FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 21, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here in Winnipeg. The finance committee, as everyone knows, is here to consult with Canadians as to what the priorities should be vis-à-vis the 1999 federal budget.

It's a pleasure to have with us this morning representatives from the Canadian Federation of Students, Manitoba; the Canadian Federation of Students, Manitoba Component; the Council of Canadians with Disabilities; the Manitoba Association of School Trustees; the Manitoba Federation of Labour; the Manitoba Federation of Union Retirees; and the Manitoba Medical Research Council.

We will begin with the Canadian Federation of Students, Manitoba Component, Ms. Kemlin Nembhard, field worker. Welcome.

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Ms. Kemlin Nembhard (Field Worker, Canadian Federation of Students, Manitoba Component): Hi. If I can just clarify, the Canadian Federation of Students national office have already made their presentation. There's no one else here to make a presentation from the national office. It's just me from the component.

The Chairman: Okay.

Ms. Kemlin Nembhard: My name is Kemlin. That's like “Kremlin” without the “r”, and I'm the field worker for the Canadian Federation of Students here in the province.

The Fed is Canada's national student organization. We represent over 400,000 post-secondary education students across the country at over 60 colleges, universities, and technical institutes in Canada.

In Manitoba, the federation represents approximately 14,000 students at the University of Winnipeg, Collège St-Boniface, and Brandon University.

Across the country, our post-secondary education system is in crisis. Students across this country are in crisis, and there is a lack of government leadership, vision, and commitment to a truly high-quality, universally accessible, and nationally planned public system of post-secondary education. There is an overall feeling that the federal government is abandoning its responsibility to students and to the Canadian population as a whole in ensuring that our public system is truly accessible.

The 1998 federal budget was dubbed the “education budget”, but in reality it did little to deal with the issues students are facing these days and the situation confronting our post-secondary education system.

While the federal government claims to recognize the dismal position students are in nowadays, there has been no meaningful action to change the situation. Students across this country believe that the federal government has failed to address in any significant way the issues and situation they now face.

What follows are our recommendations to the federal government to make our public post-secondary education system more accessible.

Our first recommendations are on funding post-secondary education: increased dedicated funding being transmitted to the provinces and funding a national tuition fee freeze.

Since 1993, the federal government has cut $2.3 billion from transfer payments to the provinces for post-secondary education. The result of these cuts has been skyrocketing tuition and other fees, staggering levels of debt, decreases in educational quality across the country, and decreased accessibility for all.

As the government has cut huge amounts of money from the transfer payments to the provinces, very few provincial governments have been making up any of the difference; therefore, at the institutional level, to recoup the losses in resources, tuition and other fees have been used to replace government funding. The majority of the burden, which is a burden that can easily be carried if shared, has fallen on the backs of individual students through higher user fees.

Drastic increases in tuition fees have translated into significant increases in student debt load. Across the country, over the last five years, on average, tuition fees have increased by approximately 60%, while inflation has only increased by approximately 6% over the same time period.

Since 1990, debt loads for full-time students across the country, after graduating, have gone from an average of $8,675 to a national average of $25,000 in this past spring of 1998. As well, over the same time period, enrolment has been on a steady decline. In this province, over the last five or six years, each institution has lost students at the rate of between 3% and 6% every year. It's a huge amount.

We should be ashamed and appalled when we consider those facts and the fact that approximately 50% of full-time post-secondary education students in Canada are forced to get a loan to be able to go to university or college, and that doesn't even touch the people who can't even go, for whom the rising costs of tuition are too formidable a barrier for them to even step through the doors.

If the federal government is seriously committed to a high-quality, truly accessible public post-secondary education system and to ensuring that the needs of students are addressed, one of the most important steps the government must take is to make a massive financial reinvestment in post-secondary education and other social programs, dedicated funding to ensure that the money is spent by provincial governments where it is meant to be spent.

Skyrocketing increases in tuition fees must be halted immediately, and the federal government must also fund a national tuition fee freeze to bring all the provinces in line with British Columbia and Quebec, which are the two provincial governments that have shown more of a commitment to accessibility for post-secondary education by freezing fees across their provinces for the past three years.

Our second recommendation is for a national strategy for financial assistance that will enhance and improve accessibility, not worsen it.

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In the 1998 federal budget there were a few nasty surprises for students. Through the federal budget, the government passed several regressive changes to the Canada student loans program and to the Bankruptcy and Insolvency Act that will and have had definite effects on students and on accessibility of education in this country. I'll just go through some of those.

First is the change in the Canada student loans program. Basically, the new changes mean decisions about who can get a loan, who's eligible for a loan, are no longer done by a set of rules. It can be done by politicians behind closed doors, where banks and other financial institutions that have money to gain from students' indebtedness can have an impact on that decision. That's the first thing.

The second change is that credit history checks have been introduced into eligibility restrictions for student loans for anybody who is over 22 years old. That is a real change from the program itself. In 1964, when the Canada loan program was created, it was created to ensure the most needy students, who couldn't afford to go to school, could be able to finance their education.

Student loans are not the same as bank loans at all. From the inception of the program until 1995, the sole basis for assessing eligibility was need, which is not at all like most loans. Although there are several problems with the current restrictive needs-based criteria and unbearable debt burdens, the program's exclusively needs-based assessment ensured the neediest students received loans. That's in peril right now with the new measures. The new measures go against the principles of needs-based loans. Students in financial need are being punished for high student debt—the high student debt situation that has been caused primarily by government cuts to programs, not because students want to be in debt.

As well, there's no evidence to link past bad credit ratings to future default or bankruptcy rates on student loans. In fact, since the beginning of the program, a full 93% of borrowers have repaid their loans. I'm a perfect example. I put myself through school and I got a loan in my last year. But up until then, there were times when I was living on my credit card to buy groceries. That's a reality for students. To do credit checks would definitely eliminate some people, the neediest people, from the program.

In addition, students should have access to a clear loan approval process that doesn't include decision-making by politicians behind closed doors.

So we'd like to see that those regressive changes in the Canada student loans program are reversed in the next budget, that the program upholds the principles of needs-based loans, and that a fair, clear, publicly accountable approval process is in place.

The second change that happened was through the bankruptcy laws. In February 1998, buried in the federal budget, the Bankruptcy and Insolvency Act was amended for the second time in less than a year to extend from two to ten years the prohibition period during which individuals are not allowed to discharge their student loans in the event of personal bankruptcy, which basically means you can't declare bankruptcy, you can't charge bankruptcy on your student loans, until after ten years after you graduate. These changes are discriminatory against student debt holders.

Until recently, debtors were provided the same protection for student loans as any other consumer debt. This legislation has created a two-tiered law: one for student debt holders and another for every other consumer debt holder. Bankruptcy protection was put in place to ensure those who are destitute and are in debt can, as a last resort, apply for bankruptcy and discharge the remaining debt.

Although we've seen a drastic increase in student indebtedness in the past decade, coupled with high youth unemployment, high poverty, and inadequate financial assistance, students are continuing to repay their loans conscientiously. Since the inception of the Canada student loans program, the percentage of loans that have never been repaid has never gone above 7%, and that's for the last 24 years. That's a really high percentage when we compare with other forms of bankruptcy rates in other sectors.

A person has no need to declare bankruptcy unless they acquire a debt. They will, and are obligated by legislation to, repay a debt if they have the financial ability to do so.

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Students don't take on debt lightly. Students have debt loads primarily for three reasons: an inadequate student aid program that is solely based on loans and lacks grants for students, a lack of federal and provincial funding for post-secondary education, and user fees for education.

Students are also unable to pay their debts for a variety of reasons, including underemployment and unemployment, high bank interest rates, and a lack of federal and provincial interest in debt relief programs. Instead of providing useful solutions to high student debt, the federal government's response to the student debt crisis has been to cater more and more to the banks rather than to the needs of students.

In terms of the bankruptcy legislation, we'd like to see the federal government repeal the ten-year prohibition for the discharge of student loan debt and supplement the current debt reduction programs offered by the federal government to make them available to student debt holders in their first year after graduation.

The second section on student financial assistance is around the Canadian Millennium Scholarship Foundation. While we applaud the federal government's intention to address the student debt crisis, we have some serious reservations about the Canadian Millennium Scholarship Foundation. As stated before, since 1990 the average graduating student debt has almost tripled. With nearly 50% of full-time students being on student loans, this appalling situation must be addressed immediately.

As well as some of the issues touched on above, to effectively deal with student debt in this country the federal government must commit to the creation of a universally accessible, nationally planned national grants program that is based solely on need. Currently, student aid is a responsibility that is shared by both levels of government. Approximately 60% of the loans come from the federal government and 40% come from the provincial governments. On the federal level the only debt reduction measures consist of small federal debt remission programs and very limited grants to offset the federal portion of students' debts.

I just want to clarify the difference between a scholarship and a grant, because that's one of the questions I've heard from different people, whether I'm talking to MPs or people in the community. There is a big difference, and I'd like to explain that difference and highlight that. Traditionally, scholarships are awarded to students who achieve some high degree of academic excellence. They're offered on an institutional, faculty, department, or community basis. Grants are based on the financial need of the individual and are offered by governments. Canada is one of only two industrialized countries in the world without a national system of grants. The only other one is Japan. Even the States has a very comprehensive system of grants they offer their students.

Students from all academic achievement categories are graduating with high levels of debt and require relief. Scholarships don't meet the needs of all students. They only meet the needs of those with the highest academic standing.

Debt reduction programs should be targeted to those who need it the most, but at the same time they should be widely available to ensure high participation rates in post-secondary education. Canada needs a national grants program. Scholarships serve specific purposes for institutions and organizations in the community.

The goals of government and the role government plays in post-secondary education are much different. The federal government has a responsibility to ensure Canadians have an opportunity to pursue post-secondary education, regardless of economic background. This includes those Canadians with above average, average, and even below average grades, not just the few at the top of the class.

The millennium foundation should be transformed from a merit-based scholarship to a needs-based grant program, which is designed to promote the principle every Canadian, regardless of social and economic background, has the opportunity to pursue lifelong learning without taking on lifelong debt. The grants should be widely available to students enrolled in any public post-secondary education system in Canada in any year of study and in any program, faculty, or department, including graduate students. The fund should be administered publicly and should be harmonized with the provincial loans and grants programs.

Another problem we have with the millennium foundation is the current disbursements made by it, which would amount to 1,000 scholarships at an average of about $3,000 per year for up to 32 months, are clearly inadequate. The foundation itself would only help about 7% of students. Approximately 50% of full-time students are on loans, so 7% does nothing to even touch the amount of people who are in serious need.

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The third section is on tax measures. In June 1998, part 5 of Bill C-36 was passed, adding a new part to the Department of Human Resources Development Act that provides for the payment of grants to encourage savings under registered education savings plans, RESPs, called the Canada education savings grants. Through this the government will contribute 20¢ for every dollar contributed to a registered education savings plan, not to exceed $400 a year.

We have some serious concerns about that, and I'll just highlight some of them. First, the RESPs savings grants are made with no needs assessment, while a student in need must fulfil eligibility requirements before they can get a loan. There's no dollar limit on how much the federal government will put into this grant. The grant is about criteria and therefore can't be budgeted for. The savings grant entrenches a two-tiered system of education, which gives more money for some individuals to pay user fees and less money to those who can least afford user fees.

Public money given out in the form of these grants takes away from the money available to transfer payments to the provinces for post-secondary education and for needs-based grants, which are of far more importance. The RESP program provides money to wealthy families and individuals who can afford to save in RRSPs. Clearly this program will benefit those individuals with higher-than-average incomes because they're the ones most likely to take advantage of RESPs and RRSPs. To reward mostly high-income families with yearly savings grants will further disadvantage middle- and low-income families. This program will in no way help those who are denied access to post-secondary education due to economic barriers.

As well, the tax measures that are contained in this section of the budget are really tax expenditures, which will deprive the federal government of revenue that could be used to restore programs.

Another section of the tax measures we'd like to see is that currently a student is allowed to deduct about $1,000 from his or her income for scholarship funds. This is inadequate. Canada is one of only a few OECD countries that doesn't allow scholarship funds to be tax-free. It's particularly important for graduate students, who get a lot of fellowships and grants but also have to work to put themselves through school. So we'd like to see the federal government implement a specific tax measure to make scholarship funds tax-free.

The fourth section is on a national employment strategy for youth and students. One of the key issues of influence on student debt is under- and unemployment. These have a direct impact on the ability of students to pay to go to school, on living expenses while in school, and on repaying their loans once their schooling is completed.

Unemployment for young people cannot be overcome without setting specific targets. Targets for the number of new jobs for young people and students must be developed in consultation with youth and students' organizations, such as the federation, labour unions, government departments, business, and provincial governments. The federal government must provide a comprehensive national strategy to create meaningful, well-paying jobs for youth and students.

Public funds shouldn't be used to provide training subsidies to corporations that have no intention of investing in hiring new workers, but rather the money should be used for the direct benefit of youth and students. The federal government must also stop the discriminatory restrictions on unemployment insurance benefits to youth.

I'll just give a conclusion and summary of the recommendations. A society that aspires to overcome social and economic inequalities must provide education opportunities that break societal barriers and bypass economic disadvantages. A publicly funded education system that is universally accessible is an integral part of a democratic society, helping people become more full and active members of society as a whole. The federal government must provide leadership, vision, and commitment with regard to quality and accessibility of our public post-secondary education system. Instead, the federal government has consistently, since 1984, been reneging on its responsibility by handing over control of our public post-secondary education system to private and corporate interests. If the federal government is sincere in its desire to deal with the student debt crisis and to ensure that our public system is truly accessible, it must begin to take serious steps to change the climate students are facing now and can expect in the future.

The best means by which to guarantee that all Canadians who have the desire and ability to go can afford to attend university or college without having to mortgage their future is to ensure that the system is funded adequately. Institutional dependence on tuition fees as funding can only be decreased by increasing the level of government funding.

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Given that tuition fees constitute the largest single education-related expense, it comes as no surprise that a significant decrease in tuition will therefore bring about a decrease in student debt. In addition, of the utmost importance is ensuring adequate employment and providing grants for the most needy students while in school.

Again, just to go over the recommendations, the federal government must reinvest in post-secondary education and other social programs by restoring the transfer payments to the provinces, and implement a new formula based on dedicated funds for post-secondary education, health, and social assistance. That way the federal government will also be getting recognition for the money they actually give to the provinces.

The federal government must fund a national tuition fee freeze, reverse the regressive changes to the Canada student loan program, uphold the principles of needs-based loans, and ensure a fair, clear, and publicly accountable approval process with regard to student loan eligibility.

The federal government must repeal the ten-year prohibition for the discharge of student loan debt. They must also supplement the current debt reduction programs offered by the federal government to make them available to student loan debt holders in their first year after graduating from school.

The Millennium Scholarship Endowment Fund must be transformed into a needs-based universally accessible national grants program that is administered by Human Resources Development Canada and not by a private foundation, and would come into effect immediately to provide resources not only in the future, but for those in need today.

The federal government must also implement specific tax measures to make scholarship funds tax-free. As well, the federal government should acknowledge the active role that all levels of government play in direct and indirect job creation; reinvest in public sector jobs; increase funding for job creation programs; and set targets for reducing unemployment and provide a comprehensive job creation strategy.

That's it. Thank you very much.

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

We will now hear from the Manitoba Medical Research Council, Dr. Gary Glavin, regional director of the Medical Research Council of Canada. Welcome.

Dr. Gary Glavin (Regional Director, Medical Research Council of Canada, Manitoba Medical Research Council): Thank you.

Mr. Chairman, ladies and gentlemen, my name is Dr. Gary Glavin. I'm the associate vice-president for research at the University of Manitoba, the regional director of the Medical Research Council of Canada, and a member of the departments of surgery and pharmacology and therapeutics at this medical school.

Last year I appeared before this committee as part of a larger and nation-wide effort to alert and educate members of Parliament, and this committee in particular, about a health research funding crisis in Canada.

Mr. Martin and his colleagues on this committee, as well as throughout the House of Commons, clearly listened and heard the argument. Your action to restore the budgets of the Medical Research Council of Canada and the other major granting councils to 1994 and 1995 levels was welcome news, and the research community in this country is grateful. However, from the point of view of the MRC, last year's budget action on your part represents a beginning.

To continue the very positive trend you began, we need to now consider ways in which health research, the foundation upon which health care is based, can move into the new millennium. One way to do this is to embrace the innovative and forward-thinking concept of the Canadian Institutes for Health Research or CIHR, as envisioned by Dr. Henry Friesen, the president of the Medical Research Council of Canada.

The CIHR concept envisions partnerships between all three national granting councils, the existing networks of centres of excellence, and has the very real potential to eclipse the current health research funding concept and organization as we know it in this country.

This dramatic reorganization in health research is necessary to ensure that Canada realizes its commitment to be at the forefront of international health research. Last year I told you that the University of Manitoba alone lost 22 scientists, primarily to the United States. We lost their innovative minds, their patents, and their intellectual property to the United States, where the per capita spending on health research is eight times what it is in Canada.

Let me give you an example. There is, as I speak to you, a prominent Canadian scientist working in Kenya on HIV, which we all agree is an important and significant health problem in the world, as well as here in Canada. This individual has identified a genetic locus for HIV resistance. Think about the implications of that. If you can figure out what product that gene produces that confers HIV resistance and where it is on the gene, it is a very short step to a vaccine, to a prevention. He is at the world forefront of HIV research.

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At the same time as I'm telling you about his work that's going on in Kenya, we are doing everything we can to prevent this individual from changing his address from the University of Manitoba to the Aaron Diamond AIDS Research Center in New York. They're after him, and we're struggling to keep this individual in Canada who will, I'm sure, one day win the top prizes in the world for medical research.

The CIHR concept will provide an environment in which health research is fully integrated into health care—they're fundamentally and inextricably linked together. It will provide a link for investigators across the country to coordinate and focus our research efforts.

The Canadian Institutes of Health Research isn't bricks and mortar; it's a virtual centre. About 10 to 15 research centres across the country will link and coordinate research in all areas and disciplines throughout the country. Each institute will link and support researchers with common interests in aging, degenerative diseases, hepatitis C, HIV, chlamydia, immunology, neuroscience, and spinal injury, just to name a few.

An example is important. There is the issue of the so-called mad cow disease that struck in Britain a couple of years ago and could only be eliminated by eradication of the current beef stocks in the entire country. I need only raise the spectre of mad cow disease hitting the Canadian beef industry and the only solution being to eradicate the current beef stocks in the country and you can begin to imagine what that would do to the economy.

You need only raise the spectre of another blood contaminant. There is an unusual blood contaminant of Creutzfeldt-Jakob disease that has struck in various locations throughout the world and is transmissible through ingesting tainted meat and through blood transfusions. I don't think we need to remind this committee about the difficulties associated with tainted blood.

The overall objective of the CIHR is to restore Canada's position as an international leader in health care and research. The National Advisory Board of Science and Technology has established a benchmark that the federal government ought to be spending 1% of Canada's total health spending of $76.5 billion on medical and health research. Thus the CIHR should be funded at about $25 per capita or $750 million a year, versus the current funding of $267 million a year.

In summary, the CIHR will result in greater efficiency and synergy of Canadian health care researchers—and I say health care researchers because the link between basic health research and health care is now firmly established. It is an investment in Canada's future and in the well-being of our children and our grandchildren. The reality is that the time taken from the molecule to the bedside is shrinking. The CIHR concept, as envisioned by Henry Friesen and the Medical Research Council of Canada, will effect that change.

Thank you.

The Chairman: Thank you very much, Dr. Glavin.

We'll now hear from the Council of Canadians with Disabilities, Mr. Laurie Beachell, national coordinator. Welcome.

Mr. Laurie Beachell (National Coordinator, Council of Canadians with Disabilities): Thank you.

We have submitted an initial presentation. We are currently doing some work around income support systems in Canada, and we'll provide that to the committee at a later date. We hope to complete that within the next couple of weeks.

I'm pleased to be here before the committee once again. The CCD, for those of you who don't know, is a national umbrella organization of persons with disabilities that basically monitors federal legislation and programs to improve the status of people with disabilities. The CCD has been around for some 25 years now, and we have continued to see incremental progress in improving the status of persons with disabilities.

Today I'd like to give you some very brief comments on what we currently see happening to our community, some general recommendations on initiatives we would like to see within the federal budget, and identify a couple of areas where we believe further discussion is needed.

While I mentioned we have continued to see incremental improvements over the years, I would have to say that in the last few years we are, frankly, treading water, if not sinking below the water. As cuts to transfer payments to provinces have been made, the social services side of that equation, which is the essential component that assists people with disabilities to participate in community life, has been reduced.

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We've seen reductions in home care programs. We've seen reductions in transportation programs. We've seen reductions in services to the point where we actually had to initiate litigation to take various governments to court.

The most prominent of these cases was the Eldridge case. Interpretive services for medical services in B.C. were wiped out, so we had to take the Government of British Columbia to court. We won a unanimous decision from the Supreme Court that said access to medical services for people who are deaf does require the provision of interpretive services.

Unfortunately, that decision is a year old, and the Government of British Columbia is still not quite in compliance with the order of the court. So things are moving slowly.

Let me just say that at this point, our community is dismayed by the lack of progress. It feels that it has innovative solutions but finds governments unwilling to take risks or invest in new innovations to address the significant disadvantage they face.

So that's the current state. What do we want in the next while? What's critical to our community? An employment initiative remains the critical element. As the federal government has devolved labour market training responsibility to the provinces, no accountability criteria or mechanisms have been built into those agreements to ensure that those who are not EI-eligible have some access to labour market training.

For our community, this is critical in that most of our members are not EI-eligible. Most of our members have not made it into the labour market. Without a targeted labour market initiative, we will not see our community gaining access to those services. The labour market agreements that the federal government has negotiated remain totally silent on this issue.

The federal government did recognize the need for addressing employment to some extent, so it created the opportunities fund in the 1996 budget. That program is now two years old and it has another year left. It is $30 million per year.

We would like to see this budget extend and reaffirm that program. Without it, we would say that the federal government has abandoned people with disabilities. Not only in their negotiations with the provinces did they not assure that the concerns of people with disabilities were addressed, but the targeted initiative comes to an end within the year. This budget needs to reaffirm that program and reinvest in it so that we do not see over the next year a wind-down of many initiatives that are actually having an effect and getting people jobs.

Second, while there have been incremental improvements in tax fairness for people with disabilities over the years, there has not been a systematic review of the tax system as it addresses the additional costs that people with disabilities bear. We would urge that department of the government to look at the definition of disability within the Income Tax Act to see who is actually eligible.

Some of the tests now being imposed to determine eligibility for disability tax credits are quite bizarre. You need to have a medical certificate. The determination says things like, can you walk 50 metres unaided? Many of our members could walk 50 metres, but they would do virtually nothing else that day if they did that. The energy that would be required to do that would wipe out any energy to go to work or continue functioning for that day. So I think we have to look at how we define both the definition within the Income Tax Act and the interpretation applied by Revenue Canada.

We would encourage the refundability of the disability tax credit and medical expense credit. Refundability, however, requires that the federal government negotiate with the provinces to ensure that this refundability is not treated as income and deducted from social assistance. Present tax benefits are only for those persons who have a taxable income, yet many people with disabilities experience additional costs even though they have no taxable income and live on social assistance. If we made the tax credit refundable, those on social assistance would have benefits, but only if agreements were reached with the provinces not to treat it as income and have it deducted dollar for dollar from their income from the social assistance benefits, which we've seen in other initiatives.

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Frankly, some years ago the federal government increased the disability benefit of $150 through the Canada Pension Plan, and not one Canadian with a disability got that benefit because the provinces grabbed it all back.

So we would encourage looking at the tax system, both those two initiatives and a more fundamental review of tax in offsetting additional costs of disability. In a broader initiative, our community now talks about what we call the Canadians with disabilities act, a mechanism for...not entitlement but for ongoing review of policy as it is created. In an analogy, we would compare it to an environmental impact survey. As social policy initiatives go forward there would be a process imposed upon those initiatives that they look at the impact upon persons with disabilities.

In the United States you have the Americans with Disabilities Act, which is civil rights legislation. We do not believe we need that, in that we have the charter of protections and guarantees, but we do need a process to ensure that things like the negotiation of labour market agreements somehow are made to address the impact upon the community, and it is not an afterthought that our community then is addressed.

Those are initiatives we see coming forward at this point. As mentioned, we have some concerns around income support programs, in particular the rather devastating changes to the Canada Pension Plan disability program. We have seen thousands of our members cut from CPP disability benefits with the new system of review. With a new system of eligibility you will be penalizing those persons who are young who become disabled, because they will not have significant attachment to the labour market to be eligible for disability benefits.

On the health side, our community, as I mentioned, was concerned with the change in the structure of transfer payments with the establishment of the CHST. The discussions about reinvestment in CHST seem to focus on health. While our community has issues in the health mode as well, primarily we're looking at social services. If there is a targeted initiative in the federal budget to reinvest in health, it will not necessarily address those issues of social services. This is probably the fundamental issue we have, in that we believe the federal government must ensure the citizenship rights of Canadians, must ensure equal access and benefit to all Canadians. Block funding systems with no accountability measures or conditions attached to them do little to promote that and in fact leave various communities abandoned by the Government of Canada and left to the discretion of provincial governments.

What we see happening is greater disparity among the provinces and a lessening of service. We still have people who purchase their wheelchairs. We still have people who cannot get the drugs covered for various treatments; for multiple sclerosis, for example, or persons with AIDS. We have great disparity across the country in attendant care provisions—some universal programs, some means tested, some with no programs at all and dependent upon family. These things restrict both the mobility of people with disabilities and their access to be full citizens in their community.

In summary, the last number of years, frankly, have not been progressive. We have found ourselves arguing for targeted programs rather than access to generic programs, because the generic programs have been exclusionary or have disappeared. We believe the tax system can do much to assist our community, but it needs a fundamental review, looking at definitions in particular. We believe the federal government must assert its leadership to ensure standards of service provision across the country.

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Thank you.

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

We'll now hear from the Manitoba Association of School Trustees, Mr. Len Schieman, president, and Jerry MacNeil, who is the executive director. Thank you.

Mr. Len Schieman (President, Manitoba Association of School Trustees): Thank you very much, Mr. Chairman.

The Manitoba Association of School Trustees welcomes the opportunity to make this presentation to the House of Commons Standing Committee on Finance.

We believe that the architects of the 1999 federal budget need to keep children at the forefront of their thoughts as they chart Canada's financial course for the upcoming year and beyond. We know you share this fundamental belief. Our purpose in making this presentation is to underscore the urgency of the situation.

Our association represents Manitoba's public school boards, but we believe that our responsibility extends to all children, not only those who are school-aged. We share a social responsibility with other levels of government—communities, churches, and families—to ensure that all children are provided with the physical and psychological supports they need to flourish both as individuals and as members of society.

One of the greatest obstacles we have to overcome in our quest is poverty, because its effects on the well-being of children are so insidious. This is not a new realization. In 1989 the House of Commons passed unanimously a resolution to eliminate child poverty in Canada by the year 2000. Yet, by 1995 1.5 million Canadian children, 21%, lived in poverty, an increase of 58% since the 1989 resolution. And Manitoba fared worse than the nation as a whole in this respect.

What does poverty mean to children? Its effects often take hold even before birth. Babies born to mothers living in poverty more often have a low birth weight. Research has shown that a low birth weight can cause serious costly and life-long disabilities and that good nutrition during pregnancy can often prevent these conditions or these problems.

As well, a number of health conditions in infants and children have been tied to the inadequacy of specific nutrients in the mother's prenatal diet. Ensuring that mothers-to-be and infants have the nutritional building blocks they need is critical in giving children the best possible start in life. Strong and healthy babies grow into strong and healthy children, children able to reach their full potential.

In July, Manitoba announced a new program, Woman and Infant Nutrition, which will provide nutritional education and nutrition benefits to provincial assistance clients who are pregnant or who have children under one year of age. This year, some 1,800 families are expected to benefit from this program. But without action on the part of the federal government, many more will fall through the cracks.

Earlier this month, a committee with representation from federal and provincial governments and the Manitoba Keewatinowi Okimakanak, a group that represents 26 northern Manitoba first nations communities, released a report detailing aspects of life in these communities. According to that report, food allowances fall an average of 35% short of covering the cost of dietary essentials. In 20 of the 26 communities studied, total welfare payments did not cover food expenses. With as much as 90% of the population in some of these communities dependent on welfare, problems associated with malnutrition are pervasive.

The committee made two recommendations to address this problem: a 20% increase in the food allowance in remote communities that do not have an all-weather road; and a subsidized transportation program that would allow food to be shipped at mail rates, that is 30¢ a kilogram, rather than cargo rates, which are 80¢ a kilogram. The report estimates that the transportation subsidy would save a family of four some $600 on their food bill, which could be used to increase the quality of the family diet.

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The other group that requires federal assistance to ensure their dietary needs are met is the working poor. A large number of the 1.5 million Canadian children who live in poverty are not of families dependent upon social assistance, but in working, often single-parent families.

Clearly, to change social assistance programs such as Manitoba's WIN initiative and those recommended for northern communities will not help these children and their families.

We need to explore alternate ways of ensuring they can enjoy the most basic human right of an adequate diet. The most effective and expedient way of reaching all children is through an enhanced national child benefit. The challenge of meeting the nutritional needs of the children continues for families in poverty as their babies grow into toddlers and then move on to school.

At the same time, they are faced with new and equally difficult obstacles. One of the greatest struggles faced by many parents, not only those in financial straits, is making appropriate child care arrangements. For many parents, the cost of care is beyond their means. For others, the hours of operation of child care facilities may not coincide with their work schedules, or there may be no available spaces. As a result many parents are forced to resort to makeshift or inadequate arrangements, or to restrict their participation in the workforce.

In a recent Canadian policy study, The Benefits and Costs of Good Child Care: The Economic Rationale for Investment in Young Children, Gordon Cleveland and Michael Krashinsky highlighted the economic benefits of supporting comprehensive child care.

The human benefits of providing quality care for all children should be self-evident. For this reason, MAST joins the Canadian School Boards Association in calling on the federal government to develop and implement a national child care strategy that will ensure all children requiring care outside the home have access to affordable, licensed care by qualified individuals in a safe, stimulating, and nurturing environment.

All children can benefit from quality child care and preschool education, but none more so than those at risk. Research by neuroscientists indicates intensive intervention in the early years can make a dramatic difference for these children. The brain is not fully developed at birth. There are vital neural connections to be made in the first two years of life. But if these connections aren't made soon enough, some windows of opportunity slam shut. Without help in the preschool years, some children will never catch up to their peers, even after years of special education and expensive intervention.

Studies such as the High/Scope Perry Preschool Project have clearly illustrated the human and economic benefits of quality preschool programs. But programs such as these cannot exist without the support of government and community.

While the start of a child's school years may alleviate some of a parent's child care concerns, although they are often replaced by new ones, other challenges emerge to take their place.

Although access to public education is the right of all Canadian children, there is a cost associated with fully exercising that right. Some of those costs are nothing new. Children have always needed school supplies and suitable clothing to attend class. However, changing economic realities have resulted in some costs that were traditionally born by government or the school division being assumed by individual schools or families. For the families of children living in poverty, finding the money to meet these expenses is especially difficult.

A recent front page story in the Winnipeg Free Press highlighted some of the ways school communities are raising funds to support programs hit by budget cuts. Through time-tested ventures such as candy sales and walkathons, and new initiatives like corporate sponsorship and the sale of advertising, schools are raising enough money to pay for services and supplies they could not otherwise afford.

In some schools, those funds are used for new playground structures and computer upgrades, but in some schools, and for some students, the needs are more basic. One inner city principal recently decided for the first time he was going to allow drink machines in the halls of the school. His goal was to generate funds to buy bus tickets to help his students reach school safely. The few dollars required to avail themselves of public transportation were beyond the reach of many students living in poverty.

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Poverty means that many young children are not physically or intellectually prepared for school. Poverty continues to take its toll on these same children as they move through the school years.

Children need hope. They need to see their own future in a positive light, but poverty robs many children of that hope at an early age. The loss of hope is reflected in their behaviour.

As they get older, children who live in poverty often require assistance from a variety of government departments and social service agencies. Health problems associated with poor diet and other lifestyle issues may increase. Many children fall further and further behind in school, requiring intensive and expensive special programming.

Children who live in poverty are more likely to be involved in gangs and engage in other criminal activities. These children can become all too familiar with our police and court system.

One of the greatest tragedies associated with children and poverty, however, has to be the rate of teen pregnancy. Too many poor teenagers, still children themselves, are having babies of their own. The cycle of poverty and all the problems associated with it is in this way being perpetuated. As a society, we cannot afford to let that cycle continue unchecked.

As a just and caring society, we must find the answer to two basic questions. First, what can we do to reduce the number of Canadians, particularly Canadian children, who live in poverty. Second, what can we do to mitigate the circumstances of those individuals who continue to live in poverty?

In answer to those questions, the Manitoba Association of School Trustees makes the following observations and recommendations.

Poverty impacts on children and their families in many negative ways, but never more fundamentally than the effect it can have on diet and nutrition. Diet affects a child's physical, intellectual, and emotional development. Poor nutrition prenatally and in infancy can be reflected in a child's readiness to learn once he or she begins school. Poverty can have long-term physical, intellectual, and social effects that seriously compromise a child's chance of growing into a healthy, happy, contributing member of society.

Therefore, the Manitoba Association of School Trustees recommends that the federal government take those measures necessary to ensure that all Canadians, and in particular children and pregnant women, have the resources to avail themselves of a healthy, well-balanced, and nutritionally adequate diet. For some families, this goal may be achieved through changes to social assistance programs; for others, however, we need to adopt a different approach.

Families living in poverty are often working families who depend on the national child tax benefit to augment wages that are inadequate to meet their basic needs. However, that benefit is often not enough. Therefore, the Manitoba Association of School Trustees recommends the federal government allocate an additional $850 million to the national child benefit in 1999 and a similar amount in the year 2000, thereby doubling the amount to which the government previously committed.

Young children need more than decent food and clothing if they are to thrive. They also need to be cared for in a loving, nurturing environment. They need to be challenged and encouraged if they are to enter school ready to learn. Whether children are being cared for by their parents or by outside caregivers, these needs remain constant. Unfortunately, many parents are unable to access high-quality care for their children when necessary. This is especially true for families in poverty, where the costs can be prohibitive.

Therefore, the Manitoba Association of School Trustees recommends that the federal government develop and implement a national child care strategy that will ensure that all children requiring care outside the home have access to affordable, licensed care by qualified individuals in a safe, stimulating, and nurturing environment.

Despite our best efforts to nourish and nurture children so that they will not feel the impact of impoverishment, the reality is that there are over one million children in this country who are already caught up in poverty's web. We must explore ways of helping these children more effectively and efficiently.

For years, government departments and other social agencies working with children have compartmentalized their services. Their individual focus is on the health, education, or family life of children, or on any of the myriad of subcomponents of these service areas. What government agencies need to do, however, is focus on the overall physical, emotional, social, and intellectual well-being of individual children with whom they work. Such a holistic concern does not meet the narrow criteria of their mandates.

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Therefore, again, the Manitoba Association of School Trustees recommends that the federal government provide increased financial assistance to the provinces in support of the development of integrated service delivery models to meet the needs of children who are at risk at an early age.

Thank you.

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

Now we'll hear from the Manitoba Federation of Labour, Mr. Rob Hilliard and Mr. John Doyle. Welcome.

Mr. Rob Hilliard (President, Manitoba Federation of Labour): Thank you very much, Mr. Chair.

This morning we'd like to direct our remarks to three subject areas: first, the pay equity liability of the federal government; second, the surplus in the EI account; and third, the fiscal surplus, particularly within the context of an economic slowdown.

On the pay equity liability, there has been an awful lot of talk since the summer ruling that directed the federal government to make the corrections to their own workforce. An awful lot of the talk has been around the issue that the amount is too large, that there is too much of a liability here, and that there has been too large a financial amount owing that has been built up. That's pretty hard to take, frankly, because the sole reason that there's a large amount of money owed to the federal workers is due to the fact that the federal government itself, through several administrations, has resorted to foot-dragging and legal manoeuvring, all designed to avoid what even Mr. Chrétien acknowledges is the government's legal and moral obligation to make adjustments to their pay scales.

To recap in a very general way, the process began way back in 1984, and it only began at that point after an unsuccessful attempt by the federal government unions to negotiate an agreeable settlement with the federal government at that time.

After filing the complaint with the Canadian Human Rights Tribunal, the federal government and the unions involved agreed to a joint process and embarked jointly on a comprehensive study of the wage rates within the federal civil service. In that process, literally thousands of jobs were assessed and analysed. The process took four years. All the parties were involved in it on a voluntary basis and agreed that was the way to go—the federal government, the unions, everybody.

After the study had been completed and the data were being analysed, the cold hard fact that there is significant, systemic discrimination in the pay scales of the federal civil service became known to everybody, and it is creating quite a large liability for the federal government. Instead of meeting that obligation, the federal government began to withdraw from the process and to challenge it. Instead of working with their own workers, there were countless numbers of court appeals and appeals on court decisions. It was back to the human rights tribunal, and so on. There was a whole series of legal manoeuvres all designed to drag the process out and to enable the federal government to not meet their own obligations to their own workers.

That is really the sole reason the liability has been built up to the very large number it is now. Continuing the past tactics of foot-dragging, of legal manoeuvring, and of simply avoiding the day of reckoning is increasing that amount every day and it makes it even more difficult to deal with.

I'd like to contrast the federal government's approach to this topic with the Manitoba government's approach, which came about at the very same time.

In the early 1980s, the Manitoba government was similarly advised by their union that they had significant discrimination in their pay scales. The two parties sat down together and negotiated an agreeable method of assessing their pay scales. They assessed them together. They agreed on the final result, and they implemented the final result years and years ago, in the early 1980s. They adjusted the pay scales, they paid people accordingly, and life has gone on just fine ever since.

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No liability has been built up by the Manitoba government. You have a workforce that does not feel their employer has ripped them off or continued to use legal manoeuvres and every trick in the book to avoid making the payments owed. The Manitoba government has proceeded without any of these issues or problems, and everything has gone on just fine.

The federal government could have reacted the same way at the time, but didn't. Unfortunately, it continues to not react that way, even to this day, some 14 years later.

We would urge the federal government to meet their obligations, stop the foot-dragging, and make the payments that even the Prime Minister and previous prime ministers have acknowledged are owed to their own workers. Stop what you've been doing, pay what you owe, and get on with things.

Before moving on to a different topic, I would like to pose a question on that topic to the committee. I'm somewhat puzzled by statements that have been made by different governments. It began with the Mulroney government and it continues today even with Mr. Massé, who has said that the money has been set aside to meet these pay equity obligations. If the money has been set aside, then what is the impact on the daily operational deficit? Is there one? I don't know. I don't understand what those statements mean. If the money has been set aside to do this, why don't you do it?

Is there going to be an impact on the operational deficit if the payments are made now? I don't know the answer to that question, but I do get confused by statements made by ministers and prime ministers when they say the money has been set aside. If it's set aside, then pay it.

On the topic of the EI surplus, first of all, we'd like to point out that the unemployment insurance account or employment insurance account—whatever it's being called these days—was set up to deal with the problems of unemployment. It was set up to cover off income loss for people who are temporarily unemployed during a period of time when they're seeking employment somewhere else.

We believe that objective is a laudable one and ought to be maintained. We do not agree with using surpluses from that account for other purposes. In fact, if one looks at the budgets of the last few years and at the surplus of the EI account, if it were not for that surplus that Mr. Martin brags about in terms of balanced budgets and now of fiscal dividends, it would not be there at all if he were not pillaging the EI account.

We believe that government surpluses, fiscal dividends, ought to be paid by the entire tax base, not just by workers and employers. This is a misuse of a targeted tax that is being used to cover off all programs. We don't believe that's fair. That's not the original intent. That's not what it should be used for. We would support the management of the EI account at arm's length for government so that those transfers back and forth no longer occur.

I'll just demonstrate again where this surplus comes from. The surplus in the EI account is not due primarily to the fact that unemployment has fallen in this country; it's due primarily to legislative changes that have taken place, first with the Mulroney government and second with the Chrétien government, that have reduced eligibility and benefits levels, which have had the effect of cutting off a lot of unemployed people from the benefits of unemployment insurance.

I'll just quote a couple of figures. While 87% of jobless workers received unemployment insurance benefits in 1989, that number today is between 36% and 37%. The surplus is owed to those workers who have had benefits cut from them.

If benefits were restored to the levels they were prior to the last legislative change made by this government, coverage could be increased. By maintaining premiums at their current level, without raising premiums at all, coverage could be increased from the current level of 37% of the unemployed to approximately 70%. The benefit level could also be returned to 60%, and the surplus would be maintained. You would not be going into a deficit situation. You would be balancing the books. The amount of revenue every year would be equivalent to the amount of expenditure every year. You would not be putting the account in any jeopardy. You could raise the benefit levels, and you could restore eligibility criteria that had been there before.

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Moving on to the fiscal surplus, I think the appropriate way to look at the fiscal surplus would be to ask the question, what is the maximum benefit we can derive from this amount of money? What is the maximum benefit to Canadians? To get the biggest bang for your buck with this amount of money, what is the best way? Many in the business community, and many others as well, are saying pay down the debt; that's what we need to do.

I'd like to refer to a Globe and Mail editorial of last year that really talks about the value of putting money on the debt. I shouldn't have to remind members of the committee that the Globe and Mail isn't exactly a left-wing organ. It said that debt in the abstract is not a problem. Its relative size is what matters, and as the relative size of the debt to the Canadian economy diminishes, that's what the issue really is. So in dollar terms, with the relative size of the Canadian economy, the debt's weight will fall precipitously, as will the interest burden, as a proportion of federal revenue.

That relative measure, the ratio of debt to gross domestic product, is the only one that really matters. Just holding the debt constant while the Canadian economy continues to grow sends the debt-to-GDP ratio spiralling downward. At the same time Ottawa would have money freed up to spend on new programs or tax cuts.

By the end of the next federal government's mandate, approximately 2002, even if the federal government does not put one dollar of surplus on the debt, the debt-to-GDP ratio falls, and they assume an annual economic growth rate of 2.5% after inflation. But even if that number were overly optimistic, there's no question we're talking about economic growth. Without putting one penny directly on the debt, the debt-to-GDP ratio would fall from 74% to 59%. Ottawa could then simultaneously increase program spending by up to 4.5% a year and offer Canadians a substantial, multi-billion-dollar tax cut, or Ottawa could throw its energies into debt reduction, defer the tax cut, and watch the debt ratio fall one measly additional percentage point to 58%.

It seems to me that simply isn't a good way to spend your money. It doesn't accomplish much. Putting it directly on the debt may make some sense to people who are looking at their own personal debt and saying, I have to get out of debt, but, frankly, that analogy doesn't hold very well when we're talking about government debt and the relative size of the economy. That's the issue we really need to be looking at.

Paying down the debt directly doesn't gain us much at all. It could, however, gain us quite a bit through tax cuts or direct government spending. We would advocate that an across-the-board tax cut isn't the most advantageous way of spending that fiscal dividend either. The difficulty with across-the-board tax cuts is the money that gets put into Canadians' pockets can wind up being spent in a lot of different ways. Particularly when we talk about upper-income Canadians, that money doesn't often get circulated in the local economy. It doesn't get used for buying Canadian goods and services or for promoting job growth within Canada. People can spend it on imports, people can travel, people can save it, people can make investments overseas—people can do a lot of things with that money.

For low-income Canadians much of it gets spent in the local economy. If there were a targeted tax cut aimed at low-income Canadians, that would probably benefit the Canadian economy the most. It would also, in our view, be far more equitable and would be helping those Canadians who need it the most. But it also has the most positive spin-off on the Canadian economy.

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However, we feel that the best way of using the fiscal dividend—and it is a fiscal dividend. We're talking about a surplus here; we're not talking about raising more money through additional taxes, and we're not talking about government deficits. We're talking about what to do with the fiscal dividend, and the greatest benefit with that fiscal dividend can be derived by spending it directly on the Canadian economy, by direct government spending.

We would advocate putting that money into health care, because we feel that health care has suffered the most, due to the focus on dealing with fiscal deficits by all levels of government over the last number of years. I think there is no question in almost every Canadian's mind that health care has suffered significantly as a result of that focus. Now that we have a fiscal surplus, money needs to be restored to the health care system.

That would have a variety of benefits. First, I think it deals clearly with the deterioration that has been going on in health care. This week we witnessed a panel of people from all sides of the political spectrum talking about their experiences in health care. Almost everybody in Manitoba has had either a direct or indirect experience with deteriorating health care over the last few years.

I thought the most telling quote I saw from that panel was a gentleman who talked about bringing his elderly mother into the hospital and having her sit in the hallway for four days, and the indignity she felt as a result of that and the outrage he felt—in fact, the shock he felt—that this could go on in our country, a prosperous country. He described the hospital as reminiscent of third world health care.

I don't think that's an overstatement, in some cases. In fact, I think that's the direction in which our Canadian health care system has been going, and money must be restored to it.

It would have the added benefit of stimulating the Canadian economy. Mr. Martin has expressed concerns about the financial crisis in the global markets and the impact that will have on the Canadian economy. There is something his government can do about that, and that is, to use that money to stimulate—albeit not in a massive way but in some way—the local domestic economy by putting that money directly in investment into Canadian goods and services like health care. It will be good for job creation, for health care, and for a general economic stimulus.

In summary, we would like to say that if the government doesn't respond in some way by putting this money back into the Canadian economy—and Mr. Martin continues to be concerned, and I think for good reason, about the impact of the global economy on the Canadian economy. We could have an exaggerated contraction going on here in Canada if he reacts by contracting the government rather than using that money to stimulate. If in fact there is a contraction going on in the private economy and in the government economy, the public economy, as well, the whole recession will be amplified and exaggerated, unemployment will begin to climb again, we will have concerns about the federal public purse, and we will begin to go back to the spiral we had of worrying about government revenues, worrying about deficits, and worrying about cutbacks. This doesn't have to happen if this surplus gets used wisely to restore services that have been cut and to stimulate the Canadian economy.

Thank you very much for the opportunity to present on this topic.

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

Now we will move to the Manitoba Federation of Union Retirees, Mr. Albert Cerilli, president.

Mr. Albert Cerilli (President, Manitoba Federation of Union Retirees): Thank you and good morning. Welcome to Winnipeg, again.

We welcome the opportunity to share with you our views on what we see as the most depressing areas of our country that need the federal government's attention. As members of this committee, you can have an influence on what direction the federal government can take to stake out a new direction for Canada and set new directions for the global economy.

Yesterday, October 20, we made our presentation to the Manitoba Minimum Wage Board, as you can see in our first attachment. In researching our case to sustain our position for a higher minimum wage for Manitoban workers, we found a number of similarities for this presentation, and we wish to highlight the areas that stuck as obscene and a danger to our democracy.

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As pointed out in our brief to the Manitoba Minimum Wage Board, the rich-poor gap is becoming so wide that all resemblance to equality and fairness is lost. In fact, the United Nations human development report measuring poverty in rich countries gives Canada a failing grade, and our federal government keeps towing the line of the powerful transnational corporations that threaten our democracy as a free and democratic society.

I want to take you to the bottom of page 1 of that brief, and I quote:

On September 8, 1998 the Winnipeg Free Press reported that “Rich-poor gap means we're no longer No. 1.” The article is attached, and it is worthy to further quote “There will be a lot of commentary on where Canada sits on this new poverty index.” The United Nations report is finally driving home the fact that we as a Province and a Country can no longer gloat about being number one.

The control of these super-powerful corporations over the global economy has been and is leapfrogging federal and provincial governments worldwide. The governments are more likely to pass laws that give these corporations a legal and legitimate right to strangle human rights and workers rights, and all of the other rights of the economy that we can think of, rather than stand up and say these are the new rules, on an even playing field basis, for all countries, for all economies.

Our Canadian government is in fact seen by Canadians as no different from the government of a dictatorship. The recent humiliating APEC Vancouver summit fiasco will haunt Canada's role before the world stage as a failure in standing up to the likes of Suharto, who is estimated to have amassed some $40 billion during his 32 years in power in Indonesia, and that was reported in the recent September issue of the Economist.

I would like to refer back to our Manitoba minimum wage brief and review with this committee the wages and benefits of CEOs and their corporate profits as related to taxes and the non-tax of the movement of international money transfers. First, I wish to quote, from pages 1 and 2, the poverty line of some five million Canadians versus CEO income and benefits, while finding new ways to cut jobs—and all you have to do is read the headlines this morning in regard to what CN intends to do after privatization and deregulation and the like.

I'll quote a short paragraph from page 2 of that brief:

The Jesuit Centre for Social Faith and Justice [based in Toronto, Ontario] produced a poster of Corporate CEOs and Presidents salary and total compensation for 1995 and I will quote a summary from the poster: “These are the real special interests—the 100 largest companies in Canada. Collectively, they have made record profits in recent years—over $65 billion in 1995—while 1.5 million Canadians remain without work.”

Those figures are still true today. To continue:

“The CEOs shown below were paid an average of $2,654,116 in 1995 nearly 90 times the average wage of working Canadians at $29,835.” May I also add to you in the matter before you that this means that many CEOs employ minimum wage workers in those Industry, creating up to 200 times the Manitoba [$5.40] minimum wage disparity between those that have and those that do not.

We make some obvious recommendations to this committee as follows, but before I do that, I want to quote from a special report that I received from one of our members who volunteers her time at the Red Deer Food Bank. I'll read this into the record, because it's really stunning about what is happening in our wage structures in this country and our workforce. Some 5.5 million people are either underemployed, unemployed, on social assistance, and so on.

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The proportion of working people who need to turn to the food banks has been rising steadily over the years. Since 1993, when 10% of our applicants were employed, the proportion has risen to 18% in 1997. The majority of those jobs are full-time, with the next being part-time, and the fewest of the employed seeking food help are casual.

Where are people who are not receiving a living wage working? The answer may or may not surprise you. In this report we will not name names, only the types of employment. One reason is to avoid embarrassment. The other is that some of the businesses are supportive of food banks. It lists a number of companies, including government, whose workers use food banks.

This kind of pressure on our society has to stop. The volunteers of these communities, and this is Red Deer, are at their wits' end in regard to helping people and noticing people who are trying to feed their families and are starving. We heard just now from the school trustees in regard to the development of young children when they suffer from lack of food and nourishment.

We've heard from the disability people in regard to what is happening with the Canada Pension Plan and disabilities. Well, we can't tolerate this kind of stuff any more in this country. I just say to this committee, it's about time we change their systems for a more equitable means of society.

The recommendations are very simply put. Oftentimes I come before this committee and give out a whole slew of figures and facts about who's getting what. I just wanted to make it brief and simple this time so that you get the message that there's something wrong with this picture. Society will not stand still for these kinds of disparities to carry on. You're going to have a civil uprising in this world like you wouldn't believe. Canada has to stand up and say enough is enough.

One of the recommendations we put to you is to put into Canadian law something that changes the requirements to tax international money transfers, referred to by some as the Tobin tax. You'll probably hear this afternoon from some of the other presenters in regard to moving trust funds out of the country, where $750 million in taxes was not paid by a large corporation. We can use the new taxes to create decent-paying jobs so that they don't have to go to food banks and beg.

I'm pushing 70 years of age and I've seen plenty. We're reverting right back to dictatorships, where nobody gives a hell until something really starts strangling us in regard to what we want as a democracy.

In relation to recommendation 2—you just heard from the Federation of Labour, and believe me, we didn't get together to write this thing—allow labour and business communities to meet with government to set up a new system of meeting the needs of the unemployed and underemployed through the employment insurance fund. That's an arm's-length administration, where they'll decide on things like the amount of training and where to create the jobs, and pay the people who are suffering. Meanwhile, the federal government reduces the qualifying period so incomes can be paid to the affected workers. You heard the figures from the federation here so I won't repeat them. And the federal government should stop any move to raid the EI fund. That's all it is: a raid on funds that don't belong to this or any other government.

By the way, there are some good experiences in the field in Germany and Holland in regard to recommendation 2.

Recommendation 3 is to amend the tax bracket to purely reflect the zero to CPI increases year after year, calculating the personal tax credits to increase in the percentage amount of the consumer price index, resulting in full indexing. I thought we had done something about that, but apparently my accountant didn't tell me.

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I was watching The Money Show on CBC the other Sunday, and the chap from KPMG talked about tax bracket creep. He gave us examples, and I want to read them into the record so that you can do something about it, because we're recommending to vote at zero, not 3%.

Tax brackets and X Files are both creepy. So you think you've made it more than half way through 1998 without being hit with a federal tax hike. Think again, because the inflation rate hasn't increased by more than 3% in each of the last five years. The federal tax brackets and amounts used to calculate personal tax credits have not been adjusted for inflation since 1992. Limited indexing adjustments to the amount over three points result in an additional hidden tax as your cost of living increases, something called bracket creep.

For example, if full indexing had been in place since 1988 when personal credits were introduced as part of the tax reform, the basic personal federal tax credit would be $260 more than the current $1,098. Not only that, the lack of full indexing since 1988, when the number of tax brackets was reduced to three, has caused about $14,070 of income to creep from the middle tax bracket to the highest tax bracket, with the result that the higher income earners are subject to a higher rate of tax of about $14,070 more than they would have been if the bracket had been fully indexed. The result is your taxable income is between $36,624 and $59,180. Bracket creep will cost you $1,339 in 1998. If your income is over $73,000, your bracket creep cost will be $1,972 this year.

So there's an obvious need for the change to the taxes, to the bracket creep, as it's referred to.

Four, restore the federal transfer payments to the provinces and territories in order to rebuild Canada's health and social programs, post-secondary education, retraining, and so on.

I think it's becoming obvious we're falling apart at the seams for the sake of reduced budgets, debts, and deficits. I say there's nothing wrong with that, but we have to look in the mirror and say when is enough, enough.

Five, put in place a program that will deal with child poverty and poverty as a whole by way of a child benefit increase, and implement a program that will provide shelter for the homeless. In the United States there are 2.5 million homeless people. If we take the percentage used in different forums of Canada's size being 25%, you're going to have close to 0.5 million or 0.25 million people who are homeless in this country. That's a shame.

Last and foremost, report to the federal government that Canadians will not tolerate any politician or person who thinks the rights and protections of our democracy are trivial or for sale. That politician or person is committing a serious mistake. Two world wars were fought to protect our democracy and the rights of free people. The APEC Vancouver summit interference with our freedoms of thought and expression will not be allowed again in this country. You can take it home to the federal government and report that. I'm telling you Canadians are fed up to their eyeballs in fighting all the other battles, and now we have to fight for our democracy again.

I say to this committee that together we have a responsibility to put this country back on track. Thank you very much.

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

We'll now move to the question and answer session. We'll begin with Mr. Epp. It will be a 10-minute round.

Mr. Ken Epp (Elk Island, Ref.): Thank you, people, for coming here today to enlighten us with regard to your views. I appreciate very much the dedication of all of the witnesses we're hearing from as we travel across the country, yours included.

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With your permission, I'd like to just go down the list, hopefully approximately in the order you gave your presentations, although when I say something, if some of the rest of you want to jump in with a comment, I think that might be in order, if the chairman permits it.

First of all, I'd like to talk about student things. I taught for 31 years before I got into this business. One of the things I say is that when I was teaching at the college level, I had some success. My students usually learned a little bit every day. Most of the time I learned too. Where I work now, that doesn't often happen.

This has given me a perspective on education. Of course, having worked with college-age students for some 27 years of my 31-year teaching career, I have a lot of empathy and concern for the way students go through life these days.

I think most of the people on the panel, Kemlin being the exception, will remember that when we went to school, things were a lot different. I know that as a student I could make enough money in the summer to pay my way through school. In fact, I consistently made 50% more than I needed every year, so I had a lot of spending money in those years as a student.

When I see what students are going through nowadays, very frankly, I'm very concerned about it, because what we're having is a change in the way we think nationally. Our governments are in debt. As individuals, we're in debt.

Now, when students graduate from university or college and they're beginning their careers and professions, we're arranging our affairs so that they too have a maximum amount of debt at the beginning of their careers. I'm very empathetic with your presentation, and I wish it were different.

Here's one of the things I'd like to ask you about. You indicate that well over half of the cost of education comes from tuition fees. I question that. It seems to me that tuition fees, excluding books, just the fees themselves, have to be considerably less than half, I would think, of the total cost of a student going to university these days. Can you just explain that?

Ms. Kemlin Nembhard: I don't think I ever said that 50% of the cost of education is covered by tuition fees. Of full-time students in Canada, 50% are on students loans. In terms of the amount that tuition fees cover, if we take a regional example, at the University of Winnipeg, tuition fees cover approximately 39% of the cost of education. It has been that way for years, which was an anomaly up to the early 1990s, but that's no longer the case. Across the country, there are a lot of universities especially where about 30% to 40% of the cost of education is covered by tuition fees.

Mr. Ken Epp: Okay. So you have tuition fees, books, and living expenses. I think those would be three broad categories for your budget. At least those were the ones I used when I was a student. Included in the cost-of-living fees, of course, would be any social expenses.

Do you think the government should do anything more than perhaps help with the tuition component? Is that taxpayer under any obligation? I'm speaking not of a legal obligation but of a moral, desirable, or social obligation to provide more for students than their tuition.

Ms. Kemlin Nembhard: Yes. I didn't cover this as fully in my presentation because it would have been a lot longer, but I think the Canadian population, the Canadian government as a whole, has the responsibility to ensure that our education system is equally accessible to any Canadian who has the desire and ability to go.

The best way to do that is for the federal government to fund education directly. It would not be by funding individuals, but let's say it would be by giving vouchers or scholarships. The best thing is to ensure that the system is adequately funded, and that can be done through the transfer payments to the provinces. Yes, I do think that morally, as a Canadian society, we should be providing to ensure that all Canadians can access it. I think it's an inherent part of a democratic society that people in the society can have equal access to post-secondary education—and that doesn't mean just university, it means colleges, technical institutes, and universities—and that those who have the ability and the desire can go and do that.

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Canada is actually one of the very few industrialized countries that doesn't provide that for their students. A lot of countries actually don't charge any tuition fees, and in those that do most of them are much lower than in Canada. Apart from that, Canada is actually one of only two countries that doesn't provide grants for their students. The only other one is Japan. Every other industrialized country actually provides grants to help cover the cost of living expenses, the cost of tuition, if they do charge it, as well as other things.

Does that answer your questions?

Mr. Ken Epp: Yes, I think it gives me a point.

You were going to say something.

Mr. Rob Hilliard: Yes. I think there are a couple of other ways governments can look at the needs of students, and certainly the areas of providing direct assistance and those kind of things are important. But, Mr. Epp, you made reference to the fact that when you were going to university some years back, you were able to work and earn 50% more than you actually needed.

Mr. Ken Epp: At $1 per hour.

Mr. Rob Hilliard: That was my experience as well, but I think one of the reasons why that's no longer possible—it's not the sole reason, but it's a contributing one—is the fact that minimum wages in this country, from coast to coast, have been eroded significantly over the course of the last 25 to 30 years in terms of their purchasing power, in terms of their relative standing with everybody else.

Mr. Cerilli made reference to the fact that here in Manitoba there's a review of the minimum wage going on. Many of us made presentations to that review yesterday. One of the things that was notable was that in 1976 the minimum wage in Manitoba was 102% of the low-income cut-off line for a single individual. Today it's 68%.

So when we're talking about students going out there and getting part-time jobs and getting work, generally speaking at or near minimum wage levels, the value of that pay cheque relative to everybody else's has diminished significantly over the course of the last 30 years.

I think there's a role for the federal government to play in trying to bring that floor up. One of the difficulties that has arisen with the federal government's decision to peg the federal minimum wage at the same level as whatever it is in that province is that there is a competing pressure back and forth between provinces to keep the minimum wage low in order to attract investment. That's where the pressures are, and if you look at what has been happening to minimum wages right across the country, it's that year over year over year the purchasing power of the minimum wage pay cheque diminishes each year.

Something needs to be done to take that negative competition factor out of the minimum wage from province to province, and I would suggest that there's a role for the federal government in there.

Mr. Ken Epp: Okay.

Mr. Albert Cerilli: You mentioned working in your area. In fact, when I was working on the railway, I think some very serious politicians came to work on the railways—CNR, CPR—before their political careers started, to work themselves through university. It was a tradition for employers in this country to hire students in the summer. I don't think you'll find that is a tradition any longer.

In fact, the minimum wage structure in this country, as just referred to, plus the fact that these students want the employer to hire them on the basis of part-time casual hours, leads to a result that the employers who do want students are not giving them full-time, even at minimum wage. If you do the statistics on this, you'll find that the percentages are very serious. You'll find that students will not respond to that kind of employment, simply because it costs them to go to work just to earn two or three or four hours, whatever the minimum is, in the provinces for that work.

I think you make a valid point in regard to our generation, my generation and yours, which had an opportunity to see a lot of students from university come and work, and become doctors, lawyers, politicians, and so on. But that's not the norm any more.

I think that it's something we should be addressing with the federal government in a more direct way with post-secondary education, toward job creation in that regard.

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Mr. Ken Epp: It seems to me—and we should be listening to you instead of you listening to me—what I've been gathering, not only from my experience, from my observations, but also now on this committee, is that one of the reasons employers don't hire students in the numbers they used to is because the costs of employment are much higher than just the cost of the wage.

Mr. Albert Cerilli: I have to disagree with you, simply because each employer now is in a rollback situation. They're cutting back. CN has just announced 3,000 people will be laid off. The spin-off effect of laying off 3,000 four times.... That's an additional 4,000 people, if you like, across this country. It's not only 3,000 from CN; it's an additional 4,000 in support services—that's an estimate—who are going to be out of work. Those spin-offs are contributing to our problems.

I think this is why in the presentation I made I wanted to show this committee the difference between the haves and the have-nots. The CEOs and the corporation profits are like this, and we're going down this way. I think there's a danger in that, and it's going to affect our democracy. Sooner or later you're going to have a bloody revolution—and we've seen it. There were two world wars over the same kind of principle. When people are starving and the kids are not going to university and can't find jobs, they'll react, and it doesn't matter who we are.

Mr. Ken Epp: Thank you.

I'd like to ask one more question to Ms. Nembhard. She made a specific statement about not applying money to individuals. Yet student loans go to individuals. You made the presentation that there should be a rollback on the length of time before they can declare bankruptcy, thereby effectively converting their loan into a student grant, which is basically what happens if you declare bankruptcy or if you have a loan where a portion or all of it is forgiven. You did talk about grants, that what we need is more grants and probably fewer loans so that the students don't rack up the debt. I would agree with you on that. But you have this little statement about funding the system, but not giving money to individuals.

I have heard from quite a few people a very positive response to the idea of having the funding actually follow the students so the students have a total choice in which institution they go to—and that would be the federal government's role. Really, strictly speaking, education is a provincial jurisdiction. Post-secondary education, of course, is partially funded by the transfers from the federal government, but they're administered by the provinces.

I wonder what your response would be if we had some sort of a system.... If you are against a voucher system for individual students, I would like to know why.

Ms. Kemlin Nembhard: First, I want to comment on one of the comments you made in terms of rolling back bankruptcy. If someone is declaring bankruptcy, it should never be considered a grant. When someone actually declares bankruptcy, they've started to pay back their loan anyway. So they are paying stuff back. The fact is that most students don't want to declare bankruptcy. It's a huge process. It takes a long period of time and it costs you money. It affects you for a long time. For instance, for seven years you can't get a credit rating. It's a huge process that people don't go into lightly. I personally find it really offensive that claiming bankruptcy should be equated with receiving a grant, because it's not.

Mr. Ken Epp: If it comes from the taxpayer and the money doesn't come back from the person who took it, then it lands up being effectively a grant.

What I'm trying to say is that perhaps we ought to be giving the grant in the first place, thereby giving the provision for the students to go to school and not give them the debt load. This is what I'm saying.

Ms. Kemlin Nembhard: I'm just going to finish. I'll touch on that next.

The other thing is that since the inception of the program, only 7% of students have actually declared bankruptcy, and that's usually after years of paying stuff on your loans, right? So at the end they've paid for their loans. Often they're just paying the interest, because you have it for a long period of time. So there's that.

What I'm saying is I think the most important thing to do is to fund the system. The most important thing the federal government can do is to ensure that there's adequate funding in the system. If you have adequate funding in the system, you won't have ever-increasing amounts of tuition fees, and when you have tuition fees that aren't skyrocketing, your level of student debt won't be skyrocketing. They're directly related. That's why the most important thing is that you have a system that is adequately funded.

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Currently, because our system is not adequately funded, we have institutions that are becoming more and more dependent on tuition fees as funding. That means because they're dependent on it, tuition fees are going up and student debts are going up. That's why it's of the utmost importance to have adequate funding of the system.

When you look at things like having a voucher system—and we can see it in our system already—institutions are becoming more and more dependent on tuition fees. Institutions don't focus as much on quality of education any more. They don't focus on their programs, diversity of programs, and choice of programs; they focus on marketing. They focus on trying to get more and more students into their institutions. They are spending more and more money on resources trying to get students into their institutions, instead of focusing on quality and choice in the programs that are actually there, because they're being backed into a corner trying to get as many students as possible into their institutions.

Mr. Ken Epp: I would tend to differ with you on that, because it seems to me you're shortchanging our students.

Ms. Kemlin Nembhard: That's what's happening.

Mr. Ken Epp: Most of the students are much better able than you're suggesting to see the difference between advertising a program that doesn't have value and isn't a quality program and one that is. If you gave vouchers for tuition to students, they would tend to reward the universities or colleges that provide good programs, because they would have built a reputation in the first place.

Ms. Kemlin Nembhard: As I said, these are things that are happening right now. Institutions are spending more and more money on marketing and trying to get students to their institutions. That's having an effect on the quality of the programs and the choice of programs.

Mr. Ken Epp: So you're saying the choice goes down when the marketing goes up?

Ms. Kemlin Nembhard: Hang on, let me finish.

Mr. Ken Epp: No. I want you to clarify the sentence you just made.

Ms. Kemlin Nembhard: I'm about to do that.

Mr. Ken Epp: Are you saying the quality of the program goes down?

Ms. Kemlin Nembhard: If you can just let me finish, in terms of choice, institutions are putting less money into programs that aren't as marketable, like fine arts and different liberal arts courses. They aren't necessarily considered as marketable as something like management degrees or business degrees, currently. Those programs that aren't considered as marketable are getting fewer resources.

You can see it across the country. The University of Manitoba is a really good example. If we compare the differences between the management department and the fine arts department or the biology department, in terms of the equipment and the resources that are in those departments, there's no comparison. A lot of it has to do with the fact that management is more marketable. That's what happens when you have a system based on a voucher system instead of being based on actually funding the system itself.

You will find that institutions will try to market their products, and more and more that's what they're doing. They're marketing their products and centring less on the actual quality of the product, the accessibility of the product, the choice they have of the institution, and the programs that are there. You can see it all over the place in any jurisdiction, whether it's in colleges or universities.

Mr. Ken Epp: Mr. Chairman, I'll come back to the others in the next round, if I may.

The Chairman: Your 10-minute round turned out to be a 20-minute round.

Mr. Ken Epp: That's your definition of 10 minutes, as I've observed in the last couple of days.

The Chairman: Right.

Mr. Nystrom.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): It's a very liberal definition, which is okay.

The Chairman: That's what the people of Canada say, anyway. Keep going.

Mr. Lorne Nystrom: I want to welcome the presenters this morning. I appreciate all your points of view. I want to say to Mr. Cerilli that I am one of those who worked at a good union job on the CPR as a university student. I remember starting at $1.98 an hour and about two months later getting $2.06 an hour. I thought I had gone to economic heaven in those days.

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I want to start off with Rob Hilliard and say to him that I agree with the direction he's going. I think the government now should look toward investing again in the country, in terms of stimulating the economy, and health care is the priority field.

The government has made a couple of mistakes over the years. Back in the 1980s, when John Crow decided to really slow down the economy with high interest rates—at one time five points higher than the Americans—that really sent us into a downspin that has added to the national debt and the deficit problems we all have. Mr. Martin made a mistake in his budget of February 1995 when he was persuaded by the Finance bureaucrats to have massive cutbacks, the most massive in the history of our country.

In effect, the federal government now is smaller than any time since the late 1940s, after the Second World War, before medicare. I think that was just the wrong direction to go in. It may have paid off the deficit a little bit sooner, but at what cost, and who is paying off the deficit? In the long run, it has made our economy less productive and the growth has been slower. It has compounded the problem of the national debt. This year we have a $3.5 billion surplus, and some of that money could have been spent on growth rather than on just bringing down the debt.

More importantly, next year there'll be a surplus again of several billion dollars, depending on the world economy—and we don't know what that'll be. I think most of that should be spent right in this country to stimulate the economy, on things such as child poverty, transfers to health, and emergency aid to western grain farmers. By the way, in my province there was a drop in net income of 84% last year in terms of the grain industry.

Things like that will be more beneficial for the country in terms of stimulating the economy and creating jobs. About 20% of that or more comes right back to the federal coffers anyway. So that might be the best debt reduction problem there is.

I generally agree with what you're saying, but want to ask you what other priorities you would have in addition to health, in terms of how we spend that money at this time.

Mr. Rob Hilliard: First of all, I didn't get my question answered, and perhaps it's because nobody here knows the answer to the question about the pay equity liability of the federal government. One thing that would help me answer that question is knowing whether or not that amount needs to come out of the current operating budget or whether it has in fact been set aside. If it has been set aside and current revenues aren't going to be affected by that expenditure, then we don't need to look at that. But I would like to emphasize again that it is a liability the federal government has. It is a moral and legal obligation, and the sooner it meets it, the sooner it can get on with things. If that doesn't come out of current revenues, then we can look at other ways to spend it.

The whole area of the transfer payment cuts Mr. Martin implemented a few budgets ago has had a huge impact on the provinces. It's had a larger impact on the have-not provinces, generally speaking. It's not just health care that's funded out of that pocket; it's also education. The experience here in Manitoba has certainly been that the public education system has been eroded. What can be thought of as core activities and core needs for the school system are now subject to fundraising.

The fundraising issue, as the gentleman from MAST indicated, winds up creating a system where neighbourhoods that are better able to raise funds from the corporate community, because there's an advantage to the corporate community, wind up having better services, more computers, and more infrastructure than inner city schools the corporate community doesn't see an advantage in making donations to, contributing to, or advertising to. So the area of education also has a huge need.

I would agree with some of the points made from the MAST presentation. Manitoba is the child poverty capital of this country. That's a shameful thing. Something like one out of four children in this province lives in poverty. They live in poverty at a time when unemployment has been going down and the economy has been growing in Manitoba. Over that very same period of time, the child poverty rate has been increasing.

To say the issue of poverty will be taken care of through economic growth and marketplace mechanisms is simply false. The evidence doesn't support that; in fact, the evidence says exactly the opposite. I would advocate putting money into poverty programs, public education, and health care. Those are the areas where the greatest social deficit has been built up as a result of the government's focus on dealing with the fiscal deficit. I would say those are the greatest needs that need to be met in the short term.

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Mr. Lorne Nystrom: Children's poverty is extremely important. As I told the committee yesterday, I was with my sister on the weekend—she teaches in the inner city in Regina. She told me about one of the students who's between six and nine years old and having tremendous problems in the school. This child's mother is a prostitute and the father is a pimp. They sell drugs. The child was born with fetal alcohol syndrome. What chance will that child ever have in life? The human costs are extremely sad and depressing, let alone the cost to the economy of someone who's not going to make a contribution, in terms of productivity, to our economy. It doesn't make any sense in terms of a long-term investment, so I certainly agree with you.

I want to shift to the EI fund. About two weeks ago, before it got lost in all this controversy over Andy Scott, we had a phenomenon in Ottawa that is extremely rare—I can't recall it happening before. The four leaders of the opposition parties, Preston Manning of the Reform, our party, the Bloc Québécois, and the Tories held a joint press conference in the same press theatre at the same time and announced a united front on the unemployment insurance fund. They want it as a separate fund. That's really rare to see. But there is some difference between the parties as to what should be happening with the money. Most of the momentum now is on the side of reducing the premiums for the employers and employees. You take the approach about expanding the benefits, and I agree with that.

I wonder if you can give the committee some more arguments as to why that is the right way to go and why you would not support a reduction in premiums to employers and employees. The momentum is on that side, and I'd like to hear more arguments as to why that is not the right way to go.

Mr. Rob Hilliard: I agree with you that the public debate seems to be focused more on that area. I've been participating in some of those public debates, and when I have raised the issue in those discussions that the primary reason for the surplus in the account is not due to a reduction in unemployment but is in fact due to a restriction in eligibility for unemployed workers and a reduction in the benefit levels paid to unemployed workers, the focus of the discussion tends to shift. Very often people look at the tax side of it and go on with that without paying attention to some of the historical context that led to this.

On the benefit of the tax reduction, under current legislative requirements and covering approximately 37% of unemployed workers, the EI account would balance itself at something in the neighbourhood of $1.85 to 90¢ for employees, rather than the current $2.70. I don't think anybody, even those in the business community advocating for a full cut, realizes there needs to be some cushion. You can't strictly cut down to a level where revenues are equivalent to expenditures now because we have to put something in the bank in the event of a downturn in the economy and so on. But even if you reduced the premium for workers by 60¢ or 70¢, it wouldn't put a huge amount of money in workers' pockets. It would put some, but it wouldn't be a huge amount of money. There wouldn't be a tremendous spin-off as a result of that. So I would argue the benefit of that is exaggerated.

When we look at what is happening to unemployed workers, if you really want an economic spin-off, most unemployed workers are having a tough time financially. If you put more money in their pockets, they will spend it in the local economy and it will have the economic spin-off that is necessary.

In this country a lot of economic policy has been geared to putting more money into rich people's pockets. We can recall a former finance minister in the Mulroney government saying “We need more millionaires in this country.” Frankly, that theory is based on the fact that if you put more money in rich people's pockets, they will wind up making investments in Canada and that will have the trickle-down effect. In a globalized economy, that is clearly a tenuous argument, because the money winds up going other places. Aside from the fact that I believe government ought to help those who need the help the most, there's a much greater economic benefit to putting money in the hands of very low-income Canadians because they spend it in the local economy and there's a greater spin-off benefit.

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To get back to your original question, I would say increasing the benefits to the levels they were prior to the legislative changes, and increasing the eligibility, restoring the eligibility, to the levels it used to be would provide a greater economic benefit in addition to greater fairness.

Mr. Albert Cerilli: I would make just one point on that. Picking up from what has just been said in answer to that, I think it's worthy to note the other side of the argument. And this is where seniors like myself, once we get into these forums and discussions.... As long as the federal, provincial, and municipal governments keep cutting back because of all the cutbacks from financial inputs, and the corporations follow suit with cutbacks, rollbacks, and wanting everybody to give it back to them, the workers in particular, what we then find is that the workforce, because of the conditioning of restraint and “you're not getting any” being made through the media, fall prey to buying into this kind of an argument and say, “I'll take whatever I can get, and one of the ways is to reduce my UI premiums.” But in reality, it's not true.

Have the economic pride shared more equally and more productively by everybody by having them pay their fair share of taxes—corporations, high income CEOs, and so on. I think you'll find once you put that across, the trend and the argument fall apart in regard to shifting from our side to the other side of saying, “Hey, give us that back.”

When you argue about putting money into the pockets of middle-income and lower-income workers, other than by trying to convince them they should ask for a decrease in what they're paying in UI premiums, for example, I think you'll find if there's a tax break across the board for them, they'll buy into the tax break because these are the benefits that go directly into the pockets of the middle- and low-income workers.

Mr. Lorne Nystrom: I wonder how Mr. Hilliard responds to the argument Paul Martin will make, in case the question doesn't come up this morning, that the EI fund is there as a contra-cyclical thing. When there are lots of unemployed, it runs into a deficit. Revenue comes out of the consolidated revenue fund to subsidize the fund. Now we're into a surplus because the unemployment rate is down, and therefore some of the money should be used in terms of the consolidated revenue fund for general spending.

What is your response to that argument? That's the argument the Minister of Finance is making, and some other premiers support that—not all of them, of course. Some economists obviously take that line as well. We've had to subsidize it as taxpayers. Now that the fund's in surplus, some of that money should be coming back to the taxpayers in terms of having a balance over a number of years. I don't subscribe to that, as you know, but I just wondered what your argument against that is. It seems on the surface to be very logical.

Mr. Rob Hilliard: The first point is that I disagree fundamentally, and the facts don't back up the claim that the surplus is there because unemployment is lower. That simply isn't the case.

If you go back over the last three legislative changes made by the federal government, they have clearly reduced the number of unemployed workers who are eligible, and they have reduced the benefit levels. If you go back prior to those legislative changes and you do your calculations on paying out benefits at the prelegislative levels to the same number of workers, your surplus disappears. You don't have it any more.

So the surplus is not there due to a reduction in unemployment. The surplus is there simply because the rules have been changed to make more unemployed workers ineligible to access those benefits. The argument is based on a fundamentally false assumption.

On the issue of the taxpayer having to subsidize the fund when times were hard, frankly that was a choice made by the federal government at that time. They could have done it in other ways. They could in fact have raised the premiums to keep the fund solvent. That would have been a more legitimate way of doing it.

The fact that it is a cyclical fund to the degree that there are cycles in the economy, cycles in unemployment levels, downturns in the economy, and increases in the unemployed numbers, means that clearly there is a greater need to have more money in the fund. Counter to that argument, obviously there is less of a need in good times.

However, it would be our position that the fund ought to be maintained on its own. It ought to be a self-funded operation through employers and workers. And there is no reason to suggest why that can't be. The reason it didn't happen in the past and the reason it's being pillaged now is through choices made by the federal government. It doesn't have to be that way.

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Mr. Laurie Beachell: I have one very quick comment. I think it's important to remember when you talk about consolidated revenue funds and the change in the program that it also used to be an insurance program.

Now, however, we have created a program that is the funder of labour market training in Canada. For those persons who are not eligible to access the fund, there are no consolidated revenue funds being applied to those persons to get labour market training. So we've taken the fund and penalized workers. We've made them less eligible for benefits. At the same time, in our labour market training policy, we've excluded whole segments of the population from access to the labour market.

Mr. Albert Cerilli: I just want to add that I think this is where the recommendation comes in with our brief in that I don't think labour in the workforce was ever consulted on those changes for the training and so on. But I think we can now put in place a new system that involves labour, business, and the government as partners with regard to an arm's-length administration of the funds. This is so that training and all the rest of it can be really looked at seriously rather than on a piecemeal basis.

Mr. Lorne Nystrom: This has become a very big issue. It's unique when you see the allies in this, from a Mike Harris or a Bob White or the four opposition parties, basically wanting a separate fund and separate accounting for the fund so that the money there belongs to the unemployed. We have some differences, of course, as to how we want to rectify the problem, but in principle, it's a very unique situation. So I'm glad you're commenting on that.

I want to ask Mr. Cerilli a question that's a little more of a look into the future. You referred to the Tobin tax.

Mr. Albert Cerilli: Yes.

Mr. Lorne Nystrom: It hasn't been announced yet, but I was very fortunate a couple of weeks ago to get the private members' business committee in the House of Commons, which represents all parties, to agree to one of my motions in the House on the Tobin tax. So that will be coming to the House of Commons as a votable motion in the next few weeks after a few hours of debate. So MPs will have to take a look at the Tobin tax for the first in terms of actually having to vote on it in the House of Commons.

It's something that we should look at very seriously. We have $1.3 trillion now in financial transactions every day. The Tobin tax is an idea of putting a very small tax on it, maybe 0.1% or even less than that. That would do something to try to dampen down some of the speculation and moves around the world. It would also create a big development fund of billions of dollars to spend on Chernobyls, third world poverty, and so on.

I wanted to ask a bit more about why you think this is a good idea. I wonder whether or not your association is reaching out across the country to other union people who are retired, the steelworkers and so on, and whether or not you would be interested in being part of a lobbying campaign on this to make it a higher-profile issue in Canada?

Mr. Albert Cerilli: I'll answer the last question first. We would certainly be happy if we could involve ourselves in any high-profile lobbying on Parliament Hill in the same fashion we did with the health coalition with regard to all the partners coming into Ottawa to lobby political parties and individuals to bring about some of the promises that were made on health care during an election. You can rest assured that if you contact us in regard to lobbying to make this a high-profile issue....

I think it's a worthy cause because it's starting to deal with the problem of globalization. In the brief, I said we need to have new rules on a level playing field. That means not only the corporate rules whereby they dictate to governments, like from an auction block. They say that if you give me this break, then I might come into your province, city, or country to invest, but if you don't give me these breaks, I'll go next door to the next country.

I think this is becoming ridiculous. I think the sands of power have shifted. Governments have to take control back in their hands, not only in Canada but across the globe, to really set forward a fair distribution of wealth, income, and investment so that the speculators....

That's why I mentioned in the brief that here is a dictator, Suharto, to whom this government kowtowed, who amassed an estimated $40 billion during the time he was in there, but nobody in that country was able to say that they wanted to share in some of that investment capital.

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So if you want to stop this kind of fluctuation of someone coming here and investing billions of dollars from this speculator to that, and moving this around and causing chaos, then I think we need to have a Tobin tax.

It would not only be in Canada, but we can start in Canada. I think then the world stage has to take over with our representatives in Parliament, along with an all-party representation at these conferences, so that all views are put forward and watchdogs are watching the government, saying here are the rules we see in a fair and equitable society on this planet. If we don't start moving toward that end....

I think in my last presentation to you I said that George Soros, a billionaire financier, said capitalism is at risk because of all these things. I repeat it again. Now other people are writing and saying it.

England's recent high commissioner to Hong Kong wrote a book. I think it's worth reading—read it. These are not socialist, left-wing radicals, like myself maybe, but the fact of the matter is that people worldwide are concerned about our democracy. They don't want to go to war again. It could be disastrous. Everybody has an atomic bomb.

So we have to put in these rules to say that we're the government and you're the ordinary citizen, the voter called Mr. Corporate Citizen. You're going to have to abide by the rules we've laid down for you on investment. So a Tobin tax is a good area to start with.

Mr. Rob Hilliard: Could I just elaborate a little further on that point? I think the issue now with the globalized economy and the financial markets is that huge amounts of capital flow in and out of countries in very short terms.

That capital is no longer used for direct investment in the local economy, for creating jobs, for developing enterprise, or for doing any of those things. That capital is used to discipline governments and allow unelected people outside of the country to determine what's going on in that country.

When the Mexican peso crisis hit a couple of years ago, foreign speculators pulled money out of Mexico at huge rates. It put the country in crisis. There were other Latin American countries that had similar difficulties.

Chile was one of them at the time. Chile had a policy whereby they applied a 50% tax rate to any capital that moved into the country and didn't stay at least 12 months. That prevented the speculators from moving the money in and out of Chile.

Chile today is a better place because of that policy. They did not have to devalue their currency. Their economy was not thrown into turmoil. I think it's instructive to note that this is one of the provisions that the MAI wants to do away with that clearly helped Chileans. It clearly helped the Chilean economy, and it didn't allow foreign speculators to determine what was going on inside of Chile.

That's a very sensible provision. Frankly, I think if more countries in the world had a provision similar to that, they would be less subject to all of these instantaneous capital flows that really aren't investing in the local economy.

Mr. Albert Cerilli: I think that's key to some of the things we're recommending. Do we really want an improved economic situation in this country in the global sense? Do we need this mobilization of funds by computerization? It's going to get worse as the financial institutions and Internet are deregulated, and so on. It's going to get a lot worse.

Mr. Nystrom, I think we need this now. Four years from now may be too late to fight an election over this.

Mr. Lorne Nystrom: Thank you very much.

The Chairman: Thank you, Mr. Nystrom.

Ms. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): I'm curious. I recognize that Ireland has free tuition for university students. You said there were lots of countries. I just didn't know of any other ones.

Ms. Kemlin Nembhard: That have zero tuition?

Ms. Carolyn Bennett: Yes.

Ms. Kemlin Nembhard: Of all the OECD countries, there are about 20 or so that have zero tuition, such as Sweden, Germany, and Spain. I didn't bring the list with me, but I could get that for you.

Ms. Carolyn Bennett: That would be great.

• 1215

One of our concerns has been accessibility as an issue, as well as debt. I guess I'm thinking of a tuition fee freeze. Do you think the federal government should have a say with transfer payments in terms of some sort of accessibility component, as with the Canada Health Act in health care? When we asked the president of the University of Toronto last week about this, he felt that the University of Toronto had an ability to.... Even though the tuition is high, they actually have set up a specific system with those students to ensure accessibility.

What does your federation have to say about accessibility?

Ms. Kemlin Nembhard: What we would like to see is a national act similar to the Canada Health Act that doesn't micro-manage, but ensures there are certain principles that are enshrined nationally and ensures that the quality and accessibility of an education you can get would be the same whether you're in Newfoundland, Ontario, or B.C.

I'm trying to remember one of the other questions you asked. It was about....

Ms. Carolyn Bennett: That's okay.

I was quite concerned when you said the amendment gave the politicians the power to set criteria behind closed doors. I think that's quite worrying. Is there an example of that, or how do you see that this could happen?

Ms. Kemlin Nembhard: It has just changed. It will actually come into effect at the end of August. The legislation itself just passed, and what it basically means is that now the Governor in Council can actually have an influence on who is eligible for a student loan.

Currently, the way the program works is that there's a process set out whereby you can go to your student loan office and find out what the process is right there, what the eligibility criteria are, and then if you don't fit those criteria you don't get a loan. If you do, then you do.

With this, it actually gives power to politicians to change those criteria, just for whatever reason they want. It's no longer a set process. It can be influenced by people, for instance, like financial institutions. It could be influenced by them if they lobbied the Governor in Council. As I said, it's not a set process any more.

Ms. Carolyn Bennett: I would hope that the reason the provision was there was that if banks were being too strict it would be in the public interest if the government would be able to say no, you have to give these loans.

Ms. Kemlin Nembhard: I think if the government was truly interested in stopping banks having control over things like that, they would stop giving more control to banks. That's not what's been happening. The federal government, since about 1985, has continuously been giving more and more control over student loans to banks, whether it's the risk sharing or things like this change—there are lots of examples. The eligibility criteria are now being changed, whereby, as I mentioned in the brief, we're going to be having credit checks and things like that. They're giving more and more power to the banks.

If the government were truly concerned about that control, they would take that control back; they would take that power back.

Ms. Carolyn Bennett: On the Canadian millennium foundation, I think your recommendation would mean that the government just had to give the per capita dollars to Quebec and let them administer it in whatever way they wanted, including not using it on student loans.

Ms. Kemlin Nembhard: I think there are ways that the federal government can ensure it is used as a grants program, as opposed to anything else. If not, then don't give them the money, because that's what it should be for.

Ms. Carolyn Bennett: I guess the reason the foundation was set up was to make sure Canadians across this country, students, had equal access to the fund.

• 1220

With regard to your recommendation around scholarship deductions, we've been trying to figure out a way of looking after the most people possible. One of the ways would be to raise the personal exemption for all Canadians on their taxes. Do you think there would be very many students, with their part-time work or tutoring plus their scholarships, if just the personal exemption was raised, who would exceed that?

Ms. Kemlin Nembhard: In terms of scholarships it's really important to have it tax free. An example is if you have a student loan and you get a scholarship; in Manitoba if you get more than $600 worth of scholarship, anything above that gets deducted off your loan, dollar for dollar, whereas if it were tax free that wouldn't happen. So it's things like that.

As well, it would be I think especially important for graduate students. You may find one or two undergraduate students who will get a lot of scholarships, but generally they don't.

Ms. Carolyn Bennett: Amongst your federation, do they think that's reasonable? On the needs versus merit people, the merit people—or so I gather from the students I've talked to—are pretty well looked after with scholarships, and the reason we wanted a needs-based system for students was so that kids who are smart enough to get into university will go. And I guess you're saying that if somebody's smart enough to get a scholarship, they should also be able to get a loan.

Ms. Kemlin Nembhard: No—

Ms. Carolyn Bennett: Isn't that giving more money to one student where it might have been able to cover two students?

Ms. Kemlin Nembhard: We would like to see grants, which is why we would like to have the millennium scholarship funds changed to a grants program, not a scholarship program. It's for exactly that reason. Because grants help the neediest students, regardless of whether they're above average, average or below average.

Ms. Carolyn Bennett: I submit that any kid in this country who can get into university should get to go.

Ms. Kemlin Nembhard: Yes. And that's exactly what we've—

Ms. Carolyn Bennett: That's merit, to me.

Ms. Kemlin Nembhard: Yes.

Mr. Albert Cerilli: Just on this point, since I've retired I've been involved in a lot of school-to-work programs. In fact, I went to Ottawa and met with the deputy ministers, and trades, and all that to start off some pilot project here. And through my last eight years, I found that many students were dropping out simply because they knew that the cost of university was prohibitive, and they couldn't go any further. And they were bright students.

In fact, I volunteer my time now by going to high schools and universities and speaking to students about the real world and also encouraging them to stay in school and do it. This afternoon I'm going out to speak at some workplaces to raise funds for United Way, for example, that looks after students in crisis and everything else.

But I think what's happening is that students will give up even before high school and drop out simply because they know that down the road they can't afford to go to university. I think we have to change this system to make it more equitable for that purpose. Otherwise, you're going to have a lot of bright students who will give up on the system.

Ms. Carolyn Bennett: I have one little question around the brain drain. If our brightest students are then going to a hugely lucrative position in the United States, do you think they should have to pay back their tuition—all of it? If they go straight from our universities to a position in the States, particularly the medical students, do you think they should have to pay back all their tuition?

Ms. Kemlin Nembhard: I would say no. I think the most effective way of dealing with the brain drain is for the federal government to actually reinvest money into the research councils.

I have a really good example. A friend of mine is doing AIDS research for the University of Manitoba at the health sciences centre. He's incredible; he's doing his PhD, but that's also his research. He doesn't finish until the spring. He's had at least three or four offers from firms in the United States that are going to be paying him a lot of money if he wants to go there for a job. His view is that he doesn't want to go to the United States. He would rather stay in Canada. But the fact is, there is no money for him in Canada.

Ms. Carolyn Bennett: I obviously am a big believer in investing properly in the research councils, and that those are jobs; 85% of those budgets are jobs.

• 1225

I taught in the Department of Family and Community Medicine at U of T. It's difficult to track, but the rumour was 50% of our graduates were going south of the border. I think that's a lot of our government-subsidized dollars leaving. Shouldn't you have to work in this country for a certain amount of time before you could go?

Ms. Kemlin Nembhard: We have a lot of graduate members in the federation, and what they say is if the jobs were here and if they paid a living wage, people would rather stay here. They would rather not have to be uprooted and go to live in the States. They would rather stay in Canada. But the fact is, there are very few jobs for them.

With regard to your previous question about scholarships, as I was saying, grants are most important. But in terms of having a scholarship be tax free, it's particularly important for graduate students, because their tuition fees are a lot higher, and a lot of times they will get a lot of fellowships and scholarships but they will also have to work at the same time. Having tax measures that ensure they can get funds that are tax free would be specifically good for graduate students, because they are really dependent on scholarships and fellowships.

Ms. Carolyn Bennett: Laurie, is there a consensus on what a more appropriate definition of disability would be?

Mr. Laurie Beachell: “No” is the simple answer. The difficulty with disability and definition is that people tend to try to define it in relation to the medical condition, and disability isn't yet defined in relation to the environment. The disability is the barrier to prevent your participation. It is not the fact your left arm doesn't work properly. So defining it is very difficult.

This is one of our biggest problems. Everybody looks for one definition, and on the disability front everybody looks for one solution, and there is no silver bullet in the disability policy initiative. It is creating systems that are flexible and co-ordinated that can look at individual need and respond to that. I think the biggest challenge we face in this country is how to develop social policy within a framework where the federal government has so diminished its levers of influence that it can have little role to play in defining social policies in this country. That is not what Canadians with disabilities expect from the federal government around leadership on issues of equality and equitable access to service.

Many of you, I'm sure, have been involved in the debates around what is the new social union. To us, the social union must be assured by somebody being ultimately responsible for citizenship rights of Canadians, and to us that is the Government of Canada.

Ms. Carolyn Bennett: A lot of the initiatives of your council have been in terms of employment and trying to get away from the idea that people want to be able to stay at home. They actually would prefer to go to work.

Obviously, this last labour market agreement was disappointing. Do you think a Canadians with disabilities act could help rework that? How do we make sure that the lens of disability is applied to all future negotiations, including the social union?

Mr. Laurie Beachell: To us, the Canadians with disabilities act is that mandatory process, the application of an analysis to initiatives that looks at disadvantaged groups, such as persons with disabilities, so that it is not an afterthought, so that we don't have negotiated labour market agreements and then the Minister of Finance and the Minister of Human Resources Development saying, oh, we missed something here; now we'd better create the opportunities fund that is targeted for people with disabilities.

• 1230

We're not interested in being separated out—you know, this is for people with disabilities and this is for the rest of the population. We want to be part of what's going on. We want into the generic program and we want a process of social policy development in this country that includes rather than excludes.

Unfortunately, what everybody's gone for, as universal programs are diminishing significantly, is the targeted initiatives to try to get the best bang for the buck. But what that does ultimately is to set people aside, to marginalize further and ghettoize people.

Students with disabilities used to be able to depend upon the university through the designated funding to get their interpreter services so they could participate in the class. Now they have to apply for a special opportunities grant through the Canada Student Loans Program so they can pay their interpreter directly. I mean, that puts the responsibility for the accommodation and for the access on the individual, not on the system. So when the Federation of Students talks about adequately funding the system to respond, that's our preference as well. We want generic systems that can respond to the needs of the various components of the community, not setting up systems where individuals somehow become responsible for their own condition.

Ms. Carolyn Bennett: Is your specific recommendation on the $10,000 limit on attendant care mainly for people who are working, meaning that they have to have somebody come to help them get out of bed? You're saying take this ceiling off, period, but what number are we actually looking at? What's an average amount of attendant care for somebody—for example, a quadriplegic—who is able to work, to get to work?

Mr. Laurie Beachell: For a lot of people it's your basic services: some assistance getting up in the morning; maybe some support at work for using bathroom facilities, etc.; or going to bed at night. And the system across Canada....

A friend of mine just accepted a job in Vancouver, a very well-paying job. This is a person who is paraplegic. One of the considerations he had to figure in was that in B.C., attendant care is means-tested. So he has to be earning....

In Manitoba his attendant care needs were covered. It was a universal program and he didn't pay anything for it. In B.C. he pays $1,000 a month. So he needs a good job paying good wages to pay for his attendant, in moving from Manitoba to B.C. That's no equity of access.

Ms. Carolyn Bennett: So with this present tax system, he would then be able to deduct only $10,000 of the $12,000 he had to pay.

Mr. Laurie Beachell: That's correct. And he'd get a portion of that, a percentage of that. It's not 100% refundable. It's that 17% or 19%; it doesn't give you dollar for dollar.

Ms. Carolyn Bennett: And you feel there should be a wash, because that's part of what we as Canadians should be doing.

Mr. Laurie Beachell: That's what we've done through other systems like medicare. We've ensured that we don't bankrupt people because they have an illness. We're saying the same thing around support services, that we don't bankrupt people or prevent them from doing things because of their situation in life.

Ms. Carolyn Bennett: Thank you.

I have one more little question.

As we are looking at accountability in social union negotiations, and perhaps the ability to measure certain things, I guess I am wondering whether this readiness to learn.... I think the priority of a lot of people is something that you think there should be national standards on, where provinces could be accountable. I guess I'm thinking about things like FAE, FAS, and learning disabilities, and certainly in certain parts of this country, settlement in terms of English as a Second Language, and whether some of the kids who enter school not able to speak English then need a lot of special care later on.

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Is that a direction in which you think we should be going, or is that something that's too big a task?

Mr. Len Schieman: We need to walk before we start to run, and the area of early of intervention in dealing with young children is something that's a relatively new concept in many areas.

We have seen, certainly, the Perry Preschool Project. The Hawaii Healthy Start project is another one that has received a lot of attention, and these projects have proven to be very useful and very helpful. So we think certainly anything that helps a child get ready for school and be ready to learn when that child enters school can only benefit the whole system.

I don't know whether we need to develop national standards. That's certainly something that would be worth looking at.

First of all, though, I think we need to make sure that all jurisdictions are agreed that this is a project that needs attention, and that's why we, as an association, have certainly pushed for early intervention activities for a number of years.

We're pleased to say that in Manitoba, for example, the children and youth secretariat, which is part of government, has introduced the Baby First program this year, which will do just that, deal with or help parents who need help at that very early age. I think it's a start, and we certainly hope that can be continued.

The Chairman: Ms. Bennett, do you have a follow-up question?

Ms. Carolyn Bennett: On your first recommendation, on prenatal nutrition, the federal government does have a prenatal nutrition program, and certainly the food banks have come to us with some concerns that because of the cutbacks in various local public health programs, the prenatal program dollars from the federal government are being used to hire an extra staff member and then the women are just being sent to the food bank. I wonder if you have any feedback on that program.

Mr. Len Schieman: I'll ask Jerry to answer that.

Mr. Jerry B. MacNeil (Executive Director, Manitoba Association of School Trustees): I have a couple of observations, and maybe my first reaction is to the notion that we need to pursue further standards.

There's no question that we need standards on a whole variety of funds across our country, but on the other hand, sometimes we get lost in that malaise of establishing standards around those things about which we already know lots.

We know a tremendous amount about the condition of our children at this point across this country with respect to poverty, and I want to make a couple of comments, if I may, about that. I'll make an assumption and then an observation, and then try to conclude the question.

Around this whole question of child poverty—which we acknowledge is not just child poverty but also family poverty, community poverty, poverty of the disabled, poverty of the university students; so it's much bigger than that—there is an assumption that I am convinced of, based upon my own experience as a member the Canadian School Boards Association lobbying on Parliament Hill. That is, this is an issue that transcends politics, transcends partisan issues, which I know you have to deal with on a whole variety of other fronts, but we have been told by every party on the Hill that this issue of child poverty in our nation transcends partisan issues. So that's my assumption.

My observation about the discussion circulating this morning and the reports that provoked those discussions, as well as those other hearings that are going on across the country, is that we're talking about the fundamental economic principle of the distribution of wealth; it isn't a question, in my mind nor in my experience, that wealth is really the issue in our country. I heard Robert Hilliard and Albert Cerilli speak about this issue with respect to their jurisdictions. It is a question of the distribution of wealth, and yet the rich are getting richer—StatsCanada can prove that—and the poor are getting poorer.

If that doesn't make us sit up and take notice, particularly as it relates to our children, then I believe we are heading down. I'm not a harbinger of doom, but I do listen to what has been told to us by our member from the retirement community. We are heading down a very dangerous road.

I say that for this reason. I was too young to fight in the last war, but I do recall it well, and I remember its aftermath. I'll tell you, we don't have to go back that far to ask ourselves the fundamental question that if we do not deal with this issue of child poverty confronting our nation today, we are into some very serious social difficulties in the very near future, as has been in the very recent past.

• 1240

For those of you who followed the Headingley riot of two years ago here in our city, which is the worst prison riot we've had in years across our country, in the report by Judge Hughes on that riot he said—and this is almost a direct quote—that this riot did not occur in April 1996; this riot occurred when practically every single one of these inmates were living in poverty 20 and 25 years ago. He said that we should acknowledge this fact, because it was not going to get any better unless we asked ourselves a fundamental question.

I would ask you to take this question back to your colleagues on Parliament Hill, because we will be raising it again in two weeks when a group of us will be on the Hill and may be meeting with some of you.

That question is, where is the rage in our country regarding the issue of child poverty? How do we stimulate within our own agencies a controlled anger about what's happening to our children?

I'm a father of six and a grandfather of eight. The other evening, as I was holding my own grandchild, who's three now, I asked myself the question, what will he be confronted with in 35 or 40 years? He'll probably be okay—please God—but many of his age group will not.

So I ask you to consider that in addressing what I believe to be one of the most critical social problems facing our country. It's not only me, but Martin said it last year in the development of his budget. Prime Minister Chrétien is on the hook as well, as are some of your other leaders, for saying this is the greatest social issue confronting our country.

I plead with you to listen to what has been said to you about the minimum wage. Ten years ago a single mother living on minimum wage had to work about 44 hours to get up to the low-income cut-off point. Today—and Rob can correct me on this—it's 72. No one in their right mind could expect a society that is rapidly growing in numbers to sustain that kind of situation.

MAST over the past few years has taken child poverty on not because we see we have the answers but because we think we can provoke enough people to that controlled rage I talked about so that it just won't go away.

We are now in the middle of a project to prevent teen pregnancy in this province. We have the highest rate of teen pregnancy in Canada, with 504 children born last year to teenage mothers as young as 15. There were 484 born the year before, and you can take it from there. You know it but sometimes we lose sight of the fact the statistics show unequivocally the relationship between that one element and the crime rate and the poverty rate.

When I speak to business people about these things—and you can tell I'm a bit of a humanist, that's my orientation—I say to them if for no other reason than greed, be concerned about the poverty issue among our children, because it's your tax dollars. We spent $10 million to rebuild Headingley prison in the same year we cut $10 million out of the public school funding. I think we have to ask ourselves this question.

Mr. Albert Cerilli: I just want to add a little bit to that.

That's why I attached a minimum wage brief that was presented yesterday, which showed how this impacts men and women downstream and commented on the adverse effects on children, as it is our opinion low income speaks to the child poverty issue.

We want to point out that workers at that level of income have very little opportunity to invest in pensions, such as RSPs. In fact, most of the time the only pension they'll receive is from the CPP contribution at minimum wage, which will leave very little as a benefit. Old age security is another one they will get.

So all of these things are interrelated, and that's why when we were researching our presentation on what was just said might happen downstream and the adverse effects, I thought we'd better start paying attention. It's just shocking what's going on, and if we do a little research and pay some attention, we'll seriously start fighting this thing together, and not with each other.

The Chairman: Mr. Beachell.

Mr. Laurie Beachell: I support all of the comments that were made.

• 1245

One other factor I'd like to bring to your attention is that social policy in this country used to be debated much more in open forums. As we have moved to this new social union model, the policy is being debated behind closed doors in manners that leave very few people accountable.

Next week the ministers of social services from across the country, along with Minister Pettigrew, meet in Toronto to discuss a document called In Unison, which defines the framework for initiatives around disability.

We're pleased to see federal and provincial governments working together, but we have no idea what goes on in those discussions, nor is the community ever invited in as a partner in the new social union framework.

So it's all ministers of finance who meet now. There's no way for citizens to know what goes on in those meetings. There's a communiqué at the end, but there's no public participation in the process. There has to be a means in defining and seeking solutions to the issue of citizenship engagement.

If we do not do that and if we continue to exclude organizations like ours and others from the table, I don't believe we will find the best innovative solutions, nor does the public have confidence in solutions that are promoted, nor do community groups help to support their governments in promoting those ideas to a broader community as well.

So I just want to say that social policy generally, not only in the cuts and the impact it has on people, but in the process in which we are now defining social policy in this country, disengages citizens from participation, and that is ultimately dangerous and ultimately will not get us good solutions.

The Chairman: Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Mr. Chairman. I have a couple of questions, and then I'd like to come back to the theme that has emerged here.

Mr. Hilliard, you talked in your presentation about what in fact one should do with the actual surplus. You started off the presentation with the pay equity issue. You made the comment that if the money is set aside, then just pay it. You're looking for an answer to that; if in fact it does not affect existing revenues, then let's just pay it.

My question to you would be that if in fact it does affect current revenues, are you then saying that should go into the mix to decide what the priorities should be with which the government should invest, or are you just saying the budget should read a one-liner basically saying “pay equity”?

Mr. Rob Hilliard: No, I wanted to know if there was going to be an impact on current revenues. If there isn't an impact, I don't know why there is so much time being spent on debating whether or not to pay it. If, however, there is an impact, then obviously that has to be balanced with a whole lot of other concerns, but in doing that balancing, I'm not suggesting that the government not be prepared to meet its obligation. The government must meet its obligation, and it must make those adjustments.

If in doing so the bank account gets depleted in the short term, then it will obviously affect the ability of government to do other things. This first obligation, however, must be met. It's a debt owed to its own workers, and it's a debt that has been going on for 14 years, so that debt must be paid and that obligation must be met.

However, if in doing all of that it reduces the fiscal surplus a significant amount, then clearly other decisions might have to come into play, realizing that there just isn't as much surplus as we had before, but that is an obligation that government has and must meet both legally and morally.

I'm still very much in favour of stimulating the local economy and doing that stimulation in a way that addresses health care needs first and other transfers that have been lopped due to federal government cuts.

Mr. Tony Valeri: So if in fact this issue becomes one that does impact any dividends significantly or perhaps eradicates the entire dividend, you would suggest that it has to be then considered in the context of the other priorities. But at the same time, you're suggesting that there is an obligation to deal with this, and if it's not possible in the short term, then you're suggesting that this be done at some point.

• 1250

I'm just trying to reconcile the two. You say it needs to be paid and needs to be done, but at the same time you're concerned that if it impacts any surplus and prevents any sort of other investment, it will have to be sort of rolled into the mix.

Mr. Rob Hilliard: I'm saying that obligation must be met, period. In meeting it there may be some rational discussions made about how much can be afforded out of any one fiscal budget, but they must be met in the short term. It has just gone on too long, and the longer it goes on the greater the liability grows.

If in doing all of that we reduce the fiscal surplus to a very small number—and frankly, I don't think it would eliminate it, because even in the recession scenario it's expected that there will be government surpluses—perhaps it will leave a smaller amount of money to stimulate the local economy and the Canadian economy. But if that stimulus will be too small to be effective, government ought to look at other areas and reprioritize to ensure there is enough money—a few billion dollars—left to put back into health care and stimulate the local economy, in order to offset cuts that have happened already and offset the effect of the financial global crisis.

Mr. Tony Valeri: Jim Stanford was in front of the committee, I believe in Toronto, and talked about his recession scenario. He essentially put forward an approximately $6 billion surplus for 1999-2000. Included in that $6 billion surplus was a $3 billion contingency reserve. That would essentially leave, for all intents and purposes—the way we've been planning budgets—about $3 billion with which to do anything. Under that recession scenario, based on the numbers out there today, a pay equity payment would essentially eradicate an entire dividend.

I'm just trying to reconcile in my mind and understand your position. You're saying pay equity needs to be paid, but if it affects the dividend to the point where government is not allowed to reinvest in any other Canadian priority, you feel it needs to be paid—unless I'm getting a mixed message here—but not necessarily in the short term.

Mr. Rob Hilliard: No. It should be paid in the short term.

Mr. Tony Valeri: It should be paid in the short term, so it will be paid at the cost of any other reinvestment in health care or anything else we're talking about.

Mr. Rob Hilliard: No, I don't think that accurately describes what I said, although I can understand—

Mr. Tony Valeri: I'm trying to understand. I can appreciate you want it both ways. I'm just trying to say that we have a trade-off here, unfortunately.

Mr. Rob Hilliard: But I'm not sure the trade-off is as you present it. The trade-off isn't necessarily meeting the federal government's obligations under pay equity or investing in health care. I'm saying the number one priority is to meet your obligations under the pay equity decision. That must be done.

If in doing that the surplus gets reduced to a level where there isn't enough left to stimulate the economy and put back into health care, then I'm saying, look, reprioritize all the other things you're doing to make sure you do find that.

Mr. Tony Valeri: Okay. So what you're saying, essentially, is finding another $2 billion somewhere in government operations to invest in health care.

Mr. Rob Hilliard: If, in meeting the pay equity decision, that's what results, yes.

Mr. Tony Valeri: Fine. That's what I wanted to understand. So if you are completely depleting the fiscal dividend, then your suggestion is to find an additional $2 billion within government operations with which to fund health care.

Mr. Rob Hilliard: That is correct.

Mr. Tony Valeri: Okay. I just wanted to make sure I understood that.

Mr. Laurie Beachell: I have just a quick comment on that.

What I see underlining your question is sort of “deserving poor”. That's not our theory of equality. If there has been inequity in the system, and workers have been penalized, we believe the obligation must be met. We also believe the Government of Canada has an obligation to equality across the board and to understand what equality means for all Canadians. We as communities seeking equality do not want to be pitted against one another, nor will we allow that to happen.

We don't want to say, okay, if you give to workers, then the disableds are out. That's not what we're saying. We're saying the government has an ultimate responsibility to ensure the citizenship rights and the equality of all Canadians, and must find ways within its system to manage that. It is not a debate about who's the most deserving, because as soon as you get to the most deserving, it means you have adopted a policy of discrimination.

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Mr. Tony Valeri: That's a fair comment. I think government would love to do all these things, and no one is intending to pit one against the other. It's a very noble thing to be able to do all these things, but the unfortunate part of this thing....

I guess I should ask this question. Unless there is disagreement with the underlying principle that governments maintain balanced budgets, then I would agree with you, but if there's an agreement at the table that governments maintain balanced budgets and that we do not want to go back to a situation where we have this ongoing deficit—in fact, today we find ourselves paying $40 billion or so a year in interest because of a debt that's accumulated because of budgets that have not been balanced—then you're faced with these types of decisions.

I don't want to put it in terms of a trade-off of one against the other. I would love to be able to do everything that's been discussed here this morning. The reality of it is that if you have an obligation that has been put on the table of a magnitude that may eradicate the actual number we're talking about with respect to a surplus to reinvest, when you get to the table that's the trade-off in choices you have to make. I don't want to put it in that context, but I would love to be able to hear from you what government should be doing in order to meet these other obligations.

We heard about the Tobin tax. We'll be able to debate that in the House, and I look forward to that, but is a position being put forward that we should be increasing taxes or doing something to bring in additional revenue in order to do the things everyone around this table is saying we should do?

Mr. Albert Cerilli: The framework is the $3 billion we have to work with. That's a fair comment. That's why we suggested that if you look at equalization of taxes and a level playing field, not only for me as a senior, or Rob in his work or you as an MP, and start looking at the taxation of the corporate world, I think you'll find there will be some equity there to supply some funding for that.

You'll probably hear about the $750 million that escaped our treasury because of a trust fund that was allowed to escape the country. So if there's $750 million that has eluded the tax man, we should be plugging up those holes. That's where this money will come from. You're going to debate the Tobin tax in the House and I'm really glad to hear that. The reaction of the citizens of this country will be interesting when when all of a sudden we have a debate on why corporation X is moving billions of dollars around the world and the countries are not receiving one cent of tax from that money and that profit.

I think that's where this debate will wind up, and that's a legitimate comment you've made to create that kind of reaction from this group because certainly there is money out there. That's why when we mention there's $60 billion or $40 billion made by some foreign dictator, that's money circulating around the world that was invested in that country by corporations and everything else. So our country deserves a better playing field in regard to receiving a tax dollar from the corporate world.

Mr. Tony Valeri: So tighten the tax rules and find the money and the revenue.

Mr. Rob Hilliard: Your comment broadens the discussion tremendously here—

Mr. Albert Cerilli: Absolutely.

Mr. Rob Hilliard: —and it will be difficult to do justice to it in a short period of time, but I guess I would reinforce the statement made earlier. I don't see the choice being made between meeting your legal and moral obligations with your workforce and/or restoring service levels that had been there before.

If that's the kind of choice you're looking at, I'm saying it's the wrong choice. I say you meet your obligations and then if you don't have enough to do those other things, you take a look at the big picture of the whole range of things, including the tax structure and all of the expenditure decisions of government.

I can't give you a quick answer to that very broad question right now, but I think there are ways of addressing it, and there are ways of prioritizing government—

Mr. Tony Valeri: Well, outside of the comment about tightening the tax structure and increasing revenues, essentially there are three large expenditures that government is involved in: transfers to the provinces, transfers to persons, and the interest on the debt.

With the exception of those three, you can look at government—and I'm sure Mr. Epp will come up with a bunch of examples—and at the things that go on in government that will give you a whole bunch of money, but it would not provide you with the kind of money to deal with the magnitude of the kinds of issues we're talking about.

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Earlier today, Mr. Nystrom talked about government program expenditures being at the 1949 level as a percentage of GDP. There have been real cuts in government operations, no one denies that. I'm not sure that a comment that says you can go and look at the bigger picture and find reallocation within existing programming to provide for more somewhere else is something that a lot of people look forward to doing, given what's been done already.

I want to move on, though, because I do accept what you've said.

Mr. Albert Cerilli: Don't leave that alone, though, because again you've broadened the debate, which is very interesting. I think it's very important.

Now is the time, then, to sit back and look in the mirror to reflect where we want to go. Where do we want to take this country? Where do we want to take this planet?

I agree, that's why we have never chosen the words to separate this group or anything else. We refer to the corporate world as an auctioneer going to provinces and saying, you give me this tax break and I will locate in your province. That's auctioning, and that's not fair. Rules have to be made.

I'm just commenting on the fact that, yes, this debate can go on all day, and I would love to stay here with you, but as I said, I have a commitment.

It's a very interesting point you've raised in broadening the debate. There are ways and means of doing it. Let's look in the mirror and reflect out first so that we can say, “Here's what we have to stop”.

Mr. Tony Valeri: Okay.

Mr. Hilliard, the other point I wanted to bring up is about your comment on supporting an arm's-length structure with respect to the employment insurance program. I want to make sure I understand this correctly. The arm's-length structure in running the employment insurance program would involve employers and employees on this board that would essentially set premiums, set benefits and essentially manage the program. In that structure, you're also advocating that government no longer stand behind the employment insurance program, that it essentially be brought out of government and set out as an arm's-length type of organization.

Is that what you are suggesting with employment insurance?

Mr. Rob Hilliard: For the most part, yes.

Mr. Tony Valeri: So if in fact there is any sort of shortfall or an unexpected downturn in the economy, and this program might run into any sort of deficit position, you see that government would not be there to ensure that benefits are there for those who have paid.

Mr. Rob Hilliard: I believe that if the fund was managed by a bipartite group, they would ensure that premiums would be set at a level to take care of that. It may be that the occasion arises where some unforeseen event happens and there's a deficit created, but the group managing the fund would then have to respond to that to deal with that deficit and find the money either by raising premiums or borrowing in anticipation of an upturn in the economy or some mechanism like that.

But basically, yes, I see no reason why it can't operate that way.

Mr. Tony Valeri: You would accept a situation with an independent-type commission and program where, if you see a downturn in the economy and a deficit in the program where one would not be able to pay benefits, you would see an increase in premiums? That would be at the worst time in an economic cycle.

Mr. Rob Hilliard: That could be a response. It could also be a response to borrow money in the short term and pay it back in the expectation of an upturn in the economy. There are a number of responses—

Mr. Tony Valeri: Borrow money from whom?

Mr. Rob Hilliard: Perhaps from the federal government, perhaps from banking institutions.

Mr. Tony Valeri: Oh. So government would still have a role to play.

Mr. Rob Hilliard: I'm talking about possibilities here. You're talking about a hypothetical situation—

Mr. Tony Valeri: Oh, no, I'm not, actually, I'm talking about a proposal that's been put on the table. This is a proposal that's being promoted out there, that because of the so-called lack of transparency, individuals are coming forward saying they want more transparency in this, and a separate fund and a separate program. Along with that separation from government comes other types of risks so that you have a completely separate arm's-length situation.

If there is any connection to the government standing behind the program, then the Auditor General would not allow that program to be sitting outside of government. It would have to sit inside consolidated revenues if the government is going to, in any way, provide an agreement to stand behind the program. That's the challenge we face.

I just want to make sure I understand that if it is out, it's out completely, and government is not involved.

Mr. Rob Hilliard: I understand your point. I guess if that's the choice to be made, yes, I believe I would have to stand on the side of that.

Mr. Tony Valeri: You would support that.

Mr. Rob Hilliard: Yes, I would.

Mr. Albert Cerilli: In addition to that—

The Chairman: Laurie Beachell.

Mr. Albert Cerilli: Sure.

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Mr. Laurie Beachell: I have a very quick comment.

You mentioned transparency. The reason we may have gotten to this point is the lack of transparency. The reason we may be at this point is the lack of citizenship engagement in determining policy around EI. The reason citizens may be calling for arm's length from government is because they don't believe the government has listened to them.

I guess that's what I think is resulting in social policies, whereas if we had a process, a partnership, where we began to work around some of these things, and people felt engaged in the process, in finding solutions, I don't think you'd be seeing the same calls for separate and autonomous and away from government. But you reap what you sow.

The Chairman: Mr. Cerilli, a final comment.

Mr. Albert Cerilli: Yes, it is a final comment.

Again, you've broadened the debate, and I think this is great. I think what we have to do is say, okay, since....

What's in the fund now, $20 billion, estimated?

Mr. Tony Valeri: There's actually no separate fund.

Mr. Albert Cerilli: Okay. In general revenue accounts.

Mr. Tony Valeri: It's consolidated revenues.

Mr. Albert Cerilli: Of course.

In addition to what has been said, people see that, as I said earlier, as a means of reducing their input into this thing without any benefit. I think if the transparency shows that there is a benefit.... That's why we're saying the triparty situation—labour, business and the government—should set up those rules. If the government has to take a role in that, because of what's being said, I think that's part of the debate as well.

Mr. Tony Valeri: I fully agree with what you've said in terms of government having to take a role. The challenge I find there is that in terms of this issue of consolidated revenue—it's in consolidated revenue or it's in a separate fund—in order to get it to a separate fund, the government can't have a role, because the Auditor General will not allow you to have a role.

Mr. Albert Cerilli: We understand that. But I think those are the mechanics of the debate within...

[Inaudible—Editor]...and if there has to be a designated fund, you can have a designated fund from fuel taxes to repair all the highways and roads of this country because they're deteriorating. We've been promoting a designated fund for that for years, but nobody's listened. I think some people now are looking back and saying maybe we should have listened, because we need to fix our infrastructure, our sewers and water systems.

So there are all kinds of mechanics out there, and I think on the point being made, to get the public involved, I think some of the experts may surface in regard to what can really be done.

The Chairman: Thank you very much.

On behalf of the committee, I'd like to thank you. As you know, as we travel across the country it's quite clear that we have many challenges and choices we have to face.

I was just adding up some of the promises. If we were to keep everything that everybody's asking for around here, it would cost us anywhere between $20 billion and $25 billion. The challenge is quite obvious.

But I think Mr. Cerilli—actually, everybody—spoke to the issue of vision as well, that it's important to really start painting a picture of the future, of what type of future you want for your grandchildren and future generations of Canadians. This is a point that needs to be stressed over and over again as we deal with this budget and future budgets.

It gets quite difficult for any country to move forward without a sense of direction. That is not to say that this country lacks a sense of direction, because quite frankly, when you compare this country to the vast majority of countries, we have done extremely well.

So on behalf of the committee I'd like to thank you very much for bringing your point of view. You can rest assured that as in all the other previous pre-budget consultations, your points of view are taken quite seriously and are usually embodied in the report to the Minister of Finance.

The meeting is suspended.

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The Chairman: I'd like to call the meeting to order and take this opportunity to welcome representatives from: the Union of Manitoba Municipalities; the Infrastructure Council of Manitoba; the Jacks Institute; Brandon University; the Canadian Association of the Non-employed; Ramboc Enterprises; and the Shamray Group. These are the scheduled participants of this panel.

As you probably know, you have approximately five to seven minutes to make your presentation, and thereafter we'll engage in a question and answer session.

We will begin with the Union of Manitoba Municipalities and its president, Jack Nicol, and vice-president, Wayne Motheral.

Welcome.

Mr. Wayne Motheral (Vice-President, Union of Manitoba Municipalities): Thank you.

Good afternoon.

The Union of Manitoba Municipalities represents 172 municipal corporations, including 118 rural municipalities and 54 urban municipalities. The mandate of our organization is to act on behalf of our members to bring about changes, whether through legislation or otherwise, that will enhance the strength and effectiveness of municipalities.

We appreciate the opportunity to meet with you today to highlight two issues we believe should be priorities for the Government of Canada's next budget.

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The first is the national infrastructure program. Approximately 18 months ago, the federal government and the provinces signed an agreement which provided additional top-up funds to the original 1994 Canada Infrastructure Works Program. The partnership between the federal, provincial, and municipal governments resulted in an extremely effective program that met the goals of creating employment opportunities and improving Canada's infrastructure.

In Manitoba, we were particularly fortunate that municipalities were given representation on the infrastructure program management committee, which recommended projects. In addition, municipalities were the proponents and equal funding partners in a large portion of the project. We believe this contributed to Manitoba having one of the most successful programs in the country. In fact, in their assessment of the infrastructure program, the federal Treasury Board concluded the local component was one of the key factors in the program's success, because priorities were established by those closest to the real problems.

And, at a time when there is a high level of cynicism about government activities, the infrastructure program is a good example of government investment and co-operation, providing both short-term and lasting benefits for Canadian communities.

In total, there has been an infrastructure investment of $245 million in Manitoba, which has resulted in 600 projects and more than 4,200 jobs. Over 50% of the projects have been in the area of traditional infrastructure, specifically, roads and bridges, sewer and water.

It is also important to point out all three levels of government received a return on their initial investment through increases in tax revenue. In fact, of the three levels of government, it is only the federal government that receives a full dollar back in revenue for every one dollar spent on the program.

Despite the success of the first program, there remains a critical need to continue to invest in the repair and maintenance of Canada's core infrastructure, such as roads, bridges, sewer, water, and extension of natural gas. For these reasons, we strongly support a new major infrastructure program being launched by the federal government, which would include an equal role for provincial and municipal governments in the funding and selection of projects.

Now, in regard to the national highways program, nowhere is the impact of federal policy decisions more visible in rural Canada than in the area of transportation. Roads of course represent one of the most important areas of municipal responsibility and are a primary concern for our membership. In the past number of years, roads and highways throughout Manitoba and the prairies have been significantly affected by increases in truck traffic due to trends such as branch line abandonment, elevator consolidation, and the elimination of the Western Grain Transportation benefit.

In recent years, there has been significant growth in both the number and weight of trucks. This trend has been exacerbated by accompanying increases in truck weights and the haul distance of trucks. In fact, during a recent meeting with the University of Manitoba Transport Institute, it was confirmed that increases in truck traffic are the major transportation infrastructure issue facing the Canadian prairies.

The effect of these increases in trucking is becoming increasingly evident in the state of our road infrastructure. A road previously estimated to last 20 years will now last only 8 years. As well, over one-half of the asphalt- and concrete-surface roads in Manitoba have exceeded or are exceeding their design life.

The four western provinces have estimated that the cumulative impact of changes in trucking patterns and distances on provincial and local road maintenance costs $30 million to $50 million annually. Further, the provinces estimate that the road network would require an upfront investment of between $600 million and $1 billion to accommodate the increased traffic requirements over a 20-year road lifespan.

Many of these road impacts are a result of federal government decisions related to agriculture and transportation policy. In addition, the impacts are occurring at a time when federal support for transportation infrastructure on the prairies is decreasing. For instance, the UMM—the Union of Manitoba Municipalities—and other stakeholders have expressed our concerns about the spending projections of Transport Canada. The projections to the year 2003 estimate that over 98% of their funding will be directed toward eastern Canada.

The changes in agricultural transportation are producing impacts that are greater than the ability of local municipalities and even provincial governments to address on their own. We strongly believe there is a need for the federal government to assume greater responsibility for prairie Canada's transportation network.

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Therefore, the Union of Manitoba Municipalities supports the development of a national transportation fund, which would be financed by federal fuel tax revenue. The federal government raises over $5 billion per year in fuel tax revenue across the country. Of that $5 billion, the government spends about $13 million in western Canada. In Manitoba, the estimated federal tax revenue on road fuels is over $140.7 million, while the federal contribution to highways in recent years has ranged between $3 million and zero.

In the past, the federal government has stated that fuel taxes go to general revenues and are not a dedicated revenue source. However, this position simply does not address the serious state of Canada's transportation infrastructure.

It is ironic that a country such as Canada, which relies on transportation infrastructure to overcome vast distances, is the only major industrial country that does not have some type of national highways program. This becomes a particularly significant issue when considering the massive investment in highways that is occurring in our neighbour, the United States, our major economic competitor.

Highways will play an increasingly vital role in our economy as changes continue to occur in the areas of value-added processing and the transportation of agricultural products. We strongly believe that infrastructure funding should not be viewed in competition with other government funding priorities. Rather, it should be viewed as a crucial element of a successful, competitive Canadian economy. We therefore urge the federal government to consider the implementation of a national transportation fund.

Thank you.

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

Now we'll hear from The Infrastructure Council of Manitoba, with Mr. Chris Lorenc, president, and Mr. Dave Harrison, chairman of the board.

Mr. Dave Harrison (Chairman of the Board, The Infrastructure Council of Manitoba): Thank you and good afternoon.

I'm going to take a moment to introduce ICM and what we represent and tell you basically why we're here.

The ICM is a council of associations, if you like. It has quite a variety of associations and is quite a diverse group. We have the engineering people, the various contracting groups, the heavy construction people—Winnipeg Construction Association, Centra Gas, and CP Rail, to name a few—and the trucking associations. We represent about 40,000 jobs and about 1200 employers in Manitoba.

The ICM mandate is to develop and promote greater public and government understanding, acceptance and support for socially, environmentally and financially responsible infrastructure maintenance, renewal and investment policies.

We have a very broad definition of what infrastructure is. It's not just the roads and streets and sewers. Of course they're a major component, but we think infrastructure also means the public buildings, the schools and the hospitals. It's really anything that affects the day-to-day existence of the citizens of this country. It's very important to this country.

To paraphrase for a moment what the Prime Minister said about five or six years ago—and I can remember him coming on television and saying how important he thought infrastructure works were to this country—when people see trucks full of concrete rolling down the street, it makes them feel good; when people see their bridges and their streets and their buildings well maintained, it makes them feel good. It affects how people think and the way they spend their money, and it helps the economy generally. We believe that to be true.

If the Prime Minister still believes that, and if you people also believe that to be true, then it's very important to take this message back to Ottawa and get some money to make sure these programs can be maintained in an effective manner.

Now I'd like to turn the microphone over to Chris Lorenc, who is going to talk about some of the specifics in our brief.

Thank you.

Mr. Chris Lorenc (President, The Infrastructure Council of Manitoba): Thank you very much.

Good afternoon, Mr. Chairman and members. It's a pleasure to be in front of this committee.

Approximately a year ago we had the opportunity of making a similar presentation to the Standing Committee on Transport wherein we addressed the whole notion of a national infrastructure policy.

You have had two documents circulated to you. The first is a rather large document at first blush and is entitled National Infrastructure Policy (NIP): A Sustained Commitment, dated January 1998. My first comment is, don't be intimidated by the bulk, because there are some 10 or 12 attachments that serve to reinforce the message contained in the 11-page brief.

The second document is entitled simply National Infrastructure Policy: A Sustained Commitment, and it is targeted for presentation to your committee.

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As Mr. Harrison has indicated, the Infrastructure Council of Manitoba is a non-profit organization that seeks to work with governments—regardless of political stripe—and with the public to encourage a better understanding of the need to invest in Canada's infrastructure.

We applaud the federal government, which has, to its great credit, successfully eliminated the budgetary deficit and is now projecting surpluses exceeding $5 billion—and growing—within the next few years on a sustained basis.

As much as it's important for the federal government and all levels of government to deal with and come to grips with budgetary deficits, we believe that the infrastructure deficit, the second deficit, is of equal significance. The infrastructure deficit is the gap between what this country invests in infrastructure as compared to what it ought to invest in a prudent fashion.

Since prior to 1993 when the program was first announced, premiers and ministers of finance, as well as ministers of highways and transportation, have consistently made the case that there must be a national infrastructure program. That particular position, expressed in the guidelines adopted at successive annual premiers' conferences, has the support of national stakeholders, and those include: the Federation of Canadian Municipalities; the Transportation Association of Canada; and the Association of Consulting Engineers of Canada. And the list goes on; it's identified at page 2 of the shorter brief.

So really, the issue before you as parliamentarians and before the nation is not whether we have a national infrastructure policy, but rather, under what arrangements do we have it and how do we get it going?

In our judgment, the country is no longer in a position of simply trying to ignore the issue. No one can estimate with any degree of precision, as in a science, the size of Canada's infrastructure deficit, but in a report in 1996, the Federation of Canadian Municipalities estimated that the municipal infrastructure deficit is in the vicinity of $44 billion. An article written by Dr. Mirza, a civil engineer out of McGill, suggests that could easily climb to $300 billion within the next 5 to 10 years if we don't do something as a nation.

With respect to highways, a recent report updating the 1988 studies, done by the Transportation Association of Canada jointly with the federal, provincial and territorial governments, moves that number up from the previous estimate of $12 billion to now $17 billion.

So the issue is not whether or not we do it; it's how we do it.

Quite often, regrettably, one hears from federal politicians that highways are a matter of provincial jurisdiction and that the federal government should not, goes the argument, contribute substantial resources on a national scale to a sector under provincial jurisdiction. With the greatest of respect, we disagree. This is not an appropriate rationale for federal government absence.

All members of this committee, all members of Parliament and all students of Canadian history recognize that jurisdiction has never interfered in addressing national needs. This country was built and her many attributes established as a consequence of leadership and financial partnership involving the federal government, quite irrespective of federal-provincial jurisdiction.

Canada's first national transportation system, the coast-to-coast CP main line, cemented the ability of this country to form. This massive project involved federal funding and federal government leadership.

Canada's first national highways system, the Trans-Canada Highway, was built with federal funding and leadership.

The establishment of Trans-Canada Airlines, succeeded by Air Canada, the Canadian National Railway, the Crow rate, the health care system, unemployment insurance, the Canada Pension Plan, federal funding for education, the social safety net programs, the Strategic Highways Improvement Program, the Canada Infrastructure Works Program and many more programs, provided a federal response to a national need, which, without federal funding and leadership, would never have happened.

That is true today with the need for a national infrastructure program focusing on three elements: the municipal infrastructure deficit; the need for a strategic national highway system; and strategic infrastructure investments. They collectively represent an enormous actual—not invented—national need that can only be properly addressed if the federal government takes the lead, establishes the program parameters and challenges the provinces to come on board, as it did so successfully with the nationally popular Canada Infrastructure Works Program.

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Challenge the premiers not to participate if they choose. They will have to explain to their constituencies why their respective provinces choose not to participate in a federal program aimed at establishing national standards.

So the issue, respectfully, is not jurisdiction. It's all a matter of political will and leadership, and we believe the federal government must demonstrate it. The best way to demonstrate that is through the federal budget.

Thank you.

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

We'll now hear from the presenter from the Jacks Institute, Ms. Evelyn Jacks.

Welcome.

Ms. Evelyn Jacks (President, Jacks Institute): Thank you very much.

I'd just like to take a moment to tell you what the Jacks Institute is. We are known as Canada's leading trainer of tax industry professionals. Our students are tax accountants, tax consultants and financial planners across the country who deal with individuals having problems with regard to their tax preparation and also do investment tax planning.

Our presentation today has followed quite closely the four questions you have asked.

The first question asked for thoughts with regard to priorities on the fiscal dividend, and we have several thoughts there. First, $45 billion in annual interest payments on the federal debt is an unacceptable amount. These payments cut into program spending and place potentially large tax burdens on future generations, which are a smaller tax base. Should interest rates rise, there would be even greater pressure on a government already challenged with aging baby boomers.

The solution is to reduce the debt we have accumulated over the years, which is over a half a trillion dollars, but this must be done gradually over the next 10 to 20 years. We feel that future deficit spending should not be allowed, and that this should be legislated.

Any leftover fiscal dividend should primarily be invested into health care research, in the best people to look after our sick and disabled and the latest medical technology to be able to do so.

Global communications should be continued and encouraged throughout the economy and the educational system. It must become easier for Canadians to access such technology from their homes for business, education and personal finance purposes.

Finally, Canada, with its unique cultural heritage, should be a world leader in art, theatre and music. Year 2000 initiatives would be a good place to start to encourage both the young and the old in particular to contribute their time, energy and creativity to a cultural renaissance in Canada.

Next, you asked how we might use tax and investment strategies to accomplish those things. We had several thoughts there. First of all, in order to continue to assist with medical care costs, to encourage increased home care of the ill and the elderly, and to continue to enhance tax credits, as the government has done over the past several budgets, to caregivers and those with high medical expenses, you may wish to consider, for example, allowing the claim for the disability tax credit and full-time nursing-home care at the same time on the same return, and removing the 3% net income limitation for medical expenses.

In addition, doctors and other medical personnel, whether they are employed or self-employed, should be able to claim tax deductions when they use medical supplies in the line of duty or on private time.

In the future, palliative care will be a very big issue as baby boomers age and die. The federal government should assist provincial governments in providing better health care for the sick and the dying. Cost sharing should be initiated to provide hospitals with funding over the next 10-year period, to recruit doctors who specialize in palliative care in the home, and to enable these people to work directly within the community. Doctors and nurses specializing in palliative and home care should be recruited and trained, and training should be provided to families assisting in palliative care or care of a chronically ill person.

In the line of preventative medicine, health spas and other types of care are used extensively in Europe to assist the ill in returning to their normal life patterns. Private industry should be encouraged through tax incentives such as accelerated capital cost allowance to participate in the care of the sick and the disabled.

In terms of the year 2000, a great milestone, perhaps the federal government would like to bring forth a new fiscal vision for the year 2000 and beyond. Some ideas for “society building” include the following.

No tax for the poor: does it make sense to tax the poor? Currently, our basic personal amount is $6,456, or about $538 a month. Does it make sense to tax moneys earned above that? And how far above that?

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In terms of relief for the middle class, the federal government's millennium initiative might be clear on the issue of putting new money into the hands of consumers. One way to do that is to restore the full indexation of tax rates, personal tax credits and refundable tax credits above certain income thresholds.

To encourage the creativity of young entrepreneurs, we might consider a young entrepreneur business loan program that would be available to top graduates of business and technology programs in post-secondary institutions across the country; this might be paired with a mature entrepreneur mentorship program. We may also wish to encourage socially responsible business enterprises and employee ownership, possibly through some increased direction with the labour-sponsored venture capital funds.

We're also finding, within the tax industry in particular, that senior citizens are being squeezed by the combination of high tax rates and low interest rates. The government might want to consider a $1,000 interest tax credit to give some relief there.

We may also wish to consider providing tax assistance to those who give back to their communities by allowing a refundable volunteer tax credit for every hour logged in community service. This would be a way for the very poor to give back to society.

We may also want to consider an initiative called something like Renaissance 2000, which would provide a tax deduction for those who contribute money to cultural education, the arts, hospital research and other centres between now and 2001.

Finally, we may wish to promote tax fairness through tax treaty changes. We may want to negotiate an increase in the adjusted cost base of assets subject to the new departure rules in Canada to ensure that no double taxation exists in the future when non-residents actually sell their Canadian assets.

For question 3—helping Canadians take advantage of the new era created by our balanced budget—basically our thoughts are the following. A barrier to such a worry-free society that the new era may create is the burden of unmanageable debt. Perhaps the government can best help Canadians prepare to take advantage of future opportunities by taking steps to manage this debt and at the same time making a commitment to its taxpayers that a fully supported modern health care system awaits our aging majority.

To ensure a wide range of job opportunities in the new economy, which was the subject of question 4, we suggest the following.

The new economy is in the information technology age. Canadians, with their well-educated society, are poised to be world leaders within that new age. Our isolation, in a way, has helped us to embrace technology, and our innovation and creativity can help us create work within Canada and around the world. International trade opportunities should continue to be promoted to become a natural networking opportunity for all of us.

Thank you very much.

The Chairman: Thank you very much, Ms. Jacks.

We'll now go to Mr. George Harris, from Cho!ces: A coalition for social justice.

Welcome.

Mr. George Harris (Representative, Cho!ces; A coalition for social justice): Good afternoon. I come from an organization called Cho!ces. We're a social justice coalition here in Manitoba.

The name itself, just for the information of those of you who may not know, comes from the fact that we recognize that governments, no matter how difficult the circumstances are, are making choices and doing so on a regular basis.

One of the things I found rather interesting in the previous presentations was the reference to the infrastructure deficit.

What I'm going to do first today is talk about deficits and the fact that, the way we see it, the government has looked at deficits from one dimension only, from the fiscal deficit. It has not looked at the whole variety of deficits that we have within our country.

It's certainly not something you ignore. You don't ignore a fiscal deficit, but if you focus your attention entirely on the fiscal deficit and ignore other deficits, this brings about tragic results. The example of the infrastructure deficit is a good one, but I'd like to give you one more to consider. You can extrapolate and continue looking at other forms of deficit.

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We talk about the social deficit. To illustrate, I want to give you a fairly simple example, something that is very close to the field in which I work. In my day-to-day life, I work with people who live with HIV and AIDS. This government, with great reluctance, finally agreed to put money into the next phase of the national AIDS strategy. Some people say that's an awful lot of money to put into a national AIDS strategy.

I want to illustrate the consequences of not doing anything. Last November, a report came out which was called The Economic Burden of HIV and AIDS. That report identified that for each new diagnosis of an HIV-positive person within our society, the future cost in terms of an economic burden to our society would be $0.75 million. So when you're talking in terms of 50,000 people within our society who are HIV-positive, you're talking in terms of a horrendous future economic burden. So the longer we sit and do nothing—and I'm talking more in terms of prevention—the heavier our future economic burden will be.

So while we focus on the fiscal deficit, we should be very careful not to ignore the other forms of deficit. I gave you a specific example of HIV and AIDS, but I could carry on and go into health, education, and other programming.

Each year we go through an exercise with the Canadian Centre for Policy Alternatives. We talk to people right across this country. We have workshops from coast to coast. We talk to people who live in poverty and to people who are looking at the various needs in the areas of health, education, and so on. We develop what we call an alternative federal budget. What we provided for you today in our documentation is a copy of the alternative federal budget.

Time won't permit going through all of this, but I would just like to focus on some of the things we pay attention to in all of this. Just so you are aware, one of the things we pay attention to is maintaining a balanced budget.

A lot of people have been very critical of some of us, and they look upon the work we do as that of just another special interest group. Generally speaking, our work has been dismissed. I don't see too much of it making its way into government policy.

I'll go on to the other things we pay attention to: sustaining economic growth; freezing the aggregate special federal taxes; restructuring taxes so that they become fairer overall, and here we we do a fair amount of work; reducing the federal debt burden; reducing the official unemployment rate; and reducing the poverty rate.

We're urging this government to do more in terms of trying to look at the many different facets of our society. This year is the 50th anniversary of the Universal Declaration of Human Rights. Most people are aware of that. If you were to look seriously at the Universal Declaration of Human Rights, you would see that it goes far beyond the civil liberties we very often think of as human rights. The rights enshrined are the right to decent health and education and the right to work and have enough leisure time. Young people today are working incredibly long hours because they have to work longer and longer in order to support themselves.

We're looking at this from a much broader point of view than what I would say is the very narrow focus on fiscal deficits. The track record over the past few months has indicated that even though the government of our country has focused its attention on the fiscal end, when we look at the global economy and the track record over the past little while we can see that it's pretty shaky.

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And as the capitalist system goes through its boom-and-bust cycle, many of us are very fearful of what's going to happen during our next bust cycle, because, on a day-to-day basis, we work with people who are in fact dealing with poverty that is—even during our so-called boom period—grinding poverty.

I'd like to leave it at that. I urge you to consider carefully the recommendations that have come forward in our alternative federal budget. I want to emphasize that we have put forward an alternative federal budget to show that there is one alternative. But it's not the only alternative. There are many others, probably as many as there are people in this room.

I hope you will look at the recommendations that are contained therein.

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

We'll now hear from Dr. C. Dennis Anderson, president of Brandon University.

Welcome.

Dr. C. Dennis Anderson (President, Brandon University): Thank you. I apologize for being late. It's about a two-and-a-half-hour drive from Brandon and I was just informed mid-morning that the time of this meeting had changed.

I appreciate the opportunity to address the committee. My perspective is the university community's perspective. I won't be talking about specific ideas on tax measures and and I apologize for that. I'm happy to listen to them, but my specific focus is the university sector, and I hope you'll understand that.

While I will be quoting some statistics from my university, I also will be sharing some on the national and international perspective. Many of the ideas I have presented in my brief are, I'm confident, shared by my colleagues across the country.

It's nice to see Canada in a position of surplus budgets with a committee coming around asking questions about what we should do with the fiscal dividend. I appreciate that the dividend is dwindling daily with the current international financial situation, but there still is some sizeable potential for helping some sectors.

I have given you a handout that's available for your researchers and recorders. In my brief time here, I wanted to emphasize the key recommendations I've included in the material.

The first three relate to the social transfer to the provinces, the Canadian Health and Social Transfer or CHST.

The fact of the matter is, in the 1990s, and mostly in the last three or four years, the CHST—or the old established programs funding transfers to the provinces—has declined by about 20%, from roughly $30 billion to $25 billion. That has had a direct impact on reducing the core funding of universities, because under the established programs funding arrangement, notionally at least, those funds were intended for health, education and social services.

The first recommendation is that the federal government do whatever it can to remind itself that the social transfer, the CHST, is for post-secondary education as well as for health and social services.

Marketing is my area, my academic discipline, and often labelling and branding are extremely important topics in marketing; the design of the acronym “CHST” has put health at the forefront of the social transfers. No doubt there's a reason for that, but there's no reference to education.

The acronym should really be CHEST, the “E” referring to “Education”. What we're appealing for in the first recommendation is for the federal government to be cognizant of, in all our communications, that the CHST is indeed for post-secondary education as well as for health and social services. Post-secondary education doesn't get mentioned frequently enough when there is reference to CHST.

The second recommendation is that the provinces also need reminding by the federal government that the CHST is indeed for post-secondary education, not just for health, and that any increases to the CHST transfer should not result in equal withdrawals on the part of the province in their own internal funding of the sectors, particularly the education sector.

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So the first two recommendations are really an appeal for heightened awareness that education, post-secondary education, is an integral part of the CHST. It should be there on this label. It isn't. I don't expect that to be changed in the short term, certainly, but it does need that kind of emphasis, at both the federal and provincial levels.

As for the level of the CHST, there definitely is a need to restore, on a staged basis over a number of years, the funding erosion that has occurred in the past four or five years. That funding erosion is as much as 20%.

The next two recommendations relate to our view of a strategic priority for investment, and that is, investment in research. You may well know that research and development is a driving force for economic growth, for quality of life and for employment.

It's interesting to reflect on Canada's relative positioning internationally on research and development in terms of gross economic expenditures on research and development. The statistics are not favourable to Canada. Among the top seven OECD countries, Canada ranks ahead of only Italy and is behind Sweden, Japan, the United States, Finland, France, Germany, the Netherlands, the United Kingdom, Denmark, and Norway.

In Canada, only about 1.5% of the gross domestic product is spent on research and development, compared to as much as 3% in Sweden and 2.5% in the United States, for example. Canada is far behind. The total size of the research and development investment in Canada is low. We need to do whatever we can to increase that investment.

For your information, in regard to the share of what investment there is in Canada, universities contribute a disproportionate share of research and development in Canada compared to our OECD partners. The university sector's role in generating research and development in Canada is about twice as important compared to the other countries. The total level of research and development is insufficient, but of what is done in Canada, I want you to know the universities do play a dominant role, hence the appeal that the research resources made available to universities be increased in this country.

There's a new proposal, which is being presented in Ottawa. It's endorsed by the Association of Colleges and Universities of Canada. The proposal is to create a national virtual network of health researchers. We are appealing to the federal government to look at that and perhaps look to a staged funding of that over a number of years.

It's important to realize that health research is more than microbiological medical research. There are many policy aspects to health. There are many other social and socio-economic determinants of health. The disciplines at our universities that relate to health research, in short, are more than what you would see if you went to only the universities that have medical doctoral schools in health, or to only the biomedical science disciplines within our science faculties.

Our social sciences, our humanities people, have an awful lot to say about the health area, and in the funding of the new proposal for a virtual health research institute across this country, we would encourage the government to have a broad view of what the determinants of the health of the nation are. They are more than microbiological. They are certainly socio-economic. They are policy-related and political as well.

Specifically, in addition to creating funding for this new concept of centres for health research, in the funding of research there is a need for increasing the funding for the existing federal granting agencies. The funding for federal granting agencies has eroded significantly in this last five years.

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I mentioned earlier that universities are important sources of research and development in this country, and the primary source for funding of that research is from the Natural Sciences and Engineering Research Council, NSERC, from the Social Sciences and Humanities Research Council, SSHRC, and from the Medical Research Council.

The budgets of NSERC and SSHRC have eroded tremendously over the last few years. They've stabilized and increased slightly in this last year, but there's an awful lot more to go.

For my particular university—and it's a very small one, with some graduate programs but primarily undergraduate ones—research is still very important. Since 1993, there has been an 80% reduction in the research funds available to my small university from a combination of SSHRC and NSERC—an 80% reduction!—at the same time that we're hearing in many sectors that research is extremely important.

That gives you an idea of the erosion to funding of research in our sector, hence my appeal that as a strategic investment, despite the importance of funding hospitals right now in the health-care sector, don't forget about the universities. Please don't forget about the importance of funding research in that sector.

In summary, we need shoring up of the transfers to the provinces, but with specific reference to those transfers that are for post-secondary education as well as those for health and social services. And within post-secondary education, there's a major federal role in supporting research at universities. It's in all of our interests.

Thank you.

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

We'll now begin the question-and-answer session with Mr. Epp.

Mr. Ken Epp: Thank you very much, Mr. Chairman, and thank you, ladies and gentlemen, for coming here this afternoon and giving us your insights with respect to the federal budget.

As you know, we're here in order to try to shake down what the priorities of Canadians are, not only in regard to the expenditure half of the budget, but also in looking at revenue sources and taxation fairness and things like that, all of the things that the finance minister normally includes in his budget speech in February. I was very interested in hearing from, first of all, the municipal representatives and the infrastructure people.

It's a theme that we have heard very loudly. Since, as you know, the Reform Party is based largely in the west, the message we're hearing loudly from the west is that with railroad abandonment the demands on our highways are increasing. One of our members put in a private member's bill to require that tax revenues from the fuel tax be designated for providing the roads that those taxes should presumably be paying for—instead of going into general revenues.

Those are some of the things that we keep hearing, and to have you reinforce that is actually rather encouraging, because it says, at least from this part of the country, that we're on the right track in terms of representing those views.

One thing you didn't mention, though—and obviously it's not part of your responsibility because you're looking at it in terms of the infrastructure and highways and roads—is that the impact has to be huge with respect to the loss of railroads. You didn't talk about this at all, but do you think that an increasing priority of the government should be to maintain a strong rail system in order to decrease the loads—a little pun there—on the highway system?

Mr. Wayne Motheral: Thank you for the question. This is something that our organization, along with the Saskatchewan Association of Rural Municipalities and the Alberta Association of Districts and Counties, brought up in our presentation to Judge Estey. Everybody's really concerned about the quickness of the abandonment. But our position at the time was that this is happening, the railroads and grain companies seem to know what their direction is, so we were almost saying that if this is happening, there is going to be an awful road impact; it is something that's real, that is going to happen. So we concentrated our efforts on road impact.

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Mr. Ken Epp: Do you in Manitoba have any hope at all of being able to stay on top of this? Because what you're doing is replacing farm trucks, which normally were the two- or three-ton trucks until a few years ago, and now we're talking of large units carrying upwards of 100,000 pounds or more. Can you actually envision yourself building a road structure throughout rural Manitoba that will actually sustain that kind of load?

Mr. Wayne Motheral: We, in cooperation with Keystone Agricultural Producers, are trying to form an agency that possibly would look into this problem, because we do feel that there needs to be designated routes for heavy traffic and, no, we can't repair all the roads. But we need designated routes. And this is something that organizations have to get together on—with the elevator companies, etc.—in order to find out exactly where these routes are going to be.

We met with the Transport Institute of the University of Manitoba and with all the technology there is today we can certainly find this out and put in projections through computer modules and all that to find out where this traffic should be. This is what we are actually going to be presenting to our own provincial government, hopefully; we are going to say that there is going to be a problem and we have to attack it soon because this is a devastating problem in western Canada, the devastation of the roads—and also the weight, as you mentioned, the heavy trucks. We don't know where the limit's going to go.

The trucking industry want to be able to haul the loads and yet—

Mr. Ken Epp: So do the farmers.

Mr. Wayne Motheral: Yes. I know. I avoid that. I'm a farmer myself. I don't like to put blame on farmers themselves, but they are certainly overloading trucks.

Mr. Ken Epp: What I'm hearing from farmers is that with the federal government subsidy and their transportation going down the tubes, combined with the loss of the railroads, they now have to either hire trucks or buy their own, and unless they are able to carry substantial loads their costs to get their product to market will simply drive them right out of business.

So I think it's a much greater problem than generally we're aware of. At least, I'll put it this way: I think it's a much greater problem than the government in Ottawa is aware of, because I think those of us from the west are probably more aware of it than they are.

So, to me, that's one of the messages we have to carry.

Mr. Chris Lorenc: If I may, those are all very good questions because they touch upon something that, quite frankly, is lacking in this country, and that is, the whole notion of a national transportation vision.

What's the strategy of investment by the federal government jointly with the provinces as it relates to creating a national transportation system that allows this country not only to remain competitive domestically, but to compete with the opportunities that are presented to our country through NAFTA and FTA?

And the first steps were really taken by the Transportation Association of Canada and the national highway system studies, which identified not all of the highways in this country as being of strategic importance to the country but 24,000 or 25,000 kilometres, principally following routes east-west and strategic connections north-south. And why is that important? It's important because those sections of the Trans-Canada plus provincial highways, if you will, carry the bulk of the traffic, allow our trucking industry to be competitive, and allow the costs of goods to remain competitive as opposed to losing their competitive edge.

In terms of the technology, there's a bit of a tragedy in this country. On the one hand, the federal government invests in programs like NSERC, which was referred to by President Anderson, which is a very good program, and one of the programs that flows from it is the NCE program, the networks of centres of excellence. One of the networks of centres of excellence is ISIS Canada, which stands for Intelligent Sensing for Innovative Structures, which happens to be headquartered in Manitoba but has research nodes in, I believe, almost every province in this country.

And that research area is extremely important to the future of the country because it deals with advanced composite materials. It deals with using different types of reinforcement materials in concrete. It talks about the use of carbon fibre or metal fibres the size of probably less than a quarter of an inch to reinforce the concrete, which allows us to use less than half the volume of concrete as compared to traditional construction techniques which use rebar, etc. And this is an area where the government is making an investment in order to allow ISIS Canada to remain a pioneer.

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The problem is, the federal government stops there, and instead of providing an opportunity to showcase that technology, which is required—not just in Canada but internationally—to address a $3 trillion infrastructure deficit, we don't showcase it.

So there's a way of being able to invest in research and to create technologies that are considerably more cost effective, whether it's life-cycle costing, repair, or new construction, which will not only benefit the country nationally and enable us to address the kind of standards you spoke of but will also create market niches for Canada.

If we're not going to be the builders of the space shuttle, let's be those who design the best infrastructure and repair it best. It's an opportunity for this country that we're missing because we're not investing where we ought to.

Mr. Ken Epp: You're saying, then, that the combination of research and using the new technology developed by it would probably, in total, cost the taxpayers of the country less than just hanging on with the old technology and trying to keep our roads and highways from falling apart.

Mr. Chris Lorenc: I would encourage you to take a look at this brief, which consists of only 11 pages. An entire section is devoted to the application of ISIS Canada technology. The projects are found from coast to coast. There's a carbon wrap material ISIS Canada is pioneering that allows us to fix bridges without shutting them down and to give them a greater weight-bearing capacity than they were originally designed for. There's a project in Winnipeg involving the application of that carbon wrap technology that will cut the repair costs by 50%—from $10 million to approximately $5 million. That allows that other $5 million to be used for other purposes.

But the kind of bridge deterioration we see in this country is no different from what you see in Japan, the United States and elsewhere. Those countries are coming to Canada to take a look at the technology, and instead of our nation showcasing it and positioning our engineers and design community to have the experience and know-how in its application, we're sitting back and saying that all we're going to do is invest in the research and the rest will take care of itself. It won't. It might work in the United States, which is capital rich. It might work in Britain, Germany, Japan, and other countries, but it can't and won't work in Canada, because we're not anywhere near as wealthy. We don't have the same level of risk capital and dollars available.

Mr. Ken Epp: And we're spread out so far.

Mr. Chris Lorenc: Exactly.

Mr. Ken Epp: Very good.

I have one more question with regard to infrastructure. I think probably the four of you, at least in this area, are supportive of the federal government's infrastructure program.

Mr. Chris Lorenc: Absolutely.

Mr. Ken Epp: You were all nodding your heads on that.

That's quite different from what I hear in Alberta. The thesis there is that there's only one taxpayer, and that it's best for the taxpayer to have as close to local control on total spending as is possible. If the federal government comes up with a program like this, basically what they do is they suck into Ottawa all of the money from across the country in the form of tax revenue, and then they mete it out according to their prior specifications.

So we landed up in Alberta, for example, with provincial government approval—I'm not going to blame the feds for this—and we helped build skyboxes in the stadiums for guys like Peter Pocklington. That's how that money was spent, and many people have said to me that it was just an obscene thing to have happen.

Also, representatives of several municipalities, including the major one in my riding, said they would not have spent this money now because they have other priorities, but the other priorities didn't fit under the program, so they had to reverse that. So here we have distant Ottawa—and in our case distant Edmonton—imposing on the municipalities what their programs should be and turning their own priorities upside down. There was some resistance to the program.

And of course the Liberals, as always, said there was total acceptance in Alberta. Of course there was, because they take our money, and if we don't involve ourselves in the program, then we just lose it. So we had to adjust and accept it. But it shouldn't be interpreted just because you take the money that you really think that's the best way of running the program in terms of administering the taxpayers' dollars.

Now, I'm giving you a little speech here about some feelings I've had expressed to me by persons in my riding and in other parts of Alberta. Is that feeling at all present in Manitoba? I suspect it isn't, but I want your answer on this.

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Mr. Chris Lorenc: Mr. Epp, I guess in a perfect world every province would have a billion-dollar surplus, as enjoyed by Alberta, and we wouldn't have to rely on the resources going to Ottawa and then coming back.

But the real world is different. The real world is that we have only a handful of provinces that are showing a surplus. We have the federal government finally showing a surplus and finally making an attempt to pay down the national debt. We have only one province that's resource-rich and resource-lucky: Alberta.

This country has been built not on the notion that what's mine is mine and I'm going to keep it and apply it as I determine, but on the basis of a national vision. When you talk about infrastructure, national highways, and strategic infrastructure investments, those are all intended to make this country equal. It's to give all of us an opportunity to benefit by the economies that we can take advantage of, as opposed to sequestering ourselves within the boundaries of a particular provincial region and saying that we don't really care how much money they have in Saskatchewan, Manitoba, or Prince Edward Island. So I would urge you to resist that kind of approach to nation-building, because it doesn't approach nation-building.

Mr. Ken Epp: Okay, I hear what you're saying, but at the same time, say we had a proper federal-provincial system of equalization payments based on a combination of population—education and health care costs are largely a function of the size of the population—and an additional factor with respect to geography. Certainly I know that Manitoba is very unique in the sense that your population is so largely concentrated in a very small part of your province and then it's very sparse in the rest. Some of the other provinces are more equally distributed.

If there were such a system devised, then the provinces and municipalities would have a greater freedom to administer the money that, quite admittedly—you're not getting any argument from me—is pooled from all taxpayers and then distributed outward. But when you have programs imposed by Ottawa as sort of “one size fits all”, then there are large inefficiencies introduced. That's what I am hearing.

But I appreciate your answer. I expected that, and I think it's probably valid for this province. So that's fine.

Mr. Dave Harrison: If I may just comment, it's a little bit disconcerting to hear the naysayers out there. Look at the media response to the infrastructure program. Unfortunately, what you hear about are skyboxes, or something that was built in Quebec that was not appropriate.

Look at the impact it had here. It was extraordinary. Talk to anybody who was involved in the infrastructure program, particularly in Winnipeg, which I'm familiar with. The rural people will tell you the same thing. When that program was announced, the city already had their ducks in order. They couldn't wait to get involved.

I think it really comes down to a question of leadership. If it's a pooled resource and a proper administration of transfer payments and all the rest, there's still federal leadership required, in my mind, to really get some of the strategic programs under way, such as a national highways program, the north-south trade corridors, and things of that nature. There is a place for Ottawa in that, and I don't think it is an imposition for the country. I don't think it's imposing a program. I think if it's looked at in the proper way, it's a real opportunity. It was an opportunity, and it was well received in this province, I can tell you that.

Mr. Ken Epp: It's as if somebody were to take all my money from me and then say they were now buying so many lemon pies of which we will all get a certain portion. I can't eat lemon pies, because I'm on this strict diet. You can tell by looking at me. You see, that's what I mean when I say this.

Mr. Dave Harrison: Yes, I know.

Mr. Ken Epp: There were definitely municipalities in my part of the world whose priorities had to be turned around in order to participate in the program. We did it, fine, but we ended up with some things undone that should have really taken priority ahead of this.

I think that's all I want to say on that area.

I'd like to ask you something with respect to taxation and fuel revenue. This goes into the general revenue, the consolidated fund of the government. You indicate correctly—this is true across Canada—that a very small proportion of the money collected by the federal government on fuel taxes is actually returned to the transportation infrastructure. We get big complaints from airline and railroad companies who also have to pay the fuel tax, but, for example, the railroad companies largely maintain their own roadways, although they're increasingly using the public highways as well.

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Are you supportive of some formula that says a proportion of that tax should be returned to transportation, or maybe the tax reduced and all of it used and the tax adjusted as the needs for transportation infrastructure are increased? Are you in favour of that kind of an idea? How would you handle that?

Mr. Chris Lorenc: We have consistently suggested to the federal government that they look at the model of the United States. In our five-page brief, on page 3 we provide a contrast in the approach between the United States and Canada.

In the United States, investment in highways is seen as an economic tool. There's a recognition that highways are a key component, part of American capital infrastructure, and they support economic competitiveness. They've just adopted legislation, T-21, which injects an additional $160 billion into their interstate highway system. A national highway system—the same thing we're talking about in this country, and it's still a pipe dream. They're investing $160 billion over the next six years.

The economic impact of that $160 billion investment in the United States, based on an analysis done by the Wall Street Journal, is $450 billion. The reason they are able to have the kind of system they have, minimizing their life cycle costs and replacement costs, is that they have a national highway trust fund.

Of every gallon purchased in the United States, 18.3¢ is invested in a national highway trust fund. Those moneys, based on that legislation, can only be going to repair, rehabilitation, and construction of their interstate highway system. That's what makes America competitive, and that's what makes us uncompetitive.

The short answer to your question is, we believe there ought to be the principle of dedicated fuel taxes applied at the federal level. Every government member we've spoken to, every administrator in the finance department we've spoken to, says this is not the United States, we don't do it that way. All right, if you're not going to do it that way, then tell us, please, how you're going to fund a transportation system that meets Canada's needs short and long term, because right now you're not doing it.

Over the next five years, the federal government will recover $25 billion in road-use field taxes. Of that $25 billion, $900 million goes to Quebec, Atlantic Canada. None of it, not a penny, comes back to western Canada. That's unacceptable.

Mr. Ken Epp: I agree with you 100%.

Now, Mr. Chairman, I'll still full of questions, but I've used 20 minutes—

The Chairman: Keep going.

Mr. Ken Epp: Why don't we give other members a chance—

The Chairman: Keep going. You have questions, ask. Take another five minutes.

Mr. Ken Epp: Oh, do you want me to carry on? Then I won't get back?

The Chairman: Probably not.

Mr. Ken Epp: Okay, that's fine, just as long as I know.

I would like to talk a little bit to the Jacks Institute and taxation. A large part of the solution, in your view, is that interest payments are rather overbearing on us, and if I read your report right, you're recommending that the federal government should spend any achievable surplus on debt reduction in order to reduce interest payments. Am I right in reading that?

Ms. Evelyn Jacks: Yes, I believe we mentioned two priorities, debt reduction as the major one, and any remaining fiscal dividend on, primarily, health care.

Mr. Ken Epp: Okay. You don't see a general tax reduction as a valid goal?

Ms. Evelyn Jacks: I believe in my brief I mentioned any such measures to reduce the debt have to be done over a period of 10 to 20 years. We don't see this as an either/or situation, because obviously there's also another very important component in the brief, which is the consumer power of the middle class.

We mentioned in there that the middle class should in fact receive some kind of tax break on a broad-based basis, but not at the expense of what we feel is really the root cause of reductions in program spending, which is the $45 billion interest payment on the debt.

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I remember quite clearly in 1985, when we went into a period of tax reform, that resulted in us having de-indexation of tax brackets and tax credits, the introduction of the minimum tax, and the conversion of personal exemptions to tax credits. At that time, Canadian taxpayers were sold on that concept, because the finance minister of the day said that $35 billion in interest payments on the debt was simply unacceptable.

Now—what is it, ten, fifteen years later—we're finding we're paying $45 billion in interest on the debt. I'm surprised, personally, that governments have not pointed to this recently as a major deterrent to program spending.

Mr. Ken Epp: Yes, it is a fact—little known because of the spin that's put on the story. We need to commend the government for resisting the temptation to spend all of the surplus. If it weren't for that, they would have added over $100 billion to the debt since they came into power, and with more debts you have more interest to pay.

Ms. Evelyn Jacks: I think it's particularly important to point out that, as to future generations, the kids coming up underneath us are fewer in number. That means the tax base is going to be less broad. I believe it's irresponsible of our generation to leave them with this kind of a mess.

Mr. Ken Epp: Yes, I agree with you.

One of the ways of achieving relief for both middle-class taxpayers and those we're actually taxing big time who are by definition living in poverty in our country would be to just increase, rather substantially, the basic exemptions. I'm just wondering whether you or the people who you talk to would be supportive of this as a means of achieving some tax relief.

That way, many of those who are at the lower level of income would end up paying no taxes at all. Those who are in the middle level of income would have a greater portion of it that wouldn't be taxed at all or at a lower rate. Up above that level, it could probably remain the same. Would you be supportive of a move like that?

Ms. Evelyn Jacks: In our brief we mentioned two items. The first one is we didn't feel it made sense to tax the poor. That all surrounds the definition of what poor is and what the poverty line is in Canada. It is a fact that households with two people—a young single mother and a baby, for example—are amongst the poorest in the country. Therefore, it doesn't make sense when someone is making around the threshold level of $7,000 a year that taxation starts at a rate of about 27% here in the province of Manitoba. At what threshold level does it really make sense to tax the poor? I think that's an important question.

But also in this country we have an invisible tax. It's called bracket creep, and it exists because we do not have full indexation of our tax rates, our personal credits, or even the thresholds at which we pay the child tax benefit. So, for example, if you've got someone retiring and they've got combined pension income sources of around $29,000, if they are withdrawing money they've been saving over their lifetime out of their RRIFs or RRSPs, they find that those withdrawals are now taxed away at 42%. Now as Canadians we have to ask ourselves, do we want to tax people whose incomes are purely middle class at 42%, especially seniors, who perhaps have a tax credit of 27% for those very same income sources they're now pulling out?

Mr. Ken Epp: I get those comments a lot from seniors who skimped and saved to look after their old age. Now they're sometimes quite distressed because their income level prevents them from getting the maximum benefits from the old age security system, and at the same time they're taxed to the hilt on the money they did save as they withdraw it. They're finding also, in my province—and I presume this is true right across the country—that there's been a substantial reduction in the benefits seniors have enjoyed. Now they're ending up paying more property taxes, and that has to be paid with after-tax dollars, and it just really erodes their savings.

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The Chairman: Thank you, Mr. Epp.

Mr. Nystrom.

Mr. Lorne Nystrom: Thank you, Mr. Chair. Maybe I'll just continue on in the same order here. I think Mr. Epp asked a lot of questions about infrastructure, so I'll continue on.

Ms. Jacks, you were saying there should be legislation to make the deficit illegal, or to prohibit a government from deficit financing. Over what period of time would that be? Each year, each cycle, each Parliament, or...?

Ms. Evelyn Jacks: Well, again, our general feelings...and certainly, we spent a lot of time talking to other tax practitioners and financial planners across the country, so some of the comments that have come out today are comments and observations these people get directly from their clients. I think overall Canadians understand the challenges of the deficit and the debt. They also understand that they value their social programs and the spending that has to go together with that.

So I think our main message is you can't do this overnight, but there should be a plan in place. You know, certainly there some generations in Canada who've never in their working lifetimes known a deficit-free year. There are some generations in Canada who have never in their working lifetimes ever heard the word “surplus”. Those are the people who are going to be the broad tax base 20 years from now. So I think...no, we can't do this overnight. But to see a plan in place to reduce not just deficits but debt in general is what we're looking for.

Mr. Lorne Nystrom: But a comment you made was you wanted legislation to make, I think, the deficit financing illegal or against the law.

Ms. Evelyn Jacks: Right.

Mr. Lorne Nystrom: We now have a surplus. You could do that if you wanted as a priority today.

But I asked that in a positive way. I come from Saskatchewan, and the NDP government there historically has been one that balances books. The party's been in power for 38 of the last 54 years, and that's the legacy of the NDP in Saskatchewan with Tommy Douglas or Allan Blakeney. In more recent times, in 1994, it was also the first government in Canada to balance its books under Roy Romanow. So I asked that in a very supportive way.

But I've always been a little bit nervous about having a piece of legislation that says you must balance your books every year, because that can handcuff a government in times of an economic downturn. Over a cycle might be a different thing, over the course of a Parliament, or a four- or five-year period. But you're not advocating to do it absolutely every year and that come hell or high water the books must be balanced, are you?

Ms. Evelyn Jacks: That's correct.

Mr. Lorne Nystrom: This would be over a period of time then, not every year.

Ms. Evelyn Jacks: That's correct.

Mr. Lorne Nystrom: Okay. I'd like to ask Mr. Harris a few questions, if I may. Welcome to the meeting today.

I like the title of your organization: Cho!ces. I think that tells us what it really is. It's a matter of choice. As we've heard again today in Winnipeg, there are a number of possible choices: infrastructure, medical research, R and D. This morning we had a very moving presentation on behalf of child poverty and hunger, and I think in Manitoba you have the highest rate of child poverty anywhere in the country, at least in the city of Winnipeg. In Saskatchewan farm incomes dropped by 84% in the last year—this is net farm income. And we heard a plea for some emergency assistance. So there are a lot of different competing positive choices out there that we'd like to fulfil.

One interesting thing you've said to us that others haven't said is that there is more revenue out there. Can you explain to us where this revenue is? Would you take it in terms of a taxation system that is different from what we have today, or would you talk about more wealth creation in terms of growing the economy and taking some from that, or is it a combination of both? And what is the rough balance between the two? I've been looking at your figures here, and there's a considerable difference in terms of several billions of dollars between the projections of Paul Martin and the projections you are making in terms of your alternative budget.

Mr. George Harris: I'd like to speak to the last part of what you asked there. Regarding the growing the economy aspect, one aspect of growing the economy—and we did hear a little bit before about the infrastructure deficit.... At times when people look at money spent on infrastructure, they look at it as a waste. If you look at spending and you look at it as an entire waste, it's a problem, because the thing is that's an investment that does return—it does return. The moment business does not have roads on which to move its goods and perform its services, business is going to suffer appreciably. So you've got that aspect.

• 1550

I'll stick with the infrastructure because there has been so much talk about infrastructure today. There is a growing economy when you put money in there and you're paying people. People are not unemployed; they're not drawing different forms of assistance.

That investment in infrastructure, if it is wisely chosen.... I'm not talking about these boxes that happened for Pocklington. I'm not talking about that kind of investment, the SkyDome kind of thing. I'm talking in terms of spending in areas that are important to meet a national infrastructure vision, that kind of thing, something that is clearly designed for the benefit of all of us, not just a sinkhole for pouring money down.

So you look at that, and it doesn't end with that individual who receives the money; that individual has the resources to spend it again within the economy, and it goes around. So growing the economy by spending is one thing. The multiplier effect the economists talk about is there.

With the spending in areas that are not as tangible, one of the big problems we have within our country is that when something is not very tangible—and I gave one example earlier—that does not readily get support, although even tangible items like the infrastructure program are not necessarily getting a rapid response.

So you have spending in areas such as preventative health care. Spending there is not spending that is entirely lost, because if that's going into the hands of people, that again can contribute to the community, but there is also the other side, which I mentioned. One simple example is what the future economic burden of not spending would be. So there's that aspect.

There is lots of potential for growing the economy, because there are spin-off effects, and that does have the effect of reducing dependence on the unemployment funds or the EI pay-outs, the reliance on social assistance, and so on. There is a revenue end, of course, because people who are working are paying taxes, and so on.

As to other revenues, some of you may or may not be aware, but I'm personally involved in a lawsuit that involves the federal government. It is a lawsuit over which a very wealthy family trust moved money out of the country against the provisions of the Income Tax Act, according to what the Auditor General reported. This is something that governments can act on and take a serious look at. In this case, it's not specifically tax expenditure, but we should look very carefully at tax expenditures to see that those are bona fide. I'm not all out against tax expenditure, but I'm certainly against something that is not bona fide tax expenditure.

Mr. Lorne Nystrom: I wonder if you want to put on the record the family trust and roughly how much money we're looking at.

Mr. George Harris: It's hard to estimate. The amount that was moved out of the country was $2.2 billion. This was during the previous government.

Mr. Lorne Nystrom: Was that $2.2 billion?

Mr. George Harris: That's $2.2 billion.

It's estimated there was between $500 million and $700 million in terms of tax revenue that was foregone.

Mr. Lorne Nystrom: Who is the family?

Mr. George Harris: The Globe and Mail identified the family, but I don't personally know them. I'm sure a lot of people have heard the reference.

So there's a fairly large area of tax expenditure, and I think there are good areas where tax expenditure can in fact be very effective. But I personally would like to see tax expenditure undergo the same level of scrutiny as direct expenditure. Unfortunately, tax expenditure doesn't often undergo the level of scrutiny that direct expenditure does, because it's just done; it's just tax forgone. The person who's been given the tax relief is, of course, happy, and income tax is regarded to be a private matter between the taxpayer and the government.

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Mr. Lorne Nystrom: I notice in your paper you talk about global spending in 1999. Paul Martin's projection is $152 billion, the alternative federal budget is $166 billion, and the difference is about $14 billion. Is most of that made up through different sources of income, in terms of taxes? That's a very short period of time to grow the economy that much faster to make up for $14 billion.

Mr. George Harris: There is the growth in terms of direct expenditures and the spin-offs. In terms of generating these figures, just so you're familiar, we try out a few different ideas. One of the things we're trying out right now is setting up a web site where people can try different things. I'll use the infrastructure example—put a bunch more money into infrastructure and see what happens to the overall budget figures. Put so much into education and see what happens. Put so much into health care—and so on. People can adjust the figures and turn out results. This has been done successfully in the United States, where people are able to take a look at the federal government and look at what the results are.

So to explain what happens here, we come up with ideas and throw things out. Informetrica does their econometric modelling.

Mr. Lorne Nystrom: Michael McCracken.

Mr. George Harris: Yes. So it's not simply that you spend so much money and automatically get so much back. There is this whole area of the various multipliers and so on.

Mr. Lorne Nystrom: I want to ask the gentleman next to you a question in his capacity as a farmer, more than in his capacity as an official representative. The Prairie Pools made a recommendation to us to have an emergency farm program, in terms of the crisis now facing agriculture, particularly in Saskatchewan, where net farm income has dropped by 84% in 1997 and is down again in 1998.

I know it's not as severe in Manitoba, where it's 30% to 40% because of the different crops you have. But do you think the time has come when we need some emergency aid? We've done this a few times in the past as a country—you remember Diefenbaker's deficiency payments and $1 billion during the Mulroney days, and so on.

Can you tell us whether or not you're facing a similar crisis in parts of Manitoba, as we are in Saskatchewan? Should that be part of the budget? Part of Manitoba, of course, is similar to Saskatchewan, but....

Mr. Wayne Motheral: I can give you a personal opinion on this, of course. I'm not representing the Union of Manitoba Municipalities in this case.

The family farm is in jeopardy right now, and that is certainly evident in Manitoba, as it is probably in Saskatchewan, and possibly Alberta too; I don't know. I realize there is a small crop insurance program that our particular government says is supposed to cover things, but we're in a situation in Canada right now where we depend, of course, on the export of grain. With the world situation the way it is, with the European Union and the American government, we are left as a kind of have-not country at this stage.

On the rules with the free trade and NAFTA and the whole thing, we've kept up with those situations, but it's been at the expense of the farming industry.

So on your question of whether I feel there should be assistance in the short term, I would definitely say there's more of a need for it right now than there was in the past.

Mr. Lorne Nystrom: This would also fit in with the idea Mr. Harris was talking about of the injection of cash into a program, where the farmers, the poor ones in particular, would spend the money right away. They would have to spend it. It would certainly not be a violation, in my opinion, of any trade rules. The Americans have just passed a bill through Congress to subsidize their farmers by $6 billion a year. The Europeans subsidize wheat producers there now by about $200 a tonne. So there's no level playing field there whatsoever.

• 1600

It's not the fault of the farmer who is very productive in this part of the world and works very hard. It's just the fault of the international trading partners and what's happening to the world market, compounded by what's happening in Asia in terms of the fewer exports now going to Asia and the affordability question of purchasing our goods and commodities.

I think our committee has to look very seriously at recommending something specific in terms of injecting some money into the economy to help a lot of farmers stay on the land, and provide some growth spin-offs in terms of the economy in general.

Mr. Wayne Motheral: Certainly I agree with that. I'm a farmer myself. Any time a farmer gets $1 in his pocket, he'll spend it. That certainly would be a lift to the local economy.

Mr. Lorne Nystrom: I know when a farmer gets $1 in his pocket, he spends $2. Or is that only in Brandon west?

Mr. Wayne Motheral: I could comment on that. I have to watch the way I'm talking because I am representing the municipalities today and I know it's just a personal comment. I'm sure the Keystone Agricultural Producers, the farm lobby group, would have a bigger comment on that.

Mr. Lorne Nystrom: Sure, or Manitoba Pool Elevators....

Dr. Anderson, in terms of the present university in Brandon, I have a couple of questions on research and development. We had a very graphic presentation yesterday in Saskatoon, complete with overheads, on the need for more investment in medical research, and certainly you're reinforcing that today. You're telling us our R and D budgets or expenditures in general are down to about the level of—was it Ireland you used?

Dr. Dennis Anderson: Italy is the only one in our league. All the other G-7s are well ahead of us.

Mr. Lorne Nystrom: Can you tell us what's happened in the last 20 years in terms of the relative expenditures in this country compared to the G-7? Have we been dropping more rapidly than a lot of them? Are we doing better than anyone?

Dr. Dennis Anderson: I don't have the figures for the rate of decline in research and development expenditures. I do have some figures for the rate of decline in total funding of education in Canada relative to some other countries. For example, over the last 20 years there's been a 43% reduction in the federal funding per student for education. Half of that reduction has occurred since 1993.

There's been a very rapid rate of decline in those overall expenditures on education. That's government support—I'm sorry, I said federal, but it's government support in Canada. Obviously the federal government doesn't fund education directly other than through research, but through the transfer payments they do. So over the last 20 years there's been a 43% reduction in funding. In 1978 there was total government funding per student of $8,900, and in 1998 it's $5,100. Again, half of that reduction has occurred in the last five years, so the rate of decline has been significant.

Mr. Lorne Nystrom: Is that in constant dollars?

Dr. Dennis Anderson: That's in 1986 constant dollars. In comparison, in the United States during the same 20-year period, there's been a 15% increase in the funding dollars per student by all governments for education.

On the research and development side, the thing that is most relevant to the universities is the decline in funding to the federal granting councils—SSHRCC, NSERC, and the Medical Research Council. There was a severe decline in that over the last four or five years. It was corrected slightly in this past year, but the funding levels in 1998 are still well below what they were in 1993. There is a tremendous shrinkage there.

We all know—and there was a discussion here in terms of the infrastructure program with the highways, the bridges, coming up with new types of materials and new construction procedures—that just doesn't happen by chance. It happens through targeted programs of research and development—people with white coats on sitting in labs who you don't see in the general public very much. It's that basic research. It is moving to applied research, pilot projects, and demonstration. A lot of that basic research and some of the applied research occurs in universities. That's why we're so concerned.

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Mr. Lorne Nystrom: I think in general what we've seen is a radical downsizing of the federal government. It's now the smallest federal sector that we've had since the Second World War. That's before medicare came in back in the late 1940s.

What we're hearing across the way is that we have to do a lot more investing in the economy. Your sector is certainly one of them. I think the United States spends eight times as much in medical research than we do as a country.

Dr. Dennis Anderson: The overall expenditures on research are certainly different by a factor of two or three at least, if you look at the kinds of research that are funded at universities.

Mr. Lorne Nystrom: So we have a lot of those fields in terms of having a vision for tomorrow and where we want our country to go. I think your message is to start investing in the future. This morning was invested in kids and child poverty and issues of that sort that are extremely important as well.

Mr. Chair, Ms. Bennett has been champing at the bit to get on, so I had better give her the floor.

The Chairman: Good idea.

Ms. Carolyn Bennett: Thank you. Maybe I'll continue with Dr. Anderson.

One of the things concerning the students we heard from this morning was the accessibility issue. Certainly, universities have a problem if there has been decreased funding, as you described. One of the responses has been increased tuition.

Dr. Dennis Anderson: Yes.

Ms. Carolyn Bennett: One of the parallels that has been articulated has been accessibility as one of the tenets of the Canada Health Act. Do you think there would be a place in terms of post-secondary education for some national standards on accessibility that might include some sort of limit on tuition?

Dr. Dennis Anderson: There's no doubt that tuition has gone up. There has been approximately a 20% reduction in federal transfer payments to the provinces. There has also been a parallel 20% reduction in the core funding of universities on average in the province. So there's a direct relation there. This has made it necessary for universities to look to their other revenue source, which is tuition, and then increase that. It has gone up many times the rate of inflation over the last four or five years.

It creates accessibility problems. We hear about it every day, being a regionally based university serving rural northern and remote Manitoba. About 25% of our students are aboriginal and with major accessibility problems.

The national figures on the proportion of the university-age cohort, which is 18-year-olds to 25-year-olds, that indeed goes on to university is something around 20%. In Manitoba, it's 16% or 17%, among the lowest in the country. So we do have an accessibility issue here.

I don't know about the national standards on that.

Ms. Carolyn Bennett: I guess my question is this. Some of the universities that are the best at fundraising seem to have the highest tuition. It seems that in an effort to be world-class as an academic institution, should there be a say that the federal government has in maintaining accessibility particularly for these kids? I think the kids who have the most difficulty thinking about going to university are the most likely to be deterred by high tuition or the potential student debt.

Dr. Dennis Anderson: I think there's a role for the federal government. I wouldn't say it would be in setting any national standards. I think they can choose the positive side, which is providing incentives and assistance. They have done so with the Canada Millennium Scholarship Endowment Fund. It will take effect a year from now and will be assisting students. That's a major, positive move. They're going to make an individual's need the primary basis for allocating those funds. They will have merit such that 5% of the fund will go out on that basis. So that will help.

It's important to clarify something when you're talking about tuition and student debt. Tuition overall is only about one-quarter of the cost of providing the education. When talking about student debt, the media often get it wrong. They refer to the average student debt as $25,000 or $30,000. Well, that's not true. Depending on the university, between 10% and 25% of their students have any debt at all, so the average figure of $25,000 is of those who have debt. That is often missed.

• 1610

So tuition is still a bargain in this country. It's among the lowest in the world. Internationally, we try to attract students and we are successful, even though we're located in Brandon and we're a small university, because university education is still a relative bargain here in Canada compared to other countries. Our international student fees also position us as one of the cheapest, if you like, places for an international student to come and study.

Ms. Carolyn Bennett: To repeat that again, the tuition is what percent of the cost?

Dr. Dennis Anderson: Tuition on average is 25% of the total operating costs of the university at our place. It is lower at some of the major graduate school places. The average figure across the country would be somewhere in the low twenties, as the proportion of the total educational cost provided through tuition.

Mr. Lorne Nystrom: Just to ask a little supplement, this morning on your microphone we had a representative from the Manitoba Federation of Students or the Canadian Federation of Students. I think she was saying fees represented what, 38% or 39%? So her figures are quite different.

Dr. Dennis Anderson: Yes, my figures are more applicable to this province perhaps, and I know in some jurisdictions the fees are a higher proportion. In some institutions, though, they are lower. Mine are more a provincial figure than a national figure.

Ms. Carolyn Bennett: So if an institution decided to double it again, do you think that should be okay with the federal government?

Dr. Dennis Anderson: No, I don't think so, though I have difficulty envisaging what role the federal government could take in that. I think the role—

Ms. Carolyn Bennett: I guess what people are saying is accessibility in the Canada Health Act is one of the levers government has in terms of the transfer payments.

Dr. Dennis Anderson: Yes.

Ms. Carolyn Bennett: I think what the students or the people calling for some sort of national standards are saying is there should equally be an accessibility standard the federal government could have on post-secondary education.

Dr. Dennis Anderson: Well, I don't have particularly deep knowledge on the matter of standards. I do, though, want to emphasize the—

Ms. Carolyn Bennett: But say you could take it as a percentage of cost, that you couldn't ever go more than 50% of your costs on tuition—

Dr. Dennis Anderson: Well, some provinces have done that. Alberta has said tuition fees can be as much as 30% of the costs, and they monitor that quite closely. I think there's more of a provincial role, and we see it in Alberta. It may be in existence in some other provinces, and it may spread.

So there would be standards, if you like. They would vary by province, and I would think it would be the provincial governments that would implement them.

Ms. Carolyn Bennett: I was interested in the support you had for the Canadian Institutes for Health Research, and I guess there had been some concerns that in the virtual set of institutes only the medical schools had been linked in the early part of the proposal. If we are going to deal with the social determinants of health, like poverty and violence in the environment, and actually do research in health care delivery as well as population health and everything else, there are many universities or academic centres that don't actually have a medical school in them. We would hope this institute for health research would have the broadest possible sort of definition of health.

Do you at Brandon feel comfortable that this new proposal has been sufficiently broadened that you think this committee should support it?

Dr. Dennis Anderson: I think we need to watch and ensure it is broadened. The Association of Universities and Colleges of Canada has endorsed the proposal, but with a number of qualifiers, and they are along the lines you have mentioned. You expressed it very well.

Statistics that would underline the comments you made indicate there are 89 universities and colleges in Canada. Only 14 of them have medical schools. Those aren't the only places where there are researchers who are doing research that is relevant to population health.

That needs to be understood. So the terms of reference for any expenditure that goes toward this virtual health research network have to be broad enough to incorporate the full spectrum of the institutions. At my little place—and we have about 3,000 students and a $20 million operating budget; it's one-fiftieth the size of the University of Toronto and one-tenth the size of the University of Manitoba. We provide students who enter medical school and virtually every profession.

• 1615

Research is very important. We have researchers who are working in the areas of health care ethics and the aging population, particularly in the rural regions. We have psychiatric nursing. They are interested in doing some clinical research on the mental health side. We don't have a medical school, but even in our small place we do have faculty members in science who are doing things close to what could be done in medical schools. But in our arts faculty, our health studies faculty, and even in our faculty of education, people are doing research that would fit very well within the population health definition, not necessarily the narrower definition of a biomedical approach to health.

Ms. Carolyn Bennett: Mr. Harris, with regard to the AIDS strategy, some of us have been concerned that only the diseases that have been politicized have ended up being treated separately from the regular MRC funding. As you are well aware, the prostate cancer people are very upset because the same number of people are dying per year as from breast cancer. The breast cancer people are upset that although ten times as many people die of breast cancer in a year than die from AIDS, the funding is ten times the other way. We've ended up with this rather nasty little competition, which I don't think you meant in your presentation from Cho!ces. It shouldn't depend on how successful a lobby group is or how many deaths occur per year. That “we or they” approach probably isn't a good way to handle health research funding. Do you have a suggestion as to how we could do this better, or is it always going to be that the diseases that get most politicized get the most money?

Mr. George Harris: I certainly hope it's not that way. I gave the example because it happens to come from my workplace. Even within Cho!ces I may not have wholehearted support, because people believe very strongly in support in other areas.

What the illustration was intended to do is show this is a critical matter for all of us, and we have to look at many of these things not so much as a sinkhole for spending but more as an investment. When we're talking in terms of education, we need trained people to effectively work in the various fields in our society. So that's an investment. I'm quite distressed when people look upon these things as simply sinkholes and wasted money.

Certainly, you are correct that the conditions that are most politicized tend to get more. The reality is at the moment we're terribly underfunded for all conditions. I think that is the reality, not just in terms of identifying it as AIDS, hepatitis C, breast cancer, or whatever, but even in general health.

I come from a process where people speak with considerable authority in different areas, and I'm not the best person to speak about the health area. Rather than talk about remedial intervening at that point, I would like to see a lot more in terms of preventative health care, which is an investment that is a lot better for our society as a whole. The tragedy of a person who comes in the door of my office and wants to talk to me because they say, I am scared, I was just diagnosed.... That's whether you're talking about breast cancer or something else. I'd like to see the investment more up front and not leave things to the point where we are.

• 1620

Ms. Carolyn Bennett: I would like to say that in terms of not only what we do, but how we do it, we've learned a great deal from the AIDS initiative. I think when Gordon Floyd spoke for the Canadian Centre for Philanthropy he was very positive about the way the AIDS dollars have been spent. It has been a collaboration with the stakeholders, so we have seen an appropriate and good buy-in for how much is on public education, prevention, community support, and how much is on research. I think it's a good example for government to follow in lots of areas.

My last question is for Ms. Jacks. I do want to just say that your brief has been one of the most interesting and thought-provoking we've seen. I think it's the kind of thing I love to see on paper because they are things that I think some people think about in terms of fairness or priorities.

My one question was about something a lot of us have talked about for a long time, and that is, people who write cheques to charities get tax breaks, but the people who spend hours and hours of their time don't. Do you think that's something that's doable? There are some charities that are able to keep hours. I think some of the hospital auxiliaries are ones that actually do clock the time. Do you think the volunteer sector is ready for this in terms of being able to give somebody a voucher for how many hours they've put in, which they would then attach to their tax form, or is it something that will take us a while to get there?

Ms. Evelyn Jacks: When we were putting this together, we weren't thinking of the administration. I think it's just as easy to give a voucher as it is to give a tax receipt. So I really don't see that as a problem.

Ms. Carolyn Bennett: But I'm thinking, what if keeping track of all of those hours might be yet another thing that charitable organizations are asked to do?

Ms. Evelyn Jacks: I personally don't see that as a problem. I see it as a bigger problem to waste the energy of youth, for example, particularly disadvantaged youth, for one reason or another, who truly want to give back to society, and also, on the other side, perhaps people who are ready to retire in the commercial sense but not in the giving back sense. Certainly, these thoughts are more for the disadvantaged and the poor in society who still feel the need to self-actualize.

Ms. Carolyn Bennett: So some of these people who actually are helping at their local community could actually end up paying less tax.

Ms. Evelyn Jacks: Certainly there would have to be a lot of thought put into this, but in terms of the whole issue of what is the tax-free zone, perhaps the tax-free zone could be raised in conjunction with time given back to the community.

Ms. Carolyn Bennett: Do you know offhand how much it would cost for us to raise the tax-free zone? I was trying to figure out if there's somebody earning minimum wage who really makes not much more than $10,000 a year. Is that—

Ms. Evelyn Jacks: I don't have the figure of what it would cost you to do that. I think you'd have to look at two things, first of all: the tax rate structure versus the refundable tax credit structure. Then the two together would have to be computed.

We often see erroneous information with regard to the products of the tax system. The reason it's erroneous—for example, why marginal tax rates are often coded incorrectly—is that they don't always take into account the refundable tax credit structure, which actually brings down marginal tax rates for low-income earners.

One thing that's very interesting, for example, about the new supplement—the basic personal amount—is it creates a new marginal tax rate structure for low-income people. If your income is under $20,000, between $6,456 and $20,000, for example, you actually have a clawback zone of this increase in the basic personal amount. The same is true with the new 3% surtax reduction. We actually end up with a new clawback zone.

We have a very complicated tax structure where it's really difficult, because it depends not just on your overall level of income but where your income comes from, to really accurately say what your bottom line tax rate is. That's why we have difficulty with those numbers.

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Ms. Carolyn Bennett: I think one of the calls on the government has been to increase personal exemptions, something that we could do that would help everybody.

Ms. Evelyn Jacks: In particular, because we haven't had indexation, if we have a single mother making $8,000 a year, I really have to question whether it's fair to take away by virtue of taxation one-third of the difference between $6,456 and $8,000.

Ms. Carolyn Bennett: I think people on disability pensions are falling about there, too.

Ms. Evelyn Jacks: Yes.

The Chairman: Thank you, Ms. Bennett.

Mr. Valeri has a question.

Mr. Tony Valeri: Thank you, Mr. Chairman. I have a quick question for Ms. Jacks.

In your presentation you talk about the debt and the interest payment on the debt. When I go through the presentation, am I correct in interpreting that essentially what you would do with any surplus would be to pay down debt first? So would you attach the entire surplus to paying down debt or a specific percentage of it?

Ms. Evelyn Jacks: My personal view would be to do this over time, to put the majority of the fiscal dividend into debt reduction over the next 20 years, because you have a large base of taxpayers who are still relatively productive who can produce the tax revenues that allow you to do that.

I believe 20 years from now you're going to have a problem as a government in terms of the size of the tax base to allow you to make any effective run at that debt. So I believe we have a 20-year window on really making substantial gains in paying down the debt. For that reason, the broad base of productive taxpayers we're dealing with—the majority of fiscal dividends should go towards debt reduction, in my view, but certainly not the entirety, because in that same 20-year period of time you're going to have increasing social needs. So there has to be a balance of some kind.

Mr. Tony Valeri: If we were to take a 20-year period, essentially you could probably assume that any sort of fiscal dividend that might appear, at least within the realm of the numbers we're talking about right now, would go entirely to pay down debt. But you're saying, let's take a longer approach to debt; let's ensure there's a commitment to pay down debt, but at the same time make sure there's some reinvestment.

Ms. Evelyn Jacks: Correct.

Mr. Tony Valeri: Okay.

I want to get some feedback on the proposal for infrastructure and the argument that was put forward, which essentially is the argument of a dedicated tax, dedicated revenues. I wouldn't mind hearing perhaps a comment from the panel.

On the concept of dedicated tax, you argue that there should be specific revenues dedicated for roads. But others would argue, why stop with roads? Why don't we have a dedicated tax for health care, for education, for roads, for employment, for whatever you can think of, to buy staples and staplers? Why don't we earmark all of the revenues for specific things? I'd like to hear some feedback on that.

How would we then deal with any sort of catastrophe that might present itself, like the floods, like hepatitis C, like other things?

Underlying my question is this. With the earmarked concept, the concept of dedicated taxation, you really eliminate any kind of flexibility. If you run out of money in a particular envelope, what do you do? If you run out of money for roads in the envelope of dedicated revenue, you no longer fix roads until there's money in that envelope. If you run out of money in health care, you run out of the possibility of doing anything for health care.

So if you're going to dedicate it coming in, do you also dedicate it going out, which means that what you have are essentially expenditures that are strictly on a per capita basis, or strictly on a money coming in, money going out basis, which would mean the way it's presently configured, Alberta, Ontario, and British Columbia would do a lot better than other provinces that are not as well off in this country? How does that speak to any sort of nation-building?

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Mr. Chris Lorenc: I'd like to try to answer that question. First of all, on the history of the gasoline taxes, if you examine the record of the House of Commons, Hansard, and take a look at how they were introduced at the time they were first considered by most of the legislatures of the provinces, you will see the tax was implemented specifically for the purpose of reinvesting in the transportation system. When over the ensuing decades it became convenient for government to apply those funds to general revenues, that's where they were applied.

The reality is we have an infrastructure deficit in this country that is—

Mr. Tony Valeri: I'm not arguing that. But others will point to the fact that the taxes were there to fund a war.

Mr. Chris Lorenc: Yes.

Mr. Tony Valeri: So you can make that argument about a lot of things.

I'm not attacking what you're saying. What I'm trying to do is to get some feedback on the concept of dedicated taxation. There's an argument going on in this country right now where some say there should be more dedicated taxation and others argue there needs to be greater flexibility so that governments can respond. Those on the side of dedicated taxation are saying there needs to be more transparency, we need to know exactly what the government is doing, and we want to know where the money is going and how it is going to be spent.

I'm saying that with this concept of dedicated taxation, you get the flip side as well. When the fund runs out, you basically don't fix roads any more. You don't do anything with health care any more. In fact, you don't really have this sort of pre-budget consultation, because essentially, if you were to come to me and say, we want to do an infrastructure program, I'd flip to page 20 and say there's no money left in the fund, or there is a lot of money left in the fund and you can go ahead and do it. Then someone comes in for health or for post-secondary education and I say, sorry, we spent all the earmarked money in the last budget and now we really don't have a lot of money. We know there's a need, but sorry, we don't have any money.

Mr. Chris Lorenc: First of all, the whole issue of funding infrastructure repair is not something the country is going to be able to do overnight in five years, ten years, or even twenty years, simply because of the problem that has been left to our and successive generations. That's point number one.

Point number two, we have said in our brief, although we didn't verbalize it in the presentation, that we subscribe to the notion that 50% of the surplus ought to be used to retire the debt. The remaining 50% should be used for strategic investments that propel economic development and growth and the generation of wealth.

Third, we have not said the $5 billion that was raised by the federal government should all go back to highways or to infrastructure. What we have said is there needs to be a reinvestment in the transportation system of the funds that were initially earmarked for the purpose of transportation. The dollar amount we're talking about in our brief is $800 million matched equally by the provinces. We have not suggested to the federal government the notion of pure dedicated taxation, as is the case in the United States, where 18.5¢ is dedicated specifically for that purpose.

Mr. Tony Valeri: But in your brief you do say that of the $5 billion, $13 million is spent in western Canada, and in Manitoba the estimated federal tax revenue from road fuels is over $140 million. When I read that through, what I get is that Manitoba is spending a lot more than they are getting back, and so in a sense you're saying we're spending it and we want it back for roads. That's where my comment is coming from.

If you agree with a 50-50 split, or any sort of split, then you're really not pointing to a dedicated tax structure. You're saying, let's look at priorities and in a list of priorities let's include infrastructure. Let's argue that infrastructure is the king, and let's do something about infrastructure. So you're not actually advocating earmarked taxation for roads.

Mr. Chris Lorenc: We're suggesting the federal government recovers $5 billion annually from the users of the system and that appropriate funding for the system should come from those who use it. We're not suggesting $5 billion. In a beautiful world I suppose that's what would happen, but we're also realistic enough to understand the approach in Canada has not been to go the route of dedicated taxation, the way it has been in the United States. That is an emerging theme for the reasons you've given.

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The public, I would suggest to you, are more prepared to pay taxes if they see there is a connection between what they pay and service delivered, as opposed to a general increase in taxation that goes to the general pot over which they have no control.

So what we're suggesting is there needs to be some discipline in terms of understanding that infrastructure underpins the economy, which allows us to fund health, education, and social safety net programs. You can't fund those things, and the fund will dry up, if you don't have an infrastructure that allows economic activity to continue to expand and to generate wealth through revenues, not only to employees but also to government. So we're urging the government to move in that direction.

Municipalities do it all the time. They do it with dedicated levies for sewer and water main renewal. If you talk to municipalities, they will tell you that where they discipline the amount of money received and where it's applied, there is success in redressing problems that were ignored in the past. We're saying that is a lesson we ought to learn from. We ought to look at other jurisdictions that use the principle of dedicated taxation for those purposes.

But there's nothing in that brief that suggests the $5 billion must absolutely be reinvested in transportation, because we understand there are other problems. That's why we take the view that 50% of the surplus that's received ought to go to retiring the debt so that we can free up additional government revenues to do other things society deems are important and 50% ought to be invested in what the nation determines are priorities. We think a portion of that 50% surplus ought to be reinvested in what keeps the economy going, that is, the infrastructure.

Mr. Tony Valeri: But you don't support dedicated taxation.

Mr. Chris Lorenc: We support dedicated taxation. If you're asking if we support a system where every single dollar received is dedicated for a specific purpose, we haven't dealt with that issue and so we have no specific position on it. We've talked about it in the context of an identified pool that is contributed to by users, and we feel a portion of what those users contribute ought to go back to the system they're using.

Mr. Tony Valeri: When you say contributed to by users, are you referring to the fuel tax or to something else?

Mr. Chris Lorenc: We're referring to the fuel tax.

Mr. Tony Valeri: That is essentially a dedicated tax.

Mr. Chris Lorenc: If you want to talk about portions dedication, I guess that's right.

Mr. Tony Valeri: Does anyone else have a comment on a dedicated tax?

The Chairman: Mr. Harris.

Mr. George Harris: Thank you, Mr. Chairman.

Generally speaking, we're not supportive of dedicated taxes or with the thinking that a portion of it will be dedicated. It gets quite complex and envelopes get empty and all that.

What's critically important is to have a clear vision of what one would want for the national infrastructure. I think I heard another presenter say there should be a strategic approach towards what we want in terms of infrastructure, and then we should look at how we go about funding it.

I think all of us are aware of horror stories about some of the infrastructure, where you start wondering why that incredibly complex, expensive piece of infrastructure got built. Very often there was not a vision, but there was a lot of lobbying, etc., and you end up with something such as an inappropriate kind of road, projecting growth that was not reasonable, and so on.

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So I think the key here is to make sure there is discipline around what kind of vision you have for national infrastructure, rather than get into the complexity of trying to dedicate taxes toward it.

Mr. Tony Valeri: That's true. Thank you.

The Chairman: Thank you, Mr. Valeri.

I want to thank the panel for.... Sorry, Mr. Motheral. Did you want to make a comment?

Mr. Wayne Motheral: I just wanted to make one comment on the dedication of taxes.

Speaking from the perspective of the Union of Manitoba Municipalities, in conjunction with the Federation of Canadian Municipalities, of course, I think the transportation fund should be set up with a portion, some sort of portion, of the fuel tax that is coming out. Now, that may be a dedicated tax, but our coalition's position is that we would like to see a portion of those taxes.

I'd just like to make a small example of our neighbouring state, North Dakota, which is what you'd call a have-not state in the United States. Some people in the southern States don't even know where it is. They do have three four-lane highways going through that particular state. If a regular county in North Dakota wished to repair bridges on a county road, it would be 80% federally funded. So they really have an ongoing infrastructure program. That's just an example.

The Chairman: On behalf of the committee, I'd like to express to you our sincerest gratitude for your presentations. You have been an excellent and interesting panel. You've certainly touched upon a number of areas, from the human deficit, to infrastructure, universities, research and development, and that takes into consideration the development of a competitive economy, which is really essential if we want to generate the type of wealth that will allow us to have the compassionate society we all strive to achieve.

Essentially, though, in the final analysis, I think as a committee we share your ultimate goal, which I think is that you want to improve the quality of life for the people of Canada, whether it's through infrastructure, research and development, or universities, or whether it is through addressing some of the social needs you so eloquently outlined. And that is exactly what drives our agenda as a committee. We want to do what's right for the people of Canada and we want to make the type of recommendations that speak to the values you have stated this afternoon.

So on behalf of the committee, once again, thank you.

This is the last session for today for committee members. We will be back tomorrow at 9 a.m., and our meetings will go on from 9 a.m. to 4 p.m., in the same city, same time, and same location.

The meeting is adjourned.