. That is no longer the case, but there is still a lot more room to eliminate the duplication we have promoting this country. So I think those are three areas that we can all work on, and I hope Mr. Martin reflects that in his upcoming budget.

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The Chair: Thanks, Mr. Pollard.

Ms Daly Todd, how much has your funding been cut back over the last three years?

Ms Daly Todd: At the federal level, 45%, and it's almost disappeared at the provincial level.

The Chair: What has this done to your budget? Can you give us figures?

Ms Daly Todd: Our total budget, that would be projects, funding and grants, has dropped from about $800,000 to about $425,000.

The Chair: Have you had to cut staff?

Ms Daly Todd: We have a small staff to begin with. We have six offices in Canada, but only one is staffed with professional staff. The rest are staffed with volunteers. We have five full-time staff members in Ottawa. For a while we cut one position, and we are at a full component. We've cut our costs. We're down to the bone. We can't attend meetings unless our expenses are paid for. We're trying to do an incredible amount of work with almost half the budget.

The Chair: Thank you.

Would each of you like to take half a minute to sum up?

Ms Ward: Mr. Chairman, if I can get away from business for a second and make a personal observation, with impending motherhood, I have never been quite as focused on the economic and social future of Canada as I am right now. Whatever direction the government takes, and all of us around the table speak from best intentions, I hope you will treat all of us in Canada with a little dignity, respect and tolerance as we go through these painful changes that the economic situation is placing upon us. While we may not like it, we understand that in some cases we will have to adjust and live with it.

Mr. Edie: Mr. Chairman, we appreciate the opportunity to make these comments. Prairie Pools has an office in Ottawa. It's staffed by three people who are in continual contact with government members and give concrete responses to things that are happening.

With the elimination of the Western Grain Transportation Act, we understand that there has been a considerable reduction in the support provided to grain growers. The comments that I made on the coast guard - if we can sit down and work.... I said when I started that the coast guard did not need to segregate their accounts, but they were never asked to. So it wasn't a criticism of their management, it was just the fact that they weren't asked to and couldn't do it. They said they'd do it, and now we're willing to work with them, as with any other government department, to make things work better and to the benefit of all Canadians.

Mr. McMillan: I didn't mention one number that I'd like to. The World Tourism Organization has predicted that by the year 2006, jobs in tourism will have tripled from their current levels. Canada is ideally situated to capitalize on this growth in tourism. One thing I would ask you to take away is the realization that tourism creates jobs, and that the promotional efforts we are now committing ourselves to will pay dividends, but it will take time.

We started off earlier this year with the Canadian Tourism Commission. They have strategically realized that the best time to focus their efforts is outside the high season, to build up business in the low seasons. So it will be a year or two before the strategies start to be felt to their full extent. So tourism promotion is key, and we believe you will be begging to increase that $50 million in future years.

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Some hon. members: Oh, oh!

Mr. McMillan: From a job standpoint, we are, as I said, an employment machine. We instantly put kids to work. It will be our job to train them and keep them in the business.

Finally, on taxation, we're not asking for a reduction. We're asking you to look at it and see in what ways we can together manipulate the fifty-plus different taxes we pay, which equate to about 50% of our revenues, to see how we can turn those into jobs.

I've enjoyed this evening very much. I enjoyed the format and I congratulate you.

The Chair: Thank you, Mr. McMillan.

Mr. Phillips.

Mr. Phillips: I'd like to point out that DFC was one of those two groups that did make specific recommendations for budget cuts last year. I notice you followed our recommendations in a number of areas and cut even more.

The Chair: Surprise!

Mr. Phillips: That should be a warning for everyone else.

It is true that efficient dairy producers have been able to receive stable and adequate returns from the marketplace. The last time I looked at quota values, one of the main reasons quota values were high was that dairy producers, unlike some of their non-supply managed alternative enterprises, were able to obtain those adequate returns from the marketplace.

I think the perception of my friends from the Consumers' Association that prices are too high at the retail level for consumers is based more on theory than on market realities. They think hitting producers hard is going to lead to lower consumer prices. Well, you don't have to look too far south to find out that isn't true. From March 1991 to June 1995, the dairy price index in the U.S. rose 4% versus 2.2% in Canada, and that at a time when U.S. producers were basically suffering through price declines.

Since you mentioned the COP formula, I'd like to address that. The COP formula was developed by a consultative committee of the Canadian Dairy Commission. Producers were two of the eleven representatives on the committee that designed that COP formula. The Consumers' Association of Canada had a rep on that committee, and that rep agreed with that particular formulation.

I might also point out the COP does measure the cost of efficient producers. It takes the average of the top 70% producers in terms of efficiency. When you do that, it means you have to be in the top 35% of producers to recover your full cost of production.

The Chairman: Thanks, Mr. Phillips.

Ms Daly Todd.

Ms Daly Todd: Mr. Phillips and I will have to debate that later.

I do want to say something to Mr. Sandercock, however, and that is that we do acknowledge there has been progress made in the poultry industry, particularly in Ontario in recent years, and we're very pleased about that.

Also, my understanding is that member on the consultative committee was non-voting. We are concerned that the committees have to some extent withdrawn their consumer representation. We're unrepresented, so we don't have a window on what's happening.

We've talked about subsidy programs to agrifood and agriculture and how they've been cut. You might think about the fact that Agriculture Canada only once has given any money to consumers to participate in the process. So if you want us to be better informed and better participants, you might consider making it available for us to have the kind of research to be there and make a contribution.

Thank you.

The Chair: Thank you, Ms Daly Todd.

Mr. Sandercock.

Mr. Sandercock: Thank you, Mr. Chairman. It's been a pleasure to be here and listen to the views of others.

Agriculture plays a very vital role in this country. We contribute over $20 billion in goods and services in Canada, and we're very proud of what we do. We provide quality product to Canadian consumers. It's the vision of Mr. Goodale and his department and in fact of the Government of Canada to export more than $20 billion worth of agriproducts from Canada by the year 2000.

I'm pleased to report that I think we're going to do more. I think we're going to do up to $23 billion. It's a real success story for our industry. Farmers today are better educated. In tractors today you see lap-top computers. We have satellite dishes that are hooked into the latest marketing services in the world. We're up to date in this country and we're very proud of the industry we have.

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When we're talking about cost-cutting, we have to remember that Canada is world renowned as a supplier of quality products. We have to make sure we don't cut the inspection services in this country and lose that reputation worldwide. That's one critical thing we have to do. We do not mind paying for it, but we have to make sure it's there because the consumers are demanding it, and we are demanding it as producers of products.

Thank you very much.

The Chairman: Thank you.

Ms Rutherford, did you want to add to that?

[Translation]

Mr. Proulx: In Canada we have an agri-food sector that we can be extremely proud of. It makes a very significant contribution to job creation and also generates substantial income through exports all over the world. We produce the best quality food basket in the world and according to the economic research service of the American Department of Agriculture, it is also the least expensive. In addition, the number of hours that the average Canadian worker must put in in order to buy the food basket is the lowest in the world, even lower than in the United States. We should be proud of this. And to maintain this system, it costs us 1.2% of the federal budget in terms of support to our sector. That is a bargain! We want to maintain this system and the cuts that have already been made last year are sufficient for the time being. We must be given time to absorb them before you start making further cuts!

The Chairman: Thank you, Mr. Proulx.

I'd like to thank you on behalf of all members. This evening we have heard from representatives of the agricultural industry who have spoken with pride of their achievements, that are of significant benefit to our great country.

[English]

We have had the hotel and tourist industries with us tonight. They have also been very proud of their recent accomplishments in terms of creating jobs and of taking advantage of some new opportunities to put Canada into the forefront and to make our economy strong. It's heartening to members to hear good-news stories.

I look across the table, though, and I see the Consumers' Association of Canada, which has been a major help to this committee in the past because it does bring another point of view. We are essentially hearing Canadians, and we have to hear the views of all Canadians. If we don't have a group like the Consumers' Association of Canada to represent consumers, we run the risk of missing out at this table. Part of the idea of the open process is that we will hear all views, and I would be alarmed for our sake, and for your own sake, to think you do not have adequate funding to do the job.

In conclusion, let me say to you, Debra Ward, that I think you hit the note properly when you said we all approach with a great deal of humility this issue of cutting expenditures, of raising taxes or whatever, to get our deficit, our debt, under control. We do so with sorrow rather than relish because we know it does impose great hardships and we know people sitting across from us have suffered very serious cuts in the last year.

We thank you very much for your confidence in the future and for your contribution to us tonight.

Sally Rutherford, did you want to add something?

Ms Rutherford: I just had one comment in support of the Consumers' Association. There are other departments of this government that make large contributions to volunteer groups, essentially, allowing them to take a very large part - some days it seems like too much of a part - in the consultative processes. I think there really is a need to try to look at equalizing some of those contributions. Certainly the demise of the Department of Consumer and Corporate Affairs couldn't have done them any good in terms of trying to solidify their position, and I think it is something that does need to be addressed.

The Chairman: I am sure they would welcome help from us, and I am sure they would welcome help from you.

Thank you very much.

We adjourn until 3:30 p.m. tomorrow.