FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 23, 1999

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[English]

The Acting Chair (Mrs. Karen Redman (Kitchener Centre, Lib.)): I'd like to bring this meeting to order and thank the witnesses for coming to share their comments and views with us as we deliberate our report, which will go to the Minister of Finance in order that he may compose the budget for the coming year.

We'll ask each of the presenters to stick to the five-minute presentation limit, please, after which time we will allow committee members to ask questions.

Today we'll be hearing from the Canadian Centre for Policy Alternatives; Consulting Engineers of British Columbia; the David Suzuki Foundation; the Greater Vancouver Chambers Transportation Planning Panel; the Health Association of B.C.; and the Corporation of the City of Vernon. Welcome.

I'd like to start out with Mr. Seth Klein, the director of the B.C. office, and Mr. Marc Lee, research economist, of the Canadian Centre for Policy Alternatives.

Welcome.

Mr. Seth Klein (Director, B.C. Office, Canadian Centre for Policy Alternatives): Good afternoon, Madam Chair and members of this committee, and thank you for this opportunity to appear once again before the House of Commons finance committee.

I'm happy to be here this year with Marc Lee, an economist who joined our office this year who has been doing some excellent work in the area of productivity and taxes. We're happy to take this chance to highlight once again some of the ideas in the alternative federal budget.

According to Finance Minister Martin, Canada's economic fundamentals have never been better. We would ask, whose fundamentals?

Unemployment and underemployment still plague us, poverty has risen, economic inequality is growing, unemployment insurance and welfare have been cut, municipalities have declared homelessness a national emergency, medicare is in crisis, universities and colleges face severe underfunding and student debt is soaring, and the environment has virtually dropped off the political radar.

This year is the tenth anniversary of the federal all-party resolution calling for the elimination of child poverty by the year 2000. Needless to say, our chances do not look very good. Tomorrow, in cities and towns across Canada, vigils will be held to mark the tenth anniversary of the Commons resolution.

Not only have we failed to eliminate child poverty, but it has gotten worse. We use StatsCan's low-income measure as our measure of poverty. One can debate the use of that, but the point is that the trends are clear and they are going up. Also, in the past 10 years, we have seen homelessness escalate and food banks proliferate.

We do not believe it overstates the case to say that even to be talking about tax cuts that disproportionately benefit the wealthy when child poverty remains near 20% and homelessness is a national emergency is, quite simply, a moral outrage.

Something just doesn't seem right here. We're a rich country. We are richer than we were when we were better at taking care of one another. The tone of the debate suggests that something is dreadfully wrong with our priorities.

We estimate the federal budget surplus next year to be almost $12 billion. The polls consistently tell us Canadians are more concerned with social reinvestment than with debt reduction or tax cuts. Most people understand that we need government to correct for the failures of the market, such as the lack of affordable housing and child care. Rather than targets for tax cuts, what we need are clear targets for lowering unemployment, poverty, and homelessness, and a determination to meet these social targets with as much determination as was shown in the campaign to eliminate the deficit.

How can that be done? It would consist of doubling transfer payments to the provinces for health, education, and welfare over the next two years and investing in new public services like public home care, thereby restoring some 100,000 jobs to the public sector. It would mean heeding the call of the Campaign 2000 child poverty advocates, who are calling for increases of $2 billion per year as an investment in Canada's children for the next five years, in the form of increases to the child tax benefit, with guarantees that this benefit will not be clawed back from the poorest of the poor, those on social assistance, as is happening in every province but two. It would mean a national child care program and new spending on early childhood education and social housing. It would mean restoring EI benefits and coverage, and, as the throne speech suggested, increasing the time available for paid parental leave.

Much as the tax cut campaigners would have us believe otherwise, healthy families at the end of the day are more than their after-tax incomes.

I'll pass it over to Marc.

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Mr. Marc Lee (Research Economist, Canadian Centre for Policy Alternatives): Thanks, Seth, and thank you, Madam Chair. I'm going to talk very briefly about productivity and taxes.

While tax cuts again have been advocated as a measure to boost Canada's productivity performance, I think there's good reason to believe they'll fail to deliver. The link between taxes on the one hand and investment and growth on the other is inconclusive at best, according to the research. In fact, the highest productivity growth rates over the 1990s are in the high-tax nations like Norway and Denmark. In both Canada and the United States, top marginal tax rates in the 1950s were in the 90% range and were correlated with high productivity growth and high real GDP growth.

Where the federal government can make a difference in productivity is not by standing on the sidelines, but through increased public investment in areas where the private sector has little incentive to invest on its own. There has been a significant decline in public investment in recent years due to cutbacks. Current public investments are only sufficient to offset the depreciation of existing public capital. A variety of public investments in areas such as infrastructure, research and development, mass transit, health care, and education would all contribute to the same productivity increases and often facilitate or complement private sector investment. However, they require that governments act with a longer-term time horizon. For example, the benefits of early childhood development may not be apparent to the economy or to the treasury for several decades.

In regard to taxes, while we support renewed social investment, this isn't to suggest that the tax situation should remain unchanged. The tax system is grossly unfair and lacks progressivity. In fact, when all federal and provincial taxes are considered, Canada already has a flat tax over the entire income range.

Across-the-board tax cuts are not what we need. The federal surplus is largely the product of some very painful and unnecessary spending cuts, cuts that have hurt the poor, the unemployed, and students the hardest. To use that surplus now for a tax cut that would disproportionately benefit the well-off is Robin Hood in reverse and just plain wrong.

Now more than ever, with the market producing a growing gap between the haves and the have-nots, we need a progressive tax system that will mitigate this inequality. We need tax changes that will lower the taxes paid by low- and middle-income earners while increasing the taxes of those earning over about $100,000.

A few ideas for fair tax reform—

The Acting Chair (Mrs. Karen Redman): Mr. Lee, you're over your time allocation. Are you near to concluding?

Mr. Marc Lee: Yes, very close.

We should be taxing capital gains at the same rate as income. We should treat a dollar earned as a dollar earned, so that investment income doesn't merit any special tax status over hard-earned labour income.

We should re-establish two upper-income tax brackets for those earning $100,000 and $150,000, which would emulate the United States, which has two additional federal income tax brackets that Canada does not.

We should institute an inheritance tax at the same rate as the United States on transfers of wealth over $1 million, a measure that would raise $3 billion in revenue.

We should broaden the personal and corporate income tax base by closing various loopholes, like the meals and entertainment deduction and the political lobbying deduction.

We should put a cap on the deductibility of corporate executive salaries that are 10 times the average wage.

We should bring in a minimum corporate income tax so corporations can't stack their deductions to eliminate their taxable income.

We should establish new green tax measures, such as a tax on carbon emissions, while eliminating subsidies like the special tax treatment afforded oil and gas production.

On the other side of the ledger, we should increase the GST tax credit for adults and disability tax credits. We should significantly increase the child tax benefit by $2,000 per child per year and ensure that this benefit goes to all low- and modest-income families, the welfare as well as the working poor.

We should increase the basic personal exemption, and we should index tax brackets to inflation, thereby ending the bracket creep that disproportionately hits low- and middle-income earners.

Ultimately, we're more than individual consumers. Our government should remind its citizens why we pay taxes. They're the price we pay for a civilized society and the price we pay for goods and services we've chosen to provide for one another collectively.

Thank you, Madam Chair.

The Acting Chair (Mrs. Karen Redman): Thank you, gentlemen.

Next we'll hear from the Consulting Engineers of British Columbia, Mr. Kerry Rudd and Ms. Kate Cockerill.

Mr. Kerry K. Rudd (President, Consulting Engineers of British Columbia): Good afternoon, and thank you.

I'm Kerry Rudd, the president of the Consulting Engineers of B.C. I am joined today by Kate Cockerill, our executive director.

The Consulting Engineers of B.C. speaks for approximately 100 of the best-known consulting engineering firms within the province. We employ about 5,000 people in B.C. and about 10,000 across Canada and overseas.

The Consulting Engineers of British Columbia welcomes the opportunity to present the Standing Committee on Finance with information to help ensure the health, safety, and economic well-being of Canada. This can only be achieved with a strong and healthy infrastructure system.

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Creating and maintaining a strong nationwide infrastructure system has been fundamental to the development of this country. Fundamental to our success is the ability to move goods across provincial borders, service remote communities, and access vital export markets. Fundamental to our sense of unity are the links from sea to prairie to sea. Fundamental to the health of the Canadian public and to our environment is the provision of clean drinking water to each and every Canadian and the treatment of waste prior to disposal.

Historically the quality of our infrastructure has contributed significantly to the high quality of life enjoyed by Canadians. This quality, combined with our natural splendour, induced 1.2 million tourists to visit B.C. in 1997, which contributed $4.1 billion to our economy. Nationally this adds up to $47 billion.

More recently, investments in our basic infrastructure have fallen well below levels required to meet our basic needs. This situation cannot continue. We therefore request your support for an immediate and significant renewed investment in our infrastructure. In this request we support the call of others, including the Association of Consulting Engineers of Canada, the Coalition to Renew Canada's Infrastructure, and the provincial governments.

It's important to create a long-term investment strategy for our national highway system and municipal infrastructure; to calculate the total asset value of the national infrastructure and include that value on the federal government's balance sheet so that Canada's infrastructure assets can be managed effectively; to develop, with the help of industry, standards on the level and timing of maintenance expenditures required to sustain this infrastructure; to target federal spending in the year 2000 budget to those infrastructure areas in the greatest need; and to develop, in consultation with the private sector, an infrastructure strategy that is intermodal and municipal in nature.

Insufficient investment costs everybody. Your objectives to enhance our national competitiveness and productivity, to support an environmentally sustainable economy, and to improve the health, safety, and quality of life for Canadians are directly related to having in place an up-to-date and efficient infrastructure. Numerous studies point to a national infrastructure deficit of some $60 billion.

Energy and productivity are wasted when infrastructure isn't working properly. Energy to boil water to make it safe for drinking is wasted energy. Fuel consumption and pollution increase with traffic congestion. Unsafe roads lead to accidents and increased costs to our health care system. These are but three examples of the costs to the economy and to the health and safety of Canadians that occur when our infrastructure is neglected.

We're losing ground daily. The OECD estimates the investment required to maintain the transportation infrastructure within its member countries ranges from 2% of GDP to as high as 17% in the less developed countries. Our own expenditures amount to 0.68% of GDP.

The United States in 1995 spent 42% more per kilometre of road than we did in Canada. The United States Transportation Equity Act is directing $198 billion into their transportation systems between 1998 and the year 2000. Canadian highways are in competition with the U.S. routes for billions of dollars a year in commercial traffic. It would seem appropriate that we increase investment in our infrastructure to regain our competitive advantage.

Unlike in other provinces, the infrastructure in British Columbia has typically lagged behind population growth. This is possible because many towns are located adjacent to clear mountain streams and lakes. As a result, drinking water often receives only minimal treatment. Also, large urban centres are located on the coast. This has allowed people to discharge municipal waste into the ocean. Our current knowledge highlights how inappropriate and unsafe these approaches can be. Clear water is not necessarily clean water.

The Acting Chair (Mrs. Karen Redman): Mr. Rudd, I hate to interrupt. I'm wondering if you could conclude. Your time is up.

Mr. Kerry Rudd: Certainly.

In conclusion, CEBC supports the recommendation of ACEC, of which we are members, for a long-term investment strategy for infrastructure. In the recent throne speech, the federal government made a commitment to a new five-year national infrastructure program. It should also be recognized that the needs cannot be met within a five-year period, and therefore investment must be part of a long-range plan. In addition, we believe the government should not wait for 2001 before committing federal funds to address the $60 billion national infrastructure deficit.

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Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you very much. I would encourage the committee members to read through the briefs if they're not covered in the presentations.

We'll now hear from Mr. Gerry Scott, climate change director; Mr. Jim Fulton, executive director; and Mr. Dermot Foley, energy director; all from the David Suzuki Foundation.

Welcome, gentlemen.

Mr. Jim Fulton (Executive Director, David Suzuki Foundation): Thank you very much, Madam Chair.

[Translation]

I apologize for submitting this document to you in English only,

[English]

but people who visit our web site can get the documents we'll be referring to in both French and English.

I'm sure members will note the title of the paper, “From Crisis to Opportunity: Climate Change, Ecological Sustainability & Economic Security”, and will reflect on the fact that Mr. Martin, our present Minister of Finance, is on the public record calling for a 20% cut in carbon dioxide emissions into the atmosphere from 1990 levels by 2005. This committee can probably have more influence on how the Minister of Finance and Canada can achieve that target than any other committee in the House, so I urge you to focus on some of the recommendations we're making in today's paper.

If you look under “Overview” on page 1, we make the point that:

Efficient energy consumption combined with a growing reliance on the sustainable use of renewable resources can increase productivity, create high-tech jobs, and foster a knowledge-based economy. In pursuing the sustainable-energy strategy, the multiple threats of climate change are reduced and our overall economy can be strengthened. There are also many co-benefits: less air pollution and acid rain, improved public health, the reduced consumption of precious water resources, and the enhanced livability in Canadian communities.

As members already know:

This transition is already underway in many of the most successful economies in the world: Germany, Japan, the Netherlands, and parts of Scandinavia.

Even in the United States and Great Britain, they're moving much more rapidly than we are here.

On page 2, under “Canada & Climate Change”, you'll note:

Canadians' economic and social well being is intimately tied to our climate and weather systems which make up our environment. Weather dependent economic activity in sectors include, among others: hydro-electric power production, utilities, fisheries, agriculture, tourism, the construction industry and forestry. These industries annually account for $130 billion worth of Canada's GDP.

If you look on page 3, under “Sustainable Energy & Economy & Social Security”:

...on average four times as many jobs are created from investments in energy efficiency as opposed to new energy supply and twice as many jobs are created from investments in renewable energy technologies compared to similar investments in conventional energy. There are also many co-benefits...

—which we list there.

Perhaps most important to this committee and to members of the House is to reflect on this fact: “Recent studies by Health Canada that show that up to 16,000 Canadians die prematurely every year as a result of air pollution.” We've recently released a series of documents regarding the loss of Canadian life by inaction on climate change and air pollution.

On the bottom of page 4, under “Sustainable Transportation Initiatives”, we note:

The federal government generates about $3.8 billion from fuel taxes, while expenditures on transportation are less than $400 million. Canada is the only OECD country that provides no federal support for public transit.

There should be, and we make some suggestions as to where that should be.

On page 5, under “Community Transportation Improvement”, we think you particularly should make recommendations on this:

A community transportation improvement fund should be established by dedicating 25 percent (or $1.5 billion) of annual federal fuel tax revenue, to be matched by provincial governments, and collectively managed along with municipal and regional governments. ...The Canadian fund would be aimed at upgrading and expanding transit infrastructure. A portion of the fund should be allocated on a cost-shared basis for alternative transportation infrastructure such as: intra-urban bicycle routes, commuter ride matching services, as well as encouraging the expansion of high-occupancy vehicle lanes for buses and car pools.

I'm sure many of you will recall that Paul Martin added 1.5¢ per litre to gas in the 1995 budget. That was $500 million a year that was to be applied to the deficit. We're encouraging you to encourage the Minister of Finance to now apply that to the environmental deficit, which, as we heard from Mr. Klein and others, is continuing to grow in this country.

In paragraph 2.2, “Automobile Efficiency Incentives”, we urge you to make a recommendation regarding:

...a revenue-neutral feebate program [that] would provide rebates to Canadians for purchases of new vehicles with high fuel efficiency, most notably hybrids, and would be funded from fees levied on vehicles with poor fuel efficiency.

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This is revenue neutral, and it's really an intelligent approach. Many countries are going this way, so we're really just calling for a levelling of the playing field. Just stop subsidizing road, freight, and infrastructure, and move to some of the more intelligent approaches that will give us a win-win situation.

Under section 3, “Tax Shifts & Economic Incentives”:

...many industrialized countries are reflecting on some very basic economic principles: taxes will restrain certain facets of an economy while tax relief encourages the growth of others.

Pollution is not included in the price of goods at the moment in Canada, and it's an external cost. We urge you to stop agreeing that the atmosphere is a free dumping ground. It can no longer be that way. The best scientists in the world have agreed on this point, and we urge you to take steps to do something about it.

Canada should apply an atmospheric user fee to the price of fossil fuels used directly by consumers or on inputs to the goods that they purchase. A commensurate reduction in taxes on other dimensions of the economy—sales taxes, income taxes, payroll taxes, or various clean, high-tech industries—would encourage employment, job creation, growth of a certain sector of the economy and/or increase personal incomes.

The last point I want to make is on the next page, under “Carbon Emission Fee”, which is really the concept of moving to polluter-pay:

A carbon fee, which is clearly revenue neutral, would be a very effective tool for reducing carbon dioxide emissions. It would send Canadians a message that Canada is serious about fighting climate change. A July 1999 poll by Environics

—which we conducted—

shows that 77 per cent of Canadians support carbon charges as a means of tackling climate change.

Over the eight-year period the total annual revenue would increase to $7.5 billion if consumption remained at 1995 levels.

So there's a huge amount of opportunity there.

And this is the last point. It's on page 7, under “Reducing Incentives for Fossil Fuel Exploration”:

The oil and gas industry currently enjoys the lowest effective rate of taxation on marginal investment: 5.5 per cent (compared to 37 per cent for the construction industry and 27.6 percent for the service industries).

What we're really calling for here is fair play. Why give special treatment to the massively profitable fossil fuel sector of this country when there are other areas of the economy that help to clean things up, improve the health of Canadians, create more jobs, stabilize the economy, and go the direction that successful economies are going around the world?

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Fulton.

My understanding is that you have this package of information. If any of the committee members would like it, you can supply them with it, is that correct?

Mr. Jim Fulton: Yes, we gave them to the clerk. The clerk can make all three of those documents available, and those who are following this transcript on the web can get both Canadian Solutions and Taking Our Breath Away off our web site in English or French. I understand committees no longer append documents as they used to, but this is the way people can still get access to the information. The web site is www.davidsuzuki.org.

The Acting Chair (Mrs. Karen Redman): Thank you very much.

We'll now hear from Mr. Robert Milbourne, who is chair of the Greater Vancouver Chamber's Transportation Planning Panel. Welcome.

Mr. Robert Milbourne (Chair, Greater Vancouver Chambers Transportation Planning Panel): Thank you. I'm Bob Milbourne, director of Pacific region for Hatch, one of Canada's largest international engineering consulting project and construction management organizations, with specialties in the transit, civil infrastructure, and mining and metallurgical sectors.

I'm appearing today in my capacity as chairman of the Greater Vancouver Chambers Transportation Planning Panel. This organization was formed under the sponsorship of the B.C. Chamber of Commerce, with support from the majority of the chambers of commerce in Greater Vancouver, including the Vancouver Board of Trade, primarily in response to the creation of TransLink, the new authority responsible for transportation systems, including transit and major road networks within the greater Vancouver regional district.

While TransLink has sought and continues to seek input from the various interest groups affected by its activities in the region, its advisory bodies are broadly based and as such do not reflect the singular views of the business community. With the advent of TransLink and the ongoing activities of bodies such as the Gateway Council, we believe there is at last a framework in place within which transportation-related matters within the region can be assessed in a cohesive manner.

The chambers involved in the panel all believe efficient and effective transportation systems that balance the requirements for moving people with those for moving goods and services are fundamental to the economic success and quality of life in greater Vancouver. The panel has embarked on a series of interactions with TransLink and other transportation-related agencies at the regional, provincial, and federal government levels to ensure that the planning, funding, and execution of transportation-related investments takes into the account the concerns of the business community.

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Getting to the point of our presentation here today, the views common to the business community that guide our work include: that public agencies must be accountable for maximizing the economic as well as the social benefits of their expenditures; that revenues raised from taxes and levies on transportation-related goods and services must be directed towards transportation and infrastructural issues; and that transportation spending must be funded from the existing and, over time, decreasing envelope of taxes and revenues at all levels of government.

Briefly, the GVRD has been the recipient of several recent major infrastructural investments that have complemented its role as a major coastal population and business centre and international gateway. These include the Deltaport complex, the airport expansion, the Sky Train expansion, the new ferry services, and so forth. Viewed in isolation, all of these projects invariably made sense to their proponents. As they became implemented, however, it became crystal clear that due to the absence of companion investments in interconnecting infrastructure that are necessary to deal with the movement of goods, services, and people, investments either failed to achieve their desired objectives or, at worst, added to the congestion, economic waste, and air quality deterioration that have regrettably become synonymous with the lower mainland.

For greater Vancouver to sustain its traditional role as the economic engine that funds both B.C. in general as well as other provinces and regions through redistribution policies, it must remain competitive with and integrated with comparable centres nearby in the U.S. In that jurisdiction, revenues raised from transportation-related goods and services are singularly directed towards investment in necessary infrastructure. The B.C. government has made a modest start in this direction by assigning a portion of fuel taxes raised in the region to the revenue base of TransLink. However, in the context of the decades of marginal investment in transportation-related infrastructure in greater Vancouver, and in the billions of dollars available to Seattle, Portland, etc., under the U.S. TEA-21 program, this initiative verges on the inconsequential. We believe what is required is a comprehensive, continuing program of directing federally and provincially raised revenues from transportation in Canada towards transportation in Canada.

Lastly, this redirection must be accomplished within a presently fixed and, over time, declining totality of direct and indirect taxes and levies by all levels of government. Greater Vancouver in particular and B.C. in general stand as eloquent testimony as to how once vibrant economic systems can be taxed, regulated, and litigated into gridlock, leading to economic stagnation and ultimately decline. Not only must the overall burden of taxation on both income-generating individuals and businesses be lifted to permit capital permeation and investment, but the recent trend of the so-called privatization of previous government monopoly services to quasi-public agencies funded by user fees without mitigation of the tax burden must also be seen for what it is: increasing taxes.

In the same context that while not everything is right about the systems that our U.S.-based competitors live and prosper under, neither is everything wrong. In particular, the combination of rigorously directed transportation-related tax revenues and tax exempt municipal and infrastructural project bonds is a powerful force for enabling the continuous investment in and modernization of their ports, airports, highways, roads, bridges, tunnels, and rail-based transportation systems. If left unmatched, that will see greater Vancouver's ability to fulfil its traditional role of supporting the balance of B.C. and the less-favoured regions of Canada much diminished.

We would recommend to you an innovative program of combining transportation-directed taxation and tax-exempt bonds for infrastructural purposes, enveloped in a commitment to abate the overall burden of taxation in a systematic, material, and consistent fashion. Such an initiative would be of enormous benefit not only to ensuring the ongoing vitality of gateways such as greater Vancouver, but also to enabling much needed programs such as the national transportation investment strategy that are also of great importance to us.

Thank you for the opportunity to share our views.

The Acting Chair (Mrs. Karen Redman): Thank you Mr. Milbourne.

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We will now hear from Mr. Larry Odegard, chief executive officer of the Health Association of British Columbia. Welcome.

Mr. Larry Odegard (Chief Executive Officer, Health Association of B.C.): Thank you, Madam Chair.

The Health Association of B.C. is a non-government, non-profit organization that represents health authorities and health service providers throughout the province. We assist these members in lobbying the government and advocating for ways in which we can improve the quality and the delivery of health services throughout the province.

We are also a member of the Canadian Healthcare Association. The CHA is a federation of provincial associations, and we're pleased to speak today both in support of what you'll hear from them next week, a week from today, when they present, but also to identify some unique issues that from the B.C. perspective are very important for us.

The CHA recommendations cannot be presented to you either often enough or strong enough. We daily hear of concerns about the health system across the country, and the federal government commitments are needed to create a sustainable, accessible, accountable, integrated, and publicly funded national health care system for the millennium.

We hasten to acknowledge the existing commitment from the federal government, and particularly the much-needed infusion of funds in this past budget, but we also need to state that this commitment must be continued. Our population is growing and aging. We also have inflation issues to deal with. We have capital equipment neglect, which I'm going to comment on, technological advances, and public expectation as well as costs such as collective agreement increases.

So the health association urges the committee to act on the recommendations put forward in the CHA brief. Now I'd identify the five additional issues that we feel from the B.C. perspective need to be addressed and discuss very briefly how the federal government can play a role in their resolution.

I'm both aware of and sensitive to the respective roles of the federal and provincial governments in health funding, but I think these are important issues to be considered nationally.

Recently the integrated health system in B.C. has been showing significant improvements in the efficiency and effectiveness of the health system. This has been reflected across most of the country where integrated systems have yielded some significant improvement.

Although it has been a good change for the health system overall, it has required several years of hard effort by the health care providers and ministries of health across the country. But it has really been a preoccupation with restructuring in the system, and there has really been a lack of focus on several really key health reform and operational issues that now need some attention.

The first one I want to mention is that related to assisted housing. The number of seniors in British Columbia continues to rise, and all communities are faced with the challenge of providing appropriate and alternative housing for these people. It's a fundamental component of community care, and we just don't have enough of these options for people in British Columbia. I know the situation is similar across the country.

Supportive housing meets the needs of seniors by offering an opportunity for independent living, affordable living, companionship in a congregate setting, and security. The benefits are not just for that individual who has the opportunity to reside there, but it is societal. It saves significantly in health care expenditures, and there are familial benefits as well, reducing the stress on the family caregivers who are at home with people in need.

The federal government could play a role here in assisted housing through the development of unique building designs, providing seed money to initiate projects, constructing and developing housing alternatives in many settings, sharing in the capital costs or assisting in the access to capital funding, and really to assist in developing health care programs for the frail elderly in these communal living situations.

The second point I'd like to make is regarding health information. There is no comprehensive interactive national information system providing current data on people receiving care.

The CIHI, the Canadian Institute for Health Information, is an excellent start in this direction. However, their information is neither as current or comprehensive as it could be due substantially to the inability of service providers to provide data on a timely and accurate basis to the CIHI. The Canadian health system ultimately does not have adequate information not only on the service we're providing, but what it's costing and what the results or outcomes of that service are.

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Primarily the information we have is on acute care and physician services, with little in the community service and health promotion and disease prevention areas. We also can't segment this information into population and sector target groups. If we had an improved information basis, foundation, and data, we would be able to plan better, deliver services more effectively, and yield improved results. We urge the federal government to fund the establishment of this system in conjunction with CIHI and the provincial and regional health authorities so that we can develop some standard performance measures, share the best practices, and distribute report cards not just through Maclean's but through other ways to our communities.

The third item is in the area of tertiary equipment. Earlier this year we conducted a local survey and discovered that no regional health authority in this province described its capital equipment situation as adequate. Really we've suffered longstanding severe neglect of major capital equipment. In our tertiary hospitals this is even more aggravated. They must turn to charitable organizations to fund most of the acquisition of equipment that they use to provide services. The trend to underfunding of capital equipment has really led to a backlog in demand for new technology for equipment that is readily available throughout other jurisdictions. And we really have not replaced some of the obsolete equipment.

I'll give you an example. Just blocks from here St. Paul's Hospital has a $12 million list of critical equipment needs, including cardiac and ICU monitors, defibrillators, heart and lung machine, renal dialysis machines, and surgical monitors.

The Acting Chair (Mrs. Karen Redman): Mr. Odegard, you're out of time. I'm wondering if you could go to concluding comments.

Mr. Larry Odegard: We feel the need to address those infrastructure areas. In rural health I want to commend the federal government for supporting the rural health research institute held recently in Prince George. More investment is needed in that area to sustain the network.

The last area I wanted to address, and not to diminish its importance, is aboriginal health. Aboriginal people across this country have poorer health status, and particularly in B.C. we see a very significant issue here. We need assistance in developing some programs that will consolidate our efforts to improve the health of aboriginal people.

I thank you for the opportunity and I apologize for going over my time. Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you very much, and no apology is necessary.

Next I'd like to welcome Mayor Wayne McGrath from the Corporation of the City of Vernon. Welcome, Mayor.

Mr. Wayne McGrath (Mayor of Vernon): Thank you, Madam Chairman. I am, as you say, the mayor of the City of Vernon, at least for another two weeks. I didn't see a great election on Saturday's election. My background is that I am a public health environmental engineer. But I am here today on behalf of the City of Vernon. I do appreciate the opportunity to appear before your committee.

The main focus of my presentation will relate to the proposed new national infrastructure program. I suppose I could end right here and say that I do support Mr. Kerry Rudd and the Consulting Engineers of B.C. in their brief. But generally speaking I also support the contention that the majority of the federal government surplus should be directed to paying down the debt with specific targets and to tax reduction.

The objective would be to apportion the surplus in a ratio most conducive to strengthening our economy. The federal government should resist the temptation to embark on a whole lot of new spending programs irrespective of their perceived merits. There must be, in my opinion, a clearer definition of the roles and responsibilities of the various levels of government; that is, between the federal and provincial and the provincial and municipal governments. There is a lot of duplication that exists today. Notwithstanding that, I do believe we must encourage expanded spending on our national highway system. A higher percentage of the federal fuel tax should be matched with provincial contributions to improve our major national highway systems, as well as other more innovative transportation systems such as those that were recommended by Mr. Fulton, who is seated next to me.

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From a municipal perspective, I do support the federal government's commitment for a new national infrastructure program. The 1993 and 1997 programs, I feel, were generally successful in meeting the objectives that were established at the time, but there were indeed some flaws and some frustrations, especially to municipalities seeking grants through that program. I believe the program should contain more clearly defined criteria. These recommendations have been made by our city through the Union of British Columbia Municipalities and the Federation of Canadian Municipalities in the past to the federal government.

But four of these criteria would include, number one, that all projects be funded equally by a municipality, a province, and the federal government, and that essentially is the basis for the past and hopefully for the future programs.

Number two, the level of funding to be distributed to municipalities should be based primarily on population, and there should be an equitable distribution of that funding.

Number three, project priorities should be determined by the municipalities with the provincial and federal approval required simply to ensure conformance with the predetermined criteria. As an example, last time, or the first time in 1993, our city had a list, we believed, of twelve very important projects, and we listed them in priority and we got funding for the twelfth most important one. This was important and we had no complaints, but it seemed rather strange that federal and provincial bureaucrats would be telling any municipality what their priority project should be, so long as they meet, as I say, the predetermined criteria.

And fourthly, I believe the criteria for eligible projects should be restricted to the more basic infrastructure: water, sewer, roads, and bridges. In the previous programs they were expanded fairly liberally, I believe.

Furthermore, I believe there must be an ongoing program to ensure a predictable source of revenue for long-term planning of capital projects by municipalities. In the event that a particular province chooses to opt out of this program—which is just about the case here in B.C.—provision should be made for a federal-municipal program to be shared equally by the federal government and the municipalities.

I know this last round of projects in 1997 in British Columbia was pretty well restricted to the transit and transportation projects, which although they were important for a lot of municipalities—probably the vast majority—they were not their priority projects. Yet we were essentially forced to put our own money into projects that we didn't consider a priority simply to be able to access the funds of the provincial and federal governments.

I know in talking to David Anderson, he indicated there was some thought of perhaps going it alone without the province. I can certainly understand the desire to involve all provinces, but when you have 10 provinces with quite differing philosophical backgrounds, sometimes it's difficult to set up a program with criteria that all can agree on. So I would suggest that if this happens again there be a program where the federal government and municipalities can share equally.

In conclusion, I would say that with the current surplus situation in the federal government, you are in a unique position to positively address the finances of Canada. And I would urge the establishment of a new national infrastructure program as part of the year 2000 budget.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you very much, Mayor McGrath.

I'm going to turn it over now to the committee to ask questions, and if you're not absolutely bilingual you may want to take your recording device, which that is not. It looks like this, and I believe it's channel 1.

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[Translation]

Mr. de Savoye.

Mr. Pierre de Savoye (Portneuf, BQ): I'd like to begin by thanking you for coming to meet with us here today. What you have to say is important to us and your opinion on the various matters gives us some important insights. We are pleased that you have taken the time to appear before us and to put what you had to say in writing.

You have, of course, talked to us about health care, education, social services and social housing. You've also talked about taxation. I won't ask you any questions on these subjects because you are preaching to someone who is already converted. I will leave it to those of my colleagues who have more specific concerns in these areas to go into them in greater detail.

You also talked about infrastructures, in particular the road network. I know that here, in British Columbia and, more particularly, in the Vancouver area, you have the issue of our American neighbour and an increased traffic flow by our American friends. Of course, when we talk about traffic flow we have to talk about roads. Since we need roads, they should be in good condition; otherwise, the whole economy may suffer and, in some cases, individuals.

One thing struck me particularly because we rarely hear about it, and I'd like to have some clarifications on it. Mr. Milbourne, you are the one who spoke about what you called tax-exempt bonds. You mentioned them in connection with the possibility of collecting a special tax for the road network.

You could perhaps enlighten the committee regarding the concept you are proposing here. What is the difference between it and what was done, for example, north of Toronto, where there is a toll highway? What is the difference between that and the toll highways that are found in New Brunswick? In short, could you please explain this concept to us?

Thank you.

[English]

Mr. Robert Milbourne: Thank you.

In the United States, tax-exempt bonds can be issued to finance new infrastructure over a 30-year period. As well, the moneys that are advanced from the federal government through the Transportation Equity Act for the 21st century are in themselves bondable. This means federal contributions to new infrastructure can be used locally to secure the bonds for issuance on gateway projects.

With respect to the difference between the program we're proposing here and the private highways as currently practised in Ontario and New Brunswick, it is possible to drive from Vancouver to San Diego, completely up and down the west coast, without paying one cent in tolls, and to drive on a first-class highway network. It is also possible to travel between airports that are first-class airports or ports that are first-class ports without paying other than the types of departure fees one encounters at the Vancouver airport.

To be competitive and to maintain the position of greater Vancouver as a gateway, this city and this region must be made to work. The interconnections must be there.

In the port of Seattle and in the town between Seattle and Vancouver, Bellingham, there is a commitment for over $30 billion of spending to improve the ports, airports, rail lines, and gateway infrastructure, aimed directly at the ongoing role of greater Vancouver.

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A few odds and ends of toll highways will not address the issues that are fundamental to the continued economic success of this region.

We do not believe that greater Vancouver has a unique set of problems. We believe the same issues will ultimately become evident in other regions in Canada and suggest strongly that programs be put in place to redirect transportation-raised revenues to transportation and infrastructure problems.

Thank you.

[Translation]

Mr. Pierre de Savoye: Issuing bonds is not the same thing as creating money, Mr. Milbourne, but means borrowing funds that will have to be repaid some day, together with interest. In Canada, there has been less desire recently to talk about borrowing money. The talk is rather of surpluses and of spending surpluses on projects.

Why, in this particular case, do you think it would be better to borrow than to use the accumulated surpluses? Of course, if we go the borrowing route, we don't need to use the surpluses, which can be used to pay down the national debt. It all comes out of the same pocket. Why do you choose this way over another?

[English]

Mr. Robert Milbourne: Thank you.

We believe the success of the U.S. program is because the moneys borrowed are employed in facilities that raise their own revenue by providing services to shippers and users of the system. The revenues derived from providing those services will retire the debt, not revenues from taxes collected at large.

Mr. Pierre de Savoye: Nevertheless, you understand that because you borrow money to issue those bonds, the federal government will not have to give you that money from the so-called surpluses to invest in the same infrastructure. At the same time, the federal government will be able to refund more of the national debt with the money you haven't received.

This is becoming a bit evasive really. What you're not borrowing here, you will borrow there; what you are not refunding here, you will refund there. I fail to see the difference. The same revenues will be generated, whether the money is invested in bonds or comes from the surpluses of the federal government. The same revenues will go back to the federal government. Why do we need to issue bonds to do that when we could pay in cash?

Mr. Robert Milbourne: Bonds would encourage the formation of long-term pools of capital. Current bonding available for ports and infrastructure investment is generally limited to a 10-year term. For example, a $100 million investment in a seaport bulk terminal in the U.S. has a $4.4 million per year operating cost advantage over a similar investment in Canada.

Mr. Pierre de Savoye: I have one last question. What amount of bonds do you think should be issued—$10 million, $100 million?

Mr. Robert Milbourne: I would like to be facetious and say whatever it takes to make the place work, but in the competing jurisdictions immediately south of here, approximately $30 billion are being invested in transportation and port- and airport-related infrastructure.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. de Savoye.

We'll go to the Hon. Lorne Nystrom.

Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Madam Chair.

I first of all want to welcome my old colleague, Jim Fulton. For those who don't know, Jim was a member of Parliament from 1979 to 1993, if I recall, for the riding of Skeena. He was always a great environmentalist in the House of Commons, and since leaving the House of Commons he has obviously followed the same pursuit.

I want to begin by asking Mr. Fulton or Mr. Scott if they can elaborate a bit more on the idea of the atmospheric user fee in terms of what we can learn from other countries and what studies may have been done in this country in terms of how we can apply it. I think it's a new idea we should be taking a serious look at, and any information you have will be very useful.

Mr. Gerry Scott (Climate Change Director, David Suzuki Foundation): First of all, I think there's a wealth of examples that it's worthy for Canadians in government and industry, and private citizens, to look at what's going on in other nations.

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Throughout western Europe in particular, there are many countries that have said “We will apply the polluter-pay principle”. It's that basic. Whether we're looking at air pollution or increasingly at climate change, these nations have said the external costs have to be gradually internalized.

If we look at the immense costs of health care, for example, Environment Canada believes the costs, direct and indirect, of air pollution are now at $10 billion. These external costs are being borne by all taxpayers, be they individual or corporate, and often at the expense of other public services. So I think it's a strong economic, environmental, and ethical argument that air pollution now cannot be continued for free.

As we move toward carbon emission fees, we would like to see either other taxes decreased or those revenues specifically directed toward investments and practices that would reduce air pollution. This past summer we did polling, and we have attached it to our submission for the members of the committee. We looked at opportunities to either cut taxes, so a carbon emission fee would be revenue neutral, or direct those revenues to specific investments, such as public transit. The public support in both cases was over 70%. We see this as an opportunity for good economics, where external costs are captured, but also for general environmental and health improvement.

Mr. Lorne Nystrom: What is the most logical way to proceed? Should we set up a small working group, a parliamentary committee, a subcommittee, or a little task force at the Department of Finance? What is the best way to try to flesh out the idea in terms of a recommendation we can make to the Minister of Finance?

Mr. Gerry Scott: One thing that's being undertaken in British Columbia, and it was just announced yesterday, is a working group within the Ministry of Finance, based on expert research papers, looking at this concept of ecological tax shifting in general.

With a specific carbon emission fee, the Ministry of Finance would certainly be in a good position to look at experiences in other nations. But there's a wealth of information in the academic and the environmental communities, and increasingly in the industrial world, where this expertise is being built up.

There are a number of ways we could go, but it is very important to have real public input into this, whether it is a working group from the public service or a subcommittee of Parliament, perhaps from this body, maybe with the Standing Committee on Environment and Sustainable Development. I think it's really important to draw on the literature and experience that is there from other jurisdictions, because it's very widespread.

Mr. Lorne Nystrom: What do other jurisdictions do about people in rural communities—Mr. Fulton and I come from rural areas originally—the farm communities, in terms of the use of fossil fuels in tractors and combines and the like?

Mr. Gerry Scott: A number of adjustment programs have been used in other nations, depending partly on the level of fuel intensity and partly on the way the tax shifting can occur because of the end use. There are also rebate programs and retrofit and efficiency programs specifically directed at lowering, for example, input costs of farmers. So there are a number of ways to do that, with the end goal always being reducing use.

People often think if they charge more per unit of energy the bill will be higher, but if we look at all the tools that can be used, the idea is to reduce waste, and in almost all cases by reducing waste we're reducing costs. Most farmers right now are looking at reducing input costs, so perhaps we can use some of this revenue to help them gain greater efficiency. The unit costs aren't the problem; it's the monthly bill.

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We have to look carefully at those adjustments, but if we say that 10 years from now we want greater efficiency, and even if unit costs are higher, we can get that by looking at these experiences elsewhere.

The Acting Chair (Mrs. Karen Redman): Mr. Nystrom, do you have a concluding remark you'd like to make? Or Mr. Fulton?

Mr. Jim Fulton: Thank you, Madam Chair. I wanted to add one point to that.

It's very important that this committee make a very strong recommendation back to the Minister of Finance. We have to recall that in 1988, again in 1990, and again in 1993, the Standing Committee on the Environment and Sustainable Development, of which the Minister of Finance was then a member, made the unanimous recommendation for a 20% reduction in carbon dioxide levels from 1990 to the year 2005. Canada participated at Kyoto and is moving towards 6% reduction.

It's very important that this committee send some very strong recommendations back. I give you a figure that would be useful to the committee as to why you need to weigh some of the recommendations you're hearing. Throughout the 1990s, reduced transit subsidies have prompted a rise in transit fares and an erosion of transit infrastructure. Since 1990, public transit usage has decreased by 13%, but simultaneously in those five years, 1990 to 1995, the number of passenger cars and trucks on the road has increased from 14.7 million to 16.1 million. That's a 9% increase. While the average distance driven in cars and trucks has decreased by 6% as a result of these trends in that five-year period, greenhouse gas emissions have increased by 10 megatonnes, which is 12%.

Keep in mind the world needs to reduce by 50%. At Kyoto, we've agreed for Canada at 6%. The Minister of Finance and all members of the House agreed in 1993 that we need 20% reductions by 2005. During this five-year period, while we've been waiting to do something, cars and trucks have gone up 12%.

The lights have to go on. We can't keep building bigger, wider, and more highways with more fuel-inefficient vehicles such as SUVs, where the fuel efficiency is going down. We have to start going the other way, and that's where our recommendations are driving. Let's move more to heavy freight, to the six-times efficiency opportunities, by moving back to steel, moving to rail. We get cleaner air and better health benefits. It starts to restructure the economy, but if we're going to meet Kyoto and if we're going to meet the requirements of our children and grandchildren, we have to face up to what's happening in the atmosphere. Canada just simply has to get back on the program where other countries are heading in reducing our greenhouse gas emissions.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Fulton.

Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Madame Chair.

First I want to thank you all for your ideas and presentations. As you know, I'm an MP from Vancouver, so I feel very at home with all of you here.

I have a couple of questions.

Mayor McGrath, I heard your concern—and a few people share your concern—about the infrastructure. I have to say, yes, the last two infrastructures were quite successful, but I also agree with you there is attached a certain amount of frustration about the distribution of funding. It would be great if some of the ideas could be implemented in the coming one. We already did talk about considering another infrastructure.

You did say the financial resources to support such infrastructure would be shared equally among the three levels. I also heard as a comment from other municipalities that they are not as resourceful, and they find that one-third will be a burden for them. Do you want to comment on that?

Mr. Wayne McGrath: I did say earlier in my presentation that there exists this duplication in funding for the same types of projects. For the most part, the basic infrastructure of a municipality is a municipality's responsibility. I for one don't agree with all these people—the public and municipalities—who are always criticizing the federal government and asking them to get their fiscal house in order, and then in the next breath they're telling them they want more money.

The municipalities must be accountable, and I would not suggest that the municipal portion—that is, the one-third—should be reduced. Municipalities have an obligation to at least share in the cost of providing those facilities that come under their jurisdiction.

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It just leads to less accountability when municipalities get senior government grants for projects. I was in consulting and probably will be again, and I've heard so many councils say over and over again, “Well, if we can get a grant for this project, we'll do it, but if we can't get a federal or a provincial grant, we won't do it.” To me, if a project is worth while doing, then the level of government having responsibility for that function should be prepared to put their dollars there.

So to answer your question, I don't believe municipalities should expect senior levels of government to be any more generous than this particular program suggests right now.

Ms. Sophia Leung: Thank you. What about the private sector and user fees?

Would the Consulting Engineers like to answer?

Mr. Kerry Rudd: Thank you.

There are examples where user fees are applicable, and in many instances we do in fact have user fees, whether they're direct or indirect. Municipal taxation, for instance, does pay for water where we have treatment plants in place. There are fuel taxes, which do contribute towards or should be contributing towards our national transportation system. So there are user fees in place.

If all those fees collected were in fact dedicated to infrastucture, it would be a significant step forward. I believe currently only a portion of the revenue collected on gas taxes, for instance, is actually put back into transportation.

Ms. Sophia Leung: Thank you.

Would the Health Association like to comment about requests for rural health needs? Recently there was a very big convention in Prince George. As a matter of fact in Ottawa the organizer came to see us, and we did provide support from the federal government. I think that was the area you identified. I think we'll continue that. Do you have any additional comment on how you're going to do this?

Mr. Larry Odegard: There's the new office of rural health that Dr. John Wooton leads in Health Canada. We've worked very closely with him. There are many similarities across the country in rural and remote areas. We need to be able to learn from one another how we've found solutions.

We need to know how to deal with significant downturns in the economies in these communities, which are very susceptible. We also have to find ways to retain the health professionals we've attracted to those areas. They're frequently drawn away to urban centres. We need to provide information networks and whatever so that they can stay in touch with their professional colleagues.

Last, we need to improve the access for these people to the tertiary or special programs—sometimes electronically, through telehealth and other approaches, and other times through improved transportation and referral networks.

Thank you.

Ms. Sophia Leung: I have one more question for Mr. Fulton.

Thank you for your presentation. You asked for the government's sustaining leadership to support ecological and environmental health. I think you know we have a new minister, David Anderson. He's very committed to that. I can promise you I will take your pamphlet personally to Ottawa for you. From the B.C. caucus, I think you will have our support.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you, Ms. Leung.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Madam Chair.

Thank you, presenters, for being here today and sharing your views with us.

For Mr. Fulton first, I haven't had a chance to read your brief fully, but on glancing through, I didn't see any mention of co-generation. I wonder if you'd see co-generation playing any role in our future energy capacity development, and if it has an environmental attribute, whether you see it as positive.

Secondly, on the amount of greenhouse gases, particularly methane, that comes off landfills, are you familiar with that issue and how we might tackle that collectively in Canada to meet our targets?

Mr. Jim Fulton: That's a very good question. I'll ask Dermot Foley, our energy director, to answer it.

Mr. Dermot Foley (Energy Director, David Suzuki Foundation): In our brief we did talk a little bit about district energy systems, which can be—they're not always, but they can be—co-generation facilities. We actively promote co-generation, particularly throughout Alberta. That's one of the areas where there are many opportunities for co-generation to decrease the use of coal to generate electricity.

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On the methane front, there are a couple of approaches we've looked at. One is to use a straight regulation and require landfills, generally through provincial ministries of environment, to capture their methane. The second approach would be to create an incentive to generate electricity from that captured methane and basically try to use the market for that sort of energy. We generally promote landfill gas electricity generation as a green energy resource. Even though it's not a renewable resource, it is an environmentally beneficial source of energy.

Mr. Jim Fulton: Mr. Scott also has a point.

Mr. Gerry Scott: At this point, one of the specific things this committee could also look at in preparation for Budget 2000 would be financing support, through municipal, regional, and provincial governments, so that more of these are used as pilots to actually demonstrate to landfill authorities that this can work and that it can be financially and environmentally beneficial.

As we look at the federal government not moving into provincial jurisdiction on an operating basis but working with provinces and regional authorities to showcase new technologies and pilot operations, certainly the landfill would be an excellent place for more federal involvement on that kind of cooperative pilot basis.

Mr. Roy Cullen: Thank you.

Mr. Odegard, if you'll allow me to be the devil's advocate for a minute, it wasn't long ago that the Prime Minister received a report from the national forum on health, a group of experts in health care. They had reached a number of conclusions. One of them, as I recall, was that in Canada, on a per capita basis, we're spending on a par with the industrialized world. That was before we injected another $11.5 billion into health care.

If you look at the recurring challenges in the health care system in making sure the delivery of care is at the right level, in the whole continuum of care that still seems to be a challenge. Provinces are responsible for the delivery of health care. If we look at the focus on prevention that we keep talking about—and which we never do—why would we, as a federal government, do more topping up on the transfers for health care? Rather, why wouldn't we focus on prevention and provide some catalysts for that?

Mr. Larry Odegard: I think both need to be done. First of all, the return of the federal money to the provincial coffers to support the provision of services is really the focus of the discussion on a national and provincial basis. We have yet to return to the 1994 level. There was a dramatic reduction in the federal transfers to the provinces to support all programs at the same time as an increase in the aging population, technological advances, and the increase in expectations. So there's a demand issue there as well.

But in regard to your point on health promotions of these prevention activities, I think throughout the country there's a great deal of effort going on there. Marginal advances have been made. But these investments in improved health have been difficult to make when the health authorities and other service delivery organizations are trying to cope with everyday expenses. They have people lined up in an emergency ward or they're waiting, here in this province, almost a year for a placement in long-term care. So when they're approached to invest in a program to reduce the level of smoking among 15-year-old girls in rural communities, that means they have to take money out of those emergency departments to support it.

So if you're offering to invest in some of these health promotion areas—

Mr. Roy Cullen: I'm not offering. I posed the question.

Mr. Larry Odegard: —we welcome that as well, but I know that locally there is an effort to reallocate. It is just difficult in these tight financial times.

Mr. Roy Cullen: May I have one final question?

The Acting Chair (Mrs. Karen Redman): Mr. Klein wanted to add something. Then I'll allow you a final remark.

Mr. Seth Klein: We would also agree with the contention that these shouldn't be mutually exclusive.

When you compare Canada and U.S. health care spending, for example, on a per capita basis the U.S. spending is in fact much higher; it's just that much more of it occurs in the private sector. When we're talking about most of the health care services that have been mentioned by us and by Mr. Odegard, these are needs and the spending is going to happen. The only question is, will they happen publicly or will they happen privately? It has been the Canadian experience that we achieve better outcomes and more equitable outcomes when it's done publicly.

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Mr. Roy Cullen: Yes. Certainly this government is supportive of that. We could spend hours discussing the health care system, but I wasn't surprised, Mr. Odegard, that you chose both solutions.

I have a quick question for Mr. McGrath.

By the way, pass on our regards to one of your residents, Mr. Judd Buchannan, and to Kaye, when you next see them.

Mr. Wayne McGrath: I know them well.

Mr. Roy Cullen: Good.

I certainly empathize with your point of view about the arrogance, if I might call it that, of people telling you what your priorities are. One of the challenges I suspect we have in terms of infrastructure programs is that the provinces tell us that constitutionally municipalities are a creature of the provinces. I know that in Ontario Mike Harris has said that if we're going to do infrastructure—this is his opening position, in any case—we talk to them, that they'll deal with the municipalities, which creates a real problem for us.

I don't know what the solution is. I think municipalities should be more involved, particularly if it's the type of program that is a third, a third, and a third. Do you have any good advice for us or is this one of those intransigent problems?

Mr. Wayne McGrath: Well, if the province doesn't cooperate, my only advice, I guess, would be to deal directly with the municipalities. I know we've had a devil of a time here in B.C. in the last couple of programs, for two programs. I've talked at length with Mr. Anderson about that. He sympathizes. As I indicated in my presentation, he indicated that the federal government was considering going it alone, without the province.

Probably my advice would be just to get a little tougher with those provinces that don't want to cooperate, because I don't think too many provinces would forego the revenues from the federal government.

Mr. Roy Cullen: Good point. Thanks.

The Acting Chair (Mrs. Karen Redman): Thank you.

Mr. Jones.

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

I just wanted to defend Mike a little. When you get into the Toronto area, you have 4.5 million people, 44 different MPs, and a lot of municipalities. If you're looking at the infrastructure program as being water, sewer, highways, transit, and all of that, a lot of municipalities are very parochial and they're really not looking at the best interests of the greater area. I think that's really what Mike meant there—not necessarily that he wants to tell every municipality how to spend their money.

One of the things that I thought, and I guess it's not...and you guys are bringing it out pretty loud and clear. At one time when we collected the gasoline tax, it was really meant to be redeployed back into a transportation system, whether it was transit or roads or whatever else.

Mr. Milbourne, in the U.S., does the U.S. collect a similar type of gasoline tax on a gallon? If they do, are they mandated to redeploy that into a transportation system or does it go into a general revenue fund and get used for everything other than transportation?

Mr. Robert Milbourne: It is directed to the funding of the transportation infrastructure investments in the U.S.; they are directed taxes.

Mr. Jim Jones: I'm aware that trucks, when they leave the west to come east to Ontario and other places east, take the U.S. routes versus the Canadian highway system. What is really the economic impact of us neglecting our transportation systems? Maybe the engineer could...?

Mr. Kerry Rudd: Thank you.

We've seen recently in Vancouver the consequences of not being able to export goods from our port, which were reported as being the $89 million a day that we lost in revenue when goods couldn't be exported from Vancouver.

Realistically, the transportation links into Vancouver are not reliable. I came to Vancouver in 1982 and certainly in that period there have been times when we've been actually landlocked, when we couldn't get out of Vancouver because there had been avalanches on the different roads and Highway 3, Highway 1, and the highway up to Pemberton were all closed. Certainly when people are looking at how to export their goods they're looking at reliability, so a number of shippers, as you say, are deciding to go north, south, down into the United States, and then use the road network in the States, which is more reliable, to gain access to the west coast.

There's very little incentive for them to then come north again into Vancouver to use our port. They stay in Seattle and Tacoma and go through those ports. So we are losing revenues through those ports.

Mr. Jim Jones: Mr. Milbourne, in your presentation you mentioned something about a U.S. port where they did a business case, and, based on the business case, they made the improvements to that port.

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Was a similar type of thing done here in Vancouver, say, or then were there limiting factors as to why they couldn't do it? Maybe the whole method of being able to finance it in a similar way to the U.S. port wasn't available.

Mr. Robert Milbourne: The fundamental difference between the two systems is that in order to access the TEA-21 funds and matching state funds, there has to be a comprehensive regional plan. It is simply not possible to go in and cherry-pick individual projects, which is the problem that has occurred in the greater Vancouver area.

An investment cannot be justified and cannot be financed unless it is viewed in an integrated context with a business plan and how it fits with the other support facilities present. You would not see in Seattle a wonderful facility like Deltaport built without any roads to it.

One of the most articulate people on this subject is the regional director for Transport Canada, who takes people on helicopter trips between all these first-class gateway assets in the Vancouver area. You can't get to them by road, as a practical matter.

The history in this area is one of the good life carrying on, I guess, to the point where it outgrew itself. Given the absence of investment, the absence of financial wherewithal to make the necessary remediations and improvements, we're looking for something that is more like what our competitors have.

Mr. Jim Jones: All right.

Mr. Fulton, I assume you know the Toronto area fairly well. Over the last number of years, it seems the only major transportation that has been built has been Highway 407, and yet the net population growth in the greater Toronto area is 100,000 people a year. What does the improper attention paid to both public transportation and the transportation network cost us from the environmental side?

Mr. Jim Fulton: I think the Health Canada study speaks legions about that. We released our health study, drawn on Health Canada data, less than a year ago. Each year, literally 16,000 or more Canadians die as a result of the combination of climate change and air pollutants.

Think of those various major arteries that run through the Toronto area and the literally hundreds of thousands of people who live on either side of those transitways. Combine that with the knowledge that's come from a giant study recently completed in Los Angeles, where they're finding both decreased lung capacity, up to 5%, among young boys and girls, and long-term increasing trends in mortality and morbidity. These are things that are not often considered by committees such as this, or ministers of finance, or transit planners, and so on.

The health issue is the one issue that's really being buried out of this paradigm. Before people start saying, yes, we need more large routes for trucks and freightways and more arteries for cars, we have to reflect back onto the stats I pointed out.

Almost half of the vehicles now sold in Canada are SUVs and small trucks. Their fuel efficiency is going down rather than up. We don't see any revenue-neutral encouragement from the Minister of Finance federally to get people to go from energy-inefficient large vehicles to environmentally friendly hybrids and fuel-efficient vehicles.

We're also not seeing the kinds of federal policy required to move some of this unnecessary multiaxial heavy freight, moving on rubber, which is what destroys the highways in Toronto and in Ontario and right across the country, at a rate of, as I said earlier, six times the per-mile, per-tonne efficiency by going back to steel. In fact, 60% of our heavy freight is now moved by rail, but an awful lot of what's moving by rubber has to go back there, and we have to start turning this vehicle problem around.

This is a very serious problem for Canada and for Canadians, much worse than for most areas of the world. We're the largest energy users, per capita, in the world. We're the second-largest producers of greenhouse gases in the world. We have a chronic and growing phenomenon in terms of decreasing lung capacity and health problems.

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I mean, if it's anywhere near as bad as what we've seen from the Los Angeles study, big cities like Toronto are really facing a dangerous and negative crunch from having these big, high-speed arteries go right through residential areas, right near school grounds. We have to get smart about our transportation policy.

That does not mean we don't support safe roads. Some people try to paint it that way. What we're saying is, don't start spending billions of dollars on bridges and causeways and giant highways connecting the cities and connecting the country from coast to coast to coast. In fact, let's get the heavy freight back onto steel and let's start reducing the number of people per vehicle, start getting fuel efficiency standards properly embedded in federal legislation.

I was in the House of Commons in 1980, when we voted and passed fleet efficiency standards. The House passed it, the Senate passed it, and now, through five different prime ministers, it has never received royal proclamation. I mean, hello.

The Acting Chair (Mrs. Karen Redman): I hate to stop you on that note, but we're out of time.

Mr. Jones, do you have a concluding remark to make?

Mr. Jim Jones: Jim, to follow up on that, I travel the 401 quite a bit going from Toronto to Ottawa, and all I see is trucks the whole way. In fact, what you try to do to stay awake is see how many trucks you can count before you count a car.

Do you have any studies or examples from other areas of the world where we could, say, from Toronto to Montreal or Toronto to Windsor put these trucks on rail as a viable and efficient way of moving these things instead of...? Really, the 401 is now a truck highway.

The Acting Chair (Mrs. Karen Redman): I trust this will be an answer in brief.

Mr. Gerry Scott: Very brief.

Both CN and CP are working overtime now to compete on what is a reasonably short haul for trucks—Montreal to Toronto, Montreal to Windsor, etc. They have dedicated services designed to take truck traffic off the road and make quick delivery within large centres.

The Railway Association and every railway will tell you they do not have a level playing field. They have discrimination in many ways on the tax side. They don't have the free ride called “infrastructure” that taxpayers provide to them. Without going back in Canadian history to the 1860s and 1870s, when one could argue that they got that free ride, today, 150 years later, they don't have that. The trucking industry does.

The second point is that they don't have the access and they don't need the access to the atmosphere as a free dumping ground. They are not causing the health impacts and costs that the trucking industry and private vehicles are.

All they are asking for—and I'm not an advocate for the industry on a commercial basis—is that in terms of health and environmental safety and infrastructure impacts, they want a level playing field. We would support that call in order that emissions can be reduced and land use patterns can be altered in a more constructive way.

There's just one final point I would make in terms of U.S. financing. It's very important to note that in America, if a region or a state or a county is out of compliance with the Clean Air Act, they don't get these federal dollars that built the interstate highway system. The Clean Air Act doesn't deal with climate change, but it's the same principle. They're dealing with air pollution. If those jurisdictions are out of compliance, that federal money is cut off. That's an important principle.

The Acting Chair (Mrs. Karen Redman): Thank you very much.

I'd like to thank all of the witnesses for coming today. Rest assured that your thoughtful presentations and comments will be part of our deliberations when we report to the Minister of Finance.

The committee will break for two minutes.

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The Acting Chair (Mrs. Karen Redman): I call this meeting to order. Thank you very much for appearing before us. As you have all been notified, I believe, you have five minutes each to give your presentations. We're trying to stick to our timelines. We have travel arrangements that sort of squeeze us at the other end, so we aren't at liberty to go over those timelines. After that we will allow the members of the committee five minutes each for questions and answers.

Thank you very much for coming to add to our deliberations, as we give advice to the Minister of Finance on the budget for 2000. My understanding is we will be hearing from the Tenants Rights Action Coalition; the Housing and Homeless Network of British Columbia; the Union of British Columbia Municipalities; the Greater Vancouver Regional District; and the British Columbia Aviation Council.

I would ask that Ms. Vanessa Geary, coordinator of the Tenants Rights Action Coalition, be the first presenter. Welcome.

Ms. Vanessa Geary (Coordinator, Tenants Rights Action Coalition): Thank you. The Tenants Rights Action Coalition, or TRAC, is based in Vancouver, although we're a province-wide umbrella, representing groups and individuals working on tenants' rights and affordable housing issues.

Each year we have direct contact with over 10,000 tenants from across B.C. We advocate for stronger tenants' rights and work on expanding and preserving the stock of affordable housing. We also work on the issue of homelessness in collaboration with groups across the province and increasingly across the country.

I want to start today by telling you the story of a woman I talked to last year the week before Christmas. As I was thinking this morning about what I wanted to tell you, she just came into my mind. Her story moved me at the time and has stuck with me ever since.

The woman called our information hotline for tenants, and she was in tears. Her husband had died the month before, leaving her as a single mother to two young children. The small business she had run with her husband before he had died had gone bankrupt, leaving her on welfare for the first time in her life. Unfortunately, the shelter component of welfare was not enough to cover the rent for the house she was living in. So for the first time in her life she was also facing a 10-day eviction notice, because she could not pay the rent she owed.

I didn't have much to offer this woman except a sympathetic ear. The waiting list for social housing had more than 10,000 names on it at the time. By the end of the call, I was also in tears.

You might think this is a worst-case scenario, and in many cases it is. But unfortunately it's not unlike the thousands of calls we get every year to the Tenants Rights Action Coalition. We get calls from people living in substandard housing, paying so much of their incomes on rent they have to go to food banks and are faced with eviction notices, with nowhere to go.

I'm here today to deliver a simple but vital message. Homelessness and the lack of affordable housing has reached crisis proportions across the country. Ensuring every Canadian has access to safe, secure, decent, and affordable housing must be made a funding priority in the next federal budget.

I wholeheartedly agree with Minister Martin, who recently said: “You have to deal with homelessness if you're going to succeed. I don't believe you can develop a modern economy and leave vast segments of your population behind.” The reality, as I see it in my daily work, is that the budget surplus, for the most part, was created by divesting in social programs, like housing. It is now time to reinvest in the most important asset we have, and that's people.

I want to give you a little bit of background about the housing situation in B.C. I don't want to bore you with too many statistics, but I just want to give you an understanding of what is happening here. Approximately one-third of the population, or 500,000 households in B.C., rent. On average, these renters earn half of what homeowners earn. According to the latest census, half of all B.C. tenants are paying more than 30% of their incomes on rent, meaning their housing is unaffordable, according to CMHC definitions. This is a 7% increase from 1991.

A staggering one in four tenants is paying more than 50% of their income on rent—a 6% increase from 1991. This represents 125,000 households. Each of these households is at risk of homelessness because they're only one paycheque away from not being able to pay the rent and getting that eviction notice.

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B.C. is consistently the most expensive place to rent in Canada, and on average, a one bedroom apartment costs about $700 a month. We also have among the tightest vacancy rates, averaging less than 3%. In parts of Vancouver it's less than 1%. Interestingly, less than 40% of residents of the lower mainland can afford to carry mortgages.

These statistics show that the reality faced by tenants in B.C. is getting worse, and the result in part is increased homelessness. It is estimated that on any given night in Vancouver, 600 people are without shelter. There are 21 shelters in the lower mainland, and every one of them is full all the time. Homelessness is not just a problem in Vancouver; it's a problem in our suburbs and in places like Victoria, Prince George, the Kootenays, and the Okanagan. It's not just a big-city issue.

What are the causes of homelessness? Of course, there are many factors that have contributed to it, such as cutbacks to other social programs, reductions in employment and insurance, lack of construction of private market rental housing, and the fact that people's incomes in real dollars are shrinking. However, the federal abandonment of responsibility for social housing programs in the early 1990s is probably the foremost reason, and has had a devastating impact.

In 1993, community and housing activists warned that if the federal government stopped funding social housing and the provinces funded—that's happened in all but two provinces—we would have a homeless problem. There is a direct correlation between what the big city mayors are calling a homeless crisis and the federal government withdrawal from housing. Since the federal withdrawal, B.C. has lost 11,000 units of social housing.

I just want to outline a couple of solutions and recommendations for the budget. First is the 1% solution, which I know you've heard about in other places. TRAC, along with hundreds of other groups across the country, has endorsed the 1% solution. It calls for an additional 1% to be spent on housing by all levels of government. For the federal government, the 1% solution totals about $2 billion annually, which I believe is about the same amount as the 50¢-per-day tax cut that was given out in the last budget.

The $2 billion will restore the cuts to housing from 1984 to 1993, and importantly, will ensure that tens of thousands of Canadians annually will have access to good-quality affordable homes. The next federal budget must contain a commitment to housing, and I urge you to adopt the 1% as a target for federal funding.

Secondly, we must look at partnerships. One of the reasons B.C.'s homeless situation is not as bad as Ontario's or even Alberta's is because the provincial government has maintained spending on new social housing. The province has been able to maximize this investment by working in partnership with municipalities, non-profits, and cooperatives, which contribute equity, most often in the form of land, to different housing projects. This reduces the overall costs and enables more units to be built.

Just down the street here, the province and the City of Vancouver have worked together to facilitate the development of both market and non-market social rental housing.

The Acting Chair (Mrs. Karen Redman): Ms. Geary, I'm wondering if you can conclude your remarks.

Ms. Vanessa Geary: Yes—thirty seconds.

These partnerships are exciting, but they can't work without the federal government getting back into housing and putting some money on the table.

On federal taxes, the Canadian Federation of Apartment Associations recently released a study where they called for tax changes. The federal tax regime, and how it either enhances or hinders rental housing construction, must be looked at in a full spectrum of solutions. The reality is that the private market has never built housing for low-income Canadians, and probably never will build it. Therefore the federal government must make a commitment to actually put funding back into social housing.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you, Ms. Geary.

Now we'll hear from Ms. Mix, a representative of the Housing and Homeless Network of British Columbia. Welcome.

Ms. Linda Mix (Speaker, Housing and Homeless Network of B.C.): Thank you, Madam Chair, and honourable members.

On behalf of the Housing and Homeless Network of B.C., I thank you for inviting us to share your thoughts on priorities for the upcoming federal budget.

The Housing and Homeless Network of B.C. is a group of over 60 community organizations, including shelter and housing providers, community advocates, and individuals who are deeply concerned about the growing crisis of homelessness across Canada.

Each and every group works individually, within our organization, with the homeless, those at risk of becoming homeless, and those who are unable to obtain any type of temporary shelter.

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Our mandate is to work collectively to end homelessness in Canada, and to that end we have agreed to work with others across the country to persuade the federal government to reinvest in housing for low- and moderate-income Canadians. It's my personal hope that the network is short-lived and that in the upcoming budget and the years following, there will be a renewed federal commitment to a national housing program.

So my message today is simple: the federal government must make a substantial funding commitment right now to end homelessness and ease the national crisis.

The magnitude of homelessness across Canada is devastating. There are 835,000 tenant households who are one rent cheque away from becoming homeless. There's not been a significant number of newly built rental housing in Canada for almost 20 years. And as my colleague said, the private sector is not building rental housing, opting instead to build condominiums. In Ottawa, for example, 2,100 rental units were demolished or converted to condominiums in 1998, compared to only 23 rental units built in that same year.

Since the federal government abrogated its responsibility for social housing to the provinces in 1993, we've lost over 75,000 units of social housing that could have been built. The fastest-growing homeless populations are kids under 18 and families with children. There is an increase of families using shelters now. Lookout Shelter in Vancouver last year had to turn away 1,800 people who could not get a bed for the night. Prince George has only 30 shelter beds, Kamloops has about 35, and Terrace has one. In many municipalities, the shelter is the drunk tank. Municipalities are struggling to fill the gap and to come to terms with the crisis on the streets in Canadian towns and cities.

Lack of affordable housing is one of the root causes of homelessness. Affordability and supply are key solutions to ending the crisis. So how, within the parameters of today's consultations and those you've had across the country, can this be achieved?

As to your first question, with growing fiscal surpluses projected over the next few years, how might Canada reform the tax system to improve its efficiency and equity? Finance Minister Paul Martin projected budget surpluses that will total $95 billion by the year 2005. This surplus is a direct result of decades of cutbacks to programs, which has contributed to homelessness.

One of the solutions is tax reform to stimulate the construction of newly built rental and social housing. The Federation of Canadian Municipalities has recommended that cutting or reducing GST on materials and services directly related to the development of rental and social housing can greatly cut the costs to stimulate the development of rental and social housing. This is only one initiative, as part of the continuum within the larger picture of federal leadership, that can create an atmosphere to stimulate the development of affordable housing.

We're also proposing that the federal government adopt the 1% solution. We at the Housing and Homeless Network have endorsed the 1% solution, as have the Federation of Canadian Municipalities and thousands of people across the country. The 1% solution calls for an additional 1%, a doubling up, of federal expenditures on housing. For the federal government, this is an extra $2 billion a year. This expenditure would cost taxpayers 50¢ a day.

The cost of not doing anything is incredible. Studies show that a supported housing unit costs taxpayers $30 to $40 a day. Compare that to $124 a day in the corrections system and $360 a day in the hospital system. It costs 10 times more to put a person in a hospital than it does to have a supported housing unit.

Within today's parameters, secure housing is a direct determinant of one's health and well-being. Once housed, one can pursue work, further education, deal effectively with one's health and family problems, and improve one's quality of life. Stimulate the development of rental and social housing and you stimulate productivity and the health of Canadians and their communities.

Clayton Research has done a study for the Co-Op Housing Foundation of Canada, and they've found that every 1,000 units of new co-op housing generated 2,200 person-years of employment and also generated $45 million in tax revenue. The answer is clear. Housing is a public investment and can provide employment and trading initiatives.

I see my time is up.

Historically, housing has been part of the social safety net. We need to look at social housing and affordable rental housing as part of the social infrastructure. It's part of bridges; it's part of airports. We need to look at housing as part of our inventory.

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Investing in social housing is good public policy. It creates a multitude of benefits, both for the economy and for Canadians.

Thanks.

The Acting Chair (Mrs. Karen Redman): Thank you, Ms. Mix, and thank you for being so quick after seeing my microphone go on. I'm impressed.

Next we'll hear from Mayor Corinne Lonsdale from the District of Squamish, representing the Union of British Columbia Municipalities. I believe she's joined by Ms. Harriet Permut, senior policy analyst.

Ms. Corinne Lonsdale (Mayor, District of Squamish; Union of British Columbia Municipalities): Good afternoon, ladies and gentlemen. Thank you for the opportunity to address your committee on our pre-budget concerns.

What is UBCM? For those of you who may not know, the Union of B.C. Municipalities represents all 180 municipal and regional district local governments in British Columbia and is a member of the Federation of Canadian Municipalities, also known as FCM.

The executive of UBCM is made up of elected officials—that is, mayors, councillors, and regional district directors—from around the province. I'm speaking to you today at the request of UBCM president Steve Thorlakson of Port St. John. I'm Mayor Corinne Lonsdale of the District of Squamish, and I sit as the director-at-large on the UBCM executive.

We are fully supportive of FCM's quality of life infrastructure program proposal and were very pleased to see the federal government recognize the need for continuing investment in infrastructure in the October 12 throne speech.

We were also gratified to hear Minister Anderson's support for the infrastructure initiative in his address to our local convention in September. As the Minister of the Environment, he shares our objectives regarding the need for clean drinking water, treated sewage, uncontaminated soil, clean air, and efficient public transportation systems. These are necessary not only for a happy environment for Canadians but also for the economic well-being of our citizens. A well-developed physical infrastructure is essential for economic growth and diversity by allowing us to track industry and create jobs for our young people so that they don't have to look for them elsewhere.

A renewed municipal infrastructure program should be tri-level, including strong provincial involvement. It should be long-term—not a one-year program, but possibly up to 10 years—to ensure effective planning and delivery. It should be balanced among investments in the environment, with emphasis on sewer and water projects; in transportation, including public transit and municipal and regional roads; and in recreational infrastructure, especially to meet the needs of our youth.

It's extremely important that the program be negotiated in the next few months and that it include a strong municipal voice in setting the terms. Municipally driven projects must be initiated and agreed to by local governments, not according to senior government priorities, which may not be relevant to local jurisdictions. The program must be governed and managed by the three levels of government and must include local government in decision-making and management committees.

If a program is developed that will meet local needs, then local government is prepared to contribute its share. We're not looking for a free ride, but neither are we prepared to participate in a program that isn't relevant to our needs.

We agree with FCM's view that the federal government would be demonstrating its serious intent to continue to fund infrastructure by including a down payment in the year 2000 budget. This would ensure that funds are available immediately after a final agreement is struck later in the year, rather than requiring projects to wait for another budget cycle.

We also want to share our views on a few other finance-related matters that concern local government in British Columbia.

We want to see a more equitable system of federal grants in lieu of property taxes implemented. We addressed this matter with the Minister of Public Works and Government Services when he visited Victoria last year. Our view is that these payments should be based on a market-driven property assessment system, as we have been using in British Columbia since 1975. This would certainly help alleviate many of the disputes in urban areas, while special rules could be applied in rural areas such as national parks.

We support our provincial government in its advocacy of a national transportation investment strategy, especially where it would provide stable funding for the national highway system. In July 1998 a paper was delivered at the western premiers' conference in Yellowknife that indicated in fiscal year 1997-98, the federal government was expecting to raise $472.4 million in road fuel taxes in British Columbia and would be spending only $4.81 million on federal highways in British Columbia.

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The estimate for 1998-99 was even worse. The revenue expectation was $488.6 million and Transport Canada was estimating to spend zero dollars in British Columbia. The same was true for the rest of western Canada. The province has about 25% of the national highway system in mileage terms and is getting no revenues returned to maintain the system. This is clearly an imbalance that needs to be rectified.

We would also like to see the federal government provide some financial relief to the beleaguered owners of leaky condos in this province. The problem has reached crisis proportions for many individuals and has affected the residential construction market in many communities. Specifically we ask that government take immediate steps to (a) provide a significant contribution toward affected home owners; (b) ensure that the cost of all qualified repairs are deductible from income tax, retroactively and in the future; and (c) repeal and refund all GST on qualified repairs and permit Registered Retirement Savings Plan funds to be used to undertake qualified repairs without penalty and permit previously withdrawn RRSP funds used to pay repairs on special assessments to be income tax rebated.

We support FCM in its quest for a renewed federal involvement in funding social housing and in seeking assistance in dealing with homelessness in our communities. British Columbia is one of only two provinces that has maintained its commitment to social housing, but we can't do it alone. The problem is national in scope and requires renewed federal assistance.

Our final request is that the RCMP be given sufficient resources to meet the staffing requirements of British Columbia; it is Canada's largest municipal contract force. These staffing shortages are chronic and are affecting our ability to ensure public safety and law enforcement in our communities.

Again, we appreciate the opportunity to speak to you today, and we'll be happy to answer any questions you may have.

The Acting Chair (Ms. Karen Redman): Thank you very much, Mayor Lonsdale.

We'll next hear from Mayor Greg Halsey-Brandt representing the City of Richmond. My apologies if I neglected to mention you at the beginning; we do have you on the list.

Mr. Greg Halsey-Brandt (Mayor of Richmond): Thank you very much, Madam Chair.

In the interests of time I'll just summarize each of the four points we have prepared, because you have it in written material in front of you. Again, thank you for the time this afternoon.

Our first point is regarding the national debt. Obviously we're very pleased that the deficit has been taken care of, but we're very concerned about the balance in terms of paying off the national debt. We would like to see a debt repayment plan made public in terms of government policy that would go on for a number of years. I don't know whether the plan is 15, 20, 25 years, or whatever it is, to pay off all or most of the national debt, but we would like to see some public document out there that is available to all the public of Canada, so we can hold whatever governments are in power accountable for paying that off.

The second point we would like to make is about the comprehensive federal-provincial-municipal infrastructure program, about which I'm sure you've heard from many members of local government across Canada on your travels. We were very pleased with the first two programs, and—I heard a question earlier from some earlier presenters—I think it worked very well in the greater Vancouver area. The first large block of money we got was for secondary sewage treatment, which affected us all, and we were very fair I think in redistributing those moneys around the region.

The second program wasn't quite so successful. The provincial government intervened and hijacked, I guess, a good portion of the funds for transit, which has traditionally been a provincial responsibility. Through the intervention of David Anderson we did get the program back on track, but what we're calling for is that the municipal governments be at the table, considering the terms of reference and what the program is all about.

There was a question earlier from one member of the committee about our not being a level of government like the feds and the province, and I would simply say the federal government should not agree to the program until the municipal governments have been consulted and, perhaps through FCM, our agreement reached in terms of the new program.

The third area for funding consideration again should be transportation, as was mentioned earlier. At the FCN there was a lot of talk from colleagues in small towns across Canada about a highways program, and I certainly understand that perspective. Our problem here in greater Vancouver, and I'm sure it's the same in Toronto and Montreal, is our bus system and expansion of the rapid transit system. As Corinne said, we would like a return on the gas tax—some semblance at least to this region, and perhaps a national transportation policy directed toward transit and a bus service.

The fourth and last area I want to talk about is additional funding for our armed forces and the Royal Canadian Mounted Police.

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As you know, the funding for the armed forces has been cut back consistently over the past few decades. We were very embarrassed, I think, as Canadians when we had to come up with enough army, navy, and air force personnel to send to East Timor. Once we made the commitment, it was very difficult to deliver, and I think we're recognized around the world for our participation in peacekeeping.

We have to ensure that our resources within our armed forces are necessary to carry out these assignments. Particularly, within the city of Richmond, we have a service battalion of reserve members who provide engineering and support services, technical support services, and we realize through firsthand experience through their experience that the funds are not there to provide the training and equipment so the members who are active in reserve units can fulfil their international obligations and their obligations in Canada.

The final point is on the RCMP, which Mayor Lonsdale just mentioned on behalf of the UBCM. Our city is the third-largest contracting partner of the RCMP in Canada. We're short 10% of our members because of the closing down of the depot, because of the freezing of the salaries for four to six years. We lost a lot of members to the City of Vancouver and other private or municipal police departments around the region. I understand we're short about 500 members in British Columbia.

We will not be back up to strength in my city until the end of the year 2000. We're looking for 10 additional members next year. We won't get them until 2001.

So we'd like to request that the finance committee ensure that the salaries of the RCMP members serving in a large urban area be competitive with neighbouring municipalities and that training depots receive sufficient funding to guarantee a regular supply of trained members.

Thank you very much. That's my presentation.

The Acting Chair (Mrs. Karen Redman): Thank you, Mayor Halsey-Brandt.

Mr. Greg Halsey-Brandt: I have a committee meeting at 4 p.m., so if you don't mind I'll slip away. I didn't realize you were going to hear everybody and then have questions at the end.

The Acting Chair (Mrs. Karen Redman): Thank you very much.

We'll now hear from Mr. Ken Cameron, manager of policy and planning, and Mayor Beth Johnson, vice-chair of the board of directors, chair of transportation and strategic planning, from the Greater Vancouver Regional District. Welcome.

Ms. Beth Johnson (Mayor of Delta; Vice-Chair, Board of Directors and Chair, Transportation and Strategic Planning, Greater Vancouver Regional District): Thank you. You'll get a bargain because you'll only have five minutes instead of 10 on our behalf. I'll be doing all the speaking. Thank you.

My name is Beth Johnson. I'm the Mayor of Delta, British Columbia, and all those other things you just said. I'd like to first add my voice to the others who have welcomed you, I am sure, throughout the day to unsunny British Columbia.

I'd like to say all Canadians are very thankful that the federal government has come to the point where they do have the surplus, but we also recognize that this has happened because of the sacrifices that have been made by a number of people throughout the country, and groups of people as well.

We must also recognize the need to meet new challenges, such as the reduction of greenhouse gases, as well as redress the negative impacts that have taken place in areas such as housing, which has been mentioned already today.

I was until this June a member of the executive committee of the Federation of Canadian Municipalities and have been intimately involved in the work they have done and the presentations they have made to the federal government. I would like to express my support for the FCM's submission to the Minister of Finance, which was entitled “Quality of Life Infrastructure Program”. It encompassed many of the goals that the Greater Vancouver Regional District has on a local level. As usual, the FCM is very much in touch with its members, and you've heard a lot of support from all of the members for the kind of work they're doing on our behalf.

We have a long history of cooperation on the regional level to protect the region's livability and environmental quality. In 1996, with the formal support of all 20 municipalities and enabling legislation from the provincial government, we were able to adopt a liveable region strategic plan to manage growth and transportation in the region for growth in the next roughly 25 years from two million to three million people.

What is remarkable about this plan is that it is directly connected to our transportation planning and, from what we've seen looking throughout North America, it is unique in North America in terms of being able to integrate those two levels of planning, transportation and land use planning, to accomplish our goals of livability.

The federal government has strong interests in this region, which contains Canada's largest port and is our country's gateway to the Pacific. As everybody knows, this is an incredibly important role that the west coast plays, although I know we're far from the centre of power sometimes.

Effective environmental management of this urban area is critical to achieving federal objectives such as the protection of fisheries resources in the Fraser River, which is the largest salmon-bearing river in the world. At certain times in the past those interests have led to beneficial cooperation among the federal, provincial, and local governments. The example that was given by Mayor Halsey-Brandt was the Annacis Island sewage treatment plant, and we're very proud to say it is one of the last two steps in making sure this river is protected in terms of pollution from these large point sources.

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The two areas in which we would like to ask the committee's support are sustainable urban transportation and need-focused housing, which are both key components of our growth management strategy. They are also both things you've heard about today, so we're going to be supporting a lot of what you've already heard.

In transportation, our approach is to contain the growing dependence of our region upon the automobile and provide stronger support for modes of transportation that are more efficient and have fewer negative impacts on the environment. To implement this strategy, we have established, in partnership with the province, a new organization called TransLink, which is one of the two halves I mentioned to you of transportation and land-use planning. It's responsible for providing transit, major roads, transportation demand management, and vehicle emission control services throughout the region.

TransLink derives most of its revenues from transportation-related sources such as fares and fuel taxes, which we believe is critical to people making the connection between what they're paying for and what they're getting and the cost of using private automobiles on roads and recognizing the impacts on the environment. It has the power to establish vehicle charges, tolls, and parking charges to finance future programs.

We believe the federal government should support this effort by providing funding for sustainable urban transportation programs in the Canadian urban regions. It doesn't have to be dedicated directly from the fuel tax. We'll be happy to receive it in whatever form it comes. I have recently been meeting with the Greater Toronto Services Board. I was there two or three weeks ago. We had the support of Montreal, the Greater Toronto Services Board, and I believe Calgary, Edmonton, and Ottawa-Carleton—major regions across Canada that feel the time is right for the federal government to recognize that this partnership in terms of providing funding for transportation alternatives is critical to a number of their own goals as well as ours.

Currently the federal government, as has been said, collects about $4 billion annually in fuel tax revenues nationwide—about $270 million in this region alone—yet federal expenditures on transportation across the entire country are only in the $400 million range. In the United States, the money that's collected from the fuel tax goes directly back to funding transportation initiatives.

Again, if it's something the federal government is not prepared to do, it does not matter to us whether it comes directly or indirectly.

We don't think the situation does justice to Canada's international position, let alone the need of its urban regions.

Do I have more time?

The Acting Chair (Mrs. Karen Redman): No. I'm sorry. It says only five minutes per group, so if you could conclude....

Ms. Beth Johnson: I will.

Are you sure? I timed this when I was sitting out in the lobby.

The transportation sector accounts for one quarter of Canada's greenhouse gas emissions.

The other two areas I would like to bring to your attention are the housing initiative and the necessity for federal involvement in housing. Canada is the only G-7 nation without a national government role in housing.

Finally, I would like to mention the cultural initiatives we would like to see. As a region, we are the third largest province, the third largest metropolitan area, but we rank nine out of 10 in terms of per capita federal support in the cultural sector, well below the national average.

Thank you for your patience. Those three areas are very important to our region as well as to other regions in Canada.

The Acting Chair (Mrs. Karen Redman): Thank you very much for that input.

We'll now hear from Mr. Gerry Lloyd, president and CEO, as well as Mr. Larry Legros, a member of the airports committee—is that right?—from the British Columbia Aviation Council.

Welcome, gentlemen.

Mr. G.N. (Gerry) Lloyd (President and CEO, British Columbia Aviation Council): Thank you, Chair and honourable members.

I'm going to ask Mr. Legros to speak first and then I will follow up with a few commercials, if time allows.

Mr. Larry Legros (Member, Airports Committee, British Columbia Aviation Council): Thank you, Gerry.

First of all, I would like to say thank you, as all the previous presenters have. It's a great opportunity, particularly in terms of an issue that we in the aviation sector have been dealing with for the past two years.

What I would like to do is bring to your attention a situation in which the Minister of Transport has introduced a new airport firefighting regulation in a manner inconsistent with the Government of Canada regulatory policy that was approved on November 9, 1995.

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I'd like to start with a brief recap of events preceding the introduction of the proposed regulation.

The national airports plan announced in 1994 by the Minister of Transport, Doug Lewis, and subsequently implemented by Minister of Transport David Anderson, outlined the transfer of 28 designated airports by way of lease to local airport authorities as well as the sale of the remaining smaller federally owned airports to local communities.

The existing Transport Canada fire halls at the smaller airports were closed in order to improve the financial viability and assist in the airport transfer to local community ownership. The 28 designated airports that handled 94% of the air passengers in Canada became subject to a Canadian aviation regulation called 303, covering aircraft firefighting to airports and airdomes, which became effective December 1, 1997. The justification for this regulation was based on a five-volume study on crash firefighting and rescue services in Canada that was prepared by Sypher:Mueller International Inc. for the inspector general of transportation safety.

The regulatory impact analysis statement for the regulation stated the cost of the regulation for the 28 designated airports was slightly over $34 million. I also quote from the same statement:

...the above analysis indicates that benefits from subpart 303, regulating Aircraft Fire Fighting services at 28 scheduled airports, are marginally sufficient to justify the costs.

The current Minister of Transport, David Collenette, proposed a new regulation 308, emergency intervention at airports, that would introduce airport firefighting services at 294 smaller airports. As a result of extensive industry consultation, the total number of airports was subsequently reduced to 123, of which 20 airports are located in B.C.

The current Transport Canada estimates for the cost of this proposed regulation are as high as $38 million in the first year and over $222 million for the first 10 years. The 123 airports identified in the proposed regulation handle 4%—and I repeat 4%—of the air passengers in Canada. This begs the question, if the benefits of the 303 regulation for 94% of the air passengers are only marginally sufficient to justify the $34 million cost, how can the benefits of the 308 regulation for an additional 4% of air passengers justify a cost of $38 million?

I would now like to refer to appendix B of the November 1995 regulatory policy, the section on regulatory process management standards. I would like to quote four regulatory requirements that have not been addressed by Transport Canada.

The first is:

Regulatory authorities proposing new regulatory requirements or regulatory changes must have evidence that a problem has arisen, that government intervention is required and that new regulatory requirements are necessary.

Our response is that Transport Canada has not presented one shred of evidence to demonstrate that a problem has arisen with respect to airport emergencies at the 123 smaller airports.

Airport certification by Transport Canada airdrome safety inspectors ensures that these airports have the emergency response plans utilizing community-based emergency services that have been approved by Transport Canada. The government intervention that has occurred has been in response to Minister Collenette's unjustified and unsubstantiated perception that firefighters are required at small airports.

As Transport Canada chose not to utilize the information of the 1988 version of the Sypher:Mueller study to seek some possible justification for their proposed new regulation, the Air Transport Association of Canada, the Canadian Airports Council, a number of individual airports, and the B.C. Aviation Council provided funding to produce a new report.

The report found that the proposed regulation is unjustified and unsupported by any rational analysis. It will not improve safety and is a poor investment in aviation safety regardless of who pays.

The Acting Chair (Mrs. Karen Redman): Mr. Legros, I'm sorry to interrupt. You have two options. You can either bring your presentation to a conclusion or allow Mr. Lloyd his brief commercial.

Mr. Larry Legros: Do you want me to continue?

Mr. Gerry Lloyd: Yes, go ahead.

Mr. Larry Legros: It's very quick.

The second regulatory requirement is:

The problem must be...documented in clear, concise terms. The problem must be analyzed. Interested parties must be consulted on alternative ways....

Our response is that there has been no documentation of a problem, only a statement that the minister wants a regulation. The current emergency plans are the logical alternative, the existing status quo.

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The third is:

It must be demonstrated that new regulatory requirements will resolve the problem. Alternative regulatory solutions must also be analyzed....

There is no problem to be resolved. The Sypher:Mueller report states that “the expenditure of scarce resources on Emergency Response Services...is not an effective way to improve...safety”.

The fourth one is:

It must be demonstrated that the benefits of regulatory requirements are greater than their costs. For all regulatory proposals a benefit-cost analysis must be carried out.

I've been attending meetings now for two years on this proposed regulation, and in all that time they have never presented a cost-benefit analysis. However, the Transport Canada chairman of the technical committee has stated at several of the meetings that “cost benefit does not support a regulation, but the Minister and the citizens of Canada expect a regulation”.

I'd like to close with two quotes from the Sypher:Mueller study. One was on the 1997 regulation and it stated:

The maximum potential number of lives saved by aircraft fire fighting services at all 28 scheduled airports is estimated at 18.5 for 1994.

From the more recent 1999 study:

At any of the airports covered by [regulation] 308 it could be expected that [emergency services] would be effective in saving lives once in 300 to 700 years.

That's the conclusion of my report. There's a written report as well.

The Acting Chair (Mrs. Karen Redman): Thank you very much, Mr. Legros.

We'll now hear from Mr. John Argue, program director from the Working Group on Poverty. Welcome, Mr. Argue.

Mr. John Argue (Program Director, Working Group on Poverty): Thank you very much. It's good to be here. I want to pass on the regrets of Holly Whittleton, who's the chair of the Working Group on Poverty. She had an emergency hospital appointment. She's okay, but couldn't arrive.

I should say first that the Working Group on Poverty is a coalition or a network of all sorts of groups, about 150 actually, throughout the lower mainland, centred in Vancouver, to work on the problems of poverty amongst immigrants and refugees. We've seen that they really fall through the cracks, so that's our main advocacy concern.

We too are pleased to see there's some financial surplus this year, and therefore we urge the committee, and in turn the government...we hope the projected financial surplus could be used to introduce a guaranteed social standard for Canadians. I'll elaborate on that to include or embrace some of the concerns I'll mention here today.

We think that first the guaranteed social standard should include everybody, that it be universal, and therefore achieve the goal of social inclusion, not leaving anybody out of the proposal or the standard throughout the country in every province. I stress that because of immigrants and refugees falling through the cracks, since we want to see everybody included in the basic social programs in this country.

We would agree with the Canadian Centre for Policy Alternatives in its advocacy through the alternative federal budgets in the past few years in urging that greater expenditures be spent on social programs, believing that this in itself would not only build up a social infrastructure in the country and help the individuals who would benefit from those individual programs, but create the basis whereby the country itself would expand economically. We think that's really important when there is some flexible money with this financial surplus.

Our fourth principle, just as an introduction, would be to emphasize partnership. We believe strongly through our own operation and through the entire country that the federal government should cooperate with the provincial governments and the municipal governments, as well as the third sector, the voluntary sector, all sorts of non-profit community groups with common aims, to help Canadians across the country. We think that's a really important principle, and we would hope the federal government would exercise it in its operations too.

In that sense I'm really pleased to be here today, and I compliment the process whereby the federal government is taking the initiative through this committee to consult people across the country. We think it's a good idea.

I will stress four programs and will summarize them briefly, because I've put it out in writing too. We would first stress children's programs.

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We speak to Campaign 2000 and all sorts of other groups across the country that advocate a children's budget where a significant amount of money be spent on children's programs, including child care and early childhood education. These will lay a basis whereby a child will not exist in poverty throughout their “child life”. If a child gets out of poverty, then hopefully they won't be in poverty when they're an adult.

Secondly, with housing, we again would identify ourselves with all sorts of groups across the country. We took part in the national meeting in Toronto last March and here in Surrey with some local partners—I'm sitting beside them—who are advocating to you the 1% solution as a brief statement of putting more money into housing.

The essence of it is that housing is such a crucial determinant for people who have economic difficulty in this country that we just think it's necessary that there be more money spent on housing. This has to address the problem of affordable housing and the more dramatic problem of homelessness itself.

Third, all sorts of groups in our network dealing with immigrants and refugees are acutely aware that there are limits in the training programs for both language skills and skills upgrading that immigrants and refugees experience when they're here. We urge the government to put more money into employment insurance in terms of the programs and benefits offered through employment insurance so that immigrants and refugees have access to those programs and therefore can achieve more quickly the point of participating in Canadian society and the economy.

Lastly, we would express solidarity with another community group with which we agree, the Canadian Council for Refugees. They urge the federal government to eliminate the right-of-landing fee, that fee of $975, per person, for immigrants and refugees. This has been shown, certainly in their experience, to create a serious barrier amounting to discrimination, in the view of the CCR, for refugees in particular, who come here at a time of emergency in their lives and find it very difficult, if not impossible, to come up with that amount of money. They therefore take on a loan to pay it off later. That is a real problem we hope will be addressed through the surplus.

Finally, we would urge that “guaranteed social standard” be a phrase instituted throughout the budget to embrace these kinds of expenditures. I have just highlighted a few that affect immigrants and refugees, but clearly, health and education are major social concerns with which we agree.

We would conclude by saying that we hope some standard could be achieved by consultation amongst all partners across the country, all levels of government, as well as organizations.

Thank you very much.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Argue. You're right under the five minutes, and that's great.

I thank all the panellists for their thoughtful interventions.

Ms. Leung, do you have some questions?

Ms. Sophia Leung: Yes, thank you, Madam Chair.

I want to thank you all for your presentations. It's good to see so many people I know. I think some of your concerns are very well spoken, and I share some of your concerns.

Regarding one of the things you have in common, affordable housing, this has been mentioned and discussed many times. Recently I held pre-budget consultations in my riding. Actually, I invited one of your friends to present to my riding. I wanted to provoke some more ideas and thinking on the issue.

Now, 1% was mentioned, and again yesterday in Calgary 1% was mentioned. You must have discussed it amongst yourselves, because it seems to be across Canada. That's interesting for us to know.

In the meantime, I want to respond to John in terms of your concern for upgrades for immigrants and refugees. As you are probably aware, the federal government each year has special funding, $45 million, for settlement. I just want you to know that. It was doubled last year. I think that should be allocated from there, then, instead of other funding.

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As well, with regard to the Council for Refugees, we've actually discussed those landing fees at committee. It will be considered, but we don't know; it very much depends.

We also heard many other concerns and requests, but even though we have a surplus, we have limited funding. There are also requests to cut taxes, to repay the debt, and for social standards. So I'd like to throw this out to you people. We don't have an unlimited surplus. We cannot fund everything.

I'd like to have some response on that.

Ms. Corinne Lonsdale: There are all those other requests, yes, but if you consider what we are looking for in an infrastructure program, we are only asking the federal government to contribute one-third, the province one-third, and municipalities one-third. The economic activity that money will generate will, I think, put more money into your coffers such that tax cuts are still a possibility and some of these other things as well.

I believe the infrastructure program will generate more revenue for the federal government.

Mr. Gerry Lloyd: In the aviation industry, if we had a reduction in fuel tax we wouldn't be sitting here today worrying about Canadian staying alive, and Air Canada. In fact, the taxes collected on aviation fuel exceed the losses of the airlines. That's in my report. We wouldn't be worrying about it if the fuel tax was cut.

The Acting Chair (Mrs. Karen Redman): Is this the commercial you promised us earlier, Mr. Lloyd?

Mr. Gerry Lloyd: That's the commercial. She asked about taxes and tax cuts, and we are looking for a fuel tax cut.

Mr. Roy Cullen: I thought you were going to talk about how we cut them when Canadian Airlines needed some help.

The Acting Chair (Mrs. Karen Redman): Would anyone else like to respond to Ms. Leung?

Mr. Argue.

Mr. John Argue: I think the various groups within the Working Group on Poverty recognize the necessity of the government having to deal with the debt in some way and therefore balance expenditures. Of course, we're mainly concerned with the social expenditures. We would emphasize that we believe the values of Canadians are to uphold the social safety network that is so reputed in this country. That is a prime concern.

Various polls over the years have shown that the typical voter or citizen would support that even extra tax money—within some limit, no doubt—be spent on social programs. I simply would reinforce that support for the dedication of most Canadians to social programs across the country.

The Acting Chair (Mrs. Karen Redman): Ms. Mix.

Ms. Linda Mix: I'd like to reiterate what John is saying. To do nothing about homelessness....

It's a shame that in such provinces as Alberta, where there is full employment and low taxes, there's a severe housing shortage. New housing isn't being built. The private sector does not do social housing in Alberta any more, and there's a huge number of homeless people in Alberta.

To do a cost-benefit analysis, as I said in my presentation, a supportive housing unit costs a hell of a lot less than a stay in the hospital or a use of the corrections system. The efficiency to the taxpayers with regard to building and creating social housing programs is incredible. I think that's the direction in which we need to look.

Ms. Sophia Leung: I just want to mention that Minister Bradshaw went across Canada, and now she is making recommendations. In the fall we had a visit from the Portland Hotel Society, which some of you know. So we do have some ideas, but I think it's important for us to hear what you have to say.

Ms. Linda Mix: Perhaps I could add just one more thing. I think we need to look at long-term ideas, not short-term. I heard Madam Bradshaw on the radio the other day, and she was talking about shelters in the short term. We need to look at solutions at least 10 years ahead.

The Acting Chair (Mrs. Karen Redman): Mayor Johnson.

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Ms. Beth Johnson: I would just like to suggest that for any spending by the federal government you obviously need to consider what it pays back to the federal government. You'll get the best bang for your buck, so to speak, if the spending is integrated with local priorities so that the money spent can be leveraged.

For example, when it comes to the transportation example that we've used, the kind of payback in terms of local economy will be large. Not only that, the national economy will be enhanced by better movement of goods, for example, if transportation problems are solved locally—because of the west coast port situation we face here.

It's a matter of leveraging and tying the money to local priorities. That's what we consider important.

The Acting Chair (Mrs. Karen Redman): Thank you.

Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair.

I thank the presenters for their thoughts today.

If I could move first to Mayor Johnson and Mr. Cameron, in your presentation you talked about this organization called TransLink. Could you describe that in more detail? Are they an agency that's responsible for delivering transportation systems?

To what extent are intelligent transportation systems a part of that? It's something that has been discussed by the transportation committee in Ottawa. Is that part of that agency?

Ms. Beth Johnson: I'll let Mr. Cameron deal with the intelligent transportation issue.

I'd just like to describe the organization, which is a very recent one; it was only incorporated on April 1 of this year. Previously, transit was provided by the B.C. Transit Authority or BC Transit. It was a crown corporation. We had no local control and we had no way of linking that with land use.

Through negotiations with provincial government and subsequent provincial legislation, there is now an organization that has a 15-member board, three of whom are members of the provincial government, 12 of whom are local mayors. Those 12 mayors also happen to be on the Greater Vancouver Regional District board as well, so we have a very close connection between the land-use planning at the GVRD and the TransLink planning for transportation.

In regard to transportation planning and operation, the planning is done at the TransLink level. The bus system is run through a subsidiary. TransLink is in charge of everything from Sea Bus to Sky Train, as well as the bus system and the major road network in the region, which is a new twist on things. TransLink's plans are required to match the land-use planning of the Greater Vancouver Regional District and to be supportive of that land-use planning. They're intimately integrated; it's a situation we've seen nowhere else in North America.

Ken would probably like to answer the question on intelligent transportation.

Mr. Ken Cameron (Manager, Policy and Planning, Greater Vancouver Regional District): Yes. Certainly we've identified some real potential for intelligent transportation systems in this region. As a gateway, we have a lot of goods and passengers moving to and through this region. We have border crossings within the region and so on.

One of the powers that TransLink has is the power to establish subsidiaries to pursue particular avenues. It has just recently established a subsidiary for intelligent transportation systems, which has representation on it from the trucking industry and the provincial transportation ministry—and I believe there are also some federal agencies represented on it.

In the longer term, I think one can develop transponders and tolling systems and all of that, which are part of intelligent transportation, but the immediate need is to move things expeditiously through our various portals using these systems, and we're developing that.

Ms. Beth Johnson: Madam Chair, may I give just a brief answer further to that? There's something I've left out and I think it's important.

Most important from your perspective, the federal government's perspective, in terms of what I've described is the fact that what we're promoting in terms of the federal government's participation in funding for transportation is that the communities that have this kind of system whereby they can link together the different kinds of transportation, including road, rail, bus, and that, with land-use planning and have some form of authority to look at the whole picture, are the ones that then would be worthy of receiving funding. In that case, you would be assured that the money would be spent in a way that tries to shift away from the automobile as much as possible and provide other opportunities.

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So the proposal we've made to the federal government does suggest that the kind of structure—or something that imitates this kind of structure—we have at the GVRD be a prerequisite for receiving the kind of funding we're talking about.

Thank you.

Mr. Roy Cullen: Mayor Johnson, in your brief, you also talked about the issue of affordable housing and homelessness. You didn't have a chance to address it in your presentation.

Ms. Geary and Ms. Mix, you talked about the issue of affordable housing and the homeless. You mentioned that the problem started when the federal government reneged—I think you used language like that—on social housing, or bailed out. I forget the exact terminology you used.

I wondered if you could describe to the committee when this happened. I'm not sure whether it was this government or the previous government. Normally what happens when programs are devolved to the provinces is that it is done in response to the need to have programs closer to where the action is. It's something the provinces promote, and we respond to that from time to time. Normally what happens is that we transfer responsibility and resources. I think you implied that the responsibility was transferred but the resources weren't. Is that correct?

Ms. Vanessa Geary: Yes. My understanding of the history of social housing is that the responsibility for the actual implementation and administration of social housing programs was devolved down to the provinces in the mid-1980s and that from the mid-1980s up to the early 1990s the federal government maintained that crucial commitment, which was the funding commitment. It actually provided two-thirds of the dollars that enabled the construction of new social housing units, these locally run non-profits or cooperatives.

What happened in the 1990s under the Tory government was that the federal government reneged or bailed out—whatever language you want to use—on its responsibility for actually providing funding for the construction of new social housing units. The problem with this was that the two-thirds funding was crucial in terms of meeting needs.

So while there are all sorts of things that have conspired to result in a homeless situation that's worse than it was in the early 1990s, the fact that the federal government has taken the funding away for two-thirds of the units that used to be built has led directly to increased homelessness. We can see it. There's a direct correlation between the number of units in B.C. that haven't been built and the growth in the B.C. waiting list for housing.

Mr. Roy Cullen: Madam Chair, it's all a matter of history now, and we want to look forward, but it might be useful if a researcher could really track that, because we get blamed for just about everything, and it would be interesting to know what actually happened...I mean, provinces set certain priorities.

There's the other thing I wanted to explore. In fact, I wanted to explore it this morning when Mayor Owen was here, but he had to leave early. The homeless...it's a very complex problem, and in regard to the linkage of affordable housing, I think most of us accept the relationship there, but there are also a number of mental health issues. The mayor talked about the fact that there may be hundreds on the street who won't go into a shelter. Mayor Lastman in Toronto has said the exact same thing to me.

It seems to me my recollection is that many of the provinces have closed down mental institutions and have intended to—and to some extent maybe have—follow up on the community support systems, but maybe that's not totally there. So when we look at the homeless...in fact, Claudette Bradshaw is looking at the longer-term solution, but she's also concerned about this winter, which is an immediate issue.

When you look at this problem and the role for the federal government, we're being very careful with this. What is the relationship between mental health issues and affordable housing? Can you help to put that into some context?

Ms. Vanessa Geary: I think Linda wants to say something about this too. It's estimated—I have a fact sheet here—that a big percentage of people who are actually living on the street do suffer from mental illness, but I think what we're trying to do here is to provide you with some background. The blame stuff doesn't really matter. What the reality is in terms of looking forward is that we have to come up with partnerships and we all have to work together in solving this problem.

The bottom line that we've all seen, that the FCM has seen, and that community groups and homeless people themselves across the country have seen is that without federal government involvement—and by that I mean actual dollars on the table—we're not going to solve this problem. Once we have the federal government as a partner at the table, I think the next step is for all of us to sit down and ask, how are we going to respond to local needs? But we need to have that commitment first.

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The Acting Chair (Mrs. Karen Redman): Ms. Mix, did you want to make a comment?

Ms. Linda Mix: So far, I would be echoing what Ms. Geary is saying.

Mr. Roy Cullen: Canadians are interested in solutions, and they don't really care about....

I'm glad to hear that at least there's some understanding of the context of this. Last year with health care, we topped up health care by $11.5 billion when we had some room fiscally to give some tax relief. So maybe we have to do something on this front again for the homeless. Who knows?

If I could mention something to Ms. Corinne Lonsdale—

The Acting Chair (Mrs. Karen Redman): You'll be the soul of brevity, right?

Mr. Roy Cullen: Yes, this will be very quick.

I'm a big fan of the infrastructure program, but there are some cynics out there who would argue. I think the intent is to fund incremental projects, not just stuff that was going to be done anyway, and leverage the municipal dollars that way. Could you tell me how that actually works at the municipal level, and also about the priority-setting exercise?

We had a presenter just now who said we should play hardball with the provinces. In fact, Mr. Jones sort of agreed—you could speak for yourself perhaps later—that we should play hardball with the provinces and say, look, unless the municipalities are there in a priority-setting exercise, you don't get a buck. Frankly, I have a lot of empathy for that, because if the municipalities aren't part of the priority-setting exercise, how's this going to work? Could you comment on those two aspects, the incrementality and the question of priority setting?

Ms. Corinne Lonsdale: With the incrementality—and you talked about how in fact those are projects that need to be done anyway—I have to tell you that in the province of British Columbia today, municipalities are pretty hard struck to come up with money for infrastructure because of downloading, not just from the provincial level but also from the federal level. It's only in recent years that we've been taking over our harbours, ports, and airports, and the province isn't coming to the table there. The province is bankrupt and there's no funding or assistance there.

There's only one taxpayer, and we're hard pressed to undertake the projects we need so very dearly in our municipalities for waste water treatment plants and clean drinking water. Road systems is another area where the province downloaded on municipalities in the last couple of years.

So, yes, the projects are there. They're on the books. But without some assistance, we're not going to be able to undertake them. We need that help. It just can't be done on our own.

I guess you can look at “incremental” in two ways. We're asking for a multi-year program as well, because so many of those projects are huge and they need to be done in phases. I'm not sure if that answers that part of it.

Mr. Roy Cullen: Sure, that's wonderful.

Ms. Corinne Lonsdale: On the other part, about the priorities, I really liked what you said a minute ago. I wouldn't want the federal government to come to the table unless the federal government is really confident that local government will determine or have a big say in what those priorities are.

In regard to the two previous infrastructure programs, the first one was great, but the last one was an absolute nightmare. Thank God for Minister Anderson, who really went to bat for us through UBCM, and so on, and at the end of the day we were able to work some of it out. But it's critical that municipalities or regional districts are involved right at the outset with the terms of reference and the priorities.

Mr. Roy Cullen: Good. Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you, Mayor Lonsdale.

I'll now let Mr. Jones speak for himself.

Mr. Jim Jones: I think what I was referring to was that you mentioned Mike Harris saying he wouldn't participate in the next one unless he had some say. I think it was more in reference to the greater Toronto area, where there are many municipalities and many mayors. That area is represented also by 42 members of Parliament. When you're seeing where the infrastructure dollars are going, to sewers, transit, roads, and things like that, you need lots of money to service those areas. A lot of times you don't always get the concurrence of the mayors. I think what Mike wants in that case would probably be proper utilization of resources if the province is going to put it towards that. That's what I think he meant.

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The Acting Chair (Mrs. Karen Redman): Was this the commercial message you promised us earlier?

Mr. Jim Jones: No.

Anyway, I'd like to ask a question to Beth Johnson.

When you made the comment about sustainable urban transportation planning, and I'm going to put “and implementation”, what are you doing in this area in conjunction with, for example, affordable housing? How is this going to be sustainable? What do you mean by “sustainable”?

Ms. Beth Johnson: I'm sorry, I'm unclear whether you're asking me about transportation or housing.

Mr. Jim Jones: I'm asking you about transportation.

Ms. Beth Johnson: Okay.

Mr. Jim Jones: How is this sustainable, when you're saying “sustainable urban transportation”?

Ms. Beth Johnson: If I don't get to what you're looking for, please tell me.

What we looked at as a region—and it was a unique opportunity to do this from the ground floor up; it was 20 municipalities that agreed on this—was a combination of transportation and land-use planning that best used our existing area to accommodate the extra million people we were expecting to receive.

The way we did that was by drawing dotted lines around all the green space, including working landscapes such as farms, finding out what was left over, and then looking at that land in terms of transportation to make sure we looked at different models, to make sure we found the best growth model to support public transportation as best we could.

For example, we chose what we called “the compact metropolitan model”, because we believed that was the best to support, with the least subsidies, major transportation initiatives such as what we call Sky Train, light rail transit through the core of the city, so that we didn't end up with urban sprawl. The densities would be concentrated around these transportation corridors in such a way that there would be less subsidization of transportation and less need for people to use their private automobiles to go to and from work. We also looked at nodes of areas where people could live and work close to home, so that they didn't have as far to go for transportation.

Then we looked at ways of making our planning and implementation of the major road network mesh with our planning and implementation of public transportation, so one basically didn't cannibalize the other, particularly so that the planning of roads didn't cannibalize the planning of public transportation.

Our goals were to keep our growth compact and not sprawl, and to keep air quality improved. A later goal that has been folded in, of course, is to reduce greenhouse gas emissions and do our share to do that, to pave less and to accommodate the kind of growth and transportation needs we have well into the future.

Does that somehow answer your question?

Mr. Jim Jones: I was also looking to see that if it's Richmond—I don't know this area that well—and Delta and places like that, you were making sure you intensified and that there wasn't just traffic always into downtown Vancouver, that the traffic was both ways, and by intensifying, instead of building apartments and affordable housing on $30-million-an-acre land, you were building it on $500,000-an-acre land, and those people could take the transit and come into Vancouver to work. That's what I believe sustainable urban transportation and land-use planning means.

Is that what you did?

Ms. Beth Johnson: Yes.

Mr. Jim Jones: I want to back up, then. All the mayors signed off on the second infrastructure program. What was the issue if it went to the transit system, for municipalities, the province, and the feds? If everybody agrees with good land-use planning and good rapid transit planning, why was there an issue here that the money should go back now to individual municipalities in this regard?

Ms. Beth Johnson: I'll let Ken answer that.

Mr. Ken Cameron: At that time transit was a provincial responsibility and the decisions were being made entirely by the province in accordance with their political priorities. There was no obvious connection between those priorities and the growth management plan.

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Mr. Jim Jones: So now transit is back on in the greater Vancouver area.

Mr. Ken Cameron: Yes.

Mr. Jim Jones: Just diverting a little bit to Toronto, I look at the 2008 Olympics plan, and everything is downtown Toronto. We're going to grow by two million people, and really the legacy of those games should be a good rapid transit system. You can only do that if you have all levels of government saying, what is the proper way to grow and how are we going to move people around? If there is an infrastructure program that comes to the Toronto area, then maybe the best use of the money would be to spend it on either water, sewers, or transit, which is still not just the local municipality.

I wanted to follow up on one thing John said. Markham is a high-growth area. We grow by about 10,000 to 12,000 people a year. A lot of the growth is from new Canadians, and I've never heard any of my new Canadians suggest using the unemployment insurance money to help them. To me the unemployment insurance program is for people who have paid into it, not for people who have never paid into it at all. So where does this come from?

Mr. John Argue: Maybe I didn't express myself clearly. The problem that I believe exists here is that when immigrants are looking to upgrade their skills as far as their profession is concerned or their language skills, much of that training and the benefits are associated with the employment insurance program and are not accessible to immigrants and refugees. The point is that they can't access that kind of training in order to participate in the job market. They come here wanting to upgrade their skills so that they can look for work and look after their families, pay taxes, and whatever, but the obstacle they are facing before they can even get hired is that training is associated with employment insurance. So it's a chicken-and-egg thing. They haven't been able to work and pay into employment insurance in order to get the training. Their concern is to get the training so that they can get work and contribute. That's the problem they would identify. The immigrants, from what I understand, wouldn't necessarily want to be associated with employment insurance or unemployment. Rather, they hope to upgrade themselves so that they can work. Their main concern is work.

Mr. Jim Jones: I understand what you just said, but to me the unemployment insurance program is for the workers who were employed and who have paid into it. When they get laid off, there should be programs to retrain them.

Maybe what is missing here is some type of program to help new Canadians adjust to the Canadian economy.

Mr. John Argue: I think that's quite reasonable, actually. It does seem a strange conjunction, I agree.

Mr. Jim Jones: Thank you.

The Acting Chair (Ms. Karen Redman): Mr. Jones, do you have a concluding remark? We're running out of time.

Mr. Jim Jones: No, I'm fine.

The Acting Chair (Ms. Karen Redman): I'd like to thank all the witnesses who came today for your thoughtful presentations, and rest assured that we will take this into consideration as we write our report.

We will suspend for two minutes.

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The Acting Chair (Ms. Karen Redman): I call this meeting back into session.

Thank you very much for joining us today. Each of you have been probably made aware of the fact that you have five minutes to make a presentation, after which time the members of the finance committee will ask you questions.

We're going to try to be very judicious in keeping you on track. We have travel commitments at the end of this meeting, so we're not going to be able to go over our time. We're very interested in what each of you has to say.

Today we're going to hear from the British Columbia and Yukon Territory Building and Construction Trades Council, Canadian CED Network, Vancouver International Airport Authority, the University of British Columbia, and Northern Rockies Regional District Town of Nelson.

First, we're going to hear from Mr. Joe Barrett, researcher, British Columbia and Yukon Territory Building and Construction Trades Council. Welcome.

Mr. Joe Barrett (Researcher, British Columbia and Yukon Territory Building and Construction Trades Council): Thank you. First of all, I'd like to thank those members who are still here. It's unfortunate there aren't a few more members.

I'm not going to go through our entire presentation. It's much too long to be able to do that in the few minutes we have.

What I do want to talk about, though, is Canadian living standards today. I want to talk about wealth distribution and the social infrastructure in Canada. At the end I'm going to make some suggestions that the building trades have already made at the national level to the committee.

I'd like to begin by looking at poverty in Canada. As you know, it's not a very pretty picture. Over 12% of our population are living in poverty, 17% are functionally illiterate, 9% are expected to die before the age of 60, and 1.3% of the workforce suffer from long-term unemployment. These UN figures are conservative. It's estimated that about 20% of Canadian children live in poverty.

In the 1960s and 1970s we saw diminishing differences, and in the 1990s we see a widening gap in differences. It was reported in a report issued last year by Armine Yalnizyan of the Centre for Social Justice in Toronto that when you have incomes at the ends of the spectrum starting to divide, you have a more divided society. To quote from her study:

The more a society is clustered...the more common is their material experience. This is a powerful unifying force.

When you have growth in the “tails” of the distribution, it leads to the opposite result. You start emphasizing going it alone.

It's unfortunate that Statistics Canada still doesn't do reporting on wealth. I understand they will be doing that soon. But apparently the results are going to be even more shocking: 1% of Canadians controlling as much as 50% of the wealth in the country. We don't know this for sure. It's a difficult thing to measure, but Statistics Canada will be starting to do this.

In the brief time I have I want to look at some of the myths. We hear over and over that the Canadian tax structure is unable to attract foreign investment because it is just too prohibitive. KPMG did a study, which they do every year, in which they showed that the Canadian corporate tax rate is actually one of the lowest in the world. It said that in Canada the combined corporate tax rate is 27.4%. Sweden, France, and the U.K. are the next lowest, with their corporate taxes being under 35%. The United States, Germany, and Italy have the highest corporate tax rate. In the U.S. corporations pay 40%, in Italy they pay 54%, and in Germany they pay 60%. Of course, as we've lost the income from corporate taxes, we've had to make it up in personal taxes.

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It's true that we have a high rate of personal income tax in Canada, but we want to look at some of the solutions. If we look at the Mike Harris solution of an across-the-board cut to personal income taxes, the only people who really benefited were the richest people in society.

If we just look at some of the statistics there, with the $5 billion in cuts, more than half of the revenue the government lost went back to the 20% of the people in the highest income tax bracket. Only 3.9% of these cuts went to the bottom 20%. It meant that $15,000 in tax cuts went to the rich, while for families with incomes under $20,000, it was a tax saving of $150.

Unfortunately, time is just ticking away here so quickly. I would have really liked to have talked a little more about how the globalization strategy—MAI and the WTO—is not working; it's here in the report.

I just want to finish by talking quickly about some of strategies that I think will work. What the Liberals did when they first came to power was in the direction of infrastructure. What we really need in Canada is a true commitment to rebuild the highway system across the country. A study last year showed it would cost $17 billion to do this. The United States is investing over $200 billion in revitalizing their highways. On top of putting people back to work, it would be a huge saving to government in health care and transportation costs. If we're talking about improving trade, improving highways is one of the best ways to do it.

The other two suggestions we have made are in social housing. It's kind of frightening for all of us to see on the news that the homeless are in front of the House of Commons. In spite of whose fault that is, the problem is a real one. You can't walk down the streets anywhere in this country without running into the homeless and people begging for money. I grew up in this city and never saw this in the 1960s and the 1970s. This is something new.

If we're going to dedicate ourselves to public service, which is what all of you have done—and it's a great sacrifice you're undertaking—one of the greatest legacies you can leave us all is some real effect to turn around the increasing poverty we're seeing in the country. Again, I refer you back to our submission to get some of the details on how to do that.

The Acting Chair (Ms. Karen Redman): Thank you very much, Mr. Barrett.

We'll now hear from Mr. Mike Lewis and Mr. Doug Weir, who's the executive director of Canadian CED Network. Welcome.

Mr. Mike Lewis (Executive Director, Centre for Canadian Enterprise and Chair, National Policy Council, Canadian CED Network): Thank you.

In a sense, maybe following up from the previous speaker, we're kind of coming from the margins and trying to talk to the mainstream about what communities are doing successfully to try to combat marginalization, not unassociated with senior governments, but making some important inroads and learning some important lessons that we think need to be scaled up.

Our membership goes from the depleted regions of the great northern peninsula in Newfoundland to Revelstoke, where Doug is the economic development commissioner, to southwest Montreal, and along the Lachine Canal to North York. So we have the sense of the people who have been working in the trenches for anywhere from five to 25 years and the organizations they've built that are making a difference.

Our national policy framework is still at a draft stage but is under discussion across the country in our own membership and with other organizations. There are three areas we think are critical to replicating some of the success that's been achieved over the last 15 years.

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First is the investment in capacity-building, and second is the investment in building mechanisms for capital formation and capital accumulation at a local level for reinvestment. Third is the investment in confidence-building at the leadership level in communities and organizations and of course among the base of people who are marginalized in any particular community.

We have several examples in the main brief that's gone to the clerk that represent this best practice. In Halifax, the business strategy of the Human Resource Development Association over 10 years took 1,400 people directly off the social assistance rolls. The return on investment from the public sector, whether municipal or provincial—there was very little federal in that particular circumstance—on a conservative basis was $1.83 for every $1 invested. This linking of social and economic goals and taking a comprehensive and more strategic approach at the local and regional levels is making a difference.

In southwest Montreal they have had the advantage of some federal dollars, partly I think because Paul Martin was also the regional development minister. That helped unleash some federal dollars to combine with other dollars for the poorest neighbourhoods of Montreal.

RESO, another community development corporation, has a 15-year history. In 1992, in the midst of that recession, Statistics Canada reported they had arrested a 25-year decline in the manufacturing capacity. This was the result of poor people organizing and creating the kinds of coalitions between business, labour, poor people's organizations, financial institutions, and small business that represent the kind of board and governing structure of a community-driven, accountable organization.

We're suggesting this experience be built on and we establish empowerment zones in the poorest parts of the country, where a series of measures we describe can be taken.

I'll turn it over to Doug just to describe one example in British Columbia, which he's been with for 15 years, I think.

Mr. Doug Weir (Executive Director, Canadian CED Network): Thank you.

I have just a clarification, Madam Chairman. I actually work as an economic development person in Revelstoke, B.C. Revelstoke is a city of 8,500 people and it's located on the Columbia River. It's fairly isolated in this province. It's been a resource-dependent community for over 100 years. In the mid-1980s it hit a period of very serious economic decline. It historically had a boom-and-bust economy, and in the 24 months leading up to 1986, 3,000 jobs were lost in our little community. We had an unemployment rate of over 25%, and of course the morale of our community was at an all-time low.

We've recovered from that, fortunately. Now we have an unemployment rate, typical for the province of B.C., at somewhat less than 10%. We have acquired a huge number of community assets and have a large number of community organizations that are able to work on behalf of the community. We've had growth in the forest sector in British Columbia over the past five years, when typically the whole province and many communities have had decreases in the number of people employed in the forest sector.

How did we do this in 13 short years? We had the opportunity, almost like a pilot project, with some resources to apply community economic development principles, where the community took action on its own behalf, relying somewhat on outside resources, but really developing a strategic plan that was comprehensive, addressing its weaknesses and building on its strengths.

In our community we implemented a strategic plan. We were able to build capacity in the community. One of the major contributors to that capacity-building was the federal government, through an EIC program called Community Futures. It allowed us to build the capacity as a community, whereas in most cases those programs are regional investments.

One of the significant things we were able to achieve in our community, in forest industry growth, was that through a research and collaborative partnership with industry we purchased a tree farm licence and operated the largest community forest corporation in British Columbia. As a community, we control 20% of the timber harvested in our region. It has gone a long way toward stabilizing the community. It has led to actual employment growth and added further value to forest products.

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In the capital and finance area Michael talked about, two initiatives really are significant. We have a community loan fund of $1.5 million, which was originally bankrolled by Canada Employment. It has now been levered to $3.5 million over a 10-year period of time, by not only reinvesting in our community but finding other funds that would help build that amount. And finally, our credit union has become a major partner of ours in the community, with an asset base of $60 million. Of that asset base, 30% is invested for economic production in the community, so it goes into commercial lending.

Finally, from my operating perspective of having been there for a period of time and having seen this process work, globalization makes it difficult for senior levels of government to deal with the structural issues at the community level, and interventions take more and more resources. Community economic development supports local decision-making, capacity-building, and implementation. It offers a cost-effective means of building strong local economies and communities while addressing economic, social, and environmental sustainability.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Weir.

We'll now hear, on behalf of the Vancouver International Airport Authority, Mr. Gugliotta, who is the vice-president of finance; Mr. John Korenic, director of airline and passenger development; and Mr. Joe Sulmona, director of strategic policy.

Welcome, gentlemen.

Mr. Tony Gugliotta (Vice-President of Finance and Chief Financial Officer, Vancouver International Airport Authority): Thank you, Madam Chair and members of the standing committee. We appreciate the opportunity to provide the committee with comments.

I'm here to briefly discuss five items with you: the ground lease payments, the need for a new foreign trade zone policy for Canada, the need for arrivals duty-free at Canada's airports, the need for a national infrastructure program, and the federal excise tax on fuel. The full text of my speech is included in the notes, so I'll just highlight certain points in order to keep to the five-minute limit.

As you know, the Vancouver International Airport Authority leases the airport from the federal government. We are a not-for-profit organization that operates the airport on behalf of the community. The airport supports over 23,000 jobs, and from 1994 to 1997 we created 5,100 new jobs at the airport—11,200 if you include multiplier effects.

Under the current rent structure, airports in Canada are projected to pay $1.2 billion in rent to the federal government over the next five years. These rent payments represent the largest expense of devolved airports and have the potential to undermine the viability and competitiveness of the air transportation industry.

The current structure of airport ground rents was struck at a time when the federal government was still incurring significant annual deficits, and fair treatment of this industry was sacrificed in order to assist with deficit reduction. This is no longer the case, and we're asking that the current structure be revisited.

In response to the federal government's review of airport authorities, the Canadian Airports Council suggested that Transport Canada involve the industry in the development of an acceptable set of key principles to support a more reasonable and transparent rent structure. We hope to commence those discussions shortly and would welcome your support as this matter is brought forward to cabinet and other government departments.

Canada needs a foreign trade zone policy. Our vision is the development of modern logistic centres that would service the entire NAFTA economy. Existing regulations do not support the establishment of such distribution centres in Canada. Instead we are witnessing what can only be described as tremendous growth by U.S. foreign trade zones.

The details of the change we request are attached as an appendix to my statement, but broadly what we are looking for from the Minister of National Revenue is a new classification called a “foreign trade zone” that provides under a single licence the ability to undertake the activities allowed under the legislation for sufferance, bonded warehouse, and duties relief facilities.

From the Minister of Finance we are requesting the elimination of the need to prepay the GST on goods that enter Canada but will eventually be re-exported. Such re-exported goods are not subject to GST, of course, and eliminating the need to prepay and apply for a refund not only enhances the attractiveness of Canada as a location for a distribution business but reduces the government's own internal processing costs. The current program is well intentioned, but it's highly restrictive and discourages the establishment in Canada of activities such as Internet order fulfilment centres and distribution centres.

Current federal legislation does not permit the sale of arrivals duty-free goods in Canada. Establishment of arrivals duty-free prior to border entry inspection would provide better customer service, but more important, it would repatriate duty-free sales back to Canada. Arrivals duty-free is anticipated to create 100 direct jobs in Canada, plus additional indirect jobs. The governments and airport authorities would benefit from this new revenue source that would otherwise be yielded to foreign competitors or lost completely.

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Preliminary consultations have been completed with industry and provincial government stakeholders, who have not raised any objections to this proposal. And the arrivals duty-free is consistent with the federal government's national airports policy, which encourages airports to become more self-sufficient and remain viable in the longer term.

We pride ourselves at the airport on the investments we've made in our new terminal and our runway and the maintenance of existing facilities. However, state-of-the-art airport facilities need to be matched with efficient road access. Airport access in the region is currently challenged by urban congestion.

The Vancouver International Airport Authority supports the Greater Vancouver Gateway Council's effort to seek a national transportation infrastructure program. This program should be linked to provincial, local, and private investment partnerships, as it is in the U.S., so that the necessary capital can be pooled and focused in a national effort to modernize Canada's transportation infrastructure.

Finally, with respect to federal excise tax on aviation fuel, airports operate in a competitive environment. In fact we compete with Seattle, Portland, Los Angeles, and San Francisco. However, one of the biggest differences between us and the west coast competitors is that our fuel costs are significantly higher. This is almost completely due to the higher taxes on aviation fuel in Canada. The extent of our fuel tax provides a significant incentive to encourage customers to select services to U.S. airports as opposed to through Canadian gateways.

While international carriers are exempt from paying U.S. federal fuel taxes, as they are in Canada, domestic charges are a modest 1.5¢ per litre. In Canada, our carriers pay a 4¢-per-litre federal excise tax for domestic services. In 1998 airlines paid a total of $75 million in federal fuel taxes, plus $160 million in provincial fuel taxes. This is an unnecessary tax burden and must be viewed as a contributing factor to why airlines in Canada have significantly higher costs than, and have not been as financially healthy as, carriers in the States.

The mission of the Vancouver International Airport Authority is to serve the community by building outstanding airports for the 21st century. We want to be a local champion by making YVR a source of local pride and a key economic generator. In order to be an economic generator, we need to improve our competitiveness via the items I just mentioned: a restructured ground rent, fuel tax reform, the ability to generate new sources of revenue through arrivals duty-free, the ability to capitalize on distribution services potential through foreign trade zones, and building better connections to a national infrastructure program.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Gugliotta.

We'll now hear from Dr. John Grace of the department of chemical and bio-resource engineering from the University of British Columbia.

Welcome.

Dr. John Grace (Department of Chemical and Bio-Resource Engineering, University of British Columbia): Thank you very much. I appreciate the chance, Madam Chair, to speak to the committee. I'll be very brief. My brief is also very brief.

I'm here partly of course as a faculty member at UBC but also as a member of the council of the Natural Sciences and Engineering Research Council of Canada. I have been on that council for the past five years, and I'm also chair of the committee on scholarships and fellowships for NSERC. It's partly in that guise that I'm here to speak to you today.

You in the federal government have done a great deal in the past two years to support university research, and we hope you will continue this. I want to talk briefly about some of the ways in which this helps.

First of all, it helps our brightest and our best and our young students, who are really the future of this country. Unless we have the top quality of education in this country, we will not be able to compete in the future. Research is vital to that.

In particular one tends to overlook the place of graduate students in the future of our country. Graduate students are often overlooked. They are the brightest, they work the hardest, and they eventually obtain masters degrees and PhD degrees. Without these people, we would not have the level of starting of new companies and some of the advances that have been made in our country and the reputation of our country that we have had in recent years.

I'd like very much to underline the fact that we have an outstanding level of graduate education in this country, but in recent years it has suffered due to a number of factors: debt carried by those students, cuts in various programs within the universities, and certainly the tuition fee increases they have had to bear.

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So we are trying very hard at NSERC to increase their participation, in particular the participation of women. We have a program we have formed to start women in faculty positions so they can be role models and mentors. It is a very small program, but it is making an impact, and we hope to do more.

We hope in particular to be able to attract more people from first nations communities and the Inuit community into our universities in general, into science and engineering, which we support at NSERC. The number at the moment is extremely small. We need those people to be trained and to go back into their communities. We also want more people with disabilities to be trained at the graduate level so they again can contribute fully in the society. We need them, and we need them as role models in every sense in our society.

So NSERC is very much involved in graduate education. It's also involved in research, basic research as well as applied research, and it's involved in innovation, and I would like to pass right on to that aspect.

I am myself a faculty member in chemical engineering, as you heard. Last year, as an example, I had approximately $0.9 million to $1 million in research funding. Only about 10% of that came from NSERC; most of that was from three other sources, industrial-supported sources. About one-third was from Japan, the Mitsubishi Chemical Corporation; about a third was from Syncrude, a large company in Alberta, as we were helping them with some of their significant problems; and about 20% was from ABB, a combustion engineering company in the United States and Europe.

NSERC, as I say, provided about 10%, but the NSERC portion is extremely important. It's catalytic. It supports the start-up of projects, which allows us then to take off and do things and gain the reputation we need to support the group. The group at the moment is about 30 people, and we have recently started a spinoff company, which we hope is going to supply hydrogen in a very innovative process to the fuel cells development in the Vancouver area. NSERC's role in this, as I say, is small but extremely vital.

My time is just about up, but I'd like to come back and emphasize that NSERC is catalytic in what it does. It supports people. It support innovation. It supports discovery. This is the future of our country, and we hope very much you will continue to support this in the future.

The Acting Chair (Mrs. Karen Redman): Thank you very much, Dr. Grace.

We'll now hear from Mr. Dan Gray, councillor and director of the Northern Rockies Regional District, Town of Nelson. Welcome.

Mr. Dan Gray (Councillor/Director, Northern Rockies Regional District, Town of Fort Nelson): Thank you very much. It's actually the Town of Fort Nelson.

Madam Chair and honourable members, thank you for the opportunity of appearing before the standing committee today.

Fort Nelson in the northern Rockies area of British Columbia urges the federal government to commit to establishing a long-term continuous national infrastructure funding program in partnership with the provinces, territories, and local governments.

We support the Federation of Canadian Municipalities' proposed quality of life infrastructure program for municipal infrastructure renewal and urge the federal Standing Committee on Finance to take it into serious account in your deliberation.

Fort Nelson and the Northern Rockies Regional District are located in the northeastern corner of British Columbia, 250 miles north of its nearest neighbour. We have a population of approximately 6,500 people in a land mass larger than Switzerland.

Our community and area constantly struggle with the costs required to construct and maintain a basic infrastructure network because our needs are many and our funding sources are limited. While our story does not contain the high numbers of Vancouver or Kelowna, as an example, they certainly are just as dramatic.

Because of our physical isolation and our small population, we cannot depend on other communities for assistance or to share costs. Our political influence is minimal when seeking grant assistance. There are fewer people and a smaller tax base to pay for infrastructure needs. The cost of providing infrastructure is higher in any case because of location, smaller project size, lack of contractor competition, and mobilization costs.

We have experienced significant increases in property taxes and net debt over the past few years, for instance, and still do not have an assured supply of potable drinking water. The community's sewer treatment facility requires major upgrading, since our discharge effluent does not meet provincial standards and the system's poor condition necessitates bypassing the treatment facility during especially heavy rainstorms and emergency discharge to the river to prevent sewage backing up into basements.

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The last time that situation occurred, the town could not act quickly enough. There were 50-plus homes that were damaged and a large quantity of untreated sewer water was released. The upgrading will cost $1.4 million. Our water distribution system was installed in the 1970s using cast iron ductile pipe. Soil conditions have proven to be hot and most of that pipe has been destroyed in less than 20 years.

We embarked on a water main replacement program 10 years ago, but in 1999, 50% of the system is still in cast iron pipe. Problems are exacerbated by the annual freeze-and-thaw cycle, and each year we must spend an additional significant portion of our budget repairing broken cast iron pipe.

Our water treatment facility was built three years ago in response to the discovery of giardia cysts in the water system. “Giardia lambia”, which is “beaver fever”, is extremely dangerous to children.

The treatment facility was only possible because of a 50% provincial infrastructure grant, but nevertheless resulted in a large increase in frontage tax rates, net debt load, and user rates. It did allow the town, however, to extend the basic potable water supply to the Fort Nelson first nations reserve lands and to other rural residents.

Programs for street upgrading and pavement, sidewalk installation, downtown revitalization, and park and boulevard enhancements are funded only in a minimum way. They stay on our drawing board but are always a lesser priority than water and sewer services or maintaining a basic road infrastructure.

As a result, we have the largest infrastructure investment deficit in those areas. Energy efficiency projects, sensitive or heritage land protection, transit, affordable housing, mental health services, and many other things don't even make the list.

In the past five years our municipal tax levy has increased by more than 50%, with no corresponding increase in population. The increase is a result of infrastructure expenditures for streets and roads and water and sewer utilities.

Frontage taxes, used to fund debenture payments, increased from $2.36 per foot in 1993 to $4.86 per foot in 1999. Our regional district is equally affected. Its solid waste disposal costs have increased by 1,000% in the same time period because of new legislated one-size-fits-all environmental standards. The budget soared from $90,000 in 1993 to $900,000-plus in 1998 and 1999.

As a direct result of federal downloading, the regional district and its taxpayers assumed operating responsibility for the Fort Nelson Airport in 1999, along with $350,000 in an annual operating deficit.

Allowing the airport to be closed in Fort Nelson was not an option. Keeping it alive and well was and is an absolute necessity. Without an airport, our community and our area would be unable to attract new commercial and industrial growth or to support what it already has in place. Our economic viability would have been destabilized on a very long-term basis.

But the airport also has $4.4 million in outstanding capital expenditures, some of which are directly attributable to the outright neglect of its infrastructure facilities and equipment during Transport Canada's years of operation.

While the federal airport capital assistance program is still in place this year to address some air-side projects, demand is great and there is no priority funding for ground-side projects.

The impact of a very basic infrastructure program for Fort Nelson and its surrounding area for the next five years is a 90% increase in municipal tax levies.

Like others, our municipality desperately needs the funding a national infrastructure program would provide for basic services. This dispersion of power through the principles of federalism is central to Canada's structure, and we view such funding as a responsible return of revenues, a fair and strategic payback to areas and to the citizens who have so generously provided the revenues in the first place.

British Columbia currently contributes approximately 20% more in federal tax dollars than actually comes back to it in services, an outflow of $5 billion per year or 4.5% of gross domestic product.

It is clear that Canadians expect national standards for infrastructure as well as other services. It is also clear that those standards are not uniform, as citizens might believe, and not likely to ever be unless federal, provincial, and local governments address the issue.

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Again we urge the standing committee to give serious consideration to recommending the establishment of a long-term quality-of-life infrastructure program such as that suggested by the Federation of Canadian Municipalities.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you very much, Mr. Gray.

We have one more presenter, who has a time constraint and will be joining us at 5 p.m. Until that time, I would invite the committee members to question the presenters.

Mr. Cullen, would you like to start off?

Mr. Roy Cullen: Thank you, Madam Chair.

Thank you, presenters, for being here with us today, and for your briefs and your presentations.

My first question would go to the Vancouver International Airport Authority, Mr. Gugliotta.

My riding is near Pearson airport. In fact, I have been working closely with them on this question of a zone, and I'm aware of this work by the Canadian Airports Council. One of the things we've been pursuing is rather than a free trade zone, an export processing zone, where I guess the difference in focus, if I understand your proposal correctly, is more on the value-added versus a distribution model. Is that what you're proposing, or do you look at value-added processing as well?

Mr. Tony Gugliotta: What we're looking at is the same concept, a distribution centre that also does value-added in terms of goods coming through the foreign trade zone for export to other parts of the country or to the U.S.

Mr. Roy Cullen: Okay.

I met with the Minister of Revenue at the time, Harb Dhaliwal—we have a new Minister of Revenue—on this concept. One of the things you keep hearing about, certainly from Revenue Canada, with some pride, is this program called duty deferral. I keep telling them it's a great program, but it doesn't quite have it, because, as you pointed out here, we have to compete with some U.S. zones. But you need to understand there is some reluctance to move in that direction because of the duty deferral program, which kind of got hyped up more recently.

On one of the issues you talked about, and one that has become clear when we've done some benchmarking work—and I supported a feasibility study and a pre-feasibility study—looking at this question of GST, it seems you could look at administrative measures and streamlining and doing a whole bunch of things, but the GST issue seems to be a critical issue. Is that your take on it as well?

Mr. Tony Gugliotta: Yes, we feel that it's just a further impediment that makes it more difficult to attract parties to set up distribution centres.

We understand the rationale for prepaying it and then justifying why you need an exemption, but given the focus of the distribution centre, we think there could be another process that would make it a little bit more feasible.

Mr. Roy Cullen: Okay.

You can understand that the Department of Finance kind of turns off when you talk about the GST, but they are looking at this aspect.

If there are free trade zones, I know in Toronto, where I am, at Pearson airport, it would be a huge economic boost. In fact, we have companies going to Buffalo, and you probably have companies going to Blaine and Bellingham, and all over the place.

Mr. Tony Gugliotta: Yes, and that's the rationale of our argument. This would not be taking away from manufacturing in Canada. In fact, our focus is on distribution and value-added. This activity is actually taking place in Mexico and the U.S.; it's not taking place in Canada. This is a way for us to try to attract some of that activity into Canada.

We have a natural geographical advantage for a lot of that activity, especially in Vancouver, given our closer location to Asia, but we haven't been able to take advantage of that geographical advantage with respect to the foreign trade zone. So we would like to be able to do that.

Mr. Roy Cullen: Okay. Well, you have a fan here, and we're going to see how we can move that forward.

Mr. Barrett, in your presentation you focused more on the macro level. You really didn't have time to expand on some of the specifics, but one of the things in Ontario—and, granted, the economy in Ontario is pretty buoyant and strong, while in B.C. it isn't, unfortunately. One of the things we hear from the trades there is the shortage of people with the right skills, the need for training, the need for a big impetus in that area. I didn't hear you say that. Is that not a problem here in B.C.?

Mr. Joe Barrett: We've seen a real decline in people getting involved in the apprenticeship programs, partly because the trades have really gone down. Our market share—I'm speaking of the unionized part of the construction industry—has dropped from roughly 80% to about 40%. It's difficult, depending on which sector of construction you're talking about, but in the industrial construction area....

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Generally, it's the unions that have been the big source of the apprentices. We make sure we don't take on an apprentice unless we can see them through the full four years of apprenticeship. Often the non-union and open-shop outfits will take on apprentices just at the ratio allowed by the apprenticeship board, or even take on two or three extras.

We ran into construction sites here in Vancouver where we had third-year apprentices supervising first-year apprentices. Often these apprentices will not be carried through the whole program. Essentially, they're being used as cheap labour. The wage rate for apprentices is a lot cheaper than for a journeyman.

Mr. Roy Cullen: I didn't really want to get into the union politics, but in the context of a national infrastructure, I've even heard it raised that if we went with another infrastructure program, there might be some concerns about having the number of skill sets. There's the quantity and the type of skill sets we need to deliver. Is that an issue?

Mr. Joe Barrett: It's kind of a chicken-and-egg issue. If you don't have the work, then you're not going to be able to give the opportunity to train.

The country is just coming out of a recession. It's true that Ontario is enjoying a bit more bland economy at this point, but the reason I went into my more political rant is because this isn't just something in B.C., Ontario, Saskatchewan, and Alberta; this is right across the continent. You have to put it in an historical context, but without a doubt, if we simply continue to privatize and move away from government involvement in infrastructure....

The comment about the airport was very interesting. The Fort Nelson experience is right across this province and I would expect across the country. If we don't reinvest in an infrastructure, it's not just material benefits we're talking about, but a whole social set of investments that come along with it.

Mr. Roy Cullen: Okay. You're no relation to Dave Barrett?

Thank you.

I would like to go to Mr. Lewis and Mr. Weir. Your proposal looks very interesting. I'm an MP in Ontario, but I've lived here for 12 years, so I understand a bit of what's going on here.

In northern Ontario, with commodity prices down, some mines have been closed. They've been picking up a bit recently, but in other parts of Canada there is a lot of concern about these areas where the out-migration is quite significant, perhaps somewhat along the lines you experienced in Revelstoke back then.

I read quickly through your model of the Revelstoke Community Forest Corporation. It was kind of an ingenious way of getting some of those timber resources back under your own wing, but I assume that required the support of the provincial government and a whole bunch of other things.

Can you take the template you have there and tell me how it could help people in northern Ontario, or parts of Nova Scotia, or other parts of Canada where they're facing the same dilemma, let's say, that Revelstoke faced in turning things around?

Mr. Doug Weir: Thank you for the question. There are two aspects I'd like to look at.

First of all, the Province of British Columbia didn't help a great deal in this process, except to deny the transfer of a licence to a company that had processed the timber harvested from those lands in another community. We were able to intervene, because it didn't meet the social and economic needs of our community, and we were able to put a partnership together with local lumber manufacturers. Each of the partners put up $1 million. That meant the City of Revelstoke putting up $1 million and our industry partners putting up $1 million. Together we borrowed $2 million and made a $4 million investment. That gave us a key place at the table, as it were, to manage the resource.

Fortunately, we have been earning about $400,000 a year net income out of that investment. So those moneys are used for other community investments and to avoid the situation where more tax load is put on the local residents to provide basic services.

• 1650

The other thing I'd like to comment on is that during these last four years a copper mine located just north of us, which employed 150 people, closed. Because we had the capacity and the organizations and programs in our community to look after what happens when those things take place, it went without a blip. Some people moved on to other mining communities, other people retrained, and other people started up small businesses. I can tell you that you could hardly notice it was going on, because we had the capacity locally to deal with it.

Mr. Mike Lewis: Just to take northwestern Ontario, if you like, I've been working in the Kenora area in the Trus Joist MacMillan plant that's being considered and the forest management licences that are in the position of being allocated by the provincial government.

The critical thing about Revelstoke and anything that relates to the natural resource side is the nature of the linkage among the local community, the resource, and those utilizing the resource. So local ownership becomes a critical factor here. In a sense Revelstoke's experience was being organized enough and having a broad enough base in its own community.

When it built capacity, it involved 500 people in its visioning process. This was not just a bureaucratic process. This was a larger-scale process for a small community to engage the citizenry in a process of setting priorities within the context of an overall community vision. That was why they were able to mobilize. It was that linkage among capacity-building, their ability to marry private, public, and community capital, and the opportunity the province supported, after a lot of political pressure, to in fact have the right to move on it.

Having said that, in northwestern Ontario, the issue, especially for first nations communities there, is under the provincial policy, which they call section 77, to afford first nations an interest in participating, given that first nations represent the majority in many of the areas where forest harvesting is going to take place, and the big issue up there is whether they have the capacity to capture the opportunities.

So it is another one of those chicken-and-egg issues. You have to have the capacity before you can capture the opportunities. If you can't capture the opportunities, how do you reinvest on a local basis in order to deal with the endemic problems of decline?

Mr. Roy Cullen: The examples you've cited are in the forest industry where you have a renewable resource. Not to understate what has been accomplished, but in some of these northern towns in Ontario, it involves a mine that just closed and will probably never reopen. In Revelstoke you had already launched something when your mine ran into problems, so you had a base to work from. How do you deal with these communities where the mine has just closed and that's it?

Mr. Mike Lewis: It's tougher. It's not a renewable resource. If it's the only game in town, it's obviously tougher. With regard to the issue of community resilience and the factors that link themselves to why some rural communities survive in some settings where the locational factor or the resource factor would seem to suggest they should die and why others do in fact die, there's no correct answer here. There are different variants. It's related to a whole series of factors, which we refer to as community resilience. The kind of leadership, the local organizations you have, the linkages among those organizations to the extent that they're collaborating under a common strategy and vision, all of those factors play a major part in whether or not those rural communities survive. This has been shown in research done in the United States and Canada.

Having said that, in some settings where you have a single community with a mine and it's remote, it's pretty tough to think about that kind of economy surviving an ore body running out.

Mr. Roy Cullen: Thank you.

The Acting Chair (Ms. Karen Redman): Thank you.

Mr. Fred Muzin from the Hospital Employees' Union has joined us, so I'm going to interrupt questioning right now and ask Mr. Muzin to please make his presentation. We'd ask you to stay within the five-minute allocation, and then we'll continue with our questioning. Welcome.

Mr. Fred Muzin (President, Hospital Employees' Union): Thank you very much.

I'm Fred Muzin, and I'm the president of the Hospital Employees' Union. We have 44,000 front-line health care workers in hospitals, care facilities, and community agencies throughout the province.

• 1655

I welcome this opportunity to again share our views on the federal budgetary priorities. Federal politicians have been getting a lot of free advice recently on how to dispose of the growing budgetary surplus. Should it be used to provide tax cuts and deep reductions or increased investment in our social and economic infrastructure?

Last week's proposal by Premier Klein to deepen the privatization of public health care in Alberta throws the debate into sharp focus and raises serious questions about the moral credibility of this government in its defence of medicare. Both Klein and Premier Harris in Ontario have accused the Prime Minister of hypocrisy for criticizing Alberta's privatization plans on the one hand while robbing the health care system of billions of dollars on the other.

The Prime Minister's credibility gap is not limited to provincial politicians; it extends to average Canadians who are being increasingly hit up for health care costs that should be covered by a taxpayer-supported medicare system.

In August, Statistics Canada reported a dramatic surge in out-of-pocket spending by Canadian families on health care; 15% more in 1997 than in the previous year, and even more for lower-income families. Clearly, there's an urgent need for the next federal budget to take bold steps to reverse its underfunding of medicare, which is leading to increased privatization.

Unfortunately, the increase in transfers announced in the 1999 budget barely begin the process of reversing the damage done by federal transfer payment cuts. At the current rate, transfer payments will reach $15 billion by 2002-03, which is $7 billion less than the 1995-96 rate if adjusted for inflation and population growth.

We're calling on the federal government to restore transfer payments to the provinces to the 1994-95 levels and to move towards a federal contribution rate of 25% of total health care expenditures, up from the current level of 10%. You'll recall that when medicare was first established, it was a 50-50 cost sharing. We've moved quite far away from that.

Restored funding must be accompanied by a legislative agenda that modernizes and expands medicare. Most urgently, we require a community and home care act fitted with principles similar to those in the Canada Health Act and designed to cover the increasing number of health care services delivered outside of institutions and outside of doctors' offices.

We also need a national drug plan as an initial step in integrating prescription drugs as fully funded components of our public health system. They make up the fastest-growing cost in our medicare system.

Other neglected social investments that impact on the health outcomes of Canadians must be addressed in next year's budget. We support the government throne speech commitment to address the national disgrace that is child poverty in this country, but we're very concerned about extending such 1999 budget measures as the national child tax benefit. It discriminates against many poor families and it's clawed back, in most provinces, for families on income assistance.

Child poverty is a consequence of poor families. Budget measures must address that reality directly. The federal government must renew its commitment to poor children by ensuring that no family's income falls below 60% of Statistics Canada's low-income cut-off and then increasing this floor to 75% over five years.

Our union also supports the Canadian Labour Congress proposals to improve employment insurance by increasing coverage to 70% of the unemployed, increasing benefit levels to 60% of weekly earnings, and repealing the divisor formula and intensity rule.

This is also a very serious women's issue. Since 1996-97, 26,000 fewer women, or 10.7% fewer, were given layoff benefits. That's as a result of the eligibility criteria increasing from 15 hours to 35 hours in order to get benefits. That's a real problem, because women are the hardest hit with family responsibilities—elder care, child care. For women under 35, there was a 16% reduction in those benefits.

This type of policy is wrong, especially after the amount of money that was clawed out of employment insurance. It has to be changed.

We also need a federal commitment to national child care based on national principles. Experts agree that quality child care significantly enhances healthy child development and is more effective when delivered as a universally accessible program rather than targeted for children in poverty.

We also urge the government to deal with the disgrace that is the homeless in this country. Libby Davies, the MP for Vancouver East, has suggested in a bill before Parliament that 1% of budgetary spending be targeted toward affordable housing. As health care workers, our members can attest to the fact that the crisis has reduced lifespans, with increased rates of illness and higher levels of chronic disease. This country must address the social determinants of health care if they want to get any handle on preserving quality medicare.

• 1700

So we urge the committee to resist the calls for broad-based tax cuts that work largely to the benefit of high-income individuals. It's critical that the government maintain its revenue base and repair and improve social programs. Instead we support the alternative federal budget's call for refundable tax credits better suited to providing tax relief to those who really need it, regardless of whether or not taxes are owed.

Finally, I urge members of this committee to argue forcefully for the exclusion of health, education, and social services from next week's World Trade Organization millennium round talks in Seattle. We already have serious concerns that client privatization efforts would lead to incursions in public health care by American corporations under NAFTA's chapter 11, and we have several examples of how appeals under that chapter have led to the devastation of environmental standards and the right of Canada to self-determine what we are as a country. So health care should not be included, because what we see is a commercialization of our whole medicare system.

Thank you very much.

The Acting Chair Mrs. Karen Redman): Thank you, Mr. Muzin.

I'm now going to go to Mr. Jones. Do you have some questions?

Mr. Jim Jones: Yes, I do.

I thought you were the president of the hospital association, and you didn't cover—

Mr. Fred Muzin: Hospital Employees' Union.

Mr. Jim Jones: Okay. Anyway my question is, first of all, to Tony.

I just don't understand the arrival of a duty-free outlet at Canadian airports. What does that really mean then? If I came in from the U.S. I could stop at a duty-free and pick up some goods to consume?

Mr. Tony Gugliotta: That's correct. Before you go through Canada Customs and Immigration there would be an arrivals duty-fee store prior to that process and you would be able to buy duty-free goods before you enter into Canada. What that does is for the Canadian traveller who is going to purchase those duty-free goods in the U.S. or in Asia, knowing they can buy those goods in Canada before they go through customs, they would defer that purchase in Asia in order to buy them in Canada.

Most countries in Asia have arrivals duty-free. It's very common in terms of airports around the world. The fear in terms of why it hasn't been placed in Canada is that people arriving would make purchases and therefore they wouldn't be buying those goods in the retail sector in the Canadian economy. What we're saying is those people would be buying duty-free goods that they otherwise would be buying in the U.S. or in Asian airports on their way back to Canada, and so we're losing sales that we could be enjoying in Canada to other airports.

Mr. Jim Jones: Good. Thank you.

Mr. Barrett, in your comments you mentioned something about a 27% corporate tax, but we're hearing that the corporate tax rate in Canada actually is 43% in comparison to the U.S.'s 39%. So I don't know what your 27% is referring to. Are you referring to the overall taxes collected, that corporate is 27%?

Mr. Joe Barrett: You know, I'm not an economist, but the one thing I have been able to find out is that there are various ways of measuring these by-lines that we hear all the time—productivity and corporate tax rates—and it's possible the KPMG study is measuring them in a different way than the study you referred to.

Mr. Jim Jones: The Mintz report.

Mr. Joe Barrett: Yes. Well, maybe this is for the economists to fight it out. But this study is an annual report that KPMG puts out to show foreign investors the attractions to coming to Canada and the corporate tax rate they claim to be one of the most favourable of all the western democracies.

Mr. Jim Jones: As we head into the new millennium and especially in the knowledge-based economy, companies create a lot of jobs but they're going to go to where there's a favourable tax jurisdiction. Right now Canada's ranking in the G-7, other than Italy, is it has the highest taxes. Other countries are cutting corporate and business taxes. Some lately have even cut them down to 31% to 33%. Today, especially in the knowledge-based industry, capital has no conscience. They will go to where they get the greatest return on investment.

• 1705

If we're continually going to finance more social-type programs rather than saying it's really the individual's responsibility to either pay into those types of programs versus the corporation—who really creates the jobs? Is it business and corporations or is it people?

Let's focus on the U.S. Their economy is on fire. They're at 4%; we're at 7.2% or 8%. It sounds like it's maybe a soft 7.2%, so it's probably 8%. If we're going to get our fair share of the growth, we're going to have to have a tax structure that is more in line with the U.S. to attract the expansion of these companies to invest here, both in manufacturing and—I'm talking knowledge-based now—in programming and research facilities.

Mr. Joe Barrett: It's very interesting to talk about this because I think this is the hottest topic in the country. How far has Canada gone in building a social safety net and how far have we retracted and retreated from where we were in the seventies and where we are, say, in comparison to the Scandinavian countries and the United States? Once you open up this whole topic, it's a Pandora's box. You can't talk simply about taxes without talking about the impact on life quality and living standards.

I think it's important to give some recognition that in the United States, the hours of work have increased on average 247 hours per married couple from 1976 compared to 1989. The wages for white-collar and college graduates were stagnant over the period 1989 to 1996. There are less secure jobs offering fewer benefits. Yes, they have a very low unemployment rate compared to ours, but what kinds of jobs are they?

More U.S. citizens were poor in the mid-1990s than in the late 1980s. An astonishing 40% of the poor in the United States had incomes that were 50% below the poverty line. Again, I want to refer back to wealth studies. Statistics Canada will be talking about wealth in upcoming studies.

I guess the holy grail for us on the left side of politics is that interest rates had to come down and had to come down quickly in order for us to recover quickly. Jim Stafford, the economist for the CAW, has actually opened up the whole idea that it's possible we've now gone and put so much money into this investment structure—if you look at where we were in the seventies and eighties—and the money is not actually being invested in the real economy; it's just all paper money that's being recycled and recycled.

It's more profitable for somebody who wants to go out and invest their money these days and put it in bonds and other paper than it is to put that money into, say, starting up a factory and purchasing all the machinery and hiring a labour force and training that labour force. You get 5.5% back on that type of an investment and you can get 8% or 9% back on the paper investments. I'm not an economist. There's something wrong in the country. Maybe it is a much bigger thing than Canada can do alone. The IMF comes to us and puts the conditions: we want you to do this or you're not going to be able to borrow any longer.

I don't need to tell you, anybody can see we're in much worse shape here at the end of the century than we were in the sixties and the seventies in terms of income distribution. I think we have to do everything we can to turn it around. One of the main ways to kick-start it is the infrastructure program, the quality of life program the municipalities are talking about. What your government did in the first few years—these are crucial just to bring some hope into people's lives. It's one sure-fire way to get people back into training.

• 1710

I can't really speak for all of the other tax measures you can bring in. It's possible that for the other Holy Grail, the RRSPs, we'll have to revisit it. It's costing $15 billion a year and only 30% of Canadians actually take advantage of it. Most Canadians don't have the money at the end of the year to invest in that.

Again, I return to what I said at the end of my presentation: why are you guys in the game? You're in the game not just to meet some ideology that's being pushed on us from above. We're all in this together to make the country work, to make it work for everybody. When we leave after our 30 or 40 years, I hope we can look back and say that our contribution actually helped average Canadians get through life a little more easily.

Yes, it is a difficult problem. A few years ago when we talked of GDP and compared our GDP to that of the U.S., we always took a 10% rule. I would venture to say that for the GDP of Canada compared to that of the U.S., when you put the Canadian GDP back into U.S. dollars, we're closer to the 6% to 7%, so somehow we're slipping. There is something wrong. I don't have the answers, but I'd like that question...and when we talk about Mr. Klein, one of the examples he talked about was how he was going to go to a privatization type of hospitalization scheme.

This hospital happens to be in Markham, which is not in my riding but in Elinor Caplan's riding. I know quite a bit about it. It's the Shouldice Hospital, which has been there for 40 years and does about 3,000 hip transplants a year. They're done in the same way as if you were going to a hospital; they're just charged through the hospitalization program.

If he's talking about those types of services instead of sending people to the U.S., I think this is a good deal. I don't believe he's talking about additional charges. He's just talking about having hospital facilities that could be owned by the private sector. What's wrong with that?

Mr. Fred Muzin: There are a number of things wrong with it. The basic premise is that privatization is out to make money. Those are taxpayers' dollars. They should not be used for personal profit. They should be invested into the public system.

The reason patients are shipped to the States is that the public system has been underfunded, in no small measure because of the lack of federal tax cuts. Study after study has shown that when you have a parallel private system, the public system suffers. In effect, you have a system just for the rich.

Mr. Jim Jones: I was coming down on the elevator today in this hotel and got on at the 36th floor with two ladies. It turned out that one lady was the other lady's mother. I asked what they were doing here and one said that she was here for eye surgery. Where was she from? She was from Dallas, Texas. The reason she had laser eye surgery here is that in the U.S. it costs four times as much.

So we have something here that we could probably start to exploit, not as an export but probably from the standpoint of bringing people here, doing health care treatments here, and making a profit out of it. What's wrong with that?

Mr. Fred Muzin: First of all, that presumes we have excess capacity in our health care system. We should invest in the public system and make sure that we reduce waiting lists, that Canadians have the kind of health care they deserve.

In the States, their kind of system has 44 million Americans with absolutely no health care coverage, and because health care benefits are tied to employment, on any given day it's more likely that there are about 66 million Americans with no health care coverage. The richest country in the world cannot provide adequate health care. So it may be fine for this one individual to be able to come up from the States, but you have tens of millions of Americans who will never get any health care coverage—even if they stay at home—no matter how long they wait. There's a fundamental problem.

We should not just use it as a marketing tool. It's called social consciousness, you know. If we're going to have a civil society, one of the things we have to have is adequate health care—along with environmental standards, public education, public pensions, etc.

But once you open up the field...and already, 30% of our health care system is privatized. The big encouragement is to extend it in home care. A lot of that is the result of government underfunding. Especially when you get into extended and long-term care and social services...the seniors have the least ability to defend themselves, to advocate for themselves. It's not very nice when you have an 80-year-old looking after a 90-year-old at home without proper home care.

• 1715

We have a lot of issues in this country, and we have to look at innovative ways to improve and expand our medicare system—long before we talk about marketing it to Americans who could probably afford the health care.

Mr. Jim Jones: I think what you said was key: we have to look at innovative ways to figure it out. We only have x number of dollars to go around. Back in the early part of this decade, especially in Ontario, the health care system wasn't sustainable. We could not afford the direction in which it was going. We have to look at new ways to do the same needs that we have today.

Mr. Fred Muzin: I think part of it is taking a look at the kind of care. There's a lot more community care, certainly home care...the demographics, the aging population. People don't want to be bound into facilities or hospitals. They'd much rather be at home, but there's no point sending people home or having drive-through hospitals if you don't have the support systems in place.

It would be very difficult to convince us that in 1999 the country cannot afford health care. We're richer and better educated than we've ever been. It's a matter of budgetary choices. I think Canadians are very committed to medicare, for good reason.

Our system has to be improved and absolutely changed and reformed. Things like the sellout on Bill C-91, the drug patent legislation, should not have been done by this government. If you're looking for money, that's one area where you could have saved money.

There are also, as you say, the social determinants of health. If you want to control health care costs, then you don't have 20% child poverty in this country and you don't have people living in cardboard boxes on the streets of Toronto or freezing to death in the cities. That simply doesn't make for good health care. Ultimately people in those kinds of economic situations will cost your system a huge amount more, and they will be a drain on the system because we're not looking after them as people.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Muzin.

Thank you, Mr. Jones.

I'm going to ask a quick question of Mr. Gray and then go to Ms. Leung for the final questions.

You make a really compelling case for Fort Nelson and for what the infrastructure program could do for Fort Nelson. Were you able to have any projects in the past through infrastructure programs?

Mr. Dan Gray: Yes, we were. That's how most of it has been funded in the past, but of course in recent years that funding has been cut dramatically. Now we're looking at significant increases in one base of taxation only, which is what any municipality has: property taxes.

The Acting Chair (Mrs. Karen Redman): Will Fort Nelson be able to come up with this one-third if it is the same model that was proposed the last few times?

Mr. Dan Gray: Without a doubt.

The Acting Chair (Mrs. Karen Redman): Without a doubt?

Mr. Dan Gray: Absolutely.

The Acting Chair (Mrs. Karen Redman): Without raising your taxes 90%?

Mr. Dan Gray: We certainly won't have to raise them 90%. Taxes will have to increase, of course, for those expenditures, but it will be significantly less and certainly not so onerous. But you know our constituents will be up in arms.

The Acting Chair (Mrs. Karen Redman): Thank you.

Ms. Leung.

Ms. Sophia Leung: Thank you, Madam Chair. I just want to follow up with Mr. Muzin. Because our government is compassionate and interested in Canadians' health, we have allocated $11.5 billion for health care for the five years. Do you know about that?

Mr. Fred Muzin: Yes.

Ms. Sophia Leung: Then, of course, again what we're concerned about are the poverty and homelessness groups. We appointed Claudette Bradshaw to look after that. She travelled across Canada to look at the problems. Now she has made her recommendations and has worked closely with the groups to develop a workable plan. For myself, I am also very interested in the downtown east side and have made different visits. I just want you to know we also are all working for the same purpose: to improve people's quality of life.

I have a question directed to Dr. Grace. I have looked over your report. You are a very strong supporter of R and D, research and development. Yes, I think you know this government has been supporting that. Of course you know we have established an Innovations Foundation, which started at $800 million and has now been increased by another $200 million. That's $1 billion. By the way, as you know, Dr. David Strangway, our former UBC president, is chair. At the top, we established CIHR, the Canada Institutes of Health Research. We all know that.

I do share your concern you pointed out about the student loans. We're all trying to help if we can.

• 1720

You commented about the graduate students. Usually they can be TAs, teaching assistants. Does that no longer exist?

Dr. John Grace: Being a TA typically brings them something in the order of $2,000 to $3,000 a year. So being a TA is helpful, but generally it's simply not enough, and that $2,000 or $3,000 would be to assist approximately 12 hours per week through the two academic terms. So it's certainly not full-time, and of course the more they work, the less time they have to study. So it's helpful that we do require more scholarships and so on to help them.

Typically now graduate students, by the time they've finished their studies, are in debt anywhere between $50,000 and $100,000, and it may take them years and years before they can pay that off. That means some of our most able students simply don't go on to do graduate work, because they fear that debt and they have family responsibilities, etc.

Ms. Sophia Leung: Thank you.

The Acting Chair (Mrs. Karen Redman): Can I be allowed just one final question, Dr. Grace?

I have two universities in my community, and a representative of WLU pointed out to me the aging cohort of the faculty and how Canadian universities have not had money or made succession plans. It certainly involves the graduate students, and it's an international problem, not just a Canadian problem. I wonder if you would share with us any thoughts you have about that problem.

Dr. John Grace: It's a severe problem. I remember back in about 1990 there was a projection that some of the major universities such as mine were going to have a number of people retiring before the year 2000. Well, those people have been retiring, but very, very few of them have been replaced. The result is that faculty strength has gone down considerably. All departments are smaller than they were 10 years ago, and of course we've had more student numbers in that time. So we're all trying to work harder and do more with fewer resources.

It is going to happen, and it has to happen, in the next decade surely, that we're going to begin to replace these people in large numbers. So there's hope there, if you like, for these graduate students, the ones who have wanted to go into faculty positions. Of course not all graduate students go on to faculty positions, only a certain proportion of them. More will be taken into universities in the future, but unfortunately I think it will happen a little bit like in the 1960s: suddenly the floodgates will open and we'll all be scrambling to hire them, and we won't necessarily hire the highest-quality ones. There will be a lost generation out there.

So we'd like to try to spread that hiring over as many years as possible. In Alberta they've started to do that, but that's the only province where massive hiring is going on in the university system.

The Acting Chair (Mrs. Karen Redman): It strikes me that one of the things the government has done and can continue to do is provide some kind of research and development funding. You talk about grants and scholarships to graduate students so that they stay in the educational stream, and we do have the best and brightest available to us at that time. Is there anything else, in your estimation, that needs to be done?

Dr. John Grace: Certainly it's a wide problem, because on the one hand you're talking about people who are going on and studying, and on the other hand we must have the opportunities for things they can do—in other words, the best equipment and so on—so that they're really being trained in a way that will put them at the leading edge. In the knowledge economy, if we're not competitive, then they're not going to ultimately be successful in many of the things they do.

So it's a wide problem. We have to have opportunities for them to work on and scholarships to support them at a reasonable level. They don't expect to be rich, but they do expect at least to be able to scrape by during those years, so that in the future there's hope as well that they can obtain these best positions and really contribute to the economy in the future.

The Acting Chair (Mrs. Karen Redman): I'd like to thank every panellist-witness who came today. Thank you very much for your thoughtful presentations. We will take these into consideration as we write our report.

The meeting is adjourned.