FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, October 30, 1997

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call this meeting to order. Thank you, Mr. Crawley. He's going to be co-chairing this meeting. I want to welcome everyone.

As you know, pursuant to Standing Order 83.1 the finance committee is holding pre-budget consultation hearings related to, of course, the upcoming budget. We are looking for suggestions and ideas of the type of recommendations we should be making to the Minister of Finance.

You have all received, I think, three questions to address for this evening. Each group will have approximately five minutes to give us an overview of the major points. Then we'll proceed into a question and answer session.

We will begin with the representative from the Canadian Conference of the Arts, Susan Annis. Welcome.

Ms. Susan Annis (Associate Director, Canadian Conference of the Arts): Thank you, Mr. Chair and members of the committee. On behalf of all of us here, thank you for this opportunity to present our views to you and to make our particular cases known on the very important matter of addressing new strategic investment in our new knowledge-based economic climate.

First of all, the CCA would like to express its gratitude to the government for the extra $25 million that has been granted to the Canada Council by the federal government, as was promised in red book II campaign commitments. The promise extends of course to include a similar amount each year over the course of the next four years—five years in total—but this first appropriation augurs well, and we're certainly very grateful for that.

In addressing the questions of the standing committee, the CCA will reach beyond the economic lexicon they were framed in to address them in a broader context as well. The case we would make before the Standing Committee on Finance today is that as we come out of the deficit-cutting era and are cautiously looking at new strategic investments, the support of our creative resources indeed represents a sound direction, both in economic and job creation terms, and in terms of our quality of life and national identity.

Our brief outlines the benefits that are reaped from a strong and vibrant cultural sector. Jobs flowing from a knowledge-based economy are created. The cultural labour force in fact is one of the fastest growing sectors in the country. A significant economic impact is realized. The cultural sector contributed $22 billion to GDP in 1994-95, which is the most recent statistic I can give you. Other sectors such as tourism enjoy important economic spin-offs.

Quality of life in our communities improves as the arts actively partner efforts to revitalize towns, enrich our education system, work with disenfranchised youth, and hold benefits for the needy—just to mention a few of the examples. Canadian cultural expression on the international stage is distinctly heard and seen.

These are all very good reasons to be investing in the cultural sector, as Canada moves beyond an industrial-based economy relying on natural resources to embrace a knowledge-based economy where the new currency is creativity and intellectual property. In this environment the cultural sector is a key economic and social engine.

Investing in the cultural sector means building a strong domestic base of creative expression and production. With the pressures of globalization brought on by new technologies, and undertakings pursuant to international trade agreements undermining our traditional means of promoting and nurturing Canadian cultural expression, the commitment of the government to nurture the roots of artistic expression in this country, our artists and creators, is wise and timely. The new appropriations to the Canada Council, which are disposed through a thinned-down, minimal bureaucracy to arts groups and artists across the country, represent a major step toward establishing this domestic base for culture in Canada.

Other commitments to support and nurture cultural expression outlined in red book II will similarly strengthen and ensure a strong domestic base.

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I'll remind you of those at this time, because we'll be watching very closely and hopefully to see that these in fact are followed through with: $15 million a year for five years for loan guarantees for multimedia productions; $15 million a year for four years for publishing support through the soon-to-be-created Canadian Publishing Development Corporation; $10 million to commission works of art for the new millennium; and reinforcement of the ability of our cultural sector to market its products internationally, including giving to a proposed trade promotion agency a special mandate to market Canadian cultural and educational products and services.

The Standing Committee on Finance should also give serious consideration to certain of the thoughtful recommendations made by the government's own Information Highway Advisory Council, in its final report, Preparing Canada for a Digital World, which suggests key areas of investment by the government in the fledging multimedia industry. This, I would suggest to you, is the cultural industry of the future. These include extending the Canadian film or video production tax credit to investments in Canadian books, sound recordings and multimedia productions. There is also a recommendation to establish a Canadian multimedia fund, and one to allocate sufficient resources to the Business Development Bank of Canada to assist in meeting the capital requirements of the expanding multimedia sector. I'd refer you to recommendations 5.7 through 5.12, if you want to look at those specifically.

These, and the recommendation to extend indefinitely the Canada Television and Cable Production Fund at $150 million annually, will strengthen the cultural infrastructure for film, television programming and multimedia productions, ensuring that Canadian cultural expression has its place at home and around the world. All of these, of course, draw from our strong domestic base of artists and creators, nurtured through investment in the Canada Council, and we've come full circle.

We would remind you also of two of the recommendations of this standing committee last year, which the government has not yet followed through with, and we would encourage you to restate them in your current report. These are to introduce income averaging measures for low-income earners such as artists or writers; and secondly, to implement tax incentives to encourage small and medium donors to contribute to cultural and other charitable organizations.

In essence, we are not putting new recommendations before you. We are saying follow through with the ones you have already come up with in the red book, follow through with the ones that have been suggested to you by your own advisory council on the information highway, and follow through with two of the ones that this committee itself made last year.

We feel that in the rebuilding process the federal government is embarking on, initial directions of investment in the cultural sector are strategically sound. It is on the right course. It must stick to that course so that all Canadians may realize the full benefits of a thriving cultural sector in terms of our economy, in terms of the well-being of our communities and our society, and in terms of our national identity and presence internationally.

Thank you very much.

The Chairman: Thank you very much for your presentation.

We'll now move to the representative from the Professional Association of Canadian Theatres, Ms. Pat Bradley. Welcome.

Ms. Pat Bradley (Professional Association of Canadian Theatres): Thank you very much, chairman and members of the committee.

I was here last year, and I'm very happy to have come back in a year, as Susan alluded to, when the Canada Council has indeed been stabilized—the beginning of five years of $25 million a year. I thank the committee for its recommendations last year and congratulate the government on that increase.

I want to talk briefly about one aspect of what has happened to the Canada Council and what has happened in the arts community, particularly in the performing arts community, as the council was cut back and as fewer and fewer resources were available for the arts community. I think the biggest effect it had in my community—the theatre community—was on youth employment.

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When public funding dries up, two effects are apparent. One is that existing organizations, some of which may have been around for 30 or 40 years, some of which may be younger than that, lose funding to their base. Unless they are able to replace it with corporate money, which is very hard to come by these days, they tend to cut back in areas where less money is coming in the door. Those areas are often areas that are directly directed towards the development and training of young audiences and young artists. Secondly, new and emerging companies are not able to get on the table in funding agencies. Again, those are the organizations which are able to offer jobs for new, recently graduated artists, technicians, administrators, and support staff.

The effect of the many years of starvation and indeed cutbacks at The Canada Council has been, I think, a generation of artists, technicians, and administrators who have been unable to fulfil their potential. A recent study in Ontario has shown that arts workers, artists, and cultural workers are among the best-educated groups of workers in our society as a sector, but education is only the beginning. There is no replacement for on-the-job training, particularly for artists and actors, directors, designers, technicians, and playwrights. So I think what we've seen during the lean times at the Canada Council has been a real lack of development of the young artists, which often spins off into the young audiences, in the sector.

With that in mind, I would agree with the CCA on their recommendations and in particular point out the necessity of sustained, stable, long-term, multi-year funding to the Canada Council.

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

The next presentation will be made from the Canadian Museums Association, Wendy McPeake, a member of the board, and John McAvity, executive director. Welcome.

Mr. John McAvity (Executive Director, Canadian Museums Association): Thank you very much, Mr. Chairman. We're very pleased to be here once again, particularly on this most historical day. We were here exactly one year ago, and one year ago, as is the case today, it was my birthday. I really wanted to request some birthday wishes here.

We have submitted a brief to you. I will not reiterate the brief, because it's in writing and you can read that and go over it, but I do want to make a couple of comments following up on the Canadian Conference of the Arts. We agree that our sector, the cultural sector as a whole, is a strategic investment in the social, the educational, and the economic well-being of our country.

Some sectors within the cultural community are faring better than others. I regret to say I'm representing one of the sectors that have been the hardest hit of all. The museum assistance program is the principal funding mechanism from the Department of Canadian Heritage and it now has the dubious distinction of being the hardest hit of all cultural programs. In the last several weeks the program has been cut by a further 20% of funding. This takes its total cut to 64% from the traditional levels.

A year ago when we appeared before the committee we asked for you, as one of my birthday wishes then, stability of funding. Regrettably, we've not seen that to be the case. This year I'm not asking you for stability. I'm asking you for enhancement of that funding, particularly as the government is seeing the end of the deficit woes and we're starting to turn a new chapter economically in this country.

I would point out that economically the museums of Canada return far more money than they cost. They return $1.5 billion in immediate activities, without including the tourist returns. I'm taking this from an internal document from the Department of Canadian Heritage. I'll cite you one example.

Last year the Barnes exhibition at the Art Gallery of Ontario cost a total investment of $3.75 million. It returned to the total economy a total of $98 million, generating 2,100 jobs, including in restaurants, in taxis, in hotels, and in a variety of support services. My point is that the tourism feature of our community is equally important, perhaps, as the educational and social aspect of what museums do.

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In our report, which I've tabled with you, there are a number of other recommendations that I would like to briefly touch upon. We're very concerned that there's been a downturn in the number of special exhibitions that travel throughout Canada and allow Canadians to appreciate better different regions and different cultures within this country.

We're asking for special consideration for travelling exhibitions. We're also asking that Canada indemnify exhibitions that travel. We are in fact the only major western nation in the world that does not indemnify. Rather, museums must purchase very costly insurance on their own. And this we think is a cost-effective and very sensible recommendation. It would actually save a great deal. The federal government could indemnify them.

We're asking you to revisit some of the tax incentives that were introduced in Mr. Martin's budget last year. They are excellent. We want to commend you on the recommendations that have come in, but we feel several of them could be enhanced a bit.

First, we're asking that the ceiling for tax donations be raised to 100% from 75%. The 100% would take it back to what the crown status or crown agent equivalent has been in the past at very little cost. We feel this would simplify the income tax system greatly.

Second, we're asking that the temporary clause that permits the donation of registered securities such as stocks and bonds in fact be made a permanent feature and that it be broadened to include other forms of security. I believe you've had some requests to this effect from the charitable sector earlier this week.

Third, we are asking that membership fees, that is, dues that individuals pay to join charitable organizations, be made tax deductible. We think this is a very low-cost mechanism to encourage more Canadians, and particularly Canadians of limited means, to participate in the cultural activity of their choice.

In terms of youth employment, we have administered a program called Young Canada Works in heritage institutions on behalf of the government. It's been a tremendous success. We could have used more money. Unfortunately, the funds were very limited and we would urge you to continue that initiative and enhance it.

Lastly, on the international front we are very much interested in participating in marketing activities to export expertise, exhibits and products that Canadian museums and art galleries have to offer. We would very much like to see some incentives put in place and programs on that level.

In conclusion, the museum community numbers 2,200. We welcome over 55 million visitors per year. We are strong and significant in terms of the social and cultural impact of this country and we think a strategic in our knowledge-based sector would pay dividends for all concerned. Thank you.

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

We will now move to the representative from ACTRA, Mr. Alexander Crawley. Welcome, sir.

Mr. Alexander S. Crawley (Alliance of Canadian Cinema, Television and Radio Artists (ACTRA): You will be happy to know that since I'm an actor I didn't bring anything written down.

I'm just here to support my colleagues across the cultural sector. Particularly, I'm proud of something the sector has accomplished in the last little while—and we were here last year to talk to you about it—and that's the Cultural Human Resources Council, which I'm happy to be chairing.

Also, I would like to point out to you in advance, echoing what the CCA said about the investment in production in film and television, which of course is where my members are working, that it does need to be made a permanent feature. I think the CFTPA and the APFTQ are going to give you some very hard arguments on that.

What I'd like to really underline for the parliamentarians here is that you can help us by finally putting to rest the myth that the cultural sector does not pay its way economically, that we're somehow standing around asking for handouts. When you look in detail at the briefs before you and you see some of the hard statistics we're starting to get, because Statistics Can is doing a better job on measuring our impact, it really is an investment. So a tax expenditure, as I know it's called, in this sector will always return more money than it gives.

I hope people are smart enough to understand this and I hope that more of you, as the Canadian political leadership, can help to educate each other and the public that we are a strategic area to invest in. We're not here for handouts. I just want to make that point and pass along to the next speaker.

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

Our next intervention will be made by the representative from the Association of Canadian Publishers, Mr. Jack Stoddart.

Welcome, sir.

Mr. Jack Stoddart (President and Chief Executive Officer, Association of Canadian Publishers): Good evening. I'm Jack Stoddart, the president of the Association of Canadian Publishers and the chairman of Stoddart Publishing Co.

Our association represents over 135 Canadian English-language book publishers, and although we're not officially here on behalf of ANEL, the French-language book publishing association, we're in a close working relationship with them and I believe what we're saying represents their viewpoints also. But it's not an official position.

This is our third year of presentation and we've found it very useful. We thank you for the time and for inviting us. Last year following the presentations, the finance committee recommended a loan guarantee program for book publishers. That has since been announced by Minister Copps and we expect it to be operational by April 1998. We thank you for the recommendation. We think it's a very positive step and we appreciated the understanding that came.

Book publishing in Canada employs over 7,000 Canadians directly full-time, and annual sales exceed $1 billion. So although there are a lot of little books out there, cumulatively it adds up to a significant amount of business.

Book publishing is an essential part of the new information economy both as suppliers of contents to the new information highway and as providers of affordable and accessible information to people in book form. People have been saying for centuries now that books are finished. I would suspect that in the next millennium, or whatever it is going to be, we will still be doing that argument, but we're hanging in there fine, thank you.

We believe that book publishing is a key component, or to be more precise, books and writing are key components to the building of the culture of this country and that's why we fight so hard to bring our concerns to your attention.

Members may recall that the book publishers experienced a 55% cut in federal funding during the program review. It was the hardest hit by far of any of the cultural industries. In response to that we built a three-point program, along with ANEL, and worked with the Department of Canadian Heritage in the development of that program. On Canada Book Day last year, April 23, the minister announced that this was the basis of the department's new programs.

There were three parts to it: enhanced stable funding; a new loan guarantee program, which I mentioned earlier has already been introduced; and then an introduction of new structural measures to level the playing field in creating new Canadian books.

The Liberal policy document red book II committed an additional $15 million annually to support book publishing. We welcome this and applaud this. We urge that it be directed to existing programs. They have already proven to be effective. I'll come back to that later.

We also applaud the new funding to the Canada Council, of course, and are hopeful that books will be part of this process.

The restored funding will correct the excessive cuts that publishers experienced during the program review and is providing a new stability to the sector. The new loan guarantee program will help publishers access capital. That is perhaps in most of the cultural industries the hardest thing to do. The traditional banking and financing industries don't see, in most cases, cultural industries as a place where they want to put their loan programs. So that we see as a very positive change.

The new structural program I am proposing tonight, however, will address the gross margin gap that Canadian publishers face when competing against foreign publishers, and that would be the completion of the three-part program.

Numerous studies have identified the structural impediments to publishing of Canadian books and our writers. The gross margin gap is attributable to the lack of economies of scale, a lack of access to the highly profitable imported titles for distribution and the inability to set prices that reflect Canadian costs because American books flood our market and effectively set the Canadian retail price that you can charge for books in Canada.

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On average there is a 9% to 10% gap between the gross margins of Canadian-controlled corporations and those of foreign-controlled corporations in the publishing business. I don't know if that is typical of other industries, but for a competitor, to have to deal with a 9% to 10% difference in gross margin is a huge disadvantage the Canadian corporations are under.

This prevents Canadian publishers from building equity in their firms. Without equity it's very hard to access the banks and the funding situation. RITC would address these barriers and close that gap. Your committee has asked for recommended tax measures and we're proposing a refundable investment tax credit for book publishing.

Precedents exist for the RITC. In 1997 the Ontario government established an RITC where publishers will receive...etc. Of course this was put forward in the film and video production area in the 1995 budget. So it is a proven approach to a funding rebate, if you want to call it that.

Studies have been concluded for the federal government by Paul Audley and Associates Ltd. in 1990, Ernst & Young in 1995, Arthur Donner in 1996, and the ACP in 1997. All the studies recommended the use of an RITC in the book publishing industry as being beneficial.

Most publishers would benefit from the RITC. There are a few, such as university presses, which are non-profit and would not fit under that category. If an RITC were brought into play we would hope there would be a corresponding situation for non-profits.

Earlier I mentioned the red book commitment of the $15 million. One of those commitments in the red book was that a new crown agency would be set up to deliver support programs to the book publishing industry. This is not a priority or a program that is being endorsed by the ACP nor ANEL. We believe the current programs and delivery vehicles are efficient and effective, and we believe there's a risk of severing the policy-forming function and program-delivery functions and urge that the government re-examine a new agency. We feel a tremendous amount of money and a lot of time would be spent in setting it up, and at the end of the day we believe it would not be an effective vehicle for developing publishing in Canada.

There are four other areas I want to mention very briefly. The first is the devastating effect of public fund cuts on libraries. Canada has historically had a terrific library program. More and more, as the funds are being cut and the purchases are being more the Danielle Steels of the world, fewer and fewer Canadian authors are finding their place in our Canadian libraries. I think that's a serious problem. Our educational publishers are under the same kind of concern.

The government is concerned about nation building. Losing the ability to create Canadian textbooks and having libraries filled with foreign novels will defeat us as surely as those who want to dismantle our country. The proposed MAI, Multilateral Agreement on Investment, poses a serious challenge to the development of a strong cultural sector. Although it's not a tax measure, we consider it a major threat.

The other one is the U.S. challenge to the magazine industry under the WTO. It will set a very dangerous precedent for all cultural industries if it is successful, and we're concerned that it may be.

We'll continue raising these concerns with other parts of government, but those areas are all of major concern.

Canadian publishers in both languages have been instrumental in creating a national literature that introduces Canadians to each other and Canada to the world. Our authors are internationally acclaimed and our exports are growing significantly. The Canadian model of fostering creative excellence, encouraging entrepreneurial tenacity, and providing modest government support works to ensure Canadians have access to our own culture, which is essentially a reflection of ourselves for ourselves.

So often we think of the success we have internationally with our artists or musicians or writers and say, isn't that wonderful? And it is. That's truly wonderful. But just as important is what we write and publish and perform for ourselves. So often, we lose track of the fact that it's that building block that counts by allowing others to go out and become successful on an international basis.

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I think our accomplishments in the cultural industries are extraordinary. We thank the committee for its recommendations in previous years. We ask for your continued interest and support of the writing and publishing in this nation.

Thank you.

The Chairman: Thank you very much, Mr. Stoddart. Now we'll move to the representative from the Writers' Union of Canada, Ms. Merilyn Simonds, who is the second vice-president. Welcome.

Ms. Merilyn Simonds (Second Vice-President, Writers' Union of Canada): Thank you.

I'm not here to represent an organization, like most of the others; I'm actually representing the creators in Canada.

As Canada shifts to a knowledge-based economy, writers are moving to the centre of the economy. They're becoming as central as farmers, fishermen, and miners once were to the old economy, which was based on resources.

There has been a lot of talk about investment in technology, but unless there's content to make that technology desirable and indispensable, that transition to a new, knowledge-based economy can't possibly succeed. Technology is only the means to the end; content is at the heart of a knowledge-based economy.

So I'm here to talk to you on behalf of those who so many people now are calling content providers; we still call ourselves writers. What we do is obviously fundamental to the publishing industry, but a vast and profitable structure rests on our work as well.

Think of the film production company, the sound editors, the movie distributors, and the popcorn sellers who all made a living from Michael Ondaatje's book, The English Patient. Think about the actors, directors, tour bus operators, and bed and breakfast owners in Prince Edward Island who make a living from Lucy Maud Montgomery. A very large industry rests on the shoulders of writers.

Behind every word on radio, television, and the stage, every word on the Internet, and every word downloaded on a database, there's a writer underneath every one of those words. These are writers who are professionals. They are skilled not only at writing but at generating ideas and gathering information. That's what makes us so pivotal to the new information age.

So to develop a knowledge-based economy, we believe that a nation has to nurture those writers, those people who are creating the intellectual property that's going to be the currency in the new information age.

The Canada Council news was fabulous, but you have to understand that only 1.6% of the 15,000 writers working in Canada today benefit from individual Canada Council grants. That's an extraordinarily small percentage. You can double, triple, and quadruple the Canada Council budget, but there will still not be a significant amount of funds going into writers' pockets.

The truth is that in Canada today a writer's life is a economic roller coaster that is so financially discouraging and so unfairly taxed that, far from being nurtured, writers in this country often feel persecuted, and for a very good reason.

I'm going to walk you through what it means to write a book in this country. Maybe some of you already know this, but I doubt if you know from doing it on a full-time basis as a writer trying to make ends meet, put kids through college, and all the rest of it.

A book takes, on average, two years to write. Mine took seven, but that's okay, I'm slow. Say that after two years the writer then places the book with a publisher and receives a $10,000 advance on royalties. In the news, you hear about six-figure advances. Now, $10,000 is considered generous; most are smaller than that. It takes another year to produce a book.

Publishers are downsizing. They're all being hurt. Writers are now being asked to choose cover art, do indexes, procure their own illustrations, and even write their own press releases. So in that third year of production, the writers are also intimately involved.

Okay, so say the book comes out. Let's say it's a runaway success. It wins a couple of prizes, and sells 10,000 copies. That's a bestseller in Canada.

Six months after publication, the royalties are calculated. It has been three and a half years now, and still no money. Several months after that, the cheques are mailed.

During this time, the writer is on the road promoting the book by doing readings, lectures, and interviews. Again, most of it is out of the writer's own pocket because publishers' budgets have been so incredibly downsized.

Finally the first royalty cheque arrives. It's a 10% royalty on a $30 book. That's $3 a book. We sold 10,000 copies, so it's $30,000, minus the advance. The cheque is for $20,000.

Wow! Right? But no, that $20,000—it's $30,000 in all—has to be averaged over four years. Four years of work have gone into this book, so that's $7,500 a year.

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Nobody can live on that. The writer takes on extra work. Every writer I know cobbles together a living from half a dozen different means. Sometimes it's selling doughnuts and driving a cab, but more likely it's a little teaching here, a little magazine writing there.

Canadian writers, as someone else said here today, are among the most educated sectors in our society. They're every bit as educated as doctors and lawyers and engineers. Yet their average income hovers around $20,000 from all sources. On average, they work over 50 hours a week.

So imagine the frustration, the absolute outrage, getting this $20,000 cheque that covers work you've done over four years and being taxed on this $20,000 as if you earned it all in that one year.

The income tax system as it stands now is geared to salaried workers and penalizes everyone whose income fluctuates. Few incomes fluctuate as disastrously as writers' do. If writers could average their income back over the years it took to produce the published work, they would pay tax in the same proportion as every other worker in Canada.

Income averaging is not a new idea. We gave it to farmers and fishermen 50 years ago when they were the centre of the resource-based economy. But now writers—in fact, all creators—are the farmers of the knowledge-based economy. Without us the culture will starve.

Income averaging used to be automatic for all taxpayers. It removes all the hidden inequities of this tax system we have. We urge the government to restore back-averaging to writers and to all those who produce original copyright material. This would benefit not only the creators but also everyone employed in all of those industries that rise from the writer's back.

As well as income averaging, the government should institute incentives for those who are fuelling the information society. Other countries go to great lengths to support their content providers. In Ireland, for instance, all income earned by artists, writers and composers is tax exempt.

I am speaking for the English-language writers. There's also a group in Quebec, UNEQ, that represents Quebec writers. Quebec writers are privileged in this country, because the Quebec income tax act has a provision whereby the first $20,000 of net income earned from copyright material is fully deductible, as is a portion of the next $10,000.

This would go far to alleviate the severe economic restraint of devoting yourself to writing in this country. Given the low level of most creators' incomes, this provision, just like back-averaging for writers, would cost the government almost nothing in lost tax revenue, but on an individual basis would put a few thousand dollars back in writers' pockets. This would not only allow the content providers to continue to work but it would also recognize their essential contribution to Canada's knowledge-based economy.

Writers take very little from the government. The social safety net doesn't extend to us. We don't get unemployment insurance and we don't get worker's compensation or sick benefits. If we want drug plans, we have to buy them ourselves. We work long hours for very little pay, because we know what we do is valuable.

All we're asking is that we be allowed to keep the same proportion of our income as other workers in this country who enjoy the benefit of a regular pay cheque. We ask that the government not make our lives any harder by continuing to penalize us and to show Canadians and the world that this government values the work of creators by instituting a copyright income deduction, as they have in Quebec.

We would also ask—and this is in the longer version you have—that you recommend that the PLR, the public lending right, be a legislated program instead of one administered through the Canada Council so that this form of funding is secure.

Of course, we also urge the continued support of the Canada Council and the continued support of all those technologies and industries that produce our work.

The government cannot create jobs for us, but we can create jobs for the country. If we're given income averaging and a copyright income deduction, the content we produce will create thousands and thousands of jobs in a new knowledge-based economy.

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The Chairman: Thank you very much.

We'll now hear from the representative from the Cultural Human Resources Council. Monsieur Jean-Phillippe Tadet, welcome.

[Translation]

Mr. Jean-Philippe Tadet (Executive Director, Cultural Human Resources Council): Good evening. It is the second time I appear before this committee and I would like to thank you for following up on one of the recommendations we made last year to strengthen the stability of the cultural training infrastructure in this country.

Last April, Minister Copps and Minister Pettigrew announced the creation of a special fund for arts and training which ensured the preservation of the main cultural training institutions at the pre-professional level. On behalf of the cultural sector, I want to thank you for taking a very innovative approach and for recognizing that this investment has a considerable impact on Canada and on all Canadian cultural communities, be they English, French or multicultural.

I would like now to make a couple of comments on our cultural sector, because I am not sure that you are completely familiar with the working environment of our cultural workforce. I will simply add to what was just said, only maybe from a more specific perspective.

Overall, there are in Canada 14 million workers. This is our workforce. It is estimated that at the moment, in the cultural sector, there are 700,000 workers. It includes creative people, but also people who work in the areas of distribution, creation, production and preservation of our cultural products and services. Of course, this workforce is not insignificant, quite the contrary.

One of its particular features is that, basically, half of the sector's workforce is made up of self-employed people, freelancers and micro and small businesses. If you look for legislative instruments or initiatives taken by the government over a number of years to help these human resources develop, get organized and play a part in Canada's economy, you will soon realize that most federal and provincial institutions have mostly focused on the employer- employee relationship.

People who work in that type of environment enjoy a number of support mechanisms, for instance, employment insurance which allows workers to be taken care of when they are unemployed. In addition to this program, which is extremely important and which represents a significant portion of government finance, there are a number of institutions, such as the large provincial or federal departments— Industry, Foreign Affairs and International Trade—, which nurture this structure focused on the employer-employee relationship.

Unions, whose action is also focused on this concept, together with employers' representatives, parity committees, labour force development boards, indeed all mechanisms presently in place, regulate the labour market. These are all investments Canada can be proud of.

However, let's now look at what is available to our own workforce. A number of minor initiatives have been taken, regarding taxes, income, deductions and tax credits. We just heard recommendations about this very eloquently put forward. What we are asking, in particular, to make income tax deductions more accessible to a number of our members, to make the law fairer to freelancers working in the cultural sector, is to ensure that what applies to writers also applies to the other players in the cultural sector.

These are minor initiatives, but they can have a big impact on our sector. What do we have available to protect and nurture our workforce? Basically, we have the support of big departments such as Culture and Communications. They can be called "big" because they add a lot of value to a number of government initiatives, but on the other hand, these departments have a relatively small budget.

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There is the Canada Council and all the other arts councils, and we very much appreciate that the committee was instrumental in getting the Canada Council's funding increased. However, if you look, overall, at the institutions which nurture and develop human resources in the cultural sector, it is clear that investment in this area is relatively small. Legislated initiatives could have more scope. I would invite you to try and consider our sector from this perspective.

[English]

The Cultural Human Resources Council has defined needs and priorities for investment in cultural human resources development, and we hope that the brief we are presenting to you today will help you to guide policy development, program development and legislation at the federal level.

I will not come back to the statistic that was mentioned so brilliantly before me. I will just tell you our idea of what kind of investment would make sense to us and to Canada, because this is the question you asked.

The first recommendation we will bring forward to you is that in order to achieve clear and strategic human resources development in the cultural sector, the government must support specific strategic adjustment mechanisms, which, with the devolution of training to the provinces, are facing new challenges. I am talking about a number of initiatives that cultural arts service organizations are putting together to help workers find jobs, orient themselves, conduct mentoring programs and do youth internships and professional development activities.

All of these activities are very low cost for the government. In fact, we have calculated that for each dollar the government is investing in those strategic adjustment mechanisms, the cultural sector is contributing two dollars, so in fact your investment is a very important investment and helps the sector grow.

These are pan-Canadian professional development activities that are essential to build a basis on which cultural job opportunities can be created for Canadians. The needs are high and may not be met by solution-regarding labour training that has been designed for other sectors. A complete brief on this issue is attached for your attentive review and we recommend that adequate and ongoing governmental support be provided to these activities.

The second recommendation deals with new technology. We believe that new technology in the form of computer and electronic communication has many impacts on the sector. First of all, it revolutionizes the handling of business and management tasks, and more importantly, the marketing and distribution of electronically based products such as sound recordings, films, books and magazines. They can themselves be used in production and are the source of new products. CHRC recommends that the government support this sector in developing new ways of meeting these challenges in areas such as digital television, for example.

Third, we recommend that tax legislation and other regulatory measures recommended to you by the Standing Committee on Finance should ensure that investment in human resources in the cultural sector is followed through on. This could apply to new government-sponsored programs or funds as well. We should probably have—and this is a a global recommendation—the creation of a human resources development fund in the cultural sector in Canada as a whole.

The possibilities for continued growth of the cultural sector in Canada and worldwide are considerable. However, the prospects for growth will depend in part on how we manage and develop the human capital, the mainstay of our sector. Both the environment and the continued development of the labour force need to be considered in mapping out effective ways to strengthen the pool of talent in order to contribute to the health and the vitality of our cultural sector in Canada. We trust that you, the committee, will recognize the importance of human resources investment, drawing upon our expertise in this area in the process of its ongoing discussion and deliberations.

• 1855

Thank you.

The Chairman: Merci, Monsieur Tadet.

Now, if I understand correctly, representatives from the Canadian Film and Television Production Association, Elizabeth McDonald and Tom Berry, will also be presenting with a representative from

[Translation]

the Association des producteurs de films et de télévision du Québec, Ms. Louise Baillargeon.

[English]

You may begin.

Ms. Elizabeth McDonald (President, Canadian Film and Television Production Association): Mr. Chairman, members of the committee, my name is Elizabeth McDonald and I am the president of the Canadian Film and Television Production Association. I'm joined today by my colleague Madame Louise Baillargeon, the

[Translation]

CEO of the Association des producteurs de films et de télévision du Québec,

[English]

and Mr. Tom Berry, an active member of both associations as well as the immediate past chair of the CFTPA and the current chair of the association's government relations committee. Mr. Berry is a feature film producer with Montreal-based Allegro Films, a Coscient group company.

Louise.

[Translation]

Ms. Louise Baillargeon (CEO, Association des producteurs de films et de télévision du Québec): The APFTQ and the CFTPA always work in partnership to represent the interests of their members which, collectively, total a little over 450 production firms in all sectors of production, in all regions of the country and in both official languages.

It is a privilege for me to be here tonight, particularly at such a crucial time for our industry.

Although the report describing our industry that we published jointly last February shows that the production volume, the export spinoffs and the number of jobs created have continued to increase over the last few years, we are extremely vulnerable since we are confronted daily with the real world, that is the biggest and the wealthiest production machinery in the world operating directly south of our border.

Tom.

[English]

Mr. Tom Berry (Chair, Government Relations Committee, Canadian Film and Television Production Association): Members of the committee, I would like to thank you once again for giving our associations the opportunity to present our views regarding the upcoming federal government budget.

Reflecting on the fact that the improving situation is creating great expectations, you have asked us to respond to three key questions.

It is important that you understand that the film and television industry is very much a new economy industry. We're not reliant on bricks and mortar; we're an integral part of the knowledge economy. We create jobs. At least 55% of all production budgets is spent directly on employment, and these are excellent jobs. They're high skilled, well-paying jobs that put significant dollars into the Canadian economy. These are jobs that all of us would want our kids to have.

What are some of the basic economic assumptions that we believe should be made about our sector? Well, while the film and television sector is becoming more of a success story within Canada, it is a false premise for this committee or members of this government to believe that our industry will continue to prosper without public support. The Canadian market is small. If this industry is going to be able to retain its Canadian identity, produce Canadian cultural product and create opportunity so that talented Canadians can continue to work in this country, it will continue to need public funding, supportive regulations and tax incentive programs.

The fact of the matter is that, outside of the United States, all other western countries—for example, the United Kingdom, France, Germany, and Australia—contribute more to their domestic production industry. These countries do not face the same threat as we do in terms of sharing a border with the United States; they do not have to deal with issues related to geography and time zones; and they do not have to produce in two official languages.

We need to ensure that there is a Canadian marketplace for our product. With the support of the CRTC, we have created demand for Canadian product on our television screens. The same cannot be said for feature films, where we have lost almost all control over our distribution and exhibition mechanisms. We have not found the political will to make a sustained and serious commitment to Canadian feature films.

• 1900

We need to be creative in terms of the support mechanisms that we establish, so that they meet both cultural and industrial objectives. We need to be prepared to invest in our workforce as new technologies such as digital, high-definition television emerge. We need to have a workforce that can produce a product that is Canadian and, furthermore, is competitive with the best that the rest of the world has to offer.

Elizabeth.

Ms. Elizabeth McDonald: Thank you, Tom.

In terms of support mechanisms, we are asking that this committee recommend to the Minister of Finance that the government's February 1998 budget contain a definite commitment to the continuation of the Canada Television and Cable Production Fund, of which both Louise and I are members of the board of directors. This fund was created in September 1997, and is scheduled to be reduced by 50% in fiscal 1998-99, disappearing altogether in fiscal 1999-2000.

The CTCPF is a unique animal. As Tom is so fond of saying, it should be the prototype for government cultural spending. It mixes public and private dollars, as well as public and private objectives, to trigger a much higher level of Canadian production activity. Over the past year alone, the fund was pivotal in the creation of over 376 programs representing 2,221 new hours of adult prime time and children's peak-viewing-hour television programming. More than 19,000 jobs have been created. CTCPF contributions encouraged $625 million in television production activity, with direct and spinoff economic benefits of approximately $525 million.

The CTCPF is an instrument that is helping the CBC to, one, redefine itself with less resources in infrastructure; two, to Canadianize its schedule; and three, to work in partnership with the private sector.

Louise.

[Translation]

Ms. Louise Baillargeon: The fund has made a very big difference for independent producers, both in terms of quality and quantity of programs now being aired in Canada.

Thanks to the new government funding allocated in September 1997, Quebec was able to almost double investments in production. They rose from 38.4 million dollars in 1995-96 to 65.1 million dollars in 1996-97. In practical terms, it means that Quebeckers can now enjoy more serious drama, more high-quality television series, more serial drama, and that almost all American programs translated in French have disappeared from our screens.

Over the last few years, audience ratings have demonstrated that Quebeckers always prefer to watch programs created by our own people, telling our own stories and featuring our own actors.

However, in Quebec, we still face a challenge because the French-language market is very limited and cannot offer, without subsidies, high-quality programming because of the economic framework which is prevalent in Quebec and the very low level of advertising returns.

[English]

From the APFTQ's perspective, the continued commitment of the federal government to this fund is essential if we want to ensure our presence on our television screens in Quebec, as well as continuing to foster a valuable French-language independent production sector in Canada.

Tom.

Mr. Tom Berry: Thank you, Louise.

As for the overall model of the CTCPF, we believe it is an effective structure. It allows the public and private sectors to set goals and objectives for spending in our sector, and it can meet both cultural and industrial objectives. Because of the mixed nature of its board of directors, it encourages normally competitive interests to work together for a single purpose.

• 1905

Based on our experience to date, we believe the CTCPF model is an appropriate mechanism for strategic investments that this government may choose to make in our cultural industries. Indeed, it is a supply-side initiative that we believe has potential to reinvent the way Canada's feature films can be supported. As Canadians, as civil servants, and as people in the private sector, we think there are a number of things that we've done right in terms of policy formation and program implementation. This is one that we should be proud of.

As a labour-intensive industry, we're also concerned with the training of workforce. Canada's ability to tap new opportunities in the knowledge-based economy will depend on the skills of the individuals in our sector. To date, we have been a partner of the federal government in the establishment of on-the-job mentoring programs. These programs are particularly important in our industry, as we rely on self-employed individuals who must have cutting-edge skills that are portable from job to job. We applaud the establishment of any programs that work with our industry, and which develop skills that can find direct application in the marketplace. We are, however, somewhat worried that the government's present emphasis is on youth training and may be overlooking one of the key realities of the knowledge-based economy, namely the need for retraining of mid-career professionals.

Finally, as for the tax system, the government announced yesterday that effective November 1, it was establishing a tax credit program that will principally benefit foreign interests. While we certainly understand the desire of any government to attract investment dollars, we're concerned that we may be beginning to detect a shift on the part of this government from programs that primarily support a Canadian-owned production sector, to programs that benefit large, well-financed, foreign-based studios and production companies.

These foreign interests certainly create jobs and economic activity in Canada; however, we're not convinced that giving them a favourable tax environment is necessarily the best long-term industrial strategy for Canadians. It is our contention that in the end, we need programs that will encourage maintaining in Canada the ownership of intellectual property. This will have the greatest long-term value. It will ensure that the benefits of all future sales derived from within or outside Canada will stay in this country. It is the intellectual property that must be viewed as the economic net asset.

In conclusion, while we very much appreciate the commitment that this government has made to our sector, we believe the improving fiscal environment creates a great opportunity. We need a continued commitment to effective public-private partnership programs and support mechanisms like the Canada Television and Cable Production Fund, which we believe represents the best way to create high-quality television programming and films that reflect our experience and values, and will respond to the marketplace while stimulating the growth of a Canadian industry and creating jobs for young people.

In conclusion, I'd like to thank you for your attention. We would be pleased to answer any of your questions.

The Chairman: Thank you, Mr. Berry. Merci, Madame Baillargeon. Thank you, Ms. McDonald.

We'll now proceed to the question and answer session. I plan to extend this session by ten minutes, and we'll start with Mr. Abbott.

Mr. Jim Abbott (Kootenay—Columbia, Ref.): I noticed that Mr. McAvity was talking about this being an historic day because it's his birthday. You'll also want to know that it's an historic day because it was ten years ago today that the Reform Party was formed in Vancouver.

I've noted the number of comments that there have been about the extension of funding to the Canada culture grants. I must tell you that I was really quite surprised that they did this under supplementary estimates; that is, in this year, with the 28% increase taking it to the highest level that it has ever been. It is something I would like to key on in order to get a broad response from you, if I might.

As the heritage critic, my recommendation to our finance critic would be to take a serious look at the issue of income averaging. I see that as being a very realistic, very serious problem, and surely we should be able to come to some kind of an answer. Secondly, in my own submissions to him in casual discussions, I have also said that I see a place for a strategic, continued use of tax credits.

• 1910

The area that I want to key on is grants. I would like you, individually or collectively, to give me an idea of how grants and the granting of Canadian taxpayers' dollars can be done in a way that is accountable.

As a politician, the last thing I want to be is a critic—that is to say, a person who will determine what is or is not going to receive the grants—but at this particular time my office literally is deluged. On a weekly basis I will receive 15 to 20 letters, telephone calls, and e-mails about things that people see or read or whatever that they find highly objectionable for any number of reasons. Basically what they want to say is, how do I, as a sponsor, the taxpayer, have a say in this issue?

Now, perhaps I'm asking you, should the person who is paying the piper, the taxpayer, indeed have a say, or should we just be turning $114 million over to a board, the heritage minister, who is supposed to be responsible to the Canadian people? The House of Commons, being responsible to the Canadian people for the expenditure of those dollars, just stands back and says, oh, I gave it to the Canada culture grants and they're administering it. Then when we try to get some information from them, they say, oh well, we really didn't know what was going on.

I would like you to tell me how, if we are going to be turning over $114 million, we the taxpayer.... I'm speaking on behalf of ordinary Canadian citizens who are sitting around a coffee shop saying, did you see that? What is a reasonable responsible vehicle that we can put into place that would even permit the continued grants that we are presently doing?

The Chairman: Who would like to answer that question? Mr. Berry.

Mr. Tom Berry: We've had a lot of experience as a country with cultural programs, and if you look at the CTCPF program we've been describing, the interesting thing about it is that there isn't a group of civil servants who are somehow charged with the task of determining what cultural products are made. It's been set up in such a way that it's the market that determines it. Television broadcasters have to want the programs, and when television broadcasters want the programs there's then a mechanism for supplying a percentage of the funding required to make them.

The television broadcasters obviously have an interest in reaching their audience.

I don't know how this would work in the case of museums, but in our sector we would encourage this kind of mechanism. We think this is an evolution in the way government funding is delivered to our sector.

The Chairman: Anybody else? Mr. Crawley.

Mr. Alexander Crawley: You're asking about grants to support individual artists to do work. We have a hard-fought, I think, and well-established tradition of arm's length funding in this country, which is quite different from the United States, where any elected person, for instance, feels that they have the right to criticize an individual work of art that they don't like because it's not to their personal taste.

I think we have a good mechanism in fact. It's called peer assessment, and we invest a lot of our own time in it and we ask recognized artists who are successful in a particular field to help to make those decisions as to who will be funded for their work. But there's no way to guarantee that everyone's going to like every piece of work.

What you need to say to those people from whom you're getting thousands of letters—and we should probably as a sector help you to do this—is, did you know that those funds also supported this, this, this and this, which your children and your community are benefiting from and are being enlightened by and are being encouraged by to develop their own point of view and their own cultural perspective?

There's no way you're going to get a panel of the cultural sector saying, why don't we legislate good taste, let's get Oliver Cromwell back. I don't think so. You have to take your lumps if you're going to foster a community of people who express individual points of view, and that's what artists do. There are going to be some that I don't like. There are going to some that you don't like. But in bulk, from an economic perspective, which is part of this committee's responsibility, is it worth while to foster the continued growth of that sector? We say it is, both economically and intrinsically.

• 1915

There's no way you're ever going to say that every piece of work that's ever funded by public moneys is going to be everyone's taste. It'll never happen.

Ms. Merilyn Simonds: Perhaps I could respond to that, as a recipient of those very same government grants. One of the things I say to people is that it's no different from funding medical research. It's no different from investing in businesses. A certain percentage of businesses fail. A certain percentage of businesses that the government funds produce things that not all of us want to buy, or even that many of us don't think are appropriate. Medical research is another very good comparable funding body where sometimes research is funded for years and years, at a cost of millions of dollars, to absolutely no end at all. The research comes up with nothing.

The principle for this kind of funding for the arts, for medicine, for any kind of venture situation, is that you have to seed a lot of ground in order for one or two or ten or twenty to take, to flourish, and to provide something of general value to the culture.

So while it's really hard to see things being funded that you personally disagree with—I don't mean you, but someone within your constituency—that's part of what we have to do in order to come up with something that's viable and worth while in a universal way. We do it in medicine, we do it in business, and we need to do it in the arts, too.

The Chairman: Thank you, Ms. Simonds. Mr. Stoddart.

Mr. Jack Stoddart: Poetry is one of the areas where many Canadians don't participate in reading. Some do, but the numbers are actually very small. Most poetry books published sell somewhere between 500 and 1,500 copies in this whole country. That's all they would sell. The question is, why should you fund poetry? Well, not everybody wants it, but a few do.

The interesting thing is, right now we have a wonderful track record of new women writers, and some very established women writers, who are getting international acclaim. We're all very proud of the Margaret Atwoods and the.... We could go through that whole list of probably almost a dozen very significant...almost all of whom are poetry writers. Almost all of them started by writing poetry.

If you look at Canada's contribution to literature in the last 5 to 10 years, it's a quality of writing. An awful lot of it is the use of words that comes from the learning of poetry writing, that development. So you can't answer the question in an absolute sense.

If we didn't have, after all the years of Canada Council, significant writers out there who satisfied not only Canadian needs but international needs as well, in a growing trend, and if we didn't have artists, musicians and entertainers who never produced outside this country, maybe we could argue that Canada Council wasn't working, or that the rules were wrong or whatever. I think we have a terrific international track record in film, in sound recording, in writing, etc.—go through all of them. I would argue that Canada Council funding is at the base. It's not the only thing, but it was very fundamental in almost every one of those areas.

So we can't answer everybody's concerns, but I think the track record is that we've really produced a lot of wonderful creators and entertainers in this country who are paying us back now, as a country, on both the Canadian and international scale.

The Chairman: Thank you, Mr. Stoddart, and thank you, Mr. Abbott.

Mr. Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): First of all, I would like to thank each of our witnesses who, on behalf of their organization or association, gave us their views on the prebudget questions.

I was very happy, as a member of Parliament representing the Bloc Québécois, to hear the lady who spoke on behalf of the Writers Union of Canada give the Quebec government as a reference in the context of her recommendations.

I have a question for the representative of the Cultural Human Resources Council. You talked about the employer-employee relationship. You told us that about 50% of the people who work in your sector are self-employed.

Did you approach Human Resources Development Canada or Revenue Canada with practical recommendations regarding the situation of these people?

Mr. Jean-Philippe Tadet: As far as Human Resources Development is concerned, we have, of course, made a number of representations which led to the recognition that the special features of Canada's cultural sector are those of what is called the workforce of the future.

• 1920

What are the characteristics of the new economy? What are the requirements of today's employers? They often need a highly- qualified, flexible, mobile workforce whose skills are portable. And, if we analyze our cultural workforce, we realize that these are its main features and that, as a result, it is very highly focused on entrepreneurship.

However, Human Resources Development did not necessarily have all the programs which could meet the needs of the workforce of the future. Because the department's strategy is rather innovative, it decided that this workforce should indeed take stock of its needs, and that is how the Cultural Human Resources Council was created.

I must say that HDRC was the first government department, federal or provincial, to move in this direction. I am happy to tell you that the Quebec government has also moved in exactly the same direction because, whether in Quebec or in the rest of Canada, today's problems regarding the workforce and its needs are relatively similar.

Of course, in the cultural sector, these needs are also different in some ways because of linguistic considerations. Book publishers don't have the same market or the same needs in Quebec, Montreal or Toronto. The film market is not at all similar. However, the skills all cultural workers must have—in business, in career management, in products and services marketing, including abroad—are, overall, intersectoral skills.

Our Council, which includes representatives from l'Union des artistes and the APFTQ through the CFTPA, is the best suited organization to give the most precise definition of what is needed in terms of developing cultural human resources in Canada. Our experiment has been very successful and it is starting to be recognized internationally. Thanks to this structure, this mechanism, this initiative, the cultural sector is being recognized in Canada for what it is, a sustainable sector in terms of workforce development.

The problem that remains to be solved involves Revenue Canada. I must say that, in this regard, the recommendations that were put forward today are extremely to the point. For instance, being able to average income from work of a cultural nature over several years is a claim we made long ago and which we believe should be met.

Also, on the issue of granting a tax deduction for a number of investments in the cultural sector, I have to tell you that there are a lot of service organizations which serve cultural workers by providing them and their employers with such services as orientation, management or contacts.

I am a film producer. If I want some information on the mechanism which can help me as a small businessman, I will go and see the CFTPA or the APFTQ. So these service organizations dedicated to arts and culture do play a role in the area of human resources development. We would like Revenue Canada to take this into account and to agree to a number of changes, especially regarding our contributions, so that they can be treated the same way as union dues paid to other large unions in other sectors of the Canadian industry.

Mr. Odina Desrochers: Mr. Chairman, can I ask another quick question?

The Chairman: Yes.

• 1925

Mr. Odina Desrochers: This is a question for Ms. Baillargeon. You told us about the rather drastic cuts to the Canada Television and Cable Production Fund. You also told us that the American giant was threatening us. Then, what would be the impact of the cuts which are supposed to be announced in the next budget on your initiatives on behalf of Quebec and Francophone producers?

Ms. Louise Baillargeon: It is clear that if producers cannot offer Quebec broadcasters affordable TV series, they will find it much easier to buy American programs, even if they are translated in French. What I am saying is that we are not necessarily protected because we speak another language. It is very easy to buy American programs dubbed in French, and they are dirt cheap.

[English]

The Chairman: Mr. Riis.

Mr. Nelson Riis (Kamloops, NDP): Thanks, Mr. Chairman.

I think some of the most creativity I've seen in the last many years is cultural organizations filling out application forms to suit certain criteria, and training programs and all sorts of things to fit. However, I guess somebody was mentioning that earlier tonight.

Although it's your birthday, John, I think you and Jack have to duke it out to see who's been hardest hit. You both said you were hardest hit, but I think you both make the point.

What has come through tonight is in one sense very encouraging, that in spite of what Susan identifies as brutal war that has been waged in the last little while on cultural programs, the sector is very vital and, in spite of it all, growing and thriving and doing well. You can only imagine what it could do with real support.

We're before the finance committee tonight, and I think all the presentations have been very thoughtful and with some very sound and creative recommendations in terms of what could be done specifically.

In terms of the cultural infrastructure, I particularly found impressive your pointing out that there are 1.1 million Canadians both directly and indirectly involved in the cultural sector—a major sector in terms of employment. Perhaps for our purposes, even more importantly, in everything we talk about we are concerned about the implication for job opportunities for so many people now and in the future for people entering the job market and the case you make on the importance of investment in the cultural sector in terms of job creation.

In terms of bang for the buck, we'd be well advised to put all of our money presumably into the sector. I suppose that's probably dreaming a bit, but still, in terms of making a case, we hear cases that we should give corporate tax cuts, that this results in jobs. I'm not sure there's much evidence of that, but you make the case that probably the best way to inject job creation is through investment in the cultural sector.

I'm going to leave it at that. I'm quite thrilled with the presentations. My other colleagues will have more pointed questions, but I do have one for Jack.

You point out the concerns about the MAI. I think all of us share concerns in terms of what this might mean to the cultural sector if we don't have really strong standards built into that. I also remember the discussion around NAFTA and FTA around the sector.

I notice the preamble of your section talking about the Canadian publishers and how well things seem to be going. I was one of the advocates who said if we sign this NAFTA agreement we might as well forget Canadian publishing, that this was going to be a really hard hit sector. Was I wrong in this, or what has happened? From your presentation, it actually seems that things are maybe better than ever.

Mr. Jack Stoddart: I would say things are getting better.

Statistically, the publishing industry in the English language has a before-tax profitability of somewhere in the neighbourhood of 2%. It was 1% the year before, and it was minus the year before, the year of the big cuts when...whatever.

In most cultural industries, and book publishing is one of those, we measure our success far more in what we produce and can sell than what we actually make.

Because this hearing was changed in date, one of the presentations we wanted to make was a proposal for an equity tax credit system where Canadians...and I believe there are significant pools of funding, either personal or corporate, that would like to invest in cultural industries. We can't attract equity when you're making 1% before tax. It's a virtual impossibility.

• 1930

I think the use of the tax system to attract capital, as we've done in the mining industry to develop exploration or as we have in software for development in that period.... If you look at the cultural industries, most of us have survived very hard times. You cut back. You let people go. You cut back what you produce. We seem to be able to survive. But to be successful in a financial sense, no, we don't have the equity in our companies to do that.

As much as we are very positive on what we produce and what we sell.... That's our success story. It's the artists' success story. If you go through it, the real dollars are being made by the large international corporations operating in this country, the Random Houses and Doubledays and HarperCollinses. They are pulling huge amounts of money out of this country and never pay a cent of tax in this country. We don't pay a lot of tax either, but that's because we're not making it, not because we can hide it; and I think there's a big difference in the two.

Our presentation shouldn't give the impression that everything is wonderful. When you're making 1% or 2% before tax, you hardly pay on your bills. If that interest rate ever changed by 2% or 3%, you would wipe that out instantly, because almost invariably in book publishing our level of debt per corporation makes us almost unviable as corporations. That's one of the reasons we have problems with the borrowing structure and all that.

So it's a good story, but it also has fundamental problems. If we don't address those.... That's why the RITC approach as one approach to funding for equity into cultural industries, not just book publishing but several of them, is a very good approach, which over the next two years perhaps could see more attention and be very positive.

The Chairman: Mr. Jones.

Mr. Jim Jones (Markham, PC): Thank you very much.

I found all the presentations very interesting and well thought out. I agreed with Merilyn when she was talking about her income averaging situation. I don't know why we don't do that even today.

I also agreed that probably an industry that is just in its infant stages is the whole digital imaging and computer graphics area. We can probably help that industry get on its feet. I think it's doing fairly well in the Toronto area. It's definitely a big industry now in New York City.

The area I would like to touch on—it's not a question, it's more of a comment—was that when you talked about cultural facilities, especially when they are at the local level, somebody spoke of libraries. There is an act out there now saying you can't charge for the taking out of books. I think if you could charge just 25¢ or 50¢ for the taking out of books.... I know in my municipality, where I sat for five years, we funded the libraries 100%. We cut back when we had tough times, but there should be some type of user-pay on some of these facilities.

Somebody also mentioned that 55 million people through.... Was that 55 million people through? What was the cost of that facility, and how much of that facility came in through user-pay from all those visits and went through all these cultural facilities and how much was through subsidization by the governments? I think in some cases some type of philosophy has to be put out there, whether it's 10% or 20% recapturing, the rest being subsidized by local, federal, or municipal governments.

I wonder what your comments are.

Ms. Pat Bradley: Except for public libraries, I would say, there isn't a cultural institution in this country—and John could probably speak to it more from the museum sector—that doesn't charge substantial user fees. In the performing arts the public subsidy has the result of making the event more affordable, but certainly the larger organizations in my constituency earn anywhere between 50% and 80% of their money at the box office. The public subsidy allows them, first of all, to do development of new Canadian artists and new Canadian work, and secondly to offer special ticket prices to youth, to seniors, and to have specials: high school matinées and things.

• 1935

Certainly in the performing arts sector there's a very large level of user-pay. That has changed a lot over 20 years. It was not as high 20 years ago as it is today, and it perhaps in some ways makes things a little bit less accessible. But the public subsidy from—in Toronto, anyway, for the next few months—four levels of government allows it to be not completely a market-driven enterprise, particularly for activities pitched at children, such as touring theatres for young audiences in the schools, etc.

Mr. John McAvity: In fairness, I would like to say right at the outset that there are perhaps two or three different groups sitting at the table here. One is the cultural industries, which are businesses successfully producing and distributing products. The other is organizations like the museums, which are non-profit, registered charitable organizations. We depend on volunteers. In fact, the number of volunteers has increased tremendously in this country. And we do depend on grants, subsidies and so on.

In terms of user fees, we've introduced them. Virtually all museums charge admission fees right now. They're at what the market will bear. We've done that and we're still facing difficulties. The difficulty we're facing now is cuts in the subsidy programs, and I think the reason for this is that is there often a lack of understanding or commitment on the part of governments as to their policy objectives.

Why then do we have museums and art galleries and various types of institutions in this country? There are legitimate social, policy-related and educational reasons for having them and for fostering the development of collections that we're proud of as Canadians, collections that we make accessible to other Canadians so that we get to understand more about our country.

I'm afraid a lot of that is at risk. The introduction to our brief is not a rosy picture. I wanted to correct Nelson Riis on that. Our brief is in fact saying that there's a tremendous downward pressure on our institutions. We're not on the radar screen. We've been lost. Our cuts have the dubious distinction of being the highest in the cultural sector, and I think this is really unfortunate. Special considerations have to be made for the non-profit sector and what it brings and gives to Canadian society.

Ms. Wendy McPeake (Director, Commercial Operations, National Museum of Science and Technology): I would also like to add something to that. In addition to having a public programming activity that can be charged for, museums have collecting and preserving responsibilities.

For example, you're probably familiar with a very prominent example. This past weekend the John McCrae medals were purchased for $400,000. Any small museum, like the one that will receive those medals, could in no way ever collect enough from their visitors to pay for those medals, and yet they do have that responsibility. So with respect to your question about charging people admission to use those facilities, we are doing that, but there's just no conceivable way that we could ever cover the costs of—

Mr. Jim Jones: I didn't say that. I said you should come up with some type of agreement before you even build the facilities, saying what the expected return is, what the philosophy is. If the philosophy is for it to be free, fine. If the philosophy is that it's going to be subsidized from the government's 80%, fine. I didn't say that you have to make a profit on a lot of the cultural facilities. But I know there is a problem with the libraries in this province, and maybe in the country, and I'm saying that if they would just change their paradigm a little bit, or if the government would change the act and say libraries can charge even 25¢, you could probably buy the books every year.

Ms. Wendy McPeake: To add to that, I think that when you look at museums and at libraries to a certain extent.... The heritage of our country is something that belongs to all Canadians, and as soon as you start charging people to access that heritage, you are limiting the number of people who can actually access it. We always have to be mindful of that when we are talking about our heritage.

The Chairman: Mr. Stoddart.

Mr. Jack Stoddart: I'd like to speak personally on this one because my association may not agree with me. I think many things have changed in Canada in the last five to ten years, and the postal subsidies that used to subsidize culture across this country have essentially disappeared. Many things have changed and new programs come in and old ones go out.

• 1940

I don't know of any other place you can go to borrow a CD, take it home, illegally tape it, have a quality product at the end of the day and never pay a cent, which is what you can do in a public library. You shouldn't do it, but that's accessible. I don't see why books should be exempt from a cost for those who can afford to use the library, and I would differentiate. I think there are people in our society who can't afford 25¢ to borrow a book and there many who can afford $1, $2 or $5.

One of the tragedies of the library system is that they spend a fortune on the Danielle Steels and the John Le Carrés. They're all wonderful writers, but our taxpayers' money is going to support writers from outside of the country. Many of them are great commercial successes but are not wonderfully enlightening in many other ways. I don't see any reason why those books should be free. I don't know how you can differentiate, but I think it is a fundamental question that the library boards and the government have to look at in the next period of time.

Can we afford not to have user fees in some way for those who can afford it? There are those who can't and there are many, particularly young people, who use libraries as another home and they sit and read. If you go into most of the libraries across the country you'll see kids in there reading and reading. I think there's a difference, but there must be some fees for those who can afford them to enhance the collections of those libraries. Most libraries don't spend more than 5% of their total budgets for the acquisition of the materials that go into the libraries. I think that's a disgrace.

One way or another, if we're going to have some form of user fees, there should be some way of dictating that they be used for materials in the libraries and not for buildings and staff costs. But it is a question that would take some investigation.

The Chairman: Go ahead, Ms. Simonds.

Ms. Merilyn Simonds: If I could just disagree with my publisher for a moment, this is personal too, but writers have come out very strongly in support of libraries and the whole notion of free libraries, which have been part of this country for as long as we've had a country. In Kingston where I come from the library was started by a donation from John A. Macdonald, so our public library goes back a long way.

One thing we need to consider when we talk about libraries is that in Ontario, at least, school librarians hardly exist any more and school libraries hardly exist any more. The public libraries are being forced to fulfil a school library function. I don't think there's any way to initiate any kind of user fee without making it a tiered system, which immediately runs into trouble.

If we value our culture, libraries are repositories of heritage. The librarians I know make a great effort to buy Canadian from Canadian publishers and keep up with Canadian books. I think this is a bottom line thing that should be guarded with as much gusto as we can for as long as we possibly can. Charge user fees elsewhere but not at the libraries.

The Chairman: Now we'll move to Mrs. Redman.

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

There's a lot of passion in this room and that's terrific to see. It's sounds to me as if some of the questioning would lead the presenters to question whether we value culture and arts, and I have to tell you we certainly do. They are in large part the footprints any civilization leaves in the sand after we're gone.

There's been some talk about people being creative when they put in applications for awards, and it's interesting because the trend lately in government has been to talk the talk of business. Obviously the people around this table have realized you need to talk the talk of business in the arts in order to get a place at the table, and I think that's good to see.

One of the statistics that was mentioned by one of the presenters was that for every $1 invested you get $2 out for training young people. The New York state did a survey and found it was a 7% to 1% return.

I can say from my own experience in the community I come from that the arts sector is very creative about squeezing dimes. I think your presentations here tonight have had enough specifics, but also enough creativity to allow us to all go away with some food for thought. Sarm Bulte is very supportive of the arts. She's not able to be here tonight because she's in her riding doing a pre-budget town hall meeting, so I have a couple of questions that I would like to present for you to respond to.

First of all, I would like to say to Mr. Stoddart that when you have your paper together, your proposal, we'd be happy to receive it.

Mr. Jack Stoddart: Thank you.

A voice: By next week.

Mrs. Karen Redman: Yes, by next week.

Mr. Jack Stoddart: Well, why not?

Mrs. Karen Redman: I'll ask both questions that Sarm asked me to ask.

First, what are the benefits from not-for-profit theatre to Canadians, and the role that it plays in training and educating our youth? That's the first question for whoever would like to answer it.

Second, prior to the establishment of the Canada Council over forty years ago, Canadians were importers of culture. Can you give either your personal or your association's view on the benefit of now investing in the exporting of Canadian culture? Instead of importing it, we're now able to export it. What are the residual benefits that exporting has for us as a nation?

The Chairman: Who'd like to answer that question?

Mr. Tom Berry: I'd like to deal with export, because we are probably the largest exporters of cultural products.

At the same time as our sector—independent film and television—is a sector that has a yearly turnover of a few billion dollars, a very substantial portion of that is in the form of exports, which is encouraging. It's great that we're manufacturing cultural artifacts that are being sold around the world.

At the same time, we have to keep it in perspective. We're dwarfed by the worldwide dominance of the cultural product machinery to the south of us. The amount of culture we import is far larger than the amount we export, whether it's books, television programs, or perhaps the most striking example, feature films.

We're all very happy to now be able to say that we do export some. If you want to look at it from an economic standpoint, the good news is that we occupy such a small slice of the worldwide market for cultural product that we can expand exponentially without threatening anybody. That's the good news. But while we do have a good news story, as Mr. Riis pointed out, it's very important to keep it in perspective at the same time.

Our sector, which, as some have observed, manufactures something that is sold and distributed, looks pretty much like other businesses. By some measures we're one of the world's larger industries, but we are a tiny fraction. Our whole industry is about one-tenth the size of one large U.S. integrated conglomerate. Our whole industry is a tenth the size of Warner, a tenth the size of Viacom, a tenth the size of Walt Disney—and there are six or seven of them.

We should certainly take pride in our commercial successes and the jobs they create, because the jobs are out of all proportion—and we have to keep coming back to this—to the size of the economic activity. At the same time, we have to realize that we have nursed this industry into being with an elaborate structure of very carefully crafted subsidies, grants, and tax incentive programs. We shouldn't simply assume that because we're so successful now, somehow we can start being treated as though we're only a business. At the best of times in economic terms, we're a cultural industry that has an industrial activity and a cultural activity, and we rely on support mechanisms of a cultural and an industrial nature.

Ms. Pat Bradley: To try to answer both those questions, I'll go back to the question of imports and exports and the foundation of the Canada Council.

• 1950

Until the foundation of the Canada Council, we were certainly a net importer of theatrical culture. What the Canada Council and the not-for-profit theatre community have done is allow us to be probably even in importing and exporting, but what it has allowed the theatre artists and the theatres in this country to do is—it sounds so trite, but it's true—to tell our own stories.

I was at Theatre Passe Muraille last month and I saw a revival of a play about the 1837 farmers' revolt. There were kids there who were probably studying it in school or who had never heard about it, and that brought to life a story that was about our past, in our province, in our community, and the farmers coming in from Richmond Hill and walking down Yonge Street.

So for the last twenty years or so, because of the Canada Council, the not-for-profit theatre has primarily produced our own stories. We have also become somewhat of an exporter of theatrical material, but in fact the effect it's had is that there's far less importing than there used to be.

Secondly, although one doesn't want to justify the existence of the not-for-profit community as a research and development tool, there's no doubt about the fact that, particularly in Toronto and also to a certain extent in Vancouver and Montreal, there is a thriving commercial theatre industry. In the old days, those would have been American shows that came in and crossed the border, bus and truck tours or things that sat down longer. Now they're Canadian, big commercial musicals like Showboat, which is in North York as we speak.

That industry wouldn't be in Canada if there wasn't a trained workforce and if there wasn't a trained audience.

Particularly with respect to young people, I go back to my point about the balance between user-pay and subsidy and my original point about what it is that the subsidy allows us to do. A lot of companies can manage to increase their earned revenue as a proportion because of the sorts of shows they do, and they will bring in perhaps 80% of their revenue from the box office. But what the subsidy allows us to do is, first, offer, at very low cost, theatrical stories to young people. Second, something that Canada does actually in the theatre industry a lot better than most other countries is we have a very thriving and creative theatre-for-young-audience sector that primarily tours to the schools and that produces almost exclusively Canadian plays. Again we're bringing those Canadian stories that are really about us into the schools.

Mr. Alexander Crawley: Since Sarm Bulte is my MP, I feel as if I should try to answer her question that she sent by you.

You can take it a step farther when you ask what the not-for-profit subsidized theatre provides to Canada. It actually provides the for-profit industries as well.

There shouldn't be any doubt about that. There's probably not a designer, an actor, a writer, or a technician who's working in the for-profit side, both of theatre and film and television, who didn't have their first experience in a not-for-profit theatre setting, either community theatre or a subsidized theatre or a cable channel. People learn from starting off in this whole sector.

You wrote your first poem when you were in school because your English teacher said you had to write a poem, and then you developed some skill for it. That's where all of the skills that fund these industries come from. They come from the volunteer and not-for-profit sector, and if we ever lose it, we won't have the profitable industries.

Mr. Jean-Philippe Tadet: Just one step, to answer your question very quickly.

In 1995 export of cultural goods and services stood at $12 billion, compared with $22 billion of imports. So in fact we had in Canada in 1995 a trade imbalance of roughly $10 billion. That has two implications.

As you say, we have difficulties with our giant down south, and certainly some successes in Canada should not make us lose the fact that we are talking about apples and oranges here.

• 1955

By the way, the last New York programming on Broadway—

Ms. Pat Bradley: Opening tonight—opera.

Mr. Jean-Philippe Tadet: Anyway, in New York last year there were four Canadian productions on the commercial side of the sector.

So we have had some successes, but there is a trade imbalance that is very big. We are asking you to help us develop our exporting skills. Maybe that is something that has not been said to you before. We believe there are skills that are required to do export. Nobody can do export just like that; it takes time and investment. We should also look at marketing Canadian training capabilities outside Canada.

You asked us what were the strategic areas for investment. I think there are investments that should be made by the government—the federal government, in that case—in areas by which our sector could develop the skills to export. That is something you should consider.

Now, I must say, exporting outside Canada is very often easier than exporting our product within Canada. That is something we should think of as well.

The Chairman: Thank you.

Mr. John McAvity: Perhaps I could respond to that question from a slightly different perspective. Our community, that of museums and art galleries in Canada, is inherently Canadian. The material created in our buildings, of historical or artistic or scientific value, is Canadian by its inherent nature. So we haven't had the same imbalance issue.

What we do have, though, is an opportunity to much better take the Canadian story—our history, our culture—abroad in the form of exhibitions, which we are not able to do. There's a lack of funding and a lack of support mechanisms for that. As well, the products of our institutions, right down to our gift shops, where we are making icons of Canadian culture, selling them in our museum boutiques...and very soon, we hope, in retail stores.

The third area is that of the expertise within our institutions. For example, a Canadian has been putting in new windows in a hermitage in St. Petersburg thanks to the expertise we have here in Canada in terms of both conservation and building proper buildings. Canadians are now in Thailand helping Thailand build science museums.

So we have this expertise. Unfortunately, we don't have adequate programs to support these. They're very much on a hit-and-miss basis. We're missing a lot of opportunities.

For example, I've been trying to get funding for an overview of what we have to offer internationally. I cannot get funding from the Department of Foreign Affairs or from any other department to fund an overview so that we can develop a broad strategy from just the museums and art galleries in Canada. That's a lacuna that I think we have to develop, because we're worth it. We have something to offer. It's a major stumbling-block.

I would really appreciate your assistance in looking into that to see if there is a way in which we can get Canadians...not just Canadian museums, not just abroad. We would like to become members of Team Canada on the next trade mission. I think this whole sector should be represented on the Team Canada missions, and yet we have not been. We have something to offer.

The Chairman: Thank you very much, Mr. McAvity, and thank you very much, Mrs. Redman.

This panel has been extremely interesting. You've provided valuable information to the pre-budget consultations. You've made a very strong case for the cultural sector. I think that probably represents the consensus of this committee.

Certainly you've provided us with some valuable and useful information as we prepare to write the report and indeed make recommendations to the Minister of Finance.

In many ways, I guess, the cultural industry really is an expression of the spirit of a country. That's very important to a nation. You can never forget that. Even the finance committee can never forget that.

• 2000

As chair of this committee, I can tell you, I'm one of those people who believes you can achieve debt and deficit reduction and at the same time invest in key areas of our economy, and invest in people. The two things are not mutually exclusive. Both things can be achieved. I've always viewed deficit and debt reduction not as an end in itself but as a means to achieve other ends.

I'll leave you with that thought. You can rest assured that you will see reflected in the report some of the points of views you've expressed so eloquently to us.

Thank you.

I'm going to suspend the meeting for a few minutes.

• 2001

• 2013

The Chairman: I would like to call the meeting back to order and welcome representatives from the Canadian Labour Congress, Ms. Mary Rowles, assistant to the president, and Andrew Jackson, senior economist; and from the Canadian Housing and Renewal Association, Sharon Chisholm.

Welcome. We'll begin with the Canadian Labour Congress.

Ms. Mary Rowles (Assistant to the President, Canadian Labour Congress): Thank you very much, Mr. Chairman.

I did want to thank all the committee members and the chair for giving us this opportunity to talk to you this evening, basically to explain how we would run things if we were sitting in your chairs. I did want to thank you, because I know you've had a very long day and it's getting towards the end of the evening, so we appreciate the time you're going to give us this evening.

I want to make just a couple of preliminary comments. For those of you who are veterans of the finance committee, some of what we're about to say this evening will be fairly familiar. In part that's because we still disagree with the fundamental macroeconomic policy the government is pursuing, as we've disagreed with it in previous years and we disagreed with the policy of previous governments. We want to present some of our alternatives this evening.

Nevertheless, I would say we are pleased Mr. Martin is inviting debate on national priorities, and debate about the values that lie behind the budget. In fact, there were some passages in his comments in Vancouver that we would support. For example, at the Canadian Labour Congress we do agree it's not sufficient to allow the market to be the entire focus of the economy. As he said, there are things the market cannot and will not do, and there are things the government can and must do. We certainly endorse those sentiments, but what we are going to suggest tonight is that the government take a very different tack and establish some very different priorities than the ones he outlined in his remarks in Vancouver.

• 2015

I think the summary itself contains the direction in which we think the government should be going. The key priorities from our perspective would be to create more and better jobs and to address what we see as a huge social deficit that has been created by the spending cuts over the previous years.

It's not news that Canada still has an extremely high rate of unemployment and that on top of the 1.4 million unemployed there are many workers who have left the workforce because jobs are unavailable. Then there are many workers who want full-time jobs and are working part-time or have entered into self-employment. From our perspective, a dramatic increase in jobs is absolutely essential if working people in Canada are to make progress after what really has been a decade of almost no progress whatsoever.

The submission we presented to you this evening does address the questions that Mr. Martin asked in Vancouver, whether debt reduction, tax cuts or program spending should be the priorities. In our opinion, we don't feel that you have to pay down the debt directly since the debt burden will fall automatically in a growing economy. Reinvesting surpluses in the economy will generate more jobs and help us deal with some of the pressing priorities that are facing us.

We feel that progressive tax reform should shift the tax burden from working people and low-income groups to the higher-income groups in our society, to corporations and to the wealthy. However, we submit that we do not need to reduce taxes as a share of the economy in order to achieve tax fairness.

We do oppose major across-the-board tax cuts at this time. From our perspective, working people would be the losers from the necessary cuts to social programs and public service. These are an important part of high living standards. Reinvestment in programs, in particular, is going to create more and better jobs, especially for women in our society. At some point in the questions and comments, we'd be happy to discuss what we feel really are the needs of women and some of the initiatives that the government should take to address that.

From our perspective, immediate priority should be given to repairing the damage of the past cuts, particularly to the unemployment insurance program and to health, post-secondary education and social assistance programs, which are cost shared with the provinces. We make suggestions in the brief for changes to the Canada health and social transfer.

I would also say that the brief does argue in favour of a national child care program in particular, increased investment in education, in training and research, and puts forward a strategy for long-term environmental sustainability, which would require government investment.

What we conclude is that, really, on the basis of high employment and a growing economy, Canadians would benefit from a large and growing fiscal dividend, and that would allow us to tackle the social deficit that has been created by past policies. Our concern, though, is that we are questioning the macroeconomic policy that the government seems determined to pursue.

I'm joined by, as you said, Andrew Jackson, the senior economist for the Canadian Labour Congress. I've asked him to address our concern about the government's commitment to NAIRU and their apparent willingness to allow interest rates to increase, which we think is going to prevent you from really increasing the social dividend and having very much play to reinvest in social programs if you continue along this course.

I wonder if, for the second part of our presentation, I could ask Andrew to say a few words about that.

The Chairman: Thank you.

Mr. Jackson.

Mr. Andrew Jackson (Senior Economist, Canadian Labour Congress); I'll be brief, Mr. Chair.

One issue we address in the brief and I bring to your attention is that when you look at the economic projections that are put forward by both the Department of Finance and the Bank of Canada, in fact, they both take really a very pessimistic view of both our medium- and long-term economic future. The Department of Finance actually believes that going into the next century we have a potential growth rate in Canada of only about 1.2%. They believe we cannot reduce unemployment below 7.8% in the medium term.

As I'm sure you're all familiar with, there's been quite a bit of debate around those topics. Can Canada grow faster? Can we create more jobs? The point I really want to underscore is, much as there may be a debate on those issues and much as the Minister of Finance in particular has said he thinks Canada can grow faster, in effect, monetary policy set by the Bank of Canada is based squarely on the view that growth now is too rapid, that jobs are being created too quickly, and that we're closing in on what they would define as full employment too fast.

• 2020

Much though that might seem external to the immediate debate before the committee, the fact of the matter is that if we have a serious fall-off in growth, if we have significantly higher interest rates...and the private sector forecast that's contained in the minister's update is that you have to forecast a 1% increase in interest rates over the next year, which is by no means insignificant. If we have slower growth and higher interest rates, the fiscal dividend everybody is debating how to spend or allocate on tax cuts or debt reduction is going to dry up pretty quickly. There just won't be that much dividend, and it really is fundamentally important to address this issue.

I want to highlight this table of numbers I passed to you. This is just a set of numbers comparing the unemployment situation today with the numbers back in 1989, which was the previous cyclical lull in Canada. The fundamental point I want to make is just how far we are today from getting back to where we were in 1989, or just how bad the real job situation in this country still is.

As everybody knows, we still have an unemployment rate of 9%, a very high youth unemployment rate. On top of that, the proportion of the working-age population participating in the workforce has fallen very sharply compared with 1989, from 67.5% to 64.9%.

Certainly we believe, as do many economists, that as our economy grows and creates jobs, many people who have dropped out of the labour force will return. When you look at the numbers, what is really striking is how much of that withdrawal from the labour force has been young people. One thing we know absolutely for sure about young people is that for many good reasons they are staying in the educational system longer, but they are going to be coming to the labour force looking for jobs. There's no shortage of potential workers there.

The other thing that's really striking is that the proportion of the workforce that's working part-time has increased by about three percentage points since the late 1980s. Amongst adult women as well the rate of part-time work has increased. At the same time, the proportion of those part-time workers who are working part-time only because they can't find full-time work has increased. On top of that we've seen a dramatic increase in self-employment over the past number of years, and many of those workers would want full-time paid jobs if they were available.

Actually, if you look at the labour force numbers, last month it was quite striking, because there was quite a significant and very healthy rate of job creation in the economy. It didn't make much of a dent in the unemployment rate, because a lot of those new full-time jobs went to part-time workers and there was a fall in self-employment.

The key point one wants to make is that the unemployment situation is very much still here and with us today despite a 9% unemployment rate, which seems superficially low compared with what it has been. There's a lot of under-employment in our economy. This operative principle of the Bank of Canada that somehow at 4% growth we're closing in on full employment, we're closing in on our capacity as a country to produce, is fundamentally wrong-headed and destructive. We have to continue making that point and entering into this debate.

The final point I would make is if we begin with an appreciation of the real extent of the unemployment situation, it also has implications for what kind of fiscal policy we would pursue. Our brief does attempt to make the point that if we take job creation and better jobs, and particularly better jobs for women, seriously as objectives, then investment in our economy, investment in the future, is a much better way of allocating a dividend than are across-the-board tax cuts or, least of all, directly paying down the debt.

The Chairman: Thank you.

Now we'll hear from Mrs. Chisholm.

Ms. Sharon Chisholm (Executive Director, Canadian Housing and Renewal Association): Thank you, and again I appreciate your indulgence in staying this late. I understand why I see a few tired faces around me. I will also try to keep my remarks brief. I appreciate your patience.

• 2025

I'm the executive director of the Canadian Housing and Renewal Association. Our association, CHRA, represents those who manage, develop, deliver and live in social housing projects across the country, including municipal non-profit housing, public housing, co-operative housing and community-based non-profit housing.

What I want to do tonight is answer your three questions, and I'll start with the first. Your first question was what economic assumptions should be used in planning for the 1998-99 budget?

We feel that finally the Canadian economy is beginning to benefit from sustained low interest rates, but there are already signs that the rates will inch upwards as the recovery gets under way. This would slow down job growth and decrease the projected surpluses. CHRA believes that the Minister of Finance has a role to play in ensuring that rates do not go up.

We also think we need tax fairness, but we do not need to reduce taxes as a share of the economy in order to achieve it. There is no need to give Canadians tax cuts across the board. But CHRA does support tax cuts or credits to poor Canadians, and one way in which much-needed help can be directed to those in need could be through tax credits designed specifically to encourage the creation of affordable housing.

I want to spend more time on the second question you gave us, and that is, what are the appropriate new strategic investments and changes to the tax system that would allow the government to best achieve its priorities?

It should come as no surprise that CHRA believes that access to decent, affordable housing should be one of the first priorities for government. Without adequate shelter, no individual or household can fully participate in Canadian society or the economy. Sadly, programs in the areas we've been involved in, in other words to address homelessness and health services, have been eroded over the past six years, and these are critical components of a healthy society and Canada must re-establish and reinvest in these programs.

In a recently released U.S. study entitled Out of Reach: Rental Housing at What Cost?, housing and jobs together are considered the two major factors impeding social progress. Simultaneous shortages of affordable housing and jobs that pay a living wage are constraining the potential success of welfare reform. The report argues that:

For welfare-to-work efforts to flourish, Americans need the twin foundations of affordable, healthy homes and living wage jobs.

The same is true in Canada. While we're not attempting the same level of welfare reform, many current policy initiatives focus on reducing disincentives to work. Part of this strategy must include access to decent, affordable housing. With a place to live, other life improvements will follow. Work and retraining are possible, better outcomes for children are noticed, and health costs are reduced. I want to talk about exact figures on that.

Canadian households continue to be in housing need, and there are at least 1.2 million households in need in Canada. On top of that, there are hundreds of thousands of others currently living within the assisted-housing stock with inadequate access to supports and services they need in order to have opportunities to move out of social housing, or to find work. And the children and youth are really left at risk, ill-prepared to break the cycle of poverty and dependency. Poor housing conditions contribute to higher costs in other areas of public policy, including many that fall at least in part within federal jurisdiction.

A recent study in the United Kingdom...and again I apologize for using studies from outside the country, unfortunately; we don't have too many within. The study in the United Kingdom related substandard housing conditions to increased costs in the area of health care, crime prevention and firefighting. Equating the annual cost estimates in these three areas alone to their capital value, and then relating them to the Canadian housing stock, provides a cost figure of $7.36 billion annually for health, crime prevention and firefighting alone. These are costs that could be saved if we moved to a more equitable and accessible non-profit social housing program.

But how to invest in housing in Canada has become a more complicated issue. The federal government has set in motion a process to devolve responsibility for social housing administration to provinces and territories. To date, four jurisdictions have signed and others are considering it, but many of the eight remaining are uncertain, and in the case of Ontario, the federal government is still not clear on what an agreement with the province might mean to the future of the housing stock.

• 2030

What will the federal government's role be in the field of housing? Will the federal government depend on provincial leadership in this area? There's no reason why the federal government on its own cannot initiate new programs. Communities, municipalities and others interested in the well-being of Canadians are waiting for some guidance. There is an imperative role for the federal government, whether it be through direct initiatives or through incentives to provinces.

Even if devolution is accomplished over the next year, which is very unlikely, the transfer of the administration of social housing to the provincial level should not be equated with a complete federal withdrawal from social housing policy in Canada. Senior governments, including the federal government, must remain involved in addressing housing affordability issues.

In fact, just recently the Metro Toronto Stakeholder Panel on Housing, in its final report to Metro council, noted that providing additional housing for low-income households requires some form of subsidy. Achieving affordability for large numbers of low-income households requires subsidies from senior levels of government. There's just no way around it.

Indeed, there are many arenas in which the participation of the Government of Canada is essential to make the devolved system work well.

In Saskatoon developers, bankers, housing advocates and government officials have been meeting together to find ways to address the shortage of affordable housing there. The group sees housing as the centre of a web of social supports needed to enjoy a high quality of life. They are ready to take up the ball and work on getting affordable housing in their communities, but they cannot act alone. They can make housing affordable, but they need subsidies to make that housing accessible to those who can't afford anywhere near a market rent.

Canada's modern social housing programs are the envy of the developed world because they have proven to be an effective means of addressing the need for affordable housing. Affordable housing within the framework of the social safety net is essential to maintaining the viability and liveability of our urban regions as attractive centres for research, for living, learning and investment.

Unfortunately, it has been amply demonstrated worldwide that there are no pure market solutions to the provision of quality housing at affordable prices for lower-income people, particularly in our major urban centres. Among other reasons, this is because land values are high.

But a city that does not provide adequate housing for those with low incomes will find itself with a rapidly growing concentration of poverty in some areas, with increasing homelessness, a deteriorating stock of existing low-cost housing, and a city that is less attractive to work and live in.

Canada's economy is increasingly influenced by its larger cities. Modern economic thinking recognizes that much of the vitality of an industrialized economy such as Canada stems from its cities. Healthy cities that work are a prerequisite for a healthy growing economy. Canada cannot prosper if the major urban centres of this country are in deep distress.

CHRA is not arguing that the Government of Canada must be responsible for all social housing or remain active administrators of social housing, but we are saying that the federal government cannot afford a passive hands-off role. It is fully in the national interest for the Government of Canada to continue to find ways within the bounds of its constitutional jurisdiction to encourage and promote, wherever possible, the development of social housing.

What would be the consequences of the federal government abdicating any responsibility in the field of housing? It's all too easy to see that a municipality that acts responsibly to try to improve its supply of affordable housing will often be left at the mercy of its neighbouring municipalities, which will be very happy to send their problems into someone else's community and see someone else's money spent.

The same may be true between as well as within provinces.

One mechanism the CHRC thinks might be useful to meet the goal is to look at the tax system as a way to reduce the cost of social housing, through a system possibly of tax credits. We're not at this point ready to talk about a specific mechanism, but we think there's a clear role for the federal government in encouraging municipalities and community groups to continue their work.

• 2035

Over the past couple of years, CHRA has been working on an initiative sponsored by CMHC called Home-Grown Solutions. Under that initiative, communities have come forward to us and have demonstrated their willingness to act in a volunteer capacity, to bring together different resources and different forms of equity to make housing affordable. But they're not able to really reach low-income groups without subsidies of some form, and that's where the federal government has a role to play.

Now I'm going to take you right to our conclusions.

We hold that housing is one of life's necessities, that without secure and adequate shelter Canadians cannot begin to participate in a meaningful way in Canadian society.

The devolution of the administration of social housing to the provinces and territories shouldn't mean that the Government of Canada has no involvement or interest in social housing. On the contrary, we think it's more important than ever that the federal government take a role within decentralization.

In this submission we've set forth a number of proposals that we hope will be considered.

I'll close by saying that what we've noticed over the past few years is that with the lack of federal leadership in the area of social housing, and with provinces unable to respond, we still have communities and municipalities recognizing and willing to work on the needs that exist there. We really think it's time for some federal leadership and guidance on what they can do.

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

Now we will move to the question and answer session.

[Translation]

Mr. Godin or Mr. Desrochers.

Mr. Odina Desrochers: Mr. Godin has left. First, I would like to thank you for your presentation and for your excellent comments on the economic situation in Canada.

Of course, regarding the Canadian Labour Congress document, I can only conclude that it is the workers throughout Canada and Quebec who essentially paid the reduction of the federal government's deficit.

I also have here a table where we can see that unemployment among young people rose, between 1989 and 1997, from 11.2 to 16.7%. It also shows that the percentage of adult women employed part-time rose from 23 to 25.5%. Regarding these two groups, the young and adult women who often try to rejoin the labour force, how can we justify the present approach taken by the federal government and what practical measures would you recommend to improve their situation?

[English]

Ms. Mary Rowles: I'm afraid I can't explain the policies of the federal government. It's quite clear that they've had a tremendously negative impact on women in particular, women from all categories.

I would like this evening to urge the committee members to consider in their recommendations the differential impact of government policies on women, particularly since the government did make a commitment at the Beijing Women's Conference that they would subject their policy initiatives to a gender screen.

The Canadian Labour Congress did a report earlier this year in which we presented both qualitative and quantitative data about the impact of the economic changes on women, and some of the statistics are quite shocking. At this point in time in Canada only 20% of women are working full-time, full-year jobs in which they make more than $30,000. Yet they bear an increasing responsibility for family support.

We have the unfortunate international reputation, amongst the industrialized countries, of having the second highest incidence of low-paid employment of women. Only Japan has more low-paid work for women.

Apparently, while women account for less than 20% of those in the top-paying job categories, they represent more than 70% in the low-paid job categories, and the unemployment statistics for women who are, for example, from aboriginal categories or who are disabled are very extreme.

For example, statistics indicate that 65% of women with disabilities want to work and feel they are capable of working, but I believe their unemployment rate is around 16.6%. Aboriginal women, 17.7% unemployment. And these are the official figures; the unofficial figures are much higher.

To get a sense of the impact on women who are working, the percentage increase in the number of women who are now working two or more jobs has shot up over the past 15 years by more than 372%. These are the people in our society who are affected by this.

• 2040

[Translation]

Mr. Odina Desrochers: Alright. This is how things are. Now, can you tell us about solutions?

[English]

Ms. Mary Rowles: I think there are at least four solutions to this problem.

Restoring government funding restores government programs and jobs for women. The best source of well-paid and stable employment for women is in the public sector.

Regrettably, we still have a very gendered economy. Women work in particular kinds of jobs, and that's not likely to change very quickly. The jobs they work at are the ones that government has traditionally funded, such as health care, education, and social services. So all the cuts that were made in transfer payments spill out into the provinces, and this has resulted in hundreds of thousands of lay-offs there.

The job creation solution for women is to restore federal funding to transfer programs to stop the cuts in the federal public service.

Another initiative that should be taken by the federal government that would help increase the wage rates for women is for it to acknowledge their pay equity responsibility and make the outstanding payments to women in the public service.

Take this example from the Atlantic provinces. There's a sign in Goose Bay, Labrador, on the outskirts of town that says the federal government owes women in this community $4 million. That's a gauge of the impact of the unpaid pay equity sum that's outstanding for those women with whom the government is dragging its heels.

That creates other jobs for other women in the community. That money is not going offshore; it gets spent directly in that town and in those shops. It's disposable income that was owed to women for many years but has still not been paid. So meeting pay equity obligations creates jobs because of the multiplier effect of federal spending in small communities like that.

The final one would be the extension and creation of new programs. For example, there are two that come to mind.

The national child care program both reduces the amount of money that women have to pay to meet their day-to-day expenses and creates jobs for women. They are the ones who will be working in a national child care program funded by the federal government.

Similarly, one of the major demands of the women's march that occurred last year, in which women marched from one end of the country to Ottawa with a set of demands, was the establishment of a program that would meet the need for services to address violence against women in small Canadian communities. That's also a job creation scheme for women that would have a very positive effect. Those are two very discrete and defined job creation programs that this community should recommend and that should be in the budget the next time around.

The Chairman: Thank you, Ms. Rowles.

[Translation]

Mr. Godin.

Mr. Yvon Godin (Acadie—Bathurst, NPD): First, I would like to say that I am disappointed. I am disappointed for the simple reason that the Canadian Labour Congress is the organization representing workers whose labour contributes to the wealth of large corporations and, on the government side, quite a few members have left because they have very little interest in the issue. I am disappointed. To me, this is an insult.

That being said, the Labour Congress is an organization which does quite useful work in this country. I will say no more but, at least, I have said what was on my mind. I don't like to say what I think behind people's back.

I would have two quick questions for you.

[English]

The Chairman: I do welcome you to the first meeting of the finance committee that you've attended.

Mr. Yvon Godin: Thank you.

[Translation]

The unemployment rate is supposed to be at 9%. Are workers in Newfoundland, New Brunswick, Nova Scotia and the Gaspé Peninsula included? I don't want to mislead anyone, but I think they are not included in the calculations of the unemployment rate because they are on the move.

Second, workers' representatives have always said that there was no alternative. However, I am told that an alternative budget is being developed. Do we know when it is going to be tabled?

[English]

Mr. Andrew Jackson: With respect to the first question, I guess the definition of unemployment that's used by Statistics Canada is that somebody must be not working—this means actually that if they work even one hour a week, they are considered employed—and they must be actively seeking work. If people in a small community where no jobs are available are drawing benefits of one sort or another, as much as they may desperately want to work they would not be counted as unemployed if they weren't working because of the circumstances in their community. As you know, there were very few active training programs implemented along with TAGS, but I guess people wouldn't be counted as unemployed if they were participating in a training program because they would not be actively seeking work.

• 2045

The point I was really trying to make here is that the fall in the participation rate in the economy represents massively disguised unemployment. One of the clearest indicators of that would be if you looked at your constituency or rural Newfoundland where the proportion of the adult population that participates in the labour force is really quite low, at about 50% or 60%. In Alberta it's more like 70% or 75%. In British Columbia it's much higher and it has been higher in Ontario.

When the economy is doing well and jobs are being created, more and more adults come to look for work. There's a lot of hidden unemployment in that sense.

When it comes to alternatives, this is the fourth year the CLC and many of our affiliated unions and other organizations, including the housing association, have participated in developing an alternative budget. Through that process we're providing an alternative spending plan and an alternative package of taxation. We're trying to quantify how many jobs that would create and what it would do for the government finances. We do all that evaluation through Informetrica Ltd. to have some independent validation.

I think as an exercise it really has been important. It has been taken relatively seriously by the government. Every year we've met with Department of Finance officials to discuss it. It's widely debated amongst economists. Many leading economists have participated in the exercise to one degree or another. We had a round table last year. Many prominent university economists like Pierre Fortin and Mike McCracken from Informetrica and so on participated in that.

We believe very strongly that there are alternatives. It's going to be an interesting process this year because a lot of the focus of the alternative budget in past years was really on how the deficit and debt situation could be addressed in a different and less destructive way. Now the debate has shifted to whether our priorities should lie in tax cuts or spending.

I think the broad ideas we've outlined in the brief will be quite consistent with the alternative budget but will put specific costing on specific proposals. If other members are interested, there was a volume published by Lorimer last year, the Alternative Federal Budget, 1997, so it's quite accessible in book format.

Often it's put that there's just a range of special interest groups out there and everybody is just behind their own issues. But one significance of the alternative budget exercise is that it brings together unions, students, anti-poverty groups and women's organizations. It's a real world kind of exercise where people have to rank some priorities and come to agreement.

It makes a real contribution to the overall budgetary process. Rather than everybody screaming “Put us first”, broad directions and alternatives are debated. There are real debates to be had, but we can come together around priorities as well.

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

Mr. Jim Jones: Was business there also to help create this alternative budget you just talked about?

Mr. Andrew Jackson: No.

Mr. Jim Jones: Business, private enterprise is the other part of the equation.

• 2050

I like your first phrase here: “to create more and better jobs”. Assuming we do not want to increase government spending, how are we going to create more and better jobs, recognizing that Canada is not an island, that Canada is competing in the global economy and we have to be competitive? How are we going to create more and better jobs? What do we have to do?

Mr. Andrew Jackson: There are many points one could address in that. When you say we can't increase government spending—

Mr. Jim Jones: That's right.

Mr. Andrew Jackson: —are you saying that in absolute dollars? Are you saying it as a share of the economy? There is this incredible—

Mr. Jim Jones: The thing is you can't just go and throw money at it and go back into a large deficit.

Mr. Andrew Jackson: Let's put that debate behind us. For the last number of years, and certainly in the alternative budget exercise, what we did quite deliberately was to adopt exactly the same deficit reduction priorities or parameters as had been set by the Minister of Finance. We said that if we were going to get into a serious debate about economic alternatives, okay, we have to put deficit reduction there squarely as one of them, now. I guess we wouldn't have overshot by $10 billion, as the minister did, which showed that in fact last budget there was a lot more in the way of available alternatives than was conceded in framing the last budget. Realistically, we could have spent $10 billion more last year and met the government's deficit target for last year. With $10 billion, when you consider the range of services cut across the country—

Mr. Jim Jones: I just want you to—

Mr. Andrew Jackson: The implications for public spending, public services, and directly on employment were actually quite considerable.

It's not a matter of saying all jobs are going to be created by governments, either. Clearly one does need a healthy, growing, innovative private sector as well. We certainly wouldn't dispute that in any sense. Both in the alternative budget and in our own proposals we give the government credit for areas they have taken seriously. Investments in the National Research Council, the technology partnerships fund, are very important investments. We think training, which directly benefits the private sector, is an incredibly important area—higher education. All of these are fundamentally important activities of government to support better jobs in the private sector as well.

The Chairman: Mr. Jackson, I would like to piggyback on something Mr. Jones said. How can you have an alternative budget and exclude the private sector, business? At a time when as a country and as a society we are trying to build the type of effective partnerships and develop the type of strategic alliances with our stakeholders that speak to developing a vision for this country in economic, social and cultural terms with all these players, here you are, you come out with an alternative budget but you exclude the people who have created close to a million jobs in the past four or five years.

Perhaps I'm missing a major point, but if you really want to get into more or less what we are doing here, as a committee.... We are not inviting just labour, we are inviting business, we are inviting social groups, we are inviting cultural groups, people who care about research and technology. We are trying to get a cross-section of Canadian society. Why would you not have the business sector?

Mr. Andrew Jackson: The alternative budget has been based explicitly on a set of goals, which I think the reality would be that most major business organizations wouldn't accept, full employment, for example, being one of them. I think there will be many points of difference in the way you approach economic issues as a starting point.

Secondly, there are a number of contexts, not least collective bargaining, where the labour movement does engage with business on other issues.

The Chairman: I understand. But if it's against—

Mr. Andrew Jackson: I think it's an important exercise in setting our objectives as a society. There will be very clear differences of view with business. On other issues there will be an engagement.

• 2055

The Chairman: We're going through pre-budget consultation as a committee. How would you feel if we just invited business to these hearings?

Ms. Mary Rowles: But your role is very different, sir. I think what you're missing in this exercise is that you are government and we don't really—despite my flip comment at the beginning—assume that we are government.

The budget was developed through a growing sense among what we refer to as social partners—social groups, women's organizations, unions, aboriginal groups, housing groups—that the government policy as reflected in your budgets did not meet our needs. It did reflect the ideology of business and the elites, for want of a better word. It certainly did not meet the needs of Canadian working people, of cultural organizations or of social activists, and there was a coming together of people to say, if we accept that the deficit needs to be reduced, can it not be done with less pain to working people in the society and with less taken away from social activists? And I regret to say that business did not share those goals, so we did not approach them.

Things have changed a little bit since 1994. I just want to make one point, sir. For those of you who were in politics in 1994, when the Ekos poll was released in that year, it showed a remarkable and what they described as an “astonishing” difference of opinion between leadership and business groups in this country and everybody else. Strict differences in priorities, which were all geared to the role of government in society...I think what happened in the alternative budget process is that those groups who shared a common sense of what the priorities of government should be—redistribution of wealth, job creation and provision of social programs through public spending, within a context of fiscal responsibility—came together to create an alternative budget.

When the alternative budget process started, I don't think you would have found a major business leader who shared the basic goals of these groups putting the budget together. I suggest that may have changed.

The Chairman: Yes.

Ms. Mary Rowles: It may have changed. I'm not convinced of that.

The Chairman: I don't know if you noticed who's attending our hearings; it's not just business groups at all. As a matter of fact, one of the comments that have been made is that this time many social groups are appearing in front of us.

But I just fail to see the logic in presenting something that you would consider sort of “an alternative” by excluding a large sector of our society and of our economic system. That is all. You're just saying that you're giving up on the business sector because it'll never see things the way you see things.

But in an era where there is a fiscal dividend, what we're finding is that there is a consensus in many areas with various sectors of our society. We've really noticed it. Social groups are talking about debt reduction as much as business groups are; it wasn't like that when I was doing social security review a few years ago.

By the same token, business groups are talking about a targeted income tax cut for low-income Canadians. That's not something they were talking about before; they were talking about an across-the-board tax cut. Things are changing. For next time maybe you can invite them, and I think we'll get a better picture, a true picture, of exactly what's going on in our country.

Mr. Jones.

Mr. Jim Jones: Thank you, Mr. Chairman. I have to to leave because I have a flight in a few minutes.

One of the things I've said many times and really believe is that I think we should have a goal of trying to, in this term, get the unemployment rate down from 9%, to cut it in half.

I've talked with the chair and said maybe that's what the finance committee should take on as a mission: figuring out what we have to do to set the pins in place to get there without going back to where we came from. To do this, first of all we're going to have to understand all the problems that got us there, and we're going to have to have everyone at the table, not just the social groups and labour. We're going to have to have the ones who have to pay the freight, like the investors, etc. I think it's a great goal, but to achieve that, we have to understand what we have to do, and it is not simply throwing money at it.

• 2100

We have the U.S. with 5% unemployment. We have Japan with 2%. If they go over 2% they go crazy over there. They commit suicide: “What do we do? We only have 2%”.

I think we now have to focus on that. This is a very competitive world in this global economy, and if we're going to play in it then we have to compete in it.

At the same time, we should be trying to give everybody hope, growth and opportunity that if they work hard they can buy the home, they can have a job and they can progress through their careers. I think everybody on this committee wants to figure out how we can do that but without more spending.

Government does not create jobs. It is the private sector that creates jobs, the private enterprises. We have lived beyond our means for the last number of years, and now we want to live within our means. Of every dollar, 33¢ goes to service the debt. Just think if we didn't have that. We would still have some of our social programs, we wouldn't be taxing our people, and we'd be more competitive. Maybe that would create the jobs.

That's all I really wanted to say.

The Chairman: Mr. Assad.

Mr. Mark Assad (Gatineau, Lib.): Thank you.

I have two short questions. I would like to start with Mrs. Chisholm.

I remember some years ago in Quebec City there was a study done concerning housing. They found that when there was adequate housing, fewer people were going to emergency hospitals, fewer people were being hospitalized, fewer people were suffering from nervous breakdowns, and there was a whole series of advantages. It showed that the money the government would invest through the provinces and the municipalities provided benefits that were very much worth while. It was really an investment.

Has your association any statistics on this? Has it been brought forward to show...? I mean, if the public were to realize that the government's investment—provincial, federal, and of course municipal—brings dividends...let alone social benefits that follow.

Ms. Sharon Chisholm: Yes. That's why I quoted from the study that was done in the U.K.

On the point of investing dollars in housing, we do know that investing in housing is one of the best ways to create employment. For every $1 million invested in housing, at least 28 person-years of employment are created.

Now, I don't think any of you could bring me any other similar kind of investment that would create that level of decent-paying jobs. Not only that, once you have a new housing development situated in a community all kinds of economic spin-offs occur after it's developed. The community starts to develop. People participate in local things. The dry-cleaner is used. The local grocery shop is used.

As you pointed out, children who live in housing where they don't have to move every few months, and it's clean, decent, affordable and close to services, are going to do better in school. They're going to be healthier. They're not going to end up in the hospital as often. All kinds of benefits accrue from that.

In some of the recent work being done by the human resources development department...I think when they're calling around and getting statistics on the health of communities if they would ask the question as to what kind of housing people live in we would know a lot more about whether or not, and to what extent, people benefit from living in affordable, decent, healthy and adequate housing.

So that's one thing we're pushing, to look at positive indicators. I don't think we've really done enough in the past of looking at what kind of outcomes we want.

We know that by building housing all kinds of wonderful outcomes come about, but we've never really intentionally gone about deciding what we want to accomplish. Do we want a healthier society? Do we want better outcomes for our kids? Do we want kids to stay in school longer and not drop out? Well, then, how do we invest our social dollars to achieve that? As we become more intentional and as we look at outcomes-based projects, I think we're going to start finding out that housing is indeed one of the best investments we can make.

• 2105

Mr. Mark Assad: Would you say that your organization has the wherewithal to reach out to many organizations like the Canadian Labour Congress to convince them that they too should embark upon this mission to show that this is very worthwhile investment?

Ms. Sharon Chisholm: Thanks very much for bringing that up. I think we're just starting to do that work. I would like to listen to a presentation by the CLC with them really saying that we have to look at housing in a much more forthright fashion.

I think that the work on the alternative budget, the work we're involved in with Campaign 2000, has really moved housing into more of a mainstream picture. One of the reasons we moved to the alternative budget is that there were a number of interest groups each lobbying the government to take on more responsibility in their particular area. Then when we were all accused of having spent too much money, of having run the country into a large deficit, we came together in the alternative budget to look at what brought us into a deficit situation and to look at what programs were going to be strategically the most important. Through that process I think people did agree that housing was a strategically important issue that we should be moving forward.

In that way the work of the alternative budget in bringing about consensus among all these groups is a great service to the Government of Canada. I mean, here we all are working together to try to come up with what the priorities are and advising the government on that. I think it's a wonderful service, and I don't think you could pay your civil servants to do it any better. I think it's something that is very valuable, and we have begun to do that. We're starting more cross-sectoral discussions, and I think that's very important.

Mr. Mark Assad: To the Labour Congress: in your report, you make reference to the NAIRU. That's economist jargon.

N-A-I-R-U. You could translate that to M-I-S-E-R-Y, as far as I'm concerned. I don't think we should be indulging in this kind of economist jargon. What does it mean to the average citizen?

And you as the Labour Congress—I find that you should be putting more pressure on the government. I'd like to know where your voice is felt on retraining, and on maybe explaining to the general populace—I don't want to get too technical here—the advantages of tax reform, for instance, and how monetary policy affects us in this country. Are you people in any way aiding by educating the membership and getting a strong voice out there that retraining is probably the only answer for getting unemployment down?

Mr. Andrew Jackson: I've just one quick point on the NAIRU. I mean, that is a lot of jargon, and it is economist jargon. If the whole economic theory was laid out squarely in plain English to people that the central bank, the Government of Canada, and other governments around the world basically have an objective of maintaining unemployment at a certain level in order to maintain price stability, I don't think ordinary people would accept that for a moment. No politician gets anywhere by sort of saying “Damn it, we really have to maintain unemployment in this country”, but I think the reality is that this is the theory on which a great deal of our economic policy is set, and particularly monetary policy.

For example, if you read the purple book, the Agenda: Jobs and Growth that the Department of Finance put out in 1995.... We get letters from the Minister of Finance, and you know, half the time I think he signs them before he actually reads them. We got a letter from the Minister of Finance to Bob White basically saying that we should never repeat the experience of the late 1980s. At that time jobs were being created rapidly; unemployment was falling. I mean, it's absolutely preposterous.

You can have a serious debate about how we reconcile a reasonable level of inflation with unemployment. We should have that debate. But I think what is absolutely and fundamentally important is that we should as a country, as a government, really set out a very clear objective for bringing down the rate of unemployment. Basically, I guess it would be one system. We've set targets for deficits and debts, we've set targets for inflation, but we have no goal and objective for unemployment.

• 2110

If the committee recommended that, that would be a major step forward, and then we can have the debate of how we can get there. That would be a debate that obviously would involve more than just the labour movement and more than just the government.

To really address unemployment as a serious objective, it does involve everybody working together in the society, as a social objective. We really need to put it out there squarely as an objective, but we haven't done that.

Mr. Paul Szabo (Mississauga South, Lib.): In a speech of October 15, the finance minister said:

The debate should be about national priorities—about how best to build a strong economy and a strong society, one of both opportunity and security.

We have already said we must reduce the debt burden. ... However, those who define the responsibility of government in terms of debt and tax reduction only, are in effect saying that targeted investments in health care or education, in innovation or the reduction of poverty, are not critical to meeting the Canadian vision.

To rule out the need to invest strategically—whether through targeted tax measures or new spending aimed at core national needs is not just bad social policy; it's bad economics.

He basically said that we can't be linear in our thinking here. We have a house and we have to pay our mortgage off, but let's not forget to repair and maintain and things like this.

I want to congratulate Mrs. Chisholm for a very thoughtful presentation. I read the brief. I thought it made some concrete points. It raised issues of the linkages between child health and outcomes, the impact on health, social and criminal justice implications.... Social housing has a very strong role to play in terms of the social repair that's necessary. I thank you for bringing it. We've heard a lot of that over the weeks in our travels right across the country, and again here.

I did want to ask for your comment, though, with regard to the interjurisdictional problems we're having here. The devolution you talked about very briefly. I think there's still very strong support for a secure social housing system within Canada, but what are we faced with vis-à-vis the provinces on this issue? What are you specifically suggesting the federal government should look at now, given where we are in terms of the devolution?

Ms. Sharon Chisholm: I guess we're in a period of uncertainty in terms of where we are with housing right now.

We at CHRA don't oppose devolution per se. The whole idea is to move administration of social housing to the provinces and territories, where it occurs anyway. Let's not duplicate our efforts. Let's have them take on the job of doing that.

Now, the federal government has said in pushing for devolution that there is still a federal role, but it hasn't been defined. When you look at the new mandate of CMHC, it's pretty slim. There's not much room there for the government to take action, but they're not constrained in taking action by the National Housing Act. There's nothing to prevent the federal government from taking action.

What CHRA is saying is if the federal government feels that devolving to the provinces is the way to go, that's fine. They're throwing the ball to the provinces.

First, let's make sure the provinces are there to catch the ball. But that's not what they're saying in Ontario. Ontario is saying, I don't know why we were ever in it in the first place, let's pass it to municipalities—where no one can pick up the ball. Let's face it, municipalities don't have the tax base. We would argue, why would the federal government want to throw the ball to Ontario when in fact Ontario is saying it is not interested in taking it on? That's a concern.

Right now we're in the uncomfortable position of having to say that, should we move towards devolution and should devolution be successful—we've signed with only four jurisdictions so far, a very small percentage of the stock, as they are the smaller jurisdictions—it probably means that the provinces will want to take a lead role. If they're responsible in terms of administering the stock, they will want to take a lead role in what kind of activity happens in housing in their own jurisdiction.

• 2115

The provinces won't do that without incentives from the federal government, so we're saying let's look at the tax system. Let's look at targeting perhaps at a tax benefit to low-income households so that they could afford to pay rent in a project that was started within their own communities. We have a lot of communities that are willing. We have volunteers, and not only on the community-based side, but also real estate agencies and real estate boards. Different parties are coming together and are saying, yes, they have a role to play and want to do something, but there's only so much they can do.

If the federal government was to put money through the tax system and that money was targeted at the non-profit housing sector, we think all kinds of projects would get started right away.

So that's a good way to get started.

The Chairman: Thank you.

I'd like to thank you all for your presentations. As you know, we're going to have a challenge in this committee. There are various views being expressed throughout the country, and we'll also have to reflect some of the objectives of dealing with the deficit and debt on one side, and social and economic spending on the other. I think the points of view that you've put forward, however, really help us in terms of identifying the priorities as we write the report and make the appropriate recommendations to the Minister of Finance.

On behalf of the committee, I'd like to thank you.

The meeting is adjourned.