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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, November 7, 2002

0900

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

0905

0910

Mr. Amir Khadir (Chairman of the Board, Centre canadien d'études et de coopération internationales (SUCO))

0915

The Chair

Mr. Frank Trotter (President, Canadian Association of Railway Suppliers)

0920

0925

The Chair

Mr. Michel Gratton (President, Brome Financial Corporation)

0930

Mr. Matthew Levinson (Vice-President, Canadian Factors Association)

The Chair

Ms. Francine Godin (Executive Director, Go for Green)

0935

Mr. Steve Grundy (Director of Development, Go for Green)

0940

The Chair

Mr. Brian P. Anthony (Executive Director, Heritage Canada Foundation)

0945

The Chair

Ms. Joan Duncan (President, Commonwealth Games, Sport Matters Group)

Mr. Victor Lachance (Senior Leader, Games Sport Matters Group)

0950

Ms. Joan Duncan

Mr. Victor Lachance

Ms. Joan Duncan

The Chair

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

Mr. Amir Khadir

Mr. Rahim Jaffer

Mr. Frank Trotter

0955

Mr. Rahim Jaffer

Mr. Brian Anthony

Mr. Rahim Jaffer

Mr. Victor Lachance

1000

Mr. Rahim Jaffer

Ms. Joan Duncan

Mr. Rahim Jaffer

The Chair

Ms. Pauline Picard (Drummond, BQ)

Mr. Amir Khadir

1005

Mr. Claude Perras (Acting Director General, Centre canadien d'études et de coopération internationales (SUCO))

Mr. Amir Khadir

Ms. Pauline Picard

The Chair

Ms. Pauline Picard

Mr. Brian P. Anthony

1010

Ms. Pauline Picard

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

The Chair

Mr. Bryon Wilfert

Mr. Frank Trotter

Mr. Bryon Wilfert

Mr. Frank Trotter

Mr. Bryon Wilfert

Mr. Frank Trotter

Mr. Bryon Wilfert

Mr. Frank Trotter

Mr. Bryon Wilfert

1015

Mr. Victor Lachance

Mr. Bryon Wilfert

Mr. Victor Lachance

Mr. Bryon Wilfert

Mr. Brian Anthony

1020

Mr. Bryon Wilfert

The Chair

Mr. Bryon Wilfert

The Chair

Mr. Scott Brison (Kings—Hants, PC)

Mr. Victor Lachance

1025

Mr. Scott Brison

Mr. Victor Lachance

Mr. Scott Brison

Mr. Victor Lachance

1030

Mr. Scott Brison

Ms. Francine Godin

Mr. Steve Grundy

Mr. Scott Brison

Mr. Brian Anthony

1035

The Chair

Mr. Scott Brison

Mr. Brian Anthony

Mr. Scott Brison

The Chair

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

1040

1045

Mr. Claude Perras

Ms. Maria Minna

Mr. Claude Perras

Ms. Maria Minna

Ms. Joan Duncan

Ms. Maria Minna

Ms. Joan Duncan

Ms. Maria Minna

1050

Mr. Victor Lachance

Ms. Maria Minna

Ms. Joan Duncan

Ms. Maria Minna

The Chair

Mr. Victor Lachance

The Chair

Mr. Pierre Paquette (Joliette, BQ)

1055

The Chair

Mr. Frank Trotter

Mr. Pierre Paquette

Mr. Brian P. Anthony

1100

Mr. Pierre Paquette

Mr. Brian P. Anthony

Mr. Pierre Paquette

Mr. Victor Lachance

1105

The Chair

Mrs. Francine Godin

Mr. Steve Grundy

The Chair

Mr. Matthew Levinson

The Chair

Mr. Matthew Levinson

The Chair

1115

The Chair

Mr. James Turk (Executive Director, Canadian Association of University Teachers)

The Chair

Mr. Gerald Brown (President and Chief Executive Officer, Association of Canadian Community Colleges)

1120

The Chair

Mr. James Turk

1125

1130

The Chair

Mr. Ian Boyko (National Chairperson, Canadian Federation of Students)

1135

1140

The Chair

Mrs. Denise Pelletier (directrice du Cabinet, Université du Québec à Montréal; Vice-President for External Communications, Humanities and Social Sciences Federation of Canada)

Mr. Guy Berthiaume (vice-recteur adjoint et chef de cabinet du recteur, Université du Québec à Montréal)

1150

Mrs. Denise Pelletier

The Chair

Mr. Rahim Jaffer

Mr. Gerald Brown

Mr. Rahim Jaffer

1155

Mr. James Turk

The Chair

Mr. James Turk

The Chair

Mr. James Turk

The Chair

Mr. Pierre Paquette

1200

The Chair

Mr. Ian Boyko

Mr. Pierre Paquette

Mr. Ian Boyko

Ms. Maria Minna

The Chair

Mr. Ian Boyko

The Chair

Mr. James Turk

1205

Mr. Pierre Paquette

Mr. Guy Berthiaume

Mrs. Denise Pelletier

Mr. Pierre Paquette

Mrs. Denise Pelletier

Mr. Pierre Paquette

Mrs. Denise Pelletier

Mr. Pierre Paquette

The Chair

Mr. Bryon Wilfert

1210

The Chair

Mr. Gerald Brown

Mr. Bryon Wilfert

The Chair

Mr. Ian Boyko

Mr. Bryon Wilfert

Mr. Ian Boyko

Mr. Bryon Wilfert

Mr. Ian Boyko

1215

The Chair

Mr. Scott Brison

The Chair

Mr. James Turk

Mr. Scott Brison

1220

The Chair

Mr. Ian Boyko

The Chair

Mr. Ian Boyko

Mr. Gerald Brown

The Chair

Ms. Maria Minna

1225

Mr. Gerald Brown

Ms. Maria Minna

Mr. Ian Boyko

Ms. Maria Minna

1230

The Chair

Mr. James Turk

The Chair

CANADA

Standing Committee on Finance

NUMBER 021

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, November 7, 2002

[Recorded by Electronic Apparatus]

¿ (0900)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Bienvenue à tous. Welcome to everyone. We are meeting today, pursuant to Standing Order 83(1), as part of the finance committee's pre-budget discussions. We have some of our other members in other parts of Canada, and we've been very happy to receive so many witnesses in our hearings to date.

¿ (0905)

This morning we will divide ourselves into two panels, the first from 9 to 11 and the second from 11 to 12.

We welcome the first panel of witnesses. From the Canadian Association of Railway Suppliers we have Frank Trotter and Gordon Patterson, who is the director. From the Canadian Factors Association is Michel Gratton, president of Brome Financial, and Matthew Levinson, vice-president of Montcap Financial Corporation. Bienvenue. From Centre canadien d'étude et de coopération internationale is Amir Khadir, chairman of the board of Suco, accompanied by Claude Perras, acting director general. From Go for Green we have Francine Godin and Steve Grundy. From Sport Matters Group are Victor Lachance, who is the senior leader, and Joan Duncan, the president of the Commonwealth Games. Welcome to you all.

We will start with eight-minute presentations. The committee and I welcome the fact that many of you were able to get your presentations sent in ahead of time. They've been translated and distributed to all of the members, not just those present here today. For those who have joined us a little later in our agenda, thank you for providing your material translated for us.

We will start now with eight minutes. I will give you a non-verbal warning at one minute prior to the end, when you should be wrapping up. Actually, because one of our presenters has to leave early, I will start with the Centre canadien d'étude et de coopération internationale.

Monsieur Khadir, s'il vous plaît.

¿ (0910)

[Translation]

Mr. Amir Khadir (Chairman of the Board, Centre canadien d'études et de coopération internationales (SUCO)): Good morning, everyone. Members, ladies and gentlemen, Madam Chair, thank you for welcoming us here. My name is Amir Khadir and I am Chairman of the Board of Directors of SUCO. I am speaking to you today on behalf of nine Canadian volunteer agencies, all active in international development. Those agencies are: Canadian Crossroads International, the Canadian Centre for International Studies and Cooperation (CECI), Canadian Executive Service Organization (CESO), CUSO, Oxfam-Québec, VSO; World University Service of Canada and, lastly, SUCO.

Together, our agencies each year send and receive more than 3,000 volunteers and are in touch with more than 60,000 volunteers who, over the years, have returned to Canada. These figures include many volunteers from the South, but they generally represent men and women from Canada who are so concerned about the disparities between life here and life in the less developed countries that they are prepared to devote weeks and months, and even years, of their life to improving the world.

Each year, through our network of members and volunteers, we reach every community in the country, from sea to sea. Our members and volunteers provide a true, concrete Canadian presence in the world, often the only Canadian presence outside the capitals, in some cases even in the entire country.

First, we would like to thank you sincerely for giving us this opportunity to express our views. International development is important. As a result of major disparities, it is an increasingly recognized international issue. I am happy that we can discuss its place in the context of discussions on Canada's finances.

In recent years, Canada has made various commitments in the field of international development. Many of those commitments had been made with other countries, particularly in the context of the UN Millennium Declaration, which contained eight development goals and 18 objectives focusing on the reduction of poverty and the promotion of sustainable development. It is important to honour those commitments if we want to promote a better world.

In the Throne Speech last September, the government emphasized support for international development. We who work in the field have for many years asserted that development issues should be among the government's priorities. We genuinely support the increases promised by the Prime Minister in his speeches in recent months.

In the Throne Speech, Canada reiterated the commitment it made at the World Summit on Sustainable Development in Johannesburg to increase its development assistance budget by 8 % next year with a view to doubling international aid by 2010. We firmly support this commitment, and that is why we are here today because, apart from the Throne Speech, the budget is the best way to evaluate the government's priorities. We want to express our desire that the intentions expressed by Canada be realized in the next federal budget.

We want to express our full support for the government in the intention it has expressed too increase the aid budget by 8 % this year and in the years to come until it has doubled by 2010. We would appreciate it rethinking the cuts it made to development aid in the mid-1990s.

In 1993, the aid budget put Canada in sixth place among donor countries. Today, based on the figures of the Canadian International Development Agency, Canada has unfortunately slipped to sixteenth place. Of course, we get the feeling that this is only the beginning if Canada is one day to achieve the objective it has set of allocating 0.7 % of gross national product to international development. Let's remember that this 0.7 % commitment was made together with all developed nations. It is a commitment that was made more than 25 years ago.

Even if we manage to double the development aid budget by 2010, we feel it will then represent only 0.4 % of our gross national product. There is still a gap between the objective and the reality. As a country, we will have to do more.

Another commitment of Canada's which we think must be met concerns tariffs. We would like to express our support for this initiative announced by the government which will have an incalculable impact on international development as well as Canada's finances. If the removal of tariffs on products from developing countries comes into force next January as planned, that will be a remarkable achievement and the mark of the kind of leadership the rest of the world needs to show. These measures must not be put in place in a way that harms Canadian workers. Fair ground rules, that is to say an even application of the International Labour Organization's and other standards should afford Canadian workers a certain degree of protection. Of course, we will have to be watchful to ensure that the ground rules remain fair, but we cannot deny the fact that, even if the increase in aid is good and necessary, it is ultimately the abolition of barriers that prevent people from earning a living that is undeniably the best solution for rebalancing trade and providing genuine assistance for development.

Taken together, these international development announcements are definitely steps in the right direction. We approve the government for having presented us with an inspiring vision of Canada's place in the world. We will be there to urge you on as you transform that vision into reality.

In closing, I would like to say a few words on the benefits Canada derives from international aid, particularly on the contribution of volunteer agencies. The Government of Canada's contribution will rely on the intellectual and financial resources of tens of thousands of Canadians. Our organizations help Canadians get involved internationally in order to improve the world, but also to improve Canada. Our returning volunteers continue to exercise a remarkable influence on Canadian society through their local contributions to improving their communities. They have managed to achieve success in politics, directing U.N. agencies and managing corporations that are proving effective on the international scene. Some who have brilliantly completed similar careers continue to share everything they have learned with those who want to learn.

Thank you once again for taking the time to listen to us. We are here now to answer your questions a little later.

¿ (0915)

The Chair: Thank you, sir.

Mr. Trotter, please.

[English]

Mr. Frank Trotter (President, Canadian Association of Railway Suppliers): Madam Chair, good morning.

With me is Gord Patterson, and accompanying us is Peter McGuire, executive director of this association, and Sab Meffe, who is available for additional expertise on tax matters, if needed.

The Canadian Association of Railway Suppliers represents firms in Canada that produce and supply services and goods to the Canadian railway industry and that export from Canada to other countries.

Canada's railways play a vitally important role in getting Canada's goods to market. This is increasingly true since the signing of the North American Free Trade Agreement. The rail mode arguably offers the best chance to minimize transportation's environmental impact, the Kyoto accord. Certainly that's true vis-à-vis the main surface mode competitor, trucking.

Trains operate in their own dedicated corridors, reducing land use requirements and at the same time removing freight and passenger traffic from our already congested road systems.

Rail handles the majority of the overall freight work while generating only 4% of the transportation sector's greenhouse gas emissions. Its emissions today are lower than in 1990, despite the growth of the business over that past decade. The problem, however, is that government tax policy, in our view, does not reflect the importance of rail transport to all Canadians. We feel the tax policy is punitive and discriminatory in many ways relative to other modes of transport and relative to our direct competitor and trading partner, the United States.

If you're following along, I'm now at the bottom of page one, skipping for the sake of speed.

Public policy must avoid imposing unnecessary costs, particularly tax costs, which result in making Canadian railways less competitive than their U.S. counterparts. The freight rail world does not receive any government subsidies and spends in excess of a billion Canadian dollars per year in some form of taxation to various jurisdictions. The same rail industry has to reinvest more than 20% of its gross revenue each and every year to maintain a productive rail transportation system that is important to all Canadians.

In May the committee received a submission from the Railway Association of Canada. The RAC submission identified three policy imbalances that affect the railways directly--fuel tax, capital tax ,and capital cost allowance rates. With respect to federal fuel taxes, the RAC asked for an exemption for fuel used by rail in international traffic as well as a reduction in the federal fuel excise tax and a matching of future U.S. fuel tax rate reductions. The RAC also sought the elimination of the federal large corporations tax that had also been recommended by this committee in its November 2001 report. We would like to indicate that we heartily support these recommendations.

For many years our association has argued for changes to the capital cost allowance provisions for rolling stock--that is, railway cars. The Standing Committee on Finance has echoed that call, but to date the government's response has fallen far short of what's needed to rectify the situation.

We are pleased that in the year 2000 budget the government proposed increasing the CCA rate for locomotives, rail cars, and railway suspension devices acquired by railways. That was increased from 10% to 15%.

While this was a step in the right direction, it did not fully redress the existing disparity with other modes of transport in Canada. As well, the changes still left the Canadian tax depreciation rate for railway assets far below that of U.S. railway competitors and is not reflective of true economic obsolescence. Nor did the changes address the disparity in the Canadian CCA rate for financing railway equipment requirements through leasing. Canadian lessors continue to be competitively disadvantaged vis-à-vis foreign leasing companies, meaning that most Canadian railway asset leases will continue to be done with foreign lessors. There is a consequent loss of tax revenues that could be flowing to Canada.

The vast majority of railway cars are leased rather than purchased by North American railways. In the seven-year period from 1995 to 2001, 84% of the rail cars built in North America were acquired by entities other than railways, generally leasing companies. In 2000 and 2001, non-railway purchases reached 96% and 93.5% respectively. Since the CCA rate for lessors was not changed in the 2000 budget, the changes that were made have been of no consequence for the vast majority of new rail cars subsequently put into service by Canadian railways.

To better understand what is transpiring in Canada, the leasing companies in our association were surveyed last year with regard to their use of the capital cost allowance for their Canadian freight car lease fleets. The numbers submitted tell an interesting story. First, Canadian-based freight car lease fleets are growing. Each and every year, from 1996 to 2000, saw an increase in the size of this fleet, from about 42,000 cars in 1996 to nearly 56,000 cars in 2000, an overall growth of about 32%.

Use of the CCA, however, comes nowhere near matching this growth. According to the information received from our members, the number of leased freight cars being depreciated under the capital cost allowance increased by only 17% during the same period or, to put it another way, 64% of the fleet was being depreciated using the CCA at the beginning and 57% five years later. For newly built cars acquired during the five-year period, a total of 4,184 are being accounted for under the CCA.

In contrast to Canadian lessors, U.S. lessors are greatly encouraged to participate in the rail car market as a result of the significantly higher U.S. tax depreciation rate applicable to that equipment. A U.S. lessor can fully depreciate an investment for rail cars in seven years, the equivalent to a CCA rate of 30%. In addition, the recent U.S. economic stimulus package offers a bonus first-year depreciation of 30% for rail assets. The gap has widened.

¿ (0920)

The CCA rate for Canadian lessors is only 13%. Hampered by the poor CCA rate on rail cars that generates a lower value of tax shield on a present-value basis, Canadian-based lessors are compelled to quote higher lease rates, as much as 13% higher, to potential customers than their U.S. competitors. Our members estimate this as being 13% to 15% higher.

One of the respondents in our survey of leasing company members had this to say:

I don't know how to emphasize the frustration we feel with the enormous difference in tax rates. If you look at our numbers, we have been able to add significant numbers of new cars. We have also compensated for the cross-border lease in cars by buying significant numbers of them from our U.S. operations. I don't believe this tells the whole story. We believe that we could have been far more successful on a level playing field. “Anecdotally”, we have lost a number of large car deals to the U.S. market. Their depreciation has a superior economic yield to our CCA rates. While dropping Canadian federal tax rates, this spread is widening.

We ask your committee to strongly recommend an increase to 30% in the CCA rate for rail cars equivalent to the U.S. tax depreciation rate. It will result in more taxable income and other tax revenues for the Canadian government.

This would give the following advantages to the Canadian lessees: greater flexibility for Canadian lessees in the use of cars, still receiving the same low lease rates; lower rates for Canadian lessees; expansion of the Canadian leasing business; funding to be provided by Canadian sources, potentially expanding their profitability; provides an alternative source for Canadian pension fund investment; provides incentive to railroad companies to replace their aging in-Canada used-fleet of rail cars, resulting in additional cost savings for the railroads; and benefits the economy as a whole, as well as the potential increase in the Canadian economic activity.

Thank you.

¿ (0925)

The Chair: Thank you very much.

Now we'll move on to the Canadian Factors Association.

Monsieur Gratton, s'il vous plaît.

[Translation]

Mr. Michel Gratton (President, Brome Financial Corporation): Ladies and gentlemen, my name is Michel Gratton, and I am President of Brome Financial Corporation, which was founded in 1994. The first investor in Brome Financial Corporation was the Fonds de solidarité du Québec.

[English]

We invested the first $3 million. Le Fonds de solidarité is the largest working venture fund in Canada. Subsequently, the Laurentian Bank of Canada invested in Brome. Brome is now controlled 51% by the Laurentian Bank.

I'm here representing the Canadian Factors Association with Matthew Levinson. Matthew is a vice-president of Montcap Financial. Montcap Financial is part of Accord Financial Group. It is a company that has been in existence for 25 years and is listed on the Toronto Stock Exchange.

Factoring is not a new industry. It has existed since the 17^th century in Canada. There are 30 factors in the country. Among large institutions offering factoring services, you'd find the National Bank and the Bank of Nova Scotia. The Desjardins Group opened a new division last month to offer factoring services. More than $3 billion of sales are factored in Canada on a yearly basis. It is a substantial industry that certainly offers a service that is in demand.

In short, and in its most simple form, factoring is the purchase of an account receivable. In the 17^th century, businesses would go to factors because they were worried about pirates and the inherent problems of transportation from the mainland to the colonies.

Today, small and medium-sized businesses come to the factors because of liquidity problems. Liquidity problems are created by substantial changes in our market. Export orders are increasing. There's a consolidation at the retail level. We see giants, like Wal-Mart and Costco, that task our small businesses and offer large, very substantial orders. Small businesses require liquidities to complete the orders. It's what the factor is there for.

Our clients are manufacturers, they're exporters, and they're growing quickly, which is why they need the liquidity, and they're faced with large orders. Many of the orders are foreign. We work very closely with the Export Development Corporation. Actually, most of the factors cooperate and work in conjunction with the EDC. Where the EDC covers the credit risk, the factors offer the liquidities to complete and finance the orders.

In most cases, we do not replace banks; we're a complement to the banks. Our clients continue dealing with their banks and, on an order per order or on an account receivable per account receivable, will come to a factor to finance those extra orders, extra sales that have come to them.

Demand for our services is growing. The factoring industry is growing, and we are here to address the deemed trust provisions of the Income Tax Act, which could potentially be a problem for our industry.

I'll let Matthew explain very briefly what the issue is.

¿ (0930)

Mr. Matthew Levinson (Vice-President, Canadian Factors Association): Thank you.

Issues arise as a result of CCRA's entitlement under the deemed trust to claim a priority lien over all the assets of a tax debtor. This claim supercedes validly existing means, publicly registered by existing secured creditors, including the factors. This super-priority covers all property, including pre-acquired and after-acquired property, defined by the time of the creation of the obligation under the deemed trust.

One of CCRA's collection methods is to issue an enhanced requirement to pay, whereby the debtor's customers are notified to pay the Crown directly moneys that would otherwise be paid to the factor. It should be noted that CCRA has no obligation to notify the secured creditors of this issuance of the enhanced requirement to pay. Typically, a factor learns of the notification to their customers directly from the customer when they refuse to pay the factor, claiming they've already paid the Crown.

Recently the Supreme Court affirmed the factors' absolute interest in the accounts receivable purchased from a tax debtor prior to CCRA obligations in the First Vancouver case.

Our industry is concerned that legislation will be introduced that entitles CCRA to priority over pre-acquired property, thereby giving CCRA retroactive recourse to past factoring transactions in an effort to collect subsequently created deemed trust obligations. We consider this to be potentially very destabilizing.

Currently there is no foolproof method for us to monitor tax debtor compliance. Even with the waiver obtained from our clients, the status of a debtor is difficult, costly, and arduous to obtain. This lack of information creates uncertainty and unnecessary risks for our industry.

We feel there's a need for a public registration of tax liens. There currently exist systems whereby we can discover the corporate status of a company, whether they're in bankruptcy, and whether there are existing secured liens under the PPSA or the hypothèque registration in Quebec. We feel that the tax lien system could be fashioned on these, or actually tagged onto one of these three search mechanisms.

We believe there's a need for a defined notice period before the triggering of the deemed trust lien rights. We also believe, with enhanced information and time, factors will oblige their clients to address their obligations to the deemed trust. The end result could be enhanced CCRA effectiveness and reduced costs of collecting from debtors in default.

In conclusion, we believe the factors are an important component of the asset-based lending industry in Canada. We believe we can make valuable contributions to the process of changing the deemed trust legislation, and we're anxious to participate in a constructive process with the government to enact workable solutions that enhance the effectiveness of the CCRA.

Thank you.

The Chair: Thank you very much for the presentation.

Now we will go to Go for Green, please, with Francine Godin.

Ms. Francine Godin (Executive Director, Go for Green): Bonjour. With me today is Steven Grundy, director of development for Go for Green.

Go for Green is a non-profit organization that promotes outdoor physical activity while respecting the environment. In the last 12 years, we have been working with many government departments, such as Health Canada, Environment Canada, and Transport Canada. We have also worked with the corporate sector--with Compaq, which is now Hewlett-Packard, Kodiak, and Home Depot, just to name a few. We also deal with all the provinces and territories. This is due to the way in which Go for Green is structured.

One of the major issues we have been working on is active transportation. Active transportation means a human-powered mode of transportation such as walking or cycling. That type of active transportation is often recommended in sustainable transportation debates, and it is rarely sufficiently supported by government programs and policies. If we are to seriously address the issue of climate change, good intentions have to be backed up with concrete action.

¿ (0935)

Mr. Steve Grundy (Director of Development, Go for Green): Madam Chair, Go for Green wants to put forward concrete actions today. Those concrete actions are called that because we want specific actions, but also concrete because we need infrastructure for active transportation in this country. If government is to move on the priority agendas identified in the Speech from the Throne, it will need to address the issues of Kyoto through the reduction of greenhouse gases; health care reform by addressing physical inactivity in this country; safe, efficient, and environmentally responsible transit systems; building healthy communities; and increasing partnerships between government and citizens. A national active transportation strategy would address all those concerns.

While governments and industry debate the relative burden each would have to bear in meeting the needs of our environment, our health care system, and our communities, it's clear that these issues will ultimately be addressed through behaviour change by individual Canadians. If Canada is to build a healthier environment and to address climate change through reducing emissions, it is clear that Canadians will have to drive their automobiles less. Two in three Canadians live within a 30-minute walk of a routine destination, and 84% live within a 30-minute bicycle ride of a routine destination, and yet very few use those modes of transportation to get to those destinations.

For healthy individuals nearly all those trips can be converted to active transportation trips. If Canada is to have health care reform that not only addresses disease but the prevention of illness, it is clear that Canadians will have to be encouraged to adopt 30 to 60 minutes of physical activity into their daily routines. From 1994-95 to 2002 the number of obese Canadians aged 20 to 64 grew by 24% to almost 2.8 million Canadians, or 15% of the population; 30% of children aged 2 to 11 are overweight and 18% are classified as obese. Juvenile diabetes is one of the fastest-growing diseases in this country.

Active transportation as only one intervention can provide much of the basic physical activity needed for healthy living among adults and children. If Canada is to build healthier, more competitive cities, it must address traffic congestion and infrastructure design that currently values cars more than people. Traffic fatalities are the leading cause of death for children over the age of one year in this country, yet we build communities for cars, not for children.

Active transportation and urban transit are positive solutions to growth and congestion issues facing our cities. I want to point out that urban transit is an essential part of the solution, but it's only applicable in 65 municipalities across this country. The other 3,935 need active transportation systems. Window dressing about walking and cycling isn't going to be enough; we need infrastructure to support those modes of transportation.

If active transportation programs are to make a significant impact on the Kyoto commitment to reduce greenhouse gases and move the dial, then major focus must be on transportation to work and to school and on support for connections to urban transit for those trips. Every workday 10 million Canadians, or 80% of our people, travel each way to and from work by private automobile. That's about five billion passenger trips per year that are taken by private automobile.

If the total working population across Canada shifted from the current average of 8% walking or cycling to work to even 10%, which is the current pattern in Ottawa-Hull, for example, then the total number of vehicle-dependent passenger trips in Canada would drop by 100 million annually, and that's just the beginning of what could be achieved in active transportation.

Less than half our children walk to school any more, but in the United States 10% of children now walk to school. That's the direction we should be heading in, but we can't go there. We need active transportation infrastructure. The active transportation strategy we're proposing should be focused on workplaces and schools because these trips account for most daily trips outside the home and offer the most bang for the buck in reducing greenhouse gas emissions.

Is active transportation a puzzle? No, we already know what works. The problems and solutions involved with promoting active transportation are well studied and widely understood, and Canada along with other countries has experienced success with good programs. The issue now is to undertake a national effort, commitment, and implementation.

There are national programs--for example, Active and Safe Routes to School--that can demonstrate large increases in the percentage of children walking or cycling to and from school. But they're oversubscribed and under-resourced. In 2002, 1,420 schools across this country registered for the Active and Safe Routes to School program. National coordination was only funded to the level of $65,000. This program works and needs funding.

Effective active transportation programs require coordinated strategies among all three levels of government, the voluntary sector, and community groups. The federal government needs to exercise national leadership and leverage its infrastructure and transportation funding investments.

The active transportation programs are not window dressing. They can make a meaningful and significant contribution to issues of environment, health, and communities. The return on investment relative to other Kyoto initiatives is very impressive. Urban transit investment, housing stock retrofitting, and new energy-efficient car designs represent billions of dollars in needed and important investment. Active transportation involves leveraging upcoming investment to include better planning and small, targeted investments in which communities take the lead.

We have some specific recommendations for government, which I will go through quickly.

First, we recommend that the federal government undertake the creation of a national secretariat for active transportation linked to the infrastructure agency.

Second, the federal government should establish a national requirement that 7% of all infrastructure funding allocated to urban transit, road, and other transportation construction be set aside for active transportation infrastructure. This has been done in the United States to the level of 10% and is much higher in the rest of the world.

It is further recommended that policy requiring these types of infrastructure enhancements be required by federal, provincial, and municipal legislation, and that agreements be sought by the three levels of government to achieve this end while determining appropriate mechanisms to administer not less than the 7% allocation.

It is further recommended that the federal government investigate and adopt federal tax incentive measures to encourage Canadians to choose active transportation wherever possible for short trips. We recommend the federal government substantially increase its support for national and regional initiatives, which have proven successful in educating and creating behaviour change among Canadians.

Finally, we recommend the federal government invest $10 million annually in community-based education and programming to encourage Canadians to adopt active transportation.

¿ (0940)

The Chair: Thank you very much for that presentation.

Now from the Heritage Canada Foundation, welcome, Mr. Anthony. Are you doing the presentation? Go ahead, sir.

[Translation]

Mr. Brian P. Anthony (Executive Director, Heritage Canada Foundation): Thank you, Madam Chair. First, allow me to thank you for the opportunity to speak to you as part of your 2002 pre-budget consultation hearings.

[English]

This is my seventh such appearance as executive director of the Heritage Canada Foundation. I want to thank you for the interest and support this committee has shown throughout.

In particular, I want to tell you how much I appreciate the strength and the clarity of the conclusion and recommendation you made last year concerning the preservation of heritage buildings, in your pre-budget report Securing our Future.

[Translation]

Since previous remarks have been made to the committee and a brief and related documents submitted this year, committee members are familiar with the Foundation's work, objectives and expectations.

[English]

I therefore need not expand on any of that at this stage, although I would be happy to do so in response to any questions you may have later. Rather, I will simply summarize our position in the hope that you will reaffirm your support for it in your 2002 pre-budget report.

[Translation]

As you know, from 1970 to 2000, Canada's built heritage has eroded alarmingly, with a rate of loss of our historic building stock of 21 to 23 %, 21 % in the major centres and 23 % in the smaller and rural communities.

[English]

In some cities the rate of loss is nearly double these national averages, and this regrettable trend continues relatively unchecked.

While the Heritage Canada Foundation applauds the recent federal historic places initiative, as mentioned in our brief, this welcome development will not achieve its objectives without the requisite fiscal incentives for heritage preservation, as also described in the brief before you and as recommended in your report last year.

The prerequisites established by the Department of Finance for such tax incentives have been put in place, and now is the time for those incentives to similarly be put in place.

[Translation]

Last year, the committee recommended that the government, and I quote, “examine changes to the tax system that encourage the restoration and preservation of heritage buildings.”

[English]

The government has devoted sufficient time and attention to examining such tax changes, and this year it would be most helpful if, in reaffirming your support, you could recommend in your pre-budget report that the federal government now proceed to implement appropriate tax changes for the preservation of heritage buildings in the forthcoming budget.

As mentioned in our brief, the Heritage Canada Foundation promotes the preservation of the built heritage of Canada for its intrinsic historical and cultural value. However, we also recognize that there are other facets and benefits that flow from preserving our heritage buildings and historic sites. These economic, employment, and environmental implications are of particular relevance to the objectives of this committee this year. And I hope our work in these areas will be of use for you in formulating your pre-budget report.

Thank you again for the opportunity to appear before you today and for your ongoing interest and support.

[Translation]

I will now be pleased to answer your questions.

¿ (0945)

[English]

The Chair: Thank you very much.

And thank you very much for all of your briefs and presentations today.

Sorry, we've missed one here.

Go ahead, Ms. Duncan, from the Sport Matters Group.

Ms. Joan Duncan (President, Commonwealth Games, Sport Matters Group): Thank you very much for this opportunity to present today.

[Translation]

I'm pleased to be of service to the committee as part of its proceedings on the next federal budget.

[English]

Sport Matters is a voluntary group of national and provincial sport leaders that have come together because of the important contribution that sport makes to Canadian society. Sport develops our youth. It connects Canadians. It contributes to health, addressing things such as obesity, and it allows us to celebrate our citizenship. Sport contributes greatly to a vibrant Canadian culture.

Mr. Victor Lachance (Senior Leader, Games Sport Matters Group): You have received our submission already, and members of the committee can obtain from that information the extent to which sport contributes to the gross domestic product, the extent to which sport contributes to the reduction of inactivity and so on.

In all of that, our message today is really quite simple. Canada has now a new Canadian sport policy, which is supported by the 14 federal, provincial, and territorial governments, but we don't have the means to implement it. We have a landmark physical activity and sport act, which is now before the Senate and soon to be enacted, but we don't have the means to implement it. The throne speech has talked about the integration of healthy living, physical activity and sports, calling for a summit next year when the government's own department, Sport Canada, doesn't have the capacity to be a player in such a process, let alone fulfill what was called for in the previous throne speech. So the Secretary of State for Amateur Sport has provided the kind of leadership needed to get us this far.

Our recommendation therefore is even simpler. Let's equip the Secretary of State for Amateur Sport and Sport Canada with the resources and the tools they need to implement these policy instruments. We're recommending that the Sport Canada budget be doubled from the current $75 million to $150 million, or, if you prefer, a percentage of the health care budget, which would be less than 2%.

[Translation]

Having regard to the contribution of sport to GNP, and having regard to all the reports that have been written to date, including the Mills Report, and all the research conducted on the impact of sport in society, and having regard as well to the statements of certain ministers, including that of the Prime Minister at the summit last year, as well as two Throne Speeches, we are here today to help you determine whether anything is missing, whether there is still anything to identify or determine so the government feels comfortable investing in sport.

¿ (0950)

[English]

Ms. Joan Duncan: You'll also note that our brief talks about sport GDP, which is sport's contribution to the gross domestic product, and also about sport's other GDP, its great domestic pride, its guaranteed disease prevention.

Mr. Victor Lachance: It gives opportunity to disadvantaged people. That's another GDP. It gives us great development potential.

Ms. Joan Duncan: It greatly reduces obesity. I'm sure from your own experiences, those of your children, your grandchildren, that you can contribute other sport GDPs.

Thank you.

The Chair: Thank you very much.

I will now go to rounds of questioning. We'll start with Mr. Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance): Thank you, Madam Chair, and thank you to all the presenters for being here this morning. It's such a large amount of information. It's always difficult to be able to take it all in during the presentations and obviously ask questions. We do appreciate you taking the time to be here. I'll try to ask as many questions of the various presenters as I can within the time I have.

[Translation]

I'm going to start with Mr. Khadir. I would like to ask him whether his organization has conducted a study of the cost to the Government of Canada of eliminating tariffs on the goods of developing countries. Do you know how much this change would cost the government?

Mr. Amir Khadir: Unfortunately, I must say that I do not have that information in hand. It is a calculation that can be done. If the committee members are interested--I believe this could be useful to them in this debate--I can send figures on that later. I'm taking note of the question.

Mr. Rahim Jaffer: That would indeed be useful to us. Thank you very much.

[English]

My next question is to the railway association. Since we've been hearing from a number of presenters, whether they be cities or various boards of trade or others, many of them have been raising the issue of infrastructure challenges. Obviously it's a big challenge that Canada faces, and many other nations as well.

I wasn't aware of the huge difference when it comes to competing with the U.S. and the capital cost allowance that's allowed to them and obviously to our industry here. Would the changes you propose to bring us in line with the U.S. allow you to make the investments into improving your infrastructure outside of just your railway cars and various other things?

There are big challenges, if I understand, with the tracks and with a number of other challenges you face. Are the suggestions you're making going to help that problem as well? How far are we when it comes to comparisons with the U.S.? You talked about that gap. How much of a competitive disadvantage is there, and what has that cost us overall in the last little while because of that huge gap you talk about between you and your U.S. competitors?

Mr. Frank Trotter: First of all, the CCA issue applies to more than just railway cars. The specific I was raising was the difference in the impact on Canadian lessors, people who lease those cars to the railroad companies, which is a significant disadvantage to our members. With respect to other forms of investment, locomotives and track and structures, they would also benefit from the same sort of acceleration.

If you think about it, it's a prospect of investment that we have to make. We're faced with the question of how we reduce pollution, how we increase capacity, because everything is becoming more congested.

We have an opportunity to spend a dollar here, effectively. Do we put it into more roads or do we put it into rail infrastructure? What we're talking about would provide an incentive to put it into railroad infrastructure, which would be invested by the companies themselves, that would lower pollution, improve the congestion issue for passenger transit as well as for freight, and lower the prices for shippers and others who use the service. So it's a win-win-win situation.

¿ (0955)

Mr. Rahim Jaffer: Okay.

My next question, if I may, is to Mr. Anthony. I was wondering if you could expand on some of the particular tax changes that you would like to see that could help obviously the protection of heritage buildings. One of the suggestions that continues to be raised within this committee from presenters, as well as from many foundations that do charity work, is the potential elimination of capital tax. That is obviously something that has a direct benefit to increasing donations to various organizations that do charity work or that do work similar to your organization.

Is that something this committee should be looking at, or do you have other suggestions for specific tax changes that we should be looking at to help with what you're doing?

Mr. Brian Anthony: Thank you very much. I'll try to be brief, although I can rave on for hours on the subject of tax reform as it applies to heritage preservation.

There are two things we have been pressing the federal Department of Finance for in recent years. One is a favourable tax treatment of legitimate restoration costs of heritage buildings, and I think we're quite close on that thanks to the support of this committee.

The other thing we have been pressing for is the elimination of capital gains tax on the donation of heritage properties to a designated organization such as mine. As you know, we do that for movable cultural property. If you donate a work of art or an artifact to a designated museum or other institution, you not only get a tax credit for the value of the gift, which you can use in computing your income tax, but any capital gains tax that normally would be associated with the donation of that gift is eliminated completely. By this means we've been able to keep a lot of significant art and artifacts in Canadian collections and therefore accessible to the public.

We feel the same should apply to immovable cultural property--that is to say, heritage buildings. We feel that significant art, artifacts, and architecture all belong in the same category of cultural assets, if you will, and I think the federal Department of Finance understands this. Indeed, the program that deals with movable cultural property has already certified four structures as immovable cultural property. So there's ample precedent for it as well. I'm hoping that we'll be able to get the Department of Finance to take that step. It would enable my organization and other similar organizations to intervene in order to save heritage buildings, because even if we get favourable tax treatment of restoration costs in place, there'll be instances where that will not be a sufficient lever to prevent the demolition of a heritage building.

In addition, in regard to your question about the larger elimination of capital gains tax, certainly we would welcome the removal of any barriers to contributing, to organizations such as mine, money, stocks and bonds, or anything else that would help us carry out our work.

Mr. Rahim Jaffer: To the organization representing sport in Canada, one of the other questions I have--and this was not presented in your brief--concerns something that may not even fall under your purview. Now, I understand you're calling for some more spending, and your arguments are sound, but one of the things brought to my attention recently is that some organizations, non-profit sports teams that are in the process of raising funds for themselves in trying to do what they do in providing sport in smaller communities, are in fact are being hassled by CCRA for the money they're raising. This has huge tax implications for some of these sports teams. It's almost creating a real disincentive for them to go about and try to create sport and activity within their communities.

I don't know if you've heard anything about this or if you can share some of the information that you may have on this to bring it to our attention. I found it concerning, but I didn't have all the information. I don't know if you know anything about that.

Mr. Victor Lachance: I'm not likely to be able to enlighten you there. I'm sure members know that registered sports organizations are captured under a distinct definition for tax purposes. So I'm not sure what the hassle might have been, whether it is the status of the organization in terms of qualifying under the RCAAA, or amateur athletic association, classification; otherwise, I'm not sure.

À (1000)

Mr. Rahim Jaffer: I don't have all the details either. It was brought to my attention by some teams in Saskatchewan, so I'll have to do some more digging to find out. I wasn't sure if you knew whether it was a wider problem or not.

Ms. Joan Duncan: Speaking as a parent and an officer of a local speed-skating club, it's certainly very difficult for the clubs themselves. They are the ones that are raising the funds on the ground. They don't have the status to issue tax receipts, etc.

Under the current law, the way we're incorporated, it's the national organization that has the charitable status. The laws are structured so that any charitable donation receipts or athletic association receipts can't have anything attached to them. So if I go out and raise funds for my club to go to a particular event, those funds can be channelled to the national organization, but we can't stipulate that they come back to us.

It really means you rest in good faith that the national organization will send it back. There have been some challenges locally in the Ottawa area with clubs, about whether or not it's even legit for it to come back, as opposed to going into the general revenue of the national association.

Mr. Rahim Jaffer: In terms of tax reform, though, the Mills committee did recommend that there be tax credits for parents, to alleviate the burden of participation in sport and the cost of equipment.

Thank you.

[Translation]

The Chair: Ms. Picard, you have 10 minutes.

Ms. Pauline Picard (Drummond, BQ): Thank you.

I thank all the witnesses for their very interesting presentations. My questions are for Mr. Khadir.

In your presentation, you mention that, even if we managed to double the development aid budget by 2010, that budget would then represent only 0.4 percent of GDP and that we should do more.

I would like you to clarify that comment. Why do you say that, even if we doubled the amount of money we are currently sending, we would still be at only 0.4 percent of GDP?

I'll put my second question to you right away. Last year, Mr. Chrétien announced the creation of the Canada Fund for Africa. We have not yet seen a single cent of that money. What priority projects should be funded immediately?

Mr. Amir Khadir: Thank you, Madam Chair.

Ms. Picard, on the 0.4 percent question, the level of Canadian development aid is currently 0.26 percent. As we mentioned, Canada ranks sixteenth. That's down from previous years. In particular, it's well below the commitments made more than 20 years ago within the bodies of the UN, which considered that, to truly change the situation and enable underdeveloped countries to commit to investments and development that could ensure greater planetary balance, the richest industrialized countries should aim for 0.7 percent of their gross national product. Certain Scandinavian countries even went beyond that in the 1980s and 1990s.

For example, with respect to the tariff question, on which Mr. Jaffer spoke, or aid granted for development, obviously, from a strictly financial and budgetary point of view, this results in expenditures. However, in a more global perspective, in which we truly understand the issues affecting our long-term interests and security, which takes on importance in the vision we have of the relations that are still unfortunately excessively characterized by conflict around the globe, everyone agrees that sustainable security must stem from a rebalancing and better distribution of wealth. Unfortunately, we are living at the start of an era when people try to settle problems of security and imbalance with brute force, as may be seen today in the Iraqi question, by repudiating the appropriate international bodies and mechanisms and by forgetting the fact that, ultimately, all this comes back to reconsidering our relations with the South and saying that these expenditures that we make for public development assistance are investments in our own future security.

It's in this sense that we consider that the effort Canada must make must be sustained and result in concrete actions. We are really very far from having achieved what was considered desirable 20 years ago. Increasing our assistance by 8 percent per year in order to double it by 2010 would only lead us to half of what is optimal.

I'll refer your question to Claude Perras, Assistant Director, CECI.

À (1005)

Mr. Claude Perras (Acting Director General, Centre canadien d'études et de coopération internationales (SUCO)): First, as you know, the $500 million fund that was announced for Africa is a fund allocated over a period of three years. At the last meeting, which was held in Montreal, we were told that approximately $200 million had been allocated and that $300 million remained to be allocated.

As regards priority projects, the organizations we represent want priority to be given to the basic needs of populations: access to potable water, to basic education and so on. There is also the entire question of reinforcing civil society in the developing countries. That's a priority for us.

As you know, the government's new programs currently place considerable emphasis on reinforcing national capabilities at the government level, but if we want to have strong and vibrant societies and democratic countries, we must not forget the entire aspect of civil society. As you know, in a number of countries in the world, consulting civil society is not part of their culture. I do not believe that, if we allocate substantial sums to governments, they will automatically develop a culture of consulting populations and civil organizations.

We feel that, in setting priorities, it is important to continue to diversify approaches. Yes, governments must be reinforced, but we also have to continue reinforcing the civil societies of developing countries, in connection with Canadian civil society. We also have a role to play to ensure that there is a bridge between civil societies here and there.

Mr. Amir Khadir: Madam Chair, before leaving you, I would like to tell you, as a doctor concerned with health and as the chairman of an organization that is engaged in international development and which is therefore concerned with sustainable development, how pleased I am to see that we are here this morning at the same table as organizations defending active transport and railways. I believe these are all questions that appeal to the same sensibilities if we view them from a global perspective. On the one hand, this would have a considerable impact on our health and thus a long-term financial impact. So it's to our advantage from the strict standpoint of an accounting calculation. On the other hand, it would reduce the Western societies' unhealthy dependence on fossil fuel resources, a dependence which unfortunately poisons North-South relations and, to a large degree, determines many conflicts which undermine the capabilities of the developed countries. Rather than spend to ensure they have low-cost energy supplies, those countries should invest in sustainable development.

I believe our perspectives are similar if we view them in this context.

Ms. Pauline Picard: Thank you very much. Do I still have a few minutes?

The Chair: Yes.

Ms. Pauline Picard: I would like to ask Mr. Anthony a question. Is there a threat that most of our buildings will disappear from the landscape if nothing is done? Is there an urgent need to intervene?

Mr. Brian P. Anthony: Yes, it's very urgent. As I just mentioned, we have suffered a loss of 21 to 23 percent of our historic buildings over the past 30 years. We have lost nearly one-quarter in one generation, and this is continuing at the same rate.

So it is very important to put measures in place, including tax incentives, to stop this erosion and encourage restoration and the adapted adjustment in the use of our historical buildings. Yes, it's very urgent.

À (1010)

Ms. Pauline Picard: Thank you very much.

[English]

The Chair: Thank you very much.

Mr. Wilfert, I can give you ten minutes now and five minutes later, or you can take it all together. It's your preference.

Mr. Bryon Wilfert (Oak Ridges, Lib.): You know me, Madam Chairman; I'll take it all together.

The Chair: Thank you.

Mr. Bryon Wilfert: Thank you, everyone, for coming.

Obviously, as we continue this exercise, the government is going to maintain fiscal prudence. We're not going to go back on the deficit. At the same time, we want to look at strategic investments, and everyone I've heard today has had some very interesting ideas. The question is, how can we prioritize for the next budget?

The Canadian Association of Railway Suppliers had three areas. You wanted capital cost allowance; an exemption for fuel used for rail in international traffic; and a reduction in federal fuel excise tax, eventually matched with the United States in future reductions. What would this cost the national treasury?

Mr. Frank Trotter: I'm sorry, I don't have the total number for that. But on the capital cost allowance, it's probably less than $100 million, depending on how much is invested.

Mr. Bryon Wilfert: One of the areas we could look at on some of these issues is a phasing in over a two- or three-year period. That would send an appropriate signal, but at the same time we would evaluate it as we went along.

Mr. Frank Trotter: I guess the short answer is anything helps, but the balance with the U.S. is particularly important. As I mentioned earlier, the amount of congestion we face is so significant on the roads, in the cities, and between the cities, that we have an opportunity here to really make a difference on congestion issues, Kyoto issues, etc., with a very simple and direct tax measure.

Mr. Bryon Wilfert: What is the average age of your railway rolling stock?

Mr. Frank Trotter: It's probably 10 to 12 years old, on average.

Mr. Bryon Wilfert: How does that compare with other OECD or G-7 states?

Mr. Frank Trotter: I don't have an answer on that, but if you think about the comparison, a truck can effectively be depreciated in four years, on capital cost allowance. In the U.S., rail cars can effectively be depreciated in less than eight years, and in Canada we're talking about up to twenty years for some of the equipment.

Mr. Bryon Wilfert: I certainly agree with you on the issue of Kyoto. We're the only country with a mythology around the railway. Obviously, I'm a very big supporter, although I won't get into my concerns about foreign ownership of railways at the moment, because that's not your particular area, but that is of concern.

The Canadian Factors Association recommended that deemed trusts be applicable as precise and identifiable data. I don't have a great problem with that. I would want to know more about how we would go about implementing that. It's certainly something we could look at.

As far as Go for Green is concerned, your suggestion on a national secretariat for active transportation is a very timely and good one. And linked to the infrastructure agency, 7% of all infrastructure funding.... As a former president of the Canadian Parks and Recreation Association, I'm in favour of anything to do with active living, so I'll show my bias there. But that is important.

On the $10 million to community-based education to encourage active transportation, I'm sure that money could be leveraged with other worthy organizations, such as CPRA, the active living organization, and so on.

You raise a very important point about health care, that we tend to emphasize the back end rather than the front end, and we need to really look at prevention. Active living is not simply...and I used to, and I guess still do, lecture on active living. You don't have to be in the gym or running the 10K; you could be gardening, you could be walking. I think that's important, and those initiatives are interesting. The national secretariat, as an example, is something that we really should be looking at.

To Sport Matters, doubling the current level of Sports Canada funding to $150 million seems like a bit of a no-brainer. My question is, who do you service? Who are you representing? What kinds of athletes are we looking at?

À (1015)

Mr. Victor Lachance: We don't necessarily represent athletes. Sport Matters is more of a voluntary group of leaders who simply care about sport and who have come together to raise these particular issues. The various organizations who participate, of course, represent athletes. Athletes CAN is a member of the Sport Matters Group. They represent primarily high-performance athletes, but we also have CPRA and CAHPERD and other organizations participating in Sport Matters as well. For instance, the Coalition for Active Living is a group with whom we have a liaison.

For us it's not so much who it services but who benefits from sport, and why they participate. We find now that we have all these wonderful policy instruments ready to capitalize on everything that sport offers. There's no shortage of research that shows the impact it has on health. All we need to do today is simply quote the federal government on that.

Mr. Bryon Wilfert: You just want the tools.

Mr. Victor Lachance: The fiscal policy simply doesn't match the existing policy instruments, and they won't with our recommendation, either. We'll still be far behind other countries. There's no country right now that we're aware of, or no industrialized nation, anyway, that puts less money per capita into sport. I think part of the problem is viewing sport a certain way, thinking of professional athletes or whatever, but that's not what we're talking about.

Mr. Bryon Wilfert: No, I realize that, and I agree with you, particularly as we're about to embark on the physical activity and sports act. I've seen the document--it's very encouraging--but without the appropriate dollars... Of course, how those dollars are allocated is important, and certainly I understand that.

To Heritage Canada, there's nothing more important to me personally than the promotion of Canadian history and Canadian heritage sites. As a former municipal politician, I can tell you that the Ontario Heritage Act is a toothless piece of legislation. In 180 days, unfortunately, we see buildings coming down.

It's a sad commentary that developers, in particular... and I've had my run-ins with many of them over the years. I realize they're in business, but one of the things they have come continually to talk about over the years is the issue of tax breaks, particularly in terms of knowing what they would get up front. In other words, if they have a particular piece, a building or something on a site, they want to know what the tax advantage would be up front if they donate it. A municipality may designate it as a historical site, as you know, but it's not very helpful.

The capital gains tax issue is important, and that, I think, we should continue to push. The Minister of Canadian Heritage talks a lot about these issues, but I'm less impressed with the delivery.

Just as a pet peeve, we did all this “re-plaquing” of the graves of Canadian prime ministers, and I would challenge most of you to find them. They don't put up signage to get to the sites, such as Pearson's in Wakefield or Meighen's just outside Stratford; you have to drive around and ask people.

So I think we should be looking at the tax issues. Again, that may be something we'd have to phase in, but I think it's very important. And the loss of so many heritage sites is a travesty. This would never occur, as you know, in many other societies. Even the Chinese, after the horrendous time of the cultural revolution, are now rebuilding, I think, the south wall in Beijing, and other sites that were destroyed. Having been to China many times, I can tell you, there's a society that is certainly doing its part now.

So I think your comments are timely. And I'm very concerned about the percentages you presented to us today.

Mr. Brian Anthony: It is a staggering rate of loss when you compare it with other countries. Actually, there's a great book that I recommend to all of you, Preserving the World's Great Cities, by Anthony Tung. He was a New York landmark preservation commissioner for many years, and he researched the rise--and in many cases, the demise--of the world's great cities. Based on his research, he estimates that during the twentieth century, which he called a century typified by a culture of destruction, we lost up to 50%, globally speaking, of our architectural legacy. Much of that, of course, was the result of war, but most of it, his research showed, occurred after the Second World War under the guise of “development” and “urban renewal” and such other anodyne expressions.

Here in Canada, we don't have war or major national disasters to explain why we have lost so much of our built heritage. Nearly one-quarter in one generation is a staggering rate of loss. In the same period of time, America and other European countries have put in place the kinds of tax incentives that have had an incredible impact, saving not only many, many individual landmarks, but whole historic districts. It has become an industry in the United States. Indeed, our research undertaken by Rutgers has shown that it is revenue-neutral to the federal government. It not only pays for itself, it also produces employment benefits, environmental benefits, economic benefits and tax benefits, as well as saving the built heritage of the States.

À (1020)

Mr. Bryon Wilfert: In your presentation you mentioned the economics of heritage preservation and a conference that was held last year. I personally--and the committee too, I'm sure--would be interested in any information you could provide with regard to that conference, what the outcomes were and what strategies you were looking at.

By the way, it just came to me--Arthur Meighen, St. Mary's; that's where...

The Chair: Mr. Anthony, if you would send that in to the clerk we'll have it translated, if it's not translated already. Then we'll distribute it to all members of the committee.

Mr. Bryon Wilfert: Thank you, Madam Chairman. Uncharacteristically, I was short.

The Chair: Thank you very much.

Mr. Brison, you have ten minutes, sir.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Madam Chair, and thank you to all our witnesses for your interventions.

I have one question in terms of amateur sport. A vibrant amateur sport network across the country is largely dependent on volunteerism. We do have tax credits in the system, for instance, for volunteer emergency service workers, as we ought to. It makes a great deal of sense.

I live in rural Nova Scotia and many rural and particularly small-town communities across Canada enjoy protection against fire and receive emergency service protection from volunteers. I would argue there is a strong case to be made for a greater utilization of the tax system to help recognize the contribution of volunteers in a wider range of activities.

It is much more difficult today to find volunteers to participate in and lead activities in our communities, whether they be minor sports or emergency service volunteers. It is very difficult. In most cases, with dual-income families being the norm, people are working harder simply to maintain or protect their current standard of living.

I would be interested in specific proposals around using the tax system to help encourage them, keeping in mind that, obviously, volunteers are exactly that; they're not looking for pay. For many of them, though, there are real costs to their volunteerism. It takes not only time, but often they invest actual money as well to support their own volunteer activities when it may not be available to them from other sources.

I would appreciate your views on that and any best-practice examples of other jurisdictions or other countries in which the tax system has been used to encourage volunteerism, specifically to recreational and physical activity.

Mr. Victor Lachance: There's no question that volunteerism underpins sport. Sport volunteers make up 35% of the volunteer capacity in Canada and there are approximately 2.2 million volunteers in sport. They do so at the community level. The recent polling that was done by the Canadian Centre for Ethics in Sport showed that the vast majority of Canadians rate community sport just behind the family in terms of imparting values to youth and so on.

That primarily is their motivation for being involved. But if you ask them whether or not we're fulfilling that potential, confidence drops off, of course, because we're not. Yet this is where we find young people exercising their volunteerism, contributing to citizenship development, and so on.

As for any currently available tax breaks, we're not aware of any. As for comparative data with other countries, we would have to look into that.

À (1025)

Mr. Scott Brison: But we do have examples in the federal tax system with fairly small tax credits. There is a recognition of volunteerism and the important work of emergency service volunteers. But I would argue that we ought to at least consider that approach.

The payback.... If we consider the importance of prevention in our health care system, as an example, and the importance of people developing healthy lifestyles early in their lives, I find it absolutely frightening and mind-boggling in many ways that today, when we have the greatest consciousness of the importance of healthy lifestyles and diets, we have a greater rate of teenage obesity than we've ever had. If you went into grocery stores 30 years ago, you didn't have lite this, and non-fat that. I guess they must be eating more—maybe eating four times the number of non-fat cookies that they would eat. Perhaps you have to do that to get the flavour; I'm not sure.

It's counterintuitive that with the greater level of consciousness we have of lifestyle issues today, there's a generation of youth throughout the industrialized world—not-just Canadians—who seem oblivious to this. Perhaps it's their counter-culture. Perhaps it's a rebellion type of thing; I don't know. While the democratization of information through the Internet is a positive thing, I guess there's a real drawback and cost with the level of inactivity of children glued to computer screens.

I really think we have to take a look at the payback, in terms of future reductions of health care costs, of any investment, whether it's through the tax system or through education. We all remember Participaction, and the comparison made with the 112-year-old Swede, or who was it...?

A voice: Not quite that old.

Mr. Victor Lachance: You know, interestingly enough, Nova Scotia may actually serve as an example of what it is you are talking about.

Because there was no strategy, the Sport Matters Group has proposed a volunteerism-in-sport initiative precisely to be able to have a strategy within sport to recruit, retain, and train volunteers, so that they can in fact enhance their capacity and delivery of programs and services.

Nova Scotia just recently developed a sport futures program. What has happened is that the existing sport body, Sport Nova Scotia—Scott Logan, I don't know if you know him—recently doubled their budget, not through sport dollars, but health dollars. The health ministry gave them an amount equal to their previous historical budget coming from sport, precisely because of the leveraging of their programs in the reduction of health care costs. The justice ministry came in, and gave them about 60% of their initial budget, because of their reduction in crime.

What they probably need now more than anything is capacity building with their volunteers, to train and educate them to enhance their ability to work and deliver the programs in a way that will give that return on investment. That kind of education can be developed in such a way, we think, that it ought to be recognized as ongoing training and education. The cost of pursuing that kind of training and education should be available as a non-taxable tax credit, in order to continue to deliver the program.

Nova Scotia is an excellent example of what is doable at the community level, responding precisely to what Canadians want.

Mr. Scott Brison: I'm glad to hear that Nova Scotia is again being avant-gardist in pursuing public policy excellence on behalf of.... But that's good to hear. It sounds like a success story to be.

Mr. Victor Lachance: Yes, maybe one that the federal government can emulate.

À (1030)

Mr. Scott Brison: They could copy a lot of what we're doing in Nova Scotia.

Ms. Francine Godin: I heard you guys last night as you were sitting here and saying that now in the stores we have those diet types of food and stuff like that.

In our generation, when we were going to school or going somewhere, we never asked our parents to drive us anywhere. We didn't even think about that. We were walking or bicycling there. So in our day we had our hour or 30 minutes of physical activity. But now we don't have that. That's why a program like ours, which is called Active and Safe Routes to School, encourages the parents and the teachers to walk the children to school. At the same time, you don't have cars idling in front of the school, which is the worst emission of gas in the air. It's one way of bringing it back. The children could walk to school with that program, as a matter of fact.

Mr. Steve Grundy: Ms. Godin, perhaps I could just jump in on that as well. I know it's tempting for us to look at kids and say they're not the same as we were when we were young, but it's social and physical environments that are the problem. The social environment is not having the access to sport and physical activity programs. The physical environment is playing an important role here too. If we have communities where parents are afraid to let their children walk to school, or if we have communities that don't allow a safe access across the street, or if there's a community where you can't get to your school within a reasonable walking or cycling distance, those kinds of things have a direct and profound impact on levels of physical activity among children.

If we address social and physical environments, children want to be active; it's their nature.

Mr. Scott Brison: It's an urban planning issue as well. I lived in New York from 1991 to 1996. New York was a city that, from an urban design perspective, from a walking and subway perspective, was probably one of the most efficient urban experiments in terms of urban planning anywhere in the world. If you look at newer cities like Atlanta or Toronto, in fact, and the degree to which these cities are built around cars, I would argue that we have to revisit not just protecting our heritage buildings but taking a serious look at urban design from the past as well, in terms of new approaches.

Even Disney, in their design of Celebration or something like that, in terms of that community, went back to a lot of the fundamentals of small towns of the past in terms of incorporating living and working spaces and recreation spaces and education spaces closer together. I think it makes a great deal of sense.

In terms of using the tax system to help preserve heritage properties and environmentally important land, I think we can consider them very similarly. What is the best practice example, from a public policy perspective, anywhere that you're aware of? What is the place or the jurisdiction that, in your view, is doing the best job of this?

Actually, I'd be interested to know, not just internationally but within Canada, the province that is doing the best job through its tax system or from a funding perspective. I'm interested in learning about that as well.

Mr. Brian Anthony: We didn't consult on this before, I want you to appreciate, but Nova Scotia is exemplary. For years, it has waived what used to be a provincial sales tax--now it's a blended tax--on goods and services associated with the restoration of designated heritage properties. There are lots of other examples I can cite from across the country at the provincial and local levels.

The City of Victoria, for example, has put in a great program of tax incentives to encourage the owners of heritage properties in the downtown core to seismically upgrade the buildings, which is a major cost, in order that they can use the second, third, and fourth floors above for office or residential purposes. They thereby encourage not only the restoration of heritage buildings but encourage people to live and work downtown, which is environmentally and physically, in terms of the health of the individual, much better than commuting in from the kind of communities you were referring to earlier.

I was going to write a follow-up letter in response to the question Mr. Wilfert put earlier, and I can include some of those examples from our experience in Canada. Perhaps the nearest good example I can cite in the international context is the American model. As I mentioned earlier, 30 years ago the Americans put in place a system of tax credits, which have made an industry in the States where investors are seeking to buy, acquire, and restore heritage properties in order to benefit from the associated tax credits. As I mentioned earlier, this saves not only individual landmarks but whole districts.

Let me give you one example, the old warehouse district of New Orleans, which was a no-go zone. Nobody ever went there because it was deemed very rundown, derelict, and dangerous. That whole area has been not only saved and the historic buildings therein preserved and restored with new uses found for them, but new life has been breathed into it, new economic and social life. People have moved into the district because it's now become a very trendy part of New Orleans in which to live. People are raising families there. They're having to create schools in what used to be a warehouse district but now is from a social point of view a great address to live at.

They've also breathed in all sorts of economic life--smart restaurants, boutiques, and a Starbucks on every block--and that's created great economic life. Of course, New Orleans is a big tourist destination, so tourism revenues flow in. Having people living in the downtown core, which makes sense environmentally, makes sense in terms of health; it reduces the amount of transportation, saves heritage buildings, and makes a bundle of money too.

À (1035)

The Chair: Thank you.

Go ahead.

Mr. Scott Brison: I just have one quick point. I'm not sure whether you're aware of a new program the City of Halifax has just implemented. I own a heritage property in Halifax, a set of apartments. In the past, if you wanted to replace the windows of those apartments, you had to replace them with wooden windows with the individual muntin bars and all that, but there was no funding provided for that. Under the new program, when you're doing that and you replace them with the authentic, handmade muntin-bar windows--and there are some local manufacturers who are making them--the city will pay, I think it's up to half, the replacement cost if you follow a very exacting code and they inspect it to make sure everything is authentic. It's costly, but at least for those owners or developers who want to maintain the authenticity of those buildings it's a significant incentive and help provided by the city. It's a new program, but I think it's going to be very important.

Mr. Brian Anthony: Thank you for raising that example. It was one of the examples I was going to put into my follow-up letter to the committee. You should know that we had our annual conference in Halifax recently on the issue of heritage tourism, and it was at that conference, at the reception hosted by the City of Halifax, that Sue Uteck, the deputy mayor, unveiled this program. We see this as a great step forward, and the kind of fiscal incentives we want from the federal government would complement that.

For example, the favourable tax treatment of restoration costs carried out under the standards and guidelines that have been developed by the federal government in consultation with the provincial and local levels of government would in effect top up the contribution the City of Halifax is making to make it much more desirable for you to restore and maintain a heritage property in the appropriate manner.

So we have a sort of nice emergent coalescing of--

Mr. Scott Brison: All we need now is a law banning vinyl siding.

The Chair: I'm going to go over to Ms. Minna.

Ms. Maria Minna (Beaches—East York, Lib.): Thank you, Madam Chair.

This is a great panel to wake up to or to start my day with: development, heritage, healthy living, green, relief. I want to start off with the development side of things, which of course was a good part of my life for a long time, and continues to be.

Firstly, I agree with what was stated before, that we keep looking at the wrong end of the stick in this world of ours. We're looking at and spending a tremendous amount of money on security. I'm not quibbling; September 11 happened and we need to do some of the things. But I think we're becoming a little paranoid and we're not addressing the bulk of the attention where it belongs, and that's in developing countries. I don't mean that in the sense of security there, but in terms of eliminating poverty, in terms of addressing the real issue, the real core underpinning problems that we have in our world.

I believe we will always have individuals who will be fanatical, who will be inclined to crime in the world. That's something we're never going to get rid of entirely, but what we will eliminate by ensuring that we eradicate poverty in the world is the pools from which they can get people and basically recruit.

I'm reminded of young people in different parts of Africa where there is conflict. If you go to recruit a child, an eight-year-old or a nine-year-old.... In some countries they abduct them, which is terrorism, which we don't talk about. People live in terror all the time. We only see the one that hits our TV screen. An eight-year-old being abducted and then forced to be a sex slave in Sierra Leone is terror, to me. And children's arms and legs hacked off just to keep the populace at bay intentionally is terrorism. Nonetheless, there are young people who are recruited. If they're desperate and they have no food, they are recruited for all kinds of things, and they willingly go and take up arms.

I remember having a conversation with a mother from our own hemisphere, in Colombia, whose daughter had joined the guerrillas. I said “Why would you give your daughter over to the guerrillas?” She said “Well, the choice was prostitution or the guerrillas, and I thought the guerrillas were better than prostitution.” That's not a choice.

So I just want to underline that, and then other examples. Shortly after September 11 I met with the ambassador of Pakistan, who said to me, “What we really need from you is assistance to educate our children”. A lot of the social programs and assistance is provided by the madrasahs and the mosques in different parts, but they don't have the finances to actually teach, so they don't teach any curriculum at all. So the child is there all day long, not learning to read or write, but learning and being taught in a fundamentalist way some of the things that we see happen.

So I go out of my way to say this--as I have 15 minutes--to really underline the fact that we must address the issue of poverty and the horrible suffering that goes on in our world all the time. I know it hits us when we see it on TV and when it hits us in our own world, and we pay attention when we see the floods and earthquakes and the famine in Africa, but that goes away in a week or so. But the constant day-to-day terror and dying of hunger and suffering of disease goes on nonetheless, without us seeing it. This is not to preach; I just want to say I agree that we really have to work hard on that stuff.

I want to go to the allocation. I'm glad to see that the government is doubling that. There's no question, and I agree with you, that it is not enough and we'll have to do better than that as we go into the future. The moneys that were allocated for the African fund, $200 million, have now been allocated. I know some of it's going to governance; and I know there's a debate, because I've had it with civil society in Canada, that most of it should be going to water and education and civil society, and so on. As you know, when I was there I actually established the social development priorities that redirected 38% of CIDA's funding into those areas, because I agree with you.

On the other hand, I also feel very strongly that we need to strengthen governance in countries. When we look at our own country, who provides education for us, our educational institutions, our education systems? Who provides social services to our society? It's the governments--municipal, federal, provincial. There's a governance structure that is required. Justice is delivered through a judicial system that has some rule of law.

À (1040)

The structures need to be strengthened, or in some cases actually developed in some countries. While I understand the need to prioritize the others, I also think we need to do this.

I would like to remind you, in addition to the $500 million that is going to the Africa Fund over a period of three years, every year Canada spends $700 million in Africa. This is the existing CIDA budget because the fund is over and above it. Of course, if I remember correctly, the Prime Minister has committed that of the doubling of the additional funds, half will go to Africa.

That's more of a commentary than a question.

Is there anything else you would like to say with respect to the social development priorities? Do you see any real sustainability there? Are things changing?

À (1045)

Mr. Claude Perras: Thank you very much, Ms. Minna, for your comments. We are very happy that for a long time you have been a good advocate for increasing the budget of the OED in Canada.

I would like to say I agree with you. We have to strengthen the capacity and governance in the developing countries. As you can see, a lot of things are happening right now in many developing countries because civil society is also emerging. You cannot have dictators, as you used to have in some countries in the past, because civil society has been strengthened and some action is being taken there. Good governance will only happen if you have a strong civil society.

Ms. Maria Minna: True enough.

Mr. Claude Perras: You may strengthen the government's way of running things. If you don't have a civil society with a watchdog, who is able to enforce it by asking for some good governance, transparency, and practice, it's very difficult. This is one of the concerns we do have.

Currently in Africa, with the change of policy by CIDA focusing primarily on a government-to-government relationship, you can start to see the impact on civil society. CIDA programs also used to work with women to help them to vote. Civil society is the access to the possibilities of being able to vote. Right now the government priorities are not to help women to vote, for example, in local countries.

Who will take care of the steps that have been taken to allow women to be able to vote in more than six or seven countries of west Africa? If the money is only channeled to government, they don't have an interest of having more women to vote in their mandate, for example.

This is where we think civil society has a role to play to ensure the balance and equilibrium. We think we are currently losing the diversity we used to have in Canada, supporting government as well as civil society, to bring the balance that is required, as well as in our own country.

Ms. Maria Minna: No. I don't disagree with you at all, obviously, with respect to strengthening civil society. In fact, I think CIDA should be untying its program. NGOs to the south should be part of the delivery of the programs. It's something I am very supportive of.

I simply want to say, at the time, CIDA used to do what's called a bilateral agreement with the country. Bilateral agreement simply means there is a more overall agreement for a framework on the types of areas of priorities. It does not in any way prevent CIDA or Canada to fund NGOs or to fund civil society with respect to women, human rights, or any of those things. I would not want to see it changed.

Ms. Joan Duncan: The committee might not be aware of what sport has to do with the development of systems.

Ms. Maria Minna: It has a lot to do with it.

Ms. Joan Duncan: In fact it does have a lot to do with it. Commonwealth Games Canada, for example, has an international sport development program.

As we're talking about things like good governance, one of the things we've seen is how sport can be used as a tool, for example, to teach people the skills of democracy and to give women the skills to participate in organizations and the management of organizations. It then gives them the skills to go on and actively participate in governance.

Under the new physical activity and sport bill, one of the areas that has been identified is our involvement in international sport. There certainly are limitations right now because of the budget Sport Canada has. It does not allow us to participate to the degree we want. One of the areas that would benefit, should we receive additional funds, would be this particular area.

Ms. Maria Minna: I agree with you entirely. But also, sports are used very effectively by Canada, or CIDA, to address the issues of AIDS and other diseases as well, through sports. For instance, there's a major program in South Africa on soccer and the leaders are trained and they work through the network of all the soccer teams to help young people, especially males, learn and understand the impact of the disease. So in addition to physical activity, there's also the educational aspect of other things that come into play.

À (1050)

Mr. Victor Lachance: In fact, Sport Canada was in Canadian Heritage. It's just been reclassified as interprovincial and international, two areas in which they're not able to deliver, but the intention is there and they recognize the impact. I think strengthening their capacity there would respond to some of your concerns.

Ms. Maria Minna: Yes, that's right.

Ms. Joan Duncan: It's also very interesting with the HIV/AIDS education we're doing, many of the lessons we've learned through working with our partners in Kenya, South Africa, Zambia, etc., are lessons we're now bringing back and using in our own communities in terms of connecting sport to HIV/AIDS education, sport not drugs, those kinds of things.

Ms. Maria Minna: I'm going to move on, but I'd simply say with respect to development that I congratulate you and all of the volunteers and NGOs who work in the development field, because it is not an easy area to work in. It's very difficult. And as you said, volunteers leave their home. Most of us, when we volunteer, go to a meeting at home, and many of them do that, but many others actually go abroad into some fairly precarious situations to help the world stay stable. So I congratulate you on what you do.

Actually I wanted to say a couple of things on the railway. I'm a railway buff. I travel by railway whenever I can, and anything we can do to improve railway across this country... We should never have moved away from railways. It's what made us and it's what we should have stayed with. We thought we could get away from it and we've privatized CN or what have you, yet here we are not even a decade later--we started cutting back just nine years ago--and now we're talking about Kyoto and we're looking at railways again.

So I want to say that, for me, it's a no-brainer that, for all kinds of reasons, this is an area we need to address and deal with.

Actually, Go for Green and Sport Matters Group are similar issues. They're different but similar issues, and you're addressing really a healthy lifestyle, and healthy living, and so on.

I wanted to ask the Sport Matters Group something. For instance, in my riding we have a baseball league. It's all volunteers, organized by this one individual who coordinates all of the coaches, all of the volunteers, all the food, all the whatever, and all the uniforms and what have you, and 3,000 kids benefit. All summer long 3,000 kids from the tiniest little guy or gal--they call them peewees and midgets--they're barely able to hold the bat up to the... I go to their games and I sponsor some of the teams. What relationship would you have with this particular type of totally voluntary group? This is where it goes to the healthy...

The Chair: Mr. Lachance, five minutes.

Mr. Victor Lachance: Quite a bit. In fact, the Sport Matters Group works with provincial organizations, which, of course, work with community organizations.

I think what's interesting about what you're noting is that unfortunately in Canada we see professional sport almost all the time, but we live amateur sport. What you're describing is what makes up 80% to 85% of sports impact on GDP. It's at the community level, and the kind of work the Sport Matters Group is doing is designed to build capacity within the volunteer network in order that this kind of benefit to society can continue.

The Chair: Thank you very much.

Now for the final ten minutes to Mr. Paquette.

[Translation]

Mr. Pierre Paquette (Joliette, BQ): Thank you, Madam Chair. I would also like to thank all the speakers. I don't want to go back over everything that has been said, but I believe many things will help us prepare our report.

I'm going to come back to the brief of the Canadian Association of Railway Suppliers. You propose a measure designed to change the rule for depreciating rolling stock, but, at the same time, you support the Railway Association of Canada's request for an exemption for fuel used by rail in international traffic. In the present context, as the Americans are increasingly protectionist and do not comply with or, looking at it in another way, comply in their own way with the rules of international trade--we see this phenomenon in the field of softwood lumber, supply management, with respect to milk in particular, in the context of the adoption by Congress of the Farm Bill, which goes completely against what the Americans advocate internationally and what common sense dictates--I wonder, both for the change in the depreciation rule and for that recommendation, whether you are not afraid those measures would draw reprisals against the Canadian railway industry or other sectors. We know that, when they are unable to attack one sector, the Americans can threaten the Canadian government; it did so in the case of magazines a few years ago. In this regard, I would like to have an overview of the competition between the Canadian and American industries, and to know whether such measures don't risk sparking a trade war. I must say that that wouldn't bother me and that the idea here is simply to know where this issue stands.

À (1055)

[English]

The Chair: Mr. Trotter, go ahead.

Mr. Frank Trotter: Yes, we understand the nature of the question. We see it all the time in terms of international trade between Canada and the U.S., the effect of what you call retaliation. But it's important to recognize that something in the order of 40%-plus of the traffic is transborder traffic today, so it's happening in the midst of that world of what you've called reprisals or reactions from the United States.

There's so much trade that has an alternative of going one way or another. For example, we have a container load of shipments from the Far East that can go to Los Angeles or Long Beach, or it can go to Seattle or to Vancouver, then, depending on where it lands, it will travel by rail, even if it's going to, say, southern Ontario. So when you look at the impact of the imbedded taxes in those types of movements, there's a significant benefit for Canadians from the removal of those taxes within the movement. So it's not just transborder, when we talk about international, it's also coming in from overseas, container movements, and through Canadian ports as well.

[Translation]

Mr. Pierre Paquette: Thank you. Mr. Anthony, you spoke of how it was important for the federal government to get involved in preserving heritage. I completely agree that heritage must be preserved. I would have liked you to speak about the coordination between the federal programs and those that exist or should exist in the provinces. We know that, in Quebec, for example, there is a program designed to preserve the religious heritage, which is very private in nature. I can tell you that, in my riding, the renovation of churches that is under way, in addition to being extraordinary, is being done in an intelligent manner. The characteristics of that community heritage are being protected. So I would like to know how you view the articulation between the federal programs and those that can or should exist in the provinces in this area.

We also know that the Infrastructure Works program had a third component which was used in a number of cases to protect a given heritage. For example, in my riding, in L'Assomption, there was an old courthouse--before Joliette inherited it, it was L'Assomption--and we were able to use the Infrastructure Works program to renovate it or at least to renovate it in part. These, of course, are programs carried out jointly by the federal government, Quebec and the municipalities. In this connection, I would like you to tell us whether you can suggest a few avenues for linking these various actions together.

Mr. Brian P. Anthony: Thank you for that question. First, it must be said that, in Canada, responsibility for protecting our built heritage is shared between the various levels of government and that, over the past two or three years, the three levels of government have worked in very close cooperation to develop a series of standards and guidelines governing the restoration and preservation of our built heritage and the development of a registry of historical buildings. As to the management of the various programs directly or indirectly affecting the protection of our built heritage, I anticipate that this kind of cooperation will continue in the coming years.

I believe it was Mr. Brison who gave us a very good example. The City of Halifax recently launched a program, and the province also has programs. I hope the federal government will announce a series of tax incentives in the next budget and that the three levels of government will be able to work together to solve this national problem. We in fact need a response at the national level, which requires participation by the three levels of government. In fact, I see no problem because there has always been good cooperation in the past. That should not change in future.

You asked two questions. What was the second?

Á (1100)

Mr. Pierre Paquette: I mainly wanted to have your opinion on how all that could be coordinated. You are not unaware that, in Quebec, we are very touchy about jurisdictional questions. For us, cultural heritage obviously comes under culture, which is first of all a Quebec government jurisdiction. The last time, there was an agreement under the Infrastructure Works program with the federal government under which Quebec was the prime contractor. However, all that was done in a cooperative arrangement. That's why I asked you whether part 3 of the Infrastructure Works program or another program that we could propose to set up should not include a component under which heritage restoration would be a priority.

Mr. Brian P. Anthony: In fact, our historic buildings are part of our infrastructure across the country. I believe we must give greater priority under the Canada Infrastructure Works program to the preservation and restoration of these historic buildings. I have noted that there were a number of examples of cooperation between the Government of Canada and those of Quebec and other provinces to ensure the built heritage is preserved through the Canada Infrastructure Works program. However, I believe we can do even more in this area, whether through this program or others such as, for example, regional development programs.

If you invite me back next year, I can perhaps talk about a broader policy designed to give greater priority to the preservation of our built heritage across all programs at the federal level.

Mr. Pierre Paquette: To come back to the world of sport--I looked for the name of your organization--we can obviously have sport incentive programs, and I for one would like that. However, one of the problems we previously mentioned is that there is a kind of change going on in the type of sport that young people play. For example, people are increasingly abandoning hockey, in particular because of the costs that activity entails. Arenas are extremely costly for municipalities, among other things. Today, it's more soccer fever. The problem, which has already been raised, is the lack of land. Could the federal government provide support in this area under the Infrastructure Works program? I have often questioned certain federal ministers on the subject of establishing infrastructures in the field of recreation, but this issue does not appear to receive much attention. To my knowledge, no projects have been accepted in my riding.

Apart from soccer, there's also BMX, for example, cycling. A BMX trail doesn't make the grade with the federal government. Perhaps they feel the sport is not noble enough. And yet, many young people, especially boys, train a lot at that. They will probably not become BMX professionals because those are few, but there are some nevertheless. So I would like to know whether we could recommend that the construction of facilities corresponding to the new realities of sport be promoted under a specific component of a program, Infrastructure Works or another.

Mr. Victor Lachance: I believe that's precisely one of the priorities that Sport Canada has identified, and that's what's good about the new act that's coming.

First, this now enables the Secretary of State for Amateur Sport to make a more concrete commitment on infrastructure issues. But what is even better is that the act now recognizes--and the policy as well; all the governments agreed--that the federal government can begin discussions, enter into bilateral agreements and work directly with the province, and not with all the provinces at the same time, which was really a barrier for the program in the past, because everyone had to agree. So if someone at one point opposed the BMX project, for example, nothing was done. Now, if provinces are interested and something can be done, the Secretary of State can go ahead with one province, as it is doing right now with Nova Scotia and New Brunswick with regard to community support, and with Saskatchewan for Aboriginal support. That's why Sport Canada must be able to respond to these requests.

Á (1105)

[English]

The Chair: Ms. Godin.

[Translation]

Mrs. Francine Godin: I wanted to raise a point in this connection. An association such as ours, which is Go for Green, has one of the programs you mentioned. We have a program called Ice Dreams under which we are making outdoor skating rinks so that people can go and skate without having to go to an arena, which may cost much more. Go for Green's programs are programs for the family, so that the entire family can participate together without needing expensive equipment. We are trying to get this infrastructure through these programs. I believe that's what Steve wanted to bring to your attention.

[English]

Mr. Steve Grundy: I have just one quick additional comment. There's one area Quebec has demonstrated leadership in over the past number of years. When you invest in physical infrastructure, it has an impact on enhancing culture in your community. So when the first infrastructure program came out, Quebec invested 13% of the dollars spent on transportation infrastructure on things like bike paths, cycle lanes, and so forth, compared to a national average of about 2%. So leadership was demonstrated there.

When we design our communities with infrastructure that supports interaction, a sense of community, and a sense of well-being, the benefits cross not only health lines, but issues related to transportation and congestion, environment through emissions, and so forth. So infrastructure goes right across all the barriers, and enhances the culture of our communities.

The Chair: Thank you very much.

Before we go, I'd just like to clarify one thing in the report from Mr. Gratton or Mr. Levinson. On the Supreme Court case you referred to, First Vancouver Finance, how recently was that decided?

Mr. Matthew Levinson: It was in March of this year.

The Chair: Okay. Your brief also refers to potential legislation. Are you aware of that coming through?

Mr. Matthew Levinson: We're aware that it's being contemplated.

The Chair: Okay. Thank you very much for bringing that to our attention.

Thanks to those of you who have come before us in the past, and those of you who are here for the first time. If you watch our Internet site, the invitation is open to all Canadians. You don't have to wait to be invited to this committee. We see as many people as time permits. So thank you, not only for preparing your briefs, but for taking the time to come, present, and answer the committee's questions. You can see from our format that we encourage discussion between the players. So thank you very much.

We are suspended for a couple of minutes to prepare for our next panel.

Á (1005)

Á (1015)

Á (1115)

The Chair: Good morning and welcome to everyone. This is panel two of our morning. We are doing pre-budget discussions pursuant to Standing Order 83(1).

I'd like to welcome, from the Association of Canadian Community Colleges, Gerald Brown, president; from the Canadian Association of University Teachers, James Turk, executive director, and David Robinson, associate executive director. He's not here.

Mr. James Turk (Executive Director, Canadian Association of University Teachers): He's in bed with pneumonia.

The Chair: Okay, I am sorry. I hope he feels better.

From the Canadian Federation of Students, Ian Boyko, who's the national chairperson; from the Université du Québec à Montréal, Denise Pelletier, directrice du Cabinet et vice-présidente aux communications externes, et Guy Berthiaume, vice-recteur adjoint et chef du cabinet du recteur.

Thank you for joining us this morning. We will go to eight-minute presentations, followed by a round of questioning. And, committee, we will go for an hour until 12:15, so I'll extend it 15 minutes.

We will go to the Association of Canadian Community Colleges first. Go ahead.

Mr. Gerald Brown (President and Chief Executive Officer, Association of Canadian Community Colleges): Thank you, Madam Chair, for the invitation to be among you this morning.

The Association of Canadian Community Colleges is a national and international representative of over 150 Canadian colleges, technical institutes, CEGEPs, and university colleges. The mandate of our association is to provide leadership and support and to advocate for member institutions in the provision of lifelong learning.

The association's submission to the advanced Standing Committee on Finance builds upon its advocacy efforts over the past two years in advancing productive linkages between governments and colleges and institutes to enable a greater sense of common purpose in approaching Canada's skills learning and innovation challenges.

With 2.5 million full-time and part-time learners in over 900 communities, Canada's colleges and institutes are our country's largest supplier of post-secondary and adult education training. As such, they offer part of a solution to the skills development and productivity challenges facing our country.

ACCC believes that the immediate action in the following areas will contribute significantly to achieving our collective goal of making Canada one of the most productive and innovative countries in the world.

Our brief that was submitted to you earlier contains six recommendations. It's my intention this morning to focus on two of these recommendations, as we believe they are of primary importance. The first one is addressing Canada's skills needs.

As outlined in “Knowledge Matters”, skills, knowledge, and innovation of the individual will become the most powerful driver behind Canada's economic and social prosperity. Encouraging Canadians to develop their skills and increase their knowledge through lifelong learning is critical to building a strong workforce that will meet the challenges of our evolving economy.

With the learning needs of our community constantly changing, it is critical that we focus on upgrading the current workforce, accelerating the provision of skilled labour training, facilitating the application of new technologies, and, more importantly, addressing the skills inclusion of those without secondary education.

For people living in remote and isolated communities, access to quality learning opportunities is also a significant challenge. With 2.5 million full- and part-time learners on campuses in 900 communities across Canada, community colleges and technical institutes are ideally suited to respond to the needs of these specific groups.

Clearly, Canada's colleges and technical institutes must be at the forefront, working closely with the federal government in developing training strategies that will address skill shortages, meet the changing needs of Canadian business, and contribute to the economic growth of our nation.

In that context, the Association of Canadian Community Colleges recommends the creation of college institute access centres, which will provide ongoing and multifaceted services and tools to help support the delivery of learning and training for at-risk groups. These centres would offer services such as community liaison, outreach and recruitment services; assessment services, such as prior learning assessment and the recognition of foreign credentials; program adaptation, alternate delivery modes and e-learning support; student success and retention support, such as mentors, coaches and peer support groups; and of course, the assistance for successful employment entry.

Our second focus is unleashing the untapped--and I guess I'll repeat that--the untapped potential and economic capacity of Canada's colleges and institutes. Canada has a national network of 150 colleges, institutes and university colleges in over 900 communities in all regions of Canada. By directly impacting on the economic growth in the surrounding communities, colleges are a powerful economic engine that helps regions across Canada achieve and sustain economies that are vital to their future prosperity. These institutions are closely connected with regional business and industry, and form a direct link between university-based fundamental research and the application of this research by small and medium-sized SMEs and communities.

Currently, over 60 of our institutions provide targeted applied research and rapid technology transfer support to business and industry. Canada's colleges are therefore well positioned to spur innovation and economic revitalization within the regions they serve. The college and institute sector is ready to be a major partner in Canada's innovation strategy through its comprehensive support for the country's small and medium-sized enterprises.

In that context, the Association of Canadian Community Colleges recommends the creation of college and community innovation and technology commercialization centres that will leverage the applied research capacity and assets of these colleges and institutes to make resources more available to SMEs, and therefore stimulate business innovation and new business creation and expansion. Through these centres, SMEs would have enhanced access to a full range of regionally based and regionally driven innovation solutions for intelligence gathering, analysis, applied research, technology transfer, and rapid commercialization.

The Association of Community Colleges is pleased to have this opportunity to present our perspective to the committee. ACCC repeats its commitment to work with government in developing policies and programs that will contribute to the economic success and prosperity of Canada.

We have made particular reference to two of our specific recommendations, and we believe they clearly respond to the federal government's skills and innovation agenda. They are targeted to individuals, their communities, and the industries that sustain these communities.

The remaining recommendations, which speak to the role of colleges in the implementation of e-learning strategies, expanding educational and economic opportunities to rural and remote communities, and addressing student debts are of equal importance, and we would be pleased to respond to any question regarding these as well.

Thank you, Madam Chairman.

Á (1120)

The Chair: Thank you very much.

Now we'll move to the Canadian Association of University Teachers, Mr. Turk.

Mr. James Turk: Thank you very much.

It's a pleasure to be with you today on behalf of the Canadian Association of University Teachers. We represent about 35,000 faculty and other academic staff who teach in universities across the country, as well as the community colleges in British Columbia.

You hear lots of presentations. I'm just wondering if any of the members of this committee have not said publicly and to your families in the last year or two that the future of Canada really rests on our knowledge, that we're a knowledge-based society, that our future is tied up with the knowledge and skills of our citizens. That's such a common claim that almost all of us are making.

At the same time, when the Hill Times had its special on education, it quoted the Minister of Human Resources Development, as well as the critics for the opposition parties, all of whom began in almost the same way, talking about how most jobs in the future were going to require post-secondary credentials, and this is crucial for the future of our country. And yet while all of that's being said and there's this consensus, our post-secondary system is crumbling.

We want to suggest to you that we really are at a crisis point in post-secondary education in Canada today. Your recommendations and the actions of the federal government will really decide if this crisis can be resolved satisfactorily, and if the widespread consensus about the importance of post-secondary education for our economy and our society is rhetoric or reality.

I wanted to make three or four points. The first is that the federal government has the fiscal room to fix this problem. I hope some of you have our brief. If you look at table 1 on page 4, which was put out before the finance minister's economic update on the projected federal government fiscal outlook, we now know that this understates the reality. The finance minister has understated the reality now for about six years. At the end of each year, suddenly there has been a lot more money than we were told there was likely to be.

The second point is that if the federal government doesn't take a significant role in resolving the problems, they're not going to be fixed. The federal government got into funding post-secondary education in the 1950s because of the incredible problems we had in post-secondary education across this country. There was wild inequity among the different provinces. What could be offered, in the federal obligation to ensure all Canadians have equal access to public services, drove a serious involvement of the federal government in funding post-secondary education. That fundamentally transformed the system and created a relative golden age, over a period of years, that we're now slowly losing.

As a share of the economy, the federal cash transfers for post-secondary education are at nearly the lowest level in 30 years.

I would draw your attention to figure 2 on page 6. If you would look at the bar graph, as opposed to the line graph, those bars will show what percentage of the gross domestic product is spent on federal cash transfers for post-secondary education. What you will note is that currently it is a little over two-tenths of 1% of GDP. In the late seventies and early eighties, it was half of 1%. That change is quite significant.

To get back to where we were in 1993-94 would take an expenditure of about $1.5 billion, and to get to a full half of 1% would require an additional expenditure of another $1.6 billion. Now, if post-secondary education is of the importance each of you attributes to it, I would suggest that as a country we could afford to put half of one penny per dollar generated by this economy into post-secondary education.

One of the principal problems for the federal government in dealing with this is the mechanism. The CHST has posed a problem for successive governments, because the federal government gets no credit: it turns over the money; it is not necessarily used by the provinces. And so I don't think the federal government is going to be able to resolve this problem until we have a new mechanism such as we propose in the brief and have represented to you in the past. We recommend creation of separate funds for education and health and social assistance, and a post-secondary education act that's characterized by transparency and accountability.

The consequences of all of this are pretty serious. We have reduced accessibility to our institutions. Tuition is up. Tuition in the last five years has shown the most rapid and consistent increase since 1857. We have produced an analysis of tuition since 1857 called “Access Denied”. I'll send each of you a copy of this research report that we did. So in the last five years, we have the most rapid increase in 150 years. Adjusted for inflation, not only is tuition now the highest it has been in Canadian history, but to give you an example, it's six times higher than it was in 1914.

So what? What it means is that many children from low- and middle-income families cannot afford to attend college or university. For the lowest quintile of income earners in the country, it would take one-quarter of the family's after-tax income simply to pay the average tuition and fees at universities in Canada.

Á (1125)

We have anecdotal evidence from various studies. The Canadian Medical Association did a study that found that only 15% of medical students now are from families that earn $40,000 or less. The cliché is that you have to be a child of a doctor to be able to afford to go to medical school. We can't afford to close out access to such a significant part of our population.

The second problem is that a large number of our students are graduating and are being saddled with debts. If you turn to figure 5 on page 13, you'll see the debt figures. These are 1995 figures, before the big increases really hit, and they don't count family indebtedness. I have children in school. I borrow money so they can go to school, and it doesn't show up as their debt. Most measures of debt don't count what families borrow to send their children to school, it only counts what's borrowed in the name of the student. Think of the economic impact of young people graduating with $20,000, $30,000, and $40,000 debts in terms of their ability to engage in economic activity like buying houses, cars, or other things. When we have a whole generation saddled with this debt, it will have economic as well as social consequences and will cause distorted job choices.

The Canadian Bar Association and the Canadian Medical Association have pointed out what is going to happen now that tuition for medical school has gone up to between $10,000 and $20,000 a year. What about young people who graduate and would like to go into public health, to be emergency room doctors, or to work in Bella Coola or Sioux Lookout? They're not going to be able to afford those choices, and it's also compromising quality.

I will conclude by pointing out that we have about 10% fewer faculty members teaching in our institutions than we had a decade ago, which means bigger classes, fewer course choices, and a weakening infrastructure. In a recent survey by the American Association of Research Libraries, to which we make reference in here, 113 university research libraries across North America were examined. Of those 113, there were 14 Canadian institutions included. When they looked at the institutions that had had a net decline in expenditures for libraries, in all of North America there were only 10 where there had been a decline over the last five years. Nine of those were Canadian. The University of Cincinnati and the University of South Carolina have spent more money on library resources than every Canadian university except the Universities of Toronto, Alberta, and British Columbia.

To solve these problems we need a new transfer mechanism. We need to set a target where half of one cent generated by our economy goes to post-secondary education. I think we need to make the Canada Millennium Scholarship Fund a truly need-based fund. We need to increase funding for granting councils and for government science. We really have a chance to deal with these problems; the question is, do we have the political will?

Thank you very much.

Á (1130)

The Chair: Thank you very much.

Now from the Canadian Federation of Students we have Mr. Boyko. Go ahead, sir.

Mr. Ian Boyko (National Chairperson, Canadian Federation of Students): Good morning. I would like to start by thanking the committee for the opportunity to present today on behalf of more than 450,000 post-secondary education students from more than sixty student unions across Canada.

Our brief to the committee contains 14 recommendations regarding government expenditure on university research, skills training, the beleaguered Millennium Scholarship Foundation, registered education savings plans, employment insurance, the Canada student loans program, and tax credits. It's all there in pretty thorough detail, so my remarks today will just cover off the recommendations concerning research vis-à-vis the innovation strategy as well as the pressing changes that are required under the Canada student loans program. Of course, if committee members require further clarification on the other points raised in the brief, I'll be more than happy to address those during the question and answer period.

The Canadian Federation of Students was both encouraged and disturbed by the goals outlined in the innovation strategy; they all have important implications for the way the finance committee puts its recommendations forward. The federation was encouraged by just the attention given to growing university research, the attention paid to public funding, and the need for research to be really grown within Canada. Within that the federation was also extremely encouraged to see attention paid to graduate students and the role graduate students have in facilitating and conducting research at public institutions.

I also want to draw attention to what the federation was most disturbed by in the innovation strategy, and that was the continuing emphasis on commercializing publicly funded university research.

I probably don't have to remind the committee that Canadian researchers have actually already rejected the federal government's attempts to increase the emphasis on the commercialization of university research. Most recently, a couple of years ago, the science and technology secretariat's expert panel on the commercialization of university research was overwhelmingly denounced in a letter to the Prime Minister, signed by more than 1,400 researchers from all disciplines. Yet despite this fact, the granting council that's received the most new federal funding in recent years is the Canada Foundation for Innovation, which of course has a stipulation that researchers, in advance of receiving public funding, strike deals with what is essentially matching funds from the private sector.

With this in mind, the federation feels that the next federal budget should really place an emphasis on growing innovation through increased spending in the Social Sciences and Humanities Research Council. In funding terms, that's been left out on the vine to wither in recent federal budgets. We echoed the council's request for an immediate infusion of $97 million for the 2003-04 year, to grow to $365 million in new funding for that granting council by 2007-08, and bringing it back to graduate students. This new money, at least in part, can address the fact that not a single Master's student in Canada is directly funded by this granting council, versus their peers in engineering and natural sciences, which are more than healthily funded by federal granting councils.

I'll now turn my attention to what the federal government has to do in the near future to improve access, and lifelong learning as well. Jim referred to a study that CAUT has recently done that showed that skyrocketing tuition fees vis-à-vis income is at its greatest disparity in more than 60 years.

In terms of lifelong learning, Statistics Canada has said that by 2005, about 75% of all new jobs will require some degree of post-secondary education. So despite what some media outlets try to portray about post-secondary education, it's actually not a leisurely or privileged pursuit for those who choose to go in that direction. It's actually a necessity in the new economy, in the information age. It's absolutely imperative that we expand access to make sure that all Canadians who actually pay for the system in their tax dollars are able to access it.

I'll just draw your attention to recommendations 8, 9, 10, and 11 on page 10.

Recommendation 8 is a recommendation to repeal the punitive changes to the Bankruptcy and Insolvency Act that were introduced in 1998. I guess related to that is recommendation 9, which is a recommendation to really implement the debt reduction repayment program also introduced in 1998, in the so-called education budget. I group those two together because they were both introduced in the same budget three years ago.

I have to say that if you blinked, you missed how quickly the bankruptcy and insolvency changes were introduced. They were introduced with lightening-quick speed. Of course, that's a regressive measure in students' estimation. The debt reduction repayment program, for all intents and purposes, has yet to be implemented. We're three years on now. With the express goal of providing assistance to 12,000 students a year, in the last three years it has provided assistance to fewer than 1,000. So for all intents and purposes, it's not even a program that's been implemented yet, but some of the other policy recommendations from that same budget have already been implemented and are hurting students.

So I draw your attention to those two recommendations.

Finally, before I close, recommendations 10 and 11 deal with fostering and turning rhetoric into reality about lifelong learning and the federal government's expressed desire to increase access for people who need to go back to either upgrade their skills or just get a post-secondary education.

Recommendation 10 refers to the necessity, I think, for the federal government to make part-time learning easier by covering the in-study interest accrued on part-time student loans during the study period, as is done already with full-time students.

Á (1135)

Recommendation 11 discusses the need to reflect reality when assessing the needs of students who are getting back into the system part-time, by not only including the education amount, but reflecting the actual living costs and related costs that many students--single parents, for example--are forced to bear when they return to school. If those non-education costs are included in the needs assessment, I think that will be a step in the right direction in ensuring that lifelong learning is more than just something in the throne speech.

In closing, there are many more recommendations, and I wish I could go over them all in more detail. The federal government, as Jim Turk outlined, is falling down on its promise to make sure that post-secondary education is available to all Canadians who want to access it. Part of it is a problem, of course, with the transfer payments to the provinces. We can get into that in more detail in the question-and-answer period. But I don't think crisis is a word that's too strong.

It seems as if every few months studies are being introduced that document the falling participation rates of low- and middle-income families in post-secondary education. That's almost exclusively because of the increasing cost of post-secondary education, and the federal government has a strong role in rectifying that.

I look forward to your questions. Thank you again for the invitation.

Á (1140)

The Chair: Thank you very much.

From the Univesité du Québec à Montréal, please commence, Madam Pelletier.

[Translation]

Mrs. Denise Pelletier (directrice du Cabinet, Université du Québec à Montréal; Vice-President for External Communications, Humanities and Social Sciences Federation of Canada): Thank you, Madam Chair.

I would like to clarify one minor point. I'm from the Université du Québec à Montréal, but I'm also Vice-President for External Communications of the Humanities and Social Sciences Federation of Canada, which represents 24,000 researchers across the country. My colleague Guy Berthiaume is from the Université de Montréal. His university has nearly 50,000 students and UQAM, where I'm from, approximately 40,000. Just to give you an idea.

Montreal is a very important Canadian city for research. According to Montreal International, which obtained data from Research Inforsource of Toronto, in 2001, Montreal universities obtained 21% of all research funding in Canada. So we're monitoring this issue with great interest.

This morning, we would like to focus our remarks, for which we have limited time, and talk to you mainly about our concerns regarding funding for research in the humanities and social sciences. In recent years, the federal government has made very significant efforts to substantially increase research funding in the natural sciences, engineering and medicine, but has made a lesser effort in the humanities and social sciences, and we now see an imbalance which we think urgently needs to be corrected.

I'll very briefly give you an idea of the situation. Currently, in Canadian universities, 65% of undergraduate students, 53% of masters and doctoral students and 54% of professors are in the humanities and social sciences. So more than half the people in Canadian universities are in these fields. And yet the Social Sciences and Humanities Research Council of Canada, which is the main source of research funding, receives only 12% of budgets granted to federal research councils and can fund only 3.5% of students through its doctoral scholarship programs. It is so short of money that it does not even have a program at the masters level.

In Canada's Innovation Strategy, which we all received with great interest, it is emphasized that, in the knowledge economy, there is an increasing demand for educated and highly skilled workers in all sectors of the economy and in all regions of the country. This observation obviously calls for increased support for research funding and the training of young researchers and support for the young researchers we are training in our universities. That's the basis of our concern. Once again this morning, I read an article in La Presse recalling the strong correlation between having a good university degree and a skilled job. I believe this no longer has to be proven.

I'll briefly give the floor to my colleague. [Editor's Note: Inaudible ] ...our first recommendation.

Mr. Guy Berthiaume (vice-recteur adjoint et chef de cabinet du recteur, Université du Québec à Montréal): In the humanities and social sciences, people forget a fundamental phenomenon to which I would like to draw your attention this morning. Our ability to shift to the knowledge economy will not depend on our ability to develop new products and resolve scientific and technological issues. What will prevent us from moving to the knowledge economy, and achieving our country's full potential, if something prevents us from doing that, are factors of an ethical, cultural, social and environmental nature. Remember Seattle, remember Genoa, remember Quebec City: the problems we're experiencing in moving to the knowledge economy are not scientific and technological.

Take the group here before us this morning. It is emblematic of the importance of the humanities and social sciences in Canada. All the distinguished members of your committee are graduates in the humanities and social sciences. You are in economics, administration, law, political science, education. You are all products of training in the humanities and social sciences, and our society has given you responsibility for managing and directing it.

So the first measure we want to draw your attention to is the development of a strong and effective scholarship programs in all fields. The knowledge society's need for highly skilled human resources is enormous. We know that 60 percent of doctoral graduates find jobs outside the university environment. It's important to remember that.

We are not here to make a special pleading; we are here to make a plea for the needs of the country, not for those of the universities. We often have this image of university professors training new generations of university professors; that's not true. Currently, more than 60 percent--and that figure is rising--of doctoral graduates, Ph.D. holders, are employed in the private sector or government sector. We are currently headed toward a shortage of 20,000 doctoral graduates over the next 10 years, and it would be an illusion to imagine that, as in the past, Canada can rely on an aggressive immigration policy to recruit the highly skilled human resources it needs because the shortages we are talking about today are universal. All countries, our competitors to the south, our European friends are currently recruiting the scarce individuals who earn a doctoral degree. So it is unimaginable that an aggressive immigration policy will solve all our problems.

So we have a problem finding highly skilled human resources in all fields and, as Denise Pelletier recalled, this is also true in the humanities and social sciences. A 1999 study, which we cited in our brief, concludes that humanities and social sciences graduates have salaries as high as science and engineering graduates, with equally high rates of return on investment.

What is the best incentive to lead larger cohorts to earn degrees and get an education? It is the creation of merit scholarships. Everyone recognizes that we have a shortage and that it is going to increase. In the humanities and social sciences, as Denise Pelletier noted, only 3.5 percent of all Canadian students who have decided to study for a masters or doctoral degree receive a scholarship from the Social Sciences and Humanities Research Council of Canada. That's 1,425 persons for the entire country out of 40,000 registered students. In addition, and we pointed this out, the Council has no masters scholarship program, which means that below the doctoral level, once again, a deterrent effect is being created.

It is therefore urgent that we introduce a scholarship program in all fields in Canada to cope with this significant shortage. The Association of Universities and Colleges of Canada and the Humanities and Social Sciences Federation of Canada have recommended the introduction of such a program, which would be managed by the three federal subsidizing councils.

I'll stop here to allow Ms. Pelletier to briefly present our last two recommendations.

Á (1150)

Mrs. Denise Pelletier: Our second recommendation concerns the matter of the basic budget of the Social Sciences and Humanities Research Council of Canada, that is the money that goes to researchers who carry out research projects and develop knowledge. Currently, they can support only 25% of the researchers at our universities, which is very little.

A moment ago, I cited the large amounts that go to the organizations. In practice, this year, in 2002-03, the SSHRC has $160 million at its disposal, but, in science and engineering, $556 million and $562 million are going to medical research. You see the existing imbalance. That imbalance has already been acknowledged by the Industry, Science and Technology Committee and by the Finance Committee. We therefore want to add our voice to yours to bring pressure to bear on the government.

The last recommendation, which you have no doubt already heard about, is the recommendation concerning the indirect research cost program. Like all Canadian universities, and as you as a committee have already supported it, we want this program to be made permanent to help the universities support the increased research effort asked of them.

On that note, I thank you. We are very pleased to have had the opportunity to meet you here, in Montreal, and we will be pleased to answer your questions.

[English]

The Chair: Thank you.

We will go to questions and we'll go until 12:15. We sit again at one o'clock, so it's six minutes each and everybody gets six minutes.

Mr. Rahim Jaffer: Thank you, Madame Chair, and thanks to all the presenters.

[Editor's Note: Technical difficulties]

Mr. Gerald Brown: Canada is a fascinating place when it comes to how to figure out how to do all this.

On education, I agree, but we're very careful in our recommendations not to infringe on what we think are the jurisdictions that belong to the federal and provincial levels. Most of our recommendations towards the federal government have been in areas that complement what we believe should be happening at the provincial level.

Our recommendation from the point of view, for instance, of access.... Both recommendations actually speak to what colleges were all about from the very beginning, which was access to post-secondary education, and opportunities for people to have access to this post-secondary education. At that time, when our institutions began, the federal government was a very active partner in funding those dimensions. So while the actual learning and curriculum and development of programming and everything is within the domain of the provincial government, we need that first step of the complementary support of being able to get people in there and support them and facilitate their ability to get into the system and get on the escalator of learning. That first step is always the most difficult. So we believe that the federal government has a role to play there.

The mechanisms by which we do that, in collaboration with or in support of the provincial government, I think I'll leave in the hands of people much more knowledgeable about how to do that. But we do think the federal government has a critical role in that dimension.

The second recommendation we have really speaks to what colleges have evolved into in the area of being very active working in their community and being very much the centre of their community. I repeat the very interesting statistics, we're 150 institutions in 900 communities, so they are, in many cases, the only presence of post-secondary education. So in the work they've been doing with the federal government with the industries in the area, etc., we see the federal government complementing and supporting them. All that work is basically designed for small and medium-sized businesses, and therefore not in any way in the context of what is the provincial mandate, which is the learning mandate.

Maybe the best analogy I can give you is that there is supply and there is demand. The provincial government has the responsibility from the point of view of education to provide the supply, but there is increasingly now the demand for contract training, etc.

Mr. Rahim Jaffer: —[Editor's Note: Technical difficulties]—

Many university teachers are talking about at least getting rid of the way the education transfers work so you can potentially earmark funds more effectively or at least work in a better way with the provinces. This has obviously been a big challenge for us.

How can we coordinate education policy more effectively from a federal government level with our provincial counterparts? Clearly, it's a provincial jurisdiction. How can we do it more effectively so we can at least work cooperatively, not step on each other's toes, and effectively create a better working system, especially when it comes to funds?

What I'd like to know in the remaining time is, in trying to increase the transfers in some way or giving better support to universities, how do we compare, in your opinion, with the United States, one of our biggest competitors?

We're trying to retain the skills of people here to go on to universities or research here at home. We continue to hear, because of our gap in spending when it comes to what universities are getting in the States as compared to Canada, that we're losing a lot of our talent down south. Could you address the issue and the concerns you have, particularly with our ability to retain skilled talent here? Overall, how can we make it better with the provinces, in your mind?

I do have a big problem when it comes to stepping into provincial jurisdiction. I want to respect them. Do we earmark funds? How can we expand on it to be able to make it work effectively? Maybe you have some thoughts on it.

Á (1155)

Mr. James Turk: Thank you very much for your question.

If this committee is, or I am, able to solve how we can better effect amicable federal-provincial relations, you'll be doing a service to Canadians, as will I. It remains a challenge.

Rather than dealing with philosophy in responding, in part, I want to deal with the practicality.

The federal government has an obligation to assure equal access to public services across Canada. The provinces have responsibility in a number of areas, health, education, and so forth.

The fact of the matter was, until the federal government became involved in a massive way in post-secondary education in the 1950s, there was incredible inequity in access and quality of post-secondary education across Canada. I think, coupled with the large number of returning veterans from the Second World War, it created a crisis as to how we were going to manage it. The Massey commission and others looked into it. The federal government got into it in a big way.

As the federal government has withdrawn some of the extent of its financial support over the last few years, we're beginning to return to the inequities we faced earlier in our history. This will link into the second part of what you were asking. We're at a point where we feel we can't afford to do it.

This goes back to what's almost a cliché: true, we are a knowledge-based economy. Our future does depend on an educated population. Yet we're making our institutions, which everyone agrees are necessary, less accessible.

The same discussion was going on in Canada in the 1920s, but it was about high schools. There was an agreement that a high school education was really important for everybody. Between 1920 and 1926, all the provinces decided to make secondary education, high school, universally accessible and free.

The Chair: Mr. Turk, I'll let Mr. Paquette add to this, because your time is up.

Mr. James Turk: Yes, okay. Let me finish the sentence, if I may.

The Chair: Yes.

Mr. James Turk: Everyone would acknowledge that post-secondary education is at least as important as secondary education was then. Yet we're not making it universally accessible and free. We're making it less accessible.

The federal government has an obligation, I think, to be in play here or else we're not going to be able to do it.

How does it work out? We talked about some principles and guidelines. We have some experience with the Canada Health Act. There are a lot of tensions around it.

The federal government has to play a role. If the federal government is going to play a role that is useful, it has to have some assurance of transparency and accountability.

Our post-secondary education draft tries to provide the details of how it can be achieved. I'll be happy to send a copy of the draft back to you.

The Chair: Mr. Paquette.

[Translation]

Mr. Pierre Paquette: Thank you, Madam Chair. Thank you everyone.

I'm obviously very pleased to see you because I am both a graduate of the Université de Montréal and of... [Editor's Note: Inaudible] ...and I even went to McGill. So I have been to virtually all the universities in Montreal. So I'm very concerned about this question.

First, I must say that this is not the first time the Canadian Association of University Teachers has proposed Canadian legislation on post-secondary education, just as we have legislation on health. I find your approach somewhat naive. Of course, it is very irritating for a number of Quebeckers to see the federal government interfering in areas of provincial jurisdiction, when it now invests virtually no money, as you moreover said. We estimate that only 8% of post-secondary education expenses are paid out of federal government transfers.

How would legislation, which would annoy the provinces more than anything else, guarantee us that the federal government would meet its obligations? In my view, there is no guarantee. The Canada Health Act did not prevent the federal government from withdrawing completely, over the past nine years, through the Canada Health and Social Transfer. So that's the first question. I think that does absolutely nothing, except enable the federal government to appear hypocritically as the defender of access to post-secondary education, as it is currently doing with regard to health.

Second, I'm still speaking to the Canadian Association of University Teachers, and to the Canadian Federation of Students as well. From what you say, your association would like the Canada Health and Social Transfer to be repealed. As for the students, they propose, on the contrary, that the government reinvest through that channel. I wonder whether it's really the Canada Transfer that's the problem or whether it's not the federal government's withdrawal instead. If the federal government had maintained its commitments... We know that roughly $18 billion is currently invested in this area, that is to say exactly the same level as when the Liberals came to power. As you know, there has been a wave of extremely heavy cuts. If the government had honoured its commitment, as it promised in the 1970s, wouldn't it be possible, by giving each of the provinces some flexibility, for the Canada Transfer to be a way of ensuring that the way of organizing our post-secondary education is consistent with the needs of each of the regions of Canada? We know that the situation is not the same everywhere in this large country.

So those are my first two questions. Then, if I have a little time, I will come back to the question of scholarships so that I can clearly understand the proposal of UQAM and the Université de Montréal.

Â (1200)

[English]

The Chair: Who will start here? Mr. Boyko.

Mr. Ian Boyko: If I could perhaps get clarification... I'm a bit unclear on where you see an inconsistency.

[Translation]

Mr. Pierre Paquette: In your recommendation 5, you propose to restore the level of the Canadian Health and Social Transfer, whereas recommendation 1 of the Canadian Association of University Teachers proposes that the Canadian Health and Social Transfer be repealed. That's quite a significant difference.

[English]

Mr. Ian Boyko: Okay. I just need to clarify that recommendation 5 is a restoration of cuts made to transfer payments. If you look also at recommendation 4, we're echoing the call for a new framework through which those transfer payments would be made.

Ms. Maria Minna: —[Editor's Note: Inaudible] —a new framework.

The Chair: Go ahead, Mr. Boyko.

Mr. Ian Boyko: As far as I understand, we have the same goals for reworking the framework of the CHST but also believe that framework needs transfer payment levels to at least what they were in the early 1990s.

The Chair: Mr. Turk.

Mr. James Turk: First of all, the federal government is very clear--and it has been successive federal governments--that when their only way of transferring money for post-secondary education is into a block fund over which there is no accountability and no transparency, they're simply not going to continue to put more money into it, which is why they've created a number of special programs, like the Canada Millennium Scholarship Endowment Fund, the Canada Foundation for Innovation, the Canada research chairs program, so the federal government can get credit. The problem is, the dedicated programs are welcome money, but they're like putting a fancy porch on a crumbling house. Unless we change the mechanism for transfer, the federal government will continue to underspend on education, which creates a problem for the provinces.

Our proposal in the context of Canada provincial relations is a difficult one. For your information, our sister organization, the FQPPU, which represents all the university teachers in Quebec, supports our position in this recommendation. And we recognize in the recommendation the unique character of Quebec and that when there's a negotiation between the federal and provincial government, the asymmetry among provinces has to be recognized in those negotiations. But we feel that in the absence of a new framework, the federal government will simply not be prepared to transfer the money for core operating expenses that's necessary to save our post-secondary education system.

Â (1205)

[Translation]

Mr. Pierre Paquette: If you want my opinion, regardless of the formula, the federal government still wants not only to maintain a very low level of involvement, but also to have control over the way of seeing things. So, in my opinion, your proposal on what is related to post-secondary education offers no guarantee. If you had spoken to me about an act requiring the federal government to maintain the level of the Canada Transfer and to index it, perhaps we would have been able to study your proposal, but you're simply proposing that the federal government interfere in Quebec's jurisdictions and then conduct blackmail, as it's currently doing in health. We're going to check with all the stakeholders. Although I agree that the federal government must reinvest in post-secondary education, I believe the way you prefer--and we heard about it in Halifax--is not very promising for Quebec.

I'll continue on the funding of post-secondary scholarships, in preference, I imagine, to the scholarships that are given by the Social Sciences and Humanities Research Council of Canada. That should be coordinated with what already exists in Quebec, that is to say the basic loans and scholarships program. In your first recommendation, you talk about a strong loans and scholarships program. There is one in Quebec. Furthermore, as you know, tuition fees have been frozen for a number of years. So I would like to ensure that the one does not compete with the other, as we saw in the case of the Millennium Scholarships, and ensure, among other things, that we're concerned with what already exists. I know that the scholarships of the Social Sciences and Humanities Research Council are extremely important for students, particularly at the doctoral level. So I would like you to clarify that.

Mr. Guy Berthiaume: It already exists, but not at a high enough level. You must know that Quebec's loans and scholarships program does not take financial needs into account, whereas we're talking about a program of merit scholarships aimed at the best candidates. In the brief, to ensure that the decisions are made in the right place and that the greatest priority is attached to this program, we suggest that the councils manage the program, as is the case for the Canada Chairs, but that the recommendations regarding the candidates themselves be made by the universities. Here we see, on the one hand, respect for regional priorities and, on the other hand, a way of absorbing and minimizing the program's administration costs. So the three federal councils would be responsible for administering the funds, but candidate identification and selection would be done by the universities.

Mrs. Denise Pelletier: If I could add something here, I would say that, if we want to draw a parallel with the Quebec side of a recommendation such as this--we're talking about merit scholarships here--if there is a conceptual association to be made, it would instead be with the scholarships that are offered by Quebec's grant-giving councils because Quebec also has grant-giving councils, and not with the loans and scholarships program which meets basic needs.

Mr. Pierre Paquette: That's what I wanted clarified.

Mrs. Denise Pelletier: That's it. That's very, very clear: these are merit scholarships for the masters and doctoral levels. At the federal level, there are none for the masters level - zero. The federal government has no money to give.

Mr. Pierre Paquette: It has the money; it doesn't have the political will.

Mrs. Denise Pelletier: Really, the SSHRC doesn't have those budgets.

Mr. Pierre Paquette: Yes, yes.

Thank you very much, Madam.

[English]

The Chair: Thank you.

Mr. Wilfert. Just six minutes.

Mr. Bryon Wilfert: Give or take a few, I'd say.

Madam Chairman, I'd like to first thank everyone and to say with great respect that in my view the time has probably come for us to have “Romanow II”, dealing with universities and colleges in this country. The fact is, I hear about provincial jurisdiction, and I hear we want federal money, but we don't want federal input. It doesn't wash.

I hear there are 14 recommendations from the students. I'd like to know what their priorities would be, because you're not going to get all 14. There's no way. We can't fund them all. Yet we are saying we want to have some control.

I agree with you that the CHST should be abandoned and it should be direct funding. But before we do that, maybe we should sit down and have a thorough review in this country of what kind of post-secondary education system we want and who's going to take the responsibility. If it is going to continue as it has done in agriculture, in environment, and in justice to be federal-provincial, maybe we'd better clarify the rules.

Some of you talk about tuition increases, which are not federal, and you talk about student debt. I went to graduate school in the 1970s, and I can tell you that I paid my debts off. I have two university students who work in my constituency office and have done so for three or four years. They not only have the job I have for them, they also have a couple of other jobs. They're working.

I realize that students have debt. Maybe it's the issue of... I hear this analogy of putting a new porch on a structure that's falling down, and that does ring true. Maybe, as I say, it's time we had a national review of what we're doing in this country, because obviously there are a lot of cracks. That's not good for the students, and that's not good for the universities.

I would say to Mr. Brown just as an aside that in Vietnam this September I met with a number of government officials, and one of the comments that was made is how much they have learned about community colleges in Canada. In Vietnam they are trying to model themselves on that particular system, and they remarked how it is so beneficial, that we are a world leader, and that we should do more exporting in that regard. I thought I would just mention that to you, because I think it's important.

I certainly agree that the funding needs to be unbundled, but I say that maybe we should look at what it is we want before we go too much further. When I hear about millennium scholarships and hear that we should scrap the program, I would say what are we saying to the provinces making clawbacks, as they did in Ontario, as an example, an action that was unconscionable?

Part of it is the lousy way we negotiate some of these agreements. The fact is that we'd be throwing the baby out with the bathwater, and I don't buy that, though I do think it's time we looked at that. Are there any comments on a national review, with federal and provincial participation, with the stakeholders, and with your organizations? I think it's really time to sit down and have this debate.

Â (1210)

The Chair: Mr. Brown will answer the question.

Mr. Gerald Brown: I'm tempted here to respond more on a personal level than to give an association reaction.

I think the problem we have in Canada.... And your example using Vietnam was a very good one, because we are in fact, with CIDA support, implementing our college system in Vietnam.

When you travel around the world, the one thing that is different from our system that strikes you in other countries is the presence and the reality of a national--I'm going to use the term--minister of education, but I use that with a broad definition.

My fear is that the challenge Canada is facing is that we have a 19th century model trying to prepare itself for the 21st century. I know we have a lot of constitutional hassles around that, but every time we try to do something in this country, we run up against the federal-provincial jurisdiction question. In many cases there's goodwill, but in many cases there's not goodwill. We need to think about that and reflect on it. That's a personal opinion.

Mr. Bryon Wilfert: Thank you.

The Chair: Mr. Boyko, did you want to comment?

Mr. Ian Boyko: Yes, I did, on a couple of levels.

In terms of saying that we're not going to get all of these 14 recommendations, I think there are certainly some that are more weighty than others, and faculty and university presidents have echoed the need to invest many more millions of dollars in social science research.

Mr. Bryon Wilfert: You need to prioritize those formulas.

Mr. Ian Boyko: That's certainly a costly endeavour. Recommendations 8 through 13 would actually have an almost negligible cost when you consider the impact they'd have in increasing access and promoting post-secondary education for groups that are not accessing the system. If you want me to prioritize, I would say accessibility, accessibility, accessibility. There's a great amount of research that's included in here that documents the falling access and the inequity of access between higher-income groups and lower-income groups.

This brings me to my next point, student debt. To talk about education in the 1970s and about paying off student debt that was accrued during the 1970s is almost a fruitless affair. I'll cite some studies here that have been done just documenting the changes between 1982 and 1995.

Mr. Bryon Wilfert: The principle's the same, though.

Mr. Ian Boyko: The average debt-to-earnings ratio for female graduates from a BA program tripled between 1982 and 1995, and males fared only slightly better.

What I'm talking about is student debt in 1982 was equal to about 17% of the salary earned after graduation for a female BA graduate. That's now climbed to 51%. And, as Jim Turk mentioned, that's data that goes up to 1995 and it doesn't kind of include some of the incredible increases that have happened since then. I'm also talking about the complete deregulation of tuition fees in British Columbia and the professional and graduate programs in Ontario.

So I think that it's easy to say that it's much worse today and we can expect to see that climb probably towards the 60% to 65% margin. And of course that's a very clear deterrent to access on the front end and it's punitive to those on the back end who are suffering these sorts of difficulties in repayment, which people whose families had the resources on the front end simply don't have to face.

I'll leave that there. Maybe there are others who want to comment.

Â (1215)

The Chair: We're over time already. Thank you.

Mr. Brison, go ahead.

Mr. Scott Brison: Thank you, Madam Chair, and thank you to the witnesses for their interventions this morning.

One idea I've had some discussions with the C.D. Howe Institute about is the notion of individual EI accounts. Now, the applicability to post-secondary education in terms of lifelong learning would be as follows. Currently, when one pays into EI one does not receive anything from them unless you lose your job. It's an EI system that works periodically when one loses his job. But there is a way to turn the EI system as it exists currently to actually help facilitate lifelong learning in the following way.

Take people who are in their thirties or forties who are underemployed in their current employment but need to study, need to go to community colleges or universities to upgrade their skills to go to more full employment. If we had a system whereby after ten years of paying into EI one was vested in effect and began to receive a statement every year that said your EI account balance is whatever it is, but gave you the flexibility and the ability to withdraw a certain amount of it in order to upgrade your skills to go from being underemployed to being more fully employed, that would be an EI system that effectively would work for people who work as well as those who have lost jobs. I think there's a severe amount and a serious amount of underemployment in Canada as a result of lack of access to these skills and training required.

I'd appreciate your feedback on something as specific as that.

The Chair: Go ahead, Mr. Turk.

Mr. James Turk: I'll go first, if I may.

As you may know, Great Britain experimented with something called individual learning accounts, which were structured the same way, although there were some important differences, and were very enthusiastic about it and were recommending it to the world. They have since totally abandoned it. I'd be happy to send you material about what were a number of the practical problems in that.

The issue really is, as you point out, there are a lot of people who are underemployed, there are a lot of people who need access to education. Tying it to an EI account that you can have access to after ten years really doesn't address the bigger problem. That is, people of all ages, all ranges, whether they are 20 or 50 or whatever, may need access. And the best way to have access is a fair tax system that provides an affordable and accessible public education system.

And it's because we're getting away from that fair, easily accessible public education system that we have to look at other measures to help people cope with what are often crippling costs. So we don't think of how we provide students access to high school and the many people who want to complete their high school degree by saying let's set up funds to do it. We have high school. It's available for free for anyone.

I think we have to recognize that post-secondary education is like high school was then, and we have to have a system that doesn't allow some people privileged access to it either because they have money or they have access to special kinds of accounts. So I think the sentiment you express is fine, but I don't think that's going to be the solution.

I'll be happy to send you the stuff about Great Britain.

Mr. Scott Brison: Yes, I'd like to see that.

It strikes me as being consistent with some of us, except that we live in a market-based economy and that individual accountability is not necessarily a bad notion within that context.

One of the concerns raised by Mr. Boyko was that of commercialization and technology transfer and partnering with private funding as part of research at the university level.

We've heard from several representatives from various universities in Canada--including the University of Toronto earlier this week, but at other points as well. These representatives actually suggested, among other things, stronger patent protection, or at least maintenance of the current patent protection, and tax measures to encourage and facilitate greater levels of private investment in research. They actually referred to the participation of private investment as validating, in many cases, the research to begin with. They viewed the private participation.... For instance, in Quebec the role of the biotech industry in its relationship with the universities and the research, it is my understanding, has been extraordinarily successful.

What is the aversion to commercialization? It's not a universally held position--among the universities I've been exposed to, in any case.

Â (1220)

The Chair: Who would like to answer that one?

Mr. Boyko.

Mr. Ian Boyko: I'll be brief, because I think Jim probably wants to jump in.

The federation's opposition to the unfettered emphasis on commercialization stems from the fear that has been realized by several examples. I'll just mention one of them. The research labs of publicly funded universities are paid for publicly; the faculty and grad students have been supported with public funds; and the public universities are supposed to be operating in the public interest. The more that gets blurred with the private sector interest, which is just more short-term gains and trying to look at the growth of their own investment, the more it threatens not only the direction the public research agenda takes, but in many ways the very approach to science that is taken.

If universities jump into these partnerships with both feet.... All these partnerships also obviously require strings attached, and it's these strings attached that are very problematic. The idea that what publicly funded researchers with some funds from the private sector yield in their research is somehow now to be kept and protected by the private sector patents or commercializable projects is anti-science in many ways.

The idea of science is to share information broadly throughout your field in order to build on the body of research and make it bigger, and to share ideas for the common goal of innovation. But the more individual corporations and private sector donors want to fence off the data they gain and protect it with patents, so that no other researchers at other universities are going to be able to see it, the more it becomes problematic. It doesn't actually achieve the goal of growing innovation; I would argue it actually inhibits it, because researchers are less apt to share information--

The Chair: I'm sorry, Mr. Boyko, but I would like to allow Mr. Brown to have a say on this, and we're over our time.

Mr. Ian Boyko: Sure. There are examples that are listed in the brief of where that's been a problem.

The Chair: Mr. Brown.

Mr. Gerald Brown: Just for the record, we're on a different page altogether when it comes to the colleges and the institutes--a completely different page.

We started out as learning institutions and teaching institutions and we provide skills training. The relationship that developed between our institutions and industry was one of training and developing skilled workers. What has evolved over the last 30 years, though, is a relationship that moves into a new culture that is really fostering research and commercialization. We're very much in favour of working in that direction.

I guess our second recommendation says to the federal government, given the success we've had so far in moving in that direction between two partners called the institutions and industry, can you imagine what we could do in Canada if the federal government stepped in and played a third part?

The Chair: Thank you very much, and thank you, Mr. Brison.

We'll move to Ms. Minna. You have six minutes.

Ms. Maria Minna: I want to start with the community colleges, Mr. Brown.

I'm a long-time supporter of college and university education in general. We've had quite a number of recommendations in this last couple of weeks from different organizations in different areas to establish national organizations. One was on national skills and apprenticeship--I don't remember the exact name, but that's what it meant. Another one, I think this morning, dealt with national healthy living, or what have you, and we've had others. I seem to be hearing more and more from various presenters about establishing national things. I sense that there's tremendous amount of need, as there was when I was involved with the social security review hearings back in 1994, for national standards, national cohesion, or national cooperation or collaboration on things so that we don't have people falling through the cracks.

Having said that, I want to ask you, in your first recommendation, for college institute access centres, one of the things you talk about, for instance, is foreign credentials. What happens now with respect to this area in the college system? Is there any work being done at all, or is it kind of...

Also, with the SMEs, you've just mentioned that the colleges have a long, very strong relationship with small business or business in general. What relationship or what work is being developed now with SMEs? Would you need the two national separate institutes, or could you do it in the one, and what would that look like, exactly?

Â (1225)

Mr. Gerald Brown: First of all, I think the cry or the demand or the wish for a more national type of focus has always been there, but the federal government has to take credit for having created or for awakening the beast, in the skill and innovation consultation process it has going on across the country. It has brought together people who have had difficulty coming together, so it's quite natural now to hear this echoing of comments across the country.

I've participated in all HRDC and Industry Canada so-called “national” consultations, and you're hearing that momentum. So it's quite natural to hear all of us say that. I think there's a wish out there.

I see them as two separate entities, the first one very much responding to the original or basic need of what our institutions are all about. If I take George Brown College in your riding, George Brown is very much dealing, and very closely, with foreign students, with immigrant students and inner-city students in many, many cases. So it's just the opportunity to have the programs and the support from the federal government that would facilitate getting these people in.

If I could just use an analogy, education is an escalator of learning. Our challenge is that many of us get on, but the most difficult challenge on any escalator is that first step. Once you've managed the first step, it takes off. So it's how do we get people who are disadvantaged, who are have-nots, to have an opportunity to get in? I see that access centre as facilitating in helping those types.

The SME one, though, is different altogether. It's very much working in the community, developing an economic challenge, bringing together all the economic partners, bringing together industry and giving that kind of help to a mom-and-pop shop and to those in the industry that sit between 50 and 70 employees, that don't have the in-house training and in-house capacity to give the kind of skills training that the people need.

Whether you're in Yorkton, Saskatchewan, or in downtown Toronto...and again I use the George Brown example, because they've just done one in Toronto that brings together a lot of the SMEs in Toronto, to look at how in fact they can bring together and be responsive to the needs of the community.

So I see them very much as two separate entities, one responding to a certain type of clientele and another one responding to a different kind.

Ms. Maria Minna: Mr. Boyko, in your recommendation for us to basically activate the 1998 budget debt reduction and repayment program, believe it or not, I thought we had. You're telling me we haven't. To what extent is that impacting on your twelfth recommendation, with respect to a debt problem?

Mr. Ian Boyko: Debt reduction and repayment was implemented in 1998, but with eligibility tables so strict that fewer than 1,000 people today have qualified for it, when it aspired to help 12,000 students every year. So when I say implement, by that I mean implement; I mean fix those eligibility tables so that people will start qualifying and students drowning in debt will be able to gain some relief.

But I also want to extend a thanks to the committee, because in last year's recommendations, that recommendation regarding debt reduction and repayment came forward. It was never acted upon. So if that could come forward again as another strong recommendation, it would be just following up on a promise and a commitment that has already been made.

Ms. Maria Minna: Just to go back for a moment, on the overall issue of education and unbundling the CHST, I never liked the CHST. I fought tooth and nail in 1995, publicly, against the elimination of the CAP. At least there were streams in the Canada Assistance Plan; there are not here. I think it's time that we review that whole thing.

I agree with my colleague. I'm not suggesting we don't do anything in education, because I don't think we can wait for Romanow to do some things--

A Voice: I didn't say that either.

Ms. Maria Minna: No, I know you're not; I'm just trying to reinforce that.

At the same time, I think it's high time that we looked at education in this country. We talked the talk, you're quite right, and we haven't really been walking the walk across. It's not just us, but also at the provincial level. When you deregulate professions, that is tantamount to saying we divest ourselves of the responsibility of making sure everyone has access to medicine, to dentistry, to engineering, what have you. In Ontario they've deregulated the professions; in B.C. they've deregulated other things. There has to be some consistency in this country in what we value. If we value it, we need to put some fences around it.

So I agree with you on that. Maybe we need to have a national... In the meantime, we can negotiate something that works under the SUFA. We do have the social union accord, which we made with the provinces, and I don't think it excludes education at all. I just wondered if you're familiar with SUFA and if you feel that would meet some of the needs in the short term.

Â (1230)

The Chair: Mr. Turk wanted a quick response.

Mr. James Turk: Yes, just two sentences, since I know our time is up. We are aware of SUFA; we're making a submission on it. I don't think we're overly hopeful that it will be a productive forum, but nevertheless it is a forum and we need to take advantage of it.

The Chair: Thank you.

That concludes this panel. We appreciate the fact that you put the time in, not only to come here and present and answer questions, but to prepare those briefs. Those briefs will be distributed to all the members of the committee. This is only one part of the committee that's operating today; we have people in other cities too.

Thank you very much, and we are adjourned for the morning.