FINA Committee Meeting

Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.

For an advanced search, use Publication Search tool.

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

Previous day publication Next day publication

37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Tuesday, November 4, 2003

0805

The Chair (Mrs. Sue Barnes (London West, Lib.))

Ms. Mary Ennis (Vice-Chairperson, Council of Canadians with Disabilities)

0810

The Chair

Dr. Chris Ferns (Past President, Association of Nova Scotia University Teachers)

0815

The Chair

Mr. Robert Cook (President and Chief Executive Officer, Nova Scotia Association of Health Organizations)

0820

0825

The Chair

Mrs. Valerie Payn (President, Metropolitan Halifax Chamber of Commerce)

Mr. Allan Gates (Federal Affairs Committee Chair, Metropolitan Halifax Chamber of Commerce)

0830

Mrs. Valerie Payn

0835

The Chair

Professor Michael Bradfield (Economics, University of Dalhousie; The Face of Poverty Consultation)

Professor Alasdair Sinclair (Professor Emeritus (Economics), University of Dalhousie; The Face of Poverty Consultation)

0840

The Chair

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance)

Dr. Chris Ferns

0845

Mr. Rahim Jaffer

Mr. Robert Cook

Mr. Rahim Jaffer

Mr. Allan Gates

0850

Mrs. Valerie Payn

Mr. Rahim Jaffer

Mrs. Valerie Payn

Mr. Rahim Jaffer

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

Mr. Robert Cook

0855

Mr. Bryon Wilfert

Mrs. Valerie Payn

0900

Mr. Bryon Wilfert

The Chair

Mr. Scott Brison (Kings—Hants, PC)

The Chair

Mr. Scott Brison

Mr. Bryon Wilfert

Mr. Scott Brison

0905

Mrs. Valerie Payn

Mr. Scott Brison

0910

The Chair

Mr. Scott Brison

The Chair

Mr. Allan Gates

The Chair

Dr. Chris Ferns

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Mr. Robert Cook

Mrs. Helen Patriquin (Vice-President, Nova Scotia Association of Health Organizations)

0915

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

Mrs. Valerie Payn

Mr. Shawn Murphy

The Chair

Prof. Michael Bradfield

Mr. Shawn Murphy

Prof. Michael Bradfield

Mr. Shawn Murphy

0920

The Chair

Prof. Alasdair Sinclair

Mr. Shawn Murphy

Prof. Alasdair Sinclair

Mr. Shawn Murphy

The Chair

Mr. Peter Stoffer (Sackville—Musquodoboit Valley—Eastern Shore, NDP)

Ms. Marie White (National Chairperson, Council of Canadians with Disabilities)

Mr. Peter Stoffer

The Chair

Prof. Michael Bradfield

Mr. Peter Stoffer

0925

Mrs. Valerie Payn

Mr. Peter Stoffer

Mrs. Valerie Payn

Mr. Peter Stoffer

Mrs. Valerie Payn

The Chair

Ms. Angela Bishop (Community Liaison, Community Action on Homelessness)

0940

0945

The Chair

Ms. Angela Bishop

The Chair

Ms. Angela Bishop

The Chair

Mr. Peter Kelly (Mayor, Halifax Regional Municipality)

0950

The Chair

Mr. Peter Kelly

The Chair

Mrs. Ann Marie Downie (Executive Director, Literacy Nova Scotia)

The Chair

Mrs. Ann Marie Downie

0955

1000

The Chair

Mrs. Ann Marie Downie

The Chair

Mrs. Ann Marie Downie

The Chair

Mr. David Hare (Nova Scotia National Executive Representative, Canadian Federation of Students)

1005

1010

The Chair

M. Desmond Morley (Executive Director, Federation of New Brunswick Faculty Associations)

1015

1020

The Chair

Mr. Rahim Jaffer

Mrs. Ann Marie Downie

1025

Mr. Rahim Jaffer

Mr. David Hare

Mr. Rahim Jaffer

Mr. David Hare

The Chair

Mr. Bryon Wilfert

1030

Mr. Peter Kelly

The Chair

Mr. George McLellan (Chief Administrative Officer, Halifax Regional Municipality)

1035

Mr. Bryon Wilfert

The Chair

Mr. Scott Brison

1040

Mr. David Hare

Mr. Scott Brison

Mr. David Hare

Mr. Scott Brison

Mr. David Hare

Mr. Desmond Morley

1045

The Chair

Mr. Shawn Murphy

Mr. Desmond Morley

Mr. Shawn Murphy

Mr. David Hare

Mr. Shawn Murphy

1050

Mr. Desmond Morley

Mr. Shawn Murphy

Mr. Desmond Morley

Mr. Shawn Murphy

Mr. Desmond Morley

Mr. Shawn Murphy

The Chair

Mr. Peter Kelly

The Chair

Mr. Peter Stoffer

The Chair

Mr. Scott Brison

1055

Mr. Peter Kelly

Mr. Peter Stoffer

Mr. Peter Kelly

Mr. Peter Stoffer

Mr. Peter Kelly

Mr. Peter Stoffer

1100

Mrs. Ann Marie Downie

The Chair

Mr. Michael Burke (National President and Director of Hope Cottage, Society of St. Vincent de Paul)

1110

Father George Leach (Outreach Worker at Hope Cottage, Society of St. Vincent de Paul)

1115

The Chair

Mrs. Katherine Reed (Project Coordinator, Antigonish Women's Resource Centre)

1120

1125

The Chair

Mrs. Mary Jess MacDonald (President, Nova Scotia School Boards Association)

1130

The Chair

Mrs. Jeanne Doucette (First President, Nova Scotia School Boards Association)

The Chair

Ms. Mary Boyd (Spokesperson, MacKillop Centre for Social Justice and PEI Alternative Provincial Budget Coalition, As Individual)

1135

1140

The Chair

Mr. Peter Wilde (Partner, Raymond Wilde Chartered Accountants)

The Chair

Mr. Peter Wilde

The Chair

Mr. Peter Wilde

The Chair

Mr. Peter Wilde

Mr. Shawn Murphy

The Chair

Mr. Shawn Murphy

The Chair

Mr. Shawn Murphy

The Chair

Mr. Peter Wilde

Mr. Shawn Murphy

Mr. Peter Wilde

The Chair

Mr. Peter Wilde

The Chair

Mr. Peter Wilde

1145

1150

The Chair

Mr. Peter Wilde

The Chair

Mr. Rahim Jaffer

Mrs. Katherine Reed

1155

Mr. Rahim Jaffer

Mrs. Mary Jess MacDonald

Mr. Rahim Jaffer

Mrs. Mary Jess MacDonald

Mr. Rahim Jaffer

Mr. Peter Wilde

Mr. Rahim Jaffer

Mr. Peter Wilde

The Chair

Mr. Bryon Wilfert

Ms. Mary Boyd

1200

Mr. Bryon Wilfert

Ms. Mary Boyd

Mr. Bryon Wilfert

Mrs. Katherine Reed

1205

The Chair

Mr. Scott Brison

The Chair

Mr. Michael Burke

Mr. Scott Brison

1210

Mrs. Katherine Reed

The Chair

Ms. Mary Boyd

The Chair

Father George Leach

Mr. Scott Brison

The Chair

Mr. Scott Brison

The Chair

Mr. Shawn Murphy

Mrs. Katherine Reed

1215

Mr. Michael Burke

Mr. Shawn Murphy

The Chair

Mr. Peter Stoffer

Mrs. Katherine Reed

Father George Leach

Ms. Mary Boyd

1220

Mr. Peter Stoffer

Mr. Peter Wilde

Mr. Peter Stoffer

Mrs. Katherine Reed

Mr. Peter Stoffer

The Chair

Mr. Shawn Murphy

Mr. Peter Stoffer

Father George Leach

The Chair

Mr. Peter Stoffer

The Chair

Mr. Scott Brison

The Chair

1225

Mrs. Mary Jess MacDonald

The Chair

Mrs. Mary Jess MacDonald

The Chair

CANADA

Standing Committee on Finance

NUMBER 097

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, November 4, 2003

[Recorded by Electronic Apparatus]

¾ (0805)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): The order of the day is Standing Order 83.1, pre-budget consultations. It is Tuesday morning and this is our first panel in Halifax, Nova Scotia. I would like to welcome all of our witnesses.

The Council of Canadians with Disabilities is represented this morning by Marie White, the national chairperson, and Mary Ennis, the vice-chairperson. Welcome to you both.

From the Association of Nova Scotia University Teachers is the past president of that organization, Dr. Chris Ferns.

From the Nova Scotia Association of Health Organizations is Mr. Robert Cook, president and chief executive officer, together with Helen Patriquin, the vice-president of the organization. Welcome.

This year the Metropolitan Halifax Chamber of Commerce is represented by the president, Valerie Payn, together with the federal affairs committee chair, Allan Gates. Welcome to you both.

The Face of Poverty Consultation is represented today by Dr. Alasdair Sinclair from Dalhousie and Dr. Michael Bradfield, also from Dalhousie. Welcome to you both.

We will start with the Council of Canadians with Disabilities. You have up to seven minutes.

Ms. Mary Ennis (Vice-Chairperson, Council of Canadians with Disabilities): The Council of Canadians with Disabilities is the umbrella cross-disability advocacy organization mandated to address barriers to citizenship for persons with disabilities at the federal level. On behalf of CCD, we thank you for inviting us to be part of this process.

In 1997 Canada was the recipient of the Franklin Delano Roosevelt International Disability Award for its work on advancing the citizenship of persons with disabilities, for the progress the country has made. At that time, the Prime Minister, the Right Hon. Jean Chrétien, travelled to New York to receive that award on behalf of Canada. On receipt of the award he said:

We are dedicated to the simple proposition that persons with disabilities have the right to enjoy and have access to any opportunity that life has to offer. Indeed, we believe it is a basic right of citizenship.

Today in 2003 we have 3.6 million Canadian citizens of all ages and from all backgrounds with disabilities. That's one in eight people.

Disability in Canada usually means living in poverty. One-third of the complaints to the Canadian Human Rights Commission continue to be disability related. That's not a great record.

As Canadians with disabilities, we have identified our needs as being disability supports, equal opportunity, and full citizenship rights. In order to meet these needs, CCD puts forth the following recommendations for budget 2004.

We would like to see the creation of a national disability-related supports program to assist the provinces in investing in better programs and services. Investments include tax measures as well as program initiatives with the provinces and territories. We would like to see the disability tax credit made refundable and the federal government require the provinces and territories to ensure that that benefit is not clawed back from social assistance recipients.

We would like to see the value of the child disability benefits increased and extended to include individuals 18 to 25 years of age. People in that age group are usually in a period of transition from school to work or are moving from living with family to community options.

We recommend the development of a labour market strategy for Canadians with disabilities. By the year 2020, Canada may have a shortage of about a million workers. We believe the country must take action now to ensure that all working-age adults have the right skills and have opportunities to contribute to the economy.

Statistics show that people with disabilities still face considerable barriers to employment in this country. We recommend that the Government of Canada become a model employer by creating more inclusive recruitment, job accommodation, and retention programs targeted towards Canadians with disabilities.

We recommend the development of inclusive labour market agreements with the provinces and territories, with specific targets addressing the employment and training needs of persons with disabilities. Until labour market agreements are inclusive of addressing our needs, we recommend that the Opportunities Fund be increased.

On the reduction and alleviation of poverty, we recommend the legislation of an earnings exemption within the Canada Pension Plan disability component and the development of collaborative initiatives with the provinces and territories to improve income support programs.

We recommend support for community organizations.

We recommend increasing the funding of the HRDC social development partnership program by $5 million.

We believe that support of the voice of persons with disabilities, those consumer-controlled, consumer-directed community organizations, is critical to good consultation and program design. People with disabilities are the experts on disabilities. We need to be at the table whenever our issues are discussed.

¾ (0810)

The Chair: Thank you very much. Now we will move to the Association of Nova Scotia University Teachers, Dr. Ferns.

Dr. Chris Ferns (Past President, Association of Nova Scotia University Teachers): I'd like to thank the committee for inviting us to come here today. I also wish to communicate regrets on the part of our president, Linda Van Esch, who was unable to be here. When I spoke to her late last night she was marooned in an airport 2,000 miles away, so unfortunately she is unable to take part in this discussion.

We have already submitted a brief outlining our concerns, and we hope the committee has had the opportunity to familiarize themselves with it. I'd like to flag a couple of points. In the brief, we did make it clear that we shared many of the concerns advanced by the Canadian Association of University Teachers in its brief to the committee regarding the impact of underfunding on Canadian universities and on their ability to offer high-quality, affordable education to today's students.

We also shared the concerns expressed by the Canadian Federation of Students regarding the extent to which soaring tuition fees, which have risen by nearly 170% since 1990-91, are compromising access to post-secondary education for our children and are burdening those who do go with the highest level of student debt in the world.

We have also drawn attention to the particular problems facing universities in Nova Scotia, where we are seriously disadvantaged by a funding formula based on provincial population rather than on the number of students educated. This works against a province such as ours, which is a net importer of students from the rest of Canada. In effect, the funding formula has the effect of reversing equalization payments so that we are penalized rather than supported for educating more than our share of Canada's students.

In addition, some of the federal initiatives designed to restore funding to the university sector unfortunately work against smaller, poorer provinces, and particularly those whose focus is on the essential task of providing high-quality undergraduate education. Neither the Canada research chairs program nor the Canada Foundation for Innovation have proved much help to Nova Scotia.

There are single institutions in Quebec, Ontario, Alberta, and British Columbia that have more chairs than Nova Scotia. The formula for CFI awards requiring matching funding from the provincial government or from private sources also works against the poorer provinces. In fact, despite having 12% of the faculty in Canada, the Atlantic region so far received 3.8% of the CFI grants.

What we would like to most bring to the attention of the committee is the impact that underfunding has had on the actual quality of education. One side effect has been a marked decline in the number of full-time faculty. In fact, throughout the 1990s in Nova Scotia, at some universities there was a virtual hiring freeze, with few or no new faculty coming in to replace those who retired or left.

The consequences are, first of all, vastly increased class sizes. I'm hearing from a number of students now, my own daughter included, that she is attending classes where there are not enough seats in the room. People have to sit on the floor. It would seem to me that if you were spending $5,500 a year on your education, the least you might get for it is a chair.

Also, I think we have seen an increasing reliance on part-time faculty to do teaching. While the problem is certainly not that part-time faculty are ipso facto inferior to their full-time colleagues, the problems are that hiring criteria are less stringent. In certain areas, finding adequately qualified instructors who are prepared to work for the stipends provided is proving difficult, if not impossible.

In addition, part-time faculty are not provided with the resources to enable them to do their job properly. Often they have no permanent office space to consult with their students. They are provided no time or money for research, and while many part-time faculty are carrying out research, it's on their own time with their own money. And again, it's true that in certain areas you will find part-time members of the faculty who are not as current in the areas of their expertise that the students have the right to expect.

In terms of the actual quality of education provided, that has been going down. There has been a perceptible decline over the last 10 years.

There is also the problem of what students are able to get from the education now offered. Ten years ago the expectation was that, yes, a lot of students would have to work during their vacations to earn money and quite a number would even have to work a few hours part-time during the term, an evening a week or perhaps a weekend, to make ends meet.

Now, it's not uncommon to find students working 20 or 30 hours a week, even full-time, and in some cases, due to the financial pressures on them, it is impossible for them to actually do the work to get the full benefit from their education. You see students falling asleep in class, not because they were out on the town but because they were working all night. You see good students who, after doing well in the course, will suddenly do catastrophically on an assignment because once again there were not enough hours in the day to do the work. The paradox is that as they pay more for their education, they get less.

¾ (0815)

I think there's another problem here, and perhaps it is a more philosophical one. What is now being promoted as a model of post-secondary education is where the student is seen as a customer--we have that word used now--purchasing her or his educational products from the menu on offer. But that's not what happens realistically.

How many students, 18 or 19 years old, come to university with a set of clearly defined career objectives, or with the information and experience necessary to determine what course of study will be the best to enable them to attain them? The fact is that education is not as efficient as the powers that be would like.

A lot of education is in fact a matter of trial and error--finding out through experience what you thought you wanted to do was not in fact what you wanted to do. University education, any education but university education especially, is about changing minds, about introducing students to new and unfamiliar ideas and ways of thinking.

It's not uncommon therefore for students to change their direction midstream as they begin to get a sense of where their real path lies. I know that's what I experienced myself as a student. Or at least that's what it should be like. It's becoming increasingly difficult to do that when the financial consequence of taking an extra year or taking a few extra courses is a major addition to an already crippling debt load.

More and more, students are being driven not by intellectual curiosity but by the need to pursue the course of study most likely to lead to careers well enough paid to enable them to pay off their debts. That, it seems to us, is the real crime. Many of us still hold the old-fashioned idea that we'd like to see our children have better opportunities than we did. What is happening now is the reverse of that.

If we see tuition fees for what they are--simply an alternative form of taxation--the 170% increase since the early nineties represents a staggering redistribution of wealth, not so much from the poor to the rich but from the young to the old. The irony is that the same policy makers who benefited from all the affordable education when they were students have now made tax cuts that primarily benefit themselves, and the cost is borne by their own children.

I know of several colleagues who 20 or so years ago overcame considerable adversity to obtain the education that enabled them to fulfill their potential and make that potential available to the rest of society. They tell me that under the current conditions they could not have done that, that their potential would have been left forever unfulfilled. I think that's a shameful state of affairs.

We believe that policies whose affect is to line our own pockets at the expense of our children can't be justified. It's for that reason we made the recommendations contained in our brief.

Thank you very much.

The Chair: Thank you very much.

Now we'll go to the Nova Scotia Association of Health Organizations, Mr. Cook.

Mr. Robert Cook (President and Chief Executive Officer, Nova Scotia Association of Health Organizations): Thank you, Madam Chair.

On behalf of the board of directors of the Nova Scotia Association of Health Organizations, thank you for the opportunity to again make a presentation to you this year.

NSAHO is an organization serving health care and community service organizations across Nova Scotia. Our membership includes nine district health authorities, the IWK Health Centre, nursing homes, residential care facilities, home care, home support, as well as adult and regional residential centres. NSAHO is a member of the Canadian Healthcare Association.

Our board members, who are trustees and managers in the Nova Scotia health system, bring the realities of today's health system to your deliberations. We hope you have had an opportunity to read our brief, and with the seven minutes allotted to us today, we're only going to raise a couple of issues outlined in the brief.

At first blush, it may seem unusual that a health organization is speaking to a committee whose major consultation themes are economic growth, job creation, and investment. However, the perspectives of health care organizations such as ours are critical to understanding these issues. NSAHO has often stated its belief that our publically funded health system is an investment in the health of Canadians and in the economic health of our country.

Any doubt about the role that our publicly funded health system plays in sustaining and growing the Canadian economy was quickly eliminated by the emergence of SARS earlier this year.

A recent survey from the Centre for Research and Information on Canada found that all Canadians in every part of the country have additional spending on health care as their top priority for the next Prime Minister. It is clear the system needs the funding.

Not only has SARS taken a toll, but we also desperately need to shore the core if we want our health system to continue to be the economic advantage it has repeatedly been shown to be.

Despite the fact that funding for health care is a top priority for most Canadians, the problem remains that current federal funding is insufficient for what we expect the system to be able to provide. Nova Scotia's share of the CHST funding provided for in the health accord of 2003 will be approximately $88 million, or 4% of our provincial 2003-04 health budget.

With health care costs growing by 7% or 8% a year, it shouldn't be surprising that provinces and organizations like NSAHO inform you that additional federal money is required to sustain and reform the current health system. It is also true that provinces that have a lower economic base like Nova Scotia struggle to maintain health programs that are equitable with those offered in other provinces.

Here in Nova Scotia we need new and sustained federal funding to ensure that Canadians have access to publicly funded services across the continuum of care, including home, community, and long-term care services, regardless of where they live.

We were encouraged to hear in the media yesterday that the finance minister is intending to announce--and in fact did announce--that the first $2 billion of any surplus will go to the provinces for health care.

NSAHO is calling on the federal government to not only provide the $2 billion, but to annually increase CHST on a predictable basis until the percentage of federal contributions at least equals 1995 rates.

Debt reduction is important to our economy, but we contend that there is a greater cost. The health system is not funded adequately. The current federal government's cost-sharing model for health, which is based solely on per capita distribution, needs to be revamped.

It does not recognize the differences in the need for health services among populations. If funding is to be equitable, adjustments must be made to accommodate variations in the average age and health status of a province.

This viewpoint is embraced by leading health systems researchers such as Steven Lewis, who recently wrote:

Because a major purpose of federal involvement is redistributive, poorer provinces should get more per capita, and so should those with demonstrably greater health care needs.

That theme, Madam Chair, was also picked up in both the Romanow commission report and the Senate report on health care in Canada.

The Canadian Institute for Health Information found that in 1998, 12% of Canadians were 65 years of age or older, yet more than 43% of what provincial and territorial governments spend on health care went to services for seniors.

¾ (0820)

In 2000-01, Nova Scotia had consistently higher health expenditures than the national average for all age groups over 65. For example, in Nova Scotia, 46.9% of health expenditures were consumed by those over 65, compared with 42.7% nationally. There is a spread of more than 4% against the interests of Nova Scotia. A purely per capita funding model will work to the advantage of those provinces where the age of the population is less than the national average. Those provinces where the population is older, such as Saskatchewan and Nova Scotia, will be disadvantaged.

Nova Scotia and a number of other provinces face a double whammy. The impact of the older population not only means higher health care expenditures, it also means there is a smaller proportion of the population of the key demographic age group of 19 to 44 whose participation in the labour force is high and whose contribution to the economy is strong. Not only are the province's efforts to strengthen its economy hampered, but the falling labour market participation rates increase the burden on all social programs.

The correlation between poor health, poverty, and unemployment is well established, and Nova Scotia has, by many measures, one of the least healthy populations in Canada. We have the highest mortality rate from lung cancer, the second highest percentage of diabetes, the highest percentage of arthritis and rheumatism, and the second highest percentage of asthma.

Nova Scotia strongly urges the federal government to implement a needs-based resource allocation model that incorporates both the prevalence of conditions that generate demand for health services plus the need for investments to improve the health of the population. While healthier and younger provinces will argue strenuously for per capita funding, it is important to note that no province allocates its own resources on a strictly per capita basis.

We recognize that this year has been an exceedingly difficult one for Canadians and that there are and will continue to be competing demands on the federal purse. We can, however, be certain that future threats to our public health system are inevitable, and because health is fundamental to the national interest and because Canadians demand it, health system funding must be the foremost federal funding priority.

Therefore, the five-year health reform fund to improve home care, palliative care, and catastrophic drug coverage must be implemented. As well, the $2 billion contingent funding in 2003-04 to the CHST base is absolutely essential if provinces such as Nova Scotia are to sustain the current health system in the short term.

Federal funding is necessary to rebuild our public health system. Canadians have spoken on the need for the federal government to appropriately fund health care. Now we need to follow through.

Thank you very much.

¾ (0825)

The Chair: The Metropolitan Halifax Chamber of Commerce.

Mrs. Valerie Payn (President, Metropolitan Halifax Chamber of Commerce): Good morning. I'm the president of the Metropolitan Halifax Chamber of Commerce. With me today is Allan Gates of Emera, who is chair of the chamber's federal finance committee.

Thank you for the opportunity for the chamber to share with you our views as you begin your budget preparations.

The Metropolitan Halifax Chamber of Commerce is a best-practice business advocacy organization representing the interests of more than 2,000 businesses in Metro Halifax that employ more than 90,000 people, over half of the Metro Halifax labour force.

We continuously strive to make Metro an even better place in which to live, work, and play. Earlier this year we faced an unwelcome challenge with Hurricane Juan. The cost to Nova Scotia is expected to be upwards of $100 million. We are hopeful that the federal government will play a role in disaster relief. We were very pleased by the recent announcement by Minister Stewart requesting flexibility under the work-sharing program so that businesses affected by the disaster are able to take advantage of that program.

Notwithstanding the challenges we have had to face post-Juan, Metro Halifax is experiencing strong growth. There has not been a more exciting time to live and work in Halifax than right now. Metro Halifax's economy is expanding. Halifax has been recognized as one of the best Canadian cities in which to do business. We have a strong global port, a collection of top universities, a growing oil and gas sector, and a vibrant entrepreneurial spirit.

The point of all this is to demonstrate that increasingly the problems we in Halifax face are problems associated with growth and prosperity. Our challenge now is to seize the opportunities that have come our way and leverage them so that more of our citizens can live more fulfilling lives in a community that preserves its values and protects its lifestyle.

We need strong leadership: leaders with wisdom and courage, leaders with a vision of tomorrow and the capability to employ plans that will see the opportunity and promises of today fulfilled.

It also requires a commitment to fiscal probity, a philosophy that will preserve and enhance the social and economic fabric of our nation.

I would now like to turn the discussion over to Allan to update you on the chamber's key federal finance priority areas.

Mr. Allan Gates (Federal Affairs Committee Chair, Metropolitan Halifax Chamber of Commerce): Thanks, Valerie.

I would like to thank the committee for coming to Halifax and for the opportunity to share the views of the chamber with you today. Let me preface my remarks by noting that the views of the Metro Halifax chamber may differ somewhat from those you hear from other parts of the Maritimes. As Valerie noted, Halifax has undergone a period of strong growth. That growth has not always been shared with all rural parts of the maritime provinces.

From the chamber's perspective, the key issues that remain a priority for our members are fiscal restraint, debt reduction, and tax reduction. Given the changing political climate, we feel it is imperative to ensure policy stability, especially in these areas. That will create the sustainable economic growth that is needed to fund desired program spending.

Starting with fiscal restraint, let me say that we are pleased with the government's achievements in getting its fiscal house in order after years of multi-billion-dollar deficits. Canadians endured some often painful cuts to make this happen. We believe it is important that the federal government ensure prudence in future program spending. Yesterday's update from the Minister of Finance underscores the importance of this given the minimal surplus anticipated.

Fiscal responsibility is necessary today. We have said it before and it bears repeating: any new spending must come from the existing spending envelope. Program spending must be kept in check. The chamber is concerned that continued increases in program spending are reducing options for the federal government.

For example, meaningful debt reduction or tax relief is not possible with the rate of growth we see in program spending today. We recognize that certain incremental growth in spending, based on population growth and inflation, is inevitable, but rather than further increase spending in real terms, we believe government must determine its priorities and exercise appropriate restraint.

Turning to debt reduction, we are pleased that the government has arrested the growth of the debt and indeed has reduced the debt by about $52 billion. However, we still believe that a clear strategy that outlines specific debt reduction plans and targets is necessary. Government must take steps to develop a plan for aggressive and realistic debt reduction: lower debt and lower debt servicing costs and more moneys available for strategic investments and program spending. We would all like to see our nation realize the advantages of fiscal flexibility.

Despite the economic performance in the U.S. in the last year and events such as SARS, mad cow disease, and Hurricane Juan here in Nova Scotia and P.E.I., the Canadian economy was surprisingly robust this year. Now is the time when we have ability to make payments towards the debt. In more difficult years we may not have this option.

Mr. Manley indicated yesterday that the federal government would still provide up to $2 billion to the provinces for additional health spending when the books are closed next fall. Two billion out of the contingency reserve of $2.3 billion is precious little to put against Canada's debt. The chamber believes that debt reduction should not be seen as optional. Continuing to reduce the debt must be part of the fiscal agenda of the federal government. Fiscal prudence must remain the watchword. Choices must be made to reduce our debt that will in the long term foster a sustainable, strong economy.

With regard to tax reduction, our members have told us many times that along with spending control and debt reduction, personal tax cuts are one of their top priorities. Tax cuts provide the stimulus we need to place our economy in a strong competitive position. Tax relief at the corporate level will increase economic activity and boost overall productivity. Recent tax cuts in the U.S. have only served to exacerbate the tax differential between the two countries.

However, we believe that sustainable tax cuts can only be maintained if government controls new spending and reduces debt. The chamber is pleased with the recent tax reduction initiatives undertaken by the federal government and the substantial and subsequent benefits this has resulted in, yet it is still imperative that debt reduction and fiscal restraint remain the focus. We urge the government to consider any tax cuts in the context of the broader fiscal picture.

We would also like to take this opportunity to add our voice to a position taken by the Canadian chamber. We agree with their suggested approach to targeted tax reduction. In particular, we believe there is merit in reducing taxes for low- and modest-income earners. With an effective marginal tax rate higher than that of Canada's top earners, relatively speaking, they pay a bigger proportion of their total revenue in taxes due to clawbacks in benefits. The situation is unfair and should be addressed.

I'll pass it back to Valerie.

¾ (0830)

Mrs. Valerie Payn: Thanks, Allan.

I'd also like to point out a couple of other areas, namely, federal air tax and energy, which I'd like you to consider as you begin your budget consideration and preparations.

Regarding federal air taxes, the chamber is concerned about some aspects of taxation in the air industry. The industry is overburdened with various federal charges. Another major concern is the national airport system rent. We believe these rents should be terminated, a view consistent with that of the Halifax International Airport Authority. We are also concerned with the current security charges and air fuel taxes. These charges have a dramatic negative impact on the economic activity in communities and we feel they should be eliminated.

On the energy side, we need a more streamlined and transparent regulatory environment for the oil and gas industry. The right regulatory environment is key to ensuring continued development in the industry.

The Canada-Nova Scotia Offshore Petroleum Resources Accord was intended to streamline the process. That has not proven to be the case. I understand Minister Dhaliwal raised the issue of a single regulatory body at the offshore Europe oil and gas conference earlier this year and again at last week's meeting of the Atlantic energy round table. This is an initiative that the chamber would definitely like to see move forward.

We want to take this opportunity to urge the federal government to recognize the importance of a clear process and to ask that the CNSOPB authority be recognized as paramount in regulating Nova Scotia's offshore.

In conclusion, we recognize that the concerns of the Halifax business community may differ from those of other communities. This highlights the dichotomy of the challenges facing various communities today, a trend that is cause for concern.

Canadians need their government to provide leadership and make decisions based on sound economic policy and to determine priority areas and exercise spending restraint. It is imperative that we control public sector spending, stay focused on commitments to balanced budgets, and reduce our national debt. These are essential to enable sustainable economic growth.

Thank you for the opportunity to present on the chamber's behalf today.

¾ (0835)

The Chair: Thank you very much.

Our final presenter in the panel is from the Face of Poverty Consultation. Who would like to start?

Dr. Bradfield.

Professor Michael Bradfield (Economics, University of Dalhousie; The Face of Poverty Consultation): Yes, I'll start.

I think you have a copy of our brief now, so I'll quickly speak to a few points in it.

The initial point simply is that poverty has been rising in Canada, particularly amongst children. A big part of that rise in poverty is in fact due to the federal government's withdrawal from the economy, both in terms of its own programs and in terms of its cuts in transfer payments, the transfers to the provinces, which have then cut back their programs and their transfer payments, as well as direct federal transfers to people.

We were told when these cuts were being made that they were necessary to protect these programs, and we just heard a similar comment in the last brief. It was said that controlling the deficit was the most important thing. In fact, it was social programs that were accused of causing the deficit.

We cite in our brief the report by Mimoto and Cross, which shows that in fact the reason we got those large deficits and growing debt was because of the tax cuts that occurred in the 1970s and 1980s and because of the high interest rate policies of the Bank of Canada and the federal government during the late 1970s and the 1980s. So it wasn't social programs; it was previous tax cuts.

Once we got into a surplus situation, we followed that with more tax cuts, so the problem that caused the situation, or the policy that caused the problem, was repeated, and now we're having more calls for more tax cuts.

Particularly bothersome to us is the fact that the majority of those cuts were in regressive tax, particularly in the capital gains inclusion rate. Contrary to what was just said, in fact, the reduction in the capital gains inclusion rate was a far greater drop in taxes than we've seen in the recent U.S. tax cuts.

In addition, in our brief we address the fact that people are poor primarily because many of them are in full-time but low-wage, unskilled jobs, so they don't make a decent wage. Many other people are in part-time or seasonal jobs. Other people in the economy are restricted in their ability to operate in the labour market, many of them because they have child care or elder care responsibilities, and others because they have health problems that limit or preclude their participation in the labour market.

Basically those two parts of our brief deal with the bits of mythology about why we got into the cuts to the social programs in the first place and who are the poor. Al Sinclair will take the rest of it.

Professor Alasdair Sinclair (Professor Emeritus (Economics), University of Dalhousie; The Face of Poverty Consultation): Thank you. We too appreciate the opportunity to be here. You've already heard some useful suggestions about poverty relief, and I'm sure, from looking at the agenda here and elsewhere, you will hear others.

We think it's helpful to think of the problem as being two different types of programs: one of a general nature that affects the entire population but which is important in reducing poverty; and second, those programs that are directly aimed at those on low incomes and in poverty.

In the first category, all studies worldwide show that education and health are crucial determinants of poverty or ways of preventing poverty. We've heard already today, and you will hear again, the importance of health and education. The federal government has a clear and direct role in health, and in education, at least in Nova Scotia, the equalization payments would be a way of funding our secondary and primary school systems. I'm not discounting the university system, but in this brief we're focusing on primary and secondary education. Those are important programs. You'll hear a lot about them. You've heard about them.

On the specific programs with respect to the disabled, the single mothers, the poor, the low-income wage earners, and so on, we do recognize that the federal government has made some useful steps in this area. The CCTB, the Canada child tax benefit, is a useful change from the family allowance, in our view.

Also, the federal government has made some initiatives in the area of what I call day care, but which people in the field call child care. There have been some benefits there.

However, in both of these programs--this is a very difficult Canadian problem, and the word “clawback” was already used--how does one prevent the provinces from clawing back when the federal government gives money? How do you get the provinces to act quickly, is what I think you will hear on the housing side. While the federal government has given money to housing for the homeless, it takes a long time.

Let me give an example on the CCTB. This is not in the brief, but Lynne McIntyre, a professor at Dalhousie University and the dean of health professions, did a study of low-income single mothers. She found that low-income single mothers in Nova Scotia were three times more likely to experience hunger than mothers in a similar situation in other Atlantic provinces. Single mothers consistently provide food for their children even when it means they themselves will be malnourished. She says it is because the tax credit in Nova Scotia has been clawed back by the province so that families do not get the kind of relief here that they get elsewhere in the Atlantic provinces. This is an Atlantic province comparison.

So we think the clawback problem is important, and it's a difficult matter in federal-provincial relations, but surely the provinces can be brought on side somehow on these matters.

It is reported in the paper that day care places have gone down in Canada, despite the program of the feds. In Nova Scotia they've gone up. It's not a criticism here.

What do we do? How do we fund it? There are different ways, but we think it could be done through the reallocation of existing funds and the reimposition of a capital gains tax so that capital gains would be equal to income; that's “a buck is a buck”. Remember the royal commission of the 1960s, that capital gains should be treated as income? Well, we go back to that, and other methods.

Those are our comments. I see we've run out of time.

¾ (0840)

The Chair: Thank you. I think for the record I should note that you are both professors in the economics department at the university.

I'm going to turn it over to my colleagues. I think since there are five of you we'll go for eight-minute rounds. I'll start with the official opposition. Mr. Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance): Thank you, Madam Chair, and thanks to all the presenters this morning for being here. It's nice to see some familiar faces from the last time I was here during my swing through Halifax.

I wouldn't mind starting with Mr. Ferns, if I could. I've listened to many of your concerns regarding post-secondary education. I too have a university in my riding, the University of Alberta, so I'm quite close to many of the people making decisions there and the challenges they face.

This is a matter of opinion, but maybe I could ask you this. One of the challenges, it seems, that comes up over and over with education is that at the federal level--and I'm not one to advocate for more government--there isn't somebody to coordinate much of the education policy and coordinate more effectively the government's priority at the federal level with post-secondary education across the country.

I'm just wondering, in some of the things you've mentioned this morning, if there is any merit, in your opinion, in having a particular minister be in charge of education at the federal level or coordinating some of this policy so that we can effectively deal with addressing some of the challenges post-secondary institutions face across the country. It seems to me there's a bit of a void there in coordinating some of that policy.

Dr. Chris Ferns: I think we'd certainly be in favour of that. This is one of the areas where the kind of structure of policy making in Canada really falls down, because what you have is a kind of gap where basically the federal government provides the funding and the provinces then have a free hand with what they do with it. Often there is a great deal of blaming that goes back and forth: the federal government complains that the provinces are not sufficiently responsible and the provinces complain that the federal government does not provide enough money. I think having a minister in charge of that would be a step forward.

But perhaps one of the other initiatives that would be helpful would be what the Canadian Association of University Teachers is proposing, which is a Canada post-secondary education act that would actually earmark funding for education and provide that funding in a form where provinces could not actually then divert it to other purposes. I mean, that's been a very big problem in Nova Scotia especially, where there has been a great lack of responsibility in terms of how it uses the funding available. For example, for the money that came in here from the millennium foundation scholarships, the province simply cut its own funding to education by the same amount, so in fact students were left as badly off as before.

So I think having some kind of sense of direction there, both in terms of having a minister dedicated toward that but also having legislation that would actually ensure that educational needs were made a priority, would be a very helpful step forward.

¾ (0845)

Mr. Rahim Jaffer: Thank you.

Since I have limited time I will have to move on to Mr. Cook, if I may.

I enjoyed your presentation and obviously share that there are many challenges that the health care system still faces. One thing that startled me was some of the figures you raised, especially in your brief, pertaining to Nova Scotia, which has some of the highest percentages of mortality rates, diabetes, and I believe arthritis and rheumatism are quite high.

I'm curious to hear your opinion on whether this is strictly just a funding problem here in Nova Scotia or whether there has to be some sort of a change when it comes to education and when it comes to some kind of preventive behaviour with the health care system. Clearly one of the things we deal with on a regular basis at the federal level is funding challenges and funding issues, but what it comes down to is that sometimes money can't change many of these things unless we change people's habits.

I'm curious to hear your opinion on how we can maybe address some of those things. Maybe it is strictly a funding issue or maybe it is an issue of habit and prevention that needs to be addressed, or maybe money is the only thing that would address that.

Maybe you can give me your opinion on that. I'd just like to hear that.

Mr. Robert Cook: I do not think money is the only issue. And I think you're right; we as Nova Scotians and perhaps all Canadians need to change our behaviour in a number of ways. But money is an important component of allowing that to happen.

I think within the health system it's the old story. I had a coffee cup one time that said “It's when the alligators are snapping at you that it's hard to remember that the idea was to drain the swamp”. In many ways the same principle holds true. It's very difficult to take funds, and it requires funds, and put them into health promotion activities and wellness activities when you have such a huge and growing cry for traditional health services.

So I agree with you that it's not the only issue, but it's a huge and important lever to make some of these other initiatives take root.

I hope that clarifies, at least in our sense, where we see it.

Mr. Rahim Jaffer: I understand that, and I agree with that. I think there has to be a partnership on both fronts as well.

I'm sure my time is running out. Maybe the last question, if I may, I will direct to the chamber of commerce and Mr. Gates.

I wonder if you could focus in on that area. I agree with a lot of your brief. I think to stimulate growth there has to be more effort put into debt reduction, and we must continue to focus on tax relief.

I want to address one area for which even we in Alberta have some concerns, and that is the issue of energy sharing, especially the revenues from energy production and especially when you look at what's been happening here in Nova Scotia and off the coast of Newfoundland. There has been a lot of potential for growth with some of the energy developments in that particular sector.

Could you shed some light on some of the current challenges when it comes to how much of the revenues are actually taken out of this region by the federal government's current cost or the current revenue-sharing equation? It seems to me that if we were to address that, many of the issues we are talking about here today could be quite easily dealt with by local governments here in Nova Scotia and in the Atlantic provinces. I hope you can shed some light on that because I know it's a big issue of concern for people here in this region.

Mr. Allan Gates: I guess one of the initial things is to get the industry fully engaged in the region before we can worry as much about its impacts on equalization payments. One of our concerns right now is the regulatory red tape that I think is limiting the pace of development.

We have a separate energy committee that has done a fair bit of work on this, and Valerie, maybe you can jump in here. However, we do know that revenue that's generated by the offshore, as I understand it, is just netted out from the equalization payments, so I guess there's a little benefit to the province from that. I guess that's a concern we probably share with Alberta.

¾ (0850)

Mrs. Valerie Payn: Of course, the industry in Canada is in its infancy so we're learning as we go. However, there is a lot of concern within the community that we are restricting the ability to explore, develop, and pursue growth if it takes so long to get regulatory approval. That is not the case in other jurisdictions.

Mr. Rahim Jaffer: Would that be strictly through the environment department or just the industry? What are some of the challenges of just natural resources for the oil and gas? Is that where you're hitting the red tape currently?

Mrs. Valerie Payn: Well, I think it's multi-layered, and that's part of the issue. Another big issue was that the Minister of the Environment did not participate in the Atlantic offshore discussions in whatever that committee was called, which met last week in Newfoundland, the Atlantic round table on energy. It met a year ago and made some commitments for action, but unfortunately I don't think a lot of progress was made.

The chamber was seeking to have Minister Anderson participate in that because as Minister of the Environment he has the last say on a lot of pieces. He did not participate in that process, for whatever reason. We are unclear as to why, but we certainly encouraged him and others to include him in the process.

It's a number of things, but it is multi-layered. A part of it is because we're going through this for the first time with an offshore versus onshore development. However, as Allan said, it's important to create an environment that allows the industry to come here to invest and not be held back in ways that are unreasonable just because of red tape and the regulatory i's to be dotted and the t's to be crossed all through various departments.

If we can streamline that and have one regulatory body, ideally that would be the way to go.

Mr. Rahim Jaffer: Thank you.

The Chair: Mr. Wilfert, please, for eight minutes.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you very much, Madam Chairman. I thank the witnesses for coming.

I would say that overall the issues for me are accountability and transparency any time the federal government sends funds to the provinces. On the issue of the Nova Scotia Association of Health Organizations, you applauded the minister's announcement yesterday of the $2 billion that will be sent to the provinces when the books are closed. You were more charitable than I was yesterday. I don't support the transfer of the $2 billion until those provinces sign onto the health care accord in terms of the health council. The health council was part of the agreement. In terms of transparency and accountability, we have the premier of Alberta saying again that he doesn't mind getting the money, but no health council.

The health council would not be established for the federal government to see where the money was going; it would be for Canadians.

I would suggest to you that every time we make an agreement with the provinces on transferring money, it doesn't take very long afterward for them to say it's never enough.

As you know, the minister announced in the 2003 budget the separation of the CHST, which is something I support, not only for health care but I would say for post-secondary education and social services.

If we're going to not be considered as an ATM machine by the provinces, we have to make sure Canadians get the accountability they need.

I was a bit concerned that although you applauded the $2 billion, there was no suggestion, as I've constantly made, that what we should be doing is saying that those who sign on will get the money and for those who do not the money will be put in escrow until such time as they do sign on. There is absolutely no incentive for provinces if in fact we simply turn over money to them without accountability. I would like your comments on that.

Mr. Robert Cook: Our association supports 100% the need of all health care systems and all players in the systems to be accountable. That includes government. Both levels of government, provider organizations, professionals, everybody needs to demonstrate a greater accountability. They need to be willing to show where all that money is going and what good it's producing for Canadians. I would agree with you on that. We also support the creation of a council to assist in that. I don't think it should be the sole mechanism by which we achieve accountability in the system, but we do support that as well.

One of the things we deplore is the inability of the provinces and the federal government to make some of these agreements work more effectively. We see that as a big difficulty in meeting a lot of the challenges that health care poses. You've presented a suggestion on which I'm not sure I can really comment because I don't know all of the issues at the federal and provincial levels of government. We certainly support principles and moves toward improving accountability.

¾ (0855)

Mr. Bryon Wilfert: With regard to the Metropolitan Halifax Chamber of Commerce, I certainly think the one area that the federal government continues to look at is the issue of fiscal restraint. The fact that the minister announced this year a $1 billion reallocation and the fact that we're looking at a systematic and ongoing examination of government spending is good news for everyone.

We need to be much more aggressive in that regard in that we need to look at existing programs. It's a cultural issue. One of my responsibilities as parliamentary secretary was to deal with ministers who did not like the suggestion that they would have to reduce, reallocate, or reprioritize. They did in the end because we had quite a big stick to use. It isn't the responsibility of the Department of Finance to tell other departments where to claw back, to cut back, or to reallocate, although we certainly could have done that.

The difficulty is that when the minister announced $2.3 billion yesterday...in my view, we don't have a debt reduction plan that would be carved in stone, because of the problems we've had this year, SARS, the forest fires, Hurricane Juan, etc. The difficulty is that the government is committed to and in fact has made very aggressive steps in paying down the debt. It is the only G-7 state that is continuing to pay down its national debt, and we're going to continue to do that. The next Prime Minister has indicated his intention to bring it down at least to 25%.

The problem is if we lock ourselves into these things and we are hit by the types of problems we've had this year, we then are in great difficulty. The $2.3 billion is a good example. We've now allocated $2 billion to the provinces, although we had agreed in the last 2002-03 so-called surplus that $7 billion would go toward the debt.

I would suggest to you that it's a lot easier in some cases to look at tax reduction issues and target to some degree that it is debt reduction simply because we don't have that same flexibility. I would assure you that it's on the fiscal restraint issue. The federal government has a $180 billion budget and 400,000 employees. Can we do better? Yes. Are we going to do better? Absolutely. Every time we save money on the national debt we have $3 billion that can go to some of the very important issues that have been raised here.

That was more of a comment, unless you have anything you want to add.

Mrs. Valerie Payn: I would simply say that I agree. We start up new programs and they're extremely difficult to close down or to have a sunset clause in them. People don't like to be given things and then have them finish for whatever reason. That's always a challenge.

Regarding the flexibility, absolutely, paying down the debt obviously would relieve us of some of the interest payments on the debt, which would allow us to put more into the very important programs we heard about today.

It's an interesting phenomenon. We surveyed members of the chamber of commerce and asked them about taxes versus debt reduction versus general performance of government. Of course, there are different answers for municipal governments on fiscal responsibility and provincial and federal governments because they're in different circumstances.

We did a survey in the past few weeks. Consistently, members of the business community are seeking a plan for debt reduction, recognizing the short-term pain obviously for the long-term gain of putting more money back into the government's hands to put it into important programs. There is great support for that ahead of tax cuts, which sounds a little unusual, but that is indeed the case. It was confirmed as late as last week.

¿ (0900)

Mr. Bryon Wilfert: On the issue of the post-secondary education act--and I'd be more interested in more information on that--I absolutely agree that there needs to be a clearer and much more accountable funding mechanism. Obviously we are not responsible for the increase in tuition fees by the provinces.

On the millennium scholarship, I heard over and over again about the clawback by the provinces. If we are going to send money, we need to have that accounted for.

On the issue of disabilities, you have made some very interesting recommendations. I don't know if they have been modelled, but I'd be interested to know what the costs for some of these changes would be, particularly on the issue of increasing the value of the child disability benefit. Some of these things may be moving numbers. It may in fact be specific costs to the government. They may be issues that we could phase in over a few years.

Given the minister's announcement yesterday, I would say, Madam Chair, that this exercise is more about how we can save and be much more strategic in some of our initiatives rather than adding a lot at this point, because we just don't have the money as a federal government. We are not going back into a deficit.

If you could maybe provide that or if you have any further information on some of these cost initiatives, it would certainly be helpful.

The Chair: You could perhaps incorporate some of those ideas into another answer or send them into the clerk for distribution.

I will go to Mr. Brison for eight minutes, please.

Mr. Scott Brison (Kings—Hants, PC): Madam Chair, following on Mr. Wilfert's comments, I think we have access to a lot of the research. If we clarify the tax measures and make sure what we are asking for, it will reflect what you are actually talking about in terms of the tax measures. I think we could actually determine the costs of those measures. That's probably a better approach than asking the witnesses to provide those measures. We are here to determine that, I would think.

The Chair: Ask those who have that expertise.

Mr. Scott Brison: I would like to request formally a costing of those tax measures, because I think it's very interesting to consider. Any policy that can help increase full participation of Canada's people with disabilities in the labour market and society in general may cost money on one hand, but would also provide, from a productivity perspective and from a social policy and economic policy perspective, great enhancements. I think it's up to us to do that. I am formally requesting that we do that costing.

Mr. Bryon Wilfert: For the record, let's give the finance department that request so that we get that information, if possible.

Mr. Scott Brison: Yes.

Thank you to all of you for your presentations this morning. I have a question for the chamber of commerce and Valerie Payn and Allan Gates on regional development policy.

For 40 years we have had roughly the same sort of model for regional development in Atlantic Canada. It has been largely an agency- and subsidy-driven model. Over the last 20 years there have been some extraordinary successes and new approaches to regional development in different parts of the world. They have moved away from agency- and subsidy-driven models to infrastructure investment and tax measures. In a lot of places the tax measures or the tax environment are seen almost as an infrastructure issue in terms of the types of levers that attract or repel both capital and talent.

I'll give you an example in Atlantic Canada. While some people compare Canada to Ireland, it really isn't a very good comparison because of the relationship between the EU and Ireland. If we compare Atlantic Canada to Ireland, there is a legitimate comparison in some ways because of the nature of the transfers from other parts of Canada to Atlantic Canada and what we could be doing differently than what we are doing right now.

One example is that ACOA's budget is $447 million per year. Total federal business taxes in Atlantic Canada are $380 million per year. A lot of ACOA's money is actually going to businesses now, but it is going to businesses chosen by bureaucrats and politicians. I don't think bureaucrats and politicians do a very good job of picking winners or losers. Actually, that's not fair; they pick losers fairly consistently.

In a general sense, I think individual market-based decisions by entrepreneurs could determine better places for investment than could politicians. We would actually have enough money to eliminate federal corporate taxes in this region and additionally put $70 million into infrastructure without costing the federal treasury a penny. It would be revenue neutral from the federal treasury perspective. I'd appreciate your feedback on that. That would leave provincial corporate tax rates in the 12% range, which would be about identical to Ireland's, by the way.

If you consider which could do more to create economic growth and prosperity in Atlantic Canada, one of the most competitive corporate tax rates in all of North America and the world or a regional development program run by bureaucrats and politicians, I think the response is self-evident. But I'd appreciate your views.

¿ (0905)

Mrs. Valerie Payn: I'll take a run at that question, and Allan would like to join in.

The chamber of commerce does not support subsidies and grants for business, first of all. It's important to acknowledge that up front. It creates an uneven playing field. It interferes with market forces. As Scott referred to, it puts bureaucrats and politicians in the business of picking winners and losers in business. We don't think that's an appropriate approach at all.

That's not to say we want that money to leave our community, obviously. That would have to be prefaced by the fact that it is far better to invest that federal contribution in infrastructure improvements or other things that would create a better environment for all businesses, not just one business over another.

I hear regularly that the worst place in the world for a business to be is to have an established business or to try to set up a business next door to another one that has a federal subsidy or any kind of a subsidy. It's not natural, it won't work, and it creates all sorts of problems, generally speaking.

In terms of a tax, wouldn't it be fabulous if we could do that? But I think politically speaking, it probably would be unacceptable in that it really contravenes the principle of fairness across our country. There is a perception to overcome. The rationale and the sensibility of it, when you just look at the dollars...there must be a great way to use it and steer away from the whole cost involved with the agency.

Mr. Scott Brison: I have one comment beyond that. Some of the other provinces--for instance, Ontario and Alberta--would be more interested if you said to those provinces that we could take FedNor in northern Ontario, western economic diversification, and Atlantic Canada, but also add to it corporate welfare in HRDC and Industry Canada and use that money to reduce taxes in a more broadly based way. That would be one of the ways to deal with it.

The second question is on the social investment side. The fiscal imbalance issue is very real. In the last 10 years the federal capacity to raise revenue has ballooned. Whether it's the GST and the commensurate increase in tax revenues as a result of that or a wide range of federal tax capers, the revenue has grown significantly. At the same time, the costs to constitutionally try to respond to health care and education have also grown. There has been a disparity in terms of fiscal imbalance. That's something we have to address in order to provide the provinces with a greater ability to provide services close to the people who are affected.

When talking about accountability, a provincial electorate keeps provincial governments pretty accountable. God help the provincial government that doesn't do its utmost to provide quality health care and education. That, from a democratic accountability lever, is a pretty significant point.

Whenever we talk about programs on the federal side that can help deliver in a more direct way, whether it's early childhood intervention, head start types of programs, or new approaches to health care, the provinces say, wait a minute, those are provincial areas of responsibility.

One idea on which I'd like your feedback reflects the principle that Tommy Douglas talked about, that provinces can be laboratories for new approaches in public policy. Medicare started as an experiment in the province of Saskatchewan. It is the idea of the federal government, in the areas of education and health care, researching best-practice models from around the world and encouraging provinces to pilot programs and cost sharing, encouraging provinces to try new approaches.

The federal government for the last 20 years has tried to deliver these monolithic programs and force them down the throats of the provinces in a one-size-fits-all approach. I don't think that necessarily reflects the reality of the very diverse country we have with the various provinces. I'd appreciate your feedback.

I apologize, Madam Chair, for taking a little more time, but I'd really appreciate their feedback on this.

If the federal government could help research best-practice models and encourage provinces financially to try new approaches, as opposed to discourage them, that may provide some interesting approaches to health care and education in a wide range of social areas.

Thank you, Madam Chair. I really appreciate that. You're a great Canadian.

¿ (0910)

The Chair: I don't want to say what you're great at.

Mr. Scott Brison: You wouldn't do that in my own province, would you?

The Chair: But you're consistent, I'll give you that.

We have two more people to get on the record and to have some interchange with you, so with respect to the feedback to Mr. Brison, if there is anybody who wants to give me very brief feedback, I'll take it.

Mr. Allan Gates: I'll just say something very quickly. I don't think the chamber wants to open up sections 91 and 92 of the British North America Act, but I think there's certainly merit in the idea of the federal government working more closely with the provinces to have programs that make sense. You have kind of a butting of heads, and you end up with situations like the millennium scholarships, where the province in effect takes that money out of the pockets of students. I think having the provinces, on a province-by-province basis, work closely with the federal government certainly bears some merit.

The Chair: Okay.

Mr. Ferns, go ahead, but we do have another panel.

Dr. Chris Ferns: I'll just say briefly that if Ireland is being used as the analogy by Mr. Brison, certainly Ireland's abolition of student tuition fees would be an initiative we'd like to see followed in Nova Scotia.

The Chair: Okay. We'll go to Mr. Murphy, please, for eight minutes, and then we'll go to Mr. Stoffer for eight minutes.

I would ask you to allow time for answers within your eight minutes. Thank you.

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

I just want to follow up with Mr. Cook on this whole issue of accountability in the health care system, because this is an important issue. Health care is the number one issue, and Canadians want the federal and provincial governments to work together.

I don't pretend to be an expert on the issue, but we had the Romanow commission, which I thought was a good study of the issue, and $34.6 billion was put into the system. I'm not going to argue that; it probably wasn't enough, but again, there was an agreement made that the national health council would be established. The agreement was reduced to writing. The provinces cashed the cheque and a day later they said they were going to renege on that part of the agreement.

Canadians want the national health council to drill in some accountability. Is your organization on the record very publicly advocating that the provinces, including your province, get on with this national health council, get on with it right now and stop the foolishness? Are you on the record with that statement?

Mr. Robert Cook: Thank you. Yes, we are on the record.

I'm going to ask Helen Patriquin to be a little more precise about exactly how we've done that.

Mrs. Helen Patriquin (Vice-President, Nova Scotia Association of Health Organizations): Our submission to the Romanow commission, sir, very distinctly called for the creation of the national health council for accountability mechanisms between the federal government and the provinces.

We also had the opportunity to discuss that initiative with our provincial minister of health, and at that time we expressed to the minister our support and indeed our position that it needed to happen. We have since been working with our provincial government in identifying people within Nova Scotia who we feel would add to the deliberations at the council level.

I would also like to add on the whole issue of accountability that one of our positions has been that it needs to be around outcomes. We need national health goals and national health targets, which are then transferred to the provinces and from the provinces to health organizations and health providers, as Mr. Cook said. Then, with that, we need incentives built in for those organizations, those providers, upwards to those provinces that show demonstrated progress in achieving those health targets, so that there is additional funding, or funding is sustained because they are actually producing the outcomes they signed on to produce.

¿ (0915)

Mr. Shawn Murphy: I just want to go now to the Halifax Chamber of Commerce, with Valerie Payn and Allan Gates. We talked about ACOA in the Atlantic region, and as you know, I chaired the “Rising Tides” document that was issued there last week. By the way, I also chaired another subcommittee on Atlantic air access, and the reports are available on my website. You probably have them anyway.

I'm not going to carry the brief for ACOA at this meeting. There are a lot of things they do that I don't think are conducive to economic development. But as for all this talk of grants and subsidies, I'm not aware of them from ACOA. They have an interest-free loan program. They do a lot of marketing assistance, skills development, trade missions to the States and Europe, and business assistance. I'm not aware of all this talk of grants and subsidies. Are you aware of that, of where that's coming from?

Mrs. Valerie Payn: I am, just from an anecdotal perspective. I've just conducted a bit of a random poll of chamber members--I can't call it a survey--and I had 200 responses. They refer to grants and subsidies. I think anything that is paid for a business that ordinarily the business would have to be responsible for themselves, whether it's a trade mission or marketing development--

Mr. Shawn Murphy: Trade mission. They would consider that--

Mrs. Valerie Payn: --would be considered something--

Mr. Shawn Murphy: --as a grant or subsidy. I know there's a group going to--they might be there now--

Mrs. Valerie Payn: Washington.

Mr. Shawn Murphy: Would that be included as a grant or subsidy?

Mrs. Valerie Payn: I can't comment on that specific one, but that's sort of anecdotally what I'm hearing and what I have heard very recently. That's why I threw that in. Whether it's the proper use of the terminology, I'm not sure, but certainly it's moneys that are given out.

Mr. Shawn Murphy: I guess from my vantage point--and again, I'm not going to carry the brief for ACOA to deal with that particular instance--I don't see that as a bad thing, necessarily. I think they have a group, a delegation, in Washington right now.

Mrs. Valerie Payn: Oh, absolutely not. In business development it's quite appropriate. I believe NSBI and the Greater Halifax Partnership are engaged in that. The Greater Halifax Partnership, for example, that economic development agency, has a lot of private money invested in it, which is unique in Canada, I think.

So absolutely there's a role, but when it comes to altering the market forces, or in other words, if you have two similar businesses and one subsidized or given money by another that's--

Mr. Shawn Murphy: I agree with that. One hotel--

Mrs. Valerie Payn: That's the piece I'm trying to get at.

Mr. Shawn Murphy: There's one hotel and then the one across the street...I agree with that.

Mrs. Valerie Payn: Exactly.

Mr. Shawn Murphy: I have another issue I want to explore, Dr. Sinclair or Dr. Bradfield.

On child poverty, I'm a little reluctant to get into this discussion with numbers, because if there are ten children in Canada in poverty that's ten too many. Then we get into this measurement issue, and that's a very touchy issue too.

In everything I have read on the subject--again, correct me if I'm wrong, because you are much more informed than I am--my understanding is that over the last two or three years the number of children in Canada living in poverty has come down significantly, although there are probably still way too many. Is that information not correct?

The Chair: Dr. Bradfield.

Prof. Michael Bradfield: Yes, your information is correct. That's exactly the point we're trying to make. The reason child poverty has dropped in the last couple of years is that the child tax benefit has been improved. That's what we're saying: these kinds of programs need to be improved further.

For instance, if you compare poverty among children and people of working age versus poverty among people 65-plus, you'll find that 65-plus poverty hasn't risen because those universal programs for the elderly--if I may say that, Al--have protected those people, whereas the other programs have been part of the cuts. So yes, poverty has diminished slightly in the last couple of years for precisely the reason we're advocating.

Mr. Shawn Murphy: I thought I heard you say child poverty was increasing, but it's actually decreasing, and the reason why it's decreasing, according to your information, is the child tax credit.

Prof. Michael Bradfield: Child poverty rose from about 1 million to 1.4 million in the 1990s. In the last couple of years it has gone down, but not back to 1 million. It has decreased from the high, but it is not back to where it was.

Mr. Shawn Murphy: I agree with you that one of the very significant programs of this government has been the child tax benefit, which I think has been tremendous and is income based, but one of the difficulties has been the clawback. When I look at the literature on the issue, I see that it has helped, but one of your submissions is that increased equalization would help child poverty. I've seen nothing that would support that assertion.

¿ (0920)

The Chair: This is the last answer on this round.

Prof. Alasdair Sinclair: The Province of Nova Scotia gets about $2 billion from the federal government. To say that it's not relevant in terms of the general health, education, and poverty alleviation measures doesn't make sense. Forty percent of our revenue comes from equalization or the CHST. Clearly the province could do a better job of using it to reduce poverty, but you can see what those equalization dollars are doing. The money is tangible. It gets in there and it goes out. To say that the province would waste increased equalization...I hope it wouldn't.

Mr. Shawn Murphy: This is just a minor point, but given your druthers, would you see the tax credit increased or equalization increased? What do you think?

Prof. Alasdair Sinclair: I think I'd go with the child tax.

Mr. Shawn Murphy: Yes, that's my point.

The Chair: Thank you.

Mr. Stoffer.

Mr. Peter Stoffer (Sackville—Musquodoboit Valley—Eastern Shore, NDP): Thank you, Madam Chair.

I'd like to welcome all of you, and our staff as well, to the great province of Nova Scotia. I have a lot of questions so I'll ask them in a sort of bullet form.

First, on the disability tax credit changes imposed on people with disabilities, I find that to be one of the most offensive things this government has ever done. Instead of doctors analysing your disability, you had bureaucrats doing it. I'd like just a brief comment on your concerns and on what effects the disability tax credit changes have had on people with disabilities.

Ms. Marie White (National Chairperson, Council of Canadians with Disabilities): For people with disabilities, the disability tax credit is only one element of a broad, required disability-related supports plan and program, but when it came under fire, that resulted in people losing the little tiny benefit they had. That benefit is only for people who work or have some form of income. It does not apply to people who are on income support. It does not apply to the people who live in poverty. It does not apply to many, many Canadians with disabilities. So for the government to attempt to reduce the numbers who are actually in receipt of it, it was quite disturbing and a trend that we do not wish to see repeated.

Mr. Peter Stoffer: Mr. Bradfield, you indicated points about seniors in poverty. One of the biggest concerns we deal with in this riding is that many seniors I represent are slipping into poverty, and not only from the high cost of living. Property assessments are going up, fuel prices are going up, drug prices are going up, and their incomes are fixed. They simply don't have the funds to be able to maintain their own homes. Many of them are having to make very drastic decisions on whether to cut back on prescriptions or sell their cars, which means they can't get in to see doctors.

I'd like you to reiterate what effect poverty is having. We don't have a seniors tax credit for poverty. We do for children, but that is clawed back by the province. What can this federal government do immediately to assist those seniors who are in seriously dire straits right now?

The Chair: Go ahead, sir.

Prof. Michael Bradfield: You mention several issues. To an extent, each of those individual issues requires specific policy changes. For instance, one of the things we ought to do is have a much better inter-urban transport system so that seniors--and everybody--could move back and forth between rural areas and cities without needing an expensive car, which is obviously becoming more expensive for a variety of reasons.

As I mentioned earlier, seniors have had some protection in terms of cuts. One of the issues you're raising is the fact that programs that do benefit seniors ought to be more sensitive to increasing costs, and we should be increasing the coverage they get under those programs. There are things like pharmaceuticals. Clearly there's a question of generic drugs and controlling the prices of pharmaceuticals. There's a whole variety of issues, some of which are perhaps specific to seniors and some of which are much more general.

Mr. Peter Stoffer: Madam Chair, I'll go now to the chamber of commerce.

I thank you for your presentation. One of the concerns I have for businesses is that if the business support systems are decaying, that's going to affect the 2,000 businesses you represent.

What I mean, for example, is security. There are issues of the RCMP, municipal policing, coast guard, and defence. There are issues that affect your businesses seriously. We saw what happened to businesses when SARS hit Toronto. Yet because of cutbacks and realignments to these programs, businesses suffered in terms of losses. Many smaller businesses in the Toronto area may not even be able to start up again. The larger ones that can take this kind of hit obviously can succeed.

In regard to the focus on debt reduction and tax cuts, if you had a choice, and just a choice, between debt reduction or tax cuts, which one would you prefer?

¿ (0925)

Mrs. Valerie Payn: As I indicated, we have surveyed our members on this, so I can speak on behalf of those 2,000 members. Their first preference is debt reduction.

Mr. Peter Stoffer: Okay. On that, you know that the fiscal surpluses the federal government likes to rave about, many of them, came from cutbacks to programs such as EI. There's almost a half-a-billion-dollar surplus going into the EI fund every month, and it is being used for other purposes. The superannuation grab from RCMP, people in the military, and the public service--there are billions of dollars taken out and put back into general revenues.

Thus, we argue on this side, or at least from my perspective, that those have gone to further tax cuts to benefit those who are extremely wealthy right now. Later on, as you'll notice, we have an awful lot of people coming to present to us, and I think very few of them are going to ask for tax cuts or debt reduction. They're going to ask for more money.

Obviously, you can't meet the needs of everybody. I guess I'd put it in this regard. When it comes to tax cuts, we saw what George Bush did with his tax cuts. He ran huge deficits. Gordon Campbell and his tax cuts ran huge deficits. To balance those off you're going to have to cut into programs that affect the poor, the environment, and issues of security.

Is there not a better way we can make businesses more competitive and offer them the opportunities to gain that entrepreneurial spirit? You're absolutely correct, by the way; Halifax is great for an entrepreneurial spirit, and what's happening in the city is extremely exciting. At the same time, we can't ignore or forget not only our national environment but those who are left behind.

If you were finance minister, if you had a $7 billion surplus that you announced for April, wouldn't it be more prudent to take $2 billion of that, put it into the health care that you promised, and put $5 billion towards the debt, for example, instead of making the promise? And I caution folks to not forget that the finance minister said “if” there's a surplus, the provinces will get that money.

They've low-balled the surplus for the last six years, and we think they'll low-ball it again. If the proverbial hits the fan, there may not be that surplus and the provinces won't get their health care money.

What would you suggest in that regard? If you were the finance minister and the provinces were really clamouring for more money for health care, education, etc.--and at the same time you had the other parties--what would you do with $7 billion of extras that you didn't anticipate?

Mrs. Valerie Payn: The chamber has been looking for a planned debt reduction schedule, obviously, and we're not suggesting that tax cuts come before deficit control, balanced budgets, and debt reduction. Debt reduction, in the long-term view of the economic stability of the country, is that by reducing the debt we can also reduce the debt servicing, which releases cash for the government to put back into programs.

In terms of what you just said, the commitment to health care and money towards debt reduction is probably what we would recommend.

Mr. Peter Stoffer: I agree with the regulatory board that it is one door that people can go through and do it, as long as that regulatory board contains prospective representation from environmentalists and also fishing groups in coastal communities, for example. You know that the concerns around Cape Breton are more regional.

If you were setting up that board and assisting the federal government in advice, who would you like to see on that board from the various departments or from your industries that would make it more streamlined, not only to protect the environment but to offer opportunities for future growth?

Mrs. Valerie Payn: I don't know if I have a response to that. I would not want to get into the particulars of that right now, Peter. However, I could certainly offer to get back to you on that, only because I wouldn't do it justice. I would want to ensure that I covered everybody, and it would be a shame to miss someone.

Basically, as you said, we would want to have one door, one regulatory system, so that it's managed as one unit, whereas now you have to go to this one and then this one and then another one.

The Chair: Thank you very much.

We're going to have some more panels, and we want to give them the fairness of time to let them make their presentations.

I want to thank you, not only on behalf of the members of our committee who are present here today, but those who are in Ottawa. All of your briefs are distributed to them, and they do find their way into the finance department, because I know their representatives attend our meetings and pick up your briefs.

Thank you very much for taking the time to put your presentation together. I do particularly want to thank those of you who made your presentations available to the committee in September so we had time to translate them and distribute them widely at that time. I also thank you for giving your time this morning to answer our questions.

With that, I'm going to suspend. We have another panel, which we will see in four minutes.

¿ (0930)

¿ (0937)

The Chair: Pursuant to Standing Order 83.1, we are in pre-budget consultations with our second panel of the day in Halifax.

I would like to welcome all of the representatives of the various organizations.

From the Community Action on Homelessness we have Angela Bishop, who is the community liaison representative. Welcome, Madam.

From the Halifax Regional Municipality we have Mayor Peter Kelly, together with his chief administrative officer, George McLellan. Welcome to you both.

From Literacy Nova Scotia we have Ann Marie Downie, executive director. Welcome, Madam.

From the Canadian Federation of Students we have David Hare, Nova Scotia national executive representative. Welcome.

The Federation of New Brunswick Faculty Associations is represented by the executive director, Desmond Morley. Welcome, and thank you very much for making the journey for us today.

We will now start with Community Action on Homelessness, for seven minutes.

Ms. Angela Bishop (Community Liaison, Community Action on Homelessness): Thank you very much, and welcome to Nova Scotia to those of you who haven't been here before. I'm very pleased to have the opportunity to speak to you today.

This paper is submitted on behalf of Community Action on Homelessness. It is an organization that represents the large number of homeless and at-risk individuals here in Nova Scotia. It's also presented in unity with other housing and homelessness organizations across Canada, notably the National Housing and Homelessness Network, which has been working for the last several years in advocating what it refers to as the one-percent solution. That is a very comprehensive strategy to address all the gaps in the housing continuum to put the majority of Canadians back into homes where they can contribute to healthy communities.

Over the past three years Community Action on Homelessness has worked very closely with all three levels of government to advance specific solutions to homelessness here in the HRM. Mayor Kelly has been a strong supporter of the work that we have done. We have been extended for three years, and we look forward to working with Mayor Kelly again over the next three years.

We address homelessness directly, but a lot of our work is also focused on advocating housing, which we see as the bigger solution to the homelessness problem and the solution to healthier communities right across Canada. Although I work on homelessness, to members of my steering committee and myself the linkages between housing and homelessness are very clear. I'm still frequently asked, how is housing a solution to homelessness--aren't people on the street because of personal difficulties? I think that in some ways the answer to that is yes. We do have a large group of people who live at risk of homelessness, and the personal challenges of those individuals push them over the edge, so to speak, to essentially homeless conditions.

However, the answer is probably a bigger no. That growing at-risk group that numbers in the hundreds of thousands across Canada has come to be the size that it is because of decisions that are made by the government and specific decisions related to the allocation of resources.

There's a strong connection between increase in homelessness and the withdrawal of federal funding in housing that began in the eighties and continued into the early 1990s, to the point where in 1998 our big city mayors declared homelessness a national disaster.

These policy changes that have created this larger at-risk group include the restructuring of the welfare state, and I think you'll have many people here speaking to that today; the housing system in crisis; and an inadequate system of support for vulnerable adults and children, the people in that at-risk group.

These initiatives, such as the SCPI, Supporting Community Partnership Initiatives, that I work under and recent commitments of dollars to housing under the bilateral housing agreement must be recognized as very important. I think they show that governments are starting to take some leadership in housing. The bottom line is that at this point in time they are not adequate to meet the real housing needs here in Halifax or across Nova Scotia, and indeed right across the country.

I noted before that the specific projects supported through SCPI have made a huge impact on the lives of people here in Halifax. However, most community agencies would say that as soon as they have some people housed and settled and moving forward in their lives, there's another person at the soup kitchen lineup and another person in the bed. What we must have is a more complete national housing strategy.

Just to refer to Halifax specifically, the 2001 census revealed that almost a quarter of households in Halifax experience affordability problems. This creates a situation where individuals and families may have increased reliance on food banks and other support services in the community. In fact, in Nova Scotia, over 28,000 individuals, families and children--actually 40% of that 28,000 are children--rely on food bank usage.

¿ (0940)

A further 12% of HRM residents pay rents that are 50% of their income. That group itself is at an extreme risk of falling over that edge into absolute homeless conditions here in our city.

It's notable that 49% of HRM residents recognize that there is a shortage of affordable housing, and a full 70% of them would support the government taking steps to address this, even if it meant an increase in taxes.

We believe that housing is the cornerstone of healthy communities, and it's a necessary prerequisite to the success of the other things that are supported through federal government initiatives, such as education and health care. Extra education dollars do very little to help an eight-year-old who's living in a home with stressed parents and a bare cupboard. Further, it does very little to help a teenager who's living in such overcrowded conditions, with or without his or her parents, that he or she can't get a good night's sleep and doesn't have the light by which to study. I've talked to young people who have enough together that they could go to school and are attempting to study under street lights, but eventually at some point they give up.

The housing issue is most urgent, of course, for lowest-income individuals across Canada, for people on social assistance, but there's also a huge problem with the working poor in accessing housing. Here in Halifax we have full-time employed individuals living at the short-term emergency shelter on Barrington Street. Just to illustrate, at minimum wage and considering the average market rents here in Halifax, there's a $50 affordability gap for two people working together at minimum wage. The situation is even worse if you're a single individual: you have a $200 affordability gap to meet average market rents here in Halifax.

When we start looking at that, I think we have to move beyond. A lot of us talk about people having the right to a home and healthy communities, but the new hot button, I would say, is that housing is an important piece of infrastructure that we have to have to ensure the economic prosperity of our cities and our communities right across the country. I hope you're all aware of the recent TD Bank report that cites it as a key piece of smart economic policy as we go forward.

Community Action joins other housing and homelessness advocates across the country in calling upon the federal government to address this need across the country by addressing it in the budget and by allocating funds that will support what's called the one-percent solution. I'm not going to go over the details, mainly because I don't have time, but there are five pieces of that that are outlined. Also, the National Housing and Homelessness Network has submitted a more detailed description of what this program would look like.

I would like to close by saying that I hope to see that the committee does address the housing issue in the next federal budget, not just the homelessness but housing, as the best form of prevention.

¿ (0945)

The Chair: I take it that you're alluding to affordable housing, as opposed to housing.

Ms. Angela Bishop: Yes.

The Chair: Thank you for coming today. When you need to leave, please just go ahead.

Ms. Angela Bishop: Okay.

The Chair: We'll go to the Halifax Regional Municipality. Go ahead, your worship, Mr. Kelly.

Mr. Peter Kelly (Mayor, Halifax Regional Municipality): Thank you, Madam Chair and committee members, and welcome to the Halifax Regional Municipality.

As you are no doubt aware, your timing here follows the most devastating hurricane to hit our region in over 100 years. However, even before Hurricane Juan, we were facing challenges that I would like to highlight to you today.

The Halifax Regional Municipality, or HRM, came into existence in 1996 as a result of the amalgamation of the former cities of Dartmouth and Halifax, the Town of Bedford, and the former Halifax County. Like most amalgamations in recent Canadian history, ours was not without controversy. However, as each year passes the fit becomes better.

As a result of the amalgamation, significant debt was incurred. I am pleased to tell you that as a result of our most recent budget our debt is now the lowest it's been since amalgamation, from $347 million to now under $300 million, or 2.9% of GDP. In addition, we have had balanced budgets for the past seven years, have lowered our tax rate in three of the last four years, and have set up reserve funds in preparation for greater challenges, particularly in infrastructure.

Growth predictions for HRM are incredible, with an additional 100,000 in residents expected in the next 20 years. At present, we already have 40% of the province's population, with a land mass greater than that of Prince Edward Island. As a result of the expected growth, we have begun a major regional planning process to better prepare for that growth.

I raise all this to demonstrate that while, yes, we do see a role for the federal government in areas such as infrastructure, we have also done our part to be fiscally responsible to our residents while planning for our future.

As our CAO remarked earlier this year while presenting HRM's budget, our aim is to deliver a balanced budget, keep debt down, and focus on investment in infrastructure. I believe our goals and those of the federal government remain very similar.

The two main areas I would like to address today include infrastructure and a municipal share of the gas tax.

Thanks to reports like the ones completed by the Prime Minister's task force on urban issues, Canada's municipal infrastructure deficiency has been noted at approximately $57 billion.

We appreciate the new infrastructure funds that were added in last year's budget, but at the risk of sounding unappreciative, the funds as announced were limited in both size and scope.

In terms of the size of the amount of infrastructure funds, the $2 billion top-up of the Canada strategic infrastructure fund was a good start, but the recent $1 billion fund directed toward grassroots municipal-rural infrastructure will not benefit HRM. While realizing that rural Canada has its needs, so do Canada's cities.

In HRM the estimate of our share of the accumulated infrastructure deficit is $155 million. We estimate the ongoing annual gap in our capital infrastructure capacity at $35 million, down from an original estimate of $50 million. That decrease represents again how the Halifax Regional Municipality has tried to meet our challenges, but in terms of increasing efficiencies, $15 million is the best we can do. That only represents replacement of an existing infrastructure, and does not take into account the pressures our rapid growth presents.

We are counting on the federal government to continue to meet us part-way in facing this challenge. If these serious challenges face a municipality of our size, no doubt the need is just as great or greater across the country. So I ask you to seriously consider the size of the national infrastructure deficit when making your recommendations.

Another consideration we would like the committee to consider is greater flexibility with the infrastructure program. Our province has limited fiscal ability to participate in federal cost-sharing programs. This can mean great delays in project funding. Programs should be considered where municipalities and the federal government can go it alone and cost-share projects together based on a formula that would also be flexible.

¿ (0950)

Now to the municipal share of gas tax. Many of our infrastructure challenges come from transportation concerns. Allowing municipalities to access a share of the gas tax would give us a source of sustainable and predictable funding. You are no doubt familiar with this item, as the Federation of Canadian Municipalities provided a plan for such a share. Also, if I could add, the big city mayors congress and the Atlantic mayors congress support this approach.

We envision that the type of infrastructure that could be replaced, repaired, or enhanced through a municipal share of the gas tax would be the type that aids in mass transit, so that our investment does not simply end up adding more vehicles on our roads.

I would also request that the committee, when considering a municipal share of the gas tax, keep the role of the provinces in mind as well, and ensure that the provinces would be unable to claw back any portion of the rebate.

If I could just clarify on that gas tax, as you know, the federal government at this time takes in $4.8 billion per year, and we also know that money is not going back to the areas from which it is derived. The big city mayors, the Atlantic mayors, and the FCM have asked for five cents of the gasoline tax, which is half of what is now being collected. We believe that $2.5 billion could add a lot of benefit across the entire country.

Thank you for your time for my presentation.

The Chair: Thank you very much.

You are probably aware that the FCM has also presented to the committee, as have other municipalities. When we were in Vancouver, Edmonton, Regina, and Winnipeg last week we heard similar concerns, so it's nice to see the consistency in presentations.

Mr. Peter Kelly: We hope that carries through to Ottawa as well.

The Chair: Well, it certainly helps the cause, I think.

We'll now move to Literacy Nova Scotia. Ms. Downie, please go ahead.

Mrs. Ann Marie Downie (Executive Director, Literacy Nova Scotia): Thank you, Madam Chair.

Thank you for the opportunity to speak with you today.

I want to apologize for reading my presentation, but when I'm in the company of such important people I tend to get nervous and ramble on.

The Chair: I can assure you that none of us should make you nervous.

A voice: None of us are important.

The Chair: We're all equally important, Ms. Downie.

Mrs. Ann Marie Downie: Literacy Nova Scotia is a not-for-profit provincial organization supporting the literacy community of Nova Scotia. Our mission is to ensure every Nova Scotian has equal access to quality literacy education.

Literacy Nova Scotia does not deliver learning programs. We support and serve adult learners and instructors in the community through advocacy work, scholarships and bursaries, professional development, and research and information.

Adult literacy is highly valued in Nova Scotia. The late Moses Coady, one of the founders of the Antigonish Movement, said that the role of adult education was to increase people's ability to achieve their potential by looking into the heavens and the depths of the sea and shaping their world, not simply conforming to it.

We see our values reflected most particularly in the response of not-for-profit organizations to the learning needs of the many Nova Scotians who do not have sufficient literacy skills to participate fully in our society. Literacy Nova Scotia is calling on the Standing Committee on Finance to recommend that the necessary resources be made available to bring these people into the mainstream of society.

According to the international adult literacy survey, literacy is the ability to use printed and written information to function in society, to achieve one's goals, and to develop one's knowledge and potential. IALS bases its evaluation of these skills on a scale that is relative to the degree of literacy required to participate in our society in a time in our history that has been called the information age.

The literacy bar is constantly rising for all Canadians. This is especially true in Nova Scotia, where the challenges we have experienced as we moved from a resource-based economy to a knowledge-based economy have resulted in many of our citizens being left on the sidelines.

We have serious literacy challenges in Nova Scotia. The Nova Scotia Department of Education estimates that 52% of Nova Scotians have serious difficulties with reading, writing, and understanding and using documents. The same government estimates indicate that 70% of new jobs in Canada require post-secondary education. Yet in Nova Scotia, 22% of adults between the ages of 25 and 54 do not have a high school diploma.

Literacy's time is now. Adult learning programs have been established in Nova Scotia, and adults can access learning opportunities at any point along the literacy continuum. If they choose, they can earn an adult high school diploma. Not all adults who could or should participate can be accommodated, though.

In 2001-02 there were 3,700 adults enrolled in four levels of adult learning programs in the province: 65% of them were enrolled in community-based programs offered by approximately 30 networks, and 154 received high school diplomas.

Schools need to expand to be more inclusive of the nearly 140,000 Nova Scotians who do not have a high school diploma. There is a role for the federal government here.

In the past two speeches from the throne the federal government acknowledged the extent of low literacy and its impact on our society and economy. It also recognized the need for a national literacy initiative to meet the challenge.

Then came the national summit on innovation and learning in November 2002, which brought together 450 leaders from the private and voluntary sectors, business and labour, academia, and various levels of government. Participants at that summit identified literacy as Canada's number one learning priority and called for the development of a pan-Canadian literacy development system.

Then the Standing Committee on Human Resources Development and the Status of Persons with Disabilities released its ground-breaking report on literacy, on raising adult literacy skills and the need for a pan-Canadian response by June 2003. In that report, parliamentarians make an urgent appeal for governments to develop a pan-Canadian literacy strategy.

In June the four labour market ministers and the Canadian ministers of education and the federal HRDC minister came together in Halifax and agreed that literacy was a priority area that warranted further joint action. In fact, Nova Scotia indicated that it was ready to address these issues on a national basis.

All this support for action on literacy shows that improving literacy in our country is an essential part of ensuring the best quality of life for all Canadians. Literacy is the essential skill that no Canadian should be without.

¿ (0955)

It's also interesting to note that the Rising Tide document Mr. Murphy referred to earlier certainly indicated that literacy and life-long learning was a key component of economic development for our province and region.

To repeat, literacy is the essential skill for our society. All facets of life are affected by literacy. Efforts to address the needs have been nothing more than heroic in many cases. Yet these efforts have not been able to break down the barriers to achieving a fully literate society.

For example, one of the rural-community-based literacy networks here in Nova Scotia must serve a geographical area of more than 4,000 square kilometres with a population of about 9,800 people. The average income per tax return in 1998 was $18,600, and the region had an unemployment rate in 1996 of 23.3%, while the provincial rate at that time was 13%. Fewer than 18% of the adults in the region between the ages of 18 and 69 have completed high school.

Last year this network offered literacy programs to 34 communities, and this cost $80,000 in funding from the Department of Education. The adults who participated in adult literacy programming offered by this network faced the same barriers to participation as those identified in national studies. Transportation and child care are tremendous barriers to participation. There is no public transportation system in this area.

There are also inadequate opportunities to move from the college community-based program to the educational institutions such as the community college and regional school boards. In fact, there were no community college programs or school board programs available in that county as well. In many cases, an adult would have to move in order to attend an adult high school program or a community college program.

An adult learner recently identified for us that there are over 139,000 Nova Scotians between the ages of 20 and 64 who do not have high school diplomas. She said that she was one of those adults, and went on to say that for every learner in an adult learning program in Nova Scotia there are more than 35 adults who are still in need of help.

In Nova Scotia, many programs struggle to meet the demands of their areas because of insufficient project-based funding, overextended staff and volunteers, and insecurities around the future of their programs. At no time in recent history has so much been demanded of the voluntary not-for-profit sector. Organizations have developed strategies to meet the responsibilities they have taken on. Their response has created a dependency on both levels of government.

I'm going over my time.

À (1000)

The Chair: Perhaps. Do we have your brief?

Mrs. Ann Marie Downie: Can I go on to my last sentence?

The Chair: If you would just highlight your recommendations and your conclusions.

Mrs. Ann Marie Downie: Yes.

The reason I'm here is to endorse the recommendations that the Movement for Canadian Literacy made to this committee in September. I think it's important for the committee to realize that we support those recommendations because they are important for our future. It is also time that the federal government responded to all the groups who identified literacy as an important need for our society. It's more than an economic issue as well.

In closing, I would like to ask the committee to consider addressing literacy issues in this budget. We have been disappointed in past budgets, so I'm very hopeful that the committee would be interested this time.

Thank you.

The Chair: Thank you very much for this input today.

We'll now go to the Canadian Federation of Students. Mr. Hare, you have seven minutes.

Mr. David Hare (Nova Scotia National Executive Representative, Canadian Federation of Students): Thank you, Madam Chair, and thank you to the committee. I believe you have the brief that we submitted.

I would like to give a brief overview of the Canadian Federation of Students. We are a national organization that also organizes provincially, given the unique characteristic of post-secondary education in Canada. We realize that there is jurisdiction for both the federal government and the provincial governments. While the brief submitted is a fairly lengthy document, I won't go over it in detail, as you have it in front of you.

I will pick out some things that are Nova Scotia-specific or areas of interest tied to the recommendations in this brief that are particular or pronounced problems here in Nova Scotia. Accepting that the federal government does have a role in post-secondary education, there are a number of issues that we feel need to be addressed.

First and foremost, to begin this discussion I would like to talk about transfer payments. With the creation of the Canada health and social transfer, we saw not only an actual cut in dollars given to the provinces but also a blurring of the line of where that money was to go. Certain governments have put more money into certain programs such as health care and education, and dealt with the cuts and the blurring. Others have used it as an excuse so that we can't identify where that money is to go.

We've seen a decrease in funding through the nineties to post-secondary education, with modest increases in direct operating grants to universities and colleges in this province. What we would be calling for is a dedicated transfer for post-secondary education.

We are encouraged by the steps taken for the upcoming year where there will be a split of the Canada health transfer and the Canada social transfer. However, we believe that a dedicated transfer to post-secondary education from the federal government to the provinces is a necessary accountability mechanism to keep the provinces accountable and also for us to see the direct funding coming from the federal government to the provinces for post-secondary education.

Another specific or pronounced problem here in Nova Scotia has to do with the accounting for how the transfers are undertaken. Currently, it's on a per capita basis. Nova Scotia is in the fairly unique situation where there is a differential between the number of students participating in Nova Scotia versus the number of out-of-province students attending post-secondary institutions in Nova Scotia. We are what they call a net importer of students.

The result is that the federal funding comes in on a per capita basis. There is funding going to the home provinces of out-of-province students, but it is not coming to Nova Scotia. It's not made up by the net leave of Nova Scotia students who receive post-secondary education in other provinces.

This is a very convenient way our provincial government uses to say “Well, our hands are tied as far as funding education; you see, we have this differential.” While it is a legitimate problem, we'd like to see that fixed.

We would propose that funding for post-secondary education be tied to the student, because we believe in portability. I believe that the principle behind post-secondary education in Canada is the ability for portability, and to be able to experience a different part of the country and study at various institutions in different parts of the country.

While we would like to see that money tied to the student as well, it would make a more equitable situation for Nova Scotia. It would also help remove the underfunding implemented by the provincial government and its ability to use this as an excuse for the underfunding of colleges and universities in Nova Scotia. However, that is not a suitable excuse to let it off the hook, so we organize provincially and lobby it for changes in the provincial jurisdiction and the areas overseen by the province in post-secondary education.

Finally, we recommend an increase in transfer payments for post-secondary education. With a dedicated transfer, we'd also like to see an increase. As I mentioned, when the CHST was implemented, there was a cut to the transfer to the provinces. We would like to see that money restored, because it had some very real implications on access to post-secondary education, primarily through the increase in tuition fees that we've seen over the nineties.

There is a wealth of data from Statistics Canada as well as other research that has been done showing that access is compromised, and people are being left behind as tuition fees--upfront financial barriers to post-secondary education--are increased.

Statistics Canada has shown that if you are from a high-income background, highest quartile of income, you are two and half times more likely to attend a university than if you are from a low-income background.

À (1005)

When this study is controlled for rural discrepancy for rural students, if you're from a high-income rural background and studying, you are 5.6 times more likely to attend a university than if you are from the lowest income quartile.

In our brief we outline a number of studies that show similar trends with increased tuition fees and the effects, the demographics of who is able to attend. The number one barrier cited for not obtaining a post-secondary education is the financial barrier.

The second issue that falls under the purview of the federal government, and which has had particularly disastrous consequences in Nova Scotia, is the Canadian Millennium Scholarship Foundation. I'm sure some of you are aware of the particular situation in Nova Scotia. However, with the implementation of the Canadian Millennium Scholarship program, what we saw was an increase of cash from an arm's-length foundation, as is established by Parliament, to the province for a form of non-repayable student financial assistance. The spirit of this initiative by the federal government was that it would increase student aid and that it would complement and not replace existing provincial programs.

There was no strong agreement between the federal government and the provinces, because it is an arm's-length foundation and not the federal government, and the federal government does have mechanisms to deliver funds such as the Canada student loans program. What we saw in Nova Scotia was the province eliminated its only form of non-repayable student financial assistance, the loan remission program, at the exact same time that this money was coming from the Millennium Scholarship Foundation.

That has had some disastrous consequences, leaving us as the only province for four years without any form of non-repayable student financial assistance. There was an announcement by the provincial government that it would be reinstating a different form of debt management program, which seems to have satisfied the foundation as living up to the spirit of the agreement. However, in pure dollar terms, a $10 million program was eliminated by the provincial government with the implementation of this federally established program, and a $5.1 million program was replaced four years later. Not only was Nova Scotia left for four years without any form of non-repayable student financial assistance, but we also have gotten half the money back in the new program. This seems to have satisfied the foundation of living up to the requirements.

As well, the research coming out of the foundation is somewhat disturbing, as it is pointing in the direction that financial barriers are not a barrier to accessing post-secondary education, contrary to what we see produced by Statistics Canada and other reputable research groups. There is obviously some concern over an organization that was established by the federal government and mandated to increase access to post-secondary education turning around and saying that financial barriers are not the barriers that need to be addressed first and foremost.

I should also mention, for those who would like to follow up on this, that as part of the establishment of the foundation it has to undergo an external review every year, and on Thursday that will be coming out. Our understanding is there will be a significant discussion of the Nova Scotia situation in the external review.

I have just two more points, as I see I am running overtime. As I mentioned with the Millennium Scholarship Foundation, in the form of grants the federal government does have a mechanism to disburse student financial assistance to students without going through the provincial jurisdiction, and that's the Canada student loans program. While tuition fees have increased and access is being compromised, it is not our position that loan limits should be increased.

Our recommendation is that any increase to federal student financial assistance must be in the form of needs-based grants, for a number of reasons. One is what we see when loan limits are raised. We saw in the mid-1990s that when the loan limits were changed, there was a massive increase in tuition fees, coupled with government funding and the ability to charge more in the minds of certain administrations because loan limits were increased. There is not just the access issue, but it causes more student debt. Any changes to student financial assistance nationally should be in the form of upfront needs-based grants delivered through the Canada student loans program mechanisms, but it should not be loan money.

The last point I'll touch on is the Canadian Foundation for Innovation and other matching funds programs for research. While it is good to see the federal government increasing funding to research, these programs are troublesome in a number of ways.

One way I would like to address is the disparity between big universities, predominantly outside the Atlantic region, receiving the majority of these chairs because of their ability to produce what would be considered to be marketable research. They do not have as much difficulty finding the corporate or the non-governmental side of the funding. Also, perhaps they have ties to the business community and an ability to raise the funds.

What we've seen is that community-based institutions and small universities and colleges are detrimentally affected by this program. They receive very few, if any, chairs.

À (1010)

I went over my time, so I'll thank you and wait for questions.

The Chair: Thank you very much.

From the Federation of New Brunswick Faculty Associations, once again we welcome Dr. Morley.

[Translation]

M. Desmond Morley (Executive Director, Federation of New Brunswick Faculty Associations): In French, it's counsellor Morley.

[English]

I'm a lawyer, not a doctor.

À (1015)

[Translation]

Good morning, ladies and gentlemen.

I'm the spokesperson for a New Brunswick bilingual organization. I've started in French but as most people here are English speaking I will go to English.

[English]

However, I have satisfied the bilingualism requirements of my federation to address the group in both languages and I'm sorry to have put the translators to so much trouble.

Thank you for permitting me to come here today. As you are well aware, I did ask to appear in Fredericton, but I appeared in Halifax the last two or three times.

I'm reminded of The Teahouse of the August Moon when Marlon Brando was told that the occupying general was going to get the people of the village together and deliver a speech about how much prosperity was going to be brought by the American occupation. Brando said “Oh, that's great, you'll get a big crowd. It's their favourite speech.”

I tend to think I'm doing the same thing here, because I see you, Ms. Barnes, and Scott, all the faces I recognize. It's getting more and more difficult to rewrite this brief every year in different words so it looks a bit different, but actually you know I'm here to say the same thing. I just keep plugging away, because the more water that wears away at the stone maybe we'll get something. I will just highlight from it.

I noticed that in the brief by ANSUT, which is our corresponding provincial association, they have drawn heavily on the principles of the Canadian Association of University Teachers' report. Because I'm the last person in line here, I hope you will accept my brief, if not for its originality, at least for its eloquence. It must have something about it.

I wrote an editorial this week that will appear in the Moncton Times & Transcript. I'll read the first few words of it:

The baby of the family turns 40 this year. Its oldest member is considerably older than that, but still participates fully in its day-to-day operations. The family's presence is province-wide, and its activities have affected, directly or indirectly, the lives of all New Brunswickers for generations. Furthermore, as its importance in the economy grows, so does the measure of its influence.

I conclude that by saying no, it doesn't have a fishing camp on the Restigouche. I was not talking about the Irving family, but about the family of New Brunswick University. There are seven campuses, and they have an equally important effect on the economy of New Brunswick. The thrust of most of the things that I've been hearing today is that education is a very important part of our economic growth and prosperity for the future.

I noticed that the ANSUT brief said that the focus of the committee this year is on the ways government can ensure stronger economic growth and job creation.

I'll just highlight from our brief. The Canadian Association of University Teachers' preamble said “if post-secondary education is a key element in promoting social development”. There really is no if there, because, as has been said by other speakers--and that's another problem with being last in line--50% or more of the jobs between 1991 and 2001, over that whole 10-year period, required a university education or a university degree. Now it's around 70%, as the previous speaker said.

There's a trite old adage: if you think education is expensive, try doing without it. All of us around the table should recognize the importance of that. And how much more important that particular trite expression is becoming in the modern-day economy. It's desperately important.

I don't find in New Brunswick that we have ever received less than the federal government has given to the province to pass on to us. We don't tar the roads with money given to us under what used to be EPF and is now the Canada health and social transfer, which was then split off a little bit to get social assistance into a different envelope. The problem is the envelope for social assistance was just hived off but there was no extra money put in it, basically.

Billions of dollars have been lost since 1993. About $1 billion a year has been taken out of the post-secondary education economy in federal funding. The smaller provinces, ourselves, P.E.I., Nova Scotia, as you heard from the Nova Scotia representatives, are feeling the pinch of it.

À (1020)

Our brief ultimately gets to the point, as Chris Ferns said earlier--and believe me, we did not collaborate on this--that what we need is free university tuition. Whether that is achievable I don't know, but certainly we need more affordable and accessible education at both the community college and the university levels. The point that all of us--Mrs. Downie, Chris Ferns, Mr. Hare, and I--are trying to make is that you, meaning the feds, cannot expect provinces of our size to give a world-class post-secondary education to our students without considerably more help than you are now giving us.

I say that in the secure knowledge that New Brunswick is not “misappropriating” federal funds to put into winning elections by tarring roads or whatever it is they do. I have checked the numbers on various occasions, and we always seem to get as much as or more than the feds are giving us, but it's not enough. I won't re-read our brief. It's in there. Most of it is in point form. Per capita federal funding for post-secondary education is now less than half of what it was 10 years ago, yet there is 50% more demand for university graduates than there was 10 years ago. That just doesn't make any sense.

I'm not going to insult the committee by going through the brief point by point, because I'm sure you must have read it. You know what I'm trying to say, and God bless you for letting me say it for three or four consecutive years. I'm going to stop there, and I'll allow the debate to continue, because I think everybody around this table knows where the FNBFA is coming from.

The Chair: Thank you.

It's nice to hear that some provinces aren't doing all the clawbacks. That is not the case across the country, as we have heard very strongly from more than one province.

This panel stops at 10:50. I'm going to take it to 10:55, again to allow seven-minute rounds.

Mr. Jaffer, seven minutes. Colleagues, I will remind you that includes the answers.

Mr. Rahim Jaffer: Thanks, Madam Chair.

Thanks to all the presenters for being here this morning. I appreciated everything you brought to the table. I'll do my best in the time that I have to address a couple of issues.

Your lordship, I appreciated your presentation. I know the challenges that municipalities face across the country. One of the things I appreciated was your focus on the gas tax being transferred to the municipalities. You may be aware that the future Prime Minister has talked about his interest in that particular area. Just recently a Canadian Alliance motion in the House of Commons was passed to that effect, that there will be a focus on this particular issue to cut the gas taxes in order hopefully for municipalities to get that transfer to deal with infrastructure. At least on that particular basis, I think most of the committee will agree with your recommendation. Seeing that the majority of members actually agreed with it in the House, hopefully we'll see that commitment in the future, especially in the future budget. I just wanted to address that.

One of the questions that came up specifically was in the area of literacy. Ann Marie, it's nice to see you again. Perhaps you could address the issue of transportation and child care. That is something I don't think I have ever really thought about being from more of an urban centre. Literacy in the rural areas is a big challenge.

What do you propose? How can we deal with that particular problem? Obviously it's tied to a funding problem to some extent. How can we allow for accessibility, whether it is through other channels, through stay-at-home learning, through the Internet, whatever it might be? How can we address those transportation challenges? Maybe your organization has thought about that to some extent.

Mrs. Ann Marie Downie: Yes, we certainly have. There's a national study by ABC Canada on what keeps people out of programs. One of the issues they raise consistently is that it's hard to get to programs. Transportation is not always reliable, and neither is child care. So one of the things that has to happen is that programs have to be more available in the communities where people live. That's an issue.

The other issue, of course, is that if we had flexibility in the hours during which programs were offered, maybe the child care could be looked after within the home more easily, rather than people having to bring the children out. Also useful would be the accessibility of child care on site or close by with places where you could leave the children. Perhaps the children themselves could get literacy and pre-school literacy training.

I really do believe that literacy in the community is fundamental. The example I used is somewhat extreme, but it's not unique to Nova Scotia that within an entire county of a province there is no availability of programming beyond the community-based programming. There has to be a way for the school boards and the community colleges to get into the community as well and service the people there.

Also, there has to be an availability of flexibility in programming. Yes, there's more than one way to do literacy training in a community, but I don't think the answer is as simple as doing literacy training over the Internet, for example. That could be a component of it, but it certainly isn't the final answer.

À (1025)

Mr. Rahim Jaffer: Okay. I appreciate that clarification.

I'll move on to David.

I appreciated many of the things you've recommended to the committee. As I mentioned earlier, I've been dealing with many of these issues as well, having the University of Alberta in my riding. I deal with a lot of the student groups there. One of the things I was interested in--and maybe you can expand on it--is the idea of tying funding to the number of students at a university to allow for portability. It's an issue I don't think I've ever really dealt with, and I'm curious. I think you're right when you say that here in Nova Scotia institutions obviously benefit from students travelling here to go to school.

From a committee perspective, how can we deal with this? Seeing that, first of all, we don't have a federal minister of education, seeing that we need better coordination with the provinces, how can we tie the funding to institutions basically on a student basis, rather than just a complete...? Maybe you can address that issue.

Mr. David Hare: It wasn't necessarily tying the funding directly from federal government to the institution, which is how federal funding took place fifty years ago, just after the war. Specifically, what I'm speaking to is the federal transfer to the provinces, that it address Nova Scotia's situation. I haven't seen the most recent statistics on net import of students, but the last statistics I saw from 1998 showed that actually Alberta had a slight import of students and Nova Scotia had a rather substantial difference in students.

What we're specifically saying is that students who leave their province to go to school are usually attending a three- to four-year program, they're living in that community, and they're being educated in that province, which isn't receiving the funds for that student that are being given by the federal government, because that money in the Canada health and social transfer--and I'm not exactly sure of the details on how it will work with the Canada health transfer and the Canada social transfer--goes to the province the student comes from. Essentially, we're saying that the funding should follow the student in the transfer payments to the province and then the province would use their various funding formulas for different institutions on that basis.

Essentially, we're saying that the money transferred from the federal government for the student should get to the province where the student is studying, as opposed to the province they come from, where they may not necessarily be studying--if that makes much sense.

Mr. Rahim Jaffer: To calculate that, would you suggest a voucher style of system or...?

Mr. David Hare: No. Essentially, the census can peg where students are at the time. There are enrolment figures. It's not exceedingly difficult to peg where a student is, especially if you look at provincial student loan programs and track them, because of course if you're from New Brunswick and study in Nova Scotia, you still apply for a New Brunswick student loan. The records are there. The administration for simply recalculating for post-secondary education students in order to transfer the federal funds based on where they are studying, as opposed to where their residency is, would not be overly complicated.

The Chair: Thank you very much. My province of Ontario just went through the double cohort, and many of the students I know have come here from London, in southwestern Ontario, so I know what you're saying.

Thank you, Mr. Jaffer.

Now we'll go to Mr. Wilfert, for seven minutes.

Mr. Bryon Wilfert: Thank you, Madam Chairman.

Mayor Kelly, on the issue of infrastructure, as a former president of the Federation of Canadian Municipalities, I can tell you that I have probably wrestled with this issue since the 1980s, much longer than most people, and I'm still not convinced that it's the right thing to do. I'm not convinced because provinces like Quebec in fact have clear legislation that does not allow the federal government to deal directly with their cities.

One of the words that seems to have been dropped from the lexicon of municipal politicians these days is the word “leverage”. I have to tell you that there has been no government that has been more involved with municipal issues than this federal government. As a member of the Prime Minister's task force on urban issues, I can tell you we found out that the federal government puts $55 billion plus into the ten largest cities in the country, and that's just scratching the surface.

I believe very strongly in the national infrastructure program. One of the things the Minister of Finance announced in this budget was of course the ten-year program with the initial down payment of $1 billion--and I underline “down payment”. The minister has also begun discussions with his provincial counterparts with regard to the gas tax issue. The problem, which you have certainly pointed out in your brief, is the issue of the clawback. That is where I have the major problem.

There is no good in you or the FCM coming to the Government of Canada without the provincial-territorial associations being equally aggressive in dealing with their provincial counterparts. It is something I have not seen; it is something I despair of. And I would have to suggest to you that if we are going to turn over any moneys--and obviously I think yesterday's announcement by the minister is rather sobering in terms of the dollars available--we must have an ironclad guarantee that the cities in this country are going to get the money.

I have not seen anything from the FCM or from anybody else at this point that would encourage me to support this. I do not want the money simply being siphoned off by the provinces. We have that with the millennium scholarships in some of the provinces, particularly in this one. That's my concern.

I would be interested in your response to that, keeping in mind that probably you won't find a greater friend, because I am continuing my contact with my municipal colleagues. I am concerned that we don't get into that situation. We give money in all sorts of areas. There is more collaboration with cities by the federal government than there ever has been in the history of this country, but I think we are getting less and less credit for that--and I was there in the lean days when nobody was talking to cities.

À (1030)

Mr. Peter Kelly: If I may, I'm going to deal with that in two parts. I'll give a brief point and then I'll have the CAO make a comment.

I concur with your thought process that we do have to deal with the provinces, but in dealing with them, you, the federal government, have a lot more powers than we do. You can manoeuvre or you can legislate or you can mandate a process before you give up any of that dollar flow.

The problem, which again was clearly noted at the big city mayors congress and at the Atlantic mayors congress, has been that we do not want clawbacks. We have been strong in our comments. We do not want them to capture from us where the taxpayer is expected to go, because again, the deficiencies are there because there is that lack of cooperation among the federal, provincial, and municipal governments. We need to work together, because we are here for the same taxpayer. Again, the provinces sometimes do not like to be circumvented from a process, because they believe it shall flow from here to here to there, as they decide. That thought process has to change.

Our CAO also wants to make a couple of other comments.

The Chair: Go ahead.

Mr. George McLellan (Chief Administrative Officer, Halifax Regional Municipality): Thank you, Madam Chair and your worship.

We certainly appreciate the growing interest in Ottawa with regard to relationships and funding issues with municipalities.

I certainly respect your background on this issue, Mr. Wilfert. However, here in the context of Halifax and Nova Scotia, we are in a somewhat difficult situation. The province of Nova Scotia, as people are aware, right now probably has about the worst economics of any provincial government in the country.

Our relationship with this province is the best we can make it. However, one of the implications of their situation, although you speak in terms of the amount of money that is directed towards municipalities, Mr. Wilfert, is that this municipality of Halifax has the highest dependency on property tax dollars of any city its size or larger in North America. Conversely, a way of restating this is that we get--and we have a document to this effect--less funding from other levels of government of any city this size or larger in North America, yet we are scrambling with the same issues.

There's a lot of money floating around. My point is whether the mechanism of matching funds from the provincial government, which is not always possible here through Nova Scotia, is appropriate or not. We just don't seem to find it here. Whether it's our size, I don't know, but certainly we are at that point now, talking about the infrastructure deficit across the country, as his worship pointed out. We have our share of that. We have less ability. We run our business in this municipality like everybody else. We're at the margin. By the time you pay the rope, soap, dope--salaries, uniforms, gasoline--then you have what's left to throw at your infrastructure issues. As I've cited here with our situation, that money's not there. If it has to come through the province, then it's difficult for us to pull it that way, not having the constitutional impact to do that.

The other issue for us, I guess, is how much of it actually finds its way here, because although there may be a lot of money being distributed, I think the numbers would bear out that per capita not much of that's coming here, which goes directly to the stereotype a lot of people have of Atlantic Canada and Halifax.

À (1035)

Mr. Bryon Wilfert: Having worked with the former Minister of Finance when I was on the FCM board and as president, and as his parliamentary secretary, and now as the parliamentary secretary to the current minister, I just want to put on the record that he is committed to considering all options that would help strengthen our cities in this country. The question is how we do it.

Mayor Kelly, you are the fourth mayor of this city that I've worked with over the years. You certainly follow some very strong mayors, mayors I have a great deal of respect for, and I think you as well are certainly articulating the issues in this community. But it is a question: we need to make sure that any moneys transferred are in fact going to go to where they're needed and that the leveraging is there.

As I always like to say, had the FCM's 1983 proposal for the national infrastructure program been taken up by the next government, we might not be in the situation we're in today, but we are committed to move forward in this area and certainly in other areas. Environment is a good example, such as the 20% Club, etc., where the federal government interacts directly with cities. Rest assured that we will continue to pursue this. The discussions are currently underway with the current minister.

The Chair: Thank you very much, all of you.

Mr. Brison, seven minutes, please.

Mr. Scott Brison: Thank you, Madam Chair.

Thanks to all of you for appearing. Welcome back, Des Morley, and welcome, David Hare.

I have a question on education. For constitutional reasons, it's a challenge for us as federal legislators to try to address some of these issues, but one that I hear over and over again from educators and from student organizations is the issue of rising tuition. Some people have even suggested tuition caps, and there's the suggestion, for instance, of no tuition at all.

In my riding we have Acadia University, which is growing in national and international status, but there's a recognition that every year tuition has increased quite significantly. At the same time, however, application rates have increased dramatically as well, because people are paying more for what they perceive to be a higher quality of education at that institution, or maybe a more specialized area of education within their chosen field of study.

How do you allow for a system that will ensure equality of access to a high-quality education but at the same time enough flexibility that ensures there can be schools that provide some level of excellence beyond what is available at the basic level? In the U.S. you have an excellent network of state universities, but you also have the Harvards, the Princetons, and the Yales that provide that extra level of excellence. I'd appreciate your insight as educators and as representatives of students.

À (1040)

Mr. David Hare: It's an interesting question, in the sense that it's a question of where the money comes from, essentially. If the argument is that this increase in tuition is what's providing the high quality of education, our argument is, quite simply, that the increase in funding should be coming from the government. Canada is committed to post-secondary education. We signed an international covenant to actually progressively eliminate tuition fees about 25 years ago.

If we are strictly talking about revenues for universities to provide a high-quality education, it's our position that those revenues should be coming from the government, quite simply. It's not adequate to say that if tuition increases, then that's what will cause a higher quality of education. If it's funding, it's funding, whether it comes from tuition fees or government. However, when it comes from tuition fees, what we see is people being left out of the system, people who can't afford the upfront costs, can't make the transition because of the cost.

You did mention that enrolments were going up. As I mentioned from the Canada survey on who's going, we have to look at who's participating and who's accessing the system. It's not a question of pure aggregate numbers that from year one to year two we have an increase in enrolment. We should be looking at who is participating.

Mr. Scott Brison: But there are still some universities that may choose to focus on a niche or a specialized area of education and perhaps because of that focus charge more and offer a different program. Are you suggesting that they shouldn't be allowed to do that?

Mr. David Hare: Differential tuition fees along program lines and increasing tuition fees--

Mr. Scott Brison: But also quality.

Mr. David Hare: But if it's coming down to a money issue, what's the difference, aside from what we've pointed out from research points, on access of where the money's coming from? We notice that if it's through tuition fees, access is suffering. That money can come from government. Governments can fund niche programs. There are a number of programs that not every university need provide. There are certain areas where certain universities and colleges specialize, and they're very good at doing that job.

The idea is an equity argument, that universities and colleges should be funded adequately to provide the programs that we recognize are being provided today, and there shouldn't be the cost poured onto the student, because when we see that, what we see is a decline in access, quite simply put.

If it's tuition fees you're looking to draw the revenue from, you could easily draw the revenue from...well, not easily, but that revenue could come from another source, and we believe that source is government.

Mr. Desmond Morley: If I may, I would just add to that.

What you're looking at is a two-tier system, in a way. With respect, your question is very consumed with the maintenance of excellence, and should we not have elite universities that are allowed to.... The implication in your question is that the Acadias of this world, which actually has the most expensive tuition in the country, but only marginally more than Mount Allison, and that's because you have to buy a computer, whether you want it or not, and that's the difference in the tuition fees....

Mount Allison is very similar to Acadia. It's a small liberal arts university with a very select coterie of alumni who send their sons and daughters there. It's a very specialized institution. It goes back a long way and is steeped in tradition and all that kind of thing.

Respectfully, Scott, you're taking a look at a very small cross-section of the community. The answer to the question, basically, is that the cream will always rise to the top. Harvard wasn't created as a tremendous powerhouse university. It just developed that way because the best minds and the best students wound up going there, and eventually it was a self-fulfilling prophecy, as is McGill in Canada, as is University of Toronto, for example.

The point we are here to address is basically the accessibility to post-secondary education. I won't go into a long philosophical diatribe here. When I first started working with the Federation of Faculty Associations, university faculty universally would not want me to be sitting in front of any kind of a panel saying that education creates jobs, because they have the purest view that education for education's sake is really what should be funded by government. That, basically, is not a pragmatic argument, and politicians who have very short purse strings are not able to listen to that argument, very frankly. You have to go before committees like this and ask how many jobs will it create or how many jobs will it prevent being lost.

I ask you to look at the statistics. We need more people in post-secondary education, not just universities. We need free tuition or very affordable tuition. Low-income families now are spending seven times more of their available income than they did ten years ago to send their children to university. The higher-income people are only spending about twice as much, as opposed to seven times as much, as a percentage of their income to get their children into post-secondary education.

À (1045)

The Chair: Thank you very much.

Mr. Murphy, the floor is yours.

Mr. Shawn Murphy: Thank you very much, Madam Chair.

I want to follow up on some of the questions on access to post-secondary education, but before I do that, we talked of the great elite universities. I represent Charlottetown, the home of the University of Prince Edward Island. We talked about Acadia and Mount Allison. I'm sure President MacLauchlan would want me to put on the record that UPEI is the greatest university in Canada. He would say that, and he'd want the minutes to reflect that.

Mr. Desmond Morley: Wade MacLauchlan is a good and old friend of mine, and my daughter is a graduate of UPEI, so I class it among the world's best universities.

Mr. Shawn Murphy: I'll pass that on.

Mr. Hare, I just want to follow up on one of your recommendations dealing with the RESP and the Millennium Scholarship Foundation.

I more or less agree with you that certainly the millennium has been, I think, from an access point of view, a monumental failure, especially what has happened here in the province of Nova Scotia. It has happened in other provinces, but perhaps not to the extreme that it's happened in this province.

I know you've made a recommendation for over 70,000, but is it not time to perhaps take everything off the table? The grandaddy of course would be the educational tax credit, which is the big expenditure for the Canadian taxpayer, the RESP, the millennium fund, and some of the other issues there, and take all this money and try to reconfigure it so that it goes to the people who need it the most on a means basis. That is a lot of money when you add those up. I know that it's probably not enough, but would it not make sense just to take the whole thing, scrap it, and start over again?

Mr. David Hare: Our recommendation, when you are talking about the RESP and the Canada Millennium Scholarship Foundation, is to take that money and put it into an upfront, needs-based grant system. When you are talking about tax incentives for saving for post-secondary education, we need to look at who benefits from that. The access issues we are trying to address for low- and middle-income families aren't being addressed by tax policy.

What we are advocating is that we take the funds from that and put it--I believe it's our second recommendation in the brief--specifically toward a needs-based grant system, which would help address the access issues we are facing. However, I didn't go explicitly into it.

Tuition fees are an integral part of access as well. You can't fund just student financial assistance and look at tuition fees separately. They are tied together. I understand that federally that's a much more difficult thing to deal with, but one of our other recommendations is to work out a strategy with the provinces and have a national act.

On that forum, I would take the money that's been budgeted for and spent on these programs, and put it into needs-based grants. That is our position.

Mr. Shawn Murphy: Another recommendation that you made--and perhaps I'll get Mr. Morley's response--is you made the suggestion, perhaps based on a Nova Scotia perspective, that the assistance follow the student, because Nova Scotia, of course, is a net importer of students. You may get what you wish for here. That would lead, I think, to perhaps Ontario universities being more aggressive than universities in Atlantic Canada. I don't imagine Newfoundland or New Brunswick are net importers of students. However, that would take money off the table from certain Atlantic Canadian provinces. That recommendation was made earlier today by your Nova Scotia counterpart association.

Do you agree with that, Mr. Morley?

À (1050)

Mr. Desmond Morley: I'm sorry, frankly, I don't fully understand where you are coming from, Mr. Murphy.

Mr. Shawn Murphy: What they are saying, and it's in a Nova Scotia context, is that since Nova Scotia is the biggest net importer of students, it should get more and that the federal financial assistance out there should follow the student. So if Nova Scotia gets 1,000 students from Quebec and Ontario, it should get the federal money, not the provincial money, that's being used to assist those students.

Now, that might work in Nova Scotia's context, but I think in the case of Newfoundland and probably New Brunswick it would take money off the table.

Mr. Desmond Morley: I'm actually not too sure. I would have to think very carefully about that. What we need is students being able to get into university, and we really don't care where. The bottom line is that in the Canadian economy we need more university graduates, whether it's from Nova Scotia, New Brunswick, or wherever.

How we would settle the mechanism for the federal money to follow a student is something I have not, quite frankly, thought out quite well. You are quite right, there could be a problem if we simply said okay, we'll give it all to the provinces, and if they get 1,000 extra students they will get 1,000 extra dollars or whatever it is. Then of course New Brunswick would lose and Newfoundland might lose if it were done that way.

However, you have to remember that there is a basic requirement, a basic infrastructure that has to be in place. Because you have a 50% drop in enrolment you can't close down 50% of the university. It just doesn't work that way. Do you see what I'm saying?

Mr. Shawn Murphy: I realize that.

Mr. Desmond Morley: So you couldn't have a direct transfer student by student. It would have to be some kind of mechanism carefully thought out.

Mr. Shawn Murphy: I know I'm on limited time, but I just have a quick question for Mayor Kelly.

I was just curious with your statement, and I sympathize with the municipalities and the pressures you are under. I know you have a very limited revenue source with your property taxes. I was very curious, and I see this in the province of Ontario. You made the comments, and perhaps they weren't significant, that you were able to lower taxes three times in the last three or four years. We heard the same thing from the province of Ontario, that it was able to lower taxes, and what a great job it was doing. But then when you read the Globe and Mail these days, the end result wasn't that great, as you know. Then this whole talk about a fiscal imbalance comes up.

My feeling is that generally Canadians don't mind paying taxes if they see that their money is being spent wisely and that the services they want are being delivered, especially in the municipalities, which is the level closest to the citizen.

I was just curious as to your tax reductions. Then of course in your next breath you are saying that you need more federal and provincial money.

The Chair: A short answer.

Mr. Peter Kelly: There are two things. One is the growth we have gone through. It helped us keep that tax level, to bring that down because of the growth. But just because the tax rate didn't go up does not mean you paid less tax, because with the assessment of your home, you paid more overall.

To go back to your point about the infrastructure, with growth comes challenge. The challenge is that you need to maintain infrastructure.

The Chair: Mr. Stoffer.

Mr. Peter Stoffer: Madam Chair, in the interest of fairness and to show these good people how Nova Scotians get along, I know my colleague from Kings--Hants had a very short question.

The Chair: The NDP can give the Tories one minute.

Mr. Scott Brison: We work together in this province.

I have a quick question on an environmental issue, so you'll probably recognize there may be collusion on this one.

One of the greatest sources of pride to Nova Scotia and to Halifax is Halifax Harbour, and maybe one of the greatest sources of embarrassment to Nova Scotia and Halifax is the condition of that harbour. For at least 30 years there's been significant discussion on how to address it.

The federal commitment has been hesitant. We have a $30 million commitment for what is a $300 million project. I would appreciate your insight as to ways the federal government can play a more important role in addressing that harbour. We can't separate and silo-ize economic issues from environmental issues any more.

Probably the greatest impact a federal government could have in terms of Atlantic Canada, if we recognize that Halifax is a centre for economic activity not just for Nova Scotia but for Atlantic Canada, is addressing that harbour. ACOA spends $447 million per year in Atlantic Canada. If we were to fix the Halifax Harbour once and for all and address that issue from an environmental perspective, that would probably have a greater economic impact on Atlantic Canada than all of the ACOA money we're spending and spreading throughout Atlantic Canada.

I'd appreciate the mayor's view on that.

À (1055)

Mr. Peter Kelly: We are spending $330 million on that project. We have signed off phase one. We are negotiating phase two.

The federal and provincial governments will both receive in kind, in terms of income tax and sales tax, $89 million approximately. Both levels of government have only given 10%, which is only $60 million plus land. The feds and the province are going to make out quite nicely on this project. If they would only give us that portion back, that would help things a long way.

On the infrastructure, the deficiency that you discussed is that this project should have been a third, a third, and a third. We would be able to do more in other directions if that commitment were there. Nowhere else in this country would you have this kind of deficiency in terms of funding percentage points.

Again, it is 10% province, 10% feds, 80% our taxpayers footing the bill. Nowhere else with this size of a project would you have this kind of deficiency. If you would treat us as you would other areas of this country, we would be very happy with that.

We can't go back and change the past, but we know potentially there are other dollars to come forward. We encourage the federal government to make sure that we work together to address these deficiencies.

Mr. Peter Stoffer: Madam Chair, I thank you for that. That was going to be my question as well, and I thank Scott for asking it.

One of the concerns I would have, your worship, and this is to put a plug in for those who would like the system to remain public, I believe it is one-third, one-third, one-third.

Mr. Peter Kelly: It is public.

Mr. Peter Stoffer: And I appreciate that, but there were concerns of privatization, and as the different phases go along we would like to keep it public.

The question I have for you is on an issue you've raised quite clearly and eloquently. In regard to the province and the clawback, that's going to be one of the challenges of the municipal gas tax.

There are two challenges. One is the role the provinces are going to play, knowing that Quebec does not have any legal standing in this regard. I know that your job as mayor of HRM is to look after the interests of HRM citizens, but I'm thinking outside the box in terms of how would the municipal gas tax affect areas like Canso? How would it affect areas like Cheticamp and smaller communities across the country? They don't have the political clout in order to achieve some of this.

I say that because with infrastructure comes development. With development comes economic opportunity. That's the money we have to fix some of the ills in the system. Very quickly, how would you see the role of the provinces? How would we ascertain assistance for the rural areas when it comes to this proposal?

Mr. Peter Kelly: The feds have a power that no other government has, in that they can legislate or they can just send out the cheques based on a proposed formula that can be negotiated. The way you work together is that if they put in $2.5 billion, 5¢ of the gasoline tax across this country, and get the provinces to pony up the other 5¢ because they take a lot more than that across this country, there you have a part of the dollars.

To go back to your point of how do you make it fair for Canso and the other small communities, if you take a percentage of that, for example 10%, and park it, that would be for the areas of challenge. The other dollars you would base on a pro-rated formula, whether it's based on consumption or population. You would do that distribution. The other 10% could address those deficiencies that you brought forward.

Again, there has to be an understanding and a commitment to legislate. If the provinces don't want to cooperate, have the guts to bypass them and say “Fine, if you don't want to participate, to hell with you. We're going to go directly to the municipalities with the cheques.” Do it, and see what kind of response you get.

Mr. Peter Stoffer: I also want to put a plug in for your chief administrator, George McLellan. I've heard nothing but good reports throughout my riding on the work that he and his staff have done in terms of the Hurricane Juan cleanup. Congratulations to you.

My very quick question to Angela Bishop is on the rise in food bank use in this country, which is up 5%. Most of those people are functionally illiterate or people who have literacy concerns that you so seriously address. There's a direct correlation. Desmond, you're absolutely right: if you think education is expensive, try doing without it. We see the effects of that.

The role of the federal government is to work with the province and the municipality. They must work on a tripartite level to address the serious concerns of illiteracy in order to get these people not just to academic standings but to vocational standings as well. We hear a lot about universities, but we don't hear the word “vocational” very often. We have such a huge shortage of skilled workers. Fill in the blanks for me, if you would.

Á (1100)

Mrs. Ann Marie Downie: There's a huge connection between poverty and literacy and between poverty and health, all of which are issues that are front and centre of our society. The costs to our health care system are going up, yet I think there are a lot of issues about people not having the skills to manoeuvre their way through the system.

Also, there are health issues. If you're poor, you don't eat right. It's very simplistic to say that if we address the literacy issue, then we're going to be addressing quality of life for families. I firmly believe that. I started teaching in 1968, when we were talking about dropout rates in Nova Scotia being around 30%. And guess what? They're still around 30%, because there's a system that doesn't value education because perhaps the family itself, the first teachers of these kids, doesn't value it.

Often it's because the parents, the family, are suffering under stresses of poverty, of health issues, of all those things that relate to literacy and relate to the inability to fully participate in their society and the despair as a result of that.

We have to look at literacy where it touches on all kinds of aspects of our life, not just the educational skills, although that's important. Nova Scotia has an underskilled workforce. It's an aging workforce, and soon there are going to be huge skill shortages in Nova Scotia. That's going to affect the educated people in our society as well.

Where are we going to get the people to come into the workforce and provide the skilled labour that we require? It has to be from the people who are already living here in Nova Scotia.

The Chair: That completes our round.

I'm going to suspend and thank you off the record to accommodate some of your local media that would like to take your picture as a panel.

I'll continue talking just to say on behalf of all our colleagues, not only the ones who are present at this meeting, but the members of our committee who are in Ottawa, we thank you for giving us your briefs and for giving them early enough so we could translate them and distribute them. Thank you for your time today and also for answering our questions.

With that, we are going to go to our next panel. We appreciate your attendance with us today. Thank you.

Á (1103)

Á (1107)

The Chair: The order of the day, pursuant to Standing Order 83.1, is pre-budget consultations. We are in Halifax on November 4, and this is our third panel this morning.

We welcome to this panel representatives of various institutions of the region:

Starting with the Society of St. Vincent de Paul, Mr. Michael Burke is the national president and director of Hope Cottage, and George Leach is the outreach worker at Hope Cottage. Welcome to you both.

From the Antigonish Women's Resource Centre is Katherine Reed, the project coordinator. Welcome to you, Madam.

From the Nova Scotia School Boards Association are Mary Jess MacDonald, president, and Jeanne Doucette, first president. Welcome to you. Bienvenue.

Here as an individual is Mary Boyd, spokesperson for the MacKillop Centre for Social Justice and the P.E.I. Alternative Provincial Budget Coalition. Welcome, and thank you for making the trip to join us today.

Also here as an individual, from Raymond Wilde Chartered Accountants, is Peter Wilde, who is a partner in that firm.

I'm going to give you seven minutes each to make your presentations. If you have written presentations that are longer than the seven minutes, either cut them down or speak to your presentation. Your written submissions go to all of our members anyway.

We will start with Mr. Burke, from the Society of St. Vincent de Paul.

Mr. Michael Burke (National President and Director of Hope Cottage, Society of St. Vincent de Paul): Thank you very much. I am very pleased to be here.

I'm representing Hope Cottage, which is an inner-city soup kitchen operating in Halifax. It was started by Father Joe Mills in 1970 as a stop-gap measure to feed people who were knocking on the door at the time. Here we are, 33 years later, just having completed a $350,000 addition to the building, so we're here for the long haul. In fact, it's rather ironic that right now we're sitting a stone's throw away from Hope Cottage. If you were Brett Favre, you probably could throw a football from here to Hope Cottage, although I can't. We're just northwest of here, in a completely different world.

Right now Hope Cottage is operated by the Society of St. Vincent de Paul, a lay organization of the Catholic Church, which does this sort of thing across the country. We have operations from Victoria to St. John's, Newfoundland.

The people we serve, both men and women, have varied backgrounds. Many have mental illnesses, addiction problems with alcohol or drugs or both, and physical disabilities. The average person coming to Hope Cottage has a grade 10 education. Many refugees who have arrived in the city are also there. Most of the people are on assistance. Those who aren't are the working poor.

The neighbourhood we operate in has a women's shelter, a night shelter for men, the Salvation Army, a needle exchange, a drop-in centre and a medical clinic. It does not have a bank or chain grocery stores. They all moved out a few years ago. Historically, the area struggles with violence. There have been at least one or two shootings a year in the neighbourhood, some resulting in fatalities.

We're noticing a disturbing rise in the number of meals served at Hope Cottage, and we suggest that this may be an indicator of the increase in the number of people who are falling off the wagon, the social wagon. Over the years we've averaged about 42,000 meals a year, and that was pretty steady from 1990 to 2000. As of late, however, the numbers are starting to increase. We're not sure exactly why, but I think it's an indication that the numbers of poor are growing. In 2001 we served 41,500 meals, which is about average. In 2002 it was up to 44,952, almost 45,000. Over the past nine months, we see a trend such that we're projecting over 52,000 meals to be served this year, which is a fairly staggering increase in the output.

What's driving this upwards? Many of these people are on assistance. Most of the people we serve are on assistance. A single, able-bodied person receives $365 a month on assistance. Rooms in the area go for $200-plus, leaving very little for people to operate on, resulting in the requirement to go to food banks or Hope Cottage soup kitchens.

Even the term “able-bodied” is almost an oxymoron. These people can physically walk from their homes to Hope Cottage, but they're suffering from addictions, lack of education, and mental illnesses. They may look able-bodied, but they're certainly not employable.

These people get their cheques and their first stop is usually the liquor store. Yes, the neighbourhood has a liquor store. We have no banks or grocery stores, but we do have liquor stores.

Of course these people suffer from addictions, so the next stop is usually the VLTs. Before the advent of government-sponsored gambling, we would notice a pretty big decline in the number of people who attended after their cheques came out. It would take about five or six days before that went back to normal. Nowadays, it's just a blip. They're back within one or two days because they'll pick up a six-pack, go to the slots or the VLTs, and their money's gone.

The second thing we want to point out is that it's very difficult if not impossible to live on $365 a month in a city like Halifax, and probably most cities. I don't think anybody would deny that statement. If you have a room, even in a rundown, dilapidated rooming house, costing you over $200 a month, the remaining $150 is just not enough to live on, so you're going to go to soup kitchens.

As for the people who come to Hope Cottage, we operate five days a week, and there are other areas to go to on the weekends, so once their money is gone, or even before their money is gone, they have little choice in the matter but to go to these places.

Á (1110)

Father George Leach (Outreach Worker at Hope Cottage, Society of St. Vincent de Paul): I'm a Jesuit priest and I work at Hope Cottage as the outreach worker.

We know that governments are aware of all of this. We realize that. This is nothing new to your minds, but we come to two very simple conclusions as we conclude this presentation.

We would like to see the assistance recipient receive his money or her money--I put it in the masculine, but inclusively for both, because women do come to Hope Cottage, not as many, but there are some--and we would like to see them have a certain security within themselves, a certain dignity, not to have to always be in that lineup waiting for food twice a day.

We're cognizant of the fact that most soup kitchens don't get a lot of funding from governments, although there is some help from time to time on improvements and so on.

We would like to have them receive a little more than the bare minimum, which is not enough to live on. As you know, they take what money they get, they get a place to live, and then they go to the soup kitchen. They try then to survive. If you pay $200 or more for a little room that is rundown and so on, you have $150 left, and you can't do much in the run of a month.

I'm noticing the time, and I want to be careful not to go over it, but we have two concrete conclusions we'd like to come to. We know that there's an affordable housing initiative from the government. Part of that's for Nova Scotia, but we've been waiting and hoping and looking for something like that to happen, and soon, because we have a great need for housing in our area.

The first of our two concluding suggestions is to increase the amount of money available to the poor and destitute. We always hear, “Oh, they're ripping off the government”. This morning I looked at a tableful of men. I was having coffee with them at 10 o'clock before I came here, and you know they're not ripping off anybody, because they have a mental disorder or a physical disability, they've walked a mile to get there for something to eat, and they're older, they're 55 to 60, and you know they can't do any more than what they're doing. They're on a very limited income. We think that should be increased.

The second suggestion is on the affordable housing project in Halifax. To do this, we would ask the federal government to insist that the provinces proceed with the projects that will produce affordable housing units now. We don't need more shelters; we need more affordable housing. We need places for people to live.

We want to thank you very much for hearing us this morning. We know that we can continue to count on your help and that some of these projects will get done as soon as possible. Thank you.

Á (1115)

The Chair: Thank you very much for the presentation.

Now I'll go to Ms. Katherine Reed.

Mrs. Katherine Reed (Project Coordinator, Antigonish Women's Resource Centre): Thank you very much for inviting me to speak this morning. My presentation also will focus on poverty.

For the past 14 years I've worked at the Antigonish Women's Resource Centre, assisting women who are poor. I've personally experienced poverty, so I understand these issues from the dual perspective of theoretical learning and lived experience. I understand the damage that poverty does, especially when it is prolonged.

Poverty is a complex problem, but the solutions to it are fairly simple and obvious. In order to mitigate the damage poverty is doing to Canadians and to the country as a whole, some straightforward policy measures are required. These measures would involve investment of public funds, but in the long run public money would be saved, or at least redirected from self-defeating damage control to more productive and proactive areas.

I will not make any emotional appeal today for compassion for the poor, nor will I moralize about the responsibility of well-off Canadians to help the less fortunate. This approach has never worked for me in the past in dealing with policy-makers. Instead, I'll attempt to make the rational case that poverty is costing Canadians a lot of money, and we can change this.

I brought with me some material that helps me make this rational case for social investments. This material is just a small part of a huge mountain of evidence, carefully researched, analyzed, and written, and collected in homes and offices in every corner of the country. It quite logically and, I would argue, powerfully makes the case for improved policy responses to poverty and investments in social and human development. It details the shocking growth of poverty and wealth in Canada and the way the Government of Canada has responded to and steered this evolution. It shows the very costly consequences of maintaining, mainly through government policy, the poverty we have in Canada, and what measures we could be taking to address the situation. I find the material compelling.

What does it say? It says that poverty is destructive and costly to individuals and to our larger society. It says that there are areas of public policy, which, were they designed and managed properly, could virtually eradicate the poverty in Canada almost instantly.

It says that there are government policies and practices that are trapping Canadians in poverty, policies like those of low minimum wages and disqualifying single mothers for social assistance if they enrol in university. It says that certain groups of people are more vulnerable to poverty, mainly, women, visible minorities, first nations people, and people with physical and mental disabilities.

It says that the wealthy in Canada are getting wealthier and that this is partly due to income tax cuts, deferrals, and write-offs for wealthy individuals and businesses.

I'd like to quickly read some excerpts from this material and make a few points of my own. To save time, I won't read all the citations.

The refusal by the politicians to improve food security in Canada has led to a 90% increase in the use of food banks over the past 15 years. Some 17% of Nova Scotians experience some form of food insecurity.

As for the feds' commitment of $680 million toward low-rent housing, this amount, spread over five years, is only a small fraction of the estimated $2-billion-a-year cost of a comprehensive national housing strategy. So lack of affordable housing--a key factor linked to hunger and food insecurity--remains a serious problem for many low-income Canadians.

Changes to Nova Scotia's social assistance system are a good example of the hardened approach to the poor that is afoot in Canada. As of August 2001, children's allowances have been eliminated. Parents are now told to find the money to feed and clothe their children in their federal-provincial child tax benefits, money that was intended to lift those families out of poverty.

The monthly social assistance personal allowance for adults is $180. This is to pay for food, clothing, and miscellaneous personal needs, such as hygiene products, cleaning supplies, newspapers, haircuts, over-the-counter medicines, co-payment for prescription drugs, transportation, etc.

The allowance is not adequate by any reasonable measure. The only other regular monthly allowance is the shelter amount, which, for most parts of the province, is grossly inadequate, particularly for Halifax Regional Municipality, Antigonish, Kentville, and Wolfville as well. A lot of poor people are living in very unhealthy housing, and that is going to be very expensive for all of us in the long term.

When I have occasionally raised these concerns to Paul Martin, he invariably has replied that he shares my feelings about poverty and would like for the federal government to do more about it, but the country simply cannot afford it. This rings hollow in light of annual budget surpluses in the billions of dollars, an estimated $193 billion between 1995 and 2000.

Tax cuts, which mainly benefit the wealthy, also raise big questions about the “we can't afford it” argument. According to Murray Dobbin, the tax cuts announced in 2000 were a $100 billion gift to Canada's wealthiest citizens, with 77% of that money going to the wealthiest 8% of the population.

Á (1120)

The last thing that I'll mention that discredits Mr. Martin's response is the practice of paying down the federal debt at an accelerated rate. Everyone knows you don't pay the mortgage off early when you are too poor to send the kids to school. This is not responsible financial management.

Alternatively, if some sensible investments were made in poverty alleviation, we would probably see the transformations that took place a few years ago during some research involving welfare-dependent single mothers in southern Ontario. These women were provided with a variety of extra support and became living examples of the benefits of social investments. This is from the National Council of Welfare's description of that research.

After two years, in the study researchers found that the depression rates of mothers dropped to only 20%, from almost half. The social adjustment scores of mothers improved. Each of the services offered to the families resulted in an increased departure from welfare. The researchers estimate that the increase in parents who leave welfare is worth $300,000 for every 100 mothers. The savings in reduced use of the public health care system are additional. As well, all the costs of providing these services were completely offset by the reduction in the cost of the parents' and children's use of services of physicians, other professionals, and the child protection system. Providing child care and recreation services, even without the combination of other services, proved to be the most cost-effective and the most effective.

From a study on poverty and health, low-income women age 40 to 60 were 92% more likely to be hospitalized than their non-poor peers. One study found that lower-income groups used 43% more physician services than upper-income groups. Poverty, in short, costs the health care system money, hundreds of millions of dollars every year.

Before I finish I would like to make a few general recommendations.

Increase investments in community organizations that assist the most vulnerable Canadians: women's organizations and organizations that assist immigrants, visible minorities, first nations peoples, and people with disabilities.

Increase investments in affordable housing and provide support to community groups working to address housing needs.

Increase transfer payments to the provinces so they are able to create affordable housing, improve social assistance benefits, provide the poor with access to post-secondary education, and deliver quality health care.

Reform the employment insurance system so that more unemployed people can access it and so that it no longer discriminates against women and people who are insecurely employed.

In conclusion, we must reorient our approach to dealing with poverty in Canada. If we continue to take the same old bad-tasting medicine of tax cuts and social spending cuts, strangling the poor with our bean-counting approach, we will never be a fully productive nation that is able to compete in and navigate this global economy. As long as 16% to 18% of Canadians live in poverty, and an even higher proportion of children, 18% to 21%, we are stuck with limited productivity, high health care and education costs, chronic and intergenerational welfare dependency, social decay, and a terrible lamentable waste of the human potential of Canadians, what I refer to as Canada's real brain drain.

Thank you for your attention.

Á (1125)

The Chair: Thank you.

Now, from the Nova Scotia School Boards Association, Mrs. MacDonald.

Mrs. Mary Jess MacDonald (President, Nova Scotia School Boards Association): Thank you, Madam Chair.

On behalf of the NSSBA and its members, I want to express our appreciation for being able to have this opportunity to make a presentation.

The Nova Scotia School Boards Association is a non-profit organization representing eight school boards in the province. It provides leadership and services. It is funded by the eight-member board and promotes advocacy, partnerships with other agencies, board member training, and cost-saving programs. Member boards have a voice in deciding how the association will represent their views to the public.

In 1989 the House of Commons unanimously passed a resolution to eliminate child poverty in Canada by the year 2000. This is something the school boards do indeed embrace. In the Speech from the Throne in 1997 the government committed itself to investing in children to ensure that all children had the best possible opportunity to develop their full potential and were equipped with the capacities they needed to be ready to learn and participate fully in our society.

In its 1997 budget, the government allocated $850 million to create an enriched and simplified Canadian child tax credit. The 1998 budget provided for an additional $850 million in two steps: $425 million annually beginning July 1999 and a further increase of $425 million commencing July 2000.

The NSSBA hopes that the federal government's commitment to the national child benefits program will continue to increase the government's focus on children and youth.

Canadian children remain in need. In the school system, we are seeing it consistently. We feel that in order to actualize the national children's agenda this will require action and further action. It's going to require a budget that will support changes taking place.

In the Speech from the Throne in January 2001, the government highlighted the need to create a more inclusive society where children get the right start in life. We are experiencing in the school system that there are a staggering number of Canadian children living in poverty. Throughout the country that number has increased exponentially over the last decade.

The federal government's leadership role in this is absolutely crucial, and must include strong and meaningful financial commitment in the 2004 budget. The 2004 budget must recognize that equal opportunity will result from children benefiting from the best possible start.

The NSSBA particularly welcomes the federal government's commitment to work with aboriginal communities in the provinces and territories to secure a better future for aboriginal children. Off-reserve aboriginal children in particular have distinct needs that must be addressed in order to prepare them to enter the public education system across the country on an equal footing with other aboriginal children.

The elements mentioned thus far address the needs of children at an early age. However, we feel that interventions targeted at the 6-to-18-year age group also have an impact, and therefore it's important to conduct research and document the importance of later interventions to ensure that the national children's agenda won't just be restricted to the early years.

Á (1130)

Our parent body, the Canadian School Boards Association, launched a federal lobby campaign in March 1997 when it released its report “Students in Poverty: Toward Awareness, Action and Wider Knowledge”. There were a number of factors that showed up there that led the NSSBA to make the issue of poverty a top priority. It has remained the strong focus of our association's attention to date.

In February 1999 we carried out a survey among the principals in the schools from the province, and it resulted in the NSSBA child welfare poverty survey. This report was released in May of that year and widely distributed. The results of the survey were consistent with the statistics in campaign 2000, the 1998 report card.

We also found that schools themselves, teachers and others, administration and so forth, were already providing a number of programs by finding their own funding.

I would like to make four recommendations as a result of this.

Commit to reduce the debt of child poverty by 50% over the next five years. In order to achieve this, child benefits must provide a maximum benefit of $4,200 per child available to all low-, modest-, and middle-income families.

Commit to an investment in early childhood quality education and care services that are universal, inclusive, and accessible to all communities.

Commit to resolve a national housing crisis through the creation of an affordable housing strategy.

Commit to national investments through the provinces and territories to free some lower tuition fees for post-secondary students across Canada. We feel that our students are the most valuable resource. We have to ensure the stability of our democratic society. We have to give them an equal footing and ensure that they have every chance to become all that they can be.

The Chair: One brief comment, because your time is up.

Mrs. Jeanne Doucette (First President, Nova Scotia School Boards Association): I was just going to say that our children represent the future of our nation, and there are only a few short years in which we can help them acquire the knowledge, skill, and attitude they need as contributors to our society. We must all work together towards the goal of ensuring that they live in a healthy environment and that their needs are met both at home and at school.

Thank you.

The Chair: Thank you very much.

We will now go to Mary Boyd.

Ms. Mary Boyd (Spokesperson, MacKillop Centre for Social Justice and PEI Alternative Provincial Budget Coalition, As Individual): Thank you, Madam Chairperson.

The MacKillop Centre for Social Justice and the P.E.I. Alternative Budget Coalition extend sincere thanks for this opportunity to present our views to this committee. And I'm not presenting so much as an individual as on behalf of those folks.

The theme of our presentation is “It costs more to keep people in poverty unless you abandon them completely”.

Some of the causes of poverty we observe are high unemployment rates, lack of full-time and well-paid jobs, and cuts to unemployment insurance. For example, in 1997, one year after UI cuts had been made, a total of $62 million was taken from the pockets of seasonal workers and others who had to depend on UI. Nothing has been done to change this situation; therefore this theft from the poorer people continues. I would also include privatization as a cause of poverty.

Prince Edward Island workers have by far the lowest weekly wages in the country, and they have to work the longest hours to earn them. Recent figures place P.E.I. weekly wages at around $537 per week, compared to the national average of $685.

People on social assistance and low-income workers are much worse off than statistics reveal. This is why we recommend that the Canada child tax benefit be given to all low-income Canadians, including those on social assistance. We recommend as well that the federal government place conditions on the CCTB to prevent provincial governments from clawing back the benefits from social assistance recipients.

Second, in order to give better protection to the economically vulnerable, the Canada assistance plan should be restored. We are appalled to hear that when some people on social assistance return to P.E.I. to be near their relatives, they are given bus tickets back to where they came from. The province more or less deports them. Surely the federal government has some way of putting policies in place to prevent those practices.

Third, in keeping with our theme, we remind this committee that very little progress has been made in fulfilling the 1990 all-party House of Commons resolution to end child poverty by the year 2000. Reports such as the Canadian Centre for Policy Alternatives' “Targeting the Most Vulnerable” found that households in Ontario have incomes as low as 53% of the Statistics Canada low income cut-off. This is no surprise to those of us who watch the indicators of poverty.

Prince Edward Island's low-income population is also farther below the low income cut-off than current statistics indicate. An example of that is a former mayor who went door to door while canvassing in the provincial election and was very moved at what he saw behind the doors in Charlottetown.

In addition, low-income earners have very little recourse to justice under the charter. The level of legal aid must be increased in order to give low-income families, such as those on social assistance, injured workers, or the working poor, opportunities to obtain justice.

In the interests of time, I'll skim over what I would say on health. I will just say that Prince Edward Island has the lowest public prescribed drug expenditures as a percentage of prescribed drugs of any province or territory. We find that our drug costs and rate of prescribing in the region are very high. In Prince Edward Island, where workers earn the lowest wages, the cost of drugs is an enormous burden. These workers are often the people who have to undergo demeaning means tests, a practice that would end if we had a national pharmacare program. Also, all four Atlantic provinces do not have a universal drug plan, and the people bear the burden.

We endorse the Romanow report's recommendation. We protest that the pharmaceutical industry enjoys subsidies and breaks while the public has no way of knowing the therapeutic value of the drugs we consume. We recommend that the practice of evergreening drugs be discontinued and that new drugs be subject to a truly scientific procedure, as outlined by the Canadian Health Coalition.

Poverty is accompanied by stress and financial problems, which threaten the health of poorer people. The WTO estimates that people in the lower income categories have twice the risk of serious illness--and even premature death--of those in the top income brackets. Health Canada states that nearly five million Canadians in the lowest income brackets are five times more likely to report poor or fair health compared to those in the highest brackets.

Á (1135)

Social assistance recipients depend more and more on food banks and soup kitchens, as do the working poor families on inadequate incomes. Many other people endure poor and dangerous working conditions and end up injured and usually in poverty. These conditions cause people to develop health problems. Add to this a safety net that barely exists thanks to cutbacks and $100 billion in tax cuts a few years ago and this is very costly to the country, as people in the lowest income brackets have twice the rate of hospitalization of those in the higher brackets.

Dennis Raphael, associate professor of health policy at York University, has opened the eyes of many with his findings that poverty caused 6,366 deaths and cost nearly $1 billion per year in heart disease costs.

In fact, statistics reveal that poverty is very costly. Hundreds of millions of dollars in health care costs could be saved by implementing the Romanow report, investing more in prevention, especially prevention of poverty, and restoring the social safety net. Not only is poverty costly in terms of causing poor health, it destroys social life and causes much unnecessary suffering.

The time to show compassion is long overdue. It is past time that we take the determinants of health seriously. Let's look at the following statistics. Those in poverty suffer more chronic illnesses, and 40% of these illnesses could be prevented, thereby saving money and enriching society. Women on low incomes between the ages of 40 and 60 are likely to be hospitalized 92% more than women of the same age in higher income brackets.

Finance Minister John Manley claims the surplus for this year is $2.3 billion, while the Canadian Centre for Policy Alternatives predicts a surplus of $6.6 billion and much larger surpluses in the coming years. The finance minister states that he will give $2 billion to the provinces for health only if it is there when the books are closed. This is equivalent to saying that the poor and sick should continue to suffer from lack of money, poor health, and even misery.

Money is needed to improve the quality of our health care system, to establish a national pharmacare program, to end the slavery of many families who have to look after sick family members because there is no home care program, to end child poverty and adult poverty as well, and to restore the social safety net to pre-Michael Wilson and pre-Paul Martin days.

In 1998, the richest 20% of Canadians had 8.5 times as much disposable income as the poorest 20%, and Canada is slipping in relation to health and well-being when compared to many of the OECD countries.

Finance Minister Manley boasts that the federal debt was reduced by $52.3 billion and that Canada now saves $3 billion each year in interest. What good is this saving if it is not reaching those who are most in need? The $7 billion surplus of last year all went to paying down the fiscal debt. None of it went to the social debt, which is on the increase.

Overcoming the social debt, which this country accumulated through cutbacks to social programs and tax cuts, must be the first priority. Why is the government willing to sacrifice $20 billion a year in capital gains costs while continuing to ignore the social debt? Poverty costs the government money, but not nearly as much as tax cuts to the wealthy. The elimination of poverty is a matter of political will.

Thank you.

Á (1140)

The Chair: Thank you very much.

Now, just before we go to Mr. Wilde, I note that his is a CICA submission.

Mr. Peter Wilde (Partner, Raymond Wilde Chartered Accountants): Yes, ma'am.

The Chair: Are you talking on behalf of CICA?

Mr. Peter Wilde: Basically I am here to indicate local support for CICA's submission.

The Chair: Go ahead, sir.

Mr. Peter Wilde: I understand that CICA didn't have an opportunity to appear before the committee, so I hope to be able to go through this.

The Chair: Go ahead.

Mr. Peter Wilde: I don't intend to go through the whole presentation, but I would like to look at certain highlights.

Mr. Shawn Murphy: You're from the Canadian Institute of Chartered Accountants, is that right?

Did they not appear before us?

The Chair: No, that was the CGA.

Mr. Shawn Murphy: CGA?

The Chair: CGA appeared.

Mr. Shawn Murphy: Perhaps I have read the brief, though, from the chartered accountants--

The Chair: Perhaps they have already appeared.

Mr. Peter Wilde: It's my understanding from talking to our government affairs people in Toronto that CICA has not been able to make a presentation this year to the committee, although it has made a submission.

Mr. Shawn Murphy: I read their submission. I'm sorry that I---

Mr. Peter Wilde: That's quite all right. I'm just indicating local support for the CICA submission.

The Chair: Essentially, you're submitting their brief. I want to know if you're speaking on behalf of CICA, because this is a CICA brief.

Mr. Peter Wilde: Yes. Essentially I'm here with the consent of the Canadian Institute of Chartered Accountants.

The Chair: That's fine. That's what I want to know.

Mr. Peter Wilde: I don't really want to take a lot of time by going through the preamble. Yes, the government has achieved significant progress in budgetary reform and in debt reduction. CICA sees debt reduction as a major contributory factor in eventually dealing with all of the concerns that have been so eloquently expressed here today by previous presenters.

We were very pleased to note in the finance minister's presentation yesterday that Canada, for the first time in a very long time, has spent more money on social programs than on debt service. It's a major concern that interest costs eat so significantly into revenues of the federal government.

If I may refer to page 4 of the presentation and the heading “Accelerated Program Spending”, the numbers there indicate that government spending and revenue initiatives announced in the last budget will cost $17.6 billion over the three-year period of 2003-05. They're going to spend an additional $6.4 billion in 2002-03, $4.7 billion in 2003-04, and $6.5 billion in 2004-05. Altogether, this means that there's an increase from $124.3 billion in 2001-02 to $149.6 billion in 2004-05. That's an increase of 20% over a relatively short period of time. We applaud the government's initiatives in this area.

With the significant spending and tax commitments made by the government, we believe it's more important now than ever to assess the future prospects for the economy as a precursor to formulating budget advice. Given the longer-term nature of many of these initiatives, changes in the economy could have important implications for the degree of fiscal room that may be available in future years for further commitments.

The economy has had a series of problems in 2003, none of which I propose to go into in detail. We've all heard about mad cow disease, SARS, and weather-related and power generation problems, which have had adverse impacts on the economy. I think they were well explained to the committee by the finance minister yesterday.

Our objective in making this presentation is to look at potential fiscal scenarios that are available to the federal government as it goes forward in its budget-making process. I now would like to bring everyone's attention to the bottom part of page 7 of the presentation, please, where we have a “base case scenario” for 2002-03. These are the federal government's own numbers. They are projecting that revenues will increase from 2002-03 and $178.7 billion to 2008-09 and $233 billion. I'm not going to calculate expenses. Program spending in the same fiscal periods is expected to increase from $138.6 billion in 2002-03 to $182.3 billion in 2008-09. It's a $44 billion increase in expenditures on an annual cumulative basis. The government is going forward, doing the best it can, I'm sure.

With public debt charges at $37.2 billion, it's going to take $37.2 billion in 2002-03 just to pay the interest on the deficit. That's expected to remain fairly static and in fact increase to $39 billion in the year 2008-09 even if the debt continues to be paid down.

The government's numbers predict that surpluses will rise through the period to the potential for the 2008-09 surplus to be almost $12 billion. Again, we use the government's own numbers. A contingency reserve of $3 billion and economic prudence at $4.5 billion will leave, in the year 2008-09, $4.4 billion available for additional initiatives in support of the submissions made by previous presenters here today.

Á (1145)

The problem that we have is that in the current year and in the next two fiscal years there is very little room for manoeuvrability in the government's own numbers.

Basically, what we are saying is that once the $3 billion annual contingency reserve and increasing amounts of economic prudence are factored in, this scenario would effectively suggest that there is no room available for new initiatives until about 2006. We have prepared two alternative scenarios on two different assumptions.

The first assumption is what happens if in fact there is a slower rate of growth in program spending than under the original base case while the rate of revenue growth remains the same?

We are assuming that the government can hold program spending basically constant per capita in terms of increasing inflation by 3% or 2% with a 1% in growth of the population. This obviously shows a very much more healthy financial picture. In fact, it could lead in 2005 to a $5 billion surplus, a $9 billion surplus in 2006, and a $12 billion surplus in 2007.

We are not advocating that all of this surplus be used for debt reduction. We see this as an opportunity to plan effective program spending increases once the money is proven to be there and to deal with the very legitimate concerns that have been expressed here this morning.

On the next page we look at an alternative scenario where--and we feel this may be more likely than the second one, actually--we assume that the growth in revenues will be at the average growth for the period from 1997 to 2005, which is about 3.3% annually, and that program spending growth will remain the same as originally projected on the base case. In those cases, we end up at the end of 2009 going into the hole by $2.8 billion, and of course if we want to maintain a contingency reserve in economic prudence, we just won't be able to.

Restricting revenue growth over the medium term to the average rate of the increase over the last seven years has significant negative implications for federal government finances. In 2005-2006 there will be an underlying surplus of only $600 million. The government would be unable to devote the $3 billion contingency reserve to debt reduction. And starting in 2006-07 the budget would only be balanced by spending amounts set aside for contingency reserve and economic prudence. The absence of an underlying surplus in those years would mean the government would have to dip into fiscal cushions to avoid a deficit.

Á (1150)

The Chair: I'm afraid I'm going to have to ask you to wrap up.

Mr. Peter Wilde: We believe that the budget should take a longer view of the country's financing and make commitments for a new mandate. We expect a new leader to exercise a strong hand in managing the country's finances, to continue to reduce the debt and the levels of taxation, and to fund a range of important initiatives for the future.

Our analysis indicates that tough decisions must be made. With the ambitious spending and tax cut initiatives already in place, and an economy that continues to fluctuate, the need for caution in budgeting remains.

Thank you.

The Chair: Thank you very much.

Now I will do six-minute rounds.

Go ahead, Mr. Jaffer.

Mr. Rahim Jaffer: Thank you, Madam Chair, and thanks to all the presenters. I'll keep my questions limited and brief.

I would like to start with Mrs. Reed. Obviously you are an expert in the area of poverty and you have done a lot of work in this area. I need a little bit of clarification, especially because you had talked about the negative impact of reducing taxes and that to some extent that doesn't really help low-income people. One of the things that has to happen, from what you have presented, and others as well on the panel, is that there needs to be an approach to deal with poverty more substantially, especially on the ground, where people are most affected by it.

If you are going to look at tax relief as one of the options to help low-income people, I was under the impression that you would raise the basic exemption for especially those types of people you just spoke about who are currently discriminated against--for instance, single mothers who are trying to work and what not.

One of the proposals we have talked about was raising the basic exemption to $10,000 so that you would effectively remove a significant number of low-income Canadians from the payroll. Now, I'm not saying that's the only solution to poverty. Obviously there has to be an approach, according to what you said, but I'd like your feedback on that particular issue. Do you see targeting it that way as being useful for people in poverty?

Mrs. Katherine Reed: I completely agree with you. It's true, it won't address poverty issues for people who are living in housing they can't afford. It won't address poverty issues of people who have incomes of less than $10,000, of whom there are many in our province and across the country. It would help some of those people and it would lift the burden for some of those people.

Á (1155)

Mr. Rahim Jaffer: Ms. MacDonald, you spoke specifically about the child tax credit. I know there was some movement in the last budget. There was an increase in that particular tax credit. It's being phased in over a period of time, and I think it's much less than what you've recommended, if I'm not mistaken. I don't have it in front of me, but I believe it was $4,200 or something.

Mrs. Mary Jess MacDonald: Yes, it was.

Mr. Rahim Jaffer: Do you see that as something that still needs to be addressed so that the tax credit would be increased and implemented immediately? I think that was one of the criticisms of the government, that it wasn't implemented fast enough and didn't go high enough.

Mrs. Mary Jess MacDonald: We are certainly recommending that increase as soon as possible, because we see more and more families falling behind. The numbers are increasing, so we would like to see that being increased as soon as possible, because it would be helpful.

Mr. Rahim Jaffer: I appreciate your other suggestions in your brief, because I think, as I mentioned earlier, they have to be taken together. You can't just focus on the tax credit issue. You have to look at the other poverty issues. I appreciate that.

Mr. Wilde, you talked about the different scenarios that the chartered accountants presented in their brief regarding the different scenarios of the government in meeting their obligations, given the potential spending increases they're proposing.

One of the things I wasn't clear on was when you specifically talked about the idea of debt reduction. Is there a suggestion that your organization would say that the contingency reserve, if there is anything left, be used to pay down debt? What's your suggestion there when it comes to that particular aspect of debt reduction? Is there any equation you would suggest or put forward?

Mr. Peter Wilde: The real serious concern that we have is the amount of money that is collected in taxation by the federal government that is applied to debt service in interest. The only way to reduce the amount of interest that you pay is to reduce the debt.

There has been significant debt reduction. We started out somewhere at $570 billion, and we've paid it down collectively now to about $520 billion, which is a real creditable achievement. That keeps the interest costs down. If we were to eliminate the interest costs, there would be significantly more money available for future programs to alleviate the concerns that are expressed by--

Mr. Rahim Jaffer: So there's no particular suggestion then that you have as to what should be the amount the government should pay down?

Mr. Peter Wilde: No. I can only speak personally on this issue; I can't speak for CICA. It might be a good idea to consider, as just happened, that there was a higher than expected surplus announced just yesterday for the year 2002-03. It's unfortunate that it all had to go to the debt.

I think there should be some sensible allocation to reduce federal debt. Maybe there was an opportunity there to do something to alleviate the concerns.

If I may, we work with the tax system, and if you crunch the numbers, it's possible for a family with an income in excess of $90,000 to still receive child tax benefits. We think there's room for manoeuvrability there in order to put the money more where it should go, rather than where it's not really needed.

The Chair: Thank you very much.

Now we'll go to Mr. Wilfert, please. Six minutes.

Mr. Bryon Wilfert: Thank you, Madam Chair.

Mr. Wilde, your comment about spending more on social programs this year rather than on servicing the national debt is something that seems to be missed on a lot of people. I think it's extremely important that we emphasize just how important is the issue of the debt.

I don't agree with Ms. Boyd about the $3 billion in interest. I don't know where we would get the money if we did not save it on the debt. We could obviously use it for social programs. I don't think that's an argument I would buy. I think it's important that we not continue to mortgage the future. We've mortgaged it too long.

Ms. Boyd, I'd be interested in your assumption that the federal so-called surplus is going to be $6.6 billion. On what do you base that?

Ms. Mary Boyd: I base it on the prediction of the Canadian Centre for Policy Alternatives. It predicts even bigger surpluses beyond this, and it has been dead right. When it started predicting federal surpluses, over the years it has come within $300,000. That's how accurate it is. It uses a different way of approaching and reporting on federal surpluses and the debt. I think it's very worth while to see and hear what the Canadian Centre for Policy Alternatives is saying and doing.

I want to quickly say one other thing about the debt. Besides the money from taxes, we should not forget another way to reduce debt that's very important, and that is the ratio of debt and deficit. That depends on the economy, because as the economy grows, more money comes into the economy. It's not just calculating certain figures in order to get rid of the debt. Some of that has happened with the kind of growth we've had in the economy. I think it's good for us to remember that as well.

Â (1200)

Mr. Bryon Wilfert: If in fact the Canadian Centre for Policy Alternatives turns out to find $4 billion that we don't have in the next five months before the fiscal year ends, maybe we should hire it, and fire the finance department, because I can tell you that---

Ms. Mary Boyd: Okay.

Mr. Bryon Wilfert: --as the Parliamentary Secretary to the Minister of Finance, I would see nothing at the moment that would even suggest anywhere near that. I'd be the first one to be very happy if we had those extra $4 billion, but I would be most surprised. I guess we'll stay tuned.

On the issue of dealing with homeless people and housing, this is probably one of the most frustrating issues we deal with as a federal government. We had the previous government of Ontario--and coming from Ontario, I can tell you the difficulty when we put our money down and the province puts no money down but then uses municipal dollars--essentially taking credit for something that it had not done.

Therefore, very few units, if any, are actually being built. It's everyone's issue; it's everyone's problem. It's not a federal problem; it's everyone's. Yet the difficulty is getting the right mechanisms. We often talk about mechanisms in terms of this.

Yes, we've eliminated a lot of people off the poverty list in the last ten years, but I would agree with Mr. Jaffer. I have suggested more than $10,000. I would support up to $15,000. I think there's a lot of evidence that suggests that in fact it would make it much more palatable but at the same time not get the clawbacks.

You know what will happen. If you raise it, then they'll say maybe on the child tax credit we should cut this back, or maybe some provincial governments will say that you won't qualify for certain programs. That needs to be examined, but again, it's getting that mechanism for housing.

I'm not really interested in homelessness. I'm interested in getting people into housing that's permanent, and the faster we can do that, the better. However, we don't seem to be able to get some of the provinces--and some of them are doing a better job than others in terms of getting these agreements. Remember, we need to negotiate with each province.

Mrs. Katherine Reed: Can I respond to that?

Something happened in Canada around 1995. It's called CHST, which is supposed to stand for Canada health and social transfer, but back where I hang out we call it “cuts hurt so tough”. I think what's happened to the provinces is that we have chiselled away at the transfer payments to the point where provinces are left with no ability to manage at all.

I understand from our Department of Community Services, which is the nest that our housing services division fits into, that the housing services division actually has been eliminated because we have new cuts in Nova Scotia now, 1% across the board.

The provinces have been completely hobbled in their ability to do anything as a result of the most significant cuts ever made to the federal transfers in the history of the country. I hear the provinces and the federal government going back and forth blaming each other for not doing affordable housing, which I've been trying to work around for about 10 or 15 years.

It boils down to the Province of Nova Scotia right now not knowing how it's going to maintain the public housing stock it has, most of which is over 20 years old. It's in deplorable condition. It also does not know how it will come up with money to match the $19.7 million that will be given by the feds under the affordable housing agreement.

Â (1205)

The Chair: Thank you very much.

Mr. Brison.

Mr. Scott Brison: Thank you, Madam Chair.

Thanks to all of you for your presentations.

Just a quick point on raising the basic personal exemption to $15,000 per year: it would take off the tax rolls 2.2 million low-income Canadians who are paying taxes today. I think that gives you an idea of the impact of that kind of approach.

There's another idea too. A lot of people are in what is referred to as a welfare trap, particularly people with children. If they take a job, they're making a decision to bring less money into their household. You can't blame them for deciding to take a course of action that will bring more money in, even though people want to work. In the U.S., there's something called an earned income tax credit, which enables people, particularly during a transition period, to not be taxed on earned income even when they're on social assistance, to try to develop into more full-time employment. I think we have to find a way. Maybe on the federal side there are limited levers, but one of the things the federal government does have is tax levers. There may be ways through the tax system. I'd appreciate comments on that.

There was a very good explanation here today about that on behalf of the people from Hope Cottage. The question people ask themselves is “Why are able-bodied people not able to find work?” For instance, we're in a city here, Halifax, which has relatively low unemployment. As a city, it's a regional centre. It's a regional centre for economic activity, but it's also a regional centre for social disparity. You have people from all over Atlantic Canada who are drawn here. For instance, there are the issues of mental illness and addiction, as well as the stigma of mental illness, which prevents us from having a more fulsome discussion as to how to address it.

Are there provinces you're aware of that perhaps are doing a better job of addressing those issues? I know that in some ways how it's addressed is ultimately provincial. The funding mechanism in terms of transfers is federal, but there are provincial things that can be done. I'd appreciate hearing about what you're aware of from other provinces or even states in terms of addressing the issues of addiction and mental illness, which strike me as something that we're not doing enough to address.

The Chair: Go ahead.

Mr. Michael Burke: No, I'm not really familiar with what's going on across the country specifically. We do cover the country from coast to coast, but getting into the specifics....

If I could just divert back to one issue, I think Mr. Wilfert's comment was that many people have been eliminated from the poverty rolls. I would say they've been eliminated from the welfare rolls, but they've just transferred to another organization to subsidize their needs. We see these people. Just the term “able-bodied” is a good point, I think. These people are not employable. We're going to have these people with us all the time. I think that when their funding gets reduced--these people are not paying taxes, they're getting $365 a month--all they do is go from one door to another.

Mr. Scott Brison: But it does speak to a prejudice that we as a society have against mental illness, in that we don't treat it as an illness, as a disability. If somebody is physically disabled, we treat it differently than if someone is mentally disabled.

On addiction, I wanted to talk about a specific kind of addiction. In many provinces--I'm not sure how many--there's been a growth in the degree to which provinces depend on revenues from gambling, whether it's VLTs or in the casino hotel. A few years ago, I read a report from The Economist magazine that analyzed the benefits or lack thereof in gambling. It came to the conclusion that the only time there's a benefit to a jurisdiction is if the gamblers, the patrons, come from other places and gamble, if they're recreational gamblers who travel to a destination point like Las Vegas or Reno or something like that and then go back home. In fact, the societal cost of gambling to jurisdictions that derive their revenue from local clientele exceeds the actual revenue.

What is your experience on the ground here in Nova Scotia? Is gambling addiction a widespread issue, for instance, for people here and for clients of Hope Cottage?

Anyone can chip in. I see in my own constituency, a rural Nova Scotian constituency, significant evidence of a societal cost.

Â (1210)

Mrs. Katherine Reed: I've just read a study done in the States in which they looked at where the poor neighbourhoods were in a particular state and where the wealthy neighbourhoods were. They found that most of the lottery tickets are sold in the poor neighbourhoods. Overwhelmingly, most of the lottery tickets are sold there. I probably would argue that for most VLT machines and those kinds of things the focus is on people with a toonie or a loonie, not a lot of money.

The Chair: I'll take another couple of comments on this point.

Ms. Boyd.

Ms. Mary Boyd: For our alternative provincial budget we refuse to take those revenues into consideration when calculating the revenue of our province, especially revenues from video lottery terminals. We do that because we know of many stories where people have become addicted to video lottery machines. That's one area that is very high risk.

I don't know what you do in relation to, say, people who can buy a ticket and even go for a few minutes to the casino and then walk away and are moderate with it. The trouble is that many people get addicted. We are aware of that. We have been trying to draw that home to our governments: that there are other ways to raise revenues besides revenues from gambling. In fact, we shouldn't be raising it that way because it is a tax mostly on the poor.

The Chair: Go ahead.

Father George Leach: My comment is a simple one. If we look around the room, I bet you there are not very many of us that put in loonies and toonies and play the VLTs. I want to say this carefully and compassionately: we live at a level such that we don't need that. If we do it on occasion, it's for fun. I'll buy a little lotto ticket for somebody at a birthday party, but we don't go there hoping to win so much that we'll be out of our poverty, because we don't live there. An intelligent person who thinks it through doesn't put a lot of money into gambling. They just know that it's not designed for them and a lot of people to get that out of it.

Mr. Scott Brison: There's just one more issue that is important.

The Chair: There's always one more issue, Mr. Brison, and--

Mr. Scott Brison: I know, but in a city like Halifax that is experiencing great growth and where you hear a positive story this morning from the mayor, and there are positive stories, you have real estate crises--

The Chair: It's Mr. Murphy's time now. Mr. Brison's mike is off.

Mr. Murphy, go ahead.

Mr. Shawn Murphy: Thank you very much, Madam Chair.

Thank you, everyone, for your presentations. I certainly enjoyed hearing the presentations this morning.

I have just one comment on the previous discussion on the predictions made by the Canadian Centre for Policy Alternatives. Ms. Boyd is quite correct, in that it's scary how close they've been over the last four years--not totally correct, but close. How they come about it I don't know. Whether it's good luck or good management, they have been very accurate.

I want to follow up on this whole issue of affordable housing. Perhaps I'll ask for different responses. As you know, the federal government did put in some money in the last couple of years. It probably wasn't near enough, but it was some. There's a problem, an inter-jurisdictional problem, that we're getting. In some provinces it's worked very well. I think that in Quebec it has worked well, but in some provinces it hasn't worked as well.

Then, too, the second issue is the delivery mechanism. In my own province, we have cooperatives. I think it's worked well. We have some kind of a subsidy for private developers, about $25,000 per unit, monitored through their rents. There are housing units owned by the provincial government, set up with their own separately administered housing corporations.

Your organizations have a lot of experience in these delivery mechanisms. In your experience, what is the best way to deliver affordable housing?

Mrs. Katherine Reed: There is no one-size-fits-all model. You need different models for different groups of people. Co-op works fantastically. Co-op housing is a huge success, not a complete success, but there are many stories of success there. Public housing has its place as well, as do emergency or short-term emergency shelters. They have their place in the mix too.

The bottom line is that there has to be some investment in it. Not only does the investment have to be in the capital cost of buildings, but also in the developmental stage, which is what has kept the women's centre in Antigonish from developing affordable housing over the last decade or so. We have searched high and low. The Sisters of St. Martha of Antigonish was the only place where we found any substantial amount of money to do the pre-development, the pre-building development stage. Now we are just going today to negotiate about seed funding through CMHC, but it's a very small amount of funding.

Â (1215)

Mr. Michael Burke: I think we have to find some kind of mechanism so that the people living in the housing have some ownership. We can look at what happened in Halifax 30 or 40 years ago now, I guess, in Africville, where people lived along the waterfront in fairly dilapidated-looking housing, but they owned it. We uprooted them and we moved them into city housing and we haven't had rest since. People must have that ownership, that pride of ownership. It's very difficult, but when we can get that, whether it's co-op or whatever, we must have some kind of ownership mechanism for these people.

Mr. Shawn Murphy: I have nothing else.

The Chair: Mr. Stoffer.

Mr. Peter Stoffer: Thank you, Madam Chair.

Thank you all very much for your presentations.

It does indicate the state of our society when Hope Cottage has to expand its facility or when 5% more people in the country have to utilize food banks, yet we hear that the paying down of the debt is good and tax cuts are good, etc. The question is, good for whom?

I believe in a three-part angled approach to debt and deficit. I believe that one-third of any surplus should be used to pay down debt. One-third should be for tax relief, like the removal of the HST from home heating oil, etc. Another third should be for reinvestment in programs, not just in social programs but in infrastructure like the coast guard, the military, etc.

Madam, I'd like to ask you a question in regard to AIMS, the institute. They will be here this afternoon. I'm not sure if you will be, but if you could pick up their brochure at the back of the room, I would sure love to have your reflection at a later time on their points of view, because their preamble to us is completely different from yours.

You're absolutely right when you say “What about our social debt?” We've concentrated so much on and even set targets for certain debts. You heard the former finance minister, now the next prime minister, barring unforeseen circumstances, talk about how by hell or high water we're going to get the fiscals straightened out. Great, but he's never said that, and no one has really ever said that, about the poverty levels in this country.

If you were in the House and could ask the former finance minister, the new prime minister, one 30-second question, what would you ask him? What would you tell him?

Mrs. Katherine Reed: When is the federal government going to shift its focus from enriching the rich to taking care of the ordinary people and the poor in this country?

Father George Leach: I would ask, where is the political will to make that kind of change? The data is in front of us. What stops the one-third, one-third, one-third, for example? What stops it? Why is it always focused on debt reduction?

Ms. Mary Boyd: I would ask why the social debt is growing--why the policies and cutbacks? What about the promises that when the debt started to disappear the social programs would be restored?

Most of all, I would ask too, “Are you the type of prime minister who blames the poor, the people who need social services and a social safety net, for the debt in the first place?” Because that's what happened when we got into this debt. They attacked the social programs and said that there was too much being spent on them, when in fact 94% of the debt and deficit was coming from high interest rates and tax breaks for the wealthy.

My question would be on that line. It would be “Are you going to continue to blame social programs and blame the people who need them for the debt and deficit? Or are you going to look at the real cause, do something about it, and restore what we once had, therefore restoring Canada in the eyes of the world as a more compassionate country that takes care of its people?”

In relation to that same question, I would ask, “Are you going to further jeopardize our social services, our health, our education, our water, and everything for trade agreements?” That's a big area, and we have to look at it.

Â (1220)

Mr. Peter Stoffer: Madam Chair, one of the reasons why the submissions from the CICA are so very important, especially to me, is that they're very balanced in their approach. I've heard them many times talking about publicly funded health care, infrastructure programs, and the environment, generally topics you don't normally get from chartered accountants. I just wanted to thank Mr. Wilde very much for that as well.

Mr. Wilde, if you were in the House of Commons and could ask the future prime minister a 30-second question on balancing the needs of fiscal concerns and social concerns, how would you ask that question? What would you ask?

Mr. Peter Wilde: It's always been a real puzzle to me as to why Canada, with so many resources, such a wealth of opportunity and skilled people, has the difficulties it has, both in terms of fiscal management and effectively helping those of our citizens who are disadvantaged. I think we could do a lot more and do a lot more a lot more effectively. To my vision, a significant part of the problem is with too many levels of government.

Mr. Peter Stoffer: Madam Chair, I would think--and I don't want to defend the government--that one of the government's valid arguments is that it gives all this money to the provinces and they turn around and are not accountable for it. You've heard Premier Klein and Premier Charest say “Just give us the money and we'll worry about it later”, which I think is absolutely wrong. Accountability is so critical.

Having VLT machines right next to the Hope Cottage or liquor store is just madness, and if I had my way they'd be gone in a heartbeat. But it's not only the federal government that needs to bear this concern, it's also provincial and municipal governments.

Very quickly, all four groups here, how would you get all these people at the table so that we're at least singing out of the same hymn book? It can't be just the federal government. The province here is going to give $140 million in tax cuts. He bragged about it yesterday, Madam Chair, saying “Boy, $60 million from the federal government, I know how to spend that on health care”.

Just reduce the amount to which you're going to benefit, reduce the corporate welfare you give to the Michelin store, Sobeys, etc., and you would have the resources in order to meet some of the needs we have. How can you very quickly get these people together?

Mrs. Katherine Reed: I have no idea. Sorry.

Mr. Peter Stoffer: That's the problem.

The Chair: Mr. Murphy does have a question.

Mr. Shawn Murphy: I just have a comment following up on Peter's. Yesterday they appeared in Ottawa with Minister Manley and they made an agreement to fund health care by an additional $2 billion. When I read today's Globe and Mail the first thing I saw was “Alberta accepts health cash but rejects the health councils”.

Mr. Peter Stoffer: That's right, exactly. There's the problem.

Father George Leach: Who has the authority then? Where does the authority rest, vis-à-vis the relationship of the federal to the provincial? Is there any line of responsibility between that?

The Chair: There is a health accord that they signed on to, but the flesh and the detail of the different responsibilities and accountability mechanisms, part of which is a health council, that was part of the agreement. We're still working on that, and that's going to take some cooperative federalism. I think cooperation is what taxpayers are more and more likely to demand.

Mr. Peter Stoffer: Hear, hear.

The Chair: We are at the end of our meeting right now.

Just for the record, Mr. Wilde, while we had this meeting going on I had my clerks contact our Ottawa clerks, because it would be very unusual for CICA to ask to be a witness here and not be given the time. In actual fact, it did communicate with the committee clerks in August saying that it wanted to submit a brief only, and had not asked. That's my information, because that wouldn't happen.

This committee in seven weeks will have seen 562 witnesses by the end of this Friday, representing 343 organizations, plus some of the people that just put in briefs.

Sometimes when I sit in this chair I feel very mean to my colleagues, and I certainly don't intend to. All your voices, especially Scott.... Scott is the most consistent one. He has a few more questions, and I understand that.

Mr. Scott Brison: An inquiring mind.

The Chair: Do you see what I mean?

What we have to do is give you all a chance, especially this year, because we will, at the end of this week hopefully, start to write a report. However, events could overtake us. We don't know. I think in this year it's even more important that you've had your time to put your voice and your concerns on the record, but not only that, your ideas.

I feel that this is such a valuable process, whether we sit in Ottawa or in different cities across the country; this is an education of each other. It's good that the CICA representative sits beside the social agencies and people who have homelessness issues, because it actually does show the prioritization, the challenges, and the choices that governments have to make. We need to make better choices and do it more efficiently, because sometimes a lot of money is spent but we are not getting the results.

Thank you very much for your--

Â (1225)

Mrs. Mary Jess MacDonald: I want to answer that question if I could.

The Chair: Go ahead, Mrs. MacDonald. I'm going to give you the last word.

Mrs. Mary Jess MacDonald: I think our organization would be looking to the federal government to provide the leadership and substantial funding to make the necessary policy changes, and work on mechanisms that would have all levels of government working with the people to address what we think is a very significant poverty problem.

The Chair: With that, I will adjourn the meeting for about an hour or less.