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, October 22, 2002

0935

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

Mr. Mark Goldblatt (Senior Consultant, Co-operative Housing Federation of Canada)

0940

The Chair

Mr. Jim Facette (President, Coalition to Renew Canada's Infrastructure)

0945

0950

The Chair

Mr. Pierre Beauchamp (Chief Executive Officer, Canadian Real Estate Association)

0955

1000

The Chair

Mr. Paul Ledwell (Chairperson, Canadian Consortium for Research)

1005

1010

The Chair

Mr. Richard Harris (Prince George—Bulkley Valley, Canadian Alliance)

Mr. Mark Goldblatt

Mr. Richard Harris

Mr. Mark Goldblatt

Mr. Richard Harris

Mr. Mark Goldblatt

Mr. Richard Harris

Mr. Jim Facette

1015

Mr. Richard Harris

The Chair

Mr. Richard Harris

Mr. Paul Ledwell

The Chair

Ms. Pauline Picard (Drummond, BQ)

1020

Mr. Jim Facette

Ms. Pauline Picard

Mr. Jim Facette

Ms. Pauline Picard

Mr. Jim Facette

Ms. Pauline Picard

Mr. Jim Facette

1025

Ms. Pauline Picard

Mr. Jim Facette

Ms. Pauline Picard

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Mr. Pierre Beauchamp

Mr. David Humphreys (Federal Affairs Adviser, Canadian Real Estate Association)

Mr. Shawn Murphy

Mr. David Humphreys

Mr. Shawn Murphy

Mr. David Humphreys

1030

The Chair

Ms. Maria Minna (Beaches—East York, Lib.)

The Chair

Mr. Mark Goldblatt

Ms. Maria Minna

Mr. Mark Goldblatt

The Chair

Mr. David Humphreys

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

1035

Mr. Mark Goldblatt

Mr. Pat Martin

Mr. Mark Goldblatt

Mr. Pat Martin

Mr. Mark Goldblatt

Mr. Pat Martin

Mr. Pierre Beauchamp

Mr. Pat Martin

Mr. Pierre Beauchamp

Mr. Pat Martin

Mr. Pierre Beauchamp

The Chair

Mr. Pat Martin

The Chair

Mr. Pierre Beauchamp

Mr. Pat Martin

Mr. Pierre Beauchamp

Mr. Pat Martin

Mr. Paul Ledwell

1040

Mr. Pat Martin

Mr. Paul Ledwell

The Chair

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

Mr. Paul Ledwell

Ms. Sophia Leung

Mr. Paul Ledwell

1045

Ms. Sophia Leung

Mr. Mark Goldblatt

Ms. Sophia Leung

Mr. Mark Goldblatt

Mr. Pierre Beauchamp

The Chair

Mr. Scott Brison (Kings—Hants, PC)

1050

Mr. Pierre Beauchamp

The Chair

Mr. Gregory Klump (Senior Economist, Canadian Real Estate Association)

1055

The Chair

Mr. Paul Ledwell

The Chair

Mr. Tony Valeri (Stoney Creek, Lib.)

1100

Mr. Gregory Klump

The Chair

Mr. Paul Ledwell

The Chair

1110

Ms. Maura Volante (Coordinator, Alliance to End Homelessness)

1115

1120

The Chair

Mr. Robert Blakely (Director of Canadian Affairs, Building and Construction Trades Department, AFL-CIO)

1125

The Chair

Mr. Claude-Paul Boivin (President, ACEC, Association of Consulting Engineers of Canada)

1130

Mr. Pierre Shoiry (President, GENIVAR inc.; Chair, Board of Directors, Association of Consulting Engineers of Canada)

1135

The Chair

Ms. Jean Szkotnicki (President, Canadian Animal Health Institute)

1140

The Chair

Ms. Jean Szkotnicki

1145

The Chair

Ms. Jean Szkotnicki

The Chair

Mr. Richard Harris

The Chair

Mr. Rob Peacock (President, Association of Fundraising Professionals)

1150

The Chair

Mr. Richard Harris

Mr. Robert Blakely

1155

Mr. Richard Harris

Mr. Robert Blakely

Mr. Richard Harris

1200

The Chair

Mr. Scott Brison

Mr. Robert Blakely

Ms. Jean Szkotnicki

1205

The Chair

Mr. Roy Cullen (Etobicoke North, Lib.)

Ms. Jean Szkotnicki

Mr. Roy Cullen

Ms. Jean Szkotnicki

Mr. Roy Cullen

Mr. Rob Peacock

1210

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

Mr. Claude Paul Boivin

The Chair

Mr. Pat Martin

Mr. Robert Blakely

Mr. Pat Martin

1215

Mr. Robert Blakely

Mr. Pat Martin

Mr. Robert Blakely

The Chair

Mr. Gary Pillitteri (Niagara Falls, Lib.)

1220

Mr. Pierre Shoiry

Mr. Robert Blakely

Mr. Gary Pillitteri

Mr. Robert Blakely

Mr. Gary Pillitteri

Mr. Robert Blakely

1225

Mr. Gary Pillitteri

Mr. Robert Blakely

The Chair

Ms. Maria Minna

Mr. Robert Blakely

Ms. Maria Minna

Mr. Claude Paul Boivin

Ms. Maria Minna

1230

Mr. Claude Paul Boivin

Ms. Maria Minna

The Chair

CANADA

Standing Committee on Finance

NUMBER 002

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, October 22, 2002

[Recorded by Electronic Apparatus]

¿ (0935)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): —[Technical difficulty--Editor] —actually under 83.1, and we'll amend the notices to reflect that.

We have witnesses this morning: from the Co-operative Housing Federation of Canada, Mark Goldblatt, senior consultant, who will be presenting first; from the Coalition to Renew Canada's Infrastructure, Jim Facette, president; from the Canadian Real Estate Association, Pierre Beauchamp, chief executive officer, and senior economist Gregory Klump; and from the Canadian Consortium for Research, Paul Ledwell, chairperson, and Paul Jones, who is assisting today.

Thank you very much for joining us. We also thank you for submitting your briefs in advance. This has facilitated our translation and all the members receiving them. I would invite you to take approximately eight minutes to kindly speak to your brief as opposed to reading from your brief, if at all possible. Then we'll hear from all of you as a panel, even though you have different subject matters, and then we'll go to rounds of questioning.

Please go ahead, from the Co-operative Housing Federation of Canada.

Mr. Mark Goldblatt (Senior Consultant, Co-operative Housing Federation of Canada): As mentioned, my name is Mark Goldblatt. I'm a senior consultant with the Co-operative Housing Federation of Canada, the national voice of Canada's not-for-profit co-op housing movement across Canada. There are 2,150 non-profit housing cooperatives across Canada. They own 91,000 units and house 250,000 people, including children.

There's been a lot of talk recently about ensuring that our cities are healthy places to live and work, and from our point of view this discussion is very worthwhile.

The Standing Committee on Finance has outlined in two questions their guidelines for the pre-budget presentations this year: first, how can Canada best ensure that greater levels of economic prosperity are widely shared by all Canadians; and two, how can the government best ensure the highest quality of life for all? If many people in our country do not have access to decent, affordable housing, how can we have healthy cities?

First of all, there is an absolute shortage of rental housing. As vacancy rates are at historic lows, there is simply not enough rental housing to go around. Perhaps more serious is the affordability crisis. Statistics Canada reported in a 2000 survey of household spending that 1,186,000 households, or 40% of all renter households, are paying more than 30% of their monthly income on rent. Of this group, 306,000 households are paying more than 50% of their monthly income in rent. Compare this with the fact that 50% of Canada's homeowners have no mortgages whatsoever, and they're living in housing that in almost all cases is of better quality than what renters have.

These are not abstract figures. You have families living in substandard basement apartments with mould on the walls. You have two families doubling up in two-bedroom apartments. These are the people who are going to food banks when in the middle of each month their money runs out. In a warmer climate around the world, these households would be living in shantytowns, clustered around the major cities. For most of us in this room, it's hard to visualize living in these conditions in such a wealthy country as ours.

In the past, between 1973 and 1992, the federal government was in the business of financing new social housing. Thousands and thousands of units were built or renovated at that time, with approximately 20,000 to 25,000 new units per year. At that time we were, every year, making a significant dent in the need for affordable rental housing.

There's been much talk about the homeless. The federal government recently has been financing new shelters and upgrading existing shelters. This is fine as far as it goes; however, if you're living in a shelter you are in fact still homeless.

A New York City study tracked homeless people over a three- to five-year period. When this population was able to access long-term affordable housing, their needs for housing were settled for the long term. This left only 20% of the homeless on the street, because in addition to being poor they have other problems, such as mental illness.

We know what to do. The non-profit cooperative housing units financed in the past are still renting on an at-cost basis. Moderate-income households now can afford these rents. Low-income households receive personal rent-geared-to-income subsidies. Most of these co-ops are not receiving any supply subsidies any more. Now they are paying market rates of interest on their mortgages. Subsidies to landlords during the same historical period have resulted in rental units at whatever the market will bear, or units that have been converted to condominiums.

We can design a new social housing program very quickly. It would include mixed-income households with a combination of those who can afford market rents with low-income households in need of personal assistance. We shouldn't go back to the mistakes of the 1950s and 1960s by having low-income social housing programs occupied 100% by low-income households. We need supply subsidies to achieve market rents at the outset.

The third guideline for the program would be rent geared to income, and subsidies for moderate- and low-income households that cannot afford the market rents. Fourth would be upfront capital grants so that the federal government does not incur ongoing subsidies over the long run. Fifth, residential rehabilitation program grants would encourage the upgrade or conversion of existing rental housing stock to residential housing. The last point would be a unilateral federal program.

¿ (0940)

I think that's just about it. I have a few more remarks.

Canada has a great deal of experience in creating social housing. I remember years ago receiving foreign delegations coming to Canada to look at our social housing system. They came because they had heard something important was happening. They went home amazed at the partnership between the federal government and the social housing sector, which includes the non-profit co-operatives I represent. It's sad, but as a country, we have an ever increasing need and very little happening by way of new social housing. We in the co-operative housing sector want to renew the partnership we had in the past with the federal government. If we don't do something, our high hopes for renewing our cities will not be realized.

Thank you very much.

The Chair: Thank you very much. Thank you for staying under your time.

We'll now go to the president from the Coalition to Renew Canada's Infrastructure. Commençez, s' il vous plâit.

[Translation]

Mr. Jim Facette (President, Coalition to Renew Canada's Infrastructure): Thank you very much, Madam Chair, members of the committee, for allowing me the opportunity to participate in today's panel.

[English]

Since its inception in 1991 the Coalition to Renew Canada's Infrastructure has participated in these pre-budget consultations. We are happy to participate again, providing a message on the need for a continued long-term plan to address Canada's physical infrastructure needs.

As the collective voice of a broad-based coalition representing all areas of the economy, we are greatly concerned about the deterioration of Canada's national highway system and its negative impact on Canada's economic growth, job creation, and productivity. The evidence, both anecdotal and academic, is clear. Investment in Canada's national highway system will net governments a tangible return on that investment, save lives, improve productivity, create jobs, and contribute to the overall economic growth of regions in Canada.

The National Highway System: Condition and Investment Needs Update report, completed in 1998 by both federal and provincial governments, reinforces these points. It also confirms what the CRCI has been saying for many years, that unless we address this problem now, the cost to rehabilitate Canada's national highway system will continue to escalate. The update report demonstrated that despite investments made, primarily by provincial governments, at that time, the state of the national highway system has got worse since 1988. Cost estimates have now escalated from $13 billion to $17 billion, due to this neglect. The joint study also indicates that new construction work is required, with the greatest need being for twinning many sections.

The Coalition to Renew Canada's Infrastructure is asking this committee to recommend that the Minister of Finance announce a ten-year national highway program with a minimum annual investment of $500 million in his next budget. The Speech from the Throne drew a blueprint for what this government wanted to accomplish, a blueprint that included a ten-year program for infrastructure to accommodate long-term strategic initiatives essential to competitiveness and sustainable growth. The blueprint also includes a new strategy for a safe, efficient, and environmentally responsible transportation system. We believe a ten-year national highway program must have a part.

If it is true that competitive cities and healthy communities are vital to our individual and national well-being, as was suggested in the Speech from the Throne, then city-to-city connectivity is vital. What the Liberal task force said in 1992 is as valid today as it was then: the economic consequences of poor roads are staggering. Studies reveal that the productivity of a region is very much dependent upon its transportation system. Traffic congestion increases the cost of transporting materials, reducing the industry's competitiveness. Bad roads also have a negative impact on tourism, an important sector of the Canadian economy.

The 1997 House of Commons Standing Committee on Transport came to a similar conclusion. The committee report said:

An efficient competitive highway system is one of the fundamental requirements of a healthy economy. It has been demonstrated beyond any doubt how important a safe and competitive highway transportation system is to trade and tourism.

Madam Chair, our full brief, which I believe has been provided to this committee, outlines returns on the investment, including tourism, lives saved, increased productivity, unity, and trade.

Short-term programs currently under way are just that, short-term. Each addresses a different part of the overall infrastructure picture, yet none goes beyond five or six years. We are, however, encouraged by the direction of this government as outlined in the Speech from the Throne, that being long-term. It is our hope that the ten-year infrastructure program includes a ten-year highway program. The list of support for such a program is both long and impressive. The Canada Transportation Act review panel dedicated a full chapter to this issue last year. In the end, it acknowledged that Ottawa must actively invest in an important piece of Canadian infrastructure, our national highway system.

In our full submission you will notice that we refer to a 1999 national highway system stakeholder meeting that was co-chaired by the Liberal caucus chair at the time, Mr. Fontana, and ourselves. The appendix to our submission lists the participants, representing a broad spectrum of support, as well as some action items. The level of commitment from the provinces and other stakeholders has not changed. The CRCI has built an array of support on this issue, including the Canadian Chamber of Commerce, the Business Council on National Issues, the Alliance of Manufacturers and Exporters, the Canadian Automobile Association, the Van Horne Institute, the Tourism Association of Canada, the Cement Association of Canada, the Canadian Construction Association, and the Association of Consulting Engineers of Canada.

Our research this summer shows that 50% of Canadians support the federal government in creating a national highway program committed to investing in Canada's highway system through a share of gasoline taxes.

¿ (0945)

The United States, our major trading partner, has made a major commitment to transportation infrastructure. The 1997 Transportation and Equity Act for the 21st Century, also known as TEA-21, provides for investment of $217 billion U.S. in transportation infrastructure. Of this total, $175 billion will be invested in highways alone. TEA-21 will need to be reauthorized no later than October 2003. Our colleagues in the United States will be seeking a comprehensive reauthorization package for highways and transit that could reach an annual federal investment of $50 billion U.S. by the year 2009. If we think we're behind now, Madam Chair, we'll definitely be at the back of the line if we do not commit ourselves to increasing federal investment in Canada's national highway system.

Madam Chair and committee members, the CRCI is often asked how we pay for a national highway program. Do we think public-private partnerships are an option? In June 1998 the Liberal committee on gasoline pricing recommended that joint action between federal and provincial governments aimed at restoring Canada's national highway system be given top priority, and that by appropriate cost-sharing formulae, public-private partnerships be established to undertake repairs at the earliest opportunity. In his grain handling and transportation review, the Honourable Willard Estey recommended that the federal and provincial governments collaborate to apply some part of the considerable fuel tax collections to the construction, maintenance, and repair of highways.

In regard to the question of private sector participation in the rehabilitation of the existing 25,000 kilometres of the national highway system, we think it is possible, but expectations must be realistic. In a report to the council of ministers responsible for transportation and highway safety, a working group studying the applicability of public-private partnerships found that many financial analysts are concerned about the unrealistic expectations proponents have with respect to the scope and applicability of the public-private partnership concept in Canada. However, where feasible, we believe it should be looked at, on a case-by-case basis, where new highways are needed that offer a non-tolling alternative.

The quality of Canada's highways includes corporate decisions regarding location, capital investment, production methods, relationships with suppliers and customers, location and availability of inventory, and access to labour. A long-term plan, such as the one laid out by the national highway review policy report and Transport Canada, would carry out reconstruction of a national highway system with maximum efficiency and create a larger economy.

Madam Chair, I'll end there. I look forward to our discussions later.

¿ (0950)

The Chair: You are just on time. Thank you very much.

We'll now move to our third presenter of the morning, the Canadian Real Estate Association. I'll call upon the president, Pierre Beauchamp. Before I do, I want to also indicate that you have with you, as your federal affairs adviser, David Humphreys, and we welcome him also to today's panel.

Go ahead, Mr. Beauchamp.

[Translation]

Mr. Pierre Beauchamp (Chief Executive Officer, Canadian Real Estate Association): Thank you very much, Madam Chair.

[English]

You do know that the Canadian Real Estate Association always welcomes this opportunity to share with you the views of realtors in Canada in this budget-making exercise.

Madam Chair, the association keeps in touch with members of Parliament in at least two other ways. You all know realtor members who represent real estate boards in your constituencies. You meet them, in fact, when they come to Ottawa for our political action exercise on an annual basis, and hopefully you meet with them in October or November of each year to again discuss some of the main files that we propose.

You may not know that we are a sponsor of the parliamentary internship program. Today, I'm pleased to tell you our association has doubled its support for that particular program this year.

We have 65,000 realtor members across Canada who carried out more than 421,000 transactions last year, representing a dollar volume of close to $75 billion.

You won't be surprised that I want to talk briefly about two familiar issues today: fiscal policy and the case for raising the annual contribution limits for registered retirement savings plans. I also want to underscore today the sections of our submission dealing with affordable housing and brownfield redevelopment. I'm here addressing both of these particular issues because they've been identified as priorities by our political action committee. Your local realtors participate fully in that particular forum.

In the committee's report last year, you noted huge dividends that come from paying down the debt. You said progress on debt repayment translated into annual savings in the order of $2.5 billion each year—money that can be used to finance tax cuts, pay for new initiatives, and help the economy weather any downturn.

These are the committee's words, not ours, Madam Chair, but you will find something very similar in our submission this year. That's why we're advocating that the government reinstate a full $3-billion contingency reserve and an additional $2 billion for economic prudence. That's why we recommend that the government incorporate debt repayment as an integral part of the annual budget.

Yes, we acknowledge that the government has made good progress on debt repayment over the last couple of years, but progress is not a reason to change the course of progress. The debt remains over $500 billion, and the servicing charges, as you well know, are still at nearly a quarter of each tax dollar.

As I said earlier, we've included a recommendation on brownfield redevelopment because our commercial members believe many of these derelict sites offer tremendous potential. We have some 4,500 members in our national commercial council who specialize in industrial, commercial, and investment real estate. In fact, the chair of our council has been working with the National Brownfield Redevelopment Strategy Task Force.

Our commercial members' experience supports the view that tax incentives are going to be necessary to kickstart the remediation process. Of the various incentives that have been discussed, the one most likely to succeed, in our view, is the recommendation to treat remediation costs as a deductible expense when computing for income tax purposes. To put it the other way around, the current requirement that funds spent on remediation have to be treated as upfront capital discourages investment in these properties.

Madam Chair, the recent Speech from the Throne said the government will be allocating additional resources for affordable housing. This is only the latest of several indications that affordable housing is back on the national agenda. Some are calling it a crisis. We await with interest the final report of the Prime Minister's Caucus Task Force on Urban Issues on a national affordable housing strategy.

We discussed the interim report with Ms. Sgro at our political action days conference in April of this year. Based on the interim report, it appears the task force is recommending two basic solutions to increase the affordability of housing. One is a spending solution and the other is a tax incentive solution.

¿ (0955)

The spending solution covers everything from subsidizing the construction of new units, to support programs for improving existing housing, to funding shelters for the homeless. We believe subsidization of new construction should take place only where there's a proven and demonstrable need. Such a situation has existed, for example, in Fort McMurray, Alberta, and our members have partnered with Canada Mortgage and Housing Corporation and others to finance new construction in this respect.

Whenever tax dollars are spent on new construction, there must be vigorous auditing to ensure that the funds are spent efficiently and that they are targeted to those in core housing need. In many cases, experience has shown that the problem of housing affordability is not so much a lack of units as it is the inability of people to afford the rents. Shelter allowances are a far more cost-effective way of meeting the shelter needs of low-income earners in these circumstances.

We support the extension of the residential rehabilitation assistance program—better known as RRAP—which is administered by Canada Mortgage and Housing Corporation. RRAP has been a great success. It has delivered the intended results efficiently and effectively. In the process, it has created thousands of jobs. CMHC anticipates an increasing need for RRAP as the housing stock ages. We support continued funding at appropriate levels.

We also recognize the need for governments to respond to the problem of homelessness in our city. We support continued funding of the supporting communities partnership initiative. With the possible exception of direct subsidization, we support these spending initiatives as necessary and priority items.

You asked us to comment on measures that governments can take to ensure the highest quality of life for all Canadians. Next to health, nothing is more important than adequate shelter, in our view. Our real concern, Madam Chair, is that the government will implement the spending solution and potentially ignore the tax incentive solution.

Ten years ago, we recommended tax changes to allow for more equitable and equal treatment of rental housing. We're not alone. Other housing stakeholders have repeatedly pointed to systemic tax barriers in the rental sector. Year after year, nothing seems to have been done.

In this submission, we have identified three tax measures the government could implement to stimulate affordable housing. They are, firstly, that residential rents should be zero-rated under the GST so that landlords can recover tax paid on purchases for repairs and improvements to their property. Secondly, rental investors should qualify for the small business deduction for income tax purposes. Thirdly, all taxpayers, and not just companies in the business of real estate, should be able to apply capital cost allowance losses against income from other sources. This is by no means the complete list of recommendations from our research paper, but these measures would make a significant difference, in our view.

A hostile environment is the main reason investors have largely given up on the residential sector. Federal, provincial, and territorial housing ministers have been studying the need for tax changes for two years. Reform is overdue. We strongly urge this committee to support our recommendations on the tax incentive side.

Madam Chair, as my last point, members are familiar with our argument for raising RRSP contribution limits. With our partners in the Retirement Income Coalition, we have recommended increases for the last several years. I want to acknowledge the committee's support, in your report last year, for a one-time increase followed by indexation. We also appreciated the opportunity for further discussion with some of you during our political action conference in April of this year.

In our new submission today, we've updated the numbers that support the arguments you recognized in your last report. Once again, you asked us how the government can assure the highest quality of life for all Canadians. Increasing RRSP ceilings will encourage those Canadians who can save money today for their own retirement to do so. That in turn will help to reduce the future tax burden on middle-income Canadians who are still working after other contributors have retired. RRSPs play a vital role for more than 2.4 million self-employed Canadians in Canada, including most of our members, who must plan for their own retirement without the luxury of a company or public service pension.

À (1000)

In our submission, we show how the current limits disadvantage those who earn commission more than those who earn salary. Public policy shouldn't discriminate amongst categories of taxpayers in this manner.

Madam Chair, we need the committee's support one more time. We believe we've been close to success on this particular file twice before, but as you well know, close doesn't count. We're asking for an increase in the annual limit to $19,000, to be followed by an annual increase of $2,000 until the $27,000 level is reached. We're also asking that limits be adjusted annually for inflation. We urge you to recommend both these measures for action in the next budget.

And that's it. Thank you very much. We're ready for your questions.

The Chair: Thank you very much.

We'll now move to the Canadian Consortium for Research.

Mr. Paul Ledwell (Chairperson, Canadian Consortium for Research): Merci, madame la présidente. Thank you, Madam Chairperson, and thank you for the invitation from this committee to appear before you today. We look forward to our discussions.

In addition to being the chairperson for the Canadian Consortium for Research, I'm also the executive director of the Humanities and Social Sciences Federation of Canada. Paul Jones, who is with me, is a research and education officer with the Canadian Association of University Teachers. Together, our two organizations make up part of the Canadian Consortium for Research, a national organization comprising 26 organizations representing over 450,000 researchers, students, and practitioners across the full spectrum of the sciences. The consortium has been in existence since 1976 to really underline the centrality of research and education for a healthy society and economy in this country.

Today we are here to impress upon you the need to address the very foundations of education and research in this country against the challenges that continue to lie before us. The following are a few of these challenges to consider: over the next 10 years universities will need to hire between 30,000 and 40,000 new faculty, with 20,000 of these replacing a retiring contingent, at the same time that all other fields, including the private and public sectors, will be seeking highly qualified personnel to replace their own retiring contingents. Student enrolments--and I hope that some of the members of the committee have seen the recent headlines--will increase by as much as 30% in the next 10 years. That's the equivalent of 200,000 new students in our universities and really the equivalent of a new Queen's, Dalhousie, Sherbrooke, or Simon Fraser in every single Canadian province in this country. At the same time, Canada will face increased competition for the best students and researchers, including our own, from other countries facing the same demographic pressure.

However significant the government's recent investments in research and education have been, the work must continue to strengthen our base in research and education and build the capacity of our universities. To this end, the consortium has put forward a number of recommendations in our brief: first, a mechanism needs to be established that ensures better core funding for our universities. The initiation of the indirect costs was a partial step toward this and should be completed. But the real issue is how to ensure our universities have the strong funding base they need to deliver quality and affordable education to Canadian citizens and to continue a strong research environment.

Recently, the consortium wrote to the provinces to underline this issue as well, since we know that education is a provincial jurisdiction and that equal responsibility lies there. In this letter, which is appended to our brief, we underline that total provincial post-secondary education spending has declined 27% since 1992-93. Only Saskatchewan and Manitoba have increased their expenditures, and our country's two richest provinces, Ontario and Alberta, have seen the biggest decline. This really doesn't seem to us a picture of preparing for the future.

But the federal government carries equal responsibility here. In the 1990s the government sharply reduced transfers to the provinces for post-secondary education, reductions that when inflation and population growth are factored in have not yet been restored. This double-whammy decrease in provincial support and federal support, which has not been restored to the levels of a decade ago, has had serious effects on all aspects of our post-secondary education system: increased tuition and high debt at graduation; financial impediments for those wishing to pursue graduate studies; fewer faculty teaching more students and consequently with less time to do research; and deteriorating buildings, labs, and libraries. Moreover, the introduction in 1996 of the CHST, the Canada health and social transfer, means that there is no accountability as to where the federal transfers are spent. As one pundit has put it, our universities and education generally have suffered from the health crisis in Canada. We need to find a mechanism to establish better accountability and ultimately ensure that more funds get to our universities.

Second, Madam Chair, the research base in Canada needs to be strengthened through increases to the granting councils. The development and introduction of the new Canadian Institutes of Health Research and recent increases to the budgets of the Natural Sciences and Engineering Research Council and the Social Sciences and Humanities Research Council have all been welcome news, but with many new faculty in our universities and their need to establish their research careers, the pressure on the budgets of the councils is only increasing. This is particularly the case with the Social Sciences and Humanities Research Council. With only 12.5% of the total allotment, SSHRC must support more than 50% of the researchers in this country and almost 60% of graduate students. With little funds, SSHRC annually has had to refuse funding to over 25% of projects that have been recommended for funding, and they are able to support only 3.5% of all graduate students in their area.

À (1005)

The consortium has consequently recommended that an asymmetrical increase be given to SSHRC to help redress this funding imbalance.

Third, programs of support need to be established to provide greater support directly to our graduate students. At present there are obstacles to continued study. Most notably, tuition fees have increased 135% in the past decade, and the resultant average undergraduate student debt now stands at $25,000. Consequently, it's not easy for these students to continue their studies in graduate and post-graduate degrees.

In professional schools such as medicine, tuition increases have been even greater. Recent studies have shown that less affluent members of society are not entering these programs as a result. Access is a real question.

If our country is to be able to compete internationally and ensure strong participation from all Canadians in building a vibrant economy, we must place priority on access to post-secondary education in general and to advanced degree programs in particular. At present, Canada is producing only 4,000 PhDs per year, a number that must increase if we are able to meet the targets laid out in the government's own innovation plan.

Finally, Madam Chair, we would underline the necessity that the government recommit to supporting government science and national facilities that provide Canada with leading-edge research.

All of these issues are about our future. As we face increased internal and external pressures, it is essential that our post-secondary education and research capacity be strengthened, be secured, to meet these challenges. We truly are at a crossroads, and we do hope that the government builds on its more recent initiatives by re-establishing the strong foundation needed for science, for research, and for education in Canada.

Thank you. Merci.

À (1010)

The Chair: Merci beaucoup.

Now we have just 55 minutes for rounds of questioning. I'm going to ask for eight-minute rounds.

Mr. Richard Harris will commence with the first eight minutes.

Mr. Richard Harris (Prince George—Bulkley Valley, Canadian Alliance): Thank you, Madam Chairman, and thank you, witnesses, for your presentations.

I have three different questions.

First, to Mr. Goldblatt, I appreciated your presentation. In your brief, you said that $680 million over five years was a recent program that was announced, but you go on to say that the results of these programs have been actually quite disappointing, with provinces using money to pay for programs other than rental housing, etc.

How can that come about? Isn't it a criterion of the federal government on these programs that if they're going to provide funding for affordable housing, the provinces sort of sign on to a specified program without the ability to make arbitrary spending decisions about the money?

Mr. Mark Goldblatt: Is your question that--

Mr. Richard Harris: How does the federal government police the carrying out of the program?

Mr. Mark Goldblatt: It certainly can be done with that approach. Just to be straightforward with you, when this agreement was signed in November of last year for this new federal-provincial program, the federal government more or less left the door wide open, unfortunately, to the kinds of abuses we've seen in terms of what the provinces have done with that bilateral, fifty-fifty federal-provincial program. The door quite clearly was left too wide open.

I think the federal government was operating in good faith with respect to this particular program, but then along came provinces like B.C., who took their share of the money and are paying for support of housing that was previously used under the Ministry of Health and so on. Ontario has put up a contribution per unit of only $2,000 against the federal $25,000. The only province that has fulfilled the expectation of the federal government is the Government of Quebec. Everywhere else this program has gone off the rails.

Yes, there wasn't an absolute need that this would happen, and it could be dealt with in the future if the federal government took a much more hard line to the approach of the provinces in response to their share of the program.

Mr. Richard Harris: Just quickly, what is the difference between rural and urban areas in regard to the need for affordable housing?

Mr. Mark Goldblatt: That's an excellent question, but just to state directly, the greatest share of rental housing in our country, not surprisingly, is the greater Montreal area, the greater Toronto area, and, guess what, the greater Vancouver lower mainland area. So that's the most visible pressing need, but I do agree with you that in rural areas you have housing needs as well. It's just that the numbers there are much less, and they tend to be invisible.

Mr. Richard Harris: Mr. Facette, whenever we're discussing road building infrastructure, particularly highways, sooner or later we seem to get round to a dedicated portion of the famous fuel taxes. The government is spending under 5% of total taxes collected, if it's that high. It's really confounding why the government does not understand that these fuel taxes were originally put in for construction and maintenance of highways, bridges, etc., and yet only a small portion is dedicated to this. Whenever there is a suggestion that the government so dedicate a reasonable portion of those taxes, they just do not get it. How can we get through to them?

Mr. Jim Facette: Sometimes the only way to get through on anything is just to keep at it, regardless of what it is. The reality is that in Canada, unlike the United States, we do not have any kind of dedication, allocation, earmarking--pick the term you want to use--of those excise taxes on fuel. In the United States they dedicate all their excise tax on fuel to a highway fund. It has a large sum of money in it. Here in Canada we take the view that the revenue dollars come in, they go into the consolidated revenue account, and they get allocated annually. Be that as it may, there is still an opportunity, in a representative kind of way, to say we are earmarking some of the excise tax on gasoline.

Our opinion poll this summer clearly indicated that Canadians are of the opinion that some of it should be put to this purpose, or at least be seen to be. They didn't say how much; we didn't ask. There are provincial governments that are doing it. We see in New Brunswick it has now happened. The Province of Alberta does give back to the City of Calgary and the City of Edmonton all the gasoline tax they collect. You are seeing it for public transit in Montreal, and you also have it for public transit, I believe, in the city of Vancouver.

There is reluctance by financial people, even at the provincial level, in all honesty, to be seen as tying the hands of future governments. It's a challenge. It has both pros and cons.

À (1015)

Mr. Richard Harris: I sympathize with the efforts of your organization and people in the transportation business. Our country's economy depends so much on infrastructure.

Mr. Beauchamp, we always get around to the RSP, and I really sympathize with your group as well. You've been trying for a number of years to get the government to allow your members to take responsibility for their retirements early in their lives, as opposed to penalizing them. I don't know what to do except keep pressing them. Hopefully, they will realize that if your members are allowed to plan early, there is certainly going to be far less of a burden on the government overall in their retirement years.

I don't have any questions. I know your proposals in your brief inside out after the last few years. But keep up the fight.

Do I have time for one more?

The Chair: You have one minute.

Mr. Richard Harris: Okay.

Mr. Ledwell, I have to ask you. We have a beautiful new university in the rural area of Prince George. How do we ensure that federal post-secondary funding is increased, or at least continued, for universities in rural areas? There's always the trend for the big bucks to go to the cities, where the area is vote-rich. Rural universities tend to take a beating. How do we combat that?

Mr. Paul Ledwell: The first tack is to increase the funds overall. I think that is important. But what we have argued for, and what is important, is to ensure that there is a strong, national system of education in this country, that not all the funds are going into the largest universities in the country, but the smaller and medium-sized universities, including those in rural parts of this country, are receiving their due share.

A lot of the federal government's recent initiatives have been to do with research. They have been fantastic; they've really supported a great number of interesting projects and significant research. But we need to get to the base, to the core of education and universities in this country, and we need programs and funding that will ensure support of all universities, regardless of size and location. I would say increase the funds first and then find the mechanism to ensure that those funds get to the universities. That's not the case now.

[Translation]

The Chair: Go ahead, Ms. Picard.

Ms. Pauline Picard (Drummond, BQ): Mr. Facette, I wanted to discuss investments in our highway system. You advocate a ten-year infrastructure program and annual investments in the order of $100 million. Based on the studies you've conducted, would such a program be nothing more than a Band-Aid solution, so to speak, in terms of truly rehabilitating Canada's highway system? Or have you conducted any studies that would give us a glimpse into the future? The current problems we face result from our lack of forethought in the past. We did not anticipate that every household would have one, two or even three automobiles. Would an investment of this magnitude alleviate some of the problem down the road? You talked about a competitive, efficient highway system. In your opinion, what would constitute a competitive, efficient highway system in the future?

À (1020)

Mr. Jim Facette: Thank you very much for that excellent question. The provinces and even the federal government know where the money is to be spent. They know a great deal about what the future holds. In fact, the studies have already been done. The problem as we see it is that a plan for the future has not been drawn up. Right now, we have programs in place to address current problems, but none targeting future areas of concern. Each province has a clear idea of what it wants. For example, Quebec has developed a ten-year plan. In terms of the future, it's a sound plan. Our coalition members like this approach a lot because it enables them to start planning this year for the next five, six or seven years. It makes their job easier.

When it comes to Canada's competitiveness, we can give you several examples of the importance of our national highway system. In New Brunswick, for instance, Premier McKenna drafted a paper on the province's highway system in 1987. Each year, some progress is made in terms of implementing the overall plan and if you travel through New Brunswick today, you will see that the highway system is wonderful and that the province's economy is humming along. That bode's incredibly well for the future.

I could give you other examples. The Alberta government devised a plan as well for investing in the province's highways. The province's economy is also remarkably healthy.

There are examples of this across the country, but to date, there is no plan in place that compares to the federal plan in the United States. Canada is the only G-7 country without a national highway system plan. That's what is missing.

Ms. Pauline Picard: So, if I understand correctly, the $700 million, ten-year program would merely improve the situation. It would not result in a national plan for a highway system.

Mr. Jim Facette: The federal government would invest $500 million, while the provincial government would also kick in some funds. This $1 billion program would be spread over several years. This kind of partnership will make it possible to draw up a plan for the future. It's important for the two levels of government to work in partnership.

Ms. Pauline Picard: Have you done any studies of the rail system? These days, rumours are floating around that a type of high-speed train might be put into service along the Quebec City-Windsor corridor. Have you heard anything about that?

Mr. Jim Facette: We've often heard this mentioned, but the coalition has not conducted any studies as such of the rail system. I believe the federal Department of Transport did a study some years ago that looked into the rail system along the Quebec City, Montreal and Windsor corridor. However, we haven't done any studies of this nature.

Ms. Pauline Picard: In your opinion, would improving the rail system help the overall state of the current highway system? Truck traffic on our highways is increasing. If traffic volume were divided among the rail and highway systems, perhaps this would help to ease the burden on our infrastructures.

Mr. Jim Facette: Perhaps, but people choose their mode of transportation to Kingston or Quebec City based on economic considerations. Companies also invoke economic reasons when they decide which mode of transportation to use, whether the destination is Toronto, Quebec City or Windsor. If it's cheaper, or if it ties in with their just-in-time system, a company, be it General Motors or some other, may opt for one mode over another. In the case of rail transport, goods must be shipped by truck to a central location and then loaded onto a train bound for Toronto or Quebec City. Another truck then picks up the goods and delivers them to General Motors, Chrysler and so forth. It's possible, but it's not the ultimate solution. The systems are integrated to some degree and certain decisions must be made.

À (1025)

Ms. Pauline Picard: You spoke of different countries. Canada is the only G-7 country to have such a run-down system. Which country boasts the best highway system of all?

Mr. Jim Facette: Many Canadians would tell you about the systems in the United States, Australia and France. France has an excellent highway system. In our opinion, these three countries have excellent systems.

Ms. Pauline Picard: Do I have any time remaining?

[English]

The Chair: We have less than a minute. In fairness, we'll move over to Mr. Murphy.

Mr. Shawn Murphy (Hillsborough, Lib.): I have a couple of questions for Mr. Beauchamp.

I want to pursue this whole area of the low vacancy rates that we have especially in our major cities. Interest rates are at a historic low and the demand is extremely low. Compared to other options such as the stock market and bonds, it would seem a real estate investment makes sense, but we don't seem to have what I consider to be a competitive market.

My question to you is why the private sector hasn't responded by building more units. Are there any public policy instruments that we could pursue to try to pursue that issue?

Mr. Pierre Beauchamp: Madam Chair, I would ask David Humphreys to respond. He's our specialist in that area.

Mr. David Humphreys (Federal Affairs Adviser, Canadian Real Estate Association): Madam Chair, our experience over the years with the Department of Finance has been that the department regards investment in the rental sector not to be a productive investment, and tax policy has seemed to become more and more restrictive.

In our submission, we referred to the paper we did ten years ago, in which we recommended a number of tax amendments, with the objective of doing what Mr. Murphy is talking about. None of those have been undertaken, so we find ourselves today with the continued and increasing drying up of investment because it has become less and less attractive for the small investor. This association represents the small investor. That's why we focus our two or three proposals in that area.

Mr. Shawn Murphy: What are two or three of the things this government should consider to stimulate the construction of new rental units?

Mr. David Humphreys: Mr. Beauchamp referred to the three we have singled out: the matter of zero-rating residential rents under the GST; that rental investors should be allowed to qualify for the small business deduction; and that all investors—not simply companies in the business of real estate—should be able to apply capital cost allowance losses against income.

There are others that this association, the home builders, and others in the field have recommended, but we felt these were three that would address both the construction and the maintenance of rental properties.

Mr. Shawn Murphy: In a lot of urban centres, we have a lot of older buildings that are beyond their useful life. All cities have fairly strict heritage bylaws. It's well known that it doesn't make any sense, from an economic point of view, to convert them to residential housing. Is there anything your association specifically recommends, though, that would prime the pump to allow these older units to be redeveloped for residential units in order to meet some of this demand that's out there?

And this is very much related to Mr. Goldblatt's submission, too.

Mr. David Humphreys: We haven't particularly addressed that, other than that we support RRAP. Various aspects of RRAP do help improve those older buildings.

À (1030)

The Chair: Is that it?

Mr. Shawn Murphy: Yes.

The Chair: Since you're only halfway through your time, I'm going to pass this over to Madam Minna.

Ms. Maria Minna (Beaches—East York, Lib.): Thank you very much.

I have two questions. One is on the issue of housing. There's no question in my mind that we have to increase affordable and accessible housing in our country. I see it in my own constituency in Toronto, where people who are making an average income cannot afford to rent, and for those with a family who need a two-bedroom apartment, it's just impossible. We have to increase the number of units, you are absolutely right.

I want to ask a question of both Mr. Beauchamp and Mark Goldblatt. Mr. Goldblatt, you said we need more upfront federal grants and unilateral federal programs, which we used to have a great deal more of in the past. Mr. Beauchamp, you were talking about the fact that the tax incentive solution is better than spending money up front, which seems to be different from what I'm getting from the other side. Of course, with the current program, as was explained, the provinces are not participating properly, so it's not tight and it's not happening.

I have two questions. The first is on the differences. Are discussions taking place between the two to come to some agreement and recommendations on which we could all work?

The other question is on the unilateral aspect. How do we get to the point where we just simply allow the provinces to wash their hands of the issue of housing, with the exception of Quebec, which is what they have in essence done? Do you have any suggestions as to how we might address that issue?

The Chair: You have one minute each to answer.

Mr. Mark Goldblatt: I will answer your first question. The co-op housing sector, or more specifically the not-for-profit rental co-op housing sector, has had a long-term, friendly relationship with the Canadian Home Builders' Association, precisely for the reason that they're doing home owner housing and we're doing rental housing. What we're seeing in our rental co-ops is that people save up a down payment and, like most Canadians, they then go out and buy a home in the private sector, where they can build equity and hope eventually to make a capital gain. So there has been a good and friendly relationship over the years with the private home building sector.

Could you just briefly, in a sentence or two, repeat your second question? I don't know if I got it exactly.

Ms. Maria Minna: I was actually trying to get into your suggestion of unilateral federal involvement. What does that mean to you? Does it mean that the Government of Canada takes the leadership or takes complete ownership of housing?

Mr. Mark Goldblatt: I was hearkening back to the past. The federal government did have unilateral programs for almost 30 years when it was funding not-for-profit housing, including the not-for-profit co-ops. The three major programs during that period were unilateral programs. The reason we're going back to the unilateral idea is quite simple. I think the federal government putting that $680 million on the table over five years was a very reasonable program, but, as I said in my remarks, the provincial governments have not followed through on their matching share.

The Chair: We just have 30 seconds left for the second question. Who will take that?

Mr. David Humphreys: Madam Chair, I would just say that the Canadian Real Estate Association is not saying that the tax incentive solution is preferable and better than the present solution. What we're saying is that the tax incentive solution has been ignored and is in need of attention. We're not against the spending as long as it's properly managed and targeted.

The Chair: Thank you very much.

We'll go to Mr. Martin now for eight minutes. Then we'll be going to Ms. Leung, and I have Mr. Valeri on the list, if you have some time there. Then we will go to Mr. Brison. Go ahead.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you, Madam Chair.

I'd like to begin with Mr. Goldblatt. I want to thank him for citing some of our once proud history with social housing in this country from the early 1970s to the early 1990s. I also want to add that it was really under the Mulroney government that we started to see the cutbacks in social housing programs, but it was the current government that sort of finished them off. Would you agree that is accurate historically?

À (1035)

Mr. Mark Goldblatt: The cuts started in 1992, as the programs were wound up--I'm just having a slip in my mind as to who was the federal government at that time. Unfortunately, the programs of the different parties federally in that period from 1992 onwards went in the same direction, which was more or less to simply wind up these programs.

Mr. Pat Martin: I used to be the president of a housing co-op. In one of the programs we made use of--and I would ask you whether reintroducing this would be one step towards the problems you raised--rather than an out-and-out grant or any kind of out-and-out subsidy, all that was offered was 100% financing and a longer amortization period, 35 years rather than 25. That made the market unit prices crunch and the deals go, where we could build. Would you agree that reintroducing that one simple measure, which is not an out-and-out subsidy, would stimulate and allow groups to build their own co-op housing projects?

Mr. Mark Goldblatt: In the current market rental environment, while that extension of the amortization period would help, you're still stuck with the difference between economic rents and market rents, which will require a subsidy, unfortunately. That's why we're stuck here talking about it today instead of going ahead on our own. Unfortunately, the private rental sector is in the same boat; they need that upfront subsidy, or the numbers don't come together.

Mr. Pat Martin: Should we do away with the down payment as an enabling measure, and you amortize it for a longer period of time, in today's market, a full 10 years longer, since the program has been cancelled, it still wouldn't crunch?

Mr. Mark Goldblatt: Very unfortunately for all of us, private sector or not-for-profit sector.

Mr. Pat Martin: Okay, very good.

I'd like to switch to Mr. Beauchamp. The one thing from your brief that stood out for me is that you're calling for an increase in the limits of RRSP contributions. What percentage of Canadians currently make the maximum contribution? Do you know? I have an idea, but do you have those figures?

Mr. Pierre Beauchamp: No, I don't have that particular figure. It won't be a huge figure.

Mr. Pat Martin: No. I think under 5%, in fact, of Canadians currently have the wherewithal to put in $13,500.

Mr. Pierre Beauchamp: If you consider the discussion in our papers, we have gone on the fairness argument. I think we've succeeded in dispelling the notion that this is a program for the rich that we are recommending. It is not.

Mr. Pat Martin: It's more than $13,500 a year to contribute to their RRSP. Who are you trying to benefit here?

Mr. Pierre Beauchamp: But what we have done--

The Chair: I'll stick to the time and let Mr. Beauchamp answer the question, and then we'll take another one.

Mr. Pat Martin: It's just that we have so little time, I'm trying to pack it all together.

The Chair: That's right, except I can only hear one person.

Mr. Pierre Beauchamp: Thank you.

We have tried to identify the types of individuals to whom this kind of program would appeal, and we've identified very ordinary Canadians in the persons of nurses, plumbers, police officers, etc.

Mr. Pat Martin: Who would put in more than $13,500 a year? You were asked to speak to certain themes with your brief: how are we going to make Canada a more equitable place--

Mr. Pierre Beauchamp: Madam Chairman, we have been submitting our position, and we have tried, to the best of our ability, for a number of years to answer the questions the finance committee has given us. In our view, we have succeeded in providing information on the competitiveness issue, on the fairness issue--

Mr. Pat Martin: You've answered my question, thank you.

Mr. Ledwell, your point was well taken about rising tuition costs and rising student debt. We're at the point where we're realizing that getting your high school isn't enough any more to make it in the marketplace. You need at least one degree. So rather than 12 years of public education, maybe there should be 15 years of public education; your first degree should be free. Has your organization researched what it would cost to simply say, extend the Public Schools Act so that K through 15 years would be free of charge, or your first undergraduate degree would have free tuition? What would something like that cost?

Mr. Paul Ledwell: We've not done research on that particular question. I suspect that the cost would be quite significant, given that tuition now has risen very high as part of the universities' overall operating budget; I think as high as 30%.

À (1040)

Mr. Pat Martin: Have you made a direct link between rising tuition and the number of people availing themselves of post-secondary education? We have documented that in our province of Manitoba, where we've cut tuition fees and frozen them ever since the NDP government has been in power, the number of students in university has risen by 16% over those three years. So would the inverse be true, that rising tuition costs have meant a noticeable drop in the number of people going to school, or are they simply borrowing more money and attending anyway?

Mr. Paul Ledwell: It's actually the latter. There's an increase in participation in university, and we anticipate that those participation rates will continue to increase. But the debt levels are increasing as a result, both for individual students who are attending universities and for families who are supporting their children to go to university.

Young people, as you underline, are saying they need a university degree, at least one, to be able to find a viable job and build a career in this country or somewhere else. That trend will only continue. We know sociologically that the children of parents who have degrees also are encouraged more to go on to post-secondary education. So I think we can only anticipate that the participation rates will increase.

But there are barriers in particular courses of study, especially in professional areas, and with deregulation of tuition fees in some provinces, specialized programs such as medicine have become very difficult for some students to afford. It's also an issue for people who are living in more remote parts of the country, because for them, access to university is at a higher cost; they must pay to live in the location where the university is. There are all kinds of barriers out there.

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

Ms. Leung, go ahead for eight minutes. If you don't use all your time, I know Mr. Valeri has a short matter.

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

Mr. Ledwell, I'm very interested in your comment on secondary education R and D. As you know, our government has recognized the need, so in the last two budgets we have given a lot of support, such as the Foundation for Innovation. Also we set up the federal university chairs, CIHR, many things. All those things probably helped. We even supported the indirect costs of universities with $200 million last budget. Would you like to comment on how we can help community colleges to prepare more technical workers and address the shortage of skilled workers in our country now?

Mr. Paul Ledwell: Thanks very much for the question.

We don't directly represent community colleges, so it would be erroneous for me to speak on their behalf. But I do know they, like universities in this country, are seeking more core support from all levels of government.

Ms. Sophia Leung: Can I reverse the question, since you're not speaking for them? We already gave a lot of support. Would you comment on what ways we can help more? Of course, it's always the dollars that are the question.

Mr. Paul Ledwell: There's no question that the federal government has in the past four years really increased its support for targeted research and for specialized programs like the Canada research chairs, and that's had a tremendous effect within universities, it's been very valuable. But over that time as well, as near as we can figure, the block transfer through the CHST has declined. Since 1993-94 the block transfer has declined by about 12%. There's a myth in this country that we're sort of pursuing a U.S. model, but when we look at the U.S. in the last 20 years, they've increased public support for post-secondary education by 30%. Over that same period of time public support for post-secondary education in Canada has declined by 20%. So clearly we're not pursuing a U.S. model.

As we laid out in our brief, we really need to attend to some of the core foundational elements of post-secondary education in this country. That's ensuring that universities have the capacity they need to meet the demands that are placed upon them right now in respect of research, education, community building. That includes attending to core support for the universities, finding the mechanism to ensure that the money the federal government is providing through the block transfers gets to the universities and that those block transfers are increased, building an increasing support for basic research through all three of the granting councils, and particularly the Social Sciences and Humanities Research Council. Those kinds of core and foundational programs I think are very important in allowing the universities to be in a position where they can meet the needs placed on them now and in the future.

À (1045)

Ms. Sophia Leung: I have a question for Mr. Goldblatt and Mr. Beauchamp.

As we know, the federal government has provided an affordable housing program with $680 million for five years. In my riding, Vancouver Kingsway, we do have quite a few. I work very closely with co-op housing, and I also know they wanted to move away from the provincial administration, and were able to do that. Since we give such support--except Quebec is doing better--how can we improve matters, because this bilateral agreement is for the provincial government to participate. That's one question.

The second thing is about co-op housing. I also discovered they're quite happy with our arrangement. They move away from the provincial government--I'm speaking for B.C. Do you want to comment about that?

The question is also directed to Mr. Beauchamp as to how we are going to improve, if you feel the arrangement is not adequate for the $680 million for the five years.

Mr. Mark Goldblatt: Obviously, most parties would agree that it's not enough money to make a serious dent in the need out there. We need about 20 to 25 units a year funded for the next 10 years. As I said, even the new money the federal government has put on the table, the $600 million over five years, is a federal-provincial program, fifty-fifty, and the problem is, to be frank, that the provinces, except Quebec, are not picking up their share. The current British Columbia government took their share of this federal-provincial money, and instead of developing new, not-for-profit rental units, or even private sector rental units, they have redirected it into a category called support of housing, which previously just came out of the Ministry of Health expenditures. So we're not even getting the impact of the new $680 million. That's pretty disappointing after all the years the homelessness advocates pressed for a new federal program.

Ms. Sophia Leung: So it is the fault of the provincial government.

Mr. Mark Goldblatt: Yes. I'll say that under the current program, which only goes as far as it can, it's definitely the fault of the British Columbia government that they have not used the federal money to create new, affordable rental housing. As I said, the only exception to that situation is the Quebec government, which has truly matched the federal expenditure, and then, on top of that money, added some more--the only example. All the rest are in the same boat, one way or another, as the British Columbia government.

Mr. Pierre Beauchamp: We have said in our paper that we support reasonable funding in a number of areas, and we identified RRAP, we identified supporting the communities partnership initiative and other elements. But we also felt strongly that the tax incentive solution was important, and we've named already the three different areas we felt should be seriously considered for emphasis by the committee.

The Chair: Thank you.

We'll go to Mr. Brison, and then, hopefully, we'll pick up your question, Mr. Valeri.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Madam Chair.

My first point, Mr. Beauchamp, is with regard to raising the RRSP limits. One of the arguments in favour of raising the RRSP contribution limit is the deferral of tax revenue well into the future. From a planning perspective, that actually can benefit us at a time when we see a demographic time bomb. A lot of people will be retiring at a point when there are going to be fewer people working, so there's actually a strong argument to be made for deferring some of that tax revenue into the future.

Further to that, the increase of RRSP limits, as you've suggested and as we support, would also address the brain drain issue. Some of the people who have the financial capacity to contribute greater amounts to an RRSP are among those people—professional and upper- and middle-income earners—who are most prone to pressures to be drawn to the U.S. That's talent we need to keep here in Canada.

I'd appreciate your view on the RRSP foreign content limit and whether or not it's in the public interest to deny Canadian investors the opportunity to diversify risk geographically.

Also, I'd like your feedback on the notion of individual EI accounts, whereby after, say, ten years of contributing, Canadians would start to get statements of their EI account balance. Upon retirement, they would be able to roll those contributions into an RRSP. We would actually reward people for not drawing, as opposed to simply those who draw.

Also, I'd appreciate hearing from more than one of you about the issue or the potential policy of mortgage interest deductibility. It's kind of like the Loch Ness monster. There's a sighting of it periodically on the public policy front. It's one of the issues we find raised in Canada quite frequently when we're talking about affordability or about the ability of individual Canadians to own their own homes. Again, because of the comparison with the U.S., clearly there would have to be limitations on the amount, but it is a tax competitiveness issue with the U.S. as well.

Lastly, in terms of university funding, I'd appreciate feedback on the issue of fiscal imbalance and, more granularly, on the Séguin report from the Conference Board of Canada. That report addressed the growth in federal revenues, largely from the GST revenues over the last several years. Commensurate with that is the growth in the spending requirements of the provinces for health, social, and education spending. I think the Séguin report was specific in recommending a transfer of some of the GST revenues or some of the consumption tax levers to the provinces. I'd appreciate your feedback on the report.

That's it. Thank you.

À (1050)

Mr. Pierre Beauchamp: Madam Chair, I'll address the issue of mortgage interest deductibility first, and then ask our senior economist to provide responses on the first two questions.

Mortgage interest deductibility is a notion that comes up from time to time. I think it is probably erroneous to suggest that it could be easily implemented in this country without understanding fully well the costs that would be associated with doing so. A comparison of Canada's tax system to the U.S. system would reveal that things are so different that you're comparing apples and oranges. I would rather stay away from a comparison with the American situation.

The cost of installing mortgage interest deductibility would have to be found somehow and established clearly, but once you've done that you would have to find out where that lost income would ultimately have to come from. Right now, we benefit from an advantage with principal residences. What would happen there? Is that where it would be collected ultimately?

At the moment, our position is to not research, or not be involved, or not pursue that particular issue at this stage, because it has not been seen by us as a major issue to deal with.

The Chair: Mr. Klump.

Mr. Gregory Klump (Senior Economist, Canadian Real Estate Association): Thank you.

À (1055)

With respect to the foreign content limit being raised, we certainly do support the idea that Canadians should be given more power to determine where it is they want to invest their money as far as portfolio decisions go. It's worth knowing, though, that the Association of Canadian Pension Managers, in initially looking to raise the content limit to 30%, arrived at that level because that's what they consider to be the maximum prudent foreign investment in your portfolio.

So professional managers would be unlikely to go above the 30% in any event, but we certainly do support the ability of Canadians to have more power in terms of where they want to invest their money in their retirement income portfolio.

With respect to the private retirement savings accounts that you mentioned, I think an important first step is to increase the contribution limits, because the carry-forward doesn't enable older working Canadians who were around when the seven-year carry-forward limit was changed to a lifetime carry-forward limit don't have enough carry-forward to maintain their pre-retirement standard of living in their post-retirement years. They need 70% of the pre-retirement income. And the carry-forward for, say, somebody who was 50 years old when the carry-forward was established means they can't get there. They would fall below the 70%. But that's in the submission.

Another idea being floated around, of course, is the idea that you could contribute to a retirement savings account. Instead of getting the tax deduction when you contribute, you get taxed on the money that goes into it, but then it would be un-taxed when you take it out, upon retirement.

So a whole host of things can and should be looked at with regard to maintaining our retirement system.

The Chair: Mr. Ledwell.

Mr. Paul Ledwell: On the issue of university transfers, I must admit that I'm not familiar with the report from the Conference Board of Canada. Again, as our brief indicates, we think the federal government should develop a mechanism to ensure that there is accountability in how the funds that are transferred to the provinces are used, to make sure they are used where they were originally directed.

We know that the federal government has also implemented a series of tax transfers, tax points, as a means of ensuring continued funding, but we know as well that the result of all of this is that funding to universities, core operating funding to universities, has declined. So the funds aren't getting to the universities. Whatever mechanism is established, we think that accountability and transparency have to be very much part of it so that we're sure that the funds, as they are earmarked, are getting to the universities.

The Chair: Thank you very much.

Mr. Valeri, go ahead.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you very much, Madam Chair.

I'll be very brief. I just want to make a couple of comments and then ask a question.

To Monsieur Beauchamp, I want to thank the association for continuing to put forward your perspective on our approach to budgeting the contingency fee, with prudence being very critical, I think, as we move forward. We shouldn't lose sight of that.

On the RRSPs themselves, along with the comments made by Mr. Brison, I think the proposal you're making is actually addressing an anomaly that's occurred as a result of the five-year tax plan that we put in place. I think it's very important to understand that those Canadians who now are taxed in the third bracket are not able to contribute to the maximum amount. I think that's an anomaly that we should deal with.

With respect to the types of RRSP accounts, I think, Mr. Klump, you were referring to what was called a Roth account in the U.S. Do you suggest that perhaps we should be pursuing on both tracks, the increase in RRSP limits along with potentially putting in place a type of account like this so that Canadians have a choice?

Just to finish my remarks, with respect to the infrastructure, Mr. Facette puts forward a ten-year plan with significant amounts of money. I think you hit the mark when you talk about productivity and what's required in the country. I just want to be on record as supporting an approach that would see us achieve that objective.

The last point I'd like to make, for Mr. Ledwell, is that you talk about the need for research. I'm fully supportive, and I think most people around the table are very supportive, of ensuring that we have the research capability in the country.

I'm wondering if you can comment on the flip side of that, the commercialization of some of that research or the application of some of that research. In innovation round tables that have occurred across the country, I know that's always been one of the items that's come back in terms of building a more innovative economy that improves the quality of life or the standard of living of Canadians. While we put money in research, what kinds of commercialization and economic opportunities are coming out of the research, along with the need for obviously meeting the basic research requirements and the need for policy-making?

I'm wondering if you could address that, and perhaps, Mr. Klump, you could address the other question.

Thank you, Madam Chair.

Á (1100)

Mr. Gregory Klump: With regard to what you referred to as the Roth system, we think it's good to have a debate about this. No research that we know of has been undertaken on that idea. Certainly, we would welcome anything that enables Canadians to better save privately for their retirement.

Our first choice, though, for reasons of competitiveness and fairness, is that the RRSP contribution limits be raised, especially, as you said, for the third tax bracket, that $75,000 to $100,000 range, where they're unable to contribute past the current $13,500 limit.

The Chair: Mr. Ledwell.

Mr. Paul Ledwell: In terms of commercialization, I think the facts bear out very clearly that in Canada, 30% of research and development is done by universities, which is far greater than any other country in the industrialized world. So there's a great deal of emphasis placed on research and development in this country being done by universities, and universities have taken up that challenge, aided by the programs that have been developed through this government. I think we can point to the host of research parks and medical centres that have been established or strengthened at Canadian universities, and the products coming from the commercialization of research, which are developed in concert with companies, have been numerous. A whole litany of programs and initiatives has been undertaken, and that will continue.

But I get back to the base. To be able to get to that targeted area of research and those strategic areas of research, we need to develop the base of research. We need to have some discovery- and inquiry-based research that can then be formed, through young researchers and others, into more targeted areas of research. Without the base those targeted areas and that commercialization just won't occur. That's why we're saying it's very important to return to that base and to find a way to support the foundation.

The Chair: Thank you very much. On behalf of all the committee members here, we congratulate you on speaking to your briefs and sticking to our timeframes. Your written presentations are with all the committee members. We appreciate your time spent sharing your thoughts with us today.

We'll now suspend for a minute so that the members can circulate and the next panel can get set up.

Á (1102)

Á (1105)

The Chair: We will resume. Thank you very much. A couple of our witnesses have not yet arrived in the building, but we will commence with our witnesses who are present.

We'll start by welcoming all of our witnesses today. We would like you to address your briefs as opposed to reading from your briefs, and then we'll be going into the rounds of questioning. You have eight minutes to do your presentation.

With us are, from the Alliance to End Homelessness, Maura Volante, the coordinator; from the Association of Fundraising Professionals, Rob Peacock, the president; from the Building and Construction Trades Department, Robert Blakely, the director of Canadian affairs; from the Association of Consulting Engineers of Canada, Claude Paul Boivin and Pierre Shoiry; and from the Canadian Animal Health Institute, Jean Szkotnicki, the president. We are also awaiting the arrival of the Ottawa Centre for Research and Innovation.

We will proceed in the order in which you're listed on our panels this morning.

Madame, please commence with your presentation to the committee. The floor is yours.

Á (1110)

Ms. Maura Volante (Coordinator, Alliance to End Homelessness): Thank you.

The Alliance to End Homelessness exists to coordinate strategies and services to put an end to homelessness in Ottawa. Our number one goal is to promote more affordable housing, but we also recognize that varying kinds of supports are needed for people to keep housing, to prevent becoming homeless in the first place, to stay in housing once they have found it, and to use that base to move forward with personal and financial goals and dreams.

Here's the vision statement, which illustrates very clearly the breadth of the task that confronts Canadian society in ending homelessness.

The Alliance to End Homelessness envisions an inclusive committee that takes responsibility for ending homelessness by ensuring that everyone has the right and support to define, access and sustain housing of their choice.

The key words in this statement are “right” and “support”. Neither of these concepts drives the housing market now, and without direct involvement from the government, there is no way to ensure these basic building blocks to a healthy life. Therefore, we advocate for the continuance and the enlargement of programs that address both supply of housing and support services to help people maintain housing.

The federal government was once a key player in the provision of social housing in this country. There is nothing to prevent it from leading the way once again. Canadians need the leadership of the federal government to weave this crucial thread back into the social safety net to mend the gaping holes resulting from years of neglect.

On a broad level, we would like to see the development of a national housing strategy, which would include supply and supports to maintain all Canadians in appropriate housing. We lend our support to the submission made by the National Housing and Homelessness Network and the Toronto Disaster Relief Committee in calls for a federal investment of $2 billion towards a five-part program to address supply, affordability, supports, rehabilitation, and emergency relief. The earmarking of 1% of the annual budget will go a long way towards ending homelessness in Canada by providing affordable housing and the services and supports needed to keep people in their homes.

As well, we support the renewal of the supporting communities partnership initiative. This program has been responsible for many successes, but did not allow for a long enough timeframe to complete the work.

In our written submission, we have focused on the impact of homelessness on children, as this is a population not usually addressed in public discussions of homelessness. Time does not permit me to outline all the arguments pertaining to this issue. Here are some of the key points.

The fastest growing segment in the homeless population is now families. In Ottawa the current average for shelter users on any given night is 961 people. Thirty per cent of these are children. These numbers are alarming enough in themselves, but they only count children staying in family shelters with their families. The numbers are actually much higher. Some families stay temporarily with family members or friends; some are staying in transitional houses for victims of familial abuse. And many parents find their children somewhere else to stay when they lose their family home, as with a grandmother or another family member. All these children suffer the impacts of homelessness, emotional stress, obstacles to good, consistent parenting, and very often the effects of poverty, lack of basic nutrition and other material supports.

All levels of government have repeatedly assured the Canadian public that their prime commitment is to the children, who represent the future prosperity of this country. Reversing the Real Brain Drain, the final report of the early years study by J. Fraser Mustard and Margaret McCain, makes it clear Ontario children are not doing as well as they might. Graph after graph shows the clear correlation between health and achievement indicators and low family incomes. They argue the importance of acting now to support the needs of children living in poverty in order to prevent greater problems as these children become adults. The authors of this report are speaking of children in low-income families generally, but the negative effects of homelessness compound the problems for low-income families. As a result of this report, the Government of Ontario has set up a network of early years centres, but no supplemental program can replace a stable home environment for the growth and development of healthy children.

Jane Jensen's presentation, “Housing is a Children's Issue”, details the negative effects of poor housing on children's health and academic development. Problems such as mould, lead, and asbestos affect children's physical health directly, while overcrowding is shown to subvert the positive effects of supplemental programs for literacy by making it difficult for children to read and study. Poor nutrition is also a factor for most children who are poorly housed, because the reason for the poor housing is insufficient income. Finally, she reminds us how hard it is for parents to maintain good parenting while under the stress of long hours and anxiety about the possibility of eviction.

Á (1115)

Merrill Cooper's paper, “Housing Affordability: A Children's Issue”, relating housing to the national children's agenda, begins with a list of the goals of the NCA. As a nation, we aspire to have children who are healthy physically and emotionally, safe and secure, successful at learning, socially engaged, and responsible. She goes on to make the argument that housing is a direct factor in achieving all four goals of the NCA, and should therefore be a priority for the federal government. She points out that Canada is the only industrialized country without a national housing strategy.

Cooper makes strong arguments for federal government action based on its own agenda of addressing the needs of children across the country. It is clear that while the provinces and municipalities have parts to play in the ending of homelessness, there is a clear jurisdictional connection for the federal government in the provision of affordable appropriate housing for Canadian families. The federal-provincial framework agreement of 2001, which has led to specific agreements in most of the provinces, is an attempt to solve this problem of housing supply, but it does not go far enough. In several of the provinces the federal money will not be used to its best advantage, because of the lack of new provincial moneys supplied to the programs.

Some other concerns include problems with the focus on private sector provision of housing and the definitions of affordability.

This framework is not a substitute for a national housing strategy. When early generations of federal governments began shaping the social safety net we now cherish as Canadians, they set their sights on health care, education, and income supplements for people in need. In those times no one could anticipate the short supply of adequate affordable housing that now exists across Canada. Later generations did recognize this need and acted on it for several decades, but this focus was lost in recent years. Now is the time to recognize that in order to actualize the vision of citizen rights to housing as a fundamental necessity of life, we must provide the supports to make sure all Canadians, from the youngest children to the most elderly citizens, have a home.

It is time to re-weave this strand into the social safety net.

Thank you.

Á (1120)

The Chair: Thank you very much.

We'll go on to our next presenter. Mr. Blakely, please.

Mr. Robert Blakely (Director of Canadian Affairs, Building and Construction Trades Department, AFL-CIO): Good morning.

I represent the construction unions, the 400,000 men and women who actually build this country. Construction is Canada's largest industry. Eight per cent of all Canadian employment is in the construction industry, and 11% of GDP is directly related to construction, 15% if you take the indirects into account.

Our industry currently exists in a demographic time-bomb state. The average age of a tradesperson in this country is 47 years of age. In some trades, like bricklayers, the average age is in the sixties. We have an industry that is greying out, and as most everyone who has ever tried to do some home improvements knows, our jobs are difficult and complicated.

In the last budget the government talked about reducing EI premiums. We support the idea of reducing EI premiums, but rather than simply giving that money back holus-bolus, we think some of it should be redirected into training and apprenticeship, to increase industry partnerships, the industry partnerships that we talked about in the skill and innovations paper delivered by several departments of the government, to deliver them through the existing community college and joint apprenticeship training committee network that exists in this country. A little known fact is that the construction unions and their employer partners are the second-largest trainer in the country. We spend $300 million a year on training people, and we maintain a training infrastructure across Canada of $600 million.

Our jobs are done in a way that is both cyclic and, in some cases, seasonal. They follow immigration patterns, development patterns, and natural resource development. We need to find a way, either through the tax system or through the unemployment insurance system, to move Canadians from areas of high unemployment to areas we need workers in.

Canada's construction industry is the home of the underground economy. Twenty-five to thirty per cent of all commercial construction, 50% of all renovations and revamp, and over 50% of all new houses is undertaken in an underground economy, where the participants do not pay taxes, do not pay EI, do not pay CPP, do not pay into workers' compensation or other forms of training levies, in all provinces except Quebec. The tax loss to the government is enormous, and to some degree, the government's contracting strategy supports this underground economy.

Canada, particularly in the municipalities and cities, has a huge hidden deficit. Roads, buildings, sewers need to be updated. Cities and municipalities do not have the resources to do it, so targeted infrastructure spending is something we support. We support perhaps redirecting some of the gasoline tax to the cities, who do not have the constitutional base to tax appropriately. And we would like to see the politics taken out of infrastructure spending by means of a long-term, cogent plan that is anti-cyclical. There is no point in the government competing in our heated construction economy to put very few people to work. Do it at a time when jobs are going wanting.

We support increased funding for national security. They say every country has an army in it: if it's not your own, it's going to be someone else's. We read in the newspaper that the Canadian air force had to beg for bombs, the PPCLI had to basically stand on the runway and hitch a ride with the Americans to go to Afghanistan, and we had to use the Canadian navy to arrest the motor vessel Katie to get our military equipment back. I think that's outlandish. We support the reports of the other parliamentary committees on funding for national security.

As to health care, we applaud what you're doing with the Romanow and Kirby commissions. The cost of our social infrastructure net is sometimes held up to be, in some way, a national problem.

Á (1125)

In fact, in our industry, when we talk to our brothers and sisters in the United States, we are told it costs $800 to $1,000 a month to buy the same basic health care that we get through our health care system.

A social safety net that is directed and is effective is a competitive advantage for this country. We have a country that has enormous resources, human and natural. We're a society that ought to be judged on how we look after the least well-off people in that society. It is a crime that there are homeless people in a country as rich as ours.

It has been our privilege to work with the Minister of Labour, the Honourable Claudette Bradshaw, on the homelessness initiative. We believe every Canadian, every person who lives in this country, ought to have a home.

Let me close off by saying that we would like lower taxes, but if lower taxes have to come at the cost of downloading more services onto the provincial governments, which download more onto the municipalities, which download more onto the ratepayers, we'd just as soon keep paying what we're paying now. There will be a surplus: balance the needs of Canadians between debt, new spending, and tax reduction.

Finally, use the budget and the budgeting process as a planning tool, as part of a longer-term strategy. We don't need to go from budget to budget. We need to plan a lot further out, and each budget should build on the strengths of the last.

Those are my comments. Thank you.

The Chair: Thank you. Very eloquently spoken.

We'll go to our next presenter, from the Association of Consulting Engineers of Canada.

[Translation]

Go ahead, Mr. Boivin.

Mr. Claude-Paul Boivin (President, ACEC, Association of Consulting Engineers of Canada): Good morning, Madam Chair. My name is Claude Paul Boivin and I'm the President of the Association of Consulting Engineers of Canada. With me is Mr. Shoiry, the President of GENIVAR Inc., one of Canada's leading firms of consulting engineers.

Our association represents all consulting engineering companies in Canada. Our 600 members employ over 52,000 Canadians and their operations translate into over $6.4 billion in economic activity in Canada per year.

[English]

Madam Chair, we are here today to talk to you about investments in infrastructure and about Canada's out-of-control infrastructure deficit.

Infrastructure includes, as you know, water treatment plants, waste water disposal systems, roads and bridges, and all of those facilities needed to support community life. If you just take water as an example, our communities cannot survive without safe drinking water. The use of water in other ways is part of our daily lives. When we get up in the morning we take a shower, we brush our teeth, we flush the toilet. All of that is made possible by our infrastructure, which sometimes we just take for granted until, of course, something goes wrong, or until something goes very wrong.

Another example of infrastructure that brings both social and economic benefits is improved urban transit. Modern urban transit will reduce urban congestion, and of course it will contribute to Canada's competitiveness. But it will also help Canada meet its commitments to the Kyoto Protocol on climate change. From a social perspective, it will allow people with low incomes, poor people, and middle-class people to access cost-effective transportation that will take them to their jobs, take them to their schools, and generally improve the quality of their lives.

Madam Chair, although it's difficult to determine the exact level of funding required to address Canada's infrastructure challenges, Canada's infrastructure deficit is estimated to be at least $44 billion, of which about $17 billion is due to underinvestment in roads and highways. If we want to modernize our rail system, we have to add another $8 billion to $10 billion.

The result of a Toronto Dominion Bank financial group report published this year is even more frightening. It estimates that the total infrastructure shortfall is growing by about $2 billion a year. That is what we mean when we refer to an out-of-control infrastructure deficit. So unless Canada acts decisively, it will be increasingly difficult to wrestle this national problem to the ground.

Our view is that Canada's infrastructure deficit and the cumulative infrastructure debt should be seen as equally crippling, as equally devastating, as the national fiscal debt, and it therefore should be tackled with the same level of priority, the same level of determination, and the same level of urgency as we do the national debt. The infrastructure deficit, when you think of it, affects people's lives very directly. It has a much greater impact on the health, safety, and well-being of Canadians than does the national fiscal debt. The federal surplus last year was almost $9 billion, and none of this money has gone to paying down our infrastructure deficit, which in fact is Canada's second national debt.

In the recent Speech from the Throne, the government promised a ten-year program for infrastructure. We certainly welcome this initiative. We applaud the government for this. It is absolutely necessary, however, that the appropriate level of funding accompany that promise for infrastructure upgrades.

[Translation]

I will now turn the floor over to Mr. Shoiry.

Á (1130)

Mr. Pierre Shoiry (President, GENIVAR inc.; Chair, Board of Directors, Association of Consulting Engineers of Canada): Madam Chair, as an industry, we applaud the government's courage in eliminating the annual deficit. We believe the time has come to turn our attention to the second national deficit, namely Canada's infrastructure deficit. We're here today to call upon the government to make a commitment to eliminating our infrastructure deficit. As consulting engineers, we play a key role in planning and developing our national infrastructure and we see first hand the problems Canada faces in this sector. Our members across the country are closely involved in this issue and are experts in this field.

[English]

We don't have to look very far to see the effects of the neglect of our infrastructure. The examples are numerous: Halifax currently dumps 150 million litres of raw sewage into the harbour every day; our national highway system is not at par with comparable countries; and no significant national highway redevelopment program has taken place in Canada since the 1960s. Just think, more than 20% of our bridges in Canada--3,600 bridges--need major strengthening and/or rehabilitation. It is time to consider the significant safety benefits to be achieved by building safer roads and highways.

[Translation]

Madam Chair, we are not alone in recommending that more money be spent on infrastructures. Other groups have taken a similar stand. In recent months, four well-respected national organizations and one task force composed of elected government representatives have urged the government to address this problem without further delay.

Our message is simple: the federal government must ensure that infrastructure investments are prioritized, well planned, permanent and secure.

[English]

Canada's infrastructure, and investments in it, must be protected. To ensure efficient use and maximum lifespan, proper maintenance and repairs are essential. Let me just make a small comparison to illustrate my point.

The nation's infrastructure is to Canada what a house is to you and to me and to the average Canadian. If the house is not properly maintained, it will soon fall into a state of deterioration. Annual patching will not fix it. You and I would not let that happen to our house; it would be irresponsible. We cannot let that happen to our infrastructure. It is part of our heritage and we must protect it.

In conclusion, the Association of Consulting Engineers of Canada wants to say to this committee that investments in infrastructure require long-term planning and firm commitments. With these projects, the financial support cannot be just turned off one year and turned on the next. Canada needs a well-funded and permanent national strategy that will give Canadians what they deserve and expect: clean water, safer disposal of wastes, reliable highways and transit systems, and a more efficient national rail system.

Delaying the tackling of our infrastructure deficit can no longer be an option. Now is the time to plan a permanent infrastructure deficit reduction program, prioritize investment, and protect it throughout its lifespan.

We want to thank you for your time.

Á (1135)

The Chair: Thank you.

Ms. Szkotnicki, please go ahead. We had your brief earlier, and I understand you've just circulated some speaking notes.

Ms. Jean Szkotnicki (President, Canadian Animal Health Institute): Yes, that's correct.

Thank you for inviting us to the meeting here today, Madam Chair. I'm Jean Szkotnicki, president of the Canadian Animal Health Institute, also known as CAHI.

CAHI represents the companies that develop, manufacture, and distribute the pharmaceuticals, biologicals, feed additives, and animal pesticides that veterinarians and animal owners rely on to ensure healthy outcomes for Canada's agricultural and domestic animal populations.

In 2000 our members generated over $480 million in sales. We provide value-added jobs for thousands of Canadians. As input suppliers to food animal production, we are a key part of Canada's agricultural industry. Agriculture is this country's third-largest employer and one of our five top industries, accounting for over 8.4% of our GDP.

In the past several years, we have spoken to you about the serious negative effects of regulatory delays and the burden of user fees that are tied to non-responsive market-access regulatory programs, and the impacts that these fees and programs have on the competitiveness of our member companies and the customers we serve. Unfortunately, although CAHI and others, including this committee, have made suggestions for improving the accountability of cost-recovery programs, serious problems remain. This year, we hope you will once again make regulatory efficiency and cost-recovery policy some of your top areas for action in the next budget.

Canada's animal health industry is the definition of a global industry. Products researched and developed in Canada are exported for use around the world. Products researched and developed in other countries are approved and imported for use here.

Most importantly, our main client industry, agriculture, is itself global. For example, Canada's red meat producers export about 50% of their production, mostly to the U.S. Canadian pork producers are the world's largest exporters, while our beef producers are third in the world. The ability of our clients to access innovative animal health products has become a critical factor in their ability to remain competitive on a global basis.

In Canada, the Veterinary Drugs Directorate and the Canadian Food Inspection Agency are the two main regulators of animal health products. At one time, the Veterinary Drugs Directorate, or VDD, was considered to be among the world's best regulators, but over the years it has become a regulatory agency of last resort. As a result, many new and innovative products are approved in Canada long after they have been approved by regulators in other industrialized countries.

Think about the following: Only seven years ago, in 1995, the VDD took an average of 481 days to review new drug submissions. Today, the processes take over 800 days—nearly twice as long—and now we pay for a portion of that service, whereas we did not in 1995. This deterioration occurred even though the VDD promised to reduce the review period to their own administrative timeframe of 180 days when we negotiated cost recovery in 1996. Ironically, agricultural producers and animal pharmaceutical makers in the U.S. complain about having to wait 420 days for new drug approvals. They should be thankful they don't have to do business here. I would also point out that there are no fees for regulatory services in the U.S.

What do Canadians gain from the extra assessment time that we have here? Really, nothing. Our analysis is no better than U.S. assessment, it is only slower. In fact, VDD submission tracking would indicate much approval time is actually lost as submissions sit inactive in a queue. The VDD's own numbers show that a new drug submission can sit in a pile for more than four years before anyone looks at it seriously. That's four years before the clock starts ticking on the 808-day review period.

These extreme review delays affect Canada's economy in three ways. First, they discourage new animal health product research and development in Canada by pushing off the date the developing company can hope to generate any return on their investment in their home market.

Á (1140)

Animal health R and D is still being done, but it is taking place in the U.S., the EU, and other places with more efficient regulatory systems that support innovation.

Inefficient regulatory processes also prevent companies, producers, and exporters from staying on top of agricultural innovation. By taking so long to approve new, innovative products, the VDD effectively denies Canadians access to these products until after they have been common elsewhere. And once innovators realize Canada's regulatory programs are inefficient, they often will not submit products for review until they have been approved elsewhere.

Inefficient regulatory programs and the relatively small size of Canada's animal health market, which is only 2.5% of the global market, have a definite economic impact. Delays limit product developers' access to Canadian revenues and deny consumers access to products already in wide use elsewhere.

Finally, when the regulatory process is not responsive to innovative products, critical competitive factors for other industries are affected. They can be significant barriers to Canada's international competitiveness. It is hard for a Canadian producer using old technology to compete with a U.S. or European producer using cutting-edge technology that has not yet been approved here.

In our written submission, we have included four case studies showing the practical effects of these delays on our members and Canada's economy. And I would point out that it doesn't have to be this way. In the right environment, cost-recovery policy and regulatory programs can actually encourage innovation, something that has already been proven in other countries. Most of the solutions we need have already been proposed, discussed, and tabled by this committee and its members.

In its 1999 pre-budget report, this committee noted the growing concern over the government's cost-recovery and charging policy. The same year the Office of the Auditor General raised similar concerns. In the spring of 2000, two and a half years ago, this committee issued a unanimous report containing 12 recommendations to improve cost-recovery by improving performance, increasing regulatory harmonization with our major trading partners, enhancing regulatory accountability, and establishing a red-tape commission to evaluate and streamline existing regulations. CAHI supports these 12 recommendations without reservation and believes they must form a vital part of any budgetary plan that seeks to maintain Canada's ability to compete in the new economy.

The Chair: You are at your limit now. We would like your recommendations. Please go ahead.

Ms. Jean Szkotnicki: My apologies.

I would point out--just to squeeze in one extra thing--that the committee did have president Lucienne Robillard report on the government's revised cost recovery policy, and had incorporated the concerns and recommendations of this committee. The minister indicated that Treasury Board would be issuing a revised draft of the policy. We are eagerly anticipating the revised draft and expect it to incorporate the committee's views.

Our six recommendations are: first, Canadian stewardship programs must be equivalent to those of other countries. For example, most western countries bar the use of unapproved drugs in animal medicine, but Canadian law allows individuals to import unapproved animal drugs for use in their own animals. This discourages animal health product companies from taking the time and effort needed to pursue Canadian approval.

Second, Canada should negotiate data-sharing agreements with regulatory programs in comparable jurisdictions. This would reduce approval delays and free Canadian regulators from repeating assessments already undertaken elsewhere, also giving them the chance to focus on new innovations. Recognition agreements would promote and expedite the use of innovative products in Canada, which has an impact on food safety and animal well-being.

Third, Canada must ensure its regulatory approval performance standards are competitive with other western nations, both to encourage domestic R and D and to give Canadians timely access to innovative products that have already been proven safe and effective. Regulatory programs that consistently lag behind their international counterparts are not meeting their duty to protect the public interest. They are also harming Canada's economy by discouraging animal health R and D in Canada, which in turn drives the best and brightest researchers to pursue their work in the U.S. and other more responsive jurisdictions. In 2000 this committee unanimously recommended that regulatory agencies charging fees be required to set performance standards, report on them annually, and reduce those fees when the standards were not met. We agree.

Fourth, Canada should improve the public accountability of its regulatory agencies by requiring them to report to Parliament. This would improve the transparency and accountability of those agencies and let policy-makers and the public determine if regulators are actually serving the public interest. Several countries, such as Australia and the U.S., already have accountability and transparency measures in place for stewardship programs. This theme also appears in the federal government's innovation paper--

Á (1145)

The Chair: Ms. Szkotnicki, we have the written report before us. Would you quickly finish stating your recommendations, please.

Ms. Jean Szkotnicki: Okay. So we agree with your report in that we should be moving forward with accountability.

Fifth, we agree that regulatory policies and standards must remain current. Right now we are finding that the regulatory programs are not current with new technologies and cannot deal with them.

Sixth, the fees should be internationally competitive and consistent with the size of the Canadian market. In the past five to ten years cost recovery has become widespread for stewardship programs. Companies understand why these fees are charged. We don't mind paying for the services, but we expect value for our investment.

Thank you for your indulgence.

The Chair: Thank you very much.

We'll now go to seven-minute rounds.

Go ahead, Mr. Harris.

Mr. Richard Harris: Thank you, Madam Chair.

The Chair: Sorry, Mr. Peacock, go ahead.

I'm sorry about that, Mr. Harris.

Mr. Richard Harris: I thought we had missed one.

Mr. Rob Peacock (President, Association of Fundraising Professionals): Thank you, Madam Chair.

Good morning. I'm honoured to have this opportunity to appear before you today. I'm executive director of campaign for the Office of University Advancement of Ryerson University in Toronto. However, at this consultation I am representing the Association of Fundraising Professionals, an association of individuals responsible for generating philanthropic support for a wide variety of charitable causes, and I serve as the president of the Greater Toronto chapter and am chair-elect for Canada.

Today I'm speaking to the committee about the current capital gains tax on gifts of qualified securities to charity. More specifically, I will be encouraging you to eliminate that tax, which we believe will increase charitable giving in Canada.

Before I begin, though, I'd like to give you a little background about the Association of Fundraising Professionals, AFP. It's the largest association of fundraising professionals in the world, with over 26,000 members world-wide and over 2,000 members in Canada. We work for a variety of not-for-profit organizations, international, provincial, local, grassroots, that champion nearly every imaginable cause: health care, housing, literacy, the environment, arts, and scientific research, to name just a few. Our members are required annually to sign a code of ethical principles and standards of professional practice, which were first developed in 1964. We also have a strong ethics enforcement policy that can result in the revocation of professional credentials and expulsion of members who engage in unethical behaviour.

I cite this background for two reasons. One is to emphasize the importance AFP places on ethical fundraising. A critical component of AFP's mission is the promotion of high ethical standards in the fundraising profession. In ethical fundraising the focus is always on the donor. Fundraisers are stewards of the public money, and the success of the charitable sector is dependent on public trust and confidence.

The second is to demonstrate that because of our diverse membership, it is critical to us that any change in tax policy benefit the entire charitable sector. We represent organizations of every stripe and size, and any policies we champion must benefit all Canadian charities. And we strongly believe that the complete elimination of the capital gains tax on gifts of qualified securities to charity is exactly such a policy.

The 1997 budget contained a provision that cut the capital gains tax in half for gifts and securities to charity. That provision was to expire in 2001. AFP appeared before the same committee last year and argued that not only should the provision be extended, it should be expanded. The capital gains tax shouldn't be just cut in half, it should be eliminated. Last year we told you the 1997 provision was dramatically increasing gifts of stock to all charity, regardless of size, scope, and issue. Last year we told you gifts of appreciated stock went from being a de minimis factor to accounting for an average of more than 10% of charity's receipted donations. Last year we told you there was tremendous support for the elimination of the tax, and nearly every party supported such a policy. This year all those points remain true. Despite the up and down trends in the current marketplace, gifts of stock continue to rise and are a critical aspect of many charities' fundraising. It is not just large organizations that are benefiting. Just ask the Canadian Cancer Society's chapter in British Columbia or the Honen's International Piano Competition in Alberta. This giving will continue as more donors become aware of how they can give appreciated stocks to charity.

Eliminating the capital gains tax for gifts of qualified securities works because of the increased tax incentive for donors. People give because they want to give, make no mistake, but there is significant research, as well as extensive anecdotal evidence, to show that tax incentives affect the size of a gift. The larger the gift the donor is considering, the more influence tax exemptions will have on their decision. Given the size of many stock gifts, which tend to be more than your average $50 or $100 donation, eliminating the capital gains tax will be a huge incentive for donors to make these kinds of gifts.

The best part of it is that the policy is completely affordable. Last year the estimated incremental cost of the elimination of the capital gains tax was less than 1% of the budget surplus for fiscal year 2000. The cost is minimal, and given the budget surplus for the most recent fiscal year, it is something we can and should do. It may even help with the budget, as more charities can rely on gifts from private citizens and less on government.

Á (1150)

Eliminating the capital gains tax for gifts of appreciated securities is sound policy. Our neighbours to the south enacted such policies years ago, and charities have reaped the benefits. I would remind you that this very committee recommended this policy last year, a decision that the entire charitable sector greatly appreciated.

AFP believes it's time to finish what we started. A complete capital gains exemption for stocks of appreciated securities will benefit everybody. Donors will have greater incentive to give, charities will receive more support and increase their capacity to sustain themselves for the long term, and the government may find the funding pressure decreases as private giving increases. In short, the elimination of the capital gains tax on gifts of qualified securities to charity will go a long way towards building the capacity of the charitable organizations and creating a self-sustaining charitable sector in Canada.

On behalf of AFP's 2,000 members in Canada, I urge the committee to recommend, in the strongest possible language, the elimination of the capital gains tax for gifts of appreciated securities to charity.

Thank you for this opportunity. I would be happy to answer any questions you may have.

The Chair: Thank you very much, and thanks to all of you.

Colleagues, I'm aware that most of you have question period to prepare for, and have this meeting until 12:30 p.m., so I'm going to ask you to start with six-minutes rounds. We'll try to get everybody in.

Thank you.

Mr. Richard Harris: Thank you, Madam Chair. I'll be brief.

Mr. Blakely, I appreciated your presentation. You touched on something that I'm keenly aware of and interested in, and that is the impending crisis we're facing with skilled trades workers, as our population ages.

I have my own thoughts on where we appear to have gone wrong with apprenticeship programs and ensuring that there would be a following of younger people into the skilled trades as the older ones retired, but where do you think was the beginning of what we now may see as an impending crisis in skilled trade workers?

Mr. Robert Blakely: I think one of the absolute key points is that people have to actually understand that there is a crisis. A significant number of people in this country, when they think of plumbers and boilermakers and carpenters, think we're troglodytes who are too stupid to make it in any other real job. The truth is, that is completely, totally, and utterly wrong.

The government of the day, in the innovations and skills paper, has actually ratcheted up the profile of apprenticeship, has said it is valid post-secondary education, and that we are in fact an important cog in what is going on. That recognition is really important.

We need in our country national standards for apprenticeship. If anything bad happened to apprenticeship in the course of the last ten years, it was when the federal government handed it over to the provinces and said, “You run it.” That allowed the Province of British Columbia, for ideological reasons, to blow up their apprenticeship system. Someone with a dogwood diploma is not going to be a transportable worker who can go from one part of this country to another. We need a boilermaker from Newfoundland to be able to show up in the tar sands of Alberta and go to work, without more; our people are professionals and need to be treated like professionals.

I suppose that's really the start of it. And we need to spend some money, because apprenticeship actually costs the employer. I mean, 80% of the cost of training someone to be a carpenter happens on the job. His employer takes him on, and for the first three years doesn't make a nickel off him; he invests in him.

Á (1155)

Mr. Richard Harris: Would you suggest that because of the focus, and certainly well-deserved focus, on the higher-technology work, that has sort of grabbed the focus of government, both provincial and federal, over the years, which has led to I guess a diminishing thought of the importance of skilled trade workers in our country, and has wrongly diminished the value of skilled trade workers in Canada?

Mr. Robert Blakely: I agree with that completely. When the federal government contracts with someone, frequently all they look at is the bid price. No one ever looks to see whether the contractor who has bid to the federal government will actually train people, will make certain that there are apprentices on the job. Instead, frequently the people who get the bid are the people who don't do training, who work in the underground economy.

Mr. Richard Harris: I would suggest that the Association of Consulting Engineers recognizes the importance of skilled trade workers, because the projects you design and suggest have to be built by these skilled people.

I appreciated your presentation. You talked about prioritizing investment, and I couldn't agree with you more. It's all about separating your wants from your needs, and new infrastructure and maintaining existing infrastructure and upgrading it is certainly a need we have, because of just the sheer size of our country and the fact that our economy depends so much on infrastructure to make it go. I hope this committee will recommend that in the prioritizing of our investment, we hold infrastructure very close to the top, if not, in this period of time, at the very top. I will certainly support that.

I sympathize and agree with Mr. Peacock. So many institutions and worthy causes depend on philanthropic approaches to their funding. I was talking to someone the other night who represents a very worthwhile cause in Ontario, and she's telling me about a $1 million potential gift coming their way, and because of the limitations on the capital gains tax elimination, she's having trouble getting it--she's hopeful that she will. I think it's a great project you've got going there to work towards the elimination. I hope the government recognizes that.

Â (1200)

The Chair: Thank you very much.

Mr. Desrochers has quite nicely given his space over to Mr. Brison, so he can give his speech in the House at the right time. We'll put Mr. Desrochers in Mr. Brison's spot.

So go ahead, sir.

Mr. Scott Brison: Merci beaucoup.

We continue to be supportive of the elimination of capital gains tax for gifts of listed securities. From a cost perspective, this would be the year to do it, because I don't know too many people who are enjoying a capital gain.

In regard to cost recovery and that issue, we still support the notion of a regulatory budget presented in the House of Commons to increase the level of transparency for regulations. Currently, regulations are introduced by stealth. A bureaucrat decides it's a good idea to introduce regulation, and there's very little parliamentary approval for some of these things. The cost of implementation, the cost of enforcement, and perhaps the largest and most important cost, the cost of compliance, ought to be considered in the House by parliamentarians, along with some quantifiable assessment of the risk. It is possible from an insurance and risk perspective to do that, so that we can actually do a cost-benefit analysis of any new regulation.

I'd appreciate in a moment your feedback on that, Ms. Szkotnicki.

Finally, on the issue of labour market mobility, you referred to the challenge of having people living in one part of the country with the skills required in another part. To what extent is the current EI system actually an impediment to labour market mobility? If people are compensated to stay in a certain part of the country in periods of downtime, when they could be more fully employed elsewhere, is the current system an impediment? I would appreciate your feedback on that.

Second, with training, would you be interested in or supportive of the idea of individual EI accounts, where, after a ten-year vesting period, people who pay into EI would receive a statement saying your EI account balance is whatever? You could actually withdraw some funds from that to upgrade your skills, to take courses required for you to go from being potentially underemployed to more fully employed.

I'd appreciate your feedback on those two questions.

Mr. Robert Blakely: Is EI an impediment? I think the days of the UIC ski team are probably over.

In terms of impediments, let me phrase it this way. A young person who wants to take a trade in New Brunswick as a carpenter or a pipefitter probably worked for a year and a half to two years at the Irving Oil Refinery, and they're hoping to work at Point Lepreau or the other electrical generating place; I forget the name of it. But there's a huge gap in between. They need to be mobile. They can't sit on their EI laurels waiting for a job to come along. The short answer is: if we had good mobility through EI, those apprentices who started their trade in New Brunswick and are now languishing would be working in Manitoba on a hydroelectric project or in Alberta on the tar sands.

On the issue of EI accounts, I can see them working effectively for some folks, such as a lawyer or a doctor. In those ways I can see it working.

For us in the trades, we're better off to have some sort of collective training mechanism where we have a centre of excellence that people can go to. They can perhaps be funded through EI while they're taking training and move on. If I have good carpenter skills and want to become a scaffolder, then I should be able to go and get those skills. Currently, there isn't a place to do that. We could create those centres of excellence and do that.

Ms. Jean Szkotnicki: Relative to your comments with regard to quantifiable accountability, certainly we would support that both pre-implementation of regulatory access programs and post-implementation. I think that pre-implementation you need some quantifiable risk-benefit analysis of programs being introduced, and post-implementation there needs to be ongoing accountability as to whether they are delivering the services and adding value not only to the direct users of the service but, more importantly, to Canadians.

Â (1205)

The Chair: Thank you.

Next is Mr. Cullen for six minutes.

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

Thank you, ladies and gentlemen, for your presentations.

I assume that Mr. Brison will support my private member's bill dealing with cost recovery and user fees, which hopefully will get into the next draw. It has been reintroduced in the House. My bill would bring more transparency and accountability to the user fees.

I'm wondering, Ms. Szkotnicki, if you could comment on something specifically. The government's innovation agenda is being taken very seriously, but I wonder sometimes if there isn't a disconnect between the innovation agenda and some of the regulatory issues that you describe, where companies have to be the first mover in the market, they have to have a competitive fee, and the performance has to be in line with the fee. Do you see an opportunity here perhaps to connect the dots better with innovation and the regulatory environment?

Ms. Jean Szkotnicki: I'm really pleased that the innovation strategy has identified regulatory performance as a need for Canadians and for Canadian industry to be competitive. At the same time the consultations have really only just begun. There's one scheduled for this fall. So we really haven't been engaged.

The one thing that concerns me is that we have an immediate issue relative to market access programs. The timeframe identified in the innovation strategy is ten years, but I don't think we can wait ten years to bring greater accountability and performance standards into the discussion.

I'm also pleased that the throne speech recognized the need for regulatory reform. So there are some are encouraging signs.

We're waiting for that second draft to come from Treasury Board. I think you as a committee and we as an industry need to assess that and see whether it addresses the needs of Industry Canada and our regulatory needs as well.

Mr. Roy Cullen: I spoke to Minister Robillard the other day. The draft had been expected earlier, but apparently the instruction has been to go out and consult more with stakeholders and then to bring it back again. Are you seeing any evidence of more consultation? You were saying that some meetings are scheduled for this fall.

Ms. Jean Szkotnicki: That's for the Industry Canada innovation strategy.

Treasury Board has consulted with the Business Coalition on Cost Recovery relative to the second draft. We have seen some shifts in paradigms, so to speak, in the sense that there is an interesting performance standard. I still grapple with, as I think they do, how to bring accountability into that process. I think industry is saying we have to have the accountability, as indeed is the finance committee.

Mr. Roy Cullen: Mr. Peacock, first of all, I think this committee has been supportive of reducing the capital gains inclusion rate on marketable security donations to charitable organizations to zero, and I think we put that in our last report. One of the other issues we also put in our report has to do with the donation of marketable securities to private trusts.There has been a differentiation between public trusts or charitable organizations and private foundations. What are your views on that? Do you see any progress in that area?

Mr. Rob Peacock: Having individuals with family-owned, private foundations able to give directly to their own private foundation gifts of marketable securities is something that would benefit the charitable sector immensely. I would suggest that, given the increased needs within the charitable sector, we would be very much supportive of any moves by the finance committee to influence the Department of Finance in that regard. Philanthropy is exploding because the need is great, and every opportunity for private benefactors to maximize the opportunities for philanthropy through their private foundations would be supported.

Â (1210)

Mr. Roy Cullen: With government realizing it can't do everything, we need to support the voluntary sector. Hopefully, we'll be able to help you out, but we'll have to see.

Do I have a couple of minutes left, Madam Chair?

The Chair: You have one minute left.

Mr. Roy Cullen: Mr. Boivin, I'm sure you're aware of the infrastructure programs that this government has had over many years. I think we're into the third. Now we have the Strategic Infrastructure Fund. Of course, it's never enough.

I have two quick questions. One, what is the role for public-private partnerships in all of this? There has been much discussion and, I think, confusion about what the opportunities and constraints are of involving the private sector.

Mr. Claude Paul Boivin: There are all sorts of opportunities for private-public partnerships. They take new approaches. There are some good examples of that, and perhaps they should be models. It's certainly something that our association encourages exploration be given to.

Some funds were set aside, but clearly they're inadequate at this stage. There doesn't seem to be a process in place to prioritize those investments. One of the things we would urge the government to consider is some sort of mechanism. We were happy with the foundation. For good reasons, perhaps, the foundation was never created. But there still needs to be some central mechanism to coordinate with the provinces and identify the priorities.

The Chair: Thank you.

Mr. Martin, go ahead for six minutes.

Mr. Pat Martin: Thank you very much, Madam Chair.

I want to thank all of you for very interesting briefs. I notice that with the grouping of the witnesses, there are common themes throughout many of your presentations. That makes it easier for us to raise issues.

I want to start with Mr. Blakely. Thank you for your brief, Mr. Blakely. Coming from the building trades myself--as you know, I'm a journeyman carpenter and former head of the Carpenters' Union--I can certainly relate to many of the issues you raise, because years ago I used to sit where you're sitting now and ask government to implement some of these amendments. So we aren't making a lot of progress.

In fact, on the issue of using EI money for labour market training, we've actually gone backwards. I'd like to start there. Given that the EI fund is showing a surplus of $700 million a month, the biggest revenue generator for the government, could you speak to how logical it is that one of the designated uses for that money should not just be income maintenance but also training to enable people to get back into the workforce?

Mr. Robert Blakely: And not just to get into the workforce? Consider Mr. Harris' question about apprenticeship. If there was some incentive for people to hire apprentices, maybe that would encourage some folks to actually say, okay, the apprentice can be a profit source, not just an investment for the future.

If you look at training, we are going to replace virtually the entire construction industry, both through growth and through retirement, in the next seven to ten years; we're going to have 100% turnover. If we do not get bright young people into the system before the baby boomers leave, we will not get the transfer of safety knowledge, technology, the how to do it, and that will be a national disaster.

Mr. Pat Martin: Good point, thank you.

The other thing I would raise with you is this. You mentioned the infrastructure spending that ought to be anti-cyclical, and perhaps we can get comments from others on this as well. Would you agree that there could be secondary objectives for infrastructure spending, such as labour market training? In other words, should there be two bottom lines when a tendering process goes out for infrastructure spending, one a low bid, so that we get good value for our money, and another a social, secondary objective of taking part in apprenticeship training or participation?

Â (1215)

Mr. Robert Blakely: We agree with that. Low bid isn't necessarily lowest cost. You need to look at lowest cost taking safety into account. If someone gives you a very low bid, but kills people, that's not in our interest. Someone who gives you a low bid and does no training doesn't help. If you look at the Barrett commission from British Columbia, you get the lowest bid. Unfortunately, all the condos leak and create a nightmare of several billion dollars. That isn't value either.

So what you're really left with is the idea of the foundation that would depoliticize infrastructure spending, which would prioritize it, which would say, in the province of New Brunswick, which now has significant unemployment, we will spend infrastructure money that will encourage those people who started their apprenticeship on the Irving project to go to work on the school, the church, the hydro dam, or whatever is being replaced in New Brunswick, finish, and become a mobile asset for deployment anywhere across the country once they've got their training done.

Mr. Pat Martin: Maybe as the last point on the infrastructure spending, it's long been one of the basic tenets of the trade union movement that wages be taken out of competition. In other words, a company should win a contract based on their skill and ability, not on their capacity to find cheaper and cheaper labour. In that light, we do have the federal fair wage schedules, where you're not allowed to pay a carpenter less than x dollars on a federal project. Should the federal fair wage schedules be set at union scale plus benefits, rather than as currently? Currently, the non-union sector that's not bound by collective agreement wages has an advantage, in that they can pay less per hour to the carpenter.

Mr. Robert Blakely: The short answer is, yes, it should be the rate plus benefits. The truth is, federal fair wage isn't enforced, and a number of federal government departments get round it by hiring a consultant. The consultant becomes the general contractor, and then builds the building; the federal fair wage never attaches to it anyway. So federal fair wage needs significant reform if it is going to help the skills agenda in this country.

The Chair: Thank you.

Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you very much, Madam Chair.

It's good to have you here, and good to see you making this type of presentation. I've missed it. Over the last few years we've had presentations but we haven't had the different groups in here together so that I could actually ask a question of one, what they want to do, with the others responding. We sort of got away from that, but today I see that I can ask that type of question.

First I want to make a comment, to Mr. Peacock, on the support we've had at this committee on the issue of eliminating capital gains on... As far as I'm concerned, it should be eliminated on all. But who am I? I can only make that kind of recommendation.

One thing that has really interested me this morning is the fact that here we have the engineers, who say there is a deficit of $44 billion in infrastructure, and here is a comment from Mr. Blakely, who says that when we have a heated economy the infrastructure should not be pushed as much; in a sense, it was part of his presentation. But, yes, it was done well in the past.

I have two questions, and I think I will go there for the first time. I don't think anybody has ever been there. That is, as the time comes up, are you prepared, as engineers... When you are preparing a bid, let's say for government, do you think job training should be included in there? It should be no different if you're doing research and development. I think job training should be put in as part of a bid. Would you be willing to say that should be a requirement passed specifically for governments in bidding for jobs, so that you are forcing a government to put that forward? It would be no different for research and development. That is number one.

Question two is to Mr. Blakely. In the past our skilled trades have always been by imports, always by immigrants. Would you also be looking at, in view of the shortage we have in skilled trades, agreements for seasonal workers, in agriculture or in other components? It would bring in... and the seasonal shortages, to be compensated by agreements with other countries, and the need of a country, or expand immigration.

It bothers me when you talk about the EI fund and how much there is there. Let's call it a tax. That's all it is. It's a socialized tax no different from anything else. We have the GST. It is a tax on doing business in this country, no different. Let's forget the notion of how much we have in there; it's only imaginary. It's going into general revenue and it should be called a tax, with the component of redistribution of a tax, of creating jobs. It should be training and creating jobs and nothing else.

Perhaps you would answer those questions.

Â (1220)

Mr. Pierre Shoiry: I have a couple of comments. First of all, I don't think the infrastructure market is a hot market now. I think there is a lack of investment in basic infrastructure--waterways, water, sewer. I think it is now a common fact that we have to invest major moneys in that sector. So it is definitely not a hot market across Canada, although maybe in some specific areas.

With respect to job training and the bidding process, I think what we have to look for now is good value for the money. Part of the good value is to have training, which could be part of the component. Some countries have incorporated that.

As engineers, we have to train people. We are facing the same challenges as the trades people. We are going to see a shortfall in engineers. We have already invested moneys, and with the help of the federal government we have created the Generation-E program, which is designed to encourage students in high schools and universities to go into the engineering sector. So training is definitely a priority for our consulting industry as well as for the construction industry.

Mr. Robert Blakely: I agree.

Value-contracting, whether you do training, whether you do safety, what you contribute to the local community, those are the sorts of things government, as a sophisticated and responsible purchaser of construction, should be doing.

As to immigration, our industry isn't seasonal anymore. At one time you could say construction was seasonal; now, with modern construction methods, it tends to be more cyclical than seasonal. I think we would favour, if people are going to immigrate to this country, that they immigrate appropriately, they come into the country, they become Canadians. We've recently had some success with the Department of Citizenship and Immigration on the new criteria for people who are seeking to immigrate, giving significant advantage in the point system to people who have a skilled trade that is compatible with Canada and have experience. That's always the way we've built things with immigrants, and I think we will continue to do that. So we're supportive of that.

Mr. Gary Pillitteri: So you would not say a specific need is to let others come into the country?

Mr. Robert Blakely: Specific need can apply when others come into the country. We're working on some programs now with the United States to make it easier for American workers to come. An American standing in Dieppe Gardens in Windsor, looking north into the United States, can see all kinds of jobs he can't secure. In the short term arrangements between Canada and the United States can apply. The cost of bringing people in for a short term from elsewhere is probably prohibitive, at least in our business.

Mr. Gary Pillitteri: I was thinking more that as we have entered into a free trade agreement with Mexico and Chile, it would include not just the Americans.

Mr. Robert Blakely: It depends on whether we're importing cheap labour or people who have skills.

Â (1225)

Mr. Gary Pillitteri: Skills.

Mr. Robert Blakely: If people have skills, yes.

The Chair: Thank you very much.

Ms. Minna, do you have one or two questions?

Ms. Maria Minna: Thank you. I'll be very quick.

First, I want to say, Mr. Blakely, that I understand very clearly the problem with the construction industry. My father worked in construction all his life, and I did volunteer work with injured construction workers for about 20 years. So I understand the industry somewhat and have a fair understanding of the problems of training.

In the late nineties we were talking about the average age in construction being 50; they've obviously got a lot older and we haven't resolved the problem. So I agree with you 100% on the need for a national apprenticeship program in this country. We cannot continue to approach it piecemeal, and we must respect trade. I think we've devalued trade in this country for a long time. We've never valued it. If you didn't have a university or college education, you weren't worth much, and that's not acceptable.

Your idea on EI is a very good one. When I was a member of the HRDC committee--I was vice-chair in 1994 when we did the social security review--that's what a number of us were talking about. We never got off the ground on it, because 1995 came, the budget cuts and so on, and we just never got into that. But it's a good idea. We thought so at the time, those of us around the table, because we were looking for a way to use some of the EI funds to retool our labour force, to continuously retrain and assist people to pick up new skills, as either the factory shut down or their skills were outdated or, as in your case, there was a shortage. So I fully support that. I think it's a great idea.

I have two questions, one for you and one for Mr. Boivin. You said the underground economy is huge and it's a loss to taxes. I wonder if you could give us some suggestions as to how we might be able to sort it out in that industry, what changes we could make.

The other question, for Mr. Boivin, is to do with professional engineers. I understand there's a shortage. Do you have a special program to recognize foreign-trained engineers' credentials in your particular system?

Maybe we could start with Mr. Blakely.

Mr. Robert Blakely: With regard to the underground economy, one way is for the Canadian government, one of the largest purchasers of construction, to actually make certain that the people they contract with do not do the work in the underground economy. A whole bunch of construction funded by the government is done by contractors who don't employ a single person. They get 150 people, they make each of them an independent subcontractor and have them go to work, and they pay them cash. That's appalling. What a waste of our money. They're not putting back into the system.

A number of people in this country, such as fair contractors, unions, provincial governments, workers' compensation boards, and CCRA, would very much like to end the underground economy. Some mechanisms are currently in place within CCRA. If they could be expanded, if there could be a public awareness campaign indicating that getting your work done in the black market economy actually hurts you, and if we went out and enforced.... I know that enforcement has become a horrible word in lots of places, but this is a case where the sum of several billion dollars a year doesn't go to the federal government, the provincial governments, and the various compensation boards. Let's go out and catch that. We're prepared to help with that.

Ms. Maria Minna: Good. I appreciate that. Thank you.

Mr. Boivin.

Mr. Claude Paul Boivin: The recognition of foreign credentials and the licensing of engineers comes under the provinces. But there is a central body, the Canadian Council of Professional Engineers, and they have an active program to address the issue of foreign credentials.

Ms. Maria Minna: How much time do I have left?

The Chair: You have one minute.

Ms. Maria Minna: Okay. I'll be very short.

I understand that it comes under the provinces. But this is one of the constant frustrations of my life. I worked on integration for immigrant people in Toronto for 20 years, and this issue has been around for a long, long time. The problem is that we say it comes under provincial jurisdiction. I'd like to cut through that. Quite frankly, the provinces don't push the professional associations to do something about it. We have people coming to my office who have basically used up what moneys they brought with them. They can't get a decent job and are forced to do menial work, and their family starts to break up. It's just not acceptable.

I appreciate that you're not provincial, but there may be some connection between your association and the provincial associations.

Â (1230)

Mr. Claude Paul Boivin: There's another national body, though, which is the Canadian Council of Professional Engineers, and they do try to coordinate with the provinces. Whether they're doing enough or whether it's moving fast enough... Our association represents the companies. I can certainly provide you with information on the CCPE program. They do have an active program to recognize foreign credentials.

Ms. Maria Minna: Okay.

The Chair: Each of you did an excellent job in getting your ideas across today. We appreciate the time and effort it took. We know that you came on shorter notice than normal, and we appreciate that also. On behalf of all the members of the committee, thank you very much.

Thank you, colleagues.

Our meeting this afternoon is from 3:30 to 5:30 . The original notice had it going on a bit longer. We have one meeting with the health councils this afternoon.

We are adjourned.