FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 5, 1997

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I call this meeting to order. Pursuant to Standing Order 83.1, the finance committee is holding pre-budget consultation hearings. As you may know, we've travelled across the country to seek input from Canadians and are holding a number of round table discussions here in Ottawa.

With us today we have representatives from the Mount Sinai Hospital Foundation of Toronto, the Canadian AIDS Society, the Health Action Lobby, the National Federation of Nurses Unions, the Canadian Health Coalition, the Royal College of Physicians and Surgeons of Canada, the Canadian Labour Congress and, as an individual, Dr. Fernand Labrie.

As you all know, you have approximately five minutes to highlight the major points of your presentation. Thereafter, we will engage in a question and answer session. On behalf of the committee I would like to welcome all of the witnesses. We will begin with the representative of the Mount Sinai Hospital Foundation of Toronto, Nicholas Offord. Welcome.

Mr. Nicholas Offord (President, Mount Sinai Hospital Foundation of Toronto): I'm glad to be here today and to have this opportunity. My perspective is, perhaps, different from many of my colleagues around the table in that I am a manager within the health care system as well as a fund-raiser in the health care system. I want to address my remarks to both sets of sectors.

First, let me say that the substantive strength and improvement of the Canadian economy has done a great deal in terms of opportunities for charitable foundations and actively raising money for the health care sector. We have been particularly encouraged by the last federal budget that sent clear messages to Canadians that the charitable sector could play a substantive supporting role to government in the provision of essential services and excellence within the system.

I'd also like to applaud the improvements in the tax system, particularly as they pertain to the donation of publicly traded securities. These have provided major opportunities for us and we're beginning to see some of those results. I'd like to remind the committee that there's still a couple of outstanding issues with respect to resolution 1 and donations of privately held companies and charities, as well as the application of the sunset clause with respect to those publicly listed donations.

I'd also like to applaud the government's initiative with respect to investment in the infrastructure through the establishment of the Canada Foundation for Innovation, which will make major investments particularly in health care research across the country.

I think it's essential for the government to realize that restraint and cutbacks in health care have had major repercussions with respect to the quality of the system. With an aging population, issues of access to limited resources will move to the forefront of the public agenda. For us at Mount Sinai, restraint has had significant impacts. Resources have been compromised to the point at which waiting lists continue to get longer and staff are stretched to their maximum.

The unwritten story here, Mr. Chairman, is that the rational and scientific distribution of limited resources leaves very little room for humanistic care, something that is a fundamental part of the treatment of disease. We're certainly not in a position to make major investments in the infrastructure, diagnostic and technological tools that clinicians and nurses need to take advantage of improving techniques, particularly new opportunities in genetics and molecular biology, which offer the hope of addressing diseases in their various early stages, preventing suffering and, indeed, invasive and expensive interventions later on in disease.

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Furthermore, we continue to experience problems with clinical and scientific leadership being lured by medical centres outside of Canada, particularly to the United States where resources are more readily available. The biomedical brain drain has a substantive health care and economic quality in terms of bioindustrial implications for the country.

I have three particular recommendations I'd like you to consider. First of all, I think we have to restore health care funding to a sustainable level where we are no longer compromising standards of care.

Second, as a knowledge-based industry, the biotech sector is an area where Canada has some natural advantages and can be a leader. To do this we must build up the physical and technological infrastructure for basic science, but we must also invest in the people that will drive discovery and opportunity. To do this, funding for the Medical Research Council must be restored and, indeed, expanded. The MRC must make expanded investments in Canada's scientific leadership, particularly medical sciences, as well as providing opportunities for young scientists to begin new programs of inquiry here in Canada.

I would like you to consider specifically matching the $800 million invested in infrastructure in the talent to utilize that infrastructure through support of programs and scientific talent.

Third, I'd like the government to reinforce its message of the important role of the charitable sector by considering enhanced benefits to modest-income Canadian donors for their charitable donations. This is sort of a voluntary tax cut, if you like, where government can reduce the burden of tax on Canadians, while ensuring those funds are directed to causes that strengthen and build the fabric of our communities and society as a whole. These funds will largely go toward opportunities for employment for Canadians in health, social service agencies, education and the arts.

While the committee has previously considered the stretch incentive proposal, as advanced by the Canadian Centre for Philanthropy, as one option for increasing these donations, generally speaking an expanded tax credit may be easier to promote and administer. Perhaps some consideration could be made to bringing charitable donations in line with those of political donations that have a substantially improved benefit.

The Chairman: Thank you very much, Mr. Offord. The next presentation will be made by the representative from the Canadian AIDS Society, Russell Armstrong. Welcome.

Mr. Russell Armstrong (Executive Director, Canadian AIDS Society): Good afternoon, Mr. Chairman. Thanks for the opportunity to present to you today. The Canadian AIDS Society is the national coalition of community-based organizations working to confront HIV/AIDS through education, care, support and advocacy.

There are over 100 organizations from coast to coast that belong to the Canadian AIDS Society. Collectively, these organizations provide the lion's share of care and support programs to the approximately 50,000 Canadians currently living with HIV. They also deliver targeted cost-effective prevention programs to the many thousands more who are at risk for this disease. The role of the Canadian AIDS Society is to speak for this community action at the national level and also to represent the needs of people living with HIV/AIDS.

Before dealing with Canadian AIDS Society advice on 1998 budget issues, I thought I should highlight briefly some key points about the HIV epidemic that I think are most relevant to budget discussions. The first point is that although we've seen, over the last year in particular, a measurable decline in the number of deaths due to AIDS, at the same time we have seen startling rises in the number of new HIV infections. Some epidemiologists suggest that we are rapidly approaching rates of new infection close to what they were in 1983-84, more than a decade ago and, more importantly, before we began to mobilize nationally to prevent further spread of the disease.

The second point is that while new treatments have prolonged life for people living with HIV/AIDS, the cost of these new treatments is beyond what individuals can afford without the assistance of either government-run or privately sponsored drug plans. It seems that having adequate drug coverage is now the key to long-term survival with HIV/AIDS, more than just the fact that these new treatments have been discovered and appear to work.

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The third point is that the HIV epidemic is advancing most among younger Canadians, particularly those at the margins of the social and economic mainstream.

Consider this: In Vancouver, where the HIV epidemic among some injection drug users is the worst in North America, it was recently reported that some people have sought to become infected with HIV in order to be able to access better social assistance benefits.

I think it raises this question: what state of desperation does someone need to be in to make this drastic step the only way for a young Canadian to obtain a basic level of income, housing and nutrition?

Moving to issues for the 1998 budget, it seems to me first and foremost that HIV must remain among Canada's priority health issues. I think the decision on the part of the Liberal government to renew the national AIDS strategy is a very important milestone recognizing this need.

However, the strategy has been renewed at 1993 levels, when all evidence indicates that we have an expanding, more complex epidemic than we had five years ago. Clearly, more resources to support the national effort on HIV/AIDS will be required. We will also have to make the funding dollar go further.

Greater efficiency, co-ordination and collaboration across government on a complex health issue like HIV/AIDS is a critical part to extending the reach of the national AIDS strategy and improving the impact of our work in the absence of new resources.

Although new treatments show promise and people living with HIV/AIDS are living longer, there is an enormous number of barriers to health and well-being that remain. The first, as I've already mentioned, is that the cost of new treatments is astronomical.

Many people living with HIV/AIDS, particularly those excluded from private insurance coverage, choose to go on social assistance in order to obtain adequate drug coverage. Many would rather remain productive members of Canadian society—productive taxpaying members of society, I might add—however, being assured adequate drug coverage is the single most significant barrier to returning to the workforce.

The federal government has made significant changes to the tax system to benefit people with disabilities like HIV/AIDS. However, many of the more systemic issues that were identified in the federal task force on disability issues report have still not been dealt with. Significant change was requested to ensure that the tax system played a more substantial role in offsetting the cost to individuals of their disabilities. Although some steps have been taken towards this goal, what new proposals would the federal government have in the 1998 budget to continue to implement the recommendations of the task force?

While provinces are still coping with the reduction in transfer payments contained in previous federal budgets, social assistance programs and, in particular, disability programs are being extensively reviewed. Complex cyclical disabilities like HIV/AIDS fare poorly in such reviews where the point seems to be to make eligibility as narrow as possible.

In this respect, I also mention the recent changes to CPP or the proposed changes to CPP disability requirements. What these changes mean is that for a young Canadian who contracts HIV and becomes progressively more disabled, your chances of outright destitution seem to have become even greater with more limited access to government disability support.

Federal-provincial discussions have begun over the last year on a new income support program for people with disabilities that is more flexible and adaptable to individual needs. I ask what significant progress on these discussions will be referenced in the 1998 budget to help dispel the gloom of tighter, more inflexible eligibility rules, rules that people living with HIV/AIDS are experiencing today.

The final budget issue I want to point to is the fact that HIV/AIDS has become a disease of the destitute, the socially and economically marginalized. New trends in the HIV epidemic are being driven by drug use. More than 50% of the 3,000 to 5,000 new cases of HIV infection each year result from injection drug use. It raises the question, why are so many Canadians driven to the hell of addiction, marginalization, and poverty?

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The answer is indeed complex. All I can suggest in the limited timeframe of this presentation is that we work specifically to identify how “the new economy”, as we say—how the benefits of the post-deficit era—trickles down, if at all, to these members of the Canadian family. But my basic point today is if the new trends in improved medical management of HIV/AIDS prove sustainable over the long term, we could be at a turning point in the history of this disease and how it affects people.

In HIV/AIDS work, we talk about the time when HIV disease will be manageable and ultimately curable. The progress will result, though, in precious little benefit if some of the barriers I've talked about to health and economic well-being—barriers that could be addressed or affected through budget measures—are not addressed. Many Canadians won't see the substantial benefit of these new discoveries.

Thank you.

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

The next presentation will be from the Health Action Lobby. Mary Ellen Jeans is co-chair and executive director of the Canadian Nurses Association, and Sharon Sholzberg-Gray is co-chair and co-executive director of the Canadian Association for Community Care.

Welcome.

Ms. Sharon Sholzberg-Gray (Co-Chair, Health Action Lobby (HEAL)): Thank you, Mr. Chairperson.

First of all we'd like to thank you for including the Health Action Lobby in your discussions today. The Health Action Lobby represents some 27 organizations that came together in the year 1990 to express concern about the erosion of medicare because of repeated cuts in the federal transfers for health care at that time.

When we came together, we thought the Health Action Lobby would only have to be in existence a few years, would make its point, and then would disappear. Unfortunately there continued to be cuts in federal transfers, and we're still here to express concerns for the future.

We have a few short remarks. We're going to try to frame them within the questions you've asked us to address. We also have a written brief to submit for your consideration, which we hope you'll be able to read shortly.

I'd like to ask Mary Ellen Jeans to speak first.

Ms. Mary Ellen Jeans (Co-Chair, Health Action Lobby (HEAL)): Thank you.

First, you've asked us to comment on the economic factors that should be used in the preparation of the 1998 budget.

HEAL has consistently recognized the need for fiscal discipline and that there are finite resources to preserve and protect the health of Canadians and fund the national health insurance system. However, within the context of an improving economic climate, HEAL believes two key issues related to health care must be addressed.

First, stability of funding for health care is essential. Although the last budget instituted a floor within the Canada Health and Social Transfer for cash payments to the provinces and territories, and Minister Martin stated that the amount of $12.5 billion is a floor, not a ceiling, we believe there remains some unfinished business in the transfer payment area. Specifically, we remain concerned that cash payments to provinces and territories will continue to decline, because the federal government included the Quebec abatement as part of the CHST cash entitlement.

The problems currently inherent in the formula, as detailed in our brief, can be rectified through the creation of an appropriate escalator that would increase the cash transfer by GDP per capita.

We also look to the government to ensure that equalization payments are used to support poorer provinces as adjustments to the CHST occur, so that a national health and social services system is maintained through the CHST.

Secondly, in terms of underlying economic principles, we believe the government must examine the public-private mix it is prepared to allow in the health care area. While public sector spending has continued to go down over the last few years, private sector spending has increased. There has been no debate or firm statement by government as to how much privatization will be allowed. It has been largely passive and unplanned.

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Private financing does not come completely from private sources, but is partially subsidized by taxpayers, because many of the costs are tax-deductible. Increases in private health spending can also affect our competitiveness. We believe the committee has a strong role to play in opening the debate on this issue, which is of grave concern to Canadians.

Ms. Sharon Sholzberg-Gray: You asked us to address the issue of strategic investments that would allow the government to address its priorities. HEAL believes it's time for a strategic investment in health care.

Continuing cuts to health care across the country have been dramatic, and Canadians are paying the price. The medicare patchwork is becoming threadbare. Even as we sit here today, and even as the government has already said there will be no further cuts in the federal transfer for health care, the cuts that were announced in previous years and that came into effect in previous fiscal years, including this fiscal year, are continuing to have effect. It seems to me we shouldn't forget that particular point of view. Billions have been taken out of the system, and that has made medicare a little bit threadbare.

HEAL believes that an integrated continuum of care, adequately funded, that provides co-ordinated access to a range of types and levels of services to meet both acute and continuing care needs is absolutely essential.

A very important point to make is that as health reform takes place and as less and less is being done in hospitals and more and more in venues other than hospitals, automatically the medicare system is shrinking. The care that is provided in hospitals is provided on a universally accessible basis under the medicare system. The care that's provided in the home, in other facilities, and in other venues may or may not be subject to user fees and co-payments.

This is all part of a public-private debate that has to take place in this country. It's unclear to me that Canadians understand that as hospitals do less, medicare is shrinking, and they'll be required to pay for more and more of the care they require. And of course some of that care is the very humanistic care that our colleague from Mount Sinai alluded to in his remarks.

Significant federal funding will be required not only to renew the health care system, but to actually maintain a universally accessible health care system across the continuum. We of course look to the government to provide some of this reinvestment as it implements the recommendations from the National Forum on Health.

We're very pleased to see the government's commitment in the Speech from the Throne to bring forward an agenda to promote good health, with an emphasis on equality of social and economic opportunity and a commitment to address the needs of children as a key priority.

We're also pleased to see the creation of the Health Transition Fund to help provinces and territories try new, innovative ways of delivering health care. We support funds for health services research, which is vital to ensure that we are basing our decisions on the right evidence and that we are evaluating new ways of delivering health care.

Ms. Mary Ellen Jeans: Finally, I'll say a few words to address your last question regarding creating employment opportunities in the new economy.

The health care sector is frequently looked upon as a drain on the economy, a system that takes from the economy rather than gives. When governments talk of creating employment, the focus has traditionally been on technology sectors or infrastructure projects.

The reality is that the health care sector employs hundreds of thousands of individuals, both health care professionals and those who provide the many ancillary products and services used by health care facilities. We have witnessed the public outcry as hospitals in small communities have been closed down. The communities have fought closures, not only to protect the vital services they provide, but because frequently that hospital is also the largest employer in the community.

We know the population is growing and aging rapidly and that the demand for health care services is likely to increase as we enter the next decade. We would urge government to put resources toward examining closely the future need for health human resources, the social infrastructure that will be required in the future. While this is not an area HEAL has worked on together in a comprehensive way, we would welcome the opportunity to participate in discussions on this topic.

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In summary, we urge the government to ensure stable funding for health care by preserving the real cash value of the CHST; to demonstrate leadership by initiating public debate on the appropriate mix of private and public spending in health care; to invest in a broad continuum of health care services for Canadians; and finally, to strengthen the federal role so the federal government can work co-operatively with provincial and territorial governments and other stakeholders to preserve and enhance the health of Canadians.

Thank you.

The Chairman: Thank you very much, Ms. Jeans and Ms. Sholzberg-Gray.

The next presentation will be from the National Federation of Nurses Unions, Ms. Kathleen Connors.

Ms. Kathleen Connors (President, National Federation of Nurses Unions): Good afternoon. I do apologize for my late arrival. It seems there was a shortage of cabs in this city, just as I'm going to allude to an impending shortage of nurses that a wonderful study by the Canadian Nurses has recently acknowledged.

Our members are the front-line deliverers of health care in Canada, and we currently represent about 47,000 nurses from six unions within the federation. As such, our members work intimately, every day of the year, 24 hours a day, in the health care system. Our knowledge from being in that system as care providers gives us some licence to make some recommendations with respect to the next federal budget and what needs to be there.

The document I have left for the committee addresses a number of issues around health care, social programs, and human resources strategies, but I want to concentrate, in the short time I have, on a couple of points that are absolutely key for the finance committee and the federal government as a whole to address. I'm glad they've already been alluded to in other presentations.

The first and foremost issue that I want to make reference to is the issue of privatization. I'd like to quote from the National Forum on Health, which reported:

The profit motive in financing health care is both inconsistent with a view of health as a public good and more over leads to high administration costs and inequities in access and quality.

Those words cannot be forgotten by the finance committee or the government as a whole.

It's with increasing concern and anger that as Canadians we watch the opening of a private hospital—because it is a private hospital—in Calgary, Alberta. We see the proliferation of private clinics, such as the King's Health Centre in Toronto and other clinics, charging exorbitant facility fees so that people can bump the queue of the public system and threaten and weaken the very fabric of our most cherished social program.

There has to be leadership from this government in addressing the issue of privatization. We would recommend that the government establish an arm's length privatization alert group to assess the impact of government cuts at all levels upon medicare; to collect information on the profit sector in health care; and to monitor the effects of trade agreements, including the Agreement on Internal Trade, NAFTA, and of course the emerging Multilateral Agreement on Investment.

As nurses who work in that system, we know the issue of a national health and human resources strategy is also key. I made reference to the fabric of the health care system. Certainly nurses see that we're the heart of the system, we're the glue that sometimes keeps it all together, but we work in partnership and collaboration with a number of other health care providers.

The Canadian Nurses Association this week released a study predicting a severe shortage of registered nurses in the next decade, so it is incumbent on the government to provide the kind of funding that will allow the development of a comprehensive national health and human resources strategy. I don't think any of us around this table want to be cared for by unlicensed, unprepared, generic health care workers when our health care is threatened and the status is of concern. You want qualified care providers there and you want to be able to attract the kind of people into the system who are necessary for today and for tomorrow.

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The brief also talks about the issue of unemployment—because there are many, many nurses in this country who are unemployed or forced into working casual—and the issue of the continuing high cost of our pharmaceutical portion of health care. There are recommendations the government should engage with respect to that.

The issue of home care is increasingly important. As nurses we know our patients are in the hospital for short periods, sent home quicker and sicker, frequently to families and to women who are expected to be the care providers. So the issues the National Forum on Health raised around the need for a home care program have to be addressed.

I can't leave this presentation without addressing the issue of women and the public sector, because I am a public sector worker. Value has to be given to the public sector workers of this country through leadership by the federal government in building a positive relationship with its own workers and recognizing the positive economic and social roles a revitalized public sector can play.

Last but not least, the women of Canada expect that outstanding pay equity settlements by you as an employer will be addressed. A review of the support of women's programs should also be given a priority.

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

The next presentation will be made by the Canadian Health Coalition, Mr. Mike McBane. Welcome.

Mr. Mike McBane (National Co-ordinator, Canadian Health Coalition): Thank you.

I wanted to focus on one area of strategic investment, since that was one of the questions you are interested in as the finance committee. In the preamble to this topic I want to quote Leslie Millen, a former secretary of the Science Council of Canada. His observation is that in our haste to adopt the agenda of the marketplace as the whole and only public agenda, the finance department, the Treasury Board, the PCO, the PMO, and industry have thrown out science policy.

This is very clear if you talk to any senior manager in government, from the DMs to the ADMs to the directors general—and I would say it doesn't matter what department. I've experienced it in Health Canada, and the level of ignorance of science is shocking. These are the managers who are destroying the science core of the government's departments. When you destroy the science core in Health Canada, you're destroying the health protection system for food, drugs, medical devices, and number of other strategic areas.

I think everyone agrees this is a strategic investment, so why are we divesting from science in the public interest, science for safety? Why would we be dismantling the entire Bureau of Drug Research? The entire bureau is gone, decommissioned in the middle of summer, with no press release, no announcement. They didn't even notify Parliament in their estimates. It was done secretly.

When we were alerted by the scientists we alerted the national media. The Department of Health lied to the CBC and said these labs aren't down, especially in the food area. At the same time as drug research they decommissioned strategic food labs. What we're seeing basically is the commercialization of everything.

There's quite an interesting American scholar who has written a book called Everything for Sale: The Virtues and Limits of Markets. The question in Canada is this. Is everything for sale with our government? Is health for sale?

John Manley, the Minister of Industry, had an announcement practically within hours of the shutting down of the drug research bureau to save “$2 million”. He handed a cheque for $60 million to a foreign drug company—a $60 million subsidy. What he said, with Jean Chrétien standing by him, was that we're going to profit from this, that this is for profit.

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It is a major scandal that we're decommissioning the core of safety protection in health. This is the major role of the federal government in health care, aside from providing aboriginal health care services. This is the front line of the federal government divesting.

We need a parliamentary inquiry urgently to call in your scientists. The scientists in your departments are your immune system. You need to listen to these people, because your senior managers have cut them off and are trying to fire them, trying to buy them out, trying to tell them to leave. And I can assure you that private industry will not provide this research. There are no private sector labs that can analyse our food system or our drug system.

This is one specific area, but I think it's important when we talk about strategic investment. When the Department of Health shut down the food and drug research, it announced a whole new investment in a health information technology system—$50 million. I would submit that this is a propaganda outfit that's being set up on the Internet to replace the science labs. We're now plugging into corporate data on the Internet, but we have no labs to verify the information. There's $50 million around for a new strategic health information system, but we don't have $2 million for a science lab?

So when I hear “health transition fund”, I wonder what we are transitioning to. Is everything for sale? Are we transitioning to a commercial system, the one that Mary Ellen and Kathleen and others have raised the alarm bells about? Where are we headed? Where has this government drawn the line between the market and the public role of government? Is there anybody at the senior levels of government who is not a traitor in terms of commerce? Where is the role of governing on behalf of the public good?

Thank you.

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

We'll now move to the representatives from the Royal College of Physicians and Surgeons of Canada. Dr. Hugh M. Scott and Danielle Fréchette, welcome.

Dr. Hugh M. Scott (Executive Director, Royal College of Physicians and Surgeons of Canada): Thank you, Mr. Chairman, and thank you for opportunity to be with you today.

The Royal College of Physicians and Surgeons of Canada represents over 31,000 medical specialists in Canada and abroad. The Royal College is dedicated to ensuring the highest quality of health care for the people of Canada. In that context, we would like to address particularly the last two questions that you asked us.

As has been stated frequently here today, there is nothing Canadians hold more dear than their health care system. This view is shared on the street, but also by elected officials who speak on behalf of the preservation of what Canadians are proud to say is one of the best health care systems in the world. Indeed, as you know, there was confirmation in the last Speech from the Throne that the government is committed to “a publicly administered, comprehensive health care system that provides universal access to high quality care for Canadians anywhere in the country”.

These values are further translated in terms of government priorities to build a society with a sound economy that invests in knowledge, education and innovation; with a healthy population; and which focuses on securing a high quality of life for its citizens. These priorities must be translated into policies that will allow the country to build on its human capital; to build a strong economy; to create jobs; to ensure the country's competitiveness in the global market; and to safeguard one of the gems of our national crown, the health system.

So today our objective really is to make just three points with you, because we think these are crucial in achieving what has been noted here.

In terms of the health care system, the country needs policies that: first, recognize the need for and the benefits of health research to safeguard the quality of health care provided to Canadians, to reduce the economic burden of ill health, to create jobs, and to maintain a competitive position in a knowledge-based economy; second, recognize that universal access to high-quality care for Canadians everywhere in the country is under serious threat given a looming significant decline in the number of medical specialists in Canada; and third, recognize the need for professionals to maintain their competence in a world of accelerating innovation.

Addressing first the question of research, as stated by the Coalition for Biomedical and Health Research in its October 28, 1997, brief to you, Canada is the only member of the G-7 to have decreased its support for health research. It has done so despite the fact that such investments not only produce new, useful information, but also enable the country to develop its own highly skilled experts, have a multitude of economic spin-offs and, most importantly, ensure high-quality health care for Canadians.

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Investment in knowledge is one of the stated priorities of the Canadian government, yet investment in basic, applied and health research has progressively declined through unprecedented reductions of support to the country's granting councils. Such a course of action not only puts Canada in a less than favourable position vis-à-vis other countries; more importantly, it's placing the future of quality health care at peril.

The reductions that have been imposed on the Medical Research Council have jeopardized the country's ability to maintain ongoing and future research, since only 50% of MRC grants were renewed and a mere 20% of new applications were funded. Not only are we at risk of losing our human capital to other jurisdictions, but with them goes the potential of improving treatment modalities, prevention, cures, and how health care is delivered.

The Royal College has demonstrated its commitment to basic and applied clinical medical research by developing a clinical investigator program as a first step in order to train the country's future clinical investigators. The college is seriously concerned that the funding crisis at the Medical Research Council has left the country with disillusioned researchers who are hard-pressed to encourage future generations to follow in their footsteps. The Royal College of Physicians and Surgeons therefore urges the Government of Canada to address, on an urgent basis, the budgetary allocation of the MRC, and to increase its funding to levels competitive to other G-7 countries by 2002.

Secondly, universal access to high-quality care for Canadians anywhere in the country is at great risk. Canada is facing a serious shortage of medical specialists in the very near future. I would remind the committee that to train a medical specialist from entry into medical school is a matter of at least ten years. There's nothing we can do about 2005, but we can start working on 2008.

This will impact not only on the accessibility of quality health care but also on Canada's ability to fully contribute to clinical research, since the overwhelming majority of researchers in this field are medical specialists with enhanced training. In fact, the number of physicians and surgeons taking care of patients has declined for the first time in 1995, and soon to be published data shows that this trend continued in 1996.

This factor is compounded by an aging medical workforce. The Canadian on the street will be feeling the effects of our aging specialist population, since a number of jurisdictions will soon have too few physicians and surgeons to meet their health care needs. I'll give you just a couple of examples.

It is alarming to note that more than 42% of the specialists in this country are 50 years of age and over. The impact of this aging specialist workforce is becoming an extremely serious concern in certain provinces. For example, 63% of the general surgeons in Saskatchewan have been practising for more than 25 years, while approximately one-third of internists and internal medicine sub-specialists in Ontario and Nova Scotia have been in practice for more than 25 years.

There have been increasing cries from rural and remote areas faced with a constant challenge to find physicians and surgeons. Five years ago, the ministers of health agreed that “physicians are a national resource”, yet no concerted national policy has been developed in this regard.

The 1970s solution of importing offshore physicians to fill our needs is neither appropriate nor fair to Canadians wanting to pursue medical careers in their homeland. The Royal College of Physicians and Surgeons therefore recommends that new federal funds be earmarked to address the medical workforce crisis in this country. Such funds will serve to create new opportunities for the training of future clinical investigators and to complement existing funding for the training and re-skilling of physicians and surgeons in disciplines and jurisdictions in which the current and future workforce will be clearly insufficient to assure access to quality care for Canadians.

Finally, I'll address a specific point, that of tax limits for educational grants.

Professional medical specialists, indeed all professionals, are required to maintain their competence in an ever-changing world in which developments occur constantly. Although technological advancement has opened the doors to a world of information—such as through the Internet—access to other forms of educational experience are still required.

Recognizing this need, the Royal College, like many of its professional educational counterparts, makes available scholarships, prizes and research grants to eligible candidates. The Royal College is concerned, however, that the dated—one might say outdated—provisions under the Income Tax Act preclude medical specialists from availing themselves of such opportunities because of the increasing economic burden faced by them and by all Canadians.

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Paragraph 56(1)(n) of the Income Tax Act specifies that the exemption of only $500 can be applied on the total of all income received in the year that is in the form of either scholarships, fellowships, bursaries or prizes. This level has been in existence for more than two decades, despite a marked inflation, as we're all aware.

The final recommendation, therefore, Mr. Chairman, is that recognizing the need for medical specialists and other professionals to maintain competence in their fields to assure quality of care to Canadians, recognizing the growing costs of educational programs, and recognizing that the exemptions from the income from sources outlined in paragraph 56(1)(n) have not been adjusted in more than two decades, the Royal College of Physicians and Surgeons recommends that the Income Tax Act be amended to increase the amount available for exemption to $1,000.

Thank you.

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

The next presentation will be from the Canadian Labour Congress: Ms. Nancy Riche, and Ms. Cindy Wiggins, senior researcher, welcome.

Ms. Nancy Riche (Executive Vice-President, Canadian Labour Congress): Thank you.

I would just like to state that the committee will hear some repetition. Rather than finding this boring, I think what this says to the committee is that there's a growing number of groups who don't normally spend time together agreeing wholeheartedly on the issue before us.

The Canadian Labour Congress represents 2.4 million members and is growing. I would say about 25% to 30% are health care workers—the front-line health care workers, with the exception of physicians.

Canada's public health care system is deeply cherished by Canadians. It is often said that medicare represents core Canadian values of equity, sharing, and collective responsibility and, in doing so, defines what it means to be Canadian.

Through the National Forum on Health, Canadians had a chance to talk about medicare. Several fundamental beliefs emerged that must inform government decisions at all levels with respect to the health care system. Key among these is the belief that health is a public good, and as such, the profit motive in financing health care is inconsistent with that belief.

Yet while governments continue to express undying support for maintaining the public health system, years of severe cuts by both federal and provincial governments have threatened the system's ability to remain universal, accessible, and comprehensive—three cornerstones of the public system. Once these break down, a two-tier health system is just around the corner.

The federal government bears a great deal of responsibility for the growing threat of privatization. In addition to previous cuts to transfers to the provinces for health care beginning in the early 1980s, the implementation of the Canada health and social transfer withdrew over $7 billion for health, education, and social assistance, almost half of which is the health share of the transfer.

These cuts have contributed directly to the downsizing and restructuring of the health care system. Every province has slashed health care budgets, closed hospitals and hospital beds, deinsured services, and hiked user fees for pharmacare programs.

Fifty thousand beds have been closed in this country. Yet around this table this morning we've heard a prediction of a shortage of nurses, a prediction of a shortage of physicians, and I would add, with 24,000 jobs being lost in this sector, a real shortage of the people who clean the hospitals and feed the patients—those who don't get the big salaries but in fact play a fundamental role in the care of the patient.

As I've said, jobs have been lost, a good number of them highly skilled and predominantly held by women. The weaker the public system, the greater the opportunity for the expansion of private health care. In fact, it could be argued that there's a real agenda to weaken the public system, thereby making it more attractive for privatization, and have the citizens agree at the same time.

There is a fundamental flaw in the CHST that may ultimately mean the end of a national public health care system. As it stands now, the federal share of public expenditures on health has fallen to just under 20% of total public expenditures, down from roughly 50% when medicare first began. The CHST contains a cash floor below which the federal contributions for all three programs may not fall. Aside from the question as to whether or not the level of the floor is sufficient, the share of the federal cash contribution to public health care will fall over time in relation to total public expenditures for health, and this will happen as the economy grows.

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At some point the federal share will approach the point of insignificance. Once the provinces are paying the majority of health costs, the authority of the federal government to enforce the national standards in the Canada Health Act will cease to exist simply because the loss of federal dollars will be a trivial penalty for the provinces to pay.

These standards are the backbone of medicare. They are what stand between a single-tier and a two-tier system of health care. This isn't fearmongering. It's just the cold, hard facts.

Perhaps some provinces would maintain a public health system, but others would not. There is at least one province right now that would allow a tier of private health care for those who can afford to pay.

Clearly, the provinces and territories are keen to limit the ability of the federal government to enforce and impose national standards. Since 1994, the provinces and territories have been refining their blueprint for a new social union in Canada. At the heart of the blueprint is a strong desire, if not demand, for limits on the federal spending power and an end to the ability of the federal government to unilaterally enforce national standards, particularly the Canada Health Act standards. The rationale for this position is based squarely on federal withdrawal of funds for major national social programs delivered by the provinces.

To this end, provincial and territorial health ministers have recommended a new administrative mechanism—a “constitutional” mechanism—to clarify, interpret and enforce the Canada health standards.

The most recent policy paper prepared by the Provincial/Territorial Council on Social Policy Renewal calls for the “joint creation of national social policy principles, standards or outcome measures through intergovernmental processes”. The premiers' and territorial leaders' intent is firm. As noted in the council paper, “New Approaches to Canada's Social Union”, unilateral federalism must end.

Thus, it is more than imperative that the federal government retain its ability to maintain and enforce national standards in the Canada Health Act or our single-tier public health system will be gone. The CHST as it is structured cannot ensure this.

The CLC, the Canada Labour Congress, therefore requests the Standing Committee on Finance to make the following recommendations to the government:

- first, that the CHST be abolished and replaced with separate pieces of legislation for each of the three major national social programs it now covers—health, education and social assistance;

- second, that the level of federal cash transfers for health care is sufficient to provide the government with the authority to enforce the standards in the Canada Health Act, with a view to ultimately returning to 50-50 cost-sharing;

- third, that changes to federal funding not be taken without ample notice being given to provinces;

- fourth, that the government commit itself to using the greatest share of future fiscal surpluses to enhance social programs generally in the interests of reducing the growing inequality within Canadian society and moving us towards a truly egalitarian society;

- fifth, that jobs, social programs and youth be the key priorities in the choices made by the government in the 1998 budget, and that the federal government maintain sole authority for the enforcement of national standards for health.

Thank you.

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

Now we'll hear from Dr. Fernand Labrie. Welcome.

[Translation]

Dr. Fernand Labrie (Research Director, Pavillion of the Laval University Hospital, University Hospital of Quebec, and Director, Department of Anatomy-Physiology, Faculty of Medicine, Laval University; appearing as an individual): Mr. Chairman, thank you very much for giving me the opportunity to present quantitative arguments to the Finance Committee, figures that show how important it is to the entire health system to support medical research.

I heard all my colleagues emphasize the importance of the health system Canadians enjoy. They see it as a real gem. However, it costs us about $75 billion per year.

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We think health research is one way, among others, to significantly reduce costs while at the same time improving the quality of health care.

My presentation will be in four parts. In the first, I will show how important it is to invest in medical research in Canada from a purely economic perspective. Secondly, I will give the example of our research centre in Quebec City, with figures that show that it is a very worthwhile investment for the Canadian government. Let me first tell you this: the annual return on investment is 600%, which is very attractive for anyone who plays the stock market. I will then speak about Canada's position in terms of medical research support. I will not dwell on percentages compared to prior years, because of the financing problem we had in Canada which goes back a long way. We now live in a global world, but we have to compare ourselves with the other countries we deal with. Finally, I will make a recommendation which, as you may have guessed, will be to encourage you to invest a little more in medical research if you would like to see an improved economy and better health care.

First of all, I would like to talk about the significant contribution the government has made in the past few years, by means of the Canadian centres of excellence. They are an excellent innovation. The entire community has a very high opinion of the Canadian foundations for health care that have just been established as well as the Canadian Foundation for Innovation. However, for them to succeed, they need a more elaborate and broader health research base.

I will give you some examples which show the importance of investing in the Medical Research Council because of its benefits in terms of health and innovation by focussing on the economic aspects of these benefits. In Canada, drug companies and other players invest approximately $1.4 billion in health. At the heart of this is the $240 million spent by the Medical Research Council. So you can see right away that it is a factor of about six. The MRC's investment translates into $1.4 billion for the Canadian economy.

The quality of the research done in Canada has attracted companies such as Bio-Méga, Merck Frosst and Astra, not necessarily because we are in Canada, but because of the expertise of our scientific researchers. Drug companies give a lot of contracts to universities and hospitals, because, of course, of the high quality of the research, which is supported by the MRC. A number of new companies have sprung up in Canada, including Biochem Pharma which is of particular interest to you, Allelix, Biomira, QLT and a number of others.

At the present time, 73,000 jobs in Canada are related to life sciences. A huge number of those are due to the $250 million the MRC invests. We also train staff. As far as increasing our knowledge is concerned, a study carried out in the United States— obviously, the results would be the same for Canada—shows that 73% of the publications used for patents, in other words, new drugs and discoveries, come from university researchers, meaning research of the type carried out by the NIH in the United States or by the MRC in Canada.

Let me give you a small example to show the impact of the MRC's investments. The Laval University Hospital Research Centre in Quebec City has 1,005 employees and a total budget of $36.9 million; of these funds, $15.3 million come from abroad and $8.2 million from the federal government, of which $4.6 million come from the MRC.

With the $5.8 million collected in taxes and the $8.2 million invested initially, you get a difference of $2.4 million. And we have a return of $15.3 million from abroad. This institute is but one example among several others in Canada, for which we could give you the same figures. In fact, at the end of the year, the return on investment was 637%, whereas Quebec was 749%. These figures are accurate and clearly show the spinoffs of the federal government's $8.2 million investment. Moreover, 1,005 jobs at home and approximately 2,500 jobs in the health sector in the Quebec City region stem from the Medical Research Council.

Another example of economic spinoffs is the $65 million contract for a joint venture between the American firm Schering- Plough and Quebec's Technology Development Fund to find a new treatment for breast cancer. This project was started in 1992 and is in its last phase, clinical phase III. It was developed entirely in Canada, which will translate into significant benefits for us, since the manufacturing will be done in Canada, based on what I said earlier. That is just one example of many.

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But we have some serious catching up to do. All documents show that we spend five times less per capita than our American friends do. The United States invests $39.99, whereas Canada invests $8.24 per capita. Furthermore, I heard half an hour ago that that was $39.99 American, which is a factor of seven. So we have a lot of catching up to do if we want to make up for lost time and give Canadians the quality of health care they demand and are entitled to, as well as help our economy, as I said earlier.

So the MRC is a very critical pillar, not only from an economic perspective, but also because of its impact on the quality of health care. Even if there were a cut of $75 billion in health care, it would be quite easy to find improvements to make up for the $240 million we would spend.

Just like the Medical Research Council, we recommend that $56 million be allocated the first year and a similar amount for subsequent years so that we can get closer to international standards in order to be competitive in the field of medical research support. Thank you very much, Mr. Chairman.

The Chairman: Thank you.

[English]

The next individual will be from Results Canada, M. Jean-François Tardif.

[Translation]

Welcome.

Mr. Jean-François Tardif (National Coordinator, Results Canada): Thank you, Mr. Chairman.

[English]

Thank you, Mr. Chairman, and thank you for the opportunity to appear before you today.

Results Canada is a citizens' action group affiliated with similar groups across the world. Our purpose is essentially to create the political will to end the worst aspects of hunger and poverty in the world. For instance, our members produce the large majority of the letters to the editor that you would see published in Canadian dailies from sea to sea.

My presentation to you today will be essentially in the area of international health and the programs Canada funds through CIDA in particular.

[Translation]

In 1990, at the World Summit for Children, Canada took the initiative by inviting the entire international community to make basic human needs a top priority. More specifically, it invited all countries to commit to reaching high goals by the end of the decade: reducing malnutrition among children by half; reducing maternal mortality by 50%; reducing infant mortality by a third; and ensuring universal access to potable water, to sanitary living conditions and family planning. I agree that those are very ambitious goals.

Unfortunately, since then, Canada has assumed a new kind of leadership, that is leadership in reducing budgets for aid programs. These were cutbacks as high as 34%, according to the government's own statistics for the past several years. We were among the top donor countries and we now find ourselves lagging far behind.

The impact of these reductions has been very hard on the health sector, a sector that is not traditionally a priority one. As a matter of fact, health gets only a few cents' worth of every dollar given to foreign aid.

The results are quite appalling. Only a year after officially adopting basic human needs as the number one priority of its foreign aid policy, the government has decided to cut back health expenditures in the aid program by 30% in the space of a year. It reduced approvals for coming years by 60%, not even a full year after having made a formal commitment in its new aid policy. I don't know if Canadians are aware of the fact that when the government decided to carry out disproportionate cuts to foreign aid, it exposed itself to a very negative consequence, namely the disappearance of its international credibility. We are no longer able to apply our own policies.

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[English]

The worst blow really came just a few days ago, when CIDA announced that Canada would terminate its international immunization program, and that was actually on the anniversary of the World Summit for Children, just to compound the problem and the optics.

Canada joined the international effort in the immunization field in 1985. That was just taking the program in action, because the international community had started to mobilize in 1980. Immunization rates were then at 20% across the planet. In one decade, these immunization rates were brought from 20% to 80% of all children being immunized. So this was a really phenomenal achievement, and Canada was part of that through its immunization program.

We're talking about three million lives being saved each year thanks to that. At $6 million spent per year in CIDA, that is 0.3% of CIDA's budget. The cost-effectiveness of Canada's immunization program can hardly be challenged, yet even with a resoundingly positive independent evaluation of the program, CIDA had to cut it because it just did not have any more money in its budget. This is endangering the lives of tens of thousands, if not hundreds of thousands of babies around the world. I am not sure if Canadians know these are the consequences of budget cuts being made, and I think it's important not to forget them when you have your deliberations as a committee.

[Translation]

Ironically CIDA took the trouble a few months ago in 1996 to recognize the importance of immunization in its health policy. It even made this its number 3 objective noting that it was necessary "to improve children's health" by "full immunization of every child". The best way of going about this was to slash spending in the program. Looking at these reductions, we cannot help thinking about the many challenges and urgent actions required in international health.

[English]

There are now challenges that require our involvement in international health, and involvement that can be done in a leveraged fashion. There is new epidemiological data that shows, for instance, that malaria is a bigger killer than we ever previously thought. UNICEF estimates that one child dies of malaria—just malaria—every 30 seconds. That is 40 times the number of children that are dying because of landmines every year.

In Ethiopia, almost 20% of the population is exposed to malaria. According to a July meeting of 700 scientists in Hyderabad, India, almost half of the world's population is at risk and their existing drugs are losing their impact. The number of deaths is growing. The World Health Organization is currently forecasting 16% annual growth rate in the disease. That is largely due to human complacency, misplaced cuts like those in Canada, and is compounded by the genetic mutation of the disease and bacteria. With global warming, of course, malaria could be back in northern countries like Canada within a matter of a decade. So this is not only their problem; it starts to become our problem, too.

The international community is organizing the fight against malaria, but there needs to be leadership. Again, we are not talking very expensive leadership. We are talking $10 million a year, 0.5% of CIDA's budget.

I could tell you similarly of exciting opportunities in the area of measles elimination within half a dozen years. We are talking eradication of polio by the end of this decade, largely under the leadership of Rotary, but they need our support. That means that for Canadians it would be cheaper to invest in the eradication of polio and the elimination of measles instead of continuing to immunize our own children against measles and polio, because the disease would not be there for all intents and purposes.

So those are possibilities for action. Against all this backdrop, what do we say the future holds for us?

[Translation]

Our future perspectives are sombre. Unfortunately reductions of 8% were announced for foreign aid spending for next year and it is not the entire aid budget that will be reduced because it is split into two: one part goes to the Department of Finance and the other to CIDA.

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[English]

So, indeed, the Department of Finance holds a part of the official development assistance envelope, and strangely enough, that part will not get cut. Actually, in the latest estimates we see a rather substantial increase, and given that there has to be an overall cut to the development assistance budget of 8%, if the Department of Finance's share doesn't decrease then CIDA's share has to decrease pretty substantially. We're talking perhaps something in the order of 12%.

I don't think the final figures have been calculated, but those are the kinds of deep cuts we'll be facing. Again, these cuts will automatically translate to cuts in health programs. So obviously we have to put an end to cuts in the aid budget and we have to reverse the trend. We have to at least limit those cuts if we cannot avert them, and we have to start announcing in next year's budget that we will start returning to normal aid levels and return to where we belong, that is, among the front runners in the aid community.

[Translation]

I'll submit a more detailed document by the end of the week.

[English]

Thank you very much.

[Translation]

The Chairman: Thank you, Mr. Tardif.

[English]

We'll now proceed to the question and answer session. We'll start with Dr. Hill.

Mr. Grant Hill (Macleod, Ref.): Thank you, and thanks to one and all for appearing.

I want to address my first comment to Mr. Offord. He mentioned that waiting lists have gone up, yet when I talk with the health minister personally, he tells me that is in fact a figment of medical practitioners' minds, that in fact it's turf protection.

Do you have data you can present to him to prove that what you say is true?

Mr. Nicholas Offord: In terms of this argument about whether the waiting lists are getting longer or shorter, there are two basic factors. One is a growing demand for the services. One particular specialty of our hospital is knee and hip replacements. We have a reality of an aging population, a reality of increasing demand in that particular sector for those kinds of services. When you combine it with what my colleague Dr. Scott is talking about, aging specialty practitioners, we have a formula here for a major crisis in this one particular area. It varies considerably by profession and it also is influenced significantly by the change in modality of practice. Hospital stays are shorter, surgical techniques are improving, and these are to some extent ameliorating the other two factors that are hurting us.

The short answer is that we're not quite sure where it's going to end up. Clearly, we need to do more in the way of training and providing new talent in areas of specialization. We need to do the skills upgrades we've talked about in order to keep waiting lists in line.

There's been an increasing emphasis in the last couple of years on community-based health care. We're supportive of that and we believe in the restructuring of the system. But the reality is that you're not going to have your hip or your knee replaced in your home. It's going to happen in a hospital by trained, professional people, and you want to have the best. Unless we start making investments in particularly our leading hospitals that perform these kinds of specialized services, we're going to be in very big trouble very quickly.

Mr. Grant Hill: If I could just make a statement to my colleagues, then, please provide the health minister with the data he says he does not have. I've listened to you, and you're all saying that the funding is short. I left my own practice because of this very reason and I'm begging you, since he says he is not convinced that there is such a problem, provide him the data; and if he won't listen to you, provide me the data and I'll be sure he listens to me.

The Chairman: Thank you, Dr. Hill.

[Translation]

Ms. Picard.

Ms. Pauline Picard (Drummond, BQ): I'd like to welcome you all. I'd like to say that if there is a deterioration in the health system at the present time, it is because of the drastic cutbacks in the Canadian Health and Social Transfer and the serious management problems this has occasioned for the provinces.

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In your presentation, Mr. Armstrong, you wondered why so many Canadians who are dependent on drugs were living in exclusion and poverty. I'd be interested in knowing your views. What do you think would be the most effective ways of stopping the spread of AIDS? What investments do you think the government should make in research or what specific means should it take to assist those people who are dealing with this disease?

Mr. Russell Armstrong: Thank you, Madam. Would you please clarify your first question?

Ms. Pauline Picard: You didn't seem to have enough time to explain why there are so many Canadians going through the hell of addiction, excluded from society and in poverty. What do you think the response to this situation should be?

Mr. Russell Armstrong: I'll answer your question in English.

[English]

The point I raised in my remarks was the fact that the HIV epidemic has gradually been driven by drug use and problems of drug addiction. What I was trying to suggest is that this appears to be a symptom of a larger malaise in Canadian society. I pose the question that I think we all need to ask: why is there so much drug use in Canadian society? Indeed, we won't be able to deal effectively with the problem of HIV transmission unless we also deal with the problem of why there are so many drug users in Canada and why there are so many drug users who use drugs in a way that leads to HIV transmission.

Does that help explain the point I was trying to make?

[Translation]

Ms. Pauline Picard: Yes. What do you see as the most effective ways of stopping the present spread of AIDS? What should we do? What should the government do?

[English]

Mr. Russell Armstrong: Indeed, the time and the focus of this committee don't permit me to expand a lot on that issue. We've recently participated in a consultation process run by the Minister of Health on the future of the national AIDS strategy, and he asked us particularly to address the kinds of questions that you've asked.

What the Canadian AIDS Society has proposed in terms of dealing most effectively with the overall problem of HIV in Canada is an expanded approach that first of all identifies the areas of health and social policy that appear to lead to situations where transmission is easier.

If I can use the example of drug use, one of the things that we've supported is a harm reduction approach to drug use: getting away from a very, perhaps, American approach to criminalization, incarceration of drug users; treating it as a medical health problem and providing tools and supports to drug users to help them manage their addictions and help them first of all use drugs in ways that don't lead to HIV transmission. That's just one example of a concrete measure we've suggested that will help deal with this larger contextual problem that I've identified.

In terms of specific investments, the national AIDS strategy is a particularly good investment on the part of the government in terms of HIV/AIDS. When I appeared before this committee last year, I had no idea whether that investment would be renewed. Luckily I come this year in a position to be able to thank the government for deciding to continue to invest in the issue of HIV/AIDS. However, what I said in my remarks today is that, given the fact that the epidemic is expanding and more complex, we have to look at the level of that investment and at possibly leveraging more investment in areas such as research and support for community action on AIDS, which is shown to be effective in both preventing new transmission and supporting the needs of those who are already infected.

The Chairman: Mr. Riis.

Mr. Nelson Riis (Kamloops, NDP): Just three quick snappers.

Russell, you mentioned the crisis in Vancouver, the staggering situation there relative to the rest of North America. The port of Seattle is often compared to Vancouver, yet the situation there is not evenly remotely similar. Why is there such a difference between Vancouver and Seattle when it comes to dealing with this HIV/AIDS issue?

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Secondly, to Fernand, your ROI that you referred to is at a staggering level. How do you measure your ROI?

To the other ones, much has been said this afternoon about the movement toward a two-tier health care system and the prices and the funding. Would someone like to comment on the impact of the MAI, particularly as we are contemplating now moving into home care and pharmacare, two national programs, and whether that would be even possible under the provisions of MAI as people know it today?

Ms. Nancy Riche: I will start on this. I am a strong believer in the conspiracy theory. If we back up a few years, everything we are here pleading this government to reinstate and restore we may find was all put in motion to accommodate the MAI.

As we understand the current Multilateral Agreement on Investment, foreign companies will be treated as well as domestic companies; in fact, foreign companies could charge that our public health system is an unfair subsidy to corporations. If this is the case, then we are in really serious trouble.

As we have stated in our brief, if this whole move to privatization allows for a two-tier system, allows for private companies, we believe, whether we are overreacting or overreaching, that particularly United States companies that have long been established in private health care will move in here, be treated like domestic companies, and with the two-tier system firmly in place, we will end up not unlike the U.S., with millions and millions of Canadians not able to receive any kind of quality health care.

The Chairman: Thank you, Ms. Riche. Mr. McBane.

Mr. Mike McBane: On the question of the MAI, I think one of the worries we have is that the negotiations on the internal trade agreement have refused to exclude health services from the rules of market trade. If our provincial governments and the federal Department of Industry refuse to exclude health services from the internal trade agreement, then we are in trouble with the MAI, because you cannot discriminate internationally what you have given domestically.

So through the back door of the internal trade agreement we are opening up, we believe, the health care system to the rules of the MAI. It is a very surreptitious, fundamentally dishonest move by industry departments mostly across the country. I would have to credit the Government of British Columbia for flagging the danger, but most other governments seem to be going along with it. It is a major danger that a lot of legal opinion is alerting us to and should be a central question and demand. We need to exclude health and social services from all trade agreements, internal and international.

The Chairman: Thank you, Mr. McBane. Does anybody else want to comment?

[Translation]

Dr. Fernand Labrie: I am happy that you've raised this question. The figures relating to support for research are very interesting and you will find details in the document I gave to you. The important point is that 15.3 million dollars come from contracts abroad, in other words new money coming into the country. Specialized firms have done calculations and subtracted from the federal government investment of 8.2 million dollars the taxes the government collects in return, namely 5.8 million dollars, which showed that in fact the actual cost for the government amounts to 2.4 million dollars. As a result of this expenditure, we attract 15.3 million dollars of new investment into the country. Our 2.4 million dollar investment resulted in an inflow of 15.3 million dollars from outside the country. This relates solely to the research centre, without taking into account the related jobs and spinoffs to other companies involved with the research centre and improving care. So it is important to examine the situation in relation to the actual figures without taking into account the emotional side of health care. Even in terms of figures it is important for the government to invest in research. Knowledge is a source of wealth for Canada.

The Chairman: Thank you.

[English]

The Chairman: Ms. Sholzberg-Gray.

Ms. Sharon Sholzberg-Gray: I would just like to make a comment that is relevant to the multilateral trade agreements, but not exactly. It covers the issue of the two-tier health care system.

I think we have to be very clear in discussing two-tier health, whether it means two tiers in terms of who delivers the system or two tiers in terms of who pays. We have, of course, a publicly insured health care system that we expect and want, but most of the health care in this country is paid for under a publicly funded insurance system. We have a lot of private providers. Some of us are less happy with that than others, but it is true that it's private companies that develop the pharmaceuticals that make the implements and the beds and build the buildings and that kind of thing. We don't complain about it as long as it is all part of our publicly insured system.

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What we really need in this country is a debate on how much of the spending on health care should be part of this publicly insured system and whether or not some parts being contracted out privately will erode the single-tier system. The point HEAL has made today and at other times is that we don't really have a single-tier system except on the acute-care, hospital, physician-provided side of the health care system. Currently we have a two-tier system in home care, in pharmaceuticals, in the drugs people have access to, and in long-term care and continuing care. Today, if you can afford it, you can buy as much long-term care as you want or need, you can buy as much home care as you want, and you can afford personally to pay for the drugs.

I think the real challenge for all of us is to find a way of bringing within the universally accessible medicare system a wide range of services that are publicly insured.

The Chairman: Thank you very much.

Mr. Jones.

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

I enjoyed all your presentations and agreed with a lot of what you had to say. One of the reasons we are going through what we're going through is the cuts in the CHST to the provinces. One of the things my party has said is that we would support a Canadian covenant for health, making sure we never go through these cuts again.

I can understand the shortage of nurses, especially in the Toronto area, the way some of the nurses have been treated, kitchen help being brought in to do some of the jobs nurses would do. I can also understand that in the nursing profession there is a lot of competition, and if you are going to treat people like that they are going to go to other professions. In the intelligent society we're moving to, they have other opportunities.

The question I have is for Dr. Scott on doctors being lured to the U.S.

What do you think of the concept of putting doctors on salary, especially in hospitals?

Dr. Hugh Scott: A large number of physicians are on salary now. I'm on salary. As a concept, I don't think it's a significant problem.

Probably one would find that depending on the circumstances, salary systems should vary. In a number of circumstances one has identified that what seems to be the best arrangement is a so-called “blended system”. For certain types of situations it's best that physicians be on salary, in others fee for service. Then there is blended, which is a certain portion of the time on salary and a certain portion of the time on the fee-for-service system. An example would be that if we are going to try to cover emergency rooms in remote or rural regions, physicians have to be guaranteed a certain income, otherwise “it's not worth their while to sit up all night to see one patient” on a fee-for-service system.

I think it is extremely dangerous to suggest that any one system, everybody on salary or everybody on fee for service.... It wouldn't be there.

The point I wanted to make about the physicians, however, is that we are now graduating fewer physicians in this country in the year 2000 than we did in 1975. The population has gone up by 30%. The population over the age of 65 is going to triple. The only country in the western world we've been able to identify that has as low a rate of opportunities to go to medical school is Albania. Why we would choose Albania as our model defies my logic.

The Chairman: Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman. I want to address my question and comment to the representatives from HEAL.

I'm most impressed with your presentation. It's a very good foundation. But I do need your reaction to an issue.

Under the cap funding before the CHST, the three envelopes were there. The dollars were calculated and transferred to the provinces. There were, however, no conditions that those funds be spent in the areas to which they relate. Under the CHST we go through the same computation, and again, no matter how much the transfer is, where it's spent is in the jurisdiction of the provinces.

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So my question to you is that, if the federal government transfers an additional $1 billion or $2 billion to the provinces for health care purposes or rationalizes that this is for health, how are we going to make sure that Klein doesn't just rack up another year of surpluses or Mike Harris doesn't spend $4.9 billion on a tax cut instead of using that money where it was intended to go? Would you advocate putting colour coding on those dollars so that if it's for health it would go to health?

Ms. Sholzberg-Gray: That's what the Health Action Lobby proposed a couple of years ago when the CHST first came into effect. At the time the government and the majority of members in the finance committee thought that by taking several funds and putting one fund together, the big one fund of course being a lot less than the three separate funds used to be, somehow all of that cash could be used to assert the conditions of the Canada Health Act.

The first point we'd like to make is that while you can't follow each dollar to ensure absolutely that it will be used on health—if that's the intention, let's say, of the federal government—it's certain that the federal government has the authority to assert the conditions of the Canada Health Act.

In other words, if it provides more money, it can't ensure that those incremental extra dollars are used to support the health care system. On the other hand, it can withhold funding because a particular province isn't adhering to the Canada Health Act and perhaps it can make the transfer of additional funds conditional upon enlarging the medicare system, making sure that it covers other parts of the health care system.

We know that a lot of the provinces are doing so in any event—they've expanded the health care system—but that's creating more of a patchwork quilt.

So it seems to me you can make the dollars conditional and that's enough. You don't have to follow each dollar exactly. That's just a bit much. That's why the government went out of shared cost, 50-50 funding years ago.

Ms. Cindy Wiggins (Senior Researcher, Canadian Labour Congress): I'd just like to add to that a bit.

The Canada assistance plan was totally conditional on provinces spending dollars in return for federal dollars. They were 50¢ dollars and the provinces had to spend on social assistance in order to get those 50¢ dollars. So even though CAP has been lumped in, it was the case that the funds were conditional for CAP.

The final point I want to make is that there is no reason why the Canada health and social transfer has to remain the mechanism for funding social programs in this country. It is simply an administrative decision to lump them together. There is no reason why you cannot have a health piece of legislation, an education piece of legislation and a social assistance or social services piece of legislation. It's purely administrative.

Ms. Kathleen Connors: Further to that, if you look at the recommendation in the NFNU brief, that is exactly what we propose, that you scrap the CHST and you create a number of what we call national social investment funds, each with its own funding formula appropriate to the needs of the social sector it covers. But also inherent in the dollars there has to be its own set of national standards. So we would have the Canada Health Act and the national standards for the investment fund in health. There would be a national income support investment fund with its own national standards, which I think were quite eminent in CAP, which got scrapped, and a post-secondary education fund that would earmark clearly the dollars for post-secondary education.

To me, investments in social income support and post-secondary education ultimately are investments in health, because if you are well educated and if you have been cared for when you have not been able to have a job or your EI has run out, your level of health will ultimately be impacted.

The Chairman: Ms. Redman, do you have a question?

Mrs. Karen Redman (Kitchener Centre, Lib.): Actually I did, but Ms. Connors just answered it before I asked it.

We've heard throughout our pre-budget deliberations a lot of people asking for the kinds of standards that we have in health care to be transferred to both social and other programs. Yet the presentation on AIDS shows us very clearly that these are all interrelated and all of these aspects impact on the community and community health.

My question was going to be for HEAL. We're also moving away from institutional health care, and you talked about the funding formula. We're also moving towards preventive health care and individuals taking more responsibility for that. While I realize that most of you are talking about specific service deliveries and funding for those modes of delivery, has anybody looked at how we get from where we are to where we need to go?

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My sense is that part of what Canadians are losing faith in the medical system over is the fact that they don't see a vision at the end of the day. Whether you want to attribute a lot of that to the provinces or the federal-provincial responsibility, there's no sense of where we need to be.

Ms. Mary Ellen Jeans: I think it's clear that there is no vision. I think the health care reform has happened in an unplanned, fiscally driven manner.

I think you would find that there are a lot of Canadians and a lot of health care providers who philosophically support reform. As my colleague pointed out, from a healing perspective, we would like to see a broadening of that comprehensive coverage of community and home care services, as well as pharmacare and the whole range of services. I think the national forum presented at least a beginning in terms of recommendations as to how we might get there, but I do think we need a concerted effort to develop that vision in a collaborative way.

One of the things that disturbs me—and I certainly heard it raised here from unlikely groups who would be saying the same thing—is that there hasn't been enough involvement of all of the stakeholders. A lot of decisions have been made possibly by financial policy decision-makers without the involvement of the public and the health care professionals who in the end do have education and some judgment about how we can make some of this happen. We've heard today about health human resources across the board leading to what could be a real serious crisis just a few years down the road that we won't even be able to address if we don't do something today.

So I think there's a real need for task forces, for people to work together to make some of these things happen, and a need for some strategic investment of health dollars to ensure that there is a federal leadership role in some of these issues.

The Chairman: Ms. Connors.

Ms. Kathleen Connors: And I think we need to look a little bit at our history books, because there are some answers. If it worked once, why can't it work again?

I think we need to look at how the hospital sector got built in this country. It was through a system of national health grants with matching federal-provincial dollars. We make reference to this in our presentation, that a similar program for 1998 is a possibility, so that there would be a grants program to assist the provinces if they're willing to put money into home care, or into reinvesting and prevention, and those sorts of things, that there would be matching funding to create the kind of infrastructure that is necessary for that kind of program to happen.

We got hospitals built because that kind of program existed in the late 1940s, 1950s and 1960s. I would suggest, being a bit of a politician myself, that you can make a lot of political hay cutting ribbons to open community health centres and publicly funded wellness clinics in 1998, as you did in cutting ribbons to open hospitals in the 1950s.

It's in keeping with what Canadians want, so it well could work if there is a political will. The provinces won't go unless the feds are putting in some money, so make it cost-shared and collaborative, and let's get on with it.

The Chairman: Thank you very much. Before I go and cut some ribbons, what we will say to you is thank you very much for your presentation. It has been a very interesting round table.

I want to tell you that as we framed this debate, based on the 50-50 split, 50% debt and tax reduction and 50% social economic programs, I think I reflect the view of the committee to say that health care is certainly a priority that we heard throughout the country, not only from this round table but from reports I received from town hall meetings that members of Parliament are holding in their own ridings and what we heard as we visited capital cities across the country. So you can rest assured that many of the thoughts and ideas and views expressed in today's round table will, I'm sure, find their way into the report to the Minister of Finance.

Thank you very much.

The meeting is adjourned.