FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, October 18, 2001

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[English]

The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): Let's call this meeting to order, and welcome everyone here this afternoon for the final session here in Halifax.

As the witnesses know, the finance committee is travelling across the country to seek public input on important issues related to the upcoming budget. We have already visited Montreal and Toronto, and we'll be visiting Vancouver, Edmonton, and Winnipeg next week.

Above and beyond that, we have also had a number of panels similar to yours in Ottawa—actually, quite a few. Hundreds of people like yourselves participate directly in the hearings, but thousands more Canadians participate at the local level through the town hall meetings that members of Parliament hold. All of this gives us a good sense of what the state of public opinion and policy is in our country. For that, we're grateful not only to the individuals who are in front of us, but to all the people who participate in the process.

This afternoon, we have the pleasure to have with us the Federation of New Brunswick Faculty Associations, the Dartmouth Literacy Network's board of directors, and the Halifax chapter of the Cement Association of Canada.

We'll begin with the Federation of New Brunswick Faculty Associations, and Professor Claude Dionne, president; along with Professor Hans Vanderleest; and Desmond Morley, executive director.

You have probably been told you have five to seven minutes to make your introductory remarks, and then we'll engage in a question-and-answer session after everyone else on the panel has completed their presentation.

Welcome.

[Translation]

Mr. Claude Dionne (President, Federation of New Brunswick Faculty Associations): Mr. Chairman, I am going to speak in French. If the members need to use the equipment, I will wait a few seconds.

[English]

The Chair: Thank you.

[Translation]

Mr. Claude Dionne: Thank you, Mr. Chairman, for inviting us again this year. Unlike previous years, as you have seen, instead of preparing a brief that would once again set out the position of our association on the issue of funding for post-secondary education, we have decided to provide you with a bill on funding for post-secondary education in Canada sponsored by the Canadian Association of University Teachers.

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As you know, we are asking, at least in this bill we are presenting, for a special resource envelope to fund post-secondary education that would be separate from the funding of health care services in Canada.

At the same time, further to our brief of last year, we would like to discuss funding for libraries at Canadian universities.

As you know, university funding is extremely important to us. The purpose of the bill we are presenting here is both to increase the accountability of universities for the federal government's funding for post-secondary education and to enable universities to highlight their contribution to, or at least their participation in, the economic development of various regions.

As you probably saw in yesterday's Globe and Mail, according to a report published in Ontario, since the Harris government in Ontario set up the research excellence awards, Ontario has attracted skills and brains; there has been a brain gain because the province of Ontario has put money into research. In other words, the Atlantic provinces, because of underfunding for universities, are losing brains. There is a brain drain toward central Canada. We are very concerned about this situation, and that is why we support this bill, which would provide for a separate envelope to fund post-secondary education.

Another issue, which you may recall us discussing last year, is library funding. The library situation is worse now than it was a year ago. The CAUT newsletter refers to a study of 112 North American universities, in the United States and Canada. Their budgets show that this year, we are falling behind American universities. We have figures here to show that not one university in the Atlantic provinces ranks among the 112 universities in North America that do research.

In our view, libraries are now the most neglected part of post-secondary education. University libraries need money to stay at a level that is comparable to other provinces and countries.

I am now going to turn the floor over to my colleague, Hans, if there is anything he wants to add.

[English]

Prof. Hans Vanderleest (Federation of New Brunswick Faculty Associations): Mr. Chair, the two key roles in university are teaching and research, and both of these are essentially supported by the infrastructure found in a strong university research library. A lack of adequate library resources in Atlantic Canada makes it very difficult for university instructors and researchers to fulfill their obligations and to carry forward their professional obligations. Altogether, we see that the social, cultural, and economic development in Canada is enhanced by a strong post-secondary education system, and that post-secondary education system requires the infrastructure support in libraries, as well as in other areas.

I believe that's all I have to say.

The Chair: Are there any further comments from the group? Mr. Morley.

Mr. Desmond Morley (Executive Director, Federation of New Brunswick Faculty Associations): I would simply like to add that for the problem that CAUT—which we support—put forward in this proposal for this legislation for standard funding for post-secondary education in Canada, it's an accountable funding, but it's much more than that. However, there has been a standard answer from politicians of all political stripes, from whichever party has been in power since the early 1980s. That was when this was first put on the front burner, so to speak, and then it slid from the front burner to the back and back to the front on various occasions in between. The answer from the politicians has always been that they don't have the money for it, that we can't have the money, that we can't get the money.

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Perhaps even worse than that is the fact that the provinces would never go along with it, and that has just basically being the biggest objection of all. Well, if Lester B. Pearson had heard that and had let it affect him in 1968, we would not have national health care standards either. What we're looking for here is something similar to the national standards that apply to health care. If they could be put in place by the federal government under Lester B. Pearson, we certainly feel there's no reason why post-secondary education couldn't be given the same status.

A recent poll came out about six months ago, showing that 92% of Canadians who were polled felt health care was Canada's highest priority. Next to that, 90% of them—only two percentage points less—said post-secondary education was a high priority. That was a Decima poll.

Nowadays, there is a burgeoning demand in the marketplace, in the economy, for post-secondary educational credentials, and particularly for university educational credentials. The marketplace and the economy in general are crying out for those credentials, but at the same time, university funding is going through the floor in terms of real, constant dollars. The reasons for that are uncertain sources of funding and the federal sources of funding coming through in dribs and drabs in various ways under various programs.

It's time to realize that post-secondary education at any level, including the university level, is part of an educational continuum that is becoming part of the necessity of being a citizen in North America these days. But various levels of government are not paying enough attention to it, or anything like the attention this reality really deserves.

Thank you, Mr. Chair.

The Chair: Thank you very much. We'll now hear from Dartmouth Literacy Network's board of directors, and Ms. Calinda Brown.

Ms. Calinda Brown (Board of Directors, Dartmouth Literacy Network): Thank you. I do believe everyone has a copy of my presentation, so I'll hit some of the high points for you and not take up too much of your time.

What we're asking for is increased funding to literacy programs, and we're asking for it from two different areas, if possible. The first is through the National Literacy Secretariat, which is part of Human Resources Development Canada. It came out in a budget speech in 1986, I believe, that the federal government wanted to give more money to literacy organizations, and this is the arm of the government used to do that.

We would like to see the more be money given to the National Literacy Secretariat, but more importantly, that the mission statement or mandate of the secretariat be changed to fund direct literacy services. Right now, they will only fund projects and research. However, the actual literacy services are the most important part of literacy programs, yet they're not receiving the funding they need.

We'd also like to see something similar to what was done with health care dollars in the recent past, with increased transfer payments to Nova Scotia and other provinces, linking those payments directly to literacy training. Right now, funding comes to us through the Department of Education, but that's only some of our funding, and not enough—and certainly not all of the funding we use at Dartmouth Literacy Network.

So those are the two main areas to which we would like to see some consideration given for funding.

Thanks.

The Chair: Thank you very much, Ms. Brown.

We'll now hear from the Halifax chapter of the Cement Association of Canada, of which Mr. Bill E. Dooley is vice-president. With him is Ted Hounslow, sales manager for the Atlantic region for Lafarge Canada, and Alicje Cornelissen, the association's director of environment and building sciences.

Mr. Dooley.

Mr. Bill E. Dooley (Vice-President, Halifax Chapter, Cement Association of Canada): Thank you very much. I think a copy of our talk has been given out to all the committee members.

On behalf of the Atlantic cement and concrete industry, I'd like to start by thanking the committee here for providing us with the opportunity to talk to you.

Also, one of our colleagues didn't make it onto the list. Mr. Gil Ross is with St. Lawrence Cement, one of our member companies.

We appreciate the challenge that is before the committee here, especially since that challenge has become even greater since September 11. We also realize that in the process of evaluating the proposals and other things you hear during these consultation processes, you are going to be required to weigh them against addressing our post-September 11 world. That said, given the continued importance of trade and the integrated North American economy that we live in, the association believes the points all raised today do have some relevance, and we hope you share our opinion.

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I don't plan to read our submission paper, which is a four-page document. I just want to get some of the highlights, as our colleagues have done here. I suppose a good place to start is with what our objectives are today. By our own admission, not enough is known about our industry, so our first objective is to very briefly tell you about our industry and its importance to the Canadian and local economies.

From a pre-budget perspective, facilitating trade with the United States is more important than ever. Maintaining a modern and efficient infrastructure in transportation is fundamental to this, and we would like to add our name to the list of Canadian companies and organizations calling for the federal government to play a more strategic policy and financial role in the renewal of Canada's infrastructure.

Finally, we would also like to speak briefly about a specific problem that has plagued the governments at the federal and provincial levels, and that's the Sydney Tar Ponds. We'd like to see an increased priority given to this project.

Let's talk a bit about the Cement Association of Canada. Basically, we're an association that represents 100% of Canada's cement producers. Those members also have concrete plants, and they also supply cement to independent ready-mix operations that are present in virtually every community across Canada. The association exists to serve its member companies in three key capacities: to market cement and concrete solutions: to provide technical support to users of cement and concrete; and to provide a vehicle for our member companies to participate in public affairs, similar to today. We are a national association. We have headquarters in Ottawa and we have five regional offices, the intent there being to address regional issues and concerns.

Just as a side note, in Canada the terms “cement” and “concrete” tend to be used interchangeably. For clarification purposes, I'll be using them interchangeably, but it should be noted that cement is actually one of the main ingredients in the making of the final product called concrete.

The Chair: You add alum in the winter so that it stays stronger when you're making concrete, right?

Mr. Bill Dooley: In the appropriate applications.

The Chair: Okay.

Mr. Bill Dooley: Cement was first produced in Canada in 1889. Since that time, our industry has grown along with Canada, and we have consistently made a positive contribution to the economy of this great country.

Presently, the cement and concrete industry contributes 22,000 jobs and $4 billion in sales to the national economy. Here in Atlantic Canada, there is one cement plant and there are distribution facilities throughout the region. We are also a significant exporting Canadian industry. Last year alone, there were over 4 million tonnes exported to the U.S., so anything affecting Canadian or U.S. trade is also going to affect the vitality of our industry. On the concrete side of things, if you look at Atlantic Canada alone, there are 145 ready-mix plants spread throughout the region, so that affects a lot of communities.

The cement and concrete industry is truly one of Canada's foundation industries, and it has consistently been a vital contributor to the national, provincial, and local economies. CAC believes a strong economy requires the underpinning of a modern and efficient infrastructure; however, we note that Canada's highway deficit has been well-documented in recent years. We also note that Canada's largest trading partner to the south is right now investing about 82 times what Canada is investing in its infrastructure. As a major cross-border trader, the cement industry is a big user of infrastructure to get our product to the States. As such, we would like to encourage the federal government to play a stronger and more active role in renewing and revitalizing this important asset.

Here in Atlantic Canada, given the volume of trade and tourism with the U.S., the importance of the highway infrastructure is particularly critical—and I'd like to reference a local example of our infrastructure deficit that was documented in the October 27 issue of the Halifax Chronicle-Herald. In that article, it was reported that a company called Creative World Travel, out of New Orleans, is considering telling its customers to avoid Route 7 here in Nova Scotia due to its poor riding condition. Not investing in infrastructure in Canada is therefore going to hurt all of us.

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When it comes to highway infrastructure renewal, we invite the standing committee to consider that research from the National Research Council and the Nova Scotia Department of Transportation and Public Works has demonstrated that concrete highways are both economical and offer environmental benefits. As an example, National Research Council studies show that a fuel savings of up to 11% for trucks can be gained. Less fuel consumption means fewer greenhouse gasses. Given the fact that a third of all emissions come from cars and trucks, this could be a tremendous asset to Canada in meeting our Kyoto commitments.

That same study also showed that concrete highways require less maintenance. Less maintenance means lower costs. It also means less congestion, and therefore less greenhouse gasses.

Here in Nova Scotia, the Department of Transportation also conducted its own study on two sections built in 1994, one asphalt and one concrete. That study concluded that concrete performed better in terms of riding quality and maintenance, and that it is therefore a viable alternative to asphalt. Since then, the Nova Scotia government has already committed to ten more kilometres of concrete paving on the 101, toward Annapolis Valley.

Although it makes sense to invest in concrete highways for high-traffic corridors, cash-strapped provinces like Nova Scotia do not always have the financial capacity to absorb that cost. Therefore, the Cement Association of Canada urges the government to explore ways to compensate provinces for the increased cost of concrete highways as a trade-off for the positive environmental and economic benefits that they generate.

You may be also interested to know that there is support from the average Canadian for concrete pavement. I would refer you to Decima research that was done in 1999, whey they went out and polled Canadians on their perceptions of concrete paving. I'll just highlight some of those perceptions.

Its most noticed advantage was durability and longevity. The respondents felt it was a safer riding surface, and that it was also the most environmentally friendly paving material: 39% of the respondents preferred a concrete surface, versus 29% for asphalt. Also, 50% said they would actually support concrete paving. The study has a margin of error of plus or minus 2.2%, 19 times out of 20.

Moving to our second recommendation, the Sydney Tar Ponds are a well-known example of the contaminated site remediation that has posed a significant problem for government. The local cement industry would like to add its name to the environmental groups of concerned citizens who believe all governments have a duty to clean up this site. We'd like to see that priority increase; we believe it should be a public policy priority with the federal government.

We also believe our industry has something to contribute to the debate over the technology most suited for this site. I don't want to get into a debate over one technology versus another; we'll leave that up to the scientists. We would simply like to make you aware of a potential cement-based solution, that being something called solidification stabilization. This technology is used in the United States in brownfield redevelopment, and it has been designated as a best demonstrable available treatment technology. It is recognized by the U.S. Environmental Protection Agency, which has mandated stabilization solidification to be used for 25% of its Superfund Program projects. Where applicable, stabilization solidification is a good, flexible solution that can take place both on-site and off-site.

In closing, we'd just like to reiterate the recommendation made to this committee in our written proposal. The Cement Association of Canada encourages the Government of Canada to explore ways to compensate and partner with provinces for a renewal of our highway infrastructure. Secondly, the government cannot lose sight of the need to clean up the Sydney Tar Ponds. In the process of considering these policy challenges, we invite you to consider both the environmental and the economic benefits of using cement and concrete solutions.

Thank you very much.

The Chair: Thank you very much.

We will now proceed to the question-and-answer session, with a five-minute round for all members.

Mr. Jaffer, you'll start.

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance): Thank you, Mr. Chairman.

Thank you for your presentations today. I'll start with the Federation of New Brunswick Faculty Associations.

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I understand the importance of infrastructure and the challenges that universities are facing now when it comes to ongoing levels of funding and to the concerns that they have about being able to invest in libraries and basic infrastructure. I have the privilege to be able to represent a riding that has the University of Alberta in it, so I work closely with a lot of their faculty and hear their concerns.

One thing has been done very effectively—and I know it's not necessarily the solution to all funding problems—in that they have been continuously embarking on an idea that seems to work very successfully. It's the idea of an industry liaison department that works in partnership with various potential industries for commercialization in research, therefore helping to balance some of the challenges that universities face in bringing in extra revenues.

However, that's not the only solution. There obviously has to be a guaranteed level of funding coming in from another source, namely government. Could you bring me up to speed on whether there's any direction being taken by the various universities you represent in New Brunswick, on whether there has been a development of that sort in terms of a faculty or the ability to liaise with industry much more effectively to help some of those revenue problems?

Mr. Desmond Morley: In New Brunswick, we have two industries, J.D. Irving and McCain Foods, and they are certainly not going to underwrite all the research in universities. When you're thinking in terms of that, you're thinking in terms of Alberta, British Columbia, or Ontario. Fortunately, that kind of mindset is prevalent there, so it's not uncommon.

People who don't live in the Maritimes don't realize what the Maritimes are like. We can't expect you to. But we have McCain Foods, which is a global operation, but we can't partner with industry because we don't really have any industry. Well, I suppose I can't say we don't have any, because we have J.D. Irving, the former K.C. Irving interests, and we have McCain. But they're certainly not in the market to partner with all four universities in New Brunswick—there are seven campuses and four universities. We just don't have the industrial infrastructure in New Brunswick—indeed, throughout the Maritimes, but we're speaking for New Brunswick—to partner with industry for research.

There is the Canada Foundation for Innovation, through which we're supposed to be able to access moneys, provided that we can find a partner in industry. But because there's no industry in the Maritimes, there's a $250-million fund in the particular area of the Maritimes that is largely administered by the Atlantic Canada Opportunities Agency. The problem with that is that we have to then go through two approval processes. We have to apply under the Canada Foundation for Innovation and get approved for that, but in not getting anything from industry—because we don't have any industry, again—we also have to apply to get the other 50% from this $250-million fund. You have to be able to get approved for that through ACOA or through some other way.

It's a very complex and difficult process to get research funding approved in the universities, because the bottom line of all of this is that the Canada Foundation for Innovation and the $250 million in surrogate partnership funding that has been set aside for it is targeted only at commercialized research. In other words, it's for research that can lead to a commercial outcome that can be sold and marketed. It's applied research rather than pure research.

Penicillin was discovered because of pure research. Somebody stumbled on it accidentally while they were playing around with a Petri dish. There are many things I could tell you about that were, but I won't go through the whole list of things. But without pure research—which is mostly done in the universities because there is no commercial liability to pure research...the universities do it because they just want to find out what's going on and what will happen. Industry is not interested in pure research. It wants to apply it to making a profit. That's what industry is about.

Mr. Rahim Jaffer: I agree, and that's why I also said there obviously has to be some commitment from governments on basic research. Hopefully, there's potential—

Mr. Desmond Morley: In New Brunswick, we have a real need for research funding for applied research, yes, but for pure research in the universities, basically it just isn't there. There are no sources of funding.

Mr. Rahim Jaffer: Ms. Brown, I just wanted to know, based on your presentation, if you have any local figures for literacy or illiteracy. I noticed in your brief that you had a national figure of about 22% in terms of the challenge that we face for literacy. Do you have any local numbers for here in Nova Scotia?

Ms. Calinda Brown: Those numbers are similar in Nova Scotia. In some areas we may be slightly higher, but certainly the 22% of adults working at the lowest levels of literacy are true for Nova Scotia as well.

Mr. Rahim Jaffer: Okay, thank you.

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My last question is to you, Mr. Dooley. I looked at your brief with great interest, and one of the concerns that I have had—and I think it's the same for a number of members on this committee, because we heard a presentation that was similar for infrastructure yesterday....

Because of some of the work you have done, I was wondering if you could advise the committee about how we should be more effectively using, for instance, fuel taxes or other forms of revenue for investment in infrastructure—namely, looking at new ways to improve highways and other forms of transportation systems. Currently, there's often criticism of how that money is being collected. Tax is obviously collected for fuel, but in the end, of the money that's supposed to be put back into infrastructure, only about 5% of it actually comes into play when it comes to reinvesting into highways and other forms of transportation systems. Maybe you have done some work on that and can give us some advice on how we should perhaps be reviewing that, perhaps by reducing fuel taxes overall, or whatever it might be.

Mr. Bill Dooley: That's an interesting question. As you pointed out, the infrastructure deficit has been well documented, but I think it's about $17 billion right now. I wasn't sure of the number, but I actually thought less than 5% of the fuel tax went back into the infrastructure system. I can't help but think that, in a pure, simplistic form, a greater return of that fuel tax money to the infrastructure system would be a good place to start.

Our association, the Construction Association of Canada, and provincial road-builders' associations right across Canada have been asking for a national highway system for several years now. As far as I know, we're still asking for it. So there's one way in which the federal government could step to the plate, get together with the provinces, come up with that system, and start investing in it.

Mr. Rahim Jaffer: There was one thing that popped into my mind on the issue of concrete. I remember that, when I was down in Houston, most of the their roads were made from concrete, if I'm not mistaken. Someone was telling me that when it gets a little bit cool or when there's a lot of rain, concrete actually becomes very slick and there's a problem with safety. I don't know if you could be the one to verify that, but that's why I thought we look more towards asphalt in this country. Maybe you could just shed some light on that.

Mr. Bill Dooley: I can point to the study that was done right here in Nova Scotia on the concrete section of the 104 out by Oxford. They actually looked at skid resistance, and the skid resistance is good. It outperforms asphalt. Now, like any capital asset, whether it's a building or whatever, it will wear over time and—pardon the pun—somewhere down the road, some maintenance would be required to get that skid resistance back again.

The Chair: Thank you, Mr. Jaffer.

Mr. Nystrom.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): I just wanted to ask a general question of all three people here today.

What the finance committee is wrestling with—and the federal government, as well—is the balance between tax cuts, program spending, and debt reduction. In the last year or so, there has been a great emphasis from the federal government on a $100-billion tax cut over five years. Also, they've placed a lot of money on paying down the national debt. There has been a bit of a slowdown in terms of program spending. In light of the fact the economy has slowed down a little bit, and now that we've had September 11, what's your recommendation now as to what that balance should be?

At the same time, the other question would be whether or not you would be nervous about going into a deficit on a temporary basis. I don't think anybody is recommending a deficit on a long-term basis, like we had back in the eighties and nineties, but what should the balance be? Have tax cuts gone far enough? Have we paid down enough of the national debt? Have we put enough money into program spending? What about our deficit? They're very simple questions.

Ms. Calinda Brown: If I might start, certainly I don't think there is any need for tax cuts. The only western country that I know of that has lower taxes than us is the States, and they offer fewer services than we do. I certainly don't see any need for tax cuts for Canadian people, especially when people are still demanding services.

I work in the provincial government, and I'm amazed by how often people expect certain levels of service from government and don't understand that if you ask for a tax cut, you have to see a reduction in services. Canadians want to maintain the services available to them and perhaps expand them to cover other areas. We can't do that with tax cuts.

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On debt reduction, we've certainly be paying off quite a bit, but if we're investing in our future, I see it as being much like a mortgage. No one would expect you to pay off your house in five years unless you had the capability to do that. If you take a full 25 years to do it, nobody looks at you strangely. I think we should also consider that. When we are using our future profits to create services now, that will create those profits in the future. I don't see any problem with that at all.

I'm sorry, what was your...

Mr. Lorne Nystrom: Program spending.

Ms. Calinda Brown: We need to increase our program spending, or reallocate it certainly, but tax cuts are not a way of giving us more money for program spending. We have to keep the levels of taxes as they are right now.

Mr. Lorne Nystrom: The last part of the question to all three of you was whether or not going into deficit temporarily would be a worry or of concern to you. I'm not asking about the deficits of 1980s and 1990s, but some argue that you build up a surplus in good times and have a deficit in bad times. Then, in good times again, you pay off that deficit and build up a surplus again. Would you be nervous about running a deficit at this time, or would you say that if it's necessary, then it's necessary?

Ms. Calinda Brown: That would be what I would say. If it's necessary, it is. Again, if we're looking at a big cost right now that's going to give us benefit over the long term, it's better to spend the money now than it is to expect to spend it in the future. For instance, in health care, it would make more sense to spend money now to keep people healthier than it would to pay for interventionist medical services some time in the future because we haven't given them the money to stay healthy now. That certainly is a problem with literacy learners. Their health is much poorer than the general populace, and if we had more programs that were helping them maintain their health now instead of waiting until they have severe health problems like heart disease, we'd be saving ourselves money in the long term.

Mr. Desmond Morley: Yes, I was delegated to answer this, Mr. Nystrom.

Very briefly, my daughter came back from Sweden not long ago. She just joined the teaching profession. At the end of her university career, she went to do six weeks in Sweden. She came back full of the—

[Editor's Note: Inaudible]

The Chair: —

Mr. Desmond Morley: Yes, well, in Mr. Nystrom, maybe I'm preaching to the converted, I don't know. I'm sure not playing to the gallery. I didn't know whether Nystrom came from Norway or wherever.

Mr. Lorne Nystrom: It's actually an Italian name.

Mr. Desmond Morley: It's Italian? Well, that's good. Bevilacqua is Swedish, isn't it? I'd forgotten.

The Chair: That's right.

Mr. Desmond Morley: Anyway, the bottom line is that their programs are the best in the world, apparently—she spent six weeks there—because everything is paid for. People there pay the highest taxes in the world, but they seem to be a reasonably happy bunch of people, as well.

I'm not really in favour of tax cuts. I know I'm probably being a bit left-wing here, but I think we all should enjoy what each of us can get, the basics. In fact, I think I'm one of those who may be politically incorrect by saying I think the events of September 11 may not have taken place if everybody in the Middle East had only a half of what we are all lucky to have—but we won't go that way. As far as I'm concerned, tax cuts are not the way to go, because of what I just said about September 11.

Program spending is obviously the direction I'm going in. Sweden spends money on programs. Post-secondary education is free there. Program spending is something we've been cutting back on for too long. Where will we find the money? Well, apparently we're projecting a surplus of over $30 billion this year in Canada. We're now projecting a smaller surplus, but it's still supposed to be a surplus of over $8 billion, so there's still money for program spending.

On debt reduction, deficit financing is always a bad thing because it mortgages future generations. I hope I haven't said this to this committee before, but one of my favourite things to say is that when we had to fight the Second World War, we found the money. We didn't go bankrupt. We're all sitting here, we all have something to eat, and we have nice lights and heat and a lot of things other people in the world don't have. But we were able to fight a five-year war. I'm from Britain. Canada was involved on my side, and thank God we won. But who won and who lost? It cost everybody billions and billions and billions of dollars. We had to go into deficit. Every single country that fought in the Second World War did. Somehow or another, we survived, yet everybody had to pay their share in paying off the debt. If it's necessary, we always find the money to do it. The thing is, we're not dealing with what we feel is necessary these days.

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The Chair: Thank you.

Mr. Dooley, would you like to make a comment?

Mr. Bill Dooley: Actually, it's an interesting question, but I don't think the cement and concrete industry has a position on tax cuts, program spending, or going into deficit. In one sense, it's a no-win question. On the other hand, I would look to the government to choose what they feel is the best route.

On the second part of the question, about deficit financing or running a deficit, if that is what we have to do in these challenging times, that's fine, I guess we go into deficit. What I'd like to see are some strings attached to that, though, so that it would stop some time in the future. That would basically be our response.

The Chair: Thank you, Mr. Nystrom.

Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC/DR): Thank you, Mr. Chairman.

Thank you, all, for your interventions.

My first point on the issue of deficit is that some of our economists, including the chief economist of the Bank of Nova Scotia, are predicting that Canada is positioned very closely to a deficit position right now if current trends are maintained and if the expected obligations required for defence, security, and some of these other areas that have become more important since September 11, are actually met. We're precariously close to a deficit right now, so I think the notion of surplus now may be a very different one than it would have been considered a few months ago.

The other one is on income taxes. We have the highest personal income taxes in the G-7, and the second highest corporate taxes in the OECD, so we have to be mindful of our tax burdens, particularly in a world where both people and capital are so mobile today.

My first question is on the CFI and the perceived or real anti-small-university bias. Some very important research occurs at undergraduate universities, for instance. Beyond that, undergraduate universities often play an important role in instilling an enthusiasm for further learning that is very important in a post-secondary university infrastructure. I'd appreciate your feedback on whether this anti-small-university bias is simply perceived, or whether it is real in terms of CFI.

[Translation]

Mr. Claude Dionne: Last May, at a CAUT meeting in Ottawa, we were given numbers on the research chairs in Canada. Around ten universities have 80% of the research chairs in Canada, and the other 20% is divided up among 27 or 28 universities.

As a result, small universities, particularly those in the Atlantic provinces, do not have many research chairs. Furthermore, local governments have a hard time funding research. Two weeks ago, we met with officials from the New Brunswick Department of Education responsible for post-secondary education. We discussed the program Mr. Harris has set up in Ontario, the research awards program, which, as yesterday's Globe and Mail shows, made it possible for two Ontario researchers to get a one-million-dollar grant each over 10 years.

When we told the officials from the New Brunswick government about that, they replied that it was hard for them to come up with $500,000 to invest in research for the entire province of New Brunswick. The Ontario government has granted $10 million, and two researchers are going to get one million dollars each over the next 10 years.

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At the same meeting, those officials told us they had met with the Alberta post-secondary Education Minister. She had a problem. She had $2 billion to divide up among universities and did not know how to go about it. We are not living in the same Canada. Eastern Canada, Central Canada and Western Canada are three different Canadas.

We want to participate fully in the life of this country. If you read the article, it was about brain gain. New Brunswick and Nova Scotia have lost researchers to Quebec and Ontario. We are losing young researchers. For a university to play its part in economic and intellectual development, it must be able to play a part in research. To retain its young researchers, it must participate in community development and do research. At present, we cannot do that. That is why we are asking you for new legislation on funding for post-secondary education. We are not saying that the federal government's funding initiatives for post-secondary education were not good. That is not what we are saying, but there is room to improve. Thank you.

[English]

Mr. Scott Brison: As a point of interest, in our meetings in Montreal yesterday, we met with some representatives from the universities in Quebec. They spoke very positively of their experience with a provincial government program to not apply provincial income tax for a five-year period to researchers coming from other jurisdictions outside Quebec. I know you can get into predatory tax policy and that sort of thing, but it's working for them at this juncture.

As a question to the concrete industry, you spoke of the importance of trade to your industry, particularly in a post-September 11 environment. Certainly before September 11, the notion of a North American customs union was discussed, as was the idea of developing a more integrated North American approach to certain perimeter security issues, working with the U.S. in particular in terms of developing that approach. After September 11, it became clear that there's going to be either a perimeter America or perimeter North America in terms of the free flow of goods and services.

Some have argued in front of this committee that it would not be in Canada's best interest, with $400 billion worth of trade per year with the U.S., to be outside of a perimeter America, so we have to make some difficult decisions. I'd appreciate your industry's perspective—or anyone else's perspective—on this issue.

Mr. Bill Dooley: I can't help but pick up on the point you made, Mr. Brison, about the volume of business we do with the U.S. I just can't imagine Canada putting itself outside a perimeter. I forget the term you used, but—

Mr. Scott Brison: Fortress America.

Mr. Bill Dooley: Yes.

They are our largest trading partner, and whether it involves security, taxation, or trying to address Kyoto, we're almost bound to...I don't want to use the term “partner up with them”, but the United States is going to impact us.

I don't know if any of my fellow members have a comment.

Mr. Ted Hounslow (Sales Manager, Atlantic Region, Lafarge Canada; Halifax Chapter, Cement Association of Canada): The comment I would make is that cement generally is a commodity that's traded internationally. In the United States, they do not have the production or manufacturing capacity to serve their own needs. They are a net importer of cement in particular, from various locations around the world. I would say the economic impact of our exports of cement into the U.S. right now make it a $1-billion industry for Canadian manufacturers—and that's in Canadian dollars exported to the U.S.

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Essentially, the American cement industry cannot supply its own needs. Environmentally, it's becoming more difficult to obtain permits to develop manufacturing facilities in the U.S. With their infrastructure program, which is very aggressive, increased demands for cement products will be prevalent over the next number of years. I would think anything that would jeopardize this trading opportunity would be regressive for our industry and the Canadian economy in general.

The Chair: Thank you, Mr. Brison.

Shawn Murphy, Albina Guarnieri, and Carolyn Bennett, for five minutes each.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman.

I want to pursue this whole area of research funding in universities, perhaps just to try to extract what you see as the solution. The lack of research funding coming to Atlantic Canadian universities is a major issue in Atlantic Canada. As you people would be aware, the government has increased substantially the CFI funding, the medical funding, and the university chairs. Those figures in the last two years have increased dramatically, but the problem is that Atlantic Canadian universities aren't getting their fair share. CFI funding is especially extremely weighted to the larger universities.

I should also tell you that in the last two days, we've received well-developed and well-presented submissions from the University of Toronto, McGill University, and the Toronto Hospital for Sick Children. The basis of their submissions was that we were giving them the money, but we weren't giving them enough money for the 40% incremental cost in the research. They were getting more money, but they want even more so that they can do more research. Basically, all that does is compound the problems you people are having—and when I say “you people”, I mean our whole Atlantic region, because there are a lot of small, great universities in Atlantic Canada.

In terms of what has happened, the government has come forward with the Atlantic Investment Partnership, which I believe accesses $300 million that can be used to lever CFI funding. I know it's complicated, and I know you have to apply to two levels of government, but do I hear you saying—I don't think it would ever fly politically—that there should be non-dedicated research funding provided to the universities? What I'm looking for is your solution to the problem—which is a major problem—that is one of the areas that I see.

The only way the Atlantic Canadian economy is going to grow is through the innovation agenda, and that has to start at the universities. I agree with you. I think you and I are on the same wavelength there, but how do we get over this? Success breeds success. These are peer-reviewed things, and I believe peer review in and of itself has an inherent bias toward the upper ones, the U of Ts, the UBCs, and the McGills. We came forward with the Atlantic Investment Partnership with the hope that it would be of help, but I guess we're looking for more answers. I would like your comments and feedback on that.

Mr. Desmond Morley: One of the problems is that it's a pretty facile answer that we get. I'm not saying any particular person, individual, group, or organization gives us this answer, but it's just a generally facile way of dealing with the situation—and Mr. Brison touched on it. We're told to go to the granting council because the funding is there, and if it's a good enough project, it will get the funding. Well, that is not the case by any means. It's refreshing to know that somebody recognizes that, Mr. Murphy. You're right. Success breeds success. But unless you have an established track record, it's very unlikely that you're going to be high in the pecking order for research grants.

As the executive director of the federation, I get news releases from UNB in Fredericton, for example, proudly announcing that a certain researcher has gotten $250,000 for a research project. That's a huge amount of money to most researchers at UNB. Now, I'm just taking UNB as an example, but there's the Université de Moncton as well, and there's Mount Allison, which also does some research. A lot of the time, I don't get news releases from.... UNB has its own publicity department, and I get regular news releases from there. Among those are ones saying a certain professor got so much money. But those are appallingly small amounts of money when you consider the kinds of research we would like to do.

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I really don't know what the solution is, other than the fact that, first of all, if the universities were funded in a stable sort of way, with federal money, we could give an accountable amount of money to the universities. That could come through the provincial governments, perhaps on a transfer basis like the one targeted for health care, but in this case targeted for post-secondary education. We would be accountable—“we” meaning the university community—through the provincial government in order that this money was spent in a certain way. It could be tied to the economy so that we would ultimately get 0.5% of the GDP. That is what we had in the late seventies and early eighties, and we were fairly well funded or adequately funded in those days—not generously, but adequately funded, which is all we're looking for now. That would be a step in the right direction.

As for research funding, Professor Dionne indicated that one of the problems with the Canada Research Chairs Program is that it was an extremely high-minded idea of the federal government. It has been devastatingly bad for Atlantic Canada because the best and the brightest researchers are going to places like the University of Toronto, where they have lots of chairs to go around. They can pick up the phone and call the brightest stars at the Université de Moncton, tell them U of T hears they're doing good research in this area but are obviously lacking the facilities they need, and offer them a research chair if they go work in Toronto. The University of Toronto can supply them with so much of this and so much of that, and it can give them such a salary and so many assistants.

Université de Moncton has 3 research chairs. The University of New Brunswick has 10 research chairs. They have 85 research chairs at McGill alone. The U of T has about 114, I think. The economies of scale are just not there in Atlantic Canada.

The introduction of the Canada Research Chairs Program was intended to prevent a brain drain. Mr. Chrétien and everybody else around him said we had a brain drain to the United States and we had to stop it, so they started the Canada Research Chairs Program to keep people in Canada. Well, that's great, but what has happened is that there has been an interprovincial brain drain. Now everybody is going to B.C., Alberta, and Toronto, at the expense of all the smaller places. It's a high-minded idea that has had a bad outcome for this particular area of the country.

I'm really here identifying the problems and not the solutions, but what we're saying is that there has to be something targeted at places that cannot get 50-50 partnering with industry—because, again, we don't have any industry—places that don't have to go through the commercial process whereby, if research cannot be commercially viable at the end, it can't be funded. We have to overcome those obstacles and come up with some kind of funding whereby research can be done in the Atlantic provinces that is pure research—most of the time, anyway—for research's sake in order to keep researchers here.

It's not just the doing of the research that's important. Before I close, let me make one very important point. The Canadian Association of University Business Officers—the administrators, the managers who run universities, have their own association—have predicted that in the next ten years, we're going to need 20,000 new university faculty across the country. Quebec realizes that—and Mr. Brison talked about the much applauded but, for our purposes, predatory tax policy that sees you not paying any provincial income tax for five years if you go to work there as a university researcher or teacher in the sciences.

We have some very bright francophones in New Brunswick. There are very bright francophones at Université de Moncton. If you offer them an income tax holiday for five years in Quebec, where they're comfortable in their French language, they're going to go to work there. If you give them research facilities and an income tax holiday, what is that going to do to Université de Moncton? It's going to denude it of the best and the brightest people.

The young people are taking off from the Atlantic provinces. Pretty soon, we're going to be like Dawson City after the gold rush. That's the way it's heading. I'm sorry, maybe that's a little bit dramatic, but think of Dawson City in the Yukon after the gold rush. That is what is going to happen. We're going to be the next Klondike, in the Atlantic provinces. We don't want to be.

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The Chair: Thank you, Mr. Morley, Mr. Murphy.

Ms. Guarnieri.

[Editor's Note: Inaudible]

An hon. member: —

The Chair: That's a thought.

Ms. Albina Guarnieri (Mississauga East, Lib.): Well, hopefully we'll be good pupils.

I just have a quick note to add to Shawn's question.

During the economic boom period, we were worried about losing our best professors and researchers to the United States, and there seemed to be no shortage of jobs south of the border. Now that the economic boom is over or is subsiding and budget cuts are imminent, we seem to have the same fear about losing professors simply through cuts.

My friends who are professors in Toronto tell me that what keeps them here is not so much the pay as it is the fact that they're allowed the research dollars to study areas of interest to them. From what you were saying, I gathered that the same trend applies here. What keeps the professors in your province are the research dollars. Would you agree?

Mr. Desmond Morley: Most of the time, yes, but there are other societal assets, such as lifestyle. For example, in New Brunswick, you can still buy a piece of land by the river for a price that is not going to cost you your grandchildren's future. Those are things people do stay in New Brunswick for. You can still afford to buy a fairly decent house on Hanwell Road in Fredericton without having to win the lottery.

But that's not going to keep everybody here. Without going as far as saying good researchers also worship the god Mammon—because that's not exactly true—we tend to find that the more ambitious researchers, the best and the brightest, tend to be willing to sacrifice the nice, laid-back, easy-living style in New Brunswick because they cannot fulfill their potential. They feel they are intellectually bankrupting themselves and are betraying their duty to their own intellect by not pursuing their talent to the greatest advantage.

When someone has a job offered to them at U of T or at McGill, by not taking it, they feel they're betraying the brains that were given to them if they do not follow an opportunity to do the best research they could possibly do. They say they love living in New Brunswick and don't particularly want to live in Toronto, but when push comes to shove, their research is the most important thing. That's what they studied for years and years for. That's why they got student loans until they were was 32 years old and didn't earn their first dollar until they were 32. That's what they sacrificed for: to be able to do that research.

It's not about money, it's not about salaries, it's not having a boat and a Mercedes. That's why I became a lawyer—although I soon lost that idea, actually, because there was a lot of competition for boats and Mercedes.

Ms. Albina Guarnieri: You're a wise man.

Mr. Desmond Morley: Yes, well, I don't have a boat or a Mercedes, but I enjoy what I'm doing now.

But you find university researchers tend to have their faults—believe me, I know, because I've worked with them for seventeen years—but largely, the vast majority of them have an ethos of research study and service to the community, and I'm proud of them for that.

Ms. Albina Guarnieri: Well, hopefully we'll make good pupils and we'll will find the solutions.

The Chair: We'll go to our final questioner, Dr. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): My first question would be to Calinda Brown.

One of the problems for lots of NGOs, whether it's for literacy or whether it's for women's health or the environment, is this thing between core funding and project funding. As you know, one of the reasons was that the accountability was viewed to be easier if you could set some goals and objectives. For a project, you could see that you got there.

If we moved back to a core funding model, how would you suggest that organizations could demonstrate accountability in terms of a mission statement? How would you suggest that the program would be evaluated?

Ms. Calinda Brown: For those of us at Dartmouth Literacy Network, or perhaps I should say those of us in the literacy field across Nova Scotia, this is becoming a very clear issue for our learners, more so than with our organization. The provincial government is demanding evaluations of their progress all the time. I do believe that when your mission is a certain goal—for instance, if people learn the literacy skills that they need—then if you're fulfilling that goal, that is your evaluation. If people are seen to be making progress, you know you have achieved what you need.

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Ms. Carolyn Bennett: Do you believe you could develop tools of results even with core funding? I know California did it with tobacco. With the Smokebusters program, if nobody stopped smoking, they stopped getting their money. Do you think you could develop a results-based program tool for core funding?

Ms. Calinda Brown: I'd like to think that, but I'd also caution that we can't have a timetable that learners are supposed to follow. They learn at their own speed, and sometimes that may take years beyond what anyone thinks is appropriate. Certainly, that's the biggest problem with project funding. A learner doesn't learn how to read in the six months that a project is funded for. It's an ongoing process that may take years, and goals change as you're going along. Whereas once they may have only wanted to learn how to read the labels on cans so they knew what they were actually buying, suddenly they want to be able to read the newspaper.

This is maybe to suggest that evaluating NGO performance according to other methods of evaluation is not appropriate, and that governments and NGOs have to get together to find another model for evaluation.

The Chair: Thank you.

Ms. Carolyn Bennett: I had a question for the faculty association.

You called for an equivalent to the Canada Health Act, like a Canada post-secondary act. That's the same initiative called for by the Canadian Federation of Students, is that right? Would you see that as portability, accessibility, and those kinds of things? You would then have accessibility in terms of tuition, is that correct?

Mr. Desmond Morley: Essentially, yes. The CFS has very similar sentiments to what we have. They have endorsed the draft of this act, the proposed legislation. What we are most concerned with is the idea that there is equal opportunity across Canada for students to get a similar education at similar cost, with a similar quality of education.

Ms. Carolyn Bennett: Now that we've been poaching professors all over the country—I'm still on the faculty of University of Toronto—

Mr. Desmond Morley: And a very fine institution it is!

Voices: Oh, oh!

Ms. Carolyn Bennett: And alumnae.

Mr. Desmond Morley: I'm a McGill alumnus myself, so there is a little bit of rivalry here to begin with.

Ms. Carolyn Bennett: On the CFI, you have to know that your members of Parliament from the east and from Manitoba have done a splendid job, not only in our caucus, but everywhere—

An hon. member: Hear, hear.

Ms. Carolyn Bennett: —among the Liberal members, it has been Andy Scott and Reg Alcock in particular—in terms of their problems with CFI and the research chairs. They have been pretty clear. Your problem is that CFI is based on the previous track record of research, and the research chairs are based on the ability to get corporations to match the dollars. Are those your issues?

Mr. Desmond Morley: It's basically the other way around, but those are the problems.

Ms. Carolyn Bennett: Yes, sorry, it's the other way around.

Is it possible to fine-tune that now? Are you still asking for the criteria to be changed? What can we do to help? Do you want the thing to just be blown up, or is there something we can do to fix it?

Mr. Desmond Morley: May I ask you a question first, because I know Andy very well? I'm on first name terms with Andy. You say Andy has made a point of trying to explain how there have been problems created by that.

Ms. Carolyn Bennett: Unbelievable.

Mr. Desmond Morley: You see, Andy has tried—and we must give him extreme credit—very hard to get extra chairs for UNB and for other places in New Brunswick. At the same time, we have made him aware that it is kind of like biting the hand that feeds you, to thank Andy while telling him he is still doing us no big favour. But I'm glad to hear he has recognized that there are problems.

Ms. Carolyn Bennett: We have a post-secondary caucus in the Liberal caucus, and it had quite an interesting meeting with Mr. Goldenberg from the PMO. You need to know your voice was well represented there.

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Mr. Desmond Morley: Well, to answer your question, Dr. Bennett, I think what we really need is for the post-secondary caucus in the Liberal party, or for any tripartisan or bipartisan parliamentary committee that is charged with examining that situation, to take into account what we have tried to point out in as impassioned a way as we possibly can today. As far as we are concerned, the Parliament of Canada—and this is a parliamentary committee, let's face it—in a non-partisan way, is doing the best it can to advance the cause of research in post-secondary education. We understand that. What we are looking for is an examination by the Parliament of Canada of the channels through which it is being done, and for a recalibration of them, if you will, to address the problems being created by some of the things already there. We're not saying to give us a whole pile more money, but we would like something fixed to GDP.

Ms. Carolyn Bennett: Maybe the chair will organize a study for this in his committee.

The Chair: Thank you, Dr. Bennett. I'll take that under advisement, and you can vote on it.

First of all, I'd like to express to you my sincerest gratitude.

Before Mr. Brison leaves, I do want to publicly acknowledge his great hospitality during our stay here in Nova Scotia. It was greatly appreciated.

As you know, after this week, we'll continue our travels across the country. We'll be going to the west coast.

I can sincerely tell you that our committee always learns from the input you give us, but as you probably witnessed today, there are different causes that people come to us with. We have to try to balance all the needs and aspirations of Canadians coming from various perspectives, of course, so we engage in trade-offs as well. Ultimately, though, our ultimate goal is to make recommendations with the view to improving the standard of living and quality of life of Canadians. I think those are the goals you share, and for that we want to thank you and once again express to you our sincerest gratitude.

Now, it being 2:57 p.m., this was our first swing across the country, and I want to thank everybody involved, from the clerks to the researchers, from the technicians to all the people who make travel arrangements. Without their hard work, the committee simply would not be able to function. On behalf of the committee, I want to thank them.

The meeting is adjourned.