FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Friday, October 17, 1997

• 1105

[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call this meeting to order and welcome everyone. Today we will also be joined by new members.

Deborah Grey and Rahim Jaffer, welcome.

Also Mr. Pillitteri has rejoined us here in Edmonton.

It will be a very interesting couple of days for us. Half of our committee has travelled elsewhere as we travel throughout the country seeking public input as to how we can really achieve positive change in our society, given the fiscal reality.

As many have said, there's no question about the fact that we are living in a new economic era, when we face many challenges and choices. What we're seeking basically from individuals, as we look to the future, is what are those choices? What are those challenges? What do you see as the major points we should be looking at? What is your plan for the short term and the long term as we deal with this new reality?

For the interveners, the witnesses, this is the way we operate. You have five minutes to make your presentation. You can choose to read from your text or just highlight the major points. Then we will move to the question-and-answer session in a very interactive way.

We will begin with the Alberta Federation of Labour.

Mr. Selby, welcome.

Mr. Jim Selby (Research Director, Alberta Federation of Labour): Thank you and good morning.

I'll try to very briefly summarize what's in our written presentation.

We think it's particularly an opportune time to engage in this kind of exercise, considering that the Province of Alberta has just undergone the same sort of process with its growth summit.

The Federation of Labour itself sponsored an alternate growth summit basically looking at what the role of government should be and what the government should be doing for people over the next 10 or 15 years. Surprisingly, most of the recommendations of the government summit matched most of the recommendations from ours, which is quite unusual for us.

On the main points, first there was a fairly strong consensus that the people of Alberta in general don't want to see tax cuts. They'd prefer to see a more active government, certainly in a couple of key areas, what we call the core public services: education, health care, and social assistance, which have been badly underfunded in Alberta. From a federal perspective, certainly part of the responsibility for that is declining federal transfers.

Secondly, we looked for a more active government in terms of regulation. A lot of working people in this province are concerned about what they see to be a withdrawal of government at all levels from regulatory behaviour, everything from meat inspection to environmental protection.

Certainly at our conference one of the things people were fairly unanimous on was a request to government to increase its regulatory role. It's not simply enough to let the marketplace decide what's appropriate for environmental protection or public safety. That is historically the role of government, and it's the role of government for good reason.

It's not a debate between frivolous spending and deficit reduction. Some people want to reduce it to that. Rather, we look at it as a chance for government, now that they're finally getting their deficits under control, to start to look at methods of reinvesting in Canadians, particularly in those core public services.

One of the real problems we've had in Canada lately, from a working person's perspective, is that real wages have been declining fairly seriously over the past decade. In Alberta the decline has been very marked.

One of the reasons wages have been declining so badly is that the unemployment level has remained stubbornly high. We have always had an objection to the notion of a non-accelerating rate of unemployment, the NARU, which most people put at about 8%.

• 1110

We have noted that the federal government, in both its previous incarnation and the current one, continues to bump interest rates when the unemployment rate drops below 8% or gets anywhere close to 8%. That's because of this assumption that wage increases are inflationary and therefore have to be combated. And of course the easiest way to keep wage increases down is to intervene in the labour market by maintaining a high unemployment level.

As a brief aside, I noticed that the ex-federal finance minister, Don Mazankowski, said the other day that he was really worried that working people didn't have enough money in their pockets. He suggested that tax cuts would be a good way to put money in their pockets. We thought that was a bit ironic, number one because tax cuts benefit higher-income earners disproportionately to lower-income earners, and secondly, the best way to put money in working people's pockets is to give them a real wage increase.

We would like to see a federal budget that aims squarely at job creation through two mechanisms.

First, the federal government as an employer should increase employment by increasing activities of the federal government. We're thinking particularly of the regulatory realm, but also of things such as research and development, which have been under the gun lately.

I would say a good example of that is the Canadian Forest Service, which has seen drastic drops in research personnel. We don't believe the forest industry, for example, can duplicate the kind of impartial research that the Canadian Forest Service can accomplish. Industry research is directed to short-term, immediate profitability, and the long-term research that CFS has done over the years is a good example of what the government can and should be doing. We believe that role should be expanded in terms of agricultural research, pharmaceutical research, food research, etc.

We think the second way the federal government can increase employment is by creating the kind of economic climate where wage increases are possible and where people will spend their money and boost the economy. So what we're suggesting is to maintain a very low interest rate policy and to take a look at what the Americans are saying about NARU and consider abandoning it as the linchpin of interest rate policies.

Finally, strictly on tax cuts, this is not the time for tax cuts. We don't believe tax cuts benefit working people. We would much rather see reinvestment in public services and in public employment and a continued slow paydown of the public debt.

Thank you.

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

We'll now move to Mr. Phillips from the Alberta Real Estate Board.

Mr. Les Phillips (President, Alberta Real Estate Association): Thank you very much.

Unfortunately we had very little time to prepare for our presentation today. The Alberta Real Estate Association represents some 7,000 realtors working in the province, and we had about a four- or five-day lead time. So I'm just going to make some general comments with regard to the budget and speak briefly on some issues we have been working on in partnership with the Canadian Real Estate Association, representing some 70,000 realtors across the country.

Basically we're pleased with the direction the federal government is going in with regard to their budgets lately. The headlines yesterday were good news for us, to see the deficit considerably smaller than what was forecast. This seems to be a trend amongst governments lately. They used to forecast deficits lower than what they were and now they're forecasting them higher than what they are.

The Alberta example is being mirrored to some degree by the federal government, maybe somewhat tentatively. But our association feels that a target of elimination of the deficit as quickly as possible—and it looks as though we're looking at 1998-99 to have that accomplished—followed by true debt reduction is the way to go.

We're also very supportive of a low interest rate policy. Obviously, being involved in the housing and real estate business, this is beneficial for not only our association and our members but for the public at large.

A couple of areas where we are a little bit concerned, though, about the direction government is going are in the area of what is ultimately amounting to tax increases that have been taking place.

One area of major concern is that of retirement savings policies, old age security and Canada Pension. The calculations we have done are showing that the proposed seniors benefit changes will result punitively on people who have saved diligently for their retirement. According to our calculations, with the clawbacks calculated into this, people with incomes in excess of $26,000 will be looking at what will amount to a tax rate of between 50% and 75% of their private retirement income.

• 1115

For our association, that is completely unacceptable. Because of the low levels where the clawback begins, that really results in this not being a pension plan but truly a tax, and we're very concerned about that. Most real estate practitioners have no private pensions whatsoever—pensions through their companies. They're relying on themselves. We feel that with the caps that have been placed on RRSP limits, followed by a clawback of public pensions, this is a real double whammy. It is very unfair, and we really feel there is right now a need for a comprehensive review of retirement savings policies by the federal government.

Another area we are very supportive of, and something that when we have a chance publicly to speak of we like to bring to the attention of politicians, is that the RRSP home buyers plan has now been used by over half a million Canadian families to purchase property. This was a program initiated by the Canadian Real Estate Association and embraced by the federal government, and rightly so. It's a program that has cost the government almost nothing and has generated a lot of spin-off business across the country. Imagine half a million families in homes because of this program, at no cost to the government. It's a perfect example of a plan where private industry can work with government to be genuinely creative in financing options and tax options, which can certainly help the economy.

One other item I would like to bring to the attention of the committee is the fact that Canadians in general are amazed when they find out that in a country such as Canada they do not have the right to own property, private property. There is no right in this country, and this is something that should be enshrined in our Constitution. Eventually it must be done. Imagine a western democracy where you don't have the right to own property, and I'm not talking just about real estate; I'm talking about property. We have the right of private use and enjoyment, but we can be deprived of it at any time.

In Alberta, we're continually told that this so-called right is well protected under the Alberta charter. Well, that's simply legislation, which can be changed in no time, and we're very concerned about this.

There are many areas that entrenchment of that right affects. We have researched many of them, from endangered species right down to women's rights, and we feel that there is a comprehensive way this can be accomplished, and indeed may, if you really look into the future, solve some of the big problems our country has. One of the big problems we have right now is who owns what piece of land in this country, and no one has the right to own it right now.

Thank you very much for this opportunity.

The Chairman: Thank you very much. On behalf of the committee I would like to thank all the members of the Alberta Real Estate Board.

We now move to Mr. Garry Benoît. Welcome.

Mr. Garry Benoît (Executive Director, Canadian Dehydrators Association): Thank you, Mr. Chairman.

This is the second year that the Canadian Dehydrators Association has taken part in the prebudget process, and we would like to thank you for the opportunity to appear before you today. Several of our member plants are located in Mr. Solberg's constituency, and he certainly knows what we are all about. Since other members appear to be new to our industry, allow me a few words of introduction.

Our association represents 29 alfalfa processing plants, where we make alfalfa pellets and cubes. About 90% of the pellets and cubes produced are exported, and most of that goes to the Pacific region, out through the west coast ports. In 1996 the total value of our exports was well over $100 million and just under 700,000 tonnes. We are a value-added success story, based mostly in the prairies. Our plants are in rural communities and provide at least 1,000 jobs. In many of these communities we're the largest employer, communities such as Falher up in the Peace River country, down in the irrigation area, usually smaller towns.

• 1120

We've reviewed the finance minister's economic statement, and we acknowledge that the minister's fiscal policy has facilitated steady progress in reduction of the federal deficit.

We note the minister's talk about measures to strengthen the national economy. In particular, we note the statement that having the appropriate infrastructure for a successful economy is a fundamental position for federal policy. The minister even noted approvingly that Canada is moving from an economy based on production of primary goods to one based on manufacturing and services.

From our perspective the reality is different. As I speak, our success in the Japanese market is being undermined by rail shipping delays.

We support rapid deficit reduction, an aggressive plan to reduce the national debt, control on government spending, low interest rates, and an end to the proliferation of user fees.

However, none of that is relevant unless we can solve the western transportation problems. Without an immediate solution our members may not survive. We've already lost sales and possible customers and wracked up crippling ocean demurrage charges. The reality is that right now the plants in Mr. Solberg's constituency and others are having these troubles in getting their processed products to Vancouver.

In March, the Japan Feed Trade Association—and about 70% of our exports go to Japan—warned the Canadian government that our export delivery delays have been “very detrimental to the image of Canadian shippers and future business”.

I have a letter here from the Japan Feed Trade Association to the Canadian ambassador in Tokyo, and it was copied to Minister Goodale, the Minister of Transport, the Minister of International Trade, and me. In fact, I'd like to leave it with the committee. I think it's worth a read because we haven't made progress since that letter arrived.

I went to Japan and was involved in meetings with Minister Goodale with the key players in Japan. We tried to smooth the feathers and indicate that we were working on these transportation problems, but they're still there.

The federal government complacency says nothing can be done because of a court challenge right now, and this goes on and on and on.

All of this is relevant to this committee, Mr. Chairman, because if we lose markets we will lay off workers. We will be forced to reduce our contribution to the rural economy. The economic statement placed enormous emphasis on the so-called new knowledge-based economy. This is all well and good, but it's high time the federal government woke up to the reality that there are serious holes in the infrastructure of rural western Canada. More specifically, the grain transportation system is not working.

We have participated in Team Canada trade missions. They are about small business and its growth in foreign markets. Timely, dependable and reasonably priced rail service is crucial to ensure our industry's and Canada's continued excellent reputation abroad. It is therefore in the interest of both our industry and the federal government that these transportation issues be resolved quickly.

We urge this committee to ring the alarm bells. Please tell the cabinet that a long-term, sustainable solution to Canada's rail transportation problems must be found.

We support a competitive rail system with Canada's two national railways, short-line railways, and American railways, all servicing multiple points in the prairies through joint track usage. However, in the immediate term we need service guarantees.

We have a monopoly situation. There isn't competition out there, and there are no service requirements. There's just nothing moving the system to get the job done in a timely fashion, and that is a disaster when you're involved in international trade.

• 1125

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

Now we'll hear from Professor Paul Boothe from the Department of Economics at the University of Alberta.

Professor Paul Boothe (Department of Economics, University of Alberta): Thank you, Mr. Chairman. I'm not representing any group. I was asked by the clerk's office to come and talk to you briefly about some new research on the process of budgeting that I've recently completed with my colleague Brad Reid at the University of Alberta, so this is less about the grander choices that have to be made in the federal budget and more about the “how to” budget and budget rules, which I hope this committee will have some impact on in the coming year.

Reducing the deficit was a big thing last term, but another big thing that happened was the restoration of the credibility of the finance department and the Minister of Finance in terms of their commitments regarding fiscal policy. We all know that was pretty costly to achieve. We had some good luck in reducing interest payments and when interest rates came down we had rising tax revenue, but we also had to have some pretty big cuts to transfer payments for health, education, and social services, with some cuts to federal programs as well.

We believe two of the goals for future fiscal policy should be to try to ensure that we never go back to a period where we have persistent deficits and try to maintain this credibility that cost so much to restore over the last term. One way the government did this over the past term was through the use of contingency reserves and so-called prudent economic assumptions that we base our budgeting on.

What I'd like to talk about very briefly is how we should use those tools in the future to try to meet those two medium-term goals. Right now, if you look at the 1996-97 budget, you'll see that we currently have about a $3 billion contingency reserve and prudent economic assumptions that are worth about $2 billion to $3 billion. It adds up to $5 billion or $6 billion of insurance in the budget to make sure we're able to meet our commitments and maintain our credibility.

Professor Reid and I used a statistical technique called a Monte Carlo simulation—I won't go into it any more deeply than that—to look at the impact of different sizes of contingency reserves on the credibility of the government. We looked at reserves of zero, $3 billion, $6 billion or $9 billion, and looked at commitments to balance every year, every two years, or every four years over the life of the government.

When you do this research you find that the best combination seems to be to have a reserve of about $6 billion in the budget, coupled with a promise that you will reverse any deficit you incur in the following year so that you have some flexibility in the budget. Unexpected circumstances can cause you to run a deficit, but your commitment to voters and to financial markets is that in the next year you'll reverse it and go back to balance.

If you use a one-year rule—you're going to balance every year—and a $6 billion contingency, you're going to fail to meet that commitment 70% of the time and your credibility is going to go out the window. If you use a two-year rule and a $6 billion reserve, you meet your commitment 90% of the time. Nine times out of ten your insurance is going to make sure that you actually meet the commitment the government makes.

One of the questions in this is whether you should have your insurance both in your contingency reserve and in your prudent assumptions or whether you should put it all together.

We argue that we really should have all our insurance in the contingency reserve. That's what improves the credibility of the government, whereas if you have these prudent economic assumptions, which more and more people are starting to discount because they're too prudent, you're reducing the credibility of the government. So it is better to have it out in the open, where people can see it, and give your best guess about what the economy is going to do and what effect that is going to have on the budget.

• 1130

There are two final things to say about this approach to budgeting. The first is that it has an important bonus in that because you do not use those contingency reserves every year—they are only insurance—they contribute to an orderly paydown of debt. Our calculations are that if you did this for four years, you would reduce the debt-to-GDP ratio by almost 14%. So, in addition to providing this insurance, it is also reaching this other government goal, and that is orderly reduction of the debt-to-GDP ratio.

The other important point to note is that most of this strategy is paid for by what I think of as the true fiscal dividend. We have had a lot of talk over the past six months or so about the fiscal dividend and a lot of confusion between the surplus and the fiscal dividend. I hope we will have some time for discussion about this, because there is a lot of confusion about them. They are not the same thing at all.

The true fiscal dividend is the reduction in interest payments that you have to make because the debt is getting lower as you go forward, and that pays for much of this insurance policy to protect the credibility of the fiscal authorities of the Government of Canada.

That is an update on our latest research. We hope it provides some guidance to you in making your budget plans for the coming year.

Thank you.

The Chairman: Thank you very much, Professor Boothe. I am sure you will get some questions during the question-and-answer session.

The next intervener is Mr. Rick Szostak. He is from the Confederation of Alberta Faculty Association.

Mr. Rich Szostak (President, Confederation of Alberta Faculty Association): Thank you, Mr. Chair, for inviting me here and for pronouncing my name correctly. I appreciate that.

Representing 5,000 professors at five different universities in Alberta, I will not go into great detail on the two questions you have placed before me. I would say that the vast majority of our members did recognize that deficit reduction was an absolute necessity and would like to see significant efforts made to reduce the debt over the next few years.

What our members feel more closely is the fact that government expenditures are not just expenses, but that most government expenditures perhaps are investments. Certainly the expenditures on advanced education in this country are one of the most important—arguably the most important—investments that this government makes. We all talk about how the future of Canada depends on a well-educated workforce, and especially on a continuing move into high-tech industries. There is a broad recognition that the university research enterprise is the cornerstone of the research capacity of this country. So in funding universities the federal government then is supporting two of the most important producers of the future economic growth of this country, the education of our workforce and the provision of research.

Over the past few years there has been, at both the provincial and federal levels, decreased support of post-secondary education. We have seen some hopeful signs in recent actions by the federal government—the Foundation for Innovation, changes to student loan programs, the Millennium Scholarship Fund—which we hope signals an increased recognition of the key role of universities in fostering economic growth.

Mr. Selby mentioned the recent growth summit held in Alberta. I don't think it is a surprise that education came out from that growth summit as being recognized as the highest priority within Alberta. I suspect you would find the same result in other provinces.

There are, of course, three ways in which the federal government funds universities in this country.

The most important in terms of money is transfers to provinces. We would certainly like to see an increase in the transfers. We are, however, conscious of the fact that at present there is little or no control over how the provinces spend those transfers on post-secondary education.

We would, in fact, advocate some efforts to tie some strings to the transfers to the provinces for post-secondary education. While we are aware of the political difficulties involved, we would ideally like to see some sort of Canada post-secondary education act like the Canada Health Act, which would have some standards in there for student assistance that would insist that universities have a research component that would have some rules about interprovincial mobility and the transferability of standards. It might even include some requirement for provincial governments to match those funds.

• 1135

The second main way in which the federal government plays a role in advanced education involves a much smaller amount of money, but is also crucially important—that is, the research funding, primarily through the three granting councils, now through the new Canada Foundation for Innovation as well.

I would like to let you know that over the last few years, as the number of young faculty have increased and as the budgets of the granting councils have decreased, what's euphemistically called a “waiting list”—those grants that the granting councils think are worthy of support but just don't have money for—has increased dramatically.

I would suggest to you that it is kind of penny wise to cut back funding of the research councils. We spend a vast amount of money providing good universities, building up libraries, paying professors. To then not allow them the $5,000 grant they need to actually perform their research is, again, perhaps a questionable way of saving money. Certainly there would be profound arguments for increasing the funding of all three granting councils. In many cases, even small increases in funding would allow a large number of faculty to do much better research.

There have also been in recent years efforts by a number of federal ministries to sponsor research in areas in which they're particularly important. The health ministry has created a fund for research in health policy. Immigration has set up several centres of research to pursue funding.

We would like to encourage those types of efforts. There is certainly a role for particular ministries in concert with the granting agencies to go out and say that these are questions we'd really like to see more research done in, and we're willing to put up some money for that. We think that can be incredibly valuable for both universities and the government. We would emphasize, however, that it can't be a substitute for the funding of curiosity-driven research by the granting councils themselves.

The third area in which the federal government has an influence on post-secondary education is their funding of student loans. While there have been some improvements in that area over the past year, we are certainly conscious in this province that student debt loads are becoming a deterrent. They are becoming a barrier to the principle that Canadians have long supported, that costs should not be a barrier to access to education.

Among the things that we would suggest you might want to look at is more attempt to harmonize the federal loans program with provincial loan programs and consideration of a remission threshold. We have one in Alberta where beyond a certain debt level, the rest of the debt is forgiven just to make sure that students, in going to university, don't incur a debt they can't pay off after.

I'll stop there. Thank you.

The Chairman: Thank you very much for an excellent presentation.

We will now move to Josh Keller and Paul Moulton of the Edmonton Arts Council.

Mr. Josh Keller (Executive Director, Edmonton Arts Council): Thank you very much. We both appreciate being here today. We're grateful that the cultural community was included in these discussions.

I'm going to touch on a few priorities for the cultural community this morning, but first I'd like to say that the arts and cultural community has contributed heavily, and we feel in a disproportionate manner, to deficit reduction. Many of our national cultural institutions, such as the CBC, Canada Council, National Arts Centre, National Film Board and Telefilm, have seen annual cuts over the past five to eight years. Arts funding has been reduced as well on a provincial basis across the country, as well as federally. From the point of view of the arts and cultural sector, deficit reduction has gone too fast and too deep for this particular sector.

We feel it's time to reinvest in this sector. We feel this sector is one of the keys to our Canadian identity. As we become more of a global village, I think Canadians want to hold on to their own individual identity. The arts have a synergy with the information age and high-tech industries that so many provinces and cities are trying to attract. We feel that debt reduction is important but we also feel that life must go on, and we'd like to see dual focuses by the government.

Many artists are trying to get more training so that they can move into the many new multimedia fields that are incorporated into the high-tech industries. It is important that we create opportunities for these artists so that they continue to grow in this economy and in this country. We must be able to tell our own story.

• 1140

I know the Minister of Finance made a lot of comments, very good comments, about how important education is to relieving the unemployment situation. We feel that the arts are a great educational tool. They help develop creativity and independent thinking amongst our young people. This is very vital to the country. We need fresh ideas from our younger generation. They need to be well versed in international culture to meet the global challenges that are coming.

Many of our young people are interested in exploring their creative talents. They want to earn their living in the arts. This sector has a tremendous capability to absorb many new employees if we can get the reinvestment we're looking for.

Not all the young people can be absorbed into the high-tech industries being created. Many are going to become dissatisfied with the low-paying and boring jobs they're going to be finding in the service sector. The arts and cultural sector is under-resourced, and most organizations are underemployed. This reinvestment can bring major returns in employment. People can find meaningful and satisfying work in the cultural community.

We would also like to see this government keep its red book promises regarding the cultural sector. This includes: $25 million for five years for the Canada Council; $3 million a year for multimedia and the information highway products; $15 million a year for five years for the publishing industry; and $10 million for art for the millennium and stable support for the CBC.

We don't want deficit reduction as the total focus of government, as I mentioned earlier. Government needs ideas. They need strategies, visions, and leadership to bring quality into people's lives. Canadians are very proud of their high quality of life, and we feel government policies must reflect this.

Major cultural institutions across the country require stable, multi-year funding. People are requiring a very businesslike approach from the arts these days, but if you are to sit down and do a three- to five-year business plan, you need to know what your funding will be for three to five years. We'd like to see some of these considerations.

Many of the people in the west are unhappy with the way Canadian Heritage distributes funds to many of the festivals across the country. They are stuck in a population-based funding formula that doesn't reflect the impact many of these festivals are having. So we would like to see some re-evaluation of regional funding for festivals as well.

Culture must be regarded as a prominent component of Canadian foreign policy. Areas that must be considered are international touring, including culture and trade missions, and support for international exposure of our artists.

We'd like to see tax credits extended and new tax credits created for investment in Canadian culture. We support the work being done by national organizations like the Canadian Conference of the Arts and other national task forces. We'd like to see the Canadian film and video production tax credits extended to other areas of Canadian content, such as books and sound recordings.

We'd also like to see the government explore some ideas in looking at tax credits for volunteers, and income averaging for lower wage earners, which takes up a great deal of people who work in the arts.

I'd like to talk a little bit about national unity, which is very important to Canadians. We feel this is where the arts can be extremely helpful in creating a better understanding between cultures. Decreasing support for the arts definitely results in weakening national unity.

Having lived here in the west for 15 to 20 years, I see less and less francophone artists touring through western Canada. It's very hard for us to have a full understanding of francophone culture if we're not getting in touch with their art and their culture. If there was more touring across the country, and more opportunities for touring, I think it definitely would be a step toward improved national unity.

Finally, the arts have a very significant effect on the economy and are definitely a catalyst for tourism.

• 1145

We have just finished, here in Edmonton, an economic impact study that we did of the economic development in Edmonton. For the $1.9 million investment that the municipal government puts into the arts in this region, the region receives an economic impact of $75 million, and when that is spun off to the province, it's $94 million. So we're talking about some significant payback for these investments.

The arts have always been seen as a recipient, rather than as a contributor, and I think we have some information that's being developed these days, with these economic impact studies, that shows that the arts are a good investment, that governments, municipalities, regions, and the country receive major benefits for their input into the arts.

Thank you very much.

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

We will now move to a representative from the social planning department of Red Deer, Coleen Jensen.

Ms. Coleen Jensen (Social Planning Department, City of Red Deer, Alberta): I am here this morning as social planning manager for the city of Red Deer, but I also wear the hat of a member from the Family and Community Support Services Association of Alberta.

I really want to bring this to your attention, because FCSS is a unique program across Canada. There isn't another province that has a program like this. Its mandate is focused on preventive social programs offered through a community-based approach, with the funding coming from a partnership from the provincial government and the municipal levels of government. Until the demise of the Canada assistance plan, the federal level of government was also involved in this.

I also want to tell you that this program leverages a whole lot beyond the municipal and provincial levels of funding, whereby community agencies do a tremendous amount in terms of fund-raising. The volunteer involvement really is an army of volunteers across Alberta that work in this social service area, looking at providing preventive social programs.

When I come before you today, of particular concern to me is the balancing that is needed between debt reduction and deficit reduction, which certainly all of us acknowledge the wisdom of, and the need that we have to address the resulting concerns that arise from this very exercise, and that's the impact on people.

In looking at the deficit reduction progress, what I'd like to do today is just tell you a few examples that are being seen at the municipal level and the grassroots community level of some of the changes that have happened resulting from the federal changes.

Firstly, several speakers have already spoken today about the transfer payments, and certainly the one I've already mentioned, the elimination of the Canada assistance plan, has really been one that has affected municipalities across Alberta, firstly because of the support that has been eliminated with the FCSS program.

Many communities, through this cost-sharing, if you look at Edmonton and Calgary, literally have lost millions of dollars related to this.

Beyond the funding for the FCSS, the impact that CAP has had is that there has been a great deal of concern that we are moving away from our cost-sharing that was based on need and adequacy and some national equity to one that is based simply on population. While of course this is said to give provinces more authority and flexibility with the changes, I would say that the impact has been a great deal on the quality of peoples' lives. There is no longer national equity, which was one of the strengths of our federation when we look at the social program level, and this continuity in the social service area that we've seen for over 30 years may well be going down the tubes.

Day care is another area that's really important in terms of federal policy. If the federal government can take a step towards this, it really shows leadership and a caring for what we all know as our most precious resource, our children. Again, the demise of the Canada assistance plan has pulled a lot of money out of communities related to day care. In my own community of 60,000, we have seen a loss of over $100,000.

There is a real concern when we look at some of the changes that are also happening provincially that I suspect are related to this loss in CAP money, where we are looking at changes in operating allowances to day care centres and we see that those are being pulled away under the guise of putting some of those dollars—and it is only some of those dollars—towards subsidy. There's a real concern for the working poor, that they're not going to be able to pay those fees.

I think some of those provincial changes are also related to the loss of transfer payments.

• 1150

I am aware of the CHST that has been created in place of this, but my concern is that social services previously under CAP were a conditional grant. The dollars were designated specifically to social services.

When we look at the CHST, we are now lumped in with the two very dominant players of health and education, which are both very important. Now social services becomes a little fish in a big pond. My real concern is that we are going to be left with substantially fewer dollars.

Another impact is related to housing. Certainly, when we look at some of the discontinuation of federal dollars for the capital side of things where we're looking at building low-cost housing and subsidized housing, this is beginning to and will continue to have a real impact as we see the housing stock in communities age. The private sector is becoming involved, but is doing so at the upscale level; they're not looking at low income. There's a real concern in communities about what will happen to the poor.

The final impact I just wanted to mention briefly is changes to immigration. What we're seeing at the municipal level is that settlement agencies are now coming to municipalities for local tax dollars to deal with settlement services. With all of the other issues on the municipal plate it feels like—at least at the municipal level—everything is beginning to land on our plates. It's a difficult thing to address.

In looking at setting priorities, I think one of the things we really need to look at is the social safety net that we have in Canada, which is what really helps to define us as Canadians, along with, of course, economic prosperity as a priority.

I recently heard an example that went like this: if we pay off the mortgage, but we don't take some time along the way to make repairs, the debt may be paid off in the end, but we won't have a house to live in. This analogy struck me as being one that was applicable today, particularly when you all come from the House of Commons. Maybe we need to think about that.

I think the federal government must provide leadership and look at establishing some social standards and subsequently providing resources that go with that. I think this may be in the form of cost sharing—and you've heard other speakers speak of this today—so that we can ensure social and economic security for all Canadians, be they rich or poor.

A national set of principles on social policy similar to those in the Canada Health Act—and we heard somebody else speak about education principles in the same way—would be a positive step. I acknowledge the fact that some provincial governments, probably including our own, would not necessarily agree, but from a municipal perspective it would be very well received.

The final point I'd like to make about setting priorities is that I believe levels of government must not do this in isolation. We must do it in partnership. If every government does it in isolation, people and programs fall through the cracks as everybody takes the stance of “it's not my responsibility”.

I believe those partnerships can come in the form of cost sharing. I think that's an important way to leverage support and commitment to programs, along with guiding principles. Again, I go back to the family and community support services model that has been held up as a successful one for over 30 years.

In summary, in terms of priorities I believe we're not supportive of tax cuts. Certainly, we are in favour of slowly paying down the debt because that is an important aspect, but the most important thing is to pay attention to the human deficit and ensure that we don't see it expanding as we look at the other side of the coin.

Thank you very much.

The Chairman: Thank you.

Now we'll hear from the final intervener, Marcel Vanden Dungen, from Prairie Pools Inc.

Mr. Marcel Vanden Dungen (Representative, Prairie Pools Inc.): Thank you, Mr. Chairman. I apologize for arriving late. There was a slight miscommunication. I appreciate being here. I represent Prairie Pools Inc., which is a joint effort between the Alberta Wheat Pool, Manitoba Pool Elevators, and the Saskatchewan Wheat Pool.

Prairie Pools is pleased with the progress made by the federal government in getting the federal fiscal situation under control. We understand that there could be a federal budget surplus as early as next fiscal year, and we believe that a government, just like a company or a family, must live within its means over the long term. For too many years the federal government has been living beyond its means. The price we paid for those years of high government spending was relatively high inflation rates and commensurately high rates of interest.

• 1155

Over the last several years, as the budget deficit has come down, we have seen the inflation rate and interest rates decline. Agriculture generally, but the grain-handling business specifically, is a capital-intensive industry that competes in a global marketplace. Therefore the reduction in rates has represented direct savings to farmers and to companies such as the pools, improving our international competitiveness. The reduction of Canadian rates relative to U.S. rates has also been one of the most important factors in keeping the Canadian dollar competitive relative to its U.S. counterpart. A good portion of Canada's grain and oilseed exports is made in U.S. dollars. An appreciating Canadian dollar would reduce returns to Canadian farmers, as it would to any other of Canada's exporters.

We believe these are reasons to congratulate the government for getting our collective finances under control. We believe they are equally valid for arguing that they should remain under control.

About the next budget, agriculture, especially the western Canadian grain and oilseed industry, has contributed more than its share to the achievement of this success. Examples include—and I believe some of these have been mentioned in earlier presentations—elimination of the $560 million per year freight assistance under the Western Grain Transportation Act, and safety net funding, which has been reduced significantly from more than $2 billion in fiscal year 1992-93 to approximately $650 million this year.

What is now needed, and what has been promised, is regulatory change that will permit farmers to capture all possible efficiency gains from the grain handling and transportation system. Our industry has identified that improvements in this system alone could have the potential to reduce costs by over $300 million per year. A KPMG study done a couple of years ago actually identified that at $500 million. These are savings that would be passed on directly to farmers. The commencement of a review to achieve these savings, which the Minister of Transport was to have initiated last spring, is still on hold.

We also believe a good portion of the reduction in federal spending was achieved by offloading to industry the cost of delivery of federal programs. Our industry is now paying fees for marine services, for licensing of pest control products through the Pest Management Regulatory Agency, and for inspection services offered by the Canadian Grain Commission. Our rough estimates indicate that these amount to approximately $200 million in charges. We understand we will be paying several new fees this year and will also see increases in several of the ones recently introduced.

These fees are nothing but user-specific taxes. We believe there should be a moratorium on cost recovery through these fees, particularly since a review of many of these fees is going to be undertaken at the current time. In future, further cost recovery by way of these fees should occur only when the services they represent can be fully commercialized and where there is competition amongst the providers of the service.

In summary, we have three main points. We urge the government first to stay the course on deficit and debt reduction; second, to initiate the promised regulatory reform to permit our industry to become more efficient; and third, to cease instituting new taxes by way of cost-recovery fees.

The Chairman: Thank you very much.

Now we'll move to the question-and-answer session. Because I want to get as many questions and answers in as possible, I'm going to ask everybody to have short questions and short answers. We will begin with Deborah Grey.

Ms. Deborah Grey (Edmonton North, Ref.): Thank you very much, all of you, for your presentations. They have been excellent.

I would just like to ask Professor Paul Boothe to expand on one of the comments he made.

You wrapped up with it, Paul: the fact that you believe the true fiscal dividend is the reduction in future interest payments on government debt. You know how staggering that is. We're now paying $48 billion a year on interest payments on that debt alone. Could you expand a bit, please, on your wrap-up point there on the true fiscal dividend?

Prof. Paul Boothe: We know the biggest contributor to reducing the federal deficit was the reduction in interest payments. That was mentioned a minute ago. The biggest single thing was the reduction in interest payments.

• 1200

I think there's a lot of confusion these days. Some people are saying that soon we'll be running a surplus instead of a deficit, and that's the fiscal dividend. The surplus is just the excess of revenue overspending, just like the deficit was the excess of spending over revenue. It's not a dividend. If at the municipal level your budget was balanced and the mayor said “let's raise taxes next year and we'll call that the dividend”, everyone would think that was nonsense.

So, really, a dividend is a return you get on an investment and the investment here is buying back government bonds—the government buying its own bonds and retiring them. So the dividend is nothing more than the interest we save by not having those bonds out there. Of course, that's a much smaller number than the surplus itself, but it's a permanent number. Once you buy back those bonds and you don't have to pay that interest, you never have to pay it again. That is the true saving that comes from the deficit reduction strategy and the debt reduction strategy we've had.

The Chairman: Thank you.

Ms. Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): Our two official languages, this is what makes for the cultural diversity of Canada.

Mr. Selby, as I was listening to your presentation, it seemed to me that the situation in Alberta at the present time is the same as the one we are living in Quebec. The cuts IN transfers to provinces have created socio-economic problems that impact crucial areas of our society.

Since the budget forecasts announced by the Minister Paul Martin last Tuesday allow us to anticipate a surplus, do you not think that Mr. Martin, in order to correct the mistakes of his department, should refund the money owed to provinces before creating new programs that seem to be an unprecedented intrusion in areas of exclusive provincial jurisdiction?

[English]

Mr. Jim Selby: I'm not sure I understand the question, to tell you the truth. What specifically was an unwarranted intrusion into provincial jurisdiction?

[Translation]

Mr. Odina Desrochers: Provinces have been penalized by the budget cuts to which they have been subjected, and the federal government wants now to introduce programs that would go over their heads, trying to correct the mistakes made in the past.

[English]

Mr. Jim Selby: I agree that the cuts to the transfer payments have penalized the provinces. I don't think there's any question about that.

One of the things we've called for is the creation of new national standards for many of the programs in order to prevent the balkanization of program delivery in the country. I'm afraid that's all I can say.

• 1205

[Translation]

Mr. Odina Desrochers: Thank you. The sound is very bad.

[English]

The Chairman: Mr. Riis.

Mr. Nelson Riis (Kamloops, NDP): There have been excellent presentations this morning so far.

I have two questions, one to Les Phillips and one to Josh. I'll just ask both questions and then you fellows can respond.

Mr. Phillips, in your comments about the property rights aspect of your presentation, at the very end you made some reference to women's rights and endangered species. I don't know how you related those two.

My second question is to Josh. There's a study in the Globe and Mail this morning that says a $5 billion cut in corporate taxes would create 50,000 jobs over five years. If you were to receive $4.3 billion in the cultural sector, do you know how many jobs that would create over five years? I know that for Coleen in the child care system it would create 200,000 jobs in that industry. So to put some of these job creation plans into some context, I'd be curious to know your response to that, Josh.

Mr. Josh Keller: I don't have a calculator with me, but it would be very significant because the average annual salary for an arts worker is in the $20,000 to $30,000 range. So you can imagine how many we're talking about.

What's more important is that we have an actual need. We have people with a strong desire to work in this sector, and I don't think there would be that much involved in training costs as well. I think the organizations could absorb people and they could be trained on the job, so there wouldn't be extra expenses there. In talking to many young people, as I do, they want to pursue their creative talents. Their options right now are minimum-wage jobs, unemployment, or going back to school, and many of them want to work, earn money, and be on their own. Culture, arts, and entertainment are very important in their lives.

There are a lot of studies showing that when you survey people under 25 years of age a great majority of them want to be in the music field, the theatrical field, or the film business. There's a very strong desire to be there. We can't absorb all those people, but we can absorb many of them into our cultural institutions.

Mr. Nelson Riis: You'd be very helpful to our committee because the case being made by the corporate sector is that a $5 billion cut in its taxes would create 50,000 jobs over a five-year period. My challenge to you—not necessarily this moment, of course—is to say how many jobs would be created in the cultural sector with $5 billion, just so we can put all these various plans into some context.

Mr. Josh Keller: Yes, sure.

Mr. Nelson Riis: On the endangered species and women's rights, I didn't catch your implication there.

Mr. Les Phillips: I was attempting to illustrate that it is a complicated issue and there are a lot of special interest groups that may oppose private property rights, for several reasons. Under endangered species, for example, you could have legislation that would protect the spotted owl on privately owned lands and not just on publicly owned lands, just to put that into perspective. Just because you own the land you can't decimate the wildlife on it.

On women's issues, there has been some concern, under various matrimonial acts, about the fact that if an individual owns land he or she can dispose of that property and do whatever he or she wishes with the proceeds. But there is legislation under various forms of dower acts, for example, that could protect a woman's rights to a portion or an interest in that land as well.

Mr. Nelson Riis: Would those acts take priority over the Constitution? I don't think they would.

Mr. Les Phillips: No, they wouldn't, but we're suggesting they can work with that right. For example, there would still be the right of government to expropriate for the better good and things of that nature.

Mr. Nelson Riis: Just to help us understand, under the endangered species legislation that may or may not occur, but if it did and a piece of private property were identified as a crucial territory for an endangered species and property rights were enshrined in the Constitution, as they are in the United States, would it make any difference?

• 1210

Mr. Les Phillips: Well, it doesn't actually make any difference as compared to what it is right now. The government would still be able to take precedence if they felt that under legislation there was a better public need, if you will, that would serve better than the private individuals.

Mr. Nelson Riis: Yes. I don't want to get into a debate.

Mr. Les Phillips: Yes. This really isn't a budget issue. I was just using this platform to bring it to your attention.

Mr. Jim Jones (Markham, PC): I'd like to get into a discussion on that on a different matter under your property rights, based on my experience as a counsellor in the town of Markham for nine years.

I'd like to go to this gentleman here, who said that lowering taxes or cutting taxes doesn't create jobs. In the last nine months, Ontario has created 218,000 jobs. When you net the cuts that they've had through the public sector, it's netted 178,000 jobs.

If lower taxes don't create jobs, how come the big companies out of the U.S., like the Intels and the Microsofts and the Suns and so on, are not locating in Canada?

Mr. Jim Selby: I don't follow the question.

Mr. Jim Jones: When companies look at places to locate their new plants and organizations, they take a lot of things into consideration. One of the things they take into consideration is taxes. Right? If one state or one province or one country has favourable tax rates, then they're going to go there. So low taxes do create jobs. High taxes don't create jobs.

In your argument you were saying, hey, we don't want lower taxes, because lower taxes create jobs. You want higher wages. Higher wages do not create jobs.

Mr. Jim Selby: Actually, that's not true. Higher wages are in fact a great job creator. Ask the real estate people whether high-wage earners buy houses or low-wage earners do. The fact of the matter is that there's an incredible economic benefit to increasing peoples' wages. Go and look at the standard of living in northern Europe and western Europe, where you have a high-wage scale.

Mr. Jim Jones: I meant high taxes.

Mr. Jim Selby: As a matter of fact, in what I said I didn't link taxes with jobs at all. You've done that. What I said was that we would prefer to have public services restored. We would prefer to have the government govern. We would prefer to have the government fulfil its role, rather than take a tax cut.

Our membership want to see health care restored. Half of Alberta's hospital beds that were open in 1991 are closed now. We want those reopened. We want our schools refunded. We want classroom sizes reduced. That's going to take money.

If you take tax cuts out, then where do the federal and provincial and municipal governments and the school boards get their money?

Mr. Jim Jones: The Ontario economy in the last quarter grew on an annualized basis at 7.5%. Companies are returning from the U.S. to Ontario because of the economic climate there. They're also coming out to Alberta because they have the lowest tax rate. By January we will have the lowest tax rate.

Even Frank McKenna, the day he steps down, says what? He believes that the maritimes need lower taxes.

Mr. Jim Selby: That's certainly one school of thought.

There are no petroleum companies in Alberta that are here because we have low taxes. There are no forestry companies here because we have low taxes. They're here because we have wood and we have oil. If our royalty rates and tax rates were ten times higher than they are, we'd still have the business.

The Chairman: Now we will move to Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): I just want to pick up on some of the comments made by Professor Boothe.

Your briefing really speaks to the first question that we have to deal with in respect to what the committee is required to deal with on economic assumptions and prudence factors. I want to touch on a couple of things.

One is your definition of fiscal dividend. I'd like you to comment on this definition and tell me whether you're in agreement with it or whether in fact you've got difficulty with it, in that the fiscal dividend is in fact a projected surplus of total revenues over total spending that would arise in the absence of any new tax or any new spending that would occur.

My second question would be this: when you talk about how the best combination turns out to be $6 billion of reserves coupled with the promise of reversing any deficit in two years, did you do any study extending that to three years and was there any significant difference in what your percentage came back at?

• 1215

Thirdly, with respect to the idea of putting all of the money into the insurance fund rather than using prudence factors, in the absence of using the prudence factors, what would you use for interest rate assumptions and growth assumptions?

Prof. Paul Boothe: First of all, as you probably suspect, I don't agree at all with that definition of the fiscal dividend. As I said, it's like someone saying that we have a balanced budget and are now going to raise taxes, and that the surplus we've suddenly created is—

Mr. Tony Valeri: But the definition is in the absence of any new taxes or any new spending.

Prof. Paul Boothe: I understand that, but basically taxes are rising because incomes are rising. Spending is essentially flat, and what we have is an excess of revenue over spending. I think it's a mistake to call that a dividend. If the dividend is the return on the investment, the investment we're making—and I think the investment that the government has discussed—is the paying down of debt. The return on that investment is the interest you save by not having to pay those government bonds.

I guess that's what I feel about the first point.

Mr. Tony Valeri: So you would define the fiscal dividend as the interest saved on—

Prof. Paul Boothe: Smaller government debt causes lower interest. That's your fiscal dividend, because that money can go into paying for programs, the things we care about.

As for a different kind of commitment, we didn't look at a three-year rule, but we did look at four, since four is sort of the normal life of a government. What basically happens is that if you have a four-year rule and a $6 billion deficit, you are ten times out of ten going to meet your commitment. The thing is, you get almost exactly the same thing with a two-year rule, and you're a lot less likely to stray off the path into starting to run persistent deficits.

Going to a four-year rule doesn't buy you very much more in terms of credibility. We're trying to maximize the credibility because what credibility does is help people plan for the future. It also helps to reduce risk premiums on interest rates so that we can have lower interest rates. But the other thing is that it helps democracy work better. If we can just say that this party says this and this party says that, we can weigh their different views without wondering whether they'll really do it or not.

So I don't think you get much extra credibility, or much extra insurance, by going to four years. The maximum for the price is at two years.

What was the final question you asked me?

Mr. Tony Valeri: It was with respect to prudence assumptions and prudence factors.

Prof. Paul Boothe: Yes, that's right.

What we're trying to do is give the government the most credibility it can have when it makes its fiscal commitments. When all the money is put into the contingency fund, everybody can see it. That gives voters and financial markets confidence. But when you put them into prudent economic assumptions, nobody believes them any more. What that does is actually reduce the credibility of the government. So what we're arguing is that if this is really an exercise to make people believe the government will do what it says it will do, the best way to do it is to have it out in the open.

It has been suggested to me by my friends at the Department of Finance and at other places in Ottawa that it's politically harder to have a $6 billion contingency than a $3 billion contingency because it's a target for people who want to spend that insurance. My reply to that is that it may be harder in Ottawa, but it's harder everywhere else—where the voters are and where the financial markets are—when half of your insurance comes from prudent assumptions that nobody believes, because basically people will just ignore them.

Mr. Tony Valeri: So in essence this is what would happen in your scenario. If you're not using prudent assumptions and you just go with what previous governments have gone with—and they in fact have done so very badly—you would be drawing upon that contingency fund. You would also be saying that because we did not use prudent assumptions, we would now have to draw on this insurance fund to deal with our deficit numbers and to ensure that we don't go back into a deficit.

Prof. Paul Boothe: I think we should use our best guess about what's going to happen to the economy, but don't blame the Minister of Finance because he or she is not exactly right every time. Nobody is, not even economists.

Mr. Tony Valeri: Unfortunately, we don't have that luxury very often.

• 1220

Prof. Paul Boothe: That's right. I think basically what we have to realize is that forecasting the economy is a very imprecise thing, like forecasting the weather, and we just have to live with that.

The Chairman: Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman. I wanted to speak with Coleen.

Coleen, in the finance minister's presentation to us a couple of days ago the line that resonated for me and for a lot of Canadians was that the real success is not where the numbers are, it is the impact on people; the effect on the real lives of people. I think that's the message you brought here as well, in your reference and your concern about the impacts on children and particularly on day care. We all understand that there are situations where parents choose and in other cases they must work, and providing good quality care is important. It does cost money for some level of government. We are only one taxpayer, so it doesn't matter which level of government, but it does cost money through subsidies.

I agree with you, but I would ask you whether you would also support another approach, or a complementary approach. There are two ways of dealing with availability of day care. One is to increase the number of spaces. The other is to reduce the demand.

A Decima poll was done some years ago where they found that 70% of parents with pre-school children were both working, and if they could, they would choose to have one parent stay at home. The economic argument was the big issue, but they also found that if there was an incentive or a subsidy to eliminate or to reduce that economic argument, many of them, if they could, would have one stay at home.

I wonder, since the end result is increased availability of spaces, either by increased supply or by reduced demand, whether you would support consideration of tax breaks for families who choose to provide direct parental care.

Ms. Coleen Jensen: Thank you, Mr. Szabo. First, I am not sure the availability of spaces is the issue. Certainly in my own experience in Alberta many spaces in day cares are empty. In fact, day cares are closing. So I think it is more the subsidy for families to be able to afford the spaces that are there. That is one case of what you said.

I think that was illustrated a year or so ago when there was an announcement that perhaps some dollars were going to be made available, the provinces were going to have to cost-share, and they were going toward additional spaces. I think most provinces got back to the federal government, saying they really don't need more spaces.

On the second part of what you indicated about helping people stay at home, I believe that is an approach. However, when we look at the high prevalence of single-parent families, for example, and if I look at my own community, it is very high: 23% of the households in Red Deer are headed by single parents, the majority being women. Those women obviously are not going to stay at home. They are also for the most part women in low-income jobs. From what I see, it's the subsidy issue related to the actual spaces available that really is the issue, although I don't take exception with the stance of what you are talking about as one piece of the continuum.

The Chairman: Mr. Solberg.

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

To follow up on what Mr. Szabo was saying, Mr. Selby indicated earlier that tax cuts benefit wealthy people more. I think he would acknowledge if we raised the basic personal exemption that would have the most benefit for low-income people.

Also, in light of the fact that we are moving into a situation where many Canadians are going to be facing a huge hike in CPP payroll tax, we're going to see a situation where many low-income people will be faced with the decision of whether they should pay the mortgage or pay for the groceries when they have to contend with that.

• 1225

So I guess my question is—to Mr. Selby, but to anyone who's interested in answering—given that scenario, given what we're facing in the very near future, if we really do want to help low-income Canadians, isn't that a good option? Isn't it a good idea to allow Canadians themselves to be able to take advantage of that tax relief and decide for themselves what they want to do with that extra money?

Mr. Jim Selby: Well, it's hard to argue about an increase in the basic exemption, but what we've said earlier is, when you're looking at a problem of low income, then isn't the problem actually low wages? I mean seriously, anything that erodes....

We have a double problem facing the government. If you decrease taxes, then the very services that low-income people depend highly upon—social assistance, health care, and public housing—are less supportable for governments to construct and to support. The question you have to ask yourself is whether the tax cut is going to be in any sense equivalent to the withdrawal of public services. Lower-income people have been more affected by the decrease in public services than higher-income people.

Our notion is, rather than drop taxes, let's talk about how to raise wages in this country. How do we get incomes back up above the poverty line?

The Chairman: Thank you very much, Mr. Solberg. This basically wraps up this meeting.

You want to ask one final question? You have 30 seconds.

Mr. Jim Jones: Yes, to the lady from Red Deer.

In the U.S., people are starting to work at home and they're guesstimating that by the year 2000, 50% of the people will be working out of their houses. If that is the case, then aren't we going in the wrong direction if we're trying to fund day care? Maybe we should be trying to make sure we have good legislation there to support people, and let the companies trust the people when they work at home.

Ms. Coleen Jensen: Mr. Jones, I don't disagree with what you're saying, and I certainly see a lot of home-based businesses beginning to spring up, but as I said before, what we need to look at is a continuum and the fleet of options available. That's not to say that I'm suggesting the only option be that we put dollars into day care, but that is an important piece. It's almost like a support service, if you will.

Mr. Selby was talking about low incomes and job creation and that sort of thing. Low-income people aren't working at low-income jobs only because of economics. There's a whole host of other issues related to it, all kinds of barriers, including low self-esteem or that they can't get some of the other supports such as day care or however you want to put that—child care in general—some kinds of things in doing that.

What I'm suggesting is that day care is only one piece of that puzzle. I agree with you; we're going to see a move in Canada towards home-based businesses and so on, and I've been there as a mother.

Mr. Jim Jones: Well, not even home-based businesses. Companies are allowing their employees to work at home.

Ms. Coleen Jensen: Absolutely, and I would support that. When my kids were little, I did that, and it worked well.

The Chairman: Thank you, Ms. Jensen.

We'll have a very brief question from Mr. Pillitteri and then we'll wrap this round table up.

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

When I came all the way from Ontario, I thought I would not miss the possibility of asking a question here in Alberta. Even though I've been here many times for past budget hearings, a little bit has changed here this morning, from what I hear of the presentations. I find everybody is trying to spend money that we don't have yet.

Let me ask a question to Rick Szostak.

You made comments on education and the increase in transfer payments. You also made another comment about tying the strings a bit more to the provinces in transfer payments. As I recall, in the past, when we had the Canada assistance plan matching and also the post-secondary education, even though they were earmarked, the provinces were not spending in the fields they should have. What would you think has changed now that those things have been done? That's one part.

Through the CHT, actually the federal government has been able to tie the strings a little bit more. If a province does not spend the money that was supposed to be spent.... Of course it is much better now, because it was not there before.

• 1230

Also, you said that matching funds also intruded in provincial jurisdiction. You made three comments: two of them never worked, and one is intrusion now in provincial jurisdiction.

Mr. Rick Szostak: First, I would agree that this has been a problem for a long time. It was a problem before the CHST, back in the days when there was money earmarked for post-secondary education. Many provinces spent barely that amount on post-secondary education, whereas the intent had clearly been that provinces would top it up considerably. In the late 1980s in Alberta I think 97% of money that was being spent on post-secondary education was coming from the federal government.

I guess one of the things I would suggest to the federal government is that it's kind of a shame that they're paying the bill but not getting the credit for it. That's one of the reasons why I would suggest even more strings.

As for the intrusion into areas of provincial jurisdiction, the federal government has exercised that spending power for many years, what you call an intrusion. I would certainly not want the federal government telling provinces what they should teach in their universities, or anything like that, but I don't see why the federal government shouldn't be strongly suggesting, at least, to provinces that they should be trying to co-ordinate their programs so that students can move easily from one province to another, shouldn't be insisting on certain standards. If the federal government is giving provinces money for post-secondary education, why can't they insist that universities have a strong research role, that there be certain standards of the sort of education that is provided? I don't consider that to be either an intrusion or impossible.

The Chairman: Thank you very much. I want to express to you our warmest and most sincere gratitude for your presentations. I think they're going to be quite helpful. We will be reviewing your submissions very carefully, but I have made special notes on the issue of tax cuts and debt and the reinvestment in health and education, common themes on which you have all expressed clear values.

At this point I would like to suspend the hearings for approximately five minutes, and we will be back with round table two.

• 1232

• 1239

The Chairman: I call the meeting back to order.

• 1240

We will begin the presentations for round table 2 with the representative from the Alberta Association for Young Children, Liz Simmons.

In this committee the way we operate is that everybody gets approximately five minutes to give us the highlights of their report. Then we engage in a session of questions and answers.

Welcome, Ms. Simmons.

Ms. Elizabeth Simmons (Vice-President, Alberta Association for Young Children): Good morning. The Alberta Association for Young Children is a provincial association representing people working with young children in day care centres, family day homes, colleges, and things like that.

We do feel there is an important need for a national strategy on child care and for investing in children. While the responsibility for raising children lies primarily with families, of course, many families do need help with this task. Those families who are working and need child care certainly need access to affordable and quality child care.

My understanding is that the national tax benefit is expected to help those who are working families but are working poor. As well, my understanding is that there are no guarantees that the dollars currently available are tied to child care, or indeed tied to the children in the family. We would certainly suggest that a mechanism be put in place to ensure that those dollars do go to benefit children.

We are wondering if there is a way to attach those dollars to licensed, quality child care, perhaps through wage-enhancement grants for qualified staff, or other methods of attaching money to indicators of quality. There are many indicators of quality child care programs. Here in Alberta we do have licensed care, but licensed care is definitely a minimum standard of child care. There are many things that some programs will offer that will extend that quality of care. If those areas could be supported, then it certainly would improve the level of care in Alberta.

That's all I'll say right now, thank you.

The Chairman: Thank you very much.

We will now move to the representative from the Alberta Council on Aging, Mr. Neil Reimer. Welcome.

Mr. C. Neil Reimer (President, Alberta Council on Aging): Good morning, and thank you for inviting me.

I represent the umbrella group in Alberta that has as its affiliates various seniors' organizations throughout the province.

I first of all would like to say a few words about demographics. Generally in Canada the seniors population is about 12%. This province is the youngest province in Canada, with a seniors population of 9.1%. A lot of the rhetoric about the difficulties society faces with seniors has been imported. We are not facing the high number of seniors that many other countries are already facing. Even here in Alberta we are about 4% or 5% below what B.C. or Saskatchewan, our neighbouring borders, have. So if you are a treasurer of a province and you have fewer people to look after, so to speak, I'm sure it's quite a bit easier.

We have been told that there is going to be considerable difficulty ahead with the baby boomers. I will refer quite a bit to this Canada West Foundation research, which I will give you a copy of.

Statistics show that baby boomers, the people who were born from 1937 to 1957, are generally quite well off. It is the later baby boomers who are not. So we challenge the proposition that we have to bump possibly for 20 years; really, it's only a problem of 10 years, 20 years hence—not as serious as what we would think. They are not going to be entitled to the GIS or all the income-tested programs we have, which is not taken into account.

We concede that seniors' incomes have gone up, possibly about 3.1% since 1980, whereas other incomes have gone down. However, what is not taken into account is the extra expenses that have been incurred as a result of the cuts.

• 1245

It would take me the whole five minutes just to read to you the topics or areas in which seniors have faced cuts in this province and across Canada.

In this province, there have been fourteen programs that have either been cut, altered, or totally eliminated, representing a 20% cut in seniors' incomes. The federal government has had ten such areas where the seniors have had cuts. In addition to these, we have the seniors' benefit program, which is coming up in the years ahead, I guess in the year 2001. We understand it is a proposal, and we hope it will not be implemented until there is serious consultation, because it also injures. There are very many negative factors in it, and I think they are included in this brief.

The priority that we likely would have is the health system. As seniors, we oppose any suggestion or any direction towards privatization or towards the elimination of the five principles of the Canada Health Act. We think they ought to be strengthened. When you are asking us how the leftover surpluses—whatever you want to call it—should be spent after the deficit is eliminated, I think we can only address that properly once those areas that have been cut seriously have been corrected.

We have been led to believe, both by the federal government and this province, that the deficit was something very serious in measure and something very dramatic to address. It has been very dramatic indeed. We were told it was going to take years to get it down, yet here we are after a couple of years, with this province having a surplus in three years. So the question has been asked about whether or not the cuts have been too deep, too fast. The question has not been asked about whether they have been too deep. And they have been too deep. Before any decision is made as to the direction society takes in terms of taxes, we don't want any tax cuts whatsoever—don't even consider them—until these matters are corrected. Many people are hurting.

I would be remiss in not pointing out that the health system in itself is an incentive for employment and industry to locate in Canada. Yesterday, I heard the chief executive officer of Ford making representations that a 9% duty removal for Japanese cars would close down 25 plants. Well, if we had a two-tiered system like the one in the United States, it would have a much more disastrous effect. Many companies have located in Canada because of the cost of health care. Having been a representative of an organization that represented many workers in both the United States and Canada, I can tell you that the cost is prohibitive in many respects in the United States. It's an incentive for employment.

Here in Alberta we have the HRG. We have the beginning of a privatization of hospitals, which I think can only lead to a two-tiered system. We believe the medicare system must be adequately funded in order that these things don't have a chance to get off the ground.

I can tell you that there is dissatisfaction in many areas with the public health system. As a senior, if you go to my doctor.... I just had a hip replacement...and if you want to go to him, he has a nine-month waiting period before he will operate. These are the kinds of things that have to be corrected in health, to our way of thinking, and I think the children or grandchildren are the two highest priorities that have to be addressed.

I think that took more than five minutes, but I thank you.

The Chairman: You are addressing some very important points.

We move now to Dr. Mark Genuis.

[Translation]

Mr. Mark Genuis (Executive Director, National Foundation for Family Research and Education): Thank you for the opportunity to address this committee. It is a pleasure for me to be here as a representative of the National Foundation for Family Research and Education.

• 1250

[English]

We have submitted a presentation and I would be happy to address that, but I would like to take just a few moments to discuss the issue on a slightly different level.

The foundation is focused on families and we have been asked to discuss the issue in that realm. I'd like to start essentially with a quote from someone who is here and has just published, frankly, an outstanding book on the family.

Mr. Szabo has stated that our society exists and sustains itself because of the family, which should be honoured for that fact. If we begin at that point, at that level, and realize that basic understanding that we virtually run and exist because of the stability of that core of our society, then a number of decisions and priorities become much clearer.

We begin to realize that, in the vast majority of cases in this great country, families are competent. Parents care for, they love their children; they do a good job with their children.

The other thing that parents say consistently throughout our country is that they wish, if it were possible, that they could spend more time caring for, bringing up, loving and teaching their children.

I had a meeting with the Hon. Anne McLellan and we were talking about the point that if parents could do this, really there could be no greater crime prevention method in this country. Parents do this service very, very well in the vast majority of cases.

Unfortunately, over the past few decades they have been hampered in many respects from doing this because of, as many would say, necessities regardless of the bottom line, because of the number of changes in our tax structure.

Hence, the purpose for coming in front of the finance committee today, to make a very simple recommendation, to say that if we focus on our greatest priority, if we focus on our greatest opportunity and our great future, then we have an opportunity to build children in a wonderful and positive manner.

We would recommend that as a finance committee the best way to do that would be to embrace the recommendations of the standing committee on health and the national forum on health, which have said “Please remove the discrimination in the tax system against Canadian families; please leave a bit more money in the pockets of Canadian families so they can make choices”—not to direct anyone's life—“based on what they themselves know is best for their children, what they themselves want to do”.

Most parents say, again, particularly at young ages, that they wish they could spend more time with their children. There are all sorts of wonderful societal implications of that in all sectors, and we would strongly recommend that the finance committee consider such a movement in order to enhance the stability of our country, in order to meet solid economic goals and in order to help the children of this country.

We can get into research, and I'd be very happy to discuss that in great detail, discuss the methods and the results. I'd be pleased to do that because our organization is focused on research, but one bottom line that we do know is that in society the best caregivers of our young children—i.e., the best builders of the foundation of our society—are the parents and regular separation from parents for more than 20 hours a week prior to the age of five increases the risk for these children for negative development in very clear areas.

So leaving some more money in the pockets of families will directly help lower and middle income families and will do a tremendous amount of good for our great country.

Thank you.

The Chairman: Thank you very much.

We now move to representatives from the Seniors Action and Liaison Team, Con Duemler. Welcome, sir.

Mr. Con Duemler (Seniors Action and Liaison Team): Thank you, Mr. Chairman. I appreciate the opportunity to address this committee once again.

Five minutes is not much time to deal with subjects that are dear to Canadians that deal with points that are of national interest and are very dear and typical of Canadian values. That's why I believe it is said that Canada is more than the sum of its parts. Canada's social programs and medicare are unique and they should be protected. Indeed, the Minister of Finance, the Hon. Mr. Martin, has assured all Canadians that these standards will be adhered to and will be maintained, and we rely on this promise.

The question of whether or not the deficit reduction program has been too fast is probably answered by itself in the fact that we're now talking prematurely about reinvestment.

• 1255

As Mr. Reimer said, the question that has not been asked is, have the cuts been too deep? We believe firmly that they have been too deep, especially in areas of prime concern to all Canadians, and to seniors in particular; that is, in the area of health care.

In that respect, we believe the change a few years back of transfers to provinces on a reduced basis and on the basis of block funding needs to be revisited. We believe the federal government's control over the maintenance of standards nation-wide has been diluted under the auspices of devolution. We're very concerned about this.

In Alberta, in particular, we hear right now of horror stories. I will share with this committee an experience I had about 36 hours ago, Mr. Chairman, where I hadn't heard from a friend, a single senior, 67 years of age, who didn't show up for an appointment on Tuesday evening. When I visited his house yesterday I found him dead on his bedroom floor. He had been a patient, under medical care, but he was not hospitalized. It is difficult for anyone to say we can blame the cuts, but it is equally difficult for those who have implemented the cuts to say that it was not the result of those cuts. The perception by the people.... And I hope none of you will have the experience I had just 36 hours ago, to find a dear friend dead for two days on his bedroom floor, without home care, without hospitalization—and he should have been hospitalized, in my opinion, but I'm not a practitioner.

I believe the weakening of the health care system is foremost in the minds of seniors, and indeed of all Canadians, especially here in Alberta, where there's now talk about core services that may even be the subject of user charges. We have health care premiums, which is a form of user charge, and we have violations of the Canada Health Act that have not been looked after by the federal government. This is not necessarily of concern to your committee, but in the end analysis, everything turns around dollars.

Lastly, I would like to speak briefly about the proposed senior benefit. We find it somewhat ironic that we're talking about reinvestment and the committee is asking the question where should we reinvest while we have a proposal here that is seriously flawed.

Just two weeks ago I came from Ottawa on a committee for seniors by Revenue Canada, human resources, and I could not get the answers to certain questions about how to deal with families when one spouse is under 65, for instance. I could not get an answer as to the meaning of “full indexation”, or “thresholds and benefits” under the proposal. I've done extensive calculations that I tabled about a week and a half ago with the informal meeting held by this committee or a part of this committee chaired by Mr. David Walker.

The calculations show that the anticipated savings—not a quick fix, as Mr. Martin said he's not interested in—the initial savings in the first year would be $200 million by the federal government. My calculations substantiate that, but they also prove that $150 million of that is at the expense of the provinces.

In the year 2030, after full implementation and after the current crop of seniors has passed away, my calculations show that the projected net savings of $8.2 billion to the federal government are probably correct, but it is equally correct to say that almost a third of that is at the expense of the provinces. What I was shocked to hear from the committee chairman, Mr. Walker, is that the provinces are aware of this and there are discussions going on right now on how to overcome these deficiencies with the provinces.

Mr. Chairman, on behalf of the committee and on behalf indeed of all Canadians, I could only implore upon you to let Canadians know what is on the table in this partnership discussion with the provinces to overcome these deficits, these tax revenue deficits to the provinces.

• 1300

It is fine to save $8 billion. It is not fine to save that money by a seriously flawed and unexplained proposal affecting seniors in two ways. One is the benefit per se, which is basically the same OAS and GIS that we have now. The extra $120 is simply because of the expected indexation at 1.75% of the January 1996 level of benefits. That may be too low, because lately inflation has run at 1.9%. Therefore the extra $120 is somewhat of a sham, we feel. It is just a safety buffer to overcome any inaccuracies in that estimate between 1996 and 2001.

The benefit itself is seriously flawed and we find that its origin can probably be found in an article by three economists, entitled “The Incidence of Low Income Among the Elderly”, in a publication in June 1994. All three economists were formerly from the Alberta treasury. This article by economists in dealing with seniors, their incidence of low income, and measuring them by a different yardstick is seriously flawed and demonstrates in the table one footnotes a total lack of understanding of seniors' lifestyles.

We have found—and I can make the connection quite easily—that this article is the underlying philosophy that gave rise to the seniors benefit program.

Mr. Chairman, my time is just about up. I will conclude by summarizing my recommendations to this committee.

If you want to give first reading to the proposed seniors benefit in the House of Commons, so be it, but do so only for the purpose of giving it wide publication, with roundtable discussions and workshops. Seniors are supposed to be given the choice to stay with the current system or go to the new system. That choice should extend and should be an informed choice. Seniors cannot cope with this highly complex thing. I'm a consultant to seniors and an adviser on these matters and I cannot advise them because of the uncertainties that exist.

The choice should be made not only for the first year of implementation in the year 2001; the choice should be made for the rest of their lives. And for as long as we have uncertainties in the program, its implementation and its structure, I cannot advise seniors on how to choose. It could be a trap if they choose to go to the new system and find out in the years to come that they have made a wrong choice and cannot go back to the original system. It may be a totally unfair trap.

And of course there is this problem with the provinces. I believe it's only reasonable in a democracy that the stakeholders and the taxpayers are aware and involved in deciding what issues are to be traded off and what programs are to be traded off to overcome the deficits to the provinces. If this is a partnership between the federal government and the provinces, Mr. Chairman, we suggest that it be broadened and include the stakeholders as well.

Thank you very much.

The Chairman: Thank you very much for a very important presentation. I'll take up some of those matters with Mr. David Walker. I'd like to get some information related to some of the points you've raised.

The next speaker is Ms. Lorna Downey, from the Alberta Association of Registered Social Workers.

Ms. Lorna Downey (Representative, Alberta Association of Registered Social Workers): Good morning, and thank you for the opportunity to address the committee.

As a representative of registered social workers in this province, I think one of the most important things we see is poverty, and of course poverty for children. Children, as you know, are not only our future, they're also the most vulnerable in our society. When we directly affect the family through tax credits, etc., we also directly affect children.

Alberta has one of the highest percentages of single-parent families, and while I applaud the government for its efforts on the national child benefit, my understanding—and I could be wrong—is that its very structure will again harm mainly the very poor and single-parent families in particular. It will not be a direct benefit to them. So I ask you to take a closer look at how it's going to be distributed throughout the country.

• 1305

I guess when you ask what your priorities should be, as far as we're concerned, targeted spending should be for the benefit of the most vulnerable, children in conditions of poverty. We have thousands of children starving in Canada. That very thought is absolutely appalling. This is one of the wealthiest countries on the planet, and we have children going hungry every day. In Edmonton I work very hard in both my professional and my personal life, trying to establish hot lunch programs in schools, for instance, because then children get one meal a couple of times a week.

I know this may be shocking to you, but it's also a reality.

We applaud you for your efforts to develop a national child benefit initiative. However, if it's going to be income based, then in effect you will be discriminating against the very poor, and single parents in particular. Of course single parents, we all know, are female. Provincial dollars should go directly to low-income families...rather than diverting funds to programs that may not have a direct benefit to those most in need.

The Government of Canada needs to integrate economic and social planning in its budget deliberations. This was a principal recommendation arising from the Alberta growth summit held here on September 29 and 30. It recognized the importance of people development.

The Bank of Canada should spell out both its social and its economic objectives. This would recognize the relationship between inflation and employment and acknowledge the potentially negative impacts of decisions based solely on economics.

Last but not least, I would like to see a focus once again on family violence and violence against women.

The Chairman: Thank you very much.

We will now move to a representative from the Alberta Teachers Association, Fran Savage. Welcome.

Ms. Fran Savage (Alberta Teachers Association): Thank you. As a representative of the Alberta Teachers Association, I'm pleased to have the opportunity to present our views to this Standing Committee on Finance. We've been asked to respond to two broad questions. My association has chosen to gear its comments to the national issue of child and family poverty. This is our response.

I might add that I have been chairing a committee on child poverty for the Alberta Teachers Association for the last six years. This has had a very broad representative base.

As far as the process of deficit reduction is concerned, in our view it has most certainly been too fast. Alberta teachers see the effects of the deficit reduction in the classrooms of this province and in the lives of the many children who learn, or attempt to learn, in our classrooms. I'm sure you all know the reasons why. A hungry child is very difficult to educate. A child who is poor or is perhaps abused because of a poor family situation is certainly not capable of being well educated.

The effects of both federal and provincial initiatives have been harmful, as I said, to the lives of these families struggling to survive and provide the essentials of life on ever-decreasing level of income support. This is a very shameful state of affairs in a nation as blessed with resources as Canada is.

As far as government priorities are concerned and what they should be, we do commend the government for its initiative in introducing the child benefit. Unfortunately it does not go far enough, and it most certainly, in our view, will not help those people who perhaps need it the most. Unfortunately the Alberta government has chosen to implement the program in such a way that it will not benefit families who need it the most, particularly those on social assistance. Instead, our provincial government plans to offset the anticipated increase in federal benefits by reducing provincial benefits available to families on social assistance.

I guess it's a simplistic question to ask, but how can people who don't make enough to pay taxes get a child tax benefit? Perhaps somebody can explain to me how that happens, because I don't quite understand it.

The root of the problem is accountability, I think. Instead of establishing stringent criteria for this program, the federal government has given provincial governments a free hand to implement it according to their political whims, perhaps, which, in the case of Alberta, seek to punish those who are unemployed.

• 1310

We urge that a social transfer act, similar in intent to the Canada Health Act, be enacted to require provinces to comply with certain criteria if they wish to continue receiving money for social purposes.

On another point, we urge the Government of Canada to live up to its 1993 election promise to put in place a national child care system that gives affordable, and perhaps free in many cases, quality day care. Too many children are placed in substandard child care situations because their parent or parents cannot afford the exorbitant fees levelled by private child care operators.

Parents who receive child care subsidies from provincial governments must open their homes and personal records, without notice, to those same governments in order to retain their subsidized status. Still other parents who would prefer to work end up staying at home to care for their children because their monthly salary would not come close to covering their child care expenses.

We must also ask how child care can be quality care when so many child care workers are paid the minimum wage. In this province, of course you know how low that is.

We were troubled to learn that the finance minister, Paul Martin, is considering tax cuts once the federal deficit has been eliminated. We're afraid that such cuts would amount to nothing more than a ploy to buy the votes of middle-class Canadians in the federal election. Such tax cuts will not benefit our neediest citizens, who do not make enough money even to pay taxes.

Taxes are the price Canadians pay to live in Canada and enjoy universal health care, public education, and a strong social safety net.

We all know that many corporations have never shouldered their share of the tax burden. If you wish, give Canada's middle class a tax break, but make sure that corporations increase their contributions so that the government can afford to do so. However, until the government looks after our most vulnerable citizens, who are economically disadvantaged children and their families, and confirms the international perception of Canada as a just and caring society, let's put aside any talk of tax cuts at this time.

I guess the last and probably most important point I could make this morning is that my association is dismayed that the poor are not represented around this table today. We are perhaps represented in the industry of poverty, if you like, if you want to call it that. These are the people who work with the people who are disadvantaged and who live in poverty. But unless I am very much mistaken, we are not hearing from the people who are actually living it.

We urge you to consult with the poor, as well as the middle-class and upper-class representatives of Canada's citizenry. Consulting with the poor will help to ensure that our social programs meet the needs of the recipients, rather than those of federal bureaucrats who may not, perhaps, in some cases have the recipient's best interests at heart.

I guess I have to point out that sitting in this room, in the audience, are some people who are living in poverty. There are people who have attended meetings of my committee. It might behove you to have a talk with them to see what happens. Put a personal face on the issue of poverty. Talk to those people. Perhaps you might get a little different perspective on what your action might need to be.

Thank you for the opportunity of addressing you.

The Chairman: Thank you very much, Ms. Savage. I think that's very wise advice. This is advice we've acted on many times during our travels.

I can tell you that one of the unique aspects of this committee this time around is that members of Parliament, in their own ridings, will be holding town hall meetings to seek the type of input you asked for. Of course the committee could only travel to certain areas, but I think that when we have 301 members of Parliament seeking input at the riding level, then you will find that this will be truly a very extensive consultation process that will speak to some of the very important issues that you raised, particularly the latter one.

Ms. Fran Savage: Very briefly, do you believe that the people who actually live with poverty will attend those meetings? Sometimes I think it's very difficult for them to go to speak out. I just alert you. Perhaps you have already thought of that, but it may not be as easy as you might think.

The Chairman: I think it's a great suggestion. Thank you.

The next speaker will be from the Quality of Life Commission, Reverend Bruce Miller.

• 1315

Reverend Bruce Miller (Quality of Life Commission): Thank you very much. Most recently I was delegated to the Alberta Economic Growth Summit. I think we've had before in Alberta an experience of roundtable discussions, one the public was very dissatisfied with. The growth summit was an improvement, our spending two days together. It became clear that there's a shift away from just dealing with economic matters in isolation but rather placing them in the context of wider issues of social development. I am really encouraged by that.

I recommend to you that maybe we need a Canadian growth summit of some type if your interest is on what kind of reinvestment should happen in the future. The model is there to copy.

There was one respect in which it was flawed. To pick up on a comment that was just made, there were no poor people present at the growth summit in Alberta. Today is International Day for the Eradication of Poverty, and it seems to me that if poor people are not allowed to speak here, then I don't have anything further to say. I was part of the social economy sector at the growth summit. Really, zero poverty is what we want in this country.

So I would like to give my time over to Midge Cuthill, a member of an anti-poverty group here in Edmonton. The Right Reverend Bill Phipps, Moderator of the United Church of Canada, is here in support of this anti-poverty group. If you'll give permission, I would like her to tell her story.

The Chairman: Go ahead.

Ms. Midge Cuthill (Chair, National Anti-Poverty Organization, Edmonton Chapter): Thank you for giving us this opportunity. Other people who have been working on our committee are also here. I really think you need to hear their stories.

The federal government is going to be making some really harsh decisions on what they're going to do once the deficit...and they've been saying that the deficit is two years before, the way they were looking at it.

I want to share a speech I just gave at Alberta Vocational College for International Day for the Eradication of Poverty. Hopefully, from that, and from the speeches I have heard from our community leaders...the impacts that people are having. So bear with me while I share this with you.

We are here today to mark the United Nations International Day for the Eradication of Poverty. In 1948 the United Nations General Assembly proclaimed the Universal Declaration of Human Rights. The declaration was accepted by unanimous vote, with only South Africa, Saudi Arabia and six Soviet bloc countries abstaining. In 1966 the declaration became two binding covenants, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. Canada ratified both covenants in 1976 with the unanimous consent of the provinces. They are now binding upon Canada in international law.

As a society, Canada agreed to these fundamental rights. Why are they being so blatantly overlooked? We need to hold our governments responsible for the promises made to their citizens and the rest of the world. In Canada, no matter what province we live in, there is a lot of talk about zero deficit, zero tolerance and zero pollution, and on and on. In the anti-poverty movement, changes have been coming fast and furious all across the country. Today, in coalition with the National Anti-Poverty Organization, we are launching the zero poverty campaign across Canada.

We, the poor, are the ones who have had to pay a disproportionately higher price over the past few years as a result of the deficit cutting. There have been massive reductions in social allowance, falling real minimum wages, increased restrictions for employment insurance, reductions in access to health and education, and cutbacks to social services. We have cried out for help only to have our children apprehended by child welfare. Apprehensions have increased by 42% since 1993, while the number of welfare recipients has decreased by 61% here in Alberta.

Provincial child care subsidies are being cut, so parents who are in school, who are working minimum-wage jobs, are now working to pay child care expenses. We need the government to look at the full impact of this, not just to save dollars.

Persons needing medication cannot afford the $2 charge for prescriptions, which they want to put in as of November 1. I myself was a concern, because I was taking Tylenol 3 when I was on social assistance. Now, because I am no longer on assistance, I'm no longer the concern. But the thing is, I'm still on the same medication.

• 1320

We have people who are in great danger of losing their homes or who have already lost their homes, living from friends to family, back to friends, and in even more severe cases, living on the streets.

Our Parliament isn't even meeting this fall. Why is that legislation not being used? We should be putting it for the homeless people right now. We need stability, not suitcases.

In Alberta our government has surpassed targets for a zero deficit campaign. Now we are asking them, the public, and the federal government to be as passionate and energetic about a zero poverty target. We have seen what governments can do if they are motivated. Let's motivate them toward a target of zero poverty by the new millennium.

Poverty is a symptom of the social debt that has accumulated over the last few years as a result of the lack of social investment. Let's truly invest in our future and head into the new millennium with zero poverty.

I would like to bring Regina Parker up here. I would like you to have a very “impactful” listen to what is going on with her life. She's a person who has been told that she is being taken off social services.

Please come up here, Regina.

The Chairman: Good morning.

Ms. Regina Parker (Individual Presentation): Good morning. This is very unusual for me, so please bear with me. I'd like to thank you for listening to me. This isn't easy to share, but I think you need to see what's happening.

I'm disabled, as you can tell, and unable to work. The way the government has worked it so far, I do not qualify for AISH, the disability...we have here, because I may in a few years be able to work. This is very unlikely, however.

I was taken off of welfare because I moved in with my daughter. They will not pay housing when you're living with a blood relative. My daughter is 21 years old. She bought a condominium three months ago so that I could come and live with her.

This is a child who was raised, partially on welfare, by a single mom. She beat all the odds. She has a a nice place for a 21-year-old. Now the government is saying I can't receive anything for rent to help her out, because she owns it. If she was renting it, that would be fine, but because she owns, she is being penalized. This isn't fair.

I am now off assistance. I live on about $400 a month. My medication costs $429. I'm not a mathematician, but that doesn't work. They want to charge people $2 per prescription. If I were on assistance, $18 would come out of my groceries and out of living, when there isn't enough there anyway. Now I have to pay 30%.

I am unable to live on the little that is given. I have no money to even buy a coffee for the month. I cannot go anywhere; I have no transportation costs. There is nothing. This is not life, it's survival. I would like to live and not just exist.

I am not to blame for being disabled. I have worked. I have been a foster parent. I help in the community wherever I can. I am not what a lot of people think of when they think of welfare. I have been active. I have done my part, as much as I could. I'm being penalized now with a substandard life in one of the richest provinces in Canada.

I read an article that said these cuts that are happening are death by a thousand cuts. That's exactly where I'm at. I don't know if I can keep on my medication. This whole bag is medication. I can't really afford it, but there is nothing in here that I can afford not to take. For each and every one of them, if I were to stop one, I would end up in the hospital. That would cost our government more.

• 1325

I'm at a total loss as to what to do, and I'm not the only one. There are people being taken off of AISH without any notice, including schizophrenics. One lady with cerebral palsy was cut off without being told. She just didn't get her cheque. This is insane. If we were to treat animals the way some of us are being treated, we'd be in trouble. You can't just give people enough to barely survive and then expect them to be happy and expect them to be peaceful. We've had people going into social service offices shooting guns, or pretending to have guns. These are desperate times.

You want to give the money to the provinces and let them do as they want, but they have no respect for the poor in this province. I'm sorry, but it will not go where it's needed. There are children who haven't eaten for days or who have only eaten spaghetti. I can tell you four ways in which to make spaghetti without any meat. It used to be that you could have 99 ways of making hamburger, but nobody can afford hamburger any more when you get to real poverty. You cannot live on spaghetti.

I am overwhelmed with the power that is in this room, so forgive me if I'm not coming across. I have never sat with such awesome people in positions, but you need to know that something has to be done. I know people right now who are contemplating suicide because they cannot go on with the way things are. These are people who have no hope of changing. It's not a matter of just going to get a job for some of these people. They aren't capable. Are we going to start watching people commit suicide?

It's wonderful to balance the budget. I'm all for that. But let's have somebody around to see it.

Thank you for your time.

Voices: Hear, hear!

The Chairman: Thank you.

Ms. Midge Cuthill: I'd like to say thank you very much for the time we've been given.

There is a lot more out there. It's on the streets. It's in our communities right now, where people are really suffering. Seventeen thousand people are using the food banks in our province in a month. Those are the ones who are known because the stats are there, but there are the unknown as well.

Alberta Vocational College is a school at which students have gone from being on assistance to school. They have a food bank that's not connected with the Edmonton Food Bank. They are the unknown stats, because they are not being counted. There are no statistics to show how many people are in there.

I'm an unknown stat. I've never used the food bank, but I've had resources. There have been times in my life when I needed to use the food bank myself, but I never went.

There are things that we're doing. We're not just part of the problem; we're part of the solution. I do appreciate all the leaders that we have at all times when they say there are going to be round tables in our province and that they're going to be doing this and that. But I'll tell you right now that the majority of the people who are invited are the people who are leaders. They're speaking on our behalf and we are tired of people speaking on our behalf. We are the people. When you put the money into the programs, it serves us.

We need to make the changes. We need to look at restructuring. We're not looking to be rich or anything. We're looking to make sure that food is on our table, that we have a roof over our heads, that child care is taken care of so that we can go to work. Those are the things that are very important for us and for the quality of our lives. Our well being is very important to us.

The Chairman: Thank you very much, everyone, for your presentations. Thank you, Reverend. I think it was a great idea to listen to....

We're now going to move to Mr. Georges Arès, a representative from the Association canadienne française de l'Alberta.

• 1330

[Translation]

Mr. Georges Arès (Association canadienne-française de l'Alberta): Good day, Mr. Chairman and members of the committee.

I think we just heard about something that is very close to the heart of the Canadian people: poverty. Our association would give its full support to the federal government if it were to take the steps required to alleviate poverty. I want to thank these ladies for their presentation; it is always very moving and I believe the government needs to react to this sort of presentation.

I would like to deal today with another aspect that is very important for this country, the issue of national unity and how the federal government could, through its spending, promote national unity.

By this I mean the way francophone communities outside of Quebec are being treated. Over the last couple of years, the federal government made deep cuts in the funds that were given us to ensure a francophone presence everywhere outside of Quebec, here in Alberta and elsewhere. The core funding for our group has been cut by 30 per cent. I do not believe that all departments and institutions of the federal government have faced reductions of this magnitude.

There have also been major reductions in the funding for post- secondary education, which directly affected the only French post- secondary institution west of Manitoba, the Faculté Saint-Jean here in Edmonton. This institution is a kind of French mini-university offering four diplomas, four bachelors degrees and one MA in French education here in Alberta. The budget cuts have affected the ability of this institution to provide services not only to francophones in Alberta, but also to francophiles of this province and the West in general, to anglophones who have been educated in French immersion schools and want to pursue their post-secondary studies in French. Some students at the Faculté Saint-Jean come from British Columbia and Saskatchewan, and some even from Quebec.

Mr. Desrochers, I know you are a member of the Bloc Québécois and I can tell you that young Quebeckers who were leaning towards separatism before coming to Alberta and studying at the Faculté Saint-Jean changed their views after having experienced a francophone community and a community of anglophone-francophiles who love the French language and culture. And it does not even take long. They become federalists and want Quebec to stay in Canada. We must encourage this type of institution; we must encourage French schools. It is not by reducing the support that we will maintain a French presence in Alberta. I think Mr. Lucien Bouchard, the Bloc Québécois and the Parti québécois are very well aware of this.

In 1995, before the referendum, there was an attempt to prevent francophone communities outside of Quebec to express their views. Mr. Bouchard was very worried about what francophones outside of Quebec might say at the time of the referendum. This is why the Bloc Québécois stated its official position on what the treatment of francophone communities outside of Quebec would be after the independence of Quebec. A few months later, the Parti québécois and the government of Quebec did the same. Later, in August, one or two months before the referendum, the Coalition pour la souveraineté, an umbrella group of 15 unions of Quebec, supported by several other organizations, also announced its official position.

All I can say is that the treatment of francophone communities outside of Quebec is an important issue for this country. Budget cuts to Radio-Canada resulted in the disappearance of already minimal services and have had a big impact on the way of thinking of francophones outside of Quebec.

I can tell you for example what happened at our last annual general assembly. I should tell you that our association has been in existence since 1926 and that we have always been federalists. We were on the federalist side in 1980 and in 1995 and we still are. But after the cuts to Radio-Canada, one of the choir institutions for our community, some of our members wondered why our association should work for national unity when it was being hit in such a fashion.

• 1335

Funding cuts to Radio-Canada have resulted in the reduction in an essential service to our community. When we complain to the Minister of Finance, he says that the culprit is Ms. Copps, the Minister of Canadian Heritage. When we speak with Ms. Copps, she answers that it is the Minister of Finance who does not provide enough dollars. They keep passing the buck. Funding cuts are made without looking at the consequences.

This is a very important matter for the country and for unity. Do you not remember that in 1980, almost all francophone associations outside of Quebec were supporting the separatists or were neutral? The only one that was not was ours, ACFA.

But the federal government invested in an area that is very important for francophones communities, following up I believe on recommendations of the Royal Commission on Bilingualism and Biculturalism, the Laurendeau-Dunton Commission: schools and management of schools by and for French-speaking Canadians. Thanks to the federal government, which introduced a funding program for school management, we finally succeeded in obtaining schools and the control of those schools. At the time of the 1995 referendum, it was found that all other associations had become federalists. This change of attitude was caused by precisely this investment of the federal government in schools and school management. In our view, this proves that if we treat French communities outside of Quebec better, we can ensure there is a place for Quebeckers everywhere in this country.

The French schools in Calgary are another example. Last year, they had 460 students, while this year they have 600. Why? Because many families from Quebec have been transferred by their companies, including Canadian Pacific which moved its head office to Calgary. These employees found a school that was already there that could take in their children. If that school had not existed, what would have happened?

Canadian society has many priorities, including alleviating poverty, as I mentioned at the beginning. We certainly need to take into account this priority in coming years, as we reinvest. I agree with the lady that before reducing taxes we must fight poverty and all these things that hurt people. However, we must also reinvest in our country in order to ensure its unity.

We need to take another look at how francophone communities outside of Quebec are being treated. They must be supported, to help them to survive, and we must ensure they receive adequate services. We have made tremendous progress in the area of education over the last ten years, but we still lack French language health and economic development services. Many cultural events never take place. There have been all sorts of areas that have not yet been looked at because our priority for many years has been our schools. We needed schools and the control of those schools to ensure that there would be at least one permanent source of French language instruction in our province of Alberta. This has now been achieved; we have 16 schools here in Alberta, which are managed by three school boards. This year, in almost all schools, the number of students registered has greatly increased.

This is largely due to the funding provided by the federal government. In 1993-94, it has invested some $110 million to implement francophone school management outside of Quebec and we can see the results. However, there should be no funding cuts to other institutions that are essential to us: post-secondary education, the Faculté Saint-Jean, Radio-Canada and those health services that we still do not have and for which we need to get support.

You must consider the positive impact of this funding that helps to ensure there is a place for the pancanadian Francophonie. If these programs were to be cut any further, there would be a reverse impact.

I am sorry to have to leave shortly since I have to go to a meeting on national unity at noon. Are there any questions for me before I leave, Mr. Chairman?

[English]

The Chairman: We have to go on to the next intervener, who will be Mr. Martin Garber-Conrad, executive director of Edmonton City Centre Church Corporation. Welcome.

• 1340

Mr. Martin Garber-Conrad (Executive Director, Edmonton City Centre Church Corporation): Thank you, Mr. Chair. I certainly appreciate the opportunity to be here. However, because I have a rather short brief and I can forward it to the clerk, if anyone else from Poverty in Action wanted to speak I would be pleased to yield my chair.

I guess not. Then I'll press on. I would like to comment on three things that the federal government has done lately and that have financial implications for yourselves and for us out here in the provinces.

The first item is the national child benefit. I would certainly like to commend the government for that initiative but nevertheless share our profound disappointment here in Alberta with the way it's being handled in this province. I think the headline in today's Edmonton Journal is not irrelevant to some of the things that have been mentioned earlier, particularly for families on social assistance. Their net benefit from this is exactly zero. We nevertheless maintain at least a tiny bit of optimism that the promised reinvestment of the provincial welfare savings will indeed be made and will be targeted toward low-income children and their families. I'll come back to that item at the end.

The second item I would like to commend the government for is the announcements made around January about youth employment. This too is a positive step, though in terms of the context of the problem a very small one. We have some disappointment based on our own experience with youth employment for high-risk young people that this group was not especially targeted. The internships will be of benefit to many young people going to college and university but not of very much benefit to street kids; low-income, high-risk kids, who also need jobs.

The third and final point I would like to make is not so much programmatic as policy or at the overall level. We feel very strongly there needs to be continued and indeed increased direct federal government investment in at-risk children and their families. There are some really excellent examples of this working very well. I think of Health Canada's community action program for children and the aboriginal head start initiative, which your government admittedly didn't start but has continued, I think quite commendably. Within the structure of that program there are obvious, easy, cost-effective ways of increasing the impact of that by simply restoring the cuts of almost 50% that were made last year.

I think the principal operative here is that it is possible, even in these days of increased provincial autonomy and demands, for the federal government to have a positive and direct partnership with communities throughout Canada. We have certainly enjoyed that relationship through Health Canada and to a lesser extent through Human Resources Development Canada, but these are some ways where even in provinces that are not particularly cooperative with sincere federal objectives of decreasing or eliminating poverty among Canada's children the government can be a positive force and can ensure national goals are met, if not with, then in spite of the provinces. So please continue your leadership, your partnerships, and your strong requirements or standards and start to reinvest even more seriously in low-income children.

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

• 1345

Now we move to the last intervener, Brian Bechtel, executive director of the Edmonton Social Planning Council.

Mr. Brian Bechtel (Executive Director, Edmonton Social Planning Council): Good morning, and thank you for the opportunity to speak with you this morning.

We've had some very eloquent presentations about poverty this morning, and I'm going to continue in the same vein.

I'm going to say first of all that here we have a national discussion about poverty. We have a national provincial program that is set to start next July to combat poverty, but we do not have a national poverty line. We do not have a consensus in this country about what poverty is. We have the StatsCan low income cut-off, or LICO, as we refer to it. It is not a poverty line and it does not have broad credibility as a poverty line. The Americans have a poverty line.

There was an extensive study done by a committee chaired by MP Barbara Greene in 1993 that looked at the whole issue of how we measure and assess poverty. To my knowledge there's been no follow-up on it. I thought there were some problems with what they had, but they still were pointing out that we still do not know what poverty is in terms of dollars. What does it take to live a life? What is the social bottom line in this country?

Until we do, I think all of our programs are still going to be the old model of, well, we're going to measure commitment by how much money we put in and not by how many children we actually take out of poverty. This is something that the national group Campaign 2000, with which the social planning council is a partner, has been saying all along. We have never had a commitment from any level of government to how many children aren't going to live in poverty after we're done.

The issue with LICO has always been that conservative critics like the Fraser Institute and the Canada West Foundation here in Alberta have always said that the low income cut-off overestimates the number of people in poverty, that it in fact disguises real improvements.

In a city the size of Edmonton, for a family of four the low income cut-off is about $33,000. Well, the people we deal with at the food banks and in the agencies dream of a $33,000 income. That is very far beyond their comprehension. We don't concern ourselves with people in the $24,000 to $50,000 range; we talk about people who have $6,000, $8,000 or $10,000 a year.

I've given you a brief excerpt from the study that the Edmonton Social Planning Council released just a couple of weeks ago. We said, “Okay, fine, you don't like LICO. Let's take a look at half of the low income cut-off for Edmonton.” We found some things that definitely backed up our sense that people are getting poorer, they are moving lower, even people under LICO.

We found that from 1993, which was the year of Alberta's major welfare reforms, to 1995 the number of families living at less than half the poverty line or the LICO essentially doubled, from 2.5% to 4.9%. Single parent families, primarily headed by women, went from 6.6% to 17.1% in the same three year period. This is our most recent data in 1995. We have no reason to think that the trend hasn't continued into 1996 and 1997. It almost tripled; there were almost three times as many families in this condition of desperate poverty.

Then we looked at the number of children, and we see that the number of children has increased dramatically. We estimate that about 15,000 more children in Edmonton alone are living below less than half the poverty line in just the three year period.

So we are seeing that our poor are getting poorer. There is absolutely no way that anybody has been able to show me anything to convince me otherwise. It's not just talk. This is StatsCan tax filer data or census data. If they don't file tax returns, some of this data they don't even show up in, although the census data would collect it. If they don't have a phone, they won't show up. Half of the people who go to food banks don't have phones.

So in many ways this may even underrepresent the most indigent population in Edmonton.

I tell you this because Edmonton is fast becoming an area of intense poverty in this province. These are the results of the welfare reforms in terms of outcome, and we need to address these kinds of outcomes with our national programs.

When we look at transfer payments to children, we see that they have dropped nationally. It would start out even lower in Alberta and has dropped faster in Alberta. Alberta children on average receive about 20% less in terms of transfer payments than the rest of the country.

All of this is to reinforce what you've already heard this morning, which is that Alberta has a social policy that has abandoned the poor and abandoned the poorest people. There are no two ways about it.

• 1350

The Canada health and social transfer, which replaced the Canada Assistance Plan about a year and a half ago now.... The previous plan had protections. They weren't extensive, but they had some protections about the way federal money is spent. The poor have been abandoned by the Canada health and social transfer. The only string attached to the money is the residence requirement, so, as when B.C. implemented their three-month waiting period, that's not possible. No other strings are attached. The provincial government can do whatever it wants, and is doing it, and it's taking an extremely narrowly ideological and dogmatic approach to poverty. There are just no two ways about it.

We too applaud the national child benefit. It's a step in the right direction. Another thing the federal government can do is ask what it takes. What is the poverty line in this country? What is our social bottom line, the line we will not allow people to drop below?

So I encourage you and applaud the leadership we have seen so far, but I'm also encouraging you not to trust the provinces always to do the right thing. The simple fact is that Minister Pettigrew, when he was the minister, said, well, the communities will monitor it. In this province, those of us who have spoken today, we can't see this Minister of Social Services. I'm not on his A list. They will not listen to what the community says.

We need the federal government. These people are Edmontonians. They're Albertans, but they're also Canadians. I would encourage you to think about that as you invest in children, as you've indicated. We need the federal government there. I think one of the strengths of the Canadian federation is that we have counterbalancing powers. Sometimes one needs to give another a tap on the shoulder and ask what is going on.

The Chairman: Thank you.

Now we'll move to the question-and-answer session. Mr. Solberg.

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

First I would like to make a point of information. I think earlier Ms. Savage raised the issue of the child tax benefit and people who don't pay income tax not benefiting by it. It is a refundable credit, so people do actually get a cheque in the mail if they don't pay income tax. That's an important piece of information, one I think people should have.

I just want to start by saying that when social program dollars are very few and far between it's very important that they be targeted to people who are the most in need. I don't know if the federal government has a principle like that by which it runs its social programs, but I do think that's an important principle and it should be applied.

But one thing that's pretty clear as I listen to everybody here is that while poverty is a huge problem, the prevention of poverty is probably the most important thing we can do to ensure we don't have poverty down the road. Once people are already poor and in that desperate situation, I suspect it's more difficult to get them out of it than if we had prevented it in the first place. It makes me believe we need to find ways to create jobs so people aren't in that situation, some way to relieve the burden on families, who too often split up for the wrong reasons. A lot of times, I would argue, it's because people are under huge financial stress.

I guess that brings me to my question, which I will direct to Dr. Genvis. Anybody else who wishes to answer, please jump in.

Under the current situation, when you have two families earning the same amount of money, if you have a single-income family versus a dual-income family, the dual-income family gets the tax break, a fairly substantial one. I wonder if Dr. Genvis could reflect on that a bit and maybe tell us just how much money we would be looking at, if he has that information. How much money would the average single-income family end up paying in taxes compared with a dual-income family earning the same amount of money?

Dr. Mark Genvis: There are two points in regard to this, and given the time, I'll make my reply brief. The first is that if you take for example a single-income family earning $40,000 or $50,000 or $60,000 and a dual-income family making exactly the same amount, generally, to the best of my understanding, the single-income family is going to pay more than $1,000 more, generally in the range of 50% more taxes, than the dual-income family. That's the first point in relation to that.

• 1355

So when you're talking about people who are already at a middle or lower-middle income and so much of our discussion has been around poverty, what you're doing to that family who either absolutely insist on caring for their children or are unable to find a second job, one or the other, is penalizing that family to a much greater extent. So as was discussed, you're bringing people more into the poverty realm.

The second point is that when people, whether they be the mother or the father, decide, if it's by choice, to leave the paid workforce to care for that family on a full-time basis, we have to realize that this is a substantial contribution to society. Not only does this family give up the tax breaks, if you will, but they also give up a full income. For example, that $40,000-a-year, single-income family would have been at $60,000 if he or she had been making an extra $20,000, or whatever. So they are not only paying a higher rate of tax. They still have to buy toys and they have all sorts of expenses in relation to bringing up a family and they are forgoing a full income to care for people they love and to make that substantial contribution.

It's a tremendous concern. These people are seriously penalized.

The Chairman: Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: First of all, I would like to say to Mr. Arès that we are very sympathetic with what he told us today and also that funding cuts to Radio-Canada have also penalized some remote areas of Quebec. I will transmit your views to our official languages critic, Louis Plamondon.

I would now like to make another brief comment, to congratulate all those who work to help the poor. These are very difficult situations. It is clear, especially since we started on this travel, that the budget cuts that were made, especially in the area of transfers to provinces, have contributed to an increase in the poverty rate throughout the country.

Ms. Cuthill, I want to congratulate you for your initiative in launching today your operation zero tolerance for poverty. This means that if you reach your goal, the economy of our society will be in perfect health. However, there is a long way to go before we get there. In your view, who should take the leadership? Should it be provinces, the federal government or a partnership between the private sector, social organizations and provincial and federal governments?

[English]

Ms. Midge Cuthill: Could you repeat the last part of the question?

[Translation]

Mr. Odina Desrochers: Who should take the leadership?

[English]

Who takes the leadership: the federal government, the provincial government, or social organizations?

Ms. Midge Cuthill: I feel we should be looking at it as a combination working together. If we don't work together we're not going to be able to make any changes. We can start by stepping into our communities and working at the grassroots level, which we are doing. We're making progress with the people themselves. But we also know we cannot do it alone, so we have to work together.

From the understanding I have, the federal government is going to be looking at transferring funds over to the provincial governments. If we're going to be trusting our provincial government, from what it has done so far, we're going to be in bigger trouble. So we need to know that we have to work together on it, having representation not only from the leadership but from the people themselves to do it. As part of it, we have to work together. As far as leadership goes, it has to be a combined leadership.

The Chairman: Mr. Riis.

Mr. Nelson Riis: Thank you very much, Mr. Chairman.

This has been a very moving set of presentations, and I think two or three things come through as common themes. First, the government of this province is a mean government. It's a cruel government. I can say that; you can't. Well, I guess you can say it.

• 1400

As for your comments in terms of the suggestion that we adopt a zero tolerance policy for poverty, that might take us far beyond preventing poverty in the future, but as for eradicating existing poverty that is increasing by the hour, I remember that in 1989 Parliament passed a motion to eradicate child poverty by the year 2000. Since then, of course, it's escalated. We have a long way to go.

I simply want to say thank you for your passionate presentation. People who care and are concerned give presentations that reflect that passion.

Normally around these tables capital is well represented, not very passionately, but well. People are not as well represented, particularly poor people, so I simply say thank you for what will perhaps be an important direction for us as a committee when we eventually file our report. We might perhaps suggest that a wonderful way to measure how wonderful this country is—which it is—would be to take serious steps to eradicate child poverty and poverty in general.

The Chairman: Thank you, Mr. Riis. Mr. Jones.

Mr. Jim Jones: I also thank you for your presentations. I really don't have a question for anyone. I thought you all represented yourselves very well. I was a little surprised to hear.... I thought the responsibility for this problem was with the province, and I thought the province was looking after it. I am a little disappointed.

I do believe, though, that we need to balance our budgets. We need to reduce the deficits, because when we are spending $48 billion on servicing the debt, that is money that cannot be used for programs to help people better their lives or used to make sure that we have a good health care system. And 50% of our debt servicing today is going to the German and Japanese banks. We have to stop that and get rid of this biggest department we have in the federal government. It is important for us to do that.

I went through something a few years ago when I was with a large company that I thought—and I still think so—was one of the greatest companies in the world, but we were humbled. Maybe we were arrogant in the 1970s and the 1980s, but we almost came to our knees. We had to do the tough restructuring. That has been done, and they did it with humility and dignity and respect for the individual. Those are some of the things that are not necessarily being done by the different levels of government. The company I am talking about is IBM. I thought we did a great job. And we're back and we did all the tough cuts. They don't make as much money as they used to, but they are employing a lot more people and they are a lot more aggressive.

What I said out in Vancouver and in other places.... There was a motion passed in Parliament, but it did not get accepted. In this term of Parliament there are a lot of accountants and economists around, and I think we can manage the debt and the budget. We can do a lot of those things. The toughest challenge is that of getting Canadians back to work. The vast majority of Canadians want to work. And as for those who cannot work, we must look after them.

We should set a realistic goal. The goal of 5% unemployment, of cutting unemployment in half, from 9% to 5% in the next four years, would be a good objective for the 301 members who have come to this 36th Parliament. That's what we should be focusing on.

Nobody likes to see or even hear the presentations, but I really appreciate them. As a Conservative, I'll be working towards that, because I have a social conscience, but I also believe that we must pay as we go. If we had been paying as we went instead of borrowing on tomorrow, we wouldn't be in this mess that we're in right now. I think some of it is behind us, but we can't relax from that standpoint, because we are in a very competitive global world. If we're going to compete in that world we have to be very cautious in what we do, but we also must look after everyone in this country.

Thank you for your presentations. I'm glad you all were here today.

The Chairman: Thank you, Mr. Jones. Ms. Redman.

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

• 1405

I'd like to thank everyone for coming. You need to know that we heard a very passionate presentation on behalf of the poor yesterday in Vancouver, so your voices aren't alone.

It has been my observation in government that most politicians truly are in government for the right reasons. One of the reasons we're travelling around on this road show is truly to get the pulse of the Canadian people, and we appreciate that you're here.

It sounds on the face of it like things are very bad in this province. Ms. Savage, you brought out a point that's been raised in my home province of Ontario. We need to look at how we partner with our provincial counterparts. Any time you partner with someone you share the vision. There's risk in that, to be sure, but I'm also a strong believer that risk needs to be shared by the community, by municipal levels as well as provincial and federal government. Obviously in this instance the federal government may be the one to provide the leadership, but I do share your concern about the impact on the working poor and on welfare recipients with the child benefit.

I also liked the comment that was made about what is the poverty line. I think that's a point well taken. Government is being asked more and more to work like businesses, and I think that's a benchmark that it might behove us as a government to work towards.

The question I actually have is for Reverend Miller. You talked about being opposed to the national child benefit program in view of the other needs. I would just tell you that I'm very supportive of that, because I thought it was one of the ways that dealt with the fact that in a partnership we're sharing the vision, and this was something that would flow money directly to children living in poverty. So I guess I would like to flesh that out a little bit more.

Rev. Bruce Miller: I didn't say on the one page that I opposed the program. I think it's a problem of accountability. There are criteria in place, but is there any accountability back to the federal government about how the provinces actually put that money into good use? That's one of the problems.

There are two problems actually. It seems to me people of low income and also people on social assistance do not have enough money to support their own children. The money coming to the provinces to support social assistance...but then that frees up money to go elsewhere into other kinds of programs. That means that the money doesn't directly go to the families with children who are in need. That's the problem I have.

It's fine to have these extra programs and to feed children in schools and so on, but to have people so poor that they have to give up their children to foster care is not acceptable. How can the province then be accountable back to the federal government about how that money is used?

Mrs. Karen Redman: The partnership that we're hammering out with the provinces—and we're still in negotiation—is that they would come in to reinvest those amounts of money into comparable programs to help children so that it won't be a matter of taking it out of one pocket and putting it in—

Rev. Bruce Miller: One of the criteria I understand is attachment to work. It would be very easy for the Alberta government to just channel that money into programs where they think, well, jobs, that's the complete answer. People who are not in a position to ever get jobs will be completely left out of the picture.

I'm not really happy with the way the criteria are defined. Then there's the problem of reporting back. There seems to be a trust on the part of the federal government. They let the provinces go ahead and they don't have to report back. To me, that's not acceptable. So while it's being fine-tuned, could we have a good mechanism for accountability?

Mrs. Karen Redman: Certainly. I mean, I don't mean to speak on behalf of the people who are actually doing the negotiating, but if you have any specific criteria or thoughts on that, I think they would be welcomed.

The Chairman: Thank you very much, Reverend.

This has been a great round table. I think the human element of the debate has really come forward, and that's very important for us to keep in mind as we travel across the country and make recommendations to the minister.

I also want to say to you that you can rest assured that this committee believes that economic growth and opportunity does not have to come at a human cost. I think we can expand opportunity and also retain security for people. That is sort of the framework we are definitely looking at.

• 1410

So on behalf of the committee members, I'd really like to thank you very much for what I think was an excellent round table this morning here in Edmonton.

The meeting is adjourned.