FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, October 22, 2001

• 0900

[English]

Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.): I'd like to call the meeting to order and welcome everyone here in Vancouver this morning.

As you know, the finance committee is travelling across the country seeking public input on priorities for the upcoming federal budget. On behalf of the committee, I want to thank all the witnesses for being here this morning. We look forward to your comments.

We have the following organizations represented this morning: the Technical University of British Columbia; the University Presidents' Council of B.C.; the Canadian Parks and Wilderness Society, B.C. Chapter; and the B.C. Road Builders & Heavy Construction Association.

We'll begin with the Technical University of British Columbia, with Tom Calvert, professor and vice-president, research and external affairs, and Dr. Linda Bartram, NSERC industrial post-doctoral fellow.

You have five to seven minutes to make your introductory remarks. Many of the briefs were received during the summer, and members have gone through them. If you can give us the highlights, it will give us time for a question and answer session.

We'll begin with Mr. Calvert. Welcome.

Dr. Tom Calvert (Natural Sciences and Engineering Research Council of Canada): Thank you for the opportunity to talk to you this morning.

I'm here really on behalf of the Natural Sciences and Engineering Research Council of Canada, NSERC. It is the federal agency that supports much of the university research in natural sciences and engineering. My day job is as the vice-president for research at the Technical University of B.C. It was Canada's newest university until they started the Ontario Institute of Technology in Durham and Oshawa.

I have my colleague, Linda Bartram, with me. She recently completed her PhD on a project that was supported indirectly by NSERC. She is now an NSERC research fellow and working with an exciting start-up company here in Vancouver.

The Government of Canada has identified a goal of moving from fifteenth to fifth in R and D investment as a percentage of GDP. These are the numbers put together by OECD. Currently, we are fifteenth. To move to fifth is going to be a major challenge over the next ten years. To do so, we need to invest heavily in highly qualified people, scientists, and engineers.

NSERC is the federal agency that supports university research in the natural sciences and engineering. It accounts for about 25% of all research in those areas. While the research outcomes are important and lead to industrial innovation, the major benefit of the research is the trained people who can build the new knowledge-based economy.

NSERC supports approximately 10,000 university-based researchers with a total budget of about $620 million. Of this $620 million, about $284 million goes to direct support of research grants. The other parts of the budget go to people-related programs and to innovation programs in collaboration with industry.

I know you had a presentation from the president of NSERC in Ottawa. I'm sure he more than covered all the bases. I want to emphasize the particular problem we're facing now.

Of course we need to increase the level of the research grants—that goes without saying. We never have enough. But the present system is working reasonably well. There is one major problem. The universities are bringing in a lot of new, exciting, young faculty, and some not so young are coming out of industry. The number of new faculty for NSERC who are asking for support this year is 762. It's balanced by only 269 retirees.

Some of the increase is due to demographics. Much of it is due to the initiatives of the different provinces in trying to increase the number of faculty and the size of the programs in computer science and engineering, the so-called information technology and communication area. Ontario has a program. Alberta has a program. Quebec has a program. The new government in B.C. has announced a program for doubling the opportunity in information technology.

It's wonderful. I applaud the provinces for doing so. There's a clear industrial need, but it creates a problem. The granting councils that support the faculty in these areas have been on relatively stable budgets, or NSERC certainly has.

• 0905

To handle the new researchers coming into the universities, at a relatively minimal level NSERC needs an increase of about $30 million a year, but not only for one year. This is going to continue for the next three or four years. It may be more; I don't know. It's hard to get the right statistics. Certainly for the next three or four years, there's going to be a continuing increase in the number of faculty researchers.

I'm here to ask for your help. We understand there are other needs. I know Don Avison from the University Presidents' Council will be talking of the need for infrastructure support. If we're going to nurture our young researchers, we really need to be able to get them started on well-supported research programs.

To give you some flavour for what I mean by all of this, my colleague, Dr. Linda Bartram, completed her PhD this summer. As a graduate student, she was supported on a networks of centres of excellence grant. The NCE was jointly supported by NSERC and SSHRC. This telling, learning assistance supported her while she was completing her PhD. She has now moved to a start-up company, SynchroPoint Wireless, in Vancouver. She is getting some help there, again from NSERC, as an industrial research fellow. I thought it would be useful to ask Linda a little bit about being involved in a university research project, and what she thinks it might mean for her company or others.

The Chair: Thank you.

Dr. Linda Bartram (Industrial Post-doctoral Fellow, Natural Sciences and Engineering Research Council of Canada): Thanks.

Good morning.

As Tom mentioned, I was a direct beneficiary of the NSERC and SSHRC overall research program. I also benefited indirectly from all of the good faculty members it supported.

I want to emphasize it's the faculty members who inspire undergrads to stay in the field and inspire them to go on to masters and doctorates in research. It's the research careers that are going to help us, especially our smaller companies, move forward from doing what everyone else does to doing what's new and carving out new avenues of opportunity.

SynchroPoint is what I would call a mature start-up, well on its way to selling products and carving out new areas. I am called a research scientist. What does that mean? We have a quote saying research is what we do when we don't know what we're doing.

The market analysts in my company tell us what people are already doing. They tell us how they are serving the markets that are already there. They don't look beyond. I look beyond. It's my job to go out and look at what people need, how people work, and how they deploy technology, and where the current things we are doing are not serving the needs that can be addressed by our future direction. Market analysts and economists are not trained to do it. We're trained to do it, because it's research.

In fact, people like me look at the economy and see everyone is building screwdrivers when we need hairdryers. While the rest of the world is standing around fanning the screwdriver to dry hair, we're going to build a product, a direction, or an initiative that moves us forward. It's going to benefit the economy as a whole.

I want to point out I don't do this in an island in my company. I am part of a bigger research community. I have access to the resources. I know the people. We all know we're working on things that can dovetail into each other and complement each other in particular ways.

In a highly competitive economy, we get to leverage resources. We benefit the students and the universities as much as they benefit us. Without the core research funding for the new faculty members, highly leveraged skills and knowledge use will wither. We'll once again move into a bunch of enterprises forging ahead on their own.

I think it's the wrong direction. I add my voice very strongly to Dr. Calvert's.

The Chair: Dr. Calvert, do you have a wrap-up comment?

Dr. Tom Calvert: No. I hope we've made our point.

The Chair: I think you said it all. Actually, come to think of it, a lot of people throughout the country are repeating very much the same themes. It means this committee will have to give a lot of serious thought to what you are saying.

I have to move on now to the University Presidents' Council of British Columbia, Mr. Don Avison, president. Welcome.

Mr. Don J. Avison (President, University Presidents' Council of British Columbia): Thanks very much, Mr. Chair.

• 0910

I'm doing what I often do, which is sitting here scribbling instead of listening to others, because I was struck, as colleagues were speaking here a moment ago, about the incredible opportunity to make a point that I think is a significant one. It really came as a result of the comments of the last speaker, building on the comments made by Dr. Calvert about the importance of research to a new economy, about looking for how to do things that we don't do now and perhaps don't even know about yet.

Let me offer what I think is one of the most significant examples of that: the Internet itself, which was a product of curiosity-driven research in publicly funded universities, a remarkable engine of growth in our economies, in this country and beyond. We don't spend enough time talking about the extent of the economic relationship between the new knowledge that's developed in our universities, the work that's done by post-doctoral students in those universities and beyond, and the impact it ultimately has in communities like this one, where the two most significant economic engines are the University of British Columbia and Simon Fraser University, and increasingly, the Technical University of British Columbia. That's only part of what I came here to talk to you about today.

I want to talk about the students who entered class a little more than a month ago here in British Columbia, and interestingly enough, not the students who entered either the Technical University of British Columbia, or Simon Fraser University, or the University of British Columbia, but the students who entered grade three here in Vancouver and in other parts of British Columbia, and in other parts of Canada, because I think those are the students who are the most relevant context in which to answer the three questions that you have put before all of us in stating the issues that you wanted to hear about in the work of the Standing Committee on Finance this year.

As I do that, I'll refer quickly to three documents. The first is the presentation document that was prepared for the committee, which I believe you have in front of you.

I've also provided a deck of materials that has been presented to the provincial government here in British Columbia, speaking about issues relevant to post-secondary education, and that I think is quite relevant to the issues I've just mentioned. I thought it would be interesting and useful, perhaps, to tell you what we're saying to the provincial government around some of the same kinds of issues.

Lastly, I'm providing a copy of a report from universities in British Columbia that is full of statistical information that I think will be very useful to you in getting a sense of what things look like here in the province of British Columbia right now.

With both the presentation materials and the deck of materials for the provincial government, you'll see that we start from the same place.

I have a quote from Dr. Pat McGeer, who was a researcher once and is a researcher again at UBC. Many of you may know that Dr. McGeer also spent a significant period of time involved in political life here in the province of British Columbia.

I went back and read Dr. McGeer's 1972 book Politics in Paradise about three years ago, and I was struck by the extent to which he understood quite clearly the challenges that were faced by the country. You'll see at the beginning of the materials what Dr. McGeer said, which I will briefly state here for the record:

Canadians in general, and British Columbians in particular owe their prosperity to natural resources. It has been the case in the past but it would be very wrong to assume that it is going to be the case in the future.

Within two generations almost the only resource worth having will be a well-educated population and we have about that space of time to convert our natural resources into human potential through the educational system.

I'd suggest to you that Dr. McGeer had it dead-on right. We didn't move nearly quickly enough in British Columbia. Our resource extraction economy will remain important to us. It continues to be, and will continue to be, one of the most significant parts of the economy in the province of British Columbia. But we did not move as rapidly as we needed to, to ensure that British Columbians had the opportunity for access to post-secondary education.

In the presentation materials, you'll see an indication of where we sit in the province of British Columbia right now compared to the rest of the country on degree production. I think it's important for you to have a sense of this, British Columbia being one of the larger provinces in Confederation.

Right now in B.C., when we compare against the rest of the country, we sit dead last compared to the rest of the provincial jurisdictions on degrees that are awarded in this province, and we get trapped, as many people do, in the interprovincial comparisons. We see, both on the post-secondary side, and significantly, on the research side that you just heard about, that we're losing significant ground to other jurisdictions.

• 0915

Let me briefly mention that the general information you have on degrees awarded in British Columbia that shows us at 80% of the national average is provided in somewhat greater detail on the next page, which will show you that when you look at it in closer detail and see where those degrees are, in a number of the areas that relate to the emergence of a new economy, our numbers are significantly lower than that. Around engineering and a number of the others, we're down in the nature of about 50% of the Canadian average.

There's reason to be optimistic there. In B.C. we've recently seen some significant announcements that suggest that we will be moving in a different direction. Dr. Calvert briefly mentioned the decision by the provincial government to double the number of degrees in computer science, computer engineering, and electrical engineering. So those numbers should be moving up significantly over the course of the coming years, and that's of fundamental importance to the province of British Columbia.

On research, I think you've heard this theme a number of places across the country, and I'll only speak to it briefly here today. The critical issue is the support for the indirect costs of research. That has been an outstanding issue for an extended period of time. The federal government, through the last several budget cycles, has taken a number of steps to deal with the importance of research, with the increase in the funding that has been made available to the granting councils and other areas that are relevant to opportunities in post-secondary education, but the indirect costs remain an outstanding issue.

There is a connection, I suggest to you, between that issue and the interests of that student who entered grade three or grade four this year, because without support for the indirect costs of research, the money has to come from someplace, and generally it has been coming from within the general operating revenues available to the universities, which means the number of seats, the number of opportunities and the nature of the experience, is eroded as a consequence of the absence of the availability of indirect cost support.

It's a fundamentally different situation than what exists across the border at the University of Washington and in other American universities, where the federal government has consistently provided indirect cost support for research that is federally sponsored. It would have a dramatic, very significant impact on the capacity of Canadian universities to meet the reasonable needs and expectations of Parliament, if we had the additional support of indirect costs.

To remain a player in the new economy, the single issue that you need to give concentrated attention to is that of indirect costs—along with some of the other ones I've mentioned here already today, but I suggest to you, absolutely the most significant one is indirect costs.

To provide Canadians with an opportunity to succeed, we need to expand the opportunities to secure access to the post-secondary environment. There, there is a fundamental need for increased cooperation between the federal and the provincial levels of government, something that has not existed adequately in this country for a very long period of time—and I say that to you having sat for two years in the chair of the deputy's committee that reports to the Council of Ministers of Education on the provincial side. To create the economic and social environment where Canadians can enjoy the best quality of life, I think the answer was in the second report on the health of Canadians, that education is absolutely one of the most fundamental keys in ensuring that this goal is met.

That's a rapid recital of a lot of material set out in the presentation documents. I'll leave it at that so that I can answer any questions the committee might have.

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

We'll now hear from the Canadian Parks and Wilderness Society, B.C. Chapter, conservation director Ms. Sabine Jessen. Welcome.

Ms. Sabine Jessen (Conservation Director, Canadian Parks and Wilderness Society, B.C. Chapter): Thank you, Mr. Chairman and members of the committee. I'm very pleased to be here.

I'll give you a little bit of background about our organization, and then I'd like to talk about two issues of importance to us in your pre-budget consultation.

You have probably heard from our organization before, but Canadian Parks and Wilderness Society was founded in 1963. We work on wilderness issues across Canada, and we have helped to protect over 400,000 square kilometres of wilderness in Canada. In British Columbia, we've been active on both terrestrial and marine issues. I work in particular on marine conservation issues here in British Columbia, which is one of the reasons I also have a focus on ocean and marine issues in my brief.

I should mention that I'm a member of the Minister's Advisory Council on Oceans, which advises Minister Dhaliwal, the Minister of Fisheries and Oceans, on national ocean issues.

There are two main issues that I'd like to talk to you about today. One is support for Canada's ocean strategy, which has been in development for a number of years, and the second is to re-emphasize and provide a western perspective on the Green Budget Coalition's work, which I know you've already heard about. This is more just to give kind of a western approach to that, and I'll launch first into the oceans strategy.

• 0920

I'm sure most of you know that we are a maritime nation and that much of our economy and society is wrapped up in what happens to the oceans. We do have the longest coastline in the world. Eight of the ten provinces and all three territories directly border on the oceans, and 25% of our population lives in coastal zones. Ocean industries are really important to the Canadian economy; they generate about $20 billion in economic activity.

One of the issues that is emerging in the oceans is that where once our interest was basically focused on fisheries and transportation issues, there are now all kinds of new and emerging ocean activities. Because of these, we are also faced with conflicts in the oceans created by some of these different activities. While there are opportunities for the oceans to generate significant new economic social and cultural benefits, we also have to be aware that sometimes these new and emerging activities do conflict. We need to be able to manage those activities in a more integrated way.

The other issue of concern to our organization is the protection of the biodiversity of Canada's oceans. Both here and around the world, biodiversity and the marine environment in general are at risk from a variety of sources and impacts, whether it's a case of pollution from both land- and sea-based activities, the introduction of alien species, the destruction of habitat—the litany goes on. We've seen the results of some of these, for example, the overharvesting of marine resources on both the east and the west coasts and the enormous economic dislocations and social issues those kinds of things do generate.

Although we're making some effort to address some of these issues, the degradation of ocean environments both here and around the world has continued, and we need to have a more integrated approach to the way we address these issues.

In 1997 Canada actually became a world leader by introducing and passing Canada's Oceans Act. One of the requirements under the Oceans Act is that the minister develop an oceans strategy to better manage all these different activities that are going on in the oceans. Now, implementing this strategy is not only the responsibility of the Minister of Fisheries and Oceans and not only is there complexity in terms of the activities that go on in the oceans, there is also complexity on the governance side. We have 20 federal agencies that have some responsibilities in the oceans, this in addition to provincial and other levels of government that have some jurisdiction over oceans issues. One of the key elements of the oceans strategy is to bring all those different jurisdictions and responsibilities together to take a more coordinated and collaborative approach on how we manage our use of the oceans.

In the 2001 throne speech the federal government did commit itself to implementing a more sustainable management of Canada's oceans as required under the Oceans Act. Now, the Department of Fisheries and Oceans has implemented some pilot projects across the country since 1997 when the Oceans Act was passed. However, my point to you here today is that if it is to do this more fully, it has not been allocated the necessary new resources to be able to fully embark on a national oceans strategy, which is urgently needed. It is my understanding that the minister is going to cabinet this fall to request the resources required, and I would encourage this committee to support that request.

The second area I'd like to speak to you about today is natural heritage protection, mostly on the terrestrial side but also including marine issues. As I mentioned before, you've heard some of these points through the Green Budget Coalition, which is a broad coalition of groups from across the country working on environmental issues. One of the areas is protecting and conserving the natural heritage, which includes the creation of new national parks and also marine conservation areas by Parks Canada.

• 0925

Again, these are not new initiatives, but there have been consistent commitments from this government over a number of years to move forward on this. We actually have some fairly concrete numbers here about what this requires, namely $493 million over the next five years. There are a couple of components to that. Certainly, there is broad public support to supply the kinds of resources needed, and there is a recognition of the need to move on establishing national parks and ensuring as well that the ecological integrity of these areas is maintained.

To give you a bit of a regional perspective on this, I might mention that there are two regions in British Columbia that do not yet have national parks. They are northern British Columbia and the interior grasslands. In the case of the latter ecosystem, it is the most threatened ecosystem in British Columbia. One-quarter of the endangered species in Canada are associated with grasslands, so this should be more of a priority in terms of completing the national parks system here.

In addition, with respect to maintaining ecological integrity, parks reports have indicated that there are a number of national parks in B.C. right now, including Pacific Rim on the west coast and Revelstoke and Glacier Parks in the interior, that are threatened by internal and external stresses. Both of those do require additional funding if we are to address those issues.

We have seen that the benefits of a healthy parks system are enormous. Here in British Columbia a number of studies have been done to show the economic benefits of having both national and provincial parks, and I'll give you some of those numbers. In British Columbia, parks generate $170 million in tax revenues for both levels of government, and of this $130 million goes directly to the federal government. Every dollar spent on park operations generates about nine dollars spent by visitors, and there are about 200,000 jobs that are currently sustained by nature-related activities.

Again, I'd just like to emphasize that dealing with both completing the national parks system and maintaining the ecological integrity is a priority for Canadians, and I'd also urge you to consider supporting the oceans strategy.

Thank you.

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

We'll now hear from the B.C. Road Builders & Heavy Construction Association and its president, Mr. Jack Davidson. Welcome. It's nice to see you again.

Mr. Jack Davidson (President, B.C. Road Builders & Heavy Construction Association): Thank you, Mr. Chair and committee members; thank you for your time and for listening to us.

I'll give you a little background. The B.C. Road Builders & Heavy Construction Association was founded in 1966. It comprises the kind of hard-driven, competitive, free-spirited people who opened up this province and who continue to make it possible for goods, services, and tourists to move about our province. We want you to recognize that in British Columbia, and indeed in all of Canada, the strength of our economies has always been based on good transportation.

Here's what we think. Canada must create the tools to attract, support, and retain human and investment capital. Canada cannot be passive in an increasingly competitive environment. One of these tools, maybe one of the most important of these tools, is efficient, competitive transportation infrastructure. Canada must build on the foundation of our traditional resource-based industries as well as continuing to diversify into the new knowledge-based sector. Canada must strengthen the transportation infrastructure that links our provinces to continental and global markets.

Transportation and highways infrastructure is an essential component of a strong economy. Regional productivity depends highly, if not completely, on the effectiveness of transportation systems. One in three jobs is dependent on trade, yet the trading system in B.C. is prone to excessive levels of congestion, and I assume the problem is national. Traffic congestion and delays increase the costs of transporting goods, reducing our competitiveness in world markets.

• 0930

The poor, almost shameful, condition of the Trans-Canada Highway system is driving container traffic south through Alberta and into the United States, where it's linking to U.S. ports. We're losing business.

Tourism opportunities will never be maximized as long as our most supernatural assets are hard to reach. Residents and visitors alike need safe, comfortable, and affordable transportation systems to access the natural splendour of our province and indeed all of Canada.

We do not have a competitive north-south route that can link the north with the United States through the Okanagan, which would be a huge trade corridor for us. Throughout British Columbia our highway and side-road access to our resource-based industries is inadequate and in a state of decay. Efficient access to and from our border crossings, our ports, and our airports is non-existent.

Highway-related accidents and injuries due to poor roadways tax our already overburdened health care system and negatively impact our quality of life. And quality of life is what we are here in Canada for.

Canada in the budget must support and promote the advantages and global competitiveness of all its regions.

Please consider, and we believe this strongly, that before we can have the health care and education programs the public is demanding we must first have a strong and robust economy to pay for it. To build such an economy you have to consider strengthening and putting money into a viable and competitive transportation system. Funds spent on transportation will return dividends in economic activity and create more tax revenue than it costs. Roads equal jobs. Canada is coming into a time of economic concern, at any rate, and to move us along and build our economy we need a transportation industry infrastructure that's competitive.

Recently the government's action to make airports safer will make it less desirable for business to use air transportation for the movement of people and products. They are going to need and require better transportation services on the ground, so you need a refocus on ground transportation.

That's all I have to say. Thank you very much for listening.

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

We'll now proceed to the question and answer session. We'll have a seven-minute round for Mr. Epp and Mr. Nystrom and then we'll go to Mr. Cullen and Ms. Barnes.

Mr. Ken Epp (Elk Island, Canadian Alliance): Thank you very much, Mr. Chairman.

Thank you all for being here and giving us your collective wisdom this morning. I'd like to begin with the universities and hope to get down the list in my time.

One of the things we hear consistently, including from you, is that we need, as a country, to invest more in research and development. I wonder whether you have any comments with respect to the administration of the funds that are presently designated. There seem to be some bottlenecks in getting the money to the right people at the right time, and I wonder whether we could improve some efficiency there and thereby get a bigger bang for our buck.

Mr. Don Avison: I'll start with that one.

Certainly it's an issue that can continue to have results and some improvements, but I think it's important to note that there has, in my view, been some significant improvement in the administration of research grants over the course of the last several years.

• 0935

We've seen with the granting councils that the extent to which the resources are moved to the researchers I think is a better situation now than it was five or certainly ten years ago in this country. While we would seek to strive for an improved level of performance, I think it's important to recognize that we've seen some significant improvement over the course of the last decade, in part because of some of the initiatives undertaken by the federal government in reinvestments as a result of the last three or four budget cycles.

In addition, and I think this is an increasingly significant issue, the accountability mechanisms that have been put in place around research have also resulted in increases in the efficiency of the communication of the results of research back to the public interest and to government. So on that side, as well, I think we've seen some improvement.

In answer to the question whether there is room for further improvement, sure, but it's important to recognize that improvements have taken place.

Dr. Tom Calvert: Perhaps I could add a brief comment.

Canada has a variety of models for getting money out to the people concerned, and I think it's great that we have models that suit the different circumstances. One model I'm familiar with was the network of centres of excellence, where a fairly large budget, in this case it was over $3 million a year, came to this research network and then was distributed to the different researchers in the field.

But as Don said, there's a tension between having accountability but also allowing some creativity. I think, to be frank, some agencies have been concerned that as a result of concern over HRDC and how some of their funds were administered, everyone else may end up having to be so accountable that you fill in time sheets by the hour, by the day, and by the week. And I think there's a danger of closing things down as well as being accountable.

Mr. Ken Epp: And we've heard that sometimes researchers spend an inordinate amount of time justifying their project instead of working on their project, so there is a balance to be reached there.

Is it Dr. Avison?

Mr. Don Avison: No.

Mr. Ken Epp: It isn't? We won't give you an honorary degree in this committee.

President Mr. Avison, then. You mentioned that British Columbia is about 20% below the average in terms of degree completion. Have you done a study as to the cause of that? And if you have, what were the results and what do you expect the federal government to do about it? Because, remember, we're here as a federal finance committee. We are preparing a report to the finance minister, who's going to prepare a budget, hopefully in the next little while. So my question stands. What's your answer?

Mr. Don Avison: So where does this come from and what does it mean? It's not particularly difficult. First, the good news. The situation has improved significantly over the course of the last decade or so. If you looked at the same issue a decade ago in the province of British Columbia, you would find that the degrees awarded...and we actually have very good numbers on degrees completed. Once people get into the system, they do well; they secure their degrees.

Our 1998 graduate follow-up survey tells us that 96% of the people who have received those degrees have attached to the labour market. So the value of the investment is pretty clear. But if you looked at this ten years ago, it would tell you that 65% was the number in comparison with the national average. So we've gone from about 65% up to 80%, and that includes not only the universities but all of the other degree-granting institutions in the province of British Columbia as well.

Part of this is a result of a conscious decision on the part of British Columbia that it could secure its resources, its intellectual capital, from elsewhere. The thinking was that if we made our investments elsewhere, people would come to the province of British Columbia and we could secure the benefit of the training of people who were trained in other provincial jurisdictions and in other parts of the world. And increasingly that is not a sustainable proposition.

So British Columbia has a lot of catching up to do to be successful in increasing the opportunities for British Columbians to have the benefit of post-secondary education.

Let me try to give you just a bit more information, as well, about what some of this means. It's not only 80% of the national average. We can look at some of those faculties, some of the disciplines that are identified in the materials I've given you. At UBC this year it took a grade point average of 90% to be able to secure access to the faculty of commerce at the University of British Columbia, and increasingly we're seeing that same phenomenon in other universities and in university colleges across B.C.

• 0940

What's the interest of the federal government? I'd suggest to you it's quite significant, that there is a blended federal and provincial jurisdiction. If you look at it from the purely constitutionalized point of view, the jurisdiction is provincial. If you look at it in terms of the national interest, if we don't have the capacity to develop the human capital to be effective into the future, then ultimately that will translate into a federal interest, because the province won't have the capacity to be as effective at the national table. And you know the economic numbers about where B.C. sits right now and how precarious the position is for British Columbia as an economic driver for the country as a whole.

We suggest to you that getting on top of this issue is critical. Where to start? Some of the pressure comes off if we deal at least with the issue of the indirect costs of research, which is a federal responsibility.

There are some other areas where I think the federal government can make some significant contributions in moving us forward, recognizing this as an issue that is of pressing and substantial concern to the national interest, not a purely provincial interest that never results in the dialogue, federally and provincially, that I think is absolutely essential.

The Chair: Mr. Epp, next question.

Mr. Ken Epp: My time is up. Should I keep on going?

The Chair: You can have another question. Go ahead.

Mr. Ken Epp: Let me do one more then.

I'm really curious about the fact that you say Canada is way down in research investment. I think primarily we're looking at the United States as a comparison point there. Then in your little graph you showed that B.C. was at the very bottom of this. That can't be the federal government's fault; that has to be your fault. You haven't been in there scrambling, fighting, getting at it.

I'm saying that in order to entice you to respond.

Mr. Don Avison: Ken, you know I'm going to.

There are a couple of things. I'll start off with this graph you have in the package, which I think my colour printer is embarrassed to print because it demonstrates the extent of the widening gap between the United States of America and Canada.

I believe this is the very graph that was put in front of the federal finance minister a number of years ago and caused him to realize that investing in research was absolutely essential if we were going to be successful as a nation.

Is it a comparison against simply the U.S.? No. As Dr. Calvert indicated to you earlier, we sit fifteenth in the OECD on research and development investment, not a very happy place for a country that takes a seat at the G-7 or G-8 table.

Is it the responsibility of universities? I'll acknowledge that we have not been nearly loud enough in seeking the resources that are absolutely essential to be successful. But remember, these are public universities; they receive their funding in research from the federal government, from the provincial governments in some cases, and the private sector does its part. In British Columbia the private sector is responsible now for about 13% of the available funding for research in British Columbia universities.

Collectively, we all have this responsibility. Unless we take it seriously and unless we deal with issues like the indirect costs of research, then we should expect to remain mired at fifteenth or fourteenth. And as we're moving toward a knowledge-based globally competitive world, that's not a recipe for success. I suggest to you that it's important to drill down further into the detail. We've done that. If you take a look at the issue of the graph that shows Canada at fifteenth, as you quite rightly point out, British Columbia's significantly down from that. We're actually someplace below Italy on the level of investment in research and development.

The Chair: Mr. Nystrom.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Maybe I'll follow up in the same area.

In terms of the research you've done, why are we so far behind? What's gone wrong? We have federal jurisdiction, provincial jurisdiction, the private sector, universities, and so on. Why are we doing so badly compared to others?

The other part of the question is looking into the future. The goal, you say, is to be in fifth place, and I certainly agree with that, or fourth or third or whatever. But is that realistic when you consider what's happening in the rest of the world? They have goals too. Are they doing things that will more than likely see us remain in fifteenth, or only go to tenth or twelfth, or fall to twentieth? I imagine the Swedes are doing a fair amount, and the Germans, the French, the Japanese, and so on.

How does it look in terms of your crystal ball? You're here 15 years from now and you're making a presentation to the then finance committee and you're going to explain to us what happened and why it happened.

Dr. Tom Calvert: You are absolutely right, it's not a fixed target; the competition is running and running fast so we have to run even faster to catch up. It's a complicated issue, and it involves all the aspects of the economy. How do you build the industrial base that can support, through revenues and taxation, the kinds of universities we need in order to produce the researchers and the engineers who will help build this economy?

• 0945

My colleague Don is an economist, and I think he's probably better at this than I am. I find it challenging.

Mr. Don Avison: I find it quite concerning and I think the way you pose the question is absolutely dead-on: what would this look like in 15 years? In five years it will look significantly worse, unless we recognize this is an issue that requires quite urgent attention.

Let me try to answer the question this way. We've been there before as a country. As we came out of the second world war, where there had been significant changes in the nature of the global economy, Canada was faced with a number of important decisions about how to deal with the future. I think we understood we wouldn't deal with the future by simply doing what we'd done in the past. We needed to recognize that the world was changing around us and we must change with it.

One of the essential keys to deal with the change was to invest in education, and we did that. And over the course of the 20 years that followed, Canada had one of the most enviable records in investment in post-secondary education, and in education generally.

I think it's the very thing that put us in a position to take a seat at the G-7 table. It's one of the things that made it most possible for Canadians and for Canada to have the prominence in the world that it now does. But are we at risk? Absolutely we are. Do we face challenges? We all know we do, and they're more significant and more difficult now as a result of the events in mid-September than they were in August or in July.

The world is not the same now as it was at the time this brief was written, but the issues, I think, are as pressing and as substantial and as critical to the future of the country. We can't plan only for how we get through the next year. We need to pick that point on the horizon that you've identified, Mr. Nystrom. What does this look like in 15 years? Where do we want to be? Let's work back from that to plan for success.

I figure that investment in research, an investment in the human capital—making sure that we're ready for that student in grade three who will be the one most impacted by what this looks like 15 years from now—is really the way we need to focus our energies.

Dr. Linda Bartram: Let me, if I may, talk a little bit about the EU model, with which I had some personal experience, and the way that, for example, the Germans go about this.

I'm an NSERC post-doctoral industrial research fellow. There are 80 of me a year in Canada. That means there are 80 people out of the entire doctoral population tasked with benefiting Canadian industry in some way with our research capabilities and our skills and our knowledge. That is a minuscule number. There is way more close collaboration in the EU—especially in Germany, France, and the U.K.—between researchers at various levels of their careers and industry.

And it's not just as simple as funding a graduate student through school and saying “Here is the $15,000 to pay for this graduate student this year.” The model is more extensive. It enables more universities, labs, and industry and government to participate in consortia that aren't overwhelmed with administration, to note a problem mentioned earlier.

What it produces is people who are intimately familiar with the problems that need to be addressed in the following five to ten years with their economies, because they have some experience and some knowledge of the domain and so don't have a huge transition to make.

It also produces, it seems to me from my personal experience, a group of industries and enterprises who are really closely, keenly aware of how valuable that resource is to them and are actively in there supporting it. That's a relationship that in my limited experience here—and I have been involved in industrial-academic collaboration for the better part of my graduate career—is more limited. I think it's a very viable one for enriching the economy.

Mr. Lorne Nystrom: I guess my other question would be on the national parks issue. How many more national parks do we need, if you were making a recommendation, and what kind of timetable do you have?

Also, in terms of highways—we don't have a national highways program, and you were commenting in your brief on that—what percentage of a highways program should be funded by the federal government?

I also noticed that in your background paper you're talking about, in some cases, using road user fees. That's controversial. In some areas of the country.... I was in New Brunswick on Saturday, where it's a controversy that they have user fees on some of the roads—toll fees, they call them down there.

I guess those would be my two questions: one to each of you.

• 0950

Ms. Sabine Jessen: On the national parks side, Canada still needs to establish fourteen national parks.

Mr. Lorne Nystrom: Fourteen?

Ms. Sabine Jessen: Yes, fourteen. The way Parks Canada has organized its process, it has a system plan. It has divided the country into natural regions and is trying to get one site to represent each region. There are still fourteen regions in Canada. That's on the terrestrial side.

On the marine side, we're even further behind. They have a program for national marine conservation areas. The legislation is currently before the heritage committee. On the marine side, there are still 26 out of 29 sites that need to be completed. So we still have a lot of work ahead of us.

Mr. Jack Davidson: We don't have a national highways program in Canada, and certainly the road builders across Canada have been lobbying for probably twenty years to get one. We think Canada—the federal government—has a responsibility to allow Canadians to trade with the United States and with one another. So our main arteries—east and west, and north and south—should be a federal responsibility.

How much should they pay for those? In British Columbia we'd like you to pay 100%, because we're broke and have no money. If we want anything done, the federal government is going to have to do it.

On the other hand, we're certainly realists and hope that the federal government and the provincial government can strike some deals, fifty-fifty. The last infrastructure program could have helped if it had been directed more to transportation. We feel the fuel tax, where you collect and invest on a ten-to-one ratio, is way out of line, and we would like some of our money spent in B.C. on roads. The economy is grinding to a standstill in B.C., in Manitoba, in Saskatchewan. In Alberta, actually, it's gone over the hump and is on its way down. Transportation is the big issue.

I forgot your second question.

Mr. Lorne Nystrom: The second one was on fees. You mention here in your brief—

Mr. Jack Davidson: Yes, we support three-P projects, absolutely—

Mr. Lorne Nystrom: What? I'm sorry.

Mr. Jack Davidson: “Three-P”: public-private partnerships—

Mr. Lorne Nystrom: Yes.

Mr. Jack Davidson: —involving toll roads, user pay. If you had a borderline and allowed the truckers to pay to get through within half an hour, they would all pay.

Mr. Lorne Nystrom: Are you talking about national roads, or certain roads, or what? I assume you aren't talking about the link to someone's house or anything like that.

Mr. Jack Davidson: No, I mean national roads: border access; access to terminals; access to ports.

Mr. Lorne Nystrom: Okay.

Mr. Jack Davidson: We could build a bridge to Vancouver Island and charge them $500 a trip. They would pay, because that's how much it costs them in time and fees to take the ferry.

Mr. Lorne Nystrom: But could you build the bridge?

Mr. Jack Davidson: Well, we could do that. They don't want one on Vancouver Island. That's the problem. They like it over there.

The Chair: Ms. Barnes.

Mrs. Sue Barnes (London West, Lib.): Thank you.

[Inaudible—Editor].... You gave us operating costs in the ratio of one to nine. By any chance, do you have anything from original capital costs and including operational costs?

Ms. Sabine Jessen: I'm sorry, I don't have those here now.

Mrs. Sue Barnes: Okay, that's fine; I didn't think you might have the figures. If you come across them, could you send them in? I absolutely believe in the establishment of national parks, but I think it's misleading when we just get a ratio that's an ongoing cost.

Probably the most compelling part for me of the university brief I read was that we're probably losing some of the students who are capable of doing university studies. I go to nine high school graduations in my riding every year. I'm appalled that it's taking over 80% to get into most—I'm from Ontario—universities. What about those 70% students who are quite capable, I think, of completion and 15 years ago would have been accepted into programs? I think that's a bigger issue. It's not necessarily this budget issue, but it's a huge issue that I think Canada and all levels of government have to address.

• 0955

We're trying to do a budget right now. Of the two issues I've heard with respect to universities, I'll deal with the simpler one first, because you just touched on it—SSHRC budgets. Historically the provision has been much lower. Are you in favour of increasing SSHRC? I would like just a very simple answer on that.

Mr. Don Avison: Absolutely.

Mrs. Sue Barnes: With regard to the CFI and the chairs, the federal government has put some parts of infrastructure costs surrounding them, so I'm taking it that your emphasis on indirect costs was related to the major granting councils.

Mr. Don Avison: It relates to the issue of the operating costs that result from a number of those issues, whether it's the Canada research chairs or as a result of the activity that has taken place through the essential investments that were made through the Canada Foundation for Innovation.

The indirect cost really relates to the operating costs that result from all of this additional activity. Ironically, there's a relationship between that issue and the one you mentioned a moment ago—that by simply wishing away that expense, it results in a significant burden that the universities can't meet. Therefore, it has an impact upon the capacity of universities to address the needs of those students who have an increasing level of GPA weight on them to be able to access programs and the nature of the experience they can expect when they get there.

The system doesn't look the same today as it did ten years ago. The ratio of students to faculty has gone up dramatically. The opportunities to be able to secure the same educational experience have gone down significantly, and the future looks quite troubling.

If you take a look at the numbers in British Columbia, where we have the highest rate of growth in the 18- to 24-year-old age group, you'll see that we're going to see a very dramatic increase over the course of the next decade. It's approximately between 12% and 14%, depending on just how many people have actually left British Columbia over the course of the last couple of years. We think the number is actually greater than that, if you take a look at it in terms of the increase in the number of mid-career learners who are coming back.

I think the great unknown factor is the significant increase in the recognition of the importance of post-secondary education, which is driving up that participation demand within the 18- to 24-year-old age group. The demand is greater. The capacity has declined. As a result, with all of those unmet costs, the ability to really meet those needs is going to put a dramatically greater strain there over the course of the coming decade.

Mrs. Sue Barnes: There are issues that are bad across the country. I'm from Ontario, and Ontario gives the lowest per capita dollar to post-secondary education, even though it's one of the richer provinces at this time.

I'm concerned about rural-urban access flips. I think we're going to have to do some studies, because there is going to be discrepancy on access to money for education.

I want to get back to indirect costs. I really do thank you for the detailed brief that shows us, by university, up to 78% costs of.... I think a lot of us shuddered when we first saw the 40% as the indirect costs. That is a battle, and I'm stating to you now, it's not a won battle around this table yet. So I'm giving you the opportunity to really expand. You do not have to convince me; I come from a research city. I have thousands of researchers—medical, industrial—in my town in London, Ontario, so I'm the converted. But I need you to address the necessity for indirect costs and how, right now, tuition rising is actually robbing from the undergraduate. I'm going to give you the time to make that case again, because I don't think you should assume it's a won battle.

Mr. Don Avison: I certainly appreciate the opportunity, nor do I proceed on the assumption that the battle has been won. It's a difficult issue, because coming to terms with the indirect costs is not one of those issues that reach out and say to you, yes, we must deal with this.

With regard to access for students, it's very easy to make the argument, and for that to be understood by people who are making the important policy decisions. As to increased investment in research, it's not as difficult to make that argument. This is the single most difficult one to make and be heard—to really have it understood that the indirect costs are critical. In part, I think it's because in some cases we have failed, as Mr. Epp has suggested, by inadequately making the case about just how important this is.

We need to engage policy-makers and those who make the political decisions at the federal and at the provincial level and, most importantly, the public to ensure this is adequately understood.

The issue is not new. When we appeared before the Standing Committee on Finance in this city a couple of years ago.... I actually went back and read the brief I read then, and it bears some striking similarities to the one I've put before you today. The circumstances have changed. The issues have become more difficult and indirect cost remains as important now—I think more important—than it was at that time, because the strains and the pressures on the system are that much more identifiable and that much more troubling.

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It simply will not be possible for universities to effectively take advantage of the research and development opportunities that might be there if the indirect costs issue isn't met.

My colleagues Dr. Calvert and Dr. Bartram have been here quite rightly identifying to you the need for additional investment and research in the granting councils, and that is something we support, but increasingly universities are coming to the conclusion that we're reaching the stage where we're going to have to say that's enough. Without some attention to the issue of the indirect costs that are driven by this research investment, the pressure on the universities is simply going to become too great. The erosion within the universities in our ability to meet the core needs of the student population that we have, at the very time when we're trying to increase that access opportunity, will simply be too dramatically great for us to be able to sustain the quality that's absolutely essential if we're going to meet that point 15 years out on the horizon.

So coming to terms with the indirect costs of research is probably one of the most important issues this committee has before it in this round of hearings in order to give quality advice to the Minister of Finance and to government on how they'll deal with the very difficult budget decisions you have before you this year.

We won't get there on research and development unless the indirect costs are adequately addressed. I think, without going on for a significant period of time, that's the best I can do. We can provide additional material. This is something I feel truly passionate about. I believe that there is a great incredible disconnect, that there has been a failure to understand that this pressure is actually going to challenge our ability to get where we need to go as a society. We've failed in adequately causing decision-makers to understand just how critically important this is.

Mrs. Sue Barnes: I just want to add that with CIHR grants, I'm hearing exactly the same words from the hospitals. I also have a number of teaching hospitals in my constituency with over a thousand medical researchers in a number of research institutes. It's not just the universities that the indirect costs affect, because a lot of these are affiliated with the university but the actual research is being done in a hospital and the hospitals themselves don't have the physical infrastructure and support.

With regard to the comments of Dr. Calvert and Dr. Bartram, I think the government's well aware of the innovation agenda. It's something that's high on our priority list, and essentially that's what you're talking about. It's not about reinventing the wheel. It's finding a new box.

Dr. Tom Calvert: I wonder whether I could say something on the indirect costs.

One way or another, universities' grants are usually more or less proportional to undergraduate enrolment. In different provinces it's done in different ways. At the end of the day, roughly, if you double the number of undergraduate students you double the grant, which of course is not directly associated in any way with the research that's going on. So it means if you're a university administrator, the way to optimize your budget is to starve the research side and grow your enrolment. That will likely give you a bigger budget. It's a crude approach, but it works.

Some years ago—30 years ago, actually—I taught in the United States for five years and I had a grant from the National Institutes of Health, which was great. But that grant included, I believe, 46% of overhead for the university. It also included my summer salary and one third of my academic year's salary. After that I had a little money for some research and graduate students. That's the comparison. That's how the University of Washington, for example, meets its bills.

Mrs. Sue Barnes: I think the papers and the documents and the charts have very well outlined that. I was struck by the fact that 78% at Harvard is going to soft costs.

Dr. Linda Bartram: By the way, it's not just commerce where students now need 90%; it's engineering, computer science, computer engineering, and some of the other applied disciplines. So let's be clear that the GPA for our incoming students is getting far beyond the reach of many of the very good high school students. I wouldn't have gotten into university with my 89.9 high school average. I wouldn't have gotten into computer science today if I'd applied from high school.

The Chair: Thank you, Mrs. Barnes, for that.

Mr. Cullen.

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Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chair, and thank you to the presenters.

I have a couple of questions for Mr. Davidson and Ms. Jessen, but I'd just like to pick up on the indirect costs of research.

I met with a departmental head not too long ago. He was in a research area, and he said that he'd heard about the indirect costs argument but that what he needed was research dollars. He said that money for the overhead costs for provincially supported research may go to the university at some level and that it may trickle down somewhere, but he never saw it. What he needed were research dollars.

I put that in the context of the federal government putting up the money for research chairs, the Canada Foundation for Innovation with over $3 billion, and the fact that we've been topping up the granting councils.

I noticed, Mr. Avison, that you made the same presentation to the province. How did they react when you said that the indirect costs of research must be met? If the federal government is responding—and I think we are in some ways though we can always do more—why isn't the province stepping up to the plate and backstopping these investments we're making?

Mr. Don Avison: Some provinces are, and in British Columbia we have seen the announcements of the new government here that there will be support for 20 additional leadership chairs in research. There is an issue here, namely that where there is provincially supported research, the province should step up to the plate and provide the indirect costs. They can't wish them away either. On the federal level it's unfinished business, and the indirect costs remain the significant outstanding issue.

You made a point about a researcher who says that he never sees the money. Well, you do see the library services. You do have the building to work in. You do have the additional support from the university infrastructure that makes it possible for that research to be done. What happens if the money is not made available? The researcher continues and asks the question, how is it that I don't get the money directly from wherever for this to happen? I think it relates in part to Mr. Epp's question as well. Is it possible for us to channel more of the money directly to the researchers to make sure it gets to the right place?

Mr. Roy Cullen: When did the provinces decide that they wouldn't provide support? I haven't studied this in any depth, but at some time it was decided the province would support post-secondary education, including teaching and research. Then somewhere along the way they said that they would support the indirect costs associated with provincially funded research, but as to the federal stuff, they were sorry, they just didn't have the resources or were not interested.

Mr. Don Avison: The provincial governments in a number of jurisdictions have increasingly supported the indirect costs that result from the provincial research they do support. Those jurisdictions—and Ontario and Alberta are the two that come immediately to mind—would take the position that if the federal government provides funding for research—and there is a national interest there, I argue—there should be a corresponding investment in the indirect costs of research.

A number of provincial jurisdictions understood the importance of this issue, but I would have to say to you that they were outside the province of British Columbia. I started by talking about Dr. McGeer. I think he really got it, but he couldn't move the hearts and minds of his colleagues—

Mr. Roy Cullen: I gather, then, that the province didn't jump up and say okay, we'll cover the indirect costs.

Mr. Don Avison: We don't know the answer to that yet because the federal finance minister will rise to his feet on February 19 and will speak to the important issues that face the country. In the same week—or in the same month, in any event—the provincial finance minister will rise to his feet and do the same thing in the province of British Columbia. My hope and expectation as they look to the future are that both of them will recognize the shared importance of addressing precisely this same issue, that the province will recognize and respond to its obligations, that the federal government will do the same, and that they'll do it in the public interest.

Mr. Roy Cullen: I hope so, because I think it is a national goal, a very worthy national goal, but that right now it is a bottleneck. I would agree with you there.

I'd like to move on. Mr. Davidson, you talked about north-south and east-west. Highways are generally a provincial responsibility, but you were talking about the national highway system, I presume. In this world of scarce resources, if you had to make a choice in British Columbia, would you strengthen the east-west arteries or the north-south?

Mr. Jack Davidson: I'd choose north-south because that's where of the majority of our trade is. I think that transportation decisions should be made solely on the issue of economic benefit. The riding or the area of the province doesn't matter. If you can justify increased commerce or a region's development through investment in highways, then it should be done. Certainly, our ports and our border link us to the rest of the world.

Mr. Roy Cullen: You mentioned the linkage with the Okanagan. Now, you have the Coquihalla Highway. Would you suggest taking a branch off that to the United States, and if you did, could it be financed with tolls?

• 1010

Mr. Jack Davidson: We have a corridor: Prince George-Vernon-Kelowna-Penticton-Osoyoos and the U.S. border. The U.S.A. has agreed to improve the road on their side if we get the road to their border. It would alleviate a lot of the traffic that now has to come down the Coquihalla through Vancouver or other Pacific ports.

Mr. Roy Cullen: What would the border town be on the B.C. side?

Mr. Jack Davidson: Osoyoos, I guess. I don't know what's on the other side. It's one of the ones where they have an orange cone after eight o'clock at night.

Mr. Roy Cullen: Could you finance that with a toll road?

Mr. Jack Davidson: Yes.

Mr. Roy Cullen: Ms. Jessen, you talked about the interior grasslands. What areas are we talking about? Is that the Okanagan?

Ms. Sabine Jessen: We're talking about the same region, which is the Okanagan, but also north of there.

Mr. Roy Cullen: Okay. There's a park that's being discussed now somewhere in the Gulf Islands, right?

Ms. Sabine Jessen: Right.

Mr. Roy Cullen: It's a Gulf Island park. What's the status of that? What is happening there?

Ms. Sabine Jessen: With respect to the Gulf Islands National Park, I think they've pretty much purchased the lands they needed to purchase. It's a different kind of national park because they've had to purchase a lot of private land rather than using crown land to create this park. Right now they're in negotiations with the provincial government over a number of other issues in order to finalize it. I'm hearing that they're quite close, and we might even have an announcement about it this fall.

Mr. Roy Cullen: Someone told me that for some of the private land the prices are becoming quite high because of speculation, and that maybe this could be a deal-breaker. Is that not the case?

Ms. Sabine Jessen: No. They have the core areas. I'm certain they would still like to be able to add to it, but they do have the core of what they need for the national park.

Mr. Roy Cullen: Good. Thank you.

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

I just have a question for Mr. Avison concerning this date of February 19. Where did you get it? It would make us very happy as it gives us a lot more time to write our report. You don't know how happy you've made this committee.

But I do have a question in reference to the budget and the timing. Do you think that Canadians would welcome a budget earlier than February 19?

Mr. Don Avison: Given the uncertainties that are out there at the moment, yes, I do. Canadians need to hear more about the vision we have for the future and how we're going to deal not only with the present but the future. They need to hear that we actually have an expectation for how we'll work our way through difficult times and that we have have a vision for the future that extends beyond the immediacy of the difficulties we now face.

The Chair: Ms. Bartram.

Dr. Linda Bartram: From the point of view of small, fast-moving businesses in my sector, I would say that this is indeed true.

The Chair: Mr. Calvert.

Dr. Tom Calvert: Yes.

The Chair: Mr. Davidson.

Mr. Jack Davidson: If the budget supported transportation, we'd like to hear it sooner than later.

The Chair: What if it doesn't?

Mr. Jack Davidson: If it doesn't, then we don't want to hear it ever.

The Chair: Ms. Jessen.

Ms. Sabine Jessen: I'd say that Canadians are expecting a budget sooner rather than later.

The Chair: Now, what about the deficit, Mr. Davidson? If we want to get the billions of dollars you and Mr. Calvert, Mr. Avison, and Ms. Jessen need...all these things cost money. How important is it for you that we remain in a non-deficit position? How important is it for the country?

Mr. Jack Davidson: I think that you can spend money if you are creating an economic environment for growth and for the ability of Canada to prosper. I think you have to do it. I don't think Canadians yet realize that we're in a slide and that we could be heading into some deep problems. The federal government's responsibility is to prevent that from happening.

The Chair: If we go back into a deficit, there's no question that it's going to have an impact on consumer and business confidence. That's a known fact. So unless you want to dispute that, what's the trade-off? In other words, how important is it that we continue to have balanced budgets?

Mr. Jack Davidson: I don't think it's that important if it prevents us from going into a bad slump.

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The Chair: So the fact that you would get into a deficit situation and interest rates would rise and it would have a negative impact on that side of the economy—

Mr. Jack Davidson: It depends on how deep it is and how you justify it.

I think that some the deficits we had in the past were just because we thought we could spend forever. I think that if you go into deficit, you have to be able to justify it on a strictly economic basis, no nice programs here and nice programs there. Every program has to justify itself in bolstering our economy, because we can't buy the stuff that everybody's looking for unless our economy is robust.

The Chair: Mr. Avison.

Mr. Don Avison: I can respond to the question in this way. I don't minimize for a moment the immediate pressures we face on the spending side as a result of the material change in circumstances that happened in mid-September. It's very difficult not to observe the extent to which spending has been taking place to respond to those issues over the course of the recent weeks, and that should be so.

However, if the cost of the necessity of responding to those immediate issues were to compromise our ability to meet the challenges of the future, if the cost was the innovation agenda, then I would suggest to you that cost is too high. We need to know where we're going to be when these things begin to settle down. If it took additional spending that had an impact on the country's deficit situation to preserve the innovation agenda, then I would say to you that's a price we would have to consider paying. I would urge you to do so if those are the trade-offs.

At the end of the day, some very difficult and important decisions are going to have to be made. We understand the importance of maintaining a fiscal state of avoiding deficit budgets. Universities understand that well, given the legislative requirement we have to avoid deficit budgets, and it's something we take very seriously. But there are critical moments when the circumstances change to such a degree that essential decisions must be made to ensure that we can still take advantage of where it is we want to be in the future. So that's the trade-off, in my view.

The Chair: There are a couple of things in reference to what you have just said. Number one, I think we need to see what the economic situation is, to get the numbers and to find out exactly what position we're in. I think we'll probably have to wait for a budget or an update for that. Number two, before this committee can actually say anything about the innovation agenda, we need to see the plan. We need to see the paper. We need to see exactly what the government is trying to achieve and how much it is going to cost. I think it would be premature for us as a committee to state anything about the innovation agenda until we see this paper, which I believe will be coming out some time soon.

So I think it's an absolute maybe in reference to this.

Ms. Sabine Jessen: Could I comment on that?

The Chair: Yes.

Ms. Sabine Jessen: Parks Canada has had its budget cut by 25% since 1993. If we look on the ground and at what's happening in Canada, we'll see that we're also losing opportunities to protect the natural environment. We have to move sooner rather than later to do that or we're not going to be able to complete the national parks system. We're going to lose what I would call irreplaceable natural assets, and there won't be anything we can do to replace them. So I think we have to look pretty carefully at that part of the agenda.

The Chair: Thank you.

We'll hear from Dr. Bartram, and then we'll go to Ms. Barnes.

Dr. Linda Bartram: I want to talk very quickly about the psychology of the deficit, because that's really what sways a great many of the forces that go on, this sort of cumulative psychology. It's a psychology right now of despair and an idea that the only thing we can do is to have short-term reactions to what obviously were long-term problems.

I'm speaking now of the university population and the tons of people I meet who are, like me, young workers out there looking at what happens to our families and at what goes on.

I think the point is more that if there were some kind of bold move that said this is our vision for the future, not for the next two years or not till the next election, and we're actually investing in something down the line, because it's really good and we believe this can happen, that would send a message that has a lot more than just an immediate fiscal benefit.

The Chair: Thank you.

We'll turn to Ms. Barnes for a final question.

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Mrs. Sue Barnes: I'm going to follow up on our chair's questioning, because I think it's important.

We're trying to find a balance where we say this government and Canada still have to retain fiscal credibility, no matter where we go. To some people, in very simplistic terms that means if you step foot in a deficit.... Some provincial governments across the country have laws in place now such that they can't do that. If they come up with emergency measures or follow through on tax cuts, obviously the other side of the equation is that somebody is going to be cut so they can stay out of a deficit situation. We're not so constrained at the federal level. We do have theoretical options here.

Many businesses and economists have said that you look at your debt-to-GDP ratio and at business cycles, not just annual deficit situations. Over a business cycle, you have periods where you're in surplus and periods where you're in deficit, and the true measurement could be—and perhaps in their terms should be—your debt-to-GDP ratio.

Theoretically, right now we're probably in a situation—even though none of us knows exactly by what percentage the economy will change this year—where conceivably we could go a few billion dollars into deficit spending and still have a downward track on debt to GDP. I'd like your comment on that proposition. We'll start with our economist.

Mr. Don Avison: I think I've been given that designation by Dr. Calvert. It's not my background. But I think you've quite rightly identified what the situation looks like at this point. We have still some significant room as a result of the prudent decisions taken over the course of the last several fiscal cycles. There's understandably a reluctance to put that at risk.

But again, the situation has changed significantly. It was changing before some of the recent events and it's more difficult now. But I agree completely with the point made by Dr. Bartram a moment ago, that it's important to articulate clearly a vision for the future and to increase the level of confidence that there's actually a plan to get us there. If that results in some movement into negative numbers, I think it's a price worth paying at this point, to ensure that the population can see a plan for the future that contemplates forward movement.

Mr. Roy Cullen: I have a quick question, Mr. Avison. On your chart called “CIHR Funding”, the share of Medical Research Council-Canadian Institute of Health Research funding for B.C. went down from just below 12% to just over 7%. Is that because you had a disproportionate share before, or now you're under-represented, or what's the reason for that?

I have another quick question. I must be misunderstanding your chart called “Degree Production”, because you have pharmacy showing over 120%. I don't understand how you can have more than there is in Canada. I'm obviously misunderstanding that chart on degree production.

Mr. Don Avison: Our degree production in pharmacy is above the national average; we show it as 120% of the national average. We have higher numbers for the production of pharmacists than other parts of the country.

We actually will use this information. We took this to the deputy minister of health to inquire whether there was an issue there that we ought to be concerned about. We were assured, “No, we actually need more of them, so don't do anything that would change the level of the production.” I think—I'm being a bit flippant—the reality is the country is under-producing pharmacists generally. So there isn't a problem in the actual supply and demand for pharmacists.

Mr. Roy Cullen: Then this is not the percentage of pharmacy degrees in Canada; it's against the norm.

Mr. Don Avison: It's against the norm of the national average. That will help you to understand why those other numbers are as troubling as they are, in engineering and business commerce and a number of the rest.

Dr. Calvert indicated earlier some of the natural pressures that result from the way funding takes place. There's a great pressure, and not just in British Columbia but in other parts of the country as well, to load up the number of the lower-cost degrees. That has meant you've seen significant slippage in a number of these areas. So we compare, in a number of cases, against a national average that may not be adequate when you take a closer look at it.

Medicine would be an excellent example, where we're 50% of the national average, but the national average is understood to be well below what we'll actually need, given the change in the demographics and population of the country.

Your other question was about research and the performance of British Columbia. It has declined significantly over the course of the last several years. At one point in time, the number we were at was on the order of 12.4%. We're down now generally to 7.5% to 8%. B.C. has 13.5% of the national population, but we're down around 8%. Alberta has 9% or so of the national population and is up around 13-plus% of the available national funding at this point.

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Mr. Roy Cullen: Why is that happening?

Mr. Don Avison: It results in part from the size of the research infrastructure available in the province of British Columbia. The British Columbia universities actually do well in the acquisition of research dollars, but the number of researchers per capita is dramatically short of what we see in other provincial jurisdictions.

Did we have the foresight, in this jurisdiction, of someone like a Peter Lougheed, who really understood the importance of tying research and development to the future of the country and made investments in the Alberta Heritage Foundation? We don't have that same experience here in the province of British Columbia.

We've seen moves in the province of Quebec and in Ontario to bring as much federal funding into those jurisdictions as possible. Is there a responsibility on the shoulders of the province to make sure it conducts its affairs to fully take advantage of what's available nationally? There is, absolutely. Is there a national interest? I say there is, given the transition in the nature of the economy.

If the provinces and the federal government aren't working closely together to ensure that across the country we get the full value of research and development and don't have an increased number of haves and have-nots, then we aren't likely to be successful in making sure we get to where we need to go. British Columbia will become an under-performer economically, and ultimately the national interest there will be recognized.

Part of the responsibility, absolutely, falls to the province to ensure they've increased the research infrastructure to fully take advantage of the opportunities the federal government has made available.

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

On behalf of the committee, I want to thank you all. You've been an excellent panel. We know exactly what your needs are.

I want to leave you with this very clear message. The fact is the finance committee has always taken a long-term view of issues. That's why we look at issues such as productivity, innovation, and others: to speak to a pro-growth agenda—a pro-growth agenda that is essentially required if we are going to have the revenue to sustain our social programs and the quality of life we as Canadians have treasured for many years.

The message you have stated, making reference to presenting a report that takes a long-term view, is right on. But we're also cognizant of the fact that we need to look at some immediate concerns, particularly those related to a national security package. We're happy with the way the government has been handling the issue thus far, but we'll have our own recommendations as to what needs to be done further down the line.

Thank you very much.

We're going to take a 10-minute break.

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• 1044

The Vice-Chair (Mr. Ken Epp): I'd like to begin this session of listening to witnesses for the pre-budget consultation. I'm Ken Epp, and I'm in the place of Maurizio Bevilacqua here today. He asked me to chair this part of the meeting.

We have four witnesses in this section, and we'd like to welcome you all: Maureen Shaw, the president of the College Institute Educators' Association of B.C., and her colleague Roseanne Moran; from the First Nations Summit Society, Harold Calla and Jason Calla; and from the Tenants Rights Action Coalition, Linda Mix.

Ms. Linda Mix (Community Legal Worker, Tenants Rights Action Coalition): I'm joined by Vanessa Geary.

The Vice-Chair (Mr. Ken Epp): Okay, joined by Vanessa Geary. Welcome.

And finally, from the Indian Taxation Advisory Board, Mr. Manny Jules.

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As you know, you have five to seven minutes to make a presentation. We'll listen to all the presentations in sequence, after which we will engage in questions, and hopefully you'll give us answers to all the questions the members of the committee have.

Let's begin with the College Institute Educators' Association of B.C., Ms. Shaw.

Ms. Maureen Shaw (President, College Institute Educators' Association of B.C.): Thank you. I'm very pleased to be able to meet with you this morning.

The College Institute Educators' Association of B.C. represents more than 7,000 educators in the province, with representatives in colleges, university colleges, institutes, and agencies throughout the province. In our institutions, there are more than 83,000 full-time equivalent students. They're in a wide range of programs, from trades training to academic, career, ESL, literacy, and so on. We've included a full description of our system in our brief to you.

I want to highlight a few of the key points in our written submission: one, the importance of providing core funding for our institutions; two, supporting the research activities in our sector; three, the importance of English language training and the need for adequate funding; and fourth, training and the way it's being financed, and some of the problems with individual learning accounts.

We all know the vital importance of investing in people and investing in post-secondary education. Increasingly, Canadians are indicating their support for that.

We know the tragic events of September 11 have created more uncertainty for us all. We've seen some of the negative effects, both in terms of the spiritual effects of that day and the economic effects. We need a government that's going to support people and support their future, and their hopes for the future.

I'd like to focus on some of the problems that have occurred because of the reductions in federal cash transfers for post-secondary education.

Across the country, we've seen astronomical rises in the cost of tuition, and as a consequence, ever-higher levels of student debt. For those who work in our institutions, it has meant more stressful working and learning environments, and sometimes the inability to provide for students the kind of support they need.

Facilities are in a sad state of repair. A recent report in British Columbia found that we need to spend $400 million for capital maintenance, that amount having been deferred by institutions scrambling to put resources directly into student instruction.

In the past decade, the B.C. provincial government has substantially increased funding for post-secondary education in the face of decreased federal transfers and significant population growth. B.C.'s population increased from 3.3 million in 1991 to just over 4 million in 2000, an increase of 21%. That's double the national average of 10.6%.

The Canadian Association of University Teachers, of which we are a member, estimates the provincial expenditure would have to increase by $2 billion to get back to 1992-93 real spending levels per capita. In British Columbia, we would require approximately $126 million more than current levels.

We also recognize that there are substantial accountability issues related to federal-provincial transfers and that there is no requirement currently for provinces to spend federal transfer funds on post-secondary education.

We therefore, along with CAUT, have recommended that the federal government repeal the CHST and work with the provinces by introducing a post-secondary education act and fund. We recommend that the fund be set at 0.5% of gross domestic product, which, according to CAUT calculations, would require an additional investment of $1.6 billion over current investment in post-secondary education.

We do know the federal government has increased funding in the research area, but there are problems with that, and I want to point out the need to better support research and innovation in the sector that I represent.

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We're doing a lot of innovative and important research, but most of it is poorly supported. Our analysis of the Canadian Foundation for Innovation shows that as of July 2001, of the $113 million received by B.C. institutions, only $2 million went to the college sector institutions in this province. While we are starting to receive more support from the granting councils, the vast majority of research funding has gone to the Canada research chairs and CFI programs.

Therefore, we have two recommendations. The first is for improved funding for the research granting councils. We're particularly concerned about the budget for the Social Sciences and Humanities Research Council, as this area has not been well supported by new research funding programs. Secondly, we recommend that the federal government take immediate steps to improve access to existing granting programs for college sector institutions.

We know there is interest from the Council of Ministers of Education, who have begun a research project to assess the kinds of research occurring in the Canadian college sector. We're pleased to see this initiative, and we hope you will support swift action in this regard.

The third area of concern is in English language training. As you know, B.C. has absorbed a tremendous number of people over the decade, and we have a great need in this province for English language training. We're aware that there are cuts in program funding, and we're concerned that the ELSA program, English Language Services to Adults, will not be able to provide the English language upgrading and training that it has in the past. Waiting lists continue to grow, and we're concerned that our institutions will be turning away vast numbers of students who need access to these programs. We ask that you review funding and the support level for English language training that is provided through the federal government.

Finally, in the area of training, we're concerned about the proposed individual learning accounts, and we would propose an alternative: an employment insurance training leave. We know Canadian employers do not have a good record in providing training for their employees. The Conference Board of Canada has confirmed this.

We are also concerned in the area of literacy. There is insufficient support for Canadians who need literacy training.

In the area of skills shortages, we've had much evidence of the looming shortage, and the individual learning account is not the means to ensure that people become sufficiently skilled in the areas in which we need them. They won't necessarily receive support from their employers.

We believe this committee has an opportunity to explore a new approach to supporting training, and we encourage you to recommend that the federal government explore this option.

Thank you very much.

The Vice-Chair (Mr. Ken Epp): Thank you very much.

We will go now to our next witness, Mr. Harold Calla.

Mr. Harold Calla (First Nations Summit Society): First of all, we would like to thank you for the opportunity to be here today.

I'm a member of the First Nations Summit. My home community is Squamish, here in Vancouver. I've been the director of finance for the past 15 years, and previous to that I worked in the private sector. So I speak to you today as someone who has had a foot in both worlds.

We want to talk about the treaty process today. We would like to leave four or five messages with you.

The first message is that a treaty should be considered an opportunity to get government right and to promote greater economic certainty.

First nations do not have an economy. They do not trade very much, and they do not participate in the economy. One of the striking events and things that I discovered when I returned home to work was how little and how difficult it was for first nations to engage in the economy. This lack of participation leads to frustration and hopelessness. Economic and social development for first nations will erode the hopelessness that breeds discontent. Resolving treaties is an important step to promoting economic and social development.

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We noted with interest a recent article in the Globe and Mail by Canada's trade minister, which made the following points:

—Increased trade is important for reducing poverty and increasing security.

—Poverty is not inevitable.

—Over the past decades, average life expectancy has risen from 45 to 64.

—Literacy rates have almost doubled.

—The percentage of the world's population with safe access to clean water has increased from 45% to 70%.

—The benefits of trade to developing countries are clear: Developing countries with open economies saw six times the economic growth of their closed contemporaries in the 1970s and 1980s; they're catching up with the rich countries, while those with closed markets are falling further behind.

We thought he was talking about first nations reserves in Canada.

Since the federal government is promoting this concept to the rest of the world, we think it's important that it also be promoted at home, and we think we have an opportunity in the treaty process to do that here in British Columbia.

Message number two is that treaties have the potential to resolve matters of economic certainty. Property-right uncertainty between jurisdictions can be clarified through a new fiscal relationship. Treaties provide a unique opportunity to get government right. The fiscal and governance arrangements pertaining to first nations are contributing to the lack of clarity about service responsibilities and therefore accountability; to a lack of incentives for developing a private sector, and consequently to the lack of own-source revenue; to the high cost currently of doing business, creating a poor investment climate in our communities; and to poor outcomes from social programming.

Treaties provide an opportunity to reassign responsibilities to correct these problems. At the highest level, there are three keys to this reassignment: ensure a greater clarity in the assignment of the responsibilities; assign services among governments according to the natural advantage of each order; and realign fiscal capacities in accordance with this reassignment.

Message number three is that to maximize their benefits to all governments, treaties must be structured to improve the first nation and provincial investment climate. In this province, I think I recall that when we got involved in the treaty process, it was the then-Socred provincial government that made the decision, based upon the lack of investment coming into this province due to the unresolved land question.

The public sector is very important to a well-functioning economy. We must include those elements in a treaty that support increased investment and first nation participation in the economy. An example of that is the tourism industry in B.C., which is crying for a greater content of participation by first nations to promote what is fast becoming a major influence in our economy in this province.

Improving the investment climate will provide benefits to all parties and improve the fiscal relations of all orders of government. To do that, we need to reduce the costs of doing business. In order to increase investment and participation of first nations in the economy, the costs of doing business must be reduced.

There have been studies done by the Department of Indian Affairs that have indicated that it takes up to six times longer to complete an investment project on first nations' lands than it does on those in adjacent jurisdictions. When it takes longer, it costs more. It costs more in professional fees, and there are opportunity costs in lost tax revenue for all orders of government and in operating profit for those investing.

Economic development improves the lives of people. We can't ignore the social conditions and the need for programs and services to deal with those. But if we continue to have a singular focus on those, or a disproportionate focus on those, we will have them forever. We need to focus on economic development to improve the lives of first nations people and allow them to catch up with the quality of life prevailing in the rest of the province.

Message number four is that the pace of settling treaties in this province is too slow. The treaty-by-treaty approach stretches capacity and creates redundancy for all parties. It makes it more difficult to achieve consistency, whereas it is necessary to promote national standards and equality in the treatment of first nations and other Canadians, and it could result in high administrative costs. There have been some changes in approach occurring in this province, and we need to have continued support for those.

One successful strategy has been to develop senior officials tables. The fiscal table is an example of that, and I'm here today as the representative from the summit who serves on the tripartite fiscal working group. The province-wide approach is being applied to several areas, not just this one, but it is meeting with great support because it will reduce the costs of redundant negotiations. It is not intended to replace negotiations underway at individual tables or undermine the autonomy of individual first nations, and we are not actually negotiating. It is intended to provide the support to develop options for consideration at individual tables, and it allows a free-form discussion on a “without prejudice” basis.

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The advantage is that people can come to the table and talk openly and freely about finding solutions, not just identifying the problems or the limited mandates. I think the next steps in this are to ensure that these processes continue to be supported through the B.C. treaty process. They serve as a non-prejudicial forum, acting as a clearing house of information and permitting a freer exploration of the parties' respective interests.

This mechanism helps address the issue of government negotiators having a very narrow mandate at the individual negotiation tables and indirectly supports public-policy goals, such as harmony of regulation and administrative arrangements, along with equity of treatment among first nations.

One of the other challenges we face, which we're going to have to come to deal with in this process, is the issue of loans and loan moneys. I think part of the challenge we face now is that the limited mandate of federal and provincial negotiators has created what is called a push to sign “thin AIPs”, where certain matters—in particular fiscal and taxation measures—are punted to the final treaty. This is causing considerable strain at the negotiation table and contributes to the dilemma that the financing is creating by having the interest clock start to tick as soon as the AIP is signed, when none of the substantive negotiations on fiscal and taxation matters have been fully considered.

I think the last message we would like to leave you with is that the treaty process should be considered a chance to build a model for other parts of Canada and possibly the world. This process should show how parties, despite differences in culture, can work together. By working together, we will provide an example of how to resolve differences and create a strong economy in which there is opportunity for all to participate and achieve a high standard of living.

This Canadian example could possibly be used in other parts of the world. We have the opportunity in this country to be the leaders. We need to commit and re-commit to this process and to the changes that are going to be needed to make it work, including the investment of moneys.

We appreciate that the events of September have created a dynamic, and government is going to have to make some hard decisions on how it allocates its resources. But government is also going to have the responsibility to ensure that we continue to invest so that our economy will recover. First nations communities are in a vacuum at the moment. We have a great opportunity to make a contribution to this country.

I would like to leave you with a final message. That is, we are not part of the problem but we can be a big part of the solution.

Thank you.

The Chair: Thank you very much.

We are now going to Ms. Mix.

Ms. Linda Mix: Thank you for the opportunity to speak with you on behalf of the B.C. Tenants Rights Action Coalition and the province's one million tenants. I am joined by my colleague, Vanessa Geary.

The Tenants Rights Action Coalition, or TRAC, is a province-wide coalition of community-based groups with a mandate to advance and protect the interests of tenants in British Columbia. We work to protect existing rental housing and promote the development of new affordable housing for low and moderate-income households.

TRAC is also a member of the National Housing and Homelessness Network. That is a nation-wide network of front-line service organizations, housing advocates, and allies.

We are asking the committee to recommend to the finance minister that the Government of Canada commit to the proposed affordable rental program and restore funding to housing in order to provide Canadians with an equal opportunity to succeed and enjoy the best quality of life and standard of living.

The affordable rental program is the proposed infusion of $680 million over four years in a cost-shared partnership with the provinces. It would be the down payment for the creation of desperately needed affordable housing for thousands of Canadian households. The development of one unit of affordable housing contributes to offset services and to about two and a half years of employment for a person.

In August of this year, the federal, provincial, and territorial housing ministers met in London, Ontario to discuss their role in ensuring that citizens were appropriately housed. At that time they agreed to work together to bring to the table their provincial strategies to see that the housing gets built. They will meet again in November. They need the assurance of the federal government that the ARP program will see the light of day.

The focus of Canadians has shifted in the past six weeks. The daily tragedies of homelessness appear to pale in comparison with what has happened to our neighbours. And now Canada has joined a war. Homelessness in Canada may not be a priority for the media and the general public; nonetheless, it continues to threaten Canadian families. It's imperative that resources earmarked for housing not be reallocated to the international war effort.

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More than 1.7 million households—or about 4.6 million people—are in “core need” of affordable housing, according to Canada Mortgage and Housing. “Core need” is when a family or an individual is paying more than 30% of income on rent. This includes 2.25 million people in 833,000 households living in overcrowded, unaffordable, and substandard rental accommodation. The opportunity for these men, women, and their children to succeed is greatly diminished when burdened with the stress of living in third-world conditions.

We know that a person's health and well-being is directly linked to his or her housing situation. Countless studies have been done in Canada and the United States that attest to this. One's ability to seek work and education and contribute to the community is directly linked to how one is housed. The ability to succeed is directly linked to having a roof over one's head.

The increasing cost of rent coupled with lower incomes for thousands of tenants increases the risk of homelessness. People with low incomes have fewer housing choices in the marketplace. Since the federal government opted out of the development of new social housing in 1993, we've been told that the private market will pick up the slack. That hasn't happened. No significant new rental housing has been built in over a decade, and what has come onstream, particularly in the Vancouver area, is high-end rental, out of the reach of the majority of renters.

Vacancy rates are the lowest they've been in years. In some parts of Vancouver the vacancy rate is less than one percent. CMHC indicates a balanced vacancy rate at about 2.5%. Renters compete for any available unit. Low-income renters cannot compete.

So the solution—the answer to the dilemma facing us and our recommendation to this committee—is that the federal government create a new national housing program by restoring funding of $2 billion annually to finance new social housing. The proposed ARP program at $680 million over four years will fund about 3,000 to 4,000 units a year for the entire country.

The Federation of Canadian Municipalities states that it would take 30,000 units a year for the next ten years just to play catch-up.

Federal spending on housing should be targeted to households that need it most, and through co-op and non-profit housing programs.

Canadians recognize that affordable housing is necessary in order for Canadians to succeed. A TRAC-sponsored Ipsos-Reid poll done last year showed that 83% of those polled supported government assisting in the building of non-profit affordable housing.

In closing, Canadians succeed and Canadians contribute when they are appropriately housed. We strongly urge this committee to make a recommendation to the finance minister on the importance of a national housing program.

Thanks.

The Chair: Thank you very much.

Last we now have Mr. Jules of the Indian Taxation Advisory Board.

Mr. C.T. (Manny) Jules (Chair, Indian Taxation Advisory Board): Thank you. I'd like to thank all of you for this opportunity.

I imagine over the last little bit you've all been inundated with a lot of requests and submissions. You're going to have to be thinking very strongly about them, and ultimately about where the priorities of government are going to be, given the horrific events of September 11.

I want to reiterate what all of the panellists have been saying. There is a substantial role for government. Government needs to be involved in making sure, whether it's education or housing, that all of these issues are tended to, particularly for the poorest of the poor. When individuals say there are third-world conditions in our country, there's no doubt that this applies to how some first nations people are living.

Given that government's priority over the foreseeable future is going to be on security, particularly national security, I believe very strongly that first nations have a critical role to play in this as it unfolds. Also, first nations have an ability right now to offer, as we offered in the past our support in two world wars prior to this one.... There hasn't been a declared world war, but first nations are very cognizant of our own security and where we fit.

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What I've been grappling with over the last number of weeks is where do first nations fit in this new reality? Are we going to be forgotten? Are we going to be studied, and then have those requests put to the side? Unfortunately, our history has very clearly shown us that's what tends to happen.

I hope in your deliberations you recommend and continue to recommend to government that first nations issues continue to be a priority of government.

In that regard, over the last number of years I've been promoting the development of four fiscal institutions that will help begin to facilitate in a very real way dealing with the impoverishment of our people.

First, to deal with the issue of accountability, we've developed in consultation with chiefs and the Assembly of First Nations a first nations management board that would begin to put in place an institution that would help—not with a club, but through a series of carrots, if you will—to ensure first nation governments are just as accountable, as I feel they are, as every other level of government in this country.

Second is the development of a statistical agency—the provincial, territorial, and federal levels of government have their own statistical agencies—to monitor what's happening and begin to project where we're going to be headed in the future. You all know very clearly what will happen if there isn't serious attention paid to first nations issues. In that regard, a statistical agency for first nations is absolutely critical to the development of governance in the future.

Third is the development of a tax commission so we can formalize what everybody else takes for granted in this country—that is, mechanisms or institutions that are mandated to deal with taxation issues. The first step for us is dealing with real property tax, but we ultimately have to deal with the whole range of taxation jurisdiction.

The last component of the institutions is a finance authority, so we can, as all other levels of government do, have access to long-term public debt financing.

The tax advisory board.... Right after the failed Charlottetown accord we co-sponsored a study done nationally looking at expenditures on Canadians and found, surprisingly enough, the same amount of revenue is spent on first nations as on all other Canadians. The fact is we have a complete lack of infrastructure in the communities, and that's again the reason we want to have our own finance authority.

I see these as building blocks not only to help create a new fiscal relationship with Canada, but also to begin to define our relationship with municipalities, regional districts, counties, and provincial and territorial governments, as well as with those citizens who reside within our reserve lands and with whom we do business.

When we talk about the future, given the horrific events of September 11, given the fact we must now, as all of us must, turn our attention to what has happened and what could be, we want to be a part of building a strong future for this country, a strong future that hopefully will promote peace internationally, and at the same time demonstrate to the world community that Canada has had problems in the past dealing with indigenous populations but has found ways to deal with them. In that way it can be a guiding light for all other countries.

Thank you.

The Vice-Chair (Mr. Ken Epp): Thank you very much. We appreciate your presentations.

We now go to a series of questions. Usually I get to ask the first question—and I'm full of them—but I have to resist the temptation now. So what we'll do is we'll have roughly ten-minute rounds and we'll just flip back and forth between whoever wants to talk. So Sue will be second, after Mr. Nystrom.

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Mr. Lorne Nystrom: I'm so used to you having the first question, Mr. Chair.

The Vice-Chair (Mr. Ken Epp): Usually I do, so now you do.

Mr. Lorne Nystrom: My first question is to Manny Jules.

You mentioned war, the First World War and the Second World War. I've been doing a lot of work in the last three years with the First Nations Veterans Association and Grand Chief Howard Anderson out of Saskatchewan, who is coordinating this. They're hoping there's something in the budget for them.

Are you aware of the issue? Can you advise the committee as to what you would like to see done? It's not one of the super-big expenditure issues, but it's still a very important issue to a lot of people in the country. First nations veterans were discriminated against when they came back from the war, because they fell under the Indian Act and not the Veterans Act. So when other veterans came back, they got education and lands, and so on—whether it's a white veteran or somebody of oriental background, or whatever—but the first nations veteran went under the Indian Act and therefore didn't get the same benefits.

Anyway, you make the speech, not me.

Mr. Manny Jules: Not only that, Lorne, but a a case in point is Kettle Point, where they had actually taken land away from the community and given it over to veterans, or given it over to.... We had a similar situation in Kamloops.

This is what I alluded to in my presentation, that there's no doubt in my mind where the aboriginal people of this country stand. They stand with the rest of the country in this tragedy. We stood beside Canada in the past. I had one of my members fight for Canada in the Boer War before World War I. So it's very important for this particular committee to be aware of the fact that aboriginal Canadians have fought and died for this country.

But the recognition has been slow in coming. It is part of the overall agenda, as far as I'm concerned, related to fiscal issues, because we have been effectively legislated out of the economy, including examples you've raised, Lorne, dealing with the Veterans Act, etc.

What we have to engage ourselves in is a whole series of initiatives that remove those barriers, not only in terms of veterans, but in terms of our youth. We have the youngest population in the country, and right now there aren't too many opportunities.

Mr. Lorne Nystrom: I'd like to go back to the rental association. You mentioned the concern about the new program announced, which is affordable rental program, for $680 million. I wonder if you can just elaborate a bit more on what this means to the economy.

In Toronto the other day, the Canadian Home Builders' Association said that when you build a new house it creates about 2.8 person-years of jobs. You're saying about 2.5, depending on the size of the house, of course. But what about the other spinoffs in terms of when you buy a house you're employing Canadians, and they spend money, and they source from Canadian companies? And of course having a house is extremely valuable on a social level.

In a time when there's a bit of a crunch on the budget because of a stall in the economy, and also September 11, I think you can make a strong argument that one way to stimulate the economy is to put a lot of money into housing. That's a very quick way to kick-start the economy in terms of creating jobs very quickly. I wonder if you can just elaborate a bit more as to the benefits of that, not so much on the social side, but in terms of the economy.

Ms. Linda Mix: The creation of any type of housing, whether it's private home ownership or whether it's condominium, contributes to the economy, but building social housing also contributes to the service sector, to the jobs. That creates an extra tax base. That's more people, that's more contractors, that's more architects, that's more developers. There are more service people paying income tax back into the tax revenues, so it helps contribute to the economy. The more you build, the more tax revenues you get back.

Mr. Lorne Nystrom: Is there anything else you wanted to add to that, Ms. Geary?

Ms. Vanessa Geary (Tenants Rights Action Coalition): I think, as you said, in terms of the benefits it's not only income-tax-based because you have increased employment, but it is the sourcing of Canadian products as well. So the spinoff from the construction of a unit of housing not only results in 2.5 person-years of employment, but there also is a spinoff in terms of other economic generators in terms of the supplies and the actual materials required to build the housing.

Mr. Lorne Nystrom: It's a quick start as well. You can start building houses very quickly.

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Ms. Vanessa Geary: Yes, and I think it is important to mention the social costs. Study after study has shown that if you spend money on a unit of affordable housing, you're going to save money on health costs. For instance, a bed in a hospital costs $600 a day, and study after study has shown that if people are living in substandard housing, their health is negatively impacted and they cost the health care system a lot more. You also could point to increased prison costs.

Mr. Lorne Nystrom: Do you have any information for the committee as to what the correlation would be? You say it's a lot more, there are a lot more health costs, and a proper house really improves health an awful lot. Is there any data you can give us that might be helpful in terms of persuading the minister?

Ms. Vanessa Geary: There are a number of studies that have been done. Anne Golden out of Toronto did a very extensive report in 1998 on housing and homelessness, and the Province of B.C. has just done a four-part study on the causes and effects of homelessness, and the costs of homelessness to the health care system and to social services. There are studies out there. I refer you to the Golden report in particular, and the report by the Province of British Columbia. There are also reports from the Federation of Canadian Municipalities, for instance, the national housing policy options paper, which gets into the dollars and cents of housing.

Mr. Lorne Nystrom: I think that would be useful in terms of persuading the Minister of Finance that this might be a strategic investment to make just in terms of an investment in creating economic activity, in creating jobs, let alone the tremendous value for people who need the housing.

My next question is to the College Institute Educators' Association of B.C. Some countries have abolished tuition fees as a means of really getting more and more people into post-secondary institutions and making university and post-secondary schools more accessible to everybody, regardless of their economic background. What's your thought on that? Give us an idea. Should we be bold and visionary and say that within five or six years we should abolish tuition fees altogether? We have no fees for high schools, elementary schools, and so on.

Ms. Maureen Shaw: Yes, we certainly have long advocated that there should be a reduction towards elimination of tuition fees. We do see in communities across British Columbia that tuition fees can be both a psychological and a real financial barrier. If they are meant to replace provincial or federal funding, they would have to go up to astronomical levels. Tuition fees right now contribute toward the revenue of post-secondary institutions in the realm of 17.5%.

Mr. Lorne Nystrom: That's the national average, roughly, is it?

Ms. Maureen Shaw: It's the B.C. average.

The college sector, though, we know relies much more on provincial government funding than do the universities. The universities have the opportunity to access other funds, other sources—that is, research grants, endowments, and so on—whereas the institutions we represent don't have the same access to those other sources of funding.

So on the tuition side, we would say it is important that students have access to post-secondary education. Increasingly the evidence is there that the lower the income the less likelihood of getting into post-secondary education, and that the programs in place are not assisting students to get into post-secondary education if their family finances are low.

Mr. Lorne Nystrom: I have a question for Mr. Calla. I come from Saskatchewan. My riding is Regina—Qu'Appelle, and I have 12 different first nations reserves in my riding, lots of aboriginal people and Métis people and first nations people in the inner city of Regina. We also are in Treaty 4 country. We have treaties. Our situation differs a lot from yours.

I wonder if you can give us a bit more of a national snapshot in terms of what you are saying today. Today you were, quite naturally, focused on British Columbia, and that's your job. But I wonder if there is any advice you want to give us in terms of the national snapshot for first nations people in terms of economic development, treaties and how they've evolved, and treaty land entitlement. I know they're at different stages across the country.

I'm quite aware of where Saskatchewan is, and I know British Columbia is radically different because you don't have the treaties we signed in Saskatchewan many years ago—not we, but our ancestors. So could we have a bit more of a national snapshot?

Mr. Harold Calla: It's not often somebody from B.C. gets to talk about national issues.

First of all, the Province of Saskatchewan, through the FSIN and provincial and federal governments, has been involved in a process to deal with these matters, and we've been aware of those. The fiscal matters that I talked about are not treaty-related matters. Treaties in British Columbia provide an opportunity to deal with them. What we're talking about fundamentally is poverty. What we're talking about is the root cause of that poverty and what we can do to improve upon it.

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From a national perspective, I think government has an interest in this. What is government's interest? It's cost aversion. The elasticity and the cost between the social net and economic development is a golden plum sitting out there waiting to be picked. It will contribute billions of dollars back into the Canadian economy, so we need nationally to focus on this. We have opportunities at the moment in British Columbia. We have opportunities in Saskatchewan because both provincial governments are sitting at the table with the federal government to engage in discussions on these issues. It's our goal. A lot of the work of former chief, now chairman, Manny Jules is to establish regional processes across the country. This is a national issue. This paper may have had the summit's name on it, but in many of the items I have addressed here, they have application nationwide.

The Vice-Chair (Mr. Ken Epp): Thank you very much, Mr. Nystrom, and the witnesses who engaged in the answers so far.

Mr. Jules, did you have a further answer? Then we'll go to Mrs. Barnes.

Mr. Manny Jules: I wanted to elaborate a bit on the question.

There is before cabinet a discussion about setting up an independent claims body to deal with what are called specific claims. There's been a commitment, I believe, of about $500 million for that. Those kinds of institutions, just like the institutions dealing with fiscal matters, are absolutely critical to have a way of addressing these matters and putting them to rest.

Right now this is one of the issues that is before government, moving towards an independent claims body. There are various tables being established across the country, one of the most notable being down east in the maritime provinces, where they had signed friendship treaties. They're now moving towards a B.C.-type treaty table. That whole issue, of course, boiled over because of the Miramichi and Burnt Church. So those kinds of things the finance committee is going to have to be very careful of in terms of monitoring. And I hope, ultimately, they will be supportive of this as well.

The Vice-Chair (Mr. Ken Epp): Great, thank you very much.

Ms. Barnes.

Mrs. Sue Barnes: Thank you, Mr. Chair.

Thank you for your presentations and the time you've taken to come here today to talk to us.

The federal finance committee has sat for a morning now listening to a number of people. No one has asked us for tax cuts. No one said you should have smaller government. In fact, we've heard exactly the opposite, that in times of crisis it seems—as Mr. Jules said—there's a substantial role for government. Right now it's amazing how the mantras have changed. In essence, what everyone has asked us for is spending increases. So you'll see the difficulty of the task when we're drawing this budget together, especially when you're in some uncharted territory with very little contextual experience to draw upon.

Having said that, first of all I'll make a point to Mr. Calla. My last venue coming into B.C. was as chair of the aboriginal affairs committee during the Nisga'a hearings. I can state unequivocally that during days of those hearings, we heard nothing but that business feels that economic certainty for British Columbia comes from having treaty resolution. That wasn't in the millions of dollars; that was a billions of dollars annual statement. So I couldn't agree with you more. I encourage any treaty movement that is possible. Certainly I am supportive of that ongoing process, because I think it is essential for the economic development not just of the first nations people, but of British Columbia people and the Canadian economy.

Next I want to ask some specific questions, and one is to the colleges and universities. You've talked about research and your experience. Again, contextually, I can go to London, my home town, to look at it. The colleges there have gotten some research grants, but they have, for the most part, been in a relationship as partners with university researchers. I'd be interested to know whether that's your experience in B.C. here, because what they're asking us for in Ontario is to be able to go on their own. I'd like to hear your answer on that.

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Ms. Maureen Shaw: In our system, we represent five university colleges. They're degree-granting, so they have the bachelor level. Some of them would like to seek graduate-level programs. They're not able to, unless it's in partnership with other post-secondary institutions.

Also, our colleges offer the first two years of university, and they have a huge number of career and trades and technology programs. So, yes, we would be looking for the ability to seek research funding independently.

There are Canada research chairs at a few of the university colleges now, but I think there's only one or two at three of the institutions. So there is not a great deal of money going to our system. I do know many of the faculties are engaged in research, and research with their community. It's usually community-based for the betterment of the community, for the economy in the region.

The way the research dollars are structured, it's very difficult to access the granting council funds, the CFI funds, or the Canada research chair funds. The big universities tend to have the advantage, and the institutions we represent cannot access it easily.

Mrs. Sue Barnes: Just as an aside, Dr. Davenport, who is the president of the University of Western Ontario, did a presentation to some of the MPs in our region, talking about correlation between tuition fees and costs of education and utilization by population demographics. He did that in comparison to other countries, like France and Germany, that have low or no tuition. The conclusion he came to, at least to us a year ago, was that we shouldn't go in that direction because of the fact that the take-up by the population didn't materially increase. So you weren't capturing more people into the system.

In Canada right now, we do have a system that is tuition-based. Mr. Jules, you talked about the growing demographic—and it is a huge demographic—that is going to be in the going-to-college, post-secondary age group, especially by the year 2015. It's 25% increase. It's an absolute reversal of what's happening in the Canadian demographics.

One of my concerns is that there is not enough money in the envelope right now to access post-secondary opportunity for those who are qualified. I know you have situations—and I can give you the Ontario experience, where we're going into a double cohort, where grade 13 is going to be wiped out. There's not enough money right now to take into post-secondary all your kids who are qualified and ready to go to school.

I am concerned that not enough voices are being heard out there, calling to make sure there is enough money—not only for all Canadians, but especially our first nations, who are the largest demographic. So I'd like to hear what you're doing or how this message is being put out by many of the organizations that you're working with now.

Ms. Maureen Shaw: I think this is a question for you.

Mrs. Sue Barnes: Actually, it's for both of you, because you're both going to have to deal with this. I think it's not being said enough.

Mr. Manny Jules: Go ahead, then.

Ms. Maureen Shaw: Okay.

We also represent two first nations institutes in the province: Nicola Valley Institute of Technology, and the Institute of Indigenous Government. As well, a number of our colleges and university colleges offer first nations programs.

We're aware of the needs of the first nations students, whether in Terrace, the east side of Vancouver, or the Malaspina region in Nanaimo. There have been targeted programs. There has been targeted funding, but we realize it has been inadequate and there needs to be more. The institutions are doing what they can to ensure there are spaces and support services for first nations students, and of course I would agree, there needs to be more funding in that area.

Mr. Manny Jules: One of the things I've found over the last number of years is that the approach we used among the southern Shuswap was to begin to develop relationships. So we have a very good relationship with Simon Fraser University, which has a degree-granting program right on the Kamloops reserve. We have, on average, 30-plus university graduates on an annual basis, and that's substantially more than when we first started, when it was zero. Obviously, those needs are going to increase.

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With respect to investment, investment has to be made in a whole range of different areas in order to achieve the maximum objective, which is a safe and secure country, one that has good productivity and that utilizes its citizens to the utmost. That, quite frankly, isn't happening right now.

How do you get people involved? One way is through jurisdictional avenues, and that's what I've been promoting in terms of fiscal institutions. If those jurisdictional tools are at the level required, they will help in a very real way to facilitate economic development. If we have that jurisdictional ability, we can have greater participation in educational programs. I feel that education is absolutely critical to our future.

If we don't have an educated population, we're going to have more homelessness and we're going to have people who aren't going to be able to look after themselves. That, I think, really started to come about in our communities as a result of imposed regulations and of always having to go to some outside master. In former days we were able to resolve issues at the community level, but that isn't the case any more. That was legislated out of existence in 1918.

Mrs. Sue Barnes: Mr. Calla, before you answer that one, I also want to add another one for you.

You're concerned about interest accruing after an agreement in principle, and I'd like to hear from you what you think your choice would be for a starting point. I'd also like to hear where your conversations have gone with the minister directly involved because I don't honestly know where that is right now.

Mr. Harold Calla: Thank you, and I thank you for your question on education, because I think it is important.

I think we do need more money for education, but I think one of the things we have to make sure of when we make that investment is that it is not just singularly focused on post-secondary education. We have to look at the challenges we face in graduating students from high school and at some of the special needs we have in our communities. Unless we do that, we're going to create this elitist group within first nations communities, people who come from stable families who don't have these challenges.

We have some very brilliant people among the Squamish who are dyslexic, for example. We have special needs. There are historical problems that have to be addressed. We see that once we have been able to make that investment in them—in most cases out of our own money—we get tremendous results for it.

So when you look at education, yes, there needs to be more money in those envelopes, but we have to go back and we have to start with these kids when they're in grades three, four, and five. That's when we have to start identifying issues and making corrections. Then, when they get to grade twelve, they themselves will be available for that.

There are tremendous successes, and my son Jason is one of them. He studied at the London School of Economics, and he's come back home to work. There are great successes in the investments you're making and in the great contributions these people are making in their home communities and in the nation.

Now, in terms of the loan, when should we start accruing interest? If interest is going to accrue, I think it has to accrue once there have been satisfactory negotiations on all chapters of a treaty.

What we have at the moment is a strong desire to see progress. Everybody wants to see progress. In British Columbia in the last two years people have awoken to the reality that treaties are more than just land and cash transfers, a settlement amount, and that your cost of government and how you will resource your cost of government are now important issues. That has arisen as a result of people not being satisfied with the land and cash offers that have been coming. There's a huge gap that needs to be narrowed and a huge education process that needs to be undertaken.

A lot of emphasis has now gone onto tax and fiscal matters. Until people are satisfied that such matters have not been punted to the final treaty, I don't think interest can start.

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The minister is fully aware of this and has been apprised of it. It's a matter that's discussed at every principals meeting, but it's a political issue. It's one issue that I think needs to be better discussed in an environment that's not filled with partisan politics, if I can say that. We're looking for a solution.

The Chair: Thank you, Ms. Barnes.

Mrs. Sue Barnes: Thank you very much, everyone.

The Chair: Mr. Pankiw.

Mr. Jim Pankiw (Saskatoon—Humboldt, PC/DR): Thank you, Mr. Chair. I have questions for three of the four groups, so I'll start with the Tenants Rights Action Coalition.

It's been stated that no one here this morning has asked for tax cuts, but I would suggest that's because hard-working families are at work. They're not here to ask for those tax cuts.

I'm going to use an example of a constituent who lives in my riding. They got running water in their home, I think, when he was in his teens. But his family never looked to the government for any help. They worked hard and got by. He educated himself, got married, and now has three kids. He works very hard and works overtime whenever he can. The mother is in an on-call job, and whenever she gets called to work, she goes. They're struggling to make ends meet.

What you're saying is that they should pay more taxes so that somebody else can get a home improvement, and they should forego their home improvement, or maybe a family vacation, or some other priority for their family. My question is, what do you suggest to this committee? How would the finance minister justify something like that?

Ms. Linda Mix: I'm not suggesting that households that are inadequately housed are asking for a handout. The economy has changed: people are working on a contract basis; people are working part-time, with a couple of jobs, just to support their families.

They're still paying higher rents. Their incomes are going down because of the way the economy has changed. I'm not suggesting that your constituents should pay more than their fair share of taxes to support people who aren't working and want to live in subsidized housing. What I am suggesting is the priorities of our federal government need to shift to hard-working families who are low-income and moderate-income and are spending 30% to 50% of their income on their housing. That is what I'm suggesting.

I think if you look at the opportunity cost of not doing the housing, you've got a lot of such hard-working, low-income families who are at risk of homelessness. That is what I'm suggesting.

Mr. Jim Pankiw: That wasn't my question. My question was, what is your suggestion to this committee on how the finance minister would justify something like that? Let's face it, hard-working families who are struggling to make ends meet pay taxes, and their taxes would go to that type of program.

Ms. Linda Mix: I think it would be very difficult for the finance minister to justify not spending money on housing.

Mr. Jim Pankiw: Okay. Thanks.

Mr. Jules, you mentioned four suggestions that you had. Concerning the tax commission, I didn't understand what you're suggesting.

Mr. Manny Jules: Right now, under section 83 of the Indian Act, there's a power that the minister can grant to a first nation community to collect real property tax. That's what I've been promoting for more than the last decade.

Mr. Jim Pankiw: Do you mean from the residents of the reserve?

Mr. Manny Jules: I mean from the residents and businesses located on the reserve. Right now it generates about $30-odd-million on an annual basis that goes into the coffers of first nation communities.

Mr. Jim Pankiw: But it's a collective property rights thing. It's not individual property ownership. So how is—

Mr. Manny Jules: It depends on the reserve. There are a number of communities that have what are called certificates of possession, which would be equivalent to indefeasible title. There are some communities that have what are called CPs, or certificates of possession, that are very similar to individual-type ownerships. There are other communities that have traditional-type ownerships that vary right across the country. By and large, most first-nation communities are implementing real property tax on the business interests located on reserve.

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Mr. Jim Pankiw: Okay, what's your suggestion, then?

Mr. Manny Jules: What I am suggesting—and it's been adopted by the Assembly of First Nations, the chiefs organization—is to remove that authority from the Indian Act. That's one area of jurisdiction that first nations would be able to assume as a first nation governance institute. It would, in effect, replace the Minister of Indian Affairs in real property taxation. It would set up, basically, a board of directors to review taxation bylaws. It would help facilitate negotiations—whether they be for fire protection, water services, or the like—between municipalities and first nations.

Mr. Jim Pankiw: Do you mean on a reserve-by-reserve basis?

Mr. Manny Jules: That's right. There are about 80-odd communities that I'm involved with in discussions about real property tax implementation right across the country.

Mr. Jim Pankiw: Yes. Your first point of the four was accountability. It would seem to me that would improve accountability.

Mr. Manny Jules: That's right. The reason that we put together the fiscal institutions and the four components is that they all linked into one another. When you talk about accountability, there have to be a number of regimes in place. The financial management board, which would be separate, would deal with some aspects of accountability, as well as training and education, in terms of administrative capability. The real property taxation area, or the tax commission, would deal as a first foray into tax jurisdiction—real property tax. Ultimately, I see this expanding to other areas of tax jurisdiction as we move down that path.

Mr. Jim Pankiw: Thank you.

My last question is for the College Institute Educators' Association. Education is a very important priority—or should be—for government. One of the problems you mentioned is high tuition costs. The student loan program has its own funding problem. There's a very high default rate, which increases the cost, so that resources allocated for student loans aren't having as great an effect as possible.

One suggestion is an income-contingent student loan repayment, in which it would be very difficult for someone to default because there'd be a certain threshold of income below which they wouldn't be obliged to repay; then, once income crossed that threshold, they'd have to start paying. Rather than their automatically being subject to a term of repayment once their education was completed, the system would be much more flexible but at the same time prevent defaults, because if people went into periods of time in which they couldn't afford to make their payments or were unemployed or something, the system would follow them along.

I don't know if you've ever heard that, or if your association has a position on it.

Ms. Maureen Shaw: I do know the default rates are higher for students who participated in private training programs. That's one problem we've identified. Students in the public sector generally across Canada do not have the same default rates as those in the private sector. We've always advocated that the government should be ensuring there is public funding for public institutions. The federal government has, in the past, been diverting training funds to private sector training institutions whose tuition fees are that much higher. Students have to carry much more of the cost of their education, with fees as high as $10,000 a year.

We know that recently there have been closures of private sector institutions such as ITI, and there's a problem with CompuCollege as well across Canada. When those closures occur, the students don't get their education. They've paid their fees, and they don't get their fees back. So often the default rates are a function of the system the student is in: if it's the private sector, it's much more problematic than the public.

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I think income-contingent loan repayment is quite a complicated arena and also problematic. It presumes that students are going to follow the pathway they set out when they first registered, and I would ask people in this room if they're all in the field they were trained for or got their degree in. If you were, you would all have to have a political science degree.

Mr. Jim Pankiw: I'm sorry, I hate to interrupt you, but that isn't it. It's simply income-contingent. Regardless of what profession or career path you chose, your repayment of that student loan would simply be tied to your income and ability to repay it.

Ms. Roseanne Moran (Research and Communication, College Institute Educators' Association of B.C.): I think there are many different models of income-contingent student loans that have been put in place. One of our concerns with that model is that it's pretty much always accompanied by astronomically increasing tuition fees. It's usually put in place to finance quite a significant privatization of the costs of post-secondary education. Students borrow an awful lot more in up-front tuition costs, with the understanding that there will be a more flexible kind of repayment system.

Some of the analysis I've looked at for income-contingent programs indicates that people who have lower incomes end up over time paying much more for their education, because they pay for a very long time and pay very high interest rates over a long period of time. It's not generally associated with increased equitability; it's normally associated with a more inequitable system.

The Chair: Thank you very much, Mr. Pankiw. Your time has elapsed.

Mr. Cullen.

Mr. Roy Cullen: Thank you, Mr. Chairman. Thank you to the presenters.

Mr. Calla, an election platform of the current provincial government, if I recall, was to have a referendum on the Nisga'a agreement. I guess my question is twofold. Is the government here going to follow through on that, and if they do, what will that do to the treaty-making process in British Columbia?

Mr. Harold Calla: I'm not aware of a referendum on the Nisga'a treaty, but I am aware that the provincial government would like to have a referendum to define what they feel is their mandate in the treaty process.

As I have said to Minister Plant, and as I know someone has said to the premier, we don't believe minority rights are subject to a referendum. What does it mean to the treaty process if he has a referendum? It could mean the end of it, if the mandate is so narrow we can't come to the table to have a discussion.

It doesn't matter at the end of the day. There's some feeling out there that if they have a referendum and get this mandate, we're going to be dragged to the table in chains to negotiate a treaty. This is a non-binding process: if we don't reach agreement, there won't be a treaty. So I appreciate that Minister Plant has said this is not about aboriginal rights, that the Constitution protects us, and that they're not going to have that aspect to this treaty. He won't let those who have a racist view dominate in this.

We don't support the concept. There are no other minorities who have their rights subject to a referendum. But the provincial government clearly has a mandate; they're going to proceed and do what they choose. Everybody has to await the outcome, and the provincial government is clearly aware that an outcome that is not satisfactory to first nations, in terms of what they perceive the mandate to be, will kill this process. The provincial government is also aware they've set this province on a course that requires economic development and our co-operation. So he has to balance those two.

Mr. Roy Cullen: Thank you. I don't agree with the need for a referendum either, but what does it matter, right? He's calling the shots, I guess.

Ms. Shaw, you had mentioned a council of ministers of education. Normally when we have these across Canada, there would be the provincial ministers and a federal minister. Who's our federal minister on that particular council, or is there one?

Ms. Roseanne Moran: Boy, that's a good question.

Mr. Roy Cullen: I would have thought Jane Stewart.

Ms. Roseanne Moran: It depends what they're looking at. There is no kind of K-to-12 participation, really, at the federal level. There's some small language funding. I think generally it's the human resources development minister. I would assume that in this one it would be. Sometimes it's the Minister of Finance.

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Mr. Roy Cullen: Okay. It's kind of a technicality, but I was just curious. It said “someone who would listen to your message at the federal level”.

On your recommendation about indirect costs of research, I'm a little confused. On the one hand you seem to be taking a different position from the university and college community, but then you go on to say you think the alternative, as well. You say to increase federal cash transfers. I can understand the rationale for that, but then you say the proper funding of sponsored research through the granting councils is the most appropriate and effective way forward at this time.

Isn't that saying roughly the same thing as the colleges and universities—to include the indirect costs of research in the research grants?

Ms. Roseanne Moran: If you're talking about the written brief, rather than putting more money into research programs like the Canadian Foundation for Innovation or the Canada research chairs program, which are more selective and much more targeted at specific types of institutions, we are recommending that new research granting funding be put through the granting councils, which distribute research funding much more equitably across the institutions.

There still needs to be more work done to support college sector institutions across the country, but I think that was the context in which we made that recommendation.

Mr. Roy Cullen: So if it's through the granting councils, I guess we as a government working with the granting councils have two choices. We can either give more money for direct research, or we can say there's a kind of fixed pot, maybe plus an augmentation, but then out of that pot x% will be for indirect costs. Is that the approach you'd prefer?

Ms Maureen Shaw: It is, as long as access to the pot is equitable, and right now it's not. So there is a recognition of that, and I know the universities have been making submissions on that to get more support for the indirect costs of research—the infrastructure, and so on.

The universities have a better ability to attract those funds. The big universities get disproportionately more of the funds—I think 85% of the Canada research chairs are in the top 10 universities in Canada, or something along that line. So the smaller institutions that serve a different kind of population or region don't have the same ability to access research dollars, where there is still a need.

We would ask that the federal government pay attention to how research dollars are structured and how the institutions have access to the funds. If it is a granting process, fair enough, but ensure the process is going to be fair to everyone and the funds are going to be equitably distributed.

Mr. Roy Cullen: Okay.

This question is for Mr. Jules, and maybe Mr. Calla could answer this too. Matthew Coon Come was in Durban not too long ago, if I recall, and he drew a parallel between the reservation system in Canada and the homelands, or the apartheid regime, in South Africa. I think the comparison was a bad one, frankly. In South Africa they've dismantled apartheid; they've dismantled the homelands. Should we be pursuing the same path and dismantling the reservation system?

Mr. Manny Jules: I think what we have to look at first is that nobody chooses to live in poverty; nobody chooses to live under any type of oppression. What I hear from a lot of people right across the country is that we want to be able to stand on our feet and contribute, as anyone else can and does in this country.

It's unfortunate that our national chief made those statements in Durban. They're statements that I don't personally agree with. I think the statements.... Not only acts of terrorism, but statements can be very divisive, and that was one of them.

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The fact of the matter is that the homelands in South Africa were based on the reservation system here in Canada and the United States. There's that kind of history. Because we know about it, we can work together to try to make a better world, if we have to change it. The only way we can change it is to begin to break down the barriers, begin to understand one another, and begin to realize that Canada's first nations must to be put in their proper place, which is a very important part of this country. If there is explicit recognition of our rights and interests, it will go a long way toward resolving a lot of the issues that are facing us.

I suggest there are internal, if you want to talk about it, security issues. You cannot have a people who are so impoverished keeping, as first nations have, this whole wish to be able to be at the same table, on the same level playing field—all of those niceties we all talk about. We want to be there and we want to participate. The only way it can happen is through constructive dialogue, not one of divisiveness.

Mr. Roy Cullen: Just to build on that plan, if we could get the governance models working for the first nations peoples the way you'd like to see them—you talked about property taxes, and there are some first nations groups now that have commodity tax jurisdiction—could you get to a point where these communities could be self-sustaining, and the fiscal arrangements between DIAND and the first nations peoples could be collapsed? Is this looking so far ahead, in a world we'll never get to?

Mr. Manny Jules: It would be self-sustaining in the same way as every other level of government in this country. The country is not made up of a whole bunch of independent states or independent provinces, to the extent that we don't rely on one another. As a matter of fact, the events of September 11 have only highlighted the fact that we need to work together as a family, to ensure that our family in this country is taken care of for many generations into the future.

As I said earlier, we didn't make a choice to amend the Indian Act in 1918, to make us a ward of the federal government. Until that point, we raised our own funds; in effect, we taxed ourselves to deal with a number of issues. That was outlawed. So those kinds of issues, I feel, are solvable, because our future depends on that—yours and mine.

If we don't begin to resolve these issues, you won't have just $7 billion of social expenditures, you'll have easily twice that, and nobody can afford that. We want to be able to be a part of the economy, not only in terms of generating resources, but also as part of the makeup of the country, so we can stand together against all forces.

The Vice-Chair (Mr. Ken Epp): Thank you very much, Mr. Cullen.

With your permission, witnesses, because we started a little late, we'll continue for a few more minutes.

I'd like to give a quick one-question round to all of the members of the committee, if they so choose. We'll start with Mr. Nystrom on that.

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

I'd like to give Jason a chance to say a few words here, if we could, so everybody has a chance to participate. I have just a general question, Jason.

You are obviously from a younger generation and very well educated. If you were the Minister of Indian Affairs and Northern Development, and the Prime Minister said you had free reign to devise a system of first nations governance in this country, what would your vision be of first nations governance and inherent right to self-government? That's a very simple question.

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Mr. Jason Calla (Councillor, First Nations Summit Society): I think this is where it gets back to the other question, which is whether we should break down reserves.

There are maybe two different ways to approach first nations economic and social development right now. One is to break down the reserves and say they're not working right now, which is very clear. I think on the human development index, if you put in the figures for on-reserve aboriginal people, they come up at about 63. Canada was ranking number one, but I think it's dropped to number three this year.

So we can move first nations people to cities and towns where markets work and they can participate in the economy, or we can do something else, which is to make markets work a little bit better and provide first nations government with the jurisdiction and authority they need to make decisions in their own communities.

I think the second solution, making markets work on first nations land, is probably a better one, because I think community is important, culture is important, and moving first nations people to cities is just not going to resolve the poverty question. You're still going to have the fiscal cost of poverty, and you won't have first nations participating.

I would definitely see the problem not as too much first nations government, but as the lack of clear jurisdiction, appropriate assignment of revenue capacity, and appropriate assignment of service responsibilities on a sufficient land base. That would be my longer-term vision—engaging those negotiations to develop a new relationship with Canada and B.C., so first nations government does have the appropriate responsibilities and can make decisions that support economic development.

The Chair: Thank you very much.

Ms. Barnes.

Mrs. Sue Barnes: Thank you.

My question will be for the colleges, because your answers in response to Mr. Cullen left me a little unclear.

There are three issues with respect to research in this country. One is an increase in research funding, globally. Another is equitable division, or a different division among large clustered centres of research, the spreading of research centres across the country in a different manner. The third is indirect costs of research. What I would like you to tell me is whether you clearly support or do not support each one of those three elements. I think that will clarify it for the committee.

I can lead you through it; it's very simple. Do you support increased research amounts for the granting councils?

Ms. Maureen Shaw: Yes.

Mrs. Sue Barnes: Do you support a more equitable division between large clusters and small clusters?

Ms. Maureen Shaw: Exactly, yes.

Mrs. Sue Barnes: Do you support funding of indirect research? I'll put it in the parameters of what's been asked of this committee, which was 40% for the indirect cost funding, because that's where you were a little unclear.

Ms. Maureen Shaw: Yes.

Ms. Roseanne Moran: I think what we said in our brief is that we have supported the Canadian Association of University Teachers' recommendation. We believe the indirect costs of research should be funded primarily through improved core funding through transfers.

Mrs. Sue Barnes: Okay. The difference is when Mr. Cullen asked you that question, he was talking about increasing the envelope and taking the indirect costs from the increased sum, and that's where my confusion comes on your answers. I still don't quite understand where you're at here.

Ms. Roseanne Moran: Well, in the colleges it would be new for us to just get some research money, but I think what we would be looking at is rather than having the indirect costs of research necessarily attached to additional research funding, to have that money funded more through basic core funding through the transfers.

Mrs. Sue Barnes: Then I'll just say to you the only problem is we have no strings. When we do a transfer for health, social services, and education, there's no way we can direct that money.

Ms. Roseanne Moran: We make a recommendation regarding that.

Mrs. Sue Barnes: Okay. Thank you.

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

Mr. Pankiw.

Mr. Jim Pankiw: Thank you, Mr. Chair.

I guess I want to ask Mr. Jules this, although Jason, when he answered Mr. Nystrom, was going in this direction as well.

Jason, you referred to social and economic integration versus delineation of appropriate responsibilities. I would see both of those as necessary.

Mr. Jules, I'm not trying to give you a hard time, but you didn't answer Mr. Cullen's question—at least to my satisfaction. Do you see the end game—never mind how long down the road it would take to get there—that we wouldn't need an Indian affairs department? Indian people would be full and equal participants in our society and economy like any other cultural group?

Mr. Manny Jules: Obviously, that's the dream. It's the dream that prevented us from being a full partner in this country. That's why I used the example of 1918. We did not choose to be a ward of the federal government. The federal government made that decision and said this is an amendment to the Indian Act and this is how you're going to govern yourselves.

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When I look toward the future, I see a future with us being a full partner within the Canadian federation. I see us having responsibilities just like every other level of government so we can have the jurisdiction and begin to be a player in terms of the fishery or in terms of whatever—you name it.

Mr. Jim Pankiw: Would that be based on your being individuals as well?

Mr. Manny Jules: Oh yes, you have to. You can't have a situation where it's just going to be government. You can't have an economy that's just on the backs of government. We've just gone through that experience here in British Columbia. It didn't work; it didn't work for a decade. When you look at strengthening the country, you have to look at the sum of all its parts.

When I look at our community as a first nation—and I've travelled extensively all across the country—I see some communities we're going to have to support as first nation communities. This is not because of an economic reason but because of some cultural reason. They may be a Shuswap community. I'm Shuswap, so it's going to be in my best interests to ensure that they have a viable economic structure, companies, or whatever.

What I foresee in the future is that first nations have to be a part of the family; they have to be a part of the federation. Right now we're not because we always have to come here with our hands out, saying can you please help us; our people are suffering and our people are dying—can you please help us? I'm sick and tired of that, of having to beg in our own land when I want to be able to have my son and my people able to stand up on their own two feet and not be beggars in this country or anyplace. I want to be strong and proud of who we are, not only in terms of the Shuswap but in terms of this country.

As I said, I had a grandfather who got a dose of mustard gas in World War I. My dad still tells the story. His father went to fight for this country, and when he came back he had no land because he was raised off the Kamloops reserve in a pit house with my grandmother. He went to fight for Canada in World War I, he was gassed, he came back, and he couldn't even go back to where he was raised. They said that he belonged over there.

What I'm suggesting is so important for the future of this country that it can't be swept under the rug. It can't be forgotten that we are an integral part of the makeup of this country.

This even applies when we talk national security issues. There was a nice little article in the paper about Point Roberts and little kids having to get to school earlier. Well, on September 11 I was on my way to Akwesasne. Akwesasne has to deal with five different jurisdictional boundaries: the Quebec provincial boundary, the Ontario provincial boundary, the New York State boundary, the Canada-United States boundary, and municipal boundaries. Just the experience of that one community means that first nations have to be involved in national security because that's a conduit for people to go illegally from their territory into the United States. There are people like the Okanagan and the Stallauo where families have been literally divided.

This is one of the reasons I came here to this committee. I feel the finance committee has one of the toughest responsibilities of any federal committee. As you asked, Jim, given the events of September 11, what are we going to do right now? We've got all these requests, and it's like what I went through when I was a chief: Manny, what are your priorities going to be? You're chief, so what are your priorities? How are you going to change the world so your people can live better?

That's the responsibility of each and every one of you sitting here: how can we continue to have Canada remain strong and how can we have Canada remain a true partner in terms of international issues dealing with the economy or dealing with you name it? My suggestion is that you have to deal with all these issues because we're all part of the same family.

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When I look below the skin of each and every one of us, we have red blood pumping through our veins, we have a heart here, we have a soul, and we have a mind. It's incumbent upon every one of us to try to make this world a better place for all of us. I'm doing this because I feel so strongly about this. Otherwise, I would have just decided to stay home and do something else. I had to leave this morning from my home in Kamloops, just as all of you had to leave from, say, London—say hello to Tom Bressette when you're back there.

When the events of September 11 happened, I was stuck in Ottawa for over a week. I phoned my son, and I was talking to him. I said, “Clarence, I can't make it home. I'm stuck here in Ottawa.” He said, “Oh, where's that, Dad?” We had driven across the country. This country, when you drive across it, is incredible. When I drive across it, I don't look at just the little cities and towns; I think about the geological history. What made this country? It made us. It made you, it made me, and it made everyone sitting around this table. When I couldn't get home and called him, he knew why. He said, “Oh, is it because of the terrorists in New York?”—and he's seven years old—and I said, “Yeah, I can't make it home, son”. He said, “Well, take a taxi”. I said, “That's too far, son”. He said, “Well, set a world's record”.

Mr. Jim Pankiw: So you did.

Mr. Manny Jules: I couldn't because I had other commitments in Ottawa. I had made up my mind then that we couldn't give up our lives. We can't give in to what's happened. We have to continue the struggle to make his life, the life of my child, and the life of everyone of us here better.

That is no easy job. Look at Afghanistan, Israel, and all of those things. We don't need that here, yet someone imagined the unimaginable on September 11. Do you think we're going to be immune to that? We're not.

It's incumbent upon every one of you as the parliamentary committee to make sure that when you deliberate as a committee, you look at all the priorities this country has come to you about. It may be about tax cuts, more education, or feeding and clothing the homeless. You name it. Where are you going to put the priorities? That's a huge responsibility.

The Vice-Chair (Mr. Ken Epp): Thank you.

Mr. Manny Jules: Just to close, I want say that I'm here to show support for the initiative on national security because I want to live in peace. What I'm promoting between first nations and the federal, provincial, and territorial governments is peace among us so our future will always be together. In my opinion, that's what Canada is about.

The Vice-Chair (Mr. Ken Epp): Thank you very much, Mr. Pankiw and Mr. Jules. This is what makes the position of chairman so difficult, because how can you interrupt an intervention like that? It's basically impossible.

Mr. Cullen, we'll have your last question.

Mr. Roy Cullen: Thank you. I know time is pressing.

Your comments were very eloquently put, Mr. Jules.

Now, I'm sure you didn't mean it as a threat, and I'm not going to take it that way—I'm glad my colleagues have been cleaning up my questions for me. However, until the end I had interpreted your remarks, sir, on sustainability as saying there's no community in Canada that is totally self-sustainable. Since we transfer CHST, equalization payments, etc., that's how I interpreted your comments.

Mr. Manny Jules: That's how I—

Mr. Roy Cullen: Yes. And Ms. Shaw, I just have a quick question for you and a very quick one for Ms. Mix.

I agree with you that it's more of a core funding issue with the overheads. I would argue that in some provinces, such as Ontario and perhaps now B.C., there has been some flexibility to increase and augment core funding. I think that is the vehicle. That's the purist view, perhaps, because we know those funds aren't always forthcoming.

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I take your recommendation about segregating the funding for education as maybe one avenue. But as to your recommendation of $2 billion a year, you can appreciate that particularly in today's context that's a big whack of dough, if I can put it in the vernacular. How can you justify that? I'm wondering what role you see for the provinces. Why should we be back into direct funding of social housing? Are there not some other instruments we could use to generate some growth in affordable housing?

Ms. Linda Mix: I think the federal government does have a role. As you know, in 1993, when the federal government opted out, most of the provinces, except for B.C. and Quebec, continued to build housing. What we've seen across the country is increased homelessness in Ontario, and it's a disaster in Alberta, where you have a lot of working people who can't find a place to live. They can't find a place to rent, and that is because of the lack of supply.

So $2 billion, as far as we're concerned, is just a small part of the budget. I think we're looking at something like a $30 billion surplus. We're not?

Mr. Roy Cullen: No.

Ms. Linda Mix: Okay. We're looking at a large surplus, in any event, and $2 billion is an investment, as far as we can see, in the future of Canadians so that we can participate, so that we can have a decent quality of life.

The Federation of Canadian Municipalities has just asked in their conference over the weekend for $1.2 billion a year. We're going one step higher than that. I think the opportunity costs to not doing the housing.... We've seen what's happened in Ontario; we're seeing what's happening across the country. We would encourage you to take this very seriously.

I think my colleague has a comment.

Ms. Vanessa Geary: I just want to add that this is going to require partnerships and of course provinces are going to have to provide funds and municipalities can do things such as provide land.

If the federal government doesn't want to get back involved in terms of providing subsidies, what you can do is provide capital grants in order to bring down the cost of actually constructing the housing.

The last thing I would leave you with is how can we justify having people living on the streets and literally dying on the streets in a country as wealthy as ours? That is what you all need to grapple with. Yes, it's going to cost money to solve this problem, but what's the priority? How can we justify people actually living on the streets?

The Vice-Chair (Mr. Ken Epp): Thank you very much. I think that should end our session today.

Thank you all, witnesses. You did a great job presenting your ideas and your insights. We value that. The committee will of course take this input into account in the production of our report.

Thank you to all the members.

With that, this session is closed. Thank you.