FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 25, 1999

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[Translation]

The Vice-Chairman (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): In accordance with its mandate under Standing Order 83.1, the Committee resumes its Pre-Budget consultations.

[English]

This is the 30th meeting of the pre-budget consultation process. I'd like to welcome our guests and remind them, as they've been forewarned, they have five to seven minutes to get their points across, and then we'd like to leave ample time for members to ask their questions.

I'd like to begin with the National Anti-Poverty Organization and welcome Laurie Rektor, its executive director; and Mike Farrell, its assistant director. Welcome, and please make your presentation.

Ms. Laurie Rektor (Executive Director, National Anti-Poverty Organization): Good afternoon. You've already saved me part of my speech, so I should get through in less than five to seven minutes.

You have our submission, and this year you received them in advance. So I thought I would depart a little from what's in our submission and talk not so much about facts and figures but about perspective.

NAPO represents the 5.2 million Canadians who are living below the low-income cut-off line. We're governed by a board of 22 individuals, who are either currently living in poverty or have significant life experiences of poverty. We're often referred to as the voice of the poor. This afternoon I want to talk about the voices we hear, the people I represent, and the issues they're concerned with.

We don't believe poor people are a special interest group. They are Canadians who, for a variety of reasons, are not benefiting in an equal and just way from the privileges our Canadian society brings to the majority of our citizens. Poor people's voices are usually not among those the non-poor population have the opportunity to hear from, or they aren't very well understood when that opportunity arises.

I'd like to give you an example of what I mean by that. NAPO is contacted fairly frequently by the media, and recently, in Ottawa, we've seen two protests against the homelessness crisis in this country. We had a lot of media calls at the office about that, and what people most often wanted to know was why the people protesting were so angry. This illustrates for us the lack of opportunity for poor people's voices to be heard.

The anger isn't new anger. Poor people and social activists have been warning and accurately predicting what the effects of cuts to social programs would be for a very long time. They've warned and warned, and the predicted crises have now hit. Understandably, people are angry that their voices haven't been heard. In addition, they are angry about the results they're seeing.

People living in poverty have paid dearly and disproportionately over the last decade, with their financial and social security, to eliminate the deficit. Few have heard, as their voices were raised in concern and protest, as cuts were being made. The deficit was largely eliminated through cuts to program spending—approximately 75%. The social safety net has been systematically shredded, and poor people will continue to suffer unless the federal government takes a leadership role in the reweaving of that net.

In addition, the cuts in the spending have also been accompanied by a shift in attitudes to poor people. There's been increasing intolerance in the general population and, for some, open disdain and hatefulness toward people simply because they're poor. This shift in attitude makes it even more difficult for the voices of the poor to be heard and respected.

NAPO believes it's time to start listening to the voices of poor people. We believe that poor people speak for the majority of us. Social security programs weren't developed solely for poor people; they were established for all of us. Healthy people don't question why we have universal health care, so why do we listen when wealthy people question income security? None of us is immune to the life-changing events that can lead to poverty, therefore we have a responsibility to ensure that the protections we value will be there for whoever needs them.

We understand that as members of Parliament and members of this committee, you listen to people who come from many perspectives. Today I'm asking you to carefully consider the voices of the poor. In many ways, they are the conscience of this country. They may not be the easiest voices to listen to, but their message is significant. The budgetary and policy proposals they have are of benefit to all Canadians.

This committee may be more familiar with a different voice than the voice of the poor—the voice for tax cuts. This voice is very articulate, loud and well organized. However, it is also selfish and self-serving. It is also not the voice of the majority.

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A recent Ekos survey found that only 19% of people felt that government should emphasize tax cuts in the upcoming budget. Our written submission provides evidence that Canada's recent fiscal crisis was the result of tax-cutting measures initiated in the 1970s. A similar course of action at the end of the century will have the same results.

NAPO is concerned about a wide variety of budgetary issues as they impact on low-income Canadians. In our submission, however, we make only three specific recommendations.

We ask the federal government to work with the provinces to develop principles for the delivery and administration of social assistance programs that will ensure that the basic needs of any Canadian in need are met, and that the federal government provide adequate funding to ensure this.

We support the 1% solution, which is the solution that asks for an additional 1% of budgetary revenues to be allocated to improve the provision of the basic housing requirements of Canadians.

Finally, we ask that if tax cuts are considered at all, priority be given to measures that will benefit low-income Canadians. These would include things like raising the value of the GST credit, indexing the GST to inflation, and raising the threshold at which low-income Canadians begin to pay tax.

I hope I haven't gone over my time. We'll be happy to answer questions later.

The Vice-Chair (Mr. Nick Discepola): Thank you. You've been very disciplined.

I'd now like to call upon Morna Ballantyne, managing director of national services; and Jane Stinson, director of research, from the Canadian Union of Public Employees. Welcome.

Ms. Morna Ballantyne (Managing Director, National Services, Canadian Union of Public Employees): Thank you. We'll also try to be brief and succinct, since we only have a few minutes before you. We also made a written submission to the committee in September.

CUPE is Canada's largest union. We represent 475,000 Canadian workers. Our members work in provincial jurisdictions as well as federal ones. We're employed by municipalities, school boards, hospitals, long-term care facilities, social service agencies, libraries, universities, public utility commissions, airlines, and many other institutions that deliver important services to Canadians.

The first thing I want to say is we are in full support of the submission that I believe was made this morning by the Canadian Labour Congress. We're also in full support of the various proposals put forward through the alternative federal budget process.

The main message we want to make, in our few minutes before you, is we think it's time for a major reinvestment in the public sector. We don't want to debate the question of whether or not there's any money to spend. There's growing consensus that the federal government has money to spend. The real issue for debate is what the money is going to be spent on.

What we want to see is a reinvestment in the public sector. For years, federal budgets have brought massive cuts to the public sector and have made massive cuts in public sector spending. It's time to reverse the trend, and it's our view that this is the best way to meet the social needs of Canadians. There are three spending priorities we want to identify in the area of public reinvestment.

First, we believe that federal spending on health and social services needs to be restored to its former levels. It's true that the last federal budget was billed as a health budget, and some money was restored. But the budget did not go nearly far enough, and that is a major priority for us.

The second major priority—and this might come as a surprise to some, because it's an issue we haven't spoken about very much in the past—is water. We believe it's time for the federal government to make a major commitment to reinvesting in Canada's public water systems.

Canada's water systems are in bad need of repair. It's estimated by the Canadian Water and Wastewater Association that over the next 15 years, $27.6 billion will be required to renew the water treatment and distribution systems. An additional $61.4 billion will be needed to upgrade sewers and wastewater treatment. That's a total of $89 billion, requiring an annual investment of $6.03 billion.

This represents a huge liability for municipalities struggling to fund downloaded services on a very limited property tax base. In the past, our federal government has provided assistance for infrastructure though cost-shared arrangements with provinces and municipalities. But this year, the federal infrastructure works program ends.

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We know we're not the only organization calling for a new federal infrastructure program; however, where we differ from others is that it is our belief that such a new federal infrastructure program has to be structured to ensure the money is used to keep our water systems in public hands. A new infrastructure fund shouldn't be used for projects that will establish private sector operation and ownership of our water systems.

The fact is that right now we have large global corporations desperate to get their hands on the Canadian water market, and they're taking full advantage of cash-strapped municipalities in their bid to take over our water systems for profit. The track record of privatized water systems shows that privatization is not the answer. A Government of France report revealed that over 5 million French citizens were supplied with water with unacceptable levels of bacteria when water was privatized in that country. Générale des Eaux, the major corporation, was found guilty in 1994 of supplying water in France that was unfit for consumption due to excessive pesticides and nitrates.

We would also expect that if we allow Canadian water systems to be privatized, we'll see significant price hikes. That was the experience in Britain when water was privatized there. Prices skyrocketed by up to 450%, with an average price hike of 67%.

Privatized water systems have often been found to be unreliable. We have an example very close at home, in Hamilton-Wentworth. In December 1994, the Regional Municipality of Hamilton-Wentworth signed a ten-year contract that transferred operation, management and maintenance of water sewage systems to Phillips Utilities, which has since been bought by a major American company, Enron Corporation, and Azurix Corp. In the next management corporation year, 180 million litres of sewage spilled into Lake Ontario and backed up into the homes and businesses in the region, including the basements of three hospitals. The incident occurred at the same time when there was a cut in the workforce and poor maintenance by this private company.

Experience shows that the public sector can finance capital infrastructures more cheaply than the private sector. With few exceptions, governments can borrow money more cheaply than corporations. Because they're more stable than even the largest corporations, even large and medium-sized municipalities pay lower rates in interest than corporate borrowers.

Affordable, high-quality, and publicly operated water services are absolutely essential. They're too important to be sacrificed to corporate greed and government irresponsibility. We know Canadians feel deeply about this issue. We have many postcards to show you to prove that Canadians feel deeply about it. I'm sure some of you have been contacted by mail, by fax or via the Internet, and this is an issue that we're pressing on.

Very quickly, the third area of priority concern for us is child care. There has been a lot of speculation that the next federal budget is going to be a children's budget, and there have been many suggestions about what the federal government ought to do with respect to children. While we support many of these suggestions, we want to say that for our 475,000 CUPE members, the most important initiative that the federal government could take to improve the lives of children and their parents is to act on the long-standing promise to put in place a national child care program. I can tell you that this is a question about which our members are passionate, and they too are collecting thousands and thousands of signatures calling for a child care program now.

In the last year, we've watched the provincial Government of Quebec do what we knew was possible. That government has put in place the beginnings of a public, accessible, not-for-profit, affordable child care program for the citizens in that province. It's doing so at tremendous expense, and there have no doubt been many problems and obstacles that the government has overcome. But the point is that we finally have the beginnings of a child care program that meets the needs of children and of their parents. This initiative must be broadened. The only way it's going to be broadened and made accessible to those of us who do not live in Quebec is for the federal government to take a leadership role, to put some money out, and then to sit down with the provinces to work out how it will be done.

Our federal government signed a social union agreement with the majority of the provinces. We have lots of concerns about this framework, but we also believe it offers a forum for the federal government to take action on child care. Our demand is very simple. Children can't wait. The federal government has the money and the opportunity. We need child care now.

The Vice-Chair (Mr. Nick Discepola): Thank you very much.

I would like to now call upon and welcome the Canadian Housing and Renewal Association, and I ask its executive director, Sharon Chisholm, to make her presentation.

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Ms. Sharon Chisholm (Executive Director, Canadian Housing and Renewal Association): Thank you.

The Canadian Housing and Renewal Association, CHRA, believes in the right of all Canadians to a decent, affordable, safe house that they can live in, raise their families in, and have a life in. We've been at this business for 32 years, and our members include municipalities, municipal officials, provincial officials, community housing groups, and many others with an interest in housing. When there were national social programs around, it meant for us that we would work to improve them. Now that there aren't any and we're in some kind of transition, it means we're working to find a new way to bring housing to Canadians.

By now you will have heard from a number of groups on the critical need for the federal government to reinvest itself into a role in the provision of affordable housing. The Federation of Canadian Municipalities has presented a comprehensive plan to ease the housing crisis. The National Coalition for the Homeless put housing back on the public agenda. The Toronto Disaster Relief Committee is another, and that's just to name a few. They've all reminded you of the critical importance of this matter. I heard from them that your responses have been encouraging and positive.

I want to tell you that our members were significantly involved in the preparation of the housing policy options paper, and that we heartily endorse its recommendations. Most importantly, I should say the problem has a magnitude that cannot be ignored. We're not in favour of small, one-off solutions. The problem must be met with significant reinvestment. At a minimum, 20,000 new affordable housing units have to be produced annually for at least ten years.

Yesterday we heard of the growing need—and, I might add, growing support—for a national children's agenda. Campaign 2000, of which CHRA is a partner, has stated that a minimum of one billion new dollars must be invested annually to create affordable housing. Again, they said we need at least 20,000 new units of social housing so that children growing up in poverty will not have the burden of frequent moves and homelessness. They recognize that living with your family in one hotel room can have devastating effects.

Minister Bradshaw crisscrossed the country, meeting with many frontline workers and the homeless themselves to get a sense of how they survive, how services are provided to them, and who they are. No one can deny her sincerity and concern for the homeless, nor her respect for the community-based groups that attempt to meet their basic needs. But now is the time for action. Canadians have heard enough, and surely you have heard enough on the extent of the problem. We have the resources to solve the problem, and if we decide to do nothing, we are sure to condemn many in Canada to the margins of society, and many more to homelessness.

Health has been described to me as the ability to participate, to participate in one's community, in the workforce, in our educational systems, to have friends, to have colleagues, to have family supports. Nothing matters as much to health as the nature of our relations to others—not genes, not provincial health care, not lifestyle, not exposure to hazards. The corrosive effect of denying people this right can be seen in the growing alienation and isolation of many groups in society. Housing is an anchor to the ability to participate. It is the anchor to good health. Housing is right up there with meaningful relationships and meaningful jobs as a determinant of good health.

Canada is a country that promotes social cohesion and encourages a sense of community. The provision of good-quality health care is a basic right that we all recognize. Yet for good health we need power over our lives, we need a sense of identity, and we need some status within the community. We can't have this without a stable and affordable roof over our heads.

At CHRA, we know that a new way of doing business is needed, but there are already many good examples of how to do it. In British Columbia, for example, a yearly allocation of 600 units of social housing—an allocation that remained in place after the federal withdrawal in 1994—has turned into 2,400 units of housing due to the ingenuity of participating cities and community groups, and the new resources that they brought to the table. We see similar success in Quebec, where renovation of existing rental stock and the involvement of the community sector, the GRTCs, is bringing about a renaissance in social housing. Other provinces are doing very little, or in some cases nothing, because either they don't have the resources or they don't consider housing a priority. How long do we really think B.C. and Quebec will be able to carry on some activity while their neighbouring provinces do nothing?

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The need for federal leadership, coordination, or involvement, call it what you may, the need for the federal government to reassert itself is pressing. We present you with our housing works proposal—it was provided to you a few months ago—which calls for a non-profit housing foundation.

On its own, the foundation will not produce the numbers needed to address the magnitude of the housing crisis, but we believe it will do two things very well: First, it will provide an opportunity for the encouragement of innovation and partnership, bringing many new players and skills to the table; and secondly, after three years of federal contributions, and we're asking for $200 million a year for three years, the foundation will be self-sustaining, with the ability to grow when there is an interest and contributions are increased.

But even without new contributions, it will be able to carry on, giving hope to communities that they can appeal to a foundation for help in getting their projects started. This sense of hope is incredibly important as we see groups struggling across the country to do something to relieve the desperate shortage of housing.

So why should a federal role in housing be your priority? Why should it be number one in the report that I know you'll be taking back to Minister Martin? I think it's because you care about an inclusive society in which we all have certain rights, you believe Canada needs to be more competitive in the next millennium, and you know how important it has been to you to have a place to go home to at night.

Without some form of help, 18% of Canadian households cannot house themselves. We are willing to help the majority in Canada by giving them tax concessions on the sale of their homes, by working through government to make sure building materials are safe, and by making sure their homes are built within adequate standards. Why can't we do the same thing for the other 18%?

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you very much.

You show exemplary discipline. Everybody is staying within the seven minutes.

Next we'll have representatives from the Canadian Life and Health Insurance Association. I welcome Mr. Daniels, its president, and Mr. Witol, its vice-president, taxation and research.

Mr. Mark R. Daniels (President, Canadian Life and Health Insurance Association Inc.): Thank you, Mr. Chairman.

In your letter of August 10, you identified five areas of focus for the committee's pre-budget consultative process. In response to your letter, we forwarded a submission, which you have in hand.

For my purposes now, I'm going to confine my prepared remarks to selected comments on three of those five areas of focus, namely, the process of budget-making, a few remarks on tax reform, and a remark on an element of the social infrastructure question.

With respect to the process of budget-making, it's our industry's view that the committee's pre-budget consultations play an important role in the process and ensure the federal budget more broadly reflects the priorities of all Canadians. On this basis, we strongly endorse the consultative budget-making process of recent years and urge that it be maintained. Moreover, we also urge that this committee maintain its central role in the budget-making process. Recent budgets have made it very clear that the Minister of Finance listens carefully to the recommendations of this committee.

One particular example of this committee's contribution, which is of particular interest to our industry, is in the 1998 budget initiative implementing this committee's recommendation to remove tax impediments that discouraged unincorporated small business from obtaining supplementary health and dental coverage. You'll remember that well. Of course this is only one of many examples that illustrate the substantial contribution this committee has made in recent years to the overall budget-making process, but clearly the model works well and it should be maintained.

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Turning briefly to the subject of tax reform, my comments here are on the structure of the tax system, not the level question, which of course you're hearing a great deal about. Our industry supports very much the recommendation contained in the committee's pre-budget report of last year, which stated that:

[an] important consideration is to give ourselves the most efficient and effective tax system possible. It could be argued that our overall competitiveness is harmed by the tax system as it is configured.

As this committee will be well aware, the MacKay Task Force on the Future of the Canadian Financial Services Sector concluded in its report:

capital taxes make our regulated financial institutions less competitive and create incentives that are inconsistent with sound prudential management. We therefore recommend that special capital taxes on regulated financial institutions be eliminated.

This committee also concluded in its report The Future Starts Now that the committee supports the principle of relying more on profit-sensitive taxes and less on capital taxes, especially when capital is needed to ensure safety and soundness.

Pursuant to those conclusions, the Minister of Finance responded in his June policy framework paper that the government will commit to a review of the capital tax regime for financial institutions. In this context, we would encourage the committee to continue to urge the government to take a leadership role in reviewing the levels of capital tax being paid in the financial services sector. As you know, it's a troublesome tax from a structural point of view, and we would urgently like to see it changed.

One final item on taxation relates to a technical tax matter involving the so-called market-to-market tax regime, which I would like to flag briefly for the committee's attention. It would not make sense for me to deal with any of the details of the tax, but I simply call your attention to the letter I sent in as a supplement to our submission.

Finally, with respect to social infrastructure—and here I just want to make a comment on an element of social infrastructure that's relevant to my particular industry—following the recommendations of this committee two years ago, the government took significant strides in ensuring students had better access to financial resources through registered education savings plans, the so-called RESPs. A further initiative that would improve the availability of RESPs to Canadian students would be to expand the number of financial institutions available to offer RESPs.

The current legislation is outdated in the sense that the Income Tax Act requires that RESPs be legally structured as trusts. The continuing requirement that RESPs take the legal form of a trust is inappropriate for today's plans. The current trust structure precludes life insurers from offering RESPs, although we do offer RRSP, RRIFs, and a whole range of other instruments.

The industry therefore urges the committee to recommend that the legislation relating to registered education savings plans be amended by broadening it to permit non-trusteed contracts in a manner consistent with other savings vehicles. It should be noted that this proposal would not result in any new government tax expenditures.

That concludes my prepared remarks. We're prepared to answer any questions.

Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Daniels.

I'd like to now welcome the Canadian Urban Transit Association, its president and chief executive officer, Mr. Michael Roschlau, and its chair, Mr. Frank McCarey.

Mr. Michael Roschlau (President and Chief Executive Officer, Canadian Urban Transit Association): Mr. Chairman and members of the committee, on behalf of everyone involved in public transit across Canada, I want to thank you for giving us the opportunity to help provide some information in setting the government's financial and fiscal priorities.

We know from the Speech from the Throne that the government has embraced technological innovation as a means of enhancing the lives of Canadians. To prove its commitment to this vision, the government is prepared to invest substantial sums of money out of its hard-won surplus. The committee heard some arguments in favour of a national transportation investment strategy earlier today, but we are here today to remind you of the importance of investments in infrastructure that have clear environmental benefits.

As long as human beings continue to live in urban centres and continue to value multiple face-to-face encounters, urban transit is going to remain absolutely essential in terms of providing universal mobility, access to jobs, access to education, and access to health care. I would even suggest that it is the engine of our real communities in the sense that it provides the actual links, tying together all the different pursuits going on in town and shaping them into a unique physical and social setting. Think, for example, how the Métro transformed the city of Montreal, how the subway transformed the city of Toronto, how the transitway has impacted mobility in Ottawa, or the Sky Train in Vancouver and light-rail transit in Calgary and Edmonton.

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In the Speech from the Throne, the government promised to work with the provinces, the municipalities, and the private sector to reach agreement by the end of next year on a five-year plan for improving this country's physical infrastructure. In a country the size of Canada, that promise can translate easily into simply laying more asphalt. We would like to remind you, however, that over 20 million Canadians depend on transit in urban centres. The federal government has an opportunity in the upcoming budget to demonstrate leadership by making urban transit a key component of the joint five-year infrastructure plan.

Our association has estimated that in addition to the municipal share, public transit will need a further $4.1 billion from the federal and provincial governments over the next five years to renew its infrastructure and to meet a growing demand.

The are four good reasons for the federal government to also make a significant contribution. The federal government has a share of responsibility to ensure the quality of life all Canadians. My colleague, the chair of the Canadian Urban Transit Association and general manager of the Saint John Transit Commission in New Brunswick, will briefly outline the importance of infrastructure funding in support of public transit.

Mr. Frank McCarey (Chair, Canadian Urban Transit Association): Mr. Chairman, there are four key points I would like to make.

All of us have seen the impact of clogged roads in our communities. Road congestion affects both commuters and businesses depending on the movement of goods and trade. Recent studies in Canada and the U.S. have estimated congestion costs in urban areas to be in the order of $1,000 annually per household. In order to ensure that Canadians remain competitive, investment in transit infrastructure is critical.

There is also a strong business case for public transit. Better use of transit can save government and taxpayers many of the hidden costs of urban travel, including road building, maintenance, parking, land costs, policing, accidents, and environmental impacts.

As Canadians we should all be concerned by the social need for public transit. Transit is important to those who can least afford a car—the working poor who rely on it every day to get to work, the aging population, people with disabilities, and students. For those new to the workplace and those trying to escape unemployment, transit is absolutely essential in their ability to access jobs.

No elected official, or indeed any Canadian, should ignore the environmental case for public transit. Transportation is the leading source of greenhouse gas emissions that are expected to cause major climate change impacts in the future. Emissions from transportation are forecast to rise 52% between 1991 and 2020. Transit in Canada should be one of the key public strategies for cleaner air, reducing the risk of climate change from greenhouse gas emissions and helping Canada meet its Kyoto Protocol commitments.

In closing, Mr. Chairman, I would like to make two additional points. First, I would like to remind members that our association was part of the coalition of various groups promoting tax-exempt transit benefits that made a presentation to the committee earlier today. Second, I would like to leave the clerk of the committee additional background information that I hope members will consult as they prepare their pre-budget report to the Minister.

We're also looking forward to answering your questions. Thank you.

The Vice-Chair (Mr. Nick Discepola): Thank you.

From Results Canada, Monsieur Jean-François Tardif, the national coordinator.

[Translation]

Welcome.

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

Ladies and gentlemen of the committee, it is an honour for me to be here today to present the views of Results Canada.

We are an organization seeking to create the political will necessary to eliminate poverty and the worst aspects of hunger throughout the world. As a lobby group, and as a group which seeks to foster the political will necessary to put an end to the terrible epidemics of hunger and poverty, we speak to elected officials and the media.

[English]

We write letters and we try to influence all the decision-makers. To give you an idea, 90% of the letters on foreign aid you'll see in the papers in Canada are written by the members of Results.

My purpose here is to actually defend an increase in the budget, but an increase in the budget for foreign aid that is targeted toward the poorest and really makes a difference in the world.

Many of you may recall that in 1990 at the World Summit for Children, Canada was taking a grand role in pronouncing human development and child survival to be overarching federal goals for foreign policy. But basically since then what Canada has taken leadership in has been cuts to foreign aid budgets. Actually, it has taken an international leadership, because it was leading the pack of donors and now it's actually among the laggards in the international community when compared on the amount of GDP it devotes to foreign aid.

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This of course creates a tremendous problem of credibility on the international scene. But that credibility problem is also compounded by a quality problem, because for every dollar of foreign aid of that reduced budget, only a few cents go for things that really matter for the poorest people on the planet, that is, primary health care that makes their children survive or not survive, and primary education that makes their girls and boys have a future or not. And that's, unfortunately, cents for every dollar.

Just last week, an international official who was in charge of evaluating the international effort on universal access to primary education was basically saying that Canada, in the area of primary education, has been “missing in action”. It's as simple as that. That's not very flattering.

But there are other examples where this lack of focus has been noted. In 1993 there was a report by the Auditor General specifying to this House that Canada's aid program had lost its focus. I quote again: “Canadian commercial and other interests appear to have shaped CIDA's activities as much as the objective of helping the poorest people become more self-reliant.” Well, since 1993 there has not been any great indication of change.

I believe there is, however, some goods news on the horizon. First of all, there is support at the highest levels to overturn the situation. There is support at the prime ministerial level to get more aid. There is support at the ministerial level, with the new minister of foreign aid, or Minister for International Cooperation as it's now called. Minister Minna decided that she would like to make health and education key priorities, so it's also reorientation qualitatively.

There is now growing support by Canadian citizens. Three-quarters of citizens polled, when they are told of the amount they spend, the amount of their taxes that goes to foreign aid, say they want to see that amount increased or at least stay at the same level—that's three-quarters. That's quite interesting in a world that speaks a lot of tax cutting instead.

If you look at the support in the media, there has been since September—and that's only the things I have personally seen—at least 50 different articles, editorials, and letters to the editor in support of an increase in foreign aid. But if you note what those articles have in common, virtually all say they want this to be targeted to an area where a real difference can be made for the poorest of the world.

What are those areas? They are basically in helping health and nutrition. I just want to quote Larry Summers, who as people know, is secretary to the treasury of the United States of America. He says:

Markets alone, without government action, cannot bring us the shared prosperity that we crave. ... Ensuring the availability of basic health care for every child is more difficult than lowering tariffs.

You can increase trade, but if you do not target interventions toward the poorest, they will not receive the benefits. There is no such thing as trickling down.

There has also been some empirical evidence that I think this committee would be interested in, which shows that by increasing investments in health or education internationally you can explain one-half to two-thirds of the growth that has occurred in now-developed countries. This would be true, for instance, for the western countries, but also for Singapore, Hong Kong, South Korea, Taiwan, and Japan. This is all empirically shown by Nobel Prize economist, Robert Fogel. The Asian Development Bank, the World Bank, and Larry Summers have done similar work.

So all this is to say that we need to focus on health and education in the area of foreign aid.

[Translation]

What should the budget contain specifically? To begin, $200 million should be earmarked for a health and nutrition leadership initiative. With $200 million a year, you can achieve extraordinary things over five years.

[English]

This is what, with $200 million, in an initiative that's already designed but unfortunately unfunded in CIDA, one could obtain. This is within five years. And this is what health professionals are willing to stake their reputations on.

So for $200 million, one-tenth of CIDA's budget, one could eradicate polio. You could save at least 250,000 cases of blindness. You could eliminate iodine deficiency disorders, which is the leading cause of preventable mental impairment in the world. You could reduce death by measles by 95% within five years. You could create a new vaccine against pneumonia that would save 2 million lives. You could bring about a drastic reduction in tuberculosis. And you would actually save, all this included, about 4 million lives a year.

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This an area where Canada could take a leadership role, and just Canada's intervention would save half a million lives and, with all the donors we'd bring around, would probably mean 4 million lives saved.

Another initiative where Canada should take the lead is in ensuring that there is access to primary education for girls in the world. Right now 150 million kids, roughly, do not have access to primary education. They're of school age, but they don't know what school is; they do not have access to primary education. Two-thirds of them are girls. If Canada were to take on rectifying that gender imbalance for $150 million a year, it could actually take the lead and wipe that out within five years. That would also have tremendous importance.

Finally, I would be remiss if I didn't mention, since Mr. Nystrom is here, that one of the things we could also see in the next budget is a push to try to gain new sources of resources through a new base that has not been tapped yet and that is definitely worth considering, which is international currency transactions. Mr. Nystrom has done quite a bit of work on this Tobin tax, as it is called, and I feel that would be also worth the committee perhaps making a recommendation for further study on.

So basically we are at a crossroads. We have an unprecedented opportunity to end the needless deaths and suffering of millions by applying what are really proven, low-cost, sustainable measures, and never has this been possible in the history of mankind. Will we take this opportunity or not? I'm sure every taxpayer would support these initiatives if the taxpayer were properly informed.

The end-of-mandate objective of rebalancing the aid budget is something that's achievable, but it really goes to the heart of what we choose to be as a country on the international scene. Are we willing to be a country whose generosity peaked in the late eighties and is now on the decline, or are we a proud and confident country who begins the new millennium with a new resolve to make a difference on the planet?

Thank you.

[Translation]

The Vice-Chairman (Mr. Nick Discepola): Thank you, Mr. Tardif.

From the national office of the Canadian Federation of Students, we would like to welcome

[English]

Mr. Michael Conlon. Thank you and welcome.

Mr. Michael Conlon (National Office, Canadian Federation of Students): The Canadian Federation of Students thanks the Standing Committee on Finance for the invitation to present our recommendations for the 2000-01 budget. I also bring greetings from our 175 delegates who are just across the river in Hull for our national general meeting, delegates from Cornerbrook to Victoria.

The Canadian Federation of Students represents more than 400,000 students at public colleges, institutions and universities across Canada. Our organization is founded on the principle that post-secondary education should be publicly funded and accessible to all Canadians as a measure of the real democratic participation of all members of our society.

In our brief, which you have, we make three basic recommendations, two of which will cost money and one of which will not cost a dime. Our first recommendation is the restoration of federal transfer payments for education in the form of a $3.7 billion infusion in the 2000 budget. We make this call in conjunction with the western premiers and the Council of Ministers of Education, among others. Though we realize that post-secondary education is a provincial jurisdiction, over 70% of the funding for post-secondary education comes from the federal government.

The crisis we have in our universities and colleges in our infrastructure, in tuition fee levels, and the social and economic crisis of student debt is largely attributable to the cuts that began in 1994. Some of them did begin in 1990, but the substantial cuts began in 1994.

Just to put these cuts in perspective for the members of the committee, the $3.7 billion figure we cite represents about 22¢ on the dollar for post-secondary education funding. So our institutions have seen a 22% decrease in funding during a period where enrolment in post-secondary education has gone up by 11%.

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The second recommendation that is contained in our brief is the establishment of a national needs-based grants program to ensure that all Canadians have access to post-secondary education. Though there were some moderate measures in the 1998 budget to help students, such as interest relief and debt reduction, these measures are of little comfort to students in Nova Scotia, for instance, who pay on average $4,400 in tuition fees for basic programs. That's not for graduate or professional programs.

It is our recommendation that if this committee shares, as I think the government does, the goal that all Canadians should have access to post-secondary education, a national needs-based program is the only means of ensuring that those low-income Canadians, those Canadians who for two, three, four, or five generations have never seen a member of their family in post-secondary education, can attend.

It is our sense that such a comprehensive grants program will cost approximately $1.2 billion.

The third recommendation we made to the committee, and the one that will not cost the government any money, is the repeal of the prejudicial 10-year prohibition on the discharge of student loans under the Bankruptcy and Insolvency Act. I can tell you quite generally that this law has generated real anger in our organization amongst our members and caused genuine hardship.

I want to give a little bit of a background of this law and how the law came into effect. In 1997, the government sought to undertake a review of the Bankruptcy and Insolvency Act and carried out what are the normal procedures for legislation and public consultations. Our federation submitted a brief, as did many bankruptcy and insolvency trustees across Canada. Overwhelmingly, the bankruptcy and insolvency trustees recommended the government not institute a prohibition against students discharging student loans, as of course did our federation. However, despite that advice, the government invoked a two-year prohibition against students to claim bankruptcy on student loans.

In the much-heralded 1998 education budget, however, less than 10 months later, with absolutely no public consultation and no public announcement whatsoever—it was buried in the ways and means section of the budget—the government changed that law to increase the prohibition to a 10-year period. Students have the dubious distinction of joining those convicted of fraud in not being able to discharge their loans.

For our members, this law is both pragmatically and ethically indefensible. On the pragmatic side, the goal of the government is to ensure that those who have the means to pay back their student loans pay them back. We find this argument somewhat specious considering that the Bankruptcy and Solvency Act itself already contains such measures. The bankruptcy procedure is not a simple procedure, nor is it cheap. It costs approximately $1,200 on the cheap end to declare bankruptcy. An individual who is petitioning for discharge of debt must demonstrate to the court that they do not have the means to pay their debt. So the argument that somehow students were getting away with declaring bankruptcy when they had offshore accounts, fancy cars or beautiful homes is, to be polite, absurd.

So we call on this committee to recommend to the finance minister, who was instrumental in bringing this law in, to repeal the law. Human Resources Development Canada challenged our organization about eight months ago to demonstrate to them that real hardship was being caused by this law. And I can tell you, we hired a summer student full-time to take calls from students telling stories of what this law had condemned them to. And essentially what it has condemned them to is 10 years of harassment at the hands of collection agents. This law serves virtually no purpose whatsoever, and would cost this committee and this government no money to repeal.

The arguments outlined in this brief are the foundation of our Access 2000 campaign this year. Access 2000 is a broad-based campaign that will reach out to our campuses and communities from St. John's to Victoria, and the goal of the campaign is to make education a social and economic priority. We would argue that right now it is not a priority.

There is great anxiety across the country fuelled by the fact that between 1990 and 1999 tuition fees increased by an average of 126%, and during that same period the average student debt upon graduation grew from $8,000 in 1990 to $25,000 in 1998. For many Canadians, especially Canadians in Ontario, access to education is now defined by the ability to pay rather than initiative.

Post-secondary has long been a symbol of hope and opportunity for Canadians, but that symbol has been tarnished by the withdrawal of federal funding and vision for post-secondary education. The economic imperative of a quality system of accessible education also carries the social message that Canadian society still looks to the federal government to play a key role in ensuring equality of opportunity for all Canadians.

In a recent Ekos poll that I'm sure you've probably heard of many times, 55% of Canadians rank social reinvestment as their number one priority for the federal budget. Only 19% listed tax cuts as a first preference.

Post-secondary education is the key to sustainable employment and a citizenry capable of meaningful participation in democratic society. As Canada enters the 21st century, we're faced with a rich irony. In an economy and in a society that seems to be changing so quickly that it defies analysis, we are forced more than ever to turn to one of our oldest and most traditional institutions, colleges and universities. Canada's future prosperity and social equity depends on the quality and accessibility of post-secondary education. We hope the committee will share that view.

We welcome questions.

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The Vice-Chair (Mr. Nick Discepola): Thank you very much.

Colleagues, I'll go with five minutes. If there's any time left, we'll apply it afterwards, but I don't believe so. Since Mr. Forseth and Ms. Guarnieri have flights to catch, I'll go with Mr. Forseth and then Ms. Guarnieri for five minutes each, please.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Ref.): Thank you, Mr. Chair.

First of all, I wanted to address a question to the National Anti-Poverty Organization.

I see your brief here, and it touches on a lot of important issues related to poverty, homelessness, income equality, and so on. You make some specific recommendations with respect to housing and tax cuts for low-income Canadians, but you have a rather general recommendation on the social safety net. You say that a strong social safety net is indispensable for us to face, for example, the challenges of globalization. Perhaps you could expand on what you would say would constitute a strong social safety net and what changes need to be made to the current system in order to fulfil that goal.

Mr. Mike Farrell (Assistant Director, National Anti-Poverty Organization): I don't think we went into detail because of space concerns and certainly not wanting to necessarily dictate in detail what has to be there. I think very much the important thing for us is that in trying to rebuild what has been destroyed, it's ultimately most important that low-income people are involved in the discussion in the rebuilding process.

I do think there are some basic elements that need to be strengthened. In particular, we have to look at—which is part of our first recommendation—the issue of building some form of national minimum floor that says basically we as a society feel there's a certain amount of income that any Canadian should be able to receive in order, if nothing else, to survive, to meet their basic needs; that we are not going to revert to barbarism, where we can make a decision that certain people we will allow to die because they don't meet certain conditions.

So I think there is a need to get back at least to that point as a starting point, that we will have some sort of floor where we provide a level of income to every single Canadian.

Mr. Paul Forseth: Have you contemplated in this that you're looking at perhaps a federal negative income tax, a guaranteed annual income, or are you just perhaps advocating higher welfare rates under provincial jurisdiction? Where does your emphasis come from?

Mr. Mike Farrell: We are not against a guaranteed annual income. I think the principle is what is important to us. In terms of how it's applied, that is something for which the details could be worked out. But at this point we're just trying to get some agreement on the principle, because even that is not there right now.

I don't know if Laurie wanted to add anything.

Ms. Laurie Rektor: I had something, but it escaped me because I was listening to Mike. So I'm sorry, I don't have anything to add right now.

Mr. Paul Forseth: The Canadian Urban Transit Association talked about advocating more public transit. Perhaps we can agree on your broad objectives, but there's quite a demand for service priorities and expenditures. Everyone's fighting over that limited pie. There'll never be enough resources to go around.

As part of your mix, what is your suggestion of how to create the wealth to pay for your objectives? Certainly just more reallocation and fighting over existing amounts will never change really substantially what we have now as far as our infrastructure mix and transportation are concerned.

So have you addressed the question of, beyond what you want, how we pay for it?

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Mr. Michael Roschlau: That's a very good question, indeed.

There are a number of opportunities. Obviously some would involve allocating portions of existing tax revenue to specific objectives of improving urban transportation infrastructure. Others could involve potential increases in revenues from automobiles.

There's a whole series of potential opportunities. In the current environment, however, we don't feel that increases and new taxes are a political reality. It's a better option for us to look at taking a portion of what's already being collected both provincially and federally in terms of tax revenues from transportation and reinvesting some of that in renewing our infrastructure and providing a more sustainable and more effective alternative to the single-occupancy vehicle in our urban areas.

Mr. Frank McCarey: We are concerned somewhat that an infrastructure program may not recognize that in fact transit is infrastructure. Some people feel that infrastructure is asphalt and sewer pipes, but transit is part of the infrastructure of a city. If a program looks at infrastructure, if they're concerned about some of the points we made, we think transit should be considered as a portion of that program.

Mr. Paul Forseth: I'll end it there.

The Vice-Chair (Mr. Nick Discepola): Ms. Guarnieri, please.

Ms. Albina Guarnieri (Mississauga East, Lib.): Thank you, Mr. Chair.

Your brief starts off with the quote:

For the taming of capitalism through basic social and economic rights was not some act of charity that can be abandoned when the going gets rough.

I think that's a quote we would all agree with around this table.

I was one of those MPs who voted in favour of eliminating child poverty by the year 2000. There was a motion in the House some ten years ago. Of course, in the meantime we've had a great deal of economic turmoil in the early 1990s, which we're emerging from today. We're now in a position to look at this issue with resources rather than simple platitudes.

My question is for Ms. Stinson. To what extent do you feel that poorly designed anti-poverty programs can be self-defeating, causing things like increases in taxes, reduced job creation, lowered economic growth, welfare traps? The question is, really, what approach should the government be looking at so that our investment in anti-poverty programs fuel economic growth rather than undermine it?

The Vice-Chair (Mr. Nick Discepola): I think that question might be addressed to Ms. Rektor.

Ms. Albina Guarnieri: Sorry.

Ms. Laurie Rektor: Unless Jane wants to have a go at it.

Ms. Jane Stinson (Director of Research, Canadian Union of Public Employees): I'll leave it to you.

Ms. Albina Guarnieri: I'll leave it for anyone who'd like to address it.

Ms. Laurie Rektor: The strength of our organization is our board of directors, who are 22 people across the country who are living in poverty. So the short answer to that question is to ensure, as we rebuild and re-weave and reconstruct, that we talk to the people who are living the life of poverty and benefit from their experience.

There are innumerable examples of bureaucratic and legislative changes that are crazy when they filter down to the lives of people who are supposedly benefiting from those changes. Actually, they are very simple to change when you work from the ground up.

Ms. Albina Guarnieri: The fundamental bottom line for me is that the children who are growing up in families where no one works are going to have a hard time being classified as anything but poor. What I was getting at was that badly designed programs that fund passive support for people really work against the poor. Would you agree with that?

Ms. Laurie Rektor: I'm not sure if what is implied in your question is a family, for example, who would not have paid employment outside of the home—is that what you would term passive support?

Ms. Albina Guarnieri: No. I'm just saying to weed out inefficiencies in badly designed programs. For instance, you can have school lunch programs for kids, and we should. If kids are hungry, we definitely should be supplying them with food. But that's not an end in itself, it's simply a band-aid solution to a larger problem.

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What I'm getting at is the essence of the pledge many of us made ten years ago to eliminate all poverty. No child can live in a poor family without being poor, so the challenge for us is to eliminate poverty. We can mask this as a children's initiative, but the reality is that the organizational reality is the only way we might try to achieve that result to eliminate all poverty.

I'm probably sounding very utopian, but that's our ultimate objective.

Ms. Laurie Rektor: If I understand some of what you're saying, I'd actually go back to your example about breakfast programs or lunch programs. Those, for NAPO, aren't good solutions, and poor people tell us that all the time. The answer is giving the resources to the families themselves. We know, for example, that parents will let themselves go hungry before they will let their children go hungry. So the answer vis-à-vis hunger is to ensure that families have the resources to feed themselves.

So again I go back to the response I gave before, and I'm afraid perhaps I'm missing some of the intricacies of your question.

Ms. Albina Guarnieri: No, I think we're agreeing.

Ms. Laurie Rektor: I think Mike has something to add.

Mr. Mike Farrell: The only thing I would add is that part of the problem has to do with the way policy-makers approach the issue of reducing poverty. There's quite a bit of support for a basic assumption in economic theory that if people are getting income from a non-work source, they will choose that income over income from a work source. That's very much a fundamental part of our economic theory.

That's not necessarily a true reflection of human nature. It's important, when we're designing our policies, not to design them based on the lowest common denominator. In fact the large majority of people want to work. It's a question of providing them with the support so that they can make the transition into the workplace, and also making sure there's a supply of good jobs out there that they can choose from.

If they move people from poverty and welfare to a job where they're in poverty, it's not necessarily a good solution. A number of things need to be dealt with, and child care is certainly one of them. To make that transition....

Single mothers who are on welfare are a group that's particularly poorly supported. For one, we have to make a decision about whether or not we're going to support single parents' choice to stay at home and support their children, or whether we're going to provide child care and the assistance with transportation or whatever that's needed so that they can find their way into the workforce.

I think a lot of people aren't aware of how low welfare rates are. They're at a point in this country right now where it's all people can do to survive day to day and pay the phone bill, pay the utility bill. Being able to find a job when you're in that situation is extremely difficult. We have to provide them with a level of income that allows them to find a job, and we're not doing that right now.

Ms. Albina Guarnieri: I'm not insensitive to the plight. Ms. Chisholm mentioned—or she deplored actually—denying participation in the community, if I understood the premise, and that's what I was getting at.

If you have good economic growth, you have a job. If kids are growing up in a home where parents aren't working, they're going to be poor. It's a question of priorities and where we invest wisely to get the better bang for our buck.

Thank you very much.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Do you want to add something, Ms. Chisholm?

Ms. Sharon Chisholm: Yes, I'd like to respond to that.

Being a Maritimer, I think there are a lot of homes that from time to time in the year are homes where there's nobody with paid employment, and they're not considered poor homes. UI reform has made those households poor homes in many ways.

I spoke just yesterday to a policy worker for the New Brunswick government, who said that in New Brunswick, with all of the new minimum-wage jobs—a flood of the them came in with the tax concessions that were offered over the past number of years in New Brunswick—many people moved off welfare into those minimum-wage jobs, even though they took a loss in income to do it. We have to be very careful about saying there isn't the desire to work.

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There's this assumption that it exists more in the Maritimes. This woman was making the argument to me that perhaps it exists elsewhere in Canada, but she hasn't seen evidence of it in the Maritimes, which of course I was glad to hear—not to belabour it.

The other point I want to make is the Caledon Institute's speaking out program, was an excellent way of getting that information. To reinforce your point, there's such a dearth of programs that go about trying to do one thing or another, but when it comes down to the recipients of those programs, if we put a nice training program in place but take away daycare, the single mom can't access that program.

I think we often don't understand how programs affect the people who are trying to access them. If we talk to those people, as NAPO was saying, we might get a whole lot more efficient in how we do things.

The Vice-Chair (Mr. Nick Discepola): Thank you very much.

Thank you, Ms. Guarnieri.

Mr. Nystrom, please. I know you'll be brief, as normal.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Absolutely. I'll be extremely brief.

Thank you, everybody, for appearing. I wish I had more than five or six minutes. I have a couple of very quick questions, if I may. I'll start with Jean-François Tardif.

The one thing you mentioned that really surprised and embarrassed me, as a Canadian, was the drop in our foreign aid as a percentage of our GDP. We used to be way up on top in the days of Lester Pearson and Pierre Trudeau, and even into the Mulroney years. Of the OECD countries, are we amongst those at the bottom in terms of the severity of the cutbacks in the last five or six years?

Mr. Jean-François Tardif: Yes. That's an easy, quick answer. We were among the first third and we've moved into the second half. So we're now officially among the second half of donors as a proportion of GDP.

Mr. Lorne Nystrom: That's really quite a commentary on the country, in view of our history.

Mr. Jean-François Tardif: Exactly. Just so we understand this, at the same time, global foreign aid has been reduced by about 20%. So we've cut much more quickly than everybody else.

Mr. Lorne Nystrom: Have we cut the fastest of any country in the OECD?

Mr. Jean-François Tardif: I think we're competing with Finland, but they've only cut for one year; we've been cutting for over 10 years. So we have the longest track record of cutting and probably the deepest cuts, although we're competing for the deepest with Finland.

Mr. Lorne Nystrom: That's very embarrassing. I think even the chair is embarrassed by that kind of cut.

The Vice-Chair (Mr. Nick Discepola): If you were in a court of law, I'd swear you were leading the witness, Mr. Nystrom. Continue.

Mr. Lorne Nystrom: I have to mention the Tobin tax. I had the honour to present a motion on it in the House last March 23, and it passed by a vote of 164 to 83. It was supported by at least one member of all the parties in the House, including a member of the Conservative Party, three or four Reformers, and the majority of the New Democrats, Liberals and Bloc.

Can you explain very briefly why we should be pursuing this with more vigour in terms of a small tax on currency speculation?

The Vice-Chair (Mr. Nick Discepola): Not hearing any objections, I'll allow you to respond.

Mr. Jean-François Tardif: Essentially, as was mentioned earlier, we can choose to always redistribute a pie that doesn't change very much because the tax base doesn't change much, or we can actually alter the tax base. Over $1 trillion change hands every day, so if there were to be a very minute tax, a fraction of a percent, on that $1 trillion of transactions every day, we could raise hundreds of billions a year. Just to end hunger and poverty on the planet within the next 10 years would take about $40 billion, so we would probably have ten times more than required.

The Vice-Chair (Mr. Nick Discepola): There's only one slight problem with the Tobin tax. Do you want to explain it or do you want me to explain it?

Mr. Jean-François Tardif: There's an issue of compliance. How can we make sure those taxes are registered?

The Vice-Chair (Mr. Nick Discepola): The whole world would have to participate—everybody in the whole world.

Mr. Jean-François Tardif: The whole world might have to participate, except that now, because those transactions are done on the Internet on the basis of a trust system, you have to register all these transactions, and they are compensated in the domestic financial system. So you would be able to track every single transaction and also tax doubly or triply the transactions through the countries that would not participate in the Tobin tax. That would therefore eliminate the risk of leakage.

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Mr. Lorne Nystrom: I think we'll let our Minister of Finance explain it to the chair later on, just to save a little bit of time.

I wanted to ask a question of NAPO. You have a comment here that's also very embarrassing to see, as a Canadian. You say in Newfoundland a single person on welfare has to live on $2,500 a year. That's not a typo in good old Newfoundland?

Ms. Laurie Rektor: No.

Mr. Lorne Nystrom: Are other provinces almost as Scrooge-like as Newfoundland, or is that far away the worst example?

Ms. Laurie Rektor: They're the worst. New Brunswick is not very good, Ontario is coming close, and Alberta is not great.

Mr. Lorne Nystrom: Do you mean Mike Harris' Ontario is coming close—big wealthy Ontario?

Ms. Laurie Rektor: He's not a friend of ours.

That is the worst, and it's not a typo. But for many provinces, what a single person has to live on is sub-human.

Mr. Lorne Nystrom: How can anybody possible live on $2,500 a year?

Ms. Laurie Rektor: We know they're not all living; we know that many people are dying.

Mr. Lorne Nystrom: What is the rate in Ontario? Mr. Conlon's from Ontario.

Ms. Laurie Rektor: A single person gets $520 per month. So after you've paid rent in Toronto—

Mr. Mike Farrell: Maximum.

Mr. Lorne Nystrom: So it's $6,000 maximum?

Ms. Laurie Rektor: Right.

Mr. Lorne Nystrom: I thought there was an economic boom in Ontario. It's still $6,000 a year. That's incredible.

I have a question for CUPE. You mentioned the very important issues of social housing—so did Ms. Chisholm—and homelessness.

The Vice-Chair (Mr. Nick Discepola): Last question.

Mr. Lorne Nystrom: I wonder what your recommendation would be as to how much we should put into the housing budget. You support the 1% solution, I gather. How much would you put into the so-called children's agenda?

Ms. Morna Ballantyne: We support the 1% solution, but you should probably direct the housing questions to Sharon. For this budget presentation, although our written submission covers more ground, we really wanted to highlight the issues of child care and water, as well as health and social service spending.

As far the children's agenda, we believe that child care is the number one priority for a number of reasons. Child care is an extremely important support, not just for poor children. It is definitely a support for poor families, but it is also a benefit that all families and children need. There are lots of studies now that show that children who are fortunate enough to receive the benefit of quality child care do better, regardless of their socio-economic backgrounds.

We support the different positions put forward by a number of organizations in terms of financial support. We're asking the federal government to put forward, I think, $2 million for child care in the next budget, as a start. That would be supplemented by provincial governments through the social union framework.

But on housing you would need to ask Sharon.

The Vice-Chair (Mr. Nick Discepola): Could you repeat the amount? I didn't hear it, Ms. Ballantyne.

Ms. Morna Ballantyne: I said $2 billion.

The Vice-Chair (Mr. Nick Discepola): Okay, thank you.

Ms. Morna Ballantyne: It's actually the same figure as for water. We're asking for $2 billion for water.

[Translation]

The Vice-Chairman (Mr. Nick Discepola): There is a small distinction.

[English]

Ms. Morna Ballantyne: We're asking for a total of $6 billion for water—$2 billion from federal, $2 billion from municipal, and $2 billion from provincial governments. That's what we believe is required over 15 years to renew the municipal water systems. Child care is $2 billion.

The Vice-Chair (Mr. Nick Discepola): Thank you. Over how many years?

Ms. Sharon Chisholm: Annually.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Ms. Chisholm, please.

Ms. Sharon Chisholm: On housing, the 1% solution costed out is very similar to FCM's option paper that has been recently costed out. FCM is calling for 20,000 new units of affordable housing a year, an additional 10,000 units of RRAP a year and 20,000 units of rent supplements that would go to existing apartments to make them more affordable to tenants.

In addition, they're supporting our foundation proposal, “Housing Works!”, which you have before you. Their estimates are $1.6 billion on an annual basis, and they're calling for at least 10 years. The 1% that CUPE supports is in and around the same numbers. It calls on all levels of government to come to the table with part of their budgets for housing.

The Vice-Chair (Mr. Nick Discepola): Thank you very much.

[Translation]

Madame Guay, please. You have five minutes or less.

Ms. Monique Guay (Laurentides, BQ): As you were speaking, I was reminded of the six years I was the social housing, environment and international co-operation critic, and I felt we had come a long way. But there's still much to do.

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Obviously, as a member for the Bloc Québécois, I represent Quebec. Our province has created $5 a day daycare, and I hope the federal government follows suit. Indeed, I think it is currently looking at a way of achieving this. I hope it works.

It's a known fact that one child out of four lives in poverty. Many more people became poor as a result of employment insurance cuts. It happened a lot because many people, who were not eligible for employment insurance anymore, went on welfare, which meant that they became even poorer.

In my riding, there are morning breakfast programs with which I am involved. There are soup kitchens. People are sinking deeper and deeper into poverty. There are places where they can get food. We call these places “Moissons” (translator's note: harvests), such as Moisson des pays d'en haut, and so on. People's needs are growing.

The government must do its part, which has not been the case for many years. There are now two classes of people: the very poor and the rich. The middle class has disappeared.

I wonder, and I would like to know what you think about this, whether people at the grassroots level should not take matters into their own hands. I agree that the government must do its part, since it has the money and all, but if it creates programs which already exist, programs which are efficient and work... We see this in everyday life. We've been to these groups and associations ourselves. Isn't there any way to make them more efficient?

I'm not talking about huge issues like training or daycare, but would it not be possible to help regional organizations so people can really make a difference? We have ambitious programs and general guidelines, but what's happening on the ground is another story.

The same holds true for international co-operation. Yes, we must give aid. We must try to reach our objectives, since we are far from reaching them yet. But we also need a certain amount of flexibility, something I feel is lacking. I would like to know what you think about this.

The Vice-Chairman (Mr. Nick Discepola): Thank you.

Who would like to reply? Ms. Stinson, please.

[English]

Ms. Jane Stinson: I think it's really alarming to see what's happening in our economy right now. We're seeing a growth in GDP. We're seeing economic growth, yet we're continuing to see ongoing federal program spending cuts, which is contributing to greater inequality, greater poverty, and less accessibility to basic social services and basic services we've taken for granted in our country.

Now, when we're looking at having more of a surplus and we could be reinvesting, instead there's a clamour to give it to people in the form of tax cuts, which is not an efficient way to deal with things. We know it doesn't help in terms of addressing issues of poverty or redistributing income, and it's not an efficient way to spend the money. Informetrica has done calculations that have shown that far more jobs are created by investing in public spending than by giving tax cuts. So if the issue is also to create jobs, it's much more effective that way.

The other disturbing trends we've seen in the recent past is the increase in personal household expenditure and various forms of user fees for services that used to be covered under tax revenue. As we see a decline in program spending, particularly in areas like health and education, we're seeing a really shocking increase in personal spending in these areas. There was a 30% increase in personal spending on health care from 1992 to 1997. Almost half of that, 13%, occurred in 1996 to 1997—in one year alone—as the CHST cuts really started to take effect.

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So that's an example of the direction in which we're heading, which is a direction of greater poverty and greater inequality, and not an efficient and effective use of our tax revenues.

[Translation]

The Vice-Chairman (Mr. Nick Discepola): Thank you. You have a few seconds left.

Ms. Monique Guay: Thank you very much. I have an additional question.

Mr. Jean-François Tardif: Regarding aid to those countries, it's true that you cannot give people prosperity. They have to create it for themselves.

Statistics have proven that if you give people throughout the world access to health care, they will thrive. Indeed, it has been estimated that half the growth rate of developing nations today is attributable to investment in health care. If people are healthy, they will create wealth. It has been estimated that if you educate third world citizens for an additional year, their national gross product will increase by 3%. So give them the tools and they'll get the job done.

There is something else I have not mentioned but which is contained in the brief I will send in a few days. Access to micro- credit. Give people a little credit, and they will start their own business and so escape the poverty trap. It's an important tool to help people help themselves.

The Vice-Chairman (Mr. Nick Discepola): Thank you, Mr. Tardif.

Madam Guay, a brief question.

Ms. Monique Guay: I know that micro-credit works. In fact, we studied the issue last year. It has an 80% success rate. That shows it works.

I have a simple question on social housing. Do subsidies for landlords work? I know that in Quebec social housing has been subsidized. This works quickly in emergency situations. Please tell us what you think about this.

Here is my final point. We have to reinvest in our social system to help the poor, but we also have to look towards what has already been done in other provinces. Some do nothing, but others fulfil their obligations. We must guard against encroaching on provincial jurisdictions. We must avoid overlap which gives rise to additional costs, since we can't afford them anyway.

The Vice-Chairman (Mr. Nick Discepola): Could you please summarize?

Ms. Monique Guay: You have to respect what has already been done in the field.

[English]

The Vice-Chair (Mr. Nick Discepola): Madam Chisholm.

Ms. Sharon Chisholm: Landlord subsidies, I'd be happy to address that.

The Vice-Chair (Mr. Nick Discepola): Very briefly, please.

Ms. Sharon Chisholm: I will be.

We did a study a few years ago, which was conducted for us by Ekos, to look at the relative costs of providing affordable housing to people through non-profit housing or a landlord subsidy program. We showed that in nine cases out of ten—and we did match pairs—it was more efficient and a lot less costly to do it through social housing. The savings don't show up in year one. The crossover rate was generally in year eight or ten, and after that the savings got larger and larger.

When they did the same study in B.C., they found that in all cases it was much cheaper to provide assistance to people through non-profit housing, where there wasn't any profit motive, and the crossover year was year four, which is a lot sooner. That reflects the kind of market situation they're dealing with in B.C.

So our position of course would be that if you want to spend the least amount of money, invest in affordable housing that'll be here forever.

The Vice-Chair (Mr. Nick Discepola): Thank you very much.

Mr. Cullen, do you have any questions?

Mr. Roy Cullen (Etobicoke North, Lib.): No, not for now. Thank you.

The Vice-Chair (Mr. Nick Discepola): I have a brief question for Mr. Daniels. You mention in your brief that you're not allowed to sell RESPs. I'm wondering what the rationale was for restricting you from selling RESPs. Was there some concern on the part of Finance officials to allow you to do that?

Mr. Mark Daniels: Jim, do you have a handle on what it was that stopped the registered educational trusts? I'm really not sure why they didn't extend.... Are you?

Mr. James Witol (Vice-President, Taxation and Research, Canadian Life and Health Insurance Association Inc.): I think the original way these things worked is that you joined a large plan, and if your children didn't go to post-secondary education, the funds were forfeited to the plan to subsidize others in it. Because of this nature of cross-subsidization, it was thought that there ought to be a trust in place to make sure that funds didn't—

The Vice-Chair (Mr. Nick Discepola): Which you are incapable of administering, is that it?

Mr. James Witol: These were big single trusteed plans.

Now you can set up plans that are just for the family, and there's no forfeiting of the funds. So there's no need for this additional trust protection. You could simply set up what would parallel an RRSP situation, where it's for the individual or the family.

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Mr. Mark Daniels: Mr. Chairman, obviously it is a business issue for our people simply because they offer competing products, or could, but it also would introduce another supply into the market and may well lead to some innovation. It would be quite useful, I think, in the marketplace.

The Vice-Chair (Mr. Nick Discepola): That's why I brought it up.

For the Canadian Union of Public Employees, in your brief you mention that you represent over 475,000 Canadian workers across the country, and you indicate which sectors. So I am to presume that you are speaking here on behalf of those 475,000 employees.

I'm sort of shocked to see the priorities you have brought forth. When I hear that your main priorities for your members are water services, infrastructure, and child care, I'm wondering if that's the only reflected position of your members, or is tax reduction totally off the Richter scale here for your members? That's not what I'm hearing across Canada.

What I'm getting at is, do you believe we should maintain the balance of 50-50, or do we have to now orient more toward social spending and forget debt reduction and taxes totally?

Ms. Morna Ballantyne: We've had a lot of debates on this issue within our union, and we should be clear that our members are extremely concerned about their paycheques. They don't take home enough money to be able to afford a decent standard of living for their families. The average CUPE wage hasn't risen in a number of years, and it is about $26,000 a year. This is for a unionized worker in Canada. It's not very high. They're very concerned about their paycheques, but they don't see tax cuts as a way to increase their buying power.

They are looking for pay hikes, for sure, and we're in very difficult collective bargaining—

The Vice-Chair (Mr. Nick Discepola): Surely the bottom line for an employee is their net take-home pay, what they see on their cheque stub. The Reform Party has been giving us this example every day. So what difference does it make to your members whether the net take-home pay is higher as a result of tax decreases or as a result of wage increases?

Ms. Morna Ballantyne: It affects them very deeply, because they deliver public services. They know the tax cuts are going to be financed by cutting the services they're delivering. So there's a very direct relationship, and they have thought long and hard about it. They also know that with every tax cut there are often a corresponding increase in user fees and increased costs in other areas, so it doesn't help them.

It does not raise their standard of living. It doesn't help them get child care.

The Vice-Chair (Mr. Nick Discepola): I would welcome, then—

Ms. Morna Ballantyne: It doesn't help them get jobs. It doesn't help them get the kind of pay increases they think they need. I'm telling you what our members are saying.

We can argue about—

The Vice-Chair (Mr. Nick Discepola): Then I think we have a communication job to do, because we're talking about a surplus here. If you take a look at the projected surpluses over the next five years, there are spending increases in that projection. We're not talking about cutting back expenditures, so your members shouldn't fear that. We're talking about the added revenues that are generated because of a growing economy and how to best distribute that.

I was just curious as to why your members wouldn't be reflecting what I hear in my riding, which is that we need a balanced approach amongst spending initiatives, as you pointed out, tax initiatives, and debt initiatives. I was just curious.

Ms. Morna Ballantyne: Those deliverers of public services care very deeply and profoundly about the public services and the public sector. One of the reasons they also are concerned about issues such as water is that we're very close to losing our public water system and handing it over to the private sector.

I think Jane wants to add something.

Ms. Jane Stinson: I was just noting in the fiscal update that even the projected increase in spending on public programs doesn't keep up with the rise in population. So it's not even keeping on par with an increase in population and the growing demands that come from that.

The Vice-Chair (Mr. Nick Discepola): I think it is—

Mr. Roy Cullen: There are demographics and inflation.

The Vice-Chair (Mr. Nick Discepola): It includes all the growth. I would invite you to maybe reread the economic update and the projections, because there is money there, so it's not meant necessarily to achieve that through more cutbacks.

I don't have any other comments except to thank you on behalf of my committee members and colleagues. We look forward to a dialogue by consulting Canadians on this important initiative. I think that has been the key success over the past few years.

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Mention has been made that we may not have moved fast enough in certain areas. But let's not forget that the only reason we're sitting here today discussing the options we have today is because we balanced our budget over the past year. For the past four or five years we didn't have the luxury of debating what to do with surpluses. We were all planning how to get rid of our evil deficit.

I'm sure your comments will be reflected in the final report. On behalf of the chair of the committee, myself, and members, I'd like to thank you for your presence here tonight and wish everyone a safe journey back home. Thank you.

The meeting is adjourned.