FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 22, 1997

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call this meeting to order and welcome everyone this morning here in St. John's, Newfoundland.

As you know, pursuant to Standing Order 83.1, the finance committee is making pre-budget consultations across the country to hear from Canadians as we face the new challenge of heading toward a balanced budget, perhaps having a surplus very soon. We're looking for ideas on how we should in fact invest the fiscal dividend.

We'd like to welcome representatives from the Coalition for Equality, who will be our first presenter. Before you begin, I want to give you some quick instructions.

This is the way we operate. Everybody has five minutes to make their presentation or to give us an overview of it. Thereafter, we will have a question and answer session. If time permits, we may have some debate and rebuttal, even amongst panel members.

You may begin. Welcome.

Ms. Bev Brown (Coalition for Equality): Hello.

Zero poverty must be the new goal of the federal government. It is time for the Canadian government to reverse the measures of the last decades that have moved income away from the lowest-income quintile of Canadians toward richer Canadians and to repay the social debt caused by lack of social investment. The poor have paid a higher price as a result of deficit cuts. There have been massive reductions in social assistance and a falling real minimum wage. The unemployment rate is officially 9%, but if discouraged workers, people on social assistance, and part-time workers who want and need to work full time are taken into account, the real rate is more like 19%, and even higher here in the Atlantic region.

We ask you to reverse the cuts of the Canada health and social transfer. Last year 3.3 million Canadians used food banks. There are now over 5 million Canadians living in poverty. On average, they are $6,700 below the poverty line, although that number is no doubt higher in Atlantic Canada. This is unacceptable.

Low-income Newfoundlanders get as little as $89 and $129 a month to live on through the human resources and employment department. There have been no income support raises since 1989.

People in this province who would rather be working at decently paying jobs are currently choosing between rent and food, heat and food, and medicine and food.

According to Senator Erminie Cohen's 1997 report, Sounding the Alarm: Poverty in Canada, in 1994 the richest fifth of Canadians had almost half the income in Canada, while the poorest quintile had only 3.4% of all income. This gap is growing.

Only corporations and wealthy Canadians have been benefiting from your economic policies. We ask you to reverse this trend, using all the measures at your disposal.

The alternative federal budget outlines options for the creation of a more just economy. We recommend the implementation of some measures from those budgets that would allow for the redistribution of income more fairly in Canada.

For example, the corporate share of income tax has been falling compared with personal income taxes. Corporate taxes are lower in Canada than in most G-7 countries. We want to see this trend reversed. We want the tax system to be used to redistribute income to the lowest-income quintile of Canadians.

For example, we want social security contributions to be restructured to reduce the burden on low-wage earners. Low-wage work should not be overtaxed, and the GST and HST sales tax, which hurts low-income earners the most, should be lowered.

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The Coalition for Equality wants the federal government to set targets to reduce unemployment with the same strength of purpose used to reduce our deficit. Job creation must be priority number one for Canada—decent jobs with good benefits.

The Canadian unemployment rate is double the jobless rate of 1989 and higher than it was last year. The one fund for unemployed Canadians, unemployment insurance, is more difficult to qualify for, so now fewer than 40% of unemployed people can claim insurance when they lose work. Fully $6 billion from this fund has been used to pay off wealthy debt-holders. It is wrong to redirect money this way when Canadians pay for and need this fund. We want to see eligibility increased so more workers can benefit from their contributions to this fund.

We ask that any new child tax benefit be extended to all low-income families. The current plan to use the tax to benefit working poor families discriminates against those who cannot find work.

In spite of government rhetoric about preparing Canadians for work with good education, post-secondary education has become more inaccessible to people with low incomes. People are asked to assume an even higher debt load to get education and training, and many people are finding this debt prohibitive. People are reluctant to take on $.20,000 and $30,000 debt in order to prepare for the labour market, especially when jobs are so scarce. We want you to take fiscal measures to increase low-income Canadians' access to post-secondary education.

The United Nations Development Index called Canada the best nation in which to live, compared with 174 other countries. That's because Canada scored well on average incomes. But life for the lowest 20% of income-earners in Canada is getting worse.

Canadian poverty and unemployment rates are among the highest in industrialized countries. We have the second-largest percentage of low-wage workers and child poverty. Almost 25% of the Canadian workforce is working poor, and that number is growing with part-time, non-standard contract work. Real family incomes have been decreasing for 15 years in spite of more hours worked and more family members working. Wage-lowering tactics are not appropriate to address the needs of Canada's poorest citizens. It is time to produce a more fair society.

We ask the federal government to get serious about job creation, get serious about eradicating poverty and get serious about meeting the needs of all Canadians. It is time to reverse the trend of income moving towards the rich.

Thank you.

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

We now move to the representative of the Newfoundland and Labrador Chamber of Commerce, Leonard Winsor, chair.

Welcome, sir.

Mr. Leonard Winsor (Chair, Newfoundland and Labrador Chamber of Commerce): Thank you very much.

I would like to thank you for the opportunity to make this presentation. We believe this process is an important one, and we have the express hope that the suggestions do not fall by the wayside but are considered and utilized in the preparation of the budget.

First of all, I might express the pleasure of the board of the Newfoundland and Labrador Chamber of Commerce to see this government has attained a balanced budget. This has been the wish of my past colleagues and board chairs for a number of years. Now that the deficit has been eliminated, we encourage the government to attack the debt and reduce it so those who succeed us do not have to face the burden of many years of overzealous government spending and a rising debt load.

Although many positive adjustments to the economy of this province are under way or just on the horizon, there are many areas that will challenge policy-makers in the next few years. We are still experiencing a muted growth in economic activity as compared to central and western Canada.

Economic growth has been adversely affected in this province by the moratorium on the groundfish fishery. This loss of 20,000-plus jobs has affected many other business sectors. The announcement that the TAGS program is ending in May must be followed by a program to replace TAGS. We believe this program should take a more practical approach to get some of these displaced workers back to work, either in fishery-related environments or in some other environment that will bring dignity to these men and women.

One example of how to do this is to offer tax incentives to any business that hires a displaced fisher or plant worker. The logistics of this program should be put together by representatives of the workers themselves, business people, zonal board representatives and government officials. We are sure that when a group of this diversity is brought together, other ideas will emanate that could enhance the lives of fisher folk and stabilize community life in our province.

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The impending royalties from megaprojects such as Hibernia and Voisey's Bay will seemingly diminish transfer payments to this province and remove most of the opportunity for the province to get on its feet before contributing to the nation. We believe the federal government should consider in these budget estimates a formula to defer for the short term this dollar-for-dollar loss of transfer to the province. Some formula must be possible to allow this at this time and for the province to repay at some future date.

We can see, as business leaders, that the process of adjustment is well under way in Newfoundland and Labrador, but we still have a ways to go. The challenge we offer you is to continue to support this adjustment process. A strong case can be made for a continued federal role in providing targeted assistance to Newfoundland in particular and Atlantic Canada in general. We realize this is becoming very much a minority view, conflicting with the more predominate view that there is no more a need for regional economic development strategies. However, it is our opinion that this majority view fails to recognize the complexity of the challenges facing the Atlantic provinces, more particularly Newfoundland and Labrador.

It threatens to leave the poorest province in Canada to handle a massive restructuring of its economy through its limited resources. This, we believe, is in direct conflict with the commitment to securing and enhancing the economic union with Canada. Our preference would be to broaden the mandate of current regional development programs to allow a wider scope for policy and program alternatives. We therefore request that you consider these last few points in your budget preparation.

Once again, I thank you for the opportunity to present to you, and I wish you good luck in the remainder of your deliberations for this process.

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

We will now move to Communities with Disabilities.

Mary Reid, welcome.

Ms. Mary Reid (Executive Director, Civic #4 Independent Living Resource Centre): Thank you, Mr. Chair.

Actually, I'm representing Civic #4, which is an independent living resource centre. I don't think that correction made it onto your copy.

I'll just say a word of introduction as to who we are. We're an organization providing services to persons who have disabilities, becoming an independent living resource centre with affiliation to the Canadian Association of IL Centres.

We strive for the inclusion of all citizens in our country, in our province, and in our communities. We strive for the removal of barriers and an end to the discrimination that prevents people from being fully engaged in this country. We firmly believe as individuals that all people must have the opportunity to take control over the decisions that affect their lives. We believe we are entitled to clear and accurate information, to the expertise of our friends and neighbours, and to support systems that enable our full contribution to our communities.

The Government of Canada has stressed the need to address deficit and debt reduction, emphasizing the need to get government spending under control in order to build the economy. We find the attack on social programs and citizenship supports to be in clear opposition to that stated intent. In many communities throughout this province, long-term tertiary levels of funding are going to be required to remediate the lack or the removal of essential services that has happened in the name of debt reduction. Ironically, these long-term costs are going to outweigh the immediate initial savings, if indeed there are any.

We need to address the CHST. The introduction of the Canada health and social transfer is still causing tremendous strain and devastation throughout much of our province. The guise of offering greater control while significantly reducing the amount of revenue for social programs has translated into a loss of essential supports and services, as well as a decrease in the minimum levels of incomes of many individuals.

The ability of this province to provide adequate and appropriate services is not possible, given the revenue. Although measures to increase efficiency and effectiveness can be found in most systems, the degree of the reduction has been unrealistic. Offloading debt control onto individuals who are vulnerable and perhaps less powerful in the political context is most objectionable. Again, within this province, the reduced revenue has resulted in cuts to social programs, including home support services, drugs and personal health supplies, technical aids, adaptive equipment, income programs, transportation, interpreting services—all of these things that happen not only in this province but across the country, and they increase poverty and they increase the isolation of individuals. They are devastating our communities.

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The loss of legislative protection within the Canada assistance plan impacts on who we are as Canadian citizens. We have been asked to support the devolution of powers and deficit cutting at the expense of collective caring. Such a move weakens the country and challenges the pride we have as citizens who want to share with each other. The protections we have address values of equality, equity and fairness, and we believe these values are still desired by Canadians.

It's interesting that Mr. Martin raised, in his presentation to the standing committee, the issue of values. We want to challenge you to look at the values as benchmarks on all policy and budget decisions. We do have values in this country: we believe in each other, and we believe in continuing with equity and equality and fairness, and we also believe that budget decisions are destroying those values.

You've asked about the question of priorities. We priorize people. We challenge you, and the Government of Canada, to invest in the positive capacity of persons with disabilities to be a major part of the social economy. We urge the continuation of strategic initiatives that network the hidden talents and the skills of people across the country. Given the necessary supports, individuals, the volunteer sector and communities are well situated to contribute to social policy research and the sharing of best practices, demonstrating strong, vibrant networks of communities.

Persons with disabilities have a lot to offer within the context of being able to work with each other across the country, finding solutions that work for themselves and offering that within their communities. The sharing of skills and information and solutions is what comprises our communities.

We challenge you and we urge you to continue significant support of national cross-disability and consumer-controlled organizations, in that it is essential in order to move towards the engagement of persons who have disabilities within the economic and social growth of this country.

We would like to acknowledge and commend the support of citizenship issues through the federal task force on disability issues, through the introduction of the opportunity fund and through the support of national organizations. As organizations of persons who have disabilities, these groups and provincial affiliates provide a strong foundation to the increased participation of persons with disabilities within communities.

We do ask you to look at the increased costs that are associated with disability-related needs, in that to facilitate full participation, to gain the expertise from persons who have disabilities, to be able to share in the skills that are there, these costs need to be covered outside of income programs.

In closure, we'd like to say that we know and we believe that the voices across this country of persons who have disabilities, of all citizens within our communities will call for a return to value-based decision-making and will call for a return to collective caring, to the issues of fairness, equality and equity. We urge you to take the risk that might be involved in terms of increased spending that will ensure full participation, that will ensure that the rights of individuals are protected, that will uphold recent Supreme Court decisions, as in the Eldridge case.

Finally, we urge you to reaffirm your leadership role as part of this country, to provide the foundation for this country, so we can continue together as a federation that believes in people and that believes in each other.

Thank you.

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

I will move to the representatives from the Emmanuel House, Jocelyn Greene and Matthew Dellavalle.

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Mr. Matthew Dellavalle (Emmanuel House): Good morning, fellow delegates and people from the community, province, and nation, on behalf of myself and Emmanuel House, a community program designed for people in transition towards personal freedom, that being mental and emotional, as well as moving toward some state of independence. In the words of the late Albert Einstein, remember, each one of us is responsible in every word and deed.

We the young, the elderly, the disabled, and the financially challenged feel that deficit reduction has burdened us deeply. Deep cuts in social benefits on a provincial and federal level have caused shock waves to be sent through the province and nation. They have caused people who are already well below the poverty line to become more impoverished, to an almost dangerous level.

We have seen the result of extreme change that happens too fast. I'm referring to deficit reduction. It has moved too fast for groups and people who feel socially responsible to the community as a whole. It has almost eliminated some programs, and it has caused others and their resources to be stretched to their extreme limits. I think we should now concentrate on the wounds that are festering in our social safety net, in which I as a Newfoundlander and a Canadian would like to regain my pride and security. It has been too rapid and has targeted those who are vulnerable, creating undue hardships for the poor. It has resulted in provincial governments having to slash services, primarily in health and education and social services.

Residents of Emmanuel House and the Naomi Centre, most of whom are abuse victims or have significant psycho-social problems, have been adversely affected. Cuts to institutional budgets have not resulted in increased support for community programs.

I have two or three points here. The first asks for expanded funding federally and provincially for transitional housing, hostels, men's and women's shelters, and decent, healthy living space for single employables in transition towards being “productive members of society”—taxpayers. The second recommends that we allocate more financial assistance to provincial governments so as to increase social benefits to alleviate the burden on citizens: better quality medical care, social integration and integrity, ongoing programs in education and career training, young entrepreneurs creating small businesses, environmental clean-ups, and renewable resources. I hope to see the conscience and the common sense of our nation, province, and community as a whole being awakened so we can reach a new stage in our evolution as citizens in one nation, province, and community, where we'll look back on deficits, social injustice, and poverty as a myth and not a fact.

What we have to fear is that a generation of Canadians without hope for the future will act out of anger. They have nothing to lose and will find whatever method they can to fight back. If we do not help people become productive citizens we will pay. The result will be increased costs for the criminal justice system and mental health fields. Alternatively, we can reinvest in social programs that give people a chance to contribute. It really should be a pretty simple choice.

I thank you from the bottom of my heart.

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

Now we will move to the representative from the Tenants' Action Association, Mr. Keith Davis. Welcome.

Mr. Keith Davis (President, Tenants' Action Association): Thank you very much for inviting me. I'm president of the tenants' association in Brophy Place. We're all people in a low-income neighbourhood who are tenants of the Newfoundland and Labrador Housing Corporation, which is the corporation that provides most of the public housing in this province.

Finance Minister Paul Martin has succeeded in reducing the fiscal deficit while ignoring the social deficit. Although the cutbacks initiated by the federal government improve the figures on the balance sheet, they cause serious problems for many people. Health care services are suffering. There is a shortage of physicians in rural areas. Hospital beds are closing, and the emergency department in one St. John's hospital is no longer open at night. One woman in Newfoundland died while she was on the waiting list for cardiac surgery.

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Schools are also underfunded. Each year parents and children are enlisted to join fund-raising campaigns for their schools. Schools are closing, teachers have been laid off, school bus routes have been eliminated, and children with challenging needs are not always able to receive the services they require.

Spending for social services has also been reduced. In this province it has resulted in cutbacks to child protection budgets and a decrease in special allowances, like dietary supplements, for example.

These are only a few of the many examples of the devastation caused by government cutbacks.

The residents of Brophy Place are among the citizens of Canada who have been hurt by cutbacks. The units around Brophy Place are owned by the Newfoundland and Labrador Housing Corporation. Most units are occupied by families with young children. Many of their households are headed by single parents. The unemployment rate in the neighbourhood is very high and the average family income is under $16,000 per annum for employed parents and under $11,000 per annum for unemployed parents.

The neighbourhood has a community centre, a parents' outreach house staffed by a Jesuit brother, a tenants' association, a clothing bank and a food bank. Although this supportive infrastructure helps, the needs of the residents are still not entirely met.

Unemployment remains stubbornly high and poverty is still rampant in the neighbourhood. Social assistance recipients have not received an increase in years and some even lost benefits when the last provincial budget was announced.

Last year, due to cutbacks to education, the provincial government tried to remove school bus service from St. John's students, including Brophy Place students. Only after a summer of protests and lobbying did the minister of education agree to reinstate school bus service on the condition that parents pay a user fee.

Recently around Brophy Place we've noticed an escalation in vandalism and harassment. We should not find this surprising. Many Brophy Place parents have been out of work for years and see no chance of ever getting a job. Also, they never have enough money to meet all of their families' needs. Their frustration transfers to their children, who are growing up in an atmosphere of hopelessness.

It is our observation that the most vulnerable people in our society have been made to pay the highest price for deficit reduction. In an economy where corporate profits are rising, we find that unacceptable.

Now that Paul Martin has exceeded his deficit reduction targets, it is time to restore or perhaps even increase funding for health care, education, social services and job creation. It is clear that many citizens of Canada are suffering, and the federal government has an obligation to assist these people in their time of need.

We would like to suggest some initiatives the federal government could undertake to alleviate some of the major problems in Canadian society.

Access to post-secondary education: under the current system students attending post-secondary institutions graduate with enormous debt loads. This serves as a deterrent to some people, and to those who pursue further education it results in a huge financial burden. This is unfair, especially in an economy offering fewer job prospects. Most industrialized nations provide free post-secondary education for their citizens. Canada ought to do the same.

Unemployment: advancing technology and corporate downsizing have eliminated many jobs. We're entering a new era in our economic history where mass labour is no longer required to maintain or increase productivity. Employers and trade unions will have to be encouraged to introduce a shorter work week and job sharing, and more money will have to be channelled into human service and community service sectors to create more employment opportunities.

Poverty: the gap between the rich and the poor in the country has doubled in the past 30 years. More families are falling below the poverty line. Social programs like employment insurance and social assistance are no longer adequate and ought to be replaced by a guaranteed annual income administered directly by Revenue Canada. It would be extended to both the employed and the unemployed and would provide sufficient benefits to ensure that all Canadians would live above the poverty line.

The Chairman: Thank you very much, Mr. Davis, for a very thoughtful presentation.

We will now hear from Emma Rooney, the representative from Voice of Justice. Welcome.

Ms. Emma Rooney (Co-Chair, Voices for Justice in Housing): Good morning. Our title is not Voice of Justice, but Voices for Justice in Housing. I'd love to be the voice of justice but it's a bit ambitious.

Some hon. members: Oh, oh.

Ms. Emma Rooney: We'll first address the question of the process of deficit reduction.

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The deficit reduction process has caused great suffering for all recipients of social programs. The process has targeted the needy and has seriously affected our identity as Canadians. We hold our social programs as an integral expression of our ability to care for each other as Canadians. A decade of cuts to programs and services has hurt many Canadian families, especially here in Newfoundland and Labrador. Since the Canadian assistance plan was changed, each year Newfoundland loses millions of dollars in transfer payments.

As some of the effects of that, in 1994 4.8 million people—one in every six Canadians—were living in poverty; in Newfoundland, one in four children live in poverty. Due to the increased cost of tuition for university students, many young people are faced with a debt of over $30,000 when they graduate. In Newfoundland, the number of social assistance caseloads rose from 22,826 in 1990 to 35,875 in 1994.

The problem of social housing in our country is becoming more dismal each year. Canada has the lowest amount of social housing stock of all the G-7 countries, as low as 1.3% of the federal spending, and we know that is falling. Social housing provides assistance to about one-third of the people who have social housing problems. The Newfoundland waiting list is about 800 families and increasing weekly.

Yet housing is a basic human right. In article 25 of the Universal Declaration of Human Rights, housing is listed.

From these effects, we would like to move to our priorities, and we recommend to our government the following: that the Government of Canada become as enthusiastic and committed to obtaining zero poverty as it has been preoccupied during the past years with zero deficit, and that it increase spending in all social programs where cuts have caused human tragedy.

In the field of social housing, instead of gradually phasing out funding, we recommend increased funding in order to help the province cope with the new needs due to the failure of the fishery and the high unemployment and to demonstrate that our government is serious about its commitment to eliminating child poverty. Housing is basic to overcoming child poverty.

On April 22 of this year the Province of Newfoundland and Labrador signed the social housing agreement with the CMHC. We recommend that our government take a very active role to see that all the contractual obligations of this agreement will be carried out by our province in order for this new agreement to work to the advantage of the people for whom social housing was originally intended and to guarantee that the rules regarding the maintaining, repairing and selling of social housing be strictly enforced.

In regard to that agreement, we strongly endorse the position of the Canadian Housing and Renewal Association in taking initiatives to amend the present agreement, that there be no unilateral changes to that agreement, and that information regarding initiatives, research, and mistakes be shared across our country, which would help all provinces obtain maximum benefits socially and economically and would assist us in building a stronger federation.

In summary, I would like to say we stress that when people's basic need for housing is not met, governments at all levels will spend more in education, health and other community services. We believe it is morally, socially and economically wrong for the Government of Canada to be passive when so many unemployed, underemployed, and disadvantaged Canadians are in need of housing. If it is true that Canada is the number one country to live in, surely that statement presupposes that Canadians live in adequate and affordable housing within this great country.

These are our expectations for the 1998 federal budget. Thank you.

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

We will now move to the representative from the Newfoundland and Labrador Federation of Labour, Elaine Price. Welcome.

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Ms. Elaine Price (President, Newfoundland and Labrador Federation of Labour): Thank you.

On behalf of the 40,000 members of the Newfoundland and Labrador Federation of Labour, I would like to thank the committee for providing us with this opportunity to participate in the pre-budget consultation.

In 1993 the Canadian deficit relative to the economy was well above the G-7 average. In 1997 it will be the lowest. While this is perceived as an impressive achievement and hailed as a victory over the deficit, it is important to remember why the deficit was such a burden in the first place. While the books have been balanced, the question that must be asked is, at what cost to Canadians?

The most important source of debt accumulation has been the anti-inflationary recessions of 1982 and 1990. The Bank of Canada, which kept interest rates high through their anti-inflation monetary policy, significantly increased the size of the federal government's debt charges and restricted economic growth and employment, impairing the ability of our economy to support the public debt.

In addition to paying more in interest rates, government revenue was reduced by the high levels of unemployment and we were pushed further into the hole.

However, instead of changing the economic and monetary policies to deal directly with the cause of the deficit—high interest rates—the federal government instead chose to adopt a singular focus and chopped program spending, and Canadians have paid dearly for that choice.

For the great majority of Canadians, the real standard of living has been sharply eroded in the 1990s, and poverty and inequality in Canadian society have drastically increased.

The unemployment rate in this country is a national disgrace. In August the national unemployment rate stood at 9% and 1.5 million Canadians officially remained unemployed. However, that is not an accurate reflection of the unemployment problem in Canada. If this figure were to include people who had stopped looking for work and people who are underemployed, this rate would be much higher; actually, it would be around 14% to 15%.

In Newfoundland and Labrador the official unemployment rate for August was 18.5%, but when you consider that the labour force participation rate was only 52.5%, this picture becomes much bleaker.

The youth labour market in this country is at a 20-year low, and the average annual unemployment rate for young people stands at 16.1%. At 29%, Newfoundland and Labrador has the highest youth unemployment rate in this country.

Growth in real income per person terms, which currently stands at minus 6%, has also declined in this decade. In fact, it may be even worse than during the decade of the Great Depression. Middle-income and poor families have been hurt badly. Research by the Canadian Council on Social Development shows that while the average after tax income of families with children dropped between 1984 and 1994, the after-tax income of families in the poorest quintile suffered a drastic decline of nearly 30% and families in the lower-middle income group experienced a 5% decline.

Poverty in Canada has reached crisis proportions; 5.2 million people, which is one out of every six Canadians, now live in poverty. Since 1989, child poverty levels have grown by 46%. Unfortunately, more and more people are going to be forced into poverty because of the cuts to social programs and the cuts to unemployment insurance.

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Young people, who are shouldering a disproportionate share of the pain folding from the federal government's past economic policies, have been hit with a double whammy. At a time when they're being told they should, and must, stay in school to gain the skills necessary to compete in the new economy, tuition fees are escalating. Many young people, especially those from poor and rural families, are being denied access to a post-secondary education.

Our public health care system is being dismantled, and as provinces respond to the CHST many Canadians are being denied access to the health care services they both need and deserve.

A heavy economic price is still being paid for the cuts to the public service. We have lost thousands of public sector jobs. These cuts have also reduced private sector employment. Beyond the depressing effect of cuts on recent rates of growth and job creation, reduced public investment in infrastructure, innovation, research and development, training, and most important, education, at all levels will result in slower growth in the future. As a matter of fact, Wood Gundy estimates that the impact of cuts to public services and social programs will reduce real growth by 1.5% in 1997 and by another 1.1% in 1998.

The sad thing is, much of this pain was unnecessary. In the past three years, the Canadian Centre for Policy Alternatives and Cho!ces have presented alternative federal budgets that have outlined how the federal government could have reached its deficit reduction goals while at the same time creating employment and improving our social programs. However, our federal government blindly followed the Bank of Canada's zero inflation policy and to the detriment of Canadian people ignored the negative consequences of high interest rates and public sector cuts on employment creation and economic growth.

These slash and trash policies, which sacrificed the benefits of economic growth and job creation, are not an effective means of improving government finances. The dismantling of vital public services and programs have inflicted intolerable hardship on millions of Canadians.

It is important to note too that one of the major contributing factors in reaching the deficit reduction goals have been economic growth and low interest rates, and not the cuts. Now the federal government has to start repairing the damage that's been caused by their misguided economic policies of the past.

With a balanced budget just around the corner and a surplus anticipated in the coming year, the possibility of debt reduction, spending increases and tax relief is being discussed. The Newfoundland and Labrador Federation of Labour believes the goals of job creation, equity, and long-term economic and social well-being should be the guiding principles in this discussion.

Economists are already predicting that any budget surpluses will automatically go toward debt reduction. I would point out that any money that is applied directly to the debt is collected through taxes and then removed from the spending stream. Diverting current spending into debt reduction will reduce economic growth and job creation.

For this reason, the Newfoundland and Labrador Federation of Labour is opposed to direct debt reduction. Besides, direct debt repayment is not necessary, as strong growth will shrink the deficit as a share of the economy. Rather than paying down the debt, any surpluses should be invested in dealing with social concerns and raising our potential for strong economic growth.

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We would also suggest that rather than implementing across-the-board tax reductions, the federal government should redesign our taxation system to redistribute the tax burden, while leaving federal taxes unchanged as a share of the economy. Progressive tax reforms that permit reductions in average and marginal rates for low- and middle-income earners, and removal of the GST from essential items, can occur without weakening the revenue base of the federal government. I would also point out that we are concerned that tax reductions would cause a further erosion of our public services and social programs. This would impact on people who are already suffering tremendous hardship because of the decisions made in previous budgets.

That leaves a third choice. Like most of the other people who have presented this morning, the Newfoundland and Labrador Federation of Labour believes that the priority for the coming year must be a reinvestment in our social programs and the people of this country.

We believe that UI benefits need to be improved and that our UI program needs to be restored. The need for social spending is stronger now in this economy than it has ever been before. Budget surpluses have to be put back into public services, and particularly into health care, labour market programs, and other social programs that have been eroded during the battle to eliminate the deficit.

We believe it is vital that separate and increased federal transfers for social assistance be given to the provinces, and that we need national standards in the area of social assistance. We believe priority has to be given to raising the standard of living for young people. We've stolen their future from them.

Priority has to be given to the establishment of a national child care program. We need increased federal investment in research, development and training. The federal government also needs to develop a strategy for long-term environmental sustainability, and I will agree with the chamber of commerce that the federal government must ensure that there is funding to continue the TAGS program or to substitute another program for TAGS. The economic and social stability of our province depends on that.

In conclusion, I would like to quote J.S. Woodsworth, who once said:

The government exists to provide for the needs of the people. When it comes to a choice between profits and property rights on the one hand and human welfare on the other, there should be no hesitation in saying we are going to place the human consideration first and let property rights and financial interests fare as best they may.

The time has come for Canada to make a choice to look after the human interests of the people in this country. We have to start fighting the huge social deficit that has been created by rebuilding our social programs and public services. Low interest rates and strong growth must be maintained to deal with the unemployment crisis, and surpluses must be reinvested in the economy to create more jobs and long-term growth. Job creation, poverty reduction, renewed social programs and public services, and the reduction of inequality in Canadian society must be the priorities for 1998.

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

We'll now move to the question and answer session. We'll begin with Mr. Harris.

Mr. Dick Harris (Prince George—Bulkley Valley, Ref.): Thank you, Mr. Chairman.

I thank the presenters for your very understandable presentations this morning. If I may, I'd like to direct a question to the representative from the chamber of commerce.

• 0825

I'm sorry I was late, Mr. Winsor. I was on the phone when you started.

I want to inquire about the opportunities for employment in Newfoundland and Labrador. I guess the question would be this. What do you see as the possible growth areas for increased employment in this part of the country? I'm not talking simply about make-work programs. Rather, are any natural growth areas available, with the potential to provide employment? If there are, what specifically can the federal government do to encourage those opportunities?

Mr. Leonard Winsor: Thank you very much.

The major areas for opportunities for employment for our Newfoundland people right now appear to be in megaprojects. Hibernia is not yet pumping oil, but it certainly has created a number of jobs. The other oilfields close by are certainly going to provide employment. But in a case like that, probably not enough Newfoundlanders are trained in those areas. Possibly the federal government should look at subsidizing it, if you wish, by tax incentives. That is the way I would like to see it done.

I think the majority of the members of my board who met this past week and gave the impetus for this believe that rather than just handing out money to people or to companies or to individuals to train, it can be done in a more roundabout way. If, for example, the companies are given a tax incentive to hire, then although it is federal government spending and it may be like a handout to Newfoundland, it's certainly a more practical approach than just handing out money, as has been done in the past.

Mr. Dick Harris: So you are talking about a partnership with the private sector to provide apprenticeship-type training, where the private sector partner would get tax incentives but they would specifically directed to that particular type of business.

Mr. Leonard Winsor: Yes.

The tourism industry is another area where I think Newfoundland and Labrador has great potential, but it has been subdued more and more every year. For those of you who are members of Parliament, just recently we have been given the news that we are now going to be charged a $4 wash fee for a car or an $8 wash fee for a truck when it leaves Newfoundland and Labrador either through Port aux Basques or through Argentia, and—

Mr. Dick Harris: What kind of fee is that?

Mr. Leonard Winsor: It's a car wash fee. That's what we call it. Actually, I call it a tax, and that's basically what it boils down to—a tax.

Anyone who comes to Newfoundland and Labrador by road and leaves by road has to have his or her vehicle washed, either at Port aux Basques or at Argentia. I think it has to do with the Department of Agriculture and the potato blight in Newfoundland. We believe as a chamber, for example, this is a tax. It's going to cost our businesses, tourism-related businesses and all businesses in Newfoundland and Labrador, a bit more to carry on business and make us a bit less competitive than mainland businesses.

Basically if that comes before you at any time, don't let it happen. Please don't let it happen.

We believe the people who benefit from this car wash, people like yourselves—the “CFAs”, as we call them here in Newfoundland, the “come from aways”—are the people who really should pay. But basically we would like to express the opinion that the federal government should pay. The federal government set up this car wash in both Argentia and Port aux Basques. Now it should continue to maintain it. It's benefiting the whole nation, so why should we as Newfoundlanders and Labradorians have to pay?

• 0830

That's one area. But that's just a small area of tourism. We believe as a chamber that there's still an extensive amount of training that can be done in the tourism sector. Again, we'd go back to the idea of offering tax incentives. I think it's a much more practical way of getting employment and getting Newfoundlanders back to work.

Mr. Nelson Riis (Kamloops, NDP): May I ask a supplementary question?

The Chairman: Go ahead.

Mr. Nelson Riis: On the matter of the megaprojects and the suggestion that we should provide tax incentives so that companies would train people, why not make that a requirement? If companies want to come in and exploit the oil resources off Newfoundland and Labrador, would it not be reasonable to expect them then to hire local people and to train them if they are not adequately trained? They're the ones who benefit ultimately. Why not have this as a cost of doing business here?

Mr. Leonard Winsor: I'd certainly agree with that, but it would take more than the Chamber of Commerce. It takes people like yourselves, who make the policies.

Mr. Nelson Riis: We have to have recommendations from people like you. That's why we're here.

Mr. Leonard Winsor: Well, take it as a recommendation, then. If it's a mandatory thing, if they're going to get a tax incentive simply by allowing Newfoundlanders and Labradorians to come to work with them and be trained with them, then I think that tax incentive will be a good thing.

The Chairman: Ms. Greene, do you want to jump into this?

Ms. Jocelyn Greene (Director, Emmanuel House): Yes, actually. We didn't realize that more than one could speak, so Matthew spoke for us, but I have some issues around that.

I'm also the representative of the Newfoundland and Labrador social workers on the transition team that is redesigning the income support program for Newfoundland and Labrador, so we've been looking at a lot of these issues. One of the things around training is the issue of increasing funding. I certainly think the private sector can assist with the cost of training.

We have a lot of paradoxes happening. We're saying we want to reinvest in training and create jobs. Currently we're trying to redesign an income support and a career development approach for people on social assistance with the mandate and the mission that we would help people get back to work, but we're staying within a fixed envelope of $11 million that's available for career development and new initiatives. It's not what we are going to do in terms of responding to the lack of people in IT or for megaprojects; it's just not possible.

On top of that, in terms of the transfer payments, we now spend $250 million on social assistance payments. That's up from $100 million that was consistent until six years ago. We are trying to redesign an income support system by taking from one poor group to give to the other. We're saying we can't do it.

These things are related. You're saying the question is around job growth possibilities. I believe there are some really good initiatives happening. There's the labour market agreement and the sectorial agreements that are in place. We have a co-management approach in this province, the labour market with the feds and the province, but they're looking at it without....

In the province we cannot respond to this training need for people on low-income social assistance, which everybody is saying is draining the economy, with $11 million available to try to develop training programs. It's just not possible. That is just one example of a direct result of the cuts to transfer payments that have occurred. There is no ability to move in that program. We have increased our social assistance payments by two and a half times. We cannot reinvest any money provincially in career development.

When you look at trying to train people to some new industries, we're trying to link into zonal boards, trying to develop a system that says let's train people on social assistance for the job opportunities that are going to be developed in the areas. The zones are saying we may do sea kayaking in the north, we may do goat farming in Bonavista, so let's train people to do that. We have no money available for training.

Mr. Dick Harris: My point was that it's fine to train people in every way, but realistically what I was looking for was where the natural growth possibilities are, in what area the training could be directed, so that there could be jobs. If you pour billions of dollars into any province you can create lots of jobs, but they're only short-term jobs. I think what the country needs is a vision that's going to create long-term jobs. There's no use revisiting every five years. We want people to get working and stay working in the mining industry, the oil industry, etc.

• 0835

I certainly agree with my colleague from Kamloops—and we do agree on things sometimes—that on the megaprojects there should be an incentive or a demand to hire locally and train locally as much as possible. That's a win-win situation for everyone.

The Chairman: Now we're going to get some panellists involved here. Ms. Price, followed by Ms. Reid, then Mr. Dellavalle.

Ms. Elaine Price: I'd just like to make a couple of quick comments.

First of all, in order to have a strong economy, we need a mixed economy. We need a strong public sector and we need a strong private sector.

I have some difficulty with relying just on megaprojects in Newfoundland. That's been one of our problems in the past. Unfortunately, when our resources have been developed, the people of this province do not—or have not in the past, and I don't think they will in the future—reap a share return from the development of those resources.

In terms of job creation, there are many ways to create jobs and there are many pressing social needs, as we have heard around the table this morning. What better way to create jobs and provide a worthwhile public service than, for example, something like a national child care program, something like social housing refits or the construction of social housing, the implementation or the coverage of a home support program under medicare? There are numerous ways to create jobs, but we have to look to the public sector as well as the private sector in order to do that, and the time has come for government to reinvest in people in this country.

Ms. Mary Reid: I just want to say very briefly that I think the bottom line should always be who is benefiting and who should be benefiting. If we look at tax incentives, certainly the private sector is benefiting, and we've seen some almost obscene profits coming out of this country in the past year, which has been very difficult for individuals who are living in poverty.

We've learned a lot in this province from the TAGS program. We've learned about retraining, we've learned about misdirected dollars. I hope the lesson we have ultimately learned is that dollars are better placed in the hands of individuals to choose their own training, to make decisions for themselves, and better placed within community-based resources and community-driven initiatives.

Mr. Matthew Dellavalle: I'm one of those consumers; I'm a person who is currently under social assistance. Basically, I've been going to school on my own without any assistance from anyone else—right now. What we need to do here is put more money into education, more than what's going in there now.

Personally, I feel that everybody's saying all of this, but I want to see it happen. I want to see some of these suggestions come around, to see people examine them thoroughly and not just brush over them, because they're very serious issues. You're not going to hear it just from us here in Newfoundland; you're going to hear it from everybody.

I've lived from country to country, I've hitchhiked from coast to coast, and what I've heard from everybody.... Being out there in the public at a low profile, you tend to find the reality that is there from all the low-income people.

I think what we need to do is invest in the third sector. As we're saying, we have the work that needs to be done that could provide meaningful job opportunities for people. I think if we went into renewable resources....

If anybody's looked into hydroelectric generation or whatever—Newfoundland has to be one of the windiest provinces that I know of. We could set up all kinds of windmills here using renewable resources—stuff that could create jobs. There are all kinds of ways of creating jobs that will last forever if we just look at the technology that's available, the people that are available. The manpower's unreal here and we should give it a chance.

The Chairman: Thank you, Mr. Dellavalle.

[Translation]

Mr. Desrochers.

Mr. Odina Desrochers (Lotbinière, BQ): I would like to thank all those who have spoken here this morning.

I would like to focus on the fishing industry issue and to talk to you about the Atlantic Groundfish Strategy. As you know, the Auditor General's report clearly states that this program will be terminated in May 1998 because there is no more money, even though the program was originally supposed to be extended until 1999. So I can understand why thousands of your fellow citizens are concerned about their future.

• 0840

Once again, the federal government has shown there has been no serious planning for assistance to regions such as yours.

First, I would like to have your opinion on the measures proposed by the federal government in an effort to help you. Second, have you taken steps to have the fishing moratorium lifted? My question is for the representative from the Newfoundland Chamber of Commerce. If other speakers wish to answer, they are welcome to do so.

[English]

Mr. Leonard Winsor: In my presentation I made the representation that we feel, as the chamber of commerce in this province, that some program—and we don't know yet what it should be, but some program—should replace the TAGS program. There's no doubt about it.

If in May this government puts 20,000-plus people on the social welfare rolls, then if you really think it's bad in Newfoundland right now, it's going to be tremendously worse in May.

That's why we, as a chamber, feel there has to be some practical solution. I believe the government had an Ottawa bureaucrat in Newfoundland just last week, and I believe I saw the gentleman on television and heard him on radio, but I really don't know if he's been out talking to the right people. That person should try to get a group of people together, as I suggested—a group of people from labour, business, and government. When I typed this speech at 2 o'clock this morning in my home in Grand Falls-Windsor, I had labour involved; I didn't omit it purposely, Elaine.

Rather than involving just government officials who set up the TAGS program, and only government officials, if there are enough people with diversities of thinking, then I really and firmly believe a program could come out that is much better than the TAGS program and it could serve the fisher folk of this province well.

I mentioned one particular example, and that was to give a tax incentive to business and to whoever wants to create a job. If there's a job there to be created, then give the tax break to that group or people. But other ideas may come forward with a diverse group of people, and I really and firmly believe and my board believes that's the way it has to be done. If one government bureaucrat comes to Newfoundland, looks at everything, and then makes a decision on his or her own personal biases, then it's not going to work.

Government officials set up the TAGS program and set up the NCARP program previous to that. It didn't work. Now we need someone else to put something into the thinking.

The Chairman: Thank you, Mr. Winsor. Ms. Price.

Ms. Elaine Price: Thank you. First of all, it's important to say we have a problem with TAGS because the number of people who were going to be affected by the moratorium was underestimated, and consequently the program was underfunded.

The FFAW, which is the union representing the majority of fishers, have put forward a number of proposals. They're suggesting that there be another provision for early retirement so that older people can exit the fishery with dignity. They're suggesting there be another round of licence buyouts.

There's also a recognition that there is a need for income support, but that it must be combined with a strong job creation component. I'm sure the labour movement would be receptive to working with the chamber and both levels of government to develop that job creation component, Len.

The Chairman: Thank you, Ms. Price.

Mr. Jones.

Mr. Jim Jones (Markham, PC): I don't really have any questions.

The Chairman: Mr. Riis.

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

I want to take a moment to reiterate that my friend, Mr. Jones, is from IBM in his previous life. They did all their own training and they didn't need a tax incentive to train employees. The banks have set their own continuous training; they don't need a tax incentive.

• 0845

Yet when it comes to resource development, whether it's mining or oil, somehow they want to bring in people. They don't want to hire local people. They need a bribe to train people. We ought to get a little tougher and say listen, you're welcome to our resources, but there's a quid pro quo here; it's called jobs, local jobs, local hire. That's just an aside.

My question goes to Bev and perhaps as well to Keith.

Bev, in your presentation you made some reference to the family incomes in the housing development that you referred to. I wonder if you could elaborate on those to try to give us committee members an idea of the actual income of individuals and families. You said low-income Newfoundlanders get as little at $89 and $129 a month to live on. Can you elaborate on some of these figures? These seem to be rather astonishing levels.

Ms. Bev Brown: Thank you for your question.

Emmanuel House, which is here today, did an informal housing survey and asked people how much money they had left over for food when they had gotten their income support payments and paid their rent. The average was $50 a month for food that people got when they got social assistance, of the people who were living in this place who had to come to Emmanuel House and had had welfare before they came there. That is not enough to live on.

People get $89 a month if they are living with relatives. So that $89 a month is the only money one would get for any expenses. If they're living with non-relatives, they get $129 a month. Other people get $300 a month to $600 a month to live in boarding homes and to live in lodging places that provide inadequate food. Some of these people are forced to leave those homes during the day and so really don't live anywhere.

All together, at least one-fifth of people in Newfoundland are getting these low rates. We have the lowest rates for single people in Canada. We don't have the lowest rates for families in Canada; we have the second-lowest rates for families in Canada.

It's the lowest rate. It's totally inadequate. People are starving.

The Chairman: Thank you, Ms. Brown.

Mr. Keith Davis: We live in public housing, in Brophy Place, and people in public housing are just a little bit better off than people in private housing on social assistance, because they have subsidized rent and they have a heating allowance, which helps them pay for their electric heat throughout the year. There's a set amount, and then once you use it up, you have to pay the full cost yourself.

In Brophy Place very few parents are working. Those who are working usually have incomes of under $16,000 a year for a family. A family on social assistance will receive under $11,000 a year, so it's well below the poverty line.

For example, I have four children, I'm on social assistance, I'm a single parent, and I receive $616 a month to live on, in addition to my rent and $370 for the child tax benefit and $3,600 a year for the heating subsidy. That's basically what I have to live on for a family of five.

Poverty is an extreme. The poverty in Newfoundland is probably far worse than it is in any other part of the country.

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

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

I really appreciate your presentations today. I have to tell you that I do think it was imperative that this government wrestle down the deficit. What we're hearing here is something we heard in Edmonton, Vancouver, and Toronto, and that is the human cost, and that's why we're here: to listen.

This probably follows along with the previous speaker's question. One of the challenges put forward to us in Edmonton was: what is poverty? We have not nationally defined poverty. I would invite anyone who wants to speak to it to do so, but I would direct it to Ms. Greene and perhaps Ms. Rooney right now. What should we take into consideration for that?

Ms. Jocelyn Greene: Actually, I have tables in this report. Just looking at it and talking about national standards, there has been a debate about the LICO or what is the actual poverty level. But as Bev spoke to, with the rates here in Newfoundland, there's such a variety. From here to the Northwest Territories I think there's a difference of over $12,000 in terms of what a family receives. And a single employable, for example, in Newfoundland receives a yearly income of $3,700. It is not possible to live on that.

• 0850

The clients we work with, the consumers of our services, now have to go to board and lodging when they leave unless we make some special...we have to disable them. We have to write letters to say that a person has psychiatric problems or special needs so he or she can achieve basic, long-term, decent housing.

When you look at what poverty is...we're struggling with this on this committee. We're trying to address equity. Single employables are at a level so below that of the family and the single person with one child.

I'm sitting at a table where we have to ask how we are going to address this. Will we take money from people who have one child and give it to single employables when we know that they're all away under the national poverty level? It's unacceptable.

And then you ask the question about TAGS.

I talked to you about the $250 million. That's an increase of two and a half times here in Newfoundland. Twenty thousand people will end up on social assistance next May. We may as well pull the plug...Charles Lynch might just as well shove us loose, because it isn't possible to do this.

What is poverty? We've just done some recent work on what it costs to live in any region, but there are some standards that we can approach. We know that right now in this province it is impossible for anybody on social assistance to live on it unless he or she is supposedly defrauding the system. Now, if you're doing good taxation in the corporate world that might be good business, but in Newfoundland or in social assistance that is considered defrauding the system. If you go out and make $50 you're supposed to report it.

Would you report it if you had two children and if, as Beth said, you had to decide whether you could buy drugs or food for them? Things like this have severely increased in the last couple of years.

I don't think there's a pat answer. But we can tell you that we just had a release this week which says that according to a food costing study conducted by the Newfoundland Dietetic Association, the cost of a budget-wise, nutritious food basket exceeds $120 for a family of four. That means they would be spending 84% of their income on food if they were feeding their children in a nutritious manner.

We're talking about such a wide gap here that I think it's just sufficient to say that it is totally below the standard people can live on.

The Chairman: Ms. Reid, then Ms. Price and then Mr. Dellavalle.

Ms. Mary Reid: I really don't know how to answer your question in terms of how to define poverty. We know lots about the impact of poverty. We know that people are hungry. We know that people are starving.

I think it's necessary to come to a definition. I believe it has to be a national definition. We have to get back into national thinking.

And I think the process in terms of defining poverty has to come from people who are poor. That means the involvement of groups like NAPO and the coalition, because for too long we've been making these kinds of decisions without the real stakeholders.

Bev might respond as well. Bev is our provincial representative on the National Anti-Poverty Association.

Ms. Bev Brown: For me poverty is defined by not having work. To me, work is the most important thing. To get a decent job with good pay—not a workfare job—is the most important thing. And if you don't have that, I think that makes you poor if you're in the low-income quintile of Canadians.

Ms. Elaine Price: This is just a caution. I know the poverty statistics are extremely embarrassing and I just want to express my concern that the government doesn't try to change the definition of poverty in order to lower the poverty rates in the country. And that's all I will say, because it is a real problem and it does exist.

The other point I will make, following up on what Bev said, is that working and having a job doesn't mean that you're above the poverty line. In this country 25% of working people are poor. They're below the poverty line because the minimum wages across the country don't provide a living wage.

The Chairman: A final comment, Mr. Dellavalle.

Mr. Matthew Dellavalle: As a recipient, I've seen my income be as low as $44 every two weeks. That is nothing. That's $88 a month. If you average that out, that's $2 and some-odd cents a day. Nobody could live on that. You couldn't even feed your cat for that much.

• 0855

I personally feel it's a very difficult lifestyle. I've tried everything. I don't know what it's like to make over $9,000 a year, let alone $15,000.

I feel I'm caught in a catch-22. If I try, they're going to cut me down. They're going to take away what I have as an income. Even when I try to get temporary work, what happens? The money I make gets taken right off my cheque—like that. There are no ifs, ands or buts; it gets taken off.

How am I going to get ahead if that job runs out in a week or two days? Just by making $100 it could affect my whole income for an entire month. It's scary. I feel I've become caught in between all of this crossfire.

I think we really need to concentrate on ironing out all these little problems we're having with our social safety net. It's going to get to a point where we have some serious, serious problems in this country, let alone the province.

The Chairman: Ms. Rooney, followed by Mr. Winsor.

Ms. Emma Rooney: I'm not sure I can define poverty. I don't like the idea of trying to define it. It looks like an illness that people have; keep away from them, they're poor. But I would say it's the people who are constantly struggling, 24 hours a day, to have human dignity for themselves and their families.

All the systems make sure that they never get there, that they're kept at the bottom. I think we've had examples of that today. These are the poor people. If their washer or dryer should break, there's no money to repair it unless it comes from the allowance for their children's clothing or their food. Next week it'll be the same. They have to pay back to something.

When the harmonized sales tax in the province put a tax on children's clothing, on heating, and on other areas, we saw how committed the people who make the decisions are to keeping these people in this undignified state that we call poverty.

Thank you.

The Chairman: Thank you, Ms. Rooney.

Mr. Winsor, final comment.

Mr. Leonard Winsor: I want to make a comment on how we feel as a chamber about getting people back to work. I can give you two examples.

A member of my board gave me this example the other day. He invested in a very unknown provincial social services program and hired two people, taking them off the social services rolls. He gave them full employment in the tourism industry, and they are making good money. So that's one example of two people who've been taken off the rolls and given a good job. That's the type of thing I think we should be doing.

I operate a very small company. I have a total of four employees, including me. I don't get paid, just to keep the other employees going. Four years ago, I hired, by a federal government subsidy, two employees, both at the same time. I didn't really believe in that subsidy in that I thought it was a handout to me as a business person, yet those two employees are still working with me today, and are productive. They were underemployed or unemployed at the time, because that was a criterion of that subsidy.

So I believe we have to do practical things like that. My whole board is of the same opinion. We have to find some way to get Newfoundlanders and Labradorians back to work. Call it tax incentives, if you wish, or call it subsidization, but get them back to work. Get them off the social services rolls and get them from being underemployed or unemployed.

Thank you.

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

This concludes our first round table. On behalf of the committee, I would like to thank you very much for your input. I'm sure some of the thoughts and ideas expressed this morning will find their way into the report and form part of the recommendations we will be making to the Minister of Finance.

At this point I will suspend the hearings for a few minutes' break. We will return with the presenters for round table 2.

• 0901

• 0912

The Chairman: I would like to call this meeting to order.

Welcome, everyone. This is round table two in St. John's, Newfoundland. On behalf of the committee, I would like to thank you very much for participating in the pre-budget consultation process. It is indeed a very important one as we, as a committee, attempt to come up with recommendations to report to the Minister of Finance in terms of what measures should be taken to ultimately improve the quality of life and economic conditions for the people of Canada.

Just to give you some quick instructions as to the way we're going to operate here today, all presenters or witnesses will have approximately five minutes. I will tap this cup as a one-minute warning. I personally do not like to cut off witnesses, so please respect the five-minute limitation.

The first presentation will be made by the acting mayor of the city of St. John's, Marie White.

Ms. Marie White (Acting Mayor, City of St. John's): I'd like to thank you for the opportunity to participate in this discussion. Pre-budget consultations have certainly become a regular occurrence in recent years. We believe they certainly serve a function in allowing individuals and groups to make points about the impact of policy decisions made without, we feel, consideration of the ultimate effects on the citizens of our country. We sincerely hope the information presented by groups such as these this morning serve as a basis of your decision-making.

There were some issues identified by the committee, on which we were asked to provide comments. Our comments in this regard will be brief. On the question of deficit reduction, we feel there is little worth saying at this point. The financial report recently given by Finance Minister Martin indicated that the current account deficit will soon be history and that the government in future will spend less, or at least no more than it receives in revenue. How this is achieved is less important than what government will do in the future. It is time to move on.

With respect to priorities to be set by government, we feel debt reduction should be a high priority, particularly debt owed to foreign banks, institutions and individual investors. Spending increases are necessary in some areas but should be carefully reviewed to ensure that Canada and Canadians receive value for the money, either in improved services or quality of life. Existing programs in spending can still stand some review, but we hope reallocation will be done with the citizens in mind, because our citizens are our best and greatest asset.

• 0915

You are now no doubt familiar with the common concerns of the FCM, which represents the Canadian municipalities. They have effectively made the case for renewed and long-term infrastructure plans, for a fair and equitable—and I stress equitable—grants in lieu structure, and an end to downloading.

I'm going to restrict my comments to how these affect the city of St. John's. The loss of federally funded and cost-shared infrastructure programs have had a major negative impact on our city. With declining revenues through provincial grant reductions, reductions in grants in lieu, and in business, realty and property taxes, the City of St. John's has had to restrict its capital work budgets to these amounts able to be provided out of revenue. If anyone were to review the city's capital works program, it would show we are struggling, not to move ahead and expand but to maintain our existing but deteriorating roads, water and sewer systems, as well as the aging equipment that will service the aforementioned.

Federal government participation is vital if we are to be able to upgrade existing infrastructure and proceed with the orderly development of our city and our region.

A special case for infrastructure money has to be made with respect to the clean-up of St. John's harbour. With prodding from the public, the three concerned municipalities have joined together to develop a plan that will restore our most historic open sewer in the country to something approaching its condition 500 years ago. The plan is expensive and the municipal governments have contributed, but we cannot do it alone. In 1997-98 the federal and provincial governments provided $1.5 million each. This is greatly appreciated, but it is only small potatoes compared to the total cost of the project, which is anticipated to be about $130 million. We will require a long-term commitment from both senior governments.

A clean harbour is not only important to our environment and hence to our children, but it is important to the viability of an industry we are developing here, and that is the cruise industry. A clean and healthy harbour can only enhance that. I would suggest respectfully that perhaps if you went down and walked around our harbour, particularly near some of the outfalls, you would understand what I'm talking about.

We concur with the position put forward by the FCM in terms of grants in lieu of taxes, including the manner used to calculate the grants, the level of grants, and the timing of them. However, the grants paid to St. John's are dropping not only because of the process but because the federal presence in this city and throughout this province is declining. Frontline operating divisions are being consolidated and downsized, and they're moving out of St. John's and out of our province.

One of the main issues in terms of downloading, perhaps, from my perspective personally as well as from the city's, is the impact it's having on non-profit housing. The Canadian government, the CMHC, has said it will no longer put money into new infrastructure for non-profit housing. My question to you is where will people go? We have maintenance agreements; they will run out. Who is going to provide the money to the city, to the province, to be able to continue to maintain its non-profit housing? The federal government at this time is setting a priority for children. Where do the children of low-income families go? Where are they going to live? I think this is a priority we cannot neglect.

I would like to finish on that point because it is of great importance to us as a city. Is it sensible that a government that is proudly proclaiming a commitment to ending child poverty is not going to give any additional budgeting to non-profit housing? Thank you.

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

We'll now move to the representative from the Newfoundland and Labrador Federation of Students, Dale Kirby. Welcome.

Mr. Dale Kirby (Provincial Chairman, Newfoundland and Labrador Federation of Students): Good morning. I'd like to thank the committee for affording us the opportunity to present to you today. Our organization represents some 25,000 students studying at public post-secondary institutes throughout the province.

The federal budget in 1996 ended the era of the established programs financing transfer, which transferred funds for post-secondary education, for education, from the federal government to the province. These funds were earmarked for post-secondary education. The Canada health and social transfer ended all that. We've had a number of problems that have developed as a result of this.

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Tuition fees have increased approximately 250% at the public college and at Memorial University since 1990. If you purchased an automobile in 1990 and came back again seven years later and purchased the same automobile and it was 250% more expensive, there would be a public outcry. People would be very disturbed at this. We are very disturbed that tuition fees have gone up so drastically. It's our feeling that we must earmark funds directly for education in this province or else this cycle is going to continue.

A direct result of this has been the rising student debt loads. I'm sure you're heard a lot about this. For the end of this year we're projecting $30,000 for the average student debt load for graduates. The effects on the economy are ridiculous, when you think about it. These people will be crippled by this debt and will not be able to go out and purchase cars, get a mortgage, start a family, start out in life. Because of this debt that they will be shouldering they will not have a fresh start. We feel Human Resources Development Canada must implement a debt relief program for students so some of this burden can be taken off them.

We've been adamantly opposed to the David Stager model of income-contingent loan repayment program. We don't feel an income-sensitive type of debt relief program is a favourable program. That type of program was implemented in Australia a few years back and all the studies that have been done have proven that this type of loans program is not effective.

We made a brief to the finance department before the last federal budget. There were seven national groups, representing everyone involved in post-secondary education, all sectors. We suggested that students with dependants get grants for attending post-secondary institutions. This appeared not in the federal budget but in the platform of the Liberal Party in the last federal election. We're hoping the government remains true to the promise to provide these grants for students with dependants, because we feel they already have enough trouble trying to attend a post-secondary institution.

Another problem we've had is that the maximum allowable amounts of students' loans are tagged to the consumer price index. They increase annually by the consumer price index minus 3%. While these amounts have not been increasing, tuition fees have increased by almost 250%. We feel the disbursements of student loans, the amounts, should mirror the actual costs of attending a post-secondary institutions.

I have a couple of final points. Changing legislation with Human Resources Development Canada has changed the way funds are transferred to the public college for a seat purchase. Before the legislation seats were purchased directly by the department. Now the onus is put on the individual. It will be reduced by 25% this year and to zero by the year 2000. This is going to be a direct gulf in the amount of money available to the public college. Something has to be considered when transferring the funds for post-secondary education to this province for next year.

In addition to this, youth unemployment has increased from some 23% in 1989 to 29% now, and it's increasing. The simple point is we need to put young people back to work in this province.

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

We'll now move to the representatives from the St. John's, Newfoundland Board of Trade, Mr. Roger Flood. Welcome.

Mr. Roger Flood (Past President, St. John's, Newfoundland Board of Trade): Good morning, and welcome to St. John's.

I would like to commend the finance committee for making these visits to Newfoundland and across the country an annual event. I certainly hope it achieves one of its objectives, and that is to get a better appreciation of the concerns of the regions. Canada has such a large geographic land mass that it creates difficulties for us on the extremities to be heard in Ottawa, and so I thank you for your visit.

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The message I wish to deliver to you is one I am sure you have heard from my colleagues at the Canadian Chamber of Commerce and from my colleagues in other boards of trade and business organizations across Canada. The message does not change in Newfoundland: the federal government must maintain its fiscal restraint measures and turn its focus to eliminating the national debt.

The government has performed well over the last several years and has eliminated the deficit. The debt, however, is a much larger problem. Our national debt is over $600 billion. Of every dollar Ottawa collects, 30¢ goes to pay the interest on the debt.

Economists like to examine the debt-to-GDP ratio to get a handle on how enormous the problem really is. The debt-to-GDP ratio measures our level of debt relative to our ability to pay.

Canada has a debt-to-GDP ratio reported by the finance minister of 65%, having crested at over 70% last year. It is widely viewed that Canada should get its debt-to-GDP ratio below 50%. Sixty per cent is the target set for European countries that want to join the single European currency area. Canada's debt ratio was at 47% in 1984 and has been below 50% from 1950 to 1984. We should strive to get back to that level.

Having such a high debt puts Canada's health, education and social programs in jeopardy. Too much of Canada's debt is held by the foreign investors, which creates great risk. If Canadian or foreign investors lose confidence in the Canadian economy or Canadian economic policy, interest rates will rise and our debt level will rise further.

Canada does not have the flexibility yet to increase program expenditures or reduce taxes. Newfoundland is one of the most vulnerable places for government restraint. We in the business community recognize the significance of getting our financial house in order and removing ourselves from the risk and decisions of the lenders.

There are actions, however, that the federal government can take to alleviate pressures on areas like Newfoundland. One would be to decentralize their procurement. Much of government's purchasing is done in Ottawa, giving little opportunity for companies located in the regions to supply government contracts.

Other areas that we at the board have talked about for a number of years now would be to locate the headquarters of government departments in the most logical and economic areas, that is, areas where they are doing business. Headquarters such as search and rescue, trade and hydrographic service, Marine Atlantic, Fisheries and Oceans, all of those areas have 80% or 90% of their business in Newfoundland yet the headquarters are located elsewhere. Marine Atlantic would have been one example; about 95% of their business is in Newfoundland. The headquarters is in New Brunswick, where they have very little. Those are the types of things where, if the government did just those items, it would save them money. In some of those areas it would actually spend genuine spending versus transfers.

The federal government must also address payroll taxes, especially employment insurance premiums paid by the employers.

The EI accounts have a significant surplus today and a suitable contingency fund. Now that the government has this reserve it should significantly reduce the premiums.

At the current rate of fiscal restraint, government should have its debt-to-GDP ratio under 6% by the year 2001 or 2002. At that time the government may wish to increase spending in areas of health and education, coupled with tax relief.

Thank you.

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

We'll now move to the representative from the New Democratic Party in Newfoundland, Mr. Jack Harris, MLA. Welcome.

Mr. Jack Harris (NDP Leader, Newfoundland): You will find a somewhat different view in my presentation from the preceding one. I want to say thank you for hearing the representations of the people here. It's important that you hear from all of us as to what we think the federal budget should contain.

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In terms of federal spending policies, I want to say that the predictions we made about what would happen to changes and the agenda being adopted by the Liberal government have created an unfortunate reality for people across the country, but also in particular in this province. Those of us and others working in the social justice field were accused of fomenting fear, but the reality in fact is worse than what we had predicted.

What we see happening in Canada right now on the overall scene is that the old saw of the rich getting richer and the poor getting poorer is in fact being borne out by Statistics Canada reports such as the recent one referring to the 1995 income-after-tax situation in Canada, which indicated the incomes of the poorest families of Canada had fallen significantly and the trend from 1989 to 1995 is that the poorest one-fifth of families had incomes decrease by 20%. The income of the richest one-fifth declined by 3%. We clearly see here that whatever fiscal health Canada as a country may be attaining is being done at the expense of the poorest of the people of the country.

We see, on the other hand, much comment about the economic success story, claims about the boom that's going on in Canada. It's a boom that's going on in corporate Canada, but it's not a boom that's affecting the poorest people of the country and it's certainly not affecting this province.

Aside from our major problem with the Atlantic groundfish industry, leaving that out of the equation altogether, we still suffer from the highest unemployment rate in the country. We have higher food costs here than elsewhere, and in this province we have one-third of the children living in poverty and going to bed and school hungry. We see that as a crisis situation and one that the federal government has not only not helped but in fact has exacerbated.

In terms of direct government spending, for example—and this is not directed to child poverty at all but just directed generally towards the economy of the province—the federal government of course has done a downsizing program of the size of the federal public service. The average reduction of the federal public sector employees in Canada is between 13% and 14%; in Newfoundland the federal government direct jobs have been decreased by over 22%, the highest in the country. That has been an extra effect in this province of direct federal government hiring being reduced, and compared to other provinces we don't have a significant federal government presence.

Before the TAGS programs was introduced, in 1992 we had the moratorium on Atlantic groundfish, the impact of which is obviously still being felt. We had probably what is the largest single lay-off in Canadian history; in excess of 20,000 people lost their jobs as a result of the collapse of that fishery. We see an end to TAGS now in 1998 instead of 1999, which was promised. That has an effect not only on the families themselves but obviously on the economy in general. So we have a very serious problem to contend with, and in 1998 the impact of that is going to be enormous.

This brings me to my next issue and that is the issue of job creation. It seems the federal government to date has expected the private sector to solve the job problem by manipulation of federal government policies. It's not working in this province, not having the effect it should have, and in fact the private sector of this province is not strong enough to respond to the need that's there.

So we have to have a concentrated effort by the federal government to solve some of the problems here. We need to see extra spending on housing and an attack on child poverty that's real. There have to be changes in the announced child benefit program. The results of the program would indicate in fact a lesser income for single-parent families or families with one child. That has to change.

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We need to reverse the policy on social housing. The alternate federal budget last year had a very comprehensive proposal on social housing, which not only would have met the housing needs, which are great here in Newfoundland, but would have also affected the economy as well in terms of jobs.

There are many programs that could be done. We think that to date the federal government attack on the deficit has really resulted in an attack on poor people and people without jobs.

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

We'll now move to the representatives from the Newfoundland and Labrador Building and Construction Trades Council, William Parsons and Vince Burton. Mr. Parsons, welcome.

Mr. William A. Parsons (Executive Director, Newfoundland and Labrador Building and Construction Trades Council): Thank you. I have, Mr. Chairman, Derm Cain, who is the president of the oil development council.

First of all, the oil development council would like to support the efforts of the building trades department of Ottawa in its presentation to the Minister of Finance on employment insurance programs.

Specifically, we are opposed to the reduction in the EI program and the use of EI funds for purposes other than what they were designated for. We remain unconvinced that such restructuring of the program will create jobs.

We do, however, endorse the use of these funds to bridge the income of workers between jobs and to support apprentices attending school. Further, we fully support the concept proposed by the building trades department to employ EI funds in assisting young Canadians to enter apprenticeship programs while bridging the gap for older workers in retirement.

We'd like to address other specific areas. Others, such as my counterparts from Ottawa, will cover the EI program. We'd like to address the underground economy, the Atlantic accord and revenue sharing, the effect of the CNOPB, and skills training.

The Atlantic accord, signed in 1985, established joint jurisdiction of the offshore oil and gas resource, which was developed for the benefit of all Canadians, and for Newfoundlanders and Labradorians in particular. In short, this act gave the province the right to tax all companies' revenues and to have a say in how these projects will be developed.

Similarly, the federal government was granted rights as well, thereby establishing the illusion that revenue sharing from the development of offshore and gas projects would be balanced. In reality, this is not the case.

Since the signing of the accord, it has been widely reported that the revenues flowing to the provincial treasury from these projects would be offset, reduced by almost their full value against the regular equalization entitlements. This would result in the province getting very little from its share of the resource ownership pie, while the other partner will take substantial gains.

The imbalance of this arrangement is further demonstrated by the fact that the little benefit the province will gain from the projects will have to be employed to support the growing demand for infrastructure and services from the industry.

Unfortunately for the development of this economy, the Government of Newfoundland and Labrador will not be able to meet all the needs, as it will be no better off fiscally after these projects than it was before.

We are at a loss to explain why the federal government supports a program of suppressing growth in economically challenged regions of the country, while it has the means to invest in long-term economic development that will pay dividends.

As we already stated, the revenue sharing from this resource is tipped grossly in favour of the federal government. In an article published recently in The Financial Post, the federal treasury will not only collect revenues directly from the project owners and the people who work on these developments, but it will double its revenue by what it will save in equalization payments to Newfoundland and Labrador. In dollar terms, the federal government will benefit by $11 billion, while the province will only receive $2 billion.

From where the oil development council sits, the benefits of the partnership with the Government of Canada on the sharing of offshore ownership makes the Churchill Falls contract look like a good deal.

We want to ask the chairperson of this committee if it is the policy of your government to balance its books and score political points with Bay Street on the backs of the people of this province and at the expense of the only real opportunity for sustainable economic development in Newfoundland and Labrador during the last 20 years. Furthermore, does the Government of Canada recognize that even after its investment in and development of this industry, it will receive a tenfold return on its investment, while a partner in ownership and the so-called principal beneficiary in the Atlantic accord will achieve only a negligible benefit?

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From our point of view as a participant in this industry and as a representative of the workers, who are also taxpayers of the province, the oil development council wishes to know whether the Government of Canada is prepared to correct this gross imbalance in revenue sharing and offer Newfoundland and Labrador the opportunity to share in the wealth of these resources and be given the opportunity to reinvest this capital for the long-term benefit of Canadians.

The second issue we wish to raise with the committee is the effectiveness of the Canada-Newfoundland Offshore Petroleum Board and the commitment of the Government of Canada to the safe and economic development of our oil and gas resources. Since 1992, the agency that was created in the Atlantic accord that jointly managed the oil and gas resources off our shores has been systematically cut to a level at which it is currently unable to fill its legislative mandate.

For those of you who are unaware of this agency and its activities, the Canadian-Newfoundland Offshore Petroleum Board, known to us as the CNOPB, is responsible for regulating and managing all petroleum-related activities in the offshore area, including ensuring good oilfield practices, worker safety, workplace environment, and a guarantee of economic benefits, where possible, for Canada and Newfoundland.

The effective withdrawal of financial support for the CNOPB has several obvious consequences, and hence concerns, for the oil development council. First, the provision of regulations to ensure that good oilfield practices are being carried out by the oil company offers us security that the oil and gas resource will be exploited in a fashion that best represents the interests and the resource owners: the taxpayers. If the enforcement of these regulations are inadequate or incomplete, then the long-term benefit of these resource projects are at risk. This would mean thousands of jobs for Newfoundlanders and Labradorians, as well as hundreds of millions of dollars in resource rents and taxation to the provincial and federal treasuries.

Second, the establishment, implementation and enforcement of the highest standards of worker safety regulations and workplace environment is of such importance that we do not think any of you are willing to place a dollar value on prevention and training against the loss of life if lives are at risk every time funding for the CNOPB is reduced. A functional and completely operational CNOPB must be in place to guarantee the safety of our families and friends. Anything else is considered a dereliction of duty.

Third, a CNOPB that is professionally staffed and committed to highlighting and guaranteeing economic benefits for the development of our resources is a priority if our goal is to provide the foundation of sustainable economic development and the potential for economic diversification for Canadians, and specifically all Newfoundlanders and Labradorians. The CNOPB must have the conviction and fortitude to ensure that this industry develops not for the benefit of the oil companies alone but for the owners of the resource, the taxpayers, so that they receive adequate compensation and use for their resources.

The CNOPB was established through the Atlantic accord to manage these resources within the best interests of all Canadians. However, this agency is unable to fulfil its mandate, as the financial resources are not in place to operate it effectively, and there is not a full-time chairperson in place to guide it. It would be very suitable for the CNOPB to say that they cannot enforce the regulations because they do not have the means, or for a chairperson to avoid commitment to the action because he is only acting in that capacity. Every day, the opportunity and environment for economic participation is growing fast and this fast-growing industry is placed at risk.

The oil development council is requesting that the commitment to the CNOPB and the Atlantic accord be restored before inaction leads to loss of lives and/or the loss of economic opportunity.

My third and final issue today is to address the lack of appropriate skills training to meet the growing demands of the oil and gas industry. Based on our experience in being on the front line of the Newfoundland oil and gas industry for the last seven years, the oil development council believes there has been inadequate research on the skills requirements that will be demanded by the oil and gas industry for the next 20 to 30 years. To this end, the Government of Canada has participated financially, and with other resources in the past, to address the skills infrastructure in this province. With the full co-operation of the province, the net result of this effort has been an oversupply in many trades and a deficit in others. The impact of has been continuous importation of worker resources into the province to support our industry.

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The oil development council believes that in order to obtain the maximum benefit from this industry in terms of both jobs and technology transfer, the province must be self-sufficient in the supply of a skilled and globally competitive workforce.

The oil development council requests this committee to recommend that a skills inventory and skills assessment be carried out within the oil and gas industry to determine where federal resources may be best allocated to achieve its maximum benefit. In order to guarantee success in this endeavour, however, this assessment must be carried out with full consultation with the industry and its participants.

One final thing, Mr. Chairman. We would like to ask one question of the committee. In the 1995 budget of Finance Minister Martin, he talked about the underground economy. He addressed the question of collecting what was owed. We would like to know what his success has been to date.

We would like to thank the members of the committee for granting us this opportunity.

The Chairman: Thank you very much, Mr. Parsons. We will move to another representative from PSAC, St. John's region, Mr. Mike Stokes.

Mr. Mike Stokes (Regional Representative, St. John's Region, Public Service Alliance of Canada): Thank you, Mr. Chairman.

Thank you for the opportunity to appear. I feel it is a good thing that you hold these meetings. We hope our presentation will find its way into your budget.

The purpose of government in a democratic society is peace, order and good government that serves all citizens. We submit that, amongst other things, our government is made up of elected members of the House of Commons, called decision-makers, and public employees who are hired to implement your decisions. To have a good company, a good government or a good anything, employees must be treated in a fair, just manner. As a government, are you treating your employees fairly? I have to answer no.

You have denied the following groups their pay equity: CR, ST, DA, EU, HF and NS. This injustice goes back to 1983. Pay equity has been negotiated to death and the government has devised delaying tactic after delaying tactic to prevent from paying for it. From 1983 to 1997 is a long time to wait for a settlement. It would be a long time to wait for a company to get its bill paid.

You have stripped your contracts of the job security clause. You have contracted out work at will, without regard to extra costs. You have frozen wages to the point where federal employees have received only one 3% raise in the last six years. You have downsized and downloaded to the point where the stress factor is unbearable. You have reserved the unkindest cut of all for our province. Your own statistics, in the attached appendices A and B, reveal that lay-offs in Newfoundland and Labrador are at 24.9%, the highest in the country. The most disadvantaged provinces has the highest lay-offs. Is this good government? At the same time, you rewarded management with bonus pay, and cabinet ministers recently rewarded themselves with a 15% raise.

I would like to quickly give you three examples of the negative impact of downsizing.

First, employees have been overworked. HRD, which has to serve this province, which is as large as Nova Scotia, New Brunswick and P.E.I. combined, has had staff reductions, and term employees have had their work week reduced to the point where last week applications for employment insurance were removed from the front desk. Applicants who required assistance were pointed to the kiosk machine.

I personally had a phone call from a person in the city who identified himself as a laid-off city worker. He had been waiting for his EI cheque for 60 days.

Another example would be the fire-fighters at the airport. Over the years, to meet safety standards Transport Canada employed five persons per shift, a fire officer and four fire-fighters. Because of government cutbacks, regulations have been changed. It is now legal to have two fire-fighters on shift. One has to act as supervisor, whether he or she wishes to or not. This has all kinds of ramifications, as two people simply cannot respond to an emergency that requires a full complement of fire-fighters.

Treasury Board identifies this as an acceptable risk. Our safety standards have suffered. The health and safety of our members is suffering, and it appears that government is intent on reducing our safety factor to that of a third world country.

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Newfoundland and Labrador depends on air travel much more than your constituents in central Canada. Safety in our air travel is therefore of the utmost importance.

As a final example, speaking from personal experience, I can state that we presently have more disability pension claims, disability insurance, and worker's compensation claims in one year than we previously had in ten years. This is not because employees wish to be on benefits. They are aware that the average benefit is for a short period—up to two years—and that their jobs may not be there to go back to. Employees are stressed out, and it's taking a toll on their health.

To directly address your questions on the process of deficit reduction and whether the process to date has been too slow or too fast, the process has been too fast. People are being adversely affected by the all-too-fast process.

Have the methods been appropriate? The methods are inappropriate because deficit reduction has been achieved on the backs of the workers, the poor, and the disadvantaged.

How should the government set its priorities with respect to debt reduction, spending increases or tax relief? By its own admission, government is two years ahead of its target for debt reduction.

Much of the country's debt was self-inflicted. At the request of the government of the day, the Bank of Canada raised interest rates to double digits. Prime Minister Trudeau was quoted as saying, we need high interest rates to create unemployment to wrestle inflation to the ground. In later years Prime Minister Mulroney announced, we have to increase interest rates to cool down Toronto. So the only problem we had in Canada was that Toronto needed to be cooled. To cool down Toronto, we bankrupted the regions, bankrupted Canada itself. With a little imagination, we could have increased taxes on permits in Toronto—say, up to 1,000%. Toronto would have been cooled and the rest of the country would have remained vibrant.

From my comments, it's obvious that I favour increased spending. It's time to put Canadians back to work. To do so, you need your employees on your side. It's not enough to introduce a new slogan like “Challenge to Serve”, which just came out in the last day or so. You must give your employees the resources that they need to properly perform their duties. You must settle pay equity, and you must authorize the Treasury Board to negotiate a decent collective agreement.

Thank you.

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

We'll now move to the representatives from the Newfoundland and Labrador Road Builders Association: Mr. Leonard Knox, Mr. David Burnell and Mr. Rick Spracklin. Welcome, gentlemen. You may begin.

Mr. Leonard Knox (President, Newfoundland and Labrador Road Builders Association): Mr. Chairman and members, thank you for the opportunity to appear before you today as you prepare your pre-budget recommendations for the minister.

Before I move on, I just want to say that we represent a large part of the private sector here in Newfoundland. We are part of corporate Canada, but our corporation is based in Newfoundland and is still waiting for all those profits that corporate Canada is making. They haven't flowed this way yet.

In the five or so minutes that I have, I'll try to be brief.

To address the issue that has been asked of us—that being ways to promote economic growth and job creation—it is a generally accepted principle that the best vehicle for growth and creating jobs is the private sector. Government quick fix programs are generally short-term jobs with no promise of a future.

It is important that governments do govern, and govern in a way that is compatible with creating an economic climate conducive to investment. Competing for business and investment in the 1990s has changed. Canada must offer a climate that reflects worldwide.... Businesses must now be prepared to compete with companies all over the world. Providing a necessary basic infrastructure is critical to promoting economic growth. In the long term, this will produce meaningful jobs for all Canadians.

As the collective voice of a broadly based association, we are greatly concerned about the deterioration of our highway network and its negative impact on Canada's economic competitiveness. Canadians are wasting fuel, time and money, endangering their health and the environment, and in the process becoming less competitive in the new global economy. Highway decay adds unnecessary costs to Canadian corporate operations and impacts negatively on our competitive capability, reducing demands for our products. Newfoundland is somewhat disadvantaged in that we don't have a railway like the rest of Canada does. Our sole means is our highways.

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I would like to briefly talk to you about two ministries in Canada which have become perhaps two of Canada's largest employers, trade and tourism.

In 1995 our trade in Canada totalled $31.5 billion, accounting for 20% of total GDP and nearly 2 million jobs. The importance of international trade in the Canadian economy grows each year. Recent Statistics Canada figures indicate that 1995 was a record-breaking year, with Canada's trade surplus growing to $28.3 billion from $15.4 billion in 1994, or 32.4% of overall GDP.

The impact of tourism on the Canadian economy continues to grow. Total tourism spending in Canada amounted to $41.8 billion in 1995. This represents a 69% increase over 1986 figures. In 1994 Canadians made 76.6 million overnight trips, of which 68.5 million, or 89%, were by automobile. International tourists number 16 million, with the American visitors accounting for 78% and the remainder coming from overseas; 60% of American visitors use automobiles for travel.

When the current Liberal administration was in opposition, the Liberal task force on infrastructure recognized the importance of highways in our economy. They recommended a federal commitment to rehabilitate and expand the Trans-Canada Highway.

To quote the task force:

...the economic consequences of poor roads is staggering. Studies reveal that the productivity of a region is very much dependent upon its transportation system. Traffic congestion increases the cost of transporting materials and goods, reducing an industry's competitiveness.... Bad roads and polluted waterways also have a negative impact on tourism, an important sector of the Canadian economy.

A recent Transport Canada study came to the same conclusions.

In our view, there remains one hurdle: how do we pay for the necessary work? After reviewing expert opinions, including ones that were provided by governments, we submit that governments continue to contribute to the maintenance of Canada's national highway system. Governments are the primary owner of public infrastructure, including highways. It has become increasingly popular for government to discuss the financing of necessary infrastructure work by trying to answer the following question: how can we, the government owner, maintain traditional infrastructure but have someone else pay for all of the work or part of the work?

When governments examine how infrastructure investments are made, more and more governments are turning to the private sector for assistance in the form of public-private partnerships. The generally accepted definition of a public-private partnership is the transfer of responsibilities from the public agency to private owners. Private owners assume responsibility for public facilities with the notion of making a profit from the sale of the service provided by the facility. Simply put, users are now charged a fee for the use of that facility—

The Chairman: Mr. Knox, can I ask you to slow down just a little bit for the interpreter?

Mr. Leonard Knox: Okay. I have the same problem with time.

The building and maintenance of Canada's national highway system by provincial and federal governments was and is paid for from tax revenues. There is no direct link between what the federal government collects in gasoline taxes and what it invests in the national highway system, as opposed to the current system in the U.S. That is to say, we do not dedicate funds for highway investment.

The federal government collects 13.7¢ per litre in gasoline taxes. In 1995 Ottawa collected $5 billion in taxes from the sale of gasoline. In fiscal year 1996-97 Transport Canada will spend only 5% of this revenue.

Mr. Chairman and members, the financing of a national highway program for Canada comes down to two basic options. We can continue to commit tax revenues or enter into public-private partnerships, which will place direct user fees on Canada's national highway system. It may be possible to blend these two options, but the governments must be prepared to place direct user fees on highways that do not currently have them. Recent Transport Canada work and a national highway review policy study demonstrate that opportunities for applying user fees to the national highway system are limited.

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In closing, Mr. Chairman, the Newfoundland and Labrador Road Builders Association offers five recommendations to this committee.

First, we recommend that through an act of Parliament the federal government designate Canada's national highway system and as described by a national highway review policy report. This should lock in the current agreed-upon system.

Second, we recommend that the federal government adopt a national highway policy that would be long term in nature and oversee future improvement, maintenance and expansion of Canada's national highway system. This will facilitate the efficient use of taxpayers' money and infrastructure investment.

Third, we recommend that to meet the immediate needs of Canada's national highway system, the federal government adopt a national highway program for rehabilitation.

Fourth, we recommend that the federal government increase its percentage of gasoline tax revenues spent on highway investment to address the immediate needs of Canada's national highway system. Our association says that if we allocate 2¢ of the revenues collected, we can maintain our highway system. We're not advocating increasing gas taxes. It's to use some of the taxes we currently have to maintain our highways.

Fifth, we recommend that the federal government set up a special highway trust fund for the allocation of funds. This would be similar to our NAFTA partners.

Mr. Chairman and members, the need, the what, the where, and the why questions have all been answered concerning the state of our national highway system. We're only left with the when, the hurdle of how we finance our national highway program.

The Liberal task force on infrastructure of 1990 had one suggestion: that applying fuel tax revenues to road construction and maintenance be examined.

Thank you for the opportunity to submit our presentation.

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

Now we will move to the representative from Newfoundland and Labrador Federal Joint Adjustment Committee, Jeannie Duffett. Welcome.

Ms. Jeannie Duffett (Newfoundland and Labrador Federal Joint Adjustment Committee): Thank you very much. It's a pleasure to present to this group today. Also, in fact, Canada doesn't stop in Nova Scotia and you've included Newfoundland and Labrador, which I'm sure is really important to each of us around this table.

I am proud of the Newfoundland and Labrador Federal Joint Adjustment Committee. The reason this committee was set up in 1995 was to deal with the 55,000 federal government workers who were eliminated through the budget that the government announced in 1995. This committee we have started was a very good process, and it made all the difference in the world because what we were able to do was assist people not to be forced out of the federal government.

The labour-management structure of the joint adjustment committee has been a unique experience for us as it set a precedent in bringing four multifunctional organizations together and focused on common issues.

When the process began, the Newfoundland and Labrador Federal Joint Adjustment Committee had to build a level of trust, a trust among all of us. And when I say “trust”, it was because it was both with our union and management, and bringing that process together was never an easy event for us to go through. But through this process we met together as an interdepartmental forum to discuss common issues, the human resource issues. As the trust grew, so did the commitment, both from unions and from management.

At the beginning, eight departments participated in this process. Currently we have 12 participating departments.

The reason I'm here today is to talk about the cuts the federal government has made within the Newfoundland and Labrador region. We represent and provide services to a population of 551,000. There's over 800 communities coast to coast, and through the coastline we have 29,000 kilometres we have to reach. Geographically, the structure of the Newfoundland and Labrador region has been a challenge for all of us.

Unfortunately for us in the Newfoundland and Labrador region, we have a population of 20% unemployed workers, and it's growing every day. Since 1995 the federal public service in the province has declined by almost 25%, which is the highest reduction in this country, and that's a fair amount of people.

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When I talk about the 25%, I also want to bring to your attention the example of the Department of Transport in this province, which has been downsized 74.8%. That's a significant cut in the Newfoundland-Labrador region. Our natural resources department has been cut by 61.3%. In another example, the Public Service Commission has been cut by 40%. I have all that information available for each and every one of you if you would like a copy.

Another example that I want to bring to you today is the Voisey's Bay issue. Everyone knows about Voisey's Bay, right? All kinds of money, all kinds of growth, all kinds of jobs were going to be there.

Unfortunately for the Newfoundland-Labrador region, we have no representation in the mines and energy section in the Newfoundland-Labrador region. We had to go to Ottawa for that type of information or for any type of contact, so it's kind of ironic that when we look at mines and energy within the Newfoundland-Labrador region we have to go to Ottawa for the information.

In Supply and Services Canada the cheque-writing facility has been eliminated from the Newfoundland-Labrador region, where it worked quite well, and has been relocated to Halifax. That means pension cheques for the Newfoundland-Labrador region or for those people who are receiving any type of training cheques are now printed in Halifax instead of here in the province of Newfoundland-Labrador.

I also mentioned how the Public Service Commission was reduced by 40%.

Those are just some of the things I wanted to bring to this table to let you know exactly what the cuts have done for the Newfoundland-Labrador region.

The other thing I want to bring to the table is the fact that the provincial government is currently going through its own program review, and you can just imagine. We've just gone through our own cuts in the federal government and the provincial government is doing the same thing.

Have the cuts been too deep? Yes, they have been—extremely. In an area of such high unemployment, the federal government should have had a better understanding of the implications of the cuts before the cuts were made. That's something I want to bring to each and every one of you, because I think there was poor planning with the cuts.

I'm asking each of you on the finance committee to strongly consider the needs of the Newfoundland-Labrador region as the federal government decides to loosen its purse strings. I am also requesting a detailed look at the impacts of the cuts made within this region. Those cuts have had some significant implications. I'm asking you to do that.

As I said, my presentation is brief, but being a federal government worker, and being in a room with so many MPs...I always believe in seizing the opportunity, and one of the things is that I want a raise. I want at least a 15% raise, like the cabinet ministers got, no less, no greater, just equal to. I am an overworked, underpaid woman and I want settlement on my pay equity.

Thank you very much for giving me the opportunity to present this to you today.

The Chairman: Thank you very much for your presentation.

The final presentation is from the Community Alliance for Better Solutions. Welcome, Ms. Joyce Hancock, Ms. Moyra Buchan and Ms. Janice Lockyer.

Ms. Joyce Hancock (Community Alliance for Better Solutions): I want to preface my statements by letting you know that CABS is an alliance of more than 100 community groups. And if you notice the way we're sitting, it's to give you a sense that if you were to hear what community groups think of deficit mania and debt reduction, you would need to spend a couple of days here listening to us. What we have to say has been quickly brought together.

I'll give Moyra a chance to speak.

Ms. Moyra Buchan (Community Alliance for Better Solutions): I'm with the Canadian Mental Health Association as well as the Community Alliance.

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Ms. Janice Lockyer (Community Alliance for Better Solutions): I'm part of the restructuring committee here in Newfoundland that's restructuring social services. I'm also a university student and I basically survived growing up on welfare in this province to make it to where I am today.

Ms. Joyce Hancock: I want to say I was also a part of a strategic social planning consultation for this province. It's certainly fresh on the heels of hearing what communities in Newfoundland and Labrador have said to our own provincial government about what they see as important for the social and economic reality of this province.

In answer to your question about whether the process been too fast or too slow, of course, it's been too fast. In this province we see what the federal government has done as a part of a resettlement process. If we have everyone in Newfoundland and Labrador live in large urban areas, you will have destroyed the fabric of our province, and in fact every day we hear more and more that kind of sentiment expressed from our communities, which are basically trying to survive. Their ideas, their innovative and creative solutions to some of the problems we have in our province are not being heard. We see each day what we call a brain drain, or the out-migration of youth, or the resettlement. We're seeing more and more of our people move to urban centres.

We hope this is more than a probe to see what the political fallout will be. With a new federal government, we very much want this committee to hear what we have to say and to come back to see some of the creative solutions that communities could offer.

We have a heavy reliance in this province on federal transfer payments, and the cuts and the debt reduction have had a massive impact on the community. It certainly has failed to take into consideration the high unemployment and the moratorium that was already in existence before you started this process. The lack of a really strong parallel job creation program that taps the capacity of our communities has meant that the deficit reduction program hit our health, education and social programs at a time when our province was in its most dependent state.

We find the federal methods have been entirely inappropriate, failing to understand this province's needs or its potential with natural resources and community capacity.

In answer to some of the questions around how should the federal government set its priorities, we find that consultations such as this are alienating and divisive, because our province is made up of more than the urban centres. We need you to hear a whole lot more about community solutions. We have a sense that industry and business always have your ear. There are many ideas and visions for increasing community capacity that you'll never hear unless you go where community groups feel safe to share those ideas with you.

We need to recognize that Canada is made up of ten provinces and two territories, and we need strong, vibrant working communities to contribute to a tax base that in turn contributes to deficit reduction. Cutting transfer payments contributes to a decrease in the accessibility of education and training; this will leave young people in a lifelong debt situation or forced to rely on income support programs.

This image of Newfoundland-Labrador as a dependent drain on Ottawa and the rest of Canada has let federal politicians get away with the misery that deficit mania has wreaked on our province. The priorities for this province must include accessible, appropriate training and education that do not leave our people in lifelong debt. We need a health care and social service system that is built on dignity and respect. We need the co-operation of federal and provincial governments in providing job creation programs that are built on the economic and social realities of this province.

Throwing money at issues like child poverty may certainly be in vogue these days, and it certainly scores political points when people want to see it as a separate entity, but it fails to recognize that children are not poor in isolation of their parents or their communities. Programs targeted at the elimination of child poverty must recognize the need for parents to have access to meaningful, decent-paying jobs.

Finally, when we start patting ourselves on the back because of where we have the debt or debt reduction, I think what we need to do.... We spend a lot of time, I think, saying where we are now on our financial books, but I think we also have to analyse what we call a social impact analysis. If the finance minister at the end of a year were to say, this is where we are in our debt and deficit reduction, this is where we are in the social impact of these financial decisions...then tell Canadians where we really are.

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In this province it's those profound impacts that we see and hear about every day, and groups that fit under the umbrella of the Community Alliance for Better Solutions hear about more and more of those impacts. I'm going to leave you a copy of what the people said in Investing in People and Communities, which we gave to our provincial government. We're eagerly awaiting to see where they stand.

But certainly the role that the federal government has to play is no less important because of our strong dependency on that relationship.

Ms. Moyra Buchan: I would like to add to what Joyce has said. We have learned some pretty grim lessons over the last few years in the wake of the cuts to transfer payments from the CHST about what that has done to our social capital. Calculations have been done in terms of dollars and cents but not in terms of people, which is why we need social auditing—auditing of the impact of social policies as well as budget estimates.

Mr. Harris referred to the growing polarities between the rich and poor in our province. We sit here in comfort in the Delta Hotel, but one in three children in our province is living in poverty. This means they are having inadequate nutrition. The measure of a healthy society is that it's people are well nourished and able to be productive. We are doing this to our children in this province.

An exercise conducted recently by the local dietetic association found that it took 84% of a family's base social assistance to purchase a thrifty, nutritious food basket. Where do people meet their other needs? We know that kids are going short on nutrition.

In terms of mental health, our association, the Canadian Mental Health Association, has done 170 seminars in the last couple of years in schools and communities. We have seen the impact of the cuts on people in terms of young people's sense of powerlessness and hopelessness about their future. We have the figure of 30% unemployment at this time. People cannot see what is going to happen to them. We are seriously eroding our social capital.

Back in 1993, at the beginning of the moratorium, our association conducted a study in 24 communities affected by the fisheries crisis on how people were feeling then. They were feeling much the same as they are feeling now in greater degrees: a sense of powerlessness over the decisions that were being made affecting their future, a sense of hopelessness and lack of control. What was recommended at that time was that people in communities should participate in planning their own futures, in assessing the strengths and weaknesses of their communities, in looking at how they could find new vital occupations to sustain their communities. That process was never put in place. If we had done that, we would now be doing much better.

Ms. Janice Lockyer: I'm here basically as someone who's currently participating in the process of trying to find new solutions to the problems we live with. I was put on a committee because of a presentation I made to some cabinet members here, who thought that I was all lovely so they put me on. I was quite happy to be on it. It was like getting your Christmas presents before anyone else knew you had them. You knew what was coming. You could see that there were great things happening. You have all these people sitting around a table and they want to do wonderful things in the province. They want linkages, they want community development, they want everything to be spiffy. Then you look at the fact that there's $250 million to do all the spiffy things with and you think, oh well, that was an exercise in futility.

Right now we have $10.9 million to spend in labour market development, which can help about 2,500 to 3,000 people in this province, and we have over 60,000 people currently on social assistance or income support. So once you start dealing with figures like that, you have to start thinking about things like targeting and who can you help and who do you leave, etc.

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I'm 27, which is really funny given that last year you extended your definition of youth to 30. I think that's what it is now. Is that right? I feel that I look like an adult, I act like an adult, and I have many adult talents and abilities, but I'm still considered a youth—and rightfully so, because I don't have a job, and I don't have experience, etc. But at the rate you're going, you're going to have to extend your definition to 40. I always joke with my mother that she'll be really proud of me when I'm 45 and I get that first good, entry-level, $20,000-a-year job that I've been searching for.

So what I want to say is that I'm on this committee as a volunteer because I really wanted to effect all these changes. I have all that youthful enthusiasm and idealism—all the stuff that's right here, in me and in other people, and that I know can be put to work, that can develop things, because I'm so brilliant. I have so many ideas—and so do my friends—but I'm stifled in this country. You keep putting up roadblocks to everything I want to do. You devalue communities, you download onto them, but you don't give them money to do what they need to do. When is it going to change? When are you going to make the difference?

It's not necessarily that we need all these big industrial jobs and what not. What we need is to start valuing the people we have and the abilities they can contribute to society. That means starting to value your communities and starting to look at the ideas they have there, making jobs so that people can stay there and can know that next year they're not going to have to move to B.C. because they got a six-month contractual position to be a Boys and Girls Club district leader but then it's over with.

I want to stay in Newfoundland. I'm born and bred. My mother's out in a small community and she's going to be pretty perturbed if I leave. I don't even know if I'm going to get to finish the work that I'm doing with this committee. I'm going to have to go somewhere, though, because I'm almost 30. I'm not a youth any more.

Ms. Moyra Buchan: Just to finish, Mr. Chairman, there is work in Newfoundland. We tend to look to the private sector to create jobs. We who work in the community know there is an enormous amount of work to be done there: in meeting the social and health needs of the people who live there, in working with young people, in working with the elderly, in working with families. Communities can identify where the work is.

Top-down solutions and the current structure of job training programs have not worked. TAGS has not worked. A great deal of money has been spent with the underlying agenda of getting people to relocate. There are jobs in communities if the communities are given the power to identify them and the resources to develop them.

The Chairman: Thank you very much.

I'd like to thank the Community Alliance for Better Solutions for expressing its point of view on this particular issue.

We'll now move to the question and answer session.

[Translation]

Mr. Desrochers, do you have any questions?

Mr. Odina Desrochers: I would like to thank each of those who have come and told us their thoughts here this morning. Each of your presentations clearly shows that you are very much aware of the social drama that is so deeply affecting your province.

I have two brief questions for Mr. Roger Flood. One concerns the Atlantic Groundfish Strategy and the other employment insurance.

Mr. Flood, I agree with you that the federal government should further decentralize its operations, which would enable it to plan a better program to assist the fishermen of your province.

As you are aware, a single civil servant in Ottawa conceived the Groundfish Strategy, a program that has been roundly criticized by the Auditor General and all the socio-economic stakeholders of Newfoundland. Would this program have been more effective if it had been instituted in cooperation with your people and administered by the provincial government?

Second, you clearly stated that the federal government should reduce employment insurance premiums. We of the Bloc Québécois are demanding a minimum 35-cent cut. Is what you are asking consistent with our objectives?

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[English]

Mr. Roger Flood: To answer the first one, if the TAGS program or a program for the fishermen had been developed in Newfoundland by the people who participated here in the fishing industry and by the provincial authorities, there's no question they would have developed a program that would have worked much better. So the answer to that is yes.

Whether 35¢ is the correct number for the reduction in the UI premiums, I'm not quite sure. But it's certainly a step in the right direction, and we would certainly support that move.

[Translation]

Mr. Odina Desrochers: Thank you, Mr. Chairman. You can give my colleague the floor.

[English]

The Chairman: Mr. Riis.

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

Once again this has been a very moving set of interventions in terms of the concerns, often desperate concerns, of people here in Newfoundland and Labrador. We had a morning session that was not dissimilar.

I must say I'm a little puzzled. We listened this morning to the chamber of commerce and their deep concern about the future of the TAGS program and the need to continue in some appropriate way. We listened to the road builders and we heard how important it is to develop this infrastructure for economic reasons. We heard appalling figures: 29% youth unemployment, student debt loads, a very unclean harbour here in St. John's that's going to require $130 million to clean up, the brain drain of people having to go to British Columbia or wherever else to find temporary employment, one-third of the kids here living in poverty, 60,000 people on some form of income support. I could go on and on.

Marie, you said you were convinced that debt reduction was the first priority. My question is to Roger, who made that case even stronger and said that maybe in three or four years from now we should increase spending. Roger, are you serious about that being your priority on behalf of the organization?

Mr. Roger Flood: If you look at the way the federal government has spent its money over the last 25 or 30 years, the amount of money we spent on transfers to social programs was about 20% to 23% of the amount of available money we had to spend. Back as far as 1961-62 we were spending 22% to 23% of our money on those programs, and we are still spending 22% to 23% today. The amount we spent on interest on debt was about 10% or 11% 30 years ago, and it's 30% today.

If we continue to run up the deficits the way we have, the impact on all of those social programs will be far more severe in three or four or five years' time than it has been over the last four or five years. We're up to 30¢. If that debt were down to where it was even 20 years ago, you could increase the amount of money we are spending on our social programs by 50% or 60% and still have more money left over than we do today. So yes, it's very important that we do start getting that debt down.

Mr. Nelson Riis: Just to clarify, the board of trade here is saying that it is their priority.... I'm assuming you are one of us and we're going to write a report that your recommendation from the board of trade would be that our report should say there should be no further spending on any of these areas for at least three or four years and we should continue to pay down the debt, not the deficit. We're assuming that we're going to be on a balanced budget and that we should make debt payments only.

Mr. Roger Flood: I'm certainly saying the percentage of funds we are paying on those programs should remain the same for the next three or four years.

I agree with the earlier comment about the TAGS program. I think that program could have achieved a whole lot more had it happened here in Newfoundland. I think we would have had a much better program to achieve what it was meant to achieve.

There were discussions here this morning about the federal civil service being cut by 25% in the province. Most of those cuts were not based on economics. They were based on politics. I made the statement earlier that the headquarters for things like Fisheries and Oceans and Marine Atlantic should be where the business is. To me it makes no economic sense at all to have 90% of Marine Atlantic's business in Newfoundland and all of the headquarters in New Brunswick. You're talking about 700 or 800 people. You also have the search and rescue, with 90% of their business off the coast of Newfoundland. The headquarters is in Nova Scotia. If you did those things the federal government would save money, but you'd certainly increase the employment in the province.

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The Chairman: Thank you.

Now, Mr. Jones, are there any questions?

Mr. Jim Jones: Thank you, Mr. Chairman.

I enjoyed all of your presentations. The problems seem to be very difficult to solve, but there are jobs in the rest of the country in some places, like the Ottawa area, and I know they're looking for people in Alberta. Is relocation not an option for some people? If it's not an option, what industries can flourish here in Newfoundland to grow jobs?

Mr. William Parsons: In the industry we represent, Newfoundland had a population of about 12,000 workers in the construction workforce. Today I would say 25% to 30% of them are elsewhere in Canada or the United States or the world. In our industry we are very much attuned to packing our suitcases and leaving town. We don't wait for jobs to come to us. We go to the jobs.

The Chairman: Mr. Jones had a comment about possible economic development.

Mr. Harris.

Mr. Jack Harris: Going elsewhere to work has been a feature of Newfoundland life for centuries. It's not a solution to economic problems in the economy of Newfoundland. Individuals may have had that as a solution for their own family. I myself have three siblings in British Columbia, some who've been there for as many as 20 years. But that's not a solution to the economic problems of Newfoundland.

In terms of industries that can grow and prosper, there are plenty, but we do need to have the basic kind of support for the economy that we're not getting now, whether it's on an income support level or whether it's on a federal government spending level generally.

Plenty of industries can grow and develop here. In the recent past we've seen the information technology sector growing very favourably. We see the offshore oil development as a real possibility for a worldwide development.

But we had to have the revenue streams to be able to...and our friends here have just made the point that the revenue streams have to be available to the local economy so that our friends on the board of trade, as well as others, can make the investments and help to create the jobs as well. We're missing the basics.

The Chairman: Thank you, Mr. Harris. Ms. Duffett, you wanted to make some comments.

Ms. Jeannie Duffett: Yes. I don't think the solution is just to work elsewhere. One thing that we've done with the federal government is that we have eliminated the mobility program.

Mr. Jim Jones: Eliminated what? I didn't hear you.

Ms. Jeannie Duffett: The mobility program. That program is now eliminated, so it's still to the cost of people who are unemployed to get off this island to find work elsewhere. I don't think work elsewhere is the solution. We're after putting a lot of people through training programs. The fact that most of our youth are leaving the province of Newfoundland...as some of the earlier speakers said, we have lots of work and economic growth here. It's just that we need some money to be put back into the province.

Ms. Marie White: It's important to realize that the character of the people is part of what makes Newfoundland what it is. If we continue to export our people, we experience not only a brain drain, we experience a history drain, and we experience a drain on the total flavour of Newfoundland and Labrador.

I think if we made the same kind of comment in some of the other provinces in the country that have a similar type of home-grown flavour and character they would be terribly insulted. I for one would never want to leave this province. I've travelled and I've lived and worked in other places. This is my home. This is where my family is. As a person who is highly educated, with a university degree, I should be able to find work in my own province and my own home, near my family and my friends.

I've taken note of what Moyra said earlier with respect to the Canadian Mental Health Association. One of the things we have to do in Newfoundland is build a healthy province with healthy communities. We cannot do that if our support networks—and I refer directly and specifically to our family and friends—are leaving or if we are forced to leave them.

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Mr. Mike Stokes: I think there's a tremendous opportunity in Newfoundland for fish farming. There's a good opportunity for agriculture. The federal government should have a law that not one ounce of fish—that's fish gut, head, anything—can be dumped in the ocean. If you had that and it was put in the ground, it would make perfect fertilizer. You'd have the richest soil you could want.

We have a big problem with seals amongst the fish. The bays are full of fish, but the fishermen who have a permit just for the scientific fishery just to see what's there are getting all kinds of seals in their nets.

Everybody knows that capelin is food for cod. I think the federal government should invest in capelin hatcheries and put the food in the water for the fish. You don't need to be a rocket scientist. If the food's not there, the fish are not there. We've been selling capelin to the Japanese for about twenty years. They want the biggest, fattest females, so we keep the smallest and then wonder why the run of capelin gets smaller and is later in coming each year. If they're smaller, they can't swim as fast.

I think we have a tremendous market in the States for prepared food. There's been some of it done. Some of it's already prepared in, say, an empty fish plant. It's put in a microwave somewhere in New York, and in three minutes it's ready to eat.

So there are all kinds of things to be done.

The Chairman: A final comment, Mr. Kirby.

Mr. Dale Kirby: I just have a brief comment on the idea of out-migration out of this province. I think our appearance before this committee today signals our intention to inhabit this rock as long as we possibly can. I don't think having either young or old educated, skilled, trained individuals leaving the province is going to help us continue to stay here. I believe we can make it here. We just need co-operation.

Thank you.

The Chairman: A point well taken.

Mr. Szabo, you had a question. Before you ask your question, could you kindly give us a report on that question related to the underground economy?

Mr. Paul Szabo (Mississauga South, Lib.): Mr. Parsons had asked about the finance minister's...

[Editor's Note: Technical difficulties]

In fact, that process was started in 1994 by Revenue Minister David Anderson, and it was continued by Jane Stewart, his successor in the revenue ministry. They held consultations across the country with provincial officials, with major bodies such as the Canadian Institute of Chartered Accountants and with other management groups, and they came out with a strategy to address the underground economy in terms of getting the best value for the limited resources available to deal with it.

Information-sharing agreements were entered into with all of the provinces. That meant the ability to identify high-risk areas through the use of technology, etc. They certainly were aware of the industries in which underground economic activity was prevalent. As a result, in the first full year, in 1995, the unbudgeted revenue from collections of taxes related to underground economic activity was about $1 billion. In 1996, the second full year of these public education information-sharing agreements, etc., an additional unbudgeted revenue of some $5 billion was generated. They have been extremely successful. There are over 19,000 calls and letters to the government every year from Canadians reporting alleged improprieties, either by disgruntled employees, by neighbours who are upset because their neighbour is saying how he took the government, etc. Those are all being followed up. As you well know, if everybody pays their fair share, we all pay less, so I think the program has so far been quite successful, but not in a draconian fashion.

The Chairman: Mrs. Redman.

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Mrs. Karen Redman: I believe it was Ms. Duffett—and if it wasn't, I apologize—who questioned why these different groups are at the table at the same time. In my view, government is no more than a very intricate balancing act, and it's really important that we hear from these groups and that indeed you hear from each other.

My question is one for the Community Alliance for Better Solutions. I really do think it's time government did get more creative, so my question to you is how, federally, can we flow support to a community? What is the best way to offer that kind of support to the communities you refer to?

Ms. Joyce Hancock: One of the things that I was not so amazed by, but certainly touched by, during the consultation when we went throughout this province is that the communities wanted the provincial government. Regardless of what we ask our provincial government, it has impact in terms of what the federal government is willing to invest in that.

If we look at community capacity, community building, as the social and economic infrastructure.... To simplify it a little, in a community you have organizations that may be doing a Boys and Girls Club or a Big Sisters, Big Brothers organization, which fight every year to survive by raising money. If it is viable for them to do things around early intervention that save money vis-à-vis the criminal justice system, why does that have to be begged for? Why isn't that seen as a job in a community that is appropriate for community capacity?

That's just a small example, but communities over and over again were telling us that's what they mean by job creation, not the old 10 weeks or 14 weeks or EI or UI programs. It was not in community per se, but sets of communities that want to survive. In keeping with the whole flavour of this province, it's not about how many of us can leave; it's about how we can build the sets of communities that are there in terms of dealing with job creation around social and economic things. Does that make any sense?

There's a whole piece in this report to our province that the federal government has to see. You need to attach national standards, or at least some standards so you don't just say here's some money; we hope you invest in communities. We want you to say here's some money; you have to look at the solutions that come from communities. Put some strings on it so we don't have to compete with people who want us to believe that if you take care of the economic solutions, the social problems will take care of themselves. We don't believe that in this province.

The Chairman: Thank you.

Ms. Moyra Buchan: If I could add to that, this report speaks in some detail about the third sector and the potential within the third sector for the creation of jobs. That's very much what Joyce has referred to.

One of our problems working in the community in the voluntary sector is that we have virtually been shut out by job creation programs. It's possible for a private business person to get $1 million to build a golf course, but it's almost impossible for us within the community sector to match the funds to create two jobs for people. Our capacity to build jobs has been eroded, and there needs to be some development of policy and direction to enable that balance to be redressed.

The Chairman: Thank you.

Thank you, everyone, for this round table. It's been a very interesting day here in St. John's, Newfoundland.

Do you have a question, Mr. Pillitteri? Okay. I'll do my closing remarks after Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): I apologize, Mr. Chairman, for not having had your attention earlier, but two things came out here that I wanted to shed some light on.

One was pay equity. You said you did not have your pay equity, but as I understand it from the Treasury Board, over $1 billion was put on the table for negotiations with the unions, and they have not accepted. Unions have not accepted that and they're waiting for a court decision. But $1 billion has been put on the table trying to come up with the negotiations.

Also, you made a remark that the ministers took a 15% raise and you wanted some of it. I understood the 15% was in their operating budgets so they would be able to pay their employees more.

A voice: Yes.

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Mr. Gary Pillitteri: I don't see how anyone could complain that they received a 15% increase under operating budgets so they would pay their workers a more equitable pay. I just wanted to bring that up, Mr. Chairman.

The Chairman: That's a question, is it not?

Ms. Duffett.

Ms. Jeannie Duffett: Thank you very much.

The information I had was from the Ottawa Citizen. The Ottawa Citizen did say that cabinet ministers did receive a 15% pay increase. Thank you for making that point quite clear, but I still want my 15%.

Voices: Oh, oh.

The Chairman: On behalf of the finance committee I'd like to express to you our warmest and sincerest gratitude for your presentations. In our travels across the country we certainly learned quite a bit about the challenges and choices we face as a committee and indeed as a country.

What was fascinating about the hearings is that they spoke to the issue of values. What are the key issues? What are the things that are motivating Canadians from coast to coast?

In a nutshell, the message we received is that it's very important to keep the balance, to understand that debt reduction is important, but so is investment in people. Taking measures to improve the quality of life of Canadians is extremely important, as are the ways to expand opportunities but at the same time give a sense of security for Canadians. I often say that we live in an era of expanding opportunities, but we also live in an era when people aren't feeling as secure as they should, given the fact that we live in an era of expanding opportunities.

On behalf of the committee, I would like to thank you again. I'm sure you will see many of the thoughts and ideas expressed at this round table reflected in our finance committee's report to the Minister of Finance.

Thank you very much. The meeting is adjourned.