EVIDENCE

[Recorded by Electronic Apparatus]

Friday, December 1, 1995

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[English]

The Chair: Order.

The finance committee is continuing its pre-budget hearings. We're delighted to be here for our second roundtable in Vancouver.

With us this afternoon are Mr. Charles Campbell; from the Capilano Students Union, Julian Albanese; from Community Based Full Employment, Peter Robinson; from the Downtown Granville Tenants Association, Sherrill Gullickson; from the Federation of Canadian Municipalities, John Les; from the Richmond Chamber of Commerce, Kirk Lawrie; from Savoy Management, Bernie Yung; from the Vancouver Foundation, Richard Mulcaster, Chris Richardson, and Bruce Buchanan; Mr. Fred Pawluk, an individual; Dr. Hardwick, associate dean of research and planning for the Faculty of Medicine at U.B.C.; and Bernard Bressler, Professor and Head of the Department of Anatomy.

Now, I've probably messed this up. I've forgotten Mr. Sulmona, manager of strategic planning at the Vancouver International Airport Authority. Did I do a great injustice to the pronunciation of anybody's name or did I miss somebody?

Thank you for being with us. We will start off with a maximum three-minute summary from each one of you as to what your concerns are or what your advice to us is. You'll have a chance to wrap up and during the course of the questions, if you haven't had time to put your case fully, I can assure you we'll give you all the time you want.

Maybe we could start off with you, Mr. Sulmona, for the first three-minute opening.

Mr. L.G. Sulmona (Manager of Strategic Planning, Vancouver International Airport Authority): Good afternoon. On behalf of our president, David Emerson, who unfortunately wasn't able to attend today, we will be putting forward more formal comments in writing to the committee.

Today I would like to cover just a couple of specific technical points and then offer to answer any questions the committee might have. As I mentioned, we will respond in writing.

From the perspective of the Vancouver International Airport Authority, as the Canadian economy becomes more dependent upon international trade, taxation measures and bureaucratic procedures that apply to export goods and services result in a less competitive environment for Canadian exporters and operators. There are a number of specific instances where taxes are either applied to export services or held for in-transit goods, which impacts the competitiveness of Canadian goods.

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Very briefly, our first issue is the GST on transborder airfares. Open Skies has resulted in significant increase in cross-border travel this year all across Canada. Industry comments are that there is a persistent airfare imbalance between nearby U.S. airports and Canadian ones. Flights to U.S. cities from nearby Seattle continue to be much cheaper, principally because of the difference between Canadian and U.S. taxes.

Most recently quite a number of U.S. carriers, particularly chartered carriers from Bellingham, a small town just south of the border, actively promoted flights into the United States that are GST-free. A similar situation exists in both Toronto and Montreal with Buffalo and Burlington respectively as the U.S. points of service.

Another problem is that GST cascades on top of the air transportation tax, further damaging Canadian air carriers in particular. For Vancouver it's a particular problem because of the proximity to the U.S. border. The GST, applied only to transborder airfares, is also discriminatory from an economic policy perspective, as it does not apply to other modes of transportation across the border.

In particular, we have a very large number of U.S. cruise ship passengers who are bound for Alaska each summer. Many of them in the past have travelled via Seattle to Vancouver, and some continue to do so. Once reaching Seattle, if one of those passengers chooses to take a bus, which in fact nearly half do, they do not pay the GST on that portion of that trip, but if they do fly between Seattle and Vancouver they pay the GST. The discriminatory aspect of that is evident.

On a final note in that regard, the tax is also punitive, as it discourages air travel, which has the highest value added to the Canadian economy of all modes of visitor arrivals.

I have two other points with regard to the movement of goods through Canada. Not only Vancouver but Toronto, Montreal, Halifax, and other communities in Canada have been working as distribution centres into the United States. There are a couple of aspects of the GST that also impact on the movement of these goods.

GST is applied to in-transit goods, those goods that come into Canada on their way to the United States or elsewhere. Once that product is re-exported, the GST is refunded. Certainly the GST is not paid on these goods. There is a significant financial and paperwork burden that is created, not just for operators in the industry but also for the Government of Canada.

I recall that one of the questions in the request for input here was on how to streamline the process of government. The creation of a GST-exempt category for all goods that transit Canada would be an opportunity to make Canada more competitive as well as to reduce the transaction costs for the Government of Canada. Certainly we think that's an opportunity for the government to reach its deficit reduction targets.

Similarly, there is something called the Special Import Measures Act, which is very similar to the GST on transit goods. This SIMA, as it's called, is for countervail duties and anti-dumping charges provisions and is again applied in the same manner; the SIMA is charged and then refunded after the goods are exported. Again, this is an opportunity for further streamlining on behalf of the government.

Those are my comments. We will have these comments in writing, as well as responses to the matters of policy that have been requested. If anyone has any questions in regard to the Vancouver International Airport Authority and our activities, I'd be more than willing to answer them.

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

From the Capilano Students Union we have Jason Lee and Mr. Julian Albanese.

Mr. Julian Albanese (Capilano Students Union): Actually, I'll be speaking. I'm Mr. Julian Albanese and I am a student. That's my role.

The Capilano Students Union would like to thank the chair, the hon. Mr. Jim Peterson, the committee members, and our fellow participants for this opportunity to speak about a most dire matter, Canada's pursuit of deficit reduction.

This endeavour to cut the deficit and tackle our nation's debt is forcing a revisioning of our national priorities and values. The committee has heard the cold hard facts of the new economic reality: reduce the deficit, pay off the debt, cut the cost of government, and decentralize the government, or else.

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The Bank of Montreal's deputy chief economist, Rick Egelton, told this committee three weeks ago that if we miss, if we go too slow, we will be punished quite severely by financial markets. Cut or else, he said.

Or else what, Mr. Chair? At present there are 46,0000 people between the ages of 19 and 24 on income assistance and 13,000 on unemployment insurance in the province of British Columbia. About 20% of our young peers have no gainful employment and no hope. Yet on Tuesday the Bank of Montreal announced record profits of $986 million in a year in which 1,400 employees were laid off. Jobless economic growth. What more can be done to punish Canada's youth? Nothing. These are the cold, hard truths for Canada's youth.

For a moment let us forget about this new economic reality and consider plain old, simple reality. If blind deficit reduction is the priority of the federal government, Canada will not get an education, Canada will go hungry, Canada will be homeless, and Canada will lose jobs and live in poverty. We are Canada. Canada was once a just society, and Canada wants that just society back again.

Though the question today is where to make the cuts - and we are prepared to offer suggestions - we first would like to make it clear to the members of the committee that there should be no cuts to the Canada health and social transfer. Moreover, we recommend maintaining the CHST at $29.7 billion, because to fight the budgetary deficit through cuts to health, social programs, and education is to exact a grave human toll that Canadians could never amend.

Our social spending is the fundamental cornerstone of what it means to grow up in Canada and to be Canadian. Canada cares and shares, and Canadians will not become the collateral damage in a war against the deficit.

Now that we have cleared that off the table, let us engage the broader challenge. We suggest three basic strategies to stop the deficit. First is effective job creation by improving access to education and promoting viable economic activities in which research development and high tech play a significant role. The long-term pay-off to job creation is less dependency on social programs.

Second is adjusting Canada's monetary policy to encourage lower interest rates and greater economic activity.

Third is closing the tax burden difference between individual Canadians and corporations. Canadians for several years have accepted wage freezes, to the benefit of their employers, and high tax burdens to help less fortunate Canadians during a previous economic downturn. Now it is the federal government that is under another squeeze by the financial markets. When corporate profits are up by 21% and the tax burden on corporations dips below 7%, it is unfair to pass the buck to Canadians again.

What will this budget say about Canada's priorities and values? Do we believe in Moody's bond raters or in Canada? Do we believe in competing with offshore child labour in the global economy or in Canada? Do we believe in a universal and united Canada? The answer is yes to Canada.

Committee members, you have been told that Canada's debt is unacceptable, but this is incorrect. What is unacceptable is the erosion of universal health care, viable social programs, and accessible and affordable post-secondary education.

So how about a $4 billion cut to the CHST? No, sir, you may not cut the heart out of Canada, not even a little.

The Chair: Thank you, Mr. Albanese.

From the Downtown Granville Tenants Association, Sherrill Gullickson, please.

Ms Sherrill Gullickson (Executive Director, Downtown Granville Tenants Association): Thank you most sincerely for this opportunity to express the concerns and issues that repeatedly thwart our work in ending homelessness and eradicating poverty in Canada. It is our hope and wish that Canada will continue to be a voice for peace, quality standards of living around the world, and a strong, united land that all citizens can excel and achieve in.

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The Downtown Granville Tenants Association is a non-profit organization whose primary purpose is to ensure that downtown south residents of Vancouver are not harmed or displaced by the redevelopment of the area. We provide front-line assistance to residents of the downtown south who are experiencing difficulty accessing their civil rights. For example, we help them with landlord-tenant disputes, accessing administrative laws and procedures, health-related services, etc.

We are a first step to information and referrals needed by residents in the area. These residents are among the poorest people in Canada and need not only protection-oriented services but opportunities to live in adequate, affordable housing; real single-tiered medical care; to train for job options; and, most importantly, to reclaim their rightful position of equality in the second-richest country in the world.

We've been asked to respond to three questions during this hearing, and I've done so in the order they were presented.

First, what should our deficit reduction target be and how can it best be achieved? I see more and more defenceless, vulnerable, hungry, homeless Canadians every week in my work. They are young, middle-aged and old. They are men, women and children. They are seldom criminal, misfit, dangerous or bad. They're often unwell, disabled, mentally ill, or simply not equipped with marketable skills, so even though some have university degrees they cannot move forward. They are Canada's long-term poor.

Although Downtown Granville Tenants Association works primarily with persons with little or no opportunity to overcome their situations, we understand the principles of profit, debt reduction, accountability - in not just government programs and dollars, but also in taxation - quality and responsible services provided to Canadians through grants, administrative bodies, agencies, etc.

We see clearly that grant money intended for assisting the poor is somehow lost in the administrative shuffle. Unfortunately, these are not popular media topics and it's easier to blame poor people for not trying hard enough.

In September 1994, in the Government of Canada discussion paper summary entitled Improving Social Security in Canada, Mr. Axworthy wrote the following comments in his preface: ``Clearly, our economic and social priorities are interdependent''; and ``The status quo is not good enough.''

These comment are most relevant and made me hopeful that all was not lost in the modernizing and rethinking of ways and means to reduce social costs.

We are the second-richest country in the world. That speaks volumes to me. It indicates that until we can guarantee every Canadian citizen an adequate income, with real social, educational and employment opportunities, the deficit must be considered our number two issue.

It is not inherent in my agenda to be the richest country in the world. I aim simply to be part of the best country in the world. I would ask you to address our human deficit first. The threat that looms over every employed Canadian, as technology moves into the year 2000, is that they, too, are at serious risk of job loss and economic hardship, with no safety net for them and their children to fall into.

As one way to lower the deficit, I would ask the Standing Committee on Finance to strongly recommend that any and all corporations owing $5 million or more in deferred taxes be required to pay in full those moneys, and that this money be directly applied to the deficit. If Canada's poor must be deprived of nutrition, adequate affordable housing, health care, income support, education and jobs in an effort to reduce the deficit, it becomes reasonable to ask our mega-corporations to at least pay what they legitimately owe, based on real earnings and profit.

With figures from 1990 to 1993, which are not inclusive, this amounts to more than $100 billion. Since then, the recession has vastly improved, which conjures up even more tax-deferred moneys. I'll give a number of examples.

In 1992 Alcan Aluminum deferred taxes to the amount of $995 billion U.S. B.C. Tel in 1992, $302 - I'm sorry, million, not billion - $302.4 million. And there are others. I've brought them and I'll show you later.

The Chair: I don't mean to cut you off. We'll give you a chance to put those on the table.

Ms Gullickson: Okay. Thank you.

The Chair: Perhaps in your opening comments you could just hit the main things you want us to consider.

Ms Gullickson: I draw your attention in the second question, therefore, to a very misleading and vicious circle. Not only do our corporations defer taxes, they promote self-serve banking, self-serve gas bars, buffet dinners, direct-dial payments, etc. We are encouraged to use these modern convenient methods, while those who once held those entry-level jobs are now living on welfare.

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We aren't saving money at Costco and Wal-Mart and self-serve gas bars because hidden in the sale price is the cost of keeping those once-employed young families on welfare. I do not begrudge profitability or good business practice; however, it is not good or reasonable business, and I cannot condone when our governments, both federal and provincial, are left holding welfare loads while the rich just get richer.

Perhaps government leadership will include the same hard-line approach used with welfare reform for those corporations that have enjoyed historically unrestrained irresponsibility in Canada. I recommend that budget measures to create an environment for jobs and growth should include cutting all tax breaks, except those that are directly responsible for actually hiring Canadians, until such time as there is no deficit.

The federal government has been well-focused on fundamental matters, such as the duplication of services, fair competition, reasonable leadership, privatization, natural selection and those businesses and programs that reflect Canadians' needs and desires. I believe it is time to push forward in this quest and include measures that will benefit only our socially responsive and conscientious businesses that provide long-term employment opportunities, realistic apprenticeships, and skills-development programs.

The Government of Canada and the corporations that provide our economic basis must ensure that Canadian employees grow and profit alongside their employers. As job descriptions change and their marketable skills vary, people should not simply be phased out.

The Chair: I'm wondering how much longer you will be. I was hoping everyone would limit their opening remarks to three minutes.

Ms Gullickson: Okay, I'll just hold at this point.

The Chair: We'll give you lots of chance to come back. Thank you very much.

Mr. Peter Robinson (Community Based Full Employment): I would ask that you cut me off whenever you choose to. Other than that, I'll just read my paper. I've appreciated the two papers that Julian and Sherrill have just put before you. Mine is along the same line.

Within each of our lives, the desire to do something significant in service to the people of Canada is alive. At this time, the people of Canada want - you may join me in believing that they deserve this - stability.

The torpor associated with the economic issues of inflation, deficit, debt is a major source of instability in Canada. To move from that torpor requires a redirection of the Canadian economy. The need at this time is to organize that redirection while being economically responsible.

Last year our presentation was made to this committee outlining the need for structural change. At that time, the economy felt unstable to Canadians. Last year's economy now seems stable. The feeling of instability has escalated significantly. It is hoped that from your current work, Canadians will feel increased stability a year from now.

Many views exist on our current situation. Community Based Full Employment gives priority to building a healthy economy using credit rather than give-away programs to maximize on the work capability of all Canadians. This paper considers the current situation from that viewpoint.

Regaining reality: definitions. In Canada's discussion of economics, the meanings of words have become warped and narrowed. I'll give you some illustrations.

``Deficit reduction'' now means cutting expenditures or increasing taxes. This definition does not include building a healthy economy. After World War II, Graham Towers, then Governor of the Bank of Canada, built a healthy economy and reduced national and provincial debt loads.

``Reform of social programs'' now means cutting programs within Canada's social safety net. This definition does not include determining the best way to help people regain their feet after a fall.

``Decentralization'' has lost its meaning. Last year's budget was a significant step toward decentralization. With federal funding cuts, the provinces are now responsible for social programs. Cutting 45,000 civil servants weakens the federal government. After these self-inflicted wounds, talk remains of maintaining a strong central government.

``Unemployment'', ``underemployment'', ``welfare'', and ``poverty'' are words that describe numbers that are experiencing deserved difficulties. This definition does not include the dimensions of words that describe people and children: Doug, John, Kira, Chris, and Maxine.

This volume of people signals that governments are creating a dysfunctional society. The action that's required is to recognize the state of denial that has caused a warping and narrowing of these meanings and insist on a return to the full meaning of words used in the discussion of the economy.

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This is World War III. Our world is experiencing a war between the rich and the poor and the war is becoming more frenzied. Canada feels like a battlefield with special interests on one side and the population on the other.

Numbers and the right to vote assure victory to the people, but substantial resources and backing from governments give special interests a belief they will win. In the last general election, the people of Canada decimated the government that gave priority to special interests. They favoured a government that promised jobs and a health economy.

Special interests have again regained the top hand. Observation of this battle is a major turnoff for many Canadians. It is causing a significant level of opting out. Without total participation of Canadians and their capabilities, deficit reduction and debt settlement is not possible.

Continuation of the battle can only lead to a total collapse of the Canadian economy and/or elimination of another major political party. It is commonly recognized that special interests finance political activity, and people vote. Wisdom requires an answer that serves all.

The Chair: Thanks, Mr. Robinson. If I could just -

Mr. Robinson: The action that follows that with regard to World War II is to find a balanced route to peace. Routes to peace are being worked out in many difficult situations in the world. Stability demands that special interests not dominate the people of Canada.

The Chair: Thanks, Mr. Robinson. We'll come back to you and give you more of a chance to put your agenda on the table.

Next, Mr. Fred Pawluk, please.

Mr. Fred Pawluk (Individual Presentation): Thank you, Mr. Chairman and fellow participants.

I'm speaking on my own behalf and I would like to share my observations based on a desire to see a healthy economic situation for Canada. I would also like to make a number of recommendations to this finance committee on how to turn our economic situation around.

It's my understanding that Statistics Canada places our debt in the following proportion. The accumulated federal debt is 50% due to cumulative interest, 44% due to uncollected revenue and deferred taxes and 6% because of social programs.

There is a crisis in credibility, Mr. Chair, for a number of reasons. I will list them.

First, there's Mr. Martin, our finance minister, and the present government, in terms of the red book promises it has not upheld.

Large corporations lack credibility because of the fact they have had an inordinate amount of influence on government decisions. If those decisions and this influence were correct in the past, we wouldn't be here today.

The Bank of Canada policy stressing low inflation and higher interest rates is detrimental and counter-productive to the economy of Canada.

Deindustrialization of Canada has occurred because of the policies that have been in place in Canada. In fact, we are more de-industrialized, out of 24 OECD nations, except for Turkey, in the last 10 years.

There's a need to meet the needs of Canadians and those working in small and medium-sized businesses who live and reside in Canada and spend and invest in Canada.

I would like to bring the comprehensive reforms to your attention. The analogy I'd like to use is the little engine that could: I think I can, I think I can, I think I can. Canada, as a country, the little country of Canada economically, must have this positive approach. We can, we can, we can - and we could. Intimidation by globalization and money speculators doesn't frighten me at all.

The points I would like to make on reform are related, first of all, to monetary reform in terms of the Bank Act of Canada. There exists a right for us, the Government of Canada and the taxpayers of Canada, to have the authority to determine the Bank of Canada policies, not the reverse. Therefore, we should have a made-in-Canada policy in terms of interest rates and in order to stimulate our economy.

Second, the Bank Act allows the chartered banks of Canada to lend out 20 times the amount of money they have in savings. This has gradually increased over the years because of sweetheart deals by the banking industry in terms of influencing the federal government.

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They have a licence to print money, Mr. Chairman. The Bank of Canada should have this same right and displace the chartered banks' ability to print money. This will be an offsetting situation that will not create or add to inflation.

We should close the tax loopholes in the Income Tax Act in regards to exit of profits from transnational corporations and also the proper assessment of transfer pricing that should not be allowed to increase the cost to Canadian-operated companies.

On the Income Tax Act, I'm told that for every dollar it cost to implement an audit $21 is returned to the Canadian taxpayer. We must enforce this situation. Remember, any regulation, any rule, any decision coming out of this finance committee is only as good as enforcement. If the federal government does not finance the means to enforce the policies, you'll never have success, no matter what policies are implemented.

The Tobin tax regarding speculation worldwide must be implemented at 0.5% to prevent the paralyzing of our economy or any other economy in the world by two or three money managers.

The family trust fund identified in the red book has not been looked at. We are the only industrialized nation that doesn't have an inheritance tax.

I'm fairly close to finishing here.

Regarding tax on financial transactions at 0.25%, it's been mentioned - -

The Chair: Okay, we understand that.

Mr. Pawluk: - in the replacement of the GST and PST, you can generate $6 billion more dollars through the federal government and the provincial government by a financial transaction tax. The Comptroller General of Canada, whose powers were reduced substantially a number of years ago, should have these powers restored to prevent the horses from exiting the barn door. We should have a stronger Comptroller General to prevent wasteful spending of money. We also need an elimination of financial contributions to political parties as a write-off.

The Chair: Okay, what's the next one? Can you maybe just list them for us? We understand what each of them means.

Mr. Pawluk: I've reached the end, other than the conclusion here.

The Chair: Okay.

Mr. Pawluk: There is a need to implement alternative money and economic reform ideas, Mr. Chairman.

The Chair: Good point, Mr. Pawluk. Thank you.

Now we move to the Vancouver Foundation, represented by Mr. Richardson, Mr. Mulcaster and Mr. Buchanan. I understand the chair, Mr. Buchanan, will be speaking.

Mr. Bruce Buchanan (Chairman, Vancouver Foundation): Thank you. My name is Bruce Buchanan. I'm the chairman of the Vancouver Foundation. The chairman of the board and the board members in the Vancouver Foundation are volunteers.

What is the Vancouver Foundation? It is a community foundation, and such foundations receive and hold in trust permanent endowment funds from various private individuals directly or through other not-for-profit agencies. These people have believed in Canada's future.

The Vancouver Foundation was established 50 years ago. Over this period of time it has accumulated investments that now exceed $400 million. Over half of this amount is invested in government securities with various levels of government. Most of the balance is invested in Canadian business securities, either stocks or bonds.

This is now the largest foundation in Canada and the fourth-largest community foundation in North America. I think we can give credit to the foresight of those who initiated this 50 years ago.

In spite of the name ``Vancouver'' in the Vancouver Foundation name, the income from investments of these funds is annually granted in many fields of interest to not-for-profit agencies throughout British Columbia.

I'm going to ask, Mr. Chairman, if Richard Mulcaster, the president of the foundation, would further describe the work of the foundation and make some comments regarding the questions posed by the standing committee.

Mr. Richard Mulcaster (President and CEO, Vancouver Foundation): Thank you. The Vancouver Foundation is a community foundation, as the chairman has mentioned, and administers a number of different types of funds on behalf of the community. It administers endowment funds for specific organizations such as universities, non-profit organizations that would wish to establish a pool of funds that we administer on their behalf. That helps them start to build their own capacity to move away from the dependency they might have on fund-raising and government grants.

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The Vancouver Foundation operates with its own discretionary grant-making money - so they are discretionary funds - with which we make particular grants to non-profit organizations.

The granting process we use is really based on a lot of community involvement, advisory committees. We involve many different people in the grant-making stream to fund projects and programs around the province of British Columbia.

The annual report being circulated will describe for you the various fields of interest in which we are active and the various grants we've made in the last year, to give you a sense of our scope and breadth.

Essentially, we're focusing on the arts and culture, which is part of the granting program, health and welfare, education, youth, child and family, environment, and medical research, to give you a sense of the scope of it.

The grant process that we use to enable community organizations, non-profit groups, to get on with their work often involves partnerships with other funders. We do joint funding with the three levels of government - federal, provincial, and municipal - in their granting program. We sometimes fund with them. Sometimes we encourage the develop of a project and encourage government to participate.

We also encourage the other foundations, family and corporate, to meet community needs.

Certainly volunteers are a part of that mix, as is the United Way, which is the sole funder of operating costs, whereas we tend to fund projects.

These partnerships are very well established and critical to meeting the needs of the non-profit sector. They provide maximum leverage to the community groups to get more money: money begets money. They provide the greatest diversity in ideas and projects and initiatives.

As well, built into that is a certain quality control with the assessment and the work that's done in looking at community initiatives and projects.

When this partnership I've spoken about is weakened, it really is of concern to us. It is weakened when one of the funding partners is not able to produce or provide the same level of support that it once was able to provide. That is the case in government in its downloading and cutbacks.

So we're concerned that there is a counter to that - if government is to cut back, that the other partners will be able to pick up more.

Certainly the community foundation movement in Canada is one of the fastest-growing forms of philanthropy in both Canada and the United States. We have about 70 community foundations across Canada. Many of the people in this room from other parts of Canada will know of the community foundation in their area. These community foundations need to grow, and need to grow faster, because they are part of the potential for meeting this need in the community. It's the community-based capacity-building that is so vital to Canada and its future.

On the questions that were proposed in today's session, we know that the deficit reduction is an immediate need. That is on the agenda, and the communities are meeting and preparing for that.

We understand that, in terms of the environment and jobs and growth, there is a need to build greater capacity. That's what community foundations do, both human and financial.

The Chair: I hate to do this to you, because you haven't had a chance to give us your recommendations, but could we come back to you?

Mr. Mulcaster: Sure.

The Chair: Thank you very much.

From the University of British Columbia, Drs. Bressler and Hardwick.

Professor Bernard H. Bressler (Head, Department of Anatomy, University of British Columbia): We have provided a brief for you, which we have left outside. I've tried to extract certain bits of it, which will give you our main message, and both myself and David will refer to parts of the brief, which will be our message.

I'm going to read parts of it.

Governments throughout the world are the largest funders of fundamental research of all types, including physical sciences, social sciences, and life sciences. In that regard Canada is definitely no exception.

The motivation for these expenditures is to create a high-quality lifestyle for our citizens and to maintain a competitive position in the world market-place.

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The return from public investment in fundamental science is enormous. The principal sponsors for this investment, the Canadian people, are also the beneficiaries. This is understood by the Canadian people, as is attested to by a recent editorial in The Globe and Mail, which we've attached to our brief.

We urge the government at this time to develop policies that look into the future and that are not just a quick fix to the current crisis. To put the Canadian situation in perspective, from 1979 to 1989 Canada's gross expenditure on research and development dropped from 1.36% in 1984 to 1.29% in 1989. By 1994 this expenditure was still at 1.54%. If we compare this with other countries, where a level of 2% is considered to be the minimum level, a country such as Germany spends almost 3%, Japan close to 3%, France, the United Kingdom - Even countries such as Finland, Sweden, and South Korea are spending over 2% on research and development.

As compared with our partners in the OECD, in 1991 our gross expenditure on research and development over our GDP ranked fourteenth among 24 countries, and it was considerably lower than for most of the G-7 countries. More recently the emerging economies of the Pacific Rim, such as Korea, Singapore, and Taiwan, have all set targets of 2.5% for expenditure on research and development as a percentage of their gross domestic product.

The brief contains more information on that particular point.

Canada must recognize fully the importance of research and deal with the issue of how this effort is currently threatened. We must not forget that since the Second World War we have developed, as have other countries, a highly successful system for advancing scientific research in universities, medical schools, private laboratories, independent research centres, and government laboratories. To a lesser extent in Canada - and I think that's the issue - the private sector has also contributed to the total R and D effort, but not to the extent that it should be able to do so.

The entire university and college system depends on investigator-initiated research and scrupulous merit review based on evaluation of scientific publications and other achievements. The benefit of research is that it serves to link research with the education and training of highly qualified personnel. I think that was alluded to in part by our colleagues from Capilano. These two issues are inextricably linked - if we are to develop a policy that will sustain our country well into the 21st century.

Governments should recognize the infrastructure cost of conducting research and the training of young people if we are to be globally competitive. Cutting the budgets of the granting councils and the infrastructure to support research in universities and colleges will remove, in our opinion, one genuinely realistic remedy for a healthy, stable, long-term solution to our economic problems. We believe you will cut the pipeline that would populate our industrial sector with the right kind of people and the right kind of companies, the companies germinating from our institutions. The people are the ones we are training.

I'm going to stop at this point to let David make a few points about the health system.

That was 3 minutes and 34 seconds.

The Chair: And you're out of breath. I was glad to hear what you said.

Dr. David F. Hardwick (University of British Columbia): Five quick points. First, I'd like to thank the committee for the opportunity to present - and also acknowledge the cut for medical research funding last year was less than it was for other sectors in the research economy - and express appreciation for that. It serves the university and also its students, researchers, and economy well. It was a wise decision and ought to be re-emulated this year.

The first point is to prepare for the future as well as economize for the present. I think this is the best advice we can give you. Take a very close look at the NABST, or National Advisory Board on Science and Technology, report. This report is well-balanced and in our view well-constituted. We recommend that the government consider a cabinet committee on science and technology as a mechanism for bringing this forward in the way Dr. Bressler has advised.

The second item I would raise is go with the winners. Nobody throws good money after bad. If you're going to support research, as we expect you will, it ought to be rigorously peer reviewed, whether it's done in-house in government or in external agencies such as industry or in universities. This is not uniformly done at present, and it ought to be done in order to make sure there's a level playing field.

Encourage partner cooperation. Dr. Bressler has raised the issue - it's particularly important in medical research - with the pharmaceutical and other industries. This is a massive growth area. It's going to continue to grow. There's no point in trying to ignore it. We ought to take a really close look at what is one of our largest-growing sectors of the health industry to make sure we benefit when it comes to patents, in the same way they do in the great American democracy to the south of us.

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Encourage focused research and at the same time facilitate individual research. One of the great disadvantages of encouraging only focused research is that you tend to put to bed those who are innovative and creative as individuals. That's a good way of stamping out your farm team. At the end of the day you're not left with a whole lot.

My final point has to do with encouraging the Department of Health in a budgetary fashion. It will be downloading a lot of activity to the provincial ministries because of cuts. That seems to be inevitable. It will therefore not be able to exercise structural authority through the use of funding. It then has to have an alternative form of authority in order to command, in some way, the respect that will maintain the universality of our health-care system.

That can best be done by creating outcomes and national technology assessment research criteria and standards that can be used and brought to bear for public pressure on the various governments, inasmuch as you won't have the structural authority and money.

I'm quite happy to answer any comments on any of these points and have some other gratuitous suggestions if we have time later.

The Chair: You will certainly have time. So will everybody. That's a political promise.

Some hon. members: Oh, oh.

The Chair: Kirk Lawrie, from the Richmond Chamber of Commerce, please.

Mr. Kirk Lawrie (Richmond Chamber of Commerce): Mr. Chairman, on behalf of the Chamber of Commerce, I thank you for the opportunity to address this committee. Given the time constraints, my responses to the three questions posed will be very brief. I look forward to providing any back-up or further information, as requested.

Looking at those three questions, the first of which, of course, was deficit reduction, we believe our target should not be deficit reduction, but rather its elimination and annual debt reduction thereafter, until we have regained mastery of our fiscal destiny. We believe this can best be achieved by a combination of increased revenues, reduced expenditures, sale of non-strategic assets, and reduced regulations.

Specifically, in terms of increased revenues, we believe the Canadian Income Tax Act and regulations must be simplified so as to broaden the tax base, thereby lowering effective rates in such a manner that tax avoidance and the underground economy become significantly less attractive. Done properly, this will have the effect of raising total revenues and lowering effective tax rates, while at the same time dramatically reducing the non-productive costs of creating, administering, policing and avoiding complex legislation.

In terms of reduced expenditures, given the extent of the problem, this is not a time for minor fixes. They'll simply slow our ultimate demise. Every area of federal expenditure must be examined, not as in the benign British approach to criminal law, where innocence is assumed and guilt must be proven -

An hon. member: Oh, oh.

Mr. Lawrie: - but as in the French version, which is guilty until proven innocent.

In terms of the sale of assets, we feel that Canada should immediately identify all of those assets that are non-strategic, sell them, and apply the proceeds to the debt.

Regarding reduced regulation, in order to be truly globally competitive - and our domestic markets are very much a part of that global market-place - the obstacles of excessive regulation must be removed. As with simplification of taxation, removal of these encumbrances would liberate healthy, legitimate businesses to contribute to the maximum to Canada's well-being.

Finally, regarding jobs and growth our focus must be on production and productivity, not on job creation. Meaningful tax reform and the resulting reduction in effective tax rates will give employers an incentive to grow while elimination of excessive regulation will enable them to do so. Job creation without regard to production and productivity will not enhance our global competitiveness. Tax and regulatory reforms will.

In terms of restructuring, we believe government should exit all businesses and services that can be effectively provided by the private sector. All regional and industry incentives should be eliminated.

Finally, government activities should devolve to the level at which they become most responsive and cost-effective.

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In summary, we have a federal debt that is already unacceptable and it continues to grow as a result of annual deficits. In order to service this debt, taxes have increased to a level that promotes the emigration of Canada's best and brightest, discourages personal and corporate growth, and encourages tax avoidance and an underground economy.

This has resulted in a classic catch-22 dilemma. Taxes cannot be increased in order to reduce the debt, as to do so would only aggravate the problem.

At the same time, we are faced with the possibility of a province representing 25% of our population electing to secede from Canada. This adds great uncertainty to the international financial community's perception of our ability to service any existing or future debt, placing further upward pressure on interest rates.

We must all move away from an entitlement mentality and face the realities of productivity and individual responsibility. This requires courageous, dedicated leadership, but we believe the vast majority of Canadians will approve and indeed will be enthusiastically supportive if, as, and when it arrives.

Mr. Charles Campbell (Individual Presentation): It's a privilege to have an opportunity to join this group, particularly as an individual.

Following 35 years in the mining industry, where efficiency was essential to survive, I joined the Immigration Appeal Board in 1973 and served there for ten years, eight as vice-chairman.

For part of my career in the mining industry, I was manager of the mine at Bralorne, B.C., which is one of British Columbia's older mines. It's at the end of the road in that part of the country, and when I got there, I simply had the usual mine manager's job to do. I had no idea how ingrown and inefficient this place had become. Simply by doing the obvious things, in the third year our productivity had increased by 32% to 33% in terms of tonnes hoisted per man-shift worked.

When I went to the Immigration Appeal Board, I saw exactly the same problem, but there was no opportunity to correct it. I worked under two chairmen who were extremely competent in their own fields, but had absolutely no idea of how to run anything. The tragedy was that there was nobody in government service on whom they could call. It seemed to me that the absence of management skill in these operations means that in government there should be some agency that provides that service to people who are competent in jobs they're given to do but are taking on responsibility they can't handle.

I'll give you just one example of what happened. As presiding officer of the court, I faced repeated requests by appellants for adjournment. These were being granted without question. It meant expensive lost time. Although it wasn't my job - because I wasn't running the office, I was just presiding over the court - I arranged with the scheduling staff to cease summoning appellants for hearings but to do so by arranged appointment. I then granted adjournments only when justified.

In one nine-month period, the period just before I left the board, the number of cases heard per support staff member, which would seem to be a reasonable base, in the western region was 23.4. In Toronto it was 12.5. In Montreal it was 7.3. We established that productivity could be doubled or tripled. Toronto and Montreal never changed, and after I left, Vancouver reverted.

In 1990 and 1991 the Law Reform Commission undertook to study the operations of the Immigration Appeal Board. They did a lot of work and they had a report running to about 160 pages. They highlighted, in one chapter, the inefficiencies and abuses of the program - late starts, 10:15 a.m. and 2:30 p.m. - and the adjournment problem. That report, for reasons we needn't go into, was never published. But it was rewritten. The rewriting was not completed until March or April of 1992. Unfortunately, the finance minister eliminated the Law Reform Commission in the February 1992 budget, which meant that it no longer had authority to publish. So all that work was wasted, and it had some valuable work in it.

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The final draft included this sentence:

Once the inquiry had been opened, adjournments topped the complaints list in each region, followed by late starts.

I suggest that what's necessary to deal with that sort of thing is an in-house management consulting group. If it was properly established and did its work properly, it would save billions of dollars. There's no question in my mind about that.

I've seen no reason why the operations of the Immigration Appeal Board couldn't have been improved to the extent that the operations at Bralorne were improved, or perhaps to a greater extent, and I think that extends deeply into government.

The Chair: Mr. Campbell, I face a real dilemma: whether to adjourn you or give Mr. Les a late start.

Mr. Campbell: I just have a couple more comments for now, but I have other things to say later.

The functions of such a body could include the scrutiny of ministerial budgets. It is my understanding that this is not the current practice. Ministers are free to run their departments and their budgets are not subject to approval by either the finance minister or Treasury Board. I found that surprising when I received this information from a very high authority, although it may be challenged here. Perhaps this explains the increase in the immigration budget from $311 million to $555 million, or 78%, in the last four deficit-cutting years. Here is a ministry where billions can be saved.

This brings me to the question of immigration, and I have a lot of things to say about that as a separate item. I also have something to say about pensions, and in looking around here, I may be sitting in a position where I have more justification in talking about pensions than anybody else.

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

Lastly, we come to John Les from the Federation of Canadian Municipalities.

Mr. John Les (President, Federation of Canadian Municipalities): Thank you very much, Mr. Chairman. It's a pleasure for me to be here today. I know you met previously with other members of the board of the Federation of Canadian Municipalities in Ottawa and particularly with my predecessor, Mary Lawrence-Mawhinney, from Lunenburg.

You've posed three specific questions today. I'll touch on them in varying degrees.

First of all, on deficit reduction targets, I would agree with some of the previous speakers that it obviously ought to be zero. I come from a level of government that habitually practises that. In fact, it's required by statute that we balance budgets every year. We could hardly recommend to any other level of government that deficit financing would be quite all right.

I think it's fair to say that as a result of balanced budgeting, generally speaking, municipalities are in reasonably good financial condition. Some places in Newfoundland are an exception, of course, because they have their own unique challenges as a result of their resource-based economies running into difficulty.

As far as budget measures to create jobs are concerned, for two years now there has been a program in place that I think everybody would recognize as having been very successful: the infrastructure program instituted by this government shortly after its election in 1993.

The program was proposed originally during the 1980s by the Federation of Canadian Municipalities as a particularly good tool not only to create jobs and stimulate growth, but also to put Canadians to work. The $6-billion program that the federal government embarked on in conjunction with the provincial governments and municipal governments has created some 100,000 jobs over the last two years.

In all cases across the country, it has been recognized as being a particularly good program that has also improved infrastructure, which will have the effect of stimulating investment in communities. It is clear that when your roadways are broken down, when your bridges are closed due to disrepair, and when your sewer and water systems don't work, it is difficult to attract investment into your communities. This infrastructure program has been a good start to stimulate that kind of investment in our communities, and as a result of that we are certain many more jobs will be created across Canada.

More recently, we have been in discussion with Natural Resources Canada with respect to a program to retrofit many municipal buildings and infrastructures across the country with a view to saving energy costs and reducing environmental emissions. We have conducted a study that would indicate that if we embarked on a program like this, a further 90,000 jobs could be created in Canada. The retrofitting of these infrastructures is obviously a very work-intensive, labour-intensive exercise, and in our discussions with NRCan we hope we can achieve some modest funding, some seed money, in the order of about $1.5 million to get this program under way.

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As to the third point you raised, I will touch on the latter part of that question about the devolution to other levels of government of federal activities. We would agree that there are certain federal activities that can quite logically be devolved to other levels of government, specifically in our case, the municipal level of government. However, the federal government needs to be careful about how that is done.

Currently devolution is taking place with respect to the operation of airports, ports and harbours across the country. In many communities that is seen as a potentially positive development. However, in some communities it really places at risk their economic future, and that has to be dealt with sensitively. It cannot be used as a vehicle whereby the federal government can extract revenue, which they take to Ottawa, leaving the community sitting high and dry.

We've met with the Minister of Transport on that recently and we expect further consultation with that ministry in that regard.

We need to remember as well that as the federal government devolves responsibilities to other levels of government, particularly the municipal level of government, we must not be simply passing on responsibility. We need to also attach to that some sources of funding. Typically municipal governments have only the property tax base available to them, and to the extent that there's more pressure put on that tax base, we are putting at risk and making it more difficult for Canadians to own their own homes. It's a national objective, or at least it should be, to promote home ownership.

The fourth point I'd like to touch on is the expected revamping of the goods and services tax. We met recently with the Minister of Finance on that issue. The Prime Minister has recently repeated the government's commitment to do something about the goods and services tax in the next budget.

I'm sure you're aware, Mr. Chairman, that municipalities presently enjoy your rebate of 57.14% of the GST they pay. That was an arrangement put in place with the previous government in order that the implementation of the GST would be a neutral situation financially.

We are concerned at the present time that, given the government's expressed desire to do something else with the GST, that rebate would be lost, perhaps.

The Chair: I don't believe that's the case at all.

Mr. Les: Well, it's good to hear you say that.

There is, however, still talk about harmonization with the provincial sales taxes. We would point to the situation as it exists in the province of Quebec, where they have indeed effected harmonization and they've added in a provincial sales tax rebate to take care of the broadening of the tax base. We would certainly salute that as a reasonable solution.

The Chair: I think we agree to that.

Mr. Les: Good.

Those are my major points, Mr. Chairman. I'd be happy to respond to any questions.

The Chair: Thanks very much, Mr. Les, and welcome to your new position as president.

Mr. Yung, I missed you. I apologize.

Mr. Bernie Yung (Savoy Management): That's okay. I'm the latecomer. In fact, I haven't prepared anything specific to talk about, but as a small business individual, there are certain things I certainly would like to see the government improve.

As everybody can tell, I am an immigrant. I came to Canada in 1975. At that time I came from Hong Kong. In those days Hong Kong, and generally the Pacific Rim countries, were not as prosperous or economically as strong as Canada. But now, twenty years afterwards, when I look back as a Canadian to where I came from, I can see the standard of living in Canada is actually deteriorating from what it was twenty years ago, when I first came. In the Pacific Rim countries, no matter how small they are, everyone sees the growth during the last twenty years is far better than Canada's.

I don't know why, whether there's something wrong with the government or something wrong with the people here or what, but certainly we can see this effect, and we realize ourselves we are not doing as well. So something has to be done or changed, as far as I can see.

Other people have already expressed a few things from their background, their experience or their concern, but there are a few things I certainly would like to add.

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Being in a small business, I found it so hard and difficult to survive and start a business in Canada. For example, if you are doing exports in a small business, there's no room for you.

First, you don't have financing or a small business loan from the bank. It's so difficult that you can't start by your own hands. I don't know whether the government is going to address certain things that some individual earlier was talking about, such as if the bank is making huge profits for their benefit, why can't some of this be returned back to society to help with small business loans? Help others who need it, so that maybe there are lower interest rates.

That will be one of the best ways to create growth for Canada. There's talk about job creation. If you don't have money to start, how can you create a job?

We have a lot of well-trained young individuals graduating from universities these days, but they can't even find a job. Never mind about job training. You keep talking about job training, but you don't give them the opportunity to work. Where's the job creation? Everything starts with money, but where's the money coming from? I think maybe that's what the government has to come up with.

The other thing is the GST. Everybody in business is so annoyed about it. There's so much duplication there. It's a waste of effort and unproductive. You're spending a lot of time on the GST rebate with filing, and it's for nothing. It's so annoying.

So a lot of people in small businesses go into the underground economy. It's going to hurt the government, of course. We know that. But how can we stop it? Why can't the government do something positive to stop it? In a way, that will make either the reduction of the deficit or the creation of jobs a lot easier.

I believe everything starts from self-initiative, but you need to have money to start anything. The government is using the money in some places it should not. We're not blaming the existing government. Maybe the previous government has already damaged the economy too much, and now we have to pick that up. But of course the current government has only been in government for the last two years. I believe it has been going on the right track, as far as I can see, but a lot can, and should, be done.

Thank you.

The Chair: Thank you, Mr. Yung.

I understand the Hon. Ray Chan is here.

Ray, would you be good enough to come up and sit at the table with us? We need your help. We're delighted with the support you've given us.

Hon. Raymond Chan (Secretary of State (Asia-Pacific)): Do you want me to answer some tough questions?

The Chair: Here's the reason we're delighted to have the minister with us. If you have any gripes against the government, we want you to direct them straight at him. If you have any compliments you want to hand out, the committee will be happy to accept them.

Thank you all very much for your presentation. I'm sorry for having cut you off, but I'll guarantee you as much time as you need.

[Translation]

Now it is time to turn to the question period.

[English]

Before I do, I'd like to introduce you to the members of Parliament here: Mr. Herb Grubel, from British Columbia; Mr. Pierre Brien,

[Translation]

that comes from Quebec;

[English]

Ron Fewchuk, from Manitoba; David Walker, from Manitoba; the Hon. Ray Chan, from Vancouver; and Brent St. Denis, from northern Ontario.

[Translation]

We now turn to you, Mr. Brien, and await your questions.

Mr. Brien (Témiscamingue): Mr. Chairman, I would first like to remind you of one point. You asked your Minister to do something about the GST; we heard it talked about on two occasions. I hope you have not forgotten that you promised to amend it within two years. The deadline is approaching; we have even exceeded it.

My question is for Mr. Campbell, who did not finish. When you stopped after three minutes, you were about to talk about the Canada Pension Plan.

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You had ideas on the subject, either about amendments that could be made to it or about changes that should not be made. I would like you to tell us what future you foresee for the Canada Pension Plan.

[English]

Mr. Campbell: Just by chance, I have it written out.

The Chair: Good. We'd like to hear it.

Mr. Campbell: The concept that Canada's current workforce is responsible for pensions payable to the retired must be eliminated. The history is this. Old Age Security was introduced in 1952 with a 1% income deduction made on tax returns. Until 1967, when it had increased to 4%, it continued to be listed on tax returns. It was part of the tax returns and was included in them. It said so on the tax form. In that year the Canada Pension Plan was introduced and that reference to Old Age Security was deleted.

It is reasonable to assume taxes continued to cover Old Age Security and those of us of a pensionable age have paid our way. That is the case against clawbacks.

The public had reason to expect these funds to be actuarially sound. It is not so only because of political failure.

I suggest that in principle, once a person leaves the shade of the family tree, that person assumes self-responsibility for life. That includes income and retirement. Some will fail and must be cared for. I suggest a universal government pension program providing necessary but limited retirement support be maintained. That will take care of the people who have fallen by the wayside.

I further suggest legislation is necessary to make corporate pension plans universal, portable, and non-convertible to cash, so people don't sell out and then have a tough time. I would suggest this program be phased in over an appropriate period until the current workforce are relieved of responsibility for their elders and are adequately providing for themselves, because I believe each of us must learn to pay our own way.

[Translation]

Mr. Brien: I have a question for Mr. Lawrie. You spoke about a simpler, more understandable tax system because, according to what you said, we could recover more revenues in that way because we are currently fighting the deficit. You spoke of a simpler system that would even entail a reduction of rates. I'm trying to see how all that could work. How could it be done? In concrete terms, what does a simpler tax system mean to you? You no doubt have ideas that could help us.

[English]

Mr. Lawrie: The simpler tax system I look to - I go back to qualifying as a CA in 1965 dans la belle province. The tax act was about that thick. Now it's about like that, and nobody understands it.

So much time is spent, first of all, in coming up with exemptions, coming up with alternatives, whatever they might be. Each one of those adds terrible complexity - it's almost exponential - each time it happens. What you end up with is nobody truly understanding it.

In addition, massive amounts of money are spent, as I say, in coming up with new ways of taxing, new ways of avoiding, and new ways of policing. All of those, I believe, could be very easily omitted if we stopped using the Income Tax Act as a means of social equity, as a means of encouraging business; simply got out of that business entirely, certainly when it comes to the corporate side of things, and left the money with the people who know how to earn it and who will reinvest it and add value.

When it comes to the individual situation, I believe again so many things have been introduced into the tax act and the whole tax regime - probably they were well intentioned at the time, but they have really done nothing to add value. So why we can't get down to a simple fact where if you earn x dollars, that is going to be taxed at whatever that rate may be. So that effective rate, I believe -

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When I came out here in 1983 from Quebec, B.C. was the second lowest in Canada. I believe now it's the highest. What's happened is that social programs have been allowed to drive the Income Tax Act to the point where it was never intended.

So, with universality and with a number of things that are now being provided for directly and indirectly, a very simple income taxation method would take away the incentive. If the top rate in B.C. right now is 59%, or whatever it comes to, then if you put it all together and if you can get that below 20%, the incentives to avoid taxes, or whatever other methods might be chosen, would have far less appeal. Simplifying to a flat rate and using other methods of promoting social equity would work much better. That, to me, is simply determining what is the base family income that's required to have some social equity and keep it away from the Income Tax Act.

[Translation]

Mr. Brien: I have a sub-question on the subject. In other words, with respect to transfers to individuals, you would prefer that tax credits for child care expenses or other things of that type granted by the government be provided instead through direct transfers to individuals. If, for example, we as a society chose to bear child care expenses, we could give the money directly to individuals, rather than provide a tax credit. That is the first part of my question.

Second, with a flat tax, we would be losing the progressive increases of the tax system. Do you agree that the system should nevertheless retain a progressive tax?

[English]

Mr. Kirk Lawrie: I'll start with the second part first.

No, I don't believe that. I think calling it ``progressive'' is just the opposite. It doesn't work. It just encourages people at the higher income levels, who can afford the advice, counsel, what have you, to avoid taxes. There's a whole industry out there that really doesn't add any value to the country. So I don't think it is progressive. All it does is result in higher rates and higher incentives for people to avoid it.

We believe social equity would be achieved by determining what is the minimum family income at which some assistance should kick in. Regardless of what the program might be, that's the way of determining it. It's not by an individual, where you might have one individual in a household who's earning $100,000 a year and another individual who happens to be on welfare.

We see that as being a tremendous inequity, and that's what is depriving the funds that would otherwise be available to people who truly need it. That money is being squandered through universality, and we don't believe it works at all.

The key to the whole thing is what is the base level of family income - or household income, if you like. We think everything should be driven from that.

Mr. Grubel: The Reform Party has just developed a taxation reform proposal based on the principles you have just enunciated, and I share many of the judgments you have made. I think we'll all be better off.

I would like to ask Mr. Campbell whether he couldn't share with us his ideas on immigration, in particular the extent to which they impinge on our mandate here and what they would do for the deficit.

Mr. Campbell: Oh, my goodness. You understand, I think, that immigration is a very complex situation. But fundamentally, immigration is costing us billions of dollars, much of which we could save, because we don't need nearly as many immigrants as we're getting. We have allowed the refugee program to get completely out of control.

We have 1,300,000 unemployed in this country and all kinds of people on welfare, and we are increasing the unemployment roll regularly or increasing the choice of people who are unemployed regularly, all with skills, with the downsizing of industry and government. It seems to me that this pool of talent could meet most of our needs.

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As near as I can find out, in terms of technological expertise there may be shortages of specialists now and again. If we need those specialists we can bring them from wherever they are to jobs already in this country, but we certainly don't need the program we have.

I mentioned the completely unreasonable increase of costs in the budget. Why are we doing this sort of thing? For instance, there is no evidence that more people will help the resident population. There were studies by the Auditor General in 1982, the Nielsen task force in 1985, a demographic review in 1989, and studies by the Auditor General again in 1990, the Economic Council in 1991, and Daniel Stoffman, who had a year's work for The Toronto Star, in 1992. In British Columbia there was the Lower Mainland Multicultural Education Project in 1992 by SPARC, the Social Planning and Research Council, the Canadian School Trustees Association and several others. Every one of them is negative toward our immigration program, every one shows up problems, every one has been published, and our immigration program goes on without anybody making any reference to this information.

So the problem as I see it - and this is what I ask this committee to think about - is that we have an immigration program that is based only on the red book statement, which, as far as I'm concerned, was simply written in terms of political correctness and not in terms of the needs of the country. In this government there have been no discussions within the party, either behind closed doors or in convention, to determine what immigration policy should be.

It's a big subject and it determines the kind of country this is going to become. It's costly right now. The costs of the operation just pile up in terms of welfare, legal aid and education.

In the two suburbs of Richmond and Surrey in the greater Vancouver area, one has 6,000 kids in portables and the other has 300 portables littering their school grounds. We can't afford this. We're in a situation where the cost of infrastructure to take care of this rapidly increasing population is something we can't afford.

Mr. Grubel: Thank you, Mr. Campbell.

Mr. Campbell: So I simply say, without going into all of the details - I can't, or we'd be here until midnight - there has to be a genuine, honest examination of what immigration should be in this country, what our responsibilities are to refugees, how we should meet our responsibilities and all of that sort of thing. None of that's being done. The whole system is just running out of control.

Mr. Grubel: Thank you, Mr. Campbell. As an economist, you have written on the subject of immigration. I know of your outstanding reputation as one of the most knowledgeable students of immigration. I'm very pleased that you brought the subject to our deliberations because it certainly impinges on the budget.

I hear you and I support your call for a re-examination of the figures used for the optimal level of immigration, which are now being used as if they were cast in stone. I'm not making a judgment on whether it should be larger or smaller, but I hear what you, as an expert, are saying.

Mr. Chairman, I would like to ask one other quick question of a gentlemen who has been most eloquent today. Mr. Robinson said a number of times that the reason the government is making all these wrong policies is that, in his understanding, it listens to special interest groups.

Could he define for me and for this committee what he means by special interest groups? For example, Mr. Lawrie has made a case for the need to limit expenditures and balance the budget so the government can have the means to do good in the future. Is he a special interest group or does he also have the interests of Canada as a whole in mind? And what about everyone else around this table who has suggested that maybe we should be cutting spending? Are they a special interest group or do they also have in mind the interests of Canada as a whole?

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Mr. Robinson: If I may, let me go back to the simpler terminology, ``the rich''. It's very simply stated that the rich in this country are running the rest of us around in circles. They are the special interests that buy the political system, and they buy the whole kit and caboodle for us to be sitting here, seeing what we can do in order to maintain bank profits. It's ridiculous to be involved in that silly game.

Very specifically, within the paper I put in front of you I take a look, for example, at the Bank of Canada, which is one of the voices for that group in Ottawa. They not only appear to - but they evidently hold a position ahead of our government in being able to maintain the priority of our government on zero inflation.

I am not clear, Mr. Chairman, how I'll get the opportunity to work with the rest of this paper, and I don't know how to respond to this situation, but basically, the Bank of Canada, in holding all priorities to the zero inflation issue; being followed by deficit reduction; being followed by job creation and a healthy economy - and job creation and a healthy economy are sufficiently far down that they don't get any position at all - it is no wonder at all that we have this ridiculous deficit problem, and we have nothing that's going to go toward its answer.

Mr. Grubel: Mr. Robinson, we had the Governor of the Bank of Canada as a witness, and I assure you he is very concerned about job creation.

Let me ask you one question to which, I am sure, you have a very good answer. At what annual income do the rich start?

Mr. Robinson: I think you could talk of 100 people and their adherents.

I have talked about this as a war. The whole German population fell behind a very few people who headed the German government at the time of the Second World War. The complication we have is not the people who are directly involved. It is the fact that there are so many adherents, people who blindly carry forward the wishes of the rich to the destruction of the balance of the population.

I will not focus even on low-income people. I will focus on medium family income having dropped 5% in the last five years, which is absolutely shameful. It dropped 7% and came back by 2%. That doesn't have to do with poor people in Canada. It has to do with the bulk of us in Canada. This is a ridiculous thing.

I totally appreciate Mr. Yung's comments when he talks about the Pacific Rim countries moving ahead and our moving back. I want to join Mr. Yung. Frankly, I would like to go to the Pacific Rim. What is happening in my country, Canada, is ridiculous. This very small number of very wealthy people who operate through the power of the Bank of Canada, who operate through the structure of political gifting - Now we have Brian Mulroney's nonsense in regard to the extent of political gifting. This country is becoming so unstable it's ridiculous. Nobody can trust anything that's going on in the scene.

We have to get back to basics. We have to build our economy on the people of Canada, not on the wishes of the wealthy.

Mr. Grubel: Mr. Robinson, if I understood you correctly, you said we're in trouble in this country because the government listens to special-interest groups. I asked you which special-interest groups. You say they're the rich. I asked you to tell me who the rich are. You say, they're just a handful of people; I don't really know who they are, but I know they're somewhere.

Then you say the fault is that of all the fools who go unknowingly and work for the agenda of the rich. Now, who exactly is - Are you saying that everybody who does whatever you don't want them to do is a fool, that special interest groups, rich fools - Who exactly is at fault here that is ruining this country?

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Mr. Robinson: Anybody who is not building this country on the wonder of the Canadian people, and anybody who is accepting the way of thinking, which is very, very common - one of the words used is ``corporatism''. If you work with corporatism and the values associated with that and you follow those through, you start to identify where they are. We are a very wonderful country. We are a wonderful country of people and they are being extraordinarily disserved by politicians who have come in saying we want to work to make jobs and economic growth our top priority. It is very clear that the top priorities in this country are zero inflation and deficit reduction.

The problem with that issue - and I've put it in the paper - is that those priorities have to be reversed if you are intending to be at all practical in dealing with this problem. The creation of jobs and building a healthy economy have to be ahead of both zero inflation and deficit reduction if we are ever to gain deficit reduction.

Mr. Grubel: I am now so glad to be able to understand how to solve this country's problems. This was crystal clear. Thank you.

Mr. Robinson: I'm not trusting what I'm hearing.

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

Mr. Walker.

Mr. Walker (Winnipeg North Centre): Thank you very much, Mr. Chairman.

I'd like to turn everybody's attention to the paper of Professor Bressler and Professor Hardwick. Obviously the federal government has had sort of a chequered career in trying to define its relationship with the universities. Since the end of the Second World War we've tried different strategies. We had a recent set of proposals about two years ago that the university community, students and faculty alike, rejected.

You've brought to our attention what I think is a very real problem of how to maintain high levels of research. Do you think the granting councils would have the capacity to grow 20%, 30% or 40% if we decided that the best way to spend our money was not to give the money to the universities through an indirect system as we do now, with no responsibility?

People object to my saying this, but in fact, as you know, we don't have any way of even asking the provinces if they gave anything to a university. In the situation right now under the transfer programs, we are not even allowed to ask the provinces if they've spent any money on a university. That's strictly hypothetical. Anybody who thinks it doesn't go to the Minister of Finance just doesn't understand the cheque system. He decides that some minister gets some money.

My question is, should we refocus our attention on the granting councils? If so, what percentage capacity would they have to grow? For example, say we said let's stop giving them money the way we're doing it now; let's give the Medical Research Council 6% more and the Social Sciences Council 75% more. What's their capacity to grow? What's the feeling of the research community? Could they grow rapidly or would we just be blowing our brains out with projects that shouldn't be funded?

Prof. Bressler: The capacity is there. I would absolutely say that the capacity is there to increase the funding to the 35% to 40% level above what they have now.

The rate of change of funding from these councils has been so static for so many years that a lot of people have been dropped off the system. Many of these people are still there and are funded from other places, but the cuts we're feeling now are extremely difficult. What we're really doing is taking the cream off the cream. So the capacity is there.

The problem is that the funding directly to the researcher for a specific project is only one aspect. The other aspect that deals with the EPF transfer payment is the infrastructure. Your comment was about the fact that the federal government writes a cheque to the provincial government and the provincial government never passes the money on. That's where our infrastructure comes from, unlike other countries.

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In the American system they call it an ``indirect'', but the president of our university likes to refer to it as a ``direct'', because it directly supports the infrastructure. A grant of $100,000 will come with a cheque for $150,000, whereas here a cheque for $100,000 comes for $100,000 or whatever, and then we have to find the difference to provide the infrastructure at the university that has come through the EPF transfer payments.

Our brief talks about the impact of that. The capacity is there but it'll be lost unless we change the mechanism of delivery of all the money, which is what we're suggesting in our brief.

Mr. Walker: I realize that. It's a very important issue - just to challenge each other on this.

I always found in universities - and I've sat on both the administration side in the university and the Social Science Council - the frustrating part of attributing the infrastructure is that the universities would like to have 30% for a David Walker who is reading a book on political science and doing a research project, and 30% for a physicist whose overhead is really quite expensive. There wasn't a fine way of really defining what it takes for the university to provide the proper situation for people to do their research.

How do you develop a mechanism for funding a university situation over which you really have very little influence, versus making sure the best researchers in this country move up from - some disciplines have an acceptance rate for funding as low as 20%? In the social science area we don't do it. Or we never used to do it by careers; we just did it by project. So people were in and out of the system depending on the project, and the sciences tend to support careers a lot more.

How do you make sure, from a federal government point of view, without ruining a university, you are financing research not defined by the government, but of international class and national class, allowing those best people to really flourish without getting involved with university politics and the questions of overhead and who gets what, where, when and all those questions?

Dr. Hardwick: I would like to address part of your first question, and then I'll turn it back to Professor Bressler.

You asked about the volume capacity, and it's clearly there. The second issue has to do with competence, and it's there as well. So I think you need not concern yourself with whether there are enough wise people around to do it. I also think if those who do the reviews don't know, they know they don't know and ask somebody in another country. With global research initiatives at the present time, I think you can be quite confident, as I do in my role, on review.

The issue of overhead is an interesting one. I couched my terms quite carefully on the NABST report. I think you have to open the competition, government done, in research, in-house as well as that done in universities and in the corporate sector. It's the only discipline you're going to bring to the infrastructure cost system; otherwise you may very well be funding areas that are inefficient.

You may turn around and find that the consortia of universities across the country can then arrive at some kind of infrastructure costs that are reasonable and competitive. I think that's going to resolve itself in that way. You have to accept the fact, though, that the Canada Act does preclude direct intervention in matters of education at the present time, but you can probably find a mechanism around that through contract.

Let me address one thing you said initially, that after World War II the federal government of Canada was inventive and looked at stimulating universities. It also recognized that if we didn't do it we were in what I technically call ``deep yogurt''.

The Chair: I don't think I'd want to come to your house for dinner.

Dr. Hardwick: Technically, what the government did in that day was invent the Medical Research Council. That stimulated the huge growth we saw here, as well as in the United States through the development of non-contract directed research in the U.S. So I think that's well worth emulating and should be looked at again. It's something that's recommended in the NABST report, which says it ought to be open to competitive study.

Mr. Walker: I sat beside Doug Kenney for five years on the Social Science Council, so I was always told how brilliant the research was and how it should be funded at UBC, in particular.

Dr. Hardwick: We agree with that, of course.

Some hon. members: Oh, oh.

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Prof. Bressler: I'm just going to give you two very quick answers. David referred to peer review, and I think you know peer review very well, so I don't have to go on. That's how you do the assessment.

Let me give you a very practical answer to the second question, how do you know how much to actually spend? Just this morning in fact, because I'm moving into a new position as VP research, our director at the university institute liaison asked me how to deal with the issue that we charge overhead on all contracts. Of course we have to charge overhead on contracts, but more and more the industrial sector is asking why we charge 38% and not 20%. They never ask why we don't charge 50%, but maybe we should be charging 50%. This is on industrial contracts.

The answer is we can assess that now quite well. We can actually look at the real cost of doing the research. The technology is there and the ability to do that is at our institutions. So from a very pragmatic point of view, I said to him, within a few short weeks we want to know exactly, so we can say to an industrial partner that wants to do a research project at a university, ``Your contract overhead is the following, and here is why it's costing you money''. I believe it's doable.

Mr. Walker: Thank you.

I have one more question, Mr. Chair.

The Chair: Is it going to be an intelligent one?

Some hon. members: Oh, oh!

Mr. Walker: I rarely get two in a row.

Some hon. members: Oh, oh!

Mr. Walker: I'll turn my attention to the Vancouver Foundation. As Mr. Richardson knows, we've been meeting with a number of the foundations over the last little while, trying to get clear in our minds what might be recommended.

You mentioned the community-based organizations, which have been brought to our attention, and the capital issues. How did you get so many donations into the Vancouver Foundation - and it's very much like the Winnipeg Foundation; there's a tremendous amount - without the issue of the capital donations, which is more and more popular amongst the foundations that raise with us? How did you manage to accumulate such large donations under the present system?

Mr. Mulcaster: In the Vancouver Foundation's fifty years of history, there were some far-sighted people at the beginning who could see there was a need to build capacity within communities to start to develop a financial pool that would meet the needs of the community. People who believe in that concept tend to want to support that kind of initiative, and Vancouver Foundation, Winnipeg Foundation and all of the seventy foundations across Canada attract money for that reason.

Whether it's an issue of tax, where they're getting the advantage of a tax concession for doing it, or whether it's a charitable thing to do, it's the right thing to do in many people's minds. I guess it's their balance. People believe there is a way to support communities and there's a way to use the tax system in a profitable way for themselves.

With the trend to the transference of wealth we talked about and the trillion dollars that will come down the line, community foundations are an appropriate place for people to leave money to build stronger communities. We see that trend growing, and that's why community foundations are growing as fast as they are.

Mr. Walker: That's fine.

The Chair: Thank you, Mr. Walker. That was surprisingly intelligent.

Some hon. members: Oh, oh!

The Chair: Can I turn now to Mr. St. Denis, please?

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

Thank you all for being here.

I'd like to pursue as well the issue of community foundations. What's happening has been a revelation to some of us, anyway, on this committee, and I think we're only seeing the tip of the iceberg, quite frankly. The potential for community foundations, not just in the bigger cities such as Vancouver, Winnipeg, etc., but out in the smaller communities and even in small rural towns, is to me quite tremendous.

I wonder if you could describe for me how you see what you're doing working in a smaller community. What kinds of changes need to be made, not costing the federal or provincial governments endless sums of money through the tax system, to help you do what you do and make it easier for the towns of 500, 1,000 and 2,000 people to create the same kinds of foundations that, as senior governments devolve responsibility, will have to pick up the slack?

Also - and His Worship Mr. Les, the Mayor of Chilliwack, might also want to answer this - do you compete with the United Way? Is it a different constituency, a different procedure? There are only so many dollars out there. I'm wondering how you deal with the annual fund-raising drives of those kinds of organizations versus the longer-term needs you seem to be addressing. I think what you are doing really has a lot to offer us for this country.

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Mr. Mulcaster: Let me start by addressing the last part of your question first; that is, the role of the United Way and the community foundation.

They have complementary roles. The Vancouver Foundation has a very close working relationship with the United Way of the Lower Mainland. One of the people in the audience today is Shamin Lalani, who is on the board of directors of the Vancouver Foundation as a previous president of the United Way of the Lower Mainland.

So we see ourselves as working very closely with all of the partnerships that exist.

If you look at it in the sense of the community foundation being the philanthropic savings account and the United Way being the philanthropic chequing account, you see that there are moneys that go to the United Way that are spent every year and the community foundation is able to attract money that will be used for the future. So it starts to establish a legacy that will be able to meet the needs down the line.

There are many challenges facing community foundations, as there are in every sector, and in all of the non-profit community as well.

One of the issues we look at as a problem is the playing field. The playing field as it relates to taxation for the non-profit sector is not level. There are certain foundations, for example, that have an advantage in the tax laws that are crown foundations. We appreciate the importance of crown foundations in the sense that they provide opportunities for more people to give, but foundations that don't have that status are not quite as attractive as those that do. Community foundations do not at this point, and we think that is an issue for the federal government to look at, to level the playing field or to consider possibilities for looking at community foundations in a similar way.

Mr. St. Denis: When we were in Winnipeg, we heard from the Thomas Sill Foundation, which I think is a private charitable foundation. The issue they raised was that under the current rules they had had a bit of a surplus - I don't know all the technical terms - whereby they were able to download some funds to some rural communities.

Let's say your board thought it would be good for Vancouver if smaller communities in the outlying areas had a chance to create a community foundation. As I understand it, you couldn't do that right now, could you?

Mr. Mulcaster: The Vancouver Foundation board for a number of years has had a priority, in fact, of helping more community foundations become established in Canada, and in British Columbia in particular. We have been instrumental in helping to develop the Community Foundations of Canada, which is a national body representing all the community foundations - I am the immediate past president of that organization - to help community foundations grow in Canada. We have support from the foundations.

Mr. St. Denis: Can you transfer some of your funds to them?

Mr. Mulcaster: No. That's more of an organizational thing, helping them grow.

In British Columbia we talk with most of the communities around the province about establishing community foundations. Some of them will establish their funds with us. They'll put their capital money in Vancouver Foundation. It makes it a smarter, larger pool, with more ability to invest.

Mr. St. Denis: With administrative expertise.

Mr. Mulcaster: More efficient - all of that.

We have about nine community foundations inside the Vancouver Foundation for whom we administer their capital as a function. It makes it efficient.

The communities know their needs. Community groups and activities are competent and able to meet the needs. What they are perhaps not the most able to do is pool capital - in some cases. When it comes to universities, of course they have the capacity. They do that, as others do as well.

Mr. St. Denis: If I am living in Smithville, which has arranged or contracted with the Vancouver Foundation to manage Smithville's funds, then, for all intents and purposes, it's Smithville's foundation.

Mr. Mulcaster: It's Smithville Foundation, and our job is to invest the money and pay the income to you at the same rate without an extra surcharge that we put on to do that, but at the same costs as we have in administering our own funds. So that makes it efficient and effective for Smithville to establish this foundation and get it rolling, and to give the potential donors the confidence they want that the money will be properly managed and properly invested and that it will be a permanent fund that goes on in perpetuity. If the local Smithville-ites aren't active for awhile, the board of the Vancouver Foundation that has this large fund will ensure the money is directed in that way.

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Mr. St. Denis: Is there a local board in Smithville?

Mr. Mulcaster: Yes. They are registered as a federal community foundation or are registered as a charitable group.

Mr. St. Denis: And they make the decisions on the disbursements but they don't have to worry about the management.

Mr. Mulcaster: That's correct.

The Thomas Sill Foundation in Manitoba felt the best way for them to get to the community - and in a sense, they are a family foundation or a corporate foundation, I guess - is to use the community foundations. Flow the money through the community foundation and the people in the local community - Smithville, in this case, or any other community - are most able and know where the needs are.

Mr. St. Denis: Can I ask the mayor of Chilliwack to say something, Mr. Chairman?

Mr. Les: I'd be happy to say something. In Chilliwack we established a foundation about ten years ago and it's doing fairly well - although we're not yet quite as large as the Vancouver Foundation. We have about $1 million in the foundation at the present time, and it's growing every year.

It allows us to do a few things. For example, a couple of years ago we hosted the B.C. Summer Games in Chilliwack and ran a profit of close to $200,000. The question arises about what to do with that money. Do we blow it on a playground or something like that? We decided to put it into the Chilliwack Foundation, and the interest on the money is going to be used perpetually to fund sporting organizations or what have you. In the end, it will put a lot more money into the community than if we had just spent it on a facility somewhere.

One of the major focuses of the foundation, as it has developed, is funding scholarships and bursaries and things like that for students who are graduating from high school particularly, in order to help fund their educational pursuits after high school. It's a wonderful way to meet some of the needs that wouldn't otherwise be met.

We're also pleased in Chilliwack to be the recipient once in awhile of the largesse of the Vancouver Foundation. I know the Chilliwack Y has been a recipient of that. Chilliwack Community Services has been a recipient of grants by the Vancouver Foundation.

I think communities that don't yet have foundations really ought to take a look at this because there are different kinds of people in our society. Some will give to the United Way and that will fulfil their desire to be philanthropic. Others want to leave some longer-lasting kind of legacy behind, and the foundation is a good way to do that.

Mr. St. Denis: It also might be a way to - I'm thinking about the difficulty of getting doctors into the rural areas. You mentioned scholarships. If you're helping your students go to medical school, it would be a nice way to have them coming back to their home as doctors.

I have something else, if you want to come back to me later.

The Chair: Go ahead, please.

Mr. St. Denis: Thank you.

On a different subject, I'd like to come back to Mr. Sulmona of the Airport Authority. Could you review again this question of GST that's now collectable on goods and services that pass through the country? You gave an example of the tourists who got off in Seattle and took the bus instead of flying.

Mr. Sulmona: There are two different examples. GST is charged on transborder airfares only. The United States is considered contiguous to Canada as a taxation area. It creates a situation in which we have a discriminatory tax. If you fly from Seattle to Vancouver you pay the tax, but if you take a bus or even a ferry, for example, you don't. So it sets up a discriminatory situation.

There is another activity that goes on, particularly in Vancouver, but it is also increasingly happening in Toronto, and I know the Hamilton airport is very much involved in the distribution of cargo, particularly to the United States, Halifax and Montreal. What occurs is this: GST is charged as goods come into Canada for reprocessing. At our international commercial centre here in Vancouver, goods are brought in, may be repackaged, etc., and are re-exported to the United States. GST is applied when those goods arrive in Canada, and when they leave it is refunded. The issue is not the fact that the GST is applied on those goods, it is the credit problems that are created for small firms trying to do this kind of business. They have to provide large bonds to the government for the GST, and there is a great deal of paperwork created in tracking all these things.

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In addition, there's paperwork involved in regard to the Government of Canada. Bill C-102 addresses some of those things, but the GST portion is not addressed. What happens is a prepayment is required. What we're suggesting is that one way to reduce some of the paperwork of government is simply to eliminate that requirement for goods that are not entering Canada permanently.

The Chair: Mr. Grubel, you had a point on that.

Mr. Grubel: I believe we had hearings on C-106, which was a bill to facilitate tariff rebates. It was suggested to me, since I've been active in promoting a free trade zone in Squamish, that this would now make it possible to establish that free trade zone, because the same problem you have just mentioned about re-export occurred in the context of tariffs. I was under the impression - but please correct me - and maybe we should look into this - whether or not it is possible to have the same provisions for the GST - if it is distinctly for re-export. They said they made it very much easier to do this.

Mr. Sulmona: Right. In fact, the comments are not about duties and tariffs. Those provisions have been exempted. Simply, there's the provision for GST and this other, CEMA, that is still applied as a prepayment - and they're refunded. We're just suggesting that's an opportunity to streamline the business processes for those types of goods.

The Chair: Thanks, Mr. Grubel.

Was that it, Mr. St. Denis? You're not soliciting funds from the foundation, are you?

Mr. St. Denis: I'm guilty.

The Chair: We're at that point where I would ask any person who hasn't been given adequate opportunity throughout the course of the initial presentation or in responding to questions to feel free to say anything else to us. But I would also like to offer each of you an opportunity to summarize, in thirty seconds, your particular position. I did cut some people off in full steam. Would anybody like to add anything?

Mr. Pawluk.

Mr. Pawluk: I'd like to address the deficit-debt situation more directly and just re-emphasize the fact that trying to eliminate or reduce social programs attacks only 6% of the responsibility for our debt. Our interest is 50% of it. We have to attack the situation of our interest rate here in Canada; determine it for the benefit of Canadians. We have that in legislation, with the federal government being able to direct the policies of the Bank of Canada.

Secondly, the 44% of uncollected revenue and deferred taxes. It is unbelievable that this is being ignored in today's day and age.

The Chair: Ms Gullickson? No.

Mr. Robinson: I have become confused by this whole process.

The Chair: The process is very simple. If you wish more time to expand on points you did not have time to raise or points that were not dealt with in the questions - are you with me so far? - then we'd be pleased to hear you.

Mr. Robinson: I would like to know that this document is going to be read by each and every person who is a member of this committee - and give me some response, or I would like to read the balance of this, so at least I would have the benefit of having on record the work that has gone into being here this afternoon, because this has not -

The Chair: How long would it take you to read it into the record?

Mr. Robinson: It would take about five or six minutes, I would expect.

The Chair: It would be better if you summarized.

Mr. Robinson: Pardon me. You are dealing with a rather serious problem in this country -

The Chair: I know -

Mr. Robinson: - and you invited my participation and have treated me rather badly, and I think you've treated some other people around this table rather badly, in the format of this session. To arrive here and be told I have three minutes when last year there was -

The Chair: Mr. Robinson, you were told by the clerk before you came that you would have three minutes for your opening remarks.

Mr. Robinson: No, sir; absolutely not. And Sherrill joins me in saying she certainly didn't have this idea of three minutes. Last year we certainly had more than three minutes.

The Chair: Okay, I understand. Then I apologize. The rules were that everywhere across Canada it's been three minutes, but I apologize to you. It's our fault. Please feel free to handle it any way you wish, Mr. Robinson.

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Mr. Robinson: Then I would go ahead and put things in order and hope others who were cut off would do the same.

The Chair: I've asked them to.

Mr. Robinson: The comments going through the report have to do with putting things in order. What comes first? Currently in Canada our priorities are zero inflation, followed by deficit reduction, followed by creating jobs and a healthy economy. As discussed, below-zero inflation has worked against economic health and deficit reduction requires economic health. Job creation and development of a healthy economy must be the first priority.

The Bank of Canada has imposed zero inflation as the top priority of the Canadian government. This year the bank started issuing reports and from the November 1995 monetary policy report comes the following.

For the past four and a half years the Bank of Canada has successfully pursued inflation control targets, and since the last report in May, the Canadian economy has been weaker than expected and the degree of slack in labour and product markets has been correspondingly greater.

This appears to mean we are happy with our performance and a lot of people don't have work.

The Bank of Canada appears to be accountable to itself and gives direction to the government.

There was a time after the Second World War when the Governor of the Bank of Canada, Graham Towers, regarded his first priority to be to the development of a stable and healthy economy. As stated by Graham Towers, prior to the end of the war, if we fail this time to build a better country and a better world once peace is ours, it will not be because of a lack of knowledge, but because of - [Technical Difficulty - Editor] - government committing their unique capabilities to regaining economic health in Canada.

On monetary policy, a review of the monetary policy report indicates the Bank of Canada is limited to using interest rates to control inflation. When inflation pressure pushes up the dollar, the reaction is with increased interest rates. This leads to pay cuts and/or job elimination. This maintains zero inflation and results in an unhealthy economy.

To go further on the issue of inflationary pressures, a contractor limited to using an earth mover would be unable to perform effectively when a backhoe or a shovel is what is needed. Inflation pressures come from a multitude of sources and require a multitude of responses.

Using a local example, there have been specific inflationary pressures causing escalation of values and real estate in Vancouver. In anticipation of China taking control in 1997, there has been considerable instability in the Hong Kong economy. This has resulted in Hong Kong residents making major investments in Vancouver real estate.

Bank commercial loan departments have been consolidated to large centres. Customers for these departments - job creators and those who maintain jobs - prefer to locate in cities to make relating to these departments convenient.

In reaction to these pressures, specific actions drawing people to other B.C. communities are more attractive than cutting pay cheques or firing people.

The action should be that as specific sources of inflation pressure are identified, the Bank of Canada should be equipped with a broad range of tools in order to effect specific and appropriate responses.

On deficit reduction, telling a story of deficit reduction might be helpful. Think of a wagon being pulled down the road by a horse called Cinderella. As might be guessed, the driver has similarities to the stepmother and the wagon is not moving all that quickly to a destination called deficit reduction. Stepmom is talking to herself: ``If I give her one extra ration of meal and offload eight safety nets, the wagon might go faster.'' And so she does this, but it doesn't pick up speed.

Stepmom decides her horse is lazy and so she takes a stick and flogs Cinderella. She keeps at it. The horse kicks periodically and the lights of deficit reduction remain a long way off. A year later, without much progress, but a lot of flogging of Cinderella, a casual Canadian comes along and says, Stepmom, I overheard you saying to yourself you should offload more safety nets. Flogging the horse may be satisfying, but you are never going to get to deficit reduction until you fill those tires. If you inflate those tires with jobs and increased pay for workers, you'll get to deficit reduction right smartly. And by the way, credit makes a great pump because it inflates what you have at hand, which is people who have opted out, particularly young people. You'll be surprised at the load they can carry.

It took awhile, but stepmom finally got it. She stopped flogging Cinderella. She learned how to use credit to inflate the tires. She even grew to appreciate Cinderella. She was last seen flying through deficit reduction and on her way to reducing the debt.

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Let us hope this happy ending will come soon. The action is to reduce the deficit in ways that serve all Canadians well. Within two years, have family incomes restored to the 1989 level, which is up 5%, and cut unemployment in half. These goals would reduce the deficit to less than 3% of GDP.

My next point is with regard to the issue of building a healthy economy and the matter of conformity. Increasing numbers of Canadians are choosing not to conform to the values of employers or to conform without enthusiasm. This works against productivity. Canadians recognize the future instability evolving with this trend. The action would be to have a working environment that attracts all Canadians. In New Brunswick, priority is given to building hope and confidence in people. This should extend across Canada.

Capital is available for the activities of large, established operations in Canada. Credit is being withdrawn from small and start-up activities, as Mr. Yung was saying. Creativity is a vital element in a healthy economy and it must be encouraged. The action is to use credit to create jobs and to capitalize small and start-up operations. Each repaid loan is a major saving for governments.

Next is credit. A person without a job can find work, be given money by the government, or starve. I hope you would join me in not favouring starvation. Giving money demeans the recipient and builds deficits; providing a job through credit lifts the person.

A small operator develops a plan for hiring two people who are currently unemployed and are costing governments $30,000 a year in direct payments and supervision. The operator is given a guarantee enabling a loan of $40,000. Ideally, the loan would be repaid. The operator continues to grow and hires more people, and two people have their lives back on the road. The effect on governments would be a direct saving of $30,000 and tax revenues would also increase. The action is to build up Canada and reduce the deficit by developing a loan system that creates jobs.

The European Union has coined the word ``subsidiarity''. Under subsidiarity - and reference was made to this principle earlier - any task of government should be done by the smallest unit able to do it. The task of the larger unit is to assist, support, and maintain standards. Job creation for local people requiring work can best be done by communities. This approach would act quickly to create jobs and re-establish our communities across Canada. The action is to place responsibility for creating jobs with communities, through making them able to guarantee credit, as required by job creators, in line with local job needs.

Following the above actions would create a major change in Canada and put the country on the road to stability. Blaming the victim, using sticks on people, and developing a crisis atmosphere destabilize the economy. You are in the fortunate position where a healthy economy can be built on the decency of the Canadian people.

Canadians recently gathered in Montreal because they care about this country, and they saved a difficult situation. Deficits are a difficulty across Canada. If an approach is taken that is based on bringing forward the best in Canadians, you can know it will succeed.

Thanks for giving me this time.

The Chair: Thanks, Mr. Robinson.

I saw your hand, Mr. Buchanan. Did you want to add something? This is before we go to our 30-second summary, which everyone will have the right to.

Mr. Buchanan: I was going to try to do this in 30 seconds, so maybe I'm the first on that.

The Chair: You have more time than that.

Mr. Buchanan: Reaching the national goals that were our challenge for this session will likely require many improvements, large and small, all over the place. In my view, there are no magic, one-time-shot kinds of solutions.

Multipurpose community foundations such as ours are a unique device if we're given the same tax treatment as single-purpose foundations. This can be done individually or categorically, easily, and at no cost.

This would result in the capacity of this sector to capture capital, mostly inheritance-style capital, for investment in our economy as capital and to better respond through its income for changing demands at the community level. This would reach or assist in reaching the national goals of improving the environment for jobs and growth through improvements to human capital in our communities and financial capital invested in our country.

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We will be leaving a copy of the last annual report of the Vancouver Foundation with the committee members, and we would be happy to respond to any further comments or questions as time permits.

The Chair: Mr. Campbell.

Mr. Campbell: When I first spoke I said I would like to say something about immigration. Of course it's too complex to deal with the whole problem. In the notes I've provided I've given quite a bit of information, but I would like to highlight a couple of things that are happening here.

I mentioned at one stage the Lower Mainland study on education. They found two years ago that 43,000 adults in British Columbia had no English, 129,000 had little English, and 12,000 would be arriving in B.C. in each of the next five years. In 1994, 24,000 arrived and they didn't have any English. There were 7,600 students; that's 300 classrooms. There were 16,400 adults who didn't have any English and who would need it if they were going to function here.

The government has a program called LINC, instruction for newcomers to Canada. The funding for LINC in British Columbia this year is $18.6 million. It serves only 5,544 applicants. That's less than 40% of the number of people who arrived the year before, needing that language. We simply can't handle it.

What happens is that as a result of that we have ethnic ghettos where they speak their language. As a result of that, 45% of the kids in Vancouver schools are in ESL classes; and 40% of those were born in Canada. So we've abandoned the opportunity that used to exist for children to learn the language of their new country by playing with the kids next door.

Mr. Pawluk: Mr. Chair, are we allowed to exercise a point of order?

The Chair: You can do whatever you want, Mr. Pawluk. We're here to try to accommodate you and not vice versa.

Mr. Pawluk: Thank you, Mr. Chair.

I think this has no relevance to the nature of the item on the agenda, and that is the finance committee -

The Chair: Mr. Pawluk, I'm going to overrule you.

Please go ahead, Mr. Campbell.

Mr. Campbell: It's a common problem.

Now, what are we doing? Just as an example of how this can develop, we have a new category of immigrants. It was developed last year. It's called the ``DROCs'': the deferred removal orders class. They are failed refugee claimants who have been under removal orders for three years and who have succeeded in holding a job for six months since making their claim; and that could have been four or five years ago. Without reference to literacy or skills or anything else, this year we're letting 2,500 of those people in here, people who are here simply because they took advantage of the opportunity to beat the system. We can't afford to educate them either.

So the problem is very complex, it's very serious, and I just beg you to look into it.

The Chair: Thanks, Mr. Campbell.

Who else wanted a word before we go into our closing summations?

Mr. Albanese: About immigration, it is my understanding that immigrants make up about the lowest segment of the population to go on welfare. I don't think the numbers in immigration - This country was founded on immigration and all that. They make productive members of society.

These ethnic ghettos you talked about - We have ghettos in regard to poverty and so forth.

They start businesses, as Mr. Yung did when he came here. I don't see that as the biggest concern in our state right now: immigrants sucking out all the wealth of the country. There are much higher prerogatives -

Mr. Campbell: Let me make it clear. I didn't say any of those things, and I'm not against immigration and I'm not against immigrants. I was talking about flaws in the system that have to be corrected. That's what I was talking about.

Mr. Albanese: You seemed to underline people who don't speak English. I assume you're hoping we'll provide more education for those people to become productive members of society.

Mr. Campbell: I was simply pointing out that we're bringing these people in so fast but we're not educating them, we're not dealing with them. One of the things we're doing is bringing in people who have great expectations for life in this country but who aren't going to be able to meet them because we can't afford to provide the services. That's the problem.

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Mr. Albanese: Right. I was just underlining that I feel they are productive members of society and they maintain themselves and actually contribute towards society, so to that extent they're not a detriment to society.

Mr. Campbell: I've asked for all that kind of thing to be examined. A lot of things are being said that aren't true. Some of what you've just said will not be substantiated by the truth, but I'm not going into that.

I'm simply saying that this is a very serious problem that is very costly to our society. It's not fair even to a lot of the immigrants. There's an obligation to examine it thoroughly, and that examination hasn't been taking place for the last 25 years. We've just drifted.

Mr. Albanese: I'm in accordance with you that it should be reanalyzed and investigated, but at the same time I think it distracts from more pressing arguments in relation to deferred taxes, as Mr. Pawluk has said. There are huge amounts of capital that lie there, as opposed to immigrants sucking the system or something.

Mr. Pawluk: With all due respect, I think Mr. Grubel and Mr. Campbell should bring their concerns to the attention of the House of Commons Standing Committee on Citizenship and Immigration.

The Chair: We've found that the finance committee is a lightning rod for just about every issue that has the slightest bit of money attached to it. That seems to be the link that puts us into it.

The budgetary process has many aspects to it, because every program we pay for has to go through the budget. Because there's an expenditure or there's revenue from these programs, they somehow come across our desk.

We have the odd other committee in the House of Commons that helps us out from time to time with these other issues, but we don't shun the responsibility of having to deal with every aspect of everything that costs us money in this country.

I think we've come to the end. I haven't seen anybody else who wanted to contribute.

We'll start with Mr. Yung for a 30-second summation. You don't need to avail yourself of that unless you so desire.

Mr. Yung: My conclusion is actually very simple. I share Mr. Lawrie's concept of the simplified tax system. My understanding is that it's not how much you make; it's how much you can keep after the tax.

The will has to go back to the people. Let them depend on themselves, not on the government.

The Chair: Mr. Sulmona.

Mr. Sulmona: Thank you for the opportunity to speak today. We will put forward our views of today in writing, as well as some of the comments we have on policy matters. Unfortunately, we weren't able to do that today.

We simply ask for consideration of streamlining the process of government.

The Chair: Mr. Albanese.

Mr. Albanese: Thank you again for having me here and allowing me to speak.

I still wonder why we are so concerned about maintaining high interest rates in order to stifle inflation and attract foreign investment. That seems to be a priority of ours, and attracting foreign capital, as opposed to being concerned with support structures for our domestic human capital and looking after the investments we've put forward in the past.

Hopefully we can take those on as priorities in a long-term goal to get rid of our deficit by educating our populace and looking after social programs.

The Chair: Mr. Lee.

Mr. Lee: I just want to thank the committee as well.

I'd also like to make a point. It's sort of a point of concurrence with Mr. Lawrie, about productivity being the root of building a Canada.

I think there is - I'll use a bad phrase - a ``paradigm shift'' in how Canadian economic sovereignty can be acted upon. What I'm talking about is that productivity is based on a real economy, but I think one of the great pressures for the Minister of Finance is to deal with a type of pressure that is based on a paper economy. In the future the Department of Finance is going to have to address the paper economy and how it's affecting Canada's budgetary decision-making.

The Chair: Ms Gullickson.

Ms Gullickson: I gave a copy of my presentation to someone in the front. I would ask the the members of the committee please to read that.

I don't feel as if I would have had an adequate hearing, so I'm actually glad that I couldn't get through it. So I'd ask you to read it.

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I'd like to thank the other witnesses I've heard today. The answers are there. I just really hope they've been heard, okay?

Thank you.

The Chair: Thank you, Ms Gullickson.

Mr. Robinson.

Mr. Robinson: This hearing this afternoon has dealt rather considerably with things, as you say, that relate to money. Sherrill is here representing people who don't have money, and I don't think Sherrill got the hearing that was deserved.

The Chair: Well, then -

Mr. Robinson: I'd like to state that really clearly, and -

The Chair: Mr. Robinson, stop.

Ms Gullickson, take as much time as you want. I've made that offer, what, five times today -

Mr. Robinson: There is not a hearing around this table for what she has to say, and it didn't come out of the conversations. Her observation during the time I was reading my paper was that you people were having some nice conversations.

I think this is a ridiculous kind of a thing, dealing with an extraordinarily important area -

The Chair: Well, then, please -

Mr. Robinson: - because the people of Canada are suffering as a result of the mismanagement of the economy of Canada. We are significantly more unstable this year than we were last year. If this is the way things are handled by this committee, next year they will be considerably more unstable than that.

You have a country where people are living in fear of what the cuts are going to be that came from Mr. Martin's budget last February. You have a country that is in fear of losing a province. You have a country with no sense of stability in its direction. There are people who are hurting - we're talking about individual people - and I'm suggesting to you that the interests of the people Sherrill represents are absolutely primary and they ought to be given the whole afternoon, because, in a relative sense, the other things are peripheral.

The Chair: Please feel free, Ms Gullickson, to take as much time as you wish. I've made that offer and I repeat it.

Ms Gullickson: It's difficult for me right now to do that. I've been sitting here and listening, and I don't want to say anything negative but I am very upset. I hear people talking about the Vancouver Foundation, which has an extraordinary cause and does phenomenal work, but what I heard in my heart was, ``Oh, my God, alms to the poor.''

I didn't hear any opportunity for people who have very little to participate in getting work, paying their taxes and moving forward. I know that may not have been an intent. I said that was a personal fear that came to mind.

There are ways to save money. There are ways to make money. The bottom end is not heard. There are people out there dying. If a man in B.C. quits his job because of any reason, and it may be a legitimate reason, he's not entitled to welfare. He's not entitled to unemployment. So he has to suffer through jobs that are absolutely horrendous.

There's a lot happening here where people can't speak up any more. Their rights aren't there. That's my concern as well. We don't have a safety net. We need some supports to stand on our own.

I don't feel today has been a hearing. I'm very upset that it wasn't - Mr. Walker left.

The Chair: So?

Ms Gullickson: I wasn't under the impression -

The Chair: We have the record.

Ms Gullickson: That's how I'm feeling, okay?

The Chair: That's fine. Do you want more time to make your views heard?

Ms Gullickson: No, I do not.

The Chair: Do you want more time, Mr. Robinson?

Mr. Robinson: No.

The Chair: Okay.

Mr. Pawluk.

Mr. Pawluk: Thank you, Mr. Chair.

Notwithstanding the situation in Quebec, the greatest solution for a united Canada comes out of repeated surveys and polls over many years. The greatest concerns of Canadian citizens, both in Quebec and in the rest of Canada, are the economy and jobs. We have to address those two situations.

The Liberal Party in the last election promised that jobs would be the highest priority. You have to live up to that promise, Mr. Chair.

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Second, you have to implement the will of average Canadians. This is a forum for listening; I appreciate that. You have to listen and implement some of the economic policy alternatives given to the standing committee on previous occasions and this time around by people such as Neil Brooks, Jack Biddell, the Committee on Monetary and Economic Reform and the Centre for Policy Alternatives.

I rest my case.

The Chair: Thank you, Mr. Pawluk.

Mr. Richardson, you've been very quiet today. Did you want to say something?

Mr. Christopher Richardson (Director, Gift Planning, Vancouver Foundation): On behalf of the Vancouver Foundation I'd like to conclude that we have developed a very simple, two-line, no-cost concept to address the inequitable crown charity situation that threatens both community foundations and also the ability of other not-for-profits to be ready and able to provide the environment for growth and jobs in the future.

There isn't time here to raise the two-line solution to the Income Tax Act, because it may raise some questions, but we'll be providing you written comments on that matter.

Thank you.

The Chair: Thanks, Mr. Richardson.

Professor Bressler.

Prof. Bressler: I want to thank you very much for the opportunity to be able to present a brief today. Our brief is to you, so it will be in the record.

As well, in spite of the fact that certain members of the groups here are upset about the fact that they may have not gotten a hearing, I can only say that except for the last two years - or maybe it's been three; I can't remember when the election was - we didn't have opportunities to do this.

I've been talking to government for years about university research and infrastructure, and I've had to spend most of my time in Ottawa doing that. Now we have an opportunity to do this in our province and our own city. I just want to say that is a very different process and we appreciate it.

Dr. Hardwick wants to make a few closing remarks.

Dr. Hardwick: Sir, thank you very much for this opportunity. My concluding comment is in support of NABST, an important report and well balanced, in our opinion.

The second component has to do with the way in which the economy is supported with research. A reading of Richard Reich's book, The Work of Nations, is well worth the while. It outlines the importance of driving your economy on the basis of innovation and creativity, and I think that is a reasonable formula.

The third item I'd raise is one I mentioned earlier, and that has to do with the devolution of various functions to the periphery. As you offload the issues of health funding and university funding, you lose your authority. The form of authority you can retain is on the basis of information and the use of the information to bring the various peripheral provincial economies into line.

This is a legitimate use of that kind of authority, and information is one thing politicians understand well. I would suggest on that basis that research at the federal level to identify the standards for the country in the areas you devolve, be they fisheries or health or education, will stand you in good stead when it comes to trying to maintain a transprovincial or a transnational standardized effort.

The Chair: Thank you.

Mr. Lawrie.

Mr. Lawrie: I hope I speak for just about everybody here when I say I know we have a voice today - you've given us a voice - but I hope we have a say. One of the things I hope you do take away from here is that at least some of the things we have had to offer do translate into either some actions or at least some good intent along the way.

In summary, really what we're looking at here is you have to do well in order to do good. A lot of people have talked on the do-good side. We can't afford to do that until we get our house in order. Our house is not in order. If we're $500 billion in debt, that is not exactly - What do we have to show for it, when it comes right down to it?

We have to get that debt in order. Having done that, then we can go forward and do a lot of those things that I would say fall into the category of doing good. But we can't do good before we do well. That's the message we want you take forward from our group in particular. Let's get our house in order and then let's get on with doing what we as Canadians can do so very well.

The Chair: Thanks, Mr. Lawrie.

Mr. Campbell.

Mr. Campbell: Thank you very much. I too appreciate being here.

I think it's fair to say we can't deal with every subject in its entirety at a meeting like this, but we can give expression to opinions about certain things and hope that, having given expression to those ideas, they'll be picked up and followed by your committee. I do believe they will be.

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In my experience in government - and I was there for 10 years - the thing that bothered me most, where I was, at least, was the lack of managerial skill. I said when I spoke before that I have the greatest respect for the people in charge, but they had responsibilities they weren't capable of handling. I believe if you deal with that you'll save billions of dollars of our money.

The Chair: Thanks, Mr. Campbell.

Mr. Les.

Mr. Les: Thank you, Mr. Chairman.

It has been an interesting opportunity for me this afternoon to represent municipal Canada before this committee.

It seems to me we have two major challenges in front of this country at the moment. One, of course, is the financial situation, and the other is the matter of national unity. To some degree, at least, the solutions to both seem to be somewhat parallel. The governance of this country will need to be restructured and decentralized. That will bear the economic results we require. It also will address to a large part the aspirations of the various provinces and regions of this country that are looking for more autonomy.

My closing comment would be that in undertaking the measures required to address the financial situation in particular, we must not pass financial obligations from one type of taxpayer to another. There is no point in ceasing to pick the taxpayer's income tax pocket and then picking his property tax pocket. That doesn't really gain the taxpayer much of anything at all. In fact it does a lot of social damage in some cases when you shift things around like that.

On behalf of the municipalities of Canada who represent the property taxpayers of Canada, please do it carefully.

The Chair: Thank you, Mr. Les.

I'd like to take a moment to try to summarize very briefly what I think we've heard. I don't attribute any of my ideas to the committee. These are my personal ideas.

I think there is support from everybody at this table for trying to deal with our debt and deficit crisis. There's very little unanimity as to how we go about it. There are those who said if we get people back to work, i.e., focus on job creation, it will go a long way toward solving the problem. I agree with that.

I think that has to be our priority in many ways. We have too high a level of either unemployment or under-employment in this country. The question is, how do we that? Some people at this table have said we will just not have the investment unless we get our deficit down and our interest rates down. We won't have confidence in our future. So it's a bit of a chicken and egg problem, but it's obvious that we have to handle both fronts.

We have heard Mr. Yung talk about the need for financing for small business - eloquently supported by Mr. Robinson - and equity capital for small entrepreneurs who want to get off their backs, lying on the street, and who, given a slight opportunity, could become productive members of our economy. We've seen this through experiments developed by Canadians in Third World countries in funding micro-business. Our banks today will not provide equity capital for small business. I believe we, as a government, have to find a way to come up with that sort of approach.

We have heard Mr. Les speak about a retrofit program, which is another infrastructure program. We will have to look very hard at that. The last infrastructure program we had cost the taxpayers about $60,000 per job. That's an expensive job creation program. But we also have to look at the fact that we gained tremendous infrastructure out of it, which we wouldn't have had otherwise, that's necessary to have a productive and competitive future.

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Charles Campbell, I want to digress. You remind me so much of a person who is very dear to me, and that's my father. My father was a businessperson, and he was on a government board called the Enterprise Development Board, which approved grants to small businesses.

One day, some people came in and made a presentation saying they had found a way to develop an unbreakable light bulb. They started to present reams and reams of reports and consultants' specs on this light bulb. My father just got very bored in the middle of this. He took it and threw it against the wall and it shattered. In that boardroom, that is now called ``The Peterson Spot'', and they've put a frame around it.

You remind me very much of the practicality of my father with the sense of straight thinking that you brought to deficiency in that one board you were dealing with. I believe much more of that can be done in every one of our public enterprises. Maybe your approach of getting some management consultants available to all of these, or management expertise, is the way to do it. I just admire you so much for your straight thinking on that particular issue.

I know you weren't intending anything against immigrants, because you said so. I know in my own riding of Willowdale, we have many people whose first language is not English. They speak it very poorly but have only learned it since they first came here. The only charge against them is that they are taking all the prizes in the high schools.

Mr. Lawrie, you talked about a number of specifics, such as cutting regional economic development incentives and things like that. You gave us some specifics to deal with the deficit and we appreciate them very much. Like Mr. Pawluk, you did not hesitate to give us very specific measures that we could use to deal with the deficit and our economic future.

Doctors Bressler and Hardwick, you've rammed it home once again that our ratio of research and development in relation to our economy is among the lowest in the industrialized world. Since I've been on the soapbox about this for the last decade, I'm delighted to see that you're there. We are not making progress substantially, and this is cause for concern. I accept your plea for fundamental research, and it is supported eloquently by Mr. Albanese on behalf of the students. We suggested last year that the granting councils be one of the few arms of government not to be cut. Unfortunately they were, but I still feel that way. We congratulate you on the work you're doing, and I hope we can meet some of the goals and aspirations you set for us.

As for the Vancouver Foundation, Christopher Richardson came to us earlier in Ottawa and brought this wonderful development forward. I believe it is an alternative way to providing services through communities and to individuals, and in a much more effective way, in many cases, than having the federal government attempting to do it. It is an alternative that has worked and we congratulate you and look to your example.

The students have made a very eloquent plea for the fact that - -they really didn't say it; it sounds too trite - they are our future, and to the extent that we ignore their potential, we are cutting off our own future.

The reduction in transfer payments does mean the cost of tuition will go up, and it would be fatuous for me to try to tell you otherwise. To the extent that they do, I hope that we will provide you with the loans you will need in order to fund your education, and that they won't be repayable except as based on your ability to pay, and based on the jobs you get thereafter.

I can't say anything other than that to you, because they already have been cut. That has been decided and that won't be reversed.

Mr. Sulmona, we thank you for giving us one more area in which we think we could be much more productive by cutting the red tape, which would make us more competitive internationally. I just worry like hell about this, though. If I get to the airport and I don't have ten bucks, do I get to leave or not? How do I do that?

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Mr. Sulmona: As a member of Parliament, I think you would be able to figure that out on your own.

The Chair: Okay. I guess that $10 is more than 7% of a $100 ticket, but maybe I missed that one.

Could I say in conclusion that, Sherrill Gullickson, you represent the people who are at the bottom, who are the least advantaged, who are the most vulnerable. I hope that whatever measures we adopt in the future will take into consideration that these people are the least deserving of meanness and pettiness on our part. We are judged, and will be judged in the future, on the basis of how we treat the people who are the least able to look after themselves.

Some solutions have been put forward, which I can accept.

I must tell you, Mr. Pawluk, and the students and others who've suggested the interest-rate solution - all we have to do is push a button in Ottawa and interest rates will go down - that there are severe consequences to pay for that in terms of our longer-term interest rates and our foreign debt. If I thought all we had to do was to push the button and lower interest rates, that it would work, then it's the first thing I would do, because it's our single biggest expenditure today - over $40 billion a year. It's not a conspiracy on my part to enrich those who have capital and are getting interest income. Quite the contrary. It would make our job so simple if all we had to do was that.

In conclusion, we've some very difficult choices. You have been extremely helpful in working with us. I also take away from this meeting, through the presence of John Les, the fact that provincial, federal, and municipal governments are all just part of one service network to our ultimate taxpayers. We have to find new ways for efficiencies, for cooperation, and for delivering of services. Canada is such an overgoverned country in relation to others.

This is going to be a monumental undertaking. We can't even get our national unity situation together, which some of you have indicated is costing us in terms of our interest rates, the uncertainty that it creates in the world market and in Canada. But I believe that, because governments are a creation of human beings and of Canadians, we have an obligation to rethink them and to try to find better ways to make them work.

It's always a treat to come to Vancouver, which is probably the most beautiful city in Canada, by miles and miles and miles. It is also probably one of the most diverse cities in terms of its political opinions, and therefore one of the most challenging and exciting to be in.

Thank you all very much.

We stand adjourned until Monday afternoon, at 3:30, in Ottawa.