[Recorded by Electronic Apparatus]

Tuesday, November 5, 1996

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[English]

The Vice-Chair (Ms Whelan): Ladies and gentlemen, I call the meeting to order.

I'm chairing the western tour of the finance committee's pre-budget consultation. Jim Peterson, the chair, is chairing the eastern portion.

Before us we have the Corporate-Higher Education Forum. I will ask Dr. Norman Wagner to start.

Dr. Norman E. Wagner (President, Corporate-Higher Education Forum): Thank you, Madam Chairman.

Colleagues, friends, I'll tell you a little about the Corporate-Higher Education Forum. I don't want to take much time to do that, but it's important to understand that this is not a lobby group. It's a not-for-profit organization of an equal number of CEOs and university presidents. I happen to have been both of those sometime in my career. Our role is to explore areas of misunderstanding primarily between the two groups: the employers, eventually, and the educators.

For the moment let me underscore the need to continue to educate Canadians on the true nature of our debt and deficit. It's difficult to believe that people are beginning to speak of new money as if that's a reality. As you know, the servicing cost of Canada's debt has run around $50 billion per year. Most people don't understand what that is, for some reason. The numbers just get too big. If you begin to explain that it's a thousand million dollars each week, perhaps people could begin to comprehend that one of the most important steps we can take to preserve our social programs in the long run is to get rid of this albatross around our necks.

We're blessed at the moment, of course, with lower interest rates, which have reduced the amount of foreign borrowing we need to do.

I'd like to speak for a second about the unacceptable level of youth unemployment and the much talked about issue of job creation. Our organization is in the process of conducting perhaps the most thorough studies we've had in some time in Quebec, Alberta and B.C., particularly with regard to unemployment among younger people. While we all have stories of PhD drivers of taxis, it's true that across this country - at least to the level of our current research - unemployment among university graduates two years into the job force is around 4%. This is constant from coast to coast. We're going to do more work on that.

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This means quite simply that the key to reducing unemployment is to have incentives and programs and whatever else is required for people to stay in school. The information age into which we're moving requires not less but more educational attainment, and that will continue.

Students who graduate from our universities and colleges have been able to find employment, usually in their fields of study, and they of course earn significantly higher salaries than those who do not continue their education. As I said, we're in the process of working with Statistics Canada to prepare more detailed documentation. This is an important point because there's a great deal of misinformation out there concerning the status of young people graduating from educational institutions.

Madam Chair, that's probably exhausted my three minutes. I have some points that I'm sure will come up in the discussion.

The Vice-Chair (Ms Whelan): Thank you very much, Dr. Wagner.

I'd like to turn now to John Pearson from Prairie Pools.

Mr. John Pearson (Chairman, Prairie Pools Inc.): Thank you, Madam Chair. I'm pleased to be here to make this presentation to the finance committee.

I don't know if you are aware of this, but the three Prairie Pools are the largest farmer-owned grain cooperatives on the prairies. We have 100,000 active members, and we're some of the largest investors on the prairies on behalf of the agricultural industry.

There are several points we want to make. First, we are aware that the government has indicated that it wants to sell its fleet of 13,000 grain hopper cars. This is a very controversial issue on the prairies, as you're well aware.

Transportation Canada has tabled two proposals for disposition of the fleet. One is for the outright sale of the cars through a tendering process. The other, which is being called the assignment option, would require the government to retain ownership of the cars until the current operating agreement with the railways can be terminated. Management of the cars would be assigned to a third party, and once the operating agreement terminates, the government could sell the cars.

As I've said, this is a very controversial issue on the prairies and there's really no consensus right now. The proposal for the sale is further complicated by the requirement to give the railways five years' notice to terminate the current operating agreement. It's also complicated by uncertainty over the future of the freight rate regime at the end of the current agreement.

As a result, we recommend that the government choose the assignment option. This will allow the termination of the operating agreement without the government having to make any concessions in order to get out of the agreement early. It will also get the industry past the review of the freight rate environment in 1999, thus allowing potential buyers to better assess the value of the railcars.

We realize that choosing this option will mean the government will not completely satisfy its objective in last year's budget, which was to sell the cars. However, the assignment option is the best option for the industry, and the fiscal impact on the government will at worst be neutral. The government is going to enjoy a revenue stream from the lease of these cars over the five-year period of the assignment, augmented by a statutory freight rate increase of 75¢ a tonne in 1998. At the end of this period the government can sell the cars en masse.

One more item that we feel is very controversial is the future of the Canadian Wheat Board on the prairies. We are concerned that some of the changes the Minister of Agriculture and Agri-Food has suggested are going to change the status of the Wheat Board, and as a result could increase the board's cost of borrowing. We're also concerned that the federal agency status will change, which will change its ability to borrow at the very lowest rates. We do not accept that a change in corporate governance means the board's government guarantees of initial prices and price adjustments should be withdrawn. These guarantees are fundamental to the Canadian Wheat Board marketing system.

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We also want to raise the issue of the negative impact of the government initiative to recover costs of services. As government departments are required to reduce their budgets, more and more they are turning cost recovery for their services over to the industry. We are facing user fees for everything from coast guard services to meat and seed inspection, grain grading, and the registration of crop protection materials.

While we don't necessarily disagree with the concept of ``user pay'' as long as the user is the primary and principal beneficiary of the service, we do disagree with the lack of attention to the concept of ``user say''. In many cases, such as the recovery of coast guard costs and the cost of registering herbicides and pesticides, those who will ultimately pay the costs have had absolutely no say in whether services are required and no say in how to make them more efficient and less expensive.

In the case of pilotage services, not only have we no say in whether the services are required for the safe movement of vessels in and around west coast ports or the St. Lawrence Seaway, but we are required by law to use them. Marine transportation legislation currently being considered by Parliament does not include measures to introduce competition into the provision of the services.

We need a commitment from the government that the user of government services will be the full participant in the process to identify required services, the cost of services and how the costs will be recovered.

There's a critical need to address taxation policies, whether for federal and provincial fuel taxes or municipal property taxes. We have been placed at a very significant competitive disadvantage when compared with our competitors in the United States. Canada's railways currently pay more than $650 million per year in fuel taxes, sales taxes and property taxes. Their U.S. counterparts receive tax incentives. This wouldn't be a problem except that the railways recover costs from the users of that service, so it's a direct effect on us.

On a positive note, we do believe the government has done some good things to our industry. We certainly appreciate the lifetime capital gains tax for small businesses and farm properties. We also congratulate the government for reinstating interest-free cash advances on a permanent basis.

In conclusion, I want to point out that our industry has significantly changed over the past few years with the reduction in both government contributions and the regulatory protection that we've had. We need the government to participate as a partner in our continuing efforts to become more efficient and more competitive.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Pearson.

I'll now turn to Patricia Marck from the Alberta Association of Registered Nurses.

Ms Patricia Marck (Nursing Consultant, Alberta Association of Registered Nurses): Thank you, Madam Chair. Thank you for inviting the Alberta Association of Registered Nurses to make this presentation to your committee today.

The AARN is a regulatory and professional body for over 21,000 registered nurses in Alberta, and we carry the responsibility for the registration and discipline of all registered nurses in Alberta. Our mission is to enable the delivery of safe, competent, ethical nursing care.

Registered nurses in Alberta are deeply concerned about the continued viability of a comprehensive, publicly funded health care system in our province and in our country. In Alberta we have undergone three years of rapid reductions in health care expenditures and multiple waves of restructuring. However, we have not seen the necessary reforms to the funding allocations and remuneration policies or to the delivery and evaluation mechanisms that would allow the citizens of Alberta to safely absorb the cumulative effects of cutting and re-engineering.

Some of the things Alberta has witnessed to date are the following.

Acute care expenditures have been dramatically reduced without adequate reallocation of funds to home and other community care. Health promotion rhetoric is not accompanied by meaningful amounts of dollars for effective health programs for the population.

Regions are being given the accountability to deliver primary care, but they have an unworkable mix of provincial and regional funding and an unworkable mix of remuneration mechanisms for the providers that deliver primary care. Some providers are funded and paid by the region while other providers are funded and paid by the province, and both the methods of funding and the methods of payment do not produce cost-effective primary care.

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There has been increasing privatization of necessary health care services. It's now seen as a wolf at the door that never goes away. The result is that in 1996 in Alberta, many registered nurses and a growing proportion of other citizens and health professionals have determined that health care is the provincial and national election issue. It is evident from recent polls here in Alberta and in other parts of Canada, and from political events, that right now Albertans rank the preservation of publicly funded and administered health care over education and employment.

In 1996 Albertans' ability to trust that necessary health care will be there for them in a reliable and affordable way has taken precedence over all other legitimate and equally important public concerns. The fact that equally significant issues are not getting the attention they perhaps deserve - I would agree with Dr. Wagner's comments on youth unemployment - underscores our main point. For governments, either provincial or national, to be credible on health care they must have a strong and unwavering stance. This is the only one that will fly.

For the AARN, a credible federal stand on health care includes, at minimum, two things. It includes an increased stability of cash transfers and the binding of federal funds to sound provincial health funding policy. It's a two-pronged approach that enables us to protect our publicly funded and administered health care system from further erosion. It allows us to improve our health system over time without escalating the costs of health care to citizens as taxpayers. We are not among those who call for an increasing no-ceiling approach to health care. It ensures that legitimate and necessary influence in health care standards is preserved.

We need both of these actions, both stable federal funding and tying those funds to provincial funding policy, for the federal government to be accountable and to safeguard our system, and for provinces to effectively administer health care programs. These actions improve the links between the health needs and the health research we already know about, on the one hand, and the public dollars that are spent. In Alberta we have already seen enough consequences of failing to take enough of the right actions at the right times for the right reasons.

In light of our own responsibilities to the public for professional nursing care, and in light of the research and analysis of the public concern, we make the following recommendations to the Standing Committee on Finance.

For 1997, 1998 and 1999, the Canada health and social transfer cash floor should be fixed at$15 billion, the level of the cash entitlement in the current 1996 fiscal year. Secondly, the escalator for the cash floor should be a three-year compound moving average of the nominal GDP activated in the 1988-89 fiscal year, not in the year 2001.

However, we do not support a no-strings approach. Money should be tied to innovative policy. We therefore think future federal cash transfers to the provinces at these levels must be tied to two things. First, federal cash transfers must be tied to provincial compliance with the Canada Health Act. Second, federal cash transfers should be designated for primary care programs. We include in here all forms of care, including physician care, that are regionally funded and that use payment mechanisms other than volume-based fee for service.

The AARN does not see that specialty programs at this point need to be tied to federal cash transfers on the basis of provincial or regional funding. The eventual goal of our publicly funded system should be integrating all public dollars into one pot for all providers and all services.

Thank you for listening to our recommendations for financing health care. We believe a federal approach to financing health care as outlined would assure Canadians and their government of two essential outcomes for our future. It would preserve a publicly funded system that can change and that can account for its programs in light of research and affordable costs. We think it will gain the trust of Canadians and convince them that our federal government has a strong and credible role to play in our health and health care.

We will submit a full brief under a separate cover. Thank you.

The Vice-Chair (Ms Whelan): Thank you very much, Ms Marck.

I will now call on Ms Heather Smith from the United Nurses of Alberta.

Ms Heather Smith (President, United Nurses of Alberta): Good morning, Madam Chair and committee members.

I'd just like to clarify a couple of points. I represent United Nurses of Alberta. Following my colleague, Patricia Marck, I'm sure there are some questions about these two groups of nurses.

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The Alberta Association of Registered Nurses is a licensing body to which the vast majority of our members, including me, belong. United Nurses of Alberta is a trade union. We represent12,500 working nurses, both registered nurses and registered psychiatric nurses. We work in a wide variety of settings across the province, including acute care, long-term care, community care, the Red Cross, the VON, and pretty much every environment in which registered nurses and registered psychiatric nurses would be employed.

Coming before this committee is quite an onerous task. I'm not an economist and it's probably been even more baffling trying to read through economic papers related to this country's financial issues. But I will attempt to provide some comments from a background with which I am familiar and which primarily relates to health care.

I suggest to you that there will be a 1997 federal budget, since I believe 1997 is going to be an election year, and the primary issue will be health care, as it will be in this province during a provincial election. This is because of growing concern from the public, both in this province and across the country, that promises of health care and assurances of services and protection from economic devastation for those who need health care services are very quickly slipping. Public trust in both provincial and federal commitments to health care is a primary issue. I think this will be very evident in both national and provincial election activities.

We are, as United Nurses of Alberta, suggesting to the federal government that in preparing its budget priorities and looking at what is appropriate for this country, particularly at a time of crisis of confidence regarding national unity - I believe we've had only a very short reprieve from this crisis - health care itself has an incredible ability to bring all Canadians together with a common thought and a common need. On that basis, we would support and request the expansion of the Canada Health Act to include areas such as long-term care, community care, ambulance services, prescription drug costs, prescribed health equipment costs, vision care, dental care, laboratory services, physiotherapy services, outpatient surgery and community care.

Many Albertans are becoming very aware, unfortunately, of the major gaps that now exist in our system. Everybody providing health care certainly supported a move to community, not recognizing the financial burdens and care burdens that would be transferred to individuals and their families.

Clearly Canada's health care system, for what it does cover in terms of hospital and medical care, has proven very cost-effective. We believe economies of scale, the single-payer system, and the expansion of that to other areas of growing costs for health care services would be embraced by the citizens of this province and this country.

We would like to see strict prohibitions against the shift from public health care to private health care. In fact, our national costs for health care, which include both private and public costs, have actually been reduced in recent years and are now just under 10% GDP. But the area of continued growth is privately provided services, which people are paying out of their own pockets after paying taxes to their provincial or federal government. We would like to see adequate federal funding to ensure implementation of the expanded Canada Health Act and to maintain federal fiscal ability to enforce the Canada Health Act.

I think this province is a clear example of the wrestling between private and public delivery systems and services. Even though many Albertans believed we had finally come to some sort of agreement regarding private clinics, this week's newspapers were again very clearly saying how a prominent private eye clinic is still able to charge individuals up to $600 for services it is providing.

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We would like to see an announcement on the provincial and territorial accountability to the federal government, to ensure that federal moneys given to the provinces and territories for health care are spent on health care.

We have concerns regarding the Canada health and social transfer bundling of funding of health care, and the ability to clearly target funding to health care and ensure that the dollars are accounted for. Some of that arises out of our own concerns in this province regarding regionalization and the accountability and disclosure of spending activities.

We would have full support for the North America Free Trade Agreement exemption of health care, including a unilateral declaration to the provinces and territories that the federal government will not sign any internal trade agreement that jeopardizes the NAFTA exemption of health care. Health care unions fought very hard a year ago to ensure that health care would not be sacrificed under the free trade agreement. We are very concerned now that the interprovincial trade agreement may undo much of what we thought was achieved under the NAFTA lobbying.

We would like to see the abrogation of the drug patent protection legislation in order to support a Canadian generic drug industry and lower the cost of drugs for individual Canadians as well as for provincial and territorial governments, where costs have certainly spiralled as a result of extensive patent protection.

We would like to see full implementation of the universality principle for all federal public pensions, including the Canada pension plan, family allowance, employment insurance and old age pension, and for all social services, health care programs and post-secondary services cost-shared with the provinces and the territories.

Finally, again in terms of economies of scale, we would like to see an announcement for federal funding and implementation of a national childcare program.

We in the United Nurses of Alberta recognize that the preceding components of the federal budget would require increased government spending. We propose that to fund these programs, the federal government include the following revenue components in the 1997 budget.

We would like to see an announcement of a revised and fair tax system that would address the issues of homelessness, hunger and poverty; and a declaration that the transnational corporations and the banks will be required to pay fair taxes for the privilege of making record-breaking profits in Canada. We would like to see legislation requiring the Bank of Canada to formally adopt a policy of low interest rates, the adoption by the federal government of a full employment policy and the implementation of an effective job creation program.

I would also ask that the federal government's budget address the issue of ``de-skilling'', calling for stabilization of workforces. Here I'm speaking particularly of health care. I have expressed to Mr. Martin in the past the diversity of comments, such as those my colleague Norm Wagner made, that we need an increased and more skilled workforce here in this country. Yet we see the devastation of skilled jobs, particularly in health care.

Finally, we would ask for investment by the federal government in workforce data collection. This could also be achieved through requiring provincial jurisdictions to supply appropriate data. In times of budget cutting, at least in this province, one of the areas that has been sacrificed is data collection of the health workforce.

The Vice-Chair (Ms Whelan): Thank you very much, Ms Smith.

I'd like to turn now to Cheryl Knebel, president of the Alberta Chamber of Commerce.

Ms Cheryl Knebel (President, Alberta Chamber of Commerce): Thank you, Madam Chair. Thank you for inviting the Alberta Chamber of Commerce before this committee.

We are an organization that has 100% membership of our 127 chambers throughout the province of Alberta, and through them we represent 20,000 businesses. We certainly appreciate the opportunity to appear in front of the standing committee to express their concerns. We have written a detailed paper for you, and I will just point out some things in it in an effort to be brief.

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First of all, our main concern is that governments at all levels must operate deficit- and debt-free to ensure that the services governments deliver and the taxes required to support them are provided in a fiscally sustainable environment. We are pleased with the October 9 economic statement of Mr. Martin, in which he is stepping up the government's deficit reduction efforts, but we encourage those efforts to be even greater.

I refer you to page 3 of the brief, where we say that reducing the debt-to-GDP ratio is the critical challenge before this committee and the government. We need to establish a reasonable debt-to-GDP target zone to regain control of our fiscal course. We believe that zone should be below 60% and should be achieved over the next five years.

To accomplish this, it is imperative that the government keep expenditures level, not increase any taxes, and reduce payroll taxes by capping the UI surplus at $5 billion. This also means government needs to accelerate the process of program rationalization, ensuring that all programs are operated frugally. Where the government cannot do that, it should provide opportunities to the private sector to deliver those programs.

Starting on page 4, we get into more specifics about some areas. I mentioned the deficit targets. We wish the reduction of the deficit would be faster.

I mentioned earlier that with respect to unemployment insurance, we believe the fund should be capped at $5 billion and there should be premium reductions. In our last sentence under ``Unemployment Insurance'', we say that we further believe the size of the fund must be subject to some form of evaluative criteria that measure current and predicted rates of employment to GDP, to hedge against unforeseen circumstances.

On page 5 of the brief we mention a few other specifics. One is with respect to transfer payments. The Alberta Chamber of Commerce believes there should be no further cuts in transfer payments to the provinces without a corresponding devolution of powers to the provinces.

With respect to resource taxes, we believe there should be no new taxes or increased taxes that would place one region or industry at a competitive disadvantage with another.

Privatization of services, either in whole or in cooperation with private sector partners, should occur where it can be shown to be appropriate, cost-effective and in the best interests of the public. We recommend that this committee recommend to the government that a priority list of services that can and should be privatized be presented to Canadians on or before budget day.

There is a discussion of regulatory overlap at the bottom of page 5. Let me just point out that we continue to encourage more streamlining of regulatory processes and a shift away from control instruments to performance objectives, leaving business free to find the least costly ways of achieving public policy objectives.

On the Canada pension plan, at the top of page 6 of the brief, recognizing that the government's plan is to have the current review completed by the end of December, we want to communicate our concern that this not be rushed if the important issues that underpin the whole purpose of the review cannot be dealt with by then.

Today you asked for our views on the upcoming budget. I want to summarize by saying that on the revenue side our advice is simple. Businesses, indeed all Canadians, have stated that no new taxes or tax increases can be tolerated.

On the expenditure side, it is clear that government will need to continue to rationalize program spending, dispensing with some programs and contracting out others. Our view on this is that each department of government should be accountable to the taxpayer for meeting its objectives by producing a long-term business plan and communicating departmental outcomes through annual business reports.

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In terms of economic growth and job creation strategies, the Alberta Chamber of Commerce reminds the committee that these are roles best performed by the private sector. Government can enable this by creating the environment in which business can succeed and prosper - in other words, by ensuring that tax levels are competitive with our trading partners, regulations are kept to a minimum and trade barriers are eliminated.

My comments end here, other than one point on trade barriers, and this includes interprovincial trade barriers. Although an agreement was made a few years ago - as I'm sure the committee has heard before - that agreement is flawed. It has too many exemptions and exceptions, and it does not have teeth. It is too bad when it's easier for Alberta to be able to trade with the United States, even in election years, than to be able to trade with British Columbia. We certainly encourage the federal government to do whatever it can, and that may mean offering something the provinces have been asking for: more power in certain areas in exchange for enforcing and obtaining a better interprovincial trade agreement.

Thank you for inviting us.

The Vice-Chair (Ms Whelan): Thank you, Ms Knebel.

I'll now turn to the Edmonton Real Estate Board, with Mr. Les Phillips, the president-elect, and Mr. Al Dredge, the president.

Mr. Les Phillips (President-elect, Alberta Real Estate Association): We represent the Edmonton Real Estate Board and its 2,200 members here in the city of Edmonton. We also represent the Alberta Real Estate Association, with its more than 7,000 members across the province. We're one of the largest trade associations in Alberta.

In 1984 our national association realized that our nation had a debt problem and prepared a position paper for this committee. We have made submissions each and every year since then to this committee.

We applaud the current government's fiscal approach, and we're pleased that the government's target of 3% of GNP for the deficit has been reached and in fact surpassed in the last year.

We have two budget proposals to present to this committee as well as one legislative change. We would also like to bring up one constitutional item while we have this forum.

Firstly, the Canadian Real Estate Association made a proposal four years ago for the use of RRSPs by first-time buyers to purchase properties. This program was accepted by the government and implemented on a temporary basis. It is now a permanent program that has resulted in more than 400,000 Canadians using the program to purchase properties. More than $3.8 billion in funds has been used for down payments, resulting in the sale of over $100 billion worth of new homes and resale homes. This has had a major impact on the Canadian economy, as home purchases often bring other economic activity with them, like the purchase of new appliances and the purchase of services.

Our proposal is that since this program has cost the federal government next to nothing - people are using their own money and these funds are repaid to their RRSP, which eliminates the need for Canadians to choose between saving for a retirement and home ownership - we suggest that the next budget have a change in this program that permits Canadians to also withdraw funds from RRSPs for use by family members for home purchases. The Canada Mortgage and Housing Corporation has long realized that this is necessary in many cases and does permit parents or immediate family members to give money to family members for home purchases. We suggest that the use of RRSP funds would be extremely beneficial to Canadians.

Our position paper outlines exactly how it would work, so I won't go into all the details.

The second item is the investors' program. The federal government is about to renegotiate its position with the provinces in the next six months with regard to immigrant investment in the country. Our proposal is that immigrant investors' moneys may be used for the development of low-income housing for Canadians.

We've developed a model that is 100% risk-free for the investor coming into Canada. As we know, we have suffered some international embarrassments with our immigrant investor program. This one is ironclad. It permits a marginal return on the investor's money, but it is 100% safe and will permit the development of more than $30 million worth of low-income housing per year in each province of Canada. Again, we have developed an extensive model, which is contained in the brief that will be presented to you.

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Another area we would like to see federal government action in is Interest Act amendments. Currently the ability to prepay one's mortgage is not legislated, and every lending institution in the country has different proposals on how mortgages can be prepaid. Some can't even be prepaid before the expiry date. We feel there should be legislative changes to permit a level playing field for all borrowers in the country.

The last item we'd like to bring to the attention of this committee is the fact that our association, both provincially and nationally, is a strong advocate of the inclusion of private property rights in the Canadian Constitution. Most Canadians are aghast when they hear that they do not have the right to own private property in this country. We simply have the right of quiet use and enjoyment of property, guarded perhaps by some provincial legislation, but not implemented in the Constitution. It was supposed to be in there when our Constitution was brought home, but it never was because of the objections of a couple of provincial governments. We feel that when countries like Bosnia have private property rights, Canadians should certainly enjoy the same privilege.

Thank you very much, Madam Chair.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Phillips.

I'd like to turn now to Dr. Kanhaya Gupta from the University of Alberta, please.

Professor Kanhaya L. Gupta (Department of Economics, University of Alberta): Thank you, Madam Chair.

As I was listening to earlier speakers, starting with Mr. Wagner, I started to feel really depressed because I found that my brief was almost redundant by that time. Everyone seemed to have made all the points that any sane person would like to make. So instead of reading the whole thing, I'll try to find a few paragraphs that still might be of interest to different members here.

According to a recent issue of The Economist, in a sample of fifteen countries, Canada ranked sixth in terms of the index of misery, which is a simple sum of the rate of inflation and unemployment. What is more, this index has remained essentially the same from 1995 to 1996, with a slight reduction in inflation being compensated for by an increase of a similar magnitude in unemployment. Further, again according to the The Economist, in a sample of twenty countries, Canada ranks ninth in terms of youth unemployment as a proportion of the labour force. Further, according to a recent report of UNICEF, in a sample of eighteen industrial countries, Canada has the second highest number of poor children, with one in seven living in poverty.

Thus, it seems to me that the focus of the next budget should be on job creation, with special attention to youth unemployment and further attention to the issues of redistribution, particularly as they relate to the most vulnerable sections of this society.

Keeping these goals in mind, the first thing I would like to emphasize is that the government must stay the course on the current policies of deficit and debt reduction and must avoid the temptation to reduce taxes, thereby indiscriminately increasing expenditures just to buy goods. There is simply no doubt that any let-up on this account would have terrible effects on interest rates, inflation, investment growth and job creation.

For adult employment, two points are important. First, although nominal interest rates and inflation are quite low, the real cost of capital is nonetheless relatively high. We could do with a further reduction in nominal rates, and the best policy to achieve that is keeping the deficit under control.

I might point out to you that there is significant evidence now.... I'm not trying to peddle my book here, but if you can spend enough money to buy it, you will find that of eleven developed countries, Canada is the country in which we found deficit and debt to have the most profound effect - a bad effect, of course - on interest rates. You might want to look at that. Therefore, the first thing is that the deficit still must be controlled.

The second point is that there must be a minimal level of uncertainty. Of course uncertainty is caused by a multiplicity of factors, but here I think what is most important is the credibility of the federal government and the behaviour of the private sector in following responsible employment policies.

The government can best establish its credibility by pursuing the current budgetary policies. The downsizing policies of the business sector, which are now being emulated by some provincial governments as well, have played havoc with consumer confidence. We now have considerable evidence that such wholesale policies of downsizing are not good even for the business sector. An unhappy and frightened labour force is conducive neither to consumer demand nor to high productivity. The feds can use moral suasion to convince business that it is in their interest to follow more responsible policies.

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It is useful to point out here that in terms of labour costs Canada comes up quite well. Thus, in a sample of nineteen countries, again according to The Economist, in terms of manufacturing labour costs per hour, Canada ranks fourteen, even better than the United States. So it would be difficult to argue that these policies of downsizing are justified by non-competitive labour costs.

In terms of investment, of course, we all understand and accept the fact that private investment is the major component. But we should not ignore the role that public investment in infrastructure can play. It creates significant externalities for the private sector, and the feds should carefully consider this particular role.

I have already mentioned the question of distributive justice. I would include this point as not really being emphasized. I do want to emphasize this. It is not, in my own considered opinion, an ideological issue. I believe that any civilized country, which also happens to be developed, should consider it a fundamental duty that its children are looked after and that its less fortunate members do not have to suffer any greater deprivation than they must. Having said that, it is quite clear to me - and we have plenty of evidence from all sorts of countries in the world - that you cannot deal with these particular issues by general, standardized macro-policies of any kind. Therefore, we must have policies specifically targeted to these disadvantaged groups.

Finally, although it might sound as if I'm trying to repeat myself about health care and education, I think I should add one particular word here. There is a widespread misconception that health and education are essentially consumer goods. This explains the widespread attempt by various levels of government to emasculate them by cutting expenditure on them and in some cases even trying to privatize them.

Given the massive evidence - and I think this sort of evidence is not commonly known outside of academia - that investment in human capital is one of the major sources of growth, this sort of thinking is clearly mistaken and is downright dangerous. In the same vein, a healthy labour force and citizenry in general is important. I would therefore urge the feds to seriously consider reorienting their expenditure policies in such a way that these two sectors do not suffer.

It is also important to remember that a highly educated, well motivated, quickly retrainable and healthy labour force and significant R and D facilities are important for competing successfully in the international arena, which for an open economy like ours is even more crucial.

The Vice-Chair (Ms Whelan): Thank you, Dr. Gupta.

I'd like to turn now to Mr. Tom McGee from the Alberta Urban Municipalities Association.

Mr. Thomas McGee (President, Alberta Urban Municipalities Association): Good morning, Chairman Whelan.

It excites me to know that the Bloc, the Reform and the Liberal Party are sitting together to think about Canadians. That makes a significant difference to the presentation we're making today.

My distinguished colleagues, I feel a little embarrassed to be at the table with the people who are here, but because I'm president of the AUMA, I represent 295 urban municipalities. Nearly 85% of the people of Alberta live in those urban municipalities, from villages to cities. I am also mayor of the small community of Drayton Valley, which is about an hour and a half outside Edmonton. That also brings me to this table to think about Canadians.

You have the brief before you, so I'm going to skip through it in the interest of brevity.

Our association supports deficit reduction by all levels of government. We have, as municipalities, reduced our debt. We have reduced administration costs and decreased the portion of revenue dedicated to staffing and salaries. We view this as a significant achievement, given that provincial transfers have declined by an overall 52% in the same time period.

We're also extremely concerned because downloading and shifting of responsibilities from one level of government to another without moving appropriate funding at the same time has created a different crisis, which is how to maintain basic services when our primary source of income is property tax. On one hand we laud the federal government for reducing debt so that future generations of Canadians aren't burdened by paying for yesterday's debt. On the other hand, it must be recognized that those future generations require appropriate resources devoted to roads, streets, bridges, water mains and sewer pipes today.

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What the federal government must always remember in any fiscal, financial or budget decision is that the decision may ultimately have an effect at the local level. A shift in federal policy direction, whether or not directly aimed at local government, may still come to rest on the shoulders of local government. It's for this reason that I feel, as a municipal government official and representative of hundreds of municipal officials, that dialogue such as what is happening today is important. The municipal perspective should be included in setting priorities.

I urge prudent and equitable use of tax revenue. Some figures recently came across my desk related to land claims and aboriginal self-government, a very difficult issue. But given my role in local government, I can't argue against self-determination by any community. I'm aware of the earnest and detailed negotiations that have occurred to make settlements possible. But I also feel that the federal government must remember it has limited resources and that the country has 30 million people to serve. I encourage efficient, effective and equitable use of limited resources.

More specifically, I'll start with an issue that is the potential second-phase national infrastructure program. Talks are continuing about shape and size as well as the players in such a new program. Let me stress that a national program is critical to the basic health of municipalities. The last program did, according to some recent literature, create 100,000 direct jobs. Even more important, a second program must be available to allow municipalities to maintain aging and deteriorating streets and water and sewer systems.

Here in Alberta, even though the infrastructure works program approved over 1,400 projects worth $608 million, infrastructure expenditures - and this is very important - declined over the period from 1989 to 1995. Decreasing infrastructure expenditures has been the one way that Alberta urban municipalities have coped with increased demands on their revenues as transfer payments have declined and new responsibilities have been downloaded on them. New infrastructure must happen.

I also would like to support the tripartite nature of the agreement. It is possible for all three levels of government to work together and work together successfully. The Alberta program had an additional feature that I think was very, very important. It had a management team with municipal representation, and this should be included in other provinces.

You may be familiar with the term ``grants in lieu'', but I would like to use another term, and that's ``payments''. ``Payments'' is a far better description. Federal departments and crown corporations receive municipal services, so it's only fair that they pay their fair share of the costs and not burden taxpayers. I say this in support of our national organization, the Federation of Canadian Municipalities, which has continued to lobby for appropriate payments by the federal government, its agencies and crown corporations to municipalities across Canada.

The second major issue for urban municipalities is downloading, particularly in the context of growing demand for services and our municipal ability to respond to the demand.

The federal balance sheet shows less spending, but it's come in the critical areas, as we've heard today, of education, health, housing and social services. Federal cuts to provinces have meant provinces are cutting back in the same critical people services, such as social services, housing and health-related needs. In many cases municipalities have been handed extra responsibilities without the financial back-up, thereby increasing again our strained resources.

No level of government can ignore the pressure to provide these services and each has some responsibility. This is the critical qualifier. Who is responsible for funding and actual service provision?

To answer the qualifier, I turn to our association's guiding principles. I didn't hand those out, but I have some copies available. The guiding principles that the urban municipalities of Alberta have adopted are a template. To be brief, the points are that the federal and provincial governments have sole responsibility for direct income redistribution programs and services. Each local urban council will maintain responsibility for the establishment of standards of services to property and people. The imposition of new standards to property and people that exceed those determined locally are to be financially supported by those who impose them.

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Thus, if the federal government sets a service standard that must be provided at the local level, then the federal government is responsible for providing adequate funds and resources to make that service provision possible. In other words, he who calls the tune also pays the piper.

The devolution of responsibilities without accompanying financial resources is seen as an attempt to escape or avoid responsibility. At the Federation of Canadian Municipalities convention this past year in Calgary, municipal leaders were encouraged to show leadership, to not give in to pressure groups and to not spend money we don't have on services we can't afford. To me, I think our leadership extends to standing up to other orders of government and saying we serve the same citizens; we serve the same taxpayers.

I'm here today to tell you the budget recommendations and decisions you make don't happen in a vacuum. They will either trickle down or they'll flood at the local level. We encourage you to look at how your policies and decisions will impact at the community level, where the people live, where the streets they drive on are located, where they turn on taps and expect water to come out, where they put their garbage out by the curb, and even where they flush their toilets. We encourage and support continued dialogue among all levels of government.

We also believe there must be recognition of the roles and services provided at the local level. Municipal governments might not make the headlines every day, ladies and gentlemen, but we are closest to the people, their needs and their problems. We can contribute significantly to setting policy directions that ultimately affect how we operate and provide services to our local citizens.

From an Alberta urban municipal point of view, I want to encourage this committee to view the next budget and every federal policy not just from its federal implications, but from how it will play out in your own home community. Remember, shifting financial responsibility could have significant repercussions in your home town, in every home town. This encompasses amalgamated health and social transfer payments to the provinces, the cost of aboriginal self-government, provincial parity in program funding, a new national infrastructure program, and the priorities you set in what programs the federal government will continue to fund.

Yes, we want you to continue to eliminate the deficit and reduce the debt load. But at the same time we want you to be consistent, we want you to be fair, and we want you to be equitable as you make changes to ensure that Canadians continue to be well served by all orders of government.

Ladies and gentlemen, thank you again. Together, working for all Canadians, we can make a difference.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. McGee.

I'll now turn to Elisabeth Ballermann from the Health Sciences Association of Alberta.

Ms Elisabeth Ballermann (President, Health Sciences Association of Alberta): Thank you, Madam Chair.

As a trade union that represents in excess of 7,500 health care workers who are paramedical professional and paramedical technical as well as general support workers in numerous settings - which encompass hospitals, group homes, the Canadian Red Cross, community health and others - we appreciate the opportunity to address the committee on issues that directly affect our membership.

We are a trade union. We are therefore by definition an interest group, and we are so unapologetically. Our comments address primarily issues that affect working Canadians. However, as health care workers we are also deeply committed to the health care system of this country. We are deeply distressed by the move of various levels of government to download their responsibilities onto another level, which finally culminates in the homes of Canadians.

Health Sciences believes that Canadians' societal values include compassion and include the need for all of our citizens to enjoy at least a basic minimum standard of living and dignity. Government policies must reflect these values. In other words, where appropriate, government should provide programs directly. We are distressed by the continuing move by all levels of government to privatize various services. To this end we'd like to address the following recommendations.

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On employment insurance, formerly known as unemployment insurance, the redesign of the program has led to a large number of workers being denied benefits at the same time as we have a surplus in the system. It is our opinion that benefit cuts were excessive. They were not warranted as cost containment measures since there was a surplus. This ought to be re-examined.

We would also encourage an innovative use for any surpluses in the system. An example of this is looking at the eligibility period for sick benefits. In cases of illness, we feel that eligibility of twenty weeks' employment is excessive and could be reduced or even eliminated to ensure that people who are stricken by illness do not also suffer huge financial burdens that will affect their ability to recover.

We also believe tax credits should be extended to members now caring for ill family members. Also, employment insurance could be used to allow these people to care for their families, since governments are offloading their responsibilities. Surpluses should not be used to reduce government deficits, but should be kept in trust for workers.

We also want to briefly address the training program that was part of unemployment. In the past, an unemployed worker could be funded for a training program for a period of one year. Under the current system, once your benefits run out, your eligibility for support runs out. We feel this does not help the employment picture of this country.

The Canada pension plan is another area we feel needs to be addressed. The confidence in the plan must be restored. Many Canadians feel the plan simply will not be there for them when they reach retirement age, and therefore the support for it is minimal or reduced. Increases in contributions may be required. It is our understanding that the plan has essentially been underfunded from its inception and this needs to be recognized.

On the Canada health and social transfer, we suggest that the single-envelope method of funding be re-examined and abandoned to enable governments at all levels, and particularly the federal government, to actually put some enforcement behind financial policies. Right now there is no ability to ensure the funding goes directly to health care. We feel, particularly in this province, that this is not necessarily to the benefit of Canadians. Funding also needs to be adequate to ensure governments can provide required services.

We believe policies must protect against the increasingly two-tiered or multi-tiered health care we are seeing here in Alberta. We believe privatization at all levels and in all sectors simply leads to reduction in average wages and therefore a reduction in benefits and the standard of living. This affects the taxation revenues of government and redistributes wealth to the few.

With regard to taxation, we believe taxation should enable the government to provide services and to effect a redistribution of wealth. It must achieve a balance between incentives to individuals and incentives to create jobs, but not at the expense of individuals. We do not believe businesses should be given tax incentives to hire workers at minimum or subsistence wage levels. Corporations' taxes should therefore be based not on their income, and not on their profits, which can be reduced by simply reinvesting money into the business. They should be based on growth in assets.

The sliding scale of personal income tax must be maintained. We cannot support any move to institute a flat tax. This is a move we frequently hear about. We don't believe the government is looking at this at the moment. We certainly would encourage a look at fair taxation. In other words, those who have greater incomes obviously should pay more taxes.

We believe the cost of providing childcare and health care to family members should be fully recognized through appropriate deductions and tax credits. This includes the full deduction of childcare costs and recognition for individuals who have to take a leave of absence from their jobs to look after children or family members. To this end, although this is not particularly a taxation issue, we believe workers should have the right to take unpaid leaves of absence without negative employment consequences.

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We further encourage the government to fulfil its promise to repeal the GST, or at minimum to reduce it. This has been a major thorn in the side of Canadians, and Canadians' confidence in the government is certainly affected when they see promises not kept.

We strongly urge the government to eliminate the GST from all reading materials. Functional illiteracy is recognized as a major problem in this country. We keep hearing that we need a skilled workforce to drive our economy. To tax reading material that encourages literature and education simply does not make sense to us.

In the area of job creation, we believe the federal infrastructure program should be renewed to enable job creation. We also encourage the federal government to look at its own policies of contracting out government services and requirements that governments bid for the right to provide services on the same basis as private business. As Canadians, we have paid for the infrastructure. We have paid for our hospitals. We have paid for our roads. We have paid for our public buildings. We should therefore be able to benefit from this expenditure when it comes to bidding for particular services.

We encourage the government to avoid zero inflation as a goal. This is not to suggest that high interest rates should be the policy, but in the past zero inflation policies have had a negative effect on the economy.

Finally, in the area of culture, we believe we must feed not only the bodies but also the minds of Canadians. We believe funding to the arts, to amateur sports and to the CBC needs to be re-evaluated and bolstered in order to create a well-rounded citizenship.

Thank you.

The Vice-Chair (Ms Whelan): Thank you very much.

I'll now turn to questions. If anyone wants to participate in questions not directed at them, please signal to me. Please try to keep your answers brief so we can get as many questions on the table as possible. We started out very well with a brief summary by Dr. Wagner, but we got a little long-winded toward the end. If we could try to keep comments brief, that would be great.

We'll begin with Mr. Rocheleau.

[Translation]

Mr. Rocheleau (Trois-Rivières): I would like to welcome everyone before asking my questions and say that I am very impressed by the quality of the briefs that were presented today and especially by their diversity. It clearly shows there should be a debate in Canada on the development of our economic system.

There is an undue type of stagnation in Canada. Opinions are far more varied than official milieux, especially newspapers, would lead us to believe. This morning's meeting is a very clear example thereof. We have heard very diverging views which were expressed extremely well.

We are here in Alberta, under Mr. Klein's government, who is from the same school of thought as Mr. Harris, who, in turn, is from the same school of thought as Mr. Reagan and Mrs. Thatcher. All those people love neoliberalism, which, in my view, utilizes a pure accounting approach, as if financial success were the equivalent of socioeconomic success. When you listen to Mr. Gupta, you can see he is just trying to impress us.

If you dig a little further under the financial statements, you can see that things are not as rosy as we are being led to believe.

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Given that, I would like the three women from the health sector to give us more detail on the possible effects of Mr. Klein's policies and those of his government on everyday life in the health sector. What was Alberta's health sector like before and what has it become, after all the modernization and cuts?

On another topic, there is an increasing number of food banks and homeless in Canada. Unemployment is on the rise. Things are not going well and we are being told they are, somewhat like in the United States.

Since we have very worthy representatives of the health sector, I would like them to give us as much specific information as possible.

The Vice-Chair (Ms Whelan): Thank you, Mr. Rocheleau.

[English]

Perhaps we could begin with Ms Marck. Do you have any comments on this question?

Ms Marck: I have many comments. I feel that because our association represents the mandate for safe nursing care - in other words, we regulate the workers - I should invite the unions to have first voice. Then I will add anything they haven't already said.

The Vice-Chair (Ms Whelan): Ms Smith.

Ms Smith: I think there are a number of adjectives that would demonstrate the changes that have occurred. Although some concerns may have been present in the past, they were nowhere near what they are now. Specifically, these descriptions are stress; fear; despondency; loss of confidence in themselves and in this government to meet health care needs for their patients, for themselves or for their families; and exploitation of health care workers.

This is predominantly a female workforce. For instance, 98% of registered nurses are female. We have seen massive destruction of regular full-time and part-time jobs, and exploitation of those same workers as casuals, as day labourers in effect. They no longer have contributions made by themselves or the employer to pension plans. They no longer have supplementary health benefits, which has become an increasing concern because of health coverage by the provincial government.

There is anger, specifically regarding their inability to meet demands, to provide the level of professional care they know they should be providing and that the citizens of this province are demanding. Increasingly, violence in the workplace is becoming an issue related to the frustration of families and individuals who are not able to access services in a timely fashion. There are many stories about individuals spending four to six days waiting in an emergency in this city to access a bed.

Downloading to the community, with all the same sorts of effects on community workers, is very evident as well. There are costs that are now expected to be borne by individuals, some of whom simply cannot afford them. These include, for example, IV, home therapy, dressings, provision of care. Individual workers increasingly assume the burden of these demands.

Needs of their own families is another area. This refers to the unpaid time raised by Elisabeth and their inability to meet professional obligations. They try to earn an income as well as picking up in their personal lives for health care and services that have now been withdrawn or diminished by the government.

The Vice-Chair (Ms Whelan): Thank you, Ms Smith.

Ms Smith: They're a very destroyed workforce, a very destroyed public in terms of confidence.

The Vice-Chair (Ms Whelan): Thank you.

Ms Ballermann, did you have anything to add to this?

Ms Ballermann: Yes. I would certainly echo all of the comments Ms Smith made this morning.

Overwhelming fatigue is one thing I hear about from our members. People have said they want to be able to provide good quality health care. We are distressed by what is happening to our system, but we are simply too tired to be able to provide the level of care we have been able to in the past.

I would be prepared to provide copies to this committee of a report just issued by the Capital Health Authority physicians. This report very clearly demonstrates for this region some of the problems we're seeing in health care.

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In Alberta 40% of funding was cut from laboratory services, which meant a massive restructuring, leaving us in a situation where there are waiting lists. There are long waits for results to get back to physicians, etc. For our members that is one major area.

At one point the Alberta government had a goal of 2.4 beds per 1,000 citizens. In Edmonton, a major urban area that services a large rural population for secondary and tertiary services also, that number is now at 1.8 according to this report by the physicians.

Movement of services into the communities I would agree with wholeheartedly. But they have not been supported by funding, by adequate staffing, so the task falls to family members to look after patients. Where professionals deem that a patient needs daily services, home care can provide them maybe only once or twice a week, and sometimes only every two weeks. These are people deemed to be in need.

One of the most telling statistics in the report from the Capital Health Authority is the rate of hospital-acquired infections in neonatal - in other words, newborn - intensive care units. That rate went up in the last quarter...for 1993 by 1,100%. I think that is a telling statistic as to what is happening to our health care system and to the workers in it.

The Vice-Chair (Ms Whelan): Thank you, Ms Ballermann.

[Translation]

Mr. Rocheleau, do you have another question?

Mr. Rocheleau: Yes, for Mr. McGee.

Many people have congratulated the Chrétien government, especially Mr. Martin for his budget, his past successes and his plans. Others, such as myself, say that Mr. Martin has the dubious honour of having passed the buck to the provinces and the poor.

As a municipal councillor, if it hasn't already happened, you will be bearing the brunt of the federal government's passing on the problem to the provincial government. What do you think of that and what are your concerns about this idea of simply passing the buck to a point where it is the people themselves who have to deal with it?

[English]

The Vice-Chair (Ms Whelan): Mr. McGee.

Mr. McGee: Thank you for the question, Mr. Rocheleau.

The interesting part of downloading, as I mentioned in my brief, is that the responsibility of the municipal government is to provide many of the services. As the mayor of a community - and I've been a mayor for seven years and a councillor for six before that - the things we thought about at the municipal level were in a fairly small box. We had our business and we did our business. But as things progress with the offloading of services, we now as mayors of communities need to think about health. That never used to be a thing we thought about. We never used to think about education, because it was another board that did that business. We never used to think about children's services, because that was another business. Increasingly, those things are on our plates.

I'm not sure we can't make the best decisions, because we are closest to the people. The question raised in my brief was that if those services are going to be taken on by the government closest to the people, then adequate funding has to be in place to do those things.

We do believe, and I believe, as municipal representatives we can make solid decisions. We are elected by the people, and quite frankly, being closest to the people, I can say they are continually and every day on our doorstep. I think the province gets insulated by big government, and at the federal level you're also insulated. How often are you back in your constituencies actually to hear? Well, I'm in my constituency every day and I hear.

Sometimes I question my ability to be able to work on all the facets being downloaded on us, but I'm growing and learning very, very fast. I think it's the same in many municipalities.

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We're also hearing from municipalities in Alberta that they're just going to say no, no, don't pass it down, we're not going to do it, we're not going to deal with it. I think that's an extreme. There's an opportunity for all of us to work together to make a better life for all Canadians.

The Vice-Chair (Ms Whelan): Mr. Solberg, please.

Mr. Solberg (Medicine Hat): Thank you very much, Madam Chairman. It's always good to be back home in Alberta.

I want to start by going on the record as saying that I truly believe the local level of government is by far the most effective level of government, and I think it makes tremendous sense to have services delivered at the local level to the degree possible, providing the resources go along with it.

I have to respond to what Mr. Rocheleau said and put things in perspective somewhat.Mr. Rocheleau suggested Alberta was some kind of hard-hearted place. I point out that in Alberta we have an unemployment rate of about 7%. People in Quebec would feel extremely fortunate if Quebec came anywhere near that. In places like Montreal it's almost double that. I also point out that it's people in Quebec who are fleeing that province, not only because of the separatist threat but also because of the high taxes, to come to places like Alberta. Clearly people in Quebec don't necessarily feel the same way Mr. Rocheleau does.

Several people have talked about some things government has not been able to provide over the last little while because of the high levels of debt in this country. They have talked about infrastructure, health care - extremely important to Canadians - and higher education, which no matter where we go, people suggest is an extremely important service that must have funding restored. People talk here about high unemployment rates, about poverty, even about advance payments from the Canadian Wheat Board and ensuring they are secured. Obviously the underlying common denominator is the high debt levels we have, the deficits we have, and the taxes this all breeds.

I want to engage people in a bit of debate. We have a government that is slowly reducing the deficit, and at the same time we have a debt that is rising. We've seen taxes for the average family rise $3,000 over the last three years. This places a tremendous strain on families. It creates unemployment. It creates tremendous uncertainty.

Instead of slowly dealing with the deficit, doesn't it make more sense to decide what the optimum size of government is; what services should be delivered by the federal government as opposed to the provincial governments, the municipal governments; decide what programs need to come under the umbrella of the federal government and which ones could be run, for instance unemployment insurance, by workers and employees themselves? Doing that would reduce the overall expenditures of government to the point where we would leave more money in the pockets of taxpayers and the real job creators out there, the people who run small businesses, for instance. Doesn't it make more sense to do that than to take the gradual approach, which over the long run will balance the budget but in the meantime adds tremendously to the debt burden and ultimately to higher taxation levels and undermines our ability to fund the very programs people here suggest are so important to Canadians?

The Vice-Chair (Ms Whelan): Mr. Solberg, is that question directed to...?

Mr. Solberg: It's directed to anyone who cares to talk.

The Vice-Chair (Ms Whelan): Ms Smith, do you have a comment?

Ms Smith: Yes. I want to be sure I understand your suggestion. You would be opting for a radical mastectomy when a lumpectomy might be appropriate to treat the disorder. Is that correct?

Mr. Solberg: No, those are your words. I am saying that we probably have a tumour that is growing at an extremely fast rate, and it's called -

Ms Smith: Right. Let's go for full amputation, which we can't undo, rather than a reasonable approach.

I'm not sure how long you've been out of Alberta, but when you say it's wrong to think Alberta is hard-hearted, I think you've been gone longer than you realize. We have been suffering in this province from a radical mastectomy approach to social services. It is very, very disproportionate and painful for a number of Albertans. I think you will find there is increasing dissatisfaction with that kind of approach by government.

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I recognize that other governments such as Ontario are just initiating this radical approach to deal with the size of government and services, but as a taxpayer and a citizen in this province and this country, I have a limited amount of income. I would rather pay taxes and have access to services, parks, libraries and other activities in this society than paying user fees every time I go to those. It does not matter whether it comes out of my right pocket or my left pocket, except that when it's added on, extra taxes, it is disproportionate and generally more costly.

Mr. Solberg: Let me ask you this -

The Vice-Chair (Ms Whelan): Mr. Solberg, there are a couple of others who want to comment on your original question.

Dr. Gupta.

Prof. Gupta: I think you try to derive a lot of comfort from the fact that Alberta has only7% unemployment. Quebec might have more, but I think it is important to remember that 7% is very high compared with 2%, or 4% for that matter. I suggest you look at examples where the unemployment rate is much lower without so much damage to the socio-economic system, as has been perpetrated by this particular approach. I wouldn't want to debate with you except to point out that you should keep that in mind. Don't look from the top; look at what has been done from the bottom.

I think you started well by saying it would be a better approach for the government to define the optimal role of government. But then you degenerated into a general kind of rhetoric by asking why we don't have a ``big bang'' approach rather than a graduated approach. No. If that's the way you're going to do it - and that's the right way to do it, by the way, and I'm quite pleased you raised it that way - we should talk about the optimum role not just of government but of government and the private sector, and then see how it comes out.

One thing that's driving you and many people who talk on these particular issues is a prior notion that the optimum role of government means a minimal role - no role. But that's the wrong way to think. It has to come out the way it comes out. We can do an honest exercise that is not tainted by any ideological hang-ups, and then we shall see what comes out.

The Vice-Chair (Ms Whelan): Thank you, Dr. Gupta. Ms Marck.

Ms Marck: I would just add the perspective from AARN that we were trying to underscore in our presentation today, which is that reducing drastically could have worked if it had been accompanied by appropriate reforms in the policy area. It was not, just like the years when escalating expenditures weren't accompanied by the appropriate policy to get accountability between the provinces and the federal government.

Health care, for instance, is run in a way that no other business would be run. Some of the workers are funded out of one pot and some out of another. Some are remunerated by some mechanisms and some by others. The government needs to come to terms with what portion of income it's willing to put into health care and then take some courageous policy steps to tie the money to certain strings that can enforce the accountability. That's what's missing right now. It's not so much a question of how much we should go down or up. Just stay where you are for a few minutes and figure out how to get the right strings in place.

The Vice-Chair (Ms Whelan): Mr. Solberg, could you be extremely brief in your next question? We're running out of time.

Mr. Solberg: I just feel I must respond. First of all, I did say that this money needs to be refocused into programs that Canadians value the most, such as health care and higher education. People have made it fairly clear that those are priorities.

The second point I want to make is that as we spend more money, of course one-third of those tax dollars that Ms Smith was referring to goes toward interest on the debt, something Mr. Wagner also mentioned. I hardly think it's an appropriate way to spend taxpayers' money - applying almost more money to that than to all social programs combined. It's a ridiculous waste of money, in my judgment.

The point I want to make is that there is an optimum size of government and there are appropriate roles for the different levels of government to play. We are far from getting to that point when we simply allow the federal government to reduce, at a rate it determines, and not at all consider the question I've raised which Dr. Gupta has responded to.

I think that's the challenge, and I would encourage people to think of how we address this whole issue in those terms.

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The Vice-Chair (Ms Whelan): Thank you. Ms Knebel.

Ms Knebel: I want to support those comments and remind the committee that over the last three years our debt has grown by $7 billion. That $7 billion could have been used for programs. It's taking money out of the programs that would benefit the public. That is why the number one focus has to be on eliminating that deficit and attacking the debt so that more money will be available for the things we want government to do.

We are also strong believers in the devolution of powers to your local levels, along with the funds to apply those powers. Then you will get the proper decisions made for those regions of the country.

I would like to emphasize again that I wish governments would clearly define their responsibilities and stop duplication, because that's one way we could save money. Right now there are so many areas where governments overlap and so many different areas where you have to get regulatory approval for activities from different levels of government. That not only costs businesses money, which costs the taxpayer because there is only one taxpayer, but it costs governments money and takes away from what we could be using for health care and education.

The Vice-Chair (Ms Whelan): Thank you very much, Ms Knebel and Mr. Solberg.

I'll now turn to Mr. Duhamel, please.

Mr. Duhamel (St. Boniface): Thank you. I appreciate the presentations and the exchange.

I want to raise one point and then ask a big question. There appear to be three positions with regard to the deficit/debt issue. One is to accelerate it. I think most people would suggest holding the course. And if I've interpreted it correctly, others are saying it may be going too quickly and causing some significant hurt along the way.

I've also heard comments with respect to the need for additional investments in health because they've been dramatically reduced, and I agree with that. This morning one reference was made to additional need for investments in research. That's a point we've heard in a number of other situations, and I suspect it's probably shared by the individuals who are here.

I heard a call from at least two sources for a new infrastructure program, perhaps with some modifications. Of course - and appropriately so - to ensure that we don't neglect our educational sector, there was some reference to the post-secondary sector and the jobs that are not out there for those people who are willing and eager to work.

It seems to me there are two major forces at play here. One is the whole issue of debt and deficit, and the other is the need for some additional investments in some of the areas I've mentioned. I'm not suggesting those are the only ones, and obviously the investments would be different and would vary from region to region. I was wondering if someone could briefly give us an indication of how to deal with this as members of Parliament. There we are, 110 of us being told at the very least to hold the spending, cut it. On the other hand, there is a need for additional investments.

The Vice-Chair (Ms Whelan): Dr. Wagner, would you be interested in replying?

Dr. Wagner: I probably can't in the time available, but I am going to leave a brief parable for members of the committee that I think puts things in a slightly different focus.

I think there's a need for us to recognize that we all have to be smarter - and the word ``smart'' is probably the wrong word. There are all kinds of businesses out there that have employed very highly skilled people. Heather, this could apply to the health system. In some cases it's not the skills of the individual that are the issue; it's the smartness or the dumbness of the company. The people who work at Consumers Distributing are just as smart and just as trained as those at Wal-Mart, for example.

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I'd like us to go one step further and think of smarter communities. There's a great, growing trend to talk about ``smart communities'' and ``smart provinces'', etc. The word ``smart'', as I said before, is perhaps the wrong word, but I think that's where the infrastructure program and all this may come together. We need trained individuals working for smart companies or organizations, whatever they are, in smart communities. And ``smart'' means more than just wired. It means communities that are committed to getting the job done. That requires an investment, Ron. Therefore I agree with what you're saying.

As for the reduction of debt, we're at a very fortunate time with interest rates where this is playing into our hands. I guess I'm of the mood that Mr. Martin is going in the right direction, and if it all works out this may solve itself. Let's hope that's the case.

If you visit Japan or Germany today you will discover two economies that are in very deep trouble. Lay-offs are about to happen along the lines we've experienced. This is a universal problem.

I would like to see the debate focused slightly differently from what has been the case in the country, and for us to quit passing the blame to each other and determine how we can have organizations - I won't say businesses, but organizations - that can function more effectively than they have in the past. That is a very big challenge. We've had people here today who say the federal government ought to impose, to govern, or whatever it is, in health. We've had others who say, oh, no, let's get the decision-making down to the municipalities. Education and health are examples going in opposite directions in terms of governance, yet they're lumped together in terms of payment.

I don't think I can add any more to that.

The Vice-Chair (Ms Whelan): Ms Knebel.

Ms Knebel: I would like to take a stab at answering that question of how the government can meet two apparently contradictory goals of reducing the deficit and obtaining additional investments.

The answer, as we see it, is to set out priorities. You may be surprised to know that the Alberta Chamber of Commerce supported the proposed infrastructure plan, with certain conditions: first, as long as it was clear it's not a job creation plan - don't sell it as that - and as long as it's truly working on the infrastructure we need to trade with the world and it's not building arenas and other things. But we also said we don't want that to increase the deficit; we want those moneys to come from other areas, so set your priorities differently. Get rid of the things you don't need to do anymore and put the available money in the things that are important to us.

I want to add one more point. When a business is in trouble, it typically has to become more efficient and more effective so it can reduce its price and improve its service to get back customers. When a government has got into trouble, typically it has been increased taxes and reduced services without working on efficiencies and effectiveness so we can actually improve service by doing things differently and smarter.

The Vice-Chair (Ms Whelan): Ms Ballermann.

Ms Ballermann: It seems to me the key here is employment. Downsizing of businesses, etc., may work very well, but we're seeing in various sectors with massive downsizing that in fact people are having to be rehired. What that results in is underemployment and lack of job security. People who are working pay taxes. People who pay taxes are not on the government payroll through unemployment insurance, through social services. Therefore, we must have useful job creation programs to create real jobs to ensure a revenue base for this country. A number of sources have found that simply downsizing, as Dr. Gupta said earlier, is not the answer to the problem.

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The Vice-Chair (Ms Whelan): Thank you very much, Ms Ballermann and Mr. Duhamel.

Mr. Pillitteri.

Mr. Pillitteri (Niagara Falls): Thank you, Madam Chair, and thank you to everyone for their presentations this morning.

I wondered after the answer that Mr. Wagner gave if there was even an attempt to ask some questions.... I do want to make a remark because you hit the nail right on the head with the remarks you made. But in some presentations here I did hear...and I cannot in any way let it go by and not make any remarks.

One comment was that employment insurance belongs to the workers. Am I to understand that as a businessman who pays $1.40 for every $1 that the worker pays, I have no say in it? As an employer I pay more than the employee does, so I think it belongs to both. I did hear that this morning.

I also heard - and if I ever saw anything political, this is strictly political - the comment about repealing the GST as promised. This is Alberta. I don't understand. You do not have a provincial sales tax. There would be more of an effect in other provinces, but here in Alberta...you do not really have much of a say like other provinces in Canada did.

I heard that we should avoid zero inflation and also fund all of the things, like CBC, like sports, but don't cut any funds. That means just continuing the past and increasing payments. I just heard those things, not that I wanted to.

My real question, to Mr. McGee, is on downloading and the municipalities taking the brunt of it. I used to be in a municipality. I was an alderman in a small community. I recall that when I was first elected we did not talk about medicare or taxes and schools. We did not talk about those things for the simple reason that they were all taken care of. There was plenty of money for health care, for the hospital and for the school boards. Nobody really questioned very much until later on, when some restructuring had to be done.

Medicare is not delivered by the municipalities, so I don't see that being downloaded. There's talk about it in some municipalities and small communities where hospitals are to close...if the municipality takes the initiative in trying to keep that hospital open.... But the brunt of the downloading has not actually been borne by the municipality.

As far as property tax goes, I don't know how it is here in Alberta, but in Ontario the property tax basically takes care of the education system.

I wanted to know what sort of downloading of social services - which it is in every other part of Canada - has happened so that the municipalities had to pick up in raising more money in order to get the job done, specifically infrastructure....

As for infrastructure, I also heard a comment that bothered me about infrastructure not being job creation. I think it is job creation, regardless of which way you look at it, regardless of which one is to take the credit - the provincial level, the federal level or the municipal level of government. The fact is that the program worked and the fact is that everybody wanted it. If a municipality wanted to build an arena or to build sewers and so on, it was up to the municipality. I don't think anybody went against it.

Having made those remarks, is there anybody who would like to take a stab at this and finance some of those projects?

The Vice-Chair (Ms Whelan): Mr. McGee, do you have any response to that?

Mr. McGee: I certainly do have a response. You may not recall this, but I said we were closest to the people. So if you see on my desk...the friends of long-term care, the friends of the Shangri-La seniors lodge, where do you think those people go when they're in trouble? Even though I might tell them it's not my area of expertise and we don't handle that, they come right to the municipalities.

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Now you say to yourself that it's really not downloading because you haven't had to put the resources into it. But what happens is that those people are eliminated from the system. Where do you think they pop up? They pop up in local municipalities. How do you handle that? What do you do with it? Where are you going to go with it? What responsibilities do you have as a municipality?

Our first responsibility is certainly not to say again, excuse me, that's not our area of expertise. The responsibility, as you know from being an alderman in your community, is to be face to face with the citizenry on a daily basis. When you move about at the federal level, you pop in once every six or seven weeks, cut a couple of ribbons, and slip back out under the guise of ``I have to go, I'm really busy''. Excuse me. The downloading comes from responsibilities....

When we talk about restructuring and we talk about value, the problem is that as politicians we haven't provided value. So when people pay their tax bill to me or to you or to the province, they don't perceive value. Why is that? The perception is that there is no value.

Quite frankly at the local level, the one closest to the people, there's huge value. My entire role is to say, here's what we provide for you. I expect my taxpayer to come to me and say, Mr. McGee, would you put a 2% increase on our local taxes for our social costs? They will perceive value at that level. The big black hole at the federal level doesn't seem to have value, and I think you have to examine that business of value and who provides what.

Also, about the infrastructure program, in my report we talked about the business of making some fairly significant standards for how that infrastructure program is put together. We don't necessarily see skyboxes and those kinds of things as part of that. There need to be standards, but at the municipal level we also say that we should be at the table in that discussion.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. McGee and Mr. Pillitteri.

Mr. Fewchuk, do you have a brief question?

Mr. Fewchuk (Selkirk - Red River): That's one beauty of being last. It's all been pretty well said.

Good morning, ladies and gentleman. As a Manitoba citizen, I'm glad to be in Alberta to sit down and relax and see all of you all this morning.

I just listened to Mr. McGee. As a former municipal politician myself, I'm somewhat surprised. He should know that many times as we sat at the table, we would say, as municipalities, you know, that's not our problem; that's provincial and they have the funding. So let's be honest. Let's not cover up here today. All three levels are involved, along with the people, who are the most important. Where I come from, all the time it's the people, and if I can help...I'm here to listen.

I have a concern about health care this morning. I would like you to take me through being a patient in Alberta. If I go to your hospital, after you ask if this is my first visit, what is your next procedure? Where is the problem?

Ms Marck: I would really like to respond to that because safe care is our responsibility.

What I would have mentioned earlier I'll say very briefly now, since we only have a few minutes left. For the five years that I have been with the Alberta Association of Registered Nurses, we have tracked, recorded and statistically analysed all calls to the practice area. We get calls not only from registered nurses, but from other health care professionals like physicians. We hear from regional boards and regional administrations. We are called by bureaucrats at Alberta's health department. And we hear from members of the public. Sometimes we hear from patients and sometimes from the family members of patients.

Based on those calls, which are analysed about every six months so that we have a comparative review from 1991 onwards, we have not a scientific project, but a pretty consistent and steady analysis of the pre-cutting era and the post-cutting era.

When I joined the AARN in 1991, safety calls were so few that I didn't have a category for them. Calls were mostly in the category of improving the standards of practice, of using research to improve care. They asked about the latest on wound management and whether they were managing pain control properly in a pediatric patient. Now -

Mr. Fewchuk: I don't want to cut you off, but I just want to get into dollars and cents. Are the wages of the first person at the desk too high? Is the doctor misusing the system? Is he calling the patient back too quickly? Let's get to the crunch.

Ms Marck: I'll try. I just want to be as objective as possible.

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In 1996, in the latest review of calls, concerns about safety from all callers are the highest category of calls. We have gone from a category that didn't exist four and a half years ago to the highest category.

I'll give you some examples from the calls. Just the other day one was from a woman whose mother had undergone surgery on her heel. She had not received the proper post-op teaching about the range of movement exercises she should begin immediately, and she now has some stiffening and shortening of tendons that was unnecessary.

I will tell you about home care calls that I get on quite a frequent basis, both from professional caregivers and family members, where they find there is a lack of resources. I know about this from personal experience with my aunt who died of cancer last spring. I helped nurse her. There were inadequate resources to relieve my cousin, who is over fifty and has one kidney and was up almost every night with my aunt for several months because there was inadequate home care coverage.

Contrary to the constant press coverage of public health and how we're going to do more health promotion, there are scant more dollars allocated to actually putting those programs in. There are public health nurses who never visit the schools they are supposed to cover, or can hardly ever visit those schools.

One of the biggest concerns we have in the area of relationships between the providers is that there is research to show that poor communication between physicians, nurses and others can jeopardize patient care. We know there are many and ongoing instances of what I would call misunderstandings, miscommunications, people under stress not functioning the way they would under optimum stress. They're under too much stress and not functioning well and not hearing each other. Mistakes happen that way, through simple human error, not through anyone being a person who should be scapegoated.

The Vice-Chair (Ms Whelan): Thank you very much, Ms Marck.

I'm going to ask each of you to summarize your comments in thirty seconds or less, and what you'd like to see as your one solution in a budget.

I want to let Mr. Pearson know that although none of the questions were directed at him, the hopper car discussion is a very lively debate in Ottawa at this time and your comments are well heard.

Mr. Phillips and Mr. Dredge, we've heard already from your national organization and we do understand the issues. You may want to be aware that there were some recommendations in the white paper review released last Thursday with regard to prepayment of mortgages, so the finance committee did have a quite detailed discussion on them. You may want to take a look at them. We will definitely take your remarks into consideration.

Mr. Duhamel does have one brief response. Since I let Mr. Solberg have a brief response, I have the duty to do that.

I want to tell you, Mr. McGee, that if you're not seeing your MP for six weeks at a time, you'd better tell him to show up in the riding. I know my colleagues around this table...I am in my riding 46 out of 52 weekends and 12 weeks out of the summer. I'd say your MP needs to be a bit more in touch with local constituents. My office is a block away from the local municipal office. I find that all concerns are my concerns, and I know the municipal people find the same.

Mr. Duhamel.

Mr. Duhamel: I just wanted to point out that a number of challenges have been presented to us this morning which require some follow-up. One in particular has stuck with me and that's the debate about the optimum size of government and the optimum size of businesses in the private sector, raised by Dr. Gupta. I hope we don't lose sight of that. It's not the optimum size of governments only. We have to look at it as a whole, the whole of society. Merci.

The Vice-Chair (Ms Whelan): Thank you, Mr. Duhamel.

We will start the closing comments. Mr. Pearson.

Mr. Pearson: I want to say thank you again for the opportunity to appear before you. I will say that I caution the government to make sure it remembers that in terms of the business world and the interaction of the business world with government, we have to remain competitive if we're going to be effective in world markets.

Ms Marck: I would echo the remarks of others in terms of giving equal consideration to the optimum size and role of government and the private sector. If you translate that into your funding, give equal consideration to how much and then spend just as much time on what strings, to what ends.

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Ms Knebel: The private sector is the creator of jobs, so work faster on reducing the deficit. Do not increase taxes. Reduce the regulatory burden so the private sector can get on with creating jobs and growing the economy.

Mr. Al Dredge (President, Edmonton Real Estate Board): As a citizen of the greatest country in the world, I think every country has its problems. I believe the federal government is on track in looking at becoming more efficient and more effective by reducing duplication of services and putting them into the hands of people who can handle them more efficiently and effectively.

It appears to me that we have to free up some capital for the young people of this country because they're our hope. We're going to suffer lots of changes in how we feel about things as we restructure, because we're used to one way of doing things and now things have changed.

The one thing we haven't addressed is technology and how that's changed our jobs and how that impacts us. That is making us feel very frightened as citizens in this country. We have to find new ways to work with technology. I believe it can also help us to help our young people and to become a more effective country.

Dr. Wagner: I'd like to suggest that we think about ways in which all of us, whether citizens, organizations, businesses, enterprises of all kinds and governments, can instil some confidence in our people. That sounds like pie in the sky, but I think we have to make the point with all the people to whom we relate that we know what we're doing. I find that's something many Canadians don't seem to understand.

There is a role for government. No one doubts that. I think Ron raised it earlier. Let's talk about the optimal size for how we can do it best. Whether that's locally, provincially, federally or privately, I think it needs to be re-examined. I'll leave it at that, but I think we have to come out of this with some feeling that we all know what we're doing, and that we have some confidence in this country.

Ms Smith: I thank the committee for the invitation to be here today. If I leave a parting request for budget planning, it is to avoid at all costs a slash-and-burn mentality in the development of the budget. Please, please, do not compound what has already been occurring at the provincial level in terms of a political ideology being used to justify disproportionate burdens on individual Canadians. This province, this country, needs a sense of stabilization and a sense of confidence in our social programs, in our government's ability to acknowledge, to meet and to fulfil obligations regarding social programs.

There is a need for the federal government to require and ensure accountability. Some of that comes back to regulations. I am not opposed to regulations. Most regulations, I believe, are in place for just reasons, for the protection of the citizens of this country. I do not believe in wholesale destruction of regulations and getting government out of the lives of the citizens of this country. I sometimes feel like the kid with his finger in the dike, trying to hold back a flood of rhetoric regarding the advantages of privatization and outsourcing in terms of competitiveness. I call for valid evaluation of practices, of any attempt to offload or shift publicly provided services and activities to private activities.

Mr. McGee: First, let me say that it was an unfair comment. I know that you as well as I work very, very hard, and that was an unfair comment. It needs to be recognized that in a moment of passion sometimes these things occur.

I would say that we need to remember there is only one taxpayer, and we all serve that taxpayer. Through dialogue, through communication such as this we can and will make a difference together. Remember, as the first order of government we are legitimate, as much as we may not seem to be sometimes, but we are a legitimate government. We need to be recognized as that and we would ask your indulgence when you start your deliberations.

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The Vice-Chair (Ms Whelan): Thank you very much, Mr. McGee. My comment was just to make sure your MP wasn't getting off too easy.

Ms Ballermann, please.

Ms Ballermann: On behalf of the Health Sciences Association of Alberta, I would like to reiterate our belief that government has a responsibility to govern, which means provision of some services; and that we must keep in mind the needs of all Canadians, and not, in the holy grail of deficit reduction, ignore the needs of this generation's poor and working people. All of them must be considered in setting government policy. That is not to say we shouldn't address the deficit; it is simply to say that we need to maintain a balance.

Prof. Gupta: I have a very small comment. I look forward to the next report of UNICEF next year. We'll deal with it after it comes and hope that the rate of child poverty in Canada will not be 14%, that it will be less than 5%. Thank you very much.

The Vice-Chair (Ms Whelan): Thank you, Dr. Gupta. I'm sure we all hope and agree with that comment.

I want to thank everyone for being with us this morning. Your briefs were very thought-provoking and very well prepared. This discussion could probably go on for another two hours with the combination of individuals we have around the table.

I want to again thank you for your time; I know it's valuable. Your comments will be taken back to Ottawa.

We're going to take five minutes to allow the table to change, and then we'll reconvene.

The meeting is adjourned.

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