FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 18, 1999

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[English]

The Chair (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 holding pre-budget consultation hearings from coast to coast to coast. Today, of course, this is Ottawa, for everyone who's thinking about where they are.

It's our pleasure to have with us a number of very interesting organizations, as always, to give input to the committee on what should be the priorities for budget 2000.

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We welcome, from T-Base Research and Communications Inc., Sharlyn Ayotte, president and CEO; and representatives from the Association of Canadian Community Colleges, the Business Coalition on Cost Recovery, the Canadian Arts Summit, and the Fisheries Council of Canada.

You have approximately five to seven minutes to make your introductory remarks. Thereafter, we will engage in a question and answer session.

Many of you already sent briefs back in September, all of which have been read by the participating members of Parliament on the committee. That's why we give you five to seven minutes to give us an overview of your priorities.

We will begin with, and welcome, Sharlyn Ayotte.

Ms. Sharlyn Ayotte (President and CEO, T-Base Research and Communications Inc.): Good afternoon, and thank you for the invitation to again appear before the committee. It is both an honour and an awesome responsibility that I actually cherish as a Canadian.

Unfortunately, my technology has just broken down. Since I'm unable to read print, I'm going to have to do this by the seat of my pants, which is something I've become really good at.

Last year, when I first appeared, I talked to the committee about the need to provide accessible information, products, programs, and services to accommodate the diverse requirements of the Canadian population. At that time, I used fairly powerful words that related back to the presentation, such words as systemic barriers, discrimination, human rights, equity, equality, values, principles, and citizenship.

As we move into the next millennium, I want it to be with a vision of a country that actually includes all of us. Let our legacy to our children be that we value and acknowledge the contributions we can all make to society.

Approximately 14 million people in Canada have difficulty accessing the full range of programs and services, information, and technologies offered by the Government of Canada. We often become isolated because of language, culture, and literacy, and sensory, cognitive and physical abilities. We all seem to have one thing in common, whether it's literacy, disability, culture, or language—that is, we experience communication barriers to our participation.

The statistics that support what I'm speaking to at this point in time are well known to most of us. Some of them are well out of date at this point.

The health and activity limitation survey from 1991, which was the last one actually put forward, states that 16% of Canadians have a disability. It further projects that by 2001, 37% of people over the age of 55 will have some form of disability. Eyesight, hearing, and mobility are particularly sensitive to deterioration as we age. As well, 48% of Canadians have difficulty accessing information easily because of literacy issues, or the inability to read and understand the written word. Aboriginal communities experience 31% disability rates, twice the national average.

Demographics in our society are changing. As the largest portion of our society gets older, we the baby boomers will still require access to programs and services that will facilitate our participation within Canadian society.

The Government of Canada has publicly endorsed the rights of all Canadians to participate fully in the social and economic fabric of our country. It's endorsed in the Canadian Human Rights Act and the Canadian Charter of Rights and Freedoms.

Amendments to the Canadian Human Rights Act in 1998, in the form of Bill S-5, address the duty to accommodate people with disabilities. Treasury Board's communication practices policy prescribes the use of all reasonable measures to reach people with disabilities.

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The time is now with us to actually contemplate what it means to apply the universal design principle. In the past, disability strategies have translated into the design and development of special programming for special people with special needs. Universal design says we can make it all happen within the same program development.

The success of the barrier-free design concept is now influencing forward-looking public and private sector leaders to challenge architects, engineers, and designers to expand their thinking to encompass related areas—for example, information design and delivery, communications design and delivery, technology design and application, and marketing and promotion of goods and services.

A number of problems have prevented those things from actually occurring. There hasn't been a consistent and comprehensive strategy, methodology, or plan to ensure that programs and services as well as the technology whereby we deliver our services are designed to reach the broadest possible portion of our population.

If we apply the universal design principle to the things we do—and that's probably the easiest of terms—it would expand the criteria around how we develop our products, programs, services, and technologies in such a way that it will include all of us.

The Government of Canada has an opportunity to provide leadership on behalf of all governments around the world and to have an impact how the rest of the globe looks at us. We're leaders in this area, and we don't properly acknowledge the contributions we actually make to the design and development of absolutely incredible technologies.

Now, this is going to be difficult for me, because I can't remember all of the recommendations I was going to make, but I can recall a couple of substantive ones.

First, I recommend that we ensure that a national communication policy is in place to ensure that all Canadians are fully and equally informed about national initiatives that are going to impact our lives.

Second, we should make full use of Canada's information safety net to make sure information is available and accessible at all designated library affiliates across Canada in all of the formats.

When we're developing national initiatives, we must ensure that during the consultative process all stakeholders are involved in the consultation. That includes all levels of governments. It includes the voluntary sector, as advocates and as service providers, as well as the business sector. We all have something at stake in what goes on.

If I were going to make a recommendation, it would be that it is possible to achieve equality of service delivery to Canadians through mainstream channels by simply developing the design criteria such that they're included in every new project the government does before it receives funding. By doing that, you're not creating a band-aid for a problem but a real solution, one where we all get to benefit.

Thank you.

The Chair: Thank you very much.

We'll now hear from the Association of Canadian Community Colleges. Mr. Brown is president and Ms. Boyles vice-president.

Welcome.

[Translation]

Mr. Gerry Brown (President, Association of Canadian Community Colleges): Thank you very much, Mr. Chairman.

The Association of Canadian Community Colleges greatly appreciates this opportunity to present its recommendations to this parliamentary committee and to discuss the important challenges that its members and the nation face.

[English]

We assume you've had the opportunity to either read our brief or be briefed on it. We also assume our brief will be attached to your proceedings.

Much like my colleague who spoke just a few moments ago, I also would like to speak a little bit from the heart in this exercise.

We have four very concrete recommendations to put before the committee. We often find, however, that in a forum like this it's probably more important to take a few moments to let you know who we are.

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The Association of Canadian Community Colleges represents 175 colleges across Canada. These colleges are distributed in 900 communities. As a community network-based organization, I think we can probably speak with a fair degree of certitude.

Many of you have ridings, and I'm absolutely convinced that one of our colleges is located in each of your ridings. They are called community colleges, institutes of technology, CEGEP in Quebec, and university colleges in British Columbia.

As the primary function of our institutions, we respond to the educational needs of industry, the community we serve, and learners. Primarily, we focus on areas called skills training, university transfer, and lifelong learning.

I mentioned to you that we have 175 colleges in 900 communities in 13 jurisdictions. You're probably asking what's common amongst all these institutions. I think if I had to tell you what was common among all these institutions, it's that they are community based, responding to their community; they have an access mandate at the post-secondary level; they're very heavily linked with industry, which is a cornerstone of some of our presentations here this afternoon; and they're global. Pretty well all of these institutions are involved in international work in pretty close to 80 countries.

I think it's important for you to know who we are, because that gives you a sense of what we're trying to do when we make our recommendations.

If you look at a lot of the media coverage our institutions are receiving now, you'll see an equation: our institutions equal economic prosperity equals quality of life. I think that's what a lot of our institutions stand for.

You have four recommendations in front of you.

I'd like to ask Terry-Anne to say a few words at the end about what we think are some emerging issues that may not be of concern to the committee today but that will, I think, be of concern to the committee in the near future.

From the point of view of our recommendations, the first one should be no surprise to you. It centres around the area of finance. I'm sure that just about every national educational organization that has come through here or will come through here will make the emphasis around the notion that the time has arrived for us to restore the CHST.

We applaud all the efforts of the government with regard to addressing the deficit. We also recognize that recently there has been a move toward restoring some of the lost ground, if I can use that term, around health, research and development, and the taxation issue. I certainly don't envy the task of the members to try to find solutions around all of that.

But I think the day has come for the federal government to think seriously about the issue of post-secondary education. We've addressed all of those other issues, and the time has arrived to address those issues around post-secondary education. You will hear that from the majority, if not all, of the national associations in education. You heard it last August from the premiers, and you heard it just recently from the finance ministers. I don't think I need to get into a long dissertation around that. We just echo that, because we believe it's important to our institutions.

We would, though, place a little wish underneath the Christmas tree, if ever the opportunity presented itself. We understand that discussions are going on in Ottawa around the notion of an infrastructure program. If such a discussion is going on, we would urge giving serious thought to targeting the colleges around that.

I can tell the members here, as a former president of a college for about 10 years, that during that decade where we downsized, every effort was made by most of the institutions to try to keep it as far away as possible from the students. The end result is that the infrastructure, our buildings and our facilities, is falling apart. If we do get an infrastructure program, I think this is an area we should look at.

The second area I draw to the attention of the committee is research. I draw your attention to it, because my sense is that there isn't much recognition at the federal level of the role colleges play in research. In the throne speech it was suggested that we give pretty close to $240 million, if my figures are correct, to post-secondary education, but they put the entire amount in universities without even mentioning colleges in the discussion. You can imagine the feeling of amazement that came out of our 175 institutions.

In the minds of many people, research in this country deals fundamentally with what we call pure research, a lot of which is being done at universities. I applaud what's being done at the universities, and our reputation as a country has certainly been very strong in that area. But I need to tell the members and I need to start telling the government that there's a lot more than just one dimension of research. There's the whole application of that research, and that's where many of our institutions are involved.

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A lot of people talk about pure research being the front end of research. I would say that a lot of the research is what I would call the back end of the research, and the front end is this application of it. That's where our institutions, working very closely with industry, are very heavily involved. We're involved from the point of view of technology transfer, prototyping, product development, and testing.

We work very closely with small, medium, and large industries. In fact, the relationship between our institutions and industry began as a training partnership. It has now very clearly moved to an applied research partnership. Companies are working daily with our institutions toward research.

I cannot understand how we can't find some way for colleges to cash in on some of this research money that's available to us. Right now we're talking about all of that going to the universities, but I would caution the members that in fact an awful lot of the research is going on in our institutions.

So we're being kind of blatant in our recommendation by saying, good, you find money for the universities, but we would ask you to find money for our institutions. When I say find money for institutions, I'm also saying to find money for a lot of creativity in finding ways in which we can work closely with the private sector in order to move forward a lot of the application of the research that comes out of our institutions.

The next dimension we'd like to draw your attention to is the need to create some sort of institute funded by the federal government that would allow us to address what I think is the real challenge of the new technologies. For those of you who have not been in one of our institutions in a long time, the world has changed drastically. The paradigm shift that is occurring in our institutions from the point of view of education is incredible. On-line education, web education, you name it, it's coming down the pipe very fast on us.

Fortunately for us, Canada is probably the most connected country in the world, and I applaud the efforts being made by Industry Canada and HRDC to move in that direction. When we travel internationally—and I get a chance to travel internationally quite a bit—Canada is at the forefront from the point of view of connectivity.

When we went with Industry Canada and HRDC across Canada and spoke with our institutions about the challenges, the barriers in the future, etc., what became very clear to us is that after we get beyond whining about the cost of the hardware, the software, and all the stuff that goes with it, the real challenge is that we have the hardware and the software and the SchoolNet kids coming into our institutions, but our faculty is caught in not knowing how to use the facilities and the new technology.

We think there's an opportunity here to move forward the agenda on connectivity and all the efforts being made by Canada in finding a way to work collectively with our institutions to create some sort of an institute that would provide professional development so that our faculty can get on track and learn to be comfortable with it and capitalize on all the peripheral stuff we have around it that makes it really important for us.

The final recommendation is one I think you'll hear also from other national associations in education, and that is the whole area of international education. We've included in our brief—and I won't go into all the details—a number of actions we need to take from the point of view of education at the international level, including student recruitment, internships, the sharing of faculty, etc.

For us the world is a village. International education is a very important dimension for us. I mentioned to you earlier that our institutions are active in about 80 countries in any given year. But when you travel around, you come smack up against Australia, France, and Britain and the huge commitment on the part of those governments in the area of international education. We think that if Canada wants to be there—and we have a lot to give to the world—then we have to think about an advocacy role for the federal government in this area.

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In summation, we're supporting the move from all our organizations from the point of view of the transfer payments, the little wish list from our colleges, and the infrastructure. We, the colleges, have to be on the government's radar map when it comes to research. It's critical. The country needs it. It's where it's being done. We're right on track for connectivity. We just need a little bit more, and we're talking about the institute that will help our faculty move forward in international advocacy.

With the small amount of time I have left, I'd ask you to give us a few moments to let Terry-Anne speak to you about some emerging trends facing us.

Ms. Terry-Anne Boyles (Vice-President, Association of Canadian Community Colleges): Thank you.

Some of these longer-term policy considerations certainly evolve from discussions that have been held before the finance committee in the past and are areas where the federal government has made significant progress over the last few years. These are the broad areas of student financial needs, student debt, access of disadvantaged people to post-secondary education, and preparatory programs for post-secondary education.

The national task force on student financial need has been working in partnership with the federal government and the provinces, and they are uncovering in the early stages of their work a plethora of issues and challenges that demand a major pan-Canadian review and analysis.

In some of our institutions, there are upwards of 80 different funding mechanisms for students. They're complex, with some people being eligible and other people not being eligible. It's time to have a more systematic approach across all of those, whether they be grant systems, loan programs, programs tied into the employment legislation, programs for access of non-status Indians or Métis, location rehabilitation for the disabled, etc. A major review needs to be undertaken.

At the same time, while the changes in the registered education savings plan legislation will mean significant changes in the longer term for middle- and upper-income families for post-secondary education, we are seeing signs of an emerging short-term crisis. We are seeing middle-income families who do not qualify for any of the loan programs and who don't have liquid collateral to qualify for bank loan programs, so they are mortgaging or remortgaging their homes, selling their homes, or cashing in their RRSPs.

These are major longer-term social policy issues that will transcend a number of other federal government areas. Some of these people are investing in their children's future or their own current future at the risk of their retirement and what that might mean to our social programs.

So we're urging a pan-Canadian approach. We wish to work in partnership with federal government and all the other players. It transcends all areas of our society. We look forward to doing that.

We are quite supportive of a couple of areas mentioned in the throne speech, in particular the national action plan on skills and learning and the development of that. Perhaps some of these policy areas could be considered within that, although they are much broader.

We're also most supportive of the indication of work with the national industry sector councils. We work extensively with sector councils in looking at the human resources needs of the industry in this country and the partnership of business and labour. It's certainly one we look forward to working with the government on again.

Again, trying to address and alleviate the plethora of conflicting programs and programs that eliminate access to post-secondary education and preparatory programs for post-secondary is a major concern of our association and our members.

Thank you.

The Chair: Thank you very much.

We'll now hear from the Business Coalition on Cost Recovery, represented by Mr. Jayson Myers, senior vice-president and chief economist of the Alliance of Manufacturers and Exporters Canada; and Jean Szkotnicki.

How was that?

Ms. Jean Szkotnicki (President, Canadian Animal Health Institute; Co-Chair, Business Coalition on Cost Recovery): You did very well.

The Chair: Thank you. I'm always very grateful myself.

Ms. Jean Szkotnicki: I was going to say you probably did better than I would with your name.

Voices: Oh, oh!

The Chair: We don't test people here.

She's the president of the Canadian Animal Health Institute.

Go ahead.

Mr. Jayson Myers (Senior Vice-President and Chief Economist, Alliance of Manufacturers and Exporters Canada; Co-Chair, Business Coalition on Cost Recovery): Thank you, Mr. Chairman.

Good afternoon, ladies and gentlemen.

The chairman has already stolen my thunder for introductions. Jean and I are co-chairs of the Business Coalition on Cost Recovery. We're here today to discuss an issue that has some very important implications for productivity and innovation in Canada: how to improve the federal government's policy on cost recovery.

The Business Coalition on Cost Recovery was founded in 1998. It includes over 20 of Canada's leading business organizations, and I'm glad to say we're accompanied by many representatives of those associations here today. Together we represent small, medium, and large enterprises in every sector of the Canadian economy.

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As a group, our members generate more than $330 billion in economic activity every year and provide jobs for well over 2 million Canadians living in every community and every neighbourhood in this country. Every Canadian is also faced with the challenges of the federal government's cost recovery programs.

I want to make something very clear. Members of the coalition understand and accept the need to pay reasonable fees for federal service. But when these fees were implemented, ministers committed to making them fair, accountable, and transparent. Our experience with cost recovery so far has not reflected these basic commitments. Canadians in general and Canadian business in particular are not receiving sufficient value for the service fees that are charged.

We released a study 10 months ago that demonstrated the magnitude of the problem, and we've distributed a summary of that study in the material you've just received.

Today user fees finance over 20% of the administrative budgets of federal departments, totalling between $5 billion and $6 billion a year. Between the 1994-95 fiscal year and the 1996-97 fiscal year, the regulatory fees charged to businesses increased by 47% in a two-year period, and the fees charged to Canadian manufacturers went up by more than 153%.

At the same time, the services received in return for those fees have not improved, and in many cases have actually gotten worse. Delays stifle innovation and our access to new technologies, seriously undermining the competitiveness of the companies that are members of our business associations. The $1.6 billion in regulatory fees charged to businesses alone in 1996-97, we calculate, reduced Canada's GDP by nearly $1.4 billion and may have killed as many as 23,000 jobs.

Frankly, when our coalition saw these numbers, we were a bit overwhelmed. While we knew cost recovery needed to be fixed, we were surprised at how badly things had gotten in such a short period of time. We were also very surprised that a program that has such far-reaching ramifications receives so little attention by Parliament. If anything, things have gotten worse since we presented our study 10 months ago.

I'd like to ask Jean to provide some specific examples about how the current policy has affected her industry.

Ms. Jean Szkotnicki: Thank you, Jay.

In 1996 the Bureau of Veterinary Drugs instituted a policy of cost recovery for new drug submissions. The bureau indicated that it intended to charge user fees for a variety of its activities, fees as high as $100,000 for certain types of veterinary drug submissions.

At the same time, industry was promised that review times would become shorter. The department's stated timeframe is 180 days, yet the average review time this year is 926 days—five times the department's own standard. In 1995, before we started to pay, the average time was 472 days. These delays seriously affect our productivity.

Today Canada has become the last major jurisdiction in which new veterinary drugs are registered, whereas 10 to 15 years ago Canada was considered a model jurisdiction where drugs were often first submitted for approval. This means Canadians are denied access to the advanced technologies that are available in the U.S. and other developed countries. In the U.S. in particular, no fees are charged for the approval of new veterinary drugs.

Other industries represented here by our coalition, including pharmaceutical and medical devices companies, have encountered similar problems. The result is that research and development for these industry sectors has tailed off substantially.

There are many more examples, but I think you have a sense of how cost recovery is affecting Canadians in ways it was never intended to do so.

Mr. Jayson Myers: Thanks, Jean.

Ladies and gentlemen, our request is very simple. The cost recovery policy must be fixed, and it has to be fixed pretty soon before any more harm is done. The finance minister, in his economic update, stated that the federal government needs to review its regulatory framework to maintain a proper balance between reducing the regulatory burden of our businesses and promoting innovation, on one hand—I would add investment—and protecting the interests of the public and the consumers on the other. We agree.

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Ten months ago our coalition received a written promise from then Treasury Board President, Marcel Massé, that the board would conduct an official review of the federal government's cost recovery policy with a view to improving it. Since that promise was made, nothing has happened. No steps have been taken to set up a review. No effort has been made to identify problem areas. No effort has been made to improve accountability or performance. Despite this inaction, business continues to pay substantial fees.

Over that same 10-month period, a minimum of $1.4 billion in user fees has been paid by Canadian industry. In the absence of leadership by Treasury Board, earlier this month our coalition prepared and sent to the minister draft terms of reference for the promised review. We've included those terms of reference in the package we've sent to you. We've also provided the board with a fairness standard against which cost recovery policy in every department should and could be benchmarked. We've also distributed those implementation standards.

Quite simply, our members can no longer afford to wait for Treasury Board. We believe that an immediate parliamentary review is required. Therefore, we have two recommendations for this committee.

First, we recommend this committee conduct its own study on federal cost recovery policy. As part of this review, we urge your committee to demand a full accounting of cost recovery revenues and how they relate to departmental main estimates. We think you'll be very surprised by the lack of accountability for these moneys.

Second, in the interim, we believe the committee should recommend the adoption of our implementation of fairness standards as a benchmark against which all new and existing cost recoveries should be assessed.

Thank you very much. Jean and I both would be very pleased to answer your questions.

The Chair: Thank you very much.

We'll now hear from the Canadian Arts Summit, the chair of the advocacy committee, Mr. J. Fleck, and Sarah Iley. Welcome.

Mr. James D. Fleck (Chair, Advocacy Committee, Canadian Arts Summit): I'd like to introduce the chair of the Canadian Arts Summit and the past-president of the Royal Winnipeg Ballet, Ms. Susan Glass, to provide some background on our organization.

Ms. Susan Glass (Chair, Canadian Arts Summit): Thanks, Jim.

Thank you to the chair and the committee members for granting us the opportunity to appear before you today. As Jim has just introduced me, my name is Susan Glass and I am here in my capacity as chair of the Canadian Arts Summit.

I'm joined by my two colleagues, Dr. Jim Fleck, who is the past-chair of the Canadian Arts Summit and chair of our current advocacy subcommittee; and Ms. Sarah Iley, who is the president and chief executive officer of the Council for Business and the Arts in Canada.

We are here to make representation to you today for a recommendation to amend the Income Tax Act to expand the definition of eligible securities donated to charities to include shares purchased through the exercise of stock options. I would reference you to our written submission under Dr. Fleck's signature of September 7.

First, let me explain who we represent as the Canadian Arts Summit. The summit is a truly unique national forum bringing together the chief executives, both administrative and artistic, and the voluntary board chairs of Canada's most significant not-for-profit cultural institutions. It comprises approximately 40 symphony orchestras, theatres, opera and ballet companies, and art museums.

Some of these institutions have a 50- to 60-year history representing the heart of this country's artistic abundance and are dedicated to enhancing the future of arts and culture in our society. Many of these organizations are the prime educational and training facilities for our country's young, aspiring, and emerging artists.

Our role here today is to act as a national voice to enhance the awareness and resourcing of arts in Canada. Because we can speak with a truly national voice, our influence can provide the leadership that will also benefit arts endeavours of all sizes—those essential, emerging, and new artists, art forms, and organizations.

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As the need for private support grows, it is imperative to provide creative ways to encourage incremental philanthropy from new donors and sources of donations. We are well aware and appreciative of the influence your committee has had in the amendment of tax laws to date to encourage the donations of marketable securities to charitable organizations.

I would like now to call on Dr. Fleck to speak specifically to the logical extension of those tax amendments to include the use of stock options.

Mr. James Fleck: Thank you, Susan.

My other hat is as president of the Art Gallery of Ontario.

Now, we appreciate the thoughtful work this committee has done in the area of tax incentives. This year we suggest an addition that will improve equity and increase giving to charitable organizations, not just in the arts but in education, health, and other needy areas.

Conceptually, stock options of marketable securities are no different from stock. The 1997 budget reduces the amount of capital gain arising when a person donates publicly traded securities to a registered charity by one-half, from 75% to 37.5%. We recommend that this provision be extended to include stock options of publicly traded, marketable securities, the value of which is just as easily established.

The problem is that when a person exercises the stock option, that immediately triggers the tax. So when they then give the stock, of course, they don't really receive any incentive to give that stock. That's also partially because stock options normally aren't transferable and aren't in themselves traded on the market. But they do have a specific value, looking at the value of the underlying stock.

What we're proposing is that when a person donates publicly traded securities that were acquired upon the exercise of a stock option, the stock option benefits should be reduced by one-half to mirror the amount that would have been taxed if the employee had acquired the shares at their exercise price and donated them when the shares had appreciated in value.

Now, this is important, of course, to encourage philanthropy. But there's an increasing trend in executive compensation, particularly in the higher-tech industries, to provide a significant portion of the compensation in the form of stock options, and it's these stock options that at the present time are treated in what we would call an inequitable way if those executives then wish to give to charitable organizations. We feel that there is a potential pool here of many people who have been fortunate and would be willing to share some of what they've gained with cultural and other organizations. We want to make it as easy and as equitable as possible to encourage them to make those gifts.

I think we always have to recognize, because sometimes there's a concern that there's a sort of tax dodge and that people will be somehow evading taxes, that when you give money, no matter what sort of tax benefit you receive, you're always worse off than if you just kept the proceeds yourself. So we certainly don't want to discourage people from making these sorts of gifts.

Again, this would extend the existing trend toward increasing incentives for charitable giving and, as I've pointed out, would equalize the tax treatment to a holder of a stock option who makes a donation of the publicly traded stock after exercising the option to that of a person with a direct public equity investment who makes a donation. This is in recognition of the fact that the holder of an option who exercises and immediately donates the stock has no economic benefit from the transaction.

So we would welcome any questions, and we appreciate your including us today.

The Chair: Thank you very much, Mr. Fleck and Ms. Glass.

We'll now hear from the Fisheries Council of Canada, Mr. Patrick McGuinness, vice-president.

Mr. Patrick McGuinness (Vice-President, Fisheries Council of Canada): Thank you very much, Mr. Chairman.

We did present a document to you in September, so what I thought I'd do is just try to review the main messages, add some overview themes, and like our friends from the Canadian Arts Summit, we'll be making a request for a change to the Income Tax Act.

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Our main message really is that Atlantic Canada needs to diversify its economy. But what we're also saying is that in order for Canada to have a sustainable fisheries on the Atlantic coast, we as a fishing industry need a diversified Atlantic economy. We need it so that we as an industry can proceed with our restructuring in a less confrontational milieu than we have today.

Basically, what we're saying is that as long as coastal communities look upon our industry as the last resort for jobs for the people living in those communities, Mr. Chairman, it would be impossible for your Minister of Fisheries and Oceans, in the long term, to manage and bring forward a sustainable Atlantic fishing industry. We'll go through resource crisis, after resource crisis, after resource crisis. We have already gone through three. This happens to be the most drastic. So the bottom line is that we have to diversify that economy if in fact you have any hopes of us as an industry, or as a resource, being sustainable in the future.

In terms of the overview themes we had in the document responding to some of the questions of priorities, in terms of the surplus, one of the things we're saying is that it's not so much a discussion as how large the surplus is, or how you spend the surplus. But we thought it would be appropriate for this committee to start looking at what are the appropriate economic targets for Canada, things such as, for example, the debt-to-GDP ratio of 65%.

We think that's unacceptable, and we think the current target of reducing it to 62% over a couple of years should also be unacceptable to this committee and unacceptable to Canadians. And the reason I say this is simply that if you look at the other countries we seem to think are our equals, or whatever—the United States, United Kingdom, France and Germany—they are at levels of 40% to 45%.

Similarly, in terms of unemployment, we're sitting with a 7%, 8%, or 9% unemployment rate. In Atlantic Canada, often it continues to be in double digits in many provinces. Are those types of unemployment rates acceptable when we see other economies, particularly the United States, operating as a sustainable level, at a very low level?

One of the other overview themes we have is that as we talk about deficit reduction... In 1995 the budget statement identified, if you will, a plan to eliminate the deficit, which was successful, and the plan was that you would have the deficit eliminated by increased taxes, reduced transfers to provinces, and reduced departmental spending.

So in 1999, if you look at how the deficit was eliminated, what you will find, in terms of the net sources of funds to eliminate that deficit, is that 70% was as the result of increased personal taxes, 14% from reduced transfers to provinces, and almost zero in reduced departmental spending. That is to say that in 1995 federal departmental spending was about $53 billion, and it is now at $54 billion. There's no question the Department of National Defence took a big hit. It went down 21%, to an expenditure now of $9 billion. But the other departments, and the reconstruction of other departments, actually increased 11%. Their expenditure now is about $43 billion.

So we're saying that's basically how you got there, and obviously what's really been happening is that the taxes being paid by the average family, whether it's federal, provincial, municipal, or whatever, have been quite substantial. In 1998 the average family earned about $50,000 and paid just over $23,000 of taxes, that is federal, provincial, municipal, GST, cost recovery, the whole range of it. Forty-six percent of the average family income is now being spent on the wide range of taxes.

So basically from an industry point of view, selling fish and seafood around the world and in Canada, we need people out there with dollars in their pocket, who are going to restaurants and can afford the prices of our fish and seafood. So anything you can do to try to encourage that type of activity where average families get more money saved in their pockets... And I'm not just talking about income tax, which is only 40% of that tax structure, but of that whole myriad of taxes, including cost recovery, including the wide range.

• 1625

In terms of what we tried to say regarding proposed tax changes, obviously one of the things we focused on was reduced EI premiums. Basically we're saying that with a $17-billion accumulated surplus, and with the need to diversify the economy in Atlantic Canada by encouraging entrepreneurship and creating small businesses, further reductions in the EI premiums are warranted.

Obviously that was written before the recent announcement of a decrease.

But bottom line, what we're saying is we know the EI program. The EI program, with the restructuring it has undergone in the last couple of years wherein you have a significant increase in the people who are contributing to the program—that is, part-time workers who in fact will not be drawing out of the program, by and large, because they will never meet the hours earned requirement... So that's a net increase in restructuring the program in terms of income. Then in terms of what has been done with respect to reducing or changing the eligibility in terms of worked hours, in industries such as mine, fisheries, logging and so forth, those people will claim substantially less out of the program than they have historically.

So net, you have a program now that, even if you had a significant downturn in the Canadian economy, will not have the type of expenditures that were experienced in the 1980s and even early 1990s. So the bottom line is that we're saying there's still a lot of room for significant reduction in EI premiums without jeopardizing the viability and integrity of the program.

I want to end by saying, as with the Canadian Arts Summit, we would like to see a change in the Income Tax Act so that the fishing industry can fully benefit from R and D tax credits. Mr. Chairman, ladies and gentlemen, for R and D tax credit purposes, R and D activity done outside Canada's 12-mile territorial sea does not qualify for R and D tax credit under the Income Tax Act. That is, in terms of the Income Tax Act, Canada is not defined out to our 200-mile economic zone or out to our continental shelf; it is defined solely to the 12-mile limit, except for one industry. The exception is that in section 225 it provides an exemption of this rule regarding R and D activity related to oil and gas and hydrocarbon activity.

What we are requesting this committee consider is extending that exemption you currently give to the oil and gas and hydrocarbon industry to the fishing industry or any other industry. And why do we say that? We say that for two fundamental reasons.

One is that what we have to do in this country is address the monumental need for better and more scientific research on Canada's fisheries resources. That's what we need. In terms of the Government of Canada's fisheries and oceans science department, its human resources are static, if not declining. As an industry, we are prepared to come to the table and put in substantial dollars in terms of addressing that issue, working with the government to do that type of research and development. A stumbling block is that once we come to the table we are not getting the type of R and D tax benefits that would make those types of projects much better for us, and we'd be more aggressive.

The second reason, and I think the more important and fundamental reason, we're making this request is simply in terms of equity. That is, what we want is a level playing field in terms of R and D activities with the oil and gas industry out in Canada's oceans.

The bottom line, ladies and gentlemen, is that just as in the fishing industry in terms of fisheries resources, you have one fleet competing with another fleet in terms of allocation of the fisheries resource—and they're saying give me the fish, don't give it to that fleet; give it to this community, not to that community—we envisage that as we move out in terms of developing the oceans, often you will have a conflict in terms of whether it is going to be a fisheries resource developed in this area or oil and gas.

• 1630

What the Income Tax Act is doing is saying Canadians have a preference for having the oil and gas explored as opposed to a fishery resource, as opposed to ecotourism, as opposed to aboriginal fishing rights, and so forth. So all we're saying is we need that amendment for a level playing field between the fishing industry and the oil and gas industry for debates and discussions concerning the future development of Canada's ocean resources.

Essentially, Mr. Chairman, ladies and gentlemen, it's a question of equity. In this year, future years, we'll have boards and governments to which the oil and gas industry will be making presentations, to which the fishing industry will be making presentations, with respect to developments and whatever. What basically is happening right now is that the Income Tax Act gives a preference to the oil and gas industry in terms of their ability to do the needed research and development to answer the questions that are demanded by these boards, and also in terms of lobbying those types of activities.

Ladies and gentlemen, Mr. Chairman, thank you very much.

The Chair: Thank you very much, Mr. McGuinness.

That concludes the introductory remarks. Now we'll move to the question and answer session, and we will begin with Mr. Forseth. It will be a 10-minute round.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Ref.): Thank you for coming and making your presentations today.

I was just now listening to Mr. Patrick McGuinness of the Fisheries Council of Canada. I would like to say I think your analysis is quite correct. For a moment there, I thought you were recounting Reform Party policy.

In any event, I wanted to address my first question to those who represent the Canadian Arts Summit. You mentioned increasing trends for employee compensation more frequently using stock options. Maybe you can comment from your sector also about the increasing trend for organizations you represent, or even universities, to acquire stable long-term funding for themselves through acquiring this kind of capitalization.

Certainly you've made a very clear recommendation about the stock options item. Have you made any estimation as to what the tax expenditure to government would be, how much this would cost the government if they were going to give such a provision? Then maybe expand on what you would see as the realized benefit to those who would receive the stock options. Maybe you could look at a bit of cost-benefit analysis on both sides.

Mr. James Fleck: The first part of the answer is that we have no hard, specific data. One of the reasons is that it would be very difficult to acquire. The nature of the stock option, even more so than with a marketable security, is that it expires at a particular point in time. And while some stock options are worth a great deal, there are other stock options that are worth very little. There is also sometimes a concern when executives cash in their stock options because it's an insider trading event, and sometimes by the market it's perceived as a lack of confidence in the company, in that something may go wrong or something of that sort.

One of the advantages of this particular program is that in certain cases it will trap—if I could put it this way—value that might be lost otherwise. If the stock option goes up and goes down, it has no value, but if it's exercised while it's still “in the money”, as they say, then that's a way in which the charitable organization will receive some income and the executive will not be criticized because the executive isn't benefiting from what's happening; he's in fact doing something that's good. So it means stock options might have a higher chance of actually getting exercised. Many of them expire and the value is just completely lost.

Now, when you talk about what the tax folks would lose, that again is very difficult to determine, because of course if you're going to be taxed at a full rate, you're going to, generally speaking, keep the stock option as long as you can, and you're not likely to exercise it at the point in time that you would now exercise it to make a charitable gift. So once again, it's very difficult to make those comparisons.

Again, I would argue that whether it's a stock or whether it's a stock option should really not make a great deal of difference from the point of view of the ministry of finance. In fact, certain of their officials have indicated that, and that conceptually they can see this is essentially the same thing.

Does that help at all in that area?

Mr. Paul Forseth: Well, I appreciate your comments. I'd just like to say that from the official opposition point of view we're very sympathetic to this proposal, and we certainly hope the committee will carefully look at it.

• 1635

I would like to address a comment to Sharlyn Ayotte. In your submission, in the recommendations, you say: “That the government demonstrate by its actions that it is committed to the principle of equal access of information and public consultation” by asking the committee to “implement the existing Treasury Board Fair Communication Practices Policy”. Are you saying that in too many circumstances the government is not living up to its own public commitments?

Ms. Sharlyn Ayotte: That's sometimes one of those no-win answers. I think what's happened is that the government's been having difficulty in understanding what's meant by communicating, reaching out to people who don't read print. Essentially it's a completely unknown realm of the world we live in. We don't understand how to do it. How do you communicate with people who don't read print? You have to use different channels.

The short answer is no, they haven't lived up to that commitment. We're still isolated and we still don't get the same degree of services as all other Canadians get. We're not asking for anything special; we're simply asking for the same, that we pay our taxes, in my case personally and corporately, and for all other Canadians to have access to the wonderful benefits they get now. So no, they're not living up to the commitment.

Mr. Paul Forseth: Okay.

Ms. Sharlyn Ayotte: They're trying, though.

Mr. Paul Forseth: Thank you very much.

The Chair: That's a very good answer.

Mr. Paul Forseth: Mr. Brown, you represent educational institutions, and obviously I think you're talking about simply more money. Have you done any analysis looking at perhaps more money coming your way as a basis of reallocation within current levels of spending, or are you basically talking about new money, looking at that so-called surplus that may materialize in the future? After you've looked at that part of the question, based on last year's level of general funding, in a broad-brush statement, what kind of percentage or how many new millions over last year are you recommending? And is that a reallocation or is that new that you're looking for?

Mr. Gerry Brown: My sense is it's probably a combination of both. I suspect that as we go through the exercise from the point of view of the federal government, the reallocation of some of the funds have already have been sent out. When we talk about the social transfer...you know, I'm not privy to the ins and outs of the finances of the government, but I'm sure they can find, for some of the programs that exist, the possibility of transferring some of the funds in that direction.

I would say when we start to total up the need to have a re-establishment of the social transfer program, the notion that colleges should be an integral part of the research program, and the notion of an institute, I think we're talking probably more toward new money as opposed to existing resources.

As far as totalling it up is concerned, we've not added a total to it. We would like, from the point of view of the social transfer program, as all the national associations have been saying, as well as the premiers of the provinces, to go back to numbers that existed a few years ago. From the point of view of research, if we think the federal government now in its throne speech feels they're comfortable in giving $240 million to faculty inside of universities, they should feel quite comfortable to give $100 million to our institutions.

Mr. Paul Forseth: Okay.

I had one final question, and that was to the Business Coalition on Cost Recovery. You mentioned the ideal of being fair, accountable, and transparent. You also talked about services rendered from government for what is paid. I just wonder about the notion the other way around, of the cost recovery of what industry takes from the general taxpayer.

I suppose the general issue I would like you to address, the key, is the comparative international situation. Companies, especially those large international corporations that often are involved in the approval process—of course we're in an international environment, and that's probably what you're looking at. Maybe you can describe where Canada sits internationally. Certainly you may also have some examples in which you might imply that the fees required are not only out of balance but don't reflect the true costs to government. That might be talking about the issue of fairness.

• 1640

Maybe you can comment, first of all, on where we sit internationally on a competitive basis when other governments are getting into the same kind of business. Then, also try to flesh out a little bit what you really mean by “fair, accountable and transparent”.

Mr. Jayson Myers: Maybe I could give two examples and then ask Jean to come in too.

One of my favourites is charging icebreaker fees on Lake Superior, charging companies for that service although they use no federal icebreakers on Lake Superior. I think that's an example of service charges levied for no service delivery.

Secondly, as an economist, I can assume many things. If I could sail a ship from Duluth, Minnesota, through the St. Lawrence Seaway, into the Atlantic Ocean, and on to any port around the world, and if I didn't dock at a Canadian port, I would be able to do that with no service charges levied on that shipment. However, if I sailed a barge from Lévis, Quebec, to Quebec City, I would be faced with a navigation charge that could amount to several thousand dollars. I think that is a good example of something that is not competitive and is a cost to doing business.

Maybe I'll ask Jean to refer to some areas in product approvals. Of course, the whole point here is that we're competing in an extremely intense international competitive environment, so you have to look at some of these costs not only as additional costs of doing business but as areas that, as Jean was indicating, have actually led to companies deciding not to introduce new and very beneficial products into the Canadian market because of those additional costs.

Ms. Jean Szkotnicki: In veterinary drugs, we have a situation in which many of our member companies have affiliates around the world. There certainly are cost recovery fees in other jurisdictions around the world, but when we look at the situation based on the size of the Canadian marketplace, the Canadian veterinary drug program is the most expensive in the world. When we look at our trading partner, the United States, certainly there are no fees charged for the approval of new veterinary drugs in the United States.

Those things have to be looked at when we look at the productivity here in Canada for our members. Globally, they represent about 2.5% or less of the global sales. We are deemed to have a very unpredictable and lengthy decision-making process here, so it begs the question about why one would do business here.

I would point out that some members of our association or institute are solely Canadian-owned, and it's Canadian venture capital going into those companies. They are now seeking approval for their products first in the United States, which has a market size that is eleven times greater than the Canadian marketplace and a more predictable regulatory system. We're seeing that happen as well. There is a reversal in which Canadian firms and technology are taken to the United States first to seek approval.

Mr. Jayson Myers: If I could add to that, we're looking at the fact that companies are very willing to pay a fee, one, if the service is delivered, and two, if there's some improvement in the process of the delivery of that service. That's really what we're asking for here.

Mr. Paul Forseth: Thank you.

The Chairman: We'll go to Mr. Nystrom.

Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you very much, Mr. Chairman.

I do want to welcome everybody for being here this afternoon and giving us your ideas. We have a greatly diverse group before us.

I wanted to start off with Mr. McGuinness of the Fisheries Council of Canada. I'm just an innocent boy from Saskatchewan. I don't know much about the fishery; I know a little bit more about wheat. Some of the things you were saying struck me as kind of strange in terms of the government looking after the debt and deficit, in terms of the debt still being too high, and in terms of not much being done in terms of cutbacks. I agree with Mr. Forseth that it sounded like Reform Party policy. It doesn't seem to reflect what I know of Atlantic Canada.

• 1645

My Liberal friends tell me that they lost most of their seats in Atlantic Canada because the government cut back too far, too fast, and was too concerned about the debt. There was too much of a cutback in EI. There was too much of a cutback in government services.

I just wondered if you could comment as to why you're making those recommendations that seem to be out of sync with general thinking in Atlantic Canada. I mean, that's why the Liberals lost so many seats. There was a backlash. Doug Young lost, David Dingwall lost, and others lost.

The Chair: I thought it was because we didn't get enough votes.

Voices: Oh, oh!

The Chair: Go ahead.

Mr. Patrick McGuinness: In terms of attacking the deficit, one of the things we note in our presentation is that reductions of transfers to provinces were a major contributor to deficit reduction. They were a 14% contribution.

The bottom line is that many of the services in communities in Atlantic Canada—and in western Canada, I'm sure—are not delivered by the federal government. They are delivered by provincial governments and municipal governments.

Our members respect what Foreign Affairs and International Trade Canada is doing, and Industry Canada and so on a so forth. But those are very distant types of organizations for our constituents. What we're saying is that we found it wasn't reduced from the budget of Foreign Affairs and International Trade Canada, it wasn't reduced from the budget of Industry Canada, and it wasn't reduced from the budget of a lot of other federal departments. There was a significant reduction in the transfers to provinces. That is what has hit our constituents. So what I'm saying is not inconsistent.

What I feel is what our people are saying, in the sense that what we want are jobs. What we want are real sustainable jobs. What we're finding is that the real sustainable jobs in Atlantic Canada are generally being produced by small businesses and in the private sector. Once you go into that type of equation, how do you generate that? The thing is that, to a large extent, it's by creating that type of positive milieu. It's not by necessarily sending your taxes to Ottawa.

Mr. Lorne Nystrom: One of the complaints I've heard from Atlantic Canada is that the EI fund has a big surplus. Seasonal workers have been cut off and a lot of people who used to qualify don't qualify any more. Of course that EI money goes directly into the consolidated revenue fund and the general revenues of the Government of Canada. You're advocating that more money to be used to pay down the debt. Again, that seems to be at cross purposes to what I hear a lot of Atlantic Canadians telling us.

As I say, I'm from Saskatchewan, so I just hear this all the time about Atlantic Canada, about there being too many cutbacks. EI is a very good example of that. That money now goes directly into general revenues. Now you're advocating that some of that EI money, which comes from the pockets of your people, should go to pay down the debt. That may not be a priority in your part of the country, from what I hear, if I hear my colleagues from Atlantic Canada correctly.

I'm not trying to be tough on you.

Mr. Patrick McGuinness: No, I appreciate what you're saying.

Mr. Lorne Nystrom: I'm just pointing out what seems to me to be—

Mr. Patrick McGuinness: I appreciate the question, and I welcome the question.

What we're saying is both. We're saying that the restructured EI program will always produce a surplus because, just as you mentioned, it's going to get increased revenue from part-time workers, most of whom will never qualify for benefits. Because of the requirement in terms of hours worked, it has reduced the call on the program by seasonal workers in areas such as the fishing industry.

What we're saying is that you can keep that viable program and continue to substantially reduce the EI premiums. What we're saying here again is that if you reduce the EI premiums, not only does it help the workers, if you will, but it also helps the business community in Atlantic Canada, the small entrepreneur who is trying to get into a business that's outside the fishing industry and can employ some of our people.

Mr. Lorne Nystrom: Would you agree that the EI program should be expanded to include more people, as it used to be? That's again the position I hear from a lot of Atlantic Canadians: too many people have been cut off. That's one reason for why there's a surplus. Fewer people qualify now than qualified four or five years ago. We've heard that often, not just from Atlantic Canadians but from people right across the country.

Mr. Patrick McGuinness: It's a difficult question.

• 1650

In terms of the restructuring of EI in terms of hours worked, there were certain gaps. Those gaps were discussed in terms of how you redo the mathematics. But the bottom line is that we don't want to go back to the situation in which our seasonal industry became more seasonal because of the way that EI was structured.

We are now in a process of restructuring our industry. Hopefully, instead of providing 10-week jobs, we're providing 15, 16, 25, 35, and hopefully 42 to 52 weeks of work at some point in time. We're still in transition. We don't want to revert to the point at which, because of the accessibility of an EI program, you structure your industry's type of working activity to get people employed.

I think what we're saying right now is that if there are gaps in the program, if you will—and over the course of the last two or three years in our industry I think we've resolved quite a few of the gaps—our industry is still restructuring, so I don't think going all the way back to the type of situation that we had before would be in our best interests at this point in time. I think one can argue that it created overcapacity in our industry, both on the harvesting side and on the processing side, with the collusion of municipalities and provincial governments.

So we're in transition and we're trying to grow. You've asked a very good question, but it's probably too early for us to give you a clear answer right now. Once we restructure our industry and get a viable, sustainable type of structure in the industry in terms of the number of plants to the number of people and then have downturns and hardships, then it may be time to look at the structure of the program.

Mr. Lorne Nystrom: To Mr. Brown, a few days ago—I think it was in the Ottawa Citizen or one of the other newspapers that we saw down here—there was a huge story on the brain drain. It was about this scientist who had moved from Canada to the United States. He said the reason he had moved down to the United States was that R and D grants today are tied to industry too much, and that they should be more open and not as tied to industry.

I'm not sure whether you saw the article or not. I just want you to comment on that. Is it a legitimate criticism that we tie this thing too much to industry, that it's not open enough? Is that one of the problems we have?

Mr. Gerry Brown: I would suggest that you retain that question and ask the Association of Universities and Colleges of Canada, because I think that issue is more relevant at their stage.

Our colleges work very closely with industry. A lot of the research that's being done at our level with our institutions is very tied to industry, so I don't think that issue is a big issue when it comes to our sector of post-secondary education. I think it's a much more relevant one for the universities. It's a big debate at the university level, as a matter of fact.

Mr. Lorne Nystrom: My last question is also to you. You were saying that your buildings are now falling apart because money is going more and more towards the student needs than to infrastructure during this downsizing decade. You say the buildings are falling apart. How serious is this? What are you looking at in terms of an estimate of how much money is needed in an infrastructure program? Can you elaborate a little bit more?

Mr. Gerry Brown: I can't put a dollar figure to it, but I appreciate the question. Not a week goes by in which one of my college presidents, out of my 175 institutions, doesn't address that issue in one form or another. In fact, I just heard a few... Actually, I was talking to the president of Algonquin College today. I'm not exactly sure that I quote him correctly, but I know he has had to think about possibly closing up one of his campuses as a result of the condition of that particular campus physically.

So it's a very serious problem, and I think it's a safety problem in many ways. That's what most of my presidents are talking to me about. It's the safety dimension around the need to maintain the maintenance of the facilities.

The Chair: Thank you very much, Mr. Nystrom.

Dr. Bennett, and then Mr. Szabo.

Ms. Carolyn Bennett (St. Paul's, Lib.): My question is also for Mr. Brown.

On your second recommendation on applied research, I want to know, first, if you feel you're not getting your fair share of the Canada Foundation for Innovation money. I want to know why you would want to set up another fund. I guess there were a couple of areas where I thought that in terms of the cross-over... In terms of globalization, you have a coalition happening here on international learning strategy, and I would assume that the impact of technology would also apply to the universities. Do you think there are special needs that the community colleges have that couldn't be done with a coalition with the universities in terms of both the impact of technology and the international education piece?

• 1655

Mr. Gerry Brown: I think there are a couple of questions there. I'll try to take one at a time.

First of all, let me speak to the whole issue of coalition. Clearly there are needs that are common to all of us in post-secondary education. I think you can appreciate that some are probably more important to the universities and others are more important to the colleges.

There are areas where we're very close and we work very closely in a collaborative way with our colleagues at the university level. Two of those are recommendations in the areas of the social transfer and international advocacy.

You can probably appreciate that when we start talking about research, we start getting a queasy feeling from our university colleagues. As Mr. Forseth said earlier, is this new money or old money? They'd probably find it a little difficult to sit around the table. They'd probably agree with us, but in a coalition they might find it a little difficult.

You have to understand that the CFI is an infrastructure program; it's not a research program, in the sense of what we're talking about. If we started to add up the total amount of money that's being put aside for research in this country, it's an incredible amount of money. The CFI is roughly well over $100 million, if I'm not mistaken, of which the college system gets about $12 million. I think we're kind of short on that.

Ms. Carolyn Bennett: Let me just interrupt, so you can answer this too. In terms of the innovation and productivity of SMEs, who is doing the research now? Are you doing the research? Are you proposing to do the research?

Mr. Gerry Brown: Right now I think some of it is being done by small businesses independently, and some of it is being done by institutions at their cost. I'm looking at a way to bring all of this together under one umbrella to allow our institutions, in most cases, to work in collaborative efforts with industry—small SMEs—and in some cases to allow our institutions to develop capacity-building in that particular area.

Just to finish my thought, there's a huge amount of money being spent here, if I think of the CFIs and the research council. The latest comments coming out of the throne speech add up to an awful lot of money being stacked up on the university side.

I guess we have a task—I don't hold the government accountable for this—to inform the community and the government of all the roles in the area of research. Maybe some of that money, either new money or old money, could find its way into our institutions.

The involvement we've had at the CFI has lent credibility to our process inside the CFI. In fact that has probably wakened up the sleeping giant inside our institutions, from the point of view of research.

Ms. Carolyn Bennett: But say we were going to set up the national education, technology and professional development institute program for college and institute staff, in terms of the impact of technology. Do you think universities would do this differently? Don't they need to know how to do distance learning and...

Mr. Gerry Brown: You could pose that question to my university colleagues, but my perception at this point is that our community colleges are quite advanced in this area. We've worked much more closely on the connectivity agenda than the AUCC and the universities have. I think a lot of our institutions are far more advanced, from the point of view of the whole notion of on-line learning, etc.

Ms. Carolyn Bennett: Do they need help?

Mr. Gerry Brown: Yes, absolutely.

Ms. Carolyn Bennett: Mr. Fleck, Ms. Iley and Ms. Glass, you're aware of Don Johnston's proposal on taking off the other 50%. You may know that there seems to be—from the view of those of us sitting here—some convergence, in that the heritage property people are saying the same thing and the ecologically sensitive lands people are saying the same thing. So there is this convergence that's happening in the finance committee about capital gains.

Obviously this is the stock option piece you've come to us about, but what are your opinions on getting rid of the other 50%? Of course, when there's consensus about things, it's a bit easier for government to act.

Mr. Gerry Brown: I have no problem in enthusiastically endorsing the notion of reducing that to zero, so it would be comparable to the U.S., among other things, and also encourage giving. The main advocacy here today is to treat stock options in the same way, whether it's 50%, 37.5%, 0% or 75%. Just treat the two the same. I would certainly be a supporter of that.

• 1700

If we as a country are going to compete in the world, particularly in the high tech area, attracting knowledge workers is one of the important elements. Once the economic factors are looked after, the environment can help attract these people to our industry. The two elements in the environment are culture and climate. We can't do much about climate, but we can do something about culture, and try to make sure we provide the museums, ballets, galleries and those types of things. Often, even if people don't go to them, they want to know they're there for their spouses and families. It's very important to encourage that.

In the Canadian budget, 1.7% of the budget is related to culture, and only 4% of the 1.7% is for the visual and performing arts. That gets down to 0.0000-something—it ain't very much. So again, it's important to try to encourage resources in that area. This is one way to do it.

Ms. Carolyn Bennett: Thanks very much.

Ms. Ayotte knows I'm converted, so I will let my colleague ask her the question.

The Chairman: Mr. Szabo.

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

I was much impressed by Sharlyn's presentation. It's a good education for all Canadians to know how many of our fellow Canadians have challenges on a daily basis. You had one today because your technology went down. I'm curious about what happened. Was it your battery or your software that abandoned you?

Ms. Sharlyn Ayotte: I was practising so hard that I ran down the battery. It was a very thoughtful presentation.

Mr. Paul Szabo: I have ViaVoice Gold, and it's amazing that you can import documents and have it read them back to you, even though you've done nothing.

Ms. Sharlyn Ayotte: I speak to it too.

Mr. Paul Szabo: Voice-activated dictation is terrific.

So we know we have lots of tools out there to use. But what happened to you today is the reality of life—things happen. All Canadians can't enjoy even accessibility to the adaptive technologies.

You've provided us with the figure that some 14 million adult Canadians have some sorts of challenges—they might be cultural barriers, literacy barriers, disability barriers, etc. I spent 20 years in corporate life, and a lot of work was done in terms of turnaround situations. Most businesses that had difficulties were those that tried to be all things to all people in all locations at all times. It was a strategy that was really not sustainable.

Although idealistically it would be wonderful to be able to do many of the things you said, I note that the policy of Treasury Board is to take all reasonable steps—and there is the qualifier. You've included in your report that it says it “prescribes the use of all reasonable measures to reach people with disabilities”. Would you characterize your recommendations to us now as being reasonable?

Ms. Sharlyn Ayotte: Absolutely. I never know where to start on things like this.

I think they're absolutely reasonable. I think they're achievable. They don't require any more funding, but simply demand that we expand how we think about the world we live in. There's no reason I can't have the tools I need, as an accommodation. My taxes accommodate you with your computer and WordPerfect, or whatever. I'm accommodated with my computer system by using “Naturally Speaking”. So we're all accommodated in one way or another.

Ms. Carolyn Bennett: But we have to have the lights on.

Ms. Sharlyn Ayotte: Exactly. In a burning building when the lights go off, you want me.

Disability or handicap is environmental. I'm handicapped by print-based media. You're handicapped when you're in a room and the lights go off. It's all the way in which we define the world we live in. So it's more than achievable.

• 1705

But there's another point that isn't in this, and that's the business reason it has to be achievable. Our largest trading partner, the United States, has put what I'm talking about into its legislation, its regulations. It demands that organizations trading into the U.S. market only sell in accessible technology. What does that do to our Canadian industries? We haven't even begun to look at it. We're still at the point where we're dealing with disability-related issues as a social development issue, and it's not that any more.

Mr. Paul Szabo: I hear you, and I don't think anybody's going to disagree that we are moving very rapidly to a technology system that will allow everyone to communicate around the world instantaneously. The world operates seven days a week, 24 hours a day. We already know that.

I wanted to ask you whether or not you had come across any recommendations of interim steps that could be taken to facilitate those who are on the ground ready to go now, rather than waiting until the world evolves to the level that's going to allow you to achieve your potential. What kinds of things can't you do or get now that could be facilitated by some sort of transitional or interim measure while the Canadian system becomes adaptable? What's your problem now?

Ms. Sharlyn Ayotte: One of the biggest problems we have as an industry, and one of the biggest problems I have as a person who has a disability and happens to run a business, is that very often when I'm out competing in the world's developing marketplaces, both in Canada and in the U.S., but specifically in Canada, I am competing against the charitable organizations that provide services to me. I have to compete with them. They get tax benefits; I do not.

If we are going to achieve a degree of integration where we're all able to participate in the world together, where we're not seen as people with disabilities or as somewhat less fortunate than the rest of the world, we have to get to the point where we're serving Canadians through mainstream channels. We need a level playing field.

So if we're developing, in order for us to achieve it, it's like Nike: Just do it. If we're going to put in a policy or develop a program, make it accessible, and make it accessible through the mainstream.

Mr. Paul Szabo: You've done a very good job.

Ms. Sharlyn Ayotte: Thank you.

Mr. Paul Szabo: Mr. Chairman, I'll also put on the record that I support that we have this matter followed up. Hopefully we'll be able to better meet our commitments. As the presenter has told us, all Canadians are suffering today, because we don't. If we do the job we're being asked to do, then we're all going to benefit.

Thank you for that.

Mr. Fleck, I wanted to briefly ask you about the options as well. When someone donates shares, those shares were purchased with tax-paid dollars. When someone is granted an option, that option was not acquired, but it has a value. In fact it represents literally compensation in another form. It's not a capital gain; it's compensation. It's a compensation alternative.

Mr. James Fleck: It is a compensation alternative, but when the person exercises the option, they have to use tax-paid dollars to pay for the difference between the so-called strike price and the market price at that particular point in time.

Excuse me. That's incorrect, so we'll erase that from our memories, just as if it hadn't happened.

Mr. Paul Szabo: Thank you.

Voices: Oh, oh!

Mr. James Fleck: We will of course be paying the strike price with tax-paid dollars, the same as if we had bought the stock at the time the option was given. The option can never be less than the market price at the time at which that option is given. So it's really an alternative between the two. You can buy stock, or if you're in the firm and you're receiving some of your compensation that way, you get the option.

• 1710

It's part of compensation, but it's compensation that has to be earned, in the sense that the value of the business to the shareholders has to increase for the value of that option to be anything, because it's zero at the time it's given.

Mr. Paul Szabo: On the aspect of the comparison to shares, have you actually worked out the mathematics and shown what the relative impact would be to a donor if it were to be implemented? Have you looked at the comparatives?

Mr. James Fleck: Oh yes.

Mr. Paul Szabo: How come you didn't provide it to us?

Mr. James Fleck: Because they're identical to those of a person who buys stock. You see, it's the marginal rate that you're being taxed on your income, and all we're trying to do is get the same treatment in both cases.

In both cases, you take 37.5% of the capital gain, which is the difference between the strike price and the price at the time at which you exercise the option, and that goes into your income if this benefit is provided. If this benefit is not provided, you're taxed on 75% of the income, which is the identical way you would be taxed if you had stock. So it's just trying to get comparable treatment provided for stock options.

Mr. Paul Szabo: The options typically would have an expiry date.

Mr. James Fleck: Yes.

Mr. Paul Szabo: If the market value were nominal relative to the strike price—

Mr. James Fleck: There's no value.

Mr. Paul Szabo: Yes, there would be no value to it. But say it's the same. Say the market value is the strike price. You still have a capital gain—

Mr. James Fleck: No.

Mr. Paul Szabo: You have a capital gain on the deemed disposition of the share, simply from the fact that your cost base was zero.

Mr. James Fleck: But your cost base won't be zero. If you have an option at $2, when you exercise the option, you'll have to pay the $2, and you'll have a cost base of $2.

Mr. Paul Szabo: Yes, sure.

Mr. James Fleck: And if it hasn't gone up—

Mr. Paul Szabo: But what you've described to us is that the transaction would be a compound transaction, where there would be an exercise of the options and a disposition.

Mr. James Fleck: Correct.

Mr. Paul Szabo: Okay. So that transaction generates a capital gain. The capital gain has to do with the value of the stock option, not the shares, in that example you gave.

Mr. James Fleck: Help me. I'm not sure I understand your question. Can we do it with a concrete example perhaps?

Mr. Paul Szabo: Sure.

Mr. James Fleck: Let's say the option is at the $2 strike price. What is it you're saying then? And let's say it's now at $5, so it has gone up. Is that the example you—

Mr. Paul Szabo: Well, no, that's not the example you talked about, because if the market value were higher, there would be tax consequences immediately.

Mr. James Fleck: Correct. So now you want to talk about if it hasn't gone up?

Mr. Paul Szabo: Yes.

Mr. James Fleck: If it hasn't gone up, there's no point in doing it. If it's a $2 option and the stock price is selling at $2, there's no point in exercising the option. If you exercised the option and then gave the stock, your cost base would be $2 and there would be no difference, so it wouldn't be treated any differently. It would just be a straight gift, just as if you'd given $2 cash.

Ms. Susan Glass: There is no capital gains, so there is no benefit to the donor of giving a stock that is trading at the same value as the option price.

Mr. Paul Szabo: That's why you're not recommending that the option itself can be donated.

Mr. James Fleck: I'm not recommending that, because in practice, stock options aren't transferable. It would be a major change and in fact would have certain other disadvantages, and therefore it would be unlikely to happen.

Stock options aren't transferable, so I'm recommending that you exercise the option and then you immediately give the stock, so that there is no benefit between the time at which you exercise the option and the time at which you give the stock. You'd have to do the two virtually simultaneously. In practice, that might be within a period of a month, just because it takes time to carry out the various steps.

Mr. Paul Szabo: Okay.

I want to pursue the student debt issue. We had some comments on post-secondary, and I'm wondering what Terry-Anne's understanding is of what the current statistics are with regard to two things: first, what percentage of students who attend post-secondary institutions have any debt whatsoever; and second, what percentage of students pay them off on time.

• 1715

Ms. Terry-Anne Boyles: We're talking about a number of funding mechanisms in terms of loan programs. In terms of loans, then, whether it's a private loan through a banking system or a loan through the Canada student loans program in harmonization with provincial loans programs, except for Quebec and the NWT, it varies by region of the country.

In some of the regions—for example, in some of the institutions in Atlantic Canada or in the north—75% or 80% of the student body are on loan programs, either provincial or federal or combined.

The data on college-level payouts on student loans programs is not currently available. It is available in terms of the university loans pattern. Indeed, we've been working with Human Resources Development Canada through the literacy and learning office to do some segregation of the data so that we can pull out strands of information that are specific to the colleges and institutes in Canada.

That's an excellent example of the data gap that we're saying exists with respect to the programs.

Now, within our colleges and institutes, a number of students are funded through other mechanisms—for example, through programs from the devolved EI programs, or programs purchased directly under the devolution of the federal post-secondary programs.

But what is known is very minimal. What we are seeing so far in the work we've been doing is that there are significant barriers for people who are not able to access any type of resources.

Mr. Paul Szabo: Just so that I don't misunderstand, the 75% or 80% referred to...

Ms. Terry-Anne Boyles: A number of the colleges in northern and Atlantic Canada. For example, the last time we talked to the College of the North Atlantic, 75% of their students were eligible under the government-sponsored loans programs, which means they are eligible under the high-needs definition, with substantial low-income family situations.

On average, 50% of the students in Ontario colleges are eligible under the Canada student loans program or the Ontario program.

Mr. Paul Szabo: Thank you, Mr. Chairman.

The Chair: Thank you very much, Mr. Szabo.

Mr. Gallaway, do you have a question?

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Oh, oh. Well, he who is last in the door...

Thank you, Mr. Chairman. I do have just a couple of questions.

As I understand it, Mr. Myers, when cost recovery was instituted there was a policy laid down by cabinet. I wonder whether you would express your opinion on what that policy said and if in fact it in some way is the same as the fairness standard you're proposing.

Mr. Jayson Myers: The cost recovery policy laid down by Treasury Board at the time required, among other things, the implementation of a regulatory policy that required departments to perform regulatory impact assessments, a part of which would be to analyse the impact on business competitiveness. There was a commitment to improve service for the services to which there is a cost attached. There was a commitment to review the costs. There was a commitment to ensure that the user fees actually reflected the true costs of implementing the service.

The implementation standards we've presented here simply reconfirm, in many respects, those standards. Part of the problem is simply that this Treasury Board policy is not being implemented by departments, but I think they go a little further than that, as well, by providing an operational framework and more specific targets and benchmarks upon which departments can both provide an assessment of the costs and call in a third party to oversee the process.

• 1720

So I think it goes beyond the current Treasury Board policy.

Mr. Roger Gallaway: In terms of implementation, there are a lot of examples we could talk about. One I often hear about is from the board of Maritime Commerce, which is not at all pleased with the ice-breaking fees on both coasts and on the Great Lakes.

Is there in any way an appeal mechanism once a bureaucracy makes a decision?

Ms. Jean Szkotnicki: No, there is no appeal mechanism for those who have entered into the cost recovery programs.

Mr. Roger Gallaway: Speaking for your association, do you in fact find, or is it your belief—and I think I'm hearing that, but maybe you can confirm this—that the various departments are in fact exceeding or overcharging or using it as another vehicle for income for them, which exceeds cost recovery in the true sense of the word? I know that's the basis for the board of Maritime Commerce, but...

Ms. Jean Szkotnicki: One of the other problem areas is that performance standards have not been set, in many cases. Indeed, where they have been set they've not been met. So we've seen a lengthening of review times or poorer service while we're paying for the service.

Mr. Jayson Myers: I would like to add as well that, in some cases, in departments you now have several processes of regulatory review where originally there might have been only one. Those processes have been put in place because it pays departments to now raise fees. In many cases, they're asking for fees that are far higher than any cost that would have been incurred. They're simply fees the departments thought they could raise by going to customers—or to Canadians; this is not just a business issue.

Mr. Roger Gallaway: I think your first recommendation, that this committee undertake a review of it, is certainly meritorious, and I think this committee should consider it after this process is completed in less than a month's time.

In closing, I will tell you that I visited with a constituent who has a lab. He has a spectrometer. I'm not a scientist or a chemist, but I do know that not only did the licensing fee increase by about $100, from $150 to $250—and that was under the auspices of AECL, who in fact exempted Ontario Hydro from the process—but as well, the cost of disposition of a machine that cost $3,500 is twice the value of the machine. It costs $7,000 to dispose of a machine that costs $3,500.

It's pretty incredible, isn't it?

Mr. Jayson Myers: Those are exactly the problems we're facing.

Mr. Roger Gallaway: And yet these people sit there straight-faced, saying, no, this is the cost of doing business in Canada.

Thank you.

The Chair: It's certainly a point we should review, because we hear this quite often, particularly from the business community. The idea is to enhance productivity, not for government to become a barrier to it.

Some very specific questions were asked by my colleagues, so perhaps I can ask a final question at the macro level in relation to the 50-50 formula.

As you know, the federal government is committed to a 50-50 formula between tax and debt reduction on one side and strategic social and economic investments on the other. Conditions have changed. For example, the government was able to balance its books one year ahead of time, and now there are projected surpluses that go beyond our expectations.

Does this committee go to the Minister of Finance and say perhaps that should be reviewed? If we do, how do you change that 50-50 formula? Is a 50-50 formula indeed necessary, or should the government basically be guided by what is good policy and what makes sense and forget about the 50-50 split?

• 1725

I'd like to hear from everybody. Where do you want to start, on the right or on the left? I don't think it's going to matter much on this one.

Mr. James Fleck: I don't know if I'm the right or the left.

I would like to be sure that 50% does go toward debt reduction. I'd like to start there and then work the rest out. It doesn't mean I don't think there should be expenditures. I'd like to see more expenditures on the so-called investment side, education and things of that sort. Health can often be seen as an investment, from my point of view.

But it is important that we don't allow ourselves to get back into the habit of expecting too much from government. As we know, often the answer in Canada is that the government should fix it. Maybe we've been partially weaned in certain areas where it's appropriate with the steps the government has taken over the last few years. It would be too easy to slip back into a mindset that expects all of the problems to be solved here.

So I'd like to see at least 50% going toward debt reduction, which we know in the long run is going to give the government more room to manoeuvre, because they won't be eating up as much in interest. The changes in the deficit were mentioned, but one very important one that wasn't mentioned at all was the low rate of interest. If we had had higher rates of interest, we would have had some real problems. Higher rates of interest could come back, and we just don't want to be in a position where we'd be held hostage to them by a very large debt.

The Chair: Sarah.

Ms. Sarah Iley (President and CEO, Council for Business and the Arts in Canada; Canadian Arts Summit): Thank you, Mr. Chairman.

I've been quiet, having already spoken to this committee, but I came in support of the Canadian Arts Summit, of which the Council for Business and the Arts is a part. I want to echo what Mr. Fleck has said.

I think that's why in a number of the recommendations made—for instance, by Don Johnston—in terms of charitable support and our own suggestion for a matching fund kind of program, we really are very concerned that we don't look on the surplus as yet another windfall.

We think this is a good opportunity. As my neighbour here expressed so eloquently, Canadians have experienced a fair degree of pain in dealing with the deficit over the past few years and have come to change their attitudes and their expectations of government to a large extent.

One of the things those of us in the charitable sector really want to do is to encourage more charity. We want to get Canadians thinking about what they can do in terms of supporting the wide spectrum of charitable activity, not only the arts, health, and education but social services, etc.

That's why all of the things we've suggested are along the lines of saying, give us a helping hand through some incentives, some matching programs, to allow Canadians to help themselves, which is something you've heard from other sectors as well. The Association of Canadian Publishers was looking at incentives, and we've heard that today from some of the others. We would bring others to the table, instead of just saying that the federal government or an amalgam of governments can provide 100% of the cost for whatever programs we want to create.

The Chair: Thank you.

Mr. McGuinness.

Mr. Patrick McGuinness: Thank you very much.

In terms of your question, I would tend to say that maybe we've been caught up too much in the 50-50 split. So the more we could downplay that and, as we say, look at what are some of the economic targets we should have in Canada in terms of having a sustainable type of economy...

Mr. Fleck mentioned that he gives high emphasis to the debt. Now, there's no question in our mind that Canada's current debt-to-GDP ratio is very excessive and will have to come down. As to whether it should be done tomorrow or within five years or seven years is debatable. But at the end of the day, I think we should be looking at what is a sustainable target for debt to GDP. That's an important issue.

• 1730

But also, from our point of view in terms of an industry that sells to people who have money in their pockets going out to restaurants, we do find that the level of retained income the average family has really hasn't increased, as you well know, and probably has decreased over the years. So we would certainly like to be able to figure out some way in which families can have more money in their pockets so they feel positive, go out to restaurants, buy lobster, buy shrimp, buy scallops, and have a good quality of life. So obviously the debt is very important, and taxes are very important.

In terms of social programs, what we're finding in Atlantic Canada is that we have a real problem in terms of finding jobs for our young people. As we say, the best social program for Canada and for young Canadians is a job. So figure out what's the best strategy in terms of getting the job, and our view is that at this point in time, after going through considerable time, it's necessary to somehow create the environment in which companies, entrepreneurs, feel they will make the investment and create the jobs for young Canadians.

The Chair: Thank you.

Mr. James Fleck: If I could make a brief comment, I was impressed with the natural memory of Ms. Ayotte in making her presentation when her artificial memory was put out of commission. More and more, in terms of increasing communications, you would have a power source or you would have a computer plug-in—many classrooms have that today—and just for this body to keep up to date with what's going on in communications, two or three plugs around this table would have solved that problem.

The Chair: That's a very good idea.

Ms. Sharlyn Ayotte: While I'm out trying to change the world and be passionately committed to trying to do everything with nothing, I'm going to turn this question over to my chief financial officer, who thinks about this stuff all the time. This is Len Fowler.

Ms. Leonard J. Fowler (Chair and Chief Operating Officer, T-Base Research and Communications Inc.): Hello.

We think that clearly paying off the debt is of critical importance to Canada.

Mr. Paul Szabo: All of it? When?

Ms. Leonard Fowler: Tomorrow, if you can. Yes, if you can write a cheque tomorrow, do it. At the same time, you have to maintain good social balance, so I think that the 50-50 is a reasonable approach, with a caveat that, clearly, a more critical look at how you spend the 50% you keep is important. I don't think Canadians mind paying taxes so much as they mind what we do with the tax money we get. Certainly the clients we have are saying they want an equitable delivery of services. And that's a very broad spectrum of people. It's not a minority of people, it's a broad spectrum, and it's not one particular disability.

The Chair: It seems to me that the fundamental question is what levels of service do you want and what level of taxation are you willing to pay? That's I think the real debate. We're not going to get all that done tonight.

Mr. Myers.

Mr. Jayson Myers: Mr. Chairman, I think it is time to revisit the 50-50 formula. But in one sense that notion of 50-50 I think really talks about a balance that has to be there between measures to promote economic growth and measures to sustain federal services, whether they are income support services for those Canadians in need of them or services in the form of support for infrastructure—educational infrastructure, physical infrastructure, and so forth—or simply good governance, the effective administration of federal legislation, which is why we're here because that's what we want to see. I think it's extremely important to see that balance.

• 1735

So I like your idea of putting good policy first, making sure we know where we want to go in terms of building a business climate, an economic climate that generates the economic growth that's going to deliver the long-term revenue so we can sustain those programs, and a system that makes sense in terms of service provided and the cost that's being paid for that. But I also think we very much must take a look at—a theme that seems to be running throughout these hearings—what it takes to improve productivity and innovation, the growth potential of the Canadian economy, because that's where income growth does come from in the end, and to look very seriously at measures that would relieve the tax burden Canadians face. That's where I would put my biggest emphasis.

But at the same time I think, coming back to our theme, there's much to be done not only in reducing tax costs, but also making sure there is a high level of quality throughout the public service. That's how businesses have prospered over the last ten years and in the face of mounting competition.

The Chair: Anyone else? Mr. Brown.

Mr. Gerry Brown: I think I'm probably going to echo some of the comments that were made earlier. I never as a citizen really thought seriously of the 50-50 other than that it was a sense of a movement, or an indication and a part of where this particular government wanted to go in looking to find some sort of a balance.

In my mind, there are probably three areas where we need to find the balance.

I think debt reduction is important. The fact that groups like us can come before you now and have the gall to even suggest spending on certain areas of initiative means that we've wrestled to the ground a big giant here that needed to be wrestled down. Now there's a sense of optimism and hope that we can address some of the future issues that are facing our system. So I think the sense of debt reduction is an important one. I think it has given a renewed vigour to our country.

I think taxation is the other area we need to address. I can speak to that from a very personal level. Two years ago I moved from Quebec to Ontario, and I can now afford a few extra lobster dinners as a result of that. So it definitely has improved my quality of life—just the taxation issue.

From our institution's point of view, I think issues that were talked about today from the point of view of debt, student debt, those types of issues, are important because a little bit more disposable income will allow families to address those issues, and we even can start considering the accessibility issue to the post-secondary education. Then there's the opportunity to look at some initiatives that move us forward along the lines Jayson was talking about—productivity, innovation, those kinds of areas.

So I think there's a need for a balance: some debt, some tax and some initiatives.

The Chair: Anyone else? Mr. Fleck.

Mr. James Fleck: One of the reasons I was trying to hang tough on the 50% was that I had about eight years of experience at senior levels in the Ontario government many years ago. One of the truisms of government is that there are always more good programs than there are dollars, and if there weren't some discipline in getting the debt down I would be concerned. There are so many good things to do that unless one takes a chunk out of the income packet and says we're going to put that into the piggy bank, it will be gone somewhere else. That's the reason I make that particular comment.

The Chair: Anyone else? Mr. Myers.

Mr. Jayson Myers: Just echoing one other thought here, I think it's extremely important in looking at whether it's government investment, or tax relief, or looking at user fees, which is a large part, you're eating up a lot of disposable income at the same time... We're talking about building the capacity of the Canadian economy. I think it's very important to look at the role of government not only in terms of the direct services that government can provide, but in terms of how government can get the biggest bang for the buck for its money in leveraging what Canadians can do for themselves. That's where I think much more effort should be placed.

The Chair: Thank you very much.

On behalf of the committee, I'd like to thank you for yet another excellent panel. You certainly added value to the debate. Our challenge of course is that we hear from Canadians from coast to coast to coast, and I can tell you on any given day that if we act on everything we hear, we'll be more than just in a deficit position, because I think everybody has valuable needs that need to be addressed.

• 1740

Having said that, our challenge is not really the debate about whether health care is important or not, because everybody understands that health care is important. The challenge we face in some major urban centres of homelessness is an issue that we all care about—or child poverty. These are issues that I don't think are really the debate. Everybody agrees we should be doing something about it. The debate really is about which road we are going to take to generate the wealth required to address these concerns. This is what we in this committee will be struggling with as we prepare recommendations for the Minister of Finance.

But, as always, you add a great deal of value to the debate, and we thank you very much for your advice.

The meeting is adjourned.