[Recorded by Electronic Apparatus]
Wednesday, November 29, 1995
.1506 
[English]
The Chair: Order. I do not want to keep you people waiting too long. The finance committee is pleased to be continuing its hearings here in Saskatoon.
With us this afternoon we have from the Concorde Group of Companies, Ian Buckwold; from the North Saskatoon Business Association, Karen Hunter; from the Prince Albert Grand Council, Debbie Brown; from the Saskatchewan Council for International Cooperation, Pauline Molder; and from the Saskatchewan Wheat Pool, Barry Senft.
If I've messed up - I usually do. I think there are some people here whom I have not introduced: Lyle Hislop, from Planned Giving, University of Saskatchewan.
I missed you, Ms Turpel.
Ms Mary Ellen Turpel (Legal Counsel, Federation of Saskatchewan Indian Nations): You announced earlier someone from the Prince Albert Grand Council. They will not be in attendance. Instead we're joined by Vice-Chief George E. Lafond from the Saskatoon District Tribal Council.
The Chair: Thank you. Our usual format is to start off with about three-minute opening comments on what you would like to see us doing and then we open it up. We will close with a brief summary - 30-seconds or so - of what you'd like to do. I just want each one of you to feel that you have adequate time to present your views to us and that we have an exchange of views. Who would like to start off? Would you like to start off, Mr. Buckwold?
Mr. Ian Buckwold (Vice-President, Concorde Group of Companies): Thank you for the opportunity to participate in the discussion. I represent the Concorde Group of Companies. Our companies are active in food service, fruit and vegetable imports and sales, property management and development.
In your invitation, you asked us to deal with three areas. I'll try to deal with them briefly in the order raised. The question in the initial one was the target for deficit reduction.
While we're not confident or feel capable of choosing an actual amount, our view is that the reduction should be significant. We believe the short-term target must be to stop the growth of the deficit so a surplus can be created and erode the actual debt. I suspect that's nothing new. You've probably heard it all across Canada.
Our view, again, is that in attacking the deficit, the attention must be devoted to cost reduction. We do not believe there can be further increases in revenue through taxation. We feel all areas of expenditures must be examined. Each department expending funds should be reviewed to determine, first, whether it actually needs to exist in its current form and, secondly, if it does, whether it performs a necessary function or whether it can be done more efficiently.
.1510
While this might appear to be simplistic, the fact remains that not a week goes by in our business where we don't encounter a layer of bureaucracy we believe might not exist if subjected to a cost-benefit analysis. It's not to say a particular department might not perform a useful function. It's a a question of whether or not its function can justify the expense. We could get into various examples, but I won't at this stage.
The next question was how budget measures could be used to create an environment for growth in jobs. Again, we believe the best way to increase jobs and enhance growth is to create an environment in which investment can result in a return. We believe this means less rather than more intervention.
While we support the social safety nets that are in place now, we again feel the cost of doing business is becoming prohibitive, examples being the premiums for unemployment insurance and the like. If you could reduce expenses or if expenses could be reduced to business, we feel business investment would increase. That would increase both jobs and growth.
We feel the only way to increase our economy or make things better is to try to increase investment and perhaps largely foreign investment. Unless we're able to create a tax environment that can enhance and somehow attract investment, we're simply not going to be in a position to do it.
Areas for attention for cuts in commercialization: we believe no area should escape examination. An area we've been dealing with recently is aircraft licensing with Transport Canada. Again, while all these are necessary issues that have to be dealt with, we feel if one looked at the cost-benefit of all the layers of people we deal with, you have to question whether the expenditure is necessary. Parks Canada is an area I'm familiar with, and again I wonder whether or not commercialization might result in both the protection of the environment if properly regulated and a reduction of an expense.
My one pet peeve is that cost reductions in the various departments over the past year or two have simply resulted in an increase in licence fees. So it seems the departments we deal with, rather than reduce expenses to deal with their budgets that have been made smaller, are increasing the fees to the businesses they deal with. We just don't think that's the way to deal with the deficit.
We feel there are areas where they could cut the costs, cut expenses, rather than simply shifting the expenses to business. I hope I'm not too negative. But from our corporate perspective we feel the government has to look internally at itself to, number one, reduce expenses and, number two, enhance the opportunity for investment.
Mr. Lyle Hislop (Development Officer, Planned Giving, University of Saskatchewan): Thank you. First of all in the way of background, the purpose of the Canadian Association of Gift Planners, CAGP, is to support philanthropy by fostering the development and growth of gift planning. CAGP creates awareness, provides education, and is an advocate for charitable giving. The CAGP is a young organization in that it was started approximately three years ago. The organization has grown rapidly, and there are now over 400 members across Canada.
The membership reflects a sense of common purpose among many diverse charitable organizations in providing charitable services to our communities. As part of this effort members have clearly identified the desire and need to work together with the federal and provincial governments in developing public policy that will not only encourage charitable giving but will also enhance charitable giving.
Issues and proposals as identified by CAGP in which CAGP is both capable of and interested in carrying on further dialogue in exploring solutions with the Standing Committee on Finance and the representatives of Revenue Canada:
One, whether a gift of appreciated property could receive a tax receipt for the fair market value but not subject the donor to capital gains.
Two, whether public foundations can re-insure gift annuities.
The Chair: I don't understand that.
.1515
Mr. Hislop: I'm not sure that I can explain it clearly enough myself. It involves using insurance policies to sort of complete the circuit or help pay for it with gift annuities. It kind of makes a cycle.
The Chair: All right.
Mr. Walker (Winnipeg North Centre): - [Inaudible - Editor] - to the life insurance premium. So this is dealing with the special issue of the charities facilitating that.
Mr. Hislop: Third, develop with Revenue Canada a period assessment of the discount rate for valuing charitable residual interest gifts, and further, publishing the rate in a professional publication and/or an interpretation bulletin.
Four, consider whether the federal tax credit could be enhanced to encourage more charitable giving.
Five, consider whether crown foundation status creates an unfair advantage for institutional beneficiaries.
Six, clarification of Revenue Canada's position on charitable gift debentures.
I would like to thank the standing committee and members of the panel for providing me with the opportunity to make this presentation today.
The Chair: Thank you, Mr. Hislop.
Ms Isabel Anderson (North Saskatoon Business Association): I'm Isabel Anderson and this is Karen Hunter. We will be speaking on behalf of the NSBA.
The Chair: Thank you.
Mr. Walker: Has Mr. Hislop submitted a presentation to the committee?
Mr. Hislop: I haven't, but I do have some copies.
Mr. Walker: Could you -
Mr. Hislop: We'd welcome that.
Ms Anderson: I'm here on behalf of the North Saskatoon Business Association. The association made a presentation to this committee last year, and we're following up on it this year. We're pleased to provide our comments, and we've addressed them to Minister Martin through you. When you receive a copy of our presentation, you'll see that it's addressed to Mr. Martin.
We're pleased to present our comments to you through the committee, as it starts its 1996 budget consultation. We refer to our earlier letter, which was submitted to you on 26 January. It's our considered opinion that although we are pleased to see some of the things that we talked about last year implemented, you've not gone far enough or fast enough. You've asked us to respond to three questions. In addressing these we again draw your attention to certain quotes from the publication Creating a Healthy Fiscal Climate, which we refer to as Martin's plan of October 18, 1994.
Your first question is what should our deficit reduction target be, and how can it best be achieved? Our position on this is summarized in this statement in Martin's plan: ``The deficit must therefore be reduced and the debt must be brought under control. There is no acceptable alternative.''
You'll find in our comments that we are concerned about the size of the debt. I personally do not believe - and I think many of my colleagues do not believe - that the issue is the size of the deficit or the size of the deficit relative to the GDP. Instead, it is bringing spending under control and bringing the debt under control, and there needs to be clear evidence that is the case.
It is interesting that from the actual results for 1994 to the fiscal year end of 31 March 1995, as reported by the minister on 1 November in the annual financial report of the Government of Canada, the following quotation shows that the economy in fact grew more than the minister expected:
- Economic growth in 1994 turned out more robust than forecast, advancing by 4.6 per cent...
Inflation was somewhat lower than expected.
The finance minister should prepare a five-year budget document that shows how you will achieve a balanced budget in four years, and how the first net reduction in Canada's debt will be made by the year 2000. Let's use common sense.
.1520
In 1994-95 you spent $1.30 for every dollar you raised, leaving you overspending by 30%. You must therefore cut by 30% to balance your books. You're not thinking in these terms. Your annual report shows that you are proud of an overexpenditure of 30%, since last year's overexpenditure was 36%. At this rate you will not balance the books for at least five more years, and at present we know that you are not planning to make cuts this big in each of the next five years.
The debt is now over $446 billion. We suggest that you target the first year of the new millennium to make the first repayment on the debt. That means a surplus budget for fiscal year 1999-2000, with a net repayment to be made by March 31, 2000.
The second question you posed was how budget measures could be used to create an environment for jobs and growth. Balancing the books will let businesses in Canada expand and prosper. Jobs are created by business. Government can only create the climate to allow business to grow, and then the jobs will be there. Creating this climate starts with balancing the books, while keeping taxes reasonable to ensure that Canada has a positive climate for business.
We have a comment on the recent developments in Quebec that is related to this. The upcoming federal government budget address must address the question of stability of the Canadian dollar, and what you are doing to get rid of the uncertainty associated with your decision to participate in Quebec politics.
We well understand the usual proposition that the stability of the dollar is the responsibility of the Bank of Canada. It is also the responsibility of the federal government, through the Department of Finance and its budgetary process.
Western Canada's biggest problem in trying to create an environment of jobs and growth comes from the federal government's involvement in Quebec politics. That encourages instability in the international financial markets with respect to the Canadian dollar.
If the federal government continues to focus its attention on fighting the next Quebec provincial election, then the Canadian dollar will continue to be weak and capital inflows will require a higher risk premium. For western Canadians to create jobs and economic growth, we need a clear statement of the federal government's involvement or intentions with respect to Quebec.
As for where further cuts might come - commercialization, privatization, or devolution to other levels of government - we do not have the data in hand to comment on specific projects of commercialization or privatization. You must assess each of them on its own merits. One of the things that concerns us is that the government must have a clear view of the phase-in and adjustment costs, and the net benefits at the end. You must be serious about discussing the actions you take with everyone at the local level who is in any way involved. Only then can you understand, and can we understand clearly, the implications of what is being done.
The changes must be done with the best interests of the people who pay the bills, that is, the taxpayers and those at the local level, clearly in mind. For example, privatization for the sake of privatization is not the answer.
The message is clear: balance the books and don't ignore it, or taxpayers will suffer again. Canadians are telling you to cut expenditures, balance the books, and don't raise taxes. International money markets are telling you to get your spending under control, balance your books, and pay down your debt.
The consequences of not following this advice unfortunately hurts the taxpayers more than the federal government. Paul Martin is accountable to act on these clear and proper instructions. Please don't let us down.
In summary, we already give you sufficient money to govern this country. Our message is that it is past time to quit wasting it on programs we can't afford. You must cut and you must cut now. We request that you carry out your plans to cut expenditures by an amount that will exceed your targets, so that any unknown factors will not see you miss your goals.
We know that you are battling against the lack of support from certain lobby groups, and even from certain members of your own party. We support you in your efforts and we hope you will have the strength and courage to go far enough on cutting the expenditure side of the budget and bringing that under control, so that we can see a balanced budget within this millennium. This will allow us to pay off the debt in the next one.
Thank you, Mr. Chairman.
.1525
Mr. Barry Senft (Second Vice-President, Saskatchewan Wheat Pool): Mr. Chairman, thank you for the opportunity to participate in the pre-budget consultations.
It is recognized that agriculture, especially in the grains and oilseeds, is doing significantly better than it has in the last number of years. For Saskatchewan, just an indication of that, the net farm income is forecast to be between the $800 million and $900 million mark. That's compared to $450 million in the last previous five years.
The Chair: We just want you to know, Mr. Senft, that we're fully prepared to take all the credit for that.
Mr. Senft: It's much appreciated.
The improved income level is a welcome change and we hope it will continue for an extended time. But it also must be recognized that the long-term price trend for grain prices in this century continues to be downwards. In real terms recent price levels are no higher than what was experienced 10 years ago. They are well below those of the 1970s when world stocks of grain were at the low levels, or at as low levels, as they are today.
Farmers have responded to the forces of the new market environment by embracing a new technology and by seeking new ways to reduce their costs. Farm size has grown and it has grown significantly since the 1970s. Farmers have diversified into new crops and also into livestock.
Educational levels have increased and government has played an essential role in assisting farmers to adjust, and during the height of the grain trade war. That was just simply to survive.
It's not clear if this era of the grain trade war distorted by export subsidies has ended or simply been abated for a short time. However, the historic role of government in agriculture continues to be valid. The federal government must continue to be involved in research, technology transfer, and the stabilization of farm income. Our government must also continue to influence the economic environment.
The government must also continue to regulate in areas where competition cannot occur naturally, such as in grain transportation. Currently, a new transportation act is being discussed and is before Parliament in the form of Bill C-101. This act has a potential to impose significant costs on the shippers of grain and we strongly encourage the federal government to act on the concerns with this legislation that have already been identified by the vast majority of shippers in western Canada.
In the trade objectives, the Minister of Agriculture and Agri-Food in conjunction with the broad cross-section of the agri-food and agricultural industry has set a target for Canadian agri-food exports of $20 billion. This would be an increase of 33% of our record of 1994, $15 billion in exports. This goal is a minimum.
Just to keep up to our traditional global food trade percentage of 3.5%, exports would need to rise a further $3 billion to $23 billion. The Saskatchewan Wheat Pool supports this target and government has announced a number of initiatives to facilitate this that are very positive. They include the establishment of a $1 billion agri-food credit facility to support new sales abroad, of an agri-food trade service to help exporters enter new markets, and of a Canadian Agri-food Marketing Council. These are all very positive as seen by our industry.
It must be emphasized that the federal agricultural funding in western Canada has already been cut significantly. One part of that expenditure, specifically the budget of the Department of Agriculture and Agri-Food, is scheduled to fall by 19% over the next three years. Some federal officials have argued this reduction is exactly on average with all the departmental budgetary cuts across the entire government.
However, such a comparison ignores completely the impact on prairie agriculture from the discontinuation of the Crow benefit, with the repeal of the WGTA. This compensation to be paid by the federal government in the coming year is worth about 30% of the total value of that program. In effect, prairie producers have taken a 70% cut to the largest single federal program expenditure that's within their industry.
.1530
It can be noted that a three-year expenditure plan was set out in the 1995-1996 budget. If that overall plan is to have any validity with the stakeholders, no additional cuts can be made one year into the implementation.
Finally, it must also be pointed out that the agricultural expenditures by our major grain exporting competitors are not declining at the same rate. In the U.S., the most severe expenditure proposal to be aired during their budget battle would cut approximately 25% from the agricultural expenditures, and that's over a seven-year period.
Given the above, we expect at a minimum that the federal government will maintain the previously announced three-year budget plan for the Department of Agriculture.
Within safety nets and the issue of them to be effective, in the 1995-1996 budget federal safety net expenditures are scheduled to decline by 30% to $600 million over the next three years. At that level the stabilizing influence the program will offer on farm income will be modest. Any additional cuts to the safety net funding will likely end any meaningful impact such programs may have.
In the area of adjustment, western Canadian agriculture is engaging in a major restructuring with the end of the WGTA. This can be noted in the recent decisions taken by the grain handling and transportation sector, the food processing sector, and individual producers.
The adjustments being made are expected to encourage greater efficiencies in cost reductions, lead to further processing of basic agricultural production, and enhance value-added activities in the food and non-food sectors. Several adjustment programs that were announced as part of the February budget that ended the Crow benefit and the WGTA included the six-year $300 million WGTA adjustment fund and the annual $60 million adaptation and rural development fund. The federal government must maintain its commitment to these programs.
The Chair: Excuse me just for a second, Mr. Senft. Could you give me some idea of how much longer you'll be?
Mr. Senft: Two to three minutes.
The Chair: Is there any way that we could come back to that? I just wanted to give people an opportunity to find out the major direction. I'll make sure you can get the whole thing on the record later on.
Mr. Senft: Sure.
The Chair: Would you mind that?
Mr. Senft: It would take two minutes to finish it off.
The Chair: All right.
Mr. Senft: Agriculture research has consistently returned far more to the national economy than it has cost. Some economic research put these returns at the excess of $40 for every dollar spent. However, before the benefits of research are usually enjoyed by all in the industry, the role of the private sector is to be constrained. The responsibility falls to the public sector to fund this essential work, and that will depend on the future or also influence the future competitiveness of the grains and oilseed sector.
Just in the area of taxes, farmers believe two tax measures should receive particular consideration. The first is the reintroduction of the investment tax credit for new machinery. The second is the continuation of the $500,000 capital gains exemption.
Under regulations and labour costs, a host of environmental and labour regulations have a valid social and economic purpose but impose additional cost to the agricultural industry. Efforts have to be taken to identify which regulations have outlived their usefulness. Such efforts must continue and be expanded to examine the full costs and benefits derived.
In conclusion, the federal government must pursue fiscal policies that recognize the contribution sectors have already made to expenditure reductions. If future expenditure reductions are being considered, they must be examined thoroughly for their impact on the domestic output, employment, and export.
The competitiveness of the grains and oilseed sector in the future is dependent on all parts of the industry working together, and we look forward by the actions of the government to work as a stakeholder within this. Thank you.
Ms Pauline Molder (President, Saskatchewan Council for International Cooperation): I'm here representing the Saskatchewan Council for International Cooperation. We are an umbrella organization of 32 NGOs here in the province.
We have already experienced the federal government's deficit-cutting measures, and we acknowledge the necessity of ensuring the deficit is kept under control. However, we would like to point out that slashing funding overnight is very disruptive to the fabric of the nation. If it's necessary to cut funding from organizations, they should be made aware of the necessity before it happens. Collective agreements are in place that have to be adjusted in order to ensure everybody is treated in a fair and equitable way.
.1535
Our concern about the impact of deficit reduction this afternoon is twofold. First, we are concerned about the impact on the population of Canada, especially on youth. We believe we must become more innovative and creative in finding opportunities for the youth. We know that many of them are discouraged and feeling disenfranchised.
Part of this creativity should be in recognizing the importance of the voluntary sector in providing individuals with job experience. I'm sure you are aware of the amount of money that is raised by the voluntary sector for both overseas development work, but also for work within Canada. In 1993 we had $86 billion in registered charities, and 4.5 million volunteers involved in that.
The voluntary sector is very important to many sectors of the Canadian economy, but it too is under siege as more individuals are substituting work hours for volunteer work. We need to become more aware of the value of this voluntary sector, and incorporate it into our thinking. International agencies working in the Third World have some excellent programs in youth placement and training. With some investment in that we could learn from those programs and incorporate that into the Canadian way of thinking in providing youth services here.
We are also very concerned about the impact of deficit reduction on our partners in the underdeveloped and developing world. Much of Canada's economic lobbying is dependent upon trade, especially trade with the developing countries in east Asia. We have seen phenomenal growth in many of these countries, but we must remember that this growth has not been uniform, either across countries or the populations within those countries.
The World Bank notes that one of the obstacles to continued economic growth in east Asia and the Third World in general is the need to meet infrastructure requirements, develop market-based institutions, and manage the environment, and then to deal with poverty, human resource development, and social security. It's estimated that 80% of east Asia's population live in low-income countries, and that 180 million people live on less than a dollar a day.
Partnerships between governments, civil society, and the international development community can provide essential tools for designing solutions to the human resource problems in these developing countries. Canada has the human resources and the knowledge base to help these countries to meet the adversities outlined above. Our challenge is to examine, possibly with other international agencies like the World Bank, the potential of a greater economic development contribution from international development NGOs.
One innovative proposal for managing the deficit is the Tobin tax. The implementation of this tax would discourage the overnight flight of capital from one country to another and would provide additional funds from a new tax base. Granted, this proposal would be more effective with support from other governments that are also suffering from similar capital investment problems. However, we believe the Canadian government has demonstrated in the past the ability to show leadership to governments of the developed world, and we believe it's possible to do that again.
Thank you for the opportunity to speak to you. We will be providing you with a more complete package of information.
The Chair: Thanks, Pauline Molder.
From the Federation of Saskatchewan Indian Nations are Chief Lafond and Mary Ellen Turpel.
Vice-Chief George E. Lafond (Federation of Saskatchewan Indian Nations): Thank you, Mr. Chairman. Chief Blaine Favel sends his regrets for being unable to attend this meeting, so we're here to speak on behalf of the Federation of Saskatchewan Indian Nations.
The Federation of Saskatchewan Indian Nations represents 72 first nations in Saskatchewan. It represents a population of 80,000 first nations in those 72 bands. The geographical area of Saskatchewan encompasses five treaty areas in which first nations descendants have signed treaties with Canada and the Crown.
The demographics that we are experiencing on our reserve have an impact, not only on our communities but also in Canada and Saskatchewan. Our population in Saskatchewan is increasing at 2.3% per annum. Of the 80,000 first nations descendants we have in Saskatchewan, 60% of those are under the age of 25.
A lot of the employment in the jobs that we do have in Saskatoon - most of those dollars come from government transfers, government type programs or security income.
.1540
Second, among our working age population consisting of 15 years plus - 80% of our people earn less than $20,000. Those income studies were given to us by Statistics Canada in 1991. So government cutbacks will have a drastic impact on our population.
One of the ways to rectify this is to examine the real relationships between first nations and the Crown. It's not so much looking at deficit reduction, it's looking to the real relationships between first nations and Canada.
Many people put us on the cost side of the ledger, but I think we've looked at the cost side of the ledgers for too long. We have to start looking at first nations people as potential earners and compatible partners inside the new relationships that go on in the provinces.
I want to turn this over to Mary Ellen Turpel to give you more in-depth answers to the three questions you asked us to answer.
Ms Turpel: As Vice-Chief Lafond noted, the chief of the federation, Chief Blaine Favel, sends his regrets that he can't be here. We have circulated some comments that he would like tabled with the committee. I'll also table a more detailed background paper for you to look at. I'm not about to go through it today. I understand that this is a different kind of exercise than that.
I would like to add a couple of comments to those of the vice-chief of the Saskatoon Tribal Council. First, the Saskatchewan first nations are not in a position to tell the Government of Canada how to address its deficit problem or how to target its reduction. Our purpose for coming here is to indicate to you that we've already had to withstand budget reductions in a number of areas that have had significant impacts on our communities, and in fact we're looking for increases rather than further reductions.
I'd like to highlight a few of those for you in the pre-budget stage. First, the three-year budget plan for the Department of Indian and Northern Affairs - that is, the plan from 1995-96 to 1997-98 - targeted a growth rate of 6+3+3 for this period of time. In fact, it was touted as a demonstration of the federal government's belief in fairness, justice, and equal opportunity that there were increases rather than reductions that would parallel the 18.9% reduction across government programming.
However, in our context in Saskatchewan, this reduced level of growth has caused us significant difficulty. In the past decade the Department of Indian Affairs budget has grown at the average rate of 8% annually, so we are dropping back 5%.
As Vice-Chief Lafond indicated, in the province of Saskatchewan we have a population growth rate that is three times the national average. In fact, the current first nations population of Saskatchewan is 80,000 people. Based on the 1991 census, the aboriginal peoples survey, Statistics Canada indicates by the year 2011, our population will have doubled in this province.
So the reductions in growth of the Department of Indian Affairs have a significant impact at the community level. Within the Federation of Saskatchewan Indian Nations, we're estimating that we will have a reduced capacity at the level of band governments by at least 15%, or as much as $500 million, and that's just in the year 1997-98. So we're facing significant shortfalls, even though the reductions to the Department of Indian Affairs are not as significant as the across-the-board reductions to departmental expenditures.
Moreover, there has been reduced growth in medical services expenditures for first nations. We estimate that this will result in a reduced capacity of approximately 12% for the Medical Services Branch of Health Canada for 1997-98. I don't think we need to bring forward statistics on the health conditions in our communities. They're profound. We are seeing a significant reduction in health services for first nations at a time when we have epidemic levels of diabetes, etc.
Furthermore, in the Department of Human Resources Development we're seeing a reduction of 35% over this same three-year period. We've already seen in 1995-96, a 15% reduction in first nations training capacity through the Pathways program. Again, with our chronic levels of social assistance and unemployment, this affects us because we have limited abilities in the area of job training.
.1545
Finally, I would just note that the new Canada Health and Social Transfer will reduce the current levels of federal contributions for income security, social services, health, and post-secondary education to Saskatchewan by 15% in 1997-98. This change in the CHST and the change in the form of tax points will mean an actual reduction of about 35% in cash transfers to Saskatchewan.
With the offloading we've experienced over the past number of years, many of our people are dependent on the province for services for which we were previously dependent on the federal government. Yet there's no indication that with the economy of Saskatchewan, which is relatively weak, the province will be able to meet these shortfalls and this offloading.
I just give those as some examples of the problems we're facing, to make the point that it is impossible for us to endure any additional reductions across the board. We're already facing some very significant problems in housing, health, and other issues in the community.
One final point I wanted to make is that from the perspective of the Federation of Saskatchewan Indian Nations, we wanted to note that we do not have open to us any of the usual instruments of fiscal federalism, such as equalization payments and tax points, because Indian people in this province and in this country are not treated as governments.
Despite our movement towards self-government, we are very much dependent on negotiating piecemeal agreements with various line departments. These are completely inadequate in funding our communities and resourcing our people.
We would certainly like to see a broader discussion, outside the context of this more narrow pre-budget discussion, on the fiscal relationship between first nations and the Crown.
We would also like to see a discussion on making available to us some of those instruments of fiscal federalism we haven't previously had. An example is the transfer payment arrangements that would be negotiated based on our populations and the needs of first nations, with direct payment to first nations instead of payments transferred through the Department of Indian Affairs, Health Canada, etc.
In conclusion, Mr. Chairman, we look forward to working with the Department of Finance and other departments on such an initiative. We're willing to do so, but to this date, however, we haven't had an opportunity.
In the pre-budget analysis we would like to see a consideration of our current social and economic positions.
We would also like to see an acknowledgement that, on the one hand, the federal government has a policy paper on self-government and has adopted some very explicit commitments on self-government. It will be very difficult for us to implement those in any meaningful way without a clear assessment and appreciation of our fiscal restraints context.
The Chair: Thank you very much.
I would like to introduce to you the members of our committee who are with us. We haveMr. Pierre Brien
[Translation]
from the province of Quebec;
[English]
Mr. Ron Fewchuk, who comes from Manitoba; Mr. Brent St. Denis from northern Ontario;Mr. David Walker, who comes from Manitoba; and Georgette Sheridan from this wonderful province of Saskatchewan.
[Translation]
Our first round of questioning will start with Mr. Brien.
[English]
Ms Turpel, while we're waiting for everybody to get lined up, could I just ask you whether the plight of Canada's first peoples throughout Canada is roughly equivalent to that here in Saskatchewan.
Ms Turpel: I think it's important to note, Mr. Chairman, that in Saskatchewan we have a higher aboriginal population than in other provinces.
In fact it's concentrated in western Canada, where we have higher numbers. In Saskatchewan, in particular, with 72 bands and the growth rate, the demographics are somewhat unusual.
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Planning for those changes, especially with the high youth population, where over 40% of our population is under the age of 25 - So it takes a different kind of planning.
Vice-Chief Lafond: The Province of Saskatchewan is well aware of this. When they talk about the future, they talk about three points in terms of the demographics.
The first is the aging population, the second is the de-ruralization of rural Saskatchewan, and the third point is of course the aboriginal part.
So it's becoming not an aboriginal issue on the margins, but it is being brought forward by the province, which is saying that it has to address this issue because it's a Saskatchewan issue.
The Chair: Could I just ask you another question? While you say your costs are going up at 8% a year, would that be equivalent in terms of other first nations people across the country?
Ms Turpel: I just have a point of clarification, Mr. Chairman. I was noting that historically, for 10 years, the budget of the Department of Indian Affairs has increased by 8% annually.
The Chair: Oh, I see.
Ms Turpel: That has not actually met our expenditures.
What we are finding - and it takes a fairly careful analysis - is that on average our shortfall is more in the neighbourhood of 20% to 25%.
There was a recent study prepared by the Department of Indian Affairs. Unfortunately, it didn't propose any solutions, but it was a study that looked at the degree of indebtedness of first nations governments across Canada.
In Saskatchewan we have bands and individual first nations governments that are in severe debt crises. Some of them have been taken over by third-party management.
Our debt situation is the result of an unusual strain, for instance, on housing budgets, etc., and being unable to meet the current situation.
So I'm saying that even with the 8% annual growth rate at the Department of Indian Affairs, with the population figures and our needs, we cannot withstand any additional cuts. In fact at this point we cannot plan, because the only thing we're planning is a bankruptcy situation and how to handle band indebtedness.
The Chair: Thank you.
[Translation]
Mr. Brien (Témiscamingue): My first question is to Mr. Buckwold. In your presentation, you said that the government had no choice but to reduce spending without increasing revenues. Do you think that anything that has to do with taxation can be viewed as an expenditure, for example some tax credits and deductions? If we make some changes, will it increase revenues or reduce expenditures?
[English]
Mr. Buckwold: From our perspective, we don't think interfering with business by tax credits is the way to go. I don't think that's the answer. I think that the way to go is really to reduce spending.
We don't think the various programs that are out there with tax credits and other sorts of artificial stimulations for business are long-term solutions to problems.
In the short term they probably work. I suspect they enhance opportunities in specific industries, but in the long term we don't think that's the route to go.
[Translation]
Mr. Brien: I'll put the same question to Ms Anderson. She said that we need to cut back by 30% if we are to balance our books because we overspend by 30%, and she had figures to back it up.
Do you think that we could solve part of the problem by reducing program expenditures and by reviewing current fiscal expenditures?
[English]
Ms Anderson: There are some tax-spending programs that might be considered, and make some sense. There are others that don't, especially from the point of view of the taxpayer.
The most important message for this committee to get in their consultations throughout the country is that spending - actual expenditures - is too high, and there are avenues through which it can be reduced.
When I talk to people and I listen to what they say about federal as well as provincial government budgeting - because you're very much aware that most of the provinces have similar problems - the message that comes through most clearly is that the issue of bringing spending under control is being avoided. It's not being dealt with. That's why the first question -
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In my opinion the first question the committee posed to us is not the right question. The question you posed is what our deficit reduction target should be.
One of the things we've learned over the last several months is that it's not a question of what the deficit is; it's a question of demonstrating to everybody, including the international monetary system, that we have our debt and spending under control. When you do that, then your deficit will go.
You have to have targets to get rid of the debt; that's the message that comes forward.
Now, if you want to use revenue-generating mechanisms to reduce spending, I don't think that's dealing with the question people are asking you do deal with. The question people want an answer to is how actual spending is going to be brought under control.
I would agree with Mr. Buckwold on this, that it's off on a tangent in a way, it's a diversion from the issue when you start talking about revenue-expenditure mechanisms and doing something with that.
You have to get spending under control. Governments are spending too much money. They're trying to do too many things with the revenue base available there. That's what has to be brought under control.
[Translation]
Mr. Brien: I can understand that we cannot expect our revenues to increase, at least in the next few years. The same people who are telling us that we should cut our spending by about 30% are also saying that we should try not to touch any of the social programs or the other programs. They are sending us conflicting messages. We have to make choices. It also means that we will have to do something about transfer payments. Those are significant amounts. Do you think that we have to cut back in all areas of expenditures or that some areas should make bigger sacrifices than others?
[English]
Ms Anderson: One of the things most governments are trying to come to terms with - and I see no reason why the Canadian government shouldn't also try to come to terms with this - is that there are certain basic services all governments are responsible for providing and are committed to.
I used to be a professor, and I often said to the students that in public policy what's wrong with having social programs is that you can never back up on them. There's always going to be somebody who complains about it, and somebody who is going to be hurt, and this is with any kind of policy.
But the fact of the matter is that there are certain services we expect from government. We have to focus our attention on what those are going to be. We have to recognize that there are other kinds of programs. Taxpayers simply don't have the money to be able to finance those extra programs, and we have to make the hard decisions.
Now you say to me, which ones am I going to cut and which ones aren't I going to cut? That's a legitimate question, it's a fair question, and if I were sitting in your chair, I'd be asking the same question.
But the fact of the matter is that we all have to start prioritizing what those are going to be. Since you're the finance committee, we as taxpayers expect you to start telling us, or at least exploring with us, what the priorities are going to be and how far down that list you're going to go. Then we make a judgment on whether that's far enough.
But the fact of the matter is that it has to be done. We have to learn to live within the budget that's available, because taxpayers - I don't really believe Canadians are the kind of people who will give you a revolt, but they're certainly not going to be happy. I mean, the development of the underground economy is an example of what happens when taxes are too high.
There has to be a level of taxes, a level of revenue, that we can afford. But in order to live within that, we have to start defining very clearly what the basic services are, what the government is going to provide, and what else has to go.
The Chair: You sure ducked that answer.
Voices: Oh, oh.
Ms Anderson: You want me to give you a list?
The Chair: We sure do.
A voice: You bet!
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The Chair: It is totally wrong to say that people are asking you to cut spending. Some people are asking us to cut spending. Some other people are asking us to increase spending. At this table four out of the six groups have said, keep spending in our area at the same level, or enhance it.
Ms Anderson: They're not necessarily saying, increase the total level of spending. They're making a distinction between why their program is important and why others might not be; that's basically the argument.
The Chair: We'd sure love to have you sitting on this side of the table, Ms Anderson.
Voices: Oh, oh.
The Chair: Georgette Sheridan, can you help us with this problem?
Mrs. Sheridan (Saskatoon - Humboldt): Since we have Isabel in a corner, I think we should keep her there. I know her well enough to say that. But I would like to pursue this, because we've hit the nub of the problem that faces us.
It's very well and good to sit around the table and say how important various things are. Let's assume that's understood.
Isabel, what I would like you to do - and maybe get some dialogue going across the table - is this: as the chair has recognized and as I listened, too, I heard four out of six saying, well, yes, the deficit has to be under control, but I need some help with my program, whatever that might be.
Let's pretend that Isabel Anderson is Minister of Finance for the day - something I know you'd like to do. How do you explain to groups like Pauline's, who I heard from after the last budget, that we're going to cut your funding? It's right, it was drastic. I guess it was done in a way, with certain commitments made, that didn't permit a transition.
Yes, the deficit and debt have to be brought under control. But how do you explain to those groups what you're doing, why it's important to do that, I suppose, rather than picking some other organization?
Also on the question of prioritizing, yes, that's what we're here to do today. But tell me, how do you prioritize?
I don't just want to put you on the pin here. I'd like to hear from the other groups as well.
What's important? Based on what you heard from all the groups today, should culture be given a special leg up? Should it be shippers?
I mean, some people would argue that the Saskatchewan Wheat Pool is big business. If I listened to Mr. Buckwold correctly, big business doesn't need government sticking its nose in, and that's your message as well.
But if you pull that thread out of the fabric a little, you're going to find out that at the end of the shipper thread sits a producer on a farm.
You could do the same thing with the aboriginal issues. You could do the same thing with helping poor people, not just in our country, but around the world. But again, if you pull the thread out, you're talking about a fundamental value of Canadian life.
Having said that again, I ask how you prioritize. Is it health care? Is it child care? Is it child care only if it can be shown to be an employment incentive, or something that generates taxpayers? Should it be rail subsidies?
We talk about revolts. I'm beginning to think Canada is going to be one of the most revolting societies on the face of the earth. There's a bit of a double entendre there.
We have the taxpayers revolting on one side; the Reform Party is always on my neck about that. On the other side, look at the people in Ontario who are revolting against the kinds of cuts that Mike Harris is putting in place right now.
These are organizations like the child-care workers. They're not exactly the people you'd expect to be out in the street looking quite violent, and yet that's what's happening. So getting these two groups together -
That's a long preamble into the -
Ms Anderson: - question.
Ms Sheridan: - discussion. I'd like to hear you tell Pauline. Then I'd like to hear Pauline's response and then everybody else's, if that's acceptable, Mr. Chair.
The Chair: I think it's a great way to proceed.
Ms Molder: You are putting me at a disadvantage.
Voices: Oh, oh!
Ms Anderson: I think Pauline already knows my answer.
The Chair: This is your chance to mark her exam.
Ms Anderson: I used to be on the board for the international council Pauline is representing, so I have a pretty good idea of their problems, and I understand them very well.
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I think what they are trying to do is a good thing, but the fact of the matter is that the federal government has certain basic responsibilities. You ask how you define them. I think it's pretty clearly defined. The Constitution of Canada defines what the Government of Canada is responsible for. You have to provide things such as the framework for international trade, the currency - there are certain basic services for which the federal government is the agency or the organization to provide those services.
It is also a fact that over the past several decades we have gotten ourselves into a situation in which, because we had a lot of money flowing into the public coffers, we've been able to support a wide range of programs. We've taken on things such as health care and growing education. But at some point if you don't have the tax revenue - partly because people won't pay it, simply because they don't have enough left in their income package to be able to pay it - you have to start sorting out which of those programs you can afford in the sense of it being probably revenue generating. It has to be a situation in which you can see down the line that there is going to be federal money coming in.
It's not just a question of raising the tax further, but there has to be an employment-generating framework within which we can all operate for the aboriginal peoples. For goodness sake, their communities have to develop. There are certain basic responsibilities for providing infrastructure and a number of other things, but to hand out money to programs isn't the answer. Surely that's partly how we got ourselves in the mess in the first place. We have been very free with a whole range of programs.
Let me raise the question of agriculture. This committee doesn't even have to ask the question. The fact of the matter is that under the General Agreement on Tariffs and Trade there are certain things with respect to agriculture that we have to do, that the federal government has to do. If this means you have to cut back on programs, then the question is how we can get help for this sector in another way. There have to be other mechanisms. Surely the western grain transportation exercise has been part of that. Whether we like it or not, that's the way it is. If we want to help out this sector, then we have to be looking to agriculture to identify where that help can come and where it's not going to cost more tax dollars.
I'm not dodging the issue. There are certain things the federal government has to do - it's their responsibility to do it, but that doesn't mean to say there have to be handouts for everybody. We have to make hard decisions about which ones they're going to be.
There's no question that community development is important for the aboriginal peoples. Just saying it's important and our sitting around and agreeing doesn't deal with the issue. Okay, what are the specifics of developing the communities? How are the federal government, the provincial governments, and the local governments going to cooperate in getting the funds into that project? That's the constructive way to go about it, it seems to me.
The Chair: Pauline, I think you should have a chance.
Ms Molder: I don't have a direct answer. I come back with a question. I hear the business community talking about the need to be allowed to do the employment generation, but as an outside observer what I see very often happening with that employment generation is that when business has capital, business buys more capital and does not generate employment. I would like to hear some creative ways about how we can generate employment. The atmosphere in which we do business requires that we do it more efficiently, which means we substitute capital for labour and we downsize. Productivity in Canada has gone up. We are one of the most productive countries in the world, but our employment is not following suit.
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So my question to Isabel is, if we give you back this money that you request so you're not paying it in taxes, how is this employment generation going to happen? How do we look after the underprivileged in our society, and how do we care for those people in the global economy whom we need to generate income for so that they can buy our goods?
Ms Anderson: It's not a question of giving back anything. It's a question of whether or not there's revenue there to pay in taxes, and the point is that it's not. The more you raise taxes, the more likely it is that you're not going to have businesses making the investment where they can employ people. That's the point.
Surely part of the point the NSBA wants to make is, look, with the tax rates we have and the revenue environment we have, the government has enough money to do what it needs to do. It shouldn't have to ask you and me and everybody else for more tax revenue. It has enough. The question is how it is spending that money, and most of the people in this country, I believe, are saying that they're not doing a particularly good job of spending the money they have, so let's look at how they're spending the money.
The Chair: That's not true. The key agricultural industry representatives in Saskatchewan came before us and said we're doing a good job of spending on the programs that support it, and they don't want us to cut them. Am I wrong about that?
Mr. Terry Harasm (Director of Policy and Economic Research, Saskatchewan Wheat Pool): I think you're wrong in the sense that where we're headed - you have to look backwards a little bit. Out of the government, particularly federally, quite a lot of money has been transferred from tax dollars to the agricultural sector. I think if you look in the most recent period of time, that number has dropped drastically.
The point we were attempting to make here is not so much that we are against, in an overall context, balancing the books, as Ms Anderson has pointed out, but one shouldn't in fact do it in a way that does not also recognize that the industry has taken a fairly significant whack at a time when we're trying to adjust to move into this new global environment. In a sense, if we as an industry are going to move forward and become competitive and deal in a globalized world, in large measure I think all parts of the industry in agriculture and government are going to have to contribute the bits and pieces if they can to make us survive and thrive in this new environment.
From our perspective, we need to increase efficiency and adapt to the new trade agreements, to the international competitive environment that exists, because if we can't be competitive internationally, we will not be around domestically.
In order to help us do that, we cannot look at increased taxes in a way that puts us at a competitive disadvantage to, for example, equivalent parts of the system in the United States, Europe, or anywhere else. I'll give you an example. Our terminals pay probably five times the taxes right now that equivalent terminals in the United States just across the line from ours do. It puts us in a position in which we have to be much better in the rest of the system in order to compete on an international basis.
We asked you not to reduce money on R and D. That's a fact. If you look at the future, and I think Ms Sheridan's question as to how you priorize expenditures - to me, one of the ways is looking down the road. Where do we want to be in the future? It would seem to me that cutting expenditures in R and D is the equivalent of eating your seed corn. I heard this the other day, and that's a fact. If you want the industry to be competitive and to be able to survive 20 or 30 years from now, you don't reduce expenditures on things like R and D.
I think it would be wrong to view us as coming here saying, do not reduce the amount of money you put into agriculture. Recognize that we've taken some fairly significant whacks, recognize that we are adapting and we need your help to be able to compete in the future as the world unfolds.
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Just as an aside, if you look at it from my perspective, one other question that needs to be put on the table is also in the area of where you cut and how much you cut. Without putting too fine a point on it, it would seem that there really isn't much room for the government to cut in areas that are discretionary, in terms of where you have the opportunity to do so.
If you're going to significantly get to the 30% or even your own target, you're going to have to go into the areas where you have mandated. You're going to have to deal with the big ones, health and education, in order to effectively reduce our debt and deficits.
The other question that also should be put on the table is that in large measure maybe we're not talking about reduced services; maybe we're talking about increased efficiency, and how some of these services are offered to the public and consumers.
I don't know, maybe we're spending, maybe the services don't decline if you reduce spending. Maybe there are smarter and more efficient ways of spending money that we currently aren't using.
That's a concept we should talk about in terms of how you reprofile money within a sector or within a particular envelope in order to get a bigger bang than we have had up until now.
Thank you.
Ms Turpel: I'd like to make a couple of comments. First, I'd like to note that the discussion we're having here is exactly the kind of discussion that profoundly disturbs us as first nations people.
We feel that we get played off against other people who are considered to be interest groups and we're thrown into the mix of what we cut. Ms Sheridan raised the issue of revolt and the problems we face.
It's important to note first that, sure, there may be demonstrations across the country in light of particular provincial budgets and deficit-reduction strategies, where you have various sectors coming forward and protesting strategies, people protests in front of legislative assemblies, etc. In our case the last protest we had was at Ipperwash, where one of our people was killed by the Ontario Provincial Police, for example.
It's really important to note that when we have protests, they bring in very significant forces to quiet our people.
On the issue of revolt, we in western Canada have been in the condition of revolt since 1870, since the Hudson's Bay Company decided to sell its interest in western Canada to the Dominion of Canada. It did so, and disenfranchised the Métis and Indian people, which gave rise to a process of negotiating treaties.
In Saskatchewan we have five Indian treaties, treaty numbers 4, 5, 6, 8, and 10. Those treaties that were negotiated with our people made very specific promises.
There is the medicine chest clause: we will provide you with health care. There is the education school clause: we will provide you with education. We will provide you with food, shelter, and clothing in times of need. We will provide you with farming equipment and training. We will provide you with annuities. We will provide you with protections for hunting, trapping, and fishing.
I can go on and on about our treaties, but it's important to note that -
The Chair: It's a point well made.
Ms Turpel: - we have constitutionally protected treaty rights, that we are not simply an interest group that can be played off against whomever will come along. There would not be settlement in western Canada if it weren't for the fact that we have treaties.
Unfortunately they haven't been implemented, and our people have been totally disenfranchised economically.
You see Vice-Chief Lafond and myself: we're very privileged people, we're educated first nations people, we're here speaking to you.
I encourage and challenge you to go to a place like the La Ronge band, spend a week in a house that has no running water, that's overpopulated, has 10 or 15 occupants, and possibly doesn't even have electricity.
These are the kinds of conditions we're facing in our community. So while Canada has enjoyed a significant amount of wealth in the past, our people have been largely disenfranchised.
I'm not saying that we need to change things just because of historical grievances, but we have these continuing treaties. They don't have an exploration date stamped on them; they continue.
All we've been saying as first nations people is that we want a fair assessment of the fiscal obligations towards first nations people. We do not want to be put off into the hands of the Department of Indian Affairs. We are not confident that it manages its finances well. I don't even think the Government of Canada is confident. Even the minister of Indian Affairs is not confident that it manages its finances well.
In fact, we can't even find out how they spend their money. They won't even tell us how they spend their money. Even in Saskatchewan we can't find out how the Saskatchewan envelope works, because they won't open the books to us.
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From a first nations' perspective, these are very volatile issues. If you want to play our people off against other interests, then in our view you play a race card that becomes very volatile. Some political parties in this country have recently attempted to do that, but we already face a situation of revolt.
Our position is very clear: we are not unmindful of the deficit and debt situation, but we will not countenance some kind of strategy that will only serve to disenfranchise our people more because of some short-term objectives about deficit reduction.
In fact, you'll have to face another generation of people that will come after us, who will be so disenfranchised that we won't even have an opportunity to have these kinds of discussions.
The Chair: That is a point well made. In other words, it's more than a budgetary matter; it's a treaty matter, apart from any humanitarian decisions that may be on the table.
Georgette, did you finish with your questions?
Mrs. Sheridan: Yes, I guess I would just add that we're still at the point at which we're saying, well, in no circumstances can there be more increased taxation, while the only other alternative is to cut spending, so there you go.
But when we are talking about making priorities - and we just heard a very eloquent argument in favour of a priority, as I see it - I don't mean that in terms of playing off one element against the other.
The suggestion was made that it was simply a matter for the federal government to look at its jurisdictional shopping list. Well, clearly aboriginal issues are well within that list. I'm not sure that you can simply take that approach, because it does spin off into health, education, a whole number of other things. So I'm only trying to illustrate the complexity of trying to determine things that way.
Also, if you comment on the Saskatchewan Wheat Pool, I like your analogy of don't eat your seedcorn. I guess I could take that another step further, and say that there would be people who would argue that not investing in decent child care for your children is the equivalent of eating your seedcorn.
It's not just a matter of asking what pays, but what pays in the big picture.
That's the end of me, Mr. Chair; I will not say another word.
The Chair: No, I thought you were so good, we're going to encourage you. And you do say a lot in Ottawa. When you're down there you're constantly talking to us about the west.
A voice: Oh, oh.
Mrs. Sheridan: Miss Chatterbox they call me.
The Chair: Ms Anderson, you have -
Ms Anderson: Yes, I'd just like to pick up on Ms Turpel's point, because I think it's an excellent one. It is also related to what Georgette has said. It reminds me of the fact that the budget process, the process you end up being obliged to go through - and it's the federal government, it's the provincial government, it's the local governments. This is particularly apparent at the local level.
You know, we've spent a long time in our world. We go through the budget process, and we have this wish-list thrown at us before the committee or the Minister of Finance.
We have to go through the process of deciding. I mean, when I say priorities, one of the things that comes to your mind is, well, which one of those items on the wish-list am I supposed to check, and which ones can I drop?
Yet that's not the way the financial decisions are often made. I'm not trying to get into an exercise of deciding which expenditures are most productive, and which aren't.
I mean, the fact of the matter is that the aboriginal peoples of this province and of this country have really important economic or financial matters, problems that have to be resolved. Going through the standard process of just looking at the wish-list doesn't help them very much.
Somehow we have to get the budget process changed around so that their needs can be integrated into the larger financial situation. When that is done there can be a set of priorities of what comes first, what comes second, and what comes third for all of us, not just one group.
I know you are in a process of trading off, but that has to be resolved.
The Chair: And I know you will not agree today on what our number one spending priority should be.
Ms Anderson: Because I'm saying to you that the process is not an exercise in going through wish-lists and making priorities just on that wish list.
The Chair: Okay.
Ms Anderson: It also has to do with where the revenue comes from, and as we've said here, what is down the line in terms of what comes back to the government, and what comes back to the community as a whole, including the local community level.
The Chair: That's a good theory.
Mr. Walker.
Mr. Walker: Thank you, Mr. Chairman.
I'd like to go back to Mr. Hislop and his presentation.
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One of the issues that has emerged for us as a committee in the last year, that we didn't look at at all in our first round a year ago, is the question of what to do with charities and charitable donations.
Of course, when I say charities, there are a number of organizations that fall under this category, from the universities to hospitals to traditional notions of charities. I just wanted to make sure I understand what the different groups are presenting to us.
Is the major problem dealing with capital gifts as opposed to annual contributions, or is it a combination of both?
Mr. Hislop: I would say it's probably a combination of both.
Mr. Walker: On the annual side the issue is whether we can somehow or other make the charitable tax deductions a little - not richer; that's not the word for it - more generous.
Mr. Hislop: To consider whether or not it would enhance or increase the amount of charitable giving overall if the donors were to receive a larger tax credit, to consider that and whether that in fact would then help the charities -
Obviously it would help them if there were increased giving. Whether or not over a period of time we might perhaps see other areas suffering, because individuals may be encouraged to give more to charities in order to receive the tax credit - Would it decrease in other areas as well?
Mr. Walker: What's the major problem faced by everyone on the capital side?
Mr. Hislop: I'm not sure I understand your question.
Mr. Walker: Some people have come to us and said that in the United States one of the reasons universities, for example, have been able to attract a large number of capital gifts is that the gains contained within that gift are protected from future taxation by the donor.
Of course, in Canada there's no such protection in a capital gift.
Mr. Hislop: Right.
Mr. Walker: Now, have you pursued in detail exactly what you're looking for?
Mr. Hislop: I'm not sure I could give you a complete answer this afternoon, and this isn't meant as a way to duck out of it. But I know that tomorrow in Calgary you are going to receive a presentation from someone from my organization who will go into much more detail.
Mr. Walker: That's fine. I just wanted to make sure that we leave the witnesses here with a real interest in this issue.
We received a very good presentation yesterday from the Thomas Sill Foundation in Winnipeg, dealing with a particular change in the Income Tax Act that allows them to disburse their moneys differently, to set up a number of corporations in small towns.
It was a very interesting idea that we -
The Chair: Mr. Walker, I'm sorry, could I interrupt you? I know that two of our very important witnesses here have to go.
Just before you leave, would you like to make a 30-second summary?
Ms Turpel: I'd just like to thank you for your time and for the committee's consideration of our comments.
I'm sorry we have to depart a little early, but we have another commitment. That's no reflection -
The Chair: No!
Ms Turpel: - on the significance of this process, but we have to run off.
The Chair: Oh, I think it's a sign of very good judgment.
Voices: Oh, oh.
Ms Turpel: We picked a perfect opportunity to depart perhaps; I don't know. Anyway, thank you very much, and good luck with your deliberations.
The Chair: I would just like to say before you go that in this committee last year it was one of the two or three areas where we recommended absolutely no cuts.
Thank you for a very eloquent, forceful, and memorable presentation.
Ms Turpel: Thank you very much.
The Chair: Sorry, Mr. Walker, I interrupted.
Mr. Walker: I think I was just about finished.
The Chair: Oh, good.
Voices: Oh, oh.
The Chair: Okay, Mr. Fewchuk.
Mr. Fewchuk (Selkirk - Red River): If I may be so bold, Ms Anderson, and ask you a question, I would like you to answer it. It would be for my eyes only. It will be put a different way on paper.
If you were the Prime Minister of Canada, could you - and somehow if you'd wish - give your ideas to me personally on what you would do. I would be very curious. It would have to be said over the mike -
Ms Anderson: Oh, with pleasure. I think Georgette already knows what I would say, on the basis of what I said about the budget last year.
I don't think anybody presumes to have all the information. I've worked with the people in the Department of Finance. I understand their problems, and I understand your problems in trying to define what a budget should look like.
But I think I also understand some of the frustration that rests with taxpayers and people out there. I believe I also understand that it's very easy to be on the Hill. When I was in Ottawa, we had a saying: when you're on the Hill you're on an island, and you sometimes forget about the details.
But having said that, I should state that there are certain things that are important. In Canada right now it's important to be able to demonstrate that the fiscal management of this country is under control.
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I don't think anybody would presume to know the details of how the committee decides to do that. But the message that has to be clear for the taxpayers of this country and for all of you who will be up for re-election before long is that you have control over the fiscal management of this country. This means that there has to be evidence that when you made a choice you made it on the basis of good judgment - you're not just throwing money at something, you're concerned about what's going to happen down the road, what's going to happen in aboriginal communities, and all of those things.
You're going to say to me that this is pretty vague, but I think you understand what I'm saying.
Mr. Fewchuk: One last thing I wish -
Ms Anderson: Yes, you want me to tell you what the decision is and, of course, I don't have your job. You have to do that.
Mr. Fewchuk: If you don't want to say it over the mike, it would be nice just for my eyes only - a piece of paper.
Ms Anderson: Let me just go a step further. In that budget last spring one of the things that didn't happen, which I think needed to happen - and as it turned out in the international community afterwards a similar judgment was made. It's not just getting expenditures under control, it's getting the debt under control. That's because of the instability that is exacerbated by the Quebec politics, and you know this, we all know this.
It's a question of getting the debt at the right state to be able to demonstrate that when you have made a judgment that it was made considering the implications for it, the adjustment costs involved, and what the net effect is down the road. I think a lot of people, whether they're right or wrong, believe that the decisions your committee make and recommend are ad hoc. Part of that is the process.
Mr. Fewchuk: I have the same argument with my daughter-in-law. She's a schoolteacher and once in a while I say, pretend you're not teaching, just put it down on paper for me.
Ms Anderson: I don't have a model - or I'm not being my economist self here. It's a very practical thing. The process itself encourages all of you, and us too, to set up a wish-list and say, this gets number one, this is number two, and this is number four. But it's not always related to where the money is coming from. In a business you have to relate it to the money because you have to worry about the bottom line. All you guys have to do is balance the budget.
Mr. Fewchuk: Thank you very much.
Ms Anderson: But understand what I'm saying. The second part of this is to demonstrate that the debt is under control.
It seems to me there was a very simple way of doing that in the budget last spring - and it's something that's already in place and - that is, simply making the observation that at least part of this GST is going to pay down the debt with the corollary that it's going to be paid down at this time. This is where we're going to make our first payment to pay down that debt because by this time our spending is under control in these ways, and we're going to be paying off the debt. In other words, just go through the exercise.
You guys say, that's all, but it's a very difficult thing to do, because it requires some foresight on how the financial management is going to proceed. I guess what we're really doing is pushing to say, let's see what that financial management is like. It seems to me that in the 1996 budget there should be clear evidence that this management mechanism is working, that everybody can say, hey, we don't know the details, but we think you have this under control and we believe you when you say the debt is going to be paid off starting at this date.
Mr. St. Denis (Algoma): As I said to the previous two panels earlier today, it's a pleasure to be back in Saskatoon.
Ms Holder, there's something in your presentation I thought was intriguing, and I hope you have the answer to it. In your section 1 there is a question relating to the needs of youth in this country. Clearly when you look at the unemployment rates of the different sectors in our society, youth unemployment is tragically high. One of the mandates of our committee, one of the questions we have to deal with, is the question of jobs.
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You mentioned in the last sentence of that first section that international agencies working in the Third World have developed youth placement and training programs that we might learn from. I believe that not only can we learn from our history, we can learn from what others beyond our borders do when facing similar problems.
So I'm wondering if you have here some examples that you could share with us of programs that are working elsewhere and that might have an application here. Or can get you them to us?
Ms Molder: I don't have them with me today, but I do have them and we can forward them to you.
Mr. St. Denis: Maybe you could forward them through Georgette. That would be helpful.
I have a second short question for Mr. Hislop, Mr. Chairman.
Mr. Walker had asked you a little bit about the charitable deduction and the capital side of giving. As I see it, there is the smaller gift giving - the donations to the Cancer Society, Kidney Foundation, etc - of $10 and $15 and $100 that you get from average citizens and that is in the realm of a tax deduction, and there are the bigger gifts. If they're big cash gifts, they're well beyond a tax deduction because there's a limit to what you can get through your tax return. So the big gifts really are of a capital nature.
So there are really two different constituencies. The intersection of the big gift givers and the small gift givers is probably very small. If you had to choose which were more important between measures to try to attract smaller dollars from more Canadians - that is, broaden the base of give giving so that you have more Canadians giving smaller gifts - versus measures that allow the bigger givers to give bigger gifts - albeit there are fewer bigger givers - which of the two would you choose? There are cost developments in either case. What has the greater long-term benefit for society?
Mr. Hislop: I don't think anybody involved with a charity would want to make that choice because you are interested in both. You want your base of small givers who develop the habit of giving and will continue to give for a long time.
Mr. St. Denis: And hopefully become rich and give you big gifts.
Mr. Hislop: And hopefully become rich and make the big gift at the end. We see that happening historically with charities. The people who do support and start small, if they continue to give to that charity because of their personal feelings or whatever, tend to give larger gifts if possible and as they're able to do so.
So, when you ask which one I would choose, I wouldn't want to have to make that choice, and that's the same situation you people find yourselves in when you're trying to set a budget.
Mr. St. Denis: It's a very vague question in a way, isn't it?
Mr. Hislop: It's a tough question.
From the perspective of where I work at the university, we in this province are just about to go into and launch crown foundations for the two universities, whereby that tax credit, as you know, has increased considerably. So there's an attractiveness there for those two institutions at this time to draw in the big donation. Right now, I would say that maybe that's the area we would be looking at with the hope of seeing larger gifts coming to our organizations. That's one of the questions we had to look at: whether or not there is any real advantage to those receiving - those who have the crown status - over the long term.
It's a difficult question. I think many charities obviously start out with many, many small donors at the base, and they then look towards the larger ones. Hopefully things build over time so that they have both groups within their target area.
Mr. St. Denis: Thanks you, Mr. Chairman.
The Chair: Thanks, Mr. St. Denis.
Can I ask one quick question of you, Ms Anderson? You're from Saskatchewan. We have cut grants to agriculture and agrifood in Canada by about $445 million over the three years from 1995-98. That's about a 20% cut. How much more can we cut them as part of our deficit reduction for the following year? In order to meet the targets you want, would you people in Saskatchewan support us if we take another $200 million out of the grain sector?
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Ms Anderson: The point I was making earlier -
The Chair: No -
Would you or would you not?
Ms Anderson: What you do with an individual program depends upon the other things in the budget. My suspicion is - and I think this is fairly common knowledge in Ottawa, although people here don't talk about it - that the economy of Saskatchewan has the capacity to provide a number of the grants that have previously come from Ottawa. I think the answer to your question has to be a particular one and I think you know what that is.
We're not talking about whether everybody in Saskatchewan agrees with it, are we? We're talking about what is possible, and what is possible is that agriculture in Saskatchewan is probably going to see more cuts in money coming from Ottawa and if they want money to go into agriculture, they're going to have to expect it to come from the provincial economy. It's the same with all the transfers and if they haven't recognized that yet, presumably part of your job is to explain that to them, isn't it?
The Chair: Thank you, Ms Anderson.
[Translation]
Mr. Brien, you're to blame for raising this issue.
[English]
This has been a very memorable meeting for me.
Mr. Buckwold, you've talked eloquently about the need to get interest rates down and therefore have a balanced budget, but you've also told us about areas where there's useless red tape, where there's bureaucratic expense that is just a drag on the system and on the private sector. If you can give specific cases to us, we will try to look into them and try to cut them out, because this is an area where none of us benefit and the savings go right to the bottom line.
Mr. Hislop, we agree with you and this is why we provoked this research. This is why, in last year's report, we said we had to look further into charities and how to encourage them. And as we, as governments, cut back surely we have an obligation to encourage individuals, or to enable or empower individuals in the private sector to do more. Thank you for the leadership you're taking here. I hope you will find our report constructive.
Ms Anderson, it's a lot of fun talking to you. You're a very forceful, very articulate person. You've made a very strong case. I can understand why you were - if you're not still - a highly respected teacher.
In terms of the grain industry, you've taken one hell of a hit. I wouldn't have believed that it'd be a Liberal government that would be forced to get rid of the Crow benefit you've had for most of this century. I just never thought the political mood or the politics would have been such that we could have done it, but I commend the way the west has responded to this and is taking up the challenge.
Thank God for good grain prices. We will certainly have them as long as the Liberals are in power in Ottawa -
Some hon. members: Oh, oh.
A voice: Take that to the banks.
The Chair: - but we certainly take our hats off to you for the way the industry has responded, and we look forward to working with you in a very constructive way.
As for you, Pauline Molder, I don't believe a Tobin tax will work unless just about every jurisdiction in the world, including Luxembourg, signs on. Therefore I think we have to look at other ways of getting this money and stopping harmful international speculation. That does not detract from the importance of the voluntary sector you represent and the importance of the NGOs that are doing incredible work here in Canada and internationally.
I believe part of the solution will be to find ways to empower you to do more, not necessarily with more and - not to detract at all from your efforts - to empower you to find more and more people to go into your groups and work with you, because in my own experience you're doing a tremendous job in some areas.
In memoriam to those departed, they made an excellent presentation on behalf of our first peoples.
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I want to thank everyone on behalf of members for taking the time to spend this afternoon with us and bring us up to date.
I have a great deal of affection for Saskatchewan. My parents were both born here and I will have to report back to them that I acted with respect, minded my manners, and had a great time meeting the people they still frequently return to visit.
Members of Parliament from all parties have appreciated your excellent presentations to us. Thank you.
This meeting is adjourned until 9 a.m. tomorrow in Calgary.