EVIDENCE

[Recorded by Electronic Apparatus]

Monday, November 27, 1995

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[English]

The Vice-Chair (Mr. Campbell): We're still awaiting the arrival of some witnesses, but since it is close to 1:15 p.m., I think we ought to begin, and hopefully they will join us in progress.

Welcome to our witnesses this afternoon. We have Gordon Sobey, past president of the Atlantic Farmers' Council, although I believe he's here as an individual; Judy Bayliss from the Co-operative Housing Federation of Canada for Prince Edward Island - and we're in real trouble, because she was here in the audience this morning, I think, so she knows how to handle this committee - David Groom from the Greater Summerside Chamber of Commerce; Smith Green Associates, for whom I guess it's a little different to be on that side of the table; and Penny MacLeod and Andrew Warren from YMCA Youth Services.

We are still awaiting representatives from the Action Canada Network and one or two others. I'll introduce them as they arrive.

Also we have Elinor Reynolds appearing as an individual.

In this round table format, we first ask witnesses to make a three- or four-minute opening statement with the salient points of their presentations and hopefully some attempt at responding to the questions set out in the letter they received from the clerk of the committee. We then will have some time for an exchange of views between and among presenters before opening it up to questions from members of Parliament.

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We'll begin with Mr. Sobey.

I apologize for the noise behind us, but I think it should quiet down.

Mr. Gordon Sobey (Individual Presentation): Thank you, Mr. Chair.

Welcome to P.E.I., to each and all members of the round-table.

I have a presentation of three or four minutes in front of me, but I can wing it fairly well. I'm not here representing the Atlantic Farmers' Council today, a hat I held last year. These are individual comments and may differ somewhat from those of my agricultural background.

In answering some of the questions posed and others that have been in my mind, I don't profess to know enough about the federal bureaucracy and budget total in dollars and cents in each of the departments, but I'd have to give the current government and the previous one a vote of confidence in their efforts for deficit reduction.

Taking a little bit from everyone seems to keep a good balance within the country and has not created economic chaos to this point, although we do have to be very conscious of some of the cuts that will still be necessary in the ensuing number of months and the effect they will have on destitute regions of Canada, of which P.E.I. is one.

Being cognizant of that, we have to continue to look at getting our deficit down to zero and to a surplus budget so we can start paying down our debt. Doing that will protect the fixed-income earners, the senior citizens of our country, who are growing in percentage of our population very rapidly.

To answer the question on ways we could cut the budget, one that I know would be used only in a crisis time is to look at the percentage of dollars being spent on remuneration of federal government civil servants. If we compare the increases over the last twenty years with those in the private sector and consider what the private sector is going to be able to pay in the future to compete with other countries in the world for jobs, we may have to decrease some of those salaries. That's certainly one option.

Another option to look at is there is still duplication with provincial governments in giving services to the general taxpayers, and there could be some realignment of some departments.

I'll not say any more. Hopefully that will create some good discussion eventually, and I look forward to it.

The Vice-Chair (Mr. Campbell): Thank you very much, Mr. Sobey.

We move next to Judy Bayliss from the Co-operative Housing Federation of Canada for Prince Edward Island.

Ms Judy Bayliss (Member, Board of Directors, Co-operative Housing Federation of Canada for Prince Edward Island): Good afternoon, everyone. This is a touch of déjà vu for a few of us, I think.

I'll start with a question to you: is anybody listening? In making this presentation this afternoon, I could almost put on the presentation I made last year to the committee, with Mr. Peterson as chair. I have made it a little more pithy and short, so I hope you'll bear with me, because I'm going to read it. I didn't have time to learn this by heart.

Housing is a basic human need deserving serious scrutiny. We believe every part of the housing process - the policies, program, planning, design, development and operations management - all require thoughtful review.

Many Canadians live in homes they individually own. A large number of people, especially in urban areas, live in privately owned rental buildings. Canada's national housing system is largely market-based, but that doesn't mean that housing policies should be left entirely to the market forces. Many Canadians don't live in any of these housing situations, they live in different social housing situations. Something I have found as I've travelled across Canada as the P.E.I. representative on the Co-operative Housing Federation is that many people on the fringes of Canada, and even central Canada too, don't have a real understanding of what co-op housing is. Therefore, I'm going to give you a little description.

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I'm not talking about equity ownership of a cooperative. Many people think that all people who live in housing co-ops have an equity interest in those building. Cooperative housing is a different way of living. It's a choice of a different lifestyle. Yes, it comes under the CMHC umbrella of social housing, but it means that people choose to live in a way different from where they have to depend on a landlord. They are their own landlord, if you want to use that definition. They run their own housing department on a small scale or large scale.

Doing a little bit of research, Mr. Chair, I've found out over my time here since this morning that you have some understanding of social housing with non-profit housing groups and things like that. So you will understand what I mean. Thank you for being here; not many people know what co-op housing is.

An enduring reality for many Canadians is almost a continual housing crisis. With this whole process of government cutbacks that we're experiencing at the moment, it seems to me that many politicians have a problem understanding the need for housing and that it is a basic human right. In my research and my reading in my little library to do with housing, I came across a quote from the United Nations International Covenant on Economic, Social and Cultural Rights, which recognizes the right of everyone to an adequate standard of living, including adequate food, clothing and housing, and to the continuous improvement of living conditions. These rights can become policy - given the political will, of course.

I'm going to try to answer the three questions that I received very quickly.

The government was elected in October 1993 on a platform to bring the deficit down. We can't argue with that, although we can argue with some of the means that have been approached so far. Still, the people of Canada voted on that platform so we will work with that.

The Minister of Finance has used the concept of a moving target to explain how he would chart the course of his deficit reduction plan. It seems from our end of things that we're dealing with moving commitments instead. The 1993-94 budget stated that money from savings would be reinvested in developing new social and co-op housing. The 1995 budget just took away all those savings. As a consequence many co-ops across Canada, and especially in Ontario because that's where the biggest concentration is, are at very serious risk.

We understand that the deficit is a major concern for many Canadians. We understand there's still a need to put more order into our public finances. However, there's another commitment on which the current government was elected and it was jobs. Sadly, for too many Canadians this is not being met.

On P.E.I. the unemployment rate is 13%. That's a lot when the population of P.E.I. is only 130,000. Twenty percent of renter households in Charlottetown spend more than half their income on housing - one-half. That's a very high percentage and makes it very difficult to provide the rest of your necessities of life with only half your money. Fifteen percent of P.E.I. households are in core housing need.

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I'm deeply involved in the housing situation on P.E.I. I'm also a member of the Charlottetown area housing authority. As a board member in that respect, I can make a comparison in my own mind to the different ways of approaching the social housing problem here on P.E.I. Because I live in a housing co-op and I'm a cooperative member in the housing sector, I can see the difference and the good money management of a housing co-op because they belong to and are operated by the members themselves. They have the responsibility of running their own housing situation, whereas someone in provided public housing, although they have every loyalty and affection for their home, does not have an understanding or a deep perception of the monetary value and the ways to redress their problem.

A fairer tax system is another way whereby our problems can be solved.

In terms of jobs, I have to get back to this again because of the relationship to co-op housing. When you're building co-op housing, per unit you're providing a year's work for two people. The CMHC estimated that every year 160,000 new housing units are needed, while over the past couple of years only 110,000 units have been built. This makes a shortfall of 50,000, and therefore more than 110,000 jobs per year are lost.

If we looked at the money we're spending and the way it's being divvied out now, maybe there is a more efficient way of doing things with the same amount of money.

I'm going to stop here because I want to still keep some shots to throw across people's boom, and I will bring those up later.

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

We move then to the Greater Summerside Chamber of Commerce and David Groom.

Mr. David Groom (President-Elect, Greater Summerside Chamber of Commerce): Thank you. We appreciate the opportunity to appear before you people today. Our representatives of last year certainly appreciated coming here and had the sense that they were meaningfully consulted.

I have a couple of general suggestions in terms of preparation time allowed. We suggest further, if at all possible, that more preparation time be allowed than the 18 days we had before our appearance today. We had to get the facts into our office and we were a little late in trying to put this together. Based on our volunteer base, it was difficult to gather information.

Another general suggestion is that in trying to understand the benefits of government fiscal measures it does not seem to us that it's always clear to most Canadians, ourselves included, just what the precise end benefits will be of our federal government fiscal measures. A lot of times, the interpretations are laid out by late print and electronic media for our vital information, and we're suggesting that maybe we should look at communicating to the Canadian public more concisely and in more innovative ways, such as an easy-to-read spread in the daily newspaper or using our on-line superhighway. Those are a couple of suggestions we have.

In terms of the response to the three questions you've posed to us, with regard to deficit reduction targets, generally speaking Canada's deficit reduction targets should be set with due competitive regard to similar targets set by our industrial trading adversaries. We continue to support government as it takes mostly expenditure measures to achieve its deficit reduction targets.

In terms of revenue measures, we would support government firmly in ensuring that large corporations always pay their fair share of taxes. Hardworking individual Canadian taxpayers should not have to bear such a great proportion of our tax load.

In terms of deficit target achievement, a fundamental guiding principle must be that this target is achieved in as humane a manner as possible so that undue hardship for groups and individuals is avoided.

In terms of reductions and cancellations, federal government grants to non-government organizations with no remaining constituency should be reduced or cancelled altogether. Such grants all too often serve to artificially support NGOs that no longer service a sufficiently public interest.

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As for further reduction in duplication and overlap, we applaud our federal government's concrete action to date in the delivery of government programs and services. We hope that it will go on being just as constructive in the future.

On elimination of levels of government, we feel that when federal transfer payments are involved, government should use its influence to ensure that these transfers go directly to the programs and service delivery and not to serve unwanted and unwelcome bureaucracies.

In terms of the budget measures for jobs and growth, taxes should be reduced for individuals and groups whenever and wherever practical. We favour training, retraining, and skills upgrading and will support any and all federal government measures that are administrated or otherwise possible to ensure that Canada's labour force is skilled enough to allow us to compete to the best advantage around the world.

Now we get to the last question you have, on further federal fiscal measures.

Cuts: We appreciate the apparent thoroughness and the precision of the government program review process. This operation should be continued. There should never be any sacred cows, federal entities forever free from any consideration as to their true present and likely future service to Canadians.

Commercialization: We must admit that as yet we have no firm convictions on these particular issues. However, we sense that there might be aspects of federal program service that can and should be commercialized, to the measurable profit, of course, of Canadian taxpayers.

Privatization: We continue to support the privatization of crown corporations, boards, agencies, and commissions where a consensus of favourable Canadian public opinion exists. As we said in our 1994 brief, so long as we can do so effectively and at less cost, private business men and women should be allowed to deliver federal programs and services. This would allow government to concentrate its efforts on areas in which Canadians strongly feel the Government of Canada should continue to play a major role.

The area served by the Greater Summerside Chamber of Commerce is deservedly well known for the vigour and cohesiveness of its volunteer effort. We cite as examples our community's volunteer efforts that led to CFB Summerside being replaced by the Summerside tax centre, the establishment of our Rotary regional library, and the great success of our 1994 International Softball Congress World Senior Softball Championship.

The most recent similar example was our success in arranging for the establishment of event centres in which we finally will be able professionally to showcase our area's performing arts.

We believe in self-reliance, in community initiatives, and that the government need play only a supporting part. This self-reliance will stand us in good stead as our federal government understandably takes steps to put our country's budgetary house in order.

In conclusion, we want to thank you for taking the time to hear the Greater Summerside Chamber of Commerce.

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

We'll move to Elinor Reynolds.

Ms Elinor Reynolds (Individual Presentation): Good afternoon. Thank you for having me here.

One of the reasons why I am here is that my soul is rotting with anger. I had to come here. I didn't want to. It took a lot of energy and time to do what I am doing.

One of the reasons why I am speaking is that I think the leadership in this country is in a sorry state. By that I mean the ethical, honest, caring individuals who are innovators and who want to leave the world a better place in which to live, or even while they live.

One example is that this morning's Guardian, in the editorial, patted Mr. George Proud, gave him an ``A'', and told him to go to the head of the class for spending almost $30,000 less on travel expenses in 1994-95 than in the previous year. Mr. MacAulay spent $74,427 on travel. Mr. Easter spent approximately $54,000. Mr. McGuire spent $64,000, approximately.

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Where did they go? What were they doing? I telephoned Air Canada this morning to get the round-trip fare from Charlottetown and it was $793 for 14 days in advance, $2,500 for business class.

Our MPs have two offices, one in the riding and one in Ottawa; the best of services; the best of people working in government; equipment, e-mail, faxes, teleconferences; everything they want. I say cut it all out.

There was supposed to be a public consultation on the post-referendum strategy. I never heard a word.

Mr. Proud says there are fewer people on unemployment. He didn't say if these people are on welfare. I wonder where they've gone to.

UI: there's more money going into UI from employees and employers across this country than is being taken out at the moment. So cuts will have to be carefully checked in this area.

We put band-aids on major surgery. For example, Mr. MacAulay had a great photo opportunity this week, handing out, in his own riding, $341,519 on National Child Care Day for seven prenatal, nutrition, and child-at-risk projects in P.E.I. These programs are and will be for the short term - happiness for twelve months.

What happened to national day care, decent transportation for people who have no cars, family planning clinics, the care of older people, prenatal clinics, nutrition clinics? They should all be under Health Canada, all the time, forever, and not just band-aids.

The Canada pension plan should not be tampered with. But more than that, I cannot understand why there is no fund for Canada pension plan. I'll bet MPs' pensions are secure.

The Globe and Mail editorial on Saturday was on the shattered myth of regional development. It is a shocking indictment of our politicians and bureaucrats: the scandal of eight years and $4 billion in program spending, and another half billion in operating costs.

P.E.I. has its own scandals; many of them. The editorial concludes that: ``After 30 years, Canadians should finally have learned that equality cannot be achieved by transferring money to businesses.''

I am told the Irving Whale cost $12 million of my taxes, my money, this year - the attempt to bring that boat to the surface. There has been not a peep from the Irvings since it went down in 1972.

Each day brings new begging letters to my door. Today it was Interval House of Toronto. There are more problems, more sickness, more violence.

The gap between the people who have lost privilege, power and money.... These people seem to be getting greedier. In the meantime we, the middle class, are being squeezed and our standard of living is eroding. Our children are staying home longer or they're coming home with their children, with no jobs, no money, and no hope.

We here in P.E.I. are 130,000 people. It's a very small place - a small town in another country, or even in Ontario. So maybe one MP and one senator from this province would be sufficient to go to Ottawa. It would certainly cost us a lot less.

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I have two quotes to finish. One is from Abraham Lincoln. He said ``You can't fool all of the people all of the time''. The other is from Margaret Thatcher, who said of politics ``You don't have to tell deliberate lies but sometimes you have to be evasive''.

I thank you.

The Vice-Chair (Mr. Campbell): Mr. Green.

Mr. John Eldon Green (Smith Green Associates): Thank you, Mr. Chairman. I thank you for the invitation to appear, but at the same time I have to be honest with you and say that I had some difficulty in accepting your kind invitation, for reasons that I'll explain very quickly. I guess I'm like Judy Bayliss to some extent.

I should say before I begin that 44 years ago I married a very strong Liberal, and I've managed to maintain my independence throughout those 44 years.

Mr. Easter is not in our district and I've never given him 5¢, but I would willingly give him more money because every time I called him for something I got an answer, even though he's not my member. I disagree with you on that one, Elinor. I have to defend Wayne's peripatetic ways. He seems to bring home the bacon.

The reason for my hesitation in coming here was that last year I served on the working group on unemployment insurance and seasonal industries, which exhaustively mined that subject. We travelled and I attended almost all of the sessions. We travelled across the country for several months and heard people, and we produced a very good overview of the situation of workers in the seasonal industries.

What we found was greatly at variance with the original discussion paper issued by the department, which itself is a very flawed document. I was surprised that the department would issue a document that read like a master's paper in economics.

Despite the findings and the efforts and the contributions made by the hundreds of people who appeared before us, the government appears to be proceeding as if our work had not been undertaken and our report never written. I read The Globe and Mail because I'm not privy to the plans of the department, and The Globe and Mail seems to have a very good tap.

We didn't expect obedience from the department, but we did expect attention and that some consideration would be given to the realities surrounding seasonal employment in the seasonal industries and those who work in them. So you'll understand why I thought maybe this would not be a good way to spend my afternoon.

But I came, since you were good enough to invite me, to make two or three points. I'd like to urge this committee and Parliament, if Parliament will listen to a boy from Albany, to reduce the attention or even the obedience that has been given to advocates from the financial community. The editors and columnists and lobbyists and organizations set up for this very purpose are presuming to speak for business, but this is not true according to the businessmen we talked to across the country. They're advocating for a system that has caused this country great difficulties, but they never turn their attention to that system itself.

I read from the Fraser Institute and C.D. Howe and The Globe and Mail and The Financial Post that the world is perfectly fine in the financial community, that there are no problems in the financial community. They don't write columns addressing the difficulties it creates. Instead, they direct their attention to a world they know nothing about, the reform of social policy, without any apparent understanding of the complexity of historical processes or how those policies came to be.

I've never heard anyone refute the account Linda McQuaig has given in her book, Shooting the Hippo, of her interview with the Canadian investment specialist for Moody's. She alleges that he began the interview as a very gentle man who she thought would be a monster and who I thought was a monster ready to chew up this country. She quotes him in the interview and she hasn't been challenged. I think she's been ignored because of the difficulty of the credit of the comment.

This man criticized the members of the financial community for overblowing Canada's debt problems. She attributed him as saying that Canadian government bonds are about as safe as anything the world has to offer, while the Canadian financial community is anxious to portray Canada's debt situation as far more precarious than it is.

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I couldn't believe this, but it's coming from the man at the Canadian desk at Moody's, who created a lot of concern last year before the budget. I wondered why the Minister of Finance would tolerate that without addressing it in the House when he's presenting the budget, by saying he didn't need help from Moody's, unless people were saying to Moody's, ``Do it for us before the budget comes out''. I'm not a paranoid man, but in that instance I wondered if it was possible.

One of the more scandalous comments in that book, still attributed to this man from Moody's, is the following, which he makes after seventeen years in the business:

It's [Canada] the only country that I handle where usually nationals from that country want the country downgraded even more - on a regular basis. They think it's rated too highly.

- that is, our bond rating. He goes on to say a great deal about this.

If that is wrong, then McQuaig should be strapped. But it hasn't been addressed. I think it is scandalous that we're still paying attention to those people who do this. They have such heavy weight in the newspapers and the headlines. You people read the papers, and you're from the major centres. The scare tactics they've been using have been setting the agenda for this country for the past five years, to the point where people are worried about whether there will be old age pensions.

I talked to a young person - or in my terms young, 55 years old - who was worried about whether there will be a pension when she comes to retire and whether there will be a health care system at all. What is going to happen to this country? That's because of that kind of nonsense, which has no basis in reality. We have a debt problem, but the debt problem wasn't created by the social policy.

That's the first reason for my coming here. I urge that until the financial community addresses the excesses in its own sector, its advocates should be given little consideration in the development of social policy, particularly pertaining to unemployment insurance.

The second reason for my coming here has to do with social policy.

The Vice-Chair (Mr. Campbell): Mr. Green, as time is running, I'm concerned about whether you're going to be able to address the three questions we asked.

Mr. Green: I'm just coming to one.

That first one is more important than anything I'll say about those three questions. If you've heard that, I'm prepared to stop right now.

The Vice-Chair (Mr. Campbell): We will have a discussion among the panel and from members, if you'd prefer to stop now. Time is running. The rest of our witnesses have arrived, and I do want to give everybody a chance to speak. Do you want to wrap up by responding to the other two questions?

Mr. Green: I would make two comments on the budget measures to create an environment for jobs. It's a rather strange question to be addressing while the government is contributing largely to the elimination of jobs as it goes, with more thousands being announced every week.

But on the business of the job environment, the difficulty for the private sector in job creation is the complexity of government, which has not improved in 20 years. I left government 15 years ago. A very good example is the development of the Northumberland Strait fixed link. Two years after construction was approved, we still haven't settled who owns property in Borden. There's no development going on because of the interactions among governments.

I could talk to you at some length about that, but I'll just pass at the moment.

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

We move on to our representatives from YMCA Youth Services.

Mr. Andrew Warren (Member, YMCA of Charlottetown Leader Corps): Thank you,Mr. Chairman. I'd like to thank the committee for the invitation to be back again this year. It's a great thing to be here. It's a great opportunity to learn about the democratic process of our government and how it's set up.

I'd like to make a note that we're from the YMCA Leader Corps, which is a youth group. We work on leadership and communication with the community of Charlottetown.

I had a chance to sit down during the morning hearings you held here, and I just have to say I'm not here today to criticize anybody. On the other hand, I'm here today to discuss a couple of concerns of my own about the deficit and perhaps ways to cut costs.

I'll stay away from criticizing taxes on corporations. That seemed to be the main focus this morning.

Over the past year the challenge has been for the government to find areas and ways to reduce the deficit. I'd like to address the issue of education, since this affects me directly on a daily basis.

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When you're considering places to perhaps cut, try not to over-cut our education, especially our extra-curricular activities. You see places all over Canada where provinces are cutting the arts programs and things like that. Perhaps harmonization taxes would be a very positive thing. Maybe harmonization of the areas we cut, perhaps evening out the cuts in all areas, would be a better thing than focusing on one main area and cutting one main thing.

I'm very interested in hearing everybody's questions and comments on each other's statements.

I'd like to again thank Yvan Loubier for being here last year and showing a lot of support for youths and their involvement. Welcome back to Prince Edward Island. I hope you enjoy your stay.

Now I'd like to pass it on to my friend, Penny MacLeod.

Ms Penny MacLeod (Member, YMCA of Charlottetown Leader Corps): Hello,Mr. Chairman. I'd like to thank you all for the invitation back this year. It's a great experience.

Andrew has pretty much summed up what I was going to say, but I'd like to address the education system also and our schools. The cuts of our classes have affected many people in our school system, but on the other hand we have gained after-school activities. In our schools we feel this is great, because we need the activities, but we also need to keep the classes that help us in our everyday life.

All in all, we seem to be learning, but we feel the areas in the educational system should be evened out and fair to all, that is, even out the classes and after-school activities. We also believe more activities should be put on outside of the school system, because there's not a lot to do for the teenagers here in P.E.I.

That's all. Thank you.

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

If committee members and other witnesses will allow me, let me welcome you again to our committee. I did not have the benefit of hearing from you last year, but I can well understand why you were invited back.

One of the things that strikes all of us as committee members is the extent to which we tend to hear, across the country, from organized groups from every sector. Whether they're representing a social agenda or a business agenda, they tend to be well organized and are pretty good at this.

This can be an intimidating exercise for some people. It is always nice to hear new voices and fresh voices. We can all use a bit of a creative and new look at things, so we very much appreciate having you here.

One of the things we're trying to accomplish with the round tables is to bring stakeholders together, those who have an interest in our future. We all share in it and everyone has an interest, no one more so than the youths of this country. So it is a pleasure to receive you here this afternoon. Thank you.

We're going to move on to Robert Sear, who's joined us. He's from the Prince Edward Island Association of Professional Engineers. Then we'll go to the Construction Association of Prince Edward Island.

Mr. Sear.

Mr. Robert Sear (Past President, Prince Edward Island Association of Professional Engineers): Thank you very much. I thank you, Mr. Chairman, for the invitation on behalf of the Association of Professional Engineers on Prince Edward Island.

Our comments are short and specifically from an engineering point of view. However, we feel that for the most part our comments help to address the three core questions and will also result in a benefit to all Canadians.

As I'm sure you know, much of Canada's infrastructure is in dire need of improvement, and for a country as large and vast as Canada, a well-built and maintained infrastructure is vital to its existence. Over the past few years we have seen that the infrastructure works program implemented by the government really does work, and we commend you and your government for the implementation of this program.

The benefits are abundantly clear here on Prince Edward Island, with projects such as the waterfront arterial roadway and numerous water and sewer infrastructure improvements in many of the smaller communities. The program certainly helps to address the issue of job creation, with engineering and construction industries being the biggest benefactors.

Also, and perhaps more importantly in looking to the future, improvements to Canada's infrastructure, particularly in water and sewer systems, are certainly a step closer to creating a friendly environment for future generations. It is in this line of thought that we encourage the federal government to continue the infrastructure works program.

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In addressing the third of your core questions, we believe it's safe to say that the government should seriously consider the continuation and development of joint public and private sector financing projects.

Of course, the biggest and best example of this concept is taking place right now on Prince Edward Island with the construction of the Northumberland Strait crossing. Projects of this nature result in a win-win situation. Projects that are vital to the future and to economic growth - like highway construction - are now possible through this type of financing.

Job creation is immense and, of course, from the government's perspective it saves money. Once again, we encourage your government to continue promoting joint public and private sector financing.

That's all I really wanted to say. We appreciate the opportunity and wish the government all the best in continuing to reduce its deficit and to create jobs. Thank you.

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

We're going to move next to Kevan MacLean, who's with the Construction Association of Prince Edward Island. Then we have one other witness from the Action Canada Network.

Mr. Kevan MacLean (President, Construction Association of Prince Edward Island): Thank you, Mr. Chairman. First, I owe you an apology. Because of an booboo between the Construction Association's office memo and our office, I missed the morning program and I feel as if I've missed maybe the most important part. I have a bit of the gist of what was taking place and I've written down a few comments I hope to address.

First, I thank you for this opportunity to say a couple of words, and as a gesture from P.E.I. I would like to say that I hope you have again tasted a little Prince Edward Island hospitality. I trust that the weather is cooperating to make your stay a pleasant one.

I have a couple of key notes, you might say, to address this deficit problem. It is of very major concern to any person in business or industry because of the value of 73% of our gross domestic product. That's sort of a scary concept considering that the interest charges are costing us 34¢ on every federal dollar. I'm sure our banker would have been giving us a pretty urgent call if that were our condition in a business sense.

Perhaps it should be eliminated with some further cuts. We appreciate and say thanks for the efforts that have been made up to date, but I feel that there have to be more pretty strenuous cuts. In reality, perhaps a lot of subsidies should be eliminated. Perhaps foreign aid could be addressed as another cut. Again, we all have this continuing problem with UIC and with some other ongoing reforms to social programs that need to be addressed pretty urgently.

Perhaps we need more drastic measures to privatize crown corporations. As a businessperson, I feel it could be done more economically, more cheaply.

We also need further tax changes. As Mr. Sear said, and as I heard the YMCA people mention, we need harmonization of taxes.

Perhaps one of the biggest killing taxes for the construction industry, at least in this province, was the GST. The GST created an even more huge, stronger and growing underground economy. It's perhaps not because people think they're really saving money but because they feel they're beating the system. If this could be somehow hidden.... I'm sure this concept is being entertained, but it needs more pressure because it really is a growing problem, perhaps more of problem than we want to admit.

One thing done in the last budget that really influenced the construction industry was the concept of UIC reform that wants to propagate or encourage the concept of a mobile workforce. On the other hand, the federal government has decreased the subsistence allowance. In effect, this has the contrary effect, because now people are being nailed in the pocketbook for what the government wants to encourage them to do. I think that if this 100% allowable allowance were returned, perhaps their concept of encouraging people to be more mobile would be effectual.

I have just a couple of notes so that I don't end up being too long-winded.

Thank you for the infrastructure program. As Mr. Sear said, it has been a great asset, a real plus to this country, to its economy and to job creation.

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For a further continuation of that concept - and it's not a new one - from the construction industry point of view we really need a national highway program, considering that 38% of our highways are deficient and 22% of our bridges are almost outdated. The situation needs to be addressed.

I will end with a thank you note, and say thank you for the opportunity to say a few words, even though they were a little belated. I apologize.

The Vice-Chair (Mr. Campbell): No apology required, Mr. MacLean. Thank you for your comments.

We conclude this section of our round table with Leo Cheverie, from the Action Canada Network.

Mr. Leo Cheverie (Action Canada Network): Thank you. Since this is a round table, I have just a few notes with me that will give you our perspective in terms of the direction for the country and what we should be looking at in terms of finances in the upcoming budget.

Primarily we're concerned about the direction we're headed in, because I know that the employment target set last year by the federal finance minister in his budget seemed to be in a wrongheaded direction. The federal budget last year tried to meet deficit reduction, but was hampered by a sharp reversal of economic growth. Since last year's budget, Canada's average 1995 gross domestic product was reduced by between $8 billion and $11 billion, below the level projected. Projected to future years, that means those budget targets intended to be met last year by the budget.... It seems to me that we're not going in the right direction.

There's also been a slowdown in Canada's labour market. Job growth was virtually stalled after the introduction of last year's budget, and the unemployment rate remains very high. I think most polls of Canadians have illustrated that their major concern has been employment. That certainly hasn't been met.

Basically, Canada's unemployment rate has declined only because the labour force participation rate has declined. Cutbacks to government programs account directly for 48% of the decline in Canada's GDP in the second quarter of this year.

The larger cuts now being planned at the federal and provincial levels will have a much larger effect, directly reducing GDP by at least 3% over the next three to four years. This indirect impact of the spending cuts due to generally reduced economic activity and lower consumer confidence has added to this economic toll.

This means that the economic recovery we're now in has been fuelled by export and also by investments in machinery and equipment, but in terms of having a true recovery in which we can pay back our deficit by having more people working and paying taxes we have to look at increasing things in the private consumption, the public sector and in residential investments. We have to look at encouraging those aspects of the economy in order to actually have a growing economy, one that has to pay off the deficit.

I think the impact has been rather more than negative so much so that the deficit targets projected in last year's budget have faltered.

In the Action Canada Network we're also looking at things nationwide. We're also concerned about the Canadian health and social transfer, because we figure that will further slow down or will halt economic growth in this country.

I have a couple of examples. One is medicare. It seems as if we'll be transferring some of this to the provinces, but provinces like Prince Edward Island have a disproportionate number of people who are elderly or who may have come back to Prince Edward Island to retire. If they're moving medicare to the provinces without any national standards, then perhaps those people who have been paying taxes across the country and have moved back here to retire will mean a disproportionate number of people here depending on that particular service which we all pay for nationally.

In terms of post-secondary education, I think that if we're looking at investment in the future, as the other people from the YMCA have talked about, we must have the investment in a future education for youth. If that's going to be undermined, I'm afraid we might end up with a two-tiered system in that area as well.

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But what I'm getting to is that in order to decrease our deficit, eliminate the deficit, and reach a target of 60% of GDP by the year 2000, we have to look at a model of actually encouraging the economy rather than imposing more burdens on it. At that time, if we adopt this model, there'll be no deficit and we can start paying back the debt. In order to do that we have to create jobs, expand the economy. There are many examples of taxing certain sectors of the economy more and also lowering interest rates.

A study done in 1991 by Statistics Canada - I think it was pointed out by one panel member earlier - found that up to 94% of the deficit at that point was caused by high interest rates and tax breaks, whereas the remaining 6% was because of government spending, and only 2% of that dealt with social spending. So cutting social spending to eliminate the deficit isn't really the cause of the deficit.

About the unemployment insurance reforms we're talking about now, it's in a surplus position at present. Obviously cutting that, or privatizing CN, which actually made money for the government...and obviously if the deficit were really the issue in those cases.... They're not contributing to the deficit. In fact, they're providing a surplus in both those cases.

So those models of privatization...that particular instance, or changing the unemployment insurance system, which has a surplus, and which both ourselves and employers contribute to, may not be the means of eliminating the deficit, because that's a false issue in those cases. But they can look at certain things, such as looking at collecting back taxes. I know the auditor general has encouraged the collection of back taxes, especially from corporations, if there are no penalties on those.

We can also look at closing certain loopholes. We can add a 31% tax bracket for incomes over $75,000 or 33% over $100,000, which might have collected an extra $850 million last year. We could also do that this year.

We can also look at possibly putting limits on RRSPs - maybe a limit of $8,000 a year. That could bring up to $1.5 billion, or even $2 billion, in the long run, which could also be used to eliminate the deficit. That could be used instead of lowering old age pensions or guaranteed income supplements, things of that nature. Those are means by which we can actually do that now.

I know also a bill was before Parliament.... It was pointed out to me where tax breaks were given to people who able to donate to, say, United States universities at the same time as changes were taking place in the CHST here. Possibly we should be able to invest in our own universities in Canada.

About banks and investment, previously they were able to invest only 5% of their moneys in Canada, and less than that abroad. Now it's up to 20%. So a certain amount of capital that could stay in the country is leaving the country. It could create employment and growth in this country.

The profits in the bank sector are slated to reach about $5 billion this year. Perhaps there is some innovative way of amending the taxation system. If they are eliminating jobs at the same time as creating those profits, they could tax them on the amount of jobs they are eliminating. Perhaps it would be a means to create employment and create income to eliminate the deficit.

There are many things we can look at in trying to develop national standards in health care, education, and social assistance. Maintaining those standards will actually mean a stronger economy, because the moneys spent in those areas will be spent in our economy rather than leaving our economy, because the people those funds are slated for are ones who actually expand the economy, which means more jobs are created, more services bought, things of that nature.

The direction we're going in right now seems to be the direction Paul Martin had last year. The economy has faltered to some extent. The growth he expected, the jobs he expected, haven't materialized; and they haven't materialized because what they've done is taken money out of the economy.

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With the advent of the CHST next year, that's going to be increasingly obvious. Rather than helping the economy, you might actually put us into another recession in which fewer dollars will be generated and the growth that we need to pay off our deficit won't take place.

So that's a sort of general context.

The Vice-Chair (Mr. Campbell): Thank you. Let me suggest that you stop there so we can have some opportunity for discussion. What we usually do at this stage is have a bit of discussion among the panellists to see if anyone cares to comment on or react to anything that has been said by any of the other presenters.

Just sitting here as chair and listening to this this afternoon, I want to suggest something to which you might want to respond.

The prescription that you have all urged on us this afternoon requires spending, or at least continuing to spend at the levels at which we have been spending. For the most part, that's the suggestion. A few specifics were offered, but not enough specifics about where the revenue to sustain or continue that spending is to come from.

To finish just where Mr. Cheverie finished, you gave us some concrete suggestions, $800 million from.... I'm not sure.

Mr. Cheverie: [Inaudible - Editor]...taxation levels.

The Vice-Chair (Mr. Campbell): Right, what the researcher was just saying, and $1 billion to $2 billion from RRSPs.

The projected deficit for this year is $32.7 billion, and we're on target to reach that. As I read it, there's clearly a consensus around the table for dealing with the deficit. Of course, $32.7 billion is an awfully big number, and I wonder if others have concrete suggestions for how we should start to chip away at that figure, beyond the ones we've heard around the table. If that helps to start the discussion, then let me start it there, and also invite you to comment on each other's presentation.

Mr. Green: The purpose of my presentation is consistent with that of Mr. Cheverie. If we're going to fix the deficit, then we'd better understand what caused it. I'm concerned about the smoke and mirrors game. I was about to get to the point that social policy hasn't accounted for the deficit. So we're not saying there should be more spending; we're just saying that's not the place to find the -

The Vice-Chair (Mr. Campbell): Then, Mr. Green, help us out. Where is it? Where will we find it? I don't think we can argue about the past at this hearing this afternoon. The past has left us with this problem. We have to deal with it for now and for the future.

Mr. Green: But the past has painted the scenario for us, hasn't it? The last two or three years gets us confused as to where the answer is.

The Vice-Chair (Mr. Campbell): If you have ideas for where the answer is, then this is the time to share them with us.

Mr. Green: I can tell you, for one thing, that as a person whose taxes have gone up considerably over the years, I'm rather sanguine about the possibility of more taxes in the business sector.

The Vice-Chair (Mr. Campbell): So you don't wish to see higher taxes.

Mr. Green: I have no problem with seeing higher taxes in the business sector. I don't want to get into numbers here, because it's a mug's game. But if that's where the deficit has occurred, then that's where you should address it, not in social policy.

The Vice-Chair (Mr. Campbell): So your suggestion would be to address it on the corporate income tax side.

Mr. Green: The various measures -

The Vice-Chair (Mr. Campbell): Fine. Okay. I don't need specific numbers, but it would be helpful to the committee to get a sense of where we should be looking that we haven't thought of. If some of you have been concerned that we've been predisposed to look at certain things and not others or that we haven't looked at the system you spoke of earlier, these are the kinds of things that are helpful to us.

Mr. Sobey: There are two things at play in social policy versus where business interests lie.

I'm a very straightforward, simple-minded person. Taxes are paid by individuals. You can increase the corporate tax rate if you wish, but the individuals are going to pay those taxes indirectly.

As far as social policy goes, we have to implement policies that give an incentive to work, not that create a disincentive to work. If I was to suggest a complete overhaul of the UI system, then everybody in this room would probably kill me, because it brings all kinds of transfer payments to this region of Canada. It's probably exactly the thing we need, but nobody wants to do it, because no one likes being hauled up on a carpet and called all kinds of dirty names.

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What we have to do as conscious Canadians is to find neutral ground between taxing individuals of the middle-class working poor and the monopolistic enterprises we have in the country, be it the banks or whatever. How do you get the dollars out of the banks at any given time, in taxes, without them passing that on to the consumers through service fees and higher interest charges?

So it's a matter of finding new ground. It's not going to be easy, because you're going to have to have these kinds of debates and at the same time do your policy reviews. You have to try to get the population to understand why you're doing it.

As far as the education issue goes, I support what the federal government has done in education. They can only deal with post-secondary education, because by and large education is part of the provincial jurisdiction. At the same time, they're trying to give the incentives to the universities to become competitive and offer good educational programs. It's the federal government's responsibility to ensure that the population of students has the resources in order to go to university and get the education, but they have to give it in such a way that it creates the incentive to do so.

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

Ms Reynolds.

Ms Reynolds: First of all, Mr. Wayne Easter would be the one politician I would definitely vote for to go to Ottawa from P.E.I.

The point I'd like to make is on regional development and the money that has been spent over the past number of years and what it hasn't done. According to Saturday's Globe, that amount is $4 billion. I don't see where we get value for our money there. Even the cost of implementing those programs was $500 million. We throw billions around like they're pennies.

I'm a frugal person; I think we have to get back to a few basics here and remember the expenditure of money and the use of it and also the fact of the accountability for that money. I don't see that.

I read about what has been spent in Cape Breton through ACOA, and in P.E.I. and Newfoundland, and that's shocking; it really is. New Brunswick seems to be doing a lot better than any of the others. Cape Breton has one of the highest unemployment rates in the country, and yet we keep on pouring tax money into Cape Breton. Surely we must see that's not the answer.

Thank you.

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

Ms Bayliss.

Ms Bayliss: I am so frustrated that I could just scream. It seems to me we're talking about two cultures and the gap between them is so huge. I recognize the official job you're doing, and I don't know anything except a little bit about Wayne, because he's a local boy. But as for the rest of you, with no disrespect, I don't know anything about your backgrounds, so please excuse me if I make some generalizations.

I'm talking about a huge gap in the real comprehension of what it's like to be the working poor. I think you, Gordon, mentioned the working poor. I guess I'm working poor. I scrape by. I work, just hold my head up, share an apartment in a co-op with my daughter, have lived probably eight or nine lifetimes like lots of other people, but life is exciting and life is good. It can be bloody awful sometimes, but on the whole it's really quite neat, and not many people get an opportunity to speak like this.

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Thank you, God, for letting me live in P.E.I., because everything is so accessible here. If you talk loud enough and often enough, if you know the right people, you can get.... I shouldn't say that, but you know what I mean. I am not talking about patronage here. It's just that accessibility works here.

For me, in my official capacity, I represent 200 co-op households on P.E.I., from the west end of the island to Montague, which is halfway to the east of the Island. Fourteen of those housing co-ops are in Charlottetown. We have French-speaking co-ops. We have co-ops for elderly people. We have little mini-communities in each one.

I have to somehow convince you of what they think about this situation. These old people in the co-ops for seniors lie awake at night. Sometimes they weep out of absolute fear, frustration and anger because they thought they were working for a future, and now they don't know. They worry about their grandchildren, their own futures, and health care. Some of them are so dependent.

A few people have mentioned today already that there seems to be a problem that's not being redressed. Canada is going to have a high proportion of people over 60 once the century turns, and no one is redressing what their needs will be. Demands on health care will be huge. Not all those people will be able to afford their own homes. They won't all be able to travel.

Luckily, through the position I hold as a director for P.E.I., I travel all over. I am sick and tired - Elinor will bear me out - of having to defend living in the Maritimes and being accused of filching and taking more from the government than is my due.

I have not been single very long, but I have worked every single day that I had to. I think there are many, many people who are absolutely puzzled. They read articles in The Globe and Mail, they watch television, and they keep up with publications for what's going on, but they don't know what's happening.

I think really what I am saying is that I agree that we should get back down to basics here. I'm serious when I say I don't know what you mean when you talk in terms of billions. I think there are many, many people.... We go to these presentations. We have national union representatives who come to the island. Many of us visit. We do all this kind of social thinking. We are very concerned and very involved in the political process here.

We hear people say that the UI fund has a surplus of $8 billion. We say, ``What?'' I can only get 53% of my contributions if I become unemployed. Excuse me, I don't understand this. I'm an artist, so excuse me if the right part of my brain doesn't kind of match the left side, which is otherwise in the room. But it seems as though something doesn't juggle.

I won't go on much longer, but I need to say something. The working poor are a reality, but just because you're poor and working doesn't mean to say that you have no self-esteem, you don't care, or you're not a Canadian with as much input and interest in the finances and running of the country as someone who's not from the east.

When there are no jobs, you are poor, and on top of that, you have no guarantee of a safe home. Look at the work co-op housing does, because if you're going to use money to provide housing and homes for people, use it efficiently.

Co-op housing works. So I'm plugging my group here: it works. If you want real alternatives, please listen.

In the next report, it would be really a good idea if some comment could be made that you had heard what we said, because there wasn't a mention last time. That's very degrading when you go to the effort of working hard.

The Vice-Chair (Mr. Campbell): Perhaps I could respond to that by saying that we take very much to heart what witnesses say before us and the conversations that take place. We discuss it afterward. Many of those themes did find their way into our report, although not all of them. Many of the recommendations we made did find their way into the budget. So I would contest the notion that this is a waste of time; it is not.

Ms Bayliss: I don't mean to imply it's a waste of time.

The Vice-Chair (Mr. Campbell): Thank you, okay. You said you didn't know where we were are coming from. To some extent, those of us from different regions don't know - as we say - where you're coming from, but we all leave here a little wiser and better educated.

Perhaps you and Ms Reynolds might agree on this much, which is that more of some of the billions she spoke about ought to be spent on co-op housing. That much you would agree on.

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At this point I'd like to turn to questions from our members, but I'd like to suggest a five-minute break for everyone. Then we'll resume with questions from the members of the panel.

Mr. Green.

Mr. Green: Would you give us a timetable for the afternoon? How long are we here for?

The Vice-Chair (Mr. Campbell): Our finish time is approximately 3 p.m., but we'll probably go a little over that. We can meet here again at 2:30 p.m., and then we'll start with questions from the members and pick up on some of the interesting themes that have been developing from our panel and each of you.

So just a five-minute break, ladies and gentlemen.

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The Vice-Chair (Mr. Campbell): Order.

We're going to begin with questions from Mr. Loubier.

[Translation]

Mr. Loubier (Saint-Hyacinthe - Bagot): My first question is to Mr. Green. You say that the federal government's financial problems are not all that serious. I would like a clarification on this, because with an accumulated debt of 550 billion dollars, Canada has the second highest debt among industrialized countries.

However, I do share your opinion regarding social programs. They are not the cause of the government's financial problems, nor is education, as Mr. Warren and Ms MacLeod were saying earlier. What we really have to do is adjust our priorities.

I would like to hear your comments about the seriousness of our financial problems, because you dealt with the topic quickly, and simply said that the situation was not all that serious. I would like you to clarify that for me, because this aspect is important.

[English]

Mr. Green: I'm very much like Linda: when we speak of $50 billion, $30 billion, $100 billion, I'm out of my field.

I was referring to the Canadian investment specialists at Moody's, who were doing the bond rating for our country, whose view it was that we're not in a very difficult position and that our problems were overblown by the financial community. That hasn't been refuted. So that's where I was taking that from.

I have no idea of what the debt ratio should be in relation to GDP. It's a game that the finance people play.

My concern was that in getting this in order by attacking the social policy, which is the way in which we equalize the inequities of the financial system.... We've known for years that the economic system doesn't always act more or less fairly. It is the job of Parliament to make sure that the thing works and that the various parts of the country share. Social policy is the instrument for doing that. As I read the papers, the attack has been on social policy as a way of addressing the debt problem. Yet we have this experienced man who says that our debt problem, in relative terms, isn't all that great.

So when you throw numbers at me, I don't know. I just have a man who does the bond rating for this country who says that we're really not in such bad shape. I have no idea of whether he's right or not, but I haven't seen it being refuted in language that I can understand. But I'm not saying that there isn't a problem, I'm just saying I would like to be sure it's in perspective, and that the causes of the problems are being addressed and we're not just addressing the most fragile part of the community that Parliament should protect.

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I have a problem with this forum being only two hours. You come here and you hear from us in two hours. It's difficult.

Another problem I have is that since World War II the economy has grown through a partnership between government and the private sector. It has grown through interactions between the public and the private sector. Now we're saying we're going to disengage the government sector and the economy is thereby going to grow somehow. I don't understand how that can happen that quickly.

I know that over the years the business community, particularly in Atlantic Canada, has developed a reliance on this very thing. We don't do things here unless we get government participation. There's no investment in anything big unless there is government participation. But there is the assumption now that if this happens, this is going to happen, and our perception is this is what's happening.

There are lots of indicators around here now that having millions withdrawn is going counter to job creation, counter to economic development. Maybe government can pull out slowly, and you can wean us off slowly. But that's the problem I have. I don't know where the theory is behind that, that we can do this and this is going to happen. It doesn't make sense to me.

I may not have answered your question. Basically, I plead ignorance on the first part. I'm just quoting from somebody else, as to the proportion of our problem.

[Translation]

Mr. Loubier: I understood your explanation, Mr. Green, except that this was the same rating service that was watching the Minister of Finance last January. It told him that if he did not take some drastic action to do something about Canada's debt in the medium term, there would be a downrating of our credit. So that is quite a contrast.

I understand the point made by Ms McQuaig in her book, which I have read, but there are two facts that are hard to reconcile. If Moody's was keeping a very close eye on the state of Canada's finances in January, and at the same time, Ms McQuaig was claiming in her book that the situation was not that serious, I see these two approaches as diametrically opposed.

My second question, if I may, Mr. Chairman, is for Mr. Sobey.

Earlier, Mr. Sobey immediately jumped to some conclusions when he said that we must not touch corporate income tax. Could it be, Mr. Sobey, that the tax system for corporations should be looked at? Might it be that some companies are doing their duty, but that others are not? There are companies that pay their income tax, like all good individuals, like all good Canadian citizens, but there are others - and there were close to 100,000 of them five or six years ago - which do not pay a cent of income tax, even though they make a profit.

Could we not revise the tax system for corporations to minimize loopholes as much as possible and to ensure that companies pay their income tax too?

To come back to what Ms Bayliss was saying earlier, we're going to have to come down to earth and start looking at the small, specific things that can be done to ensure that everyone pays their fair share of income tax, and that the poorest members of society are given some support, because it makes no sense to carry on as we have been for the last two years. The unemployment insurance program is being cut as are transfers for postsecondary education and health. We have to call a halt to this somewhere!

[English]

Mr. Sobey: Thank you.

I erred in saying corporate taxes should be left alone. I guess I agree. I'm one of these people who support a total overhaul of the tax system, but I also know the political reality of it, that you can only tinker with it from time to time or you get a general public revolt. But this, the whole ramification of taxation in order to create a fairer tax system, is something that needs to be addressed in Canada.

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But we have to come back to what I said before. By and large, individuals pay taxes. It's not the corporations. But at the same time we need a mechanism in place that ensures the corporations, such as the big banks, that have the ability to pass on everything they do to the people who do business with them pay their share of taxes. That's where the incentives have to be used in order to create employment - everyone wants jobs - and you can use the tax system to do that.

So that's where I am on the corporate tax bit. Everybody must pay their share, but you also have to realize that at the end of the day the individual is going to pay the tax.

As for our overall government spending and deficit, I know Mr. Martin is of the opinion that we need only minor tinkering with the tax system. I'm one of the people who would like to see a harmonization of the GST and the PST, knowing full well the minister does as well. It's a matter of trying to get everybody else in the other provinces on side. Alberta certainly would be a kicker, but I understand B.C.'s even worse.

I'll leave it at that. I'd like to create some discussion here.

I guess my comments would go further. Although spending on social programs may not have led to the disastrous proportion of our public debt today, by and large it has created the problem, because over the years we as individuals have the general feeling that government owes us either a living or at least the capabilities of that. I'd like to put the social policy and the business sides seemingly at loggerheads. It's the business side that is going to take us.... What government wishes is that business enterprises, as John Eldon has said, are going to lead the recovery and create the jobs and are the way we can reduce the deficit through growth.

I'll leave that. I hope there will be some discussion.

The Vice-Chair (Mr. Campbell): Mr. Green, you said on two occasions, once in your presentation and once in replying to Mr. Loubier, that the deficit was ``overblown''. I think that's the word you used. You're quoting from this article and this anonymous gentleman. The financial community -

Mr. Green: It's not anonymous. I just don't have his name.

The Vice-Chair (Mr. Campbell): Okay, I'm sorry.

You said the financial community plays these games. That's your quote. Did he give any indication why, or do you think you have a reason why, people would blow it up or ``play these games''?

Mr. Green: Implicit in the article was dissatisfaction with social policy. It was the -

The Vice-Chair (Mr. Campbell): So it's designed to lead to an attack on social policy.

Mr. Green: Yes.

The Vice-Chair (Mr. Campbell): I see. So it's a bit of a conspiracy theory approach to the -

Mr. Green: It's hard to get into conspiracy theory. There is a bit of a right-wing movement in the country. In case -

The Vice-Chair (Mr. Campbell): I had a couple of them in my riding - just a couple.

Mr. Green: May I comment on Gordon's point? There is a dependency on social policy, but it's a dependency that's shared by business. We heard a lot about the construction industry when we travelled across the country; the construction industry taking more money out of unemployment insurance than they put in, for example. They talked about unemployment insurance being used to supplement wages and replace wages.

This is very true. Fifty years later, we caught on that unemployment insurance is available in the wintertime. If you're in the construction business and you work typically for fourteen or fifteen weeks, you know there's unemployment insurance. The employers know. Everybody knows there's unemployment insurance for the rest of the year. So the employers count on that.

The Vice-Chair (Mr. Campbell): Excuse me, Mr. Green. Members have been very patient. I wonder if you could just wrap up that point and let me turn to Mr. Solberg. If there's time, we can come back to it.

Mr. Green: There are two points. The first point was made by a group of business representatives that you should go cold turkey - twenty weeks a year and that's it. Twenty weeks a year means in P.E.I. we'd have to generate 90,000 more weeks of work. Workers don't make that work; the business community does, and business isn't missing those opportunities. That's what's going to have to happen.

The second point is you can look at the subsidization of construction in two ways: who's subsidizing whom...? If they can get work for only sixteen weeks a year, we have to triple their wages. We don't triple their wages because unemployment insurance is there. If you're going to take out unemployment insurance, then you have to be prepared for big wage heaves.

The Vice-Chair (Mr. Campbell): That seems to be an argument for a major overhaul of UI. Thank you.

Mr. Solberg.

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Mr. Solberg (Medicine Hat): Thank you very much, Mr. Chair.

Mr. Green, I just want to follow up on the chair's remarks about the Moody's Investors Service. I'm wondering, doesn't it seem odd to you that the financial community would be pushing for a downgrade if this would lead to higher interest rates that would hurt their own businesses and also dampen consumer spending, which would also hurt their businesses? Why would they want to do that?

Mr. Green: I have no idea. Why would the manager of Moody's say that if he wasn't under the pressure to do it?

It's there, and he hasn't denied it and no one has checked it out.

Mr. Solberg: Other brokerage houses such as Dominion Bond Rating Service have also had the same concerns. Isn't that true?

Mr. Loubier did point out one of the most -

Mr. Green: Excuse me. It does come into the financial community and I'm suggesting the financial community is under a bit of suspicion.

Mr. Solberg: If you're trotting this out, you're using it as evidence of some sort to make your case. I think it's only fair for us to ask you some questions about this, because obviously you suggest this probably has some merit.

Mr. Loubier did point out we're the most indebted industrialized nation in the world. On that basis, wouldn't it make sense for bond rating services to be very concerned about that?

I just wanted to make that point.

I want to follow up a little further on something said this morning. I feel we must address it again. On this idea of taxing the banks and large corporations, I must point out many of these corporations and banks include among their shareholders retired people and other people, and include pension funds from labour, for instance.

If we impose a further tax on them, isn't it true these taxes would be passed on in the form of lower profits, and that shareholders, including retired people, will have lower returns on their income and lower retirement incomes? Isn't that correct?

Mr. Green: First, that's a redistributive effect. It's redistribution, that's all.

As I said in my presentation, my wife and I have investments and it's very nice that they're protected. But I really don't want them protected at the expense of other people, so other people have no money whatsoever. That's the situation we're in.

Mr. Solberg: Yes. It's just that sometimes people offer these solutions. Although they look very good when you consider it might be just banks affected, we must remember at the end of the day there are people involved in this.

Mr. Green: Exactly.

Mr. Solberg: Sometimes there are people who are of little means, and if we propose these taxes, we'll be taking money directly out of their mouths as well as their pockets.

Really, the same applies when we're talking about people with higher incomes. If you have a $75,000 income and you're employing somebody and suddenly you start to feel the pinch, maybe you decide to let the employee go so you can make up for it in your income.

All I'm saying is there are ramifications to all these things. In fairness, Mr. Cheverie is the one who made the suggestion. Perhaps he'd like to address it.

Mr. Cheverie: All I want to refer to is what has been referred to by other people as voodoo economics.

When you look at what is happening, I know in some of the largest businesses in Canada there has been a net loss of jobs. Specifically, the Business Council on National Issues has mentioned those companies in the past number of years. Canadian-owned smaller businesses have been the only ones who have increased employment in this country over the last number of years. I think this is something to their credit.

Also, I have a report here by the International Monetary Fund, which I don't normally quote, but this is a report they did on Canada.

They talk about Canada's tax system and corporations. They say the preference Canada gives, for example, in terms of low tax rates for small businesses, which is a 16-point tax rate deduction for the first $200,000 earned by a Canadian-controlled private corporation, reduces the effective tax rate from 28% to 12%. While this deduction is designed nationally to promote small business, it's available regardless of a firm's size or income.

If you want to target the help to small business, which is where jobs are being created, maybe gear a tax system to those who actually preserve or create jobs and maybe tax people who are eliminating jobs.

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There are also other things to preserve - tax credits for research and development, for example. I think the recent example in Canada has been banks receiving tax credits for research and development where they have paid less tax or even no tax and at the same time used those things they've developed to eliminate jobs.

Recently, even on P.E.I. we've had branches closing down. We've had banks making hundreds of thousands of dollars of profits, yet they are closing down branches and eliminating employees.

I find that unconscionable if they're making the profits they are making, especially when 50% of the investment in Canada's banks is in pension funds. Why don't we reinvest the money here for ourselves and for the benefit of our economy? This would help stimulate the economy and reduce the deficit.

So there are people who are paying taxes and people who aren't. I'm saying you have to look at the means of taxation. But the International Monetary Fund says these preferences are relatively generous and their effectiveness in promoting investment does not appear to have been enlarged. That's something worth knowing.

Being from a regional part of the country, the other thing I wanted to mention is unemployment insurance. Unless tourists start coming here to go to Cavendish Beach in November or December, we really are dependent on a regional economy based on seasonal factors. The unemployment insurance system as it now exists recognizes this to some extent. Being in a surplus and not contributing anything to the deficit - as a matter of fact, being funds of both employers and employees - it is to the benefit of both seasonal employers and seasonal employees to have the workforce that is trained and that has been involved in certain industries such as construction, tourism and the fisheries available in those places.

We've long been forced to go down the road to look for employment in other places. In this part of the country those people have perhaps returned and are dependent on our health care system and other things in this region....

The Vice-Chair (Mr. Campbell): We now have to switch to this side of the table. This isn't necessarily right and left, by the way. It depends on where you're sitting.

Mr. Easter - and I'll resist the opportunity to comment on where you are sitting.

Mr. Easter (Malpeque): Thank you, Mr. Chairman.

At the beginning, I certainly want to thank the groups from P.E.I. who have responded to the call of the finance committee. I know it takes time. It takes a day and it takes preparation time. As Judy Bayliss mentioned, I think, she was a little angry. And there is a little tension sometimes created in these discussions. But an old fellow once told me, you never have learning unless there's tension. So tension is a good thing.

I have two questions. I know you're under the pressure of time, Mr. Chairman, so I'll ask them both.

A number of people have mentioned job creation in terms of the discussion. There was some criticism of ACOA in regional development. This committee is looking, certainly, at finances and job creation as well as a cabinet committee.

I'm wondering if you have any ideas - even the seed of an idea that might develop into something - in terms of job creation. How can the federal government help in that area? Keeping in mind we are at a time when there are federal cutbacks, when there is technology costing jobs, and when there is business consolidation costing jobs, what can we do from a federal perspective to help in that area?

Secondly, to John Eldon Green, you said the financial community must address the excesses in its own community. I agree with you. This is an important point, because what we're trapped in as a federal government is the social and economic balance of the direction of the country in the future. And we always find the public sector under constant attack and constant scrutiny. But there is never the same constant scrutiny in terms of the private sector and the waste that goes on there.

Elinor Reynolds mentioned the flights we make. I can certainly tell you some big businesses, in the flights they make, are unbelievable as well. Both need to be looked at. I'm not critical of what you said. I'm just saying both need to be looked at.

I'm wondering if you could maybe elaborate a little further on that, John Eldon. And if anybody else has any ideas on job creation, we'd like to hear them, even just the seed of an idea. Thank you.

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Mr. Green: Just in terms of job creation, Wayne, I believe there is a role for government in doing this, but the federal system has become very complex. I refer to delays in decision-making, the number of interactions. We met with groups in Newfoundland. One was a fisheries group trying to develop a salmon industry on the west coast, interacting with seven different agencies of the federal and provincial governments from the west coast, flying back and forth to do that.

Here, it's not unusual to have to interact with four different agencies of the two governments to get decisions, which can take weeks or months to get made, with people who are trying to do this as private business people being unable to wait around that long for something to happen.

There is the constant reorganization of both governments, changes in personnel, people moving into positions without depth in that field.

There are the excessively complex controls, the management controls that are established in government, the multi-year operational planning, which is a joke. It has been going on for 20 years. I know of one federal government that has hired some person to prepare the MYOPs for that department, for all the divisions.

So all those things happen, and this is why it's not surprising to me. In fact, I warned it several years ago, in a presentation to the FEARO panel, that the bridge might produce nothing for us because we'll never get around to getting it straightened out. A bridge is being built at Borden and it's one of the world's great secrets. Nothing is happening there.

So even if I come up with a brilliant idea in the next five minutes, I know it's going to take a long time to get it through the system. You're aware of that.

I don't say that government should withdraw, but it should simplify it, because by the time it works its way down through the system, too many people touch it. That's the difficulty.

If I could speak just briefly on the excesses, last week I was listening to Peter Gzowski. He had three financial writers on. They were talking in great good humour about Michael Milliken getting a $50 million consultant contract from Ted Turner and another investment firm getting a $25 million fee for moving money from one institution to another without adding anything of economic value. It was just moving the money around.

Last night I watched the art sale - people bidding $25 million, $28 million, $30 million for a piece of art. So much money moves around in that circle that it has nothing to do with the real world.

The financial system rewards strange kinds of behaviour. That's why I say that it's the disproportion.

Ms Bayliss: I promise that I won't shout at you this time.

I have some suggestions that come before the jobs, Wayne, and I hope you have your pen in your hand.

I've never really been unemployed since I had to earn my own living, which has been for nearly eight years. Through fair means or foul, I've always managed to scrape by. Just out of interest - because I was getting a bit frustrated with what seemed to be my lack of climbing up the yuppie ladder - I checked out at UI what retraining is available. I can't get retrained because I'm not unemployed. So I thought, okay, I'll pack my job in. No, I can't do that because I'm penalized. I have to wait for 12 weeks before I qualify for unemployment insurance if I resign simply because I want to improve my lot.

I was pushed from pillar to post for three weeks. Even now I would be interested in retraining, because I'm an artist. That's fine. I do mural art. In the winter I cannot work outside here. This is pretty difficult when it's minus 20 degrees. Besides, the paint doesn't dry; it just freezes and falls off the wall. So I have a problem.

I know there are many people on P.E.I., because this is the kind of place.... As you will gather from the way I speak, I've chosen to come and live here. There are many people from other parts of the world and other parts of Canada who live here because of the quality of life - which needs redefining. I'm trying to say that this is a very real problem. It is extremely difficult to get any realistic, accessible retraining by quality instructors who you genuinely feel have something to offer you and who do not consider you to be totally uneducated.

I have two university degrees and I don't consider myself to be uneducated.

I choose to live here and I'm happy with that choice, but I would like to paint my way, even when I'm older. It looks to me as though I'm not being allowed to do that.

You can't just manufacture jobs out of thin air. You can't just produce jobs because you're desperate for work, so you'll take any 18-month contract.

It's really important, but we're just being pushed from pillar to post. It's as if the paperwork is being followed but the service is not being provided.

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The Vice-Chair (Mr. Campbell): Mr. Pillitteri.

Mr. Pillitteri (Niagara Falls): Thank you very much, Mr. Chairman.

I've heard some comments here this morning that possibly some of us live in an ivory tower. The question asked was whether or not we are listening, specifically by Judy - if I may call you that. There are some out there who believe the notion that some of us don't understand because we're living in that ivory tower someplace in Canada.

Let me tell you about myself. I'm one of the ethnics who, at the age of twelve, came into this country with a suitcase in 1948. I had short pants. I arrived here in Halifax and I moved on in this country, going on to the Niagara Peninsula, Hamilton, and Toronto.

I came back here in 1960. I introduced some pizza here in Nova Scotia, Newfoundland and P.E.I. The same person who, from when he left school in 1952....

I never stopped going to school. I continued going to school until I got married. As a matter of fact, I stopped reading at night-time because my wife thought that by being married we'd have more interesting things to do than for me to further my education and to further my knowledge of this country of ours. And it is a beautiful country.

In my life, from the first day I started to work.... I worked some nineteen years at General Motors. They hired me three times and I quit three times. Besides that, I had another day-to-day job as an independent businessman, which I continue to do to this day. I continue to work, and my wife still works at the business that we own. I employ some fourteen to twenty people, depending on the part of the season that we happen to be talking about.

We have three children, who have seven university degrees between the three of them.

So this is Canada, and this is a reality of Canada. No one holds us or has to give us something on a platter. This is one individual who is telling you a little bit about himself.

Today, when I have a meeting with my accountant - and this goes back to what you said about deferred taxes, Mr. Cheverie - he tells me that deferred taxes are actually an accounting notion. Deferred taxes are not just provisions, they are taxes for future taxes. They're not taxes to be collected. They are account estimates. My accountant tells me how much we might grow by this year, how many jobs we're therefore going to be creating, and how much in taxes we are going to be paying as a result. They're not what I owe the government in taxes - I wish I could pay much more in taxes than I do pay because I would be creating more jobs - and therefore cannot be collected, although the government can collect interest on them; they are only accounting terms.

But I don't want to speak about myself or about the knowledge of taxes that I have. I want to make another remark.

I liked some of your comments, Mr. Cheverie. In 1980-81 we had a debt of about $100 million. Through deficit spending, we're up to somewhere around $600 billion. That's the spending, the issue of printing money. Both deficit spending and printing money are the same thing.

Where are the jobs today? We should have no unemployment whatsoever here in Canada. Would you please try to relate.... This government in the last two years has created 460,000 jobs and has reduced the deficit. You, on the other hand, are saying we should create more of a deficit, create more jobs, pay more taxes and create more debt. Would you like to answer that?

Mr. Cheverie: There are two things there. I guess my main point came from looking at the model adopted by the federal budget last year. In terms of the growth and employment projections he anticipated, one major fact was that Paul Martin wasn't meeting some of his targets, in part because the budget itself negatively impacted on economic growth, period, I think that's....

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I was looking at one document in particular, which you may have tabled already. It's called The Macroeconomics of Cutbacks: Paul Martin's 1995 Budget and Canada's Economic Slowdown, and is published by the Canadian Centre for Policy Alternatives. The document looks at the fact that when the budget was tabled, the impact the federal government has on the economy wasn't taken into account to the fullest extent it should have been. In fact, I think that contribution to the economic slowdown of the country is going to increase probably quite substantially, especially with the advent of the Canadian health and social transfer.

There is one other thing. In terms of deferred taxes, I'm not sure what your accountant told you. I do know that in one of the auditor general's reports he was quite concerned about deferred taxation. He encouraged the government to do something about that particular situation.

Mr. Pillitteri: [Inaudible - Editor] ...not just taxes.

Mr. Cheverie: You're referring to unpaid taxes, uncollected, and that's a whole other can of worms.

Mr. Pillitteri: It's a different issue.

In any event, I beg to differ with you as far as Mr. Martin's projections are concerned. They were very conservative. The growth was there, the job creation was there, and he was still almost $2 billion under deficit. That was lower than what he expected. So maybe I have a different opinion.

Mr. Cheverie: I'll make just one brief point on that. I think he was meeting his targets possibly because interest rates decreased to a larger extent than what he may have originally anticipated. But the other targets, in terms of growth - employment and that sort of thing - were more stagnant.

One other thing I just want to point out, when looking at the whole question in terms of the deficit, is that I think we also have to look at.... I know the model we're following may be similar to that. Recently, we've had the ambassador of New Zealand go through a cross-Canada check. There are a lot of social and environmental factors and costs included in these figures. If you're cutting back in certain areas of health care, education and whatever else, those impacts and those social or human deficits may be very real in oncoming years. The costs of those may also be quite substantial.

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

Mr. Sobey, you wanted to make a comment.

Mr. Sobey: I have a couple of comments I'd like to make with regard to what Mr. Easter has asked, that being the role government can play when technology takes over jobs. If technology has taken over those jobs in the private sector, there's not a lot a government can do about it, except probably to do exactly what they are doing through International Trade in opening up trade agreements - encouraging Canadian entrepreneurs to get out into the world marketplace and to create more exports that will create the jobs back home.

The labour market and the individual businesses who decide to invest in new technology to eliminate jobs will determine whether or not those jobs will be eliminated or retraining will take place in order to hold them. There's not a lot government can do with that. If government again puts in disincentives for progress, Canada will lose because we will not keep up with other industrialized nations in securing more market growth in those technology industries.

As far as the budget per se is concerned in terms of meeting the targets, it should be known that the only way Paul Martin can make an immediate impact on the country's finances is by increasing taxes. It takes a number of years for decreased spending to actually show up in the public accounts. In order to do what we have to do to decrease spending, the projections that are made are actually based on what was put into effect a couple of years prior. The budget this year projects $32.7 billion, so we're still working on those.

And I'll cut it there.

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

Mrs. Brushett (Cumberland - Colchester): Thank you, Mr. Chair.

I'll pose three quick questions, and then you can deal with the presenters.

David Groom, you talked about cutting funding to the NGOs. Would you cut all of them or some of them, and by how much?

Leo Cheverie, you talked about the CHST and your great fear of the provincial government. As I understand it, you have ten provincial members representing the riding that Mr. Easter represents federally. If you have ten people to talk to, surely you can get your views expressed and can hold them responsible if we still maintain the Canada Health Act and its five parameters under which we give this single-tier health system.

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Judy Bayliss talked about the great fear regarding seniors and the increased number of seniors we'll all see, and I can assure you that I'm very much aware of this. I live in Nova Scotia; our problems are identical and the increase in seniors per capita is much higher here in the Atlantic region.

This is a concern, but don't believe that by cutting the deficit and looking to cutting the debt at this time we're doing a favour to preserve those systems for seniors, which they enjoy so much today. Most of them are living better today than they ever lived during their working years as younger people. Also, we're providing some security for their grandchildren, the youth of today.

The Vice-Chair (Mr. Campbell): Mr. Groom, I'll ask you to go very quickly because we are going to wrap up.

Mr. Groom: Regarding the NGOs, I was primarily referring to our local community. We'll take the Prince County Caledonia Club. It's a group and individual community-based society that derives its income from a local area. I'm not suggesting cutting all of the NGOs; I'm just suggesting that we have a look at some of the ones that maybe should be cut.

Getting back to Prince County Caledonia Club, it's based in Summerside and is a very active group that is community-oriented. It is organized in the local community and supported by the local community, because it's a worthwhile cause. They create a lot of culture-oriented events and they're backed by the community. So we have the backing of the community for those types of non-charitable organizations.

Mr. Cheverie: We're talking about the Canada health and social transfer as it's related to health care. I think we have to look at it in terms of the fact that we want to have national standards, whether they be in health care or social assistance or post-secondary education. What I'm afraid will happen is that we will develop a two-tiered system. To some extent, these programs were established as a national priority.

I think the example of Prince Edward Island, particularly with health care or education, is important. We have a disproportionate percentage of our population that may be seniors or students, for example, because that's the basis of our population. Therefore, we educate people provincially, they leave to find employment elsewhere, and they come back and retire. The province is responsible for them when they are not wage earners.

Therefore, it has to be a national system for it to be effective.

Mrs. Brushett: There are no national standards today.

Mr. Cheverie: There are national standards for social assistance, in terms of the CAP. There are national standards in terms of the Canada Health Act and in terms of portability, accessibility, etc.

Mrs. Brushett: So what you're after is guidelines.

Mr. Cheverie: They're more than guidelines. If the federal Minister of Health wants to go after Alberta, they're more than guidelines. Diane Marleau wants to charge in terms of private clinics in Alberta, and I think she's doing it presently. They're more than guidelines, because she wouldn't have the power to do that.

But what we're talking about is basically national standards for these things that benefit all Canadians. Obviously, we're going to be looking at changes in terms of employment. I admit there is a certain measure of even having people be able to move across the country to find employment or seek employment or to seek various things. So in order for people to benefit fully from the system we have in Canada, we need national standards in those areas.

In terms of post-secondary education, I think it's also very important in terms of investing in the future of all Canadians, wherever they may live. What I'm concerned about in the long run is that in certain institutions or in certain areas of the country, if you're transferring tax points back to the provinces, wherever they may be, there's an equal level or ability of various provinces to be able to maintain certain standards despite what their will is to do that. So I don't think it's a matter of political will; we have to have the resources to have those standards.

Some people have reflected on the recent vote in Quebec and said that if we're not able to maintain our national ability as Canadians everywhere to benefit from the type of society we want to create, then that's eroding the national unity or the sense of national unity that we all feel as Canadians. I think that's something that is probably going to build up over a gradual period of time.

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Some of them were instituted originally back during the Great Depression...in terms of looking at these sorts of things. Now they're gone or are being eroded very, very quickly, but they were built up very gradually to engender that sense of national pride and sharing.

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

Ms Bayliss, did you want to comment?

Ms Bayliss: Yes. When did I ever pass up a chance to make a comment?

I can't argue in theory with your remarks that, yes, seniors should feel safe...by the motive behind wanting to cut the deficit. I wouldn't argue with that if we could be guaranteed it would happen.

I don't know. All I know is that elderly people and people who in not too many years will be technically elderly are worried. Probably in common sense, in the cool light of day, they need not be. But they have a perception. Every single day when you read the newspaper, you switch the TV on, you listen to the news...by any reading, we're changing. People are weary of change. They are frightened of change. They can't rely on anything.

John Eldon talked about how lucky he is that he and his wife have some investments. Well, I'm very happy for them, and I'm glad that won't be a worry for them. But many, many people of middle age and over are absolutely incapable of making any serious plans for the future; and it's not because they had a lifetime, if you excuse my paraphrasing you, of being handed things on a plate.

I don't take that very kindly, if I may say so, because I wasn't meaning to imply, Mr. Pillitteri, that we want things to be handed on a plate or that we haven't worked hard. But in the last budget, when we were told all kinds of retraining would be offered.... We go and check it out, and it's not available. That's all I meant.

Back to you, madam. I can't read your name from here. If you understand my meaning, people are weary of change because they've heard it so much they don't know now what they can rely on, when they always thought they could. It's that uncertainty.... There's a real perception of uncertainty out there. It's hard to say, don't worry, you'll be fine; your pension system is fine; it's intact, don't worry. They're nervous.

The Vice-Chair (Mr. Campbell): Mr. Loubier had

[Translation]

a small clarification.

Mr. Loubier: I'd just like to make a small clarification for Mr. Pillitteri, Mr. Chairman. He spoke about income tax carried over by companies, and he said it was just a bookkeeping entry that had no impact on tax revenue. That is not quite true.

If companies can carry over the payment of their income tax for three or four years - let's say four years - they can invest the dollar of income tax that they owe the federal treasury and earn a return of 10 per cent a year for four years. Moreover, since they do not pay what they owe the federal government until four years later, they will actually pay the federal government only 64 cents in income tax.

Any income tax carried over for a year is a cost to the federal government, because there's no return on it. Individuals, however, are not allowed to carry over their income tax payments for three or four years and to invest the money, earn a return and thereby pay less income tax in real terms at the end of the four-year period. So we have to be careful when we talk about these matters. This is not merely a bookkeeping entry.

[English]

The Vice-Chair (Mr. Campbell): I'll give Mr. Pillitteri a chance.

Mr. Pillitteri: Well, it's not mumbo-jumbo. The fact is what we're talking about is deferred taxes. I was explaining only deferred taxes, not taxes to be collected. But also within the deferred taxes is what one plans.

You're an accountant. You're an economist. You know it quite well. If last year or the year before you had losses and you had to borrow, you're able to recuperate in order to pay it.

If we are a group of haves and become a group of have-nots, we will all be have-nots afterwards. If business doesn't have the opportunity to reinvest in order to charter their future and possibly recuperate from the past, I don't think there'll be many businesses that will try to create jobs or advance the betterment of all people, because when a businessman advances himself, he also provides a job for those others.

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

We have gone over time, but that's a testament to a very interesting discussion here this afternoon.

I want to respond to something Mr. Cheverie said earlier, just to set the record straight. He made a concrete suggestion that we address the small business corporate rate, saying it should not be available to large corporations.

Mr. Cheverie, you're usually ahead of your time, but on this one I'm afraid you're a little late. That was done in 1994. Presently the small business rate of 12% is available to companies that have taxable income of $200,000 or less. It was previously the case just as you stated it, which was that you had it on your first $200,000 of income.

So in fact the $2 billion it costs right now in giving small business that break, if you will, is indeed for small businesses with $200,000 or less of income. But it's an excellent idea and in fact one we implemented in our first budget.

I want to wrap up by turning to our representatives from YMCA Leader Corps, who have listened extremely patiently and who have, as representatives of youth, an extremely serious interest in these sometimes rather academic discussions. For them, this is real life; this is their future. They hear choices discussed here, and I wonder if they have any observations they'd like to share with us about this process or about their views for a direction we should take in this country.

We'll end with the two of you, or one of you, as you wish.

Mr. Warren: As I sat today and watched the morning and the afternoon sessions, I saw a couple of things that probably could be changed the next time around.

What people were supposed to be discussing at this meeting got way out of proportion, and they started bickering over things that I just don't think have anything to do with the three questions that were originally asked.

We should try to focus more on giving the finance committee solutions to the problems and perhaps answers to some of the questions they are asking, instead of debating things that are presently happening. I think there would be a better result if everybody could just get down to the main points and really stick to the main points.

It's good that the House of Commons is putting out this committee and it's good that you had the patience to go to every province in Canada. It can't be easy listening to every beef every different organization has all around the country. I think everybody should take into consideration what these gentlemen do on a daily basis when they're doing this.

It's a really great thing. Keep it up, guys.

The Vice-Chair (Mr. Campbell): Thank you very much. I promise members and witnesses that was not a set-up. I didn't know what we were going to hear.

Voices: Oh, oh!

The Vice-Chair (Mr. Campbell): I want to thank all of you very much for taking time out of your busy days to be with us in our too brief stay in Charlottetown. The hospitality has been just fine. The ideas have been interesting and provocative. We thank you very much.

That's it for today. Thank you, again, very much.

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