EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 29, 1995

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[English]

The Chair: Bonjour, tout le monde. Order, please. We are beginning our pre-budget hearings in Saskatoon.

Our witnesses today are: from the Battlefords Tribal Council, Gary LaPlante; from Citizens Concerned About Free Trade, David Orchard; from Hoarchuk, Cannam, Joa and Partners, Les Wall; from the Saskatchewan AIDS Network, Jeff Dodds; from the Saskatchewan Association of Rural Municipalities, Sinclair Harrison; from the Saskatchewan Childcare Association, Mary Ann Knowles; from the Saskatoon Chamber of Commerce, Phil Mamchur; from the Social Fairness Action Coalition, Bob Fink; and from the Wanuskewin Heritage Park, Jeremy Morgan.

We welcome you and we look forward to your presentations. Perhaps we could start off with three-minute opening statements by each of you, after which we can go into discussion. Is that all right with you?

Mary Ann Knowles, would you like to start off?

Ms Mary Ann Knowles (Director, Saskatchewan Childcare Association): Good morning. I'm Mary Ann Knowles, director of the Saskatchewan Childcare Association.

To start, I'd like to give you an example. Bernadette is a single parent who's worked with our organization for a number of years. In 1981 she was faced with having to raise and support her three-year-old child and herself on her own. With the aid of a childcare subsidy provided by the provincial government, Bernadette continued her career while her daughter attended a licensed day care in Saskatoon.

Over the course of the seven years that Bernadette's daughter was in childcare, Bernadette, as a single parent, received $9,695 in subsidies. Since that time, Bernadette has paid $82,524 to the government in the form of federal and provincial taxes.

Unfortunately, stories such as Bernadette's are less likely to occur today. In 1981 childcare subsidies paid up to 90% of the childcare fees. Parents receiving full subsidies paid $30 per month as their portion of the fee.

In Saskatchewan subsidy levels have not risen since 1982, except for marginal increases in specific areas. Consequently, a parent receiving a full subsidy today can pay $150 to $200 on top of the aid received. Because income levels have not been adjusted to take inflation into account, a parent today is less likely to qualify for subsidy.

While funding for childcare in Saskatchewan has been static, the number of single parents, dual-income families, and parents returning to school has increased dramatically. These families must juggle work, school, and childcare demands with little support from government. The cost of quality care can be very discouraging to them.

Over 100,000 children in Saskatchewan require childcare because their parents are either working or going to school, but there are less than 7,000 subsidized spaces available.

Childcare has been a cost-shared program between the provinces and the federal government. However, because no federal childcare policy or initiatives existed, a province like Saskatchewan was able to let its childcare funding become obsolete with no federal intervention.

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The lack of policy is now allowing the Ontario government to dismantle one of the country's better childcare programs. Across Canada, childcare programs vary greatly from province to province with no consistent, minimum standards or funding policies.

The Saskatchewan Childcare Association is calling on the federal government to implement a national childcare strategy, which ensures that provinces must develop an affordable, accessible childcare system based on national policies to ensure minimum levels of quality and funding.

Public funding for childcare must increase to ensure that parents' fees realistically reflect the family income and the childcare costs. The number of licensed, subsidized spaces needs to increase to reflect the increasing number of families who use non-parental care.

The creation of a national childcare strategy will take time and funds to develop, and we realize this. In the short term, the federal government needs to begin by putting funds into the budget to develop 150,000 childcare spaces over a three-year period, which was a promise in the red book. This money should be used not only to develop new spaces, but to increase the funding for existing spaces where needed.

Second, the federal government must look at its current childcare funding, the bulk of which is through an income credit. A tax credit at the end of the year does little to help parents meet monthly childcare costs. It also does not aid low-income parents. Instead this money needs to be used to begin creating a system that provides affordable care for families.

Third, the government must begin to look at childcare as part of its job-creation strategy. In the past when government has looked at job creation and infrastructure programs, childcare has been overlooked in favour of construction and other traditional fields, yet quality childcare programs are a needed service and provide meaningful employment. Childcare is labour-intensive and 80% of the funding government provides goes back into the economy through wages.

Day cares and family day homes are not just providing a social service. They are also small businesses. In Saskatchewan the 100 day cares annually pay out over $15 million in wages and purchase millions of dollars worth of food, materials, equipment, and services. Licensed day homes in Saskatchewan have wages of over $7 million. Funding that is put into childcare is put directly back into the Canadian economy.

Finally, the federal government must begin to look at childcare as part of a preventative strategy for children. When young children are disadvantaged due to social and environmental factors, they are more likely to require remedial schooling, are more prone to delinquency, and are more likely to require income support and costly rehabilitation programs later in life.

A high-quality pre-school program can create a positive environment for growth and development. Research has clearly shown that children in childcare programs, especially children who are disadvantaged and considered at risk, are less likely to require remedial schooling and rehabilitation programs and are less likely to be delinquent. Studies indicate that for high-risk children, there's up to a 7:1 savings ratio. For every $1 spent now on quality programs for pre-schoolers, $7 in rehabilitation costs will be saved later in that child's life.

The SCCA realizes that calling for increased funding development for childcare programs is contradictory to the federal cost-cutting agenda. However, the Government of Canada cannot concentrate only on cutting the deficit today. It must also look at how it can create a healthy economy for tomorrow. Programs such as childcare, which support employment, will help to create this healthy economy.

Thank you.

The Chair: Thank you very much, Ms Knowles.

Mr. Morgan, please.

Mr. Jeremy Morgan (Executive Director, Wanuskewin Heritage Park): Thank you very much.

I'm the executive director of Wanuskewin Heritage Park, but I'd also like to speak from the perspective of the current president of the national body for cultural managers, the Association of Cultural Executives, and from a perspective of someone who's involved in cultural tourism in a great way.

Very briefly, I think the perspective of many people in the cultural community - the people I work with - is that we're in an incredible transition from one economy to another. It's an economy that is signalled by the reduction of grants to cultural organizations. I think many people in the cultural community have come to understand - not necessarily like - that this is part of a necessary deficit-reduction agenda.

But having said that, we caution you and ask you, your colleagues, and the people who work for you not to make decisions in a policy vacuum. I think the perception in the cultural community is that many of the recent reductions have been made in a vacuum, which has made it very difficult for organizations to adjust. For a museum to go from being 70% grant-funded to 40% grant-funded means maybe some downsizing, but also, in the end, it means replacement of those funds, going from basically a public economy to a private economy.

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In that case, it takes one to two to three years to replace funding. I think the perception, the worry, in the community is that in the meantime much will be lost that cannot be replaced. There is decreasing reluctance to participate in this shift and to participate in a very intelligent, very proactive, very aggressive way.

In the meantime we would like the decisions that drive the funding programs of the Department of Canadian Heritage to be communicated and to be done with some form of consultation with the community. We would like you to use all the mechanisms that are available to you as parliamentarians and to the people you work with, whether it's tax, whether it's regulations, or whether it's shifting of priorities within departments, to ensure that there is a broad-based policy that's guiding these reductions and that there is literally time for the institutions and the individuals to adjust.

I think you've heard more recently from Arthur Drache and others, such as the Canadian Museums Association, about the importance of the tax system to donations and to individual donors. There have been lots of comparisons with what happens in the States with regard to appreciated capital property. I would encourage you to keep looking at those things and to have your staff and the people in the system look at them.

We need to know what the economic impact of these changes is, and we suggest that's not something that has been calculated ahead of the decisions being made. We need to see some kind of a national cultural strategy so that there is a purpose to the grassroots kinds of cuts that are being made and so that the people in the communities have a chance to adjust. It's a very simple message we have.

The cultural products that are being reduced at this time are what both speak to and help create our sense of national identity. It would seem to me that at this time more than any other, it's important that those things that help to shape our national identity and that have shaped it for one hundred and some years only be changed or altered with some great care. That's the message I'd like to leave with you today.

The Chair: Thanks, Mr. Morgan.

Mr. McKay.

Mr. Milton McKay (Resource Person, Inter-Governmental Relations, Battlefords Tribal Council): Good morning, Mr. Chairman, ladies and gentlemen. My name is Milton McKay. I'm here on behalf of the Battlefords Tribal Council.

We appreciate the opportunity to be consulted on the development of the federal budget. The federal deficit has become everyone's problem. The policy of the federal government resolves to cope with this deficit in the Canadian economy and every individual community, firm, and the people within it. It has direct and immediate implications for all people.

Our people have pressing needs for housing, for health care, and for education. Above all, we need jobs. Today, unemployment has reached crisis proportions for our people nearly everywhere. This is not the time to start cutting social and economic programs for our people.

Our people signed treaties with the Crown generations ago. In coming before you today, I wish first and foremost to impress upon you the importance that must be attached to respecting the nation-to-nation commitments that were made to our people in the treaties. The treaties provide that, in return for the surrender of our land in perpetuity to the Government of Canada by our people, the Government of Canada would in perpetuity provide our people with the resources needed to care for their basic needs. The treaties are a deal made between our two peoples. We have kept our end of the bargain and it is incumbent on you to keep yours.

We recognize that the federal government has a serious and difficult problem of trying to balance its accounts. That problem has also become our problem. It is in our interest, individually and as a people, to try to help you overcome this deficit problem, but not at the expense of our treaty rights and not at the expense of destroying the social equilibrium of Canadian society.

We wish to present some alternatives for your consideration, alternatives that would allow the continuation and even the enhancement of programs needed by our people, but at less cost to the federal government.

In particular, I would ask that the committee consider how aboriginal self-government can fit in with the federal government's deficit reduction objectives. Self-government should not be seen as something that would cost the federal government more. In fact, it could lead to a more efficient and less costly way of meeting the needs of first nations.

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

Mr. LaPlante, did you want to add to that?

Mr. Gary LaPlante (Executive Council Representative, Battlefords Tribal Council): No.

The Chair: Okay, thank you.

Mr. Harrison.

Mr. Sinclair Harrison (President, Saskatchewan Association of Rural Municipalities): As president, I would like to thank you on behalf of the Saskatchewan Association of Rural Municipalities.

I would like to make some opening comments. I would hope that once we get into the three questions, we'd have time to get into things a little further. Is that the correct understanding?

The Chair: Please.

Mr. Harrison: Certainly, as I think everybody from the House of Commons understands, Saskatchewan has gone through some drastic changes in this past year, especially on the transportation side. We placed a value of $7 billion on the Crow benefit and we're receiving$1.6 billion, so we have a significant shortfall in that area. The agriculture community is struggling to make up that difference.

The change in the transportation subsidy certainly is having an effect on the rail system. We've seen a study done on some of the branch lines already, and it recommends that those be taken out of service. We don't know how many more are going to fall into that same category.

I think you all appreciate that there are two ways of transporting in Saskatchewan: either you do it by rail or by road. For every mile of railroad that we discontinue, it means that those loads are transferred onto the road system. Any of you who have had the opportunity to drive on our roads in the past year know that they're not in good shape. We have what we call thin pavements that are going back to gravel at an alarming rate; looking at what may happen in the future, we're going to have a significant number of miles going back to gravel from pavement. That's certainly a concern.

I know transportation may be considered a provincial issue, but there are federal fuel taxes collected and provincial fuel taxes collected. Only 4% of the collected federal fuel taxes find their way back into the road system. We feel very strongly that this must change if we're going to keep the road network in this country, and especially in Saskatchewan, at the level it should be at. To do that, more of those dollars are going to have to find their way back into the roads.

Certainly, the recent infrastructure program that took place over the last couple of years did a fantastic job in getting that work started, but it has to be more than a two-year program. Roads wear out every year, not just during two years out of every fifty. The program got the ball rolling and generated good economic activity on the prairies and right across Canada. You should be applauded for what you started, but once you start something it's nice to carry on. Our infrastructure certainly needs it.

Another process going on in Saskatchewan right now, and one that is having a big effect on rural Saskatchewan, involves Indian land claims. These lands are being purchased on a willing-buyer, willing-seller basis across the province. We have one tax compensation package worked out for treaty land entitlement, but we do not have one worked out for specific claims. This is a situation in which the Indian bands are purchasing lands in rural municipalities - a quarter here, a half-section there - and once it goes to reserve status, there is no tax compensation for the rural municipalities. In order to be good neighbours, this is going to have to be worked out. The non-Indian community is not going to pay the taxes or compensate for those tax dollars. When my taxes go up to pay for somebody else's inability to pay, it just doesn't work out. The fact that we've worked one out for treaty land entitlement has set a precedent set, has provided a model. We would encourage you to mirror that agreement for the specific claims. I certainly know the Indian community wants to get this land to go to reserve status, but there's a third party there who has to be addressed. The sooner that is dealt with, the sooner things will proceed in Saskatchewan much more smoothly.

With that, I think I'll draw my remarks to a conclusion. We can deal with the three questions at a later date.

The Chair: Thank you, Mr. Harrison.

Mr. Sherloski.

Mr. Greg Sherloski (Committee Member, Saskatoon Chamber of Commerce): Good morning. On behalf of the Saskatoon Chamber of Commerce, it is my pleasure to make this presentation to your committee this morning. The central theme of our presentation is familiar to you; it is not unlike the presentation made by the Canadian Chamber of Commerce to this committee last week.

We reiterate the support of the Canadian Chamber of Commerce for continued and significant reductions in the deficit without any increases in taxes. As you are aware, our membership is prepared to share in the budget cuts by supporting further reductions in business subsidies.

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I would like to take a few minutes to highlight a number of points concerning Canada's debt-deficit position, the overall tax burden being faced by Canadians, and the potential impact of federal expenditure cuts on other levels of government.

As we see it, the fundamental problem of economic policy is not the deficit or the deficit-GDP ratio; it is a level of debt relative to our ability to finance this debt. Therefore, the appropriate highest profile target for fiscal policy should be changed. Instead of targeting a 3% deficit-GDP ratio in 1996-97, we should be giving the highest profile to targeting a debt-GDP ratio in the 55% to 60% range several years later.

The theme of fiscal policy must be continued expenditure restraint with no tax increases until the debt problem is in hand. This means that reaching the 3% deficit-GDP target in 1996-97 and eliminating the deficit several years later are benchmarks along the route to getting our financial house in order. These are appropriate interim targets - no more, no less. Attaining them will be no reason for any complacency or shift in government priorities.

It is important that a long-term plan be in place to eliminate the deficit in order to convince capital markets of Canada's commitment to eliminating the deficit. However, having said this, we caution against federal spending cuts that are likely to be met with higher provincial deficits or taxation, thus resulting in an overall fiscal and economic deterioration. This is partly because provincial debts tend to be financed at higher interest rates than our federal deficits and province-specific tax increases generate less revenue and greater disincentives than countrywide ones.

The ultimate objective of fiscal policy is to get the government into a position in which it can once again have the flexibility to be responsive to the needs of the public. This day will not arrive until the debt-GDP ratio has fallen significantly from its current level. Any backing off from program or expenditure restraint will simply mean that government will be even less equipped to serve those in need in the future.

Canadians of the past decade consumed all of the government's revenues and program expenditures. Neither present nor future Canadians will be able to draw as heavily on government revenues, not for at least another decade. Annual debt servicing costs are destined to stay in the $50-billion range for most of the next decade; therefore, there is no way government program expenditures can approach the level of government revenues for the next decade.

The only way the government can get itself in the position of being able to allocate most of its revenues to program expenditures as it has over the past decade is to reduce the level of debt significantly.

For the next decade, Canadians are destined to pay more in taxes than our counterparts in most developed countries and at the same time receive less from the government in program services. Apart from the debt problems, Canadians already feel overtaxed. Medium- and higher-income Canadians pay significantly more in income tax than their American counterparts, and American taxes are rumoured to be on the way down. These disparities encourage Canadians to look south for both employment and investment opportunities.

Given the widespread concern of Canadians about the overall increase in their tax burden over the past decade, it is important that any tax changes in the budget be revenue neutral. Whatever tax increases that are felt to be necessary to increase tax fairness should be offset by reductions in general tax rates.

In conclusion, the Saskatoon Chamber feels that any backing off from the current budget targets, or a failure to eliminate the deficit in this political mandate, or a failure to bring the debt-GDP ratio down to a 55% range several years later, will only make this problem much worse and stretch the problem beyond the next decade.

We strongly encourage the government to implement a deficit reduction plan that looks beyond the next year or two and targets a zero deficit at a definite point in the future.

The Chair: Thank you, Mr. Sherloski.

Mr. Orchard, please.

Mr. David Orchard (National Chairman, Citizens Concerned About Free Trade):Mr. Chairman, I'm speaking here on behalf of our organization, Citizens Concerned About Free Trade, and I am a farmer from the Saskatoon area.

You've asked us to direct ourselves to three questions here today, the first one being: what should our deficit reduction target be and how can it best be achieved?

That question assumes that the deficit is the main problem we're facing here in Canada and it loads the answer. The deficit really is simply a symptom of the lack of economic growth that we're experiencing. The best way to achieve a reduction in this deficit is to put the economy on its feet.

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The questions that should be asked are why do we not have economic growth in Canada and why have we not had economic growth in the most recent years? One of the reasons is that since 1988, the Canada-U.S. free trade agreement has cost us 25% of our manufacturing base in this country, and you can't lose a quarter of your manufacturing base without having a dramatic impact on your revenue side.

Your second question is how may budget measures be used to create an environment for jobs and growth? What measures did we use in the last major depression in the 1930s? It's as if in this country we have no historical memory.

Throughout the 1930s the economists were telling us, ``We're broke. We have to slash and cut. There's no more money.'' Then suddenly in 1939 we found the money, and we doubled the size of the Canadian economy from 1939 to 1946, in just six years. How did we do that? We didn't do that by running off to foreign banks and borrowing money to finance the war effort. We did that internally, in Canada.

It's not just budget measures that are required; it's an entire strategy. Of our total debt in this country, 50% is interest that's being paid, and a good chunk of that - almost 40% - is interest that's being paid to foreign creditors. We have no business borrowing any money outside Canada at all. We have no need to.

During the Second World War we financed all of that internally. We used the Bank of Canada, which loaned money to the provinces and to the federal government at 0.5% interest.

The Bank of Canada could be used in exactly the same way today. The Bank of Canada should simply buy down our foreign debt so that it is used to finance the requirements within Canada, just exactly as the Bank of Japan does in Japan. That way the interest stays in Canada and doesn't flow out in Japanese yen to Tokyo or in U.S. dollars to New York banks.

We have to have a breakthrough. We're swamped with these orthodox solutions with a certain kind of economic model that looks simply south of the border.

Let's look at who have been the success stories.

In 1950 the United States was producing 52% of the world's manufactured products. Last year they produced 17%, and it's falling. The United States is in dramatic decline.

Let's look at who are the success stories.

In 1950 Japan had the same size economy as Canada. Where are they now? They've bypassed us four times over. They're now out-producing the United States in terms of industrial products. How did they do it? They rejected completely foreign ownership, foreign control, and the free trade model. They've built their economy with a national policy that involves the governments, the banks, and industry. Japan has a 3% unemployment rate, and they consider that a disaster right now. They don't borrow money outside of Japan. They know that any successful country has to export capital, not import it.

We're on exactly the opposite route. We need to repatriate the Canadian economy, following the model that has been successful in both Japan and Korea.

In 1960 South Korea had a per capita income of $110 per person per year, and last year it was over $10,000 per person. They now produce 40% of the world's shipping. We're going on our knees begging them to set up auto plants in Ontario, for heaven's sake, as if we have to go to a little country like Korea to build an automotive industry.

Canada should have its own car, aerospace, movie, and cultural industries, and we should be financing them. We should be backing them and putting them into place through government policies.

You don't create jobs by slashing and downsizing. The route you're on is exactly the opposite of what should be followed.

You ask in your third question what areas of federal activity should be considered for further cuts, commercialization, privatization, or devolution to other levels of government. This question reveals the agenda you're on, which is exactly the opposite of what should be followed.

You're selling Canadian National Rail. It's being privatized. This means our major rail network is going to go into U.S. hands. We all know who's going to end up with it: Burlington Northern. The largest U.S. rail company is going to end up controlling CN.

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I just returned from a month in Quebec. In Montreal I met with a number of shippers and small rail lines in Quebec. There's a tremendous angst in Quebec about the impact this is going to have on -

I just have a couple of minutes left to go, Mr. Chairman.

The Chair: I was trying to give each of our participants three minutes to open up. We'll give you lots of time afterwards to come back to these other points you want to make, if you don't mind, Mr. Orchard.

Mr. Orchard: Do I have time to wind it up or are you cutting me off?

The Chair: I'd prefer that you cut yourself off -

Mr. Orchard: Well, I'm not going to do that.

The Chair: - because I will not do that to you.

Mr. Orchard: I'm going to wind up then.

The Chair: You're quite free to run the show yourself.

Mr. Orchard: I'm not running the show. I'm just going to finish what I have to say.

The point is with what you're doing with CN rail, at the same time as the government's talking about national unity, you're slashing the very links that hold this country together. The products from Quebec and from the rest of this country are going to be run through Chicago as the central hub. It's crocodile tears to be talking about national unity when you're cutting those links.

A good chunk of the discontent in Quebec is economic, and they're facing the same kinds of....

The policies you are implementing are exactly the opposite of what's needed and you have no mandate, as a government, to be pursuing them. Your red book promised just the opposite. You said you wouldn't be taking a slashing and cutting approach like Kim Campbell was advocating, but would be creating jobs and doing the opposite. You have not lived up to that.

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

Mr. Peterson or Mr. Fink.

Mr. Bob Fink (Social Fairness Action Coalition): I'll start off with a quote from The Guardian Weekly's Chris Mihill. He said, ``Poverty is the world's greatest killer.'' This is becoming common knowledge. Yet in Canada, one in five children live in poverty. Conditions of aboriginal people are deeply depressed. Canada may exceed U.S.A. spending on social programs, at 18% of our economy, but Sweden spends almost double that, with 34%, and Germany 28%.

The federal government further cut $7 billion from social programs transfer payments to the provinces. The greatest victims will be the poor and middle-income Canadians. The Canada Assistance Plan is cancelled as of next March. Few national standards remain.

Yet these hearings ask, after these decisions are made, what deficit reduction targets should be and how best to achieve them. Is this another phony consultation process just to find further cuts? I say ``another'' because this happened at previous hearings on social programs review.

Questioned last time on whether the panel consulted merely for appearance's sake, when Axworthy and Martin had already announced plans for drastic cuts, then vice-chair of your panel and current vice-chair of your panel, Mr. Campbell, said to me:

I will never succeed of disabusing you of your cynicism. This panel is not something we have undertaken in the knowledge that it is a futile exercise. We're not cynical....

Despite this, and before the hearings barely finished, the government cancelled the social programs review and proceeded with its draconian cuts to provincial transfers anyway.

However, we hope this is not another pretence at consultation, so we'll once again respond to the panel.

First of all, the panel's question as posed is loaded and geared to a corporate agenda. Here are our priorities.

The Chair: Please feel free to give us any agenda you want. You don't have to be guided by those questions in any way whatsoever, Mr. Fink.

Mr. Fink: Well, I'm dealing with them.

The Chair: Good.

Mr. Fink: Deficit cutting may have some value, but instead of it being a top priority, our highest priority would be full employment programs rather than just deficit cutting and massive lay-offs. The red book promise of jobs, jobs, jobs is continually ignored.

Our next priority is fair taxation. Increase corporate taxes and return to progressive taxation. Close the princely entertainment expenses loopholes, along with the tax-sheltering aspects of the RRSPs. We would like to see corporations held strictly accountable regarding tax deferrals and tax debts. Corporations that cannot maintain and create jobs must pay up back-deferred taxes. Why should they escape the same kind of hovering, vulture-like monitoring of accounts that is inflicted upon people on welfare who are already at half the poverty line and who are scrutinized down to their last penny? I know this from first-hand experience.

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National standards must be restored and are required to prevent a provincial competitive race to the bottom, which creates ever lowering rates and services to the poor. This occurs when desperate people move from province to province as each province in turn makes more cuts to social programs.

National standards are important in other areas like health. Without such standards as part of the next budget, federalism itself and a united Canada will be at great risk. Governments talk about preserving the Canadian way of life and values, so why increasingly imitate the U.S.A. and third world values?

We would like to see lower interest rates to encourage the economy and ease debt payments.

Job creation is possible through a reduced work week, or what we refer to as an extra shift, including possible elimination of overtime, which would bring many people back from the unemployment lines.

We would like to see a stop to the hype about being competitive. What's the point in competitiveness? Mexico and the U.S.A. are competitive. The result is that they are world-class leaders in homelessness, violence, and ill health with million of people ineligible for health care. They are leaders in unemployment and social alienation. It's as if poverty is the end goal, especially when columnist Don McGillivray, whom I quoted last time, wrote that the Bank of Canada manipulates interest rates to make sure unemployment remains acceptably high.

Unemployment costs society, if not the Bank of Canada, especially in the long run. Instead, a reduced work week means a more stable and productive workforce, fewer accidents and health bills, smaller UIC pay-outs, and UIC deductions that are spread out, paid for by a larger workforce. Increased consumer demand in sales will pay back some businesses for any increased labour costs.

We fear, however, that official concern about deficits and costs are a cover story, hiding a deeper corporate agenda, which is to create a society without unions, without regulations, restrictions, or corporate social responsibility, even if it does cost more for now, because later it would be a profitable system in which the business world increasingly would have a free hand with its workers and with the environment, and would hardly need to answer to anyone.

The Chair: Thank you, Mr. Fink. We have a certain variety of opinions around the table today.

Let me take the time to introduce our members of Parliament to you.

[Translation]

From the province of Quebec, we have Mr. Paul Crête and Mr. Pierre Brien,

[English]

and from Quebec as well, we have Mr. Nick Discepola; from northern Ontario, Mr. St. Denis; from Manitoba, Mr. Ron Fewchuk and Mr. David Walker, who has just arrived; and from the province of Saskatchewan, a person who is with us today but is not a regular member of our finance committee, Georgette Sheridan.

Before we turn to questions from members, did anybody wish to comment on something another of the members at the table has said?

Okay, then, we'll go directly to questions.

[Translation]

Mr. Crête.

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Mr. Crête (Kamouraska - Rivière-du-Loup): Thank you for your presentations. As a Quebec MP, I found it very enlightening to hear the comments of people from the West. Last year, I toured with the Standing Committee on Human Resources Development and this gave us a much broader perspective on things.

My question is directed to all of the intervenors. The Saskatchewan Association of Rural Municipalities states in its brief that the constitutional debate should be set aside. However, no one said very much about the transportation issue.

Pursuant to the Constitution, the provinces are responsible for road transportation, while the federal government is responsible for inter-provincial rail transportation. Doesn't this prove, and there are many other examples, that in terms of coming up with solutions, we should take a good look at jurisdictions so that a province such as Saskatchewan can have an adequate transportation policy to face the 21st century. Don't you agree?

Wouldn't it be more logical and efficient for a single government to have responsibility for transportation policy as a whole, so as to allow for integrated action between the different modes of transportation? This would also allow us to deal with existing competition and any competition arising from the free trade agreements. My question is directed to all those who mentioned free trade, to representatives of municipalities as well as to all those who are concerned about economic development.

[English]

The Chair: Mr. Harrison, s'il vous plaît.

Mr. Harrison: I think I got your question or concern. I'm not so sure it's a question of jurisdiction we're worried about; it's the lack of dollars. When you have a lack of dollars, you start looking around and wondering what the problem is. As I indicated in my opening comments, the roads generate significant dollars, and if a major portion of those tax dollars went back into the roads, we would have no complaint. It's not a jurisdictional problem.

The fact is that the railroads are being sold. As long as we get service at a reasonable rate, who buys them is not a major concern of ours. The fact that rails are being torn up and that we're getting shrinking dollars for rebuilding the structure is our major concern.

[Translation]

Mr. Orchard: I would also like to answer this question. I disagree with your constitutional stance, Mr. Crête, but I nevertheless want to welcome you to Saskatchewan. I will continue in English.

[English]

In our view, the answer is not to hand over transportation to each of the provinces and create a Balkanized, inefficient network across the country. It was the national rail system that bound this country together, and the government here, in a criminal way and without any mandate, is systematically selling it off to the United States.

It's not going to go into provincial responsibility; it's going under U.S. control in the same way as Canadian Airlines has gone under American control. So both Quebec and the rest of Canada are going to depend on foreign owners of the major network links that hold this country together. The answer is not to hand it over to provincial jurisdiction, but to have a strong central government to combine these regions together, in our view.

[Translation]

The Chair: Do you disagree with that, Mr. Crête?

Mr. Crête: I would like to get back to the issue of financing. When we say today that we are having a financing problem, we have to understand that this problem originates somewhere. If we are no longer able to borrow money or to pour more money into the system, it's the system itself that has led to a lack of control over spending.

We cannot prop up for very long a system that doesn't allow us to assess very accurately which level of government is responsible for a particular type of spending. If jurisdictions were spelled out very clearly, from a federalist perspective - not one that I share - wouldn't there be more money available for social programs? We could then make cuts in the right areas in other sectors.

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If we continue along our present course, we will hit a wall and it will no longer be the governments of Canada and the provinces that will decide. Our fate will rest in the hands of the lenders.

[English]

Mr. Harrison: I won't pretend to get into a jurisdictional war here, but to me it's strictly economics. I guess we're going to agree to disagree on this one.

The federal government, as you know, is offloading. They sold off CN railroad. What was that? It was economics. It wasn't jurisdictional. When they do that we don't know what's going to happen to the branch line on CN.

If the Toronto Stock Exchange and other stock exchanges around the world are going to drive efficiencies and not have any regard for the social network of the prairies, we could end up with one main line of CN and we'd have to truck everything to the main line. If that's what happens, then there's a transfer from one jurisdiction to another within the province. The province is responsible for the highway system and the rural municipalities are responsible for the administration of the railroads.

We get offloaded from the federal government to the provincial government, and then they offload to us. We are the bottom; we have nowhere to offload. There's not another level of government, and we're getting sick and tired of picking up the load. I guess what this exercise today is all about is who is going to start paying their fair share at what level.

The Chair: Thank you.

[Translation]

Thank you very much, Mr. Crête. Mr. St. Denis, you now have the floor.

[English]

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

Thank you all for being here. It's a pleasure to be in Saskatoon again. I believe our committee was here another time on the GST and previous consultations.

I have a couple of shorter questions, starting with Mr. Orchard. I'm aware of your long-standing interest in the free trade issue, and I don't feel qualified at this point in time to debate that issue with you.

You made a comment that the Bank of Japan, as you understand it, does the kinds of things you feel the Bank of Canada should be doing in terms of interest rate intervention. That's a simplified way of saying it. We've had debates on that subject at numerous meetings, and it's a polarized debate, quite frankly. On that debate the Government of Canada has chosen and continues to choose not to intervene on the interest rate side but to stay on the inflation side.

For the edification of all of us here, would you briefly explain to us how you understand the Bank of Canada is able to do those kinds of things and get away with it, given the realities of the international financial marketplace? That is really what determines a lot of the decisions that are made now, because in the 1930s the world was a lot different from what it is right now.

Mr. Orchard: The first question is on putting our debt and deficit -

Mr. St. Denis: Focus on the Bank of Japan. You made some comments about Japan. We don't want to take other people's time away, but it would be helpful to know what Japan does.

Mr. Orchard: I intend to do that. I'm just going to back up for one minute. We have a debt and deficit hysteria in this country, mostly driven by the Reform Party, which stands at 9% in the polls. We had a bigger comparable debt after the Second World War than we have today, and it didn't drive us into pauperdom. The question is how we deal with that.

During the Second World War and after that, the Bank of Canada, as you know, created almost 40% of the money in this country. Under the whole guise of the government standing back and standing away from the economy, we've since turned all of that over to the private sector. So our private banks are now creating 98% of the money in this country. We're borrowing it from them at all levels - municipal, provincial and federal - and paying them interest; 50% of our debt is directly from interest paid to the banks.

The Government of Japan follows a completely different policy. Recently their unemployment rate touched 3% and the Government of Japan - you might have followed this - announced a huge stimulus, equivalent to billions of U.S. dollars, into infrastructure in Japan. They financed all of that internally through the Bank of Japan. They didn't borrow one cent abroad or from private banks, so the interest will be repaid to the Bank of Japan, which is owned by the Government of Japan, in the same way the Bank of Canada is owned 100% by the Government of Canada. Any interest that the Bank of Canada makes returns to the people, and that's what we should be doing instead of going and borrowing from New York banks and paying the interest flowing out of Canada in U.S. dollars.

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Korea has followed a similar policy in building the Korean miracle. We're doing exactly the opposite. We're borrowing more and more because the government policies of high interest rates are forcing the provinces to borrow from foreign banks, so Saskatchewan is trotting around the world borrowing from foreign banks and we're paying that interest.

You should take the handcuffs off the government here and let the Bank of Canada do what it did before. The legislation is still in place to allow you to do that. It's a matter of political will. In this global environment, Japan competes best and they use their bank. They're not saying, ``Oh, the global environment doesn't allow us to use our Bank of Japan.''

Mr. St. Denis: Okay, thank you. Do I have time for a second small question, Mr. Chairman?

The Chair: Sure.

Mr. St. Denis: The other question that I'm sure will bear considerably on the finance minister's mind as he ponders the next budget is this question of national standards - not versus - in relation to the devolution of some federal responsibilities to the provinces.

I think it's simplistic to say that automatically transferring responsibilities from the federal government to the provinces is the way to go. I think what's best for Canada is the way to go.

I think Mr. Fink mentioned - I hope I have that right - the importance of maintaining a federal presence in various standards. I'm wondering if we could go so far as to say that even though the federal government might transfer responsibilities in cooperation with the provinces, the federal government at the same time would still maintain its hand in there, not only in social services but also in education, in transportation and in health, as it does in other areas. You and others might have comments on that.

Mr. Fink: If they intended to do that they would have passed a new assistance act before they cancelled the old one. The old one had a number of standards in it.

Mr. St. Denis: But not in education.

Mr. Fink: No, not in education, but it helped. For example, they were trying to enforce one standard against Alberta. All of those standards should be looked at and strengthened, not decentralized; otherwise, you will have competition between provinces that would devolve mostly against the weaker and the poorer people in those provinces.

Mr. St. Denis: Would you say that Canadians generally agree that the federal government should be there from sea to sea to sea and from coast to coast keeping certain standards the same?

Mr. Fink: I don't know how many Canadians have actually thought about it and formed an opinion. I don't have a sense of what Canadian opinion would be, but I imagine that with a certain amount of experience with lack of standards over the next year or so along with the transfer cuts you're going to have a very strong outcry against the lack of national standards.

Mr. St. Denis: Has anybody else -

Mr. Warren Peterson (Representative, Social Fairness Action Coalition): May I respond as well? With the debates currently raging over health care reform, I think it is certainly fair to say that the public is overwhelmingly on the side of national standards. I think there is no question about it.

Mr. St. Denis: Thank you.

The Chair: Thank you, Mr. St. Denis.

[Translation]

Mr. Brien (Témiscamingue): My question is for Mr. Harrison. However, I would like to start by briefly commenting on something he said in his brief. He stated that we must put constitutional talks on ice. You have to understand, nevertheless, that from Quebec's perspective, constitutional and economic issues are related.

Further on, you say that granting special status to one member of the Canadian family will create problems. The opposite is also true, because if this special status is not granted, problems will arise. That's what I wanted to say.

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On page 3, you state that in order to balance the budget, cuts should be made to non-essential services.

What exactly do you have in mind? To which services are you referring? Which services do you feel the government can cut because, in your view, they are non-essential?

[English]

Mr. Harrison: Some of the things that we were thinking about.... I don't know what kinds of dollars are going into foreign aid, but certainly we want to look after Canadians first. We certainly have a concern for all people in the world, but first -

The Chair: It's about $2.2 billion, and we cut it by 10% last year.

Mr. Harrison: We would suggest that it is one area that must be looked at. We certainly have literally thousands of associations in this country, across our broad nation, all of which have good intentions and all of which are looking for money. We would suggest that perhaps we should look at which associations we are helping out. If they can raise money within their associations, we would ask them to explore that very carefully rather than going straight to the federal government and provincial governments at this time for assistance.

Mr. Fink: Yes I would like to underline what Mr. Peterson said about how people feel about national standards when it comes to health. I think it's pretty unanimous. I think everybody applauded the federal government for moving into the problem of privatization in Alberta. My hesitation was about whether or not that sentiment about standards was universal because of the willingness of a large part of the population to accept this anti-poor-people propaganda that began - or was continued, even - when the Prime Minister spoke of beer-guzzling, unemployed, UIC recipients and so on.

This whole hype that puts down the poor has created a certain attitude. The only standard remaining now in the area of social assistance is that no province can set up residency requirements for collecting assistance, which actually encourages people to move from one province to another. That then pressures each province to retaliate by lowering its rates because it doesn't want to have all the people moving into the province in question.

In a sense, where there is a strong feeling for standards in the health care area, I think there is a weak feeling in the social services area. I think a lot of it is due to the political climate that all the corporate and political people in power right now have created against the poor people, in terms of popular opinion.

The Chair: Thank you, Mr. Fink.

Mr. Brien.

[Translation]

Mr. Brien: I have another question for Mr. Orchard. You stated in two different ways that the Bank of Canada should buy down a larger share of our foreign debt.

This would be fraught with consequences. For example, don't you think that such action would push inflation upward and affect Canada's competitive position on international markets? For the past two years, our economic growth has been largely export driven. If the inflation rate in the Canadian economy were to begin climbing again, other problems would emerge.

Do you realize that this kind of action could put very strong upward pressure on inflation?

[English]

Mr. Orchard: I'm aware that some people argue this could lead to strong inflation. That's not actually the case, though, because simply having the Bank of Canada paying down the foreign debt that we have and repatriating it into Canada would not be inflationary. It would still have to be paid back to the Bank of Canada, but the Bank of Canada could set the interest rates and the terms. It would then circulate in Canada.

Instead of paying money to American banks in American dollars, or to the Japanese banks in heightened Japanese yen, which is what we're doing, that money would stay in Canada. This would not be inflationary. This would simply finance it internally.

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We have the same situation with the sale of Canada savings bonds, or during the Second World War, the sale of victory bonds. Those were purchased by Canadians, and the interest was paid to Canadians. That same program could be expanded today. With Canada savings bonds, they cut off the sales in November here.

There could be much more financing of the debt internally through instruments like the Canada savings bonds, but the government doesn't want it because the Reform Party tells the government that all the Canada savings bonds are part of Canada's national debt, and that's what we're told. When you add up the figures for the national debt, even the money held by Canadians in Canada savings bonds is included as part of that. That's not damaging to Canada.

There has been no analysis of what debt is productive and what debt is a problem. Many times debt is not a problem. If we're in a recessionary time like now, we should not be worrying about the debt. We should be getting economic growth going. Instead they're doing the opposite, slashing, and they're going to drive us further and further into the hole as we went in the 1930s.

The Chair: Thank you. Merci, monsieur Brien.

Mr. Walker, please.

Mr. Walker (Winnipeg North Centre): Thank you very much, Mr. Chairman, and my apologies to the witnesses for being late this morning.

I was going to ask a question of Mr. Harrison, but just in passing, Mr. Orchard, the government recognizes very much the need to have greater Canadian ownership of the national debt, by using instruments such as the Canada savings bonds program more aggressively. That's why this new national debt organization has been set up in Toronto. Hopefully, we'll be able to pull it out from the government structure and be much more aggressive on those issues.

Mr. Harrison, I am curious about a point in your brief. On page 8, you talk about the role of the federal government, and as you know, we're thinking about this very carefully. One of the concerns we have and one of the reasons we're on the road is to make sure that areas of the country that often aren't heard, particularly rural western Canada, have their messages quite clear in Ottawa.

In setting up the task force on the future of Canada Post, which we have, we're very concerned that any new mandate or any new changes in structure protect the delivery of postal services to rural western Canada.

The impression I have here is you're questioning whether or not Canada Post should continue because they'll always have a subsidy. I can't imagine a time in which Canada Post and/or CBC wouldn't have a subsidy in order to continue.

Are you suggesting here that Canada Post no longer has a role that you see as a government-operated commercial enterprise in rural Canada?

Mr. Harrison: What we're suggesting is that everything has to be evaluated, and if there's a better and cheaper way of doing it, we have to explore it. With modern technology, with electronic transfer, we're suggesting here that you evaluate the service, along with talking to people like ourselves. If we can do it better, we're encouraging that.

Mr. Walker: Okay. Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Walker.

Mr. Discepola.

[Translation]

Mr. Discepola (Vaudreuil): First of all, I would like to thank our invited panelists for answering the question of our Bloc colleague. Their wisdom has reassured me and convinced me that quite apart from the politicians, Canadians from all parts of the country are very well informed about constitutional policy.

I want to reiterate our government's position and particularly the position of our Prime Minister who has said that everything will be on the table. The government never opens up the Constitution before putting some kind of program in place. Therefore, if you have any suggestions, feel free to share them with us. We will not be looking at the Constitution to see who has jurisdiction over a particular area.

The province of Quebec has been granted full jurisdiction over its immigration policy and yesterday, the province of Manitoba expressed the desire to conclude an agreement on immigration and the GST. We are open to suggestions. However, we don't intend to launch a constitutional debate. Our government has many other priorities.

[English]

Mr. Sherloski, I listened with tremendous debate and I'm getting a bit more perturbed as I see the business community - and I am a small business person - with a fixation not only now of eliminating our deficit, but also attacking our debt.

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We had a proposal yesterday from someone who said we should go ahead and have a fixed program, even a 20-year program, on reducing the debt load to Canadians.

What is the most important thing for the business community? Is it lower interest rates, the deficit, or the debt? What if you had a choice of just one of those items? I know there all related, but I'll have the second part of my question if you can answer that one immediately. If you had a choice, what would your interest rate preference be today?

Mr. Sherloski: Our preference at this time would be to address the debt issue first.

Mr. Discepola: The debt or the deficit?

Mr. Sherloski: The deficit first, I think. I think the debt would follow that.

Mr. Discepola: So what is the fixation about having a low debt? Most of your members, I presume, are business people.

Mr. Sherloski: Yes.

Mr. Discepola: You're allowed to write off any plant or equipment over the useful life of the plant or equipment. You're allowed to take amortization depreciation.

We, as municipal, provincial, and federal governments, have to capitalize everything in the year we incur it. So even if we build a road that's going to last 15 or 20 years, we have to expect it in that one year. We can build a hospital and airports, etc. Why? Because we can't sell those. Those things really don't have any market value, so it's understandable.

But isn't a certain amount of debt acceptable if we can maintain acceptable interest rate levels?

Mr. Phil Mamchur (President, Saskatoon Chamber of Commerce): I think in our proposal we suggested about a 55% to 60% objective at the outset.

Mr. Discepola: I realize that. That would mean that not only do we have to eliminate our deficit, but we have to start attacking our debt. If you take a look at that figure, we're going to be below 0%.

Mr. Mamchur: I think Saskatchewan is probably a good example for eliminating the deficit. Now they're starting to work on the debt.

You see a very strong Saskatchewan and Saskatoon economy. As you indicated, they're very well linked together in terms of interest rates. If we can control the deficit and debt then we can control interest rates and keep them down in the general economy. Small business then will certainly continue to grow.

Mr. Discepola: But despite our efforts over the past two years to control the interest rate through aggressive deficit reduction measures, we've seen large businesses downsizing. We had massive lay-offs in the Montreal area, for example. I don't see that this is the significant factor in job creation that we're after.

I think this is crucial. I see Mr. Fink, for example, and other people coming to us, sadly enough, saying that the provinces are now going to put a further burden on the welfare recipients. There are pressures on health reform, etc.

Then I look back and say that maybe we, as a central government, should hold it back. Maybe we shouldn't be on our 3% red book commitment. Why do we have to go beyond 3% at this moment in time?

Let's say our economic growth is 2% next year. Why can't we go to 2%? It means we don't add to our debt problem. If the economic growth next year is as forecasted, which is roughly 4%, then maybe we can take some of that economic growth and use it to reduce the deficit, as opposed to always targeting expenditure measures right away.

Mr. Mamchur: I think there are probably a lot of inefficiencies that could be targeted. That question came up before.

Certainly, there are all kinds of duplications between the federal and provincial governments in terms of the services they offer. I think this is a time when people are really looking at rethinking government in terms of what services are being provided.

I think a good example that's been shown by your government is in terms of the airport and transportation sector. Airport authorities are to be provided, and they would then be sent to the local people to empower them.

I think that would be an excellent move, as well as privatizing CN, which is another one.

Those sorts of things provide good opportunities for reducing the deficit and the debt without necessarily cutting into the social services.

Mr. Discepola: I'll conclude, Mr. Chairman, by saying that I can see all these efforts. Last year we did that. We spent almost two months as a committee trying to find a hundred million dollars here and a billion dollars there, only to see that from the time we deposited our reports to the time when the finance minister introduced his budget, the interest rate had gone up 1%, which wiped out all our work.

I look at that and say that if we're going to do the same exercise this year and make all the effort possible to try to cut back duplication while the interest rate still stays at 7% or 8%, then the business community is never going to be satisfied, because we'll never get the interest rate down low enough for them.

In the meantime, we've heard some people say that we could have maybe spread it out over a longer period of time instead of concentrating it all into one short period.

Thank you, Chair.

The Chair: Thank you, Mr. Discepola.

Mrs. Sheridan please.

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Mrs. Sheridan (Saskatoon - Humboldt): Thank you, Mr. Chair. My question focuses first of all on question 2 of the parameters that were set out relating to budget measures and the environment for jobs and growth. It's directed mainly at Mr. Harrison and Ms Knowles but also indirectly atMr. McKay and Mr. Morgan.

As I was listening, both Mr. Harrison and Ms Knowles mentioned the infrastructure program favourably, that it has been successful. I would suggest that one reason for that was the partnership nature of the program. But each also had suggested there were limitations in Mr. Harrison's case, the fact that he'd like to it continue forever. In Ms Knowles case, she recognized a gender difficulty with the infrastructure program in the sense that the greater number of jobs in the infrastructure program can go to males if you're out working on roads or doing construction of one kind or another.

Ms Knowles also raised an interesting point, I thought, in terms of, I guess what I would call, social infrastructure if you look at the guidance and development and building up of little children as part of an infrastructure, and I certainly do.

I'm just wondering if, firstly to Ms Knowles but then to the others I mentioned, your association - and the child care association certainly falls within provincial jurisdiction, and we have that typical thorny issue of jurisdiction here. But has your organization or have you personally any thoughts on partnership strategies or ways that the most dollars could be spread the farthest that would also, again, have to do with unemployment? I would throw that question also to the other people who, if you look at cultural infrastructure and social programs in general, for comment on that, in terms of actual partnership strategy.

Ms Knowles: In terms of partnership what we would like to see between the federal and provincial is some federal policy and guidelines. In terms of spreading dollars, child care in some ways is a rather new issue, I mean in comparison with health and education. It's always been there, but it's only in the last 15 to 20 years that family dynamics and working dynamics have changed dramatically.

What happens is some provinces put in money with this government and other provinces reduce child care with the next government. Because it's a fairly new issue, there's no consistency there.

I guess what we would like to ask the federal government to do in terms of federal partnership is to provide some national guidelines and minimal standards so that there is some consistency there, so that a province like Ontario, which has worked to build up the child care system...this government is now dismantling that, the next government may decide to put it back in. I don't think that's an efficient use of dollars. All of this building up and taking away costs money.

So I would like to see, in terms of partnership, national guidelines and some leadership from the federal government in creating child care spaces and making it a priority. It is something that will aid employment. I use the example of a single parent. She received $10,000 in subsidies and has gone back and has now turned around and paid back $83,000 in taxes. It does aid employment.

In terms of infrastructure it is something that's overlooked, yet it's a service that we need as families, not just women, work. It's a service that we need, and at the same time it does provide meaningful work and labour intensive work, and the money does go back into the economy.

Does that answer your question?

The Chair: Do you have another question?

Mrs. Sheridan: I'd just like to hear if anyone else has any comments on this.

Mr. Harrison: Certainly, as I indicated we favoured the infrastructure dollars and the way it was handled. In rural Saskatchewan it was the choice of the rural municipalities to put it all back into roads. It generated good economic activity throughout all rural Saskatchewan, and we feel that it certainly must continue.

We've got cutbacks in our school system. We're seeing fewer and fewer schools, which means that our rural kids have to travel further by school bus. And in order to do that they need good roads.

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Our essential services - our fire trucks, ambulances and police - have to have the roads. So we feel the road system must be transferred from the non-essential services into the essential services, especially in the prairies, where we are so dependent on our roads.

The Chair: Mr. Morgan.

Mr. Morgan: The cultural community consists in a sense of two complementary but sometimes different areas. One is, if you will, the public purpose - the enjoyment of culture for its own sake and for the personal development of people, both the creators and the people in the audiences.

The other side of that is the knowledge-based industry, which is culture represented in new technology. Some of the issues that are part of that, with the federal government and with the provinces, are as follows.

The creation of the Canadian Tourism Commission, for example, was an important but very preliminary step in linking tourism, culture, and the information-based industries that will drive tourism for the next many years.

Parks Canada, for example, under the Department of Canadian Heritage, is being - maybe ``devolved'' is not the correct word and maybe ``commercialized'' is not the correct word, but some combination of those things. Parks Canada, with the support of Treasury Board, I think, is able to earn money and retain it for future development.

Parks Canada has a major role in supporting working with the rest of the like-minded cultural community across the country because of the resource it has, because of its expertise and because of the networks it's developed.

What I think will work in the cultural community is strategic investment and the development of partnerships based upon the long term and based largely upon the knowledge-based industry aspect of culture. An IMAX film is being developed in Saskatchewan out of the T-rex find. Also there's the development of really interesting CD-ROM materials and hopefully the development of the super information highway, which I think is a federal policy.

We're sort of waiting to see where that's going to go. People are most interested in that development. That needs to be given at least more prominence in terms of public policy.

The Chair: Thank you, Mr. Morgan.

Lastly, Mr. Fink, you wanted to add something to that very briefly.

Mr. Fink: I recall, but vaguely - and maybe someone around the table or someone from the finance committee can refresh my memory - that the Liberal government had a day care program they were going to institute several years back.

The Chair: I'll tell you exactly what it was. In 1988, before the election, we promised about a $5 billion national child care program. The Tories promised one of about $4.5 billion, and the NDP at about $8 billion.

Mr. Fink: Okay. That didn't take place.

The Chair: No.

Mr. Fink: I'm wondering whether, if it had taken place, it could have in fact prevented the dismantling activity that has gone on and is going on in Ontario. I'm just wondering if you have an opinion on whether Harris would have been able to get away with this much.

The Chair: I think we should talk about that after. We're here to get your opinion.

Some hon. members: Oh, oh.

The Chair: It's a very interesting question and a very important question.

Mr. Fink: If you have an opinion on it, I think you should express it now. I'm hoping you will, anyway.

The Chair: I'll have to think about it.

Mr. LaPlante.

Mr. LaPlante: Concerning the second question in reference to partnerships, for the first nations within the Battlefords Tribal Council, if partnership is put in the context of cooperation, we're all for it in respect to creating jobs. But we have to be careful about how we proceed with that because of the fact that co-management is a concept that's relatively new in Saskatchewan and has been somewhat controversial.

We're not at a point where we've given up on it. It's something we'd like to continue on. I hope partnership in this case would mean cooperation; we'd be all for it.

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The Chair: Thank you, Mr. LaPlante, and thank you, Mrs. Sheridan.

Mr. Discepola, you said you want one very brief comment.

Mr. Discepola: Yes, it is for Mr. Morgan, since he brought it up.

When I listened to Mr. Harrison state, justifiably so, that we should take a look at everything and how we deliver all services and improve them, I agree with that. But I have a dilemma. Maybe being from Quebec, I'm more sensitive to these issues.

When Mr. Morgan stated that we have to develop and improve a national identity from one coast to the other, I agree totally and wholeheartedly. But when I hear people make suggestions that we should privatize and privatize, as an alternative - and you even suggested that we should look at privatizing Parks Canada, for example - I want to bring the debate to focus and state that clearly, from a federalist Québécois perspective, when I see us closing all the rural post offices, for example, when I see us looking at the local employment centres and closing those in favour of new technology or whatever, when I see suggestions that we should privatize other federal institutions, let me tell you that it hurts my heart because from a Québécois perspective that's the only federal symbol we have in Quebec, that Canadian flag.

When I go throughout my riding and I go by the post office, I proudly look and see the Canadian flag. If we get rid of all those symbols, and when you take a look at the risk premium we share today, which is caused by two factors, the debt load of Canadians as well as the political instability, I question whether we should not be investing more in initiatives like national unity issues or national identity as opposed to divesting ourselves of all the federal symbols in our province.

Mr. Morgan: I did not advocate and certainly wouldn't advocate privatizing Parks Canada. What I was suggesting is that the current initiatives, which are to enable Parks Canada to generate revenue to pay its way at some level, are strong in many cases, not across the board but strong in many cases, and I think will help them to create more partnerships that can in turn support the kind of cultural infrastructure across the country that you and I are both in favour of.

I think the Canadian Tourism Commission is a good example of privatizing, if you will, but under very clear federal guidelines, the same as the provincial tourism authority in Saskatchewan. So I think there's the federal role, and it doesn't mean to say that the consumers of the service - in the case of the tourism industry, the industry itself - can't have a major role in guiding the programs, in this case, the marketing programs. It opens up the field and creates new opportunities without diminishing the federal responsibility, or in fact the federal presence. That would be my perception, sir.

The Chair: Thank you, Mr. Discepola.

I would like each participant to have a chance to give us a 30-second summary before we leave here. But are there any of you who have anything else you'd like to put on the record that you haven't had a chance to mention to us?

I knew you would, Mr. Orchard.

Mr. Orchard: I want to reply to what Mr. Walker said, but also to Mr. Discepola.

I agree entirely that this fixation with some kind of fixed number in deficit reduction is harmful. You might have seen the figures that have been worked out by Mr. Carrigan in Toronto, that if we had full employment in this country, the deficit would be reduced to zero in five years. This is the route we should be taking.

But there's the elephant in the living room that nobody's talking about, and that's the NAFTA with the United States, which is preventing us from taking the steps we would need to get there. We've seen the slashing of the Crow rate, in western Canada here, the removal of it entirely to accommodate ourselves to this trade agreement. This is hurting the country.

In contradiction to what my friends here from the chamber of commerce are saying - they're advocating privatization, commercialization, the CN sale - this is not going to help either the debt situation or the employment situation in this country; it's going to hurt it.

CP Rail sold their line, as you know, from Sherbrooke to the east coast. They sold it to a U.S. rail company. Now the jobs are not being done in Quebec any more; they're being done across the line in Maine, and the repairs. That's the kind of future we're facing under this commercialization mania. We're getting rid of the very nerves and veins and blood that hold this country together.

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Mr. Walker, you asked me whether I'd taken notice of your program for Canada savings bonds. I've taken notice of it, but will your committee recommend vigorously that we get this debt back into Canadian hands, start using the Bank of Canada, and use instruments that have been advocated to you by many people - Canada savings bonds and others - to get that debt back into Canadian hands? Will your committee be recommending that in a strong fashion?

Mr. Walker: I can't speak for the committee.

The Chair: We'll take that as a representation.

By way of summary - yes, Mr. Sherloski.

Mr. Sherloski: I'd like to make one point that gets back to the discussion you were having with Mr. Discepola.

Not being an economist, but having had a little more time to think through your original question, I think back to and I congratulate the government on its initiatives with the deficit in the past year. You raised the point about the interest rate going up another percentage point or maintaining itself. My feeling is that if the government hadn't taken the initiatives it did, our interest rates might be 2% or 3% higher than they were a year ago. I think that is the impact of it.

The Chair: Thanks, Mr. Sherloski. Could we go now to summaries?

Before we go there, Mr. LaPlante, did you want to add something?

Mr. LaPlante: No, I just neglected to make quite an important -

The Chair: Please feel free.

Mr. LaPlante: As far as the partnerships go, I wanted to remind everyone around the table that from our perspective the original partnership was the treaties themselves. I neglected to point that out again.

The Chair: Thank you, Mr. LaPlante.

We come now to 30-second summaries. Would you like to start, Mr. Peterson or Mr. Fink?

Mr. Fink: He has a couple of....

Mr. Peterson: I have a brief comment. This committee could do worse than to inspect seriously a document called Alternative Federal Budget, 1995, available through the Canadian Centre for Policy Alternatives. It embodies a perceptual and conceptual framework that I think is a very important one for the committee.

The Chair: We have that document.

Mr. Peterson: I think it would be very much worth visiting seriously.

The Chair: We certainly shall. Thank you very much.

Ms Knowles.

Ms Knowles: In summary, I'd like to use one example in terms of partnership and where it's important in childcare, and that is first nations on reserves. It has been a problem for a long time. When you talk about preventive strategies for children and employment, in terms of first nations there's a dire need there. But first nations fall through the cracks because on reserve is a federal matter but childcare is a provincial matter. There have been some federal initiatives to try to clean that up, but until we have a clear federal childcare policy and a clear partnership with the provinces on it, those gaps are always going to exist.

As I said before, childcare is an important alternative. In Saskatchewan 70% of mothers of pre-school children are now in the workforce. We need to recognize that and we need to have social programs that support employment and catch up to the needs of society.

The Chair: Thank you.

Mr. Morgan.

Mr. Morgan: My comments would be that as this economy does change, the decisions of the federal government in culture are purposeful decisions: that they are focused, that they come out of policy discussion with stakeholders across the country, and that they are based upon a vision and not purely on budget.

The Chair: Thanks.

Mr. McKay.

Mr. McKay: Thanks for the opportunity to be here and included in this process.

There are a number of suggestions and recommendations that we have made. We prepared them in a brief, which will be made available to all the members and which goes into much more detail on the three questions that were put to us. I'll leave that here with everyone.

The Chair: Thank you.

Mr. Harrison.

Mr. Harrison: I failed to tell you about one standing resolution of our association, which is that we're all Canadians and should all be treated as one group. If we dealt with all Canadians and dealt with that issue rather than dealing with one specific sector and making rules for them, life would be much simpler in this country. We would ask you, when you're trying to reduce your budgets, to look at each department and treat us all equally. If we're going to take reductions, each department must take its share of a hit.

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In our paper we talked about a flat tax, and certainly we'd like to explore that with you further at any time, at your convenience.

Research is one area that has been hit heavily in the past, and we would like to remind you that we rely heavily on research in the agricultural community in Saskatchewan. So we would ask you to not hit us too hard in the research area, because agriculture certainly depends on it.

Again, we didn't get a chance to go through our brief with you word by word, so we would ask you in your leisure and bedtime reading to take that with you.

The Chair: Perhaps you could give us some more documents as well to buttress it. Thanks,Mr. Harrison.

Mr. Sherloski.

Mr. Sherloski: In summary, very quickly, we encourage your committee to look at reducing the duplication of services.

We ask that any tax changes that are proposed in the budget be revenue neutral. If there are going to be changes, in regard to fairness, please make sure they're revenue neutral and that general tax rates are reduced accordingly.

Lastly, we continue to ask you to address the deficit and debt issue and continue the work that was started on that a year ago. Thank you.

The Chair: Lastly, Mr. Orchard, please.

Mr. Orchard: I should mention that I speak here for our 12,000 members across the country. We've been in existence for 10 years and have never, of course, had a cent of taxpayers' money. We exist because there's a demand for us. We fought Mulroney for eight years and now we find we have to fight the new Mulroneyites that have taken power in Ottawa.

So you ask what we -

Mr. Walker: In the meantime you can get along well with us.

Mr. Orchard: Very good, because you're not in Ottawa.

What your policy here is doing is essentially consolidating Mulroney's and turning all the lines in this country north and south. We're not going to have any improvement in our economic situation until we build a Canadian economy that we control here.

So as far as last recommendations, study Japan, study what they have done and how they've done it, how they have nine of the world's ten largest banks, and how they've become the economic superpower. Canada could do exactly the same thing.

We're going exactly the opposite route, making ourselves into a satellite-tail wagging on the U.S. dog.

So as a closing comment, I hope you'll go home and read your red book, because that's what you got elected on and those are many of the things that made sense. Instead, you've become a mouthpiece for the Reform Party, whose support has been consistently under 10% and is falling.

The Chair: Thanks, Mr. Orchard.

I want to thank each one of you on behalf of all of our members.

Dealing first of all with Mr. Orchard, I think all of us want to see a greater percentage of our debt held in Canada, if it is possible to do it with reasonable interest rates. I reject categorically your position that the Bank of Canada should buy down the foreign debt. That would mean issuing a lot of paper and monetizing the debt, which other countries have tried with very disastrous consequences in terms of inflation. So we will not do that.

I'm speaking for myself, not the committee - I reject categorically your concept that we can do what we did in World War II. As you will recall, in World War II all of our national assets were at the beck and call of the war effort. We had total rationing of all essential commodities, including foods, and we had total wage and price controls. That might be the consequence if we don't get our economy in order, but I don't think we're at that stage right now.

In terms of the rest of you, I detect that everyone except for Mr. Orchard said that we do have to get our deficit under control. This came from the chamber, and they suggested a new way of looking at it. Mr. Peterson and Mr. Fink say that the deficit should not be our priority. You've indicated that you do want strong national standards in our social programs, and I remind you that it was this committee last spring that said there must always be a cash component to the Canada Health and Social Transfer in order that we can have the leverage to try to create those national standards.

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But what I'm hearing more about today are these mutual partnerships, partnerships in terms of childcare. They are new programs where there is not only a federal involvement, but where we implicate and involve the provinces and the municipalities in this relationship. We have an obligation to try to bring the various jurisdictions together so we do not have overlap, duplication, and conflict but work together to deliver one final product effectively to the only person who counts, the Canadian taxpayer, the Canadian citizen.

There is a call for new relationships and new partnerships with our municipalities, with our first people, not only in terms of respecting our treaties but going on from there together to build a Canada that can satisfy the needs of all of us.

We need a new partnership with our cultural community. Mr. Morgan has recognized that cutbacks to his area are inevitable. You have simply said put in place alternatives that will enable you over time to go from an industry that is highly dependent on government and public grants to one which has greater ability to raise funds on its own, through the tax system. You'll need time to do that. We are the finance committee that recommended that in our last report and that invited those people before us, including Arthur Drache, to bring those ideas forward. We are very partial to them.

The days ahead are not going to be easy. I wish there were some painless solutions to our problems of debt and deficit and that we didn't have to cut. We certainly are not interested in trying to download federal problems on other levels of government.

We will take your representations back to Ottawa, conscious of the fact that you are committed and caring and that you are on the line in many of these areas, having to deliver the services that are so important to those people in Canada who are the least favoured. Thank you very much for your presentation to us.

We will adjourn for five minutes while the next witnesses come forward. Thank you.