EVIDENCE

[Recorded by Electronic Apparatus]

Friday, November 8, 1996

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[English]

The Chairman: Order please. We are pleased to have our second group of witnesses before the Standing Committee on Finance of the House of Commons with us here in Toronto.

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I would ask that you limit your opening remarks to three minutes. Because we have so many witnesses, I'll have to be a little bit diligent in trying to enforce that time limit to make sure that everybody has a fair opportunity to present his or her case. I will ensure you enough time through the question and answer period, or thereafter, to expand on anything you want to present to us so that we as members of Parliament can hear them and so that other witnesses can also hear them and comment on them. We're very concerned about what your specific recommendations are to us.

Our first witness is from the Ontario Council of Agencies Serving Immigrants, and she is the president, Kay Blair.

Ms Blair, please.

Ms Kay Blair (President, Ontario Council of Agencies Serving Immigrants, (OCASI)): Thank you, Mr. Chairman, for allowing the Ontario Council of Agencies Serving Immigrants to speak to the Standing Committee on Finance today. The Ontario Council of Agencies Serving Immigrants is an organization that consists of over 140 member organizations. Our organization provides a fundamental service in the essential settlement and integration of immigrants and refugees to this country. It is our firm belief that immigrants make a significant contribution to Canada, to the economic, social, and cultural life of Canada.

In particular today I want to be able to speak with you about three areas that have worked quite significantly well for our constituency. In particular, we would like to talk about the important role played by the federal government in facilitating the settlement and integration of immigrants and refugees, particularly in the labour force. It is quite clear that if a person does not have any attachment to the workforce, where they can begin to develop some self-reliance, he or she will not be able to experience any form of settlement and/or integration whereby he or she can become an effective contributor to Canadian society. We're very concerned about that.

Secondly, we want to speak about the crucial contribution that immigrants and refugees have made to the Canadian economy. Third, we will address the important contribution that has been made by three particular federal departments, whether it be Canadian Heritage, multiculturalism policy and programs, or Citizenship and Immigration, which funds the language training and has the ultimate responsibility for the immigrants and refugees to Canada, or the Human Resources Department, which has traditionally provided the resources to assist immigrants to gain an attachment to the workforce.

When we begin to talk about the contribution of immigrants to Canada, we like to point out that immigrants to Canada bring economic wealth with them, and in fact it is good business for Canada to continue to recognize and value the contribution that immigrants bring to this country.

One of the things of most concern to us is the fact that we have a large pool of immigrants and refugees in this country whose skills and talents are underutilized. In regard to the very countries we trade with and where we've had very successful trade missions, individuals from those countries are currently citizens of this country and are not able to utilize their skills and talents. We urge this committee to begin to think about those things and reposition Canada in the global market by valuing and utilizing the skills of individuals that are currently untapped.

In addition to that, we want to talk a little bit about Canadian Heritage. Recently the Canadian heritage department has gone through a program review and has identified three critical areas as its priorities. The Ontario Council of Agencies Serving Immigrants supports those priorities and thinks they're critical in maintaining social order, equality, and fairness for all. In particular, in the area of social justice, building a fair and equitable society ensures that each person will have an opportunity to participate and contribute to the life of each one in this country.

The second priority is in terms of identity and is that of fostering a society that recognizes multiculturalism as a fundamental characteristic of Canada. We believe that multiculturalism is the cornerstone of democracy in this country. As such, we encourage this committee to strengthen the mandate of the multiculturalism policy to ensure it addresses the issues that will assist all of us to experience a sense of fairness, equality, and full participation in this society.

Of greatest concern to OCASI is the -

The Chairman: Ms Blair, I'm going to have to ask you to wrap up quickly, please.

Ms Blair: I'll do it very quickly.

The Chairman: Thank you.

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Ms Blair: I really need to speak a little bit about the Human Resources Development Canada changes to the unemployment insurance legislation, which has recently become the Employment Insurance Act, and to state very clearly that it is of great concern to us, because the changes to this legislation have really resulted in a loss of access to training and employment services for immigrants and new entrants to the workforce. If we're talking about economic renewal and putting Canadians back to work so that they can actually assist with bringing the deficit down, legislation like this has just erected enormous barriers and created denial for people who are skilled, talented and not able to attach to the workforce.

Basically what we're asking here is that in your submission and your final decision-making, please take these issues into account from an economic perspective. If you have people in this country who are skilled and talented, in whom their governments have invested and who are now here, we encourage you to recognize those skills and utilize them so that Canada can truly be a competitive country in the global market.

The Chairman: Thank you very much, Ms Blair.

From the Ontario Marina Operators Association, Mr. Shaw, three minutes, please.

Mr. Michael Shaw (Executive Director, Ontario Marina Operators Association): Thank you, Mr. Chairman. The Ontario Marina Operators Association represents some 350 marina operators in the province of Ontario. Some of them handle over 500 boats at their marinas, but the majority are small family businesses. Ontario represents about half of the recreational boating activity in Canada. The key services that marina operators provide, and on which their livelihood depends, are seasonal dockage, winter storage, repair services, and providing counsel when people wish to sell their boats privately.

By their ability to provide these services, the marina operators hope to retain their customers and their families as long as they enjoy boating and not lose them to other activities like golf.

The Chairman: I'm not sure I agree with you.

Mr. Shaw: This provides their sustenance, sir. Although some of them may be guilty of playing golf on their off moments, they have very little down time, I can assure you.

I'm appearing with reference to the amendments to the goods and services tax legislation included in the ways and means motion, tabled on April 23, and specifically the amendments relating to agents and auctioneers. My point is that marina operators who facilitate transactions between principals, and who are not required to collect tax, do not act as agents or auctioneers. We are therefore asking that they be specifically excluded from this amendment.

I should explain the role of the marina operator. Typically, Mr. Jones may wish to sell his recreational vessel. He values it at a certain amount. He conveys this information to the marina operator. Mr. Smith may advise the operator that he is seeking a similar boat. The marina operator introduces the two principals, who then make their own agreement as to the purchase price. The prospective purchaser may depend on the marina operator's familiarity with the boat and seek his assessment of its seaworthiness, operating characteristics and general condition. He also advises the prospective purchaser of his obligation with regard to such matters as licence transfer - which is typically a somewhat complex and frustrating process for the new boater - and payment of provincial sales tax.

As I've already suggested, the two principals agree independently on the amount to be paid for the boat, and typically the purchaser pays the marina operator a service fee of 10% of the purchase price. The operator of course pays the GST on the amount of his fee.

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There are a couple of points regarding this scenario. First, the marina operator is not acting as an agent. He is not empowered to bind either of the principals into a contract or the terms of a contract. Second, the marina operator does not have the authority to buy or sell on behalf of a principal. Principals communicate between themselves to arrive at the sale/purchase decision.

The Chairman: Thanks very much.

Mr. Shaw: We would just appreciate having an assurance that marinas are excluded from the effect of the...

The Chairman: I understand. Thank you very much, Mr. Shaw.

I apologize for having to cut you off, Mr. Shaw. I hate to have to do that.

From the Association of Canadian Pension Management, we have Jeffrey Graham.

[Translation]

Mr. Jeffrey S. Graham (lawyer, Borden and Elliott, Association of Canadian Pension Management): Thank you, Mr. Chairman and members of the Standing Finance Committee, for the opportunity to present our ideas in this process of budgetary consultations.

[English]

ACPM is the national voice for pension plan sponsors in Canada. I have the privilege of chairing the association's advocacy and government relations committee. The committee includes some of Canada's leading pension practitioners, drawn from positions of responsibility with the sponsors of pension plans and the actuarial, investment and legal communities.

With me today are two members of the committee: Malcolm Hamilton, a principal with William M. Mercer and a leading authority on pension policy issues, and Keith Ambachtseer, president of Ambachtseer and Associates, a respected adviser on pension investment issues. I hope each of my colleagues will have an opportunity to participate in the discussion that follows by responding to your questions and comments. As a group, we very much want to share our collective expertise with this committee.

Let me briefly outline the views of the association that are relevant as the federal government plans its next budget.

First, like most Canadians, members of ACPM appreciate the strong leadership shown by this government in setting and meeting credible deficit reduction targets. The Minister of Finance and his colleagues deserve our thanks for having made such a positive contribution to creating a climate in which Canadians can be confident in their economy and investors can be encouraged to invest in Canada. At the end of the day Canadians, regardless of political stripe, want a federal government that shows strong and consistent leadership and that governs in the interests of all Canadians.

Second, this association had the privilege of appearing before this committee in last year's pre-budget consultation process. A number of our messages at that time are still relevant. First, Canadians should be encouraged to take increased responsibility for their economic security at retirement through individual and corporate retirement savings plans. Second, we must not mortgage the future of our children by taxing pools of savings for retirement for consumption today. Third, the government should be promoting the expansion of private pension plans. Fourth, regulations should not impede the investment of pension assets for maximum return.

Looking ahead to this year's budget, from our perspective a key issue for the government is its role in helping Canadians meet their retirement income needs. We recognize that the federal government shares this objective, as evidenced by its efforts to reform CPP and place it on a more sustainable basis.

In a national survey of our members, we found support for moderate CPP contribution increases combined with benefit reductions, and strong support for the CPP fund to be managed on private sector principles.

The recent delay in announcing changes to the CPP is troubling, particularly as it has been linked to political squabbling between provinces and the federal government. It is simply not acceptable that the CPP or other issues related to securing the retirement needs of Canadians become hostage to other elements of intergovernmental dialogue.

The association notes that in last year's budget, the federal government announced that the OAS and GIS programs will be replaced with a seniors benefit. Some members of our committee are concerned with the potential negative impact of the seniors benefit on the incentive of the middle class to save for their retirement.

At the same time, many of our members are concerned with the changes to the RRSP and RPP also announced in the 1996 budget, notably the decision to freeze RRSP contribution limits until 2004 and RPP limits until 2005. The changes suggest an ad hoc approach to the taxation of retirement income. We regret that the recommendation contained in this committee's pre-budget consultation report last year to undertake a comprehensive study of the retirement needs of Canadians before making changes to programs involving retirement income has not yet been completed - although we note that under the leadership of Mr. Duhamel, a report on aging issues is being undertaken, we believe, by the Liberal caucus.

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The Chairman: Could I ask you to wrap up, Jeff, please?

Mr. Graham: Yes.

The Minister of Finance, in his recent economic statement before this committee, indicated that the government is working to provide Canadians with the support they require to take advantage of the modern economy.

From our perspective, there's one very obvious change to tax policy that will help Canadians create additional wealth, thereby leading to greater economic prosperity, and that change is the elimination of the 20% foreign property rule.

These are preliminary comments. My colleagues and I look forward to the upcoming round table discussion.

The Chairman: Thanks very much, Mr. Graham.

From Let's Talk Science, we have Bonnie Schmidt.

Welcome.

Ms Bonnie Schmidt (Director, Let's Talk Science): Thank you for the opportunity to address the committee.

As I'm sure the committee knows, science and technology are the driving forces for an economy that's based on knowledge and innovation. Technology is the engine of economic growth, and science drives that technology. They create jobs, build industry and support our standard of living.

A scientifically literate workforce is essential to Canada's economy. We need to create knowledge and be able to use the technological innovations. Indeed many government documents that have come out over the last eight to ten years have relayed the importance of developing a science culture in Canada.

Although the situation's improved a little bit, I don't think we're doing all that well. In fact last year a national survey came out that suggested 60% of Canadian adults can't name a single Canadian scientist or achievement, nearly half the population doesn't know it takes a year for the earth to go around the sun, and a quarter of our population isn't yet quite sure the sun doesn't go around the earth. And women clearly remain under-represented in science and technology fields.

These are really important issues to Canada's economy, and we need to find ways to address them.

In my opinion, education underpins scientific research and technological innovation. Science education and skills training are absolutely critical to our economic development.

Right now, across this country, literally thousands of professional scientists and engineers and science students are volunteering their time to help develop the skills in young Canadians and develop a science culture in this country. As financial support for education diminishes, the need for these thousands of volunteers is increasing.

The program I offer, Let's Talk Science, is located across Canada. We have hundreds of university representatives and industry-based people who volunteer their time to try to help develop the skills in young Canadians.

I believe the federal government has four roles. In my limited time doing this type of work, I've worked quite closely with Industry Canada, and they do have a portfolio that looks at these types of issues. Unfortunately they are being cut.

The four roles I see are as follows.

One, recognize and communicate the importance of science literacy for Canada.

Two, support volunteer organizations, especially during the early phases of projects designed to develop a culture. It's very difficult for non-profits to find core operating funds right now. We can get industry-based support, but the core funds are hard to find.

Support research into informal science learning and act as a catalyst for increasing industry support. In the last few years, the limited amount of money Industry Canada has been able to put into this has leveraged an average of $5 for every $1 they've put in for a program called Science Culture Canada. For what they've done through National Science and Technology Week, they've been able to leverage $12 for every $1 of government support.

To end, I suggest there are five ways the government can get involved to help improve the science culture and that will lead to economic growth and job creation.

One, support non-profit volunteer organizations that actually coordinate the efforts of all these volunteers. As I said before, it's very difficult for us to find core funding. It's quite easy to find industries to support projects.

Two, encourage and support research into formal science learning. If we don't understand what programs are actually effective, then we're not going to go anywhere with the skills development.

Recognize excellence in the teaching of scientific skills at all levels. Some of the programs, including the Prime Minister's awards for excellence in math, science and technology education, are ending next year.

Support the teaching of content and processes that lead to the development of scientific skill. In my opinion, far too much emphasis is being placed on putting a computer in front of every child and wiring the schools, making sure everybody is wired to the Internet. There's very little focus on the content of what the kids are learning and the skills development in the process.

Finally, help to increase the partnerships with industry to support our projects. Many of our small non-profit groups have been extremely successful in leveraging for financial support from the industry. But if the government doesn't show its support, there's not a lot of reason for industry to back it as well.

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Thank you for the opportunity of appearing here today.

The Chairman: Thanks very much, Bonnie Schmidt. You packed a lot into your three minutes. Congratulations.

Representing the Canadian Opera Company, may we have Roy Hogg, please.

Mr. Roy Hogg (Past Treasurer, Canadian Opera Company): Thank you, Mr. Chairman. We have no written presentation, but we did provide input to the Canada Council task force on tax reform. I simply want to focus on one or two issues that we would like to urge further consideration of.

The Canadian Opera Company, as perhaps many or all other arts organizations, is faced with two critical caches: one, the funding of current operations, and secondly, providing some form of capital or endowment support for the future so that earnings on that endowment capital can assist the continued development and contribution of the arts organizations in Canada.

The 1996 budget measures are a very welcome first step. They go a long way to motivating additional contributions via the tax system. But, Mr. Chairman, we need further assistance to build this capital or endowment support for the long term. The capital gains exemption for appreciated property donated to charitable organizations is one way of achieving that additional assistance. We recognize the issues surrounding a capital gains exemption.

First of all, we are the first to suggest that a 91% indirect support of government is not on in these difficult times. However, we would urge that the assumptions surrounding the conclusion of that 91% indirect support be further reviewed, particularly in two areas. The first area is the assumption that a zero-adjusted cost base would apply to the donation of appreciated capital property. The second is the timing issue. The only alternative to the donation to the charitable organization of the appreciated property would be the immediate sale and payment of the tax.

In our experience those two assumptions bear further study and review. There are of course larger or other issues surrounding a capital gains exemption, not the least of which is the valuation issue. We might look to the adoption of rules by other countries, particularly our neighbours to the south who have dealt with valuation issues in a way that appears to work reasonably well.

Secondly, there is the issue of certain foundations. Again, we might look to the rules adopted by the U.S., where other than pass-through foundations are not subject to any enhanced capital gains exemption but to the ordinary rules surrounding donations of appreciated property.

Our greatest concern, Mr. Chairman, as I hurry to wind up, is that we get caught in a transition period. We look not only to declining government support but also to the elimination of it, and we need at least some transition assistance. That transition assistance might be provided through the capital gains exemption being available for only a stipulated period of time. For example, it could be available for ten years from the later of the adoption of the legislation or the start date of any new charity, to put everybody on a level playing field.

Mr. Chairman, we appreciate this opportunity. We urge further consideration and study of this issue of a potential capital gains exemption. We'd be happy to participate further.

The Chairman: Thanks very much, Mr. Roy Hogg.

From the Crop Protection Institute, we have Charles Milne.

Welcome.

Mr. Charles D. Milne (Vice-President, Government Affairs, Crop Protection Institute): Thanks very much for this opportunity. The Crop Protection Institute is a non-profit trade association representing the manufacturers, formulators and distributors of crop protection materials in Canada. We were founded in 1952 and we have been the voice of the industry ever since.

I'm here today to talk a little bit -

The Chairman: Please slow down. The translation makes it very difficult.

Mr. Milne: I didn't appreciate that I only have three minutes, sir.

The Chairman: What were you told you would have?

Mr. Milne: I was led to understand I had 15 minutes.

The Chairman: From whom?

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Mr. Milne: When I talked to the clerk's office a couple of weeks ago...

The Chairman: I apologize to you. We have not been able to do that anywhere across Canada.

Mr. Milne: I appreciate with the forum that you wouldn't...so I'm scrambling a bit here, sir.

In any case, the issue I'd like to table today is that of cost recovery. Our industry is being faced with cost recovery, and we understand that's part of the landscape today. We don't have an opposition to cost recovery if it's done properly.

The experience that our industry has had with the Pest Management Regulatory Agency of Health Canada is one that we can all learn from. It has highlighted the fact that in government terms we need a greater client orientation and a greater business perspective for this dynamic to work. It is in fact a de facto tax on industries.

There are a number of areas where we feel there's a lot of improvement needed and a lot of consistency required. Perhaps a central agency like Treasury Board could take a more direct role in areas such as determining the difference between recovery of cost and payment for privilege, the difference between a public and private good, the application of GST and the cumulative impacts of cost recovery.

The point I'd like to make is that when funds are exchanged, an expectation for value is carried with this. In our case, value can manifest itself in client service, quality, accuracy, timeliness, accountability, or recourse. To date, the Pest Management Regulatory Agency has been unwilling to meet those expectations of our industry. Nor has the PMRA treated our industry as a full partner in this client relationship. We feel other areas have accomplished that, but we've yet to see it.

Industry consultation has been one way. The agency speaks to us, industry responds, but rarely has our input been reflected in changes. In one instance this year we were given a discussion paper by the PMRA where certain policies would be implemented before the end of the comment period. It's little wonder that our industry felt it necessary to hire a court reporter to record our unbiased minutes at a subsequent PMRA industry meeting.

These are the observations and recommendations from our industry's experience with the PMRA. It's an organization whose staff has increased significantly. Its budget has doubled and its activities have expanded, despite being the consolidation of parts of four separate departments.

This is in sharp contrast to the overall government downsizing of budgets, reduction of staff and elimination of activities. Cost recovery appears to be an opportunity to have the client pay so that government can live like yesterday well into the future. Consistency, competency, and competitiveness in client orientation must displace complacency, arrogance and secrecy within some user-pay areas of the government in order for user pay to work and not become the generator of additional work and a source of endless litigation.

User pay is an opportunity to make a major positive change in the dynamic between government and industry. To date, for some of us user pay has confirmed that as a free good the government service was priced about right.

Thank you for your time.

The Chairman: Mr. Milne, I can assure you this is the fourth time the committee has heard about the PMRA. Thank you very much. We will convey those concerns to the minister.

Our next witness, from World Vision, is Charlie Fluit.

Mr. Charlie Fluit (Vice-President, Finance and Administration, World Vision): Thank you, Mr. Chairman.

Mr. Chairman, committee members, ladies and gentlemen, my colleague Mr. Scott and I speak today on behalf of World Vision Canada, an international Christian relief and development organization. We have over 45 years of experience fighting poverty and injustice in over 100 countries around the world, and with the ongoing support of over 350,000 Canadians.

Although less than 13% of our revenues are from government sources, declining Canadian commitment to overseas development assistance is nonetheless a source of growing concern. World Vision Canada expresses deep regret that Canadian overseas assistance is at its lowest level in 30 years, despite the current government's explicit promises to reverse this trend. This is a distinctly un-Canadian trend. It not only endangers Canada's global humanitarian reputation but also poses a direct and very real threat to the lives of millions of people in the developing world. Historically, Canadian overseas assistance has been concerned primarily with the basic needs of the world's poorest people. Since 1994 CIDA has ostensibly reserved 25% of the aid envelope for this purpose.

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Recognizing the current fiscal reality, World Vision Canada submits three recommendations. One is that impending cuts to CIDA over the next two years totalling more than $300 million must not be applied to the 25% allocation for basic human needs. Two, Canada's international relief fund must be separated from those funds used for basic human needs to ensure that disaster funds are not taken out of the ongoing allocation for basic human needs. Three, CIDA must ensure that basic human needs funding is not used as pretext for tied aid - aid that often puts the interest of Canadian business before that of the alleviation of poverty. Lastly, while Canada wrings its hands about its own state of affairs, poverty and malnutrition are not on holiday. Canada made commitments decades ago to assist and empower the world's poor and afflicted. We cannot now renegotiate the human contract simply because we've mismanaged our own collective pocketbook.

As the ministry of finance notes in Creating a Healthy Fiscal Climate, as one of its principles to guide choices:

Deficit reduction should never be a blind accounting exercise that ignores the impact on broader economic and social goals. Deficit reduction is fundamentally an exercise in setting priorities and making reasoned choices.

World Vision Canada urges the committee to consider the recommendations presented here on the basis of reasoned moral choices and the setting of humane priorities. We urge the committee to extend its view beyond the borders of Canada and to consider Canada's increasingly weak position within the international humanitarian community.

Mr. Chairman, members of the committee, our written report in both official languages is available. We commend it for your careful consideration and your information. Thank you for your attention.

The Chairman: Thank you very much, Mr. Fluit.

From the Canadian Restaurant and Foodservices Association, we have Michael Ferrabee. Welcome.

Mr. Michael Ferrabee (Vice-President, Government Affairs, Canadian Restaurant and Foodservices Association): Thank you very much, Mr. Chairman and members of the committee.

I would very much encourage this committee, as an independent committee of the elected House of Commons, in the last year of the government's mandate, to come out and actually challenge Minister Martin on what we consider to be three key issues. The first issue is lower payroll taxes. They will allow us to create jobs for youth. There's a youth employment crisis in this country, and this will allow us to create the necessary jobs to alleviate this. Fix the GST so that as an industry we don't have to run uphill to hire Canada's young people. And abandon the heavy-handed tactics of forcing business to include tax in the price in Atlantic Canada.

The Canadian Restaurant and Foodservices Association is Canada's largest trade association. We have 13,500 members representing more than 40,000 outlets. We're a $30 billion industry and we have 840,000 jobs.

The industry, as you all well know, has been struggling. We've had a dramatic decline in our market share since the introduction of the GST - what we call the share of stomach - a decline from which we have not yet recovered. Ten years ago, before tax income was twice what it is today... Bankruptcies in 1995 were the highest ever, and same-store sales have declined every year since 1990.

On the issue of payroll taxes, I have two books here, the purple and green books that you'll recall from a couple of years ago: Agenda: Jobs and Growth. There are a number of quotes in here about payroll taxes. They've been called the perverse effect of payroll taxes. We understood that to be through the reform process...a manner in which the government was going to try to alleviate the whole payroll tax problem. I think we all intuitively understand that payroll taxes are a tax on jobs.

We were encouraged by the reform efforts under UI and very much supported them, but we got sideswiped by that process. We are now facing on January 1 a 17% increase in contributions for UI because of first-dollar coverage. We now learn that the minister is considering hoarding the UI surplus, or worse, spending it on make-work jobs. We feel we've been duped.

There is now talk of eliminating the yearly basic exemption in the CPP as well. This, for our industry, would represent a 76% increase before a penny in premium has been added.

I would encourage you to challenge Mr. Martin to cut payroll taxes, to lower UI rates by up to 50¢, and to preserve the YBE.

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You're all aware of the presentation I made before this committee previously with the caviar and the milk. I think you're probably well aware of that issue. It forces us to run uphill and to create jobs because of the unlevel playing field with the GST. I would encourage you again to challengeMr. Martin to address that.

On the issue of GST harmonization in Atlantic Canada, harmonization is one of those things that if you say it quickly it sounds great. Our experience thus far has not been great. The government has announced that it's intending in a very heavy-handed way to insist that business include the taxes in the price. As far as I'm concerned, this is a deliberate attempt to try to dupe the consumer. They claim the support for this is consumer-based. Frankly, if it's consumer-based and the consumers really want it, business will respond by including it. I don't understand why the government needs to intervene.

I would encourage you to challenge the government on these three key issues: cutting payroll taxes that would let us create youth jobs; fixing the GST; and dropping the heavy-handed efforts on tax-included pricing.

Thank you for your indulgence, Mr. Chairman.

The Chairman: Thanks very much, Mr. Ferrabee.

From the City of Etobicoke, Tom Denes. Welcome.

Mr. Tom Denes (Commissioner of Works, City Council of Etobicoke): Thank you,Mr. Chairman. I'll be very brief.

I'm here to tell you about the federal-provincial infrastructure program that was initiated in 1994. In the city of Etobicoke it has created 340 person-years of employment. It has allowed us to complete some major projects that otherwise wouldn't have become a reality.

If you had more time I would advise you to visit our Etobicoke waterfront, where the program is unfolding. Ms Augustine and I have been there several times in recent weeks. You can see the effect of the infrastructure program and how the Etobicoke waterfront is going to be totally different from what we see downtown. The mistakes of Harbourfront obviously will be avoided.

We are asking for a continuation of the program. We are asking you to concentrate this program in four different areas in Etobicoke. One would be road projects. I haven't detailed them here, but we have a list of road projects that would become part of this program if it was available.

We would draw your attention to the grade separation program. This is the railway-roadway separation that the federal government has always been very actively involved with and that could come under this program. We have three major crossing points that are still not grade separated, and they are still a source of aggravation to local industry. Of course, they represent a very serious safety problem.

We would like to assess our long-term infrastructure needs with a study that would cost approximately $2 million. That could be part of this program as well.

The last item we would like to address, if the program is extended, is the Etobicoke waterfront. Just to put the finishing touches on what we began, we would need approximately $11 million altogether.

Mr. Chairman, my submission details some of what I have just said and further details are available. We urge you to promote the program and to talk to the province in order to extend it.

The Chairman: Thank you very much, Mr. Denes.

From the Committee on Monetary and Economic Reform, William Krehm.

Mr. William Krehm (Chairman of the Board, Committee on Monetary and Economic Reform (COMER)): Thank you, Mr. Chairman and members of the round table.

I was impressed by the fact that so many of those who have spoken up to now reach the word ``macro'' or ``deficit'' and bow their heads in reverence and stop. I'm going to start there.

Why is there no money? All you have to do is turn to page 22-6 of the Canada Year Book and you will read the following:

Fixed assets, such as government buildings and public works are charged to budgetary expenditures at the time of acquisition and are shown on the statement of assets and liabilities at a nominal $1.00.

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Let's apply that source of non-accountancy to Mr. Martin's shipping line. If he entered the cost of the ships of the line at $1, his balance sheet would show bankruptcy.

The second point is this. If he even tried to put the cost of his ships on the freight of a current year, his freight charges would have to hit the sky. That, ladies and gentlemen, is the source of the government's both inflationary and deficit problems.

I won't be able to deal with this at length in three minutes; however, as appendices to my brief I have some very recent correspondence with the Minister of State for International Financial Institutions, his reply, and my reply, which will elucidate it.

For those who may be interested in why your problems exist, I have a few copies of our monthly newsletter.

Few Canadians realize what a gem we have in the Bank of Canada Act. That arises from the fact that unlike most central banks, it wasn't founded to finance Napoleon's wars or other conquering heroes; it was founded in the depths of the Depression to lift the country out of the Depression and not to sink it into one. It is set out in the first paragraph that the goal of the bank is to attenuate fluctuations not in prices alone, but in employment, in trade and in the exchange rate. No zero inflation is the sole goal there.

The sole shareholder of the Bank of Canada is the Government of Canada; hence it's not funny money when the interest paid on government debt held by the Bank of Canada comes back substantially to the government. It is via dividends, which is a very respectable institution.

That is how the Second World War was financed at interest rates of 1.5% to 2.5%. That is how after the war was finished, a vast penniless immigration was brought into this country and housed and educated.

In 1991, when our banks got themselves into first-class difficulties financing Mr. Campeau's efforts to buy up all the department store chains in the States - along with the Reichmanns - a bill was passed through Parliament phasing out the reserves that our banks used to hold with the central bank and earned them no interest rates. As a result of that, and some other legislation coming from the bank for international settlements, the banks have been able to build up their holdings of government debt with no cash of their own from $20 billion before this bill was -

The Chairman: I take it your recommendation is that the Bank of Canada should own Government of Canada bonds. Is that what you're saying?

Mr. Krehm: That is part of it.

The Chairman: And there should be reserves on our chartered banks.

Mr. Krehm: That's right.

The Chairman: I apologize for having to cut you off.

Mr. Krehm: You understand how ridiculous it is, after the government, for twenty years, has ignored these things, to ask anybody, frankly -

The Chairman: We'll give you lots of time.

Mr. Krehm: I hope so. I want to thank you for the three minutes you did give me.

The Chairman: It's not me giving it to you. It's all other witnesses giving it to you. Thank you.

From the Ecumenical Coalition for Economic Justice, we welcome Joy Kennedy and John Dillon.

Ms Joy Kennedy (Coordinator for EcoJustice for the Anglican Church of Canada, Ecumenical Coalition for Economic Justice): Thank you for this opportunity to present the views of the Ecumenical Coalition for Economic Justice, commonly called ECEJ. This is a national project of the Anglican, Roman Catholic, Lutheran, Presbyterian and United Churches in Canada.

The Chairman: That's the first time they've been together since the Reformation, isn't it?

Ms Kennedy: No, we've been together since GATT-Fly, so maybe 20 years.

We do speak with one voice and one mind on the subject of economic and social justice. Our mandate is to assist all those churches and others in the mission of promoting economic and social justice in Canada and indeed throughout the world.

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We want to talk today about our collaboration with other justice-seeking groups in Canada in a process to develop an annual alternative federal budget, whose perspective has enriched our understanding of the potential for budgetary measures to redress poverty and injustice. It is a process that includes people from NGOs, churches and reputable economists from across this country.

Our first premise is that we believe there are always alternatives. We don't buy the line that we don't have any choice. We believe that Canadians, of all people, have many choices. But it's important for us to remember that economic choices are ethical choices about what is important in building community.

Today we're being called upon to make moral choices that uphold cherished Canadian values, such as human dignity, mutual responsibility, social equity, gender equity, economic equity, fiscal fairness and ecological sustainability. We need to be asking about those values when choices are made as to who benefits from those choices and who doesn't.

We have some specific things we want to refer to, but we won't do the numbers crunch. Those numbers for the alternative federal budget will be forthcoming in February, but we will just point out some highlights.

The Chairman: That's far too late for it to be taken into consideration.

Ms Kennedy: It would be too late for this committee, but we do have the 1996 federal budget.

The Chairman: It is too late for the finance department in setting its own budget.

Ms Kennedy: Yes, we understand that. We do have figures from our 1996 process to which we would refer you.

The Chairman: Thank you.

Ms Kennedy: Now that falling interest rates will allow Mr. Martin to meet and surpass his deficit targets, as he projects, it's time to turn our attention to the social deficit and the urgent need for good jobs, adequate housing and the restoration of social services. This is no time for a large across-the-board tax cut à la Ontario, although we could see some lightening of the tax burden on the working poor. An across-the-board tax cut would be very inefficient in trying to stimulate the economy, since tax cuts just really tend to benefit the rich more than the poor. The question then is, who actually benefits?

A better route to job creation is direct government spending on neglected areas, such as the long-promised national child care program, social housing and environmental programs, such as building retrofits to save energy.

Public sector lay-offs have had devastating direct and indirect effects on jobs. The Wood Gundy estimates are that the fiscal drag from federal and provincial restraint measures has cost Canada just under half a million jobs between 1994 and 1996.

While we have welcomed the Canada infrastructure works program, most of that money was spent on traditional infrastructure of roads, water, sewage and employing mostly male construction workers. Public investment in social infrastructure, such as recreational, educational and child care centres, is also radically needed. Such investments would help equalize job creation between women and men, as well as benefiting users and workers at these facilities, who are often women.

We regret that the federal government has all but abandoned its involvement in the construction of new social housing; yet some 1.2 million Canadians can't afford their current housing. An average capital grant of somewhere between $35,000 and $40,000 is needed to provide affordable housing for households with median renter income. An investment there would have job pay-offs. Similarly, we believe the federal government should fulfil its promises on child care.

Our colleagues here have referred to items that we would like to affirm. One is the international commitments that Canada has. We would underline looking at a Tobin tax. I won't go into that but you know what I'm talking about.

The Chairman: We understand.

Ms Kennedy: Another colleague at the table, the previous speaker, has talked about policy options around the Bank of Canada. That is one area in which we have several suggestions. I won't go into that, but I just want to note that those are key areas.

We're particularly concerned that as we are at the threshold of turning around the deficit, it is time to really think about our monetary policy and look at costing the social costs, as well as the economic costs, of decisions made with respect to any further cuts and with respect to the impact of the CHST on provinces. It's also time to continue to ask that the government take into account another way of costing out its fiscal policy.

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The Chairman: Thank you.

Ms Kennedy: Did that wrap up fast enough?

The Chairman: You've done a wonderful job. We have studied the alternative budget from last year and we have had other testimony about it this year.

Ms Kennedy: Okay.

The Chairman: But it's good for everybody else to hear what these alternatives are. I appreciate you being able to lay them out.

Thank you so much.

[Translation]

We move now to question period.

Mr. Rocheleau, you have the floor.

Mr. Rocheleau (Trois-Rivières): First of all, I want to thank all the witnesses who came here to talk to us.

Ms Blair, you want the minister of Finance to provide even bigger budgets to Heritage Canada for the promotion of multiculturalism. You probably now that this is a very delicate matter in the present constitutional context, especially in Quebec, a province that provides 25% of the Canadian budget.

I understand your position on multiculturalism but I would like to know if you are aware that this goes directly against another principle that is very well entrenched in Canada, among Canadians in general and Quebeckers in particular, and that is the idea of the two founding peoples, which would be somewhat dimmed by multiculturalism.

If we pursue this multiculturalism policy, are we to understand that if the concept of distinct society were ever to be seriously considered and did not remain the empty shell that it is now, it should not be considered as an option to the sovereignty solution that is presently offered to Quebeckers? I don't know if I made myself clear.

[English]

Ms Blair: Thank you for your question.

I do believe that the points you've raised, as they relate to Quebec and the two founding nations...I think it's really important to understand that when we talk about multiculturalism as the cornerstone of Canadian democracy, it's an inclusive approach to all persons living in Canada.

I don't think there should be any question as to Quebec's need with regard to multiculturalism, because we're not talking about a policy that is intended to mystify racism in any way. We're talking about a policy that looks at every person in this country as part of this country, as having access to all programs and services, and as being part of this country and building this country in a collective process. That's why we're committed to the promotion of multiculturalism.

When I did talk about strengthening the multiculturalism policy under Canadian Heritage, I was not requesting additional resources. I was asking for leadership in the implementation of the review process and I was asking for real programs to be put in place to enhance civic participation, to enhance building a Canadian identity and to enhance social justice. Those things are the basis for it.

Currently, with respect to the kinds of programs that are funded under the multiculturalism policy for the NGO sector, only 13% of $18.6 million goes toward NGO programming, so it's quite minimal. We're not requesting more money. We're saying that if you're putting a policy in place that is going to enhance social justice for all, it must have some teeth to it, and it must be maintained and enforced by the federal government.

[Translation]

Mr. Rocheleau: Another short question. Suppose that Quebeckers decided to remain more or less definitely within the Confederation.

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Would you then consider Quebec as a distinct society with distinct powers, and not the empty shell that is at the present time being extolled by the government? I mean that Quebec would have distinct powers that would distinguish it, as a people, from those other entities that are the provinces, whereas our own demand is to be recognized as a people. That is really the basic issue.

[English]

Ms Blair: I don't know if I'm responding to your question clearly, but I think if we truly understand multiculturalism, within the context of a multicultural society, there is distinctness, in my understanding.

Quebec's decision to remain as part of Canada is something that I'm not going to address as part of this process. What I'm saying is, if we deal with multiculturalism as a totality, it will embrace and include all persons.

[Translation]

Mr. Rocheleau: Mr. Graham, since you represent the Association of Canadian Pension Management, you probably know that more and more pressure is being exerted on government to allow RRSPs to be used for purposes that are different than those that were considered originally, such as the purchase of a house. What is the position of your association on this?

[English]

Mr. Graham: Thank you. One of my colleagues may have something to add to my answer,Mr. Chairman, if you'll permit this.

First of all, I am a lawyer. We're a national voluntary association, so we all participate in the association from our different perspectives. I do work in the pension sector. Generally speaking, we're all very much concerned as pension professionals in ensuring that the retirement needs of Canadians are met.

I don't know that we've actually, as a group, considered the particular proposals or efforts to provide specific incentives as to whether it be first homes or in other respects. Generally speaking, we're concerned about ensuring by and large that we all have adequate resources, whomever we may be, to retire in dignity and to take care of our own needs.

Do any of you gentlemen have anything to add to that point?

Mr. Keith Ambachtseer (President, Ambachtseer and Associates): The only thing I'd add is I'm not aware of any evidence that suggests people remove money from RRSPs without clearly understanding the consequences. There are Canadians today who find themselves in a situation where they don't have employment income and they need money to live on. If in that circumstance they take money out of an RRSP, far be it for me to oppose it. That may not be what the RRSP was intended to do, but in the circumstances I think that's an eminently sensible use of the money. I don't think the government should do anything to prevent that from happening.

The Chairman: Could I have just a supplementary on that while you're still there? Would you mind?

[Translation]

Could I ask a supplementary?

[English]

We've had a number of people suggest to us that there could be other uses. One is that you could use an RRSP of a relative to help a first-time home purchase by an individual. For instance, a child could use his parent's RRSP to do that. Another suggestion is that you should be able to borrow money from the RRSP to start a small business.

Mr. Ambachtseer: I'd be less keen on those things. The RRSP is a vehicle to provide financial security. Its primary purpose is to provide that security to people who can't earn an income because they're retired or unable to work. When you start using it to finance small business and home purchases, I think that detracts from the program.

You won't find many financial advisers in Canada suggesting that people should take large percentages of their retirement savings and devote them entirely either to home purchase or to financing small business. Their focus should be a diversified portfolio that gives them the assurance that when they need that money it will be there. So if there's an advantage to doing that to a minor extent to relatively young people, perhaps you could make sense of it, but I don't think it should be the focus of the use of RRSP moneys.

The Chairman: Thank you very much.

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Mr. Solberg, please.

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

I want to start by acknowledging some of the presentations that were made. We've heard from different groups, sometimes making the same points over and over again. I think that's helpful because it helps drill the point home.

Mr. Milne has referred to the Pest Management Regulatory Agency, and the more I hear about it the more I understand it has been a complete debacle. I appreciate what you have to say. I think if you are going to have user pay, you must have user say. That point is very clear to me. I can assure you that I'll certainly be doing my best to try to reverse the trend in the Pest Management Regulatory Agency, but also in keeping an eye on cost-recovery schemes in general.

Other people have made points about charitable donations. Again, we've heard these things over and over, but to me the point is still salient. We simply must do more through charitable organizations, and that applies to those who, for instance, are actually distributing food to people. It also applies to cultural organizations and groups that promote understanding of science. I think those things are very important.

I want to touch for a moment on some of the presentations that have been made with respect to the need to increase social spending. This is a very frustrating area, because over the last several years, as the government has wrestled with its financial constraints, we have seen actual decreases in overall spending on social programs. There's no question about that.

It's interesting when you look at the budgetary figures. In 1993-94 the government had total spending of about $158 billion. By 1996-97 it will be $156 billion. In other words, it's only going down $2 billion. The reason we're feeling the pinch is because over that period the interest costs went up about $10 billion. At the same time, taxes have gone up to try to keep level with all this sort of thing. Taxes have gone up quite dramatically. The result has been a double whammy, because with increased taxes you get higher levels of unemployment and less capacity for any interest payments getting into social programs and less capacity to fund this displacement of people and some of the problems it causes.

The point I'm trying to make is that over the last many years we've accumulated so much debt that in fact I would argue, Ms Kennedy, that the fiscal drag that Jeff Rubin of Wood Gundy was referring to wasn't because of cuts, but because of a $600 billion debt and close to $50 billion in interest payments. I saw the same article, and I'm fairly certain he was talking about the overall size of the debt.

The point I'm trying to make is that until we can arrest this problem, we don't have the capacity to start to turn around and provide help to the degree that it's necessary for people who need help through social spending.

The Chairman: I think there will be some disagreement with you there.

Mr. Solberg: We'll just leave it at that.

The Chairman: Do you want to start off, Joy Kennedy? I know William Krehm has a question.

Ms Kennedy: I would, but I'd actually like to defer to my colleague John Dillon, who hasn't had a chance to comment. We would have the same answer.

Mr. John Dillon (Research Coordinator, Ecumenical Coalition for Economic Justice): I think, Mr. Chairman, that this question does raise the centrality of the question of interest rates and monetary policy. As welcome as the lower nominal interest rates are now, I think we know that in real terms we still are very high in historical terms.

Our concern is that at the first sign of renewed inflation or if nominal rates happen to rise in the United States, there's been no change in monetary policy per se, and the Bank of Canada may very soon begin to raise rates once again.

Two years ago, in this committee, in Hamilton, we had a very lively discussion about monetary policy. At the time your colleague Mr. Walker, from the chair, promised that this committee would hear from the Bank of Canada on the question. You subsequently did have another hearing with the Bank of Canada. Mr. Walker wrote back saying you would like to change monetary policy and lower rates but you really didn't have room to do that.

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I submit, Mr. Chairman, that the subsequent recent history of lower rates, which did not damage the value of the Canadian dollar and did not see a large capital flight from Canada, are evidence to the contrary that indeed there is room to bring rates down.

I wonder what this committee's views are on changing actual Bank of Canada policy so that, at the first sign of some moderate inflation, the Bank takes a more active role in the money markets and makes every effort to bring down that interest cost through setting the overnight rates, active buying and selling of short-term bonds, and through using the Bank of Canada, as Mr. Krehm has suggested, to hold more of the government debt. I think that's the key to being able to meet our social obligations.

The Chairman: Mr. Krehm.

Mr. Krehm: I'll be very brief. I notice Mr. Thiessen has taken the bow for the low interest rates.

When the economy is battered enough, there are neither lenders nor buyers. That was the experience of the 1930s. That has been entirely buried. People who bury their history are condemned to relive it.

The loading up of long-term debt is even more important than short-term debt. Somebody alluded to the fact that our long-term debt is still above that of the United States. That's not surprising, because $60 billion of additional debt, most of which is long-term, that could have been held by the Bank of Canada with higher reserves in order to dampen the inflationary effect, if such existed, is now left to the market.

This matter shouldn't be confrontational. It involves the most fruitful part of Canada's history. We would invite the government behind closed doors for a frank and friendly discussion on a chapter of Canadian history that has been buried. The inflation is not commodity inflation; it is financial inflation. One of these days this government is going to be faced with a major meltdown of the financial structure, and then what is it going to say for having clogged its ears?

The Chairman: Thanks, Mr. Krehm.

Mr. Graham.

Mr. Graham: My colleague Mr. Ambachtseer has a comment, with your permission, sir.

The Chairman: Absolutely.

Mr. Ambachtseer: I'm wearing my financial economist hat. My field is pension finance and investments generally. I can't help but make an observation in terms of the remarks. One of the interesting things that has happened in the global economy is that we now have an international global financial market.

Canada's capital market is 3% of a very much larger capital market. The fact that we now have the benefits of interest rates that are declining daily is because of the fact that the global investors have finally decided we have once again become a credible country in which to invest. That's what has made all the difference.

I would stand with those who say it's the credibility of the policies of both the Government of Canada and the Bank of Canada that has created these lower interest rates. The idea that we can manipulate these rates inside Canada is just not right. We live in a global economy and it will be the global investors who will determine not only Canadian interest rates but interest rates around the world, based on the credibility of the policies of the individual countries. That's why we're now winning.

The Chairman: Having this dispute doesn't make our task any easier. Thanks a lot.

Barry Campbell, please.

Mr. Campbell (St. Paul's): I have a couple of questions. The first is for Mr. Ferrabee.

I must take exception to your suggestion to us that Canadians do not want tax-included pricing. Along with colleagues around the table here, I travelled across the country in our GST hearings two years ago. I can tell you quite to the contrary that the one consistent thing we heard after people saying they hated the GST was that they wanted it incorporated into the purchase price. That was from retailers and consumers, who were the vast majority of witnesses before us. They said to do that while also taking care of the provincial sales tax, incorporating that as well.

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My question is about your suggestion on premiums. I have met with representatives of your organizations, and I have food services and many restaurants in my riding. You have been very effective advocates at every stage in terms of telling us what impacts the various things we have done or have not done are having on your industry. But on the premium cut, I wonder if you could help us. Are you aware of the cost to consolidated revenue that comes with every 5¢ cut? I believe your organization is, and I'd like to discuss that. What would your 50¢ proposed cut cost?

Mr. Ferrabee: I'm sorry, I don't have those figures with me today -

Mr. Campbell: It's about $3.5 billion, and with all due respect to what motivates you to suggest that we do that, and with all due respect to the salutary impact that you believe it would have,Mr. Ferrabee, I ask you to tell me where you think that should come from. Something else has to be cut to make up for that revenue loss, because, regrettably, that's the situation we're in. Does your organization have any suggestions?

Mr. Ferrabee: To begin with, I would disagree with the premise.

Mr. Campbell: Okay, fair enough.

Mr. Ferrabee: Perhaps you can explain it if I'm misguided, but my understanding - and the understanding of all of the business community - of the manner in which the UI fund runs, along with everything else involved in that process, including premiums, was that we would build up a suitable reserve. I think most people agreed that was $5 billion. We supported that effort and saw it as a reserve necessary for some kind of downturn in the economy. We believed, Mr. Campbell, that after the reserve was built up to the necessary $5 billion through that process, the result would be a rate cut of some kind.

I do not believe - and I do not think the business community generally believes - that all of that money being collected for unemployment insurance was flowing into the Consolidated Revenue Fund to fund all kinds of other programs. I know Mr. Martin has made representations to that effect recently, or perhaps has been hinting in that direction. But that was not our understanding of what was going to be done with the UI money. The UI money was going to build up a reserve, and we were to then see rates themselves decline once that reserve had been built up.

We're very troubled by the notion you may be expressing: that this money is somehow going to flow into general operating reserves, either to make Mr. Martin's deficit figures look better or perhaps to be spent on make-work projects. That really concerns us a lot.

Mr. Campbell: Let me respond. You asked for the facts and I'll give you the facts.

This money is not sitting in any UI surplus account. There hasn't been one for years and years and years. It's not out there anywhere. It is a notional entry that records the state of the account from one time to another, be it in deficit or be it in surplus. I do believe the business community has understood that for a long time. It isn't a case of hinting. It isn't a case of not coming clean with that reality. We talk about a surplus because government, as an employer and as employees as well, wants to know what the status of the account is at any given time. You also know that it has been in deficit for many years, has moved into surplus this past year, and is building up a surplus now. Reasonable people can have a reasonable disagreement on what an appropriate surplus is to guard against having to jack up those rates in the event of a recession.

The chief actuary has suggested that something far north of $5 billion to $6 billion is what's appropriate as a surplus. Be that as it may, whether it's $5 billion or $10 billion or $12 billion or$15 billion, it isn't out there as a separate amount of money sitting to be taken back without any impact whatsoever on the Consolidated Revenue Fund. Just as when it was in deficit in billions of dollars, it wasn't sitting out there minus money in the account; it was paid for out of consolidated revenues.

So I just make that point. I don't argue the point that business would like to see a lower rate and believes it would have a great impact on their ability to do certain things, but it is not without impunity.

I also want to add that in terms of premium reductions, since this government came into power in 1993, the rate did not go to $3.33 as scheduled. It is down to $2.95. We all believe it will continue to fall in this general direction, but what we may disagree about is the velocity or the trajectory, as somebody suggested the other day.

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Now, if you'll allow me, Mr. Chairman, I have a question for Mr. Krehm.

Mr. Ferrabee: First, I'd like a quick opportunity to respond to both that and your earlier question about tax-included pricing.

I do understand that there is consumer research out there that supports the notion of tax-included pricing. I don't take exception to that at all. I do understand that it's out there. I understand also that consumers behave perhaps differently from what they would sometimes tell a surveyor. That's fine. I accept the fact that this may well be the case. My only point was that if this is the case, and if you are so certain about the fact that this is going to be a good thing and consumers are going to want it, business will respond to it. There is no question about it. Business will respond. They respond to consumer demand.

That the government feels the need to legislate and decide that business must go through a very expensive process in one select part of the country and not the rest of the country during the process of trying to harmonize this tax is what we take exception to.

I'd like that to be clear and understood.

Mr. Campbell: Fair enough.

Mr. Ferrabee: On the issue of UI rates, I listened to your argument, and with respect. You seem to have said to me that the justification for raising rates in the first place - and we understood it then - was that it had been running this deficit and we had to build up a surplus. But you then seemed to be telling me that now that we've built up the surplus, we've decided that the money is no longer earmarked.

It is a dramatic change in certainly our, and I think the business community's, understanding about the reasons why UI rates were raised so significantly when they were, why they continue to remain unconscionably high, and what that money is intended to be used for. That is a dramatic change, in our understanding, about the purpose of those funds.

Mr. Campbell: Mr. Ferrabee, this government has not raised rates. It has lowered UI rates from the projected increase of $3.30 down to $2.95.

Mr. Ferrabee: Why do they remain so high?

Mr. Campbell: You still believe they are too high.

Mr. Ferrabee: Absolutely.

Mr. Campbell: ``Unconscionable'', I guess, is in the eye of the beholder. Again, it's a question of velocity or trajectory.

Mr. Krehm, again...and it's the same theme.

I'm sorry, Mr. Chairman. This seems to be the role I find myself playing a lot in these excellent round tables, because they do provide an opportunity for back and forth, which is great.

Everything has an impact. There isn't any voodoo economics. There's no magic solution. There's no quick and easy way out of something we did to ourselves over a period of 20 or 30 years. There are no quick, cost-free solutions.

That brings me to Mr. Krehm and his suggestions. People who espouse the view that the solution lies with the Bank of Canada are misunderstood sometimes as suggesting that it has no cost or no impact.

I want to give you, Mr. Krehm, the opportunity to tell us what impact, if any, going back to reserve requirements and insisting that the Bank of Canada hold a certain percentage of Canadian government debt, this will have on other lending by the banks or on the Canadian economy. I'm going to give you that chance, because you've left the impression that this is one of these easy, cost-free ways out of this, and it's so self-evident, it's amazing nobody has done it so far.

Mr. Krehm: Oh, don't say nobody has done it so far. I refer you to the 1944 Standing Committee on Banking and Commerce and the 1939 one quoted in my appendices. You will find that we did it very well. We financed the war. The ratio of federal debt to the GNP was at 140% in 1946, and by 1975 it was down to less than 22%. So don't say we didn't do it before. That's my first point.

If we're going to have a discussion, you people who have been elected have to make yourselves conversant with monetary matters. For example, can we afford a $5 billion to $6 billion entitlement to our chartered banks, which is the result of this increase in their holdings of government debt, and which they use to buy up chunks of Mexican banks?

The Bank of Nova Scotia went down there months before the Mexican meltdown -

Mr. Campbell: But the question was, what impact would this policy have on this economy? I'm well aware of the history. I am also aware that in those years, Mr. Krehm, as you well know, we ran very high operating surpluses and had extraordinary growth for a sustained period of time in the post-war era. We have a different economy functioning, and I think it behoves us then to look at what impact it would have. So let's look at the impact this time.

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Mr. Krehm: Before that time came the 1930s, when we ran deficits because there was so much unemployment. If we had a reasonably fully employed population, we wouldn't have the deficit. It is interest rates that have eaten us out of house and home.

You asked what the results are. Let me tell you, there would be $5 billion to $6 billion of entitlement to our chartered banks, which was not given as recently as 1990, available for other purposes. I would suggest a generous part of that be used as insurance for the same banks resuming adequate lending to small and middle-sized businesses.

Mr. Campbell: But Mr. Krehm, you've just suggested the banks are going to have to lend this to the government, in effect, so how are they going to also lend it to the small businesses?

Mr. Krehm: No, they will not lend it to the government. The Bank of Canada will lend it to the government.

A certain amount of money supply is necessary for an economy to function. That is a privilege of a state. If it issues too much money it becomes inflationary; if it does not issue enough it is deflationary. I am not suggesting that the total money supply, being the money created by the Bank of Canada plus the money created by the chartered banks, be created one iota. I merely ask that the Bank of Canada create more, as it used to, and that the chartered banks create less. That's it in a few words.

Mr. Campbell: That clarifies it. Thank you.

The Chairman: Ms Whelan followed by Mr. Pillitteri.

Ms Whelan (Essex - Windsor): Thank you, Mr. Chairman. I apologize for having to step out for a few minutes.

I want to ask a question to Mr. Milne about cost recovery.

One of your solutions is to empower the Treasury Board to oversee and scrutinize all cost-recovery departments and agencies to ensure their user-pay principles are being applied universally. Then you go on to talk about the private versus the public good.

I have grave concerns about the whole issue of cost recovery and I have grave concerns on how we would ever define the private versus the public good. I'm not sure it's fair to the agriculture society to say it's all their cost when we as Canadians all benefit.

I'm concerned that having the Treasury Board scrutinize everything is itself going to run up costs. Maybe you could expand on that a bit for me.

Mr. Milne: From our experience in the situation, we've noticed there have been great inconsistencies between how our proposed cost-recovery scheme is being implemented and how those of others within the same department, Health Canada, are being implemented.

There are examples within the pharmaceutical industry, with veterinary drugs and within medical devices. There is a great difference between all of those. However, what is being proposed by the agency we deal with, the Pest Management Regulatory Agency, is a new high-water mark with respect to the amount of cost recovery in relation to the size of the industry as compared to the others, as well as some of the tactics that are being employed.

My suggestion is that some degree of consistency within the administration of cost-recovery schemes is necessary. To be told that when we make a comparison it's irrelevant is pretty thin gruel. We'd like to see some justification as to why it's appropriate to recover 60% of costs from our industry as opposed to 25% from another industry.

When it comes to whether or not a single body should oversee it, that's a suggestion. It seems to me that as the situation exists now, some departments or agencies choose to interpret these guidelines to their own preference. Some have been very equitable; some have been rather draconian. I just suggest that perhaps before these things get rolled out, some broader parameters that have some teeth to them be dictated to agencies that find themselves in a position to undertake cost recovery.

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In answer to your earlier question, I'm not suggesting that the agricultural community bears all of this totally, not at all. I have worked very closely with the Canadian Federation of Agriculture and a number of its member organizations to have a united front on this. It is with some reluctance that we accept cost recovery, but we're prepared to pay only for that where we think there is a direct commercial benefit.

There are a number of activities within the scope of the Pest Management Regulatory Agency that in our view, and in the view of many of our coalition partners, are to the benefit of society in general. We feel that those issues are already paid for through other sources of revenue. As taxpayers, we're paying for the assurance that nothing is going on the market that is going to hurt anybody, that there are no health concerns about this.

When it comes to registering a product for commercial gain, yes, certainly, while we hope that they would review the data we submit in as expedient a fashion as possible, we're prepared to pay for that, provided it's done in an expedient way and it's not being feather-bedded. We don't believe that things that are in the general societal interest should be cost-recovered because doing so is almost like double-dipping. They've already been paid for once by all taxpayers, whether they are involved in an agricultural endeavour or their only involvement is being a consumer of agricultural products. But as a registrant to the agency, we needn't be paying for it twice. The distinction of what we're paying for should be made much clearer. Right now we don't know.

Ms Whelan: So your suggestion is that as we go into the implementation of the further cuts announced in the last budget, there needs to be a broad policy guideline for all departments to follow for every sector that they affect in cost recovery.

Mr. Milne: I think there would have to be some teeth to it. I don't have too many problems with the Treasury Board guidelines. They seem fairly equitable. The frustration is that there doesn't appear to be anything more than moral suasion to have the departments and agencies adhere to them. There's no policing out there. There's no accountability. That's what we as industry find to be very frustrating.

Ms Whelan: Again, I apologize for having stepped out, but with regard to the presentation made by Mr. Denes, I read your presentation with interest earlier. You talk specifically about Etobicoke. Maybe you mentioned this in your opening comments, but I wonder if you are in favour of another national infrastructure program that would benefit all communities and not just one.

Mr. Denes: I'm sorry if I created the impression that I was speaking only for Etobicoke. In fact, I am. But we would like to see a federal-provincial partnership developing the same way as it did in 1994, involving the municipalities in a three-party arrangement.

Ms Whelan: For the record, can you expand on the benefits of an infrastructure program for a municipality?

Mr. Denes: In my submission you will find reference to the benefits we have seen coming out of the previous program. It contributed to the maintenance of the quality of the physical infrastructure in the city. That is something we need a great deal of assistance with right now. It provided job creation and employment skills. Very importantly, in the case of Etobicoke, it promoted important environmental projects.

I mentioned the waterfront. There is a project going on down there that is going to be a milestone in treating storm water. We used to just let the storm water with all its pollutants run right into the lake. We are planning to create a natural environment, to create some wetlands, and through the process filter the storm water. This is a brand-new process, an environmentally helpful process. This is a vital thing that this program has brought about.

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Ms Whelan: I have a final question for you. The federal government has been criticized for the amount it cost per job for the infrastructure program. I don't believe that other businesses write off those types of investments in one year and on that basis determine that's what the cost is. Do you agree that the cost per job cannot be evaluated on those criteria - that it's $80,000 per job or whatever the number is that people like to throw around - when you look at the long-term and multiplier effects that it has for community?

Mr. Denes: These are capital works programs and capital works programs are never written off in one year. They are multi-year programs and we've always viewed these programs as such.

Ms Whelan: Thank you.

The Chairman: Thanks, Ms Whelan.

Mr. Pillitteri.

Mr. Pillitteri (Niagara Falls): Thanks, Mr. Chairman. I apologize for not having been here and heard most of the presentations.

The Chairman: You missed some really good ones, I want to tell you that.

Mr. Pillitteri: I can imagine. I certainly will read anything that is written, especially fromMr. Milne, because we made acquaintance before about cost recovery, pest management and so on.

In an earlier presentation in western Canada - I don't recall which city it was, perhaps Vancouver or Edmonton. Mr. Graham, in your opening remarks you talked about private pension plans and the problem of actually getting people enticed into private pension plans. You did mention the new federal government program that will be coming in the year 2001 - the seniors benefit.

I recall someone making a presentation - in Edmonton, I think - about the new seniors benefit being nothing more than a welfare program. I understand the program we put out, but I have a problem understanding someone who tells me it's nothing more than a welfare program. You are trying to sell a private package for pensioners, and saying the government is actually interfering with this new package. What are the changes from the present old age security and supplemental to the old age security that would affect us? Is it a better program coming out? Do you fear you will no longer be competitive in selling this program? Or could the new package coming out be much better?

I have a small one to Mr. Shaw about the marina. You said that you do not act as an agent, but you do get the two people together. What is the difference? One sets the price, but you take a commission of 10%. Give me a little answer on that.

The Chairman: Why don't we do Mr. Shaw first so that Mr. Graham can think of his answer.

Mr. Shaw: I'm not a lawyer so I can't give you a very clear definition, but in the case of a real estate agent, I understand the transaction is put through his or her principals - the real estate agency - and some of the finances travel that way. In this case the marina operator simply brings the two principals together, and they conclude the arrangement without any documentation on his behalf.

Mr. Pillitteri: But he takes the fee?

Mr. Shaw: He is paid a fee, which may vary. Indeed.

The Chairman: Mr. Graham.

Mr. Graham: Thank you, Mr. Chairman.

That was an excellent question, Mr. Pillitteri. I am really happy that Mr. Hamilton is here with me. He has given that issue a great deal of thought, and with your permission I would ask him to answer.

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Mr. Malcolm P. Hamilton (Member, Association of Canadian Pension Managers): The seniors benefit is an attempt to make old age security affordable in the face of an aging population. I suspect everyone around the table knows this because you read it in the paper every week now, but thirty years from now we are going to have twice as many seniors. This means that if old age security is left in the form it is in today, it will be twice as expensive, and that's $40 billion a year.

The seniors benefit is an attempt to reserve the old age security moneys for the people who need it. That's very laudable, and I don't think anybody quarrels with that. The problem is that it's done, unavoidably, through income testing, which means the message going out to low- to middle-income Canadians is that if you save for retirement you don't get old age security, whereas if you don't save for retirement you do.

More and more programs are being run on that basis, both provincially and federally, whether it's the drug benefit programs that are being income tested, or GAIN in Ontario, the seniors benefit and all the tax credits. When you add up all of these income-tested programs, the message to Canadians and families with incomes of less than about $35,000 is that not only don't you need to save, but if you do, it will cost you a lot at the other end. I think people need to take a good look at this and make sure the system we end up with, with everything income tested, is as viable as people presume.

Mr. Pillitteri: To follow up on that, you did not mention the supplement to the old age security, which is means tested today, is it not?

Mr. Hamilton: Yes. We've always had a number of income-tested programs - we have the guaranteed income supplement, GAIN, etc. - but the list is being added to with great regularity. We have many programs like old age security, the tax credits and the provincial drug benefit plans, which five years ago weren't income tested and now are or will be income tested, and that creates a disincentive for people to provide for themselves.

Mr. Pillitteri: Thank you. I feel much more comfortable now with the answers.

The Chairman: Thank you, Mr. Pillitteri.

Mr. Jackson, did you have a question?

Mr. Jackson (Bruce - Grey): I have a quick observation. As I noted, many countries have a pension that is very similar to the Canada Pension Plan. It works quite well. It can be enhanced by putting more money into it. There is a lot of pressure now by some proponents to take the pension away, not have any pension at all, and have everyone buy RRSPs.

As we discuss RRSPs, we find that people are trying to withdraw those RRSPs. We have a lot of people who will be changing jobs and so on who will be taking them out. A pension is supposed to be a basic level, and if you want to enhance it, you put in RRSPs.

One of the things perplexing me is that the federal government gets blamed... We don't have total jurisdiction over this pension, and we have to get some consensus.

The other thing that comes up all the time is that the pension is not going to be there. Some people are trying to start an inter-generational war by telling young people it won't be there for them, so why should they be paying for it? I think it's important that all Canadians continue to pay. The pension is a basic Canadian ideal, and it should stay that way.

My last observation is that we really don't know anything. We try to extrapolate that the seniors are going to double in thirty years or what have you, but as far as I can see, a lot of things could change in the meantime. Remember that these visions that we're having are not absolute. They are only targets.

The Chairman: Thank you.

[Translation]

Mr. Rocheleau, please.

M. Rocheleau: Mrs. Kennedy, Mr. Dillon, you provide in your report a critique of the present situation, but from an administrative perspective, and perhaps even an accounting one, which reminds me of the people who congratulate the government and urge it to stick to its policy of expenditure cuts and deficit reduction without worrying too much about its social and economic impact.

I would like to know why we are not using the appropriate words, unless it is because you do not agree with those who claim that we are not going through Neo-Liberal times in Canada as well as abroad. This is the approach that was implemented in the US by Mr. Reagan, and then in England by Mrs. Thatcher.

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In Canada, this ideology has two champions: Mr. Harris and Mr. Klein. In Quebec, we are unfortunately going more or less in the same direction, but at least we do it somewhat reluctantly. We apologize about it and we try to minimize the impact on the less fortunate of our citizens, whereas some other governments seem to be quite proud of what they do.

Why are you not using those words? Is it because this policy is generally endorsed by Canadians and that everyone thinks these are only temporary and strictly administrative measures? I heard on the news yesterday, and I think I understood what was being said, but I'm not bilingual, that a debate is beginning in Ontario about Mr. Harris who was talking about abused children and was denying any link between malnutrition of children in poor families and his Neo-Liberal policies.

What is your position on this?

[English]

Ms Kennedy: I'll start and John may do a follow-up.

I think the churches would say that regardless of what political party, political platform or economic platform is the prevailing one of the day, improvements always need to be made and human lives are always at stake, and human lives are affected by policies, budgets and the actions of the collective community.

Where churches come in at an observation level, it would be to say that in this past period of turbulence we are observing the real human impacts and real human costs, whether it's federal or provincial policy and movement and budgets. We are observing people who are falling through the cracks. Since the CHST came in we have been seeing radical increases in economic impacts on students, on low-income families and on health care to a degree, although I think health care is a different discussion.

We're saying that if you don't count the social costs now, you pay for them later. We know that in terms of the social and economic cost of violence in the family, for example, which can be directly and indirectly related to the economic situation in the country or in a community... We now have some studies that calculate the social and economic cost of violence in families. We know that violence in families has not gone down but radically up in the last couple of years, and that's not just more reporting.

We are looking at the increased social and economic costs of criminal justice. As people struggle with making ends meet and surviving, we find that criminal activity increases sometimes. It doesn't take very long, if you talk to a group of inmates - our chaplains are in the prisons a lot, and you start finding that maybe there is a basic sort of human fallability there. But when the economic pressure on people is such that they see no alternatives, they sometimes do turn to illegitimate means.

We believe white collar crime rates are also going up, from talking to members in our churches. That's because it's driven by a value that we have to be richer, we have to spend more, we have to speculate on capital and financial transactions. The whole thing is driven by an underlying value of self-interest and greed. That's a personal observation. There's going to be fallout from that.

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We would say that any government that is calculating its fiscal policies, the economic cost of whatever programs, must consider that the long-term social impact and the cost of this is going to come out somewhere down the road. It's the old adage: you can pay me now or you can pay me later.

The Chairman: Very briefly, Mr. Solberg, please.

Mr. Solberg: Thank you very much, Mr. Chairman.

Mr. Graham, your group has called for expansion of private pension plans and enhanced RRSPs. Why have you stopped short of advocating the Chilean model that my party has been proposing?

There's probably no short answer to that question.

Mr. Graham: No, not at all.

Again, Mr. Chairman, if you don't mind, I would ask my colleague to answer.

Mr. Hamilton: It's not that we're opposed to the Chilean model; it's that the Canada Pension Plan isn't strong enough to take apart right now. We think the real priority in the Canada Pension Plan is to get the baby boom generation to put more money in before it retires. We're not talking about projections here. The baby boom generation is twice as big as the one that preceded it. The one that follows the baby boom generation is smaller than the baby boom generation. That's not a projection; that's a head count. You do the head count and it's pretty obvious. The baby boom generation had better put some money aside, and it has to do it quickly. We can't wrangle for ten years about whether to privatize or not, push the baby boom generation through the system paying 5% of pay, and then turn to the next generation and say, guess what, you inherit $700 billion of deficit.

We think the easiest route to go in the short term is to get the thing better funded.

The Chairman: Mr. Fewchuk, please.

Mr. Fewchuk (Selkirk - Red River): Mr. Graham, where does the person who makes $200 a week, $800 a month, $9,600 a year, fit in with your pension?

Mr. Hamilton: Which pension?

Mr. Fewchuk: He makes a total of $9,600 a year, but basically he or she makes $200 a week.

Mr. Hamilton: Married or single?

Mr. Fewchuk: Married or single - we'll have both versions.

Mr. Hamilton: That person doesn't need a pension. The seniors benefit says that a single Canadian who never worked a day in their life or saved a penny in their life when they get to age 65 will have $11,400 a year after tax. A married couple will have $18,400 a year after tax if they never worked a day, never got a penny from the Canada Pension Plan, never saved a penny their whole life.

To criticize the retirement saving system for not providing pensions to people who have absolutely no need of pensions, I think, is unfair.

Mr. Fewchuk: I think it's unfair to say that somebody who makes $200 a week cannot save money.

Thank you.

The Chairman: Could I ask Bonnie Schmidt a question? You are a teacher, are you not?

Ms Schmidt: No, I'm a physiologist by training.

The Chairman: Are you the one who developed a plan where you went into the high schools?

Ms Schmidt: Yes.

The Chairman: The first need you identified was that a lot of our women in high schools were not studying the sciences. Wasn't that your first concern, and so you tackled it?

Ms Schmidt: Actually, several of our concerns revolved around the ability of teachers to teach science effectively and therefore keep all kids interested in science. There's a lot of research suggesting that girls in particular get turned off science by grade 7 or 8, and we then lose an awful lot of our workforce for science.

We have addressed a lot of these issues and have found very effective ways of getting volunteers out to the schools to help kids and teachers learn more and develop their skill base.

The Chairman: Could you give me an example of someone you put into a school and how they made a difference?

Ms Schmidt: One example happened in our first year. It involves a young student in grade 11 who was having some difficulty at home and had been a fairly good student but was failing quite miserably in her high school. We put a PhD candidate into that school to work with the teacher and help that teacher on a full-year basis to work with the children. She seemed to touch base with this one girl named Christine.

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By the end of the year Christine had asked Cathy, who is the graduate student, if she could just shadow her at the lab for a day because she was having difficulty at home and had failed many of her courses. She ended up volunteering in the lab for six weeks. This is a grade 11 student. She went back to school in the new year having Cathy as a mentor. She redid all of her science courses and is now a science major at the university and has come to volunteer for us now.

The program that started at Western was not supposed to take up a career for me. It was just supposed to be a small outreach project that I designed. It's now become a national level organization with core sponsorship from the industry sector, because the private sector has recognized this as a very great issue.

One of the things I was talking about earlier is the fact that non-profit organizations like mine can attract industry support, but much of the support we really need is for core operating. Many industries want to put their name on something. If you can call your project by that industry name, you can attract substantial amounts of money. But it's the day-to-day clerical work, the secretarial work, that is very difficult to find.

Programs like the science culture Canada program, which is a peer review granting agency through Industry Canada, will be ending and it will take out a very large infrastructure in our country.

The Chairman: How much are we contributing now?

Ms Schmidt: Only $2.5 million apparently.

The Chairman: A year?

Ms Schmidt: A year, and it's scheduled to end in one year. It's my understanding that the$2.5 million is leveraged another $15 million in private support.

The Chairman: How many volunteers do you have helping in the field right now?

Ms Schmidt: Let's Talk Science is a growing organization. We're probably looking at between 1,000 and 2,000 across Canada. If you were to put together the non-profit organizations, there are probably a total of many thousands. I can say easily 20,000 volunteers are giving up their time, and these are students and professional scientists. If we were to leverage, the $15 million is the cash we're able to leverage. It's not the volunteer time, which would be much higher than that.

The Chairman: Congratulations.

Ms Schmidt: Thank you. Thank you for the invitation today, too.

The Chairman: Have you given us a written submission? Good, thanks.

Would any of you like to take a maximum of 15 seconds to give us the thought you want us to have in our heads when we lay down to sleep tonight?

Ms Kennedy: We're not going to get out of the fiscal spiral we're in unless we seriously look at a review of monetary policy.

The Chairman: Mr. Dillon.

Mr. Dillon: In that regard, you asked for help earlier when debate arose about the international market and Canada's ability to have independent interest rates. Help is at hand, Mr. Chairman. We're about to publish a book called Turning the Tide: Confronting the Money Traders. In it we have an in-depth discussion of the Tobin tax and other measures that would give Canada more room.

The Chairman: Mr. Krehm.

Mr. Krehm: I would suggest that the government would be foolhardy if it didn't prepare a fall-back program in case Mr. Thiessen's projections don't come out. You're going to have a first-class disaster on your hands. And in the most friendly way conceivable, let us carry on discussion about fall-back.

The Chairman: Mr. Denes.

Mr. Denes: I said what I had to say about the infrastructure program. I thank you for the previous round, and we're looking forward to continuing.

The Chairman: Mr. Ferrabee.

Mr. Ferrabee: I would just encourage this committee to take this opportunity to seriously challenge the finance minister on the three issues I raised, which were lowering payroll taxes, fixing the GST so we don't have to run uphill, and abandoning heavy-handed tactics of forcing business to include the price in Atlantic Canada.

The Chairman: Mr. Fluit.

Mr. Fluit: We're disappointed, and probably appalled, at the lack of discussion about the poor, particularly the poor overseas. Hundreds of thousands are walking around Africa today and we're arguing about our own mismanaged little part of the pie.

Overseas assistance is 1% of the expenditure of this country, and that's just not enough. Frankly, we're not asking for more right now. The federal government is an important partner of World Vision Canada. What we're looking for is more strategic targeting and a commitment to regain the international reputation this country had. We slipped into the bottom third of countries in the OECD. The Americans are more generous than we are in giving to the poorest countries.

If you're looking for more money, perhaps you should look at casino earnings or lotteries. I'm paying a lot of money through tax on my hard-earned dollars, as we all are, and we let people who just win a game of chance walk away with the full amount.

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We have to focus on targeting CIDA more on the basic human needs of the people most vulnerable in this world.

The Chairman: Mr. Milne.

Mr. Milne: I would encourage the government, as it pursues cost recovery, to realize that it already has a blueprint of how not to do it, with the PMRA. It could presumably be on a more favourable course from here out if we pay attention to some of the pitfalls of the past.

The Chairman: Roy Hogg.

Mr. Hogg: Mr. Chairman, only to repeat my thanks, and to say I'm an optimist. There are solutions out there. Let's maintain the dialogue.

The Chairman: Bonnie Schmidt.

Ms Schmidt: I just want to advise everyone to keep your eyes on the press in the next couple of weeks, as the results from the third international math and science study are released. I will guarantee nobody here will be impressed by the showing of Canadian students and their scientific ability. I'd also like to reiterate the fact that we really do need to focus on our human capital in this country and make sure that our young Canadians are really prepared to live in tomorrow's world.

The Chairman: Jeff Graham.

Mr. Graham: ACPM thanks the committee for being included in the consultation process. The pension community wants to work with the federal government to develop coherent policy relating to retirement income of Canadians. Ad hoc responses should be avoided.

The Chairman: Mr. Shaw.

Mr. Shaw: Thank you again, Mr. Chairman, and committee members, for this opportunity. A number of small business people in a rather fragile industry would very much appreciate your support in getting clarification on those amendments and matters that I brought up. Thank you.

The Chairman: Lastly, Ms Blair.

Ms Blair: I'd like to thank you for having the opportunity to be here. I want to leave you with two very quick thoughts. There's a civil rights activist who says ``I might be invited to dinner, but it doesn't necessarily mean that we're dining together''. What I hear today indicates that quite clearly.

I want to urge the federal government to provide leadership in promoting and informing Canadians about the benefits of multiculturalism. The Conference Board of Canada has said multiculturalism is economically sound for Canada. Let's build on that, so that Canada can then truly compete in a global market.

For immigrants and refugees to be effective contributors to Canada and address the anti-immigrant backlash that's happening in our society today and is creating social problems, we need to look at the kinds of policies that have created barriers to their participation in the workforce, in particular the Employment Insurance Act. It denies access to individuals who've had no attachment to the workforce because they may not have the skills required to participate.

I urge some leadership at the federal government level, to provide some direction and accountability to the provincial government as it goes through the process of devolution. Thank you.

The Chairman: To the Ecumenical Coalition, your members are working on a daily basis with people who are in need, and they see these needs very clearly. You have spoken very eloquently on behalf of these people. I accept, and I think all members accept, what you have said about those needs having been exacerbated by cuts. Whether the precise solutions that you have in mind we would agree with, I'm not just sure yet. We will look forward to your study on the Tobin tax and how we might be able to do it unilaterally.

Mr. Krehm, I'm sure that you will be part of this publication - I don't mean you will be working on this publication. We do know there is a cost to what you propose. Whether that is a cost that Canadians would be willing to absorb at this time is another issue, because as we know and you know and you admit, nothing comes free. Otherwise we would have found that solution and that magical pot of gold that exists somewhere.

Mr. Krehm: [Inaudible - Editor]

The Chairman: I understand, and it was done during the wartime period. We also had rationing - of everything, pretty well - and maybe that's the solution.

Mr. Denes, thank you for your support.

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Mr. Ferrabee, you have asked for a tax cut of some $3.5 billion at a time when groups are asking us to actually increase spending on social programs, and these are the difficult -

Mr. Ferrabee: [Inaudible - Editor]

The Chairman: Well, whatever. It's revenue that we are taking in to pay down the deficit of $3.5 billion, and there's no doubt that employers and employees are paying it. You can say they're overpaying or not, but it's a tax cut at a time when we have very severe demands on us - for the people representing the coalition, for the people represented by Mr. Fluit.

In this committee in the past, Mr. Fluit, you've made a very eloquent plea for more ODA. We have attempted to resist that in the past.

Mr. Fluit: We're not asking for more ODA.

The Chairman: No, I know. But we have attempted to resist cuts in the past. I'm just saying this committee I think is amenable to the arguments you put forward to it, for better doing it.

Mr. Fluit: Thank you.

The Chairman: We see the need for it, because - as you put it so eloquently - we're a very rich part of a very big global economy, in which we are very blessed.

Mr. Milne, we'll pass it on. We've heard this repeatedly, and thanks for coming to us.

Mr. Hogg, we like your suggestion. Thanks for your support of what we said last year in our report about appreciated capital property being able to be donated, to allow the charitable and the private voluntary sector to do the things that government has pulled out of.

Bonnie Schmidt, I look forward to reading your paper. I think you're onto something that's really important. If we are ultimately going to have the economic growth and productivity that we need, it's going to be through the types of efforts that you are doing. I can think of no greater long-term key to the future than education and training, and you've developed a new modality for that which I think is paying great dividends.

Mr. Graham, you and your compatriots and friends have again urged the necessity for us to come to grips with the CPP. We just cannot afford to bury our heads in the sand and put it off.

We've heard you, Mr. Shaw, that your agents don't want to have to pay the tax on the services that they perform.

Kay Blair, I couldn't agree with you more. You spoke, and I quote you, on the issue of ``access to the Canadian workforce by skilled, talented people, educated at the expense of other governments''. Immigrants have provided us an incredibly cheap way to fill holes in our labour force. I feel guilty, taking them from many of the countries they come from. But how fortunate we are, and in terms of what they can contribute to the economy of the future in the global economy with their knowledge of language, social customs, business customs, and markets, we as a trading nation could use our immigrant population much more effectively than we already are. So congratulations, and thank you very much.

On behalf of all members, I don't think we have 100% agreement around this table on either what the problems are or what the solutions are, but as members I think we all feel very enlightened and thankful and grateful to you for having come before us.

We adjourn until two o'clock.

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