FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 7, 1998

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[English]

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

As you know, the committee is travelling across the country to seek input for pre-budget consultation to give our recommendations based on what we hear across the country to the House of Commons and indeed the Minister of Finance as he prepares to write the 1999 budget.

We have with us representatives from the Credit Union Central of British Columbia; End Legislated Poverty; la Fédération des francophones de la Colombie-Britannique; National Association of Women and the Law; and the Social Planning Research Council of British Columbia.

Many of you have appeared in front of our committee before, so you know how this operates, but for those who are new to the process, we basically give you five to seven minutes to give us an overview of your major points, and thereafter we engage in a question and answer session.

We will begin with Credit Union Central of British Columbia, Mr. Helmut Pastrick.

Welcome.

Mr. Helmut Pastrick (Chief Economist, Credit Union Central of British Columbia): Thank you, and good morning. I'll be brief.

First of all, thank you for inviting our input into the priorities for the upcoming federal budget.

The main government priorities for the fiscal dividend should be tax relief and debt reduction. Lower taxes are essential for a more competitive Canadian economy and to stimulate economic activity.

In particular, federal income tax rates are too high and are at the maximum tolerable amount for most taxpayers. A phased reduction in the income tax rate over the next several years, commencing with the 1999 budget, would be an appropriate strategy.

Achieving income tax rates comparable to those of our largest trading nation, the United States, would be very beneficial to the Canadian economy, as that would allow its citizens and businesses to be more competitive. In today's open and highly competitive business environment, countries are obliged to manage their attractiveness in order to attract and retain entrepreneurs, those primarily responsible for job creation. Many industrialized countries are reducing taxes, and Canada cannot afford to be left behind.

Another benefit to lowering income tax rates now is that it will be a form of fiscal policy insurance in the event of a future economic recession or any other event requiring fiscal stimulus. If it should ever be necessary to raise taxes in that event, it would be more palatable to taxpayers to do so from a lower tax rate.

In this new economy it is critical that governments set the right environment for people and businesses to be more productive and competitive. This is the best way to ensure a wide range of job opportunities. In this more open world, cost competitiveness is all important. Nations increasingly compete with tax policies, and this competition will continue in the coming years. Personal and corporate taxation must be reduced.

Government initiatives to sustain and grow basic physical infrastructure along with our educational infrastructure are also necessary. Reducing subsidies and protectionism so that domestic industries compete on the basis of productivity, cost, and the merits of goods and services produced will provide the best chance for us to succeed in this new era.

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In British Columbia we face the particularly challenging task of diversifying our provincial economy more quickly to the new-growth industries, of encouraging more innovation and value-added economic activity, and of strengthening our traditional resource sectors.

These new realities of the 21st century will demand responsive governments. We realize that federal taxation policy cannot be a salvation for British Columbia's economic challenges. However, it does form a piece of the solution. Again, competing against other jurisdictions that have more attractive tax rates is something that is part of the new reality of our situation.

So we feel that lower tax rates in the long run will enhance economic activity and ultimately B.C.'s economic status.

Thank you.

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

We'll now hear Linda Moreau from End Legislated Poverty.

Ms. Linda Moreau (Organizer, End Legislated Poverty): Good morning, and thanks to the members for having End Legislated Poverty here to consult with you.

End Legislated Poverty agrees with the report from the Canadian Centre for Policy Alternatives, which you heard here on Monday, with respect to the interest rates, especially, and with respect to restoring social program funding, especially welfare funding. In general, we support the recommendations that come out in the alternate federal budget.

I just wanted to add three points, though, to the report from the Canadian Centre for Policy Alternatives.

One, this is the fiftieth anniversary of the Universal Declaration of Human Rights. Canada was a signatory to that, of course. As well, Canada signed the UN Convention on Economic, Social and Cultural Rights. This year Canada is reporting on how it's doing fulfilling those rights for Canadians.

In 1993, when we last reported, the UN Committee on Economic, Cultural and Social Rights told Canada that there seems to be no measurable progress in alleviating poverty over the last decade. The committee was concerned that half of the single mothers in Canada and a large number of children live in poverty and that there's no procedure to ensure that those who must depend entirely on welfare payments do not derive an income that is at or above the poverty line. There was strong evidence of hunger in Canada and widespread discrimination in housing against people with children, people on social assistance, people with low incomes, and people who are indebted. This committee noted that although these forms of discrimination were prohibited by law in Canada's provinces, that didn't eliminate the discrimination.

We have a chance this year and with this budget to rectify some of those shameful lacks in our legislation in our policy. I have two examples of how this could be done.

One is that the child tax benefit that was introduced is clearly discriminatory against parents and children who are on welfare. Over 60% of Canada's poor children won't benefit from this child tax benefit at all because their families are on welfare. The benefit reinforces the stereotype of deserving and undeserving low-income people—the working poor seem to be deserving and people on welfare trying to raise their children seem to be undeserving. That change alone for people on welfare to get this child tax benefit would alleviate some child poverty.

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The other point I want to bring up is that the Toronto Disaster Relief Committee is calling on all levels of government to declare homelessness as a national disaster and spend 1% of their budgets on housing and other services for homeless people.

We at End Legislated Poverty think this is an important thing, and we're hoping that this budget will not only reflect the concerns of low-income people but will also make an economy that's strong, where there's jobs created, and we do end legislated poverty.

Thanks very much.

The Chairman: Thank you very much.

We'll now hear from the Fédération des francophones de la Colombie-Britannique.

Madam Coté and Madam Friolet.

[Translation]

Ms. Diane Côté (President, Fédération des francophones de la Colombie-Britannique): Good morning. I would like to thank the members of the committee for giving us this opportunity to discuss priorities for the next federal budget with you. This is the second time this year that we are appearing before your committee and we appreciate the opportunity given to us to enter into a dialogue which, we hope, will enable you to better understand the importance of investing in the official languages of Canada.

I am Diane Côté, and I am the president of the Fédération des francophones de la Colombie-Britannique. I am accompanied by madam Yseult Friolet, who is the executive director of our organization.

The Fédération des francophones de la Colombie-Britannique has existed for 53 years. Its role is to promote, represent and defend the rights and interests of the francophones in British Columbia. We also strive to protect their linguistic and cultural heritage.

According to the 1996 census data, nearly 61,000 people in British Columbia declared that French was their mother tongue and that they still spoke and understood the language. We are, in fact, the third largest francophone community outside Quebec; only Ontario and New Brunswick have a larger French-speaking population.

The francophone element constitutes an asset in Canada. The amount allocated for programs to assist our communities represents only .02% of the federal budget. Those who deem this amount excessive certainly have a vision of Canada that does not correspond to the one enshrined in our Constitution.

A long time ago, Canada made a pact among its founding peoples, the francophones, the anglophones and the Aboriginal peoples, so that they would feel at home throughout the country. To this end, Canada has, over the years, made political and financial decisions to preserve the character of our country, which, we must admit, enables us to be different from our neighbours to the South.

Each year, there is a new budget; it either reaffirms Canada's commitment to our unique communities or creates new challenges. In the past six years, we have seen primarily challenges. Each year the funding for minority-language programs has decreased.

Two programs have been particularly affected, two programs that play an essential role in the development and growth of our communities: the Official Languages Community Support Program and the Official Languages in Education Program, both administered by Heritage Canada.

Let me give you a few examples. In the 1998, the Minister of Finance decreased the main estimates of the Department of Canadian Heritage by 6.6%. This is having repercussions on the activities of our organizations. Last year, across the country, our Community Assistance Programs were cut by 15%. Since 1993, the funds allocated for the operation of francophone organizations in British Columbia have decreased by more than 30%. In the educational sector, federal government support in British Columbia was cut by 21% from 1993 to 1998.

However, such assistance is supposed to reflect the Canadian government's commitment to minority-language education. It should be pointed out that minority-language education requires specific commitments that the provincial governments are not always willing to make. The official language communities across Canada freely admit the importance of the federal government in this area. However, cuts in recent years have threatened the creation of the educational structures that make it possible to give francophone youth the tools necessary for their linguistic and cultural development.

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Your committee must recognize the importance of giving the Department of Canadian Heritage the funds necessary so that it can continue to fulfill its role in this area.

The amounts allocated to us represent, on average, less than half the total budgets of our member associations; however, they constitute the basic structure that allows us to acquire the important, even essential tools to achieve our development objectives. Government assistance represents a very important element in the planning of our development initiatives.

In the coming year, we have to count on adequate funding so we can negotiate new agreements between Canada and these communities, agreements that will allow us to reach our development goals, as set out in our comprehensive development plan.

The Department of Canadian Heritage cannot have its budget cut again in 1999. In a few weeks, we will begin talks with Canadian Heritage to come to an agreement on funding levels for a five-year period. This exercise will be carried out in every province. We are therefore at a crossroads.

If Canada is to continue being a place where official languages are more than an abstract idea, the federal government's fiscal choices must reflect its commitment to this cornerstone of Canadian society. All indications are that our official bilingualism places us in a win-win situation.

Two major events will put Canada in the limelight in 1999, and the Finance Minister will have to participate in them also. The year 1999 will mark the 30th anniversary of the Official Languages Act, which will doubtless be a time to take stock of what we have achieved to date.

The year 1999 could also be described as the year of La Francophonie because we will welcome the members of the international French-speaking community to Moncton, New Brunswick, for the Francophone Summit.

Some of the earliest indications of the government's intentions regarding Canada's French-speaking communities will be found in the 1999 budget. Your committee has the opportunity to send a clear signal to the government as to the priority to be given to the issue of official languages promotion. You can tell the Finance Minister that he has a unique role to play when the time comes to remind Canadians that the special character of our society is recognized at all levels of government.

We know that the Canadian Heritage Minister will be asking for additional resources in order to provide official languages communities with the funds they require to meet future challenges.

We hope that Cabinet will look favourably on the initiatives put forward by the Canadian Heritage Minister and allocate the funds required to implement them.

We recommend that the funding levels of the Official Languages in Education Program be increased so that the Government of Canada can meet its obligations under section 23 of the Canadian Charter of Rights and Freedoms.

Your committee must take a position on this critical issue. It must indicate to the 60,000 francophones and 250,000 bilingual individuals in British Columbia that Canada is committed to linguistic duality. We firmly believe that these investments will guarantee a prosperous and united Canada in the future.

We are not asking that the Canadian government return to an era of runaway spending; we are asking that it act to recognize the people who have made Canada a model among nations.

To use financial terms, what we are asking for is an investment in the human capital of Canada's French-speaking community. The dividend we will earn is a society that respects the cultural and linguistic differences that contribute to the vitality of our Canadian society.

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

[English]

We will now hear from the National Association of Women and the Law, Professor Young and Ms. Day. Welcome.

Professor Margot E. Young (Member, National Association of Women and the Law): Thank you.

Shelagh Day and I will be speaking for the National Association of Women and the Law, or NAWL. I am a professor of law at the University of Victoria and Shelagh Day is a human rights and equality consultant. We're both members of NAWL.

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The National Association of Women and the Law, formed since 1974, is a national non-profit feminist organization. NAWL members, numbering over 1,000, are drawn from all across Canada, and include lawyers, academics, judges, law students and others committed to gender equality. In addition to a national office, NAWL has 17 local chapters across Canada.

Shelagh.

Ms. Shelagh Day (Special Human Rights Adviser, National Association of Women and the Law): Thank you very much. We're very pleased to be here this morning and very pleased to convey to you our most important message, which is that the priority for this budget must be directed to dealing with what is now an alarming social deficit in Canada. This is much more important than overall tax cuts and much more important than debt reduction.

When the Budget Implementation Act was introduced in 1995, Canadians were persuaded that it was excessive social spending that was causing the deficit. That was the message of the time. But now, in fact, this particular message has been discredited by economists right across the board.

Social spending did not cause the deficit. It was caused by higher interest rates and the lower employment and economic growth those higher interest rates caused. Nor is it clear that social cuts have in fact given us the balanced budget we have now. We can attribute that to lower interest rates and better economic growth.

Consequently, it's not clear that the social cuts, the deep social cuts we've experienced between 1995 and now, have done anything in fact to balance the budget, but they have produced alarming social problems in the country. Certainly, given the message that was conveyed in 1995, Canadians have every expectation that once we have a fiscal dividend it will go back into dealing with those social cuts, redressing the cuts that were made in social programs, and dealing with the problems that have been created because of those cuts.

A major concern for us is that the impact of social cuts has fallen very heavily on women and children. I was interested to note, in yesterday's Globe and Mail, that Mr. Martin spoke to the International Monetary Fund's development committee in Washington. He said this:

While we have all felt the effects of the financial turmoil, the fragile economies of the world's poorest countries have been particularly hard hit. Although many of these countries have not been directly affected by capital market volatility, they are suffering the indirect effects of lower commodity prices and falling export demand.

And here is the thing I want you to hear:

Moreover, the poor in these societies, the least able to protect themselves, are suffering most. Women and children, who are the most vulnerable, feel the impact of adjustment efforts first and hardest.

This reality has driven home what we all know to be the first real message from recent events—that we cannot ignore the real consequences for people in any crisis assistance or response package. The social implications have to be recognized up front and on par with the economic response.

Now, Mr. Martin is talking to the International Monetary Fund about poor countries. My point is that precisely the same impact has happened in Canada with the restructuring that has taken place over the last period of time. The social implications of the restructuring that's been done have not been taken into account here. Now is the time to redress that problem.

These cuts have hit women hardest for a number of reasons. Women have a higher risk of poverty. Women have less access to good jobs. Women carry the burden of unpaid work. In all of these ways, women have been hit hard. They've been hit by the loss of good jobs in the public sector, the good jobs that women have traditionally held in health care and education.

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They've been hit by cuts to social assistance because they are a larger group of the poor in this country. That is simply a fact.

They've been hit by cuts to social services that are of particular importance to women. I include in that cuts to public daycare; cuts to funds that are going to shelters for women who are victims of violence; cuts to legal aid for family law and immigration and refugee law rather than criminal legal aid; and cuts to care-giving services for people with disabilities and people who are looking after people in their homes. All of those things hit women very directly, and those are the things that have been cut in this period of time.

The CHST introduced in the Budget Implementation Act had characteristics that have had a severe impact on women. First of all, there was just a cut in the money, in the transfers, and that resulted in cuts to social services, as we know. Then there was the change from 50-50 cost sharing. That reduced the incentive for provinces to put money into the specified social services I just listed. Earlier, if they put in 50¢, they'd get $1 worth of services for people in their province. That incentive has gone.

In addition to that, in the CHST, where all the money is rolled into one transfer, there is now no money specifically designated for welfare. That has allowed provinces to cut welfare funds, which we know they have done.

There is a justice and equality issue here. There is a social justice issue. There is an equality deficit that's been created by the fiscal policies of the government over the last three years. But there's also another reason for addressing the social deficit: It's also a threat to future economic prosperity.

People now recognize that there is not one economy. In fact, people now talk about three economies. There's the private market commodity economy; the public sector economy; and the family, community care economy. Each one of these is incredibly important to the creation of wealth in Canada.

The private sector economy does not stand alone. It's dependent on the public sector economy for services like health, education and infrastructure. It's dependent on the family and community and care economy for all of the unpaid work that's done, mostly by women, to look after children and older people and to do volunteer work. The private sector economy depends on both of those.

If we shrink the public sector economy and we damage the family and community economy by overloading it, in fact what we're doing in the long term is giving ourselves a less healthy economy, and posing long-term problems for ourselves as we look toward the future.

What should the government do about it now? What's the most important thing to be done? Well, we have a number of recommendations.

First of all, we think it's extremely important, now that we have a fiscal dividend, to in fact put money back into transfer payments. We should be returning to the level of funding for health education and welfare that we had before 1995.

The government should also be assuming a leadership role again in establishing national standards for social programs. We know there is pressure from the provinces to back off from this role, but it's our view—and we believe it's the view of many, many Canadians—that we want consistency in social programs, we want consistency in social services across the country, and we want some standards to be there for everyone.

We believe in section 36 of the Constitution, in other words. We believe the federal government has an extraordinarily important role in establishing that for everyone in Canada, and we urge you not to back away from it.

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We recommend also that there be designated funding for social services that are of particular importance to women's equality. Those include some of the ones that have now been lost—public childcare services, legal aid for family law, etc. Those are ones I've mentioned.

We're also recommending that, again, we have some standards for social assistance in this country. Some of the things that are being done in social assistance programs across the country are devastating. They're cruel. We shouldn't be tolerating that.

We're also asking that as you move forward on the commitment to deal with new standards for social programs, you include an equality principle in this. It's very important now. The government has committed itself to gender equality, but we want to see it lived out, and we don't see that yet.

In fact, what we see is that we've had policies implemented through the budgets over the last three years that have been very damaging to women in the very biggest picture. Now we want to see some reversal of that.

Thank you.

The Chairman: Thank you very much.

Prof. Margot Young: I actually have just a few more comments to add to that.

The Chairman: Sure, go ahead.

Prof. Margot Young: I want to spend the last few minutes of our submission discussing the use of the tax system to provide support for the care work that women do.

In particular, I'll focus on recent proposals for a caregiver credit and for a childcare expense deduction as illustrative of the need for a specifically gendered tax policy analysis and program implementation. NAWL's recommendations with respect to these particular tax programs highlight the need for a tax system that is responsive to the realities of women's paid and unpaid work. Our recommendations caution against the use of tax expenditures as the sole method for effecting programs dealing with the issues that arise around the question of women's unpaid work.

It is NAWL's firmly held opinion, backed up by a large number of academic and expert studies, that the use of tax deductions to channel resources to childcare is ill-considered use of such resources and possibly the least effective way of promoting the goals of a broad-based, accessible, and affordable childcare system.

Tax deductions deliver the greatest benefit to highest-income families and are of zero value to the most needy, who have insufficient taxable income against which to claim the deduction. Deductions do nothing to promote the creation of public, regulated, non-profit daycare spaces, and equally do nothing to protect childcare workers from exploitative work conditions.

Simply put, a program of tax expenditures is inadequate as a public daycare policy, and does not deliver on the government's election promise to implement a national childcare program.

While NAWL congratulates the government on its recognition that unpaid caregiving work done by women has an economic value, it urges the government to ensure that this recognition is reflected in policies that are responsive to the goals of gender equality.

For instance, although NAWL supports the proposal for the new childcare tax credit for individuals who reside with and care for elderly and infirm relatives, NAWL urges the government to ensure that this tax benefit is implemented in a manner that promotes women's equality.

Three design features of this tax credit are essential from an equality perspective, and these are features that apply to other kinds of tax expenditure programs as well.

First, the credit should be delivered directly to the primary caregiver, and there should be a rebuttable presumption that the caregiver is the woman in the family unit.

Secondly, a caregiver should be entitled to the credit whether she does or does not earn market income. The phenomenon of women's double shiftwork, well documented in social science research, tells us that women retain primary responsibility for caregiving work in the family even when they are also engaged in full-time labour.

The third necessary design feature is that the credit must be a refundable one so that it benefits full-time and low-income homemakers. A non-refundable credit is of no use to an individual with little or no income, as she has no tax liability against which to claim the credit. Thus, to benefit caregivers with little or no income, the credit must be refundable.

Additional problems are associated with the use of the tax system to deliver the tax benefits for private retirement schemes. There isn't time to go into this now, but I would direct committee members' attention to this discussion in our brief and the problematic nature of such a tax expenditure program for women.

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In conclusion, NAWL urges the government to adopt a set of gender equality principles to guide the development of policies dealing with women's unpaid work and with daycare funding. The government must be sensitive to the ways in which tax policy can discriminate and does discriminate against women, and in particular against low-income women.

NAWL's brief and our comments today detail some of those gender equality principles we urge the government to adopt with the intention of encouraging the government to ensure that its policies and budget choices promote women's equality in both the public and private spheres.

Thank you.

The Chairman: Thank you very much.

We're going to the question and answer session now.

Mr. Kenney.

Mr. Jason Kenney (Calgary Southeast, Ref.): Thank you, Mr. Chairman.

I thank all the panellists for their thoughtful presentations, for the work they've put into them, and for appearing before us today.

Many different issues were raised from different perspectives, but I'd actually like to pick up on the last point from Professor Young with respect to designing the tax system to provide greater equity for care given at home.

Would your organization support converting the current childcare tax deduction into a refundable credit for caregivers? Just to be clear, is that what you're proposing?

Prof. Margot Young: Actually, I was talking about two separate programs. One is a deduction that applies for childcare that individuals can use to get back some of the money expended on daycare services—babysitting, camp fees, boarding schools and those types of things. The other program is a set of tax expenditures that provides a credit to individuals who are the primary caregivers for elderly or infirm relatives who reside with them. So these are two different sets.

Mr. Jason Kenney: But what about for children?

Prof. Margot Young: The caregiver credit does not apply to caregiving that women do for their children. It's elderly or infirm relatives. So it applies to a situation, for example, of a woman who is looking after an infirm parent and is doing caregiving work. It's an example of the kind of unrecognized caregiving work that women do in the care economy, as Ms. Day has detailed for you.

Mr. Jason Kenney: Perhaps I'm not understanding it here. I'll try to clarify my question.

Part of that unrecognized care that women and some men give at home is care to children. Right now the tax code provides a deduction for third-party receiptable daycare expenses but provides no recognition for those who forgo a second income in two-parent families to provide daycare at home.

Would you support changes to the tax code that would convert that childcare tax deduction into a refundable credit for childcare at home?

Prof. Margot Young: No, boldly put; generally put, I would say that NAWL would have several concerns with that.

First of all, we have general concerns about the use of tax expenditures as the sole means of providing for a national program of recognizing women's currently unpaid childcare work. The concerns I detailed in connection to childcare deductions I think are also relevant to some kind of tax-system-administered wages or income for women who do childcare work for their own children at home.

I think there are real dangers in using tax deductions for those kinds of activities.

Mr. Jason Kenney: I'm not proposing a refundable credit. I'm just asking, why wouldn't you use the same mechanism— There's a proposal before the House of Commons now from one of our colleagues, Paul Szabo, to provide a refundable credit for caregivers of children or the elderly infirm. Why wouldn't you broaden the same principle you wish to apply to the elderly infirm who are given care at home to children who are given care at home? Why the distinction?

Ms. Shelagh Day: I think one of the concerns we have is how this is going to be implemented. We know that's a proposal at the moment. We're very aware of it. But there are ways in which it can be implemented that in fact will, in our view, exacerbate women's inequality, not help it. So how one goes about dealing with this particular proposal is extraordinarily important.

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For example, we understand that Mr. Szabo's proposal is that there be income splitting.

Mr. Jason Kenney: He has several proposals. That's one of them.

Ms. Shelagh Day: Right.

Mr. Jason Kenney: Actually, I'm not sure that was. That was a private member's bill from a Reform MP in the last Parliament.

But go ahead.

Ms. Shelagh Day: Okay.

If we were to go in the direction of income splitting, in fact what would happen is that the value of the credit would go, most probably, to income-earning males. The assumption is that somehow the woman who is not earning any market income is going to have access to whatever benefit he gets by having a higher income because of this credit, but there isn't any reason to think that this is necessarily the case. So it gives no direct benefit, in our view, to the woman who's actually performing the work.

Part of what we're concerned about is how such a program might be dealt with. As we say, it can be dealt with in such a way that what it does is reward higher-income men who have a stay-at-home wife and provide a greater incentive for women to not have income of their own, and that doesn't go in the direction of increasing women's equality.

We think there are ways that such a program could be done so that it would be a proper recognition of women's unpaid work, but the way it's done is extraordinarily important. We have set out principles that we think should apply to any programs of this kind where we're dealing with unpaid work. The credits should go directly to the woman with, as we've said, a rebuttable presumption that the caregiver might be a man. It has to recognize that women who are doing paid work should also be eligible to receive this credit, and it has to be done in a way that does not simply send us back into what is now an old-fashioned and unrealistic version of the family, which is a male breadwinner and a stay-at-home woman.

Mr. Jason Kenney: That really reaches the nub of the question, doesn't it? But it occurs to me that there are millions of Canadian women and men who choose to forgo a second income to stay at home and raise young children. I know this. I mean, this is an incontestable fact.

Are they being unrealistic by making that choice? Ought not society provide equity for that choice made? Why ought we to discriminate in favour of those two-income families who have more income, who get to claim a deduction for their childcare, and discriminate against those families who make a sacrifice to do what they believe is in the best interests of their children, raising them at home? Why do you support this inequity?

Ms. Shelagh Day: What we're saying is that it needs to be done in such a way that in fact what it does is support choice—

Mr. Jason Kenney: Right.

Ms. Shelagh Day: —and not in such a way that what it in fact does is reward one model of—

Mr. Jason Kenney: But you said you believe that one choice, the choice of working outside the home and paying for third-party care, is preferable to the choice of forgoing the second income and raising children at home.

Ms. Shelagh Day: No, I don't think that. I don't think that.

Mr. Jason Kenney: Okay.

Ms. Shelagh Day: I think it's very important that people, and particularly women, have the ability to make that choice, but I think it's also extraordinarily important how we go about any such program. Because what we don't want to see is that in fact the choice for women, which is still an extremely difficult one— Women are not on an even footing about this, about going outside into the market economy, because they still have what we consider to be a tax on them, of the unpaid care they give, right? So they're not as flexible or as mobile when they move out into the paid economy.

We have to take that into account, that women and men are not on the same footing in terms of their access to market income, and we must not put in place a program that in fact exacerbates that inequality.

Prof. Margot Young: Perhaps I can add a few comments to that.

I think it's important to recognize that many women do not have the option of staying home to look after their children. We know the poverty rates in Canada, already high, would be much higher if in fact these households and many Canadian households didn't have the second income that women bring in.

Mr. Jason Kenney: But if they had a refundable credit, that option would be more affordable, wouldn't it?

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Prof. Margot Young: Yes, and I want to reiterate, it depends, again, upon the way the credit is formulated. These are really critical details. I was trying to indicate that in my discussion of the characteristics necessary in order to make the caregiver credit a meaningful one for the women who need it.

NAWL is definitely very supportive of recognition of women's unpaid work in the home, but our principle is that we respect not only those women who decide to stay home and look after their children but also those women who decide to enter the labour market or who have no choice but to enter the labour market because of their family's economic circumstances.

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

Monsieur Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): I would like to begin by thanking you for participating in this exercise today. It's always important to hear the views of each of your groups so that the finance committee will be better informed in making the necessary recommendations.

I have a few questions for the Fédération des francophones de la Colombie-Britannique. You said you have begun negotiating with the Canadian Heritage Minister, trying to get across that the funding for official languages programs should be increased. Have you given an indication of the order of these increases? Have you mentioned a percentage, a dollar amount?

Ms. Diane Côté: We didn't talk about percentages or amounts in the recommendation. As I speak, francophone communities across the country are trying to put a precise figure to their needs in their five-year comprehensive development plans. We know that with the implementation of school governance, for example... We mention the education support program and federal-provincial transfers.

We know that we are just starting out here in British Columbia. Our school board was formed very recently and it must bring in a whole new capital plan to provide schools for the French-speaking young people of British Columbia. The school board has assessed its needs at $30,000 over the next five years. As far as BC's French-speaking community as a whole is concerned, according to our comprehensive development plan, we will need nearly $12 million over the next five years.

Mr. Odina Desrochers: Have recent cutbacks led to a reduction in the services offered to your community?

Ms. Diane Côté: Of course, and especially in the area of education. They have had an impact on our capacity to grow. Currently, with the implementation of school governance and the increasing numbers of young people who will be finishing high school in French, we want to and we have to work at setting up a post-secondary system in British Columbia. We will have to set up, not necessarily a university system, but a post-secondary system that is in keeping with the needs and means of British Columbia. It is impossible to organize this at the present time. We have done some groundwork, but the budget cuts prevent us from going further.

As for the francophone organizations here in British Columbia, they have seen huge cuts in their program budgets in the last few years. This means that our associations had to work extremely hard to rebuild the services they offered to their members.

Thanks to certain projects, we managed to compensate for some of the lost funding. However, as you are well aware, when you are working on developing and presenting projects, on promoting them to the public and seeking sponsors—which eats up half our budget, as we said in the brief—there is no time left to spend on the members. This is a vicious circle that makes organizations realize how extremely important it is to have core funding that will allow them to operate while improving the services they offer.

Mr. Odina Desrochers: Does the provincial government support your work?

Ms. Diane Côté: Here in British Columbia, not at all. The provincial government has always been categorically opposed to everything we do.

Mr. Odina Desrochers: I have a question to ask you.

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Are the per capita amounts that you receive for the population you represent as high as those currently paid to Alliance Quebec in Quebec?

Ms. Diane Côté: I do not know how much Alliance Quebec receives. We did some calculations for the last Canada-communities agreement signed in March 1996, to make comparisons with the other western provinces. We were of course comparing French-speaking communities. At that time, British Columbia was well below the standard applied in other western provinces.

We were able to recover some of this, but we are not yet equal to them or at an equitable level.

Mr. Odina Desrochers: When you talk about comparisons with Manitoba, for example, you say that your province is still—

Ms. Diane Côté: Yes. Currently, the average in the other western provinces is about $30 per person. In British Columbia it is still $19.

Mr. Odina Desrochers: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Desrochers.

[English]

Mr. Riis.

Mr. Nelson Riis (Kamloops, Thompson and Highland Valleys, NDP): Thank you very much, Mr. Chairman.

We've had very interesting presentations this morning. I appreciate the thought that went into the research.

I have three or four questions, first of all to Helmut.

Don't misunderstand my question, Helmut, because I realize you are here representing an organization and had specific recommendations to make on tax reduction and debt reduction as priorities. Around this table we also hear other requests. There are 1.4 million children living in poverty because their parents live in poverty. We hear from the mayor of Vancouver about the thousands of people who are homeless in the city and have actually no place to live. Every city is the same across the country. There's a semi-crisis in the health care sector—problems in terms of elder care, childcare, pharmacare, home care—and a crisis in education in terms of lack of funding for new programs, research and development.

As I say, don't misunderstand my question, but are you suggesting that we should just forget all of those and give people a tax cut as the nation's priority and pay down some on the debt?

Mr. Helmut Pastrick: The short answer? No.

Mr. Nelson Riis: Okay.

Mr. Helmut Pastrick: I don't believe we could ignore other demands or legitimate needs in our society. My presentation was relatively narrow and focused. Economics indeed can't answer all questions of social origin. Generally, though, enhanced economic performance tends to also be associated with reduced social need.

Mr. Nelson Riis: And I appreciate that. I just wanted to get that clarification, because I didn't think that's what you were saying. It's somewhat misleading to us around the table, because we do hear from people who make that claim, as you did, but it's refreshing to hear, you know, don't just ignore the fact that you have thousands of people without a house to live in this winter.

Mr. Helmut Pastrick: Very much so.

Mr. Nelson Riis: Okay. Fair enough.

I have a question to Professor Young and to Ms. Day. The issue of pay equity was not raised. I'd be curious, Professor Young, to hear your take on what's happening around that issue.

To Ms. Day, you make the case very persuasively in terms of the social deficit and the social pain caused by some of the cuts. What I see as an emerging dilemma—

You might have seen in the news yesterday—I'm sure you did—that the four federal opposition parties came together, for the first time in history, probably, to call for the Minister of Finance not to use the surpluses in the EI fund for anything but providing support for those who have lost their jobs, or the people who have paid into the fund.

Now, my suspicion is that if this was to be done, as the opposition parties are calling for, there would be no surplus; that is the surplus. The surplus is the EI fund surplus.

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If you were us, what would you do, as somebody who is outside the political loop, in a sense? Because I really see this as a dilemma that's going to hit us probably next week in terms of coming to some way to face that.

My last question, Mr. Chairman, is to Linda, who reminded us of some shameful circumstances, particularly regarding the poorest of Canadians.

What did you think about the news yesterday from the Business Council on National Issues suggesting that the highest priority for the federal government to consider should be to give tax breaks to those people earning over $100,000?

Now, it's a bit of a rhetorical question, but I'd like to hear your response.

The Chairman: Professor Young.

Prof. Margot Young: I'm going to deal with the question about pay equity. I have two points to make about it, first with respect to the government's recent decision to appeal the pay equity tribunal's decision in the PSAC case.

I think that's an appalling decision. NAWL's position is one of great disappointment and disgust at the federal government's failure to live up to its obligations, both its stated commitment to pay equity, when the Liberal Party was in opposition, and its obligation as the federal government to take a leadership role.

The tribunal termed pay equity a human right, that it's an important characteristic of women's status in society. The current disproportionate share of poverty that women occupy in Canadian society is due to women's status in the labour market, a large portion of which has to do with the extent to which women are not paid on an equal basis with men in comparable work situations. So I think the government should be urged to not appeal the decision and to pay the money that's owed to women. This is money that is owed to women. They were underpaid for the last 13 or 14 years.

Secondly, more generally, I think the principle of pay equity is an important one. Again, the government should take a leadership role in ensuring that this essential condition of women's equality is one that characterizes its involvement in the labour market and the involvement of those organizations over which it has constitutional jurisdiction.

I don't know if I've answered all aspects of your question, but I'm willing to take more...if there's more you want to talk about.

Ms. Shelagh Day: I'd like to add a couple of comments to that.

The basis for the appeal on the part of the federal government apparently is that, you know, there are questions of law that need to be dealt with. The questions of law arise in two decisions, one from Mr. Muldoon and one from a decision called SEPQA.

Those decisions in fact provide very little foundation for an appeal. If you look at them very carefully, they're both very thin decisions. You know, what real foundation there is for the government to say that there are important legal issues to be determined is very difficult to discern for anyone who is familiar with human rights law. That makes the situation much worse.

The other thing is that we have been told for years now that funds were being set aside specifically to pay for pay equity for women when the tribunal decision came along. The word from the government has been, yes, we're taking care of this; yes, we're being responsible; yes, we're making sure there is money set aside specifically for this. Then, when the decision comes down, what we hear is, oh, well, you know, if we pay out to women, then we couldn't put money into health care spending.

For me, this is an incredible irony, because in fact what you're doing then is not just not paying women the wages they're actually owed but also arguing that in order to put money back into health care, women should be paying a tax. The burden of that should fall on women again, when the cuts to health care have already fallen on women.

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So it's a very disrespectful decision that's been taken, and one that's very hard for Canadian women to absorb.

On to the EI dilemma. I am very sympathetic to the opposition parties about the EI funds, because there has been a longstanding understanding that this was an insurance scheme paid into by employers and employees, and it was specifically to deal with unemployment. The wall or boundary around that particular program has been understood by Canadians for a very long time, ever since the program came into effect.

The unfortunate thing, in our view, is that one of the reasons we have this huge surplus in the EI fund now is that we have cut so drastically the premiums, the payouts, in particular ways that in fact we're building up money precisely off the backs of employees who need that money and aren't getting it.

We would also argue that the new eligibility requirements are having particular impacts on women, with more negative impacts on women, because women are more involved than men in part-time work and more involved in going in and out of the labour force. Because those eligibility requirements have been tightened up, women are feeling the brunt of those eligibility requirement changes as well.

First of all, then, I'd like to say that one of the things we would like to see happen is that we broaden those eligibility requirements again so that in fact the surplus of the EI fund is actually going to people who are unemployed and who need that money. I think it's completely wrong for it to be simply taken away into general revenue.

Let me go one step further, however. If in fact this is the surplus, as you say, and this is the only surplus there is, then at the very least, I would say, it would be terrible for the government to spend that money on anything other than social programs, and social programs that go to addressing the needs of the poorest people in Canada.

That's the only use of that surplus that I could see having any legitimacy.

Prof. Margot Young: I want to add one comment to that.

The Chairman: Sure, go ahead.

Prof. Margot Young: Another important point is to realize that low- and middle-income earners pay as a percentage of their income a larger amount in UI premiums. So if in fact the surplus is used to bring down the debt, it means that this debt reduction is being done disproportionately on the backs of low- and middle-income earners.

The Chairman: Ms. Moreau.

Ms. Linda Moreau: Thank you.

Just to answer your question, the Business Council on National Issues is a business lobby group that is pushing the trickle-down economy, where there are winners and losers. They have clearly been the winners. They've been advocating cuts to welfare, lower taxes for the wealthy, high interest rates—basically more competition, and in the case of working people and low-income people, more impoverishment.

Of the $10.4 billion the 1995 federal budget took away from health, education and social programs, almost 85% of that went to investors and bond holders in the form of interest charges. The federal government is thus serving as a collection agency for banks and wealthy financial people, passing on to the rich the 35¢ out of every dollar it takes in taxes from working people. That's according to the Canadian Centre for Policy Alternatives monitor.

There are many more people in Canada suffering from poverty and deprivation over the last eight years. The 20% wealthiest Canadians increased their average incomes by $2,000, and the poorest 20% of Canadians on average saw their incomes fall by $500.

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There's a terrible urgency in Canada right now to address the problems of homelessness, hunger and poverty in general. I think the only thing we can do in good conscience is to tailor a budget that will help the neediest, that will redress some of the problems that are coming up again and again in terms of the total inequality, the immoral gap between the wealthy people that the Business Council on National Interests represent and lobby for and the rest of us, basically—especially, ordinary working people and poor people.

The Chairman: Any further comments from the panellists?

Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chairman.

I want to thank all the panellists for their very fine presentations.

I have a question for you, Ms. Moreau. You come and request 1% of the federal budget to assist the poor. Of course this government has tried to assess different ways to try to support and help the underprivileged. I just wonder if you think any specific social program, or retraining, perhaps, also should be looked into? Of course, financial assistance is very important and useful, but I was thinking instead of mobilizing whatever they have to build more potential, to try to retrain to help them break out of this cycle, if possible.

I'm not trying to say we shouldn't be supportive, but I'd like you to explore any programs that you think are more useful.

Ms. Linda Moreau: My experience is especially in B.C., where I know that the majority of people who are on welfare in B.C. at any given moment are not going to stay on welfare more than about six months. That includes single mothers as well.

So when we talk about poor people, what's happening is that people are moving in and out of the welfare system—maybe getting a job, for whatever reason losing it, or keeping it, getting unemployment insurance, and then maybe getting another job. There's a high turnover of people. Most people, except for people with young children, disabled people, and older people, move out of the welfare system quite quickly.

So one of the things that would help would be a real and very sincere effort to have job creation talked about in a real way—that we think it's gotten to a crisis situation, the issue of poverty and unemployment, and that we can't leave it just to the private sector to create jobs. We should have a sincere opening up of the dialogue about where people get their incomes.

When we have this global economy, where people are competing with workers in Mexico, at lower and lower wages, we need to think about where people get their work. How can people get income? If it's not from a job, then it has to be from other social programs.

That whole issue is being left up to the individual and the family, which is quite cruel, in a way, when we are thinking of living in a very rich country and looking after each other.

That would be one of the things, then—to look at how the government can encourage job creation. That would be a big thing.

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Ms. Sophia Leung: Professor Young and Ms. Day, but first I'll make a few comments.

In the summer, the B.C. caucus toured the north. Actually, I did a session with a mental health group, a mixed group, in Prince George. I faced exactly what you people described. It's very devastating. But this was a program specially provided by the federal government, Human Resources, in retraining.

Of course, I had a short time, but I found there was growth there. Two groups presented. One was abused women, with devastating experiences, and the other group was really retraining. Both aim for education retraining to gain employment. That was a very good example for me to see there's a lot of human growth, human potential that can be mobilized through meaningful programs in retraining.

I'd like both of you to comment on that.

Ms. Shelagh Day: I think one of the problems we have when we talk about people who are receiving welfare in Canada, particularly, I would say, in the last five years, is that we speak as though there were jobs for everyone and that there's some problem with the people who are receiving welfare because they're not out there having one at the moment. So it's an unrealistic conversation, as I think Linda has already said, because in fact we do have high unemployment in Canada and there aren't jobs out there for everyone.

The other thing that I don't think we take into account in those circumstances is the increase in Canada of non-standard jobs. That has a lot to do with people moving onto social assistance and off it again, as Linda has described.

Mr. Nelson Riis: What's a non-standard job?

Ms. Shelagh Day: A non-standard job is a job that is not full time, not full year. So we have an increase in part-time, casual, temporary, seasonal work in Canada, and it is part of the impact of globalization and freer trade that in fact we have more jobs of this kind.

More of those jobs, I might say, are also held by women. About 40% of women now are in non-standard jobs, and a lot of people are holding two or three in order to make an income they can live on. Because those jobs are fragile—their employers are essentially pulling in people on a temporary basis for what they want and then putting them into unemployment again—a lot of people have a very uneasy economic circumstance to live with.

As Linda says, they move from a non-standard job that disappears to probably not at the moment unemployment insurance, because the eligibility requirements have gotten tightened and it's particularly difficult for those people to get unemployment insurance, and then social assistance is the only thing that's left until they can find another non-standard job, which is essentially what's available to them.

So the blaming we've been doing about this is I think just so unfortunate, and it really does tear up what I think of as the beautiful fabric of Canada, the tolerance and sense of social justice we've had and that I think really has kept us together.

So to do what Linda says, which is to stop blaming people and have a real conversation about how everybody's going to get a decent income in this country, would be a relief.

Ms. Sophia Leung: I just want to say that I salute you three ladies, plus this lady here. I think you are doing a fine job.

I want you to know that in the Liberal Party, women MPs have reached 25%. It's the first time we've reached that proportion—and we recognize that our representation should be higher the next time.

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We also want you to know that we carry a lot of your concerns. My colleague and I belong to other subcommittees. We are concerned about and verbalize women's issues. As a matter of fact, there is a women's caucus in this Parliament.

So I want you to know, you are not standing alone. I want you to recognize that. We are all very concerned. I want to encourage you to carry on your good work and keep communication open.

Thank you.

Prof. Margot Young: Thank you. We appreciate those comments. It's good news.

I want to add just one comment to my colleague's points, and then to speak directly to the issue of what you can do for us in the Liberal caucus for women's groups, for women's equality struggles.

I want to make more clear the interconnection of some of the issues we've talked about in response to the questions that have been asked. Ms. Day has detailed well the characteristics of what is known as the secondary labour market as opposed to the primary labour market—that is, a labour market sector where jobs are part time, they don't have benefits, they are not stable.

These are precisely the kinds of jobs that, because of the restrictions in the eligibility requirements for employment insurance, now do not provide their holders with access to employment insurance. When we talk about the problem of poverty, of the inability of many Canadians to make a good life for themselves in this tremendously rich and resourced country, we need to look at factors, systemic factors, such as entitlement to employment insurance, interest rates, and government spending. Those are the kinds of systemic factors that result in the unemployment we currently see and in the poverty rate we currently have in Canada.

As Ms. Day emphasized, it is important to look at the systemic factors and not just focus on the so-called inadequacies of the people who are poor.

I have done a lot of work, in advocacy groups, with low-income people, and I can tell you they are very skilled and they are very well trained. There just aren't the jobs that will provide them with the kind of income security they need to live or to realize their full entitlement as members of our society.

So it's important not to focus on retraining programs but instead for the government to become involved in job creation, both directly through job creation programs and also through a change in its overall economic policy with respect to things like interest rates and government spending.

As our brief details, many of the jobs that have been lost are as a result of reductions in government spending. Government programs have been significant providers of good primary sector jobs for women, and women have suffered the cuts in social spending not just through reduced access to programs but also through reduced access to decent, well-benefited jobs.

I want to pick up on your comments about the perspectives of the women's caucus in the government. I urge you to support us in our Fair Share program. Women's groups across Canada are currently working to persuade the government to increase its funding to women's groups. Women's groups are currently dramatically and very destructively underfunded. We would like to see the funding to women's programs increased to a level where $2 for every woman in Canada is spent on women's advocacy groups.

Our brief details in its last section the important role we feel these groups play in ensuring that the government lives up to its obligations to support the goals of gender equality, and we hope you'll work for a fair share of government spending going towards women's programs.

The Chairman: Thank you. Ms. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): Thanks, Mr. Chair.

I guess one of the problems in government is that you can't do everything. The desire for perfect shouldn't get in the way of good, and I think sometimes when government tries to something that's good, it's lambasted for it not being perfect. I think the child tax credit is one of those things.

In your brief, Ms. Moreau, I think it says it wasn't designed to reduce child poverty, but indeed I think it had a very specific goal, which was the welfare wall. Certainly all of the patients in my office, who actually would rather be working— I think a lot of them felt that it did help with that.

Obviously we could do more, such as give a drug card for their first year off welfare. There are lots of things that have been done in Australia, and things that would actually help with that. In terms of self esteem, from all the things we know, to actually get people working is the first choice of all those people, right? But they need to have childcare and so on.

That's just a statement.

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When we come to what we, as the federal government, could do, I guess as we move to this next set of choices, the CHST— If we were going to look at social determinants of health, bundling poverty and health ought to have been a good thing. If people want to put more on poverty, they're going to save money on health. We know that. That just isn't what happened. CHST went to tax cuts in some provinces, I think without too much moving of the shells.

I would like to know, in terms of standards and consistency—and there are a lot of us who think there is a call for national standards, particularly in health care—do you think there are some things that we could be looking at measuring in the welfare or in the social safety net, things that there could be a consensus built around, and that we could actually try to have a go at having Canadians have confidence that it doesn't matter where they live, their health care and their social safety net will be there for them?

Ms. Linda Moreau: I'd have to start by saying, first of all, the parents who benefit from the child tax benefit now could be the parents who don't benefit from it a year from now. As women's children get older, they move off welfare. There might be a crisis in the family and they might move back onto welfare. So please don't stop considering giving that money to people on welfare, too, because they're essentially the same people.

When you give that money to a mother on welfare, the children will be healthier, and possibly it will help get her ready for work, because it would give more income to the family. Please stop thinking that it's enough to give working parents that child tax credit. It's very important to keep that option open and to give it to people on welfare, too.

About the CHST, I think simply going back to the standards we lost, the Canada Assistance Plan we lost. Those standards Canada apparently was very proud of, because it boasted to the UN that this was the way we were providing for all Canadians in an equal way, as you're talking about in terms of “Wherever you live, you should have the same standards”.

Those Canada Assistance Plan standards were very simple: That welfare be adequate; that people could move from province to province and get welfare; that they wouldn't be forced to work for their welfare; that we would be a country that wouldn't have forced labour, in other words—and at least two provinces, Alberta and Ontario, do have workfare, where you have to work for your welfare, which totally undercuts waged people as it lowers wages when you have people forced to work for their welfare; and that there be a simple appeal process for people if they disagree with their welfare worker.

Bringing those standards back, especially the adequate welfare rate, would be something that would bring people out of poverty and in health in quite a stark way. We had those standards before, so there's no reason we couldn't work with them again.

Ms. Carolyn Bennett: I guess the other is that the percentage that people are paying on their rent is something we're not dealing with appropriately.

It's interesting that in terms of the Toronto Disaster Relief Committee, 1% of their budget is spent on housing and other services for the homeless. I guess I have some concern that we actually articulate the mental health aspect of that as well as the substance abuse programs which, as we all know, comes from deeply seated problems, usually, and are not self-inflicted. So I guess I would hope that we would articulate a real need for us to have some national look at that as well.

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In the EI debate, I think there are choices that women are making in terms of non-standard part-time work, and certainly if we actually start to do this homecare business properly women will be paid to help as we move people from hospital into home, and there will be choices.

One of the things that some of the agencies tell us is that lots of the women working for homecare organizations are choosing to do things that are part time and non-standard, so I guess I would want your suggestions as to how we can do that in a EI-friendly way.

As well, I would like to know what you think about maternity leave and whether, if we move to a more European model of maternity leave, you think that would lead to increased job creation in that obviously if somebody is off on maternity leave for a year, that job is more likely to be filled than somebody struggling in it for 15 weeks.

Ms. Shelagh Day: I might say, that's quite a package of issues.

I'd like to start by going back, though—

Ms. Carolyn Bennett: Actually, maybe I'll just throw in the other one.

Ms. Shelagh Day: Oh, oh.

Ms. Carolyn Bennett: In terms of the EI debate, you've heard the Prime Minister in the House say that if it stays out here, 60% of that money would go back to employers. If we had a choice, in this next budget, of increasing the personal tax exemption for people so that it went to everybody, would that not be seen to be having a similar and a credible use of borrowing from that fund?

Because if that fund goes into deficit, it comes out of consolidated revenue. We've always been able to prop up the fund this way. Now we're saying, is it time, in terms of the social deficit, to borrow from that fund in order to do a couple things that may be under both columns, like increasing the personal tax exemption, which I think is a child poverty move?

So I have to say—

Ms. Shelagh Day: Okay. Let me start back at the beginning, because I want to add some comments to this thing about the child tax credit.

I think Linda's point is really important, that we're treating these groups of people as though in fact they were distinct—the people who are on welfare and the people who are in the paid economy—when in fact there is an incredible amount of movement back and forth.

Again, I think the welfare wall is part of a kind of construction we've made that there is this welfare wall, and somehow or another we have to provide incentives for people to get over to the other side, when in fact we all know that everybody who's on welfare wants over to the other side of that wall. So I do think it's a bit of a political construction to talk about the welfare wall.

I was very interested in an article I saw in the Globe and Mail a little while ago by Patrick Monahan, essentially saying to look at Ontario; it just reduced its welfare rates and now the welfare rolls are reduced. What that proves is, you know, if you just pay people less on social assistance, then you can get some off the rolls, because it's clearly a disincentive to be on social assistance if what you're offering is too little.

Well, I think that's such an absurd equation for him to make, to essentially say that the more you penalize people on welfare, the more you can get them off the welfare rolls. The fact of the matter is, people have disappeared in a way that we don't even know, or have an explanation for, and that I think is very frightening. We haven't been looking into what is the explanation for that.

Ms. Carolyn Bennett: They've been evicted or are on the street.

Ms. Shelagh Day: Exactly. We now have thousands of people who are homeless in Toronto. Those equations, I think, are oversimplistic, and we have to be very careful about them.

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One of the things that would make a really big difference for women moving from welfare into jobs is decent childcare. It's a really big hurdle for very poor women who want to hold down a job that in fact there isn't decent, quality, affordable childcare they can rely on. I think that may be one of the biggest hurdles of all, so I think we really have to take that into account.

That connects—and I'm going to jump over the CHST question for a minute—to this—

Ms. Carolyn Bennett: So is that an area where you think there should be national standards?

Ms. Shelagh Day: Absolutely.

Ms. Carolyn Bennett: I mean, the daycare provision in Ontario welfare is not there. You can't go to school because you don't have any daycare.

Ms. Shelagh Day: Absolutely.

Prof. Margot Young: It's also an area where there's significant potential for federal involvement through its spending power. In fact, the Liberal Party promised to increase public daycare spaces by 50,000 a year for three years and hasn't fulfilled that promise. That's the kind of program I think we need to make the sorts of choices you described women as taking—taking low-paying work in the care sector, taking part-time jobs—less problematic choices.

I would have a lot more confidence that these were choices I wanted to give real meaning and significance to if I knew that women actually had other options, which the provision of non-profit, nationally regulated daycare spaces and public daycare centres would provide those women.

Ms. Shelagh Day: On the question of flexibility of choices and non-standard work, one of the things I want to point out is that there's a whole lot of research now that says of the women who are doing part-time work, a very high percentage—I'm sorry I don't have the number at my fingertips this minute—would like full-time work and can't find it. So it's wrong for us to assume that the women who are out there doing part-time work are all doing it by choice. Some are, but a lot are not, and cannot find full-time work.

I think that's a really important thing in terms of our thinking about what it is that's actually going on in this non-standard work area. I think we've had the sense that, oh, flexibility is good for women, because they can choose their hours and they can work part time and things like that, but in fact we have a very high percentage of those women saying, “I want a full-time job and I can't find one”. A lot of women are holding not one part-time job—which is another distortion in this—but several part-time jobs in order, in fact, to make enough income to support their families. So I think those are really important things in terms of the flexibility of choices.

Of course we should have better maternity leave. I do agree with you that this would make better job rotation in terms of those things.

Just to go back to the CHST, it's very difficult for any of us who have looked at this carefully to deal with the question of the loss of standards that is represented by the repeal of CAP. The fact of the matter is, we kept the standards in the Canadian Health Act and repealed the standards in the Canada Assistance Plan when there was no reason to. That didn't save any money. All it did was put all provincial governments in the position of being able to have no designated funds for social assistance and to take whatever they wanted and to provide welfare programs in whatever way they wanted—or not at all. There is no requirement on them to spend any money on social assistance now.

The fact of the matter is, we did something to profoundly change the political values of this country when we did that. I think it's been very destructive, and I think it's really important for us to go back and look very carefully. We can make those standards better. The ones that were there are really very basic ones. We can now make them better. We need to do things like you're talking about. We need to also imbue those standards with some recognition of what they have to do with women's inequality, full equality. In other words, they also have to have some gender content to them in order to be functioning properly.

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It's extraordinarily important for us to have some common standards here, and I think it's really important to the social union. I mean, this is a political question, too: What binds this country together? It has to be the common values we all share, and I believe it is.

Ms. Carolyn Bennett: And accountability for those, too.

Ms. Shelagh Day: And accountability for those. I think we have to deal with the standards and we have to deal with some stable way of ensuring that there is a funding understanding, that the federal government cannot just pull out without some real accountability process with the provinces. We thought we had that.

The Chairman: Thank you, Ms. Bennett.

Do you want to add to that?

Prof. Margot Day: I have three just very quick and sort of disconnected points to add to that discussion.

I want to go back to the description of the child tax credit just to reiterate that, yes, the objectives are sound, but there's no reason to exclude income assistance families from that benefit. What that does in fact is set up a distinction between the deserving and undeserving, which is a false distinction, and simply serves to stigmatize people on income assistance and to individualize the causes of that.

Ms. Carolyn Bennett: That was an implementation problem right at the provincial level. We actually had no recourse.

Prof. Margot Young: That's absolutely right, but this is federal money, and the federal government needs to take responsibility for ensuring that it's spent in a way that is consistent with the objectives of the federal government's initiatives in giving the provinces that money in the first place.

The second point I want to make has to do with the way we characterize these issues, that it's very easy for us to talk about child poverty and to talk about measures that alleviate poverty as being directed at child poverty, but it's important to realize that children are poor because they're attached to poor adults, and we need to talk much more directly and deal specifically with the problem of adult poverty. That's why children are poor. That needs to be the focus. I would urge the federal government to have the courage to speak about adult poverty as being the concern in this area.

The last point has to do with maternity leave. I think Ms. Day spoke very well to that. I would add only that if we're thinking about what's wrong with maternity leave as it's currently set up in the Employment Insurance Act, a two-week waiting period is just absolutely nonsensical. It's punitive in the context of employment insurance benefits to begin with. It loses any semblance of meaning when it gets applied to maternity benefits.

You understand what I mean by the two-week waiting period; there's a two-week period in which benefits are not payable and other income sources cannot be accessed.

Ms. Carolyn Bennett: I have a small francophonie question. I guess throughout the unity challenge, whether it was the floods in Manitoba or the St. Paul community in Alberta or yourselves in British Columbia—and my cottage is in a totally francophone little part of southern Ontario—we feel that we should hear more from the organizations that are trying to preserve the francophone culture throughout our country. Some of us have a view that should Quebec separate, you would end up with a much less critical mass of that culture within Canada, and you would be even less able to do the job that is difficult at this time.

What I want to know, I guess, is whether there is something you think the federal government could do to help you with the unity project.

Ms. Diane Côté: I think one of the important points is that the federal government respect its commitment towards development and enhancement of the francophone populations across the country. That has to be done through investment in the francophone population.

Yes, there has been some progress made in the last 30 years to a certain extent, but it is still a long way from what it should be and what compensation should have happened because of the losses that occurred and because of the assimilation that occurred throughout the years. We didn't respect the rights of the francophone people across Canada.

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I have a feeling that in the last several years one of the main problems has been defining the francophone population in Canada. In Quebec, Ontario and New Brunswick, a little bit—and that triangle is fine and recognized—but the rest of Canada for some reason has been totally forgotten in the picture.

That's why I brought up specifically today the fact that British Columbia francophones are right now the third-most important in numbers in Canada outside of Quebec. I think that's extremely important to start realizing. It's not only a historical pact we have with, as I said, the three founding nations—the anglophones, the francophones and the native peoples—but it's also a pact that crosses from sea to sea to sea. It's not territorial. Therefore, it needs to be addressed in terms of the populations in the different provinces and the needs of those populations.

The Chairman: Thank you.

Ms. Yseult Friolet (Executive Director, Fédération des francophones de la Columbie-Britannique): I would just like to add that I think a unity project should be the business of all Canadians, not only francophones in B.C.

As well, there are maybe three areas where the federal government could help us—for example, education. Why in this country did we receive just two years ago the right to have our own school boards? We spent a lot of money going to court, and we're still going back to court because we don't have a full-fledged school board. This is happening today in B.C. Part of the money should come from the provincial government and also with the help of the federal government. We have pointed out that the funding for education has been going down, which doesn't help unity, I can tell you this.

Some of our members are poor people as well. They are illiterate or they have difficulties. We have a centre in downtown eastside Vancouver, which is one of the poorest in the country, and those people don't have services. Why? Because there are no social services for French people in this province. There's no social justice. There are no medical services or anything. Those are areas where the federal government could help us. I think it would be of great importance.

I also think we are a bit of a barrier. We are so fortunate, being bilingual and being in this country, and I think what would help unity is if all francophones would be allowed on Canadian territories everywhere. I think this would send a very strong message to the nationalists in Quebec who want to secede. They would feel comfortable when they leave Quebec because they would be in a country that's their own and where they can have a bit of French services. I think the federal government has a very strong role to play.

They did it when B.C. decided in social transfers, as you may remember, that if you were moving from another province, you had to wait, as a Canadian, to receive its medical premium or something like that. The federal government took a very strong hold there and said, no, you cannot do this, even if social services are a provincial jurisdiction.

So there are a lot of areas for leadership for the federal government, and we hope they will do it in the next few years. I think it's very important.

Thank you.

The Chairman: I'd like to thank the panellists for an excellent presentation. I often wonder, as I hear all the various views expressed by the different groups that come in front of us—

As you know, one of our major jobs is to make recommendations to the Minister of Finance to get ready for the 1999 budget. Here in British Columbia we heard many people with different views. Some people who appeared in front of us talked about the importance of the national debt and its reduction. Some people talked to us about the impact of the national debt on international markets and how that in fact has an impact on interest rates and generation of economic growth in our economy.

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There were individuals today who spoke about the reduction of personal income tax. Some were advocating an increase in basic personal exemption and an increase in transfer payments to the provinces. Some individuals said basically we should be targeting the future a lot more, and by that they mean investing in education and research and development.

There's also of course the challenging issue of employment insurance, where there are people who advocate that all of the so-called surplus in this so-called account needs to be returned to the people who have paid into it. Some advocate actually reducing premiums and others advocate even increasing benefits.

The reason I've listed all of these concerns is that everybody presents their case, I think, with the ultimate goal of improving the quality of life for Canadians. There's nothing I have heard today that disputes that. I think for all of you, that's the ultimate goal, as it is for all of us, although we may come at different issues from different perspectives.

The reality, however, is that to fulfil all these requests it would require quite a few dollars, when, quite frankly, unless Mr. Minister Martin surprises me, I don't think the surplus is going to be as large as it was expected to be just a few months ago, which also speaks to the issue of volatility in the economy.

So there are going to be some choices we have to make, and there are going to be some difficult choices. They're not easy. The challenges faced by the poor in this country are real. The challenges faced by over a million children who live in poverty are very real. You know, the fact that in a developed country like ours, we have breakfast programs because we have children who are going to school hungry and who can't really study because they're hungry— They're not even getting basic needs.

But the fact remains, there's a general consensus in Canada today—and anybody here who's heard otherwise, please let me know—that people are not interested in returning to the deficit position of the past. They want to maintain a balanced budget, which means who knows what the surplus is going to be.

But if I add up all the promises and all the needs and requests that have been made here in British Columbia, we're well into the tens of billions of dollars. And that's not going to be possible if we stick with a balanced budget.

So unless there's somebody here on this panel who's advocating returning to the days of deficit financing, then we're going to have to make some serious choices. I'm going to ask you this: If you were to give me one priority item, what would it be?

Mr. Helmut Patrick: I think in a strong economy, economic growth enhances even our social performance, if you will. I'll go back to the main point, that tax reduction over a number of years, phased in within a balanced budget context, would go a long way to enhancing Canada's economic growth, notwithstanding that there is a growth slowdown. We could use a bit of a fiscal stimulus in probably the coming year or two, but longer term, our tax structure does inhibit growth over what it could otherwise be.

The Chairman: Mr. Riis.

Mr. Nelson Riis: Can I just seek some clarification? I think your question is a useful one in terms of honing in on some of these issues.

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Helmut, you're staying with the idea of a tax reduction of some type. Let's say, then, we have to decide in this budget what kind of a tax reduction. Would you see it as a targeted tax reduction in some sector, like the BCNI is proposing, would you look at a GST reduction, or is it across the board? What kind of tax reduction would you advise in this budget?

Mr. Helmut Pastrick: I would go on the income side, personal income tax and corporate income tax.

Mr. Nelson Riis: Everybody, across the board?

Mr. Helmut Pastrick: Fairly much, yes. Of course, we have a graduated tax system, but I would say it would need to hit most people. After all, businesses—entrepreneurs—create jobs, and over the long term that's been the case and will likely continue. A healthy business climate will encourage economic growth and provide widespread benefits.

I know it's not a perfect world we live in. These questions are not black and white; there are shades of grey, no doubt about it. Again, from my narrow economic point of view, healthy economic growth does benefit all members of society over the longer term.

Mr. Nelson Riis: Jason, could I ask you a question?

Mr. Jason Kenney: Am I a witness now, Nelson?

Mr. Nelson Riis: It's sort of a take-off on this question.

If we were looking at across-the-board tax cuts of five points or whatever, Jason—and I go back to your previous life; I mean, you know more about this than probably most of us—what kind of a tax savings would a person expect? Can you give us an example or two?

I'm assuming that we have maybe $8 billion to play with here. If we're going to take that across the tax system, what would a person like you, or people around the table, maybe expect as a tax saving?

Mr. Jason Kenney: We've costed about $9 billion in tax relief through raising the basic exemption up to about $9,000, raising the spousal equivalent to that, the same level as the basic exemption, converting the childcare deduction to a credit, as I've suggested. Some of these recommendations that have come out of the finance committee in the past would amount to about $1,600 or $1,700 for an average family, for a medium-income family, once it was fully implemented. So it's not insignificant.

Mr. Nelson Riis: So maybe $150 a month for a family, or something like that?

Mr. Jason Kenney: I guess it works out to that, yes.

Mr. Nelson Riis: Okay. Thank you.

The Chairman: Ms. Moreau.

Ms. Linda Moreau: My thinking is along opposite lines to the first person who spoke here in that Canada hasn't had an inheritance tax. We could do that.

The alternate federal budget suggested introducing two upper-income tax brackets at $100,000 and $150,000 of income. Our corporate taxes are among the lowest in the OECD countries, well below the U.S. It may actually be quite a popular move, except with the banks, to impose a tax on excess profits of banks and other private financial institutions. This would generate a lot of revenue, and I think it would go a long way toward putting money back in the system.

The people I'm talking about who have profited from our low tax rates have profited for the last decade or so, and I think it's just right, as part of being Canadians in this society, to put back some of what they've gotten. As far as I understand it—I wouldn't know personally—a lot of them have lavish lifestyles. In some ways, our tax system is legislating greed. When we see people who are hungry and homeless, and children using food banks, it's time to open up the discussion and talk about obligations and rightness in terms of the tax system.

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The Chairman: Thanks.

Mr. Jason Kenney: Can I have a brief follow-up?

The Chairman: Absolutely.

Mr. Jason Kenney: Sure—a round table here.

Ms. Moreau, you said that the current tax system is legislating greed. British Columbia's marginal tax rate for income tax is 54.5%, which is the highest in North America. Do you really think it's fair to characterize that as legislating greed?

Secondly, do you think the fact that British Columbia has the highest marginal tax rates in North America may have something to do with the fact that it right now has the lowest economic growth rate in North America?

Ms. Linda Moreau: Our understanding from other sources is that there are thousands of people who don't pay that, who manage not to. In fact, I was talking to someone on the phone a few months ago who owned two houses and was in a higher-income bracket. He said that with lawyers, he was able not to pay taxes, and he called our office to say he thought this was unfair. So I know on the books it says that, but there are people who don't pay those taxes.

The whole notion of the trickle-down economy, that if the government helps corporations and businesses in terms of tax cuts, they will create jobs, is not working. It is not working. I don't know where those people are taking their money—maybe to another country or whatever—but that notion, the Milton Friedman school of economics, we can see is not working.

Mr. Jason Kenney: I don't think Glen Clark has tried Friedman economics yet, but—

Ms. Linda Moreau: This idea that you help rich people and they will create jobs is not working. It enriches some people and it has impoverished basically the rest of us. It's not a fair system, and it's time to either think of new ways or even, with relief, go back to a Keynesian model, where the tax system is used to address inequalities.

It may sound radical, but I think it's totally radical and absurd that we don't have an inheritance tax in Canada and that, as I said, our corporate taxes are well below those in the U.S. That's absurd.

The Chairman: Ms. Day.

Ms. Shelagh Day: I think we should put money back into transfer payments, and I think we should put money back into transfer payments and work on the conditions. These two things go together, to me. They went together when the first decision was made and they need to go together when we restore.

As I said before, I think Canadians had an expectation when they saw social spending cuts happen that in fact what they were doing was being responsible people and getting rid of the deficit. Their expectation is that when the deficit is gone, they can get back those social programs and social services that are in fact so important to them and that they do believe have to do with justice and fairness in the country.

You say what you think about the consensus; I think there's a consensus like that among the Canadian people. I think that's an expectation we had and I think it's an expectation the government in fact encouraged us to have—you know, take the cuts now, but when the pain is over, we'll be able to restore our social programs.

The Chairman: But you're not disputing the fact that there's a general consensus that nobody's interested in going back to a deficit position.

Ms. Shelagh Day: I will say this to you: I think people don't want a return to a deficit position if in fact what it means is that in order to get rid of the deficit again, we go through just what we've gone through. That's different from just saying, you know, don't go to deficit spending.

If people assume that there's deficit spending and then what it means is that we dismantle social programs, and, no, they don't want to do that, then I agree; there's a consensus about that.

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The Chairman: You would also have to agree that if you go back to the deficit, you won't be able to afford the programs anyway.

Ms. Shelagh Day: No, I'm sorry. About that, you're still making an equation that I don't agree with, which is that if you put money into social spending, somehow or another that money just goes nowhere. It doesn't create revenue, it doesn't create jobs. I think that's wrong.

If you put money into social spending, it creates jobs, and because of that it creates tax revenue and it supports the private economy. So I think this is a false dichotomy, again. Social spending creates jobs and therefore creates revenue, too.

I really want us to get over this set-up that we've gotten into, saying, oh, well, you know, that's just money that vanishes down the drain into poor peoples' pockets and goes nowhere; it doesn't help the economy, it doesn't do anything; we just have to pay out, that's all.

The Chairman: I just want to be clear, because you're directing your particular statements to me. What I am referring to you is what I hear across the country, and that's what people are telling me and telling the members of the committee, that in fact, no, they don't want to go back to a deficit position, because they understand the economic and social repercussions of a deficit position. I don't think I'm misrepresenting the views of the people who've appeared in front of the committee, because, quite frankly, I think it's probably the clearest message we receive everywhere we go.

But I understand what you're saying.

Prof. Margot Young: I would dispute not your assessment of what you've heard on this committee but what you take to be a consequence of that expression of public opinion, which is that it is social spending that is the problem with respect to the deficit.

So leaving aside the politics of the deficit and whether we ought to be as concerned about it as we have been, or whether we should still be that concerned, I think it's really important to emphasize that it's fairly well accepted among Canadian economists now that the federal deficit was not caused by social spending. Instead, factors like high interest rates, low employment and slow economic growth were much more significant in leading to the kind of deficit that Canada had.

So when you ask your question to us, my response would be that I don't see social spending as implicating the kind of concern you have heard about the deficit.

I want to also mention that when we're thinking about government expenditures and balancing budgets, of real concern is the often-unrecognized social welfare spending for corporations that is currently located within our tax system. We've already heard mention of Canada's low corporate tax rates, but our tax act also has things like business deductions, business credits, tax deferrals, which disproportionately benefit wealthy corporations, and we have significant government expenditures, in the form of tax expenditures, to help corporations, currently costing us tremendous amounts of money. In fact, if we look at the amount of deferred taxes alone, in many years that was more than enough to cope with the annual deficit.

So I think a concern about a deficit should also focus on the kind of spending that favours already wealthy corporations, lodged currently in the form of tax expenditures. I would add to our discussion of inheritance taxes the idea of a wealth tax. Canada is one of the few western nations that doesn't have a wealth tax as well.

This brings me to the fact that I think the priority for this budget—and I would reiterate that it's dealing with the social deficit—should be transfer payments with conditions attached to ensure that we restore the social fabric to Canadian society.

I would emphasize that this kind of government spending does have implications for a healthy economy in the form of, as Ms. Day has mentioned, more jobs, increased taxes, more spending. It's important to realize as well that, as we've already talked about today, government investment in the public sector and in the care sector supports a healthy private sector so that when we increase our social spending to provide for the activities, for women's unpaid work in the care sector, to establish public programs and have them adequately funded in the areas of health, education, income assistance and childcare programs, we're actually providing the necessary foundation for a healthy economy, for a healthy private sector.

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I think there's an artificial split we've been relying on between the economic and the social. They're mutually reinforcable, and we need to put some investments into the social economy, the public sphere, the care sphere, in order to ensure that we have a healthy economic sphere. And that, I think, should be the priority for this budget.

The Chairman: That's very clear. Thank you.

Ms. Côté.

[Translation]

Ms. Diane Côté: If I may, I will speak in French this time around.

Identity is a very important consideration for Canada. At this stage in our history, investing in the Canadian identity is essential. To my mind, it is not money out the window, as the lady said.

We should make it possible for francophones in British Columbia and everywhere else in Canada—both inside and outside Quebec—to be full citizens, not just second-class citizens. That will require investment by the federal government—investment with conditions attached. Earlier, Yseult said—and this lady repeated it—that conditions had to be attached to transfer payments received by the provinces. Canadian taxpayers' money should be distributed fairly and equitably among the provinces. And that includes official-language minorities. In particular, I'm thinking about education, which may be under provincial jurisdiction but is funded in part by federal transfer payments.

As for francophone organizations in provinces other than Quebec, they provide French-language communities with a great many services and jobs, which in fact represent an investment for their province and their environment as a whole.

So investing in our official-language minorities is not a useless expense. It is an investment with real returns that makes it possible for Canada to be what it is, a country with two official languages, a country that is tolerant and welcoming to all communities of the world, and a country that is open to the world.

[English]

The Chairman: Merçi beaucoup.

Mr. McKay.

Mr. John McKay (Scarborough East, Lib.): Thank you, Mr. Chairman. I thought you were into your windup mode there. I assume you were somewhat afraid that I or Mr. Gallaway might ask questions about bank derivatives.

The Chairman: Since neither one of us knows what the heck those are.

Voices: Oh, oh.

Mr. John McKay: Nor does anyone else on the panel, including yesterday's panel, where we spent endless hours trying to understand bank derivatives.

The Chairman: There's a question here, isn't there?

Mr. John McKay: There is a question. I always get to the speech first, which may blow us all out of the water anyway.

I wanted to explore this issue of childcare. I tend to agree with your analysis that the whole thing is a complete mess right now. I'd like to go back to basic principles. I want to understand whether your position is that how Canadians raise their children is irrelevant to the tax system, whether they raise them outside of their home through third parties or whether they raise inside of their homes, with one spouse staying home.

Is that a foundational principle with respect to your proposal?

Prof. Margot Young: I think a foundational principle of our proposal is that women should have equal opportunities with respect to choosing whether they're going to enter the labour market or stay at home and look after their children and work at home.

Mr. John McKay: So maximize choice, then.

Prof. Margot Young: Yes—that women face the same opportunities men do with respect to a very important decision, what kind of work you're going to devote your life to.

Mr. John McKay: And the choice should be made within that family.

Prof. Margot Young: I'm sorry; I don't understand that question.

Mr. John McKay: Well, presumably the choice as to whether the woman, in most instances, although sometimes it's the man, does go into the workforce with respect to childcare or does not go into the workforce with respect to childcare is made by that family.

Prof. Margot Young: Made by the woman.

Mr. John McKay: Why should it be made by the woman?

Prof. Margot Young: Because it's her life, it's her decision, it's her choice about how to— I mean, presumably she makes it in conjunction—

Mr. John McKay: Really? How is it that women get to make the choice with respect to raising children?

Prof. Margot Young: I'm sorry; again, I don't understand that question.

Mr. John McKay: Then I'll ask you again. I don't understand that.

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Prof. Margot Young: It seems to me we're talking about a very fundamental—

Mr. John McKay: Yes, we are.

Prof. Margot Young: —personal decision that individuals make, the course of one's life and the choices one makes with respect to that.

Mr. John McKay: If I and my wife have a child, it's my wife's decision alone as to whether she does or does not go back into the workforce? What about—

Prof. Margot Young: It's ultimately your wife's decision. I'm sure women consult with their partners, the significant others in their lives, but I would say ultimately it's the woman's decision, yes.

Mr. John McKay: So it is solely the decision of the woman, ultimately the decision of the woman, as to whether she does or does not go back into the workforce.

Prof. Margot Young: Let me just put the question back to you. I'm not sure why you're asking me this repeatedly. Can you be a bit clearer about what your concern is here?

Mr. John McKay: I'm asking because I want to understand foundational principles here. You see, I tend to agree with your position—the thing is a bit of a mess right now—but I want to understand what principles we're using when we go to the redesign of the system. I would have thought that your position would be that you would think that a family makes its decision as to what is in the best interests of that family, and once that decision is made, the Income Tax Act should be utterly, completely neutral as to how it responds to the decision of that family.

What's wrong with that?

Prof. Margot Young: Well, I would put back to you this question: Why are you concerned about framing the issue as being a question of a woman's choice? Do you have a problem with it being understood as being ultimately a woman's choice?

Mr. John McKay: I have a problem saying that it is anything other than a family's choice.

Ms. Shelagh Day: Maybe I can flesh this out a little bit more.

I have an aunt, of whom I'm very fond. She is married to my uncle, and lived with him for years and years. He worked on the CN. He was a railroad engineer. They had seven children. She raised the children. She stayed at home. After her children were raised, she also helped look after the grandchildren. At a certain point, when the children were grown up, she said to my Uncle Bill, “I'd like a job, and I want to go out to work”. And he said to her, “If you go out and get a job, never come back”.

So part of what I think we're trying to say here is that there are some questions, some fundamental questions, about women's equality that have to do with their ability to make choices about whether or not they stay at home or whether or not they go out to work, and when.

Mr. John McKay: But what we're talking about here is the responsiveness of a tax system to family situations.

Ms. Shelagh Day: Yes.

Mr. John McKay: What I'm driving towards here is how to design a system that is gender neutral on how the tax system responds to choices of families as to how they raise their children.

Ms. Shelagh Day: I think perhaps the difference between us, then, is that we would say that in fact the tax system should be designed in such a way that it doesn't increase women's inequality and but in fact supports women's equality. So it's not simply a matter of designing a system that looks gender neutral on its face, because our experience with such systems is that often what they do in practice is favour the men, who are already more privileged with respect to access to income and so on.

Mr. John McKay: Doesn't the present system, though, give the deductions and the credits primarily to the low-income spouse? Is that prejudicial to the low-income spouse or is that beneficial to the low-income spouse?

Prof. Margot Young: I'll get to that question in a second. I just want to back up a bit and elaborate on what I take to be quite a fundamental difference in how we approach the issue.

Mr. John McKay: I'm not sure that it is, but you go ahead on that.

Prof. Margot Young: I think it is, actually, if the discomfort I understand you to have with framing this as being about women's choice means we disagree about that. I think it's important to recognize that within families, the distribution of resources and power is often unequal, and that, as Ms. Day's story indicates, women don't always do what would be their choice. They are often in a relatively disempowered position with respect to this. That's why it's important to frame this as a woman's choice.

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It's also important, in designing any system that deals with this issue, to take into account the gendered reality of men and women's lives, that men and women are not currently in the same social circumstances in Canadian society. A gender neutral program doesn't recognize that. So in fact we would argue for gender specific principles, principles of gender equality, to inform any program that deals with this issue.

Now, to get to your question about credits and deductions being payable to the lowest-income spouse, some of the proposals on the table for dealing with issues such as income splitting do not direct the benefits to the woman or to the primary caregiver in the family, and those are problematic. As we've said before, other kinds of measures, such as deductions and non-refundable credits, again don't actually get benefits into the hands of women.

Mr. John McKay: Isn't it something of a conceit on your part to impose that particular view of how families conduct themselves within their homes?

Prof. Margot Young: No. I don't think we're imposing any view on whether women should stay at home.

Mr. John McKay: Sure you are.

Prof. Margot Young: Hang on, let me finish. Let me answer your question.

I don't think we're imposing any view on how women should resolve the question of whether they stay at home and care for their children or enter the labour market. All we are saying is that they ought to have a choice to do either, and that their choice to do one is respected and recognized by Canadian society.

Mr. John McKay: But surely Revenue Canada should respect the choice as to how a family sorts itself out as to who goes to work or doesn't go to work, how a child is raised and how a child is not raised. Surely Revenue Canada should have no say on how that family decides to make that choice.

Ms. Shelagh Day: Revenue Canada is supposed to have a system that in fact complies with the Constitution, and the role of the government is to ensure that those principles are adhered to in every policy it creates. Section 15 of that Constitution says that we have guaranteed equality in the country. If in fact what we do is set up a tax system that further exacerbates the inequality we have at the moment, that we all recognize in terms of women's income, economic status and choices available to them and so on, then in fact Revenue Canada, and the government, I would say, is not complying with the Constitution.

So we can't just say, sorry, hands off, because its job is to in fact create systems that support equality in the country, including the equality of women.

Mr. John McKay: So you would presumably take it to its logical conclusion, which is that any program that favours women over families would in fact be a constitutionally invalid program.

Ms. Shelagh Day: I don't know what that means. I think any program that supports women helps families, so why you're making this dichotomy is beyond me.

Mr. John McKay: Well, I think it's you who makes the dichotomy, because you come to advocate a particular philosophical view of how families are to be raised. My response to you is that surely it is a principle that Revenue Canada be a neutral instrument with respect to how families make the choice with respect to how they raise their children.

Prof. Margot Young: I just don't know how you can impute that to us. I'll repeat one more time that we want women who choose to remain and care for their children at home to be as respected and as supported as women who choose to go out and work in the paid labour force.

Mr. John McKay: Okay. So we're on the same page.

Prof. Margot Young: But we've said that about five times already today.

Mr. John McKay: You see, the trouble I have is that in the last budget, I did very well. My family does very well indeed, because we're a relatively affluent family. My wife works, and we did all right with these little deductions. But I can't say that to my neighbour. My neighbour, for choices they made in their family, chooses to look after their children at home. And what I hear you saying is that Revenue Canada should continue to favour my family over that family.

Prof. Margot Young: No, and I'll give you an example of how we haven't said that. When I talked about the necessity for credits to be refundable, I put it in the context of a full-time homemaker.

Mr. John McKay: Actually, that was a good idea. I liked that idea.

Prof. Margot Young: So I would have great difficulty with credits that help affluent families like yours and that don't help lower-income families.

Mr. John McKay: Yes.

Prof. Margot Young: I think the issue of women's unpaid work in the family is an important one. We want to make sure that the way the government deals with it is a way that respects the principles of gender equality, to which they have committed themselves in the federal plan for gender equality, and to which they are obligated by section 15 of the Charter of Rights and Freedoms. That's our point, simply.

• 1430

Mr. John McKay: And I hope you take my point.

Prof. Margot Young: I don't take your point. I'm sorry, but I think some of the distinctions you're drawing are at odds with our understanding of gender equality.

Mr. John McKay: Then in fact I would say that the law of unintended consequences will continue to prevail in the system, that the more you drive towards the issue of—quote unquote—“gender equality”, the less we will be able to benefit children and families.

Prof. Margot Young: I just don't understand that linkage. I think we're talking about respecting and valuing women's unpaid childcare work as a principle of gender equality. That is a foundational principle of gender equality.

Mr. John McKay: Okay. Thanks.

The Chairman: Mr. Gallaway.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Thank you. I have two very quick questions.

Mr. Pastrick, you've been ignored this morning. I want to draw a comparison, and I just want your response.

I live in southern Ontario on the border, and the state of Michigan has undergone extreme cuts to social programs, massive cuts. In that period of about five or six years we've also seen that the unemployment rate has gone to virtually zero—chemical traces.

How do you juxtapose that with what is being said in terms of social programs here, where there are virtually no social programs and there is virtually no unemployment? There is no unemployment.

Go ahead, Mr. Pastrick.

Mr. Helmut Pastrick: I wasn't daydreaming, but the question is—

Mr. Roger Gallaway: You've heard about the need for more money for social programs, and I'm giving you an example of where the money has been withdrawn very severely, to the point that the system is minimalist, yet the unemployment rate has plummeted to the point where it's about 2% or below.

Mr. Helmut Pastrick: You know, we have to be careful with simple correlations where seemingly there is a cause and effect. I don't understand the south Michigan economy in any detail, but there could well be other factors at play that would pull down the unemployment rate.

Mr. Jason Kenney: The flip side of social spending is much lower taxes.

Mr. Helmut Pastrick: Indeed, that could be an implication there, and whether indeed that happened, I don't know. If so, then that could well be a contributor to economic growth and more jobs, pulling down the unemployment rate. But we always have to be careful with these simple cause-and-effect relationships that are thrown out. It's a complex world, and there are so many factors that come into play.

I don't know enough about that circumstance other than to say, again, in general, economic history is I think full of examples where economic growth is typically enhanced by sound fiscal policies, by policies that encourage businesses, and we shouldn't always say business versus labour or the rich versus the poor. I think we're all in this together, and it's interlinked. For a number of reasons we have firms that thrive and are very successful and others where there are individuals who don't. So it's not a black and white world.

Businesses employ people, so we are in it together. I wish people wouldn't always talk about us versus them. I don't think it gets us very far.

Generally, sound economic policies, sound fiscal policies, are commensurate with good economic growth. The world we face ourselves in the new century is very competitive out there, and we need to ensure that we can attract businesses, keep businesses, keep people. We don't want to see people leaving to go to the United States. We want to keep them in Canada and see them develop to their full potential.

How can we do that? Part of it must be having a good social safety net, having a sound educational system and health system. All of those are very critical. But also we need to ensure that we do the right kinds of things to encourage business to locate here.

I also mentioned in my albeit brief commentary that there could be examples where we encourage the wrong kinds of businesses to locate through subsidies. How much money is spent on subsidies to a variety of industries that perhaps ought not to be subsidized?

• 1435

I know these are very social questions involved here, not unlike what we experienced in B.C. with Skeena Cellulose in Prince Rupert. That's a very fundamental question that I'm sure is repeated many times throughout our country.

Again, I think if you talk about foundational principles here, over time, a sound business climate, encouraging both individual entrepreneurship and corporate, if you will, generally enhances economic growth. I don't think it's a race to the bottom, where people say we're fighting against low wages in Mexico; I think it's a race to the top. We have to ensure that we are engaged in value-added industries or activities so that we continually rise to higher levels of value added, not lower levels of wages.

[Translation]

Mr. Roger Gallaway: Ms. Côté, you talked about a problem you had here, in this province. You mentioned criteria—

[Editor's Note: Inaudible]— for schools.

Ms. Diane Côté: For transfer payments.

Mr. Roger Gallaway: I believe that 21% of subsidies has disappeared over five years. Are you aware by how much provincial funding for schools has been cut?

Ms. Diane Côté: If you mean funding provided to schools by the provinces, I don't really know. Please understand that, in our francophone community, the French-language school board and governance has just been in place for two years. Before that, our children attended English-language schools and school boards. So things have changed completely.

When we say there have been cuts to the OLEP—the Official Languages in Education Program—we mean cuts to a federal-provincial transfer program covering the special costs of French-language education. It means cutting the education of francophone children. It also means cutting amounts earmarked for children studying French in immersion classes, children studying in core French program, and children studying French as a second language in regular public schools. This includes French courses offered at a variety of universities, at Simon Fraser, UBC, and in colleges. The OLEP includes all that. In British Columbia alone, the OLEP was cut by 21%. This had a direct impact on the quality of French-language teaching in British Columbia, because we received very little funding and very little assistance.

As we all know, francophone communities in British Columbia are in a very difficult situation, and face special problems because the province does not recognize its official-language minority. Thus, it does not invest one red cent in the official-language minority community. We have a great deal of difficulty getting this across to people.

As I was saying earlier, the federal government should use its spending power to impose some conditions. It should require compliance with the Charter of Rights and Freedoms, and should provide transfer payments only on condition that minimum services are provided to the official-language minority.

Mr. Roger Gallaway: Are French-language school boards subsidized by the provincial government only?

Ms. Diane Côté: They receive funds from the Department of Education, but there are also federal-provincial transfer payments.

Mr. Roger Gallaway: Thank you.

The Chairman: Thank you, Mr. Gallaway.

• 1440

[English]

Mr. Kenney, a final question.

Mr. Jason Kenney: I'd like to turn again to Mr. Pastrick from the credit union, who's been a little neglected this morning.

Earlier, Mr. Pastrick, I asked Ms. Moreau whether she thought there was a connection between the fact that British Columbia has the highest marginal tax rates in North America, at 54.5%, and the lowest growth rate currently.

I wonder if you can comment on that question. Do you see a correlation there? And to what extent do you believe the current economic difficulties faced by British Columbia and the consequent social problems that have arisen are a consequence of fiscal policy here in British Columbia, and in Canada, high tax rates, high levels of debt and public borrowing, as opposed to the international circumstances that have affected British Columbia?

To clarify, my question is, to what extent would you ascribe the current economic difficulties of British Columbia to tight fiscal policy on the tax and debt side as opposed to the international export and trade situation?

Mr. Helmut Pastrick: Good question.

In my view, the current state we find ourselves in within the B.C. economy is due largely to the Asia-Pacific problem—the drop in exports, the drop in commodity prices. However, over the medium to longer term, B.C.'s economic performance in the 1990s, and even to some extent the later 1980s, has not been as stellar as one might think. I think there we can look to our tax policy, fiscal policy, federal and provincial—I know there's probably more of a basis for provincial in the 1990s, certainly—as contributing to a rather mediocre performance in the 1990s.

B.C. has benefited from a large population inflow, a housing boom, and we had the impression that we were doing very well. When we compared ourselves with central Canada during 1991 and 1992, yes, we were. Obviously, Ontario was in a recession, and we were at least growing to some extent. So in that sense there was a relative boom.

Getting back to your initial question, I think the difference between our performance in 1997 and where we are today in 1998 is primarily due to the Asia-Pacific problem, the drop in commodity prices. However, we did have a rather mediocre performance prior to that, in 1995 and 1996, when we grew at only 1% each year, well below our normal level of around 2.5% to 3%. There we would have to look, I think, to some other problems. Commodity price swings come into play as well.

We can get into some of the various sectors that typically were driving the B.C. economy—and I'm talking forestry and mining, the traditional engines of growth. They have not been performing well in the last two to four years, and even during the 1990s. They've been lagging in terms of their historical performance.

So, yes, over the long to medium term we can look to a variety of government policies that have come into play. As well, though, the B.C. forest industry no longer is able to operate at a lower cost level than it was before, simply due to our terrain. We are no longer able to access the easy-to-get-at timber, which has already been done. We have to go further afield. Our terrain is more difficult, and that adds to our cost structure inherently. That's just part of B.C.

Look at our high housing costs and the land costs in the Lower Mainland, obviously due to our geography. As well, beyond provincial policies would be municipal policies. To what extent has that contributed to a disjointed planning process, to inadequate transportation systems, for example?

So there are some high-cost structures inherent to B.C. Regardless of who's in power or what policies are in place, we would be a high-cost producer, if you will, at least to some extent. But some of our government policies—and this is with the forestry side in mind, and even the tax side—do contribute to our current state, that's true, yes.

Mr. Jason Kenney: Thank you.

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

• 1445

On behalf of the committee, I'd like to thank you very much for what has been an excellent panel. Everybody's opinion during this process matters. We really learn a lot every time we go out and listen to the people of Canada.

If the success we received last year in making sure that the Minister of Finance actually adopted a good number of our recommendations, it's in large part because of the excellent contribution by the people of Canada, over 4,000 of whom participated in the process.

The messages we heard from you are loud and clear, and you can rest assured that they are indeed noted and will be part and parcel of our report to the Minister of Finance and to the House of Commons. Thank you.

The meeting is adjourned.