FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, November 16, 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 afternoon.

As everyone knows, the finance committee is presently seeking input from Canadians from coast to coast to coast on what the priorities should be vis-à-vis the upcoming federal budget.

This afternoon we have the pleasure of having with us representatives from the following organizations: the Canadian Association of Speech-Language Pathologists and Audiologists; the Canadian Automobile Dealers Association; the Canadian Federation of Apartment Associations; the Federation of Canadian Software Developers; the National Action Committee on the Status of Women; the National Aluminum Association; the Canadian Home Care Association; and the Multi-Employer Benefit Plan Council of Canada.

As you know, you have approximately five to seven minutes to make your presentation, and thereafter we will engage in a question and answer session.

We will begin with the Canadian Association of Speech-Language Pathologists and Audiologists, Mr. Keith Christopher, executive director. Welcome.

Mr. Keith Christopher (Executive Director, Canadian Association of Speech-Language Pathologists and Audiologists): Thank you very much for having us.

I want to talk about an issue that's been of some concern to our members and to our consumers. On January 1, 1999, there will be a cancellation of the GST-HST waiver, which has been with our services for the last number of years. This means people receiving these services will pay 7% or 15% more, depending on whether it's GST or HST.

The Department of Finance decided that, in terms of whether the waiver would be extended or not, you had to be licensed in five provinces. According to the regulations, we are licensed in four. Those four provinces are New Brunswick, Quebec, Ontario and Saskatchewan.

The problem has been in Manitoba. Manitoba was the first province where our services were licensed. They were licensed in 1961, which really predates medicare, under a private bill. What happened is the Department of Finance decided to not consider Manitoba licensed, even though they're the archetype for all the others, even though they've been in operation for over 35 years and there have been no problems in terms of the regulations, and even though the Minister of Health, Darren Praznik, regards our profession as being licensed within Manitoba.

It's been a concern also in the Department of Finance. One of the senior lawyers, Doug Wyatt, indicated to us there's no distinction between a private bill and the bill under the Ministry of Health. It has still been disallowed.

We feel that, in fairness, what should happen is Manitoba should at least be grandfathered in. If they have been able to be effective for 35 years, why should they suddenly now be discontinued?

Not allowing Manitoba would affect approximately 10% of the Canadian population, and that's conservative, because as the population ages, there are more communication problems. In the United States, they estimate the percentage of people with communications problems is between about 10% and 20%.

Canadians will feel the impact, because as you cut back on health services, more and more of our members are private practitioners, which means in effect they have to charge the people receiving these services either 7% or 15%.

So we believe what happened was an oversight. It's unfortunate. We have been unable to change the Department of Finance's perception of this, even though the impact is quite dramatic. The people who require these services are obviously not the most wealthy because of the problem they have. Or they're parents who have a lot of extra costs, including their own children going to private services.

So it has a double impact. We've cut back in health services, and now on top of that we've created a situation where those who need these services also have to pay a tax. The revenue that would accrue to Mr. Martin is comparatively insignificant, but the impact on the people who have to provide it is quite dramatic.

So we feel this is not only unfair, it doesn't make sense in any of its aspects. Even the lawyers in the Ministry of Finance agree that it doesn't make any sense.

I'm making the major presentation, but I've asked Sandra Short to speak. Sandra Short is a consumer who served on the board of our Canadian speech and hearing association. Two of her four children had communication problems. She would like to make a brief comment on this.

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Ms. Sandra Short (Consumer Representative, Canadian Association of Speech-Language Pathologists and Audiologists): Thank you, Keith.

I'm sure you have had consumers here before asking you not to impose a tax. I'm joining the ranks. To be honest, private speech-language pathology is a service that most of us, as parents, resent having to purchase in the first place. We expect the service to be provided to us through public health care, and through our school system, where necessary. When we don't get it through our publicly funded health care system, we are forced to purchase it privately.

I did it myself privately for my four-year-old son, who spoke in vowels. He had no consonants in his ability to speak, yet was on a one-year waiting list at CHEO. That's when I chose to purchase the service. It was $80 an hour at that time. It is now typically $85 an hour we pay to purchase speech services.

Frankly, I'd really resent paying a tax on top of paying for a service I don't think I should have to purchase in the first place.

In my role as a consumer adviser to the Canadian Association of Speech-Language Pathologists and Audiologists, I've looked at the Manitoba legislation. Frankly, I don't understand where the Department of Finance is coming from when they say the profession is not regulated in the province of Manitoba as a health care profession. It has been for a long time. It's not directly accountable to the Minister of Health. However, it was introduced in 1961. It's been there for some 35-plus years. I believe that was even before the introduction of medicare in Canada. So I think it's wrong of the department to force every Canadian across the country to pay a tax on something because the department fails to recognize what's going on in Manitoba. Our position is that Manitoba is regulated as a health care profession and it should be, at the very least, grandfathered.

The Department of Finance has said the situation in Manitoba is ambiguous. I think if it's ambiguous, then the benefit of the doubt has to be given to the consumer. This issue should be grandfathered in and we should not have to pay a tax on purchasing the service anywhere else in the country.

One other thing I did want to add, by the way, is I notice that one of the senators has introduced a bill to amend the Excise Tax Act to exclude all reading materials from the application of GST. I suppose I'd support this too. But I would like to say that some kids won't learn to read if they don't get speech services to assist them. And I think this is more important.

Thank you.

The Chairman: Thank you, Ms. Short.

Thank you, Mr. Christopher.

We'll now hear from the Canadian Automobile Dealers Association. Welcome to the president, Richard Gauthier, and Mr. Huw Williams, director of public affairs.

Mr. Richard Gauthier (President, Canadian Automobile Dealers Association): Good afternoon, Mr. Chairman.

[Translation]

Good afternoon and thank you for having us here today.

[English]

I'd like to introduce myself. My name is Rick Gauthier. I'm the president of the Canadian Automobile Dealers Association. And with me is Huw Williams, our director of public affairs.

I'm here representing 3,500 new automobile dealers and 115,000 men and women who are employed at these dealerships from coast to coast.

Mr. Chairman, we have four points we'd like to cover today. My staff has prepared a 13-page speech for me. But I would like to take, with your permission, a common-sense approach, which is predicated on the fact that you've been here since very early this morning and you are familiar with two of the issues I would like to discuss today. So I would like to basically handle a couple of these issues right off the cuff and cut to the chase, if I may use that expression.

Firstly, I would like to bring up the issue of the tools tax deductibility for technicians, which you have been made aware before. We at the Canadian Automobile Dealers Association really appreciated your support last year in recommending tax relief in this particular area. However, the Department of Finance did not see fit to act on your recommendations. We certainly would like you to continue to push the Department of Finance on this very, very important issue.

This issue is really, Mr. Chairman, all about fairness and the creation of jobs for youth. Auto dealers today cannot find technicians as we enter an age of ever-increasing, complicated technology in the repair of vehicles. The job creation aspect, which is intricately tied into this issue, is very important. But most of all, as I said, it is all about fairness. If musicians and chainsaw operators can deduct the cost of their tools for their trade, why can't our technicians, who have to invest anywhere between $15,000 and $30,000 in order to be able to obtain a job and then maintain that job?

I will not bore you will all of the details. You can read all about it here in our submission for November 1998, copies of which will be passed around. But we certainly would like to encourage you to continue your support of this issue.

I'd like to move on to the small-business deduction issue, which we represented to you last year at about this time. This is all about inflation. The small-business tax deduction has been stuck at $200,000 since 1982. We are now 1998. Inflationary factors alone clearly indicate that our dealers, in order to stay in business, have had to invest money in their plant and facilities, upgrading their tools. Factories are constantly downloading the cost of operating a dealership onto our dealers while they cut their own costs. This small-business tax deduction, as I said, has been stuck at $200,000 since 1982. We strongly recommend and believe that this should be increased to $400,000.

The third issue, Mr. Chairman, ladies and gentlemen, is one that deals with a revision to the definition of taxable capital to exclude lien notes. While I would like to handle this off the cuff, it is a much more complicated issue, which we have not addressed before this committee in the past. If you would allow me to refer to my notes in that regard, I would like to do this at this time.

In 1989 the concept of taxable capital was introduced into the Income Tax Act for use in determining a corporation part 1.3 tax liability. This new tax on capital was not aimed at small business. To release small businesses from the compliance burden of this new tax, a $10 million threshold was introduced so that only corporations with capital in excess of $10 million were subject to the tax.

In September 1994 the government announced additional changes to the ITA, placing a much higher degree of diligence on the part of large corporations seeking to appeal income tax assessments issued by Revenue Canada. These proposed amendments properly impose a higher degree of diligence on those corporations that can afford to comply, and the criterion used to determine whether a corporation is a large corporation is the same taxable capital definition originally used in part 1.3 of the ITA.

In each of these situations outlined above, the definition of a small business has been set as those businesses with taxable capital below $10 million. We are in complete agreement with the rationale for the changes in the ITA identified above, and are satisfied that the use of capital as a measurement of the size of business is a reasonable parameter. We are concerned, however, that the present definition of taxable capital creates an anomaly peculiar to our industry, to the disadvantage of automobile dealers.

Subsection 181.2(3) of the ITA requires, and I quote: “all indebtedness of the corporation— represented by bonds, debentures, notes, mortgages, bankers' acceptances or similar obligations” to be included in a corporation's capital. Unlike virtually any other retail industry, retail automobile dealers finance the acquisition of inventory through indebtedness known as lien notes. In other industries the acquisition of inventory is financed through trade accounts payable. Liabilities evidenced by lien notes are included in the definition of taxable capital. Liabilities evidenced by trade accounts payable, however, are not. Therefore the current definition of taxable capital requires retail automobile dealers to include inventory financing in taxable capital. Other industries do not.

This problem is exacerbated by the nature of the industry. Automobiles are a high-cost item with a relatively slow turnover time period. Thus, the effect of vehicle inventory on capital is much greater than for other retailers. A comparison of two identically sized retailers, one of whom is an automobile dealer, will give two significantly different amounts of taxable capital for purposes of the ITA because of the method of inventory financing.

In order to eliminate this anomaly, we recommend that the definition of taxable capital be amended to exclude lien notes payable. This anomaly has been recognized by three of five provinces that levy a provincial capital tax on automobile dealers.

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In Manitoba, lien notes payable are excluded from capital for farm machinery, truck and auto dealerships if the lien note represents financing by way of a wholesale paper secured by a special charge on new or used motor vehicles or farm equipment inventory.

In British Columbia, lien notes payable are excluded from capital for farm machinery, truck and auto dealerships if the liability outstanding is outstanding for less that 120 days as of the fiscal year end.

Finally, in Quebec, lien notes payable are excluded from capital for farm machinery, truck and auto dealerships if the liability outstanding is less than 180 days at fiscal year end.

For these reasons, Mr. Chairman, ladies and gentlemen, we believe a new definition should be given to this particular area, as this again singles out auto dealerships, which are in a very particular situation in this regard.

I would like to conclude my presentation with a request for a reduction in contributions to an employment fund and reduced personal income tax. This is basic economics 101, Mr. Chairman. This would result in economies to the taxpayers across the country. Again, turning these savings back into the economy would act as a stimulus. This is the first time in over twenty years that our government has been in a position to implement this basic economic theory, and we strongly recommend that it be considered at this time.

So there you go. You have the four points contained in our official presentation: one, tools tax deductibility, which is all about fairness; two, a small-business deduction, because we're stuck in the eighties, as the old saying goes, and we need to modernize this tax law to bring it into today's economic realities; three, a fairer definition of the issue of taxable capital; and last but not least, employment insurance that ties directly with the required and sustained economic growth that we need in Canada should also be considered at this time.

I'd like to thank you very much.

The Chairman: Thank you very much for your presentation, Mr. Gauthier, Mr. Williams.

We'll now hear from the Canadian Federation of Apartment Associations, represented by Mr. Tex Enemark, the chairman of tax committee. Welcome.

Mr. Tex Enemark (Chair, Tax Committee, Canadian Federation of Apartment Associations): Thank you, Mr. Chairman. I'm afraid I can't blame anybody else for my fourteen-page presentation. I therefore produced another presentation that's only two pages long, and hopefully it will lead more people to perhaps ask some questions about this at the end.

Late last week the Canadian Federation of Apartment Associations released a study of the impact of federal income tax and the GST on the Canadian rental housing industry. In presenting this study to the finance committee today, we are asking that the committee closely examine the impact of federal taxation on the plight of tenants in this province, as they are the people who ultimately pay these taxes.

The Canadian Federation of Apartment Associations is a federally chartered, non-profit organization established three years ago. It has 17 members across the country, and it represents about 600,000 residential rentals. I'm here representing the Rental Housing Council of British Columbia. The consultant who did our study, Frank Clayton, a well-known authority on Canadian housing matters, is here to address anything technical that the committee might raise. Also here is Robert Orr, who is the president of a development company in Vancouver, and who could address any questions the committee might have relating to the business. Milton Bogoch, my opposite number for Alberta, is here as well.

The essence of our message is as follows: Somehow, despite an emerging rental housing shortage in much Canada, the plight of Canada's tenants is not an issue on the national political agenda, and it's about time that changed. It was in response to what is a clearly emerging problem that we commissioned this study that examines the economic impact of the post-1971 changes in federal tax legislation on the construction, operation and ownership of rental housing in Canada.

I would refer you to figure 3-1 in the report that we have given you. It traces the decline of the investment in rental housing in this country to a point where we're building 10% of the rental housing we were building 25 years ago. When you factor in demolitions, we're probably in the negative in the amount of rental housing available in Canada, and certainly in the number of key markets.

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In tracing that decline from when rentals accounted for over 50% of new housing units to today when purpose-built rentals are barely 5% of new construction, the study details our failure to build sufficient new rentals over the past two decades to properly house those who need or choose rental housing. Population projections show that Canada cannot accommodate our internal migration, to Toronto and Alberta in particular these days, and the arrival of a quarter million new immigrants each year, without complementary rental housing policies. That is, we need over 40,000 new rental housing units a year through 2020, and we are producing, as I say, about 5,000 units, and net, probably producing none.

The study points out that in several centres the vacancy rate is very tight. In normal circumstances, one would expect the market would respond by building more rentals. These are not being built, because of the bias in our tax laws against investment in and ownership of rental housing.

The report points out some of the discrimination against rentals, and I'll give you a few of these.

A motel, hotel, or family farm investor does not pay the capital gains tax on a sale if the proceeds are used for a similar investment within a year. Apartment owners are not allowed the same so-called rollover privileges. As it trickles through the system, this creates a very considerable disincentive to maintain buildings and in fact ultimately creates a tax incentive to demolish buildings prematurely.

A person operating a hotel, motel, or a family farm is accorded small-business tax treatment. A rental property owner, unless he's incorporated, does not have that treatment, and no matter how active he is in the day-to-day operation of the business, an apartment rental investment is treated as passive investment unless it has six employees or more, which includes the great bulk of small investors in the country.

A homeowner building a house for himself—and homeowners are usually better off than tenants—gets a rebate of 2.5 points on the GST. Non-profit rentals receive half the GST back, but market rentals receive no such rebate. In HST jurisdictions, this adds $15,000 to the cost of building a $100,000 unit.

A homeowner pays no capital gains tax on his principal residence when he sells it, yet a tenant, who, as I say, is less well off than the average homeowner, will pay that same capital gains tax through his rental payments to his landlord. In British Columbia, in Vancouver, that probably accounts for about $100 a month of a tenant's rent, which will ultimately go to paying off that tax. Yet, as I say, most tenants are less well off than homeowners.

The report says tax discrimination has had two net results. Little rental housing is being built, which is in turn causing a rental housing shortage and declining housing standards, and the large stock of rental housing that predates the 1971 tax law changes is aging, and aging quickly, particularly in areas where there's rent control, and it requires major investment in renovation and upgrading.

There is a rental housing crisis on the horizon in many of Canada's communities, and in some it has already arrived. It's tenants who suffer from these policies. The rental problem has been the subject of media attention from time to time, but incredibly, this is the first examination in 26 years of the role of tax policy in creating these problems and this shortage.

The CFAA is not asking for a return to the perhaps overly generous pre-1972 tax regime that allowed 10% capital cost allowance on frame buildings and for the write off of other capital cost allowance losses against other income. But we point out that the current tax climate is increasing the costs and lowering the housing standards of those who rent, and is costing Canada jobs and tax revenues from foregone new rental construction and from people living in basement suites where homeowners are probably under-representing their income from these basement suites, creating a large underground economy of homeowners who are also exempt from the capital gains tax. This results in governments losing both GST and HST revenues and income taxes, and it is therefore perhaps resulting in lower tax revenues than a more balanced policy would reflect. Clayton and we believe our proposals would yield a net increase in revenues to governments, and at the very worst, be revenue neutral.

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The rental industry, as I repeat, is not asking for complex changes or special treatment, only for equality. We ask to be treated in the same way that other sectors are treated. Motels, hotels, and family farms benefit from rollovers on sale and repurchase and are treated as small businesses where appropriate. Rental housing should be treated the same way. Each should receive equal treatment as an active business, and new rental housing construction should be treated the same as home ownership or non-profit ownership insofar as GST and HST are concerned.

Thank you very much.

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

We'll now hear from the Federation of Canadian Software Developers. Mr. Sheldon Wiseman is president and CEO of Amberwood Productions Inc. Mr. Larry Whitehead is president and CEO of Columbia Diversified Software. Welcome.

Mr. Sheldon S. Wiseman (President, Federation of Canadian Software Developers): Thank you, Mr. Chair. I would ask Mr. Whitehead to commence the remarks. Mr. Nifco, Mr. Whitehead, and I have separate comments to make to you.

Mr. Larry Whitehead (Vice-Chairman, Federation of Canadian Software Developers): Good afternoon, Mr. Chairman and ladies and gentlemen.

I'm the vice-chairman of the Federation of Canadian Software Developers. The federation was created early in 1998 to address the specific needs and concerns of the Canadian software development industry. The federation has a national scope. It's the only association in Canada today that represents specifically the Canadian software developer.

Currently, the association has more than 50 members, and discussions are under way with another 250 software firms located from Victoria to Halifax. The federation is managed by a board of directors. We communicate with members using our web site, e-mail, written correspondence, and monthly meetings.

There are three primary problems facing the Canadian software development industry today.

First, the larger, well-established firms—take for example Electronic Arts in Vancouver—have their own perception of the problems. If you were to speak with Mr. Glen Wong, president of Electronic Arts, he would tell you that his problems are taxes, taxes, and more taxes.

Second, if you address the concerns of small, fledgling software developers, their biggest problem is a lack of early stage investment capital, which is desperately needed to grow their companies and market their products globally. The termination of the class 12 software tax shelter program in December 1997 has further exacerbated the early stage funding problems.

Third, all companies, whether large or small, have experienced problems caused by brain drain, with Canadian software engineers and executives moving to the U.S. for higher salaries and greatly reduced levels of taxation.

In our brief presentation today, we cannot hope to address all the issues currently facing the Canadian software developer. However, we can address problem number two, which is the lack of early stage investment capital available to the Canadian software development industry.

With the termination of the class 12 program, there's no government support or program enabling an emerging software developer to access start-up capital in Canada. The SR and ED program is primarily focused on research and development. However, the problem that arises after the developer creates a great piece of software is how to get this product to market. At the post-development stage, sales are generally minimal, and the company does not have a long track record, which is required to attract capital from banks, traditional venture capitalists, public equity markets, and labour-sponsored funds.

Another point I would like to make is that if software development firms had easy access to early stage capital, they could perhaps more effectively compete with the brain drain of employees to the U.S. by paying higher salaries to motivate employees to stay in Canada.

There's a lot of press about the information technology industry being one of the economic engines driving our economy into the future. However, Canadians must develop programs to support and finance this industry.

At this time, I would like to introduce Nathan Nifco, chairman of the Federation of Canadian Software Developers. He's a software engineer with a master's degree both in computer science and business administration. Mr. Nifco currently operates his own computer software development firm.

Mr. Nathan Nifco (Chairman, Federation of Canadian Software Developers): Thank you, Larry.

Mr. Chairman, ladies and gentlemen, as a Canadian software developer, I have first-hand experience with the issues being addressed here.

I represent a company, Nifco Synergy, that was established in 1991 with a mandate of developing and marketing software. Today, we market our products and services in three countries, including the U.S. Our clients are Fortune 500 firms that are involved in international trade. We procure capital to expand our operations through a class 12 finance— while creating jobs in Canada without losing ownership of the company. Without risk capital, we would not be able to be where we are today.

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To make a distinction between the software industry and any development of software within IT is important. While software and information technology are integral components in the new economy, it is our belief that Canada needs a strong and vibrant software industry. This industry is facing today a series of challenges: the brain drain; the lack of employee retention due to competition with other countries; a shortage of skilled labour; and increasing dependency on foreign supplies of software applications.

But tomorrow's opportunities—such as the incubation of Canadian talent and intellectual property to transform them into world-class products and services; the fact that the Internet is changing everything, even the software industry; more opportunities for commercial software to be developed on the Internet—are increasing day by day. A huge migration from existing desktop software applications to the Internet is emerging.

In Canada today 50% of young people are unemployed. The software industry presents a prime platform to fulfil that need. There is a need to foster and create an environment in Canada to build a strong software industry that is world class. Supporting technological advancement within the commercial software industry in Canada will bring not only the economic returns needed, but will export Canadian talent and know-how without physically moving people.

Software companies need risk capital. Without risk capital, software companies will not be able to prosper. We believe that Canada is in a unique position at the moment to become either a world leader or, alternatively, a third world country in terms of its software industry. Innovative programs like the one proposed here during this presentation will increase the potential to build a vibrant world-class software industry.

Mr. Sheldon Wiseman: Mr. Chairman, I would like to very briefly recap the comments made by my two colleagues.

Without risk capital, the software industry in Canada will not survive. The industry is on a downward trend at the moment because of lack of availability of risk capital.

The availability of risk capital will permit four things to occur. One is the enhancement and extension of basic software concepts in this country. The second, as has been alluded to, is the ability to pay world-class compensation, which will reverse the brain drain to the United States. The third is job creation. And the fourth is strategic worldwide marketing of sales of Canadian software. The third and fourth points are synergistic and related to each other.

The issue is, how does one create an environment where risk capital becomes available to the software industry? What we are proposing is that the Government of Canada recognize software investment corporations, that they be recognized and defined in the law, and that these corporations be private-sector-managed, private-sector-funded, profit-driven, Canadian-controlled, Canadian-operated incorporated entities.

Software investment corporations would be limited in terms of their investment to eligible corporations, which would be defined under appropriate legislation, which eligible corporations would be solely engaged in the development and the exploitation of Canadian software. It would be constrained in terms of the investment opportunities to corporations that are in early start-up phases.

In order to create the environment where risk capital will come forward for these software investment corporations, we are suggesting that any growth in the value of an eligible company in which money has been placed would carry no tax implications if the investment was held for at least five years. The second point we make is that there should be no capital gains attached to shareholder growth. The third is that investments by individuals would be RRSP eligible. And the fourth is that investors in software investment corporations receive federal tax credits very similar to those the government has in place for the film and television industry.

We are proposing a 25% tax credit payable over a two-year period. What we're really looking for is a regime that is similar in some respects to film and television support programs that would help Canada maintain a viable position in the software industry worldwide.

Thank you, Mr. Chair.

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The Chairman: Thank you very much, Mr. Wiseman, Mr. Whitehead, and Mr. Nifco.

We'll now hear from the National Action Committee on the Status of Women, Ms. Joan Grant-Cummings. Welcome.

Ms. Joan Grant-Cummings (President, National Action Committee on the Status of Women): Thank you, Mr. Chairman, and good afternoon to everyone else.

The National Action Committee on the Status of Women, as some of you may know, is the largest feminist lobby group in Canada. We're 26 years old. We have membership from coast to coast. Our group is an umbrella organization for 700 women's groups across this country.

Over the last year, and actually over the last four budgets, the Women's Program fund has been consistently cut by the federal government. Women's groups have never gotten full funding from the government; we've always had to do fundraising in addition to grants that we call core funding to just support our most stable of activities. What we have happening in Canada now is the fact that women's ability to participate politically, economically, and socially has been compromised by these cuts where we have women's groups shutting down. And we're talking about women's shelters; we're talking about women's counselling centres; we're talking about women's education and training centres in their communities. And in fact there are parts of this country in provinces where there are no women's support services.

We have seen a correlation between the increase in poverty and the increase in violence against women, which is also well documented with the United Nations Commission for the Status of Women, which has mentioned Canada's regression in terms of dealing with women's equality issues.

I want to start out by giving you a snapshot of what is happening with some women in Canada. While some of us may be moving ahead, getting places, there are many more women who are not. Currently, based on the information we have from Statistics Canada, most women are now in non-standard jobs. We're talking about part-time jobs, temporary jobs, so-called self-employed jobs, or women are holding multiple jobs just to stay alive.

Most single mothers, who are vilified a lot by many people in society, work: 46% of them work full-time and 15% of them work part-time. Women work, on the average in terms of full-time, 73¢ to the male dollar—and that is a particular group of women. When it comes to aboriginal women, when it comes to students, when it comes to women of colour and immigrant women, in some cases they're working more like 50¢ to the male dollar. You can check that with Statistics Canada.

Women make up 70% of all part-time workers. Women still face sex, race, and age discrimination in the workplace. In fact a recent study shows that 90% of women report that at least one incident of sexual harassment has been their experience in the paid workforce. Women are 55% of those borrowing full-time Canada student loans, and an estimated 43% will not be able to complete their loan repayments.

There are 2.9 million Canadian women living in poverty, and that's over 56% of all the poor people. When it comes to aboriginal women, when it comes to single seniors, unattached young women and recent female immigrants, the percentage of poverty is even higher. The Government of Canada currently only spends 53¢ per capita for women's programming under the Women's Program fund. We think that statistic speaks for itself.

Our concern with this next budget is that economic equity be reflected in the budget. We believe that since Canada has committed itself to the free market global economy, it must take steps to also support in a social economy. We cannot say that we're a progressive competitive country and still have women earning, on the average, $30,000 compared to the man's $41,000. Obviously there's something wrong there. We feel that Canada has to get rid of its record of having the second-highest rate of low-paid female jobs of all the rich nations in the world. That is not a record for us to be proud of.

We also want to mention again specifically the fact that the government is engaged in a process to contest the Human Rights Tribunal on the pay equity payment to public sector workers. And we feel, given our record of having the second-highest rate of low-paid female wages—and these are mainly low-paid female jobs—that the government really should move to pay off this debt to the women.

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We want to further reiterate what we said in 1996 when 100,000 women across this country participated in a women's march against poverty: that there needs to be an increase in the minimum wage. We're telling women to buy, use their purchasing power, but with what? If we want to have women support this global economy then they must be able to buy all these wonderful goods we have. We're suggesting that the minimum wage be $7.85, which is not an increase really, but will just give women the purchasing power we had in 1975.

We want to reiterate our comments from last year that the child tax benefit, while being a step toward dealing with child poverty, should also cover families on social assistance, not just the so-called working poor. Many women and many families end up on social assistance because they cannot find jobs that will pay their rent—you talk about rental properties not being available—and have basic food supplies. So issues of food security, of shelter, all of those issues guide women and families ending up on social assistance. It's not because we dream of being welfare moms.

We want to also reiterate that we participated in a 1998 alternative federal budget, and there are a number of things we outlined that we feel are essential to building a social economy under this new globalized capitalist economic system. We firmly believe that for all members of Canadian society to feel a part of the political process, to impact government policy, in particular economic policies that affect all of our lives, then the government has to spend to further civil society participation. We reiterate that we think the government needs to put at least $30 million into the women democracy fund known as the Women's Program fund. That will bring it to just $2—a toonie—per woman and girl child in this family.

We also reiterate that to stop this regressive move in terms of an increasing imbalance against women and girls in this country, the $50 million women's groups have been saying for years needs to be spent in terms of shelter, counselling services and so on must be allocated. The government needs to make a commitment to doing that to eradicate violence against women going into the new millennium.

We still do not have a national day care program. In terms of housing, as you all know, there is a homeless problem in this country. We're talking about a rich nation with people sleeping at the places where we have our wonderful banks. We feel that spending a mere $300 million on new non-profit and co-op housing is at least a step in the right direction where you can have at least 10,000 new units. That is something we also said in 1996, and especially as 40% of all the mother-led lone-parent families are in housing needs, that is a progressive step toward ensuring women's equality and women's participation.

Female students are dropping out at a higher rate than male students. They do not have access to the types of jobs that young men have or male students have. The unattached ones have actually the highest poverty rates in this country, depending on where they live in the country. We are recommending again that $400 million for student grants be assigned based on need in support with Canadian Federation of Students.

I want to end by sharing with you some of the principles we have outlined in Building a Social Economy.

If we're going to talk about full participation of all peoples in Canadian society, and Canada is to be a leader in having an equality-based society, then we have to ensure that equal participation and remuneration of men and women become a government priority. We have to ensure that a democratic participation of workers and all members of society, especially those who at the moment find themselves outside of such participation, are facilitated. We have to assure that services and programs that meet the needs of the people, as recognized under the UN Declaration of Human Hights and the Canadian Charter of Rights and Freedom, remain in the public domain and not be privatized or eliminated, such as our medicare program.

We want to emphasize that goods and services that meet the needs of the community that produces them are also an essential piece of this in a real economic sense. If we cannot purchase these goods, it makes no sense to us. We want to reiterate again our call that we need to have an enhanced medicare system, meaning having a pharmacare system and a well funded home care system. It is women who have the highest burden of dealing with home care issues right now, mainly unpaid. I think Canada knows the UN figures on that. Nations, Canada included, are getting away with $3 trillion worth of unpaid work by women in our society, and we need to deal with that.

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We believe that if the budget isn't appropriate for women, the budget isn't appropriate for Canadians. We strongly encourage you to act this year on some of the things we've been saying for the past four years, but on which we haven't seen anything happen at all.

Thank you.

The Chairman: Thank you very much, Ms. Grant-Cummings.

We'll now hear from the National Aluminum Association, and we welcome Monsieur Jean-Marc Crevier.

[Translation]

Mr. Jean-Marc Crevier (President, Syndicat national des employé(es) de l'aluminium d'Arvida): Ladies and gentlemen, committee members, it is with much interest that I am here today to discuss the subject of the potential uses of federal government budgetary surpluses. As president of the Syndicat national des employé(es) de l'aluminium d'Arvida, I represent a trade union that filed a legal challenge to the Employment Insurance Act in Superior Court last September 30th. This legal procedure was initiated at the request of the 3,400 workers who belong to our union, all employees of Alcan, and has received the support of hundreds of thousands of other Canadians in Quebec and throughout the country.

It is obvious that the arguments put forward to justify this legal procedure against the federal government will be pleaded in due course in Superior Court and it is not my intention to discuss this subject today. I will just briefly explain that, for our union, the budgetary surpluses of the employment insurance fund belong exclusively to those who have contributed to it: the workers and the employers. Any attempt by the federal government to appropriate the surpluses, for whatever reason, is considered by the workers as theft.

I would now like to talk about the use of the government's real surpluses, that is, those that really belong to the federal government and that result from savings in the management of its own budgets.

For the workers I represent, an important share of the future budgetary surpluses should be spent on creating jobs in the country through projects which have proven their worth, particularly projects promoting work sharing.

We all know that one of the important responsibilities of a government is to use the powers and tools at its disposal to do whatever it can to reduce the inequities in our society. And the first sensible step in this direction is surely to do all that is possible to provide jobs to those who have been deprived of their right to work.

I've always found it curious that most of the politicians who preach about the urgency of creating jobs during election campaigns rapidly forget this priority when elected. However, you don't need witchcraft to create jobs. Any government that is willing to break with traditional ways and show a little initiative will be able to do it. Let me share with you the experiment carried out by our union.

In the early 1990s, the workers at the Alcan Complex in Jonquière, in the Saguenay Region, suffered massive layoffs: over 500 of them lost their jobs. For the first time, the unimaginable happened for Alcan workers: overnight, many of them found themselves on unemployment insurance or dependent on welfare to survive. This had never happened before at Alcan. It was tragic to see one's co-workers suddenly in danger of losing everything, because they had no job. This was the situation when our union began examining different formulas for work sharing, even making it a major issue in our labour negotiations with Alcan in 1995.

Thus, on October 21, 1995, the Syndicat national des employé(es) de l'aluminium d'Arvida and Alcan officially signed an agreement setting out the terms and conditions for implementing a work sharing formula, commonly called 40/38 or 35/33.

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Basically, the formula allows employees working on a regular schedule to sign an individual agreement with the employer, whereby they agree to work 40 hours a week but to be paid for only 38 hours. The two unpaid hours of work are transferred into a bank of hours that the employee may take as leave.

In the end, when permanent employees take the additional leave they have built up, employees who were laid off in the last few years can be called back, or new permanent employees can even be hired.

Theoretically, for every 20 workers participating in the program, at least one job is created or maintained. Workers participate in the work sharing program on a voluntary basis. Nevertheless, the federal and provincial governments agreed, as an incentive, to provide financial assistance to participating workers in order to partially compensate them for their losses. The budgeted amounts added up to $460 the first year—it's a pilot project—$230 the second year and $115 the third year. After that, there's no more money. These amounts are available for each worker participating in the program. Government funding will end December 31 because, unfortunately, both governments are reluctant to renew the agreement, despite the clearly positive results.

In fact, more than 100 jobs have been directly created at Alcan's Jonquière Complex thanks to employee participation in the work sharing program. This translates into over 100 workers who were able to avoid becoming dependent on, or who were able to get off, unemployment insurance or social assistance, and who are working and contributing through their taxes to a more prosperous community, instead of relying on government handouts for survival.

You know what creating 100 new jobs by setting up a new company involves in terms of public and private investments. We're talking about several millions of dollars, maybe hundreds of millions.

In contrast, creating 100 jobs by means of work sharing seems so inexpensive and easy that we wonder why our governments are taking so long to opt for a policy of work sharing. Since its financial situation has substantially improved and, for the first time in years, significant budgetary surpluses are being forecast, the timing could not be better for the federal government. With predicted surpluses of billions of dollars, the federal government has all the financial latitude it needs to increase, throughout the country, in the public and private sectors, the number of work sharing experiments like the one put in place at Alcan's Jonquière Complex.

We do not doubt that it is the most effective way of rapidly creating thousands of jobs in Canada. And the federal government will quickly recover its investment, because so many more workers will be paying their share of income and other taxes, thereby increasing government revenues. In Europe, work sharing has been the subject of serious debate for a few years, and several governments are about to take major steps in this direction.

In North America, the Canadian government now has a good opportunity to invest in job creation by allocating a substantial share of its budgetary surpluses to work sharing experiments in various sectors. It would be providing concrete evidence that, with regards to job creation, it is sincere and capable of putting its words into action, in the best interest of all Canadians.

Work sharing is a formula that works. It's not the only formula, but it's a good one. Alcan workers can testify to that. Thank you.

[English]

The Chairman: Thank you very much, Monsieur Crevier.

We'll now hear from the Canadian Home Care Association. We have with us Mr. Phil Gaudet and Lesley Larsen. Welcome.

Mr. Phil Gaudet (President, Canadian Home Care Association): Thank you, and good afternoon, ladies and gentlemen.

As president of the Canadian Home Care Association, I and my colleague, Lesley Larsen, executive director, would like to thank you for the opportunity to meet with you today.

The Canadian Home Care Association is a national membership organization for individuals and agencies involved in the delivery of home care across the land, public and privately funded: researchers, educators, students, policy analysts, planners, suppliers, national, provincial and regional organizations, consumers, anyone with an interest in home care.

Home care has become an integral part of our health system. It can be a catalyst for transforming the system and ensuring its future sustainability and responsiveness.

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Our message today is that investing in home care must be an urgent priority for our federal government. It has been identified as the priority area for additional medicare funding by many, including recently the College of Family Physicians, the Canadian Nurses Association, but most importantly by polls taken of Canadians at large within the last year.

Our brief outlines our position on why investing in home care is both a necessary and wise use of the federal fiscal dividend.

Home care programs are under pressurized growth in the aftermath of health restructuring across Canada. The need for home care services continues to outpace the availability of resources. Rapid increases in the number of clients receiving home care and in the growing intensity and complexity of their services have rendered the current level of funding to home care insufficient.

As home care programs undertake an escalated acute care and long-term care substitution function, older, frail clients requiring only home support services are being dropped off the list. Many reappear later at the hospital emergency door.

Waiting lists for home care are growing, and in more areas user fees are raised or initiated. As a result, a considerable strain is being placed on the family and on volunteer caregivers providing care in the home. The most natural place for individuals and their families to be is at home. Consider that 70% of home care is currently provided informally by families, especially women. While most do so willingly, their numbers are declining.

We understand that informed, knowledgeable, and supported individuals and families will be the key to success in our future health system. Services and financial supports required for those caregivers must be addressed or we predict two negative outcomes will result. First, the growing cynicism of family caregivers regarding the preparedness of the system to help them now and in the future will continue unchecked. Secondly, we will see a rapid return to building more institutions and a reliance on facility-based services.

We are pleased that our prime minister and our health minister have expressed their commitment to investing in home care. We urge your committee to also recommend that the federal government not back away from this commitment.

In particular, funding is urgently needed to redevelop the entire infrastructure of a Canadian home care system. Resources should be contributed for the development of an effective information system, for an effective human resource policy regarding training, salaries, etc., and for system performance measures.

As a minimum, the federal government should insist on adequate reporting to allow Canadians to assess the outcome of current health care restructuring activities. We need to act now to build a sustainable system, to maximize the strength of the home care setting, to legitimize home care as an effective setting in the continuum of health care. It is essential that funding be provided so that principles of universality, accessibility, portability, comprehensiveness and public administration can continue to be applied by the provinces within their home care programs.

On behalf of the Canadian Home Care Association, I thank you for the opportunity to speak to you. I will be pleased to respond to your questions.

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

We'll now hear from the Multi-Employer Benefit Plan Council of Canada. Mr. Bill Anderson, welcome.

Mr. William Anderson (President, Multi-Employer Benefit Plan Council of Canada): Committee members, other presenters, we're pleased again to participate in the pre-budget consultation process.

With me is Mr. Joe Maloney, director of the Canadian Building Trades Council, whose members make up a large part of our organization.

The purpose of our submission is both to assist the government in meeting its fiscal and monetary objectives and to represent the interests of our members. To this end, we provide commentary on a number of specific issues that fall under one or more of the four questions originally asked of us.

At the outset, we congratulate the government on achieving a balanced budget. MEBCO can voice a general agreement respecting the stated priorities of the finance minister. In particular, we note and support the Honourable Paul Martin's comments in a speech delivered on August 6, 1998 in which he stated a vision for Canada in the 21st century.

A significant portion of MEBCO's submission to the committee, dated November 5, 1997, was devoted to the proposed seniors benefit. MEBCO recommended that the seniors benefit be abandoned.

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On July 28, 1998, the finance minister announced that the OAS-GIS system would be preserved. MEBCO applauds this action, and in particular supports the statements by the finance minister on the seniors benefit.

Echoing the finance minister's comments, MEBCO supports a continued reduction of the national debt, a reduction of taxes, and the restoration and enhancement of social programs. Clearly these objects are not necessarily complementary; difficult choices must be made in light of competing priorities.

Who is MEBCO? I'm sure many people here are not familiar with MEBCO. The Multi-Employer Benefit Plan Council of Canada represents the interests of Canadian multi-employer pension and benefit programs. It is representative of all the persons and disciplines involved with these programs.

There are approximately 360 multi-employer benefit plans and pension plans in Canada, which have memberships of approximately 850,000 individuals contributing in excess of $1.1 billion into these programs. The majority of Canadians who participate in these programs are in the middle to low-income bracket.

I'd like to break my presentation into two different sections, one in the health field and one in the pension field. In the health field, in particular, we feel that the federal government should renew its commitment to fund 50% of the costs of health care. This will reduce the tendency for provincial governments to shift costs to the private sector and it will put less burden on private income, on private plans to support these issues.

We think it's extremely important that the federal government complete a comprehensive analysis of the impact of Canada's aging population on Canada's economic and social policies. We have talked with the federal and provincial governments on this before.

The study should be completed as soon as possible so that alternative policies can be formulated, debated and implemented in a reasonable timeframe. This not only affects our health plans but also our pension plans and to a large degree the government programs of OAS and the Canada Pension Plan.

MEBCO applauds the government's decision in the 1998 budget to permit a deduction for self-employed individuals for supplementary health and dental expenses, thereby promoting equity between employees and the self-employed. MEBCO continues to oppose the taxation of group benefit plans. It would discourage the participation in benefit programs, thereby placing an additional burden on the public health care system.

In the pension area, our primary concern is to ensure that benefits are received by the beneficiaries and that the contributions are allowed on a tax-free basis. The investment income earned should not be taxed, and the only taxation should come when the employee or the individual withdraws that money upon retirement—EET, exempt, exempt, and taxed when received.

We're also concerned that the government should allow individuals to receive and to put away for as much pension as they possibly can on an individual basis and on a group basis, whether it's a pension plan or whether it's an RRSP. In order to do that, we feel there are a number of income tax changes and/or changes in the maximum amount you are able to put away that should be looked at by the government. They should in fact be brought back to some of the terms that were in effect years ago.

Also, in regard to the programs we have in Ontario, there is now a retail sales tax put on our benefit programs. We're hoping that if harmonization takes place, benefit programs will be exempt. A 15% tax on benefit programs will just discourage individuals from taking part in those programs and it will again put more burden on the private sector.

Perhaps I can just touch on one other area, the underground economy. We work very intently with the government on the underground economy, as did Joe's people, as did the unionized individuals in this country, to make sure that the proper taxes should be paid and have been paid. We applaud the Canadian building trades for their efforts.

Lastly, our benefit programs depend on jobs being available. I don't think I'm too far off the mark from others who are here. The infrastructure and job creation are very important to our members so that they can put money away to provide themselves with benefit programs and pension programs. We would ask that the government continue in its efforts to provide such programs, and in particular, in the construction industry.

Thank you, Mr. Chairman.

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The Chairman: Thank you very much, Mr. Anderson. I'd like to thank all the members of the panel.

We'll now hear from Mr. Epp with his questions.

Mr. Ken Epp (Elk Island, Ref.): Thank you, Mr. Chairman, and thank you to all of the witnesses who have come to our committee today.

We're hearing from a lot of different groups and many different representations, and quite a wide variety of input, but also some common threads.

First of all, I'd like to talk to Keith Christopher and Sandra Short with respect to their presentation. It seems to me that you have one simple suggestion; that is, there should be no GST on services that you have to provide in what could probably properly be called a medical service. So that's the summary of it. But you haven't said anything about changing the definition so that this would actually be covered by medicare. You complained that it wasn't, but you didn't make a suggestion that it should be changed so that it would be covered. Did I misread you on that?

Ms. Sandra Short: You didn't misread us on that. I think in my presentation I said there's some resentment that it wasn't often provided in the publicly funded system. Certainly we want the service in the publicly funded service sector, but the reality we're dealing with right now, given the cuts in medicare and the cuts in the school systems, is that we as consumers are sometimes now forced to purchase it privately. If we're forced to continue to be in that realm, at the very least we don't want to add insult to injury by having to pay a tax when we do have to pay $85 an hour for speech therapy. But yes, certainly the first preference is that we not pay for it in the first place.

Mr. Ken Epp: I think in a very, very small way I share your outrage. I was asked not long ago in a telephone interview to make a contribution to a charitable organization. They said “Do you want us to bill you, or will you just send it?” I said “You'd better bill me so that I don't forget”. When I got the bill, it included the GST. So this government is even taxing charitable donations. I'm with you on that.

Thank you very much. I think we got your message.

You'd like to add one more thing?

Mr. Keith Christopher: I have one comment.

Our annoyance with this is that we've always had the waiver, so we're not really asking the government to do anything other than extend the waiver as it always was. So it's really a situation where, for all the reasons we've talked about, it compounds the problem, but we've already had it, we've always had it, and it seems that the idea of taking it away is arbitrary, because the main sticking block is Manitoba. We still we don't understand why the first off the mark, the archetype for all the rest, should be penalized because they don't fit into the rules that now apply and that were not available in 1961.

At the very least, in fairness, it should be grandfathered in. It's compounded because all the others that came after—Ontario, Quebec, Saskatchewan, and New Brunswick—have modelled themselves and their actual legislation after Manitoba. So on any level, and even among the lawyers in the Department of Finance, they agree that there's no difference between what was a private bill and what came out later. So there's no merit at all in what's been proposed. The impact in terms of what it will do to people who buy the service is quite dramatic, and the actual revenue accrued is, at best, modest.

So it has a lot of impact on small individuals or small entities, but the overall effect in terms of generated revenue is very insignificant in terms of what it would do.

Mr. Ken Epp: Thank you. We can talk a long time, but I want to get to some of these other people as well.

To the Canadian Automobile Dealers Association, you want to reduce EI, you want to reduce personal income taxes, you want to arrange things so small business doesn't have to pay taxes on their $400,000, that basic tax deduction for small business, and you want to have mechanics not have to pay taxes, or at least to be able to deduct the cost of their mechanics' tools from their taxable income—in other words, give, give, give. Where do you think the money is going to come from?

Mr. Richard Gauthier: We believe the government is in a position right now, sir, an unprecedented position, to be able to do this, given its focus on the creation of jobs. We believe that all of these issues would address that.

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Mr. Huw Williams (Director, Public Affairs, Canadian Automobile Dealers Association): If I can jump in, I think the other thing you have to look at is the costing out of measures. If you look at the tool tax deductibility, it's a very small number. We're talking about $50 million. That's a targeted tax, really, and that's clearly our first priority.

From there, you're looking at broader tax relief, and the government has clearly got some decisions to make. But when you're setting priorities in terms of keeping the economy rolling, small business has clearly got to be a priority in terms of jobs.

All these tax cuts and this tax relief we've asked for are targeted toward creating employment. Look specifically at the reduction of employer and employee contributions to EI premiums. That's clearly a tax on jobs. There's a surplus there that's outside the government's regular surplus. It's holding people back, particularly small business, from hiring people. If you look at our members, who have an average of 55 employees, there's been a real clawback in terms of hiring extra people because of the tax burden every time you bring somebody else onto the payroll. I think the government fundamentally needs to re-evaluate tax measures with respect to jobs.

Mr. Ken Epp: Again, I guess we're on your side on that. Here's a paid political announcement. My party is definitely in favour of reducing EI premiums. We tried to persuade the government to do that for the last number of weeks. Also, one of our members had a private member's bill on the deductibility of mechanics' tools. So I think we're probably on your side substantially there.

Let's move along to these apartment people. I'm amazed to find out that there are so few new rental apartments being built. Government taxation policies have killed the industry, I would say, between the GST and the investment policies.

I think your presentation is very clear, but I have a few specific questions for you. First of all, why is it that if you rent a house— For example, I'm renting my space in a hotel when I live in Ottawa. Why are hotels and motels treated differently from rental agencies when it comes to tax considerations? Why do you think that is?

Mr. Tex Enemark: Well, we just met with the tax policy people over in the Department of Finance. I think there's a lack of clarity in understanding just what the nature of the rental business is. I hope we were able to clarify that.

They seem to be of the view that owning rental property is entirely a passive investment very much like an investment in stocks and bonds and so on, so that most of your income over the lifetime of the investment comes from a capital gain, not from the operating revenue. I think we perhaps tried to correct that. That seems to be the problem. They simply have misunderstood the nature of the business over the last 26 years.

Mr. Ken Epp: Okay. As for the things you suggested here, I wrote down ten items. I probably missed a few, but they'll be more detailed in your brief, which we've got, of course. You're basically telling us that because of these policies right now, even aging units that should be replaced are simply being torn down and replaced with other businesses. Is that what we're hearing from you?

Mr. Tex Enemark: Well, the tax structure that was put in place in 1971 might have suited 1971. For the 20 years prior to that, there was a considerable incentive to invest in rental housing.

Then the tax policy reversed. Since that time, there's been a considerable disincentive to invest in rental housing.

The result is we have this huge stock of rental buildings that are 20, 30, 40, and 50 years old. These buildings are aging. Because of the nature of the investment and the fact that rollover was done away with in 1971, people made their investment back in the 1950s or 1960s. As they grow old, they're not selling them because the tax penalty is so high. But there will have to be a very substantial tax penalty paid when these people die and there is a deemed disposition. The tax penalty at that point is so great, and in many areas the residual value is simply in the land and not in the building, that there's an incentive at that point to simply demolish the building, declare terminal loss and replace a rental building with a condominium.

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We live under a very difficult regulatory burden at the provincial level. People just want to get out of the rental housing business, build condominiums, sell the condominiums off and take their money and go off and do something else with it.

Mr. Ken Epp: Are you suggesting that what you're going to do would actually solve this problem?

I think your main themes are rollover and equal tax treatment with respect to cost of operation and depreciation. What would you like to see, a 10% rate of depreciation on apartments again? What are you after there?

Mr. Tex Enemark: No, I think there are three things here.

We're sympathetic to the fiscal position that the country is in, and we don't want to tamper with the fiscal framework that the government has established. We don't think we're important enough to succeed with that kind of an argument. But we think the current crisis has been a long time in coming, and modest movement now will prevent a real crisis of national proportions from emerging, and enough building will start to be created.

Essentially, we're asking for three things that basically put rental housing on an equivalency with home ownership and with other types of similar investments. One of those is rollover, the ability to buy a duplex and sell it, and if you invest in a fourplex or something within say a year, you have your capital to do that intact. That's simply a recognition of the nature of the way your business grows in the rental business. Some businesses grow by buying another piece of property, and you push a wall out and you expand, and that sort of thing. You grow in the rental business by trading up and building on your equity. We think rollover is the single most important thing. We think the federal government is not getting much revenue now out of the capital gains tax on rental properties, because nobody's selling because nobody can afford to, and the new construction that will take place as a result of rollover will be a tax winner for the government.

The second thing we're asking for is fair treatment on the GST. If you build a non-profit rental building, you pay half the GST. If you build yourself a house worth less than $350,000, you pay 2.5% less GST; you pay a 4.5% GST. But if you're a tenant renting a new suite, you're paying the full GST through your rent, which is another $20 or $30 a month. So there's that business of equity.

Then there is the business of treating these investments, where they are operated by the people that own them, as small businesses. In the same way that Mom and Pop run a motel on one corner, Mom and Pop running an apartment building on the other should receive the same small-business treatment. We don't think there's an enormous amount of money involved in all this, in aggregate, and we think it will create enough new investment in the business and bring people back so that we'll avoid what is an emerging problem of people sleeping under bridges in this country.

Mr. Ken Epp: It seems to me that it would also substantially help the construction industry.

Mr. Tex Enemark: For many, many years, in the 1950s and 1960s, when what's now called Canada Mortgage and Housing was responsible for over 55% of new residential construction in the country through its lending activity and its insurance activity, policies varied year by year in how much money they gave CMHC, because construction activity has such a huge multiplier effect, probably greater than anything else government can do on the economy.

Mr. Ken Epp: Thank you. Again, we can talk on and on.

How much more time do I have? Can I keep on going?

The Chairman: No, I think we have to move on, Mr. Epp. Thanks.

Mr. Ken Epp: Can I take a few seconds with the software guys?

The Chairman: You sure can.

Mr. Ken Epp: Software is sort of a part that's near and dear to my heart. In fact one of the best-kept secrets in the world is that there's an organization called Epp Software back in Alberta. Great ideas, but no marketing skills—that's the bottom line of it.

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I'd like to just ask you about your main emphasis. You're saying if I invest in a software company I shouldn't have to pay any taxes on money I earn there. You talked about a five-year tax holiday, and I don't quite understand what you're talking about, because most software companies don't make money for the first five years.

Mr. Sheldon Wiseman: We're specifically talking about any capital gains implications. If there's growth in the value of the corporation in which investment has been made, it should carry no tax implications if it's held for five years.

Mr. Ken Epp: Okay. I've toyed with this idea. It seems to me we might do well in this country to have tax-free capital gains in any case, like we used to have in the old days. Do you agree with that?

Mr. Sheldon Wiseman: It's a difficult question. I suppose it raises a lot of fiscal questions that relate to other industries. I don't know, it's a tough comment.

Mr. Ken Epp: It was such a great stimulus to the economy. We'd probably have more government revenue than the little we get from the capital gains taxes when people finally get around to dying and paying them.

I have one last question with respect to the brain drain. You say higher salaries and lower taxes draw people to the United States—I think Mr. Nifco mentioned that. I understand that's not true, and if you take the total cost of living in the U.S., including health care and everything, it's higher. So your facts aren't right. Do you want to correct me?

Mr. Nathan Nifco: Yes, we have practical experience. In our company we actually lost seven people to the U.S. this year. While it may be true that at the end of the day they don't gain and remain neutral in terms of the cost of living and benefits, in those circumstances they were offered almost double the salary by a U.S. concern working in the software industry. Because they perceived they were in a high tax bracket in Canada, they made their decisions to move to the U.S. in a matter of weeks.

Our case is not unique. We've been consulting with other software companies, and there's fierce competition in terms of skilled labour in this industry. The shortage of labour produces a dynamic such thta companies are recruiting all over the world, bringing people into the software industry and doubling their salaries or giving extra benefits to move and work in those companies.

Mr. Ken Epp: So why don't you, to keep them here, just pay them so much they will come here from the U.S.?

Mr. Nathan Nifco: That's exactly what we propose. We want some of our companies to have access to risk capital to be able to match the salaries and benefits of other countries.

Mr. Ken Epp: Okay. Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Epp.

Ms. Redman.

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

I actually have two questions. One is for the Canadian Automobile Dealers Association. You talked about the fact your industry is unique in the retail industry specifically because the capital requirements of retail auto dealers include inventory, financing and taxable capital. Why are you treated as an anomaly?

Mr. Richard Gauthier: Why are we treated as an anomaly?

Mrs. Karen Redman: What is it about your industry that would have led the government to treat you in this different fashion?

Mr. Richard Gauthier: I think it was strictly an oversight. Automobile dealers, by the nature of their business, just got caught up in the interpretation of the law. They are called upon to carry excessively high inventories. The average cost of a vehicle today ranges anywhere from $28,000 to $30,000. I believe it was just a question of taxable capital being caught up in the interpretation it is given today. That is why we would like it to be redefined to exclude lien notes.

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Mrs. Karen Redman: This may be chalk and cheese, and there may be no sort of bridging of subjects, but one of the things I've learned from the MacKay task force is that leasing automobiles has become an incredibly huge growth market, and something like 46% of new acquisitions are through leasing. How is that handled in your accounts? When I lease a car from car dealer X, does car dealer X still own the car, or do I as the lessee own the car?

Mr. Richard Gauthier: If you're leasing a vehicle, as a lessee you do not own the car. The lessor will own the car and can be the dealer, if the dealer operates his own independent leasing company, or a financing arm, such as a factory subsidiary, General Motors Acceptance Corporation being an example. In either case the lessor would own the vehicle but not the lessee. The fact you're leasing the unit means you're only paying for the right to use the vehicle.

Mrs. Karen Redman: In scenarios A and B you've given, if you as the car dealer are the lessor, is that car then part of your inventory?

Mr. Richard Gauthier: Yes.

Mrs. Karen Redman: So it would show up in that kind of tax structure you speak about here.

Mr. Richard Gauthier: That's correct.

Mrs. Karen Redman: I found it interesting that you used the examples of Manitoba, British Columbia, and Quebec. They seem time-sensitive, and I guess I would ask what the significance of that is.

Mr. Richard Gauthier: I'm not sure I understand your question.

Mrs. Karen Redman: You talked about it being outstanding for over 120 days in British Columbia and over 180 days in Quebec.

Mr. Richard Gauthier: I understand now. It's that way because the provinces have recognized that these are not necessarily fast-moving items, and therefore are apt to stay in inventory for anywhere from five to six months, on average.

Mr. Huw Williams: I guess the basic rationale is those provincial governments have recognized the expense of the items individually, and the number of those items sitting on the lots for as long as they do don't fairly represent the size of the businesses.

Mrs. Karen Redman: Thank you.

Mr. Crevier, you talked about job sharing in your presentation, and I think it's really interesting and innovative. I just wonder who does the job sharing.

If I'm a sole earner in a household, I need a 40-hour workweek. How am I going to get the kind of money I need to support my family if I job-share with somebody else? There must be only a certain number of people in any organization whose lifestyles would lend themselves to job sharing.

[Translation]

Mr. Jean-Marc Crevier: No, and that's why work sharing is on a voluntary basis. Not all of the workers earn the same wage, but two-thirds of the more than 300 people have joined the program on a voluntary basis. There are some who, for all kinds of reasons, did not wish to join, but a large percentage of them did join.

What would happen in the case of people who are in the situation you describe? We don't have any of them in the company where the workers are working. I am unable to tell you to what extent these employees could join the program. We were looking at the effect of such a project on the whole group. It was a three-year pilot project. The federal government's financial contribution was $1.2 million. Since two-thirds of our people joined the program, the federal government contributed nearly $725,000 over three years. We had calculated the return on income tax to the federal government; there was a return of nearly $1.7 million on income tax. For the group as a whole, it became lucrative to adopt formulas like that one, especially since it was on a voluntary basis. That's why we're asking the government to continue this measure and even expand it.

[English]

Mrs. Karen Redman: Thank you.

The Chairman: Are there any further questions? Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman.

• 1705

I want to follow up with the CADA on the leased vehicles because it's a question that came up when we were in Montreal. It has to do with the capital cost allowance treatment of vehicles leased. The basic explanation is CCA provides a faster write-off for accounting purposes, which means that it helps generate cashflow. And as Mrs. Redman laid out, there has been a phenomenal growth in leasing of automobiles. Has that translated in fact into a benefit, because you're doing more leasing than sale of cars, in terms of your ability to generate cashflow to finance growth?

Mr. Richard Gauthier: By “benefit”, do you mean from the standpoint of the profitability realized?

Mr. Paul Szabo: Well, there is a benefit to having the CCA of a leased vehicle. So if I have a leased vehicle and one I just sold outright, which one is more beneficial to the dealer?

Mr. Richard Gauthier: From the standpoint of the dealer who does not own or operate their own independent leasing company, there is no difference. It's just another way of marketing a vehicle, which makes those vehicles more readily available to the consumer today. As Mrs. Redman pointed out earlier, the growth in popularity of leasing is solely due to the increase in the cost of vehicles over the last years as it relates to the average disposable income of Canadians.

Mr. Paul Szabo: Okay. This is important, because you've basically said we need some help, whether it be tax breaks, EI breaks, and so on. What it really comes down to is some sort of tax benefit, and because the automobile dealership industry has shifted from sale of automobiles to almost half its business being lease of automobiles, that means all of a sudden cars that you used to purchase or get from the production, from the factory, would turn over very quickly. You're really not claiming a CCA on them, so there's really no equivalent cashflow generator or tax benefit generator by the fact that you have deferred taxes.

What I'm asking you is, if the people in Montreal who came before us and said the important thing to them is that they don't want to lose the ownership of the automobile by having somebody else finance it, like a bank, does that mean that over time, by changing your business from purchase to a better lease-purchase balance, in fact there has been a significant tax benefit to Canadian automobile dealers?

Mr. Richard Gauthier: Considering that of the 3,500 dealers in Canada approximately 1,300 dealers operate their own independent leasing companies, that would indicate that the vast majority of dealers do not operate their own leasing companies and therefore are not benefiting from the capital cost allowance advantages relating to leasing.

On the point you make, the fact that there's a faster turnover, if somehow you're trying to tie that into the definition of taxable capital, I don't really think there's a relationship there.

In reality, I guess the benefit or the reason leasing has become so popular, as I said earlier, is because of the fact that the price of vehicles has escalated dramatically over the last 10 years, and for the automobile dealer and the manufacturing companies this has proven to be a viable method in marketing their product and making it available to the consumer. At the end of the day, the consumer is the one who has really created the popularity of leasing. They have adopted that formula as a means to be able to acquire a vehicle and change their vehicle on a more regular basis.

Huw, did you want to—

Mr. Huw Williams: Yes, if I can interject, Mr. Szabo, I think the key thing to remind committee members about in terms of CCA is that it does provide a cashflow to the individual dealer's business in a way that if you don't have CCA, you would be borrowing that money anyway. So it's almost like a double whammy.

If you're running your own leasing business, you're getting CCA, which you're immediately allowed to roll over into your own business to keep it going, and you don't have to go out and borrow. If you lose the CCA, not only do you lose the tax benefits along with it, but you then have to go out and borrow it and pay interest on it from your financial partner. So CCA has really allowed dealers to reinvest immediately in their business without having to pay financial institutions for it.

• 1710

A third factor is that the banks are currently involved in leasing, but not only by providing capital to the 1,300 independent leasing companies that dealers operate. Mr. Gauthier referred to this. They also have quasi-lease programs out there such as the Scotia Dealer Value Lease Plan. There are 400 dealers across the country signed up on that program. Scotia Bank has the ability in that instance to provide the interest rate, and to provide the money for the lease transaction. But they're not allowed to collect the title on it, so they're not buying and trading cars because they're prohibited from doing so under the Bank Act. The CCA in that deal doesn't go to the bank, it rests where it rightly belongs in terms of—

Mr. Richard Gauthier: It resides with the dealer.

Mr. Huw Williams: Yes, it rests where it rightly belongs in terms of being able to reinvest in your business. I think that's an important point, and I appreciate you bringing it up.

Mr. Paul Szabo: I agree. It has been a question that took a long time to get answered through all the work, because it's really the title of ownership and where it resides which is the critical value being sought.

I have a quick question with regard to the tools question and the deductibility of technicians' tools. In the automobile industry the practice is that the company does not buy the tools. What is the practice in other industries? Are there any industries where the employer practice is to either purchase or provide an allowance for a technician's tools, so it's the corporation funding the value of the tools?

Mr. Richard Gauthier: I'm not sure I can intelligently speak on behalf of other industries in that regard, Mr. Szabo. I would like to stress that we have often been asked why the employers do not purchase the tools for the technicians. The reality is employers are spending, on average, anywhere from $400,00 to $500,000 to maintain their own diagnostic equipment and to purchase equipment necessary for the maintenance of the new technology being introduced almost on a monthly basis by the factories. I can only speak about our industry in this regard, but certainly I don't believe it is unique.

Huw?

Mr. Huw Williams: I think the important thing to remember in terms of the tax deductibility of technicians' tools is if technicians are running their own businesses they are allowed to deduct those. So why are we penalizing them, because they have to do it as a condition of employment? At the end of the day, the thing that really concerns dealers across the country is this. There are jobs out there for young people to enter as technicians and as apprentices, but these people aren't taking those jobs because they're afraid of the upfront expenditures and the fact that they can't write off those expenditures. This is one of the reasons why, in the coalition on tool tax deductibility, most of the trade colleges in this country are in support of this position.

The Chairman: Thank you, Mr. Szabo.

[Translation]

Ms. Girard-Bujold.

Ms. Jocelyne Girard-Bujold (Jonquière, BQ): I would have had several questions for Mr. Jean-Marc Crevier on his brief, but I know that he has to leave for the airport in four minutes.

The work experience obtained by the employees Mr. Jean-Marc Crevier represents in the Jonquière riding was very conclusive.

You know that politicians rack their brains over finding ways of creating jobs in regions where unemployment is high and where young people are leaving in droves. Young people must be given the opportunity to join the ranks of large companies. The steps taken by the employees, management and the two levels of government have been very conclusive.

I would like Mr. Crevier to give us some clarification and tell us if it would be possible for him to table, with the committee, the statistics that prove that governments should move more and more in the same direction to create jobs.

Mr. Jean-Marc Crevier: The statistics that we currently have were compiled by the Centre for Interuniversity Research and Analysis on Organizations. Our union includes 112 workers who got their jobs back. Our business has 200 employees, some of whom belong to other groups and opted for work sharing.

The Centre for Interuniversity Research and Analysis on Organizations, the CIRANO, is funded by both government and business, and not by the unions. The research conducted by the Centre clearly shows that this type of arrangement is beneficial for society as a whole. They analyzed all of the costs and determined that the money invested in work sharing was easily and quickly recovered. It does not cost anything.

• 1715

Yes, we can provide your committee with the voluminous report that we have. It includes appendices that explain how the program works as well as the negotiation process that was undertaken with the two levels of government and the company.

Ms. Jocelyne Girard-Bujold: Mr. Crevier, as you know, we are studying what is happening elsewhere in the world. When you came to meet me, you always referred to Europe, where this formula is much more advanced. I would like you to tell us about that.

Mr. Jean-Marc Crevier: In Europe, a pilot project was launched three years ago with a view to reducing the work week by two hours. Currently, there are debating the possibility of making the work week 32 hours, thus reducing the work week by eight hours. This reduction represents a significant salary cut, but that the point they have reached. In Europe, they seem to be able to debate this issue and to make the necessary legislative changes. Essentially, it is a debate that involves workers' associations, management associations and government.

Earlier on, Ms. Redman told us that not all workers are in a position to support this formula because of the impact it has on salaries. That is why the pilot project was on a voluntary basis. However, two-thirds of the workers adhered to it. If we could extend this formula to major industries and to the public service, we could create thousands of jobs.

I do not know how we could convince people to participate. It is unfortunate that to make progress in this area at home and to get people to understand that the purpose of the negotiations was to create jobs, we had to mobilize a host of people and almost go on strike. Initially, people perceived us as the fat cats of the system who were only fighting to get richer. But after a year or two, people started understanding that the fight was not for the money, but to give people jobs. People are starting to see that it is paying off. I come from the region where unemployment is the highest in Canada. When 100 permanent jobs are created in various sectors where wages are between $40,000 and $50,000 a year, it is not negligeable. People are talking about it more and more.

Why should it always be the same people, ie the workers, who have to pick up the tab? We maintain that, like the workers, business and both levels of government must do their share. Society as a whole must take steps to give people an opportunity to work.

Ms. Jocelyne Girard-Bujold: Thank you, Mr. Chairman. Unfortunately, Mr. Crevier must now leave.

[English]

The Chairman: Thank you.

Any further questions? Ms. Redman.

Mrs. Karen Redman: I just wanted to clarify. I hope it was clear. I think it's a very creative solution. The suggestion you're making is that it be expanded, and obviously being voluntary is part of it. There are scenarios it wouldn't work for. So I hope you didn't misunderstand. I think it's very creative.

[Translation]

Mr. Jean-Marc Crevier: I do not understand your question.

[English]

Mrs. Karen Redman: No. I've clarified.

[Translation]

Thank you very much.

[English]

The Chairman: On behalf of the committee, I'd like to thank you very much for your excellent presentations.

I think that when all is said and done, there is a common theme emerging in these hearings. This common theme is that we all strive to improve the quality of life for the people of Canada. That's something you all share. I think it is the ultimate goal. Our committee's challange, of course, is to develop a framework that speaks to the reality so eloquently being expressed throughout the country on which road we should take to make sure the quality of life of Canadians is improved.

• 1720

Another issue also emerging quite strongly in the hearings is the issue of increasing or bettering the standard of living in our country through increased productivity. Recent studies have illustrated that the gap between the United States and Canada is widening. I mean productivity in a very positive way. How do we utilize our human resources in the best possible way to achieve the best results for all Canadians, regardless of their income levels and the regions they come from, and the keeping in mind the diversity that is very much a part of our country?

With that challenge, we thank you very much for your input. You can rest assured we will reflect upon the points you have raised this afternoon.

The meeting is suspended.

• 1721

• 1806

The Chairman: I'd like to call the meeting to order and welcome everyone here this evening.

We have the pleasure of having with us the following organizations: the Canadian Teachers' Federation, the Employee Share Ownership & Investment Association, Greenpeace, the Multiple Sclerosis Society of Canada, the University of Western Ontario, and World Vision Canada.

We will begin with Mr. John Staple, the director of economic services of the Canadian Teachers' Federation, and Mr. Harvey Weiner, the acting secretary general. Welcome.

Mr. Harvey Weiner (Acting Secretary General, Canadian Teachers' Federation): Thank you, Mr. Chairman.

[Translation]

The Canadian Teachers' Federation comprises 13 provincial and territorial organizations that represent 240,000 teachers in publicly funded elementary and secondary schools in each province and territory in Canada.

[English]

We appreciate very much the opportunity to present to you some considerations for the upcoming 1999 budget, and we empathize with members of the committee. We imagine you've endured a fairly gruelling schedule of hearings and are probably suffering a bit from brief fatigue. But we hope you may pick up a few nuggets in our presentation that are worthy of retention in the recommendations you will be making to the Minister of Finance for the 1999 budget.

Let me say at the outset that the federation is cognizant of the fiscal difficulties this country has gone through and continues to wrestle with. We appreciate the very difficult decisions committee members have to make in terms of coming to grips with recommendations for the 1999 budget.

We would like to suggest to you that we look at this budget process as not only a budget for 1999, but a budget for the year 2000 and a budget for the year 2001. We would suggest very strongly that, in the recommendations made, commitments on certain issues of priority can be made on a rolling-target basis. We think the precedent was set by Minister Martin in establishing a rolling target for deficit reduction. He has obviously met and exceeded those particular targets. We see no reason why we cannot establish rolling targets on other issues of major concern to Canadians, and on an incremental basis begin the process of improving services that have been damaged as a result of cutbacks.

From our perspective as a federation, when we look at the fiscal dividend issue, our priority is to reinvest in Canada's social programs with a very specific and strong priority on children and youth issues. We would suggest to members of the committee that when you look at issues such as health, which is a concern to the Canadian population, when you look at issues such as education, which is a concern to the Canadian population, when you look at issues such as employment, which is also of concern to the Canadian population, you consider these facts. Education begins at birth. Good health begins at birth. The development of productive, contributing members of civil society begins at birth.

• 1810

If this country's priority becomes—and it should become—the provision for every Canadian child of every possible opportunity to reach full potential, to begin to invest in this and make that commitment politically, to work in unison with provincial governments where there is shared jurisdiction, to work in unison with non-government organizations such as our own and voluntary organizations, which are the service providers to these young children, then we will make a major step forward in improving not only the economy of this nation, but the social well-being of this country.

Every research study that has been done, including the national longitudinal survey of children and youth, financed by Human Resources Development Canada, demonstrates conclusively that early intervention measures pay tremendous dividends at the end of the line in terms of reduced social costs, reduced health costs, and reduced costs of non-productive potential employees for this particular nation.

So to conclude on that particular issue, we feel it is possible to make a much stronger commitment to the issue of children and youth, to put that in the forefront of the upcoming budget, and to indicate the government's intention for the year 2000 and the year 2001 rolling targets on this particular issue that show real commitment for this kind of investment. We recognize that one of the difficulties politicians have is that very often they measure their lives in three-year to five-year blocks, and perhaps don't have that long-term vision. But that long-term vision, when you look at some of the studies that have been done in the United States, Canada, and the Scandinavian countries, studies that are longitudinal in nature, definitely provide conclusive evidence of the arguments I have just made to you.

Furthermore, when we look at some of the recent headlines in the newspapers of the nation, we think that the finance minister perhaps has a little bit more marge de manoeuvre than perhaps previously anticipated. The surplus projections have obviously been very conservative, to say the least, and we do feel that a greater effort can be made in this respect. It is also an issue of credibility for the government when it reports on its surplus figures that those figures are in fact, shall we say, within the ballpark rather than somewhere out in left field.

A number of other issues we would like to highlight briefly in this opening presentation—and by the way, Mr. Staple and I would welcome your questions on this and the other issues—would be the need at this particular juncture, given the employment insurance surplus, to improve benefits and increase access to benefits to those who are contributing to the fund. These are the parents of the children and youth we are talking about. If we help those individuals we help the children and youth of this nation as well.

Finally, my last comment is perhaps a little bit more directed to the specific concerns many of our teachers have as they see the increasing amount of baggage that kids carry to school on a daily basis. They are finding they are putting more out of pocket in terms of supplies and expenses they are incurring because of many of the cutbacks that have resulted, the domino effect, and the way in which those cutbacks have affected the provinces. This certainly has implications in terms of professional expenses that teachers incur.

We're not here making a plea to this government to do what the Korean government did many years ago. For those of you who are not familiar with that, the Korean government has exempted teachers fully from income tax, recognizing the important task they carry out for the children of that particular nation. But we do feel that there are certain tax considerations based on professional expenses that teachers do incur that could be dealt with in a more equitable way than is currently the case.

I thank you, Chair, and we'll be pleased to answer your questions.

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

We'll now hear from the representative from the Employee Share Ownership & Investment Association, Ms. Julia Markus. Welcome.

Ms. Julia Markus (Executive Director, Employee Share Ownership & Investment Association): Thank you, Mr. Chair. And thank you very much for giving me the opportunity to come and make a presentation this evening.

• 1815

It's been very interesting to realize that what the finance committee really does is deal with the well-being of the country. I thought it was technical financial issues. But given that context, in being here to talk about employee ownership I guess I'm here to talk about the economic well-being of the country, which I would say is free enterprise at its best.

There already are, just so that you're aware, employee ownership programs in several provinces where they provide tax credits to resident employees. There's British Columbia; there's Manitoba; Saskatchewan; sort of here in Ontario; Quebec and Nova Scotia.

The problem with it is that they're only able to provide the tax credit to the employees for investing in their companies, and there is so much evidence now that shows employee ownership is so beneficial to all of the parties involved that it needs to come up to the federal level. What's missing to get this initiative under way really is a kick-start so the companies will start considering employee ownership.

I'm pleased to say that it's really a non-partisan issue. In British Columbia, where I'm from, the employee ownership tax program by the government was created by the Social Credit. It's maintained now by the NDP government, and one of the founding members is the Liberal finance critic. It's not a political issue.

I think I can speak for a lot of different sectors of the economy, because in the membership of our association we have public companies, private companies, trade unions, government departments, professionals and academics. And that interesting development in our membership, which is reflected on our board, has come about because in our 10-year history we've always maintained an unbiased role in this, that employee ownership is not to the benefit of one party or another, that if it doesn't have all sides come together and work collaboratively it really won't work for anyone. So we maintain that position, and I think we've gotten a lot of respect for it and a 500% increase in our membership over the last four years.

Some of you may not be familiar with this because it's relatively unknown across the country. So I should define just what employee share ownership really means. It is a formal system a company brings in, which has legal documents and securities regulations, that allows employees to become shareholders in the companies they work for. In Canada generally this happens with employees buying shares. In many other countries, predominantly the United States, employees are given shares as an employee benefit.

It's done because there are a lot of tax incentives. And now the research has shown that the results have been so good in terms of the productivity of the companies involved that the government continues to support it even though I believe their annual budget is something in the order of $12 billion or $13 billion in forgone taxes. They get a net gain of something like 20% in increased tax revenues they generate from that employee ownership.

So that's what it is. But what it does isn't quite as obviously apparent. We have a lot of issues in Canada that employee ownership addresses, and I'm just going to run down them very briefly. I think the best known nowadays, or at least the one most in the news, is our brain drain. We have a lot of employees going south because companies there are offering them more money.

There's no question that the attractiveness of employment with a company is improved somewhat if they are able to have shares in that company. As a result of that, we have the unanimous support of the high-technology sector. They think employee ownership and stock options are one of the very few things that Canada can do right now to make their companies more attractive to employees.

There's also the issue of income assistance at retirement. I think that's well known to be a pressing problem in the future. When employees are shareholders in their company, research has shown that their equity stake increases in value, much as it does when you own a house. So there's going to be less need for government assistance when people can retire and cash in their shares. It's common wisdom that you buy a house so you can build up equity, and the increase in value is going to come to you and take care of you a little bit better.

I think owning a home is a very passive investment compared to working in a company and owning shares in it, because when you own a financial interest in the company you work at, you're able to have a very powerful and positive effect on how it performs.

• 1820

I think we have a slightly more esoteric issue economically, and that's the problem of the concentration of capital ownership in this country. I won't go into it, because there's no time, but having more shareholders of corporate equity means we have more dispersal of capital ownership, which is a very positive thing. It also decreases the income disparity we've got in the country.

When employees buy their shares, as they do in 99% of the cases we see in Canada, this becomes a source of equity capital for small businesses. It's something that's not easy for them to access. Unlike venture capital, it's patient capital and it's local. So that means the equity ownership stays in that local region and it will wait it out.

We also have a fairly large problem coming up as a result of the population demographic. There are a lot of baby boom entrepreneurs out there who started businesses. In the next 10 or 20 years, there's going to be a wave of companies that are going to close down because those people won't be able to find people to buy their businesses. They won't have heirs or children who are interested in taking over the nuts and bolts kind of businesses they started.

Offering an incentive for employee ownership allows employees to buy out those owners gradually over time. This lets them phase out their ownership and recoup their investment in those businesses while not losing jobs.

On a larger scale of business closures, the other thing we're starting to see, especially in British Columbia in the resource sector, is business closures of subsidiaries of owners who are now foreign. Employee buyouts are and have been a way to save those companies and jobs, many of which are still economically viable.

Job creation is also high on the agenda of the government. The study showed that the majority of employee-owned companies create three times more new jobs than their competitors. In fact, we did a study in British Columbia of private companies with employee ownership. It showed that 56% of them actually increased the number of jobs that were in the company since they brought their employee share plan, and three-quarters of them increased by more than 20%. The share value of more than 80% of them increased, while decreasing in only 8% of them.

The Toronto Stock Exchange has done surveys that show the economic performance of companies with substantial employee ownership outperforms their competitors on every measure you can imagine. They tracked public company indexes of companies with employee ownership in the United States and Britain. They outperformed in all the other major indexes, Standard & Poor's, Dow Jones, and Britain's index, by substantial numbers. They were into the double digits.

In terms of national support, Canada is actually lagging behind a lot of other countries. It's far behind the United States, which has had employee ownership legislation for more than 25 years now. They also have it throughout western Europe. It's in a lot of the privatizing legislation in the eastern bloc, such as Poland and Hungary. It's in Japan. It's a very strong and competitive tool in which there's no loser; it's a win-win situation for everybody.

Fortunately, in Canada we do have some mechanisms that can be used for employee ownership. RRSPs can be used to hold the shares of both private and public companies, which is a very good thing. We also have deferred-profit-sharing plans, which can be used for the same thing, and that now can even borrow money. We do have these provincial programs.

But that kick-start is what's going to be needed, because it's not the employees that make the decision to bring in employee share plans, it's the company. I often get asked a confrontational question: If it's such a good thing, why do the companies need an incentive? The truth of the matter is that they all live on very short timelines or financial horizons, and in order to pay attention to something like this, they need to see something on their balance sheet this year.

A tax credit is what we're proposing. First, we're proposing a tax credit of $10 million. This is a pool that would be available for the expenses of companies bringing in a shared-ownership plan for employees, which is one of the most manageable and reasonable things we could suggest. It's not a large amount of money, but in British Columbia this year, they have a tax credit pool of $1.2 million. So if you extrapolate that across the country, it's a modest experiment that the government could try.

• 1825

We're also suggesting that we need an incentive for company owners to pay attention to the idea of employee buyouts as they're going to retire. What has been suggested is a deferral of capital gains tax on the money that owners get from selling their shares to employees, with some proviso that they invest it in another Canadian equity so that the money stays in the economy.

There are also the employees to consider. This isn't something they have ever done, in many cases, and I think that's why the provinces have put these incentives together. What could be done on a national level is to let employees have a tax incentive similar to the labour-sponsored venture capital tax credit. So they could choose whether to use that, which also invests in Canadian companies, or to invest directly in their own company.

The other issue is access to money for employees to buy shares. That's a fairly difficult subject. One of the things we're suggesting is that the Small Businesses Loans Act regulations, not the act itself, could be amended to create a category for employee share ownership loans. There has also been some discussion between Human Resources Canada and the Ontario Workers Co-op Federation of a $16.5 million job-creation loan fund, which would be ideal for employee share ownership also.

The final component that's really needed is an infrastructure of professionals who understand what employee ownership is and will counsel their clients to consider one. To get to that point, they need to be educated on the subject. In order to get educated on the subject, I think we can tie that back into the first recommendation. If there's going to be a tax credit for expenses, then the professionals should have to be educated and accredited in order to do it.

That in itself would create a foundation that would make employee ownership flourish in this country. It's really surprising how many companies come to the association when they've heard about it and say this is a brilliant idea; why hasn't anybody every told us about this before?

If it's only possible to take forward one recommendation, I would make it the first one, a tax credit for the expenses of doing an employee share ownership plan, because strategically it has the most impact.

I know you have to consider many possibilities for incentives to build a new economy, but I think sharing corporate ownership should be the foundation.

Thank you very much.

The Chairman: Thank you, Ms. Markus.

We'll now hear from representatives from Greenpeace, Mr. Steven Guilbeault, officer in charge, climate and energy campaign. Welcome.

Mr. Steven Guilbeault (Officer in Charge, Climate and Energy Campaign, Greenpeace): Thank you, Mr. Chair.

Greenpeace would also like to state its appreciation to the committee for inviting us here tonight.

I'm accompanied by Mr. Richard Legault, from Hélimax, and Mr. Raye Thomas, from New Sun Energy, who will both do a very brief presentation from their industry's perspective on the Greenpeace proposal for the 1999 budget.

My name is Steven Guilbeault. I've been with Greenpeace for about a year, and I've been following the climate change issue since 1995. I was at the first Conference of the Parties in Berlin in 1995. I was also in Kyoto last year and attended various international meetings.

[Translation]

We will make our presentation in both languages in the interest of all participants.

[English]

Why invest in renewables? Wind and solar have the fastest growth rate: last year, wind achieved a 25% growth rate in comparison to 1996, and for solar it was 16%. If you compare that to coal, oil or gas, all three of them were below a 4.5% growth rate in 1997, compared to 1996. Renewables create jobs and build new industries in Canada, help us reach our Kyoto target, and reduce air pollution and premature death in Canada. According to a study done by the David Suzuki Foundation, 16,000 people die prematurely in Canada each year due to atmospheric pollution.

[Translation]

Our first proposal deals with a green energy purchasing program that is based on an existing program in Alberta, where the Department of Natural Resources and the Department of the Environment purchase their electricity from renewable sources, namely wind and biomass. I will let Mr. Legault provide you with more detail on what we are suggesting in that regard, but I would simply like to mention that when we talk about "externalities," we are referring to unpaid costs associated with an activity, which is generally industrial in nature, such as the social cost of air pollution. We talked about 16,000 deaths earlier on.

• 1830

By using various methods that are recognized in the scientific community, we can determine the cost of these "externalities." In the case of our first proposal, which deals with green energy purchasing, savings for society are of the order of $5.5 million per year with respect to reductions in NOx emissions, and savings of just over $34 million per year with respect to sulphur dioxide.

[English]

I would move now to the second proposal, which is a 100,000 solar rooftops program.

As some of you may have heard, Canada is the only major industrial country without a solar rooftop program. The United States has announced a one-million solar rooftop program by the year 2007. The European Community also has announced a one-million solar rooftop program by the year 2007. Japan has already installed 20,000 photovoltaic systems, and their target is to reach 30,000 by the year 2000. The U.S. Department of Energy has a purchase order for 500,000 photovoltaic systems, and sales in the U.S. last year reached $850 million, with 3,800 jobs created for every $100 million in photovoltaic cells.

I would like to quote Mr. John Browne, who is the chief executive officer of British Petroleum, who said very recently:

One day, this industry [solar PV] will be as big as oil.

Not only is British Petroleum talking about solar, but British Petroleum is actually one of the biggest photovoltaic producers in the world.

On the economic benefits of such a program,

[Translation]

Greenpeace would like a 25% tax credit applied to the purchase of a kilowatt system—or, if you prefer, 1,000 watts—which represents roughly one quarter of the electricity consumed by a typical Canadian household. Since the cost of such a system is $12,000 and since we are proposing the application of a 25% credit, as has been proposed in the United States, we are talking about a tax credit of up to $3,000 at the residential level. That would represent an investment of $300 million over an eleven-year period, from 1999 to 2010, or an annual investment of $27 million. With the GST alone, the government could recover $21 million by the year 2010. Moreover, at least 1,800 jobs in Canada would be created and roughly 100 megawatts of solar energy would be produced by the end of the program.

Once again, I go back to the issue of "externalities." In terms of kilograms of various components, this would represent more than 200,000 kilograms of nitrogen oxide per year, 54,000 kilograms of sulphur dioxide per year, and roughly 128 million kilograms of CO². In calculating the annual savings, I left out the CO² simply because it continues to be a subject of hot debate and the community has not yet reached an agreement on the cost, whether it be per ton of CO² or per kilogram. By leaving out the CO², yearly benefits or costs avoided on an annual basis are roughly $500,000.

I will now move on to our last proposal, which deals with the extension of the Renewable Energy Deployment Initiative program,

[English]

or the Renewable Energy Deployment Initiative, REDI. This existing program from Natural Resources Canada gives a tax credit of 25% to commercial and industrial application for the use of what we call “passive solar energy”, which is different from photovoltaic, which creates electricity through the sun. When we talk about passive, we're more talking about solar water heaters, geothermal use of energy. This program has been in place several years already.

Natural Resources Canada looked at the potential for the extension of the program to the residential sector, which is not the case right now. In terms of sales, we're looking at 150,000 units until 2010, an investment of $75 million until 2010, $7 million per year. In GST revenue, we're looking at $21 million by the year 2010.

• 1535

I'd like to point out that in energy savings, just for that project, we're talking about half a billion dollars.

I would like to pass the microphone now to Mr. Richard Legault from Hélimax.

The Chairman: Before you begin, you can probably hear the bells. That's a signal for us to go and vote. We have approximately seven or eight minutes before the vote. So we'll complete both of your presentations, then we'll come back and hear another three presentations, and then we'll have a question and answer session.

Mr. Steven Guilbeault: Before I let Richard go ahead, I would like our presentation to be appended to the committee's final report.

The Chairman: Everything you said is taken into consideration for the report. That is how the process works.

Mr. Steven Guilbeault: It was my understanding that for the report to be appended to the committee's final report, I had to specifically ask for it.

The Chairman: No.

Mr. Steven Guilbeault: Okay. Thank you.

Mr. Ken Epp: Very simply, we have a stack of paper this high.

The Chairman: The substance of what you say is more important than whether reports are appended or not. You can rest assured that we'll be listening very carefully to what you have to say.

Mr. Richard Legault (Member, Greenpeace): Good evening, Mr. Chair, ladies and gentlemen, mesdames et messieurs.

When Mr. Guilbeault invited me to come here tonight to speak as a representative of the wind industry, I was very pleased to accept the invitation because the wind industry is now coming of age. So I will present some statistics and say a few words about my experience in the wind industry.

In a nutshell, Greenpeace is proposing that all federal buildings use green energy, starting with 50% of their consumption, up to 100%, with 10% incremental consumption over five years.

We will follow with a slide presentation.

The green energy definition would favour wind, biomass, and solar energy, although there could be other types of energy. There would be a distribution of green energy purchasing amongst all the provinces of Canada. Just as a matter of reference, Mr. Guilbeault mentioned earlier that there was a pilot program going on in Alberta to promote the purchasing of green energy. That gave birth to a few windmills and it also included a small hydro power project as well as a biomass project.

The second slide shows a few statistics on the federal buildings for all of the country. There are 51,514 federal buildings with a surface of 22 million square metres. The annual consumption in Canada just for the federal buildings is over 3.6 billion kilowatt hours. It's not easy to translate that into something concrete, but it represents $340 million per year in terms of electricity purchased. Those numbers are from the federal government, and I was surprised to see that the average price paid is over 9¢ per kilowatt hour, which is actually very high.

[Translation]

If only wind energy were used, the annual consumption would represent a generating capacity of 1,875 megawatts, or the equivalent of 2,500 industrial-size wind turbines, ie 750-kilowatt wind turbines, which are the most powerful commonly used wind turbines on the market today. These facilities would require an investment of $3 billion, which is a substantial amount.

• 1840

[English]

In terms of benefits, if the federal government was to buy all of its energy consumption from green energy or renewables, such a program would represent 15,000 to 20,000 person-years for the construction phase and 950 full-time jobs for the operation of the windmills. It would definitely send a signal to the industry.

This is, by the way, a very fast-growing industry all around the world. It's now starting in Canada, but we have a little bit of catch-up to do. It's an industry with a 20% growth, annually. It's been 20% for the past three or four years, and it's expected to be that way for the future. It's a high-tech industry, of course.

In terms of the environment, it represents a reduction of CO₂. I'm sitting on the electricity table, and our mandate is to propose solutions to the federal government in the context of the Kyoto Summit. I can tell you that 3.6 million tonnes of CO₂ reduction would represent a substantial amount; 6.6 thousand tonnes of NO_x reduction as well as 16,000 tonnes of SO₂ reduction.

In terms of benefits, there is a 100-megawatt project under construction right now in the Gaspé Bay area in the province of Quebec. That has given birth already to a manufacturing plant assembling the most modern turbines in the world in Boucherville, in the suburbs of Montreal. There is also a blade manufacturing plant here in Ontario.

[Translation]

It is difficult to assess the costs of such a proposal because of the varying views about the costs of one kilowatt hour of wind energy. However, in the case of a major program to purchase green energy, I think that the cost of wind energy would be less than what the federal government is currently spending on energy. When I did this exercise, I became aware of how much the federal government is spending at the moment and I determined the cost of an extra cent per kilowatt hour. That amounts to $300 million over 10 years, $25,500 person years, less than $12,000 per person year and a zero cost after 10 years, since the wind network quickly results in quite an impressive cost reduction. We therefore think that the costs of this program are very limited, if they are a factor at all, when all the "externalities" are taken into account.

To summarize, wind energy is developing very quickly. I would invite you to go to the Gaspé wind energy park, which is one of the largest in the world. Since it will probably be difficult for you to get there, I would encourage you to listen to reports or read articles on the subject.

Thank you very much.

[English]

Thank you very much.

The Chairman: Thank you.

Mr. Thomas, you have approximately a minute and a half to make your comments.

Mr. Raye E. Thomas (Member, Greenpeace): I'm here in support of the program for the 100,000 roofs for photovoltaics. The impact of that will primarily be one of industrial creation. At the moment, with the job creation around the world, it's estimated that by 2010 there will be 750,000 people employed in photovoltaics. In Canada in this past year there were 201 people employed in it. It's growing at the rate of 30% to 40% a year, not the 16% a year that was mentioned by Steven. There is no major manufacturer in Canada. However, we are a knowledge-based exporting type of industry.

For example, my company has over 90% of its business in exports. We're supplying photovoltaics production plants to Germany, for example, at this particular point in time and to the Netherlands and various developing countries. We want to see one happen here in Canada.

The actual introduction of this type of program would create enough of a market in Canada so that you would probably have a 10-megawatt plant in production one year from now. The number of jobs that would immediately be created in that factory would be for about 100 people. Over a ten-year period, we estimate that we would create about 1,600 jobs in the industry, with peripheral employment that could be as high as 5,000 to 10,000 people in the industry.

• 1845

We feel the program is justified. We're competing strongly against other countries that have a very definite program to create jobs to dominate the worldwide industry. We're not getting our fair share, but we have an opportunity to do so. I think if we act now and we have a Canadian government that champions the industry, we have a good chance of being a world leader.

The Chairman: Thank you very much, Mr. Thomas. As you probably know, there will be a question and answer session. Perhaps then questions will be asked so you can expand on your points. We'll have to suspend now because we have to do our duty and vote.

• 1846

• 1933

The Chairman: I'd like to call the meeting back to order, and once again we apologize for the delay. However, we had approximately seven votes or so to deal with this evening.

The next presentation will be made by the representative of the Multiple Sclerosis Society of Canada, Ms. Nickie Cassidy. Welcome.

Ms. Nickie Cassidy (National Social Action Volunteer, Multiple Sclerosis Society of Canada): Thank you, Mr. Chair.

As was already said, my name is Nickie Cassidy and I'm here as a representative of the MS Society of Canada and as a person with MS. I'll speak to you briefly only of the highlights of our written presentation to the committee.

MS is the most common disease of the central nervous system affecting young adults in Canada. The disease may cause vision problems, numbness, loss of balance, extreme fatigue, tremors, and even paralysis. Canada has one of the highest prevalence rates of MS in the world.

Specifically, I'm here to urge you to consider expressing your clear support for strategic spending to, one, provide financial relief for Canadians with catastrophic drug costs; two, implement a fairer tax relief program for people with disabilities; three, increase support to people who cannot work due to disability; four, increase medical research funding; and five, expand the capacity of the voluntary sector to meet the health and social service needs of vulnerable Canadians such as those with MS.

• 1935

Insofar as catastrophic drug costs are concerned, I would like to say that we're not asking for pharmacare. What we are asking is for the federal government to play a leadership role in providing a fair and comprehensive program to provide individuals and families across Canada with protection against catastrophic drug costs.

For instance, in the last three years, new drugs for MS, which have received federal approval, have meant that for the first time in Canadian history there are drugs that can alter the course of MS and delay the progression of disability. MS is now a treatable disease, but at a cost of $17,000 per year on average, most people cannot afford to pay for the drugs themselves.

The MS Society has been active in pushing for the inclusion of these drugs in provincial drug cost reimbursement programs. We have been successful in nine out of ten provinces. However, the level of reimbursement and access criteria vary from province to province. In other words, access to these drug therapies largely depends on where you reside. This is illogical. We urge the committee to consider recommending that the federal government play a leadership role in providing a fair and comprehensive program to provide Canadians with protection against catastrophic drug costs.

A fairer tax relief program. The 1997 budget introduced a number of initiatives that recognized the cost of disability and to reduce the barriers to employment for people with disabilities. These proposals constituted part of the task force report, The Will to Act, and we would like to urge the committee to push for the implementation of all task force recommendations. Specifically, we support significant revisions to income tax legislation to more fairly recognize the extraordinary costs of disability.

The Income Tax Act currently includes two key measures: the medical expenses tax credit and the disability tax credit. However, the administration of the credits make it difficult for people with MS to receive equitable treatment. Specifically, the definition of disability used for the purposes of qualifying for the disability tax credit is far too restrictive. The requirement that the illness be prolonged and severe excludes many people with cyclical or recurring disabilities such as MS. We strongly urge the committee to support changes to the definition of disability, such as the one recently introduced in the Ontario Disability Support Program Act of 1997.

Also, the two credits available assist people or their families who have taxable income. We urge the committee to support the introduction of a new refundable disability expense tax credit combining both current credits and to increase the tax rate used to calculate the credit from 17% to 29% for low-income beneficiaries.

Support to people who can't work. Many people with MS feel that hard-line CPP policies are leaving them with no disability income protection. In 1996, the administration of disability benefits was tightened through legislative measures. Since then we've heard from hundreds of Canadians with MS from all parts of the country who are experiencing difficulties qualifying for CPP disability benefits. Convincing CPP officials that the disabling symptoms associated with MS, including fatigue, are severe and prolonged has been an ongoing challenge. With our assistance, many—and I can almost say most—have won on appeal, but at a high personal cost. Waits of nearly two years are not uncommon. People have had to mortgage their house and almost lose their lives waiting for CPP.

We are also concerned about the new criteria requiring individuals to have contributed in four of the last six years. People with fluctuating conditions such as MS have difficulty remaining attached to the workforce on a full-time and long-term basis. Given that insurance companies often, if not always, deny private insurance to those with MS, these workers are left with no disability coverage at all. The MS Society strongly urges this committee to recommend that the government reinstate the previous criteria, which required contributions in two of the last three years or five of the last ten years.

We concur with the task force on disability issues, which calls for the development of a national income support program for persons with disabilities.

• 1940

On research funding, current federal spending levels for health research are critically low. There is a new brain drain occurring in Canada. We are losing our health researchers to the U.S. and other countries. Of the $76 billion total annual cost of health care in Canada, only 0.3% is spent on research. That amounts to only $10.45 per capita in Canada, compared to $49.49 in the United States. Even raising this amount to 1% would make a tremendous difference. By investing in medical research, Canada stands to gain on two counts: improved health and improved economic output.

We support the idea of establishing a Canadian institute of health research. The proposal to create one organization or structure that would act as the focal point for health research in Canada should be a major step forward. If implemented correctly, the proposal should enhance health research in Canada.

Expand the capacity of the voluntary sector to meet health and social services needs. The MS Society of Canada is dedicated to providing services for people with MS and to fund medical research on this disease. So far, success in fund-raising has allowed us to do this. However, research shows that the average charitable donation made by Canadians is less than $200. The majority of our revenue is from individuals who donate from $25 to $50. The current tax incentive system provides very little tax relief to this group, minimizing the incentive for the average donor to give. This incentive should be increased.

Also, there has been an increase in demand for our services and programs, making it more difficult to fulfil our research commitments. Tax legislation ensures that minimal amounts are spent on administration, but these pressures have the effect that the infrastructure of the not-for-profit sector has systemic inefficiencies, particularly in the areas of technological improvements. We feel that funding for core costs, such as management and technology, should be reinstituted.

Finally, to support innovation, efficiency, and leadership in the non-profit sector, we urge the committee to support the creation of a technology fund, perhaps in partnership with large corporations, that charities could apply to.

In our written submission, we conclude by asking the committee to consider a list of 10 items to help meet the needs of people with disabilities. I'll quickly read them to you: play a leadership role in providing a fair and comprehensive program to provide individuals and families across Canada with protection against catastrophic drug costs; support a recommendation by the federal task force on disability issues to introduce a new refundable disability expense tax credit to replace the disability tax credit and the medical expenses tax credit, and to increase the tax rate used to calculate the credit from 17% to 29% for low-income beneficiaries; make changes to the definition of “disability” and administration of the CPP disability benefits that will ensure people who cannot work due to disability are assessed promptly and equitably; reinstate the previous eligibility criteria for CPP disability benefits, which require that individuals have contributed in two of the last three years or five of the last ten years; support a recommendation by the federal task force on disability issues, calling on the Government of Canada, in conjunction with the provinces, to ensure that an adequate disability income support system is in place and that serious consideration be given to moving toward a disability insurance program that covers all Canadians; increase the level of health research funding to 1% of the $76 billion total annual cost of health care in Canada; support the idea to establish a Canadian institute of health research to create one organization or structure that would act as the focal point for health research in Canada; enhance the tax incentives for modest-income donors; invest in the infrastructure of Canada's voluntary sector; and lastly, increase funding to voluntary organizations involved in the delivery of health-related programs and services.

I would like to conclude by asking you, as you preside over what to do with the modest fiscal surplus this year, to consider implementing targeted spending initiatives that will benefit people with MS and others who have been hit particularly hard by what has been, in real per capita terms, no less than a 20% decline in program spending since 1992.

• 1945

Thank you.

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

We'll now hear from the University of Western Ontario's dean of the faculty of medicine and dentistry. Welcome, Dr. Robert McMurtry.

Dr. Robert McMurtry (Dean, Faculty of Medicine and Dentistry, University of Western Ontario): Thank you very much, Mr. Chairman.

You've certainly heard an extraordinary series of presentations tonight that are highly resonant with the position that I wish to put before the committee. I'll make mention of those as I go through my presentation. I'll certainly endeavour to be timely.

I'm here to talk about health research, broadly writ. I'm here to talk about the three types of health research that would make a transformative difference to Canadians, the health care system, and our economic future and well-being. We are at a crossroads in terms of the decisions that are taken in the next few months. So under three headings, I will speak about the health of Canadians, the importance of evaluation in health care, and the enormous importance of fundamental research.

In terms of the health of Canadians, it makes no sense to me that with the infrastructure that has already been created in this country in at least 16 centres from coast to coast—it's probably 22—that we do not take advantage of this to compel each and every one of those centres to be engaged in population health.

Population health means putting the finger on the pulse of the well-being of the nation. So many things are happening and going awry that place our population at risk. This would include what's happened to children. There's an increasing number of children in poverty. You've heard some eloquent presentations about the enormous importance of early childhood intervention. The evidence on that is very compelling from the Canadian Teachers' Federation. Indeed, the investment in the first two years of existence is one of the most important the government can make.

In addition, we have problems that beset the country with the increasing discrepancy in wealth. That also has an adverse effect on health. We are seeing the determinants of health adversely affected.

Third, you heard a very important presentation from Greenpeace. They spoke about the deterioration of the quality of air. Indeed, it's fair to say that the life support systems of our existence in Canada, as they are everywhere in the world—that means the water, air, and land itself—are being compromised.

The question is, who's measuring it and keeping track of it? It's a frightening question because we're nowhere near to having the answers. But this is not through a lack of expertise or data. What's lacking is a central focus and organization for this to occur.

There are precedents for this. I can cite them for you should you wish to ask the question. Nothing less will do than giving that mandate through something like the Canadian institutes for health research in the population health section. Nothing less will do than a mandate that will keep track of health and well-being in each of the regions in coordination with each other and with an organization such as the Canadian Institute for Health Information.

At the moment, what we're dealing with is opportunity lost. So as you hear these presentations about what's happening to the air, it's very real. In southern Ontario, we're in the dubious position of being the North American leader in low-level ozone. We also have a particularly high incidence of asthma and hospital admissions of people with lung disease and other related problems.

There are other environmental issues. You just heard about MS. Why is it that neurodegenerative diseases are on the increase even when you correct for age? The answer is that we don't know. Why is it that Canadians have so often been affected with MS, the most common of the neurodegenerative diseases? We don't know.

We could be, and should be, doing better in tracking those. What will we do with infectious diseases and re-emerging pathogens? We don't know. In the absence of an organized population health profile organized through an organization such as the Canadian institutes for health research, we will remain in the dark instead of being an international exemplar. So in short, population health is of extraordinary importance.

I'll move now to the second major element of the three I'm speaking of in regard to research, which is the element of evaluation in health care.

• 1950

Some years ago, Judith Maxwell and the Economic Council of Canada—this has since gone the way of all flesh—did a very important study. Her work continues in cooperation with the University of Ottawa and Queen's University. In it they said best practices had the potential for saving as much as $7 billion a year.

Ask yourself this question: why is evaluative research not a co-production of patient care? There has been talk of report cards for hospitals. It needs to go well beyond that. Once again, the precedent for that exists. It is possible and the mechanisms are there, but if you had a central organizing principle, such as the Canadian institutes for health research, you'd know the money you were spending was wisely spent and it wasn't an opportunity cost. You'd know that as we expanded into the future, the investment we were making was a sound one.

You've heard Nickie Cassidy speak to the 0.3% investment. The 0.3% of $75 billion is what we're currently expending. In a document such as this I see the United States is talking about investing more in research. They express dismay because their expenditure in the National Institutes of Health amounts to only ten days' expenditure in the health care system. In Canada, we aren't spending enough to pay for one day. We're completely out of line internationally, and it's extraordinary.

So how are we spending, why are we spending, and is there opportunity cost? Evaluative sciences in health care are what will lead to wiser expenditures for the future, so we don't repeat the mistakes of the past. We have an opportunity to identify best practices and achieve savings. We have the opportunity to have evidence-based health care in a way we haven't in the past and to maintain person-centred care at the same time, so each individual is treated as such.

The third and final part of the research portion I was going to speak to is fundamental research. There is a very sad story to tell about the brain drain, and you've heard it again and again from other witnesses speaking from other directions. I can tell you five stories from the past year.

There is the biochemist who went to a job in Hong Hong because the resources offered were fourfold what we could muster. I could tell you of the cancer researcher who's just gone to the American southeast with a similar funding story, especially for being able to do his science. I can tell you the story of a transplant surgeon who went to St. Louis and a neurosurgeon who went to Detroit. Their stories are repeated and retold. We just lost a pharmacologist and a toxicologist—terribly important areas—to Pittsburgh. How much more often will the story have to be told across the country until we awaken and give our young scientists a future? We are simply non-competitive.

What will it take to awaken us? Who is going to give the answers to the sorts of questions that are being posed this evening, whether they are from Greenpeace or the Multiple Sclerosis Society?

We're missing opportunities. People who are our most talented and brightest youngsters are going from being part of the Canadian team to being the competition. The question is why.

I'll close on the element of fundamental research to say to you that it's often thought of as a nicety as opposed to a necessity. Let me say without fear of contradiction that there is no such thing as a complex tertiary or quaternary care program that is not research-intensive. It does not exist. Research, education, and care missions are profoundly intertwined, and to fail to invest in one is a serious error. It is tomorrow's health care.

When you talk about fundamental research in future care, when you talk about population health, where do you target and focus on the needs? That's the needs-based analysis. When you talk about evaluative sciences, that means avoiding the opportunity cost in the areas we've created in the past.

So in the final analysis, we're speaking about the future. We either invest now or we will retell the story of the Arrow when we dismantled the world's most advanced airplane. We are in the process now of dismantling the world's best health care system. Will you act? Will this government act and try to make a difference? It's spread so widely to every sector of society. It's not money spent and lost; it's money that creates jobs because jobs in science and research are competitive with any job sector in terms of 30,000 per job year.

• 1955

It can create start-up companies with shareholder employees, which is a very important issue we heard earlier. It will contribute to growth. So the question we're asking ourselves in the final analysis is, how much do we really believe in the future of Canada?

Thank you.

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

We'll now hear from World Vision Canada. Is Ms. Linda Tripp not here?

Ms. Kathy Vandergrift (Senior Policy Officer, World Vision Canada): I'm here in place of Linda Tripp, the vice-president for advocacy and government relations, because she is coordinating World Vision's response to the emergency in Central America right now. She sends her regrets.

The Chairman: Welcome, Ms. Vandergrift.

Ms. Kathy Vandergrift: Thank you. World Vision Canada appreciates the fact that last year's budget halted the very large cuts to overseas development assistance and recommitted Canada to the goal of 0.7% of GDP to help our neighbours in the poorest countries. However, if we are serious about meeting the 0.7% target, the 1999 budget must include a real increase in development assistance, which is currently at 0.27%—a 30-year low. It's at the lowest point since the countries adopted the 0.7% target.

Members of the committee may be interested in knowing that other countries have managed to deal with deficits and maintain their ODA levels above the 0.7% international standard. I cite for you Sweden at 0.76%, Norway at 0.86%, Denmark at 0.97%, and the Netherlands at 0.81%. These are the countries Canada likes to be compared to in the international arena. If we want to continue that, we need to address our own record in overseas development assistance.

This is not just a matter of noble targets and feeling good about our generosity. World Vision Canada knows from over 45 years of international experience that investing in basic human development is essential for Canada's trade agenda and its role in international affairs. The Canadian government has given a high priority to expanding trade, and we are reaping the benefits of that, even in developing countries. In fact the disparity between what we take from developing countries and what we contribute has grown rapidly. Canada now receives $1.65 in income from loans and investments in poor countries for every $1 spent on aid in similar countries.

We hear a lot about the concept of a level playing field in international trade. Development assistance is key to creating a genuine level playing field for long-term healthy trade. We brag about being number one on the UN development index. We should also be number one in helping people who lack some of the basic resources for development.

World Vision Canada recommends that the finance committee support an increase in ODA, but not a blanket increase. The increase should go to meeting basic human needs such as basic education and health care, targeted to those most in need. Targeting the poorest may seem self-evident, but in fact our aid to sub-Saharan Africa, one of the poorest areas in the world, has dropped by 30%, which is more than the total drop in ODA. Our aid to the 48 least developed countries has declined by 33% since 1992, compared to an overall decrease in ODA of 21%.

Basic human needs are needs that will not be met by private investment and trade, but they are essential for full participation in a global economy. In Canada we recognize the importance of education and health for our own future. The same is true for people in other countries who do not have the same capacity we enjoy. I would remind you that the foreign affairs committee last year unanimously endorsed increasing the portion spent on basic human needs.

A clear focus for development assistance on basic needs and poverty reduction would also help to build public support for it. It is the humanitarian aspects of international development that are strongly supported by Canadians. Last year Canadians donated more than $100 million to World Vision for that kind of support.

• 2000

Tying aid to trade or jobs in Canada has often resulted in poor targeting, inefficiencies, and resulting public skepticism about international development.

Finally, we have a comment about ODA and our role in the international arena. World Vision Canada is excited that Canada won a seat on the Security Council. We will continue to work with the Department of Foreign Affairs on important initiatives such as eliminating land mines and the new drive to protect children from the impacts of armed conflict. But our ability to use the seat on the Security Council to build alliances and to influence international decisions for peace will depend on our contributions to international development.

Human security, the goal of our foreign policy, is directly related to social development goals. So to achieve our Canadian objectives in international trade and in international affairs, the 1999 budget should include an increase in international development assistance targeted to invest in the basic social development in countries with the greatest need.

Thank you.

The Chairman: Thank you, Ms. Vandergrift.

We'll now move to the question and answer session. This will be a 10-minute round starting with Mr. Epp.

Mr. Ken Epp: Thank you, Mr. Chairman.

I would like to thank each of you for your presentation. You all focused on different areas we should look at in our budget thinking, and I'd like to begin with the teachers' federation.

You indicate the EI surplus should be used for education and for health and so on. Is that as a result of having checked with your members? I know you represent the teachers, and then of course we have the trustees' associations—the employers, so to speak. I'm just wondering whether you represent the wishes of teachers across the country on this or whether this is just something you came up with in your own little group. I'm just trying to find—

A voice:

[Editor's Note: Inaudible]

Mr. Ken Epp: Something like the Liberal Party, yes.

Mr. Harvey Weiner: I'll try not to take offence at that comment.

We have a fairly extensive consultation process involving our member organizations, who are the provincial and territorial affiliates representing teachers. Teachers probably make the largest net contribution to the EI fund of any group in terms of drawing benefits. We feel well-placed to argue for the expansion of benefits to those who are entitled to those benefits and the increasingly large pool of individuals in this country who are unfortunate enough to not have jobs or have given up hope of ever finding jobs.

So it's definitely a position that has been carefully considered and developed at the national level.

My colleague John Staple may want to add something to this.

Mr. John Staple (Director, Economic Services, Canadian Teachers' Federation): I think like many other groups, we are asking ourselves the question as to whether or not the EI reform measures are doing what they set out to do. I think in many respects the measures have missed the boat or don't respond adequately to the types of non-traditional work patterns of many Canadians, particularly part-time workers.

In a system that purports to offer benefits from the point in time when the first dollar is earned, there are large numbers of Canadians in continuing contracts or permanent positions that are not of a full-time nature, let's say, and who have established those work patterns over a period of years, but who will never be able to collect the benefits they pay for.

• 2005

What makes it even more difficult for our members to accept is the fact that these individuals are not able to access regular benefits, but they cannot access the specialty benefits under sickness and maternity that other individuals in permanent positions in a more full-time capacity can access. We see that as a fundamental weakness of the system.

Mr. Ken Epp: I should backtrack just a little bit. I wasn't questioning your process; I wanted to know what your process was. I wasn't meaning to offend. My apologies.

With respect to this, basically what we have is a balanced budget in Canada now. One could argue that it's a result, totally, of the overpayments into the EI fund, since the accumulated surplus in the EI fund altogether succeeds probably by a factor of one and a half our total accumulated surplus in our budget in the last year or year and a half. I want to know whether you think it's only employers and employees who should be doing this or whether it should be spread across all Canadians. That's one question I have.

You're also basically saying you would not want to see the EI premiums reduced. You would still like to have every employer and employee, together, pay about $850 per year more than they should to keep it sound. You'd like to keep it that way and instead increase benefit availability. Am I right in hearing you say that?

Mr. John Staple: I don't believe we addressed the contribution rates at all. In our presentation and in our remarks following that we addressed the fact that the legislation, in its current form, has resulted in significant surpluses for one major reason. There are many more people paying the contributions and too few people who should be getting benefits who are unable to become eligible for those benefits. So we did not address the contribution rates, but rather we addressed those elements of the system that prevent people from obtaining benefits that we think they should legitimately be entitled to.

Mr. Harvey Weiner: In answer to the first part of your question, these are moneys paid by employers and employees, unless we want to consider this a special tax that's going to be based on employees' and employers' contributions, which is going to fund all sorts of other things. It would be more upfront to increase other tax rates that would spread right across the population.

So you're quite right in your assumption that we see this as moneys that belong to the employees and the employers who have contributed. Our view is that there are too few at the moment who are eligible for benefits. That pool can be expanded and the benefits and the conditions for obtaining benefits can be expanded. We're looking at an unemployment rate that's relatively high, but it is masked, obviously, by very large percentages of individuals who just simply don't appear on the unemployment rolls because they've given up looking for work.

Mr. Ken Epp: I want to ask Ms. Marcus a question or two.

You made a very interesting presentation, and I don't know if you've studied the experience of the Japanese people. They use this model a lot in their companies— and also building retirement funds. Basically, in your lifetime you earn shares in the company you work for; that will be your retirement source of funds. Hence, there's a little motivation there to make sure you do things that are good for the company in the long run, instead of just for this week or this month.

You indicated that you needed some incentives and you talked about tax credits. I'm going to ask you specifically, tax credits for what?

Ms. Julia Markus: The key priority would be a tax credit for the expenses that a company incurs in putting together an employee share ownership plan. We use that recommendation based on the research and development tax credit, because one of the sectors that will take this up quite strongly is the technology sector, and they understand that.

• 2010

If you allow a tax credit based on the investment, you have no way of controlling how much that's going to be unless you limit it as a pool. In British Columbia, where they cap the amount they will provide an incentive on in terms of what the employees invest, we found that the employees generally will invest up to that limit and no more.

So we would like to see a tax credit on the expenses with some reasonable regulations determined by the size of the company and the size of the investment they raise from the employees.

Mr. Ken Epp: When you speak of a tax credit then, you are basically saying this could be achieved by not including that as taxable income or by being able to write it off as an expense?

Ms. Julia Markus: No, that's a deduction.

Mr. Ken Epp: I know that's a deduction. How would you determine the size of this tax credit? You're actually asking the government to subsidize the costs of doing something that's good for everybody.

Ms. Julia Markus: Yes. And it's not dissimilar to what the provincial government does in British Columbia. They will reimburse directly 50% of the costs of setting up an employee share ownership program. They call it a cost-sharing incentive.

We find that still isn't an incentive for a company to recoup it. A tax credit for the expenses has the benefit of especially incenting companies that aren't in a profit position yet but will be, and that applies to the technology sector in a big way.

Mr. Ken Epp: On interest-free loans, who pays the interest then? Money is never free.

Ms. Julia Markus: This is a discussion the Canadian Worker Cooperative Federation is having with Human Resources under the job creation fund.

I believe the idea was that the job creation fund would set up this pool. The payments back to the government would be interest free and it would be self-perpetuating that way. The employees don't get it interest free. It's a pool of interest-free capital, and then the interest on the payments helps that grow, much like the community economic development fund.

Mr. Ken Epp: If the government provides interest-free money, whether it's in a pool or whatever, that comes from the taxpayer and the taxpayers are the people who earn it. In some cases it would be businesses that are competing with the fact that they are now forced through this tax system to subsidize it so that they can reorganize. Is that a wise way of doing it?

Ms. Julia Markus: One would think that would be quite an incentive for them to get on the program.

Mr. Ken Epp: In other words, your agenda is to try to reduce the amount of individual ownership of companies and businesses and to increase employee-owned businesses.

Ms. Julia Markus: I agree with what you're saying, but what you said isn't quite the way I would put it. Our objective is to increase individual ownership of businesses. All the employees would own common shares of the company and they would purchase them. And if they wanted they would be able to borrow the money.

It's one of the problems of companies of any size. The employees just don't have enough money to buy a substantial position in it. There needs to be some formula somehow or other to get that money into their hands.

Mr. Ken Epp: There are not many companies that can afford to do what IBM did over the years. They provided employees with a share of the company through regular contributions to buying shares, and the company used to give them at a guaranteed price.

Ms. Julia Markus: As a matter of fact, quite a lot of public companies in Canada encourage their employees to buy shares by giving them a two-for-one deal or a one-for-one deal. That is a little bit difficult for private companies to do because the ownership is so tightly held.

Mr. Ken Epp: It's interesting. I think I heard what you said.

Moving along to Ms. Cassidy, since I have two friends who have MS, your position actually was not news to me. I hear from these people and from others how difficult it is to cope with both the disease and the costs of survival with the special needs there.

We are again going to talk a little bit about tax credits. You indicated you wanted to have an increased tax credit to 29% for something specific, and then I ran out of ink here.

• 2015

Ms. Nickie Cassidy: The tax credit would be increased for those with low income. From 17% to 29% is what the MS Society is recommending right at the moment.

There are two separate tax credits at the moment. There is one that deals with expenditures directly related to an illness—in our case, MS. There is another one that is an employment tax credit; in other words, I'm employed and so I can apply for this disability tax credit, and if I don't make enough money, a spouse or family member can do so. This doesn't do a whole lot for people who are not currently employed.

What we are proposing is, instead of having the two separate programs, that they be combined, and in the case of low-income families or family members of people with MS, we are proposing that it be increased from 17% to 29%.

Mr. Ken Epp: Okay, and it would be a refundable tax credit.

Ms. Nickie Cassidy: Refundable, yes. That's the key word. Thank you.

Mr. Ken Epp: Okay.

You talked about catastrophic drug costs, and then you said, “But I'm not promoting pharmacare”. Why did you throw that little phrase in, that you're not promoting pharmacare?

Ms. Nickie Cassidy: Pharmacare and catastrophic drug costs are not the same thing. Pharmacare would cover, from what I can understand, every drug. hat we're talking about are drugs like Betaseron, which is the first of the drugs that were federally approved. Currently it depends on where you live. The only province not covering the costs at the moment is New Brunswick. In the nine other provinces, there is a way for you to apply; there are certain methods for you to pay for it. But the bottom line is that the cost to individuals or their families to get this drug, which in fact treats the disease, is approximately $17,000 per year. We're saying that's far too much.

We as a society are self-funding. All of our funds come from our fund-raising efforts. We get no funding from any kind of government. But the demands for people needing assistance for that while they're waiting in the province of Ontario, say, for Trillium funding to come through for them to assist them in their payment— In other provinces there are other ways.

In other words, right now there are ten formularies for ten provinces. There are some provinces that cover a certain proportion of the costs—some lower, some higher. It's ridiculous that if you have an illness like MS in Canada, it depends on where you live what kind of help you can get with the drugs you're getting. We're not talking about a prescription for something like clonazepham, which costs maybe $30 a prescription; we're talking of thousands of dollars per month.

But it is visible in many of our members who are now able to access those drugs that they're still able to work; they're still able to pay taxes; they're still able to contribute to society. These drugs are not a cure; they are a treatment that allows people to carry on and lead much more normal lives, if you will. I hate to use that word “disability”, but I think you know what I'm getting at.

Mr. Ken Epp: It alleviates the symptoms.

Ms. Nickie Cassidy: Yes, it does. Well, it does a little more than that. In some cases, it almost eradicates them and pushes them back for certain individuals.

Obviously, like any other drugs, it doesn't work for everyone, but for a large segment of people with MS, with the exacerbating, remitting kind of MS, these drugs do work, but the costs of them are what we call “catastrophic” when you're talking several thousand dollars per year.

Those are the ones on which we're looking for some kind of leadership from the federal government for the provinces. I'm not sure how you go about that; that's up to you, of course. But we need some kind of leadership so that individual people don't have to go through ten formularies, ten provinces, and ten ways of trying to find help in funding for drugs that for them are quite vital.

Mr. Ken Epp: We would have to let the policy wonks work out the conflict between federal and provincial jurisdiction on it, but I certainly—

Ms. Nickie Cassidy: Certainly there must be some way of getting federal leadership when it comes to something as high cost as that. Under the old CAP program there was direction for that kind of thing. We're not saying go back to the future, or even pharmacare; we are saying that these catastrophic drugs are a real burden, not only to individuals, but to the society who are trying to help these people to pay for them. It really is ridiculous. It depends on where you live whether or not you get help for it.

• 2020

Mr. Ken Epp: Okay. I have questions for the others too. Should I quit, Mr. Chairman, or do you want me to carry on?

The Chairman: I don't think you should quit, but I think you should stop asking questions.

Mr. Ken Epp: Okay. I'll be fair to some of the other members of the committee. If there's time afterwards, I'll be back.

The Chairman: Thank you, Mr. Epp. We appreciate that.

We'll go with Dr. Bennett, followed by Mr. Fontana.

Ms. Carolyn Bennett (St. Paul's, Lib.): My first question is for Dean McMurtry. In trying to explain to people what you mean by co-production, is that sort of measuring quality as we go? What do you mean when you say co-production?

Dr. Robert McMurtry: Exactly that—the key element being that the patients are actually partners in it and very much informed. When that happens, in fact satisfaction goes up. The model of which I speak is one in which as care is carried on, you're gathering information that would relate first to patients' satisfaction and second to the measurable biological outcome to show that you have indeed had an influence on quality-adjusted life years. I don't know if that phrase makes sense to you.

Ms. Carolyn Bennett: Yes.

Dr. Robert McMurtry: The quality and duration of life are both being measured, and you're looking to be sure that what you're doing is resulting in an optimum benefit for the person individually and of course in cohorts.

Ms. Carolyn Bennett: The best practices and the savings that would come from that—are you calling for a set of national standards on best practices?

Dr. Robert McMurtry: I'm inclined for principle in best practices. There's no such thing as a national standard. I think that's one of the difficulties we can get to. I think you can have national standards on single pairs, such as we do with medicare, but you can't have national standards on the care for an individual.

For example, if an individual has a simple injury like a torn ligament, there is no logic to say there's a national standard, because depending on whether they're a single mother or a corporate vice-president, a concert pianist, a competitive athlete, or a pensioner, the treatment could easily vary. That's what I mean by patient-centred. We will never want to lose track of that.

What I'm getting at is that as you do the standard interventions you are looking at, the cost of them, to be sure that you're doing the thing that is least intrusive for the patient, at the best available cost—

That's why I have a bit of a negative reaction in talking in terms of national standards. The standards should be that we always make that an inquiry, that we always do critical appraisal of what we're doing. That should be the standard. In terms of giving answers for every intervention, you can't do it.

Ms. Carolyn Bennett: I guess one of the things that's been interesting is really how far behind the health care sector is in information technology. As we set that up, I think a lot of us hope there will be an ability to measure as we connect. I'm wondering if you think there could be a way of setting acceptability standards in terms of quality measures, whether that's cardiac waiting lists or waiting lists for total hip replacements. If we aren't measuring those things in a uniform way, it's very difficult to set up the differences across this country and then be able to allocate. So when we talk of health report cards, we need to be able to measure these kinds of things in a very similar way. There has to be some accountability in terms of how the resources are allocated.

Dr. Robert McMurtry: I'm not sure if there's a question there. I agree with most of what you're saying.

Ms. Carolyn Bennett: I guess when I'm talking about national standards, we would have to know that in Halifax people are waiting two years for a total hip replacement and in Toronto it's three months. I have to say—

Dr. Robert McMurtry: There's something wrong here.

Ms. Carolyn Bennett: —there's something wrong here. Or that Interferon or certain drugs are paid for in certain provinces and not in others— We are saying, accessibility to what? Bargain basement care or high-quality care?

• 2025

Dr. Robert McMurtry: To appropriate care.

What really troubles me about waiting lists as a measure is that quite often the standards for why a person would be on the waiting list aren't the same. Total hip replacement is a great operation, but that's not what we're talking about. We're talking about people who might be in need. We have to have reproducible measures to show that it's appropriate that they're on the waiting list, and that's what's lacking.

The good news is that there is an explosion of growth and information in communication among at least the 16 centres across the country. The capacity for doing that does exist. The interest in looking at outcome appraisals does exist. The capacity for critical appraisal of your outcomes does exist, and indeed critical appraisal of who should be on the waiting list. I can say that in the past, some of the waiting lists weren't a legitimate reflection of need.

Ms. Carolyn Bennett: I would be concerned about the waiting list for a hysterectomy, in that if there are ten times the hysterectomies done in one centre as in another—

Dr. Robert McMurtry: Something's not right.

Ms. Carolyn Bennett: —for exactly the same condition, something is wrong again.

Dr. Robert McMurtry: Correct.

Ms. Carolyn Bennett: In terms of the government's choices in this next budget, do you think there are things you would want the federal government to focus on? I think you've made a good case in terms of health research, but there's going to be a debate in terms of raising the CHST, giving money with strings. Do you have an opinion?

Dr. Robert McMurtry: As always, but I thank you for the opportunity to speak to it.

I think the federal government constitutionally separated research from care. I would say that is a dichotomy that serves no one well, and the greatest task facing the federal government is to bring them back together. Under the Constitution, the area where you can make a direct investment and make the most enormous difference is through research, population health, the evaluative sciences, of which you have been speaking so eloquently, and of course the fundamental research, which will give us the near cures and approaches to help with neurodegenerative diseases like MS.

Ms. Carolyn Bennett: Are you comfortable that this CIHR, as it's been proposed by Dr. Friesen, will deal with these important things? There has been some criticism that it's a very medical model and that perhaps population health, or prevention or things that work in prevention, things that don't work in prevention or at the evaluative sciences— Do you feel that the trends from hospital to community care and doctors to multidisciplinary care are properly reflected in Dr. Friesen's proposal as it is right now?

Dr. Robert McMurtry: In a word, yes. I think Dr. Friesen would be the first one to say that if it didn't, then it ought not to be funded.

I have a conflict of interest, because I am on the Medical Research Council. But the point is that all of us have been using phrases such as “molecule to community”. We feel very strongly about the need to have a partnership with the regions and communities we serve.

We feel that in the absence of population health we would be missing the boat. And it's not an either/or proposition. So the trends you talked about, from one profession to multidisciplinarity, from the pure biomedical model to the broader vision of health research, are embraced.

Henry Friesen has been heard to say at MRC that he would like to change the name to the Health Research Council. And he means it. So I think those criticisms are based on perhaps historical stereotyping, as opposed to current realities. There is nothing more reassuring than speaking to Dr. Friesen on the way he has partnered, I think effectively, with SSHRC and NSERC and the voluntary agencies in this. You've heard from MS and also the Heart and Stroke Society as well as the National Cancer Society and the Canadian Arthritis Society. So I think he has been very broad in his view.

Ms. Carolyn Bennett: On the catastrophic drug, Ms. Cassidy, could you explain how you think that would work—how the federal government could actually help with this. Or is it part of—I don't know how to put it any other way—national standards that say these things just have to be looked after in the provinces?

• 2030

Ms. Nickie Cassidy: I don't think there's any way around it other than to do that.

Ms. Carolyn Bennett: With something that costs $17,000 a year, it's a bit unreasonable for somebody to have to go fill the prescription and wait three months to be reimbursed, right?

Ms. Nickie Cassidy: Sometimes it's six months, depending on where you are, or even longer. I can obviously speak more about Ontario. Look, with ten formularies and ten provinces, I can't keep them all straight in my mind. I couldn't bring everything with me, so I can't tell you individually how it works in each province. I can tell you it's different in the nine out of the ten provinces that are funding it.

In Ontario, at the moment, people with MS have to pay for the first six months. Then they apply for Trillium funding to then get the funding back again. There are changes in the wind to help that out, but it hasn't happened yet.

Ms. Carolyn Bennett: Okay. Can you just explain for the committee the disability expense tax credit as opposed to the disability tax credit? Can you help us with what the criteria would be?

Ms. Nickie Cassidy: All right. As for the disability expense tax credit, for instance, air conditioners are now tax deductible for people with MS, but you have a limit. At the moment, you'll get a 17% tax credit on your income tax if you earn income or someone in your family earns income. I'm employed. There's a disability tax credit for working people. So there's a certain line where you get the personal exemption. Then there's another line for the disability tax credit.

This happens if you can qualify. Another thing we're asking for is a change in that definition.

A few years ago—I think it was in 1996—the federal government changed the criteria. They made it so difficult that if it had not been for my problems with—I'm going to be blunt right now—my bladder and bowels, I wouldn't have qualified for that. While I work, I do need extraordinary— I think I'm considered disabled for almost any other program, so how come I'm not disabled when it comes to income tax? If it were not for that one loophole, I would not get the disability tax credit as it's currently worded. That's highly unfair.

The second thing is the expenses I incur personally for my walker and the various aids I have to get. The Province of Ontario used to fund this, but it just doesn't any more. It does it to a certain point, but it's so little. My insurance company covers some of it, but we're talking of fairly extraordinary costs.

I've got MS. My husband has a heart condition and psoriasis, and he's a diabetic. My daughter has asthma and allergies. Our drug costs in our household average about $1,500 a month. I can only speak for me at the moment. By the time the end of the year comes, I'm only allowed 17% of that, which I'm not arguing with.

But what about the families who don't have an income and still have those kinds of costs? If they don't have any kind of drug plan, where do they get the money to pay for this right now? Well, they don't. How much they're getting depends on where they live. What we're saying is we need some kind of federal direction. I know we got away from it when CAP died, but somehow or another, this has to be replaced. Some kind of federal direction has to be given to the provinces to extend funding.

Ms. Carolyn Bennett: The issue is that you would like some tax credit on expenses. When we talked to the cystic fibrosis people, they obviously also have an issue, because breathing doesn't seem to be something that's listed there.

Ms. Nickie Cassidy: Neither are ostomy supplies listed there.

Ms. Carolyn Bennett: Do you think the groups could come together to find a definition of disability that would help us?

Ms. Nickie Cassidy: Yes.

Ms. Carolyn Bennett: Governments don't deal very well with problems; they like solutions.

Ms. Nickie Cassidy: Yes, we've been all through this in Ontario. When the ODSP came in last year, this was fought over and argued with. Every group with a disability made presentations. We came up with a definition of “disability” on which we all agreed. In any kind of community, including the community of people with disabilities, this is unusual. We have all agreed that the definition of “disability” as it currently reads in the Ontario Disability Support Plan Act is the one we would like to see for income tax purposes.

• 2035

The Chairman: Thank you, Dr. Bennett.

Ms. Redman.

Mrs. Karen Redman: Thank you, Mr. Chairman.

I'd hate to monopolize this one witness, but there's one thing I'd like to touch on with Ms. Cassidy, because it's certainly something I've heard in my riding. I represent Kitchener, and I believe that we have a huge incidence of MS. I was therefore amazed to see we're not on the list of places where you have your offices.

Ms. Nickie Cassidy: It's part of another office.

Mrs. Karen Redman: Oh, okay.

When you talk about CPP and disability benefits, and the difficulty in getting them, could we address the episodic nature of MS through definition or criteria? It's certainly something I've heard from my constituents, and I think it needs to be attended to.

Ms. Nickie Cassidy: I wish I'd been able to bring all of my background documentation, but I believe there were five or six points at which there was a critical question about the word “or” as opposed to “and”. You suffer from “blank”, and it then used to read—as it does in the federal definition right now—“and it has to be prolonged and severe”. Nowhere in there can it be “or”. It could be “prolonged and/or severe”, but in the case of MS, about which I can only speak, it is sometimes definitely prolonged. It's a life-long sentence. It's not going anywhere. Is it severe? Not always. I'm sitting here this evening, and I've been doing very well recently—mainly because I have a cold, as strange as that may sound—but the fact is that there are some days when I have to use a walker and there have been some times when I've needed to use a scooter. It's a disease that waxes and wanes, but we don't know why. I'm sure Dr. McMurtry would agree that if we could find that out, we'd all be very happy indeed, which is why we need more research money.

As far as the disability definition is concerned, it's very important that we get it right federally as well, for all of these reasons. It's already right in Ontario for certain deductions, but getting it right federally is what we'd like to see.

Does that answer your question, or did I lose it somewhere along the line?

Mrs. Karen Redman: Yes, that's fine, because my question was basically whether it could be done through the definition.

Ms. Nickie Cassidy: Yes, because for the CPP right now, what they're saying is you can't get benefits because your illness is not both prolonged and severe. If you had the right definition, then there might be less of what the CPP people are saying.

The kind of fatigue you get with MS is almost indescribable. It's not a fatigue that makes you tired. It's a fatigue such that you are almost totally incapable of doing anything. It's something I've never been able to describe adequately. I don't know if there is an adequate definition of it, but it's an all-encompassing drawing of power from you. How do you tell a CPP person who sees someone walking across the room that, at that moment, she is so chronically fatigued that if she tried to start working, she might last ten minutes and then doze right off on the table?

Mrs. Karen Redman: I do appreciate that you have answered my question. I was actually also looking at recommendation 4, in which you suggest that we revisit two of the last three years, or five of the last ten years as well.

Ms. Nickie Cassidy: Yes, that's very important as well, because in cyclical diseases—and not only in MS—people are able to go into remission. They are able to work for a couple of years sometimes, and they think they have it beat because they're in remission and everything is going to come out well. But, boom, what happens is you wake up one morning and that's it, you're not able to do it. With the more restrictive criteria we're seeing now, more and more of our people simply cannot collect on insurance they've paid into for many years.

Mrs. Karen Redman: So your suggestion is that the definition and criteria are one component, but we should also revisit the eligibility rule.

Ms. Nickie Cassidy: Yes.

Mrs. Karen Redman: Thank you.

I'd like to ask something of you, Ms. Vandergrift. I don't have a written submission, but I really enjoyed your presentation. You talked about the reduction in the basic human needs at a greater rate than the actual overall reduction. Given the fact that we are working towards a target that would see us increase more funding on an international scale, if we reallocate that, would you see us reallocating it while not funding some things that are currently getting money, in order to look after these basic needs?

• 2040

Ms. Kathy Vandergrift: Certainly, part of it could be reallocating what exists. There has long been a goal that at least 25% of ODA should go to basic human needs. If we are going to move forward to the 0.7%, I see an opportunity for us to do so strategically so that we get maximum benefit in responding to the needs. As we move forward, we can then make sure it goes into that category. That's the easiest time to do it.

Mrs. Karen Redman: Thank you very much. I do appreciate that. It certainly goes along with the kind of strategic reinvestment this government has made in the past.

If I could, I'll quickly ask a question of Greenpeace. You were interrupted by the vote, which was really unfortunate, because I was really enjoying your presentation. A couple of times, in passing, you talked about the Kyoto protocol. With the recommendations you are making, which I think are basically over a three-year period and are looking at two kinds of energy—wind energy and solar energy—how would that bring us along with the undertakings we took at Kyoto?

Mr. Steven Guilbeault: A rough evaluation of the first proposal—the one concerning a green purchasing program for the federal government—would probably give us approximately 5% of our Kyoto target over a ten-year period. We placed 2010 strategically in between what is referred to in the Kyoto protocol as the budget period that goes from 2008 to 2012. It would be realistic to think the total package we presented here tonight is probably somewhere in between 7% and 10% of our Kyoto target.

Mrs. Karen Redman: Thank you very much.

The Chairman: Thank you, Mrs. Redman.

On behalf of the committee, I'd like to thank all the members of this round table for your input. As you have probably gathered, we hear different points of view. As we basically wrap up our hearings, we really face a great challenge in trying to put all the pieces together. Everybody brings a unique perspective that is extremely valuable to the process. For that, on behalf of the committee, we're very grateful.

The meeting is adjourned. Thank you.