FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 21, 1998

• 0812

[English]

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.): Good morning.

Pursuant to Standing Orders 108(2) and 83.1, the committee resumes its pre-budget consultation process. Today we're in P.E.I. We're awaiting some members who had to take the earliest flight possible after a vote yesterday in the House of Commons. We don't know when they will be able to arrive, not knowing the air schedule.

Also, Dr. Dohoo has requested to be heard first so that he can leave to receive a delegation, and I believe it would be appropriate at this time. So maybe I would ask Dr. Dohoo to commence. In the meantime, we will await two other witnesses, and maybe some members of Parliament will be able to arrive.

I welcome you this morning. Normally we have a five- to ten-minute presentation by witnesses such as yourself and then we open up to questions from members of Parliament. In this case, I'll make an exception and maybe we'll go with Dr. Dohoo and then ask the questions, so that he can leave and accommodate his schedule. Then we'll continue with the other presentations. So to the other witnesses, if that's agreeable, I would thank you for your cooperation, and I would ask Dr. Dohoo to make his presentation.

Good morning, and welcome.

Dr. Ian R. Dohoo (Associate Dean, Graduate Studies and Research, Atlantic Veterinary College, University of P.E.I.): Good morning. Thank you very much. I certainly appreciate the opportunity to appear this morning and make a presentation.

I do have a very brief, two-page submission, which I've provided to the committee.

[Translation]

I'm sorry, but I didn't have enough time to translate the brief into French.

[English]

There is also an attachment with the submission. The attachment is called Veterinary Research and Human Health, and we have provided 30 copies of that in English only.

[Translation]

We also brought 10 copies of the French version, which is entitled Recherche vétérinaire et santé humaine.

[English]

My presentation will be brief, Mr. Chairman. I really would like to make three points. As your schedule said, I'm primarily representing the Atlantic Veterinary College, but I also speak on behalf of the Confederation of Canadian Faculties of Agriculture and Veterinary Medicine. So there's a bit of a national perspective to this presentation as well.

The first point I'd like to make is that research funding is important, and that on a relative scale it's just as important here in the small town of Charlottetown as it is to the University of Toronto. Our reputation as a professional school, both our national reputation and our international reputation, is really heavily based on our research abilities, our research productivity, and our research track record. It's that national and international reputation that enables us to attract funding from private corporations to support further research and also to engage in service and teaching activities both across this country and in many countries around the world.

• 0815

I've listed in my submission just a few of the countries where faculty members from the Atlantic Veterinary College have had funding for activities just within the last 12 months.

So research funding is important to us. Unfortunately, veterinary schools fall somewhat between the cracks in that we don't fit clearly into the Medical Research Council's bailiwick, nor do we fit clearly into NSERC's arena. So we have some problems in that we're not covered by a major granting council.

On the subject of research funding in general, particularly the federal provision of research funding, the first thing I'd like to say is that I'd like to congratulate the current government on the establishment of the Canada Foundation for Innovation about a year and a half ago. That's been a real boon to universities. It's going to help us bring our infrastructure up to standard. Specifically, I'd like to congratulate them on recognizing that small universities, small institutions, many in the periphery of the country, have special needs. Within the Canada Foundation for Innovation they established the Research Development Fund, which was particularly targeted at small universities. We anticipate that will be of significant benefit to us.

There are two major issues relating to research funding that I'd really like to make a pitch for this morning. The first is the Canadian Institutes for Health Research. I'm not sure if you're aware of this proposal. It was initiated by the Medical Research Council but is now much broader than just the MRC. There's a task force of 30 prominent Canadians. We're fortunate to have one of our faculty members, Dr. Alastair Cribb, chosen to represent veterinary medicine and other constituencies on that task force. This is a proposal for a major new health research funding initiative that would operate on a national basis and would greatly expand the scope of activities that are currently covered by the Medical Research Council. It's this expansion of scope that we, the faculties of veterinary medicine, find particularly attractive.

There are four Canadian colleges of veterinary medicine, all internationally accredited. We carry out a lot of very basic research that's equally applicable to human health and to animal health. However, there are many other areas of research that we also carry out that really address questions of animal health that have important implications for human health.

I think probably all of you are familiar with the terrible problems the United Kingdom has faced recently with mad cow disease, about the economic devastation it's brought about, plus the human health consequences. You don't have to think back too far to the disastrous consequences of the Jack-in-the-Box outbreak of hamburger disease in the United States. There are many other areas where veterinary research has a profound impact on human health. That's really the subject of these two attachments, the attachments that accompany this submission.

We can do a tremendous amount to assist, support, and aid the maintenance of health of Canadians and we look forward to playing an important role in the CIHR to do that. So we'd like to express our unequivocal support for the establishment of the CIHR.

The process that's being followed—and I've identified this in the submission as a relatively short-term issue—is that the task force is working and is going to present a proposal to the Hon. Allan Rock at the end of this month. I presume from there it will then go to cabinet for discussion and consideration. I'd just like you to keep in mind that a proposal like that has a big impact in far-flung places like Charlottetown, not just in Toronto and Montreal.

The second issue I'd like to bring to your attention is another one that relates directly to federal funding of research. Obviously, as a faculty of veterinary medicine, and representing an organization of several faculties of veterinary medicine, we do a lot of research that's of benefit to the agricultural community. We have a bit of an unusual situation in Canada relative to other developed countries in that while federally we have a major investment in agricultural research, about $250 million a year, through Agriculture Canada, it's virtually all intramural spending. It supports research activities at agricultural stations operated by Agriculture and Agri-Food Canada.

• 0820

I certainly don't want to belittle the major contribution that those stations make to our agricultural industries; however, we have virtually no extramural funding of applied agricultural research—and of the developed countries that I am aware of, it's very unusual not to capitalize on all of the expertise that exists in universities around the country to support our agricultural industries.

The problem has been exacerbated a little bit recently by an action by Agriculture Canada, which has established a program called the matching investment initiative, where they will match funds that industry provides to Ag Canada to support research. While I applaud all efforts to encourage and increase private sector support and involvement in research, that was one of our major sources of research. What that has done is put us now in direct competition with Agriculture Canada for those dollars, and of course Agriculture and Agri-Food Canada has the ability to bring matching dollars to the table.

Again, I want to stress that I'm not here trying to reduce Agriculture Canada's ability to conduct valuable research. We have a very productive working relationship with the agricultural research station here in Charlottetown, as is evidenced by a collaborative effort we've undertaken in the last year to establish a swine research facility, but we do need some mechanism for providing extramural support for agricultural research across the country. That's going to be a longer-term proposal, but I would like to bring that to your attention.

Those are the three points I wanted to make. First of all, research funding is important. Secondly, as the college of veterinary medicine and the four colleges of veterinary medicine, we strongly support the establishment of the Canadian Institutes for Health Research. Finally, in the long term, we would really like to work with the federal government on identifying an appropriate mechanism for providing extramural funding of agricultural research.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Dr. Dohoo.

I'd like to turn now to Mr. Gerry Ritz for his comments.

Mr. Gerry Ritz (Battlefords—Lloydminster, Ref.): Thank you, Mr. Chairman.

Thank you for your presentation, Dr. Dohoo. You talk about disparity in research funding between the small colleges and those that are larger and more centrally located, in Toronto, and things like that. Are there extenuating circumstances—student enrolment, cost of the programs to the students, facilities and equipment? Is that part of the reason, or are there other extenuating circumstances?

Dr. Ian Dohoo: One of the major issues is that research support is often given in support of substantial groups of individuals, so it's easier to generate particularly competitively available research if you're part of a large group. At the small institutions, we have one or two people in the discipline, where at a much larger centre they might have twenty or thirty people in that discipline.

That has a number of implications. First of all, teaching loads tend to be heavier at smaller institutions, and so less time is available for research, but it's equally as important to those individuals to maintain international competitiveness.

The second reason is that the ability of some of the larger centres to generate additional funds to support development of programs is much larger. I'll just use as an example—and I'm not knocking the University of Toronto; they're a fine institution. When the Canada Foundation for Innovation came along, they could tap into resources that enable them to hire a number of professional grant writers to develop and write their proposals for submission to CFI.

At a place like the University of Prince Edward Island we don't have those resources, so that makes it more difficult to compete. It was in recognition of that, I think, that the CFI established a separate fund for research development at small institutions, and we appreciate that approach because it helps to level the playing field a little bit.

Has that answered your question?

Mr. Gerry Ritz: Yes.

Would there be some validity to the idea of targeting the research funding? You make mention that agriculture should definitely be done here, and I take it that's not happening at this time.

Dr. Ian Dohoo: Oh, no. It is. We have a very strong fish health program. In fact, probably the greatest contributor to our international reputation is our fish health program.

Mr. Gerry Ritz: Okay, so you have here already the lion's share of that research.

Dr. Ian Dohoo: Yes, that's right, and we do our best to work on and capitalize and build on our strengths.

There are other unique opportunities here, advantages of being in a small, predominantly rural area. Our food animal people probably have greater access to food animal populations in which to work than some of the other veterinary schools that are in more urbanized settings.

Mr. Gerry Ritz: Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you.

• 0825

Dr. Dohoo, you mentioned that the matching investment initiative seems to compete for scarce resources and funding. Could you elaborate on that, and how can we avoid that? Is it really competing for the full gamut of potentially...I guess, from the industrial sector, or is it maybe that some sources may not actually be provided unless they are approached by representation from Agriculture Canada? Would you elaborate a bit, please?

Dr. Ian Dohoo: The way the matching investment initiative works is that private sector partners who want to have some research done can have dollars supporting that research matched by AAFC, Agriculture and Agri-Food Canada, but it only applies to research that's carried out by Agriculture and Agri-Food Canada.

At the present time I think it's attracting somewhere in the neighbourhood of $35 million in research from the private sector. What I'm afraid I can't tell you is, is that additional $35 million that is coming in from the private sector because of the availability of the matching funds, or are they diluting out dollars that might flow to other sources, particularly universities, for that research?

I don't have any figures on that. I don't think nationally we have any figures on the sort of spectrum of private sector research that's going into universities in the agricultural arena.

The Vice-Chair (Mr. Nick Discepola): We will then continue with the rest of the witnesses. I know you're on a very tight schedule also, and I want to thank you for participating this morning.

Dr. Ian Dohoo: It was my pleasure. I appreciate the opportunity, and I appreciate the chance to go first. We have a delegation visiting from Cuba and I'm supposed to spend some time with them. So thank you.

The Vice-Chair (Mr. Nick Discepola): Excellent. Thank you very much.

We also have with us this morning Ms. Mary Boyd, who is here on a personal representation basis; from the Council of Canadians, Mr. Leo Broderick; from the Greater Charlottetown Area Chamber of Commerce, Mr. Shawn Murphy and Mr. Steve Loggie; Ms. Edith Perry, also an individual presentation; and we're waiting for two other people.

So maybe we'll start, then, with Ms. Boyd.

Ms. Mary Boyd (Representative, P.E.I. Health Coalition; P.E.I. Action Canada Network): Thank you, Mr. Chairperson. I am actually wearing two hats this morning, that of the P.E.I. Health Coalition and that of the P.E.I. Action Canada Network.

I want to begin my presentation by saying that last year those of us who prepared for this committee hearing and spent a great deal of time looking into the P.E.I. situation in order to give you meaningful feedback were very hurt and insulted at the end of the session when we walked out at coffee break into the lobby and heard some of the members of this committee saying that it was a waste of time and using some rather foul language to describe the input of our people.

For us as Canadians who take some pride in this country, who love this country, who believe that we have rights as citizens, who think this is a democratic exercise that is before us today, it's really disconcerting to hear people from this committee go outside and talk like that. It means that our words have meant nothing, that all of our concerns, our compassion, our research, the things that people have said to us—and those are many things and ideas—have been put aside. Also, I don't think there were even any quotes from people from that session in the report.

That's one thing we want to launch a complaint about, because it's shocking. I guess that's the only way we can describe it. I wanted to say that.

I know it's difficult. We raised questions about policy. We raised questions about poverty. We tried to get to the root causes of poverty, and I recall the words of Archbishop Don Helder Pessoa Camara of Recife, Brazil, who said, “When I give food to the poor, I am called a saint; when I ask why the people are poor, I am called a communist.”

• 0830

We're here because we're asking why the people are poor. That's a matter of justice. The name-calling is therefore totally inappropriate, but to us it's a mirror of what's wrong with our country. It reflects the kinds of ugly trends that are developing in Canada now, and it reflects what we're dealing with. This is a very different Canada from the Canada of fifteen or twenty years ago, and I think it's time we started working to change that around, Mr. Chairman.

Having gotten that off my chest—I know it's not you and I know it's not the staff; it was elected members. I want to make that clear.

It seems that the finance minister is still reluctant to use the federal budget surplus to restore social programs that were done away with under the destructive Canada health and social transfer and other cutbacks. The latest excuse is the current misfortunes of the stock exchange. It seems that debt reduction still takes precedence over the needs of Canadians who are sinking further into poverty after the barrage of cuts delivered by the Mulroney and Chrétien governments. Canadians in this category need a break and need to have social programs restored.

Regardless of the financial situation in the country, which is certainly a lot brighter now than it was a few years ago, we need a five-year reinvestment in health care to get the federal share of health funding up to 25% of the health budget. Medicare began with a 50-50 cost-sharing arrangement, and now 11% comes from the federal government. It is therefore urgent that we immediately begin to get that share at least back up to 25%.

It is important that this budget put in place a financial plan for the next five years that puts back a minimum of $5 billion per year into health care for that period. Without this major federal government investment, you are sending the signal that you are abandoning one-tier medicare. We're not looking for or talking about new programs at this moment, but restoring basic services that have been cut back. Furthermore, dollars put into home care should be used to ensure a continuum of care.

We know the funds are there, but cutbacks have made our medicare system ill. In fact, the patient is in critical condition. A strong federal government presence can use its financial weight to enforce public standards rather than a private, for-profit system. Mr. Chairperson, I can't underline enough the importance of the federal government being involved in our social programs and medicare. To ensure national standards, we need some kind of a lever. This new social union that is developing in the country right now is bad news. It's certainly bad news for Canadians who believe one of our rights as Canadian citizens is to have strong social programs.

If all of this is left to the provinces and the federal government withdraws, then there is no lever. We know those of us who live in the smaller, poorer provinces will pay greatly. I could tell you many, many stories of hardship. It really takes having a sick person or a seriously ill person and getting into the system to realize the delays. We're closing down and shutting out so many beds in the hospitals that for families it now means delays in surgery or paying for things that should be a right under medicare. The list goes on and on, but I won't spend time on it. I think we all know about these things, and that's why I underline the need for strong, national programs and for equality of health care in this country.

Please, try to stay away from a private, for-profit system. It seems to come across to us that government's goal is to take dollars from taxpayers and put them into private hands rather than into public hands with these programs. Home care and pharmacare need to be delivered publicly, not privately. That's the number one point I want to make.

• 0835

Secondly, I want to refer to the surplus in the unemployment insurance fund. We still prefer to call it UI, not EI, because we believe people have a right to an insurance program that will protect them when they are unemployed. That was what UI was for in its origins. Therefore, that surplus belongs to that insurance program in order to protect the unemployed.

We now find that less than 40% of Canadians are actually protected by that insurance. We know the many personal stories of people who have been caused untold hardships because of what has happened with UI. The cuts to UI constitute one of the most severe attacks on the poor that we have witnessed in this country—and not just recently, but ever. The new approach assures poverty and puts the claimant at great risk. And that's the other thing. With the way in which UI is calculated now, if there are missing weeks, it looks as if the claimant is doing something dishonest. The onus reverts to that claimant to prove that this is not the case. Some claimants have had very great difficulty with it.

The third point I want to make is that it should be of grave concern that the 1998 United Nations Human Development Report has ranked Canada tenth out of the seventeen top industrial countries when based on the human poverty index. That's the legacy of Mr. Martin's cutbacks. Canada has been singled out as a country with significant problems of poverty. On the one hand, it gets singled out as one of the richest countries in the world. We hear it's doing great when the human quality index puts us at number one. But Canada is ranked tenth overall in this regard and is ranked thirteenth out of seventeen countries when comparing percentages of people living below the poverty line. This is a very severe problem.

As the finance committee, you know the allocation of funds to overcome poverty is extremely important. Take the new child tax benefit and look at what's happening to it. People on social assistance are receiving absolutely none of that in this province and in most provinces. That's totally wrong. That whole credit was meant to overcome poverty in Canada. It was not supposed to be earmarked for people who are working.

Now, God knows, there are people who are working who need help. There are many poor working families, and their children are suffering. If we don't create meaningful jobs with good pay and security, though, and if we don't do something to raise the minimum wage in our provinces—our minimum wage rate in P.E.I. is disgraceful; it does not pay a living wage—we are guaranteeing that these workers will stay below the poverty line.

We have to overcome poverty by putting into place policies that are able to give people what they deserve. In other words, I'm talking about equality, fairness, fair sharing, and again, rights of equality in this country as citizens. It's not fair that people in Atlantic Canada are always the ones who are asked to have a lower standard of living, to live with the highest rates of unemployment, to live with the lowest rates of health care, to live with the lowest minimum wages, to live with a lot of part-time work. I could go on and on, and it's just not fair. We need to get this country on a better footing as far as equality goes.

We have passed around a copy of the Prince Edward Island alternative budget. I'd like you to read it, because it tells a lot about what is happening in this province. It certainly gives some unbelievable statistics on poverty that are not changing at all but are remaining static. It talks about the 5 million people in poverty in Canada, of whom 1.4 million are children—an astounding 21% of children in Canada who are poverty-stricken. It also talks about the recommendations of the alternative federal budget that aim to overcome this.

There are ways to overcome it; there are choices. I think we need to pay attention to the recommendations of alternative budgets in order to overcome poverty.

• 0840

In Prince Edward Island, there are 30,394 families out of 70,197 who earn $20,000 or less. Over 60% of Island families earn $30,000 or less. Only 16,300 Island families earn $40,000 or more. Perhaps even more telling is the fact that 25% of households or individuals account for only 5% of all income received in this province. It gives you some idea of the inequality. We have recommendations in the provincial budget about how things could be changed around here. We don't have to stay in this static mode. We don't have to say there are no alternatives, because there are alternatives.

What is at stake is fairer distribution of income. That will never come as long as we keep mutilating programs like unemployment insurance; as long as we deny children on welfare the benefits of the new child tax benefit; as long as we do not have a fairer minimum wage and better working conditions across the country; and as long as we don't do something to alleviate the financial burdens on the poorest, because the poorest are paying the highest taxes in this country.

The last point I want to make is that, in their poverty, too many Canadians have had to resort to food banks. A new study has come out showing that mostly women and children are the ones who depend on food banks. They've conducted interviews with a sample of 153 women recruited from emergency food relief programs in Metropolitan Toronto, and those interviews reveal a very disturbing picture of severe poverty, food scarcity, and deprivation. It's important that we understand that the food deprivation documented in the study occurred despite the charitable food assistance women were able to obtain from food banks; despite things like turkey drives at Christmas and things like that; and despite a host of other strategies they employed to augment scarce household resources. We have to start restoring our social programs. Food banks, soup kitchens, and special drives are not working. We have to get at the root causes of poverty and we have to restore the policies that have been there to assure equality for Canadians. As I said before, this requires national standards to protect us.

The same will happen with health care. In terms of home care now, Canadian women are being burdened by having to care for sick people who should either be hospitalized or be cared for by professionals. They're coming home to people who have no skills, and they have to be cared for in people's homes. This is a terrible burden.

I can't believe that this is Canada, what with all our wealth. Not only were we able to balance the budget, but we have surpluses now. Those surpluses were gained on the backs of the poor of this country; on the backs of our social programs; on the back of health care. That's where the surpluses should be put. That's the only way we're going to have a Canada that can hold up its head internationally, because the statistics comparing us to the rest of the world around poverty issues are making us look very bad.

So, Mr. Chairperson, I plead with you to hear these words, to take them seriously, to look at the alternatives in the alternative budgets, and to never give in to the TINA principle—that there is no alternative—because there is.

The Vice-Chair (Mr. Nick Discepola): Thank you very much for your insightful comments, Mrs. Boyd.

I'd now like to ask Mr. Broderick to continue. For the members who have just arrived, Mr. Broderick gave us a little quiz that asks nine questions. If you want to fill it out, you might be able to follow him along. I don't know what he has in mind.

Mr. Leo Broderick (Member, Board of Directors, Council of Canadians): I just gave you that to test your knowledge on corporate globalization. Certainly, we do know that the impact of globalization is not good for Prince Edward Islanders, and some of those facts impact on us daily. If you want to check your answers, I will quickly give them, but I'm not going to spend a lot of time on them. The quiz was just for a little bit of fun, but it's on extremely serious information. I'll deal with that information in a few minutes.

• 0845

My comments this morning will deal primarily with four areas, and they'll be very brief. One is the issue of sustained high unemployment in the country and here in Prince Edward Island, and what's being done to address that most critical social problem. Second, falling from that is the rising poverty and the marginalization of young people, women, and children. As well, there's a growing marginalization of people who are elderly.

I'll deal briefly with tax policies that prevent the sharing of the costs of public programs fairly across the country and here in Prince Edward Island. I'll deal very briefly with debt reduction and what we can do to receive more taxes from individuals and corporations in the country.

My first point is on the sustained high unemployment. In Prince Edward Island we have an economic development policy that is extremely misdirected and is producing large-scale, wholesale poverty. It is the policy following tourism development. The issue of tourist development worldwide brings a fair amount of wealth to very few people but impoverishes most people.

Here in Prince Edward Island it appears that the development of tourism is now proceeding full-scale. People who work in the tourist industry will probably work for 16 weeks. It's very seasonal work at minimum wage, and it affects many of our young people and women. If they work for 16 weeks at $5.40 an hour for approximately 40 hours a week, they will take in $3,396. We found when we did the alternative budget that many tourist workers—and they are increasing in number—are becoming extremely poor. With the unemployment insurance restrictions, they will not receive many benefits from the unemployment insurance fund.

So if we're going to continue with an economic development policy in this province that continues to be seasonal, there must be some social safety net that ensures these people who contribute productively for 16 weeks are in some way provided with a decent wage or a decent income for the rest of the year. Now $5.40 an hour is poverty wages, and we recommend that the federal government, in working with provinces, somehow ensure that minimum wages are increased.

The trend, of course, across the country is to say we don't really need minimum wages at all. In fact, there's never been a more critical time to ensure that people are protected by labour laws that ensure they have a decent standard of living. In Prince Edward Island, particularly in the tourist industry—and it will become more critical as we put many more of our dollars into tourism development—we are going to find many more people living in poverty. There is sustained high unemployment in Prince Edward Island. It is around 13% and it has not moved. There is rising poverty, as I mentioned, among the various groups of people.

I could talk about more than the tourist industry, but we have proposed that there can be meaningful economic development if it's community based and put in the hands of people. We have proposed in our alternative budget community work councils that would be an innovative approach to ensuring that communities provide employment at decent wages with decent benefits.

The surplus we're dealing with at the federal level should be turned into some kind of cooperative programs with provinces, to have real community development that gives real, meaningful, and decent-paying jobs to people who are in need.

• 0850

The second point I want to make is we're now hearing a great deal about tax cuts, and tax cuts are being presented by many political parties as the panacea. It is also being presented that if we have tax cuts there will be economic growth and job creation. There is nothing further from the truth. I believe we're moving into a situation in Canada where the expectation is that everyone will receive and want a tax cut, and no one more than those who can well afford to pay more taxes.

The research indicates that if we took $1 billion from the surplus and spent it in the public service, we would create approximately 56,000 jobs. The government next year could simply re-employ all the public service workers across this country who have lost their jobs in the 1990s. If we re-hired teachers, nurses, government employees, and cultural workers, we could employ 56,000 people tomorrow. The structures are there to accommodate these workers. The research also indicates that if we put $1 billion into goods and services in the private sector, we would only create 28,000 jobs; and if we put $1 billion into infrastructure programs across the country, we would employ 26,000.

Clearly, employing people in the public service will pay greater dividends initially and in the long term. So tax cuts are not the answer to employment development. The whole notion of tax cuts is based on the false premise that people across this country only want to make choices in the things they can purchase in the private sector—goods. We do not hear people asking for private highways. We do not hear a great demand for private health care. We do not hear a great demand for private education. Yet we're being told that tax cuts will deliver or reduce public expenditures and you can take your savings and re-invest them in the private sector. I do not hear a great demand for that across the country, yet we're being told that's what Canadians want.

It reminds me of the situation in California ten years ago when they went through this debate and initiated major tax cuts. I'll use public education in California as an example. California ten years ago was first in the United States in terms of the quality of education it provided to the most number of people. Today, with the huge tax cuts and the restrictions placed on politicians to make decisions that are in the interest of citizens, it has moved to 36th position and is declining rapidly. They have destroyed the public service of public education.

The highest priority in this budget should be placed on the needs of the unemployed, the underemployed, and the salary and wage earners. We do not need huge tax cuts for the wealthy and corporations. We can and should increase taxation and have a small tax on every foreign exchange transaction—you all are familiar with the Tobin tax. I think it's important for the finance minister to initiate this and insist, when we deal with international governments, it become a priority. It would in many ways cut down on the speculative investment.

There should be increased taxes on businesses and wealthy individuals if they are doing business in this country but look for tax havens elsewhere. If businesses and wealthy individuals hide their money in tax havens—and it's my understanding there are billions of dollars—and refuse to pay taxes on the dollars that are made in this country, we should blacklist the tax havens. There needs to be work in that area.

• 0855

We must consider a wealth tax, as there is in Europe, and we should consider a wealth transfer, as they have in the United States. We would receive additional billions of dollars.

On the final suggestion with respect to taxation, we need legislation—and it should be introduced as something that's possible in this budget—to levy a steep surtax on any firm cutting its workforce in a year in which they have declared a profit. In today's newspaper we see that Canadian National has chopped 3,000 more jobs, and it has huge profits this year. This is repeated and repeated by many corporations across the country. It would appear that the shareholders and executive bonuses and salaries are more important than the lives of working Canadians.

If the finance minister and members of the House of Commons can disassociate themselves from these big businesses for a moment, we could have legislation that would put a tax on any firm cutting its workforce when there is a profit in that particular year.

We need to continue with targets for unemployment. We do not have those. It is important, particularly here in Prince Edward Island, to have targets for unemployment. In cooperation with the federal government we could reduce the levels of unemployment and people could once again return to meaningful, well-paying jobs.

I will conclude by stating that we're seeing right across this country a tremendous removal of public dollars from public education. I realize public education is a provincial responsibility, but with the CHST reducing dollars to provinces, in this province we have lost millions because the need to give dollars to other areas such as health and social services is taking away from what ordinarily would have gone to public education.

As an example, Prince Edward Island spends the least amount of dollars per student in public education anywhere in Canada, and we're close to the bottom in all jurisdictions in the United States and Canada. We spend $5,150. The national average is $6,074. We are in a desperate situation with respect to education. We need more dollars for public education right across the country. I know it's a provincial responsibility, but there must be a means by which we can work out a more equitable sharing of public education.

One of the problems is that some people believe business-education partnerships, which are mushrooming right across the country, will put into public education the amount of dollars that have been taken out. We have seen at the university level, with respect to research, how corporate intrusion of funds can corrupt the research. We're seeing in public education that the intrusion of corporations across the country will simply corrupt the minds of our young people.

So I ask for consideration when you meet and give advice to the finance minister. Clearly, we need a more equitable distribution of wealth in this country.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Broderick.

I'd like to now turn to the chamber of commerce. Will both you and Mr. Loggie be presenting, Mr. Murphy, or just yourself?

Mr. Shawn Murphy (Past President, Greater Charlottetown Area Chamber of Commerce): Mr. Chairman, I'll be making the presentation and Mr. Loggie will be the consultant on the questions.

The Vice-Chair (Mr. Nick Discepola): Excellent.

Mr. Broderick, maybe you can give us the answers to your questionnaire.

Mr. Leo Broderick: Okay, because I have to head back.

On question one, which of the following products is not owned by Philip Morris, the world's largest cigarette company, the answer is Hostess Potato Chips, (e).

I hope all of you get 10 because you shouldn't even be in your positions unless you can answer the questions correctly.

Two, at what age do North American corporations begin to target people as consumers of their products? The answer is (d), 9. Some are suggesting it's much younger than that. This is most critical because they're moving into our public schools to advertise. Their target is young people.

• 0900

Three, which two organizations are primarily responsible for managing the world debt of countries, implementing structural adjustment programs, and crippling the economies of developing nations? The answer is (d), the IMF and World Bank.

Four, which corporation has more money than 161 countries? The answer is Wal-Mart, which is soon to come to Prince Edward Island.

Five, which of the following countries is not a member of the Asia-Pacific Economic Cooperation forum? The answer is (d), India.

Six, last year, Michael Eisner, CEO of Disney Corporation, made $575 million. How much does Disney pay its workers in Haiti to produce 101 Dalmatians children's garments that retail for $20? The answer is (a), 6¢ per garment.

Seven, transnational corporations sell 33% of the world's assets. What percentage of the world's workforce do they employ? The answer is less than 1%. Actually, I think that should have said the 500 top corporations, but it does point out the power that corporations around this world have. In fact, however, their corporate responsibility in terms of employing people is very, very limited.

Eight, twenty years ago, the United Nations reported that 7,000 transnational corporations were operating throughout the world. Approximately how many are there today? The answer is (a), 40,000.

Nine, of the 100 largest economies in the world today, how many are transnational corporations? The answer is (d), 51.

Ten, in 1996, how many Canadians reported income of less than $10,000? The answer is (c), 5.4 million.

The questions and answers are very important. Actually, the question asked is sometimes more important than the answer.

The Vice-Chair (Mr. Nick Discepola): Thank you. I won't begin to disclose the results to members, especially my own results.

Mr. Leo Broderick: Who received ten out of ten? You're on the move to making good decisions, I hope.

The Vice-Chair (Mr. Nick Discepola): Mr. Murphy, please. Welcome.

Mr. Shawn Murphy: Thank you very much, Mr. Chairman.

Mr. Loggie and I are here representing the Greater Charlottetown Area Chamber of Commerce. The chamber is the voice of business in the Charlottetown area. I should add before I start our presentation that the majority of our members employ five persons or less. As you people know, this has been the engine of economic growth in this country during the past number of years.

Initially, Mr. Chairman and members of the committee, our organization wishes to recognize and congratulate the government in its efforts to eliminate the annual deficit of this country and begin the gradual process of eliminating the accumulated debt that has been accumulated over the past number of years. It is our position that this course of balancing the budget, keeping the net debt-to-GDP ratio on a downward track, and third, eliminating the accumulated debt is the correct approach. It's the approach that ought to be followed by this government when it tables its 1999-2000 budget and future budgets.

It's our position that whether we like it or not, we are dealing in a globalization of different economies and businesses. Our interest rates and economy are affected, whether we like it or not, by foreign investors and foreign political climates. This country has to have the flexibility to deal with those issues.

We submit that one of the ways to have that flexibility is through lower interest rates and lower deficits. It's our position that lower deficits lead directly to lower interest rates, economic growth, and job creation. Most importantly, this provides this administration and future administrations with the flexibility to meet future challenges. It's our position that this government has no mandate to mortgage or borrow against future generations, crippling future governments that will have decision-making powers. At this time, it's very important, ladies and gentlemen, that you have a steady hand on the throttle and continue on the same course you're on, which is deficit reduction. Therefore, it's our first and, I should add, most important recommendation. Our other recommendations are secondary to this recommendation.

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Our fundamental recommendation, which is contained in number 1 of our submission, is that this government table a surplus budget for the 1999-2000 fiscal year, that this budget be based upon prudent conservative economic assumptions, and that it continue to have a contingency reserve, which, if it is not needed, should be applied to the accumulated debt of the country to continue the downward trend of the net debt-to-GDP ratio.

The second area of our submission, Mr. Chairman, members of the committee, is dealing with the so-called fiscal dividend, which we have read so much about in the past six months. This country, like a lot of businesses.... A lot of problems in business, and I assume in politics too, start when the till is full. I think that is what we're seeing right now. In his budget, which he tabled in February of 1998, the finance minister made a policy statement that one half of any future surpluses would be used to fund increases in existing or new programs, and the remaining half would be used to fund deficit reduction and decreases in personal income taxes.

It is our submission that to maintain his credibility, the finance minister ought to stick with this policy statement. There has been some suggestion that there may be a departure. We recommend to this government that, as Mr. Broderick and Ms. Boyd have indicated, there has been pain experienced by Canadians, and there probably is a requirement for program increases. We're not going to get into the political debate as to where they're needed. It would appear that health care is probably the number one priority. We would suggest that discipline be used and deficit reduction be the number one priority, but that the finance minister also continue on the track, on the formula, he announced in February of this year. That, ladies and gentlemen, is our second recommendation.

The third issue we'd like to deal with is this whole area of EI premiums. We recognize there's no separate EI fund, but rather these revenues are added to, and benefits paid from, the general revenue of the country. However, we do recognize that there has been over the last three or four years a fairly significant discrepancy between what is collected and what is paid out. We're not advocating the country—the Minister of Finance—eliminate this deficit, because he cannot afford it. However, we are recommending a decrease be made this year, as was made last year, and that the Minister of Finance commence the gradual process of a decrease in these premiums so they equate reasonably with the level of premiums paid out. Again, that recommendation is subject to the test of affordability and whether or not this government can afford to implement that recommendation.

The fourth issue we'd like to bring up to this committee is perhaps not a major issue, but it's something that puzzles us. That is the announcement of the millennium scholarships that was made in February of this year. This is a very laudable program. We can't sit here and argue against it. There are many students who are denied education because of high tuition costs. But we take exception to the accounting methods that were used for this, and the whole purpose of the announcement. It does in our view distort the financial picture that was presented to Canadians. We understand this endowment was expensed in this fiscal year. We understand the program will be used for students commencing in the year 2000 or thereafter.

If the country were running a surplus of $40 billion or $50 billion, this might be a wise expenditure of taxpayers' funds, but we do not see it. We just question why it was done. What was the purpose behind it? Our recommendation is that the government not incur any further initiatives such as this that would incur expenditures to fund programs that occur in future years.

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The fifth issue we would like to present to this committee again deals with income taxes. We would suggest that the government consider income tax reductions, but again this is subject to the caveat of affordability, and the income tax cuts should be made only when the government can afford it. We're not sitting here recommending a decrease in corporate taxes. We're not recommending an increase in the small business deduction. I think caution and prudence have to be the watchwords as we go forward, but if the country can afford it, then I think personal income tax cuts are warranted, and they would in our view result in an economic stimulus for this country.

The last recommendation we would make to this committee, Mr. Chairman and members of the committee, is in reduced expenditures. Again, we do feel that the government has made much progress in the past number of years. We believe that the program review implemented, the six tests, are very important, are good. We would suggest that the government keep its eye on the ball and make sure that things do not get out of control again, that every increase in existing program expenses and any new programs be subject to the rigid tests that we understand are being implemented now, and that new expenditures be examined very carefully because things can slip out of control very quickly when political pressures come to bear and other factors that you people in your jobs see every day.

Ladies and gentlemen, that concludes our submission. We do appreciate the opportunity to appear before this committee and to make this presentation.

Thank you very much.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Murphy. I'm sure members will have questions.

I will now conclude with Ms. Perry, please.

Ms. Edith Perry (Individual Presentation): Welcome.

I have a couple of points and observations to make regarding education, and this is for those of us who live on the Island and are present here today as well. Did you know that if you wanted to find out a phone number for one of the P.E.I. schools, you would have to look in the directory under the yellow pages this year, as for all other businesses?

Also, I'd like to throw out a comment about brain drain, which seems to be now making the headlines in various provinces. You have a little chart that I handed out, and I tried to do an overview of what I received as an income from 1995. I also made a note of what I received as a salary prior to that. I'll get into that a little bit further along. I wanted to point out in response to some of the comments about minimum wage that when I started to work outside of the home in 1994, I worked in housekeeping for one of the Island's chain hotels. The minimum wage at the time was, I believe, $4.85, and we were paid $5 an hour. Students were paid the minimum wage, which I found quite interesting, since they were also required to do exactly the same kind of work we were doing with the same kinds of results. When I brought this up as an issue the following year when they were hiring again for the summer, they did increase the students' wage to $5 and they increased my wage to $5.10.

I'd like to ask this question under the headline of poverty and income. How many of you people would be able to live on what is now the average wage of $6.50 and $7 an hour for an average of 25 hours a week?

• 0915

Most of these jobs are seasonal jobs beginning in May—sometimes April until fall, sometimes October or November. Other jobs, such as the one I do, are year-round, but I average 25 hours a week. I'm fortunate; I've gradually inched my income, as you can tell by the chart, up to $8.25 an hour. The other people around me who have started work more recently are still making around $7.25 to $7.50 an hour.

Just get a picture in your mind of how you would maintain a family, a home, on that kind of an income. Just put that in perspective.

I also want to point out that since I made a presentation last year, I have to say that I haven't personally, and my family, seen any positive results from the federal budget that was put in place. As far as I'm concerned, a member of the grassroots, it hasn't had a positive impact at all for me. I'll get into that a little bit further.

I promised to present a letter from our local school, the grade 9 class. There will be more coming. It's an exercise that happened because, fortunately, one of our progressive teachers decided to implement a little more civic knowledge and savvy into classrooms, and I applaud the teacher for doing that. You will find that these letters are written from students on a cross-section of concerns. Certainly education, the high cost of their future education, and the situation of EI are apparently front and foremost in those letters.

I would strongly recommend that members of Parliament respond personally to these letters and give them serious thought and be very honest. If you can't deliver, please say so. This is your future generation, and I think you'll find them pretty savvy already.

I want to draw attention to at least one letter I know is there. She is very concerned about the situation of EI because her father—and this is a single-parent family—relies on EI. He is a seasonal worker. He has literacy difficulties. He is trapped in the ghetto of part-time seasonal, poor, low-paying work, and this child of his, at age 14, is trapped in that same slot with him. She has the savvy to know that if they don't get an adequate EI benefit for the rest of the year, they're in real difficulty.

So please accept those letters. There will be more coming, and I would, again, strongly recommend that there be a response to them.

I'll just throw the issue of health care out here, and and there will be Mary Boyd and others who will address all the issues of education, poverty, literacy, and health care as the day progresses. I just want to give a little personal face on something that confronted me the other day.

A neighbour's father, an elderly person, was in the hospital; he is blind. Meals were brought to him and he wasn't able to eat the meals because, number one, he wasn't sure, in the confusion of a hospital room, if they had been brought to him. He wouldn't have known that he had food except that at least one family member always made sure they were there to feed him. In the other bed next to him was an elderly man who was deaf, who of course wouldn't even hear if somebody brought the meal to him, and he didn't have family close enough to be there at all mealtimes to ensure that he was fed. So my neighbour and her family members made sure he was fed as well; otherwise the man wouldn't be fed.

It isn't the fault of the hospital. They're so understaffed and overworked, there is no one there to do it. It's just a little point I thought I'd bring up.

• 0920

Referring to my chart—this is my own analysis, and I was a little shocked myself—the deduction for the personal retirement benefit, CPP, has increased slightly, from about 90¢ to $1, from 1995 to 1998. I'm not sure how much the government contributes to my CPP. The UI deduction, which is another form of personal benefit for me, has also increased slightly, by an average of about 75¢. With regard to the employers' contribution, I understand their contribution to UI has been decreased, but I'm not sure by how much. The income tax deduction has increased noticeably, by about $1 to $1.25. My hourly wage increased during the period 1995 to 1998 from $7.25 to $8.25. This should mean my yearly income would have increased. However, it has instead decreased due to the increase in the deductions, the ones that benefit me included. So I'm concluding that while my take home pay has decreased, the two deductions that would benefit me personally have only slightly increased, and if I collect UI, I understand there are more restrictions on qualifying and less UI benefits being paid out.

The life of most families here in Prince Edward Island, and also in western Canada where I come from, is that in order to make a little bit above or at the poverty line, which for a family of four is around $21,000, both members of the family, if there are two members, are required to work at two or three jobs. Certainly, here in Prince Edward Island that is the case. If you're a single parent, tough luck. If you can juggle part-time jobs, two and three of them, to make up a 40- or 50-hour week, good luck. So that is the reality.

In my own situation my husband is 57 years old. He is a professional. He would have been interested in Dr. Dohoo's presentation because my husband is also a veterinarian. He is unemployed and is required to go out to western Canada to get three or possibly four months of work. The rest of the year we exist on UI.

Our youngest of three children is now 18 and is attending UPEI. You can see what I'm making. We have a little bit of savings, which can very rapidly evaporate. We've been very frugal in how we live so that we do not have a mortgage and we do not have outstanding debts. So it's just plain, ordinary expenses, such as property taxes, insurance, electric bills, and helping our children as much as we can because all three are in university. We probably have a combined income of around $25,000 a year.

My husband's chances of getting a full-time job are nil. He has diabetes, and if he develops blindness, which is a real possibility, he will not be able to get any kind of work. So our savings will go very rapidly before we get to age 65. I am 56, and my job opportunities, regardless of my professional training and work experience, are also nil. I work at grading mussels, because that's all I can get.

In December 1997 Statistics Canada indicated that in 1996 the top 20% of income earners had a 1.8% increase in their income. The bottom 20% had a 3.1% decrease in income. That was in 1996, and I'm sure it hasn't improved since that time. At the same time, the cost of living continues to increase, partially due to taxes such as the GST. Any decrease in income taxes, as suggested by the federal finance minister, I would suggest, will not benefit me as a low-income earner. We do not have enough income to utilize the tax breaks that are entrenched in our tax system, which ultimately benefits high-end income earners.

• 0925

What disturbs me greatly is to hear a government member, and I believe it's you Mr. Szabo, suggest Mr. Martin should change the way Stats Canada measures poverty in Canada. Apparently you are proposing Stats Canada should measure poverty level cut-offs based on whether people can afford bare necessities, such as heat and food, rather than measuring being poor relative to other Canadians.

At this point I'd like to point out that my husband and I, and families around us in P.E.I., may very well be able to live at a low level of income. We have wood in our back lots, perhaps some families have inherited or taken over their family homes, or they have an extended family that can help them out. There are ways and means we all find of being able to manage despite our income.

Just because we are able to do that doesn't mean to say we're not poor. I'd rather have my income compared to how other people across the country exist. The danger here is what you're going to end up doing is wiping poor people off your records. It's something you may have to reconsider in how you address that issue.

I'm also very much worried about the trial balloons that Mr. Martin is sending up: the need for more belt-tightening, that Canadians need to be vigilant in preparing for another Depression, that there is no new money available, and so on. He's quoted as saying we must weather the tempest around us in reference to the so-called Asian flu and erratic global stock markets, which I personally believe is the most foolish way of measuring how we should be with the economic situation. The most erratic, unreasonable, groundless means of dealing with money is in the stock market.

I'm here to say enough is enough. I and other Canadians are saying we have had enough of belt-tightening. It's time for some other people to do the belt-tightening, and that's at the upper-income level. I think there was a little quiz you did about corporate interest, and I think that needs to be addressed.

I'm from western Canada, where health care, hospitalization—the beginning of medicare—developed, and I want health care right at the top—one tier, publicly funded, publicly accessible to everyone, no matter what their income, and funded properly.

I want public education there at the top where it should be. It should be publicly funded and properly and adequately resourced, because it is these two issues and how we deal with them that is important to our next generations.

I remember what it was like when I was 8 years old and we didn't have medicare; we didn't have hospitalization paid for. My parents waited until my baby sister almost died because they couldn't afford to take her to the hospital. When they did finally say, what choice have we got, and they took her, she was admitted and immediately had emergency surgery. The end result was, of course, she luckily didn't have hearing damage, and of course she didn't die. But we did get, two years later, a tax notice from our local municipality, because the hospital applied the hospital bill against our taxes. We almost lost the place we lived in. We sold three or four of our cows, our only source of income, so we could pay the taxes.

Let's not go back to that. It is happening. There are people, believe it or not, here in this province, in my community, and across Canada, who are not going to hospitals. They are not seeing doctors until the very last crunch. I think, Mary, your health coalition bears that out.

Don't go back to that system. When Canadians are polled, you know they are saying health and jobs.... And if you look at all the studies that are done, unemployment, the stress of being poor, contributes to the status of our health. They are one and the same.

• 0930

Something else I need to point out is that those of us who are low-income workers, and that includes people who depend on EI and social assistance, cannot afford to buy health care or education. When you're talking about education and partnering with private interests, in the end we're going to have a two-tier education system, and it's already started. I'm not talking about home schooling; I'm talking about private schools that are being set up across our country, and only those of us who can afford it are able to send our kids. Is that what we want?

I come from a one-room country school situation, and there are certainly comparisons to the kind of education I had in my little one-room country school as compared to the schools that were available to the higher-end income earners. There were more people; there was a broader tax base. They got a better education than I did. And that's as recent as the 1950s.

We don't have enough personal income, so many of the things you're talking about, such as tax cuts and income tax breaks, don't benefit us. I know. I've made out income taxes. My husband does too. They don't help us. We still pay GST, we pay user fees—you name it, we're paying it out of our pocket. And we don't get any breaks for that. The few dollars here and there that come to families with children mean nothing. What do you get? For one kid you get $3, $4, $5, $6, or is it $10, $20 maybe? You can't even buy a pair of shoes for that.

I have a couple of other points Mary Boyd—

The Vice-Chair (Mr. Nick Discepola): Ms. Perry, you've been going for quite a long time. We also have another witness and I'd like to get to questions from members. I think we can both benefit by having a good dialogue. You'll be able, in your answers to questions, to elaborate on some of the points. So maybe if you could take a few minutes—

Ms. Edith Perry: I have just a couple of points here to make.

The Vice-Chair (Mr. Nick Discepola): Excellent. Go ahead.

Ms. Edith Perry: I appreciate the opportunity, but I'm pretty disturbed about the situation and where our country is going. As a community member, I think I have a right to sit here and express my viewpoint.

I think you need to really pay attention to the fact that right here in our country of plenty we have mother hunger, and that came out of the University of Toronto Faculty of Medicine report just this year—it came out in April. You all know what mother hunger is. I have young women right here in Prince Edward Island saying they're seriously considering not having children because they can't afford it; they're going to have heavy students loans.

I've already talked about the trickle-down effect of social programs to provincial governments, and I'll talk about that in discussion later this morning.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Ms. Perry.

We now conclude with Mr. Dave Barrett, who's here representing the Prince Edward Island New Democratic Party on behalf of the leader, Dr. Herb Dickieson.

Welcome, Mr. Barrett.

Mr. Dave Barrett (Office Coordinator, Prince Edward Island New Democratic Party): Thank you, Edith, for that.

I apologize for being a little behind in the schedule. We're a very busy office and we're also a very small office. We do rely on a lot of volunteer services to help us get things done.

To begin, good morning, honourable members, ladies and gentlemen, all. I am here today on behalf of Dr. Herb Dickieson, leader of the Island New Democrats, and the office of the third party in the Legislative Assembly of Prince Edward Island. It is my pleasure to present to this committee a brief that focuses on three important issues, although there were certainly many more to choose from.

To begin, our first concern centres around the continuing devolution of employment insurance and how recent modifications to the program, including departmental aspects of compliance and enforcement in the field, are cause for great concern among many Islanders. Island New Democrats have three concerns surrounding this issue. First is an increase in working hours to become eligible for EI. Eligibility for the EI has been decreased and EI payments have been decreased. Basically, this means an Islander involved in seasonal work can now expect to work more hours to qualify for EI, have increased problems accessing the program, and receive less once he or she is in receipt of EI.

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In a province with many workers who depend upon seasonal work in agriculture, tourism or fisheries, these new changes are unacceptable. It must be recognized by all Canadians that seasonal workers in the resource, agriculture, and tourism sectors of the economy make a great contribution to this country every day and provide many Canadians with the goods and services they have come to depend on.

It is important for all Canadians, and especially our members of Parliament, to remember where that lobster came from the next time they enjoy one, or those potatoes, or that wonderful summer vacation spent by your family on Prince Edward Island. Chances are that good or service was provided through the labour of a seasonal worker, and chances are that seasonal worker is finding it much more difficult to survive because of your decisions.

The economic reality of Prince Edward Island and places like it is that we will continue to have seasonal industries. This is how we live. Make no mistake, however, in thinking this to be quaint or traditional. Our seasonal workers supply the goods and services to a market that expresses demand, and they should not be penalized for following the dictates of the market.

A secondary issue surrounding EI is the recent direction the minister responsible for Human Resources Development Canada has taken with the department—specifically, one, cost-recovery as a business model, and two, enhanced compliance efforts that are perceived as rigid, unfair, and bureaucratic.

There is considerable concern in the general Island community that Human Resources Development Canada, in its administration and enforcement of the Employment Insurance Act and under the direction of the minister, is attempting to position a social program originally designed to benefit Canadians into a position of cost-recovery through heavy emphasis on compliance.

There are numerous Island-wide examples of the social destruction caused to individuals, families, and their communities when, presumed to be guilty, citizens are heavily penalized for a list of offences deemed to have occurred by HRDC. These new cost-recovery and compliance methodologies that are now in place for the new business model of HRDC must be reconsidered.

Cost-recovery on the backs of low-income Canadians is a disgrace, and the penalties associated with numerous supposed infractions are entirely unrealistic and clearly designed to generate revenue, not educate the public.

Our advice to the members here today is to consider the EI surplus, consider regional circumstances, consider whether you benefit from seasonal workers, and consider a reasonable and fair approach to administering and enforcing the employment insurance in this country.

Our second concern, and one that's been addressed—and I will be very brief—is health care and the CHST federal transfers to the provinces. It is our opinion, and the opinion of the New Democratic Party in general, both federally and provincially, that more emphasis needs to be placed in this area and that increases in payments need to occur simply to maintain our current level of health care. Funding must be increased and a commitment must be made to all Canadians that health care is a top priority for the Government of Canada.

Our final concern in this brief is post-secondary education. We believe there is a travesty occurring in this country, and young Canadians are paying the heaviest price. We are respectfully informing you today that we must have affordable access to quality post-secondary education, and we want to hear from the Government of Canada that the crisis in post-secondary education will be brought to an end.

An example can best illustrate the problem. In 1995 the average Canadian student debt load for a four-year undergraduate program was $17,000; in 1997 the debt load was $25,000, and this is predicted to rise to $40,000 by 2003.

In 1995, the average summer student unemployment rate was 16%. That figure rose to 19% in 1997. In the Maritimes alone, student unemployment was estimated at 25%. Since 1993, tuition at the University of Prince Edward Island has gone from $229 per course to $331, an increase of $1,000 per year. It's much the same story at the community college.

These figures indicate a serious problem and should tell us that post-secondary education will soon only be available to the wealthy in Canada. With increasing pressure from the banking sector to reduce or curtail student loans, with heavy spending cuts in education by the federal government, and with the increase in pressure society exerts on youth to receive an education as the only way out of the poverty trap, it is quickly revealed that we as Canadians have a serious collective problem.

It is our belief that fairness must be reintroduced into the system, that adequate levels of funding be re-established, that better student employment opportunities be created, and that sectors of the economy, including banking and employers, be provided the right incentives and climate to encourage higher education for as many Canadians as possible. Our future depends upon it. Thank you very much.

• 0940

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Barrett.

I'd like to quickly turn to questions from members. We'll start with the Reform Party, Mr. Ritz.

Mr. Gerry Ritz: Thank you, Mr. Chairman. Thank you so much, folks, for your presentations here this morning. I'll start with Mr. Barrett, since he was last.

On the last page of your document you talked about encouraging higher education, the cost of undergraduate programs, and so on. You seem to be targeting strictly university degrees and so on as your line of defence against student employment. Could we not go more to the European model, where they are targeting the trades people more? There's a lot more emphasis on technical education, which involves basically one- or two-year programs. They're out in the workforce. There's a much smaller investment needed. They're earning money. It addresses the youth employment problem we have.

There's a tremendous demand across the country for carpenters, electricians, masons, plumbers, auto mechanics, body shop workers, and heavy duty mechanics. Is there not more direction we could take that way? I know everything that has been done in the last budget and so on really targeted universities more than anything else. Is there any saving grace in going more to the technical side?

Mr. Dave Barrett: I certainly wouldn't disagree with you. Anything that can foster employment for Canadian youth and their further development is good. We certainly believe in a well-rounded education. We don't simply believe that people should be educated for specific tasks in the economy. However, there is much merit in what you say. We simply centred our brief on three core ideas, but certainly that would be encompassed in it. It doesn't necessarily have to specifically be the university environment that the focus is upon.

We are seeing with our universities today a much broader extent of the courses. We're seeing partnering, etc. So we see those realms being encompassed even at the university and community college levels. Your point is well made, and I thank you for it.

The Vice-Chair (Mr. Nick Discepola): Mrs. Perry, please.

Ms. Edith Perry: I'd like to point out that many of those courses in the trades field are offered by community colleges and training schools; however, young people who take those courses also go into heavy student loan situations. Unless you have the European model, where apprenticeship is part of the program, you're really not getting any further ahead than the one who's going to university.

Mr. Gerry Ritz: That's where the private sector starts to create their apprenticeship programs that can be done in the public education system.

Ms. Edith Perry: Yes. I'm not that familiar with the apprenticeship program as it stands in Europe today, but I do know that something along those lines seems to have been worked out in Canada for the last 30 or 40 years, where companies are given subsidies from governments to hire people. I don't think that's what we're talking about in terms of apprenticeships. I know my husband worked for a couple of businesses in Winnipeg where that was indeed the case. If we're talking about apprenticeships, let's really look at bona fide apprenticeship programs.

Mr. Gerry Ritz: Point taken. Going back to Mrs. Perry, one point you made was that you saw no positive results for you as far as tax breaks and so on in last year's budget.

Ms. Edith Perry: No.

Mr. Gerry Ritz: There were increased child care credits, but of course your kids are too old to qualify for them. There were some tax breaks for the lower.... That was the targeted tax relief, the message we heard, yet you're saying it did not work for you.

Ms. Edith Perry: No.

The Vice-Chair (Mr. Nick Discepola): The tax relief you're referring to, Mr. Ritz, is that we increased the basic personal exemption by $500, so right away you would have received a tax saving on the $500.

Ms. Edith Perry: Yes, but at the same time property taxes increased, living tax—

The Vice-Chair (Mr. Nick Discepola): You're saying it wasn't enough, but you got a tax saving.

Ms. Edith Perry: While you're giving us some benefits, other things are going up.

Mr. Gerry Ritz: The unfortunate part is you have three different levels of government taxing you—federal, provincial, and municipal.

Ms. Edith Perry: Well, provincial—

Mr. Gerry Ritz: You may get relief from one, but then the other one says “Oh, there's some dollars we can take.” There's only one taxpayer, and all three levels are taking taxes from you.

Ms. Edith Perry: That's right, but when we say governments we mean all governments should be responsible. The federal government should—

Mr. Gerry Ritz: Work in concert.

Ms. Edith Perry: Yes.

Mr. Gerry Ritz: Okay. All right.

The Vice-Chair (Mr. Nick Discepola): Thank you very much. You can continue if you wish or we can come back.

Mr. Gerry Ritz: If you want to go around and come back again, that's fine.

The Vice-Chair (Mr. Nick Discepola): Excellent. Thank you.

Mr. Paul Szabo, please.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you very much. I suspect the board of trade wouldn't get a lot of support from his end of the table, and that's good. The most interesting and influencing opinions are those that come from individuals who are on the front lines and experiencing it.

Mrs. Perry, because we have a shortage of time, I know you didn't hear me ask the question to Mr. Martin—

Ms. Edith Perry: No, I didn't.

• 0945

Mr. Paul Szabo: —because your quotation was from Rosemary Speirs, who wrote about it. In fact, if you had heard the question and how I developed it, this basically said that Canadians don't realize that we have poverty in Canada. Statistics Canada's low-income cut-off is not a poverty line; it's an arbitrary thing to fit you in somewhere. Basically, the point was that we need to establish a poverty line, because when we do, Canadians are going to find out that there are an awful lot of people in this country who are living on less than $10,000 a year. Most of those in poverty are at that level. Then it would increase the urgency to target it.

The conclusion of my presentation to Mr. Martin was that I believe that dealing with the issue of poverty, homelessness, etc., in Canada is as high a priority as tax cuts and other program spending.

You suggested that I change my point of view. I just want you to know that I really don't want to change my view.

Ms. Edith Perry: Well, if that's the case, stick with it.

Mr. Paul Szabo: I'll stick with it. If you knew a little bit of my work.... I've had more bills on helping low-income families and child poverty issues. In fact, child poverty is a political term; it's really family poverty—

Ms. Edith Perry: Yes.

Mr. Paul Szabo: —that you have to deal with.

I have a question maybe for both of you that has to do with how we really deal with poverty. I know the provinces claw back. I know we've got to deal with that one there. If you continue to just give money to people who are poor, eventually that, plus all the other benefits you give, accumulate to an amount such that you're effectively giving a guaranteed annual income. It will rise over time. We'll say that this is how much people need, and if they can't provide it themselves, then all levels of government are going to provide these benefits. It's going to get to a certain point such that I'm a little concerned about it breeding dependency.

I'm interested in your views as to how we get to a point where we're giving people a hand up rather than a handout. It's a subtle difference, but people need to be able to help themselves. I wonder if we are going to be able to do something about poverty, other than the obvious thing about giving people jobs or helping people find jobs.

Ms. Edith Perry: When you referred to both of us, were you referring to Mr. Murphy?

Mr. Paul Szabo: No, I was referring to the individual witnesses.

Ms. Edith Perry: Okay. I worked in social services in Manitoba for a number of years prior to starting a family, when I made a commitment to stay at home. When you're talking about dependency, there are other reasons for dependency for people who end up relying on welfare. It can be dysfunctions within the family itself. It can be sexual abuse or physical abuse. It can be addiction. It can be literacy or learning problems. There are—

Mr. Paul Szabo: Family breakups.

Ms. Edith Perry: Yes. People may have mental or physical handicaps. They're all put in a situation where they rely on this financial assistance. So we have that cycle there regardless. I think when you're talking about a form of guaranteed annual income, you also have to look at the other resources that are there.

Small businesses should be given some type of resources to help them hire people with.... I think this is beginning, and they're trying to do that. When people are hired, if their wages are subsidized, there should be guarantees that this isn't going to be abused by the employer as well.

Mr. Paul Szabo: Maybe Ms. Boyd has some comment.

Ms. Mary Boyd: I have a couple of points to make. First of all, going back to when you mentioned Rosemary Speirs, I read that article. There was a point in there that really bothered me. To her credit, she said that you did that with your tongue in your cheek. She said you made that thing about redefining the poverty line not to say that the poor should become invisible, but to urge more dialogue.

• 0950

Mr. Paul Szabo: She wanted to say that I was trying to lower the number of people.

Ms. Mary Boyd: She did, but also there was a nuance in there that you were trying to get at something. That's in fairness to her. She didn't condemn you.

Mr. Paul Szabo: She was making news, rather than reporting it.

Ms. Mary Boyd: Okay, but she did say something else in there that really concerns me. I have a suspicion—I think it's more than a suspicion—that Paul Martin is trying to create new legislation to enable the federal government to keep the UI surplus. This is very dangerous, and I hope the committee notes that. That's not the purpose of the UI fund, which is meant to insure people at times of unemployment. I think that kind of a change in policy is extremely dangerous.

Your other question was about what we could do to help people in poverty. First of all, all the working poor in this country are giving a handout to the businesses that employ them. We know that. So why is it always that the poor are perceived as the ones who are receiving the handout? Look at what Leo Broderick said about tourism in this province and what Mr. Barrett just said. Tell the people when they come to enjoy this province that it's actually at the behest of the people who are working for low wages and seasonal jobs and are then cut back from UI. They work as hard as anybody. There's such a tremendous discrepancy between what people recognize as work that's legitimate for being paid and what isn't. So that's a very big problem.

I would agree with a guaranteed annual income, but it can be just as mean-spirited as any other program. I want to say that here on Prince Edward Island, the last time I checked, I think single men get about $234 a month. How can anybody live on that? This is unbelievable stuff. I don't think we're breeding dependency for people when we have such a high unemployment rate. I don't think it's a handout. It's for the common good. I think that every politician needs to be reminded that your role is to safeguard the common good.

This is the 50th anniversary of the Universal Declaration of Human Rights. Everybody has a right to adequate food, clothing, income, work—this is not being provided by our governments—just wages, just working conditions, etc. We are not providing this as a country. It's a value and a right, not a handout, hand-down, or anything like that.

The last thing I want to say is that businesses do get handouts, lots of them. And a lot of those programs are going straight to supplementing businesses. But in our alternative provincial budget—we're not the only ones who recommended this—we did make a recommendation that we should develop elected community development councils as a job strategy, a way of creating jobs. These would be elected by the people in the community. The people in the community would look and determine that there are jobs that are of benefit to the community. These jobs would be created, and the people in the community would be given those jobs. We would make sure in our communities that there were decent working conditions, there would be value, people would be well paid, this would give people a living, and all of that.

The key thing is democracy and elections. Our health boards are appointed in this country, not elected, so there's an awful lot that ties the hands of the people because of the fact that we're not operating as a democratic country.

Mr. Paul Szabo: Just in case the press are here and may be going to write about my suggestion that we're breeding dependency today, we do understand that if you continue on this road to throw out increased benefits, to deal with poverty by simply increasing benefits, then eventually you do effectively reach a guaranteed annual income. It doesn't deal with how you get a preventative situation as opposed to a curative one. You try to help people help themselves. The point here is that people want the dignity of work, and they want assistance when they need assistance.

I just want to announce to you that I was in Ottawa yesterday signing a bill that I'll be tabling next Tuesday in the House. It will provide paid parental benefits under EI for a period of one year. This is to invest in children.

• 0955

Ms. Edith Perry: Mary raised this and you talked about it: the guaranteed annual income. Actually, there was a pilot project in the latter part of the 1960s that was started in Manitoba by the provincial government there. At that time, in the provincial and federal governments, some of the ministers were consulting with each other on the issue of poverty and social programs. Apparently, from what I read on that pilot project, it was beginning to show some success. Then, of course, the federal government pulled its financing, and the provincial government wasn't able to continue, so it ended. So we still have a long way to go on those sorts of things.

If you're talking about how we stop dependency, I would agree with the points Mary was making. But to put a little bit of a personal face on it, I mentioned today the fact that very young women are saying they're really seriously considering not having children or delaying having children because they're looking at not having a job that will give them an adequate income. A number of them already are starting out with heavy debt loads.

In my own family, my 24-year-old daughter has a debt load. She finally admitted to me that it was $35,000. That's after we had already put in several thousand dollars in kind and actual finances from our limited income to help her attain a B.A. and a B.S.W. She is working at a job that's in an area she wants to do, but she's being paid a little over $11 an hour. This is in Manitoba. We're allowing them to live in our house out there for free; we weren't able to sell the house. How do you pay a debt and start a family?

The Vice-Chair (Mr. Nick Discepola): Thank you. I'd like to move on, please.

Ms. Mary Boyd: I just want to say something quickly. This is an important point. I'll finish off quickly. I recommended a health plan to restore health funding to some kind of a balance, even if it's only 25%, which would be $5 billion a year.

Much of the job losses have been in cutbacks in hospitals, higher education, and the public sector. This is where we've created a lot of hardship and unemployment. Leo Broderick showed how a government putting money into its services can create more jobs than putting money into anything else.

That's why I disagree with the chamber of commerce. I do not agree that the private sector is the engine of growth in this country. This is the right-wing, neo-liberal kind of thinking that we have been fed all the time.

Look at the public sector. Government has responsibilities to the people. It is your responsibility to safeguard the common good. We cannot depend on the private sector to safeguard the common good.

The Vice-Chair (Mr. Nick Discepola): What issues are you recommending in terms of health care funding? I'm not getting a clear signal.

Ms. Mary Boyd: We're saying to have a five-year plan whereby $5 billion would be put back into health care.

The Vice-Chair (Mr. Nick Discepola): An additional $5 billion?

Ms. Mary Boyd: That would be each year for five years. That will restore—

The Vice-Chair (Mr. Nick Discepola): Please, I want to get some clarification. Are you saying that you're calling for an additional $5 billion per year over the next five years for a total of an additional $25 billion?

Ms. Mary Boyd: Yes, because that's what you've taken out. That's how these cuts have been destroying—

The Vice-Chair (Mr. Nick Discepola): That's not what we've taken out.

Ms. Mary Boyd: Well, it's down to 11¢ now for the federal contribution, but it used to be 50-50.

The Vice-Chair (Mr. Nick Discepola): Well, we have taken that in total health care transfers as well as education. There was $7 billion in the cash component aspect of it. The additional revenue generated because of the tax component is about $2 billion. So the net take-out is $5 billion over five years. So if you're calling for an additional $5 billion for the next five years, that's quite a difference. If you're then restoring the funding, it's different. That's what I'm trying to clarify.

Ms. Mary Boyd: That would be restoring and strengthening it, because different things have been introduced that have increased the cost of health. One of them is the monopoly on drugs. That's the fastest-growing cost.

The Vice-Chair (Mr. Nick Discepola): Where do we get the money?

Ms. Mary Boyd: The money is there.

The Vice-Chair (Mr. Nick Discepola): You're calling for an awful lot of programs. I want you to take some time and think of all the priorities, because what we have to do as a committee is report on the priorities with the limited resources we have. We have a $3.5-billion surplus at the end of 1998. We may have, depending on some economic projections, an additional $5 billion to $6 billion next year.

That's not very much money to do an awful lot of things. If your priority is saying to invest $5 billion in health care, then we don't have any money to do any of the other priorities you set.

Ms. Mary Boyd: I'm sorry, but the alternative federal budget people.... You're talking about what Paul Martin says in his budget. I'm talking about how the alternative federal budget has found ways much earlier of balancing the budget. It found that Paul Martin has understated regularly the size of the debt, the amount of money, and the surplus. There's more money there than people care to admit, and it should be put back into the programs that have caused and are continuing to cause so much suffering for Canadians.

• 1000

The Vice-Chair (Mr. Nick Discepola): Thank you.

I'd like to call on Madam Vautour. Bienvenue. Mrs. Angela Vautour is from the New Democratic Party.

Ms. Angela Vautour (Beauséjour—Petitcodiac, NDP): I want to apologize for being late, but that's part of being a mother.

I want to thank you for your presentation.

On the Island we're hearing a lot about the unemployment insurance program and fund, which is something I certainly understand very well, not having been dependent on the program but having to use it in order to feed both myself and my child.

As you are aware, we're looking at a $20 billion surplus in the UI fund, and you are right when you say Paul Martin wanted to use it for other things.

What do you think of—

The Vice-Chair (Mr. Nick Discepola): There is no $20 billion surplus.

Ms. Angela Vautour: We're hearing this all the time in the House. It's out there.

The Vice-Chair (Mr. Nick Discepola): There is no $20 billion surplus. Even the Chamber of Commerce in their presentation said that has been used for the deficit.

Ms. Angela Vautour: We know it has been used. The only thing is—

The Vice-Chair (Mr. Nick Discepola): So there's no magical account sitting there where we can go tomorrow morning and get $20 billion and do great things with it.

Ms. Angela Vautour: That's because it was used for things other than UI. But if it hadn't been used, we'd have a $20 billion surplus.

Do you agree the surplus should be used for things other than unemployment insurance?

Ms. Mary Boyd: No, I don't agree at all. I think it's a disgrace that a few years ago 87% of unemployed Canadians were eligible for UI and now it's down to less than 40%. That is what's causing the widening gap between the rich and the poor in this country.

I once had to draw unemployment insurance, and I have to say at that time—and this was before it was really mutilated—I found it to be one of the most policed things, I found it to be very meagre, and I found it to need lots of improvement. Instead of having those improvements, it's been tinkered with, and it doesn't even resemble its former self.

I freelance for my living, and I would never be eligible to draw unemployment insurance again because of having to freelance. I'm one of the people who could never be eligible for unemployment insurance because of what I do, whether I needed it or not. And there are so many of those. So put it back and make it an insurance policy.

The Vice-Chair (Mr. Nick Discepola): By the same token, I don't think you've paid, Ms. Boyd—

Ms. Mary Boyd: Pardon?

The Vice-Chair (Mr. Nick Discepola): I've been self-employed since the age of 26, and I've never collected unemployment insurance. But by the same token, self-employed people don't pay.

Ms. Mary Boyd: Self-employed people don't pay, but they pay taxes. They pay lots of other things.

The Vice-Chair (Mr. Nick Discepola): But we're talking about unemployment insurance.

Ms. Mary Boyd: Yes, but they could pay if they wanted to be eligible and if there were a set-up that really insured people in the times they're unemployed, because if you're freelancing there are times when you're unemployed.

Ms. Angela Vautour: So you're saying we should look at insuring the self-employed sector.

Ms. Mary Boyd: The people who are doing part-time work and who do not have steady employment, where they get a contract and when it's finished they may have spaces in between before they get any other kind of work, have nothing. So if they paid unemployment insurance during the time they had a contract, they should be eligible for unemployment insurance if they can't get another one. There's just no protection for people.

The Vice-Chair (Mr. Nick Discepola): Mr. Loggie, I believe you have something to add.

Mr. Steve Loggie (Chair, Policy Committee, Greater Charlottetown Area Chamber of Commerce): Good morning.

I'd just like to start by saying all the presenters here fundamentally want the same thing, and that's a much stronger Canada, a Canada that doesn't have the suffering in unemployment, poverty, health care, and education. Our chamber members are citizens themselves. They go home to these same situations.

The question is how do we get there and how do we get there sustainably. A lot of our presentation focuses on the need to reduce the federal debt. We're in a cycle here, one in which we are tied into a global economy with foreign investment and all the ramifications of it. Our country has to be strong, and therefore we cannot have the debt load that we have in this country. By keeping our debt down and putting a priority on it we can have a healthy economy, because we can keep our interest rates low and encourage foreign investments here.

• 1005

With a healthy economy our businesses will be healthier. Our chamber members will be healthy. We're not the Wal-Marts of the world. Our members are very small businesses generally, most with modest profitability, and every year we're faced with the prospect of going out and trying to sustain our business, trying to make it grow, and trying to keep our people employed.

My own business has 100 people. If we don't have the economic climate to keep the business going, then it's a hundred other people we have in the same situation.

I'm afraid I would disagree with one of the speakers in that business is the engine for employment growth. We have to have those dollars coming into our economy. Qualified small business will be the engine.

The Vice-Chair (Mr. Nick Discepola): The five and seven employees, the ma and pa shops—that's the engine for growth.

Mr. Steve Loggie: So the cycle is employment through business, business through healthy economy, and to have that we have to have a healthy infrastructure.

The chamber has said in its recommendations that we believe 50% of the surplus should be put toward debt reduction. If the other 50%.... We believe, with the other speakers, there is and has been a great degree of suffering in this country and it's time to remedy that. But we have to take a balanced approach, so at the end of the day, many years down the road, for our children, we have a sense of independence as a country where we don't have to rely on foreign investment to the degree we do, we can keep interest rates low, and we can get back to the country we all want.

That's all I have to say.

The Vice-Chair (Mr. Nick Discepola): Thank you.

I'd like to turn back to Ms. Vautour, please.

Ms. Angela Vautour: So, representing the chamber of commerce, what you're saying is none of the businesses you represent are complaining that the loss of revenue in their communities through the cuts to employment insurance have affected them. I'm just wondering if you're getting any of those complaints. And do you agree that while we were running this surplus, which is also a program that is helping enter partnership with businesses; provides training, which helps the businesses; provides the revenue that makes a healthier community; and gives spending money so people can buy from the businesses...? So you agree that this be taken away while we have a fund that can actually fund this?

Mr. Steve Loggie: Are you referring to the surplus of money in the employment...? We're saying the EI fund or the UI fund, whatever you wish, was set up for one specific purpose and that was for the needs of the unemployed. We're saying the fund is being overfunded, so there should be amendments made such that this gets back to fulfilling the mandate it had to start with, which was to meet the needs of unemployed persons.

The Vice-Chair (Mr. Nick Discepola): But that's not what you are saying in your recommendation number 3. If you read your recommendation number 3, you're saying we should treat that surplus as a tax on Canadian business and workers, but not as a—

Mr. Steve Loggie: As a surplus, yes. It doesn't exist. We're saying from here on in, there should be changes made such that there's a matching between the needs of the fund and the premiums associated with it. I believe that's what—

The Vice-Chair (Mr. Nick Discepola): But are you saying we should return, through a reduction in premiums, the full surplus that tax generated?

Mr. Steve Loggie: No, we're saying from here on in, let's address the needs of the fund going forward with the premiums that will be allocated to us.

The Vice-Chair (Mr. Nick Discepola): So we should look, as Mrs. Boyd just said, at maybe increasing benefits so we cover more of the people who have been left out of the system right now.

Mr. Shawn Murphy: No, I don't think we're saying that, Mr. Chairman. I think our presentation is that it will be gradual. We recognize there's no separate UI fund, firstly, and any decrease has to be gradual and has to be subject to the test of affordability.

The Vice-Chair (Mr. Nick Discepola): Could you propose a timeframe and a reduction schedule?

Mr. Shawn Murphy: We haven't proposed a timeframe. I believe there was a 20¢ reduction last year. We'd certainly like to see at least that this year, and it would be starting gradually.

• 1010

The Vice-Chair (Mr. Nick Discepola): Notwithstanding that, there will be a surplus generated because of that tax. If we reduce it 10¢, for example, we'll get a $4 billion surplus next year; if we reduce it 20¢, we might get a $3 billion surplus. So there still will be a surplus generated.

The opposition members are calling for and saying we're stealing that money and it has to go back to the people who contributed, which would mean 60% would go back to employers and the other 40% would go back to working Canadians. That's what the opposition has called for.

Mr. Shawn Murphy: If I can be allowed a minute here, I have two points.

We're saying that any decrease has to be gradual, and it all has to be subject to the test of affordability. Our number one recommendation is that the deficit be reduced.

I have one other minor comment in response to Ms. Vautour.

On the question of UI benefits, we haven't polled our members, and we apologize that we don't have the answer to that question, but there is one issue that is probably more important to our businesses and to our families in this community, and that is interest rates. There's no greater robber of disposable income than when a young family has to go out and pay a 12%, 13%, 14%, or 15% mortgage if they're trying to buy a home, and that drives everything up. It's the same with business borrowing money. It is a very significant advantage for business and homeowners, car owners, people, everyone, that interest rates be low.

Ms. Angela Vautour: I don't disagree with that. You were mentioning affordability, as long as it's affordable. We have a fund that shows that it is affordable to give more to the unemployed and to help in job creation and training. We have accumulated or could have accumulated $20 billion.

So I don't think the affordability part is being questioned here. What we're questioning is, should we use it to both help the unemployed and help the employers, or should we just bring down the premiums and keep bringing them down and keep lowering the qualifying...and just leave these people out with nothing?

Also, you mentioned that you didn't poll your members, so I wonder how—

Mr. Shawn Murphy: That was for the question about whether or not they felt a decrease or increase in business because of the changes in UI benefits in the past number of years. We polled our members on these positions; we didn't ask them a specific question on that issue.

The Vice-Chair (Mr. Nick Discepola): This is very interesting. We were supposed to go until 11 a.m., but with the cooperation of members, I think there's enough interest that we'll continue if the witnesses can stay until maybe about noon. Is that okay?

All right. Then I'll now turn my questions to Mr. Pillitteri, please.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you, Mr. Chairman, and good morning.

In the presentations, I think really not much changes from other parts of eastern Canada we've been in. But to Ms. Perry, on the presentation she made, and of course some innuendo that EI was cut to the employers...that has never been done. As a matter of fact—

Ms. Edith Perry: Employers don't pay benefits?

Mr. Gary Pillitteri: No, not the benefits. As a matter of fact, the contribution is, for your $12.42 that you paid EI, employers pay $17.39 to the—

The Vice-Chair (Mr. Nick Discepola): They pay 1.4 times the employee.

Ms. Edith Perry: The employer still pays.

Mr. Gary Pillitteri: Yes, the employer portion.

Ms. Edith Perry: Is that a decrease from what they were paying before?

Mr. Gary Pillitteri: Everyone's decrease was equal to everyone, the employees and the employers.

The Vice-Chair (Mr. Nick Discepola): So if you take your table, for example, the reason your premiums have gone up...because you made allusion to that. The rates themselves have dropped by 10¢ or 20¢, I believe, as the chamber testified, over the past four years.

Ms. Edith Perry: To whom?

The Vice-Chair (Mr. Nick Discepola): To everybody.

Ms. Edith Perry: My rate as an employee went up.

The Vice-Chair (Mr. Nick Discepola): No, the rates went down. But the reason your premiums have gone up is because you've had an increase. But your rates for both employers and employees went down.

Ms. Edith Perry: I'm not debating. My intention was to show that when all is said and done, the income you take home is still less than what you're paying out.

The Vice-Chair (Mr. Nick Discepola): Continue, Mr. Pillitteri, please.

Mr. Gary Pillitteri: Thank you for trying to explain it, Mr. Chairman. Eventually I would have tried to express it myself or explain it. But let me continue.

• 1015

When you were making the presentation, you were talking about trying to file your income tax. I think you have at least over $200 coming back, in accordance with the tax that you're supposed to be paying. Anyway, this is not where I'm going.

Through the whole presentation, you were saying this whole issue of an EI surplus is dreaming in technicolour. Since 1986—that's twelve years ago—the EI fund has gone to general revenues. In ten of the last seventeen years, it's been in a deficit position. Are we cherry-picking now that there's a $20 billion surplus with accountability? I'd ask members to check into that, too.

Ms. Edith Perry: Did government have the right to take from the EI or UI fund?

Mr. Gary Pillitteri: Since 1986. There was a $6 billion deficit in 1986, and the Auditor General said it was better to put it into general revenues so that the government could pay out of general revenues.

Ms. Edith Perry: Was the legislation changed so that this was possible?

Mr. Gary Pillitteri: It was a recommendation by the Auditor General of the day, and those practices have been followed since 1986.

Mr. Edith Perry: Which means the legislation was changed.

Mr. Gary Pillitteri: The legislation was changed at the time the Auditor General said this money should be going into general revenues.

The Vice-Chair (Mr. Nick Discepola): In 1992, the legislation was changed to provide in order for governments to make up the shortfall. Also included was an obligation to reduce the premiums if there was a surplus. I believe that was when it was changed, but if any member knows the date, please correct me.

Mr. Paul Szabo: When UI came in 1940, it was never actually funded by or put in a separate bank account, because it always ran a deficit. The government always was the backstop.

In fairness, Mr. Chairman and colleagues, there's no question that there have historically been pluses and minuses. We're now into a situation where in fact surpluses appear to be growing. But, Mr. Chairman, the experts who look at this stuff say that if we go into a recession, we could in fact be in a deficit position of about $12 billion within a year. The question really becomes how much of a reserve you need.

The Vice-Chair (Mr. Nick Discepola): I think Mr. Pillitteri was getting to that, if we just let him continue.

Mr. Gary Pillitteri: Thank you.

The Vice-Chair (Mr. Nick Discepola): You take too long to get to your questions, so others jump in. Get to your point, please.

Mr. Gary Pillitteri: Thank you very much, Mr. Chairman. I thought you had extended things until twelve o'clock. Like I said, we're dreaming in technicolour.

It's been said that for every 10¢ that we reduce premiums, that would be $700 million less when we're talking about surpluses. Do you know the statistics show that 80% used to qualify and now 40% qualify? I might remind you that the employers of those three to five people qualify as individuals in there, but they never qualify. None of the employers ever qualify. Let's use statistics a little bit more accurately, because those statistics are not proper.

The Vice-Chair (Mr. Nick Discepola): You're taking a long time to get to your question.

Mr. Gary Pillitteri: I'm just making some comments first.

We're talking about reducing that fund and about giving back to the workers and employers. When you talk about a reduction across the board, I want you to come clean. Some individuals say to just give the reduction to the workers, not to the employers. This is where you get a lot of.... A lot of individuals say the money belongs to the workers, but it also belongs to the employers who have paid into it but will never qualify. Therefore, if you're talking about a reduction, you should also be talking about a reduction for them. When you're taking 20¢ or 30¢ or 40¢—they even tend to say to bring it down to $2.70—that would mean there is $5 billion less in that fund. That's what it would mean. If there's $5 billion less, there's nothing else that government could look at in terms of some tax cuts or in terms of lowering the debt. Of course, if we were to go down to that, we could be going back into deficit again. Let's tell the truth.

• 1020

The question I'm getting at is whether you want this reduction of EI funds to go towards everyone across the board or just specifically to the employees. That's what Buzz Hargrove suggested—just the employees, and never mind the other guys; they don't deserve anything back. That's what I want a response to.

Ms. Mary Boyd: I'd like to respond.

It was meant as an insurance policy for people when they are unemployed. It seems to me that whatever the statistics are that we can put on something, those statistics are flesh and blood, people who have to eat and have to survive. The changes have created tremendous hardship.

The money really comes from the employers and the employees, not from the government. When the government borrows from the UI fund, it pays interest. That just goes to show it's not the government's fund. It got out of that and left it to the payment of the employers and employees. The employers have agreed on this fund. It was one of the fundamental marks of decency in this country. It reflected the values of Canadians, the idea that we are our brothers' and sisters' keepers. That's basic, like medicare, pensions, and all the general things for well-being.

If government hadn't cut back so much, we would have more employment in this country. We would have more people paying taxes. Once we have that, our debt goes down automatically. We don't have to say that, after taking so much from Canadians and causing so much hardship, we have to continue this if there's any surplus. We should be injecting more into the economy to make it more vibrant. That will automatically take care of the debt.

Right now, Canada is not considered a sick country as far as finances goes, not on debt. Let us act and live as a country that has the kinds of resources we have, so that there's fairness in this country.

Mr. Gary Pillitteri: So you're suggesting that we go back into a deficit position again?

Ms. Mary Boyd: I don't think we're going back into deficit right now. We're talking about what we do with a surplus. The debt and the deficit are two different things. As people continue to pay taxes, the debt goes down.

The Vice-Chair (Mr. Nick Discepola): What Mr. Pillitteri is trying to ask is whether that $4 billion or $5 billion or $6 billion should go back to employers and employees, or should we use it for other priority items?

Ms. Mary Boyd: It should go back so that more than 35% of the people are eligible for unemployment insurance, and so that the people who are drawing are not cut back so severely.

Mr. Gary Pillitteri: I have no more questions, Mr. Chairman.

The Vice-Chair (Mr. Nick Discepola): So what you're saying is that we should keep it and reduce premiums slightly, maybe by 10¢ or 20¢, as the chamber is calling for. You're saying that we should maybe look at enlarging the eligibility of some of the people, at decreasing the number of hours required to qualify, and increasing some of the benefits. What you called for initially was a return of the money, though. That's what we're trying to draw out of you.

Ms. Perry, I believe you had something you would like to add.

Ms. Edith Perry: I asked this question last year; I've asked it of various committees and I still haven't gotten an answer. We seem to be really concerned about debt reduction. When the GST was implemented, the argument used by the government of the day was that it was to go towards debt reduction. Has anything gone towards debt reduction?

Mr. Gary Pillitteri: It went to general revenues from day one.

Ms. Edith Perry: So the Mulroney government didn't apply the GST to the—

The Vice-Chair (Mr. Nick Discepola): No, when the GST legislation was introduced, it called for any surplus in the GST to go to directly reducing the debt.

Ms. Edith Perry: Well, that wasn't the argument made when they were trying to sell it.

The Vice-Chair (Mr. Nick Discepola): That was the legislation.

Ms. Edith Perry: So nothing has gone towards the debt?

The Vice-Chair (Mr. Nick Discepola): To that point in time, the revenues that the GST generated never—

Ms. Edith Perry: So, in other words, Canadians are going to have to do a lot of belt tightening.

Mr. Paul Szabo: Mr. Chairman, it's a circular argument. If you took GST collections and applied them to the debt, you would increase the deficit because you wouldn't have that revenue in general revenues. Alternatively, if you just reduced the deficit, the amount of borrowing you would have to make.... It's six of one, half-dozen of another. You can't colour-code it all. One way or another, they flow through. So it's the same either way.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Szabo.

Ms. Edith Perry: But what about the debt?

The Vice-Chair (Mr. Nick Discepola): I'll go to Mr. Ritz, please. I'd like to continue the discussion.

• 1025

Mr. Gerry Ritz: Thank you, Mr. Chairman.

There's one point we haven't heard here. They talk about the Auditor General making a recommendation in 1986 to put it into general revenues. Following up on that, rates have gone up and up and up since 1986. That's why we're in a surplus situation here.

The Vice-Chair (Mr. Nick Discepola): No.

Mr. Gerry Ritz: Rates have increased—

The Vice-Chair (Mr. Nick Discepola): In 1993 the deficit position of the EI fund stood at $6 billion.

Mr. Gerry Ritz: Rates have changed—

The Vice-Chair (Mr. Nick Discepola): Since 1993 the rates have gone down, as testified by the chamber—

Mr. Gerry Ritz: By 40¢.

The Vice-Chair (Mr. Nick Discepola): No. It was scheduled to go up to $3.30. We're now at $2.70.

Mr. Gerry Ritz: All I'm saying is that today's world is not 1986's world. In 1997 the Auditor General made recommendations that the fund be toned down a little bit due to the legislation that's in place.

My question to the people out there is should the EI fund be a separate account, not general revenues? It is in a trust situation because it's strictly employers and employees that have put the money in, not the federal government. Should it be in a separate fund?

Mr. Dave Barrett: Perhaps I could respond to that. The position of the federal New Democrats is the same as that of the provincial New Democrats, which is there should be a separate fund created for that. These are trust funds that are given in trust by the employer and the employee and paid through the payrolls—

Mr. Paul Szabo: Who takes care of deficits?

Mr. Dave Barrett: Who takes care of deficits in the fund? I guess you would have to maybe do some carry-forwards or some carry-backs on that. That's something that could be arranged. Maybe it could be a forward financing fund or something like that. I don't know.

The Vice-Chair (Mr. Nick Discepola): Would it be an independent body?

Mr. Dave Barrett: It would have to be an independent body.

The Vice-Chair (Mr. Nick Discepola): Who would compose the membership?

Mr. Dave Barrett: Those are details that could be worked out. The main thing is to keep the minister's—

The Vice-Chair (Mr. Nick Discepola): You're making a very important recommendation, and you're not the only one. I think there are other groups. It should have been well thought out, I believe, before you made that recommendation to the government.

Mr. Dave Barrett: I'm just repeating what the federal position is on this, and the provincial position—

Mr. Paul Szabo: How many Canadians would opt out of EI?

Mr. Dave Barrett: I don't think that's relevant to this particular question.

The Vice-Chair (Mr. Nick Discepola): Then let me give you the relevancy. I come from the province of Quebec. We've asked you some key questions. First of all, if it needs to be independent, it means it has to be out of general revenues. It means there's no responsibility on the part of the government, as per general criteria.

You would have to have representation from the provinces, the federal government, labour, unions, small business, and big business.

A lot of people have used the example of the CPP being a separate fund. What happens in the case where a province then decides it would like to opt out, as my province has done many times? We would have to acquiesce to that request. Is that correct? Then what would happen in the next referendum when a future demagogue premier of a province would decide not only to use the $19 billion in the QPP fund but maybe the $12 billion in the EI fund for his own personal political—

Mr. Dave Barrett: I don't see how either of those arguments follow, with respect, sir. If you're using the CPP as an analogy, we don't see any provinces opting out of that. As a matter of fact, they're—

The Vice-Chair (Mr. Nick Discepola): If the premier of the province on the eve of the referendum had legislation and a process in place to take that $19 billion of Quebecers' money and to use it for his own political ambitions, how would you prevent that?

Mr. Dave Barrett: So you're saying the QPP is being used for the minister's own political interests.

The Vice-Chair (Mr. Nick Discepola): It was. You can read in all the documentation that Premier Parizeau had a plan of action in place to tap into the $19 billion.

Mr. Dave Barrett: So you feel the same problem will occur when we have a separate fund for the EI.

The Vice-Chair (Mr. Nick Discepola): I'm just wondering if it's well thought out.

Mr. Dave Barrett: The politicians will usurp the funds for their own politic ambitions. Is that what you're saying? That's business as usual, is it not? That's occurring now.

The Vice-Chair (Mr. Nick Discepola): I think the chamber had something to say.

Mr. Shawn Murphy: Our position would not be a separate fund, Mr. Chairman. There are a lot of issues you raised that would occur if we went to a separate fund, but also I think the Minister of Finance would have no other option but to implement a payroll tax, as you see in European countries right now, to cover the deficiency. It could be done using an actuarial-based fund, but I think you would lose the quality.

• 1030

And let's not forget—to our fellow Prince Edward Islanders—that for every dollar we collect there are three paid out in this province. I think that's fair; I think there's no problem with that. In P.E.I. you collect $1 but receive $3 in benefits.

Ms. Angela Vautour: I agree.

Mr. Shawn Murphy: And that's based on the seasonality of our employment. These witnesses have mentioned that.

The Vice-Chair (Mr. Nick Discepola): There are other sectors that are even more—

Mr. Shawn Murphy: But on an actuarial-based program that may not be able to continue.

The Vice-Chair (Mr. Nick Discepola): That's right. That's a very good point.

Mrs. Boyd, please.

Ms. Mary Boyd: As I understand the budgeting process, EI is considered as income for the federal government and is calculated in the revenue.

The Vice-Chair (Mr. Nick Discepola): That's right.

Ms. Mary Boyd: Which then if you take it out it's more of a deficit kind of thing.

What I've heard people say is that they don't have an argument with that, about it being calculated in the revenues, but that it should be administered independently because it's too political now. It's the party in power that does all the regulations, changes the laws, changes the policies, and makes it a very political football, but if it were administered by an independent body but still under the responsibility of the government, I think it would work a lot better.

The Vice-Chair (Mr. Nick Discepola): Okay.

Ms. Edith Perry: If we're going to be talking about EI, I would like to address some of the opinions on why I think we got that surplus in the first place, or this mythical surplus, I guess is what you people are trying to tell us.

Mr. Paul Szabo: The EI fund is in analysis.

The Vice-Chair (Mr. Nick Discepola): It's like reviewing your last five or six years' home budget and discovering that for some reason a particular area of revenue, whether it was your daughter's revenue stream coming in, generated a certain amount of overall family revenue.

Ms. Edith Perry: Whatever the case may be, and we're talking about there being a surplus out there, I want to address how that surplus came about. And I think there is information coming out now. Perhaps some of you are familiar with Mike Clancy, who did a report on discrimination and human rights in terms of EI. He was a former HRDC employee who quit working for that federal department because of what he saw happening. And we have information from sources in Prince Edward Island showing the abuses that are taking place in terms of how EI recipients are having money, benefits, ripped off of them. It amounts to a scam and it involves training.

Are you familiar with the report by Mike Clancy?

Mr. Paul Szabo: I remember it.

Ms. Edith Perry: We have reason to believe the same thing is happening here. I personally know of several people who have had letters sent to them saying that they were overpaid and they were required to pay back within a given time, and they at this point weren't able to find out for sure how that would come about. It's not as if they hadn't drawn EI before, and suddenly there's this increase in letters being sent out.

What interests me, and you may want to get this report, because it's put out by the Unemployed Workers Council—

The Vice-Chair (Mr. Nick Discepola): If you want to table the report, Ms. Perry—

Ms. Edith Perry: You can have a copy.

The Vice-Chair (Mr. Nick Discepola): We can make a copy during the break and give it back to you, and then we'll have it for our use.

Ms. Edith Perry: Apparently there are incentives given to regional directors to be able to save money.

Mr. Paul Szabo: Are you suggesting that the laws are not being followed? You're making that allegation.

Ms. Edith Perry: Yes, from my understanding there are—

Mr. Paul Szabo: If you're aware of cases where the law is not being followed, then you should deal with that.

Ms. Edith Perry: You might want to talk to Mike Clancy.

The Vice-Chair (Mr. Nick Discepola): I'd like to turn to Mrs. Redman, who has been patient.

Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Mr. Chairman.

I would like to thank all of you for your interventions. Especially some of them such as yours, Ms. Perry, have been very personal. I think often statistics don't bear the eloquence that somebody's personal experience does, so I do thank you for that.

• 1035

I wanted to ask the chamber a question. Mr. Loggie almost answered the question I wanted to ask before I asked it. This was about the fact that chambers of commerce are often looked at as “them”, not unlike the way government is often looked at. But we all are people who live in communities.

I happen to be from southern Ontario, and our area is officially underserviced by the medical profession. So medical care is something we hear about all across Canada. We have very diverse manufacturing, quite a healthy economic profile, and yet we have trouble not only getting doctors to our area, but also getting levels that are not only comparable to the rest of Ontario, but the rest of Canada. We don't have large universities attached to us, and because of that we're having trouble drawing medical people.

We talked about not being the Wal-Marts of this world, and the fact that the majority of your membership and your chamber has five or fewer employees. I find that really stunning, because statistics would tell us that 80% of new job growth, exactly the kinds of jobs that Ms. Boyd and the first presenter talked about—that is real, long-term viable jobs—are being created by people from small and medium-sized businesses. However, there are the Wal-Marts of the world, and they're coming to a province near you real soon. They do create a different climate. I'm trying to segue from business to health care. There are so many things happening right now.

Mr. Loggie, you talked about getting back to the Canada we all love. I have to tell you, the future is here. Certainly with the MacKay task force what we hear is that virtual banks are already in our communities. They're not putting down bricks and mortar. I don't know if nationally we can stop them. Personally, the kind of philosophical debate within my head is whether it's a good thing to stop them. The future in Canada is going to look very different from what the past did. Part of that is the Wal-Mart. Part of that is the global economy.

Technology is a revolution that probably next to the manufacturing revolution is unparalleled in modern civilization. It's hitting health care. Really, the nub of my question is that as a government we have to make choices. Very clearly, we're all acknowledging that. Given that there are so many influences—whether it's private medical people coming in and trying to market medicare in Canada, and the people who can pay get the medicine and the health care they need now—is the best thing this government can do to reinvest in the CHST?

I'm hearing that health care is number one across Canada. Certainly it's a huge issue in my community. We've heard about social services. We've heard about education. As a federal government, the reality is we are in partnership with the provincial government. It is in turn in partnership with the municipal government. Mr. Ritz already pointed out, and we're all very well aware, that there is only one taxpayer. So as a government looking at the fact that there is an opportunity because there is a surplus that we may be able to apply or reinvest, some in my chamber of commerce are saying don't just go into new programming. Yet as a federal government we said that over our mandate as a government in this term we will look at two-year rolling targets. We will look at prudence factors. Over that mandate we will reinvest 50% of any surplus. We're not looking at a yearly basis. We're now looking at a four or five-year span. So I would contend that I don't think Minister Martin really has been less than honest with that promise we made in the election.

What's the best thing we can do for Canadians? In Ontario, I hear of some people who are very suspicious of the provincial government. I heard some of those things here today. Yet the reality is that like it or not, we're in partnership with those provinces. So what's the best way to ensure that whatever we do is the best thing we can do for all Canadians?

The Vice-Chair (Mr. Nick Discepola): The question is a philosophical question, and a very difficult one to answer. Would Mr. Murphy or anyone like to tackle that first?

Mr. Shawn Murphy: Do I take it your question deals with the 50%? Mr. Martin's made the policy statement that 50% of any surpluses will be used to fund existing programs or new programs. Is that the basis of the question you're asking us? Are you asking where this 50% should go?

Mrs. Karen Redman: What I'm asking is not just where it should go, but how it should go. This is because government is as much about how it does business and what it chooses to fund. So is CHST the best way to go?

• 1040

Mr. Shawn Murphy: I must apologize, Ms. Redman; I don't think we have a mandate from our chamber to get into the actual politics of the debate.

From the media and as these witnesses have testified, we are aware that health care is a major issue right across this country, and as you yourself have said, there are other issues too. Education is an issue. But as to how the money is to be actually spent, I don't believe I or Mr. Loggie have a mandate from our members to say that 30% be spent on health, and that kind of thing.

Mrs. Karen Redman: That's fair. If you're comfortable answering as an individual, that's fine, and if you feel that's outside your mandate, that's fair as well. But you did raise the point about reinvesting, and I would assume that there has been some discussion as to how that should look.

Mr. Shawn Murphy: Reinvesting?

Mrs. Karen Redman: Any surplus of 50%. You're just saying do it. You haven't discussed how the government should do that.

Mr. Shawn Murphy: We seemed to get from Mr. Martin's comments of October 14 that there might be some back-peddling on that recommendation. He didn't say that, but certain expectations would have to be lowered. Our recommendation is that to maintain credibility, he should stick to that policy statement.

The Vice-Chair (Mr. Nick Discepola): They've also said, Karen, in recommendation 5 that personal income tax should be targeted when feasible, but they are sort of saying respect that one undertaking, and they're leaving the discretion up to the minister as to what proportion and what priorities.

Mr. Shawn Murphy: That's over the mandate, though, not—

Mrs. Karen Redman: Yes, my point is that it is over the mandate, but my question was also that you haven't discussed the how.

Mr. Steve Loggie: As a membership, we haven't. Even as individuals, I think we could vary in terms of where we would fall out on that. It's very difficult.

It's the obvious, but it's such a difficult situation for our government to address all of these needs, and priorities may change year to year also.

I think Ms. Boyd might want to—

Ms. Mary Boyd: Thank you.

First of all, I want to respond to your more philosophical line about the future being here and mentioning that Wal-Mart is coming soon. Yes, it's coming to P.E.I., and I want to say to our friends in the chamber of commerce, yes, I agree that many jobs and the great majority of jobs are represented by small and medium-sized business. But I don't understand why there is enthusiasm about the coming of Wal-Mart, because as far as I'm concerned, it's going to ruin those businesses and many of them are going to go out of business. That is a problem, to have a giant that's bigger than 161 countries coming into a small province like P.E.I. It's going to compete with all those small businesses, not enhance them. The quality of stuff that they sell is not good either.

There's a second point on the philosophical part that I think is important when we say government has choices, and so on: Government also has responsibility in the face of all of this globalization, where, as Leo mentioned, there are 40,000 transnational corporations in the world now, and they have 200,000 subsidiaries besides. They control the world, and governments are listening too much to these forces and not to the people.

Government, the nation state, still has responsibility to the people of the nation and to its own nation. You have power to do that, which you have to use. It's not that people are helpless and because of globalization we have to open our arms and surrender and get into this world thing. No, there is responsibility on the part of government to safeguard the common good of the people in each country.

As far as the Canada health and social transfer is concerned, it should be gotten rid of. Look what it did to unemployment and to the Canada Assistance Plan. It took away the rights of welfare recipients, which is a violation of United Nations laws. It took away their right to appeal. It took away their right to welfare. It took away their right to have welfare without workfare imposed on them, and all of that stuff, which is terribly unjust. It gave money in a lump sum, not earmarked to health, higher education or welfare, but just gave it to the provinces, so that money can end up in highways or anywhere. Our health care is suffering from that, as is our higher education, as are the welfare recipients and many others.

• 1045

That was one of the worst pieces of legislation introduced in this country in a long time, and it went a long way to destroying the social fabric. Get rid of it and go back to saying health is a priority that has to be funded. It needs to remain universal.

Once we start privatizing home care and all these things, we're going to open the doors to an American system, which is a two-tiered system. But it's more than that. It's a much more expensive system than our publicly administered medicare. When our medicare works, it really works. As a member of the health coalition, I have heard many times doctors from the States coming up to Canada to our meetings and saying, for God's sake don't give over to this privatized American way. Then they start telling you about the ridiculous, awful things that are happening through HMOs and everything in the States, and people dying within reach of the hospital because they don't qualify for some reason to be admitted into the hospital.

We're getting tragedies here because of the cutbacks, but nothing.... When it gets so ridiculous that if you have cataracts in the States, your insurance will cover an operation on one eye but not on the other eye, unless you can prove that you need the other eye for work.... Those are the kinds of things that are happening under that privatized American system, which we do not need.

Mrs. Karen Redman: Just let me interject. Are you saying you want to go back to the good old days, and you want to have dollars colour-coded, which certainly, as you point out, is not the case now? Or do we somehow have to look at a new vision of health care? That's really where I was going when I talked about the future. Obviously there are things right now.... Canadians are very concerned about medicare.

Ms. Mary Boyd: But what is a new vision of health in your definition? When I have people talking about a new vision of health care, they're talking about letting the private sector in, charging Canadians more money, and using public money to go into private pockets. That's what I'm hearing as a new vision of health care. We are one of the leading countries in the world because of the five universal principles of health care, and I'm saying we have to safeguard those by all means.

Mrs. Karen Redman: And your argument would be predicated on the part of safeguarding that is purely dollars?

Ms. Mary Boyd: Yes, but there's a myth around that our health care is getting more expensive, and I just pointed out that we're getting less and less federal money put into our health care, not more. So it's not more expensive for the federal government. Where it's expensive is in the increase in drugs because we've allowed a monopoly for the transnational corporations and they put the prices of drugs up. That's where the increased costs of health care are.

We're talking about partnership with the provinces, yes, because this is a country. This whole social contract, which gives more power to the provinces, and the federal government not keeping its hand in there strongly enough to enforce national standards, is going to create great disparities in this country. We all have to be against that. We depend on a strong, national input into medicare, with the money put in there giving the federal government a lever to enforce national standards. This is Canada. It's not 10 separate entities. This is a nation and we need to keep it as a nation.

And the multilateral agreement on investment, which hasn't been mentioned yet, if that comes into being it is going to do a tremendous amount to destroy this country—our medicare and many, many things. We have local examples here; we don't have the time to give them. But we're seeing that kind of thing and just how vulnerable we are to that kind of outside influence claiming rights in this country, and our government letting itself be helpless in the face of protecting its citizens against that.

This is a scary scenario for the future if it happens. It's going to create much more poverty and a much wider gap between rich and poor. It's going to mean many more Canadians are going to die. If you watched This Hour Has 22 Minutes last night, I agreed with Marg Delahunty about how Canadians die. And withdrawing health care is one good way to kill Canadians. It's not guns. We're talking a lot about gun legislation, which I'm in favour of. But it's not guns. It's withdrawing our national standards—our health care, our supports for the poor—and welfare on which you can't afford to eat or have decent shelter or anything like that. It's allowing our students, who have become so burdened with debt, to go out and get a $5 or $6 an hour job and be expected after all those years of university to pay their debts. That's what's killing us.

• 1050

The Vice-Chair (Mr. Nick Discepola): I'd like to continue, please. We have only about ten minutes left, and there are two other members who would like to ask questions.

Mrs. Vautour, please.

Ms. Angela Vautour: There are two issues I'd like to get your opinion on. The transitional job fund is finishing, and I'm wondering what your feelings are about trying to have this fund continue. I don't know if you're aware of the fund. The transitional job fund was set up on a three-year trial basis to help during the transition, following the cuts to unemployment insurance. I believe that fund is exhausted by this point, and there is a call for more of that fund, because it's for job creation. It's helping people start up businesses and what not.

The Vice-Chair (Mr. Nick Discepola): It's a fund that also helps the regions that have a higher than average level of unemployment, and it's funded through the EI premiums.

Mr. Shawn Murphy: I'm aware of the fund, and I'm aware of what has been done in Prince Edward Island with the fund. I have to again apologize that the chamber doesn't have a position, and it certainly didn't disclose that to me.

At this point I'm speaking for Shawn Murphy. I certainly see the need for the fund. Speaking personally, I think the fund ought to continue, with the caveat it should be administered properly.

This leads to one other comment I would make. I agree with a lot of what Mr. Broderick and Ms. Boyd have said today, but there's one issue I do want to take vehement exception to, and that is the point made by Mr. Broderick and supported by Ms. Boyd that job creation can occur much more efficiently by the government spending in the area of public service versus by private enterprise. Mr. Broderick had statistics, and I challenge those statistics. I challenge that principle.

Again, this relates to the comment you're making, Ms. Vautour, about it being properly administered.

Ms. Angela Vautour: I want to add I certainly recognize the small businesses are the job creators across the country. We have to recognize that. But I also recognize there is a need for government. By reinvesting in health care you're going to create jobs. That's not to say we should invest in health care just to create jobs. The thing is you're investing in health care because we need the investment in health care and it is going to create jobs. The same thing is going to happen with education and so on.

Unfortunately, there has been waste in the past because of various factors. It was said we have to create jobs, but there was really no long-term planning, and the Atlantic area has been a victim of that. There has been a lot of money wasted because of that, and I have no problem admitting that. Unfortunately, it is continuing.

That is why I'm glad you are cautious with the transitional job fund, because government has the last say as to who gets the money. I make recommendations. I don't know if Andy still does it, but Andy Scott actually approves them or gives a big recommendation to Pettigrew.

So I'm concerned about that part, that it's not independent enough.

Mr. Shawn Murphy: And over here it's Mr. MacAulay.

Ms. Angela Vautour: Okay. I agree with that. I certainly don't look at the political party when I recommend it. I've recommended all kinds.

The Vice-Chair (Mr. Nick Discepola): Time is up, Mrs. Vautour. A chairman's greatest fear is when a member says “I have a very small question”.

Ms. Angela Vautour: The only thing is the pilot project. I don't know if that has been brought up.

The Vice-Chair (Mr. Nick Discepola): Is this your second small question?

Ms. Angela Vautour: This is a small question.

Is anybody concerned about the pilot project? I do believe the chamber should be concerned, because they were last year when we realized one hour was equal to a week, so people were trying to get employees in for one hour or one day a week, which was really penalizing our seasonal workers. There hasn't been any word on whether or not this is going to continue, and it is going to finish in November. Has there been any thought put in? I would put this question to any one of you. The pilot project is with the small weeks.

• 1055

Mr. Shawn Murphy: I don't believe we have enough knowledge on it to comment. Sorry.

Ms. Angela Vautour: I am surprised that you would not have any knowledge on it, because the reason—

The Vice-Chair (Mr. Nick Discepola): I think the pilot project is in New Brunswick, though, not in P.E.I.

Ms. Angela Vautour: No, the pilot project is across most of the country, because there are two parts of this: we had the bundling up of the small weeks, and then we had the dropping of small weeks.

Here in the Atlantic, we have the bundling up, which doesn't penalize. But businesses were very concerned. I remember a potato industry here actually had to close down in the winter because.... And he totally agreed.

The Vice-Chair (Mr. Nick Discepola): Can we get to your small question? I have another member who has a very small question.

Mr. Steve Loggie: I don't think the chamber can speak to the issue. I'm on the policy committee and we haven't discussed it, so I can't really speak to it, and I don't have enough personal knowledge to speak to it as an individual. I apologize.

The Vice-Chair (Mr. Nick Discepola): Can we conclude, then, with a very, very small question from Mr. Szabo, please?

Mr. Paul Szabo: I wonder if the chamber was aware of the Canada Foundation for Innovation, the $850-million fund that was set up. Were you pleased with that program and the accounting part?

Mr. Shawn Murphy: Yes.

Mr. Paul Szabo: You were. But you're not pleased with the millennium scholarship fund accounting. In fact they're identical.

Mr. Shawn Murphy: I didn't realize the $800 million was expensed. Is that correct?

Mr. Paul Szabo: Yes.

Mr. Shawn Murphy: If that's the case, then—

Mr. Paul Szabo: Just for your information, if the government had chosen to operate the millennium scholarship fund through the established Canada Foundation for Innovation, the Auditor General would not have qualified his opinion. It was just a matter that the millennium scholarship foundation had not formally been established because it couldn't be until the budget was passed in the House.

It was a small technicality. In fact, the comptroller general of the House of Commons, who was seconded from the CA industry, gave the government a recommendation that it was the appropriate accounting. There have been recommendations from the CICA that in fact the government is establishing appropriate accounting treatment because it identifies the commitments that have to be made. They have to follow through. Governments don't account like business.

So I raise it with you that even the Auditor General didn't say it distorts. He just said he didn't support it because the millennium scholarship foundation hadn't been legally established.

Mr. Shawn Murphy: I don't want to get into a large debate on accounting principles as they relate to business or government, and I certainly don't want to get into an argument on the merits of the millennium scholarship or the merits of the innovation fund. Both these programs are good. They're excellent programs. But we still come back to our recommendation that by doing this—and it might not be a major issue—the government has distorted, from a common sense point of view, leaving aside your CICA regulations, the financial picture that you have presented to the Canadian taxpayers.

If that money had not been expensed, instead of $3.5 billion the surplus budget would be $6 billion. I think you as elected politicians owe it to the taxpayers to....

You do not have a mandate to incur deficits, to mortgage the property and assets and income of future generations, our children and grandchildren. Likewise, you don't have a mandate to incur expenses—

Mr. Paul Szabo: You're cherry-picking, though, because if the government did not expense every building that it purchased last year, it would have had a tremendous surplus.

Mr. Shawn Murphy: You're getting into an argument on accounting that CICA—

Mr. Paul Szabo: So are you, because if you do make a commitment that 100,000 students in Canada will get assistance to have accessibility to post-secondary, you have to have the things in motion, and that money has to be earmarked and the commitment has to be met.

The Vice-Chair (Mr. Nick Discepola): Paul, the legislation in this case didn't occur until after the announcement of the budget, also. So in fairness, it may be a technicality.

Mr. Paul Szabo: Sure, you can argue this many ways, but I want you to know that the Auditor General would not have qualified his opinion had we done it through the Canada Foundation for Innovation, so that's how arbitrary the situation is. It's not as serious as you think.

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

• 1100

Ms. Edith Perry: If this committee is going to make recommendations to Mr. Martin and his staff—I know you're nearing the conclusion of this session—I would, as an individual Canadian, strongly recommend that you pay attention to the voice of people across Canada. Listen to what they have been telling you time and time again in polls that I'm sure your government has taken and during election campaigns. Now you're hearing this on your travels. They say that health care, education, and jobs or employment, the money we make, are the important—

The Vice-Chair (Mr. Nick Discepola): Well, that's the balance we're trying to achieve. That's why we're trying to—

Ms. Edith Perry: That's right. I'm of an older generation, and I would like to make sure that I somehow have something to live on when I get too old to be able to work. My kids need a future. Mr. Murphy and his organization are concerned about the future generations. Well, so are we. What happens to these kids until 2000? They've got to live to. There are young women saying they're not planning to have children, or they're seriously considering that. I think we should be really concerned about the viewpoint of people out there.

As for the kinds of jobs, do they have to go into business and technological training if that isn't their speciality or talent area? We have a lot of kids doing that. They're dropping out of business colleges and out of community colleges with student loans because it wasn't where they should have been in the first place. There are all these things that you really have to look at.

Ms. Mary Boyd: I have a question for you. May I have a question, please?

The Vice-Chair (Mr. Nick Discepola): A very short one.

Ms. Mary Boyd: Okay. We have not been able to deal with Angela Vautour's question about UI. Can we write in to you and the committee?

The Vice-Chair (Mr. Nick Discepola): Absolutely.

Ms. Mary Boyd: Okay. I'll take 15 seconds to say to Mr. Murphy that the fact the public service does create all these jobs does not go against the private sector. This has come from the research of the alternative federal budget, whereby 150 political scientists and economists in this country, mostly with PhDs, have said that this is the case from the research. It's not from the top of our head. This is research that's very well documented.

The Vice-Chair (Mr. Nick Discepola): Is your alternative budget, federally speaking, well documented as to where we would get the $5 billion that you want reinvested in health care? What about the x billion dollars you haven't stipulated that you want to invest in education? There's the x billion dollars that you want to invest in other social programs. There's the $5 billion or $6 billion that you want to give back because of the EI surplus. If you add that all up, we're running at about $15 billion or $20 billion. Where do you get those added revenues?

Ms. Mary Boyd: Well, I think we have made many suggestions about how to—

The Vice-Chair (Mr. Nick Discepola): Could you elaborate on one or two of them?

Ms. Mary Boyd: —get this country back on its feet through stimulating.... We talked about lowering interest rates. We made many suggestions—

The Vice-Chair (Mr. Nick Discepola): And you'd do all that—

Ms. Mary Boyd: We also talked about taxing the rich and taxing the corporations—

The Vice-Chair (Mr. Nick Discepola): Thank you.

Ms. Mary Boyd: —and clearing up the loopholes for all these corporate things. It's there. The research has been done. Ask Neil Brooks. He's an expert on taxation in Canada. He's one of them.

The Vice-Chair (Mr. Nick Discepola): Well, thank you very much. You can see by the duration of the meeting that we've gone an hour overboard. You've incited and encouraged an awful lot of dialogue. Obviously, you've reached—

Ms. Edith Perry: There's something else—

The Vice-Chair (Mr. Nick Discepola): No, I'm sorry, we have to conclude. We have to go until one o'clock.

Ms. Edith Perry: —that hasn't been taken seriously or considered. I think Ms. Boyd and her group should be—

The Vice-Chair (Mr. Nick Discepola): I asked her to qualify where she would get the added revenues. I gave her ample time.

Ms. Mary Boyd: And I think I did that. There is a surplus, and then there are other ways to create more money. We've been saying this for years. I don't understand—

The Vice-Chair (Mr. Nick Discepola): You said it would be by taxing corporations and the rich. You've enumerated—

Ms. Mary Boyd: It's also by purposeful job-creation targets that get more Canadians back into the money and working and paying taxes. That's where the greatest source of revenue is going to come from.

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

There are some people who think this is a waste of time. I firmly believe it's not a waste of time. I want to give you some examples. I believe firmly that over the past five years that I've participated in these hearings, I have physically seen in each budget a small measure that certainly.... Maybe I didn't see this as an individual MP, but I can recall many times when because of group pressure and caucus members, for example, or because of something we heard, we were able to actually get the ear of the Minister of Finance. I can pinpoint one or two things in the budget and say “Hey, damn it all, I had something to do with that”.

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I think that's what our purpose here is as MPs. We are here to listen. There's a group of MPs also in the west having hearings in Vancouver, Calgary, and all the provinces. We've been on the road already for three weeks—this is our third week. We will go back to Ottawa next week, and then will conclude our hearings in Montreal.

We make a report to the Minister of Finance. It's a report that's published every year. We're not going to get 100% of the recommendations, obviously, but our batting average has been excellent—up to 50% or 60% for sure.

You may not see the one item you came here for, but remember, we have a balancing act to do. We have to take all we have heard and put it together in the form of what is called a budget. That's not an easy task to do. If we had alternatives, we could make very significant changes, but we have to think long term, short term and the balance between the regions, as you have said.

I just want to pick up on one little point, because it seems to have been again played down. It's the $500 exemption we increased. Let me tell you what it meant for Canadians. It meant those earning less than $20,000 a year actually got $500 more in their pockets that year. If we're talking about a family with an income of $40,000 a year, they actually got $1,000 more in their pockets that year. The 3% elimination, for example, meant that one-income families making $30,000 got $145 in their pockets. Those one-income families making $50,000 got $238.

You see concrete measures, but remember last year we didn't even know what our budget would be. We have to make very difficult choices, but they're the choices we feel are best for Canadians. That's the balance we have to try for. I want to reiterate that we take these hearings very seriously. The report, as you can see, will be tabled in December, well in advance of the February budget planning process. The Minister of Finance looks forward to our recommendations annually.

If you have anything to add, as Mrs. Boyd said, you are welcome to put it in writing and forward it to the clerk of the House of Commons finance committee. We will make sure all members of the committee, including those travelling out west, get them.

I want to thank you for your participation. You've certainly brought to our viewpoint an awful lot of food for thought. We will have to balance the different recommendations from the different groups, and that's what we will reflect in the report. Thank you once again.

We will adjourn now for a quick 50 minutes for lunch and phone calls. Thank you.

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• 1209

The Vice-Chair (Mr. Nick Discepola): Good afternoon and welcome. We're resuming, under Standing Orders 108(2) and 83.1, the pre-budget consultation. This afternoon we have a very heavy agenda, as we did this morning.

I'd like to welcome Mr. Brian Curley and Mrs. Deanna Duguay from ALERT.

[Translation]

I would also like to welcome the representatives of the Fédération des parents de l'Île-du-Prince-Édouard, Mr. Robichaud, the president, and Ms. Marie-Berthe Losier.

[English]

We have with us from the Medical Society of P.E.I. Dr. Rosemary Henderson, president. From the P.E.I. Advisory Council on the Status of Women we have Ms. Sharon O'Brien, chair, and Ms. Rankin.

I believe there are others, but I can't see all the nameplates. Ms. Nimmo, are you also with them ?

Ms. Liz Nimmo (Chair, P.E.I. Literacy Alliance): I'm with Literacy Alliance.

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The Vice-Chair (Mr. Nick Discepola): With us from P.E.I. Literacy Alliance is Diane Morrow and Ms. Nimmo; from the Public Service Alliance of Canada, Mary MacNeil, regional representative for P.E.I. and N.B.; and from the University of P.E.I., Dr. Lawrence Heider and Mr. Neil Henry, vice-president.

Welcome. The process is probably familiar to most of you. There will be five- to ten-minute rounds. I'd like to restrict that, because it's quite a large group. We have another group coming at three o'clock, and we'd like to leave ample time for good dialogue with the members of Parliament.

I'll just go in the same order as on my list and maybe ask Mr. Curley to start, please. Welcome.

Mr. Brian Curley (ALERT): Thank you. ALERT is an association of welfare recipients and supporters who work to improve the conditions of those in poverty through lobbying and educating governments and the public. We're pleased to be included in this discussion of public policy, as it has a profound impact on the lives of the poor in this province and country.

However, we must state a concern we have about this hearing process. It is difficult to place great value on these hearings when evidence shows government doesn't intend to give serious consideration to the voice of the poor in Canada. After hearing from poverty advocates at last year's hearings here in Charlottetown, a committee member was heard to say, “What a waste of MPs' time listening to that BS”. This remark, along with some members' absenteeism and inattention, was an insult to the democratic process and to the poor of Canada.

Also, in a newspaper article in the Guardian of October 19 Rosemary Speirs said Paul Martin had shut his ears to the reckless advice of opposition parties, the provincial premiers, and business and social groups. If the finance minister's ears are shut, why are we here and why is taxpayers' money being wasted on a useless farce? We can only hope it isn't so.

Ms. Deanna Duguay (ALERT): The following are some examples of things ALERT members have heard about in our province of P.E.I.

A single mother works all month for a net benefit to her of only $19. A single mom lost her $161 monthly assistance cheque from welfare because she had no transportation and could not comply with a request she accept employment. This request was also unreasonable in that she would have to take her child out of bed at 4 a.m. to go a babysitter 45 kilometres from her home, and then travel a further 45 kilometres to report to work at 6 a.m.

A majority of parents on welfare are spending a portion of their food money on rent, heat, and electricity because of inadequate welfare rates for these items of basic necessity. A woman said most of her remaining food money, after paying rent, went on school lunches, with little or nothing left to provide morning and evening meals in a family home.

Migrant workers from out of province are sleeping on the floors of apartments they have not rented. There are many cases where a lack of transportation is delaying and preventing prompt medical treatment. There's the case of a woman who did not have a chair to sit on at meal time so she could eat at the table with her children. All children whose parents happen to receive any social assistance get nothing from the national child benefit.

Mr. Brian Curley: We have some recommendations, but we'll only read a few of them because of time constraints.

We recommend that the funding and the conditions attached to it, which were lost in the change from CAP to CHST, be restored. The conditions of funding through provinces should be enforced more strictly than they were under the Canada Assistance Plan.

Benefit levels paid under EI should be increased so as to ensure unemployed workers have enough income to support their families without having to resort to welfare or food banks. This step could be coupled with regulation changes to make eligibility requirements reflect the reality of the unemployment rate in the region. These improvements would not cost Canadians taxpayers anything, as money from the EI fund does not belong to the government but to the people who pay into it for the purpose of having such an income when unemployed.

Transfer funding for education should be increased to stop the downloading of the federal deficit on the backs of students.

The Government of Canada should ensure all poor children receive equal benefit from the national child benefit. The commitment of government to eradicate child poverty hasn't been acted on as yet. Surely this national child benefit could be used as a first step in the right direction, if only all poor children had the use of the money sent to them. It would be at best only a token gesture in light of Canada's violation of the International Covenant on Economic, Social and Cultural Rights.

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It is essential that the federal government retain the right and power to enforce some national standards on all health and social welfare programs. This is needed to provide citizens with fair treatment in all parts of Canada. Also, it is Canada that is signatory to the UN covenant mentioned above and that must honour its commitments under that agreement. They need the power to control those programs to enable them to fulfil their duties under that commitment.

Personal and income tax exemptions should be raised to equal the low-income cutoff figure set out by Statistics Canada.

Those are a few of the recommendations we make. Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Curley.

[Translation]

I welcome the representatives of the Fédération des parents de l'Île-du-Prince-Édouard. Mr. Robichaud, I invite you to give your presentation.

Mr. Ulysse Robichaud (President, Fédération des parents de l'Île-du-Prince-Édouard): Our brief is about education in French as a first language in Prince Edward Island.

Although the island province has five Acadian and Francophone regions, there are only two French-language schools, François-Buote de Charlottetown school and Évangéline d'Abram-Village school.

The regions of Prince-West, Rustico and Summerside are still demanding their schools. The Fédération des parents de l'Île-du-Prince-Édouard is awaiting the response of the Supreme Court of Canada with respect to authorization to appear in court to defend our constitutional rights to have a French-language school in the Summerside region.

Time is short, because assimilation is doing a lot of damage. In some communities, parents no longer speak the language and grandparents are unable to make themselves understood when they speak French to their grandchildren. A whole culture is disappearing in Prince Edward Island. Unless something changes soon, it will no longer even be possible to apply section 23 of the Charter of Rights and Freedoms.

When tourists come to Prince Edward Island in the summer, they will be forced to press keys on a computer if they want to learn that there were Acadians and Francophones here, because we are disappearing. It is sad to think that we will become part of Canadian folklore unless governments give us financial assistance to help us survive.

For us in the federation, it is clear that access to French- language education in each Acadian community is an essential tool to combat assimilation. The same is the case for including kindergarten in the school system in Prince Edward Island, the only province in the country where kindergarten is not part of the school system.

The importance of kindergarten is recognized from one end of Canada to the other. Research has demonstrated that when there is no kindergarten system, it presents an additional obstacle to a host of others faced by Francophones in Prince Edward Island. Our province is not equal to the other provinces. The lack of kindergartens also contributes to our assimilation.

Education is the basis of all development, whether we are speaking of technology, economics or any other area. As I was saying before, our economy is likely to suffer if tourists who come to Prince Edward Island realize that there is no longer anyone who speaks French and that they have to push a button to learn that Acadians used to live there. This will not attract tourists. In my opinion, this is an important point.

We have an obligation, as a society, to offer our young people the tools they need and an environment that is conducive to quality learning. I believe that I can safely say that all the world's parents want the best for their children. Parents in Prince Edward Island are no different. We want access to quality education in our language, irrespective of place of birth. Of course it is important for our survival as a people to pass on our culture and language to our children, from as young an age as possible. Indeed, is not one of the objectives of section 23 the maintenance and development of official language minorities and cultures in Canada?

The Convention on the rights of children adopted on 20 November 1989 by the United Nations and ratified by Canada in 1991 was intended to protect the health and welfare of children around the world by recognizing their rights to survival, protection, development and participation. The following question therefore arises: Is not giving all our young people the opportunity to attend French-language kindergarten and school by providing them with access to a quality program and to the resources they need for their education an effective development tool?

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Because we do not have schools that give education in French as a first language in Prince Edward Island, we feel assimilated by the immersion system. It is a good system for Anglophones, but it does not constitute a satisfactory French-language education for our Francophones. I would like to emphasize that the federal government has spent considerable amounts of money in the system for Anglophones to become bilingual. This is a laudable initiative, but it should not, however, lead to the disappearance of our whole community and our Acadian roots. Do we need two languages in Canada? Those who founded Canada, those who founded Prince Edward Island, our Acadians, have seen their language disappear, while immersion schools are being built for public servants arriving from Ottawa. That is the problem being experienced in Prince Edward Island by the community that settled here around the year 1600, after the deportation of the Acadians.

As an agency dedicated to the promotion and defence of education in French as a first language, it is becoming increasingly difficult for us to play our role. Budget cuts, in particular to basic operations, require our employee to spend most of her time trying to find funding rather than on efforts to accomplish our goals.

A Canada-community agreement is not operative for us, the parents. Entrusting us with the task of setting priorities and assuming responsibility for slashing certain programs is a very delicate matter. How does one go about setting priorities and determining what is most important in a community? Everything is important. If a program is slashed, it has repercussions on another program. If education is prioritized, another area needs to be slashed, and this may be linked to education.

The same thing happens in nature. If you cut all the trees in a forest, all the animals will disappear. If we set a priority on protecting animals, and in particular squirrels, they will not be able to survive if we cut down the forest. The same thing happens at the community level. There is a serious risk of slashing just about everywhere. This method has not worked in Prince Edward Island. We do not even know how long we will be able to keep our employee on, because we have had our funds cut by $15,000 to $20,000. We, the members of the Fédération des parents de l'Île-du-Prince-Édouard, feel that we come first. We represent parents and the future.

I should add that Heritage Canada is the main funder of the Fédération des parents de l'Île-du-Prince-Édouard. Education is not easy to sell, even though everyone appears to agree that it is important.

And yet, we need to be able to operate in a stable manner if we are to be able to focus our efforts on the work to be done. The Fédération des parents de l'Île-du-Prince-Édouard has many achievements to its credit. However, many of the projects begun need follow-up action. We are working to conduct all sorts of excellent projects, but we do not have the money to continue them all. It comes back once again to the Canada-community agreement.

We have also been forced to ask our volunteers to shoulder more responsibilities. It is becoming increasingly difficult to find new volunteers because the workload is so heavy. It is therefore often the same people who wear different hats on a variety of committees. Our volunteers are exhausted. Another factor that does not help is that people have the impression that our governments have abandoned us.

I would like to add that we learned this morning that we would be able to take our case before the Supreme Court of Canada. Over the next few minutes, I would like to discuss the Court Challenges Program. We are certainly lucky to have the support of the Program to take our case before the courts. However, the funds available are inadequate to pay our lawyer's fee. The obstacles we will face in having our constitutional rights recognized and respected appear to be boundless. Our lawyer, Robert McConnell, will never be properly paid for all the work and time he has devoted to our efforts to obtain a French-language school in the Summerside region.

As you know, we will be taking our case before the courts. It is difficult to believe that we have to go all the way to the Supreme Court of Canada to get a French school in the Summerside- Miscouche region, the very place where the first World Acadian Congress was held and where the Acadian flag was designed. And to think that today, in our beautiful country of Canada, we are forced to go all the way to the Supreme Court of Canada to get a school! Parents say that this is pretty sad.

I thank you for your presence among us today. I hope that this exercise will yield concrete results and that it will enable you to have a better understanding of what life is really like for Acadians in Prince Edward Island.

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In conclusion, there is still a great deal of work to do. With young islanders not having access to the same services young Canadians have in other provinces, it is difficult to speak of growth and development. What can we say about equal status, except that it is still a long way from becoming a reality in Prince Edward Island.

A final note is that 20 November is Child Day.

We have not lost hope, although after working as volunteers for so long in this area, we sometimes become more and more discouraged. The government appears to have all sorts of action plans and projects. Although Acadians are better accepted in Canada, there is always the risk of assimilation because they are not given the tools they need to survive. A hundred years ago, an Acadian writer from Rustico, Henri Blanchard, wrote that he was saddened that Acadians had never been accepted as a people, as Francophones, by the Anglophones of Canada, but that at least they had been able to preserve their religion and their language.

Today, we are better accepted, but we are not given the tools we need to survive. In a way, it was easier to preserve our culture 100 years ago, even though there was less money. In today's world, it is impossible to survive where we are without money or jobs. We cannot continue to live the way we did 100 years ago. The ground rules have changed. The tools we need require money. We need to find a better way of determining how funds are to be distributed to us. We should not have to spend all our time on our knees. We should be able to set up programs and have the money needed to keep them going.

Thank you very much. If you have any questions, I would be happy to answer them. In Prince Edward Island, where assimilation is a threat that has now achieved a level of 50 to 60 percent, action is urgent. Thank you very much.

The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Robichaud. I will do one thing for you: I will pass on your brief to the chairs of the House of Commons Heritage and Languages Committees. Many of the points you have raised fall to a great extent within the terms of reference of these committees. This will not, however, prevent us from discussing further with you the points you have raised and from asking questions. These other committees may, however, be a better forum than the Finance Committee to present your claims. I nevertheless admit that I can see the connections between the questions you have raised and our mandate.

Mr. Ulysse Robichaud: Yes, I agree, but without financial support, we will not be able to pursue our projects. We have identified a host of things. We have done good work, but the projects...

The Vice-Chair (Mr. Nick Discepola): Things always take money.

Mr. Ulysse Robichaud: That's it. We were placed in this situation, in this system. We are not the ones who placed ourselves in the system.

The Vice-Chair (Mr. Nick Discepola): All right.

Mr. Ulysse Robichaud: Thank you.

[English]

The Vice-Chair (Mr. Nick Discepola): We have Dr. Rosemary Henderson from the Medical Society of Prince Edward Island. Welcome.

Dr. Rosemary Henderson (President, Medical Society of Prince Edward Island): Thank you very much, Mr. Chairman, members of the committee.

I represent the Medical Society of Prince Edward Island, which is a provincial division of the Canadian Medical Association. Our mandate is to provide leadership and representation for physicians and to promote high standards of health and health care for all Islanders. We are pleased to have the opportunity to participate in this consultative process.

We support, as do the majority of Canadians, the principles of a strong, publicly funded health system, as described in the Canada Health Act. We have grave concerns about the sustainability of such a system in today's fiscal environment. As the committee is aware, there has been a cumulative $45.5 billion withholding of scheduled transfer payments from the federal government to the provincial and territorial governments since 1982. In Prince Edward Island, between the 1995-96 and 1997-98 fiscal years transfer payments for health decreased by $32.9 million approximately.

At the same time the health budget was being cut the province embarked on health reform, the aim of which was to create a seamless health system that recognized and used the determinants of health to focus on health promotion and illness prevention, while providing appropriate accessible and sustainable health services to Islanders. In the minds of the public and many health professionals, health reform became synonymous with cutbacks. Some of the more worthwhile goals of health reform have not been realized because of this fiscal sabotage.

While the dual hit of reform and budget cutbacks did indeed spur some needed changes to the health system, the efficiencies that were possible, at least within the realm of political and fiscal reality in this province, have long since been accomplished. And they have left the system under severe stress. Physicians have difficulty accessing hospital beds for patients who are acutely ill. The bed occupancy rate in the medical surgical units at the island's largest hospital is over 95%. This means that the cancellation of elective surgery is a common experience and that we have no flexibility to cope with the conditions of increased demand that arrive periodically, such as happens with the annual flu season.

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There are too few nurses in hospitals and they are caring for patients who are sicker than ever before. There are insufficient resources in the home care and long-term care sectors to offer the level of care the public deserves. Some Islanders are unable to find a family doctor. Waiting times for certain consultant services, operative procedures, and diagnostic tests are too long. Cataract surgery and major joint replacement surgery, for example, are booked up to one year in advance here. One of the orthopedic surgeons was telling me just the other day of a young man of his, a 50-year-old gentleman, who was self-employed, who owns his own construction company, who has been off work for a year now waiting for his joint replacement surgery. What is the effect on the local economy of that gentleman's illness and disability?

Diagnostic testing procedures such as barium enemas are booked up to two months in advance. If you're being investigated for rectal bleeding, which may be caused by cancer, that's too long to wait.

Aging infrastructure, aging staff, and an aging population will only make this situation worse. P.E.I. has a relatively old population compared to the rest of Canada. People aged 75 or greater made up 6.1% of our population in 1996. It's estimated to rise to 6.4% this year and 6.5% in 2000. The pressure this will exert on the system will be significant. Many of the problems this population experiences are those with which we are already experiencing difficulty.

Ophthalmologic problems such as cataracts, degenerative joint disease requiring replacement surgery, cardiovascular diseases such as heart attacks and strokes, and dementias and cancers will all become increasingly common.

Accordingly, we endorse the recommendations of the Canadian Medical Association, which were presented to the Standing Committee on Finance on August 31 of this year. Briefly, the aim is to stabilize health care funding and to create a time-limited, transitional fund that would allow an element of renewal in the health system.

It is therefore recommended:

(1) That the federal government introduce a health-specific portion of cash transfers to the provinces and territories.

(2) That in addition to the current level of federal cash transferred to the provinces and territories for health care the federal government restore a minimum of $2.5 billion in cash on an annual basis to be earmarked for health care effective April 1, 1999.

(3) That beginning April 1, 2000, the federal government fully index the total cash entitlement allocated to health care, taking into account factors such as population growth, aging, epidemiology, current knowledge in new technologies and economic growth.

(4) That the federal government establish a one-time health system renewal fund in the amount of $3 billion to be disbursed over the three-year period beginning April 1, 1999, for acute care infrastructure support, community care infrastructure support, to support Canadians at risk with respect to pharmacotherapy and medical-device acquisition, and for health information technology.

We also additionally endorse the recommendations of the CMA with respect to tobacco taxation policy, tobacco control program support, the GST, RRSPs, non-taxable health benefits, and health research in Canada.

The Medical Society of Prince Edward Island urges the federal government to reinvest in the health care sector. We must regain our pride in our publicly funded system. We must continue to strive for an efficient, effective, and sustainable system. But above all, we must have the resources necessary to care for our patients properly. And we are willing to join with the public, with other health care providers, and with the provincial and federal governments to ensure that this happens.

Thank you very much for your attention.

The Vice-Chair (Mr. Nick Discepola): Thank you, Dr. Henderson.

I'd like now to turn to the P.E.I. Advisory Council on the Status of Women, Ms. Sharon O'Brien, please.

Ms. Sharon O'Brien (Chair, P.E.I. Advisory Council on the Status of Women): The P.E.I. Advisory Council on the Status of Women is a government agency mandated to advise the provincial government and to help develop public awareness about issues relating to the status of women in Prince Edward Island. Established in 1975 by an order in council, the advisory council now operates under full legislative standing as set out in the 1988 P.E.I. Advisory Council on the Status of Women Act.

At arm's length from the provincial government, the council reports to the P.E.I. legislature through the minister responsible for the status of women, but retains its right to publish or comment on issues without ministerial consent.

The advisory council is dedicated to equality and to supporting women's full and active participation in the social, legal, cultural, economic and political spheres of life. To work toward this goal, the council engages in a wide variety of activities that help to monitor issues of concern to women, and to develop public awareness about issues affecting the status of women. The advisory council's mandate includes recommending legislation, policies and practices that will promote equal opportunity for women and improve the status of women.

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The advisory council is comprised of nine volunteer women appointed by the executive council of P.E.I. council members, along with support staff persons, ensure a continuing liaison with women's organizations and women in their communities. Council meets regularly to discuss and deal with numerous and varied issues of concern to Island women. The advisory council is not mandated to deal with federal government issues; however, federal policy issues impact directly on Island women. Although there are many issues that we could address today, we will focus briefly on the following four issues: a government agency to facilitate family dispute remedies; accessible and adequate family law legal aid; pay equity; and increased funding for women's programs.

Establishment of family dispute resolution agencies across the country is a positive response to the difficulties faced by families upon marriage breakdown. A family dispute resolution agency should be created in each province to assist women, men and children to negotiate through the steps to resolving custody and access and other family issues. This agency would serve as a first point of entry for case assessment and referrals, and would act as a clearing house for up-to-date information on programs and services available to citizens.

The development of the family dispute resolution agency could follow the maintenance enforcement system in place today. The maintenance enforcement system of Canada was initiated under the leadership of and with funding from the federal government. It was designed and delivered by provincial governments, depending on the needs and resources of the province. The family dispute resolution agency could be based on the maintenance enforcement model, and could act as a clearing house for information and resources available in areas other than legal issues.

Our recommendation is that family dispute resolution agencies be established as a first point of entry for women, men and children upon family unit breakdown, for information, assessment and referrals for legal and non-legal remedies.

Turning to legal aid, the legal aid program in Prince Edward Island provides adequate coverage in criminal cases but very little for family law cases. In divorce cases, except in exceptional ones of immediate threat of violence, Islanders are not eligible for any family legal aid. Welfare recipients get access to a government lawyer who will help them get child support payments, although there is a waiting list of hundreds and the delay can be from months on up to a year.

Untold numbers of Island women each year—and men in some cases—are without child support payments from their ex-spouses, without proper separation agreements, without satisfactory visitation arrangement, and even without custody of their children, all because they can't afford a lawyer to access legal remedies. Where legal financial need is demonstrated, legal aid should be provided. Our recommendation is that the federal government implement a cost-sharing provision for legal aid costs in family law cases. This provision should be the same for family law cases and criminal law cases.

On pay equity, it is no longer news to anyone that women in P.E.I. and Canada earn 72¢ for every dollar that men earn. The truth is, women and women don't usually do the same type of work, and men's work is better-paid. It is in this context that the recent landmark decision at the Canadian Human Rights Tribunal on pay equity was an historic victory for women workers. In P.E.I. there are more than a thousand individuals, mostly women, who would be affected by the recent ruling. These women are our sisters, mothers, neighbours and friends. They are often single parents who are not making ends meet with their current salaries. As a reality check, these low-income women would be returning a good chunk of the money they have been awarded back to the federal government through taxes.

Island women need to be reassured that the federal government is committed to gender equality through compensation to those, mostly women, who have experienced discrimination under unequal employment practices for decades. We know that if the government accepts this ruling and sets the national standard for all employers, all Canadian men and women and their children will benefit. Our recommendation, therefore, is that the federal government honour the pay equity decision of the Canadian Human Rights Tribunal.

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On funding for the women's program, funding must be increased in order to sustain the ability of equality-seeking women's groups to do research, undertake public education, provide services, and affect government policy development at the national, provincial, territorial and local levels. The women's program is an essential component of a broad strategy of policies, programs and other initiatives directed at women. It should be understood that the women's program plays a singular role in encouraging and sustaining the ability of women's organizations to do research, raise public awareness, provide services and affect government policy development on equality issues.

The advisory council urges your government to ensure that women in Canada can participate fully in Canadian society by concretely supporting the means through which their voices can be heard, and by which their work in equality-seeking organizations toward social, economic and political justice is sustained. Our recommendation is that the federal government increase the allocation of funds in the 1999 federal budget to the women's program.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Ms. O'Brien.

I'd like to continue with—

Mr. Paul Szabo: Just for clarification, Mr. Chair, could Ms. O'Brien tell us specifically what the women's program is that she's referring to?

Ms. Sharon O'Brien: It's under Hedy Fry's—

Mr. Paul Szabo: The status of women program.

Ms. Sharon O'Brien: Yes.

The Vice-Chair (Mr. Nick Discepola): Thank you for that point of clarification, Mr. Szabo.

Continuing with the P.E.I. Literacy Alliance, with us is Ms. Dianne Morrow. Welcome.

Ms. Dianne Morrow (Executive Director, Prince Edward Island Literacy Alliance): Thank you. With me are Liz Nimmo, the chair of the alliance, and Lillian Mead, an adult learner representative on the alliance board. I'll give the five-minute overview, and they look forward to making their contributions during the discussion afterwards.

Thank you for the opportunity to present our views to you today. The P.E.I. Literacy Alliance is an umbrella group with 28 organizational members, all with an interest in literacy issues—and I believe our brochure was circulated with our brief. We want to impress upon you the importance of the federal government not just maintaining, but increasing its involvement in those issues.

The International Adult Literacy Survey, which is known as IALS, was carried out by Statistics Canada and the Organization for Economic Cooperation and Development in 1995, with follow-ups in 1996, 1997, and ongoing. Those surveys clearly show that having a literate adult population is an essential precondition for economic growth. IALS makes it clear that having strong literacy skills is a prerequisite for meeting the challenges of the new economy.

Before I briefly refer to what some have called the shocking statistics on adult literacy from IALS, I will clarify what we mean by literacy so that you understand what those statistics are measuring. Literacy is more than the ability to look at letters and sound out a word. That process is decoding. Speaking as somebody who wishes she were bilingual, I can decode some French, but that doesn't mean I understand the meaning of the sentence. Decoding is vital, but it's not the whole picture by any stretch.

In the IALS survey, “literacy” refers to the skills and knowledge needed to understand and make use of print information. A standard example includes being able to understand and use the dosage instructions on a medicine label. A mother dispensing medicine for her child has to be able to read that label. More and more, people need to be able to handle the automated kiosks such as the ones you see in banks or at the Canada Employment Centre in order to find out information that will help them get a job. Reading a telephone bill or many other bills can become more and more challenging. That's a document kind of literacy that's very specific and challenging. There's also the issue of communicating with your school—reading a letter sent home by the child's teacher or writing one to your child's teacher.

Bearing in mind this functional definition of “literacy”, the IALS tells us that 50% of Canadians are not comfortable with reading. Actually, it's 48% for Canadians on average, but here in Prince Edward Island and in eastern Canada it's 50% or more. As you go from east to west, literacy levels rise; Newfoundland appears to have the lowest levels of literacy.

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To indicate how these figures break down, 22% of Canadians aged 16 and older have profound difficulty handling the basic literacy tasks that are encountered in everyday life. Fully 60% of all social assistance recipients in Canada fit into that category. An additional 26% of Canadians have some difficulty with literacy tasks if the information contained in print is unfamiliar or if the material is not carefully laid out and easy to read. By that, I mean that the text is too dense or too small, or the sentences are too long.

Looking at the data in another way, the statistic that may shock you the most is that only one Canadian in five has the highest levels of literacy skills. Those are the kinds of literacy skills required to perform effectively in knowledge-based jobs. By “highest literacy levels”, we mean the ability to integrate information from a variety of print resources to solve complex problems.

Here in Prince Edward Island, an exciting adult literacy strategy called Tough Challenges, Great Rewards was launched on International Literacy Day, September 8, 1996. It was launched by Senator Joyce Fairbairn—who you would all know as a champion of literacy—and by then Premier Catherine Callbeck. That document was produced through a provincial committee that was chaired by the Department of Education. It involved representatives from other government departments, as well as community-based groups such as the P.E.I. Literacy Alliance. The goal of that strategy is to make adult literacy accessible and affordable to all adult learners in P.E.I.

I'm just going to jump over some of the brief because of time. I'll highlight the issues that we see flowing from that laudable goal.

One of the key issues for adult literacy education is the need for an environment that provides stability for ongoing programs and allows for innovation. I've heard others here mention already today how debilitating it is for underpaid staff to constantly be seeking piecemeal funding for little projects. What is really needed is ongoing, sustained funding for a successful program. The reality in adult literacy education programs is that they're run in an ad hoc way because there is not enough funding. A learner may take a twelve-week or, if lucky, a twenty-week program and then have to wait six months or a year before another one is available. This piecemeal approach has obvious drawbacks, both for the learners and the instructors.

The second issue that I'm highlighting is that funding from HRDC cannot be used to help run ongoing literacy programs for adults. We understand the fact that education is a within the provincial jurisdiction, particularly kindergarten—which we don't have here—and the grades one to twelve education system. But there is no adult education system that parallels the school system, and we've seen many excellent federally funded pilots just come to an end because the money to carry them on is not available anywhere else. It's not available provincially, so we see busy literacy workers expending energy to create a new spin for a short-term proposal over and over again in order to meet the ongoing learning needs of adult literacy learners. You can appreciate that if you're starting at a grade three or grade four reading level, a twelve-week program isn't going to get you very far along. So we question why federal funding can't be sustained for projects that prove themselves to be successful for learners.

Our third issue is that over the past few years here on P.E.I., largely through community initiative, eleven learning centres scattered across the island have developed. Some of them are in very tiny communities, one of them being in the Knights of Columbus hall on Palmer's Road in West Prince—and it's also the bingo hall. Our communities are providing many in-kind contributions to those centres, from the volunteer boards to the free heat, light and space, but they can't pay coordinators' salaries. Without a paid coordinator, the outreach to encourage people to come in and then to keep the place open once people discover its value doesn't take place. So that's an issue.

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The fourth one is the devolution of training dollars raises many concerns for literacy learners. The training dollars have devolved from being entirely handled by Human Resources Development Canada to being managed by a co-managed model here in P.E.I. The provincial government and the federal government have a joint committee responsible for implementing the labour market development agreement.

We know it's a complicated process and we know the skills, loans, and grants subcommittee of that process is working on how the changes affect learners. I believe in July of this year individuals will obtain vouchers to purchase their own training, and the purchase of blocks of seats, which has always been done in the past to create classes people could attend if they were eligible by being on EI, will end. It means the individual will have to choose where he or she takes the academic upgrading. Particularly for people with literacy issues, trying to sort that out and figure that out is quite a challenge.

Because there won't be block purchases of seats that would allow a well-trained service to exist, we fear there might be more short-term, piecemeal programs and even less stability and predictability than there is now. We have three simple solutions and here they are.

We suggest the decision makers broaden the mandate of either the National Literacy Secretariat or Human Resources Development Canada to include ongoing funding for proven projects that are having a positive impact on their communities' adult literacy levels. The work the National Literacy Secretariat has done is extremely valuable and needs to be continued. In addition, literacy programs in P.E.I. and across Canada—and I sit on the national board and I hear this all across the country—desperately need longer-term support for their core work.

The second solution is to provide a block of funding through the labour market partnerships program to sustain learning centres. These centres are quite different from institutions that deliver only 12- or 20-week programs. They are community based and work to create long-term change in the community. They use a flexible drop-in service as well as group programs and flexible hours. It's much different from a learner getting a voucher for a short-term program.

Most learners using those centres won't be eligible anyway if they are not on EI. There are unmet needs. These centres for the first time have been able to provide adult upgrading at no cost, in the daytime or on the weekends, for people who need it. So a block of funding through the local labour market partnerships program would be helpful.

The third solution is, despite what Minister Martin said earlier this week to you, we certainly hope some of the surplus will be earmarked to create ongoing programs for adult literacy learners.

In conclusion, spending a portion of that surplus on such a basic critical need would be an investment in Canadians who need it most. To significantly increase Canada's literacy levels, the federal government must go beyond short-term solutions and make a longer-term commitment. Canada will pay a price for its literacy problems; the question is how. Either we invest in adult literacy now in a proactive way, or we pay later—and we're paying now—in terms of higher costs for social assistance, unemployment benefits and other forms of support for people out of work.

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We're paying now in terms of the higher costs associated with accidents and health problems that are linked to low literacy levels, and in terms of the lower levels of productivity in the workplace, which research shows are also associated with low literacy levels.

Thank you for meeting with us today. We hope you'll seriously consider our points.

The Vice-Chair (Mr. Nick Discepola): Thank you very much for those points, Ms. Morrow.

I will now ask Ms. Mary MacNeil to continue, and ask Ms. O'Brien if she wouldn't mind giving her microphone over to Dr. Heider. Thank you.

Welcome, Ms. MacNeil.

Ms. Mary MacNeil (Regional Representative for Prince Edward Island and New Brunswick, Public Service Alliance of Canada): Thank you.

I'm representing the Public Service Alliance of Canada and the group I'm representing is the federal employees. We have other members in other lines of work.

The federal employees have not had a negotiated collective agreement since 1989. In 1991, 155,000 employees went out on a legal strike. When the government failed to produce a fair and decent contract, these employees were legislated back to work.

We've seen huge transformations in the workplace at this time due to technological change. Reorganizing and restructuring are the norm in these offices. To accommodate this, the government legislated away our reasonable job offer for many alternative delivery initiatives.

In 1993, with the new government came new promises. Instead, they got a four-year extension on a wage freeze right up until 1996, which cost alliance members thousands of dollars. Collective agreements were rolled back again when the government suspended increments.

Employees are living through wage freezes, suspensions of collective bargaining and gutting of the public services. Three years ago the federal budget announced they were going to cut back 45,000 government employees, and the numbers quickly rose. They're now up to over 55,000. We also have the outstanding pay equity issue.

At the same time, we're seeing senior executives receiving up to 19% in raises, and bonuses of up to $12,000 a year. MPs voted themselves an 8.4% raise and doubled their housing allowance. RCMP received a 12.85% raise. The military received raises of 9.4%. Judiciary received 12% raises. Senators, in addition to their salaries, gave themselves a housing allowance of $9,000 per year, plus $181 per day tax-free just to show up for work.

Meanwhile, I don't know if anybody realizes that negotiations have broken down with the alliance. Their offer was very strings-attached, with more concessions. It worked out to just over 1%, what they're offering government employees.

The concern I wish to present today, however, is one that as a representative I find quite alarming. I deal with federal employees every day in the coast guard, penitentiary services, Veterans Affairs, Revenue Canada, and Agriculture Canada. The concerns the employees are bringing to me are that they are working much harder and they're under very stressful working conditions. When those 55,000 employees left, the work didn't leave with them. Where there were three and four people doing a job, now there's one person.

Most of the operating budgets have also been cut, as you know. There are insufficient funds and dangerous work situations.

The move to agency status, which came through the last federal budget, has left workers with a lot of concerns about their futures, and the fear that comes along with the agency is privatization. They seem to be getting a step closer to privatization.

The same people are taking home less pay than they did in 1991. This is due to wage freezes, as I mentioned, and the increase in deductions of Canada Pension Plan and EI. I'm seeing actual pay stubs showing they are making less money than they made in 1991.

Morale is at an all-time low. Food inspection, airports, parks, and revenue are all up for sale.

We feel the responsibility of the government is to ensure the safety and security of the country. There are very definite responsibilities around the environment, revenue, veterans affairs, agriculture, protecting our border crossings, coast guard, national defence and others.

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However, the comments the workers are making to me are that the government is being hypocritical, with the pay increases to the hierarchy but not to them. They're being very neglectful by dismantling government services. They're putting profits, cost recovery, and privatization before safety by selling our airports and possibly dismantling the coast guard functions. We already lost millions out of the coast guard when they put them with fisheries.

There will be a $55 million cut to the coast guard before next April. On P.E.I. alone they're talking about the buoys being pulled out. Search and rescue and our environmental response team may be out of P.E.I. We don't know where the $55 million will be cut from, but that's one of the possibilities the employees have already had a hint of. Search and rescue I guess will be out of Halifax.

There are predictions of more tragedies in the air, sea, food safety or the environment. I hear about them on a daily basis. Employees give me little bits and pieces of what's happening in the workplace and what they can foresee. Whether it's the coast guard and they talk about helicopters...I can go on and on. Most of their predictions, I'm sorry to say, are coming to reality.

The government's reputation is now of a mean-spirited employer who is disrespectful to its employees and above the law by ignoring human rights.

We know the upcoming budget will not be able to meet everybody's needs. However, a halt to the devolution, downsizing, and destruction of government service should be a priority. We can't take any more cuts.

The concerns the employees have asked me to present today are around privatization and contracting out. These are not the most efficient and effective ways to do business. They are merely ways to appease businesses and to make money and profit on food inspection. For example, by privatizing food inspection jobs, industry will be inspecting their own products, and we just know that doesn't work.

We only have to look at Britain and what privatization has done to their water system. That's a very good example of why we shouldn't be going that way. Mad cow disease is an example of what can happen with privatization.

Employees of the federal government are asking for respect for their collective agreements. These are legal agreements. They want a fair wage increase. They're only asking to keep up with the cost of living. They want respect of their human rights by honouring the pay equity tribunal. They want to give Canadians the protection and safety they deserve over food, water, fisheries, borders, revenues, veterans, Canada Pension Plan, old age security, and employment insurance. These are all essential services and are good for all Canadians.

We hope to see a budget that reflects the services we need as Canadians, respects our human rights and legal agreements, and is fair to workers. Federal employees are hard working and take their roles and responsibilities seriously. They would like to be able to continue their jobs with dignity.

The Vice-Chair (Mr. Nick Discepola): Thank you very much. Thank you very much, Ms. MacNeil.

We will now conclude with the presentation from the University of Prince Edward Island, Dr. Lawrence Heider, please. Welcome.

Dr. Lawrence E. Heider (Acting President, University of Prince Edward Island): Thank you.

The Association of Universities and Colleges of Canada will submit a brief on the issues raised in the current consultation. The University of Prince Edward Island supports the statements in that document.

The statements in the document are supported by employment and salary facts for Prince Edward Island. Persons with university degrees have higher rates of employment and receive better income. This is extremely important to our future welfare.

Funding for post-secondary education must be given a higher priority if this nation wants full potential for and from its bright people. In this regard, two federal programs recently instituted are very valuable to post-secondary education. The Canada Foundation for Innovation and the small universities grants, for us particularly, will allow us to better serve our students and broader constituencies by developing our research infrastructure.

The millennium fund will help students access university education. This should help reverse downward university enrolment trends. University enrolments have declined by about 9% since 1992-93.

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The University of Prince Edward Island appreciates what the federal government has done for building research infrastructure and for its financial assistance to students. The federal government and the provinces must work together to increase core funding to universities.

In the past seven years the University of Prince Edward Island's core funding has decreased by more than 15%. This has happened in the face of increased costs due to moderate inflationary pressure and particularly by currency exchange rates.

Libraries are particularly hard-hit by current exchange rates, but all units within the university suffer. We have downsized faculty and staff numbers. We have not been able to maintain facilities in the manner that prudent judgment dictates. Having fewer faculty members means less opportunity for students. This needs to be reversed.

Our inability to properly maintain facilities leaves the problem for the future, and this should be addressed sooner rather than later. While new funds for research infrastructure are a great benefit, we have to maintain all facilities for all university needs if we want to be responsible to students in years to come. Reduction or even stability in core funding increases the pressure to raise student tuition and other university services user fees.

While no university administration want to unjustly raise tuition, responsible management must consider revenues from tuition and fees as a means of maintaining quality programs. Obviously, if total university revenue is static or falls, programs are eliminated or weakened. University self-support, including tuition and user fees, must provide larger proportions of the university budget when core funding is reduced. No responsible administrator wants a reduction in programs, program quality, or the breadth of offerings within a program.

What is the alternative if core funding declines and fees are not increased? Obviously, programs suffer. We need to reverse this trend of the last several years. Plans for long-term core support need to be developed and all levels of government need to work together toward this goal.

Some students who are capable of achieving success in university education are being encouraged to choose other programs. Students with sufficient work time are eligible for EI even when enrolled in community college or technical school programs.

This in itself is good. However, if a student capable of university education chooses another path simply because the choice results in short-term financial feasibility, the longer-term benefit of university education is lost not only to a person who makes such a choice, but to the long term welfare of Canada. There needs to be a way for students choosing university education to be as advantaged by federal programs as they would be if choosing another post-secondary route.

We appreciate this opportunity to comment. We hope our efforts with those of the others here today will encourage the federal government to help build opportunities for Canadians to have better access to university programs and rebuild a university system second to none in the world.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Dr. Heider.

We have approximately fifteen minutes left. I would ask members to be very specific. There are five members. I will give each of you ten minutes. That also includes the response time. Therefore, I would ask those who are responding to try to stick to the subject matter and be as precise as possible with getting your information across. Is that all right? So we'll do it that way, and we'll start with the Reform Party and Mr. Ritz.

Mr. Gerry Ritz: Thank you, Mr. Chairman.

Thank you, ladies and gentlemen, for your presentations here today.

Going to the literacy issue right off the bat, since we're limited for time, I'm wondering whether university professors notice a problem with literacy on entrance-level students. Is it showing up at that level, or are you lucky enough to get the one in five who's literate?

Dr. Lawrence Heider: We recognize that there's a problem with literacy. Toward that end, I might add that we proposed a program to HRDC. A consortium of the Memorial University of Newfoundland, University College of Cape Breton, and University College of Prince Edward Island are to work toward lifelong learning and the improvement of literacy.

Most of the students who come to us, because of the requirements for university entry, are literate. There are a few, fewer than 10%, who would have some difficulty.

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Mr. Gerry Ritz: Okay. Following up on that theme with Ms. Morrow, as for the causes of illiteracy, is it a lack of educational opportunity? Are the schools just not doing a proper job? Or do we go right back to technology and say the computer is doing it all and all the kid has to do is push the buttons? Are those all factors, or are there some other ideas that you have?

Ms. Dianne Morrow: I think there are many factors.

Would you like to speak to that, Lillian?

Ms. Lillian Mead (Adult Learner Representative, P.E.I. Literacy Alliance): I think there are all kinds of different factors. A big part of the problem is that about 60% of Islanders are at level one and on social service and unemployment. We need to put a little bit more money behind them so they can upgrade. They don't want to be on services, they want to be able to go to work. But they can't afford to do it, and they need support.

Mr. Gerry Ritz: You're talking about 16-year-olds in your presentation and so on. They're still in the school system. How do we nip it in the bud, so to speak?

Ms. Dianne Morrow: One of the most common ways to nip it in the bud is to support family literacy programs. I was really pleased to see that additional moneys were allocated to the literacy secretariat in the last budget. Family and workplace literacy became research priorities with that.

When you help parents who have literacy problems, that changes everything in the home. Then they're comfortable teaching the love of reading to their children. They read them bedtime stories. These are all the things that many people take for granted. It's a lifelong process.

Poverty is a huge reason. There are lots of issues. Some of it is the unmet needs of children with learning disabilities. Maybe the class size was too big in the schools and there's not the individual attention. There's a whole—

Mr. Gerry Ritz: But you're talking about four out of five people or students. Those are tremendous numbers.

Ms. Dianne Morrow: Level three, in the middle, is sort of the basic level of skills needed to cope with everyday tasks, such as reading the newspaper, dealing with bus schedules, and all that kind of stuff. Those at the top levels are the ones who are ready and able to handle the high-level jobs in the economy.

The International Adult Literacy Survey did a comparison. Canada is only in the middle. Look at places like Sweden and Iceland. These have just whole different cultures. Most workplaces have a library and day care within them. The children are in the day care, so parents can go at lunch time and share story time with their kids.

And the library is not just for kids. My husband went to a forestry meeting in Sweden and came home just blown away by the forestry workers in their logging shirts and all the rest of it going to the library and bringing home books for their wives, themselves, and their kids from the community library. It's just a whole cultural shift.

Mr. Gerry Ritz: Thank you.

The Vice-Chair (Mr. Nick Discepola): You've still got about another five minutes.

Mr. Gerry Ritz: Oh, good for me.

Ms. MacNeil, in your presentation you talked about dangerous workplace situations. Can you expand on that a little bit? What exactly do you mean?

Ms. Mary MacNeil: The one example I gave was the Canadian Coast Guard. They have grave concerns. As for examples that are out in the public, I get lots of examples of some employees are nervous about talking about. Agriculture right now has gone to an agency. They're talking about privatizing food inspections.

Mr. Gerry Ritz: But how does that make the workplace dangerous?

Ms. Mary MacNeil: As for privatizing food inspections, I gave the example of mad cow disease. That's a very definite example of privatization. When you privatize, you have to make money at it. When you make money at something, you cut corners or it's not the same service as they're getting right now.

They're already telling us that meat inspectors just on the island here used to be able to turn over the chicken and look at it. There are so many per minute. Right now, that has been doubled and tripled. So much is going by very fast.

They're getting major pressure. I know of even violent situations where when they stop a line because they notice something's wrong with meat. It's money. You're talking about money when you stop a line, yet what they're doing is hopefully protecting food that's going out there.

We've had dangerous situations in which a meat inspector had tires slashed and was thrown up against a wall. That's happening now with the increase. There's pressure on these companies now.

If you privatize this, you could actually buy off.... I guess the other concern is that you'll give them less money. They'll get less money through privatization.

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Mr. Gerry Ritz: You're talking assault situations. You get arrested for doing that.

Ms. Mary MacNeil: Yes, we deal with lots of cases where there are actually very dangerous situations. They are talking about privatizing potato inspectors. That might not affect the health and safety, but they think it will cause a lower standard.

You're talking about doing the same job that's done now to make money at it. Our research labs are crippled; they're closing down research labs, but they're also having some of the scientists doing cost recovery on the job. They have to do some private industry stuff, then when they finish that they can go and do the research on food safety. They have to do cost recovery.

Potato inspectors can turn down a farmer's field that is no good, and then they have to go to the farmer and put their hand out and say you have to pay me so many dollars for this. That's the situation; that's the reality.

The coast guard are a very grave example. I don't have to tell you about helicopters and what is happening right now in the last month. They are saying right now that they want to take the buoys out of P.E.I. They are saying they don't need them, since a lot of fisheries boats have radar on them. The high-class fishermen may have a radar on their boat, but the average fishing boats don't have radar. How are they going to tell where they are and where the bottom is? Our pleasure crafts don't have that. That's one of the justifications for taking them out, because some people have them.

Mr. Gerry Ritz: I have one more quick one.

Dr. Henderson, in your presentation you talked about how the medical society's willing to join with the public, other health care professionals, and of course the levels of government to ensure that this happens, your sustainable health care. What do you mean by the public and other health care professionals?

Dr. Rosemary Henderson: Exactly what I say. I mean the public who are either within the health system already, in terms of being what we would traditionally call patients, as well as other public interest groups that have an interest in health, and other health professionals—nurses, physiotherapists, occupational therapists, LNAs—the people who are actually working in the system providing the front-line health care delivery.

Mr. Gerry Ritz: Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you very much. It's great to see the discipline here.

Mrs. Redman, please.

Mrs. Karen Redman: Thank you, Mr. Chair. I too will be the soul of brevity.

I would like to ask Dr. Heider to talk about the investment we have made into research and development. I know that I have universities in my riding and they are very happy about that.

Earlier today we had a witness who talked about, in essence—and I'm going to paraphrase—the pollution of the corporate dollars into research and development. Yet it seems to me that there is a balance that we can reach. I'm just wondering, from an educator's point of view, how do we determine what the right mix is between the public money and the private corporate funding to make sure that the milieu is there for the proper research?

Dr. Lawrence Heider: I certainly can't give you a formula. We know that several things have happened. We know that some things may happen in the future. One of the problems over the past few years has been that funds for direct support of research from the granting councils has declined.

Now we see an initiative to infuse new money through what is being called Canadian institutes for health research, and we're certainly supportive of that effort. We hope it happens. That will put more money into biomedical health research, and we think that's very important.

One of the other things that has happened, as an example, within Agriculture and Agri-Food Canada, is that they have a matching investment initiative program now. That has taken some money from industry, which the department has matched. It has actually increased the amount of research done by that department.

At the same time that this was done by the federal government, some of the money that now goes to Agriculture and Agri-Food Canada from industry, because it's matched by the federal government and universities can't participate in that program, has been lost to universities. There was a double hit there because of federal action.

What is the best mix? In any university, we would like to have a very high proportion of granting council money, because we believe that's what we are best positioned to do. However, we do not neglect to try to get industry money for research contracts. I would think that at this point in time we are about 60-40 in the favour of industrial contract research. I would like to see us be at 80% grant funding for research, but that's only a personal opinion. I've never seen a study on that.

• 1320

Mrs. Karen Redman: Thank you very much. Actually, that's really what I was thinking. I appreciate that.

Ms. O'Brien, in your brief you talk about increased funding for women's programs. My question specifically is are you talking about the level of funding or the type of funding or both? Because there's been a bit of a change and I know that it got mixed reviews from women's groups.

Ms. Heidi Rankin (Acting Executive Director, P.E.I. Advisory Council on the Status of Women): I think it's both. I think that's a fairly simple answer.

The levels need to reflect the number of women in the population and the needs there, but also there has been a narrowing of focus. The research has been narrowed as well, and the sense among women in the community is that it needs to go back in the hands of women in the community. They need more say in the agenda, in what issues are important, at that level. So organizational funding or core funding, which used to be available for women's community-based organizations, now has been eliminated and now it's project-focused. What that does is limit the options.

Mrs. Karen Redman: I have a supplementary question, if I could.

You talk about accessing, or having an impact on the funding. Do you think the current mechanism for community women's groups to access that and have their voice heard is adequate, or do we need to look at this as well?

Ms. Heidi Rankin: It's been disappointing all the way along, even that the Canadian Advisory Council on the Status of Women was eliminated. Even issues around research and how that is done I think still needs a lot of discussion. It's created a situation where organizations have to sometimes focus on issues that might not be the priorities, either in the areas.... And participatory community research certainly is not valued or can't be incorporated the same way that it used to be. I think there is the big picture to be looked at again.

Mrs. Karen Redman: Thank you.

Dr. Henderson, you talk about health care and restructuring. There are a lot of things going on in health care, and it's definitely at the front of every Canadian's brain, I can tell you. We hear it right across Canada. One of the balances that we as a government have to decide is if we do specific funding or we put more money back in the CHST. I know that's covered in your brief.

One of the questions that begs being asked is if we put provisos or somehow colour-code this money as the federal government and hand it over to the provinces in the CHST, and they don't adhere to the five principles, or the six if we were to bring standards in, a logical stick that I would think the federal government could use is withhold the funding. Yet that only hurts Canadians and the medical system. As much as it seems appealing to somehow use that as leverage over the provinces, what we hear from many Canadians in different provinces is that the belief that the province will actually dedicate that to health care is sometimes suspect in their minds. So to withhold that funding is only hurting Canadians and the consumers, or the user patients, whatever you want to call them. So I don't find that really a satisfactory stick, yet I don't know where to go with it. So I'm asking you if you've given any thought to that.

Dr. Rosemary Henderson: I think this is certainly a legitimate concern. I would start by saying that I don't think the federal government has much of a stick unless it is supporting the health system strongly by means of federal transfer dollars in some fashion. You're certainly losing your ability to promote national standards when you withdraw funding or withhold funding.

I think to some extent that concern can be allayed by creating the health-specific proportion of the CHST payment, as I mentioned in my brief, and that it at least is an assurance that it is allocated to the health system. But I think the provinces have to maintain a fair degree of flexibility to be able to apportion those payments within the health system as they see appropriate.

For instance, in our health system, the way that we have the budget organized, social assistance is within that health budget. If our regional boards, in their wisdom, decide that this is where it is going to have the most bang for the buck sort of thing, then that's where some of the funding will go. It has to be a blend of allocation, at least into the area of health, and flexibility at the provincial level.

• 1325

Mrs. Karen Redman: Thank you.

I have three minutes. I would defer to my colleagues.

The Vice-Chair (Mr. Nick Discepola): All right, thank you very much. I will go to Ms. Vautour.

[Translation]

Ms. Angela Vautour: Ulysse, I would like to begin by thanking you for your presentation. I am Acadian and I understand your concerns about official languages. You are right to be worried. It is not only in New Brunswick that Francophone communities outside of Quebec or Acadians are trying to survive. It has been demonstrated that minority Francophone communities outside of Quebec are disappearing, for all the reasons you have given.

It was not thought that all these problems would arise one day from one end of the country to the other. We have serious problems and it is difficult to keep our country together. These problems show that we still have work to do.

I will certainly pass on your brief to the committee members. I believe that there are plans to visit the Atlantic provinces, and if so, it will be important for your name to be on the list of witnesses who appear. You should not give up on the case you are defending. I hope that recognition will be achieved for the fact that there are two languages in this country, that there are Acadians living in the Atlantic provinces and that they need to be respected.

That is my message for you, Ulysse. I am very happy to see you here. I have taken the liberty of using your first name because I know you well. We worked together in Prince Edward Island. It has been a long time since we have seen one another.

[English]

My next comment would be to Mary, who I want to address as Mary because I know her very well. Having been an employee and a member of the Public Service Alliance of Canada for 14 years, I understand the frustration. I certainly understand the frustration when you're looking at pay increases. And yes, members of Parliament did give themselves a raise. I had serious problems with that.

The Vice-Chair (Mr. Nick Discepola): Was it 8.4%? Would you explain how you got that figure?

Ms. Angela Vautour: Oh, maybe it is. It's two, two, and two and two.

The Vice-Chair (Mr. Nick Discepola): It's over how many years?

Ms. Angela Vautour: It's over four years.

The Vice-Chair (Mr. Nick Discepola): Okay. I thought it was 2%, so I wondered.

Ms. Angela Vautour: No, it's 2% per year for four years.

The Vice-Chair (Mr. Nick Discepola): Why didn't you say it was over 30 years? That way you could say it was 60%.

Ms. Mary MacNeil: I have it here for you. We'd take the same offer, though.

The Vice-Chair (Mr. Nick Discepola): Do you want to repeat that? You would take a 2%—

Ms. Mary MacNeil: It adds up to 8.4% over four years.

The Vice-Chair (Mr. Nick Discepola): So you'll take the same offer?

Ms. Mary MacNeil: I'm not on the negotiating team.

I know what the federal employees are saying. A lot of them said under 2% is too low, and cut out the strings attached. But I would make a good guess from talking to employees that if they were offered 8.4%, it certainly would be a far cry from what they're being offered now.

The Vice-Chair (Mr. Nick Discepola): All right, I'll let Mr. Massé know that.

Ms. Mary MacNeil: They never even came close to that; 1% is far from 8.4%.

Ms. Angela Vautour: Also, the pay equity was brought up a few times. Again, I don't understand why it's not settled—

The Vice-Chair (Mr. Nick Discepola): Could I ask a question on that, if you don't mind, Angela?

Do you view that, really, as a women's issue?

Ms. Mary MacNeil: Most definitely.

The Vice-Chair (Mr. Nick Discepola): Why?

Ms. Mary MacNeil: Fourteen years ago I was in a pay equity complaint as a nursing assistant, and there's no question in my mind. I was a nursing assistant. Male orderlies got hired off the street; I took 12 months of training and did a totally different job. The only reason, I was told 14 years ago, was that these men had families to support.

If you look at our classification system in the government, the Auditor General even said that it's sexist, biased, and antiquated, and the tribunal made the same statement. When you look at our classification system, a lot of women's work had no value for working conditions, but the men's work.... If a mechanic gets grease on his hands, that's a working condition; give him a point. The nurse has her hands in dirt, but she's in a white uniform; it's clean, and there's no value on working conditions. It's a very male-female problem.

The Vice-Chair (Mr. Nick Discepola): Do you agree, then, that it shouldn't be?

• 1330

Ms. Mary MacNeil: Yes, there shouldn't be a problem. We're working on changing our classification system. It's antiquated.

The Vice-Chair (Mr. Nick Discepola): Sorry, Angela, I took up some of your time.

Ms. Angela Vautour: I know the agencies, and I understand, being with Parks.

What are you seeing as a decrease in salaries as we go to agencies and alternate service delivery?

Ms. Mary MacNeil: The consumers agency is new, but we are saying it is taking government services and putting them at a further arm's length distance from the responsibility of government, both in agencies and crown corporations. It doesn't go to the minister in charge; you deal with that board or whatever.

So we're finding that there are two-year agreements. Over two years they are a little bit safe. Within two years there are already talks within those departments for further cuts, so there is going to be another big cut. What's happening in these agencies, for example the Canadian Food Inspection Agency, is that it has been only a year, and already they have studies that will be up in the year of how they are going to privatize some of the jobs. So we see why they went to an agency was to put it further away from government responsibility and then to do more cuts and privatize more. That's what I'm seeing, and I'm seeing in writing the same thing on privatization.

Ms. Angela Vautour: And the privatization would bring lower salaries?

Ms. Mary MacNeil: Definitely lower salaries. In the privatization in Goose Bay from National Defence, it's a British company that runs the civilian jobs there, and they contract it out to other companies. So in the safety and security at National Defence in Goose Bay, as I said, it's a British company, and some of them make a minimum wage. It is disgraceful. And because it's in Goose Bay, a lot of them had to take these jobs, with thousands of dollars drop in salary.

In the past year, just on P.E.I., to give you an example, some people in Fisheries took a $10,000 drop just to stay on the Island, to stay working for the same department, and doing sometimes the same jobs. Some of them changed their jobs slightly because of the cuts.

Ms. Angela Vautour: Going to the literacy problem, there was a question about what the factors are. I'm going to give you a personal example of my own family. We were very poor growing up. I remember my sister leaving grade 11 to go to work to help bring us up. So I see poverty as being a big factor. Would we say it's the biggest factor?

Ms. Dianne Morrow: I don't like to say anything without substantiated research, but it's a huge factor. My own father left school in grade eight to help out the family.

Ms. Angela Vautour: Even though we're talking about 16-year-olds, you have to remember that if the parents are poor, it just keeps on going.

Ms. Dianne Morrow: Absolutely.

Ms. Liz Nimmo: I think we should point out that 80% of Canadian seniors have very severe problems with literacy. I think this is probably a generational thing, where people left school early, which is clear in areas like agricultural communities where people would work on the farms, or fishing, and so on. There are many reasons for this problem, and I don't really think you can pin it down to one thing in particular.

Ms. Dianne Morrow: But you know, the scariest thing is that the Statistics Canada folks are going to do another study in the year 2002 to 2003 to see what progress we've made, but from what they can see, up to the year 2035 they are still anticipating.... It's a huge issue. I used to hope and believe 20 years ago that in 20 years it would be much better.

Ms. Angela Vautour: Is there proof that usually children being brought up in richer families have better education or can read better, or does it happen in both instances, as with one being brought up very poor?

Ms. Dianne Morrow: That's a tricky one. The island's people will skirt around that. I think there is a positive relationship.

Ms. Lillian Mead: I believe, with our population, almost half of us can't read. They want us to read to our children and make it fun. Well, it's not much fun if you can't read, and it's not much fun to listen to. I think if we had some money behind us.... You don't have money, you can't get the services you need.

I'm living through that misery myself, because I've had a problem and my child is having a problem. There are all kinds of problems related to low literacy. I've begged for money to get my child a little extra tutoring now, but in the past he has been very angry and lashing out and hurting people who are closest to him, his support. Now that he's beginning to learn a little bit more, he's happier. He said he was hurting us because he was angry and he had too many problems. Now he's learning to read and the whole family is kind of loving again, and this is what we want.

• 1335

So many problems are caused by low literacy. If we could only address that.... Without that help, there is no hope and it's going to get worse.

Ms. Angela Vautour: Am I out of time?

The Vice-Chair (Mr. Nick Discepola): You have about 30 seconds, if you want.

[Translation]

Ms. Angela Vautour: I would simply like to bring one fact to the attention of Ulysse, who spoke about the Acadians. When the boundaries of the district I represent were changed, part of the area where most of the French-language communities live was removed and added to a district that is mostly English. The culture is very different. The law, which aims at the protection of Acadians, was truly flouted when such decisions were made. Decisions like these need to be stopped in future to protect Acadians.

Mr. Ulysse Robichaud: All the programs and initiatives that the government puts on paper look good. But reality is what happens in the communities, and it is Acadians who have to suffer the consequences. The government has a poor understanding of our needs and has introduced programs that will not address them. They divide us, and end up dividing communities.

Our volunteers work very hard on excellent projects. We have accomplished interesting things, for example in the Tignish region, where most of Prince Edward Island's Acadians are. But we had to set some of these projects aside because it was decided that they were less of a priority. We are working on projects in the area, but we do not have the money needed to hire staff. As we speak, an attempt was made to establish a French-language kindergarten for approximately thirty students, but we don't have the money to buy the chairs and the desks. These are the sorts of situations we are confronted with. That is why we say that it's a matter of money. The responsibility rests with the Canadian government. If it wants this country to be bilingual, and is in favour of the development of two languages and two cultures, then it needs to understand that it has to do something. Otherwise, we will disappear. It may agree on these principles, but it does nothing. We will disappear from the map; and we'll become nothing more than folklore.

I feel that this is sad. The tourists who come here and who want to meet Acadians, and to speak to them and learn about their culture, will no longer be able to do so. Our culture is an asset to all of Canada, including from the economic standpoint.

Ms. Angela Vautour: We spoke of post-secondary education, but there also serious problems in our elementary schools. The other day, my son came home from school and gave me some cards for a $1,000 bingo game. He is in Grade 4, and he was going to play bingo in class and try to win $1,000. I have serious problems with that. The money collected should be used to buy school equipment.

Mr. Ulysse Robichaud: We, the parents, are the core, and if we disappear, the whole future of the Francophone community will disappear as well. Who else can the torch be passed to? We are going to be suffocated and we will die. Many programs have been started with reassurances that things will continue until the end of our days, but nothing happens after that to consolidate progress and make the future secure.

In Prince Edward Island, the Francophone school board is controlled by the provincial government. All of its financing comes from the provincial government and any new initiatives that it wishes to undertake must be submitted to the Department of Education. We established our federation because we believed that it was important for parents to be represented. We are not tied to the government; we are an independent federation.

One hundred years ago, we may have survived, but today it is impossible because of the existing government system. Carrying out any project today requires a great deal of money. While attempting to obtain a Francophone school in Summerside for the past two or three years, our employee has had to spend all her time in Court. We went to Court twice. We won our case, but the Court of Appeal overturned the decision. We now need to take our case to the Supreme Court of Canada. All our resources and all our staff have been spending all their time defending the Summerside case. If we abandon the fight, we will not have a Francophone school, we will be assimilated and that will be the end of it. It is really a test case to set a precedent. If we lose our case before the Supreme Court of Canada it will be the end of our Francophone schools in Prince Edward Island. That is why I say that it is a matter of money. At the moment, we do not even have enough money to pay our lawyer. We would like the federal government to recognize the urgency of our situation and to find simpler ways of helping us financially. The current system is much too complicated.

• 1340

Ms. Angela Vautour: That is why they say we have to begin by doing something...

The Vice-Chair (Mr. Nick Discepola): Angela, please do not interrupt Mr. Robichaud. Your presentation has already lasted five minutes too long.

Mr. Ulysse Robichaud: I'm sorry.

The Vice-Chair (Mr. Nick Discepola): I would like to clarify a fact that may have eluded Ms. Vautour, because she was not an MP in 1993, unlike most of us. Under the Canadian Constitution, the electoral boundaries of the various districts and the number of seats need to be reviewed after every census. Thus the number of districts went from 296 in 1993 to 301 in 1997. I admit, Ms. Vautour, that I know of no MP who has ever been satisfied with a readjustment of districts. A Bill was introduced to dispute it, but the House of Commons did not pass it. The way things are is not the fault of the Liberal government. The process was begun in 1990, and needed to be carried through.

Ms. Angela Vautour: I would like an opportunity to reply. I was simply arguing for the rights of Acadians and Francophones, who need to take their case to the courts. The fact remains that 35 percent of the district was cut away and the Francophone community is now represented by a unilingual Anglophone MP.

The Vice-Chair (Mr. Nick Discepola): But the government cannot prevent such situations from occurring. Elections Canada is mandated to set electoral district boundaries, based on demographic data, and I agree with this.

Ms. Angela Vautour: But they should be respected.

The Vice-Chair (Mr. Nick Discepola): We could equally well have taken steps and followed the proper procedure in such a case.

Ms. Angela Vautour: Yes, but it was not done.

The Vice-Chair (Mr. Nick Discepola): Mr. Szabo, please. You have 10 minutes.

[English]

Mr. Paul Szabo: I want to thank you all.

The Vice-Chair (Mr. Nick Discepola): You can take ten and Gary will take eight.

Mr. Paul Szabo: We'll take nine each.

I honestly believe process is important and it does work and influence. In our world of Parliament consensus is the issue, not who voted for what. It's what did the people say, how many times was it said and with what passion, etc. I think you've all done extremely well in terms of presenting your cases. It's very important. You should be satisfied and aware that we've heard you.

I was most moved by ALERT, because when you get frustrated, a little angry and maybe a little bit cross, it's not because you're angry, mean and cross by nature; it's because the issue is that important. It's obvious also that ALERT and maybe some other people read the Rosemary Speirs story in which she reported little bits of things.

What really happened there—and I actually asked the question that generated most of the story—was that I said maybe we should redefine, or define for the first time, what the poverty line is in Canada and abandon the Statistics Canada LICO, which is for instance about $16,500 for an individual in an urban centre. Rosemary Speirs suggested that Paul Szabo asked that planted question because they just want to lower the poverty line so you have fewer people living in poverty. What she didn't report was what I said afterwards. I said Canadians should understand that even if you reduce that poverty level from $16,500 down to $10,000, or something like that, the number of people in poverty would not go down very low because in Canada the majority of people living in poverty are getting less than $8,000 per year. That's the reality.

There are a lot Canadians who don't honestly believe there are people out there who are hungry and don't have shelter or the proper necessities of life. We don't realize how serious it is, because somebody set this mark, which seems to be pretty satisfactory. For a family of four it's $26,000 a year. There are people living on the streets in all of our communities. We have people in Ottawa sleeping on grates across the street from Parliament Hill. Every day when I walk home to this little shacky hotel I stay in, there are men sleeping on heating grates in the capital of our country.

I want you to know I told the Minister of Finance, and I've told a lot of people very publicly, that I believe addressing poverty in this budget is as high a priority as any. I believe that. It should be right up there with the health care system and any other priority. It's not that it should be the only one touched, but as we can afford to do things on certain fronts, it should not take a second space to any priority.

• 1345

Having said that, I want to share something with you, because I think it's important that we understand a couple of issues here—

The Vice-Chair (Mr. Nick Discepola): You've already taken six minutes—

Mr. Paul Szabo: That's okay.

The Vice-Chair (Mr. Nick Discepola): —so you may want to give him a chance.

Mr. Paul Szabo: Let me just quickly say, if we were to raise the personal exemption to the LICO level, it would be available to all Canadians. It would be a $2,500 a year increase in the pocket of a poor Canadian, and a $5,000 a year increase to the highest-income-earning Canadian. I don't think you want to do that. On top of that, it would cost about $35 billion. I think you probably wanted to say that maybe low-income-earning Canadians shouldn't start paying taxes until they've earned so much money, so it's more targeted to the low.

The second other point I want to make, so I can give you some time to comment back, is on deferred corporate taxes. This comes up a lot. I'm a chartered accountant by profession and I can tell you that other than corporations that are defrauding the government or cheating or whatever, corporations pay every cent they owe on their income tax returns. Their financial statements show a line called “deferred taxes”. Another name for deferred taxes is taxes that they will have to pay in future years because of what they've already done. The Income Tax Act says they can write off, for instance, manufacturing and processing assets 100% in the year of acquisition, whereas generally accepted accounting principles say you must write them off over five years. The fact that you get an accelerated write-off for tax purposes creates this deferred tax account. You should understand that deferred taxes are not owing today; they are owing in the future. It's just a notation. It's not one of your strong points here, but the rest of your stuff is bang-on.

The Vice-Chair (Mr. Nick Discepola): Maybe we should let them answer their own questions. You were getting into the habit of asking the questions also, so I was worried.

Mr. Paul Szabo: That's okay.

The Vice-Chair (Mr. Nick Discepola): Let's give them some time.

Mr. Paul Szabo: I'm sure they have something to say.

The Vice-Chair (Mr. Nick Discepola): Mr. Curley, please.

Mr. Brian Curley: I didn't want to make the body of our presentation a bunch of statistics, because maybe part of the problem is that when people like Paul Martin sit and deal with a budget, they deal with statistics and can forget about people, and that's who's really being affected. We may be wrong on some things or a bit off on them, but we gave you some examples of what's really happened to people.

I also want to comment on the literacy thing. There is definitely a relationship between poverty and illiteracy, and the National Anti-Poverty Organization did a study on that four years ago. There's a report on that available at NAPO in Ottawa, and it might be worth investigating. That's all, I guess.

Mr. Paul Szabo: Okay.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Szabo. Does anyone want to add anything else? Believe it or not, you still have a minute.

Mr. Paul Szabo: Mr. Heider, post-secondary education is extremely important. Children who get post-secondary education in Canada actually have an unemployment rate of 6.5% after they graduate, and Canadians with university degrees—in fact, as a whole—have an unemployment rate of 4.5%. Although I really hope everybody gets their shot, what concerns me more, quite frankly, is that Canada has, on average, a 30% high school dropout rate. These kids who leave school before they even get a high school diploma represent Canada's poor-in-waiting. How do you feel about that?

Dr. Lawrence Heider: I think your point is well taken, but I don't think post-secondary education should be looked at in isolation and I don't think literacy should be looked at in isolation. There is an entire issue of lifelong learning.

I came here as a representative of a university to bring that case to you, but I also support the case that was given here by Dianne Morrow about literacy. We have tried to work toward that and bring the university into assisting. I mentioned the Atlantic islands university program that we proposed.

We believe in lifelong learning. Post-secondary education, whether it's university or community college education or training, is a part of that. I wish we could keep more kids in school. If we kept more kids in school we'd get more kids into university. We'd have better literacy rates.

• 1350

The Vice-Chair (Mr. Nick Discepola): Thank you very much for the concise answer.

That now leaves us with Mr. Pillitteri, who has a habit of rambling on too. He assures me he will get through his questions very quickly.

Mr. Gary Pillitteri: Thank you very much, Mr. Chairman. I hope you do not interfere in my questioning or any of my colleagues over here, so I will take my full ten minutes.

First I want to make some comments on some of the presentations here. Mr. Szabo tried to correct someone about deferred corporate tax. There is also, in the same recommendation one, that the tax law exempting family trusts from taxation should be repealed and taxes should be collected. Taxes are collected on that. They only have a redeeming period of 21 years, but eventually all taxes get paid. That's one part.

Then you have another part here that money market speculators should be taxed. Anyone making money in the stock market does pay taxes. What you're probably referring to is the Tobin tax. Any transaction should be taxed, not the corporate. Anyone making money on the stock market does pay taxes.

Another point is transfer of money to branch companies. They're also taxed.

This is to Mary MacNeil, who made some comments about agriculture. That is more in my field, having been a farmer years ago before cost recovery was started. Cost recovery in all segments is an undue burden to the producer, yes, because eventually everything gets passed on to the consumer.

You made a remark about handouts. If potatoes are rejected...going back to it, he has to get paid. In the past producers went back and forth once, twice or three times and got the same inspection, and therefore the taxpayer was paying for something that was not really needed. But I also want to say that some of those jobs are not really worthy of the presentations they do. We had potato inspectors, fruit inspectors, vegetable inspectors, and they inspected the quality—if it was mature enough to go to the marketplace and not dangerous to the people who were to consume that product. A lot of those jobs within Agriculture Canada were being duplicated by the agricultural provinces; they had their own inspections and the federal government did its own inspections. This is not new to P.E.I. This has happened across the country. A lot of those jobs were really redundant. Eventually all of us taxpayers paid.

In today's society you're talking about meat inspectors and so on. We have the least worries in the world about our food availability and inspection, be it beef or poultry. Some of us will not eat American chickens, including me. If you only knew...their inspection is by the private sector down there. I do understand what you're getting at. But with fruit and vegetables, a lot of those jobs in inspection become redundant. Even though I'm in that field, I think cost recovery is acceptable because of the redundancy of those operations.

You also made a remark about—

The Vice-Chair (Mr. Nick Discepola): Are we getting to your question?

Mr. Gary Pillitteri: We're coming to my question.

You made a remark about the selling of airports and things that are happening. The federal government has not sold one airport. It's been given to the local authorities to manage. At least in my own area it was transferred to the local authorities, but the federal government still owns the property, and I think this is so across the country.

• 1355

Now here's my question. You spoke about pay equity, and you're saying it should have been paid. We have not received any raises and so on, and pay equity should be installed. On which amount should it be settled?

Ms. Mary MacNeil: It's simple. The federal government did a study from 1985 to 1989. They hired an American firm and paid them $1 million U.S. They did an in-depth study, and 4,500 jobs were studied. That was the methodology the federal government insisted on using, which used a lot of averaging. At that time the government didn't say go job to job and use these other methodologies. That was what they sold to us as a union. I was involved in that study. That methodology was used because of the vast numbers we're talking about. As I said, the government sold that to us and told us it was the only way to go and that the other one would be too expensive to implement. So that's the methodology.

The tribunal reviewed a lot of material over six years and said again the methodology was good. They added a few little changes, but it's very close to the methodology used. They have a methodology. The government in 1985 to 1989 found it to be good. The tribunal said it's the right methodology. With regard to this argument about other methodologies, there's a million reasons we can't go job to job, because it would cost the government a heck of a lot more money to start reviewing every single job. What the other one did was just an averaging. That's the argument. The methodology is fair.

It's very simple. The only thing that has to be done, and it can be done in a matter of a week or two, is to start printing the cheques.

Mr. Gary Pillitteri: In the Bell Canada and Muldoon cases they used a different methodology.

Ms Mary MacNeil: But the—

Mr. Gary Pillitteri: I'll just make a point, and then you can answer.

If we were to implement it with that methodology, with the $1.3 billion put on the table by the federal government into pay equity, it already would have been covered. The remark was made then that the private sector could go ahead and implement pay equity. The private sector has implemented pay equity. Personally, I think it's a matter of discussion and negotiations with unions, rather than the methodology used in settling the pay equity.

Ms. Mary MacNeil: I'd like to just clear up your Bell Canada comment. Bell Canada is in court over whether or not they should go to a tribunal. That's what the Bell Canada hearing is about.

We were in court in 1991. We won in court. The government took it to a higher court. We won that, and we went to a tribunal hearing.

Bell Canada has not put out any facts or figures. They talk about job to job, but they haven't put out all the study data we have. That hasn't even been started in Bell Canada. I think the Bell Canada argument is a very weak one. It doesn't have grounds. There are a lot of reasons. I could give you a document that will tell you why job to job doesn't work, and the government gave that to us to tell us years ago not to go. In the tribunal hearings Treasury Board never went in and said “This is what we propose”, because they know it's not good. That to me is a weak argument.

You mentioned food inspection. We have scientists who have made very grave comments. A lot of labs in food inspection have been closed down. It has happened across Canada. The federal government closed them down. The drug research lab has been closed down. So there are concerns around food inspection. There are fewer food inspectors. There are fewer border crossing people.

You have heard our concern about safety. We may be doing some of the same food inspections we were doing years ago, we may have a good track record, but there are fewer people doing the same amount of work. That's reason for any employer to have concern about safety. I'm talking to employees who are stressed out and tired and who are saying they have to inspect more in a minute than they had to do two, three, and four years ago. That's the health and safety issue. I realize what you're saying about potatoes and that. Business should also be concerned, because we want a good-quality product. But in the food inspection area there are safety hazards, and employees are saying it's coming to a head. It's starting to peak.

Mr. Gary Pillitteri: Could I just have another 30 seconds for my next comment?

• 1400

The Vice-Chair (Mr. Nick Discepola): You have 30 seconds, and this is the last comment.

Mr. Gary Pillitteri: If we follow the human rights tribunal's deliberations, it would be a minimum of $5 billion up to $7 billion in pay equity that would have to be paid out. Today we're only talking about a $3.5 billion to $4 billion surplus. I think the next budget would be in deficit if that's the road we're about to take.

Thank you, Mr. Chair.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Along that line, I would just like to clarify one presentation from Dr. Henderson. In your table on page two, the numbers didn't ring a bell with me. I thought they were rather startling numbers when you calculate the shortfall in health care, because what we're hearing is that health care is obviously a priority issue for Canadians.

As a parliamentarian, I often ask myself what is the ultimate expenditure that we should, as a country, invest in health care. When you see some representations that other countries are spending 9% or 10% of their GDP—which is usually a good measure, I believe—and we're spending 8% and we're getting much more bang for the buck than the others, I say to myself, “What should we be looking at as a government to arrive at an optimal amount?” It can't just be money all the time. It's got to be a balanced approach.

The first thing we implemented in the government when we had the opportunity was we invested back in health care. That was after the recommendation that was followed by the National Forum on Health Care. After I believe 18 months of study through specialists in the field, they said that you should put back $1 billion in funding. We brought it back to $12 billion; I believe it's $12.5 billion.

Now we're hearing representations throughout the country that this is not enough. We had a representation this morning that called for $5 billion extra spending over the next five years just in health care alone. In Ottawa we had representation, much like yours, that we should spend $2.5 billion additional a year.

When you give us comparative charts they can be misleading, because obviously the $39.5 billion shortfall is a starting figure. But you have to also include in your charts, which I believe you didn't—and that's where I give you the opportunity to correct it—the tax point value in the CHST transfers. And understand that the tax point value.... I mean, the cash entitlement was one thing, and if the federal government had continued under the old regime the cash entitlement would have dwindled down to zero. Then some of the issues Mrs. Redman referred to about having a whip or a stick so you could go after the provinces that didn't comply would have been.... Manoeuvring possibilities wouldn't have been there, because we wouldn't have had that stick.

So is it fair to compare? If I do the numbers and I also include the tax point value, then we get a different representation. It's no longer at $39.5 billion. Again, you're calling that over seven years, I believe. From my numbers, if you include the extra revenues the provinces get through tax revenues, that figure would be almost halved, to $19.6 billion. Does yours include the tax revenues or not?

Dr. Rosemary Henderson: Well, I just have to start off by clarifying that the $45.5 billion figure I actually quoted in my verbal representation obviously took into account the $30 billion from the changes in the EPS formulas back in the 1980s and early part of the 1990s up until the time the CHST was implemented.

With respect to your question around the tax point values, these calculations have been—you're correct—based on the cash entitlements. The $2.5 billion is based on restoring that cash entitlement to the 1995-96 level.

I would actually defer a discussion about the relative value of including your tax point values versus your cash entitlements, if you would permit me, to the CMA's director of economics, who is sitting in the audience behind me. I'm not an economist and I don't feel completely comfortable dealing with—

The Vice-Chair (Mr. Nick Discepola): No, but in your profession what I was trying to ask and draw out of you was what is the ultimate level? Are you saying that we should invest an extra $6 billion?

Dr. Rosemary Henderson: You know, really what I would say to you is not as opposed to $6 billion or any specific values. I would tell you that I think we should spend at an appropriate level to arrive at reasonable health outcomes for the populace. There are all kinds of economic measures you can put into place, whether you're talking about relating it to the GDP and so on and so forth as a traditional way of comparing and measuring. That's certainly one way of doing it.

I think you have to really look at how healthy your populace is, and I think you have to start looking at outcome measurements. That's one of things we are moving toward in health, and we haven't gone very far along that road. Just how healthy do you want your populace to be? What sorts of priorities do you want to put into place?

• 1405

The Vice-Chair (Mr. Nick Discepola): Gary.

Mr. Gary Pillitteri: I think you're putting figures out there, but why not? Most nations.... Right now we're spending almost 10% to GDP. The United States is over 16% and going up, and some European countries are at 6% or 8%. So if you're going that route, what ratio to GDP would you want to put out that Canadians should be spending on health care in Canada?

Dr. Rosemary Henderson: I'm not going to answer that question. How do you want to compare the health of Canadians versus the health of Americans, knowing how many Americans are not covered by health insurance? The health of the Japanese compared to the health of Canadians...?

Mr. Gary Pillitteri: We had a presentation about some other countries in Europe and how well they are doing. I heard of Switzerland, I heard of Sweden, those countries, and how well they're doing with the social programs. By taking those into account and using those figures, where would you want to be?

Dr. Rosemary Henderson: You're not going to be able to pin me down on that. Sorry.

The Vice-Chair (Mr. Nick Discepola): But that's the full debate, because what happens is you take a look at the abuse, the overuse of the system at times by Canadians. Maybe we should have more accountability. I often think that I should receive a statement on the medical system, much like a Visa statement.

We should be told annually, as Canadians, how much we've cost the health care system. We're not. As a result, we go to one hospital, one medical opinion, and we're not satisfied with that, so we go to a second, to a third. Each time you do that, you're putting extra pressure on the system.

What we're trying to assess is we could put up more money, but maybe there has to be a better accountability and better use of the money we have, a more efficient use.

Dr. Rosemary Henderson: I certainly will agree with you wholeheartedly there. Unquestionably, accountability is something that has to be worked on in the next years to come.

The Vice-Chair (Mr. Nick Discepola): Thank you very much. Thank you for being patient and for being concise to some of the members and to the guests who have been here.

We will now adjourn for roughly two or three minutes. Don't go away. Please don't leave the room. We will clear up and welcome our next guests.

Thank you to all again.

• 1408

• 1415

The Vice-Chair (Mr. Nick Discepola): Order. We're resuming the pre-budget consultation process under Standing Orders 108(2) and 83.1.

I'd like to now welcome, from the official opposition of the Prince Edward Island provincial government, Mr. Robert Morrissey, MLA and finance critic; from the P.E.I. Federation of Agriculture, Ms. Mette Ching, president, and Ms. Lisa Dennis; and from the P.E.I. Fishermen's Association, Mr. Rory McLellan and Mr. Donald Strongman. I welcome you all.

I'll start with my list. Maybe that's the best way to go. Mr. Morrissey, please.

Mr. Robert Morrissey (Member of Legislative Assembly of Prince Edward Island): Do you want me to begin?

The Vice-Chair (Mr. Nick Discepola): Yes, please. The format is that we'll have five or ten minutes for presentations, which will be followed by—

Mr. Robert Morrissey: I'm just concerned about where the rest of your committee is.

The Vice-Chair (Mr. Nick Discepola): I always start, because if I give them five minutes, as all politicians, they'll take fifty. Therefore, we'll start. Then when they hear the microphones on, they'll rush back. You'll see them come back.

Mr. Robert Morrissey: On behalf of the official opposition of Prince Edward Island, I want to thank you and the committee members for this opportunity to offer our views on the Minister of Finance's recent economic statement. As well, again, I want to thank you for coming to Prince Edward Island and offering Islanders the opportunity to pass on their perspectives to you and your committee.

As my time before the committee is brief, I will get to the point. In the context of national finances, our major concern as an opposition is the adequacy of funding for health care both at the federal and provincial levels.

Mr. Chair, it can easily be argued that Canada is one of the most successful nation-states in all of history. One of the key reasons for this success has been an historical willingness to gradually and effectively build on the key components of our caring society. There are several pillars that rest upon the foundation of Canada's unique sense of social responsibility. Those pillars are the health, prosperity, education, and capabilities of its citizens. It has been effectively demonstrated that these several pillars, health, wealth, education, and abilities, are interdependent; they rely upon one another.

In other words, Mr. Chair, if we shortchange our investment in our health care system, then we imperil the prosperity and capacity of our nation. Therefore, I firmly believe that a substantial investment in our health care system, an investment designed to bring medicare into the 21st century, is an investment that isn't isolated. In fact, our future wealth and success depends to a large extent on how well we approach the challenges associated with health care.

When listening to the finance minister's statement, I was particularly taken by the following words that related to the size of the economy: “Government spending on programs today is already at its lowest level since demobilization after World War II”. Mr. Chair, that was more than half a century ago, before medicare and before advances in medical science began to promote longer lifespans among our seniors. It was before immunization progress began to offer a growing confidence in the public health of our population. In the half century since the close of World War II, Canadians have embraced a health care system that promotes health, encourages wealth, and allows the capacity for increased education.

In our embrace of the medicare system, Canadians have also allowed for a price to be paid that is considered more than fair in the context of the benefits that accrue to us all. For that reason, Mr. Chair, I think Canadians are justified in their expectation of further investment in our health care system. I must take issue with the Minister of Finance when he says “We can't; we simply don't have the money now.”

Mr. Chair, we do have the money. This fiscal year, the Minister of Finance is projecting a $3.5-billion surplus, which is the first surplus recorded in nearly three decades. That money belongs to Canadians, to Islanders. When I listen to those around me, I'm left with the indelible impression that a great majority of our citizens want to see that money invested in health care.

• 1420

Mr. Chair, the inadequacy of federal assistance for provincial health care systems is well known on Prince Edward Island. The provincial government here, of which I am part, has consistently been unable to make ends meet. The result has been low morale among staff and a disheartening and growing lack of confidence among many Islanders. Consequently, a sad chorus of potential cuts or increased costs seem to always accompany any discussion of our health care system. And recently, our provincial government started what I consider to be a journey down a dangerous path when it introduced means testing for multiple sclerosis medications, something that has never been done on Prince Edward Island before.

However, while I disagree with the current provincial government's methods in budgeting, I do sympathize with their plight. There often isn't enough money. And in the context of bed closures and crowded hospital wards, the finance minister's discussion about the intricacies of global stock market pressures appears to us as distant and removed from our island reality as a mathematician's algebraic formulae are from a grocery list.

That said, Mr. Chair, I also recognize that adequate funding for health care also demands a mature understanding of government's social responsibilities. I certainly cannot expect this committee to explain how our provincial treasurer managed to squander an estimated additional $30 million to $35 million in unanticipated federal revenues last year. But again, the spending priorities of our provincial government are not of paramount concern to your committee.

Once again, Mr. Chair, I would like to quote the finance minister. I think the following words have a lot to say about this very issue, this matter of priorities:

Despite the problems of the day, we must never again allow short-term preoccupations to blind us to the long-term needs of the nation. The fact is, that's what governments have done all too often, neglecting the need for a consistent, long-term economic strategy—and it is Canadians who paid the price.

There are several items in that quotation. First, health care is not a short-term preoccupation, it's an essential item today. Second, the long-term needs of our nation are based on an effective health care system. Third, a long-term economic strategy should support the need for health, wealth, and education. That long-term strategy must focus on our nation's needs, not the concerns of money traders in Tokyo or New York.

Mr. Chair, to reiterate, a new investment in health care is vital. Such an investment will only contribute to the general economic prosperity of our country.

Once again, Mr. Chair, I know your time is brief. With that, I conclude my comments and thank the committee for the opportunity to present my views on behalf of the official opposition of Prince Edward Island.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Morrissey. I'd like to turn now to Ms. Ching, please.

Ms. Mette Ching (President, Prince Edward Island Federation of Agriculture): Thank you. We also want to thank you for this opportunity to present a few of the views, perhaps with a bit more of a twist from the Island.

The P.E.I. Federation of Agriculture is basically a general farm lobby organization working on behalf of farmers with a broad range of commodities, farm sizes, and equity levels. We are proud of our family farms in P.E.I. We gross about $273 million in farm cash receipts in 1997. While the potato sector remains the major crop, the livestock industry provides a stable balance to our ag economy.

It's forecast that farmers will continue to be the number one private sector employer in P.E.I. However, our own farmers, like their Canadian counterparts, are facing reduced commodity prices this year, mainly due to the Asian economic crisis, which is starting to spill back into North America. The forecasts indicate that producers could see their incomes shrink by as much as 40% this year. So while we're proud of our island's agriculture economy, we are very concerned about what the next year may bring.

• 1425

When we appeared before you in November 1995 we reported $311 million in farm cash receipts in P.E.I.; 1997 receipts are $273 million. This kind of downward trend causes us great concern. The health of the Island economy is integrally linked to the health of the agricultural economy, as the health of agriculture is integrally linked to the health of the Canadian economy.

We appreciate the opportunity to make the presentation and would like to address the following issues: disaster relief programs; cost recovery; the transportation infrastructure; the EI surplus; and the CARD fund, the Canadian Adaptation and Rural Development Fund.

The federation is proud of its association with the Canadian Federation of Agriculture, or CFA, which is the largest general farm lobby organization in the country. As a director of CFA, I recently had the opportunity to discuss the projected farm income situation for 1998. I would be remiss not to take this opportunity to reiterate concerns expressed at that board of directors' meeting.

Briefly, according to Statistics Canada, farm cash receipts totalled $14.1 billion between January and June 1998, which is down 5.1% from the first half of 1997. Both crops and livestock declined compared with the same period last year. Crop receipts declined 6.8% to $6.6 billion on the heels of a substantial drop in revenue from wheat. Livestock receipts fell 4.2% to $6.9 billion, due largely to lower hog prices. The destabilization of world demand for agricultural products and the Asian financial crisis are the major causes of historic decline in hog and grain prices.

Faced with this situation, Canadian farmers had to withdraw from their NISAs, which is a net income stabilization account jointly funded by farmers and the federal and provincial governments. For the first six months of this year, NISA withdrawals increased by nearly 70%. On average, NISA accounts are about $18,500 per farmer across Canada.

Many Canadian farmers have not been able to build up sufficient reserves in this account to provide for disaster relief and to survive this crisis. Safety net programs need to be broadened, including a new income disaster program that will help farmers in the case of major income decreases due to natural economic disasters.

The P.E.I. Federation of Agriculture requests that the federal government examine this financial crisis and offer a substantial safety net program for Canadian farmers.

In recent years, the federal government has heard loud and clear from farm organizations, which are concerned about cost recovery. Farmers realize that deficit reduction is essential if Canada is to repay its substantial debt, and we applaud Finance Minister Paul Martin's recent announcement of a $3.5-billion surplus, a first for any Canadian government in almost three decades. While farmers realize the need for fiscal responsibility, the escalating costs are an increasingly significant on-farm cost burden.

For an example in the horticultural sector in P.E.I., the effects of the current user-pay system have escalated from $370,000 in 1995-96 to $516,000 in 1996-97 for export compulsory inspection fees. These are only the fees that are paid for U.S. shipment inspections.

The horticultural sector is impacted heavily and disproportionately by cost recovery. In a global marketplace, these costs cannot be passed on to the consumer. If Canada wishes to continue with its emphasis on exports and regional equity, the agriculture sector has to be an even playing field to be competitive.

Indeed, at our annual meeting in 1998, the federation membership passed the following resolution:

Whereas Agriculture & Agri-Food Canada and other federal departments continue to pursue an agenda of cost-recovery; and

Whereas the Agriculture & Agri-Food Canada figures clearly state that the impacts of these measures have hit the farmers of Prince Edward Island hardest of any province in the country; and

Whereas continued pursuit of these measures is eroding our profitability and viability;

Therefore be it resolved that the PEI Federation of Agriculture and Prince Edward Island Department of Agriculture & Forestry continue to work with farm organizations and commodity groups to ensure a fair distribution of costs between the public and private sectors.

• 1430

The P.E.I. Federation of Agriculture recommends a more balanced approach between the public and private sector to cost recovery initiatives.

In the area of transportation and infrastucture, with the demise of railroads on P.E.I. almost all transport to and from the Island is via roads. This crucial link for supplies and movement of products is being threatened with increased costs as provincial governments in other provinces are instituting a user-pay system of highways. Regional disparities will increase as the practice of user pay for our public highways proliferates. The greater the distance from markets the greater the cumulative effects of these user-pay highways.

In response to that, the P.E.I. Federation of Agriculture requests that the government ensures that the infrastructure of interprovincial roads be equitable across all provinces.

Regarding the EI surplus, no doubt your committee has heard from many groups and individuals regarding the current $7 billion surplus in the employment insurance fund. To deal with this issue briefly, we feel that the money collected from employers by the federal government for the insurance of Canadian workers should not be used to pay the country's long-term debt. This would amount to indirect taxation through a fund set up for an entirely different purpose. Dollars collected for this fund belong to Canadian workers and employers who contributed these funds. Seasonal workers and employers of seasonal help depend on a strong EI program.

The Federation of Agriculture requests the government use this fund for what it was intended, an insurance income for those who find themselves unemployed.

In regard to the Canadian Adaptation and Rural Development Fund, on a more positive note, the P.E.I. Federation of Agriculture would like to commend the federal government for its September 1998 announcement that the CARD fund will continue into the next millennium. It's not clear yet how that CARD fund is to be divided up.

As agricultural stakeholders, Island farmers are pleased that the government lends stability by continued funding and demonstrates recognition of the importance of Canada's agrifood sector. Created in 1995, the CARD fund is a $60-million-per-year government initiative designed to encourage growth, development and adaptation in Canada's agrifood industry. P.E.I. has benefited from this fund in a number of areas.

The P.E.I. Federation of Agriculture is pleased to administer the Canadian agricultural safety program, an initiative of the CARD fund and the Canadian Coalition for Agricultural Safety and Rural Health. Since the program's inception, all 10 provinces have accessed a portion of the $1-million-per-year funding. It has been utilized to initiate and coordinate farm safety and health awareness projects.

P.E.I., like other Canadian provinces and territories, has benefited from the CARD's adaptation councils. The P.E.I. ADAPT Council received $1.75 million during the first phase of CARD funding. These funds are designed to encourage innovation, growth and good environmental practices.

We have also benefited from the CARD funds, which, to name a few, have supported the following initiatives: business planning for agri-ventures; the Canadian farm business management program; the Canadian on-farm food safety program; farm debt mediation services; HACCP, the national hazard analysis critical control point adaptation contribution program; and the matching investment initiative.

We applaud the Government of Canada's commitment to the Canadian Adaptation and Rural Development Fund and request that that fund be increased from $60 million to $75 million per year. This fund has put more decision-making power in the hands of industry to support growth and job creation in the agri food sector and rural communities.

• 1435

In conclusion, on behalf of the Federation of Agriculture membership, I'd like to thank you for the opportunity to address your standing committee. The federation believes that industry and government must work closely together to ensure the economic and social vitality of our industry, our province, and our country.

I'll leave you with this thought: the health and welfare of our rural communities depends on the ability of a farmer to survive and prosper.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Ms. Ching.

I'll now turn to the P.E.I. Fishermen's Association. Will Mr. McLellan or Mr. Strongman, or both, present?

Mr. Strongman, welcome.

Mr. Donnie Strongman (President, Prince Edward Island Fishermen's Association Ltd.): Mr. Chairman, ladies and gentlemen, thank you for this rare opportunity to address your important committee as it reflects on the federal budget soon to be announced by Finance Minister Martin.

My name is Donnie Strongman. I am president of the P.E.I. Fishermen's Association. Mr. McLellan is our managing director. We are with the P.E.I. Fishermen's Association, and we represent approximately 1,500 inshore fishermen here on P.E.I. Most of our fishermen fish lobsters, and unlike our colleagues in other provinces, our dependency on cod and other groundfish is less acute.

In short, our fishermen are largely successful and employ over 3,000 people directly and another 5,000 in plants and other supporting industries. There is an ongoing debate on whether we are the second or third major contributor to the economy here on the Island, behind the potato industry. But there is little doubt that per capita this industry is more important to the Island economy than the automotive industry is to Ontario.

In April 1958 the Government of Canada introduced an unemployment insurance program for Canadians. From its outset, this program recognized the country's dependence on seasonal and part-time workers as a benefit to all Canadians but needing a program such as UI in order to maintain a dignified livelihood.

One of the biggest misconceptions that people who live in urban Canada have about rural Canadians is that the rural areas are a drain on the economy. This of course is not true, and there are numerous studies that demonstrate this—most recently, Creating New Wealth from the Sea, which was commissioned by our own national organization, the Canadian Council of Professional Fish Harvesters.

Another study was the Working Group on Seasonal Work and Unemployment Insurance. This study, which is readily available, was chaired by Patrick Grady and was commissioned by Minister Axworthy while he was employment minister.

Many Canadian governments have recognized the importance of farmers, fishermen, and other resource-based rural occupations and have put in place many programs to support these occupations. Many initiatives were undertaken to provide these rural people with a special place in the Canadian economy. Not the least of these was the full extension of unemployment insurance benefits to all fishermen in 1972.

Governor General Roméo LeBlanc was fisheries minister when he recognized that fishermen require some form of income stabilization. It was a matter of legislative convenience that this stabilization was delivered through the unemployment insurance system, but the results were that rural fishermen were able to survive the winter without hardship.

The last budget attacked this program and, in doing so, attacked rural Canadians. Following are some examples.

One example was the downloading of employer premiums on fish harvesters through so-called employment insurance administration fees. Under the new legislation, self-employed fish harvesters are required to pay employee premiums equivalent to 2.9% of their insurable fish sales up to a ceiling of $39,000. Companies, in turn, are required to pay employer premiums of 1.4 times the fish harvesters' contributions. Across the country, however, fish companies have been systematically violating the spirit of the law by passing on the costs of their EI contributions to fish harvesters by charging them an administration fee equivalent to the employer's EI premiums.

Annex A is an example of a typical statement from the sales of a seven- to ten-day halibut trip in Nova Scotia. I'm not going to go through that, Mr. Chairman. The statement shows the crew's total EI contributions amounted to $524.36. The employer's EI contribution, which does not appear on the statement, is calculated by multiplying the crew's, or employees', contribution by 1.4. In this case the employer's contribution amounted to $734.11, that is $524 by 1.4, which is exactly the amount of administration fee the company charged the crew as part of the trip's expenses. We have received many reports this practice has become widespread amongst Island fish companies since this new EI fishing regulation went into force. We believe this practice is a violation of section 84 of the Employment Insurance Act regarding the shared employee-employer responsibility for EI premiums.

• 1440

Number two is the issue of continued payment of EI administration fees on insurable earnings that exceed $39,000. As shown above, fish harvesters are paying both the employee and employer premiums for EI. The new regulations stipulated that payment of premiums cease once insurable fish sales reach $39,000. In practice, however, payment of EI employee premiums and the company's administration fees only cease when sales reach the $39,000 ceiling to the same company.

Under the new system, fish harvesters who have insurable sales in excess of $39,000 spread over several companies continue to pay both the EI employee premiums and administration fees until sales reach the $39,000 ceiling with each individual company. The practice of most fishers is to spread their sales among several processors in order to stimulate competition amongst buyers. This situation, therefore, is both widespread and very costly to the individual fish harvester.

As illustrated in the table below, a fish harvester who has $100,000 in total sales to three or more buyers and none of which exceeds a $39,000 cap pays approximately $2,500 more in EI administration fees than the fish harvester who has $100,000 in sales to a single buyer. There is an example there.

Number three is companies reimbursed for EI employer premiums paid by fish harvesters. While fish harvesters are able to claim an income tax refund for any overpayment of employee premiums, they receive no reimbursement for the EI overpayment of administration fees. Fish companies, on the other hand, will be able to claim up to $10,000 in overpayments under the New Hires program. Therefore, the fish companies will be receiving reimbursement for payments that have been made by fish harvesters.

Number four is the use of administration fees by companies to reduce competition among buyers. Fish harvesters have informed us fish companies are using the administration fee levy to discourage harvesters from diversifying their sales amongst several buyers. As mentioned above, harvesters tend to spread sales among several different buyers in order to stimulate dockside price and market competition amongst buyers. However, individual buyers are informing fish harvesters that if they continue to sell their catch to them, they will waive the administration fee once sales reach $39,000. As demonstrated above, there is a strong financial penalty to those harvesters with sales over $39,000 who continue to sell to different buyers. The new EI regulations, therefore, are having an unintended negative effect on dockside price and market competition in the fishery.

The conclusions are:

- One, the new fishing regulations for employment insurance have generated several unintended negative impacts for fish harvesters, notably that fish harvesters end up paying both employee and employer premiums through the imposition of an administration fee on insurable sales.

- Two, fish harvesters continue to pay employer premiums in excess of the maximum amount required because there is presently no administrative mechanism to tally an individual's insurable sales to different buyers during the fishing season.

- Three, this situation is having a negative impact on market competition and the dockside price paid to fish harvesters.

- Four, fish companies are able to recoup employer premium overpayments that have in fact been made by fish harvesters.

- Five, there are serious inconsistencies within the system, with fishers in some areas having to pay premiums while elsewhere fish harvesters do not have to pay.

• 1445

Mr. Rory McLellan (General Manager, Prince Edward Island Fishermen's Association Ltd.): We understand some of these problems have been addressed in some local areas. However, we believe more global solutions are needed.

Another issue is that fishermen are fearful this government is not committed to the vision of the fishery put forward by today's Governor General. We believe Mr. Martin could soften these fears if he would mention in the budget the government's commitment to provide stable incomes for fishermen in the long term.

This leads us to our primary concern today, which is fishermen's retirement. Currently, fishermen retire with the knowledge they don't require a pension plan because of the value of their vessels and licences they've acquired over years of hard work. What they are finding is their long-term security is threatened by capital gains tax. We are working with our colleagues across the country, and they have made, and will continue to make, presentations to the finance department to raise the capital gains exemption for fishermen to $500,000, the same as that enjoyed by farmers since 1985. This exemption, which was given to farmers in 1985, replaced a previous program that allowed farmers to reduce their capital gains taxes through contributions to a special farm RRSP program. Under the current laws 75% of a farmer's exemption is tax deductible, which means on a maximum capital gain of $500,000 a farmer is able to deduct is $375,000 from his or her taxable income.

The exemption applies to capital gains on the sale of qualified foreign property as defined by Revenue Canada. Qualified foreign property includes land and buildings as well as shares in a family farm corporation owned by the farmer or the farmer's spouse. It also includes such things as egg and milk quotas, which Revenue Canada calls eligible capital property. The capital gain occurs when qualified farm property is sold for more than it originally cost to acquire the property. For example, a farmer sells for $1 million of qualified farm property, consisting of land, buildings, shares in the family and quotas, that originally cost him $500,000. The capital gain in this case would be $500,000.

At present there are two ways for fish harvesters to reduce the tax they pay on capital gains. One, if their fishing enterprise is incorporated as a small business and the business meets certain criteria, for example, the business owns all the enterprise's property, that is, boats, gear, and quotas—it is illegal for a company to own a licence, so having that item appear in our brief is a mistake—then the owners would be eligible for the $500,000 small business capital gains exemption. Although this option is available, it is not used very often. Two, if they elected to make a deemed disposition of property when the $100,000 capital gains exemption for individuals was eliminated in 1994, then they would be eligible for an exemption of property up to a gain of $100,000.

According to the Canadian Federation of Agriculture, farmers get a special capital gains exemption because their investment in farm property is considered to be equivalent to contributing to a pension fund. Farmers were able to convince Revenue Canada the capital gain from the sale of farm property should be tax exempt because farmers do not benefit from non-taxed private pension schemes.

We believe our situation is the same. It is significant Revenue Canada includes the sale of quotas, such as egg and milk quotas, in its definition of capital property that is exempt from income tax under the capital gains provisions. Farm quotas would appear on the surface to be similar to both fish quotas and limited entry fishing licences, both of which are currently taxed if sold for a capital gain.

According to DFO officials, there have been two recent licence buy-back situations where they have intervened with Revenue Canada concerning capital gains exemptions for fish harvesters. In 1992-93 Atlantic fish harvesters who sold licences under the northern cod adjustment and recovery program were covered under the $100,000 capital gains exemption that applied to all Canadians. When NCARP ran out in 1994, it was replaced by TAGS, the Atlantic groundfish strategy, which included a licence buy-back program. Because the $100,000 capital gains exemption was abolished in 1994, the Department of Fisheries and Oceans applied to and received permission from Revenue Canada to have the extension extended to fish harvesters who sold their licences under the Atlantic groundfish strategy. In 1996 the department again applied to Revenue Canada to extend the same $100,000 capital gains exemption for Pacific salmon fishers under the $80-million licence buyout program, which is known as the Mifflin plan. This time their request was denied.

• 1450

Having a capital gains exemption equivalent to that of farmers is significant. Capital gain is taxed at the same rate as any other taxable income. The federal income tax rate for taxable income over $59,180 is 29%. Provincial tax rates vary between 60% and 63% of the federal tax and amount to approximately another 18%. When the federal surtax is added in, the tax rate for income over $59,180 is roughly 50%.

Having a capital gains tax exemption makes a big difference for someone in the highest bracket, with a taxable income of $59,000 or more. Example A shows that someone with a capital gain of $100,000 and no exemption would pay $37,500 in income tax, while in example B, with the exemption, there is no tax whatsoever.

According to DFO sources, both Human Resources Development and provincial government officials are concerned about what happens to individuals who accept buyout packages. They are concerned that the buyouts will lead to increased client loans for HRDC programs or provincial welfare programs if the buyouts are either too low or not invested wisely.

Apparently experience from previous programs lends support to those concerns. This source suggested that it could be argued that it would be prudent for the government to deal with the problem at the front end by increasing the amount of buyout through a capital gains exemption than bothering to have to spend it later in social programs.

Farmers have very generous capital gains exemptions based on a rationale related to their self-employment status that could just as easily be applied to fish harvesters. On the surface it would appear, therefore, that the government is not dealing with both sectors. Fairness would dictate that fish harvesters be provided with the same tax exemptions as farmers.

Moreover, a significant number of fish harvesters on both coasts are facing opportunities for significant capital gains if government proceeds with licence buyout programs for Atlantic groundfishers and Pacific salmon fishers. The capital gain will be especially high for those individuals who were part of the first generation to receive limited-entry licences and individual quotas. A lack of capital gains exemption could influence the take-up and buyout of any programs.

Finally, we know we have limited time, so there are a lot of things we are going to leave out, but we would be remiss if we did not mention what the recent federal cutbacks have done to fishermen and the fishing industry in Atlantic Canada.

Licensing fees our fishermen must pay to the federal government have increased in excess of 600%. Fees for docking our boats at derelict wharves have gone from $3 to, in some cases, in excess of $1,000. Dredging, which is much needed on our sandy island, is now non-existent, and the cost of lives lost will be difficult to calculate. Lighthouses and navigational aids are being systematically removed and will be totally gone by the year 2002, and once again, the cost of human lives lost will be difficult to calculate. There are many more examples of this.

While fish harvesters' costs escalate exponentially, the level of service provided by the federal government to meet even their most basic needs is being eliminated. For example, the human resources for conservation and protection have been dramatically cut, leading to problem of poaching and illegal fishing activities.

Fish harvesters are being asked to pay to have their fish landings monitored, because the department has decided it does not trust the figures provided by fishermen and buyers and it is not prepared to provide any personnel to monitor landings. This practice has led to viable fishing enterprises such as rock crab, dogfish, herring and other species being totally abandoned due to the cost. This means that new wealth and foreign currency that could have been brought into this country has been abandoned in a careless administrative morass of bungling over regulation.

To sum up, we have asked you for two things today: first and foremost, an administrative change to the capital gains exemption, raising the exemption to $500,000 from $100,000; and secondly, that the Minister of Finance indicate in his budget that he is prepared to continue and enhance the EI system for fishermen and give us a general indication that this government cares for the fishermen and for Atlantic Canadians.

Thank you very much.

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

I'll now turn to the Reform Party and ask Mr. Ritz to begin questioning.

Mr. Gerry Ritz: Thank you, Mr. Chairman.

I listened with great interest to the presentations. My background is agriculture as well, and of course, the fishing has a lot of that same type of resource-based productivity.

• 1455

On the agricultural side, you're talking about the income shrinkage on the Island. For agriculture, it's 40% this year. In my province of Saskatchewan, farmers' net income is expected to shrink 84%. We have an income crisis there as well.

We're seeing the average age of farmers out on the prairies go way up. It's just the older guys who are hanging on. The young guys are being forced off the farms and so on. Do you see that here as well? Are you into a situation in which it takes all of your farm income to support your farming habit, the same as happens with us?

Ms. Mette Ching: You've asked a couple of questions. First, will income go down by 80%? I guess we're projecting 40%. A lot of our more volatile product still is potatoes, and about half of that acreage now is under contract, which stabilizes the price. It takes some of the bumps and lumps out of it, so it's not quite as bad as grains, as is the case in the prairies.

The second question was the average age of farmers. I believe it's 57.5 on the Island. You see fewer and fewer young people. I don't believe it's due to a lack of desire. I know the fisheries presentation has quite a broad scope on the capital gains. I think the transition of farming in P.E.I., as across Canada, is a problem. Farms nowadays require a lot of money. We recently bought a tractor, and it would be more than what you would pay for a fishing vessel and a licence. And we don't need one tractor, we need many tractors.

I think the capital investment that's required and the capital rollovers that are going on through the industry are a major crisis, not dollar-wise but in terms of how to manage them, how to do things. I realize we get a $500,000 capital gains deduction, but that doesn't make much of a dent for today's farm. And you have to go through a lot of loopholes to be able to maximize and utilize those.

Mr. Gerry Ritz: In our situation in Saskatchewan, I'd say the average farmer has in excess of $1 million worth of equipment, but there are lots with twice that. The $500,000 capital gains deduction does not begin to address the valuation in land, and everybody's gotten bigger. It's not what it's supposed to be.

Have the European and American subsidies had an effect on your products here? Has the low Canadian dollar been a stimulant? You're saying it's contract, and that some of it's going into the States. Has that helped?

Ms. Mette Ching: The low Canadian dollar has had a positive impact. On the other hand, a lot of our imports come from outside Canada. Most of the tractors are not built here. We recently bought a tractor. From the time we asked about it to the time we committed, it had gone up $2,000 because of the currency exchange.

The subsidies in the European countries and the recent subsidy that was announced in the United States are having a major impact on agriculture in Canada and P.E.I. We are no longer competitive. We're third from the bottom as far as subsidizing or putting our farmers on an even playing field is concerned, third from the bottom in the economically developed countries. I don't know what's going to happen in the next couple of years, but I'm not really looking forward to it.

Mr. Gerry Ritz: To try to understand this period of transition, on page 2 you talk about an income disaster program for natural disasters. We've had a real drought situation out there, and that's a natural disaster, of course, the same as an ice storm or a flood or whatever. Do you have any skeleton of that program, or is it just an idea?

Ms. Mette Ching: No, there are a couple of skeletons available. One's in P.E.I. We used part of our allotment of NISA money to provide a small disaster program in P.E.I. I believe there's also one available in in Alberta and one in B.C., but they're small and they're part of the current funding. Some of the provinces have taken the moneys from the NISA program and have put them into a disaster relief program, so it was provincial decisions that created those. The NISA program was supposed to stabilize agricultural income, but it hasn't been around very long—just since 1992. Most farmers have not built up sufficient equity in that to use it as a disaster aid.

• 1500

Mr. Gerry Ritz: Our problem in the prairies has been that the young farmers who need it can't get the money in fast enough. It's based on net income, but there hasn't been any. You can't get the dollar-for-dollar contributions when you don't have any net income. So it's unfortunate. It would be a tremendous vehicle if we could ever get it to work, but it takes an infusion of cash.

Ms. Mette Ching: Also, the red meat sector is not well represented under that program.

Mr. Gerry Ritz: Yes, it's not whole farm.

Ms. Mette Ching: They're trying to make it that way. I think it's moving in that direction, but it isn't there yet.

Mr. Gerry Ritz: Do I have any time left?

The Vice-Chair (Mr. Nick Discepola): Yes.

Mr. Gerry Ritz: Great.

Mr. Morrissey, in the prospectus that you gave us, you're saying that a long-term economic strategic needs to be implemented. I agree with that, but you also go on to say that we need to look after ourselves and not the concerns of money traders in Tokyo and New York. What exactly are you getting at there? They own a big chunk of our national debt. How do we hold them off? How do we tell them that we're going to do this first and they can just wait their turn?

Mr. Robert Morrissey: I guess a simple response may be that the national debt did not accumulate in a year. It will therefore take a systematic long-term plan to stabilize it and to begin paying it down. I guess there are economic models given showing that as the GDP increases, the debt decreases as well. I believe Minister Martin used some of those models in his first years as finance minister when approaching the debt. There are also models out there that show that the health of any population has a direct link to the viability and wealth-creating capacity of that nation. You can look at European models or you can look at the house models.

I have listened to some of the briefs that were given here today, and I believe you would hear the same thing across the country. What we're saying is that if there's one area that appears to have suffered, it would appear to be the health sector. Having been in provincial government, I would say you hear the same concerns being echoed by provincial governments and by the populace right across the country. The cuts in health care went too far, were too deep.

I was listening to the chairman's comments earlier. He said that if they had kept going, we'd be a lot lower than we are today. Well, we're grateful for the fact that your government stopped the declining scale and stabilized things, but stabilizing didn't build us back up to where we came from. Here in P.E.I. we felt it dramatically. For the small jurisdictions—Saskatchewan would be another one, with its small population—the impacts were severe. I lived through a period of years of health cutbacks, and we had no option. We could either run a $100-million deficit on small Prince Edward Island, or we could look at areas in all of our budgets. Health care is the single biggest cost factor.

So rather than look at a host of issues that are well represented by presenters here today, I looked at the one that seems to be on the minds of most Islanders, certainly, and I would have to say most Canadians. That is health care and the adequacy of funding for it.

Mr. Gerry Ritz: But depending on whose numbers you use, when 27¢ to 30¢ of every dollar in revenue coming in through taxation is going towards interest on the debt, is it not prudent to get that debt down? In your own household, you have to get your mortgage down so that you have more money left over for the things you want to buy. In the government's case, that would include health care, education, the social safety net, and so on. Is it not more prudent to get that under control?

Mr. Robert Morrissey: I think a mistake is made if you use the national finances in comparison to a household income. You're not a household.

Mr. Gerry Ritz: I understand that.

Mr. Robert Morrissey: When you use those numbers and use ratios, it defies the underlying problem, which is where your health care is. You've certainly made major steps by not increasing the debt and by holding the line on it. But what we're saying is that, given this situation, you have to look at what may cause more problems down the road. That “what” is the whole question of adequacy of health care. We are an aging population, too. Looking at the numbers of farmers here in P.E.I., it's actually scary when you look at the demographics confronting our population trends. That's why we look at the whole area of home care. Health care is an area that the federal government should be looking at.

Mr. Gerry Ritz: Thank you.

A voice: But Mr. Ritz brings up a good point. In Ontario we could take, say, $10 billion and invest it in a one-time program or a one-time quick fix to maybe address some of the short-term problems. But if we were to take that $10 billion and write down our debt, it would then give us a minimum of $800 million annually, in perpetuity, with which to address long-term problems. That's what he's saying when you compare household income.

• 1505

I know that I give my children the same instructions. If they have a bit of money that they want to invest, I certainly don't tell them to do it on the stock market because they're never going to get 18% or 20%. The first thing you do is pay down your credit cards.

I agree with that when confronted with household debts, but as legislators, as a government, you have a moral and social responsibility to the population as well that has to be balanced in the overall financial picture and context.

What we're saying is balance it. I would hope that the committee comes away.... I won't put a dollar figure on it, because it's easy to get caught in ratios of our GDP to that of other countries. There's an old saying, that it depends on who formulated the numbers that went into the ratio. So I'm not going to engage in 9% or 10% and compare it to somebody else.

I was in Sweden and looked at their system. It's very different from ours. I won't get into saying they're spending 10% while Canada's spending 8% or 9% and that this where should it be. I will simply go back to the point. I would suggest that you will come away from your hearings across the country with the opinion that health care is probably foremost in the presentations that will be made to you. Therefore, it's obviously a problem, and the federal government must balance, begin repairing, begin building, and deal with the national debt. As I indicated, you've come a long way, but in fact you haven't added to it, and you've put some against it in the last number of years. Let's begin looking at health care as we address the long-term cost with the national debt. We can't forget what long-term costs might be forced on this country by underfunding health care.

The Vice-Chair (Mr. Nick Discepola): Mr. Ritz.

Mr. Gerry Ritz: As legislators, though, we also walk a tightrope. You make a good case for the aging population and the health care dollars that need to go to support that, but as legislators, we also have a fiduciary responsibility to the next generation not to mortgage their future.

Mr. Robert Morrissey: But health care is not relegated to the old.

Mr. Gerry Ritz: No, no, I understand that, but your point was that we have to look after health care for the aged.

Mr. Robert Morrissey: I simply indicated the demographics. So it's going to be a burden on our system whether we like it or not.

Mr. Gerry Ritz: Yes, we also have to be careful what we pass on.

Mr. Robert Morrissey: Exactly. Health care cuts across the board as well—

Mr. Gerry Ritz: Yes, it does.

Mr. Robert Morrissey: If our young people are straddled with the cost of looking after their aging parents or grandparents, that's a burden as well. So you cannot isolate the young from the old.

Mr. Gerry Ritz: That's right.

Mr. Robert Morrissey: It's issue that's going to continue to confront your government. It's an issue that confronts every provincial government.

When I look here in Atlantic Canada, everybody has announced that their surpluses have evaporated this fiscal year. They're all running huge deficits now. When you look at where it is, it's health care. Why? It's not that health care has overspent; health care is consistently underfunded. It was underfunded when I was part of government, and it's underfunded again today. They don't put the right amount in to begin with.

The Vice-Chair (Mr. Nick Discepola): What's the optimum funding?

Mr. Robert Morrissey: You asked that of a doctor earlier when I was sitting here.

The Vice-Chair (Mr. Nick Discepola): She was unable to answer.

Mr. Robert Morrissey: Well, it's a bit like if you could tell me what this winter's snow clearing is going to be before we have the winter. Then maybe I could come up with an answer.

The Vice-Chair (Mr. Nick Discepola): They have to budget it every year. Sometimes we live with it, sometimes we don't.

Mr. Robert Morrissey: The problem we have—

The Vice-Chair (Mr. Nick Discepola): The problem is that we suffer the consequences.

Mr. Robert Morrissey: Yes, you don't know when you're going to get ill and who's going to use the system. If you're going to have the system that Canadians apparently want, which is the system that has built up since 1970 when medicare came in, then you have to pay the price when you go there and use the system. It's the user system. When we go to use it, the state has always paid for it.

The Vice-Chair (Mr. Nick Discepola): But we had the National Forum on Health. They studied the process. They studied the funding situation. They studied the situation throughout the country. They recommended $12.5 billion in funding.

Mr. Robert Morrissey: That was in new funding?

The Vice-Chair (Mr. Nick Discepola): No, it was in total funding. That's what they felt should be the optimum value in spending in the cash component.

Mr. Robert Morrissey: That's what's being spent now.

The Vice-Chair (Mr. Nick Discepola): That's exactly what we did. We established that level last year, I believe, as soon as we had the fiscal capacity.

Now, the debate seems to be—

Mr. Robert Morrissey: But why are we still closing hospital beds and why are we—

The Vice-Chair (Mr. Nick Discepola): I ask myself why provinces close hospital beds. In my own case, I'm from a province that closed five hospitals, yet the government decided to invest $160 million in the metro extension to an island. I don't understand. It becomes provincial responsibility—

Mr. Robert Morrissey: You chastize the provincial government here for taking new dollars that it received from Ottawa in transfers last year. You're pointing them out for it.

The Vice-Chair (Mr. Nick Discepola): Another good example is in Ontario.

Mr. Robert Morrissey: But excuse me, though. Medicare is dictated by the federal state. The policies—

The Vice-Chair (Mr. Nick Discepola): The administration is local.

• 1510

Mr. Robert Morrissey: Yes, but the policy is federally arranged. I know because we looked at trying to be more flexible in our jurisdictions. When we tried, Ottawa came down with its heavy hand and said we couldn't do that. I believe Ontario had funding with health on that because some of their provincial practices targeted in the area of health care.

So it's a national program. The federal government, very rightly so, very jealously guards it as a national program, and rightly maintains their position of dictating the standards for medicare and how it should be applied across the country. I support that, but if you're going to dictate that you'd better be prepared to pay the price too.

The Vice-Chair (Mr. Nick Discepola): We do. We pay over 50% of it.

Mr. Robert Morrissey: It's not quite adequate enough.

The Vice-Chair (Mr. Nick Discepola): Point taken.

Mr. Pillitteri, please.

Mr. Gary Pillitteri: Thank you, Mr. Chairman.

I want to thank you very much for your presentations.

I want to ask a question. Agriculture seems to have come into the picture a little bit here—on the Island, of course. We didn't hear much of it from other provinces, such as Newfoundland or Nova Scotia.

I am quite impressed with the study you've done on agriculture, with the facts and the figures, but one thing that has never really been told to the Canadian people is the amount of subsidy the Europeans have—what we're fighting with, what we're competing with. It goes back to I don't know how many rounds of negotiations, where they were supposed to be bringing down their barriers on subsidies, but every time we turn around they keep increasing the subsidies. Also the United States, sometimes with NAFTA, before they are caught subsidizing a program they change the name of it and go into a different program of subsidy and continue to subsidize.

Free trade has helped in many ways. I was one who fought it, as someone in agriculture. I know my area was devastated, but western Canada benefited from free trade in agriculture and some parts here did, so let's not throw the whole thing out.

Let me say one thing about this adaptation program, where you want to increase from $60 million to $70 million to $75 million. Sometimes Canadians don't see the benefits for a country. You take a look at what benefits one area more than another. Here is this adaptation program where you used, from your own figures, $1.5 million. In the whole province of Ontario, where we have approximately 40% of the population and the agriculture component is higher, there was only $7 million used in this adaptation program. Within Canada, these adaptation programs have sometimes benefited smaller communities and provinces, and sometimes a subsidy benefits one province more than another.

Sometimes I wonder, in the same token, politically—and maybe this is not the forum to bring it up. But I did have a forum within Ontario and a lot of times these programs were not given merit where merit was due. The adaptation program was a federal program, and the provincial governments were taking the credit whenever agricultural programs were announced. I just wonder how it is done here in the province of P.E.I. I know specifically in Ontario it was used for political clout. People thought the provincial government put this adaptation fund there. We made quite a representation to the Minister of Agriculture, Lyle Vanclief, in order to maintain this program and keep it in place. I just wonder what the feeling is here from the farming community.

Ms. Mette Ching: Are you referring specifically to the adaptation program?

Mr. Gary Pillitteri: Yes.

• 1515

Ms. Mette Ching: I think it got off to a rocky start here. A number of people were on the committee when it started. They put together some policies, etc., and then they were told by the powers that be in Ottawa they were going in the wrong direction. This was even after having signed an agreement spelling out the general areas they were going in. So I don't want this to sound like...yes, it is a bit of sour grapes.

On the other hand, I think it's under way now and they're making some progress, but to say this is an extra added bonus to our area.... You were talking about European agriculture, and it is subsidized approximately at the rate of 42% and Canada is about 23%.

Mr. Gary Pillitteri: It's even less than that now.

Ms. Mette Ching: Yes, it keeps dropping. These statistics are probably two years old, so it's probably around 17% or something. These types of programs are called “GATT green” and are acceptable by other trading partners. We do put some money into them, but they are areas that more dollars could be channelled into.

The other thing is, do the green programs benefit the farmer or society as a whole? The green programs are usually things that are done to the land to improve it. They are the kinds of things farmers perhaps wouldn't do if they had to shell out 100% of the money without some kind of tax benefit or other incentive. Yet in the long run, they are the kinds of programs that will keep our land in good shape.

Mr. Gary Pillitteri: Yes. I just want to ask one more question.

I've heard comments by Mr. Morrissey about how the debt was not created in one year. Maybe we should remember that in 1972 we were $6 billion in debt. In 1985 it had jumped to about $185 billion. By 1993, when the Liberals came into power again, it was about $485 billion and today it's up somewhere around $587 billion. At the rate of $3 billion we paid down in the contingency fund last year, how long would it take to get rid of the debt of $587 billion? Have you done a study on that? If you think it's not the next generation or the generation after that, how many generations will be carrying it at this rate if we don't have any concerns about our spending habits in Canada?

Mr. Robert Morrissey: I guess I have to answer that in a bit more global perspective. I would have to then compare the value of the dollar to the 1970 number you used. As well, several generations have benefited substantially from some of the programs governments embarked on during those periods that ran up the debt. The debt was run up in the name of all the people of the country, and we have assets such as that.

I used to be chastised by some of my colleagues in the past for saying you cannot approach government financing from the same perspective as a household. You have to reach for that, but you can't make decisions based on that. Governments have broader responsibilities than households do and than individuals do in business.

Canada is—the term is probably wrong and I don't mean it in a negative way—a socialist state. We have a lot of social programming, and as a Canadian I am proud of that. I have no problem paying the level of taxes I pay. I choose to live in Canada and not the U.S., where there is a lesser tax system, because I know what my taxes go for. They help pay for what built this country and made us unique and puts us at the top of the UN countries—that is our broad-based medicare programs and broad-based social safety nets, whether it's EI for fishermen or safety nets for farmers. That's what makes Canada different.

To suddenly say we have $3 billion and we'd better rush and put it all against the debt or the sky's going to fall in...well, I don't think the sky's going to fall in.

• 1520

We have to be prudent and the steps taken by the federal government haven't been prudent. You've come a long way in stopping the crazy escalation of the debt, but we've all paid a price for that. Whether it's fishermen and user fees or farmers, everybody's paid a price for that, but we have one thing in common more than anything, and that is our health and the need for an adequately funded health care program. I'm not writing the next federal budget, but you have to walk that fine line in recognizing what some of the great needs in this country are and balance them with prudent fiscal policy.

Mr. Gary Pillitteri: Mr. Morrissey, I do understand and I want to understand about the social cuts, and so my government is specifically here to look at that. But also let me say we have benefited from health care and all that, but that is our generation. The next generation will have to pay for their health care as well as our health care from the infrastructure we've put in and the infrastructure we've taken out and the mistakes we have made. So the sooner we start attacking the issues—

Mr. Robert Morrissey: Is any country in the world debt-free by definition?

Mr. Gary Pillitteri: I didn't say that. I imagine there is, but let's look at it this way.

Mr. Robert Morrissey: Are we prepared to live in that climate with that violence, as in Hong Kong?

The Vice-Chair (Mr. Nick Discepola): Order, order!

Mr. Gary Pillitteri: Let's look at it this way, Mr. Morrissey. By definition, let's say we are running a $50-billion surplus today and $42 billion of that is being paid toward that debt. Just imagine how much more our generation and the ones coming would have benefited if we had lived within our means.

Mr. Robert Morrissey: But what would the price have been if we hadn't run the deficit in those times to begin with? I get that same argument, and I have to leave with this point. Every time I sat down and we tried to put our budget together—and P.E.I.'s standard is small—$156 million of our $800 million budget was paying the interest on our debt. We could marvel at all the wonderful things we could do with that $156 million, but if we were not paying the interest on the debt, I would say somebody would have made one hell of a sacrifice.

We have to look at it in perspective. That's why I go back to how the debt began, how it accumulated. It accumulated by providing services to us all, whether it was education, roads, or the infrastructure that makes Canada Canada. I don't think we're terribly out of whack with most others.

Mr. Gary Pillitteri: Just one more question, Mr. Chair.

I also remember that in 1978 changes were made in the EI program. Those who worked for 8 weeks were able to collect for 52 weeks.

Thank you, Mr. Chairman.

The Vice-Chair (Mr. Nick Discepola): I believe you have to leave, therefore—

Mr. Robert Morrissey: We have changed quite a bit since then, considering, and today there is a program that doesn't cost quite as much. That's why you have such a big surplus in it.

The Vice-Chair (Mr. Nick Discepola): Ms. Redman, a small question, because one of our guests has to leave.

Mrs. Karen Redman: Thank you, Mr. Chair.

Just before Mr. Morrissey leaves, and I see he's taken his name tag and he probably—

Mr. Robert Morrissey: I'm coming back tomorrow. They told me to save it and bring it back. You see, I'm concerned about the debt.

Mrs. Karen Redman: In both your brief and your comments you talked about provincial debt. As a federal government, should we worry about provincial debt?

Mr. Robert Morrissey: Of course. If we go bankrupt who's going to bail us out? I call it a fool's paradise, where provinces allow municipalities to run up big debts. At the end of the day if they become insolvent, there's no truer saying than that there's only one taxpayer, whether it's municipal, provincial or federal. They're taking the taxes out of my pocket collectively.

Mr. Paul Szabo: Do you support the capital gains exemption for fishermen?

Mr. Robert Morrissey: I think it has to be changed and looked at in the context of today's value. A fishing boat today is well over $100,000.

Mr. Paul Szabo: They're recommending $500,000.

Mr. Robert Morrissey: I don't know if $500,000 is real compared to agriculture. I don't think it is. Yet these people don't have pension plans that we as parliamentarians or people in professions enjoy. They're self-employed primary producers. I think you should look at increasing it for both.

The Vice-Chair (Mr. Nick Discepola): Just on that topic, let's not lose sight that it's a $500,000 or $100,000, whatever the case may be, capital gain. If I as a farmer have invested $2 million and I now have a value of $2.5 million, I get $500,000 free in my pocket. How many Canadians can put away $500,000 in their lifetime, capital gains free? So even though I understand and appreciate that some businesses have a heavy start-up or heavy equipment cost, it is still the actual gain that we're taxed.

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Mr. Robert Morrissey: I think it's a small, small reward for the agony and uncertainty that people employed in these industries go through.

The Vice-Chair (Mr. Nick Discepola): I've been a small business person, sir, for 26 years, and I've had agonizing things too.

Mr. Robert Morrissey: I agree. I am too, and I think there should be some.

The Vice-Chair (Mr. Nick Discepola): I would love to have $500,000 capital gains for my business—

Mr. Robert Morrissey: Well, you should. You should be lobbying for that.

Mr. Rory McLellan: Just to participate a little bit, one of the things that agriculture and fishing have in common and you can look at is, if it's such a wonderful business, why in both cases are their numbers decreasing, and decreasing dramatically? The number of farmers in P.E.I., the number of family farms, and the number of small fishing operations in Atlantic Canada are decreasing. So obviously we have some economic problem.

The Vice-Chair (Mr. Nick Discepola): Well, it's because the entry required is very expensive, and that's why maybe not too many people are getting into the business. When you have to buy a tractor—and some of them cost, what, $75,000 or $100,000 per tractor?—it's incredible.

So I want to put it in that perspective, and since Mr. Morrissey is still here, I want to go on to the debt issue.

When I was mayor, my administration got attacked because of the debt level. I often said, if you take the per capita debtload, and in Canada it's $19,000 per every Canadian, I would readily pay the interest on that $19,000—figure it out; it's less than $1,900—to live in the best country in the world, with its quality of health and its quality of education.

My parents didn't have the quality of transportation that we have. They didn't have the access to schools that we have. They didn't have the access to the airports that we have. I can go on and on in examples. So to say that we are going to leave a terrible legacy to our grandchildren, to my grandchildren...I don't buy that argument.

The argument that I used as a mayor also was that if a citizen was in my council meeting, I said, “Sir or madam, tomorrow morning if you leave my municipality, I won't send you a bill for your share of the debt.”

It's the same thing when you're welcomed in another province; the province doesn't send you their bill for their share of the debt. As you said, it's part of delivering a level of service and a quality of life for Canadians. We shouldn't lose sight of that, and the debate now should be on how we re-establish that equilibrium that may have been lost over the past several years. So I want to thank you for your comment.

Mr. Robert Morrissey: I agree. I'm a first-generation Canadian. My mother is American-born, so I have close ties to the U.S.

People come and say, “I was down in the States, and look at the price of gas.” Well, that's a terribly simplistic approach versus Canada. We pay our taxes and we pay a good amount, but we also get back a lot more from our state, whether it's provincial or federal, than they do in the American system. I would not take their system over ours any day.

The Vice-Chair (Mr. Nick Discepola): I have cousins who live in the United States. It's $16,000 per child to educate their children. It's $6,000 to $7,000 to bear a child in a hospital, just to give birth to a child.

Mr. Robert Morrissey: So I hope we don't lose that perspective in going forward. I think you have to be proven and maintain. I don't think I would want to see a period of return to those years when we were chalking up the debt so high; I really do not.

Mr. Paul Szabo: Mr. Chairman—

The Vice-Chair (Mr. Nick Discepola): Oh, the Fraser Institute, the Reform Party's best friend.

Mr. Paul Szabo: —just for demonstration purposes, Canada's value, excluding land value, estimated at around $3 trillion plus, say, $600 billion of debt, means that there's a net equity, if we had a real balance sheet and capitalized all the assets that we have.

You raise the thing about what we are leaving to our children. We're not leaving a debt. We're leaving a country that's worth a hell of a lot more than our long-term debt.

Mr. Robert Morrissey: Certainly we have a great dowry that has to be managed and paid, and I agree with you.

If I look at my life span in P.E.I. with the supports I have, we're better off today. We all want money, but the system is fundamentally the roads.... The infrastructure is better than it was even 20 years ago, significantly better. If you travel throughout the country, you see that consistently.

Mr. Paul Szabo: I think I'm going to leave it so Karen can—

The Vice-Chair (Mr. Nick Discepola): Then I'll pass over to Karen, please.

• 1530

Mrs. Karen Redman: Thank you, Mr. Chair.

I was just trying one sneak one in because I thought you were leaving.

Mr. Robert Morrissey: I was until it was too intriguing.

Mrs. Karen Redman: Basically, I wanted to ask you about whether or not we need to be concerned about the combined debt. I do think that when international forces look at us...and it's something we've seen time and again in our briefs. Certainly, we've evidenced through the MacKay task force's work that we truly have a global marketplace and the future really is here. Those global forces do impact on us. It's something we need to take into account.

Mr. Robert Morrissey: I think we have to be awfully cautious as we move forward on the MIT discussions, and we've seen that in these last several months. If you talk about the globalization in the market and the uncertainty that's come, I think it would be an uncertain world dealing with the multilateral agreement on the transfer of capital. The discussions that were under way, I believe, are off again. Yes, we have to be careful that we don't lose control of our own internal destiny. I'm not so sure that this would affect it; it seems to be more speculative profit-taking than anything else.

Mrs. Karen Redman: I think it is somewhat speculative, but nonetheless it's in the equation and part of the conversation when international forces look at Canada and at whether we're a good risk to invest in or to lend money to. So I think the provincial debt needs to be in that conversation.

Mr. Robert Morrissey: Was it really the way they were looking at us that affected our dollar? If you look at every case, it seems to be the flavour of the month or week—which country the currency traders are going to take a run on. After awhile, from my perspective, there didn't appear to be much reason behind the way pressure was being exerted on foreign currencies versus the U.S. dollar.

Mrs. Karen Redman: Thank you very much.

That was my only question for Mr. Morrissey. My other question, which is almost a question and a comment, is to Mr. McLellan and Mr. Strongman.

I was part of an EI study group, and I really appreciate the fact that you're putting in voices and faces, because I have to agree with you absolutely that there are unintended consequences.

There is one thing I wanted to broach a little bit, and I don't know if it's a particularly fair question. But you mentioned TAGS in your brief. Was TAGS, after it's all said and done—and it's not over yet, I realize—a good thing?

Mr. Rory McLellan: It was a necessary thing. Is what happens after any natural disaster a good thing? Is it good that boats are looking for parts of Swissair? The collapse of the groundfishery in Newfoundland was referred to by Richard Cashin as a devastation of biblical proportions. It was a wipeout of a way of life. The federal government had to respond.

It's sad that these events took place. So it's sad that TAGS became necessary. But TAGS has been largely unsuccessful. The promise of TAGS was a promise of a recovery of a future, that we could retrain people, that people would retire, that people wouldn't be dependent on something that didn't exist any more. It hasn't worked.

It hasn't worked for a whole number of reasons, most of which are more reasons of the heart than reasons of money. Mostly, people didn't want to leave their rural economy. People have it in their blood to be part of Atlantic Canada and don't want to move to London or Oshawa. So that's one of the reasons it didn't work. Another reason is what are you buying? Right now if you accept a package to get out, if you accept $200,000 from the government, you're going to get cracked with a capital gains tax. So what the government's giving you with one hand they're taking away with the other.

And there isn't an industry to replace it. If these people could go and become something else, great, but when their great-great-grandfathers were fishing off the Grand Banks for the last 500 years, it's difficult to tell this guy that there's another side of the mountain, there's something else he can do. It's not in his heart. It's not in his blood. He won't do it easily.

The Vice-Chair (Mr. Nick Discepola): Mr. Strongman, would you want to add anything?

Mr. Donnie Strongman: I would only say that the same thing really applies to the fishing as applies to the farmers, that 37% or 38% of the fishermen now in Atlantic Canada are over the age of 55. If you do move away, who's going to hire a 55-year-old?

The Vice-Chair (Mr. Nick Discepola): Mrs. Redman, do you have anything else?

• 1535

Mrs. Karen Redman: No, just to say thanks very much.

Mr. Rory McLellan: We're aware of your work on that task force, and thank you very much.

Mrs. Karen Redman: You're welcome.

The Vice-Chair (Mr. Nick Discepola): Mr. Szabo.

Mr. Paul Szabo: Thank you very much.

Mr. Morrissey said he was here to give the P.E.I. perspective. I found what was said to be very interesting and important about the fact that for a person whose heritage is the fishery, it's very difficult for them to do something else, or for us to ask them to try to do something else, and maybe there are no options. Just hypothetically, does that mean we should consider a guaranteed annual income for fishermen, to set a value on the person's needs and satisfy that need and be done with it?

Mr. Rory McLellan: I don't know Roméo LeBlanc personally, although I've met him a number of times, but that's what was in his heart. Unemployment insurance was not something Roméo LeBlanc had admired. He wanted to provide a stable base of income for fishermen so they wouldn't go hungry. In some parts of his riding of Beauséjour, where he's from, there were some people living in some pretty rough circumstances. So that's what the social dividend was. That's why fishermen collect unemployment insurance, because he saw the need to stabilize.

As a fishermen's association, of course the concept of a guaranteed annual income is beyond our realm of expertise. But it seems to me you have a lot of different bureaucracies in this country that write cheques. If I were king, I would think it might be easier to have one bureaucracy that writes cheques than many bureaucracies that write cheques. But that's a political question for all Canadians. It goes beyond the fishery.

Mr. Paul Szabo: I think that's quite right. Administrative efficiency means better one than a whole bunch.

The point about a guaranteed annual income is it seems there are many places where people can derive social benefits for various reasons, and when you consider how much it costs to administer all those programs and all the other stuff, why not just eliminate all the administration and say let's refocus the money where it's necessary?

It's a philosophical question. But Roméo LeBlanc wanted to make sure people didn't go hungry and they'd have this stable income, and I think nobody in Canada should ever live in fear of going hungry.

Stats Canada's low-income cutoff for a family of four living in an urban centre of 500,000 or more people is approximately $26,000 a year. I think I can understand the ballpark number. But it's hard to equate that, as Mr. Discepola was talking about earlier, with the calculations that were done, such as, “I make $59,000 a year and I want to get my $100,000 capital gain, and I'm going to save $67,500.” Only 10% of Canadians as a whole make more than $50,000, and it seems that betwixt and between you've presented the poverty side of benefits, that is, EI benefits have been cut and we have to restore those, but on the other side I need these tax breaks because I'm going to get taxed so much when I cash in my $500,000. I was hoping maybe we could find out how to focus on the real needs. If you do believe we have limited resources in the short term with which to help Canadians, which priority would you take?

Mr. Rory McLellan: You just can't do that. My friend Mette will tell you about agriculture—by the way, I noticed she was wearing a fish tag.

• 1540

Mr. Paul Szabo: See, cooperation.

Mr. Rory McLellan: I know about the fishery a little bit, and I suspect agriculture is the same. It's a very cyclical business, and sometimes people do make large amounts of money in a very short period of time. In the snow crab fishery, for example, people can make a fortune. People can become wealthy in one year. But other fishermen are far below the $26,000 annual income and would have difficulty feeding a family of four, and some years are way worse than others.

When it costs $250,000 to buy the piece of paper that is a lobster licence today, although you know a lot of money may be changing hands, you're up against some pretty tough economics. With the economics of that, I would estimate that you would have to generate $42,000 in capital, in income, just to break even and not to make any money. Although large amounts of money are moving, that doesn't mean somebody is accumulating wealth. In fact, quite often it means the opposite.

Mr. Paul Szabo: I have one last question for you. We have a number of industries across Canada that have a disproportionate participation in EI, as you know. The construction industry gets about $4 out for every dollar it puts in. The automotive sector tends to be an excessive user at times. There are the fisheries. And forestry is another one where it's a long history.

I heard a rumour that there is going to be a task force going across Canada on EI. Since everybody seems to be so interested in the notional surplus, that task force would start talking to Canadians about what they would like EI to be. The goal would be to define it finally. Is it insurance for lost income? Is it an income supplement? Is it whatever else? I have to tell you that I am very much afraid some Canadians would say nobody should take out more than they put in.

Mr. Rory McLellan: Then it's not an insurance program, it's an investment club. Insurance means that we all put money in to share a risk.

Mr. Paul Szabo: I'm talking about doing so on a consistent basis, year after year, as I only work seasonally and I have to bring my income up to a level.

Mr. Rory McLellan: But that concept nullifies the concept of insurance. They're saying we shouldn't have unemployment insurance, we should have an unemployment investment fund. It's a whole different concept.

Mr. Paul Szabo: I know. It's a dog's breakfast if you start talking about it.

Ms. Mette Ching: I think the point we brought forward was that if it's EI, it should be EI in the way it was originally intended. Use it as EI rather than for training people or using the funds for whatever, like putting it into general revenue.

Mr. Paul Szabo: Wage subsidies.

Ms. Mette Ching: Wage subsidies or whatever. If it is EI, then I think we should go back to the original meanings of what some of these programs were. If there is a surplus, fine, then adjust it and reduce the amount you put into it.

I guess our concept was to make the programs pure again. If you don't retain their integrity, they all become mixed up between social programs, insurance programs, and various other programs.

Mr. Paul Szabo: I agree.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Mr. Ritz, please.

Mr. Gerry Ritz: I just have one quick point.

In your intervention on the fisheries, you talked about employment insurance administration fees. A little bit further on, you stated that “this practice is in violation of section 84”. Have you challenged that? Is anybody doing any work on that?

Mr. Rory McLellan: Yes, except I don't know which ones.

You know, people can tell lies. The fact is that the processor is deducting the exact amount of his premium. If you bring him into the official kingdom, if you bring him before somebody from EI and ask him if that's what he's doing, he's going to say it's just a coincidence, it just happened that way. Because of the nature of our trusting EI people, they tend to believe him, and that's the end of the story.

Mr. Gerry Ritz: On your billing, you have this annex A here. It has administration fees down as part of your costing. Do they actually show it on the billing?

Mr. Rory McLellan: Oh yes.

Mr. Gerry Ritz: So how do they justify it?

Mr. Rory McLellan: They say it's for doing your bookkeeping for you.

Mr. Donnie Strongman: There's no law against charging administration fees.

Mr. Rory McLellan: In some cases, yes.

Mr. Gerry Ritz: So it's a technicality.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Mr. Pillitteri, a short one.

Mr. Gary Pillitteri: How about two short questions?

• 1545

The Vice-Chair (Mr. Nick Discepola): We'll have two short questions. We'll give the last question to Mr. Pillitteri.

Mr. Gary Pillitteri: Thank you, Mr. Chairman. At the start, Mr. McLellan, I must say, you answered all the questions sincerely, and one thing that I would beg to differ with you on is that in your presentation you asked for a $500,000 deduction.

The capital gains are the same for the farmer, and let's not forget that a farmer has the ups and downs. You can see very well how the decline of incomes has been, and choosing actually to stay within that boundary of living.... On the other hand, among fishermen, the employer and the employee both qualify for EI. In the farmer's case, the employer does not qualify for EI.

Mr. Rory McLellan: That has always been troublesome. Where I work is in a building with all of the farm groups. I am surprised that they don't stone our office because of that fact.

That's always been personally puzzling. I don't understand why that is. It seems to me that there are a whole bunch of people who are less deserving than farmers—and, no, I'n not going to name them—who do collect EI. I don't see any reason why farmers don't collect EI. Clearly, if you're from the west, you can't harvest the wheat beneath the snow. It's not your fault that it's snowing. I don't see why. It was mentioned when we asked for the $500,000 capital gains exemption, that maybe what the government should do is lower the farmers exemption to $100,000 and that would make everything equal. I don't think that's a good idea.

The Vice-Chair (Mr. Nick Discepola): Who mentioned that?

Mr. Rory McLellan: I think we should we get the $500,000 and the farmers should be able to collect EI.

The Vice-Chair (Mr. Nick Discepola): Are there any other questions? No? Then I would like to thank our guests for presenting their case. Obviously, our challenge is to make sure that we report your case equitably, and we are challenged as a government to make sure we reflect your wishes and your priorities, as you've eloquently put them, in our budget. We will do that in December.

I'd like to now adjourn the meeting until tomorrow morning at 9 a.m., when we will reconvene hearings on the future of financial institutions. Thank you, all.