FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, September 28, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I would like to call the meeting to order and welcome everyone here this afternoon.

As you know, the finance committee, pursuant to Standing Orders 108(2) and 83.1, resumes its pre-budget consultation process. We are of course waiting for Canadians' input on means and ways to improve the quality of life for the people of Canada through budgetary measures, and we'd like to basically know what your views on the priorities are.

We will begin with Action Canada for Population and Development: Ms. Katherine McDonald, and Ms. Ann Burnett, parliamentary coordinator. Welcome.

Ms. Katherine McDonald (Executive Director, Action Canada for Population and Development): My name is Katherine McDonald. I'm the executive director for Action Canada for Population and Development, and I have with me Ann Burnett, who is our parliamentary affairs coordinator.

Action Canada for Population and Development is a new NGO, and it was formed with a mandate to foster discussion and debate concerning the broad range of issues on population, reproductive health, and sustainable development. We focus on the commitments that Canada made at the International Conference on Population and Development, which was held in Cairo in 1994.

In particular, the Cairo conference, as it is often called, was a real step forward in terms of international family planning and population issues, because for the first time the international community took a look at the way programs were developed and delivered for women and focused on women's rights and women's empowerment in a way the international community really hadn't done before. Prior to that point, during previous conferences on population and development the international community looked at national targets, population policies, trying to slow population growth and reduce the fertility rate of women without really paying an awful lot of attention to whether or not the women had any role in developing or designing the programs.

We're coming up to the five-year review of the ICPD, the International Conference on Population and Development. While the ICPD focuses on women's reproductive rights and health and the reproductive rights and health of the men in the family and the children, it also has focus on international migration, and certainly lots of discussion concerning sustainable development policies.

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The other important thing to remember and to know about the ICPD was that it was the first time that the international community set actual financial targets to take a broader approach to women's reproductive health and the health of their families. So they set financial targets. The targets they set were graded to increase immediately following the conference, again in the year 2000, in the year 2005, and so on until the year 2015. Canada's share of those commitments is estimated to be $200 million per year by the year 2000. That amounts to about $7 per Canadian per year, but last year we only spent $50 million. So we are only 25% of the way to the commitments that were set in 1994.

Now, these weren't vague promises. The figures have been identified by the OECD and confirmed by our own Canadian government. And in an effort to spur Canada to reach its financial targets set at Cairo, we have produced a scorecard, a graphical outline showing where we need to be by the year 2000. That scorecard is attached as a photocopy to our brief, which should be contained in a blue folder. It contains an original of the scorecard and a short description of the main facets of the International Conference on Population and Development. That scorecard, unfortunately, is only available in English. It's been produced by the United Nations Population Fund, the World Bank and the World Health Organization.

Our position before the finance committee really is twofold today. It's first of all to let you know that this is a key international conference that took place in Cairo in 1994, that it's not just another UN conference, that it represents a breakthrough in international development strategies in addressing the real needs of women and their families that will lead to, we hope, decreased poverty, fewer children dying before their first birthday, more women living through the complications of pregnancy and childbirth.

Today, despite the fact that we have initiatives to review maternal mortality, nearly 600,000 women die every year from complications related to pregnancy and childbirth. It's estimated that between one-third and one-half of those deaths could be prevented with basic obstetrical care and trained health attendants.

So the approach we're taking here is more than just providing family planning services; it's taking a broader reproductive health approach, an approach that addresses the needs of women, and an approach that we believe we will be able to show during the Cairo plus five review is a huge and enormous success in the countries where it has been successfully implemented.

The challenge we're facing is that while almost three-quarters of the developing countries' share of the financial burden of meeting the needs of women and their families has been met, only about one-third of the money promised by donor countries has been met. And if we look at Canada's position within that hierarchical list, we're doing very poorly indeed.

So my plea to the committee today would be to take recognition of the fact that this key conference took place, to recognize that although we have many priorities within Canada and internationally, a substantial increase in the amount of money for overseas development assistance is necessary. All those things being absolutely equal and strong factors, the plea is that we should really meet those key commitments we have made as a priority.

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Canada has taken a strong position as a leader in the international community. We're very proud of the position we have taken on landmines and in the recent establishment of the International Criminal Court. We are acknowledged as the leader in the area of human rights, and taking a stand for women's reproductive rights would only expand Canada's role within the international community.

In terms of economic benefits for Canadians, to increase the capacity of non-governmental organizations and governmental agencies within Canada to actually develop and deliver reproductive health programming in developing countries would mean a substantial increase in expertise for health care workers within Canada and experts in international development. I think if we make the investment now in that programming, we will see met a number of key commitments that this government has made, we will increase employment opportunities for Canadians both within Canada and internationally, we will take a strong and proper moral stand on key international commitments, as we should, and we will really place ourselves as part of the global community.

We have to pay attention to what goes on globally. We all know that. Recent events in Asia have pointed out only too clearly how much our country and our economic condition are affected by other markets. By investing in women, their children, and the families in those countries, we will see a direct benefit globally and within Canada.

We are about to launch a campaign called “$200 million by 2000”, where we intend to take our scorecard and other analyses of Canada's contribution across the country. We're part of the NGO consultation process during Cairo plus five, and we support and work with such organizations as the Canadian Association for Parliamentarians on Population and Development, who are working very hard to achieve the Cairo implementation.

I don't want to take up very much more time. I hope that if you have questions concerning either the substance of the ICPD commitments or the analysis of Canada's position on those commitments, you will ask me during what I hope will be a very fruitful and interesting discussion.

Thank you.

The Chairman: Thank you very much, Ms McDonald.

We will now hear from the Canadian Council for International Cooperation, Ms. Gauri Sreenivasan. Welcome.

Ms. Gauri Sreenivasan (Policy Coordinator, Canadian Council for International Cooperation): Thank you very much. I would like to thank you for inviting me to speak before the committee today. My name is Gauri Sreenivasan. I head the policy team at CCIC.

[Translation]

The Canadian Council for International Co-operation (CCIC) is a coalition of more than 100 non-governmental organizations who seek to advance the course of human development in ways that favour social and economic equity, democratic participation, environmental integrity and respect for human rights.

In examining the four questions put forward by the Committee I would like to stress three important aspects of the context that informs our recommendations today.

First, we live in a world of unprecedented global interdependence where currency speculation, capital flows and stock market fluctuations are closely watched by all nations. We have witnessed that what happens in Asia has repercussions in Russia, in Canada, and in all regions of the world.

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Secondly, Canadians are living in a global economy and society, but it is one that is highly and increasingly unequal. The share of the richest fifth of the world's population has grown from 32 times the poorest fifth in 1970 to more than double the poorest fifth in 1995. Poverty also knows no boundaries. Despite a 1989 parliamentary commitment to end child poverty in Canada, a mere six years later close to 500,000 Canadian children had slipped into the relentless cycle of poverty. Canada is now well positioned, after several years of cutbacks and budget balancing, to seriously address the growing gap between the rich and the poor.

Thirdly, ODA has suffered much during this decade and must be the target of increased support. Canadian ODA for 1998-99 is estimated at $2.3 billion or 0.27% of our GNP, a steep decline from 0.46% in 1992. Canadians continue to see themselves as important players on the world stage and we must act concretely and decisively if we want to maintain the respect that Canada has justly deserved for its international activism.

[English]

Let me start with the issue of global interdependence and instability. I have recently returned from a CCIC-led mission of parliamentarians and other Canadian leaders, including your colleagues Jean Augustine, Daniel Turp and Libby Davies, to Indonesia and Thailand. The purpose of this mission was to investigate the roots of the Asian financial crisis and the effects of the crisis on the poor, and to look at the implications for Canada. Our mission's report—I brought some copies if people are interested in it—addresses the issues that really form a very important backdrop of uncertainty as the Minister of Finance prepares the next budget.

What we witnessed and what we found was a human and developmental crisis of staggering proportions. Countries hailed as models of economic growth just a few short years ago have fallen hard and fast, with devastating impacts for the poor. By the year's end, Thailand will see one-fifth of its population plunge below the poverty line. In Indonesia, it is estimated that half of that country's population, 100 million people, will be living in poverty by the end of 1998.

Although the crisis has dramatic impacts on the people of Asia, it quickly became obvious during our trip that the crisis had major impacts for the whole world, and for Canada, beyond the well-documented impact on the Canadian dollar. For example, we can be fairly certain that increased Asian exports and reduced imports, which follow prescriptions from the International Monetary Fund, may depress growth in Canada by at least 1%. As we are concerned about unemployment in Canada, knowing well the pattern of firms seeking environments of less regulation and lower wages abroad, we can also clearly see the importance of making sure workers in Asia or wherever they are have both safe working conditions and decent wages.

Canadians are concerned about the environment. We need to pay attention to what happens in Asia. International financial institutions are encouraging further deforestation there as part of bailout conditions—a major cause of climate change.

In summary, what we drew from our recent mission to Asia, and what we feel strongly needs to be recognized in the committee today, is that in the decisions we are taking now about how to manage our national economy and our society, we must take into account that the shape of our future will be determined as much by what happens outside our borders as within our borders.

We have brought a number of recommendations to Minister Martin on the global financial front, noting that a response based on either aid or international bailouts alone will not be sufficient to address this global crisis. I'd be happy to go over in more detail with the committee during our discussion some of those recommendations. I won't go into them in depth now, but I'll just say, in short, that they address regulation of particularly short-term international capital flows and a reworking of the International Monetary Fund.

But let me go to the second point: the gap between the rich and the poor. CCIC and our 100 members have launched recently, in concert with a number of domestic groups, the “in common” campaign. The premise of our campaign is that poverty in Canada and internationally is not inevitable. What we need are concerted actions on the part of government, civil society and the private sector to act and work together for policies and programs that can eradicate poverty.

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We feel very strongly that Canadians are themselves committed to act as global citizens and respond to the intolerable human conditions of endemic poverty. Why do we think that? There are a number of factors.

First, we know that private donations have not diminished to address these issues during a time when governments have cut programs such as ODA. The results of a recent 1997 Angus Reid poll suggest that support for Canada's aid program is increasing and that a recent Compas-Southam opinion poll shows that Canadians are strongly committed to humanitarian values and the sharing of Canada's relative well-being with those living in poverty. Lastly, this same poll shows that Canadians are committed to universally recognized human rights, including the right to an education and to health care and to a sustainable livelihood, and that they look to the government to promote and protect these rights.

Canadians want to continue showing their support for international development and for the work of non-governmental organizations on these issues. So what concretely are we recommending to the committee in that context, then? We have recommendations regarding the tax structure of charitable giving and regarding the budget for international assistance.

On the first issue, we need to give Canadians targeted tax incentives so they can be encouraged to continue giving to charities and to give more generously. As a member of the voluntary sector roundtable, we support the recommendations they have put forward. Let me highlight two specific proposals being developed by the charitable incentives review task force.

The first is a proposal designed to encourage more Canadians to give to charity and to encourage people who give small amounts to give more. In the U.S., the State of Arkansas recently introduced a special tax incentive for donors who increase their giving to certain charities by up to $200 a year. An incentive along the same lines in Canada could generate as much as $50 million per year in additional donations.

The second proposal will simplify the tax credit and equalize the tax benefit that is available for all donors regardless of income level.

With regard to international development assistance, what are we recommending with respect to Canada's aid budget? Again to reiterate, it's very important to point out that ODA has borne a disproportionate burden in the fight against the budgetary deficit since the early 1990s. It has declined almost 40% in real terms. A recent review of Canadian ODA performance by the OECD suggests that Canada's reputation internationally is under threat. There is strong concern that in its role in the world, both at home and internationally, Canada will not be able to meet its own commitments.

Our two main messages regarding the aid program and in budgetary terms are simply, first, that we do need to increase our support to ODA, and secondly, that we need to revitalize what Canada's contribution is in terms of focusing those resources on poverty eradication. So with respect to generally increasing aid levels, we look to this committee and the government to demonstrate strong leadership and build on the positive budget signal in the last budget, 1998-99, by committing urgently needed resources to restore Canada's international reputation.

We'd like to see laid out three key things. First is a timetable for incremental increases that will gradually bring Canada back up to its international commitment of 0.7% of GNP. We're looking in particular for a medium-level target to minimally return to our historic level of generosity at 0.35% of GNP for aid for the next five to seven years. We would like to see a timetable called for that.

Second, we would like to see Canada forgive outstanding debt owed to Canada by the highly indebted, least-developed countries. We are currently owed $1.2 billion Canadian by the poorest nations.

Third, new and additional financial resources need to be put into the ODA envelope for 1999-2000. We recommend a 6% increase in the international assistance envelope, with funds being targeted to poverty reduction. This would represent approximately $120 million over the fiscal year 1998-99.

Finally, with respect to sharpening the focus and the quality of aid, because these issues are as important as the quantity of aid, we do know that CIDA has taken a number of very important steps to put policies in place to identify achievable results. We have, for example, committed to the OECD target to reduce extreme poverty, defined as living on less than $1 a day, by one-half for the year 2015.

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Research done by the UNDP and others has demonstrated that these targets are achievable. Not only must new resources be mobilized, but also detailed strategies need to be elaborated in order to actually implement that goal, and Canadian NGOs want to work with CIDA on this.

We'd like to mention two areas. We'd like to see CIDA devote at least 60% of its aid budget to poverty eradication in programs that directly improve the conditions and rights of people living in poverty. The remaining 40% does need to be directed to activities that can be clearly demonstrated to be linked to poverty eradication.

Secondly, regarding the committee's interest in the question of how we help Canadians respond to the new economy in the new context, we feel strongly that we need to invest in education and public engagement with respect to global citizenship on the part of Canadians. Canadians want to understand the local impact of global issues, and they want to discover ways in which they can make a contribution to a better world. We're looking for a partnership with CIDA and other institutions to ensure that in their communities, their workplaces and their schools, Canadians are engaged in informed discussion of global issues, including development cooperation. We would note that currently CIDA spends less than 0.5% on development information and education programming.

In conclusion, we'd like to echo the words of Finance Minister Paul Martin—which we don't often do—who earlier this year said:

The great nations of the 21st century will be those...where the gap between the rich and poor is narrowed, where the mainstream is constantly widened, where the quality of life is in fact lifted for all so that the most vulnerable in our society are protected.

We call on the Canadian government to take up this challenge by reinvesting in Canada's aid program and contributing to the goal of eradicating poverty.

Thank you.

The Chairman: Thank you very much.

Now we'll go to the Canadian Council on Social Development: Mr. Chuck Birchall, past president; Susan Carter, associate director; and Pierre Laliberté, research associate. Welcome.

Mr. Chuck Birchall (Past President, Canadian Council on Social Development): Thank you. My name is Chuck Birchall. I am the past president, and I thank you for welcoming us today.

As you may know, the Canadian Council on Social Development is an independent, national, non-profit organization. It's led by a volunteer board of directors, and I am one of them. These directors come from across Canada. The CCSD has a broad mandate, which is focused on issues of social and economic security.

I know, Chairman, that you posed four questions to us and others in your letter of May 25. Our brief, which we've submitted to you, has attempted to respond to those questions. At the same time, we recognize that since you wrote to us, the economic ground may have shifted somewhat. Our brief has attempted to address in some respect that shift as well.

I think I would like to simply stress three things we put forward in our brief. The main question you posed in your letter remains, what should the government's focus be in regard to the fiscal dividend? We believe that the government should focus its attention on improving children's well-being. The new child benefit no doubt constitutes the most important social initiative undertaken by the current government, and it is so far regarded as a success story, particularly in terms of provincial and federal cooperation. But the needs of children remain constant in terms of child poverty.

We recommend that you consolidate the new benefit and that you consider an additional investment of $850 million by the year 2000. We suggest that you take the additional step of developing a comprehensive plan of action around children and youth. Other issues, such as adequate child care, early childhood development, safe communities, transition to adulthood, and early and continuous education, deserve the government's full attention, especially in view of the provincial governments' willingness to advance the children's agenda. One tax initiative, which my colleagues may wish to elaborate on in the discussion, is reinstituting a universal child tax credit.

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The second point I would like to underscore for you relates to the third sector. As the representative from the CCIC has commented, we too are a member of the voluntary sector roundtable, and we support the recommendations she has put forward to you this afternoon.

In addition, just as the government did with its infrastructure program, we suggest the government consider a commitment to the so-called third-sector economy—that is, investing in community organizations that provide jobs and much-needed social and health support services. This could be done through the creation of a national community development fund.

Lastly, there seems to have been a great deal of discussion recently around the employment insurance premium. The CCSD believes the EI premium should serve the purpose for which it was levied initially—in other words, to provide income support to Canadians who are temporarily out of work. The CCSD does not believe a reduction in the premium should be a priority, as Canada has in place payroll taxes that compare favourably to most OECD countries and to the United States.

Coverage of the unemployed has plummeted from 83% in 1990 to 42% in 1997. Savings have been in large part made on the backs of premium payers and at the expense of provinces, which have had to spend more on social assistance. We believe the priority should be given to restoring in part the EI benefits, including maternal and parental leave.

Thank you for permitting us to make this brief statement. We look forward to participating in the discussion.

The Chairman: Thank you very much.

Now we'll move on to the National Anti-Poverty Organization: Mr. Mike Farrell, assistant director, and Laurie Rektor.

Ms. Laurie Rektor (Executive Director, National Anti-Poverty Organization): Hi. I would be the Laurie person of that duo. I'm the executive director of the National Anti-Poverty Organization, and Mike Farrell is the assistant director. We would both like to have a little bit of your time this afternoon. I will lay out some of the issues we're dealing with this year, and Mike will look at some of the things we're recommending this committee consider.

The National Anti-Poverty Organization has been around since 1971 and is most commonly referred to as the voice of Canada's poor. That is because our board of directors is comprised of 21 individuals who are either currently living in poverty or have had significant life experience of living in poverty. They direct the staff and the organization as to what issues to respond to and offer suggestions on how we would proceed on those types of things. Our board members come from all across Canada, so they represent every region and are quite diverse in the knowledge and expertise they were able to transmit to this organization to bring forward today.

I wanted to talk a little bit about what our board are telling us this year—what life is like, what they see as some of the major concerns and issues. It's been a difficult year for Canada's poor, for the people who are living in poverty. It's been a difficult year and a difficult number of years for a variety of reasons.

First of all, the number of people living in poverty is growing. Right now there are over 5.2 million Canadians who are living below the low-income cut-off. A great proportion of these are children, and this is also of concern to our membership. Also, the depth of poverty is increasing, and I think Mike will talk a little bit later about some figures that show the gap. We've heard a lot from some of the other organizations and we know intuitively in the work we do that the gap between the rich and the poor is widening. There is also statistical evidence to support this.

The use of Canada's food banks is skyrocketing. Since 1989 the increase in the use of the food banks has been 118%. In 1989 Canada had almost no food banks. Now the use of the food bank is a daily part of many thousands of Canadians' lives.

The number of people living below the low-income cut-off, as I said, is increasing. It has gone up 40% since 1989. We've seen that size of increase of Canadians living in poverty.

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There's also another difficulty, another challenge that is facing the people we represent, Canada's poor, which is increasing levels of intolerance and I would say genuine ignorance of what the reality of being poor in Canada is. In the same way that some people live their lives so far removed from what it is to be poor, many people don't know that we really have poor people in Canada.

When I met with my brother yesterday, whom I haven't seen since I took the position on at the National Anti-Poverty Organization, he was happy that I had a new job, but he wasn't quite sure that we needed to have an organization to represent Canada's poor. This is a well-intentioned, well-educated, well-read individual. I think what the people we represent are telling us is one of the biggest barriers they're facing in addition to the increases in poverty is just the fact that most people don't recognize what life is like for poor Canadians.

I'd like to have Mike talk a little bit about some of our recommendations and concerns, and how they would translate into budgetary solutions.

Mr. Mike Farrell (Assistant Executive Director, National Anti-Poverty Organization): I want to apologize because we didn't have time to get our written submission translated into French. We will be translating it and providing a copy hopefully next week.

I want to expand a little on what Laurie was saying and talk about what we're recommending. We only have three recommendations. They come out of discussions with our board members and discussions with over 400 local anti-poverty groups. We have a lot of contact with groups across the country.

I think first what we want to see is a recognition that people in Canada have a right to have financial assistance from the government regardless of the reason they are in need. If they have no source of income whatsoever, they have a right to have some financial support from the government. Right now that right has been taken away from them because there are hundreds if not thousands of Canadians who do not receive any financial support whatsoever and they don't have a job. We don't even know where they are.

The second recommendation has to do with the employment insurance fund. I'm glad CCSD mentioned it. I find it surprising, and I read about this in the paper all the time, that the fund is expected to have a surplus of $20 billion by the end of the year. Everyone's talking about how much the premiums should be cut. I think you mentioned that by 1997 the coverage of EI benefits was down to 42% of the unemployed. Right now it's down to 36%; it's dropped even further in 1998. This means that Canadian workers are paying into an insurance plan and most of them they will never receive the benefits from this insurance plan they're paying into. I don't understand how that can be possible. I think we should change the plan as soon as possible so that people, when they lose their jobs, are able to have something to keep them going in the meantime.

Up until now what has happened is those people who are unemployed that no longer qualify for benefits fall down to the social assistance programs in the provinces. The provinces have reacted by tightening up the social assistance programs so that fewer people are eligible to qualify because they don't have the financial capability to deal with the people that are falling onto their plan. So increasing numbers of people have no source of support whatsoever.

The third recommendation has to do with the national child benefit. NAPO has talked about this before with this committee. I think it would be a real benefit if you could hear it from the people themselves. When our board members talk about the national child benefit there's fire in their eyes. This is a program that's seen as just outright discrimination against people on social assistance, because families on social assistance don't receive a dime from this program. Our recommendation is to extend that benefit to all poor families, not just the working poor, as a first step and certainly increase the amount that's being put into the plan.

The Chairman: Any further comments? Thank you.

Now we'll hear, from the Canada Family Action Coalition, Mr. Peter Stock, affairs director. Welcome.

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Mr. Peter Stock (National Affairs Director, Canadian Family Action Coalition): Thank you, Mr. Chairman. It's our pleasure to appear here today. I think everybody has the document we submitted in front of them. I won't read through that and bore you to tears. You can read that on your own time, if you like. I'd just like to touch on the key points that I address in it.

The first is the over-taxation that we see happening in Canada. At this point in time we sense some serious commitment from the Government of Canada to deal with that problem. There certainly is an indication from the finance minister and the Prime Minister at this time that they want to deal with that and they want to get tax levels down for Canadians. Of course, it's the business of the government to decide how that best can be done, and we'll leave that in your capable hands.

The point at the heart of this debate is, what is the correct level of taxation? That's a debate that's going to rage for years to come as governments come and go. I do believe what we're hearing from our membership is a clear sense that people feel over-taxed, and I don't believe that has to do just with strained finances at home. I think that has to do with a couple of other factors too, which we address further along in our presentation.

The first is the concept of taxation that treats some families better than others. That is particularly striking in the area of the child care expense deduction, where families who choose licensed day care in fact receive a benefit far in excess of those benefits assigned to families who do not choose licensed day care. For some families it's as much as $10,000 a year. It's a phenomenal amount of money and it prevents some families from making the child care choices they want to make, whether it's choosing a relative or a neighbour or staying at home themselves to raise their children. They'd like to make those choices. We've indicated in our documentation polls that show that a significant percentage of Canadians—maybe as much as 40%—want to have the option to stay home to look after their children but can't because of the financial pressures.

There's a growing sentiment out there, we're sensing, that some aspects of the tax system aren't being adequately addressed in terms of their equal treatment of all Canadians.

The second area we address, of course, is wasteful spending. Canadians certainly feel, when they see their dollars wasted on certain projects, grants, or programs, that indeed their taxes have been spent poorly and as a result they've been over-taxed. If they see the money wasted, they say they could have better spent that themselves on a community organization or a local charity.

Again, we've mentioned some examples in our paper. Sex change operations was an interesting one that we saw just a few weeks ago. The military has decided to fund that at a cost, I believe, of about $50,000 for the soldier involved. When I hear from our membership about that, they say that's not good spending; that's not proper spending; that's not what we should be spending our military budget on.

Of course, this is also happening in our prison system. Prisoners are getting sex change operations. I think they probably look a little different coming out than they did going in, and maybe that's helpful to them when they re-enter the community, but I'm not sure the taxpayers should be funding it.

The final area we mention is that of funding special interest groups. You've heard from many of them before this committee, testifying as to the contribution they make to Canadian society. It's our suggestion that if they are in fact a necessary part of our democracy, they could find the funding themselves from the constituencies they claim to represent. They do not need the backing of the Government of Canada to make their political statements and their activities a reality.

We'd ask you to consider more responsible spending in areas where you can. We'd ask you to consider that tax system again and the inherent unfairness. Try to make it fair and work towards that and I believe Canadians will be confident that their government is doing a good job for them. Thank you.

The Chairman: Thank you, Mr. Stock.

We'll move to a question and answer session, and we'll begin with Mr. Ritz.

Mr. Gerry Ritz (Battlefords—Lloydminster, Ref.): Thank you, Mr. Chairman, and thank you, participants, for being here today and giving us your words of wisdom. There is certainly food for thought in a lot of what you're saying.

There is a common thread through a couple of the presentations on Canada's commitments to the world. We were a front-line country at one point in anti-poverty, women's rights, and so on. Can we still afford to be? Can we dedicate dollars to those foreign causes when we have child poverty in this country? The United Nations is now decrying Canada's number one status in the world due to our child poverty.

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Someone mentioned the increased use of food banks. How do we justify to our own taxpayers and our own people at home that we're going to send...? I know a commitment was made a short time ago, when Korea was in crisis, for $1 billion by the Canadian government. That was handled through the IMF. The dollars went into Korea and basically they bailed out banks and so on. The IMF really took over the social safety net of the country, to the detriment of the people who were involved.

Can the Government of Canada give the taxpayers of Canada the assurance that those dollars will get to the target in a most expeditious and efficient way, and not jeopardize our own programs at home? Can anybody shed light on that?

The Chairman: Who would like to answer that question? Ms. McDonald.

Ms. Katherine McDonald: I think what we have to remember is that there are really two prongs. First of all, we should live up to the promises we have made. So if we've promised and we've made a commitment, then we owe it to the people we promised to live up to the promise. We should not be breaking promises as Canadians.

Number two, I think quite apart from the moral commitment and some might even argue the legal commitment to live up to our promises, there is a benefit back for Canadians in providing for a secure world, a world where fewer children die, where more children are likely to live to get a basic education, to contribute to their family's well-being. The spin-off can be for us stronger trading partners, a strengthened economy within Canada in terms of developing the expertise to provide some of the technical assistance that people in developing countries are asking us for, and by reducing the kinds of wars and strife that are brought on by people who simply have nowhere else to go.

We're in a situation where we have more refugees right now in Africa than ever before. We have a very good record on refugees within Canada, but people who come to this country as refugees come because they have no other choice. So if we assist them to live productively and happily in their country of origin, then we're not going to be sending huge amounts over to Sudan for famine relief, if we could prevent the famine in Sudan in the first place.

I think it's a circular mode, and we have to see ourselves as part of it. We're not going to get anywhere with band-aid solutions, but we will get somewhere if we have a much more focused approach. I love CCIC's approach of saying let's take this percentage and look at poverty eradication and let's really look at how much of a percentage of our GNP we should be putting towards these programs and do it.

Mr. Gerry Ritz: I certainly agree with what you're saying.

The Chairman: Gauri, would you like to add something?

Ms. Gauri Sreenivasan: Sure. I guess there are a couple of other points in addition to the ones that Katherine has already made and that speak to some of your questions.

Going to the heart of your question, we don't really feel that it's a trade-off between addressing children who are hungry at home and children overseas. I'm not denying that clearly budgets involve choices and priorities, but in our view the ethical imperative of addressing poverty at home and overseas is critical for both. Those aren't the two choices; those two kids aren't the ones who need to be traded off against each other. We feel it's very important that Canada continue its foreign aid program overseas and that in fact it is an appropriate time to increase it. We don't see that at the expense of key social investments at home. So I think that's an important point to make.

Secondly, I think you asked a question about the efficacy of aid. What institutions reach the poor the most effectively? In our experience in Asia, for example, the recent bailouts led by the International Monetary Fund in fact did not serve the poor. The conditions attached to those programs exacerbated conditions of poverty for the poorest.

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We feel it's extremely incumbent upon the Canadian government to not only engage in a question of whether we can increase international assistance abroad, but also engage in a very serious political reform program for institutions like the IMF. For example, in countries like Indonesia, we heard over and over again that this is not a government we can be channelling aid to at this point; we need to be working through non-governmental organizations. So depending on the country context, it's very critical to make careful choices about the delivery mechanism.

In general, institutions like the International Monetary Fund really are in need of a serious overhaul. And that's not just a comment coming from NGOs or from groups that have traditionally been seen to be critical of these institutions. We see a significant political consensus emerging, from the left and from the right, about the failure of the prescriptions that have come from the IMF.

So in terms of the mechanisms, I think you raise an important point, but I would underscore what Katherine has said about international commitments.

I guess the last point I have is it's not just a question of us gaining things here in Canada, but that these issues truly are global issues and that Canadians do understand that. Our information as we speak with Canadians in polls really is that they don't feel it's the time to abandon the world's poor, that in fact they would like to see effective aid and increased aid. And their own private donations indicate that commitment.

The Chairman: Thank you.

Mr. Ritz.

Mr. Gerry Ritz: No, that's fine. Thank you.

The Chairman: Madame Guay.

[Translation]

Ms. Monique Guay (Laurentides, BQ): Allow me to introduce myself. My name is Monique Guay and I am a Bloc Québécois member and my party's international cooperation critic. I also sit on the Executive Board of the Canadian Association of Parliamentarians for Population and Development. I am therefore very familiar with this issue.

Katherine, I am very pleased to see you. I had the pleasure in the past of travelling with you to Belgium, where you practised speaking French.

It is obvious that child poverty exists in Canada. Given that we know that one child out of five is living under the poverty line, it is urgent that we intervene. Canada having attained a zero deficit, it must immediately provide in its budget for funding targeted at relieving this very serious situation.

We made official commitments in Cairo. We signed documents committing us to do our share. However, once again we are seeing that we won't be carrying through on these commitments. If you look at the scale, you will see that we won't reach the promised level of aid by the year 2000 without a miracle or the finance minister deciding to inject the necessary amounts of money. We really must do something.

I had the opportunity to travel and I made my way, among other places, to Asia, to familiarize myself with the programs that have been put in place there for the people, in particular family planning programs geared to educating young girls and women. Family planning is critically important in these regions, and it struck me that there is still much to be done and that Canada is not yet doing its fair share, or at least the share that we have been attributed.

Katherine could perhaps give me some idea of the deadlines we could set so as to be able to reach our international objectives, without forgetting that we also have national objectives, here at home.

[English]

The Chairman: Who is going to answer that question? Ms. McDonald.

Ms. Katherine McDonald: I think the dealines in terms of the Cairo commitments are pretty clear. We're looking at $9.7 billion globally to meet the Cairo commitment by the year 2000. We're looking at Canada's share being $200 million per year.

We've seen a number of countries that have met their commitments already. The Netherlands has actually legislated 4% of its overseas development assistance to population, reproductive health, and development programs related to the ICPD commitments. They've signed legislation in place saying that they will devote 4% of their overseas development assistance in those areas.

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I agree with you, Ms. Guay, that it would take a miracle to meet the commitments by the year 2000. However, if we put it in context and say this is seven dollars per Canadian per year, I think the money could be found. It is a question, in my view, of whether or not there is the political will for the money to be found, because it is not a large amount. Making that serious an increase of 75% over the next two budget cycles would require an awful lot of political will within this country.

I would like to certainly echo CCIC's position. It's not a question of trading off one program for another. Although my organization focuses on the ICPD, I'm also very strongly interested in seeing the overall assistance envelope grow, and I look forward to working with my colleagues in other NGOs who are interested in the same end.

I think if Canada came out with a staged approach to its key commitments, and if it had a timetable set out whereby we would not only go back to the levels that we have seen in the past, but reach some of the other commitment levels that have been set in the past—to get to 0.7% of our GNP, for example—it would be an achievement we would be proud of. We're at 0.27% now, though, and I don't think we're doing very well.

The Chairman: Who else would like to comment on that question?

[Translation]

Ms. Gauri Sreenivasan: I would like to briefly intervene and stress that, as indicated in our brief, we concede that in the short term it will not be possible for Canada to reach its target of 0.7% of our GNP. We are nevertheless asking that a plan be set up so as to ensure that a target of 0.35% be reached over the course of the next seven years. We are therefore proposing a medium-size target for the middle term. One of the tables I brought with me today indicates how much that should cost according to certain hypotheses relating to the fiscal dividend.

Ms. Monique Guay: Mr. Chairman, I would like to make a final comment. In the area of foreign aid and international development, one must be aware that we are moving more and more towards market globalization. One day, everything will be within easy reach. If we succeed in bringing developing countries closer to our level, it will obviously be easier to create some degree of international economic stability and to avoid the types of crises we have been subjected to.

I know that the cuts imposed upon CIDA over the last few years have been rather heavy. We had to reduce our contributions to vaccination clinics in Africa that were offering very important or perhaps even essential services and that were contributing to the eradication of life-threatening diseases that have been raging for thousands of years. Therefore, it is important that we find a happy medium. I believe that CIDA is very capable of administering this type of funding. I would like it to report more often to us on its activities so that we might be better able to appreciate its work. Thank you.

[English]

The Chairman: Thank you very much.

Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman.

I just wanted to make a brief comment about Mr. Stock's presentation. I guess it's no secret that I would strongly support investing in children. The point about the child care expense deduction is well taken, but it's curious that it benefits high-income earners over low. I would think investing in children is something there's not going to be too much argument against, and I hope it gets due consideration in the process.

I want to address my comments to the representatives of the National Anti-Poverty Organization. I think it's about time we took this situation seriously. I am very concerned about poverty in Canada, but I'm going to ask you to think about being a little bit more bold with your organization about the reality of poverty.

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I believe we need to in fact establish a real poverty line in Canada. According to the low-income cut-off, in Ottawa a family of four with $26,000 of income is deemed to be living in poverty. But when you take the child tax benefit, the GST credit, and the provincial sales tax credit, in fact their equivalent incomes are over $30,000. That's not the poverty you're talking about.

The other aspect is that 12% of the families in Canada are lone-parent families. I'm not talking about unmarried mothers, I'm talking about lone parents—moms or dads being the principal and only caregiver. They account for 46% of all children living in poverty. Almost half of the children living in poverty are in fact in most cases manufactured poverty. It's because of other decisions taken, for whatever reasons, and those are choices that people make.

The people you're talking about and whom I wish you would speak about more are a large percentage of people who are living in poverty and in fact are making income levels below $10,000. In fact food on the table, clothes on your back, and the shelter you need is what you're asking for, and that's not too much to ask for. I think our value system in Canada.... Poverty is not just child poverty—that's a political term. We have to start talking about family poverty, in terms of values and in terms of the necessities of life.

I hope you get reasonable consideration on these things, but you can help your case by dealing with true poverty and not inflating numbers or wrapping in a number of situations that in fact tend to desensitize Canadians to the issue. I think we've got to talk about the reality of real poverty, of food, shelter, and clothing in Canada.

Please, can I have your comments?

The Chairman: Who would like to comment? Mr. Farrell.

Mr. Mike Farrell: I'll go first. I appreciate your comments; it's nice to see the passion you're bringing.

I think the question of measuring poverty has been extremely controversial, and there are a number of ways it is measured. CCSD has a particular measure of their own, and the low-income cut-off is another way.

Basically poverty is measured in one of two ways. Either you measure absolute poverty, which is whether or not people are able to just survive, or you measure relative poverty. Both of them have uses. I think when you talk about absolute poverty you're dealing with people who are close to death, let's say, and certain measures need to be taken to take care of that type of poverty. Relative poverty has to do with how poor people are relative to the average or relative to some other measure, and that in itself is a valid measurement for income inequality, because beyond the absolute poverty measure, equality of incomes is also an important measure of society's health.

So whether or not the LICOs define a situation where people are barely able to survive or whether it's a situation where they are relatively much poorer off than the average, it's still a very important measurement that we have to keep track of.

In the brief we've submitted one of the points we've made is that income inequality is increasing. I think since 1989 the inequality in earned income has been gradually increasing, but up until 1995 the combination of taxes and transfers from governments has offset that inequality so that inequality wasn't increasing. But from 1995 to 1996 the top 20% of Canadian income-earners actually saw their incomes go up about $2,000, while the lowest 20% of Canadian income-earners saw their income drop by $500. So what we're seeing is a growing gap between the rich and the poor. I think the low-income cut-offs are an important measure in terms of relative poverty.

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I just wanted to comment on the other point, on lone parents, because as you say, there are people who are in drastic circumstances. We have a board member who has spent some time as a homeless person. If you spend some time with him, he can tell you some pretty scary stories about life on the street.

I think we have to get away from the idea that people are causing their own poverty. As a society, we have to take responsibility for the economic and social structures we've created that cause these things to happen. If a man or woman finds himself or herself alone with children, the barriers to getting out of poverty are tremendous.

Let me give you an example. In a number of provinces they've now changed rules for people on welfare. It used to be that people on welfare, particularly single parents, could continue receiving welfare while they went back into an educational institution to get training in order to upgrade their skills so that they'd have a better chance of finding a job. A number of provinces have eliminated that. If you're on social assistance and you want to go back to school, you have to leave social assistance and apply for a provincial student loan. That puts you into debt, which you then have to pay back.

I think we can change the structure of our programs to support people so that they don't go into poverty, or so that they have an easier way to get out when they fall in. I don't think we're looking at a situation in which people are saying they're going to do this and are going to end up poor, that it's sort of a lifestyle choice thing. I don't believe that to be true.

I remember watching coverage of the ice storm disaster in Quebec and eastern Ontario and of the floods in Manitoba. People were living in shelters and had to get food from different places. What I found ironic was that it was so easy to declare these things national emergencies because people saw that these were acts of God or whatever, that they just happened, that there was no way people could plan all these things. Well, poverty is like that. You don't plan for it. Something happens. Somebody dies. You have a marriage breakdown. There's some sort of huge health problem in your family. Something happens in your life and you fall into poverty. This isn't about people making choices.

The Chairman: We'll go to Mr. Stock, and then we'll go to Ms Carter.

Mr. Peter Stock: Thank you, Mr. Chairman.

Mr. Szabo has raised an excellent point with regard to the low-income cut-off. Statistics Canada has emphasized repeatedly that it is not a measure of poverty, and of course there are some good reasons for that. If you look at that group of people who are considered to be in the low-income cut-off category, 25% of them own their own homes, mortgage-free. We're probably talking mostly about seniors, but these are people who are living on an income that does not need to be as great as that of perhaps many other members of society. It is, however, completely adequate for their means and their needs.

Another group in that category, of course, is students at university or college. They are considered independently for the purposes of their income. At the same time, they are living in a situation where an income of $10,000 or less is still adequate to pay for their tuition, buy their books, buy food and find a residence to live in and attend school. These are not the kinds of people in society whom we really consider poor or needy, but they are people who fall into the low-income cut-off.

So Mr. Szabo's point is correct. We need to start looking a little bit more closely at need, not at just plain income based on family status.

Thank you.

The Chairman: Ms. Carter.

Ms. Susan Carter (Associate Director, Canadian Council on Social Development): Thank you.

I'd like to make several points with respect to the question of how we understand or how we define poverty. There's a great deal of evidence to demonstrate that what makes the real difference is the degree of the size of the spread, the differential between upper-income and lower-income groups of people.

We've been doing some very interesting research recently to look at child outcomes—what you can expect to see, what you find among groups of children in terms of their health, in terms of their contact with the legal system, in terms of their schooling, the effectiveness of their schooling, their likelihood of dropping out. All these sorts of outcomes or results, if you like, relate very closely to level of income and income differential. That suggests that there isn't a magic point to say that below this point people are going to be struggling and facing poor outcomes, and above this point everything is fine. It doesn't work that way. It's a continuum.

• 1640

There remains the issue of how we define the point below which people don't have enough to support themselves. The low-income cut-offs have been used very widely as a measure of where that line falls.

One of the things that's very interesting is that we recently looked at the Gallup survey, which over the last 25 years has asked as one of their standard questions: What is the amount that a family of four should have in order to be able to live in a reasonable way? Over 25 years the amount that has been mentioned is practically identical to the low-income cut-off point, suggesting that there is in society an agreement, that Canadians agree that this is about the point below which people have to struggle and don't have adequate resources to support themselves and their families.

There's one other point I want to raise, and that is, when we're discussing this, to remember the issue about the depth of poverty. On average, families living below the poverty line are not just below the poverty line; they're $8,000 to $12,000 below the poverty line. They're way down there. So it's not simply a question of modest amounts so that they can cross that point; it's a much deeper problem than that.

The Chairman: Mr. Birchall.

Mr. Chuck Birchall: That's fine, thank you.

The Chairman: Ms. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): Thank you, Mr. Chairman. I would like to ask a question in terms of real recommendations.

Mr. Birchall, in your brief but not in your presentation the concern was explained about across-the-board tax relief and that your preference would be to increase the basic tax exemption. Could you explain that a little bit? Do you think we could actually sell that as a poverty move?

Mr. Chuck Birchall: In the interest of all three of us having a crack, my colleague Mr. Laliberté will answer that.

Mr. Pierre Laliberté (Research Associate, Canadian Council on Social Development): There are many ways that can be done. This is one possible way.

The fact is, for a few years now the tax burden of low-income people has actually increased. This is due in great part to the partial de-indexation of the tax bracket credits and benefits. By the way, this is actually probably the most important area we would see in terms of immediately changing the tax system, something that would benefit everybody but most specifically people who are very dependent on these credits and benefits. So the idea of increasing the basic personal exemption is just one way.

Another measure that could be taken but that would be more ambitious would be to actually make those tax brackets a little more progressive, just the way they used to be. But that again would be more ambitious.

The other part, also, when we deal with the tax—and I think I'll take an opportunity here—is that we have some reservations at CCSD about the idea of giving people.... I mean, everyone wants a tax cut, and we do too. I don't think any individual would refuse it. But right now when we talk about the surplus, a big chunk of this surplus coming out of the EI account mixes very uneasily. We feel that we should not be taking money that comes from an essentially regressive payroll tax to subsidize a cut in a rather progressive income tax system.

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This is certainly something we would like to caution the committee about, stampeding into an across-the-board tax cut because it's popular when in fact the resources might not actually be there to afford such a cut.

I will leave it at that.

Ms. Carolyn Bennett: One of the things happening now in the social union negotiations between the provinces and the federal government is that the word “accountability” is coming in, which I guess a lot of us feel is a good thing.

Your brief talks about outcome indicators in health care. Do you think we could begin to look at outcome indicators in the social safety net and in terms of moving in accountability terms to affordable housing, child care, readiness to learn, and those sorts of things? Again, to start to measure it costs money. Do you see that it would be a worthwhile investment of the government to help the provinces begin to measure these things?

Ms. Susan Carter: Absolutely. This is a critical component in order to be able to guide and direct spending and indicate spending priorities, indicate where governments need to put more emphasis. There is a need to develop indicators that actually measure real results, that measure what difference is being made, and not to measure process.

We're very strong supporters of moving in that direction. We've called on the government on a number of occasions to commit resources to this effort. It's work that we've been developing ourselves in our organization, because we see this as central to the way the management of programs and the selection of priorities and future directions is going to be able to be set.

The Chairman: Thank you.

Mr. Riis.

Mr. Nelson Riis (Kamloops, Thompson and Highland Valleys, NDP): Thank you, Mr. Chairman.

I don't want my comments to be misunderstood, but this discussion seems somewhat surreal to me. It's a bit like getting a warning that a hurricane is roaring down on us and we're sitting around talking about what tape to use on our windows.

We make choices. That's what governments are about, making choices. The government has made a choice to eliminate the deficit. It had to dip into the EI fund to do it, but it did it and there's no more deficit left.

I think the CCIC mentioned some place in Southeast Asia where the poverty was at about 20% of the population, or they're expecting that. That's what it is in Canada. Allegedly, we're the richest country in the world. We have 20% already. Last year, when people were here we had 1.5 million children in poverty, and we still do. There are some countries that don't have kids in poverty because there are no adults living in poverty.

It seems to me that talking about the definition of poverty is really getting a little bit off the track. In a country like ours, where the gap between rich and poor is widening each year, where the number of people living in poverty goes up, where we're reminded that the food bank business is booming, and where our programs to assist people in need are cut back, and so on, why are you so calm?

Year after year you appear here, and the situation is getting worse. We have the anti-poverty groups, which I think somebody referred to. They don't seem to be working too well, unless it's to generate more poverty, because poverty is going up.

Can I ask each of you a question to represent your various groups? Why is it that things are just getting worse and not getting better at all? They're not getting better. I'm not saying the government doesn't do things or that steps aren't being taken. We have child benefit programs. The reality is that the situation is worsening in our country. For some countries, such as Bangladesh and perhaps Indonesia at the time, you can't do much about it.

Look at the IMF. Scott and I were just in Russia, and they sent in $18 billion. What happened? There were hundreds of more millionaires created, and they've all left the country. They're now living in the Cayman Islands, I suppose, or some of them in Canada, buying big palatial homes in Toronto.

What's the problem? Can you folks cut down to the nub of this and say what needs to be done to get this situation moving in the right direction? Right now it isn't moving.

Mike, why don't you start?

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Mr. Mike Farrell: I'll start by apologizing for my calmness. Lately I've had a couple of calls from the media about the government consultation process, and I think that goes a long way in explaining my calmness.

It has been my experience that regardless of what I say today, decisions about the budget are being taken by the finance minister and the PMO, and maybe the cabinet has some influence. I don't think they're listening to what I'm saying, and I think that has been the history with NAPO for a number of years. I look back at submissions we've made. We come here every year and we put resources into making some kind of submission, but based on what I can see, it doesn't make a difference. So I think we have to save our strength for the people who are listening and try to make our points there.

I share your concern. I'm almost convinced we're going to have a recession next year. With the cuts in the EI program and with what the provinces have done to the social assistance program, I think it's going to be disastrous. Over 700,000 Canadians used food banks in March of this year. If you think it's bad right now, next year it's going to be a disaster.

The Chairman: Thank you, Mr. Farrell.

Mr. Birchall.

Mr. Chuck Birchall: There are probably a rich variety of answers to your question, but it comes down to two words: labour market. That's what's happening in this country. We are undergoing—as you know, because this is your business—massive restructuring, and people can't make adjustments fast enough. We did studies around part-time work, and our studies show that people don't want to work part-time; they want more work. They're not seeking to avoid work; they want work. Yet the numbers are growing.

The problem is finding good jobs, well-paying jobs, and the record is there. It's not getting better; it's getting worse. There are some very good jobs, so the people who are at the top end of the economic scale have very good jobs. But there are some people who are getting left behind, and the numbers are there. We collect the statistics. We analyse them and draw conclusions based on those statistics. But it comes down to the labour market. The issue is to what extent the government is prepared to help, or in a position to help, people adjust to that kind of labour market.

The Chairman: Are there any further comments? Mr. Stock.

Mr. Peter Stock: Thank you.

I think we would be somewhat concerned about your comment, Mr. Riis, that with 20% poverty in Thailand and 20% poverty in Canada, we have the same problem. I don't think we do. I think it's a very different problem that is suffered in Thailand: it's real poverty, abject poverty; it's children sold into slavery and prostitution and all sorts of other terrible things, such as people actually starving to death and so on. We do not have that problem in Canada.

Mr. Nelson Riis: Do we not have that?

Mr. Peter Stock: No, we don't, not by any estimation. We don't have kids starving to death in Canada, and I would defy you to find examples of this. In fact, the low-income cut-off you're using as a basis for determining there's 20% poverty in Canada is not the same cut-off that would be used in Thailand.

If we took the income of a person in this country who is living on welfare, and most of these people would be considered low income by comparison, and gave it to a person living in a country such as Thailand, in that country that person would be considered to be middle-class. I think you would find the same kind of thing if you looked at where Canadians have been over the last 50 years. Take the time period of 1945 to 1950. People who were considered middle-class back then are the people we consider to be poor today. It's the same income in real dollar terms.

We've grown incredibly as a society. This is the wealthiest society that has ever existed in the history of the world, and we are benefiting from that. That is the reason we are able to afford $2 billion in foreign aid every year for countries such as Thailand and China.

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I cannot agree that there is the same problem with poverty in Canada that there is in Thailand, sir.

Mr. Nelson Riis: In interpreting my remarks you totally misunderstood what I was trying to suggest. I don't suggest we compare Canada with Thailand or Bangladesh. The point I'm trying to make is that the point was well taken that there's a serious poverty problem relatively speaking in Thailand or Cambodia or wherever, but we also have one of the richest countries in the world. Other rich countries don't have poverty, Mr. Stock. There are countries in this world that don't have any poverty.

Mr. Peter Stock: They do not have relative poverty, sir. That is not the same thing as poverty generally speaking.

Mr. Nelson Riis: Well, fair enough.

The Chairman: Ms. McDonald.

Ms. Katherine McDonald: The United Nations recently came out with a report saying that we were the best place in the world to live using the UNDP indicators. Well, the indicators they're looking at are not wealth. They're looking at things like access to education, access to health care, equality between men and women—although we used to be ninth in the gender index, if I remember correctly. So it's quality-of-life issues the UN is measuring here, not absolute wealth or the average income of any one person.

It's very interesting to me being involved in such a new NGO, and I've been recently working with a group of aboriginal organizations to do an analysis of aboriginal women's health and outcomes using the UNDP indicators. I think what we'll find, in fact I know what we'll find, is that there are pockets of aboriginal communities in Canada that are on the same scale as Chad or Ethiopia.

I think if we're talking about inequality and the gap between rich and poor, then we have a responsibility to look at what the results are of our system, not what the average is—not how many, what the average income is, but where the wealth is and how it is distributed. I think that should be our intention as well internationally, to look at distribution of wealth between the rich and the poor and between the rich and the poor countries.

The Chairman: Ms. Carter.

Ms. Susan Carter: I would just add to that, to make sure that the members of the committee are aware, this year's report from the UN has an overall ranking but then it looks at a number of different dimensions.

In terms of poverty, Canada's position has moved well down and is now tenth in terms of how we are doing in terms of poverty, absolutely confirming the fact that there are a significant number of countries that are doing a much better job than we are in terms of reducing poverty.

The Chairman: Ms. Rektor.

Ms. Laurie Rektor: I would like to further add that our position as tenth is in what they introduced as a new human poverty index, and Canada is tenth out of seventeen developed countries. So that's actually a fairly dismal showing, given the resources that we have available to us in this country.

The Chairman: Okay. Mr. Brison.

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

It's interesting that some of the presentations had a global perspective in addressing the issues and others were more domestically focused. All of them were very thought-provoking.

On the global side, there was an article today in the Globe and Mail written by Jeffrey Garten, who is the dean of the Yale School of Management. He's done a lot of good writing on, for instance, the delinkage that has occurred between human rights and foreign policy. He's a very bright guy. It's about a global central bank whereby the central banks of the G-7 or the G-8 would actually be expanded. You would have a G-15, for instance, to include some other member states who would work together. The central banks would work together to fund a global central bank that would effectively help to avert some of the difficulties we find ourselves in. Whereas the IMF is reactionary, this would be more proactive in a sense.

• 1700

As Nelson mentioned, we recently participated in an Inter-Parliamentary Union conference in Russia during the week when the ruble took its most significant bashing and Primakov became prime minister. It's just awe-inspiringly dreadful what has occurred over there, and the misappropriation of funds to the corporate oligarchy has not served or benefited anybody, except the corporate oligarchy and the people in power.

I'd be interested, very quickly, in your feedback on the concept of a global central bank, and then I have a domestic issue.

The Chairman: Who would like to answer that question? Ms. Sreenivasan.

Ms. Gauri Sreenivasan: I can't answer it in detail—I haven't seen this particular proposal—but I have a few comments on the concept.

I think it is very clear, through the global liberalization of financial markets, that we do need new rules of the game internationally to govern what is in fact an international world economy. I think we also see severe shortcomings in the International Monetary Fund. I would concur with your point about the IMF, about whether an institution is purely reactive. How do we make institutions that can more proactively ensure global stability?

I would be concerned about a global bank, or any new global institution, because it can easily fall prey to the same kinds of problems as other global institutions.

Some of the key problems in our current global institutions, whether they're the World Bank or the International Monetary Fund, relate to the question of who calls the shots and the distribution of power, how decision-making is done. Part of the problem with banks is that they tend to be run more according to the question of who puts more money into them versus the UN system of one country, one vote, or even proportional representation. I guess part of the concern would relate to the governance issue of such an institution and how we ensure, before we create new institutions, that we've really properly understood the problems with the ones we currently have.

I'm not sure again what proactive would mean, but there certainly does need to be international consensus on issues of wiser lending. Part of the problem with the Asian crisis was as much a problem of foolish lending and very short-term and speculative lending as well as, as a result, short-term borrowing. So we do need new rules of the game that relate to the question of countries as they take on debts, but also to commercial banks and lending institutions as they loan in such a precipitous way.

Those are some of the issues that I would see a new institution or a new international consensus addressing. But I'm not sure in particular how a global bank could speak to that.

Mr. Scott Brison: One of the issues that we don't speak of as frequently as perhaps we should is that one of the difficulties with the Asian crisis.... Most of those countries continued to provide a fiscal policy that was inconsistent with that of its monetary policy. That was itself an issue that has not been addressed either.

I know the IMF is a whipping-post for some of its conditionality. I would argue, after spending a little time in Russia and speaking with some of the people over there, that some of those conditions were not unreasonable. For instance, things like a tax policy that actually received revenue from people in a broadly based way, or a regulatory policy that actually worked.... The IMF is not all bad, in the same way the World Bank is not all bad. There's some potential with the World Bank.

Anyway, I appreciate your feedback on that. I'll give you the article. I also have an article in my office from Foreign Affairs in a similar vein by the same guy.

• 1705

On the domestic side, I wanted to clarify something. One member of the committee raised the issue of manufactured poverty and linked it with the lone-parent issue. It's very important that we recognize that first of all there's a causality in terms of divorce, that poverty and financial hardship can exacerbate difficulties in marriages.

I think we should also recognize that our institutions in the 1990s perhaps reflect the realities of the 1950s in some ways. We don't necessarily recognize that in fact we do have a higher divorce rate today. I don't believe personally that this is the cause of poverty. I think that in a lot of cases we have couples who would have, in a 1950s context, stayed together for the kids, even though the relationships in the family may have been extraordinarily dysfunctional.

As parliamentarians, when we look around us, the divorce rate is very high. I would not want you to think that around this table there's a consensus on manufactured poverty, that there is such a thing as manufactured poverty, or for instance that there should be more freedom for wealthy couples or well-to-do couples to divorce than there should be for poor people and that poor people should stay together because it's better for their family income levels. I don't believe that personally.

I would like you to comment on how in some ways our current programs could actually reflect the reality of the nineties in terms of marital status and some of these new realities—for instance, things like the importance of actively supporting things like a national head start program and early intervention. Some of those studies indicate—and I know Mr. Szabo is familiar with some of them—that a dollar invested in a child in a high-risk situation can actually save society around seven dollars by the age of thirty.

I went to an elementary school where there were thirty students in grade six. It was a very poor area. Of the thirty who left grade six, only eight of them ever graduated from high school. And when I look at the abject poverty they're living in now, the absolute poverty many of them are living in in the same community today, the community I represent and live in today, I think we have to take a hard look at things like head start programs and early intervention. It's particularly important.

Also, I represent a rural community or rural riding. While rural poverty may be more bucolic and less egregious to the eyes when we look at those houses and the fences and the lawns and the little gardens and that kind of thing, in fact the demographics in terms of teen pregnancies and high school dropout rates and substance and spousal abuse are just as bad in many ways as they are in the inner cities.

I'd like your comments on some of those issues.

The Chairman: Ms. McDonald or Ms. Carter.

Ms. Katherine McDonald: I just want to make a very brief comment.

I'm not here as part of the National Anti-Poverty Organization or the Council on Social Development, but what you say hits me hard. I was a single mother at the age of eighteen, lived on welfare for eight years, put myself through university and through law school and pulled myself up by the proverbial bootstraps. So it's very hard for me to keep quiet when I hear, with all due respect, my colleague talking about manufactured poverty.

I think there's a certain amount of poverty that is time-limited, which I experienced, which was short term. But it still made a difference when my six-year-old had to go to a birthday party without a present to take, or with a very small present to take, and it was different from the presents his schoolmates were taking. There are all sorts of issues around poverty and how long it lasts, whether or not there's a light at the end of the tunnel.

I think if we did one thing in this country to start to alleviate poverty, one investment that would make a huge difference would be to provide university education, post-secondary education, and obviously high school education as well—a real push and a real investment in education of young women who are single parents to have an opportunity to get out of a box and get ahead. That's only going to be a very small percentage of the population in terms of overall poverty, but it is a cheap investment, a quick investment, and it pays off almost immediately.

• 1710

Although I don't work in this area, I have in the past. So I apologize to my colleagues who have the expertise in this area. After all, Mr. Riis was looking for passion, so I had to....

Mr. Scott Brison: Thank you very much. I think we should sometimes take the blinders off and actually try to deal with the issues as they exist. It's very easy to get sucked into a vortex of sanctimony sometimes, and I don't think that is healthy. We do live in a society that is changing, and if we don't reflect those changes people are going to drop through the cracks of the traditionally defined system.

Mr. Peter Stock: I appreciate Mr. Brison's comments. I think he's really zeroed in on what's at the root of all this. It is, in our view, the stability of the family unit—

Mr. Scott Brison: That was not my point.

Mr. Peter Stock: Well, that's certainly what I gained from that.

One issue that we would address is this. It's interesting, because Betty Friedan, the noted feminist, spoke to this in the last year. She admitted that the problem of no-fault divorce was one of the leading problems, in her mind, in the area of creating poverty, the breakdown of the family, etc. Back in the seventies, when no-fault divorce was the big issue and they were really pushing for it, maybe they went a little too far. Maybe fault is something that should be considered in the context of divorce. In many cases dad leaves the family and abandons them and they really are left in the situations you are talking about. Or in some cases it's the mother. Either way, divorce certainly costs families, and it doesn't benefit the children. There's no question about that.

Mr. Scott Brison: What about families that stay together for financial reasons and the husband beats the wife? There's an inherent sexism to what you're suggesting, in a sense. There's also, if I may, a certain income prejudice here, because effectively people who are well off can afford to divorce; they don't have to live with someone they can't stand any more. If you're poor, though, then you really shouldn't do that; you should continue to live in an insufferable situation with someone you despise and fight with continually in front of the children because you are poor.

Mr. Peter Stock: I would suggest in turn that even in wealthy couples' situations there is still a great problem in terms of income. There's a lifestyle. One of the individuals over here referred to presents taken to birthday parties, that they're not as big. Even in a wealthy family, if you break it up and you've got an additional residence to pay for—

Mr. Scott Brison: We're not talking about a Jag versus a Lexus here.

Mr. Peter Stock: Well, actually the reality for most families is if one of the spouses in the couple decides to leave home, many times they're taking off to be with another individual, another spouse, if you will, and maybe even taking on additional family responsibilities elsewhere. There are tremendous costs associated with this.

To suggest that the idea of reconsidering the issue of fault divorce is a problem because it might differentiate between wealthy couples and others I don't think is the real reason we should be looking at this. We need to consider the children involved. We need to consider the majority of Canadians who are going to suffer in a very real way a situation of some relative poverty, if not real poverty, as a result of divorce.

Mr. Scott Brison: So you don't feel that our social programs should reflect the social realities of an evolving society in terms of these things, and that we should in fact take a sort of Pavlovian approach to things like divorce, such that if you divorce you're going to pay a significant cost because you've done something that is wrong?

Mr. Peter Stock: I'm sorry, maybe you could clarify that.

Mr. Scott Brison: Well, you're suggesting, I believe, that our social programs remain static and that we don't need to really change the programs, that the problem is that people are just doing the wrong things, and people should not divorce. By doing so, they're doing something inherently selfish or they are somehow compromising their children by getting out of a dysfunctional relationship. Is that it?

• 1715

Mr. Peter Stock: That is in fact exactly what I'm suggesting. If there is fault and it can be proven, then of course that does hurt the existing family, and it especially hurts the children.

Mr. Scott Brison: Incompatibility or an inability to get along?

Mr. Peter Stock: That wouldn't necessarily be grounds for a fault-based divorce then.

Mr. Scott Brison: Okay. Thank you.

The Chairman: Ms. Carter.

Ms. Susan Carter: I wanted to return to the issue of the demonstrated benefit of programs that provide for early intervention. There's a great deal of evidence about to demonstrate and to prove the value of such programs, whether it's head start or whether it's the very interesting 1, 2, 3 GO! program in Montreal. There are a lot of these sorts of interventions that are starting up and are having very good results.

The one that I think you were referring to is an American example, the Perry Preschool, which is one of the most documented. It found that one dollar spent in early childhood intervention had a seven dollar pay-off.

Mr. Paul Szabo: In the ghetto.

Ms. Susan Carter: Yes. Well, this is the second part of what I was—

Mr. Paul Szabo: That's not the average situation.

Ms. Susan Carter: No. What I was going to say is that where programs like this have a real value is in mitigating or counteracting some of the consequences of growing up in a disadvantaged situation. So the value of these programs is clear and demonstrable.

At the same time, there is a need to try to work on the problems of income inequality so that you have a lot fewer children growing up disadvantaged and in poverty.

Mr. Scott Brison: If I can make one comment relative to “in the ghetto”, there are ghetto-like circumstances and situations out there in environments that do not seem ghetto-like. I'm talking about rural poverty again, which is an issue that I feel very strongly about. It doesn't look like a ghetto, but it is ghetto-like in terms of the situations that exist. Thank you very much.

The Chairman: Thank you, Mr. Brison, for the question and the extensive comments.

As I listen to you, I am of course very concerned about the fact that there are people in this country who are living in conditions that we all wish they were not living in. I think all members of this committee are moved by one essential goal, and that is to improve the quality of life of the people of Canada. I think that's ultimately our goal. I don't think we want to do anything but that.

But history also tells us that it's not just a money issue. It's not a question of just spending more on children's programs or adult programs, whatever programs you were talking about, because some programs have succeeded and some have failed. When this government took over, we took over a $42 billion deficit. We wished we hadn't taken over a $42 billion deficit. Some people blamed the fact that we had a $42 billion deficit on poor spending patterns of the past, with programs with no accountability, no follow-up, nothing.

I'll tell you clearly that if people would say to me, invest $20 billion in this program and you will eradicate poverty, or spend $10 billion and all these individuals are going to be lifted up and everybody is going to be better off...I don't think any member of Parliament would say no to that. Quite frankly, if you can just fix the problem by spending more, then that's what people would do. At the end of the day, if society is better off, as politicians we've achieved our end. We have improved the quality of life of the people of Canada. That ultimately is our goal. But the past tells us that that's not the case. Many social programs have not been successful.

• 1720

I was involved in a social security review program back in 1993. I can tell you that throughout the country I found many programs that were great programs, as you remember. They were making things work.

I often ask myself a question about the literacy problem we have in our country. Why is it that we have so many people who can read and write in this country, but we have 30%—I think it's as high as that in some areas—who can't read or write?

The point I'm making is that nation-building goes above and beyond budgetary items. It goes above and beyond line items on a budget sheet. It speaks also to individuals taking hold of some of the responsibilities that we have today—those that we have as citizens, that you have in your groups, of course. I don't think you do this because of the astronomical salaries that you're offered. I think you do it because you care about building a better country.

So on one hand we're confronted with the polarization of classes based on technological know-how. That is linked again to education. Yet you find out we spend more on education than most countries, right? Then you look at the fact that some people are arguing it's a basic personal exemption. You raise that and you'll get people off the tax rolls. That's true; we did that last year. At least I think we did. I guess millions of Canadians are better off in the tax system than they were last year. Think of the 3% surtax up to $50,000.

People are better off, but it can't just be these things. We need to do more.

I just want to know something from you, because you have experience at the community level. Government provides opportunities for people, and that should be its responsibility. But it's also the responsibility of people to make the most of those opportunities. I want to know from your experience if we have a 30% high school drop-out rate because all the schools of our country are bad schools and we don't have good teachers. Or do we have a 30% high school drop-out rate because we don't have state-of-the-art computer networks? People tell me we're the most connected country in the world.

What should we be doing, above and beyond? I heard your message. You want increased funding for international aid. You want increases in basic personal exemption. Some of you may want reductions in taxes, but not across the board. I heard all those messages, but I don't think these things are going to cure everything. I'll tell you that right now. So when you go above and beyond those, what should we be doing to really get this country moving?

Ms. Susan Carter: I hate to disappoint you, but I think we should probably be starting with the recognition that there isn't one thing that's going to make everything better. However, I think there are a number of things we can do that work at the base, that work at addressing and improving the situation, the conditions in which the next generation and the families in which they live find themselves. I think that's a major way to look at how we can make a big difference: by working to the future.

I think of a lot of the areas that are designed to prevent problems and to intervene early and address shortfalls before they turn into problems.... Those are some of the longer-term ways in which we can be moving to make things better overall.

I also would like to mention that in terms of individual responsibility and individuals being involved and working for solutions themselves, there is a great deal of evidence about just how engaged people are.

• 1725

There was a large survey that came out this summer that documented the volunteer hours that are put in by people right across this country, working in their communities on things they believe in. If you were to take those volunteer hours and translate them into jobs, you would come up with an amount that is larger than the economy of six of the provinces of this country. That is a very large contribution. It bears witness to the engagement and the responsibility that people do have, and their willingness and their desire to work on the communities they live in.

The Chairman: Who would like to respond? Ms. Sreenivasan.

Ms. Gauri Sreenivasan: It is a very big question, and I think Susan's answer is probably safe, and also appropriate, that there is no one thing.

You focused in particular on the question of youth—youth who may by dropping out, youth who may not be engaged—and how we get them engaged. When I was in Indonesia, I thought that we would mostly meet people who would be completely frustrated and apathetic and not engaged at all, considering the situation of their country. I thought we would meet people who would be fatalistic. In fact, although we did meet some people like that, and we did meet organizations who didn't have a sense of what to do, when we met with young people and students and young workers, there was a sense of injustice and energy and optimism that they must turn the situation around that we did not see qualitatively in other meetings.

I only say that because of your own focus on the question of youth in Canada. I don't mean this in terms of just more money put into international aid, although these kinds of programs do require resources, and I don't want to kid around about it, but I do think that one of the questions we need to look at seriously, in terms of getting this country moving or the question of young Canadians engaging, is how we encourage Canadians to understand the global context Canada is in.

The whole question involves youth having the opportunity to meet with youth internationally, not just to understand the world. When you go out and you understand the world and you see these issues overseas, you gain an enormous understanding about your own country, and both its limits and the opportunities at home.

To me, one of our key challenges—and there is no magic bullet—is to look at education for youth over the next 5, 10, 25 years and really look at investments in curriculums and programs that enable youth to understand Canada as a member of the global village. These would also give youth international exposure and let them see their responsibilities and opportunities at home in Canada to work on issues internationally.

It's a general area, but I think there is a real need for us to be thinking about getting our country going again. We can't just be thinking about our national boundaries. We have to recognize the global context, and we have to be preparing young Canadians for that.

The Chairman: Thank you. Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you, Mr. Chairman. Of course when we're getting this far on in asking questions, a lot of the questions have been asked.

I was listening quite attentively to your presentations, and of course the chairman just now asked a very broad question on things we have done in the child tax credit in the last budget, raising the basic personal exemption, the elimination of surtax, eliminating some 13 million people who benefited in the tax cuts.

I also heard some remarks through the questions and answers that we have made a commitment. We committed to the international counterpart of our commitments. I also heard that we shouldn't be touching the UI fund because it is workers and employers. We also heard Mr. Riis mention the fact that we eliminated the deficit on the backs of the working people.

• 1730

Let's put it this way: when we took office there was a deficit of over $6 billion in the EI fund. There was a $3.30 premium; that's been put down to $2.70 now. And of course there's a surplus, but there's no money, because it's general revenue.

Most of you come in here saying what we should be doing. It's all spending money. And if we have to go on principles, what we have dedicated to go elsewhere, we should not be touching the EI fund.

Would anyone want to tell me where the government is to get the money to spend on some of these programs? Or would you rather see that the fund not be touched and some of the things you're asking for not be there—no tax cuts, no increase in the basic exemptions? Where would you say the money should come from? Or would you suggest we go back into deficit again? That's one part.

Mr. Stock, you also made a comment when you came in that money had better be spent in proper ways, as you said about sex changes. Sitting on this side of the House, surely I don't condone any sex changes for any inmates or anyone in the military. I don't want to leave the impression, which you are insinuating, that we approve of this as parliamentarians.

The Chairman: Mr. Birchall.

Mr. Chuck Birchall: The question's a good question—how do you find money. There are a variety of ways to find money. They may not all be palatable, but there are ways to find money.

You don't always have to cycle back to the EI fund. You could institute a wealth transfer tax, a modest transfer tax of about 5%, which would generate some money for you. You could lower the ceilings on RRSP contributions. Again, you would get money as a result. Those are just two suggestions, but the debate.... I think you're right, it is always difficult to find the money. Those are two ways you can do it.

In the EI fund, which was set up for a particular purpose.... I suppose the CCSD's view is if you're going to change the purpose, if you're going to use the funds for a different purpose, then maybe you should revisit it and face it squarely, and not pretend it was set up for another purpose. That's one of the points we're making in that regard.

The Chairman: Mr. Stock.

Mr. Peter Stock: Thank you.

First of all, regarding the EI fund, I appreciate your comments. I suppose if one were to cut the premiums further, one would reduce the size of the surplus and that would, for working—

Mr. Gary Pillitteri: We would eliminate it.

Mr. Peter Stock: —Canadians, be the same as receiving a tax cut on the other portion of their tax bill. One's a payroll tax, one's an income tax, but the net effect is they're paying less tax. So that might be a way to approach that particular situation, sir.

Then on the sex change operations, I regret to inform you that in fact the Minister of Defence did approve that very sex change operation I referred to just a few weeks ago. At the same time, these have been going on in our prisons; you can check with the former Solicitor General and the current one to find out that—

Mr. Gary Pillitteri: They were forced by human rights.

Mr. Peter Stock: They were not forced, sir. They were not forced by the Human Rights Commission. They made this decision freely.

The Chairman: Ms. McDonald.

Ms. Katherine McDonald: Not to prolong the debate on the sex change operations, but the reality is if you live in at least some of the provinces in this country, sex change operations are paid for. The fact that you're in the military should not put you in a different position from any other Canadian. And presumably if you're in prison, the same thing would apply. If we're talking about universal access to health care in Canada, it seems to me to be a very silly point to be debating.

• 1735

The Chairman: Health care is obviously a very important issue, which Canadians are certainly engaged in.

I think we're over our time. Mr. Riis, you would like a final comment.

Mr. Nelson Riis: I'd like 30 seconds to respond to your question, and I appreciate the comment from my friend, Mr. Pillitteri. I think inheriting a $42 billion deficit was a nightmare to us all. The government, in its wisdom—and we could debate the wisdom—decided it was appropriate to eliminate that deficit, and they did successfully. It took a real commitment to do just that, and a lot of things changed in the country, but that goal was accomplished and all kinds of benefits now start to accrue, as this debate reflects.

The Chairman: Not yet.

Mr. Nelson Riis: In 1989 Parliament passed a motion to eradicate child poverty by the year 2000. Set that aside. It didn't happen. Perhaps an approach, Mr. Chairman, would be for us, with the same determination we took as a Parliament, and as a government particularly, to eliminate the deficit within x number of years—set targets—to consider doing something like this for poverty. We can't eradicate this, as you suggest in your comments, in the next year or two or five or whatever. But we could set a goal. A year from now we could gather these folks around the table and ask how we did. If it's down a point or two, then we say okay, we're making some progress, and next year we'll try again.

I want to hold up the effort the government has made on the deficit as a model that could in fact be applied to other areas that are important in our society.

Thank you.

The Chairman: Thank you.

I just want to end on this comment.

Mr. Farrell, you can rest assured that there is one thing I'm going to guarantee you. Every single group that comes in front of us gets a fair hearing. Sometimes you don't get 100% of what you ask for, but if you look at the measures taken in the last budget, some people are better off. Low-income Canadians are better off as a result of some of those measures.

I really hope you spend some time—and I'm talking to the entire panel—to see the sorts of challenges we face as a committee. One day you have a group that wants across-the-board tax cuts. You get another group that wants targeted tax cuts, another group that wants EI premium reductions, another group that wants more expenditures in R and D, and another group that wants the national debt to be the only thing we work on. So we're challenged, of course, by so many choices and long, long lists of demands by Canadians. We need to use the limited wisdom we have acquired over the years to make the best choices for the people of Canada given the present circumstances, and that's the only thing that really guides this committee.

At the end of the day, as I said earlier, we want to improve the quality of life for the people we represent. That's what's really the driving force. I hope we do more for children who live in poverty. I hope we can provide better health care for Canadians. I hope we can give greater accessibility to education and worker retraining and everything else we do. But there are choices to be made and trade-offs that occur as a result.

Mr. Riis.

Mr. Nelson Riis: Just to pick up on the point you made, the balance we do here, today we have relative uniformity in the presenters, with the exception perhaps of Peter, who's off on a little different tangent. It would be an interesting discussion to have this group alongside two or three of the groups you referred to, the ones that are just crying for tax breaks, crying for more investments in capital cost allowance write-offs, or whatever. It would be interesting to have a bit of a mixture.

The Chairman: We will do that. So you may be called back.

On behalf of the committee, thank you very much.

I'm going to suspend the hearings for approximately 35 to 40 minutes.

• 1740

• 1815

The Chairman: I'll call the meeting back to order and welcome everyone here this evening. We have the pleasure to have with us representatives from the Building and Construction Trades Department. With us are Joseph Maloney, director of Canadian affairs, and Robert Belleville, director of Canadian affairs for the Sheet Metal Workers' International Association. We also have Mr. Bruce Campbell, executive director with the Canadian Centre for Policy Alternatives, and Mr. Mark Goldblatt, president of the Canadian Worker Co-operative Federation.

Welcome, gentlemen. You are not new to the pre-budget consultation process, so you know you have approximately ten minutes to make your presentation. Thereafter, we will engage in a question and answer session.

We will begin with Mr. Maloney.

Mr. Joseph Maloney (Director of Canadian Affairs, Building and Construction Trades Department): Thank you so much, Mr. Chairman, for the opportunity to once again appear before this committee.

I believe the submission from the building trades is before you. With the submission is an attachment, a backgrounder on some of the EI problems that I'm going to explain just for further information. I won't read the submission to you folks. I'll let you do that at your leisure. I'll explain it as quickly and concisely as I can so that we can get into the questions.

I do want to let you know up front that this submission is a proactive submission. The solutions that we are recommending today are incentive-driven, aimed at getting Canadians—specifically construction workers—off EI scenarios and back into the workforce.

I heard the last group talking about surpluses and stuff like that. I just want to be very clear up front that, from our point of view, we all knew going into this thing that there would be no surplus for the federal government if it was not for the EI account. Now, also from our point of view, when a legitimate surplus comes to the Canadian taxpayer—and not just strictly on the EI account—we'd like to first of all see that sound social policies are in place for every Canadian. When we talk about splitting up that surplus, we'd like to see a 33-33-33 split of any fiscal surplus that's out there. One-third should be targeted towards existing social programs, one-third should go to tax relief, and one-third should go to improving the operation of government. We don't want it to be solely on employment insurance.

When I talk about employment insurance, I talk about Bill C-12, which was passed in July 1996. Two fundamental things happened with that bill. First, it allowed the government to transfer billions of dollars of surplus in the EI account to general revenues to pay down the deficit. The second thing that happened in that legislation was the moving of the thing from passive income support to supposedly active measures.

When we talk about active measures, we mean that you changed the name from unemployment insurance to employment insurance. It's supposed to be an upbeat program that isn't supposed to penalize Canadians or make them afraid to use it.

Starting on page 5 of our brief, I'd like to take you through some of the punishing rules that are inside that program and how those rules affect Canadians, specifically construction workers.

The first one is the intensity rule. This rule punishes workers. For every twenty weeks that they're on EI from July 1 forward, they lose 1% of their benefits. If you look at this chart, you'll see a $413 maximum benefit. Let's keep in mind that effective July 1, 1996, the maximum benefit was reduced overnight from $448 to $413. Now, as people use the EI program and start to lose 1% of their benefits to a maximum of 5%, you can see how fast money comes out of an individual's pocket when he's unemployed.

In the construction industry, this hits us directly. We do use the program, because the harder we work, the faster we're out of a job. It's the nature of our business, so we're punished by this rule probably more than any other Canadians.

• 1820

The next page refers to the short week problem. The graph on the top line shows the example of an individual who worked a total of 420 hours, which was enough to qualify for benefits. Since those hours were earned over a 15-week period, under the divisor calculation that person's income was spread over 15 weeks. The line below that refers to the example of an individual in the same town who just happened to work 28 hours more in 4 different weeks. Since that person worked those 28 hours in 4 different weeks, using the same divisor calculation, their income was now spread over 19 weeks. So they actually worked more hours and got less benefits. That's a very major problem for people who wish to take every available hour of work that's out there.

We're recommending a solution to that problem; that is, for those who work 15 hours or less in a week, those hours would not count for benefit calculation unless they're needed for eligibility. It's a pretty fair saw-off, and it encourages people to take every available hour of work that's out there. We've placed this before the government now for some time, and we'd like to see some movement on that.

The next problem we see is in the clawback levels. Prior to July 1, 1996, the clawback threshold was set at about $63,000. What that meant is that if you earned $63,000 and collected unemployment insurance, you had to pay back 30% of your pogey. That's fair enough. On July 1, 1996, the threshold dropped from $63,000 to $48,750, one shot over night. Then, from July 1 on, after 20 weeks of collecting unemployment insurance, the threshold dropped from $48,750 to $39,000, and it has stayed there.

It was done pretty quickly, and it's pretty harmful to people when they file their income tax that they have to start paying back 50%, 60% or 70%, because the maximum repayment is 100%. People are going to say, “You stung me once, but you won't sting me twice”, and the next time around, they're just going to go into the underground economy. They won't earn more than $39,000. This is a major disincentive.

All we're asking is that the threshold level be reviewed and that there be some kind of blend-in period or something, but that it not drop from $63,000 to $39,000 within 20 weeks.

Another problem is the re-entrant rule. The way this thing works is that you must work a minimum of 490 hours in a 52-week period in order to be deemed a worker in the eyes of the employment insurance system. If you do not have a minimum of 490 hours in a 52-week period, in order to requalify for employment insurance benefits you must have worked 910 hours, no matter where you live in the country. In construction, during recessions we can be out of work for a year or more at a time, through no fault of our own. In a lot of cases workers are unable to requalify at 910 hours so they cannot get unemployment insurance. Therefore, they have to go on welfare or whatever.

When we talked to the government about this before the legislation was passed, they explained that it was not their intention to penalize people in the workforce but that they wanted to encourage younger Canadians to stay in school and not to get on a life cycle of EI, which we agreed with. We didn't have a problem with that. They were supposed to clean that up and look at a longer workplace attachment for people already in the workforce. It has yet to be done, and therefore a lot of people will be hurt when another recession hits the construction industry.

Another issue is an hour bank system. We wanted to put as many incentives as possible in the employment insurance program so that Canadians would not be afraid to work every hour that's out there. One thing we recommended is that if you work beyond a set threshold in a 52-week period—for example, a threshold of 1,400 hours—you should be able to bank or carry forward any extra hours you worked for one calendar year, if you need them for the next year. This is a great incentive to discourage people from just working to qualify. The aim is to try to get them out of that cycle. Everybody we talked to about this thinks it's a great idea. All we're asking is that a government committee be set up, with business and labour, to study the concept to see if it's workable, what kinds of costs are involved, and where we could go with it.

• 1825

On training issues and apprenticeship funding, the one major problem we have is that, prior to April 30, 1996, when an apprentice was released from an employer to go to trade school on a block release for 8 or 10 weeks at a time, there was no two-week waiting period for unemployment insurance benefits. On April 30, 1996, this was removed.

Apprentices now have a two-week waiting period when they go to trade school. It is a major barrier for apprentices. They don't want to go to trade school. A lot of the time apprentices are in the workforce, they have young families—stuff like this. That two weeks without income support punishes them. It is a barrier for them, either in completing their apprenticeship or in making them not want to go. It's creating a lot of problems.

We're told by bureaucrats in the federal government that this has nothing to do with them any more, that it is a provincial responsibility. We say no, don't be misled by that. Employment insurance is a federal responsibility; it is not a provincial matter. The federal government has the authority to restore that two weeks for apprenticeship funding.

To restore that funding for all apprentices, not only construction workers, would be about $10 million a year. When we perceive that there is a $20 billion surplus, we've got to ask ourselves, where is the government's feeling for apprenticeship in this country? Have they just shuffled it off to the provincial governments and ignored it?

Another thing we have put forward to the federal government is the linking of apprenticeship to retirement. In high unemployment areas such as Cape Breton Island, we have about 80% of construction workers unemployed at any one time. The age group between 55 and 64 is anywhere from 80% to 100% unemployed at any one time.

This group formed a construction older worker committee and put together what they called a Third Force Volunteer Corps group. They were intending to offer volunteer hours to the community over a 10-year period and have apprentices train with them. In turn, they would have the government give them some kind of bridge into retirement.

What we're asking, and this relates to the brief I have with me, is that we start a pilot program in Cape Breton to see if this type of thing is feasible. We have been told up front by the government that it is not feasible, it is not workable, but we ask this committee to review that once again.

Another thing we've asked the government about is the east-west mobility of construction workers. Right now we have construction workers in parts of the country who do not have jobs, and there is a big boom coming up in Alberta over the next several years. Part of the problem for construction workers getting from Quebec—or Newfoundland, or P.E.I., or wherever they live—to Alberta is the price of the airfare. We're asking for temporary mobility assistance to be provided through the employment insurance fund so a worker can get from point A to point B to get a job and get off employment insurance. We think this would fit right in with the employment insurance program as it leads to employment, getting workers off EI and back into the workforce for the amount of a plane or bus ticket.

In the last budget the government recognized in the tax system that construction workers get what we call board allowance. When workers are working away from their homes they get some kind of subsistence allowance from their employer, and this money was not to be deemed as income when they did their income tax. The government partially realized this, and they put it in the budget last year. I think the formula said the worker had to be at least 30 kilometres away from a town of 40,000 people for this income to be exempted from total income for tax purposes. We're asking that the subsistence allowance a construction worker receives anywhere in the country not be treated as taxable allowance, because these workers are maintaining two residences.

On the future of employment insurance, we're asking that a tripartite group be set up out of business, labour, and management to run the EI account and to have more input into it than they have presently.

As well, last year this committee recognized the tool tax credit in your report, but it didn't make the budget. We're asking that it be put in again and that the tool tax credit be allowed for all construction workers across the country.

As for the underground economy, I would like to give credit where credit is due to the government. They have introduced a mandatory reporting system for construction subcontracting effective January 1999. That will mean that if I get a contract as a general contractor and subcontract part of the work out to you as another contractor, I must report to the government the value of that contract. It will go a long way towards eradicating a lot of the underground economy activity, and we thank the government for that. It's a good start.

• 1830

We have here a joint industry study on the underground economy in the construction industry. Eight specific proposals came out of this study. Four of them fall within the federal government's jurisdiction, and we'd like you to review those four proposals for some kind of implementation down the road. They are on page 14.

They basically set up—and I think it would fall under the Department of Revenue's jurisdiction—very clear criteria for identifying what an independent contractor is versus an employee. Right now there's a very loosey-goosey way of determining it, and people can bypass it very quickly.

Another one is setting fair wage schedules for federally funded construction work. Right now they're under review, but we'd like this committee to support the review and to implement them as soon as possible.

The other two are in there.

As well, we have a major problem in the construction industry under NAFTA, chapter 15, where U.S. workers are coming into Canada, under false pretences in a lot of cases, and doing hands-on construction work. I know it probably doesn't fit within the mandate of this committee, but we have a problem when we discover U.S. workers doing our work. We can't get them off the job sites. The law does not allow the removal of these people once they're in the country.

It drives construction workers crazy. When you're out of work for five or six months at a time and you know there's a U.S. worker illegally doing your job, what would a person think? So we're asking this committee to recommend to whatever department it is that they look at tightening up something in the legislation they're responsible for so that when illegal U.S. construction workers are caught here, they can be removed.

I'll stop there and turn it over to whoever else wants to speak, and maybe answer any questions.

The Chairman: We'll hear from Mr. Campbell.

Mr. Robert Belleville (Director of Canadian Affairs, Sheet Metal Workers' International Association): Mr. Chairman, if I may, before we go on, Joe has outlined in the brief something concerning temporary mobility of construction workers. I want to illustrate briefly, from my perspective, the necessity of what we're going after.

I have a situation that has just come up within the last month and a half where we have an American firm that has a major job in Alberta. We have been told they need 42 stainless steel welders. I have canvassed my locals across Canada—and by the way, we still have 25% unemployment in my union—and we can get 42 stainless steel welders.

The problem I have, of course, is mobility. Some of our members have been unemployed for such a long time that mobility is a real issue. How do we get those 42 Canadians back to work in a town called Taber, Alberta?

Of course, I've been talking to HRDC people to come up with some provision for temporary assistance to get these guys to work in that situation. The problem I have is, if we don't have this type of program, this American firm will then be able to say to me, “You can't supply; therefore, we will use section 15 and get entry of our 42 American welders who can do the work.”

That is a real example of the things we're going to be facing when we have the demands that are going to be coming shortly from Alberta, unless we have an infrastructure. It can only come through EI, because that's the whole framework.

By the way, we had that in the 1970s. I was around in the 1970s. I was a business agent out of this city, and we had a situation where we did have temporary allocation assistance.

I ask that the committee really look at this issue. This is an issue that's going to be hitting the fan from here on in, trying to get people from east to west or west to east. Of course, the incentive is to get them off the rolls. They want to work, but they need some assistance to travel, and I just wanted to illustrate this with an example.

Thank you.

The Chairman: Thank you very much, Mr. Belleville.

Back to you, Mr. Campbell.

Mr. Bruce Campbell (Executive Director, Canadian Centre for Policy Alternatives): Thank you, Mr. Chairman. Thank you for inviting me here this evening.

• 1835

By way of introduction, I would like to say that the Canadian Centre for Policy Alternatives is a policy research organization. We are primarily membership-based. We have 4,000 individual and organizational members. We have regional offices in Manitoba and Vancouver, and by this time next year I hope to be able to say we have an office in the Atlantic.

We are also co-hosts of a project called the alternative federal budget, which we have been doing for four years. We are into our fifth year now. This is the result of last year's exercise. I will leave a copy with the clerk, and should any of the members not have received a copy, I would be pleased to provide it.

We are, as the saying goes, living in dangerous economic times. The finance minister's proclamation that Canada was entering a new golden age is but a haunting echo six months later. In fact, it may supplant “come hell or high water”, as the most enduring of the Paul Martin quotes.

We are a year into a global financial crisis, a crisis that is spreading and deepening. I don't think it is overly alarmist to say that the current situation has uncomfortable parallels to 1929, and I would advise you to look back at history. Go to the library and get out John Kenneth Galbraith's The Great Crash 1929. The historical record shows that it took far too long and too much human suffering for free market orthodoxy to be replaced by sensible policy-making.

Let's look at the current macroeconomic situation.

Economic growth is slowing. There has been no job creation since April and no GDP growth since May. The consensus private sector forecast for this year has been revised downward from 3.5% to 2.5%. You know that every percentage point decline in economic growth reduces revenue to the government by close to $2 billion. Of course, the good news is that Martin's own forecasts were so conservative that this still means a fiscal surplus in the order of $5 billion.

The only reason official unemployment hasn't yet risen is because people are leaving the labour force. Unemployment has reached its low point and is almost certain to rise again under current policies.

The annual inflation rate is falling, despite the decline in the dollar. It was 0.8% for the year ending August 1998. In the 19 months since the 1% to 3% inflation targets were established, inflation has been under the bottom of the target band 40% of the time, under the mid-point in the target band 80% of the time, and has never once exceeded 3%, the upper limit. The obsession with zero inflation has to end.

There has also been a huge outflow of Canadian capital—$10 billion in the first half of 1998—mainly to safer U.S. securities, and this outflow has likely accelerated in the last three months, intensifying the pressure on the dollar.

So what is the government doing? Well, the Bank of Canada has bumped up its main rate to 6%, so that is more than 5% in real terms. But to its credit, the bank has resisted. It resisted for a long time, at least, the pressure from many quarters to defend a 70-cent dollar by raising interest rates. This would have made the situation much worse.

Mr. Martin's budget this year calls for further program cuts of $1.5 billion—program cuts.

In the first four months of this fiscal year, the government actually retired some $9 billion worth of debt. At a time of economic contraction these measures will reinforce the downturn. In other words, they'll make matters worse.

• 1840

What should the government do? In my view, priority number one should be to avoid sliding into recession and to take the measures necessary to keep growth at around 3% for this year and the next. The way to do this is through a major fiscal stimulus, that is, through an increase in spending and through targeted tax reduction. Retiring the debt is unwise, as I've said. First, it reinforces the downturn at a time when government should be taking counter-cyclical measures. Second, it's a distortion of public priorities at a time when education, health care, and other public services and social supports have been severely damaged. Reinvestment in these vital areas must take precedence over paying down debt. To use a household metaphor, I can't think of many families that would use extra dollars to accelerate their mortgage payments instead of sending their youth to university.

I want to say a brief word about unemployment insurance. The present and previous governments have together produced a huge surplus in the EI account, largely by reducing unemployed people's access to this much-needed program, forcing many onto social assistance and forcing others to take bad jobs out of desperation to avoid welfare. The share of unemployed people eligible to collect EI has dropped from 87% at the beginning of the decade to less than 40% today. I find it very disturbing that the debate revolves around cutting premiums instead of restoring access to insurance, especially in these times of uncertainty and insecurity.

The second stimulative fiscal measure the government should take is tax relief for low- and middle-income individuals and families, but not for the wealthiest. The latter have done rather well during the nineties, and an across-the-board tax cut would be unwise from a policy perspective because the stimulative effect would be much less, since high-income earners tend to spend proportionately less than middle- and lower-income earners, and tend to spend a proportionately greater amount outside the country.

Secondly, it's morally indefensible for the rich to get the bulk of the tax break from an across-the-board tax cut when it is the poor and the middle class who have borne the burden of adjustment costs in the nineties.

I would stress that tax relief should not come at the expense of reducing fiscal capacity. The rich should finance this tax relief through a number of means, for example a wealth transfer or inheritance tax. For the first time in 25 years inequality amongst Canadians, after taxes and public transfers, is starting to widen. We've known for a long time that market inequality, that is, from earnings and investments, has been growing. But government redistribution through social programs and the tax system has kept the distribution remarkably stable. In other words, public sector redistribution has, until recently, compensated for market failure, but no longer. The most recent figures are now showing a growing disparity, the result of spending cuts in the 1995 budget. The last thing we need is regressive tax measures.

Monetary policy should basically be supportive of the fiscal direction I'm suggesting. For example, the central bank should drop its key lending rate at the earliest possible time.

Second, it's to the finance minister's credit that he resisted the strong financial lobby to raise, if not remove, the 20% ceiling on investment abroad of tax-subsidized pension funds. The financial outflow in the last few months would have greatly added to the pressure on the dollar if they had had their way. We have long advocated gradually reducing that ceiling.

• 1845

Third, the Bank of Canada should be more active in buying and holding federal debt—in other words, monetizing a greater proportion of government debt than it has done in recent years. Our view is that this would provide a form of monetary easing that would reduce the government's debt service bill.

There's much that the government could do on the international stage as a member of the G-8. Canadians—both civil servants and politicians—were active in constructing the Bretton Woods system that was so responsible for our prosperity in the post-war period, and I'm sure they could do it again.

There are all kinds of proposals out there. We can talk about them in the discussion, but I'll leave it at that for now.

The Chairman: Thank you very much, Mr. Campbell.

We'll now hear from Mr. Goldblatt.

Mr. Mark Goldblatt (President, Canadian Worker Co-operative Federation): Good evening. My name is Mark Goldblatt. I'm the president of the Canadian Worker Co-operative Federation.

The Canadian Worker Co-operative Federation is a very young organization by the standards of Canada's very large co-op sector. We were organized in 1991 in Antigonish, Nova Scotia.

Currently, there are about 225 worker co-ops in Canada, with approximately 14,000 employee members. By far, the vast majority of these worker co-ops are in the province of Quebec, and it's noteworthy that the province of Quebec is the only political jurisdiction in Canada so far that has invested heavily in capitalizing worker co-operatives.

The purpose of worker co-operatives is to provide employment. They are therefore a vehicle for both job retention and job creation. For example, in the area of job retention, a retiring owner who does not have any family members to take over the business can use one to sell the business to their employees. Another job retention example is found in businesses that are in serious difficulty and require a turnaround. Perhaps an extremely large-scale example of that would have been the turnaround of Algoma Steel in Sault Ste. Marie some years ago.

As I said, they are also vehicles for job creation. For example, they can be used as part of a regional economic development strategy.

The distinguishing characteristic of worker co-operatives is quite straightforward. In worker co-operatives, the employees own the business on the basis of one member, one vote. They are therefore democratically controlled and are a vehicle wherein people can do something directly about their own employment situation.

Worker co-ops need not be a marginal idea. If we look to the latest numbers from the European Union, they report that there are 700,000 members in employee-owned worker co-operatives in the European Union, with heavy concentrations in Spain, France, and Italy. In Italy in particular, for example, there is a large concentration of worker-owned co-operatives in the construction industry.

In the traditional private capital sector that we're all so used to, you could use the expression that says private capital hires labour. In the case of worker co-operatives, it's the reverse. Labour hires capital. As a result, it's a different structural model. One of the challenges we therefore face is familiarizing Canadian financial institutions with this particular model.

The major problem we're having—and this leads into the proposal I want to present to you this evening—is what we're calling an equity gap. Our approach to capitalizing worker co-ops, whether they're retention situations or job creation situations, is to raise about 25% of the firm's initial capitalization from the worker co-op members themselves. In the service industry, you're looking at an absolute low of $1,000 or $2,000 for a job, up to let's say around $10,000 per job.

It's our experience that we can raise about another 50% of the capitalization from conventional Canadian lenders like the Federal Business Development Bank, the chartered banks, the caisses populaires, and credit unions, but we keep falling short by around 25% of the necessary capitalization.

This leads into our proposal that we're actively discussing with the federal human resources development ministry. We're working with them around our idea for a federally funded worker co-op job creation fund that would be included in next February's federal budget. Specifically in our discussions with them we are seeking a one-time loan of $16.5 million that would be payment-free for the first 10 years, with repayments starting in year 11 at the rate of about $1 million a year. This fund would specifically be used to take a 25% to 30% equity position in new worker co-operatives. Although it's not the basis of our proposal, there is revenue associated with this expenditure should the federal government undertake it, in that obviously we're only in the business of setting up businesses so there will be a flow-back of corporate and individual income taxes.

• 1850

The fund we're proposing would be simultaneously active in all Canadian provinces and territories. We arrived at the specific $16.5 million on the basis of our projections to make the fund become self-sufficient so that we don't have to keep coming back and coming back. In our detailed projections we show a declining balance in the fund over its first nine years of operation. After that the number of performing investments would increase and the fund's balance would climb back up again and be self-sufficient on an ongoing basis.

We've modelled the design of our fund heavily on something that's known as the Northwest Territories Cooperative Development Fund, which is a fund that the federal government seeded with $10 million in 1986. That fund, which is owned by Arctic Co-operatives Limited, has now risen to $20 million plus. It's noteworthy that the network of multi-purpose community co-ops in the Northwest Territories is now the second biggest employer in the Northwest Territories after the federal government.

I will run through seven basic advantages of the worker co-op model and then conclude. First is enhanced productivity, simply because people are working directly for themselves.

Second, the research shows, and our full-blown proposal goes into this in some detail, that if properly mentored, employee-owned worker co-operatives have a higher survival rate than traditional small business start-ups.

Third, as I said earlier, they are an excellent vehicle for regional economic development. In a worker co-op obviously the jobs are controlled in the local community, and as long as the worker co-op is breaking even the business will continue on and on and on. Capital will not migrate to other areas seeking higher rates of return after the government business assistance has exhausted itself.

Fourth, worker co-operatives develop the skills of their members, including management skills and leadership skills, that benefit both the business and the larger community in which they live.

Fifth, worker co-operatives structurally are very sensitive to the communities in which they operate because the people who own the businesses and make the corporate decisions are the same people who live in the local community. So any downstream impacts by the business—for example, environmental impacts—are directly fed into the work co-op's decision-making process.

Six, worker co-operatives can be an alternative to offset concentrations of private capital. Obviously there is a current trend in many areas of Canada's economy toward oligopoly, and the co-op model is a decentralizing alternative that spreads power into local communities as opposed to putting it in fewer and fewer hands of fewer and fewer actors.

Finally, and again we go into this in our major proposal, which was submitted to HRD, the statistics show that developing jobs through worker co-ops compares very cost effectively with other historic government job creation programs. I'll just leave it there.

The Chairman: Thank you very much, Mr. Goldblatt.

We'll begin with Mr. Epp.

Mr. Ken Epp (Elk Island, Ref.): Thank you. I'd like to thank all of the presenters for their presentations.

• 1855

First of all, I'd like to direct a question to Mr. Maloney. I think he gave a very good summary of the situation with the construction trade. To what degree does the federal government, through the EI fund, have an obligation to actually help people move from place to place? If there was a job to be had somewhere, you'd think people would travel on over there and get the job and that this would be how they would then pay it back. All of the immigrants who came to this country did that, I think. They looked at an opportunity to make some money and paid back the cost of the trip.

Mr. Joseph Maloney: The EI account or EI legislation has no obligation to provide any kind of mobility assistance. Presently in the legislation, there are mechanisms available for permanent relocation. If I move from one province to another and I'm going to permanently relocate my family, they will pay back the travelling and moving expenses.

What we're suggesting is that the construction industry has a very transient workforce at best. There are a lot of short-term jobs involved. In a lot of cases, there is a major barrier for a worker in a high unemployment area to get the job in another province. The reason they can't get there is that they don't have the money to travel there. They either have to borrow the money or do something else along those lines. In a lot of cases, they can't do that.

What we're saying is that if we're going to call this thing employment insurance and not unemployment insurance, then it should be an upbeat program. If I can prove to the local CEC office that I have secured a job in Alberta, that it is good for such and such a length of time, and that I would like to access some transportation costs to get there, it just makes good sense to me and a lot of other people I've talked to. If the employment insurance fund was to give somebody $400 or $500 to get them out there in order to get them to work and off employment insurance, that money would be paid back in the first couple of weeks once the person is paying back into the income tax system and all the programs. It's just another incentive-driven program that should be inside employment insurance.

Mr. Ken Epp: Perhaps Mr. Belleville would want to respond to this, too.

I agree that we should do everything possible to have our population gainfully employed as opposed to collecting employment insurance. I guess what I'm asking is this. Originally, the old unemployment insurance fund was set up as a true insurance to protect an individual or family against loss of income if employment was temporarily lost. This is now being broadened, just like the Canada Pension Plan has broadened. It used to be a pension for retirement and now it has a whole bunch of other things wrapped up into it. Are you in favour of altering the EI purpose substantially?

I think Mr. Campbell mentioned, too, that there should be more of an availability of funds rather than reducing the payments or reducing the premiums. Making more money available would, of course, quite substantially alter the way it has been working. Are you saying that's what we should do?

Mr. Joseph Maloney: Mr. Epp, what I'm saying is that you should be using EI moneys for EI purposes. When you give somebody temporary mobility assistance to get to work, that should fall within the employment insurance program. Right now, as we know, any surplus in that account has gone to deficit reduction. That's certainly not inside the employment insurance program.

Mr. Ken Epp: Yes, I agree with that.

Mr. Joseph Maloney: I'm saying that EI money should be used for EI purposes, and temporary relocation assistance is and should be inside that program. You do it for permanent relocation right now. All I'm saying is that you should be doing it for temporary relocation. A construction worker is not going to permanently relocate his family to another province for a two-month job. We have to take that into consideration.

Mr. Ken Epp: Okay.

Next, I have a question with respect to the debt. I'm hearing a mixed message from all the witnesses coming to this committee. Some say to get the debt down so that we can reduce our interest payments, in turn allowing more of the money we pay as taxpayers to be used for things like tax relief and/or furthering government programs, paying for health care, and things like that. Let's not pay interest; rather let's pay for programs. I then have some of you here today who are saying we should end our obsession with paying off the debt. Let's keep that wonderful debt—sorry, that's my word; you didn't say that.

The Chairman: Did you want that stricken from the record?

Some hon. members: Oh, oh.

Mr. Ken Epp: No, it's okay.

• 1900

Keep the debt. Keep paying the interest. It takes one-third of every tax dollar right now just to pay interest on the debt. Let's keep doing that, and still increase funding for programs and so on.

Is that really your message, that you don't want to pay off the debt?

Mr. Joseph Maloney: Who are you asking?

Mr. Ken Epp: Everybody.

Mr. Bruce Campbell: Maybe I could take a stab at that since I addressed it more directly than anybody else.

Mr. Ken Epp: Yes, you did.

Mr. Bruce Campbell: I think the operative word here is the debt burden, and the debt burden means the debt-to-GDP ratio. When Paul Martin talks about reducing the debt burden, he's talking primarily about reducing the debt-to-GDP ratio, not the absolute numbers—although, as I indicated, there's a lot of debt retirement going on.

So if, for example, our earlier generation of politicians—the politicians who were in charge of things in the post-war period—had thought in those terms, when the debt-to-GDP ratio was about 115% of GDP—very high, much higher than it is now.... If they had thought, oh, we really can't take measures to build an unemployment insurance program or to build a pension system or a system of social supports and assistance for post-secondary education because we have to pay down that debt, then I think we would have really been deprived in the post-war period. Instead, the post-war period was a period of unprecedented prosperity.

In the period from 1945 to 1975 that debt-to-GDP ratio decreased from 115% of GDP to about 15% of GDP. That didn't occur because the government was paying down or retiring debt, although in the first period there was some of that. In the first decade about 15% of debt reduction was accounted for by actual retirement of debt, but after that, in fact, the debt was rising. But the economy was growing much faster, so the burden of debt kept falling. It wasn't until the post-1975 period that the debt started to rise again and then reached a peak at over 70% of GDP in the mid-1990s, and it's been falling steadily since.

My point is, especially at this juncture, it is a dangerous time. Economic growth is slowing and I think you'll see unemployment is about to rise. The government has a plan to continue to reduce spending. So if you're doing all of that, you're reinforcing—you're bringing in pro-cyclical policies at a time when you should be bringing in counter-cyclical policies.

My point is that major economic stimulus will have a positive effect on economic growth, and I indicated that every percentage point increase in growth adds about $2 billion to revenue. So it's important to look at the top part of the equation as well as the bottom.

There is one final point I would make. I agree with you that the debt interest payments are high, and they do constitute a drain on funds that could go elsewhere into priority areas. One of the things I would suggest to reduce that overall bill—and I acknowledge that there are constraints on interest rates under the current financial instability—is that the Bank of Canada take a more active role in monetizing debt, which would have the effect of lowering the overall debt servicing bill. You would find that's a way to lower the bill without actually paying it off or retiring it.

The Chairman: Thank you, Mr. Campbell.

Mr. Goldblatt.

• 1905

Mr. Mark Goldblatt: All I would add is that from our point of view what we're looking for from the federal government would be essentially a balanced approach. Instead of just taking a single policy objective like reducing the debt, there's a whole variety of needs out there in the Canadian public. We're looking at a balanced approach that would spread the limited resources the federal government has across a number of different objectives, one of which would be economic stimulation, employment stimulation, as well as continuing to reduce the debt load.

Mr. Robert Belleville: I would agree that paying off the debt is a real problem, but certainly not on the backs of the unemployed. And I don't believe dipping into the EI surplus is the way to do it. I just gave you a real-case scenario, an active case, of getting Canadians back to work, and some people have a problem with it. For the life of me, I can't understand it. You have an option to put 42 Canadians to work in the analogy I gave you. The option is if we don't get the assistance, we may not get the people there to work on that site. Others will do the work, and they won't be Canadians. Why not invest in Canadians? Why not allocate some of that $20 billion for that mobility assistance to get our Canadians back to work?

You want to eradicate the debt, sir and ladies. Let me tell you, the way to do it is to get Canadian people back to work. To get Canadians back to work you've got to invest in the Canadian market. You've got to do some of the things that I'm suggesting. You've got to give the incentive. You've got to give the assistance to some of our guys who have been unemployed for a year or more.

There has to be a solution. The debt is a serious problem, but when you're unemployed that's minuscule to the poor Canadian who hasn't worked for a year. He has to get back to work so he can help pay off that debt. And he can get it done if you'll assist him. That's the alternative we're giving you.

I didn't have a chance to say this earlier, but that's the whole reasoning around the assistance for getting people back to work.

The Chairman: Just to clarify that point, Mr. Maloney, you did have a 33....

Mr. Joseph Maloney: Yes. In our brief, on page 3, the last paragraph, when a legitimate surplus comes—not just an EI surplus; we'd like to get government right and get the programs right first—we're suggesting a 33-33-33 split on social programs, on tax relief, and the other third to the operation of the government, whether that be debt reduction or whatever. So like my friend, we are going for a balanced approach.

The Chairman: Do you have another question?

Mr. Ken Epp: Yes, I have now a further question.

You talk about “incentive”. For example, Mr. Goldblatt makes a big point of the fact that if you get the workers actually involved in the business they're working in, they own part of the action, they're going to work better, they're less likely to leave the job, for whatever reason. And yet I'm wondering whether you would apply the same thing to the entrepreneur who basically takes the risks to build the manufacturing plants, to get things organized, get them together to provide the employment.

One of you even suggested that we should reinstitute the inheritance tax and maybe have a wealth tax—that was Mr. Campbell—and I'm saying taxes generally discourage an activity. Whatever activity you tax, it discourages it. That's generally true. So if you're going to tax the entrepreneur, you're going to drive him out of the country. I can just see myself—why would I invest $500,000 in this country if it's assured that two-thirds of it is going to go to the government instead of my children? I'm going to go and find a place where I can keep that for my family. Is there not a balance to be reached there as well?

Mr. Mark Goldblatt: Yes, there is a balance. As you mentioned concerning our proposal around employee-owned co-operatives, I think the whole idea of providing an incentive for the ordinary working person under the co-op model to participate in the financial success of the business in which they're working is a very strong way to encourage the kind of entrepreneurial activity you're talking about, and that would apply as well to single entrepreneurs. It applies to our model, but it applies as well to the traditional entrepreneurial model where people are basically working for themselves. It applies to both models.

• 1910

Mr. Bruce Campbell: As the wealth tax was mentioned, I just want to elaborate briefly on what we have proposed in the past. It's not necessarily what we will include in our alternative budget this year. We had proposed a wealth tax on large estates. It was a very small amount. Surely, you realize that we're one of three countries in the industrialized world that doesn't have a form of wealth tax, and there are a lot of countries in the industrialized world that are doing actually quite well.

Overall tax-wise, we're not at the high end. We're more or less in the middle in terms of all taxes as a percentage of the economy. Surely, you're not suggesting that if we lower taxes sufficiently, we'll get to full employment and 5%-a-year growth. Is that what you're suggesting?

Mr. Ken Epp: Well, you're the one—

Mr. Bruce Campbell: According to studies done by KPMG over the last couple of years of urban centres across Canada and the United States, we're very competitive on the corporate side with our main competitors in the U.S. market. So it's really not a question of our tax system on the corporate side being uncompetitive.

Mr. Ken Epp: You have this little book, this alternate budget. I want a copy of that.

Mr. Bruce Campbell: Sure.

Mr. Ken Epp: Just for the record, I'd like to know if that is a balanced budget.

Mr. Bruce Campbell: Yes. One of the parameters we established in previous years is that fiscal track that gets us to a balanced budget that stays balanced thereafter. One of the differences between our approach and the government's is that for the last four years Paul Martin has greatly exceeded his own deficit reduction target. So we set ourselves fairly realistic targets. We don't do what the government did, which was to set a target and then exceed it, for example last year by $17 billion. But it does take a different path to deficit reduction.

Mr. Ken Epp: In response to that, I would simply say that if you set the bar at 10 centimetres, I could clear it, too.

I have one last question in this round, Mr. Chairman.

The Chairman: I thought the other one was your last one.

Mr. Ken Epp: Can I just quickly ask one more?

The Chairman: Do it very quickly.

Mr. Ken Epp: None of you mentioned personal income taxes. Are we to read from that that all of you think the rate of personal income tax in Canada is not a concern?

Mr. Joseph Maloney: I explained that our position was 33-33-33. You can build personal income tax into that, but there should be a balanced approach.

Mr. Bruce Campbell: In the last decade the top personal rates at the federal level have lowered and come together. There used to be five categories and now there are three. For those at the top end it has been advantageous. Of course, there is a whole raft of very hefty tax breaks. The top 10% of income earners have done quite well in the 1990s. So an across-the-board tax cut is not something we would recommend. We would recommend targeted tax reductions, perhaps reducing the brackets and eliminating the surtax at the lower end and so forth.

Mr. Mark Goldblatt: I'd like to make a very general comment. It is, of course, very desirable to reduce personal income taxes. I think we are almost all agreed that we're not going to run up future deficits. So at the same time we ask the public to support lowering income taxes, we must also ask what services they would like reduced in order to fund those tax reductions without running up a deficit. The two questions go hand in hand.

[Translation]

The Chairman: Mr. Rocheleau.

Mr. Yves Rocheleau (Trois-Rivières, BQ): Mr. Campbell, if I understood correctly, you stated that during the course of the first six months of 1998, some $10 billion in capital fled Canada. What do you think of the idea of one day imposing a tax on international financial transactions? What do you think of the Canadian government's attitude vis-à-vis the tax havens that exist today?

• 1915

[English]

Mr. Bruce Campbell: I should get the translation.

I can talk about the Tobin tax, certainly. The Tobin tax is a tax we've been supportive of in our alternative budget in the past. The proposal has been around for a long time. I'm sure you're all familiar with it. It has probably come up over and over again in presentations.

It was first proposed by James Tobin, Nobel Prize winner, who a long time ago was actually very concerned with the collapse of Bretton Woods and the implications of that for the expanding private unregulated financial markets and the impact they would have on national economies, on national economic policy. I think his concern, which goes way back to the mid-1970s, has been borne out.

There has been an enormous increase in foreign exchange markets, a whole plethora of financial instruments that have been used and developed to move very quickly from market to market to take advantage of very small differentials in interest rates. We're talking about day in, day out, a couple of days in, a couple of days out. That's what a speculative transaction tax would be designed to limit. It would not only have the ability to raise a substantial amount of tax, because the amounts we're talking about are enormous, but more important, and I think it was Tobin's purpose in his speculative tax, was to give back some powers to national governments to set policies in accordance with national priorities and not just what the financial markets dictated.

So yes, I think that and other measures should be on the table for consideration. There is a whole bunch of measures at the international level that can be considered, from a world central bank along the lines that Keynes envisaged but never fully materialized in Bretton Woods, to a series of capital controls, some of which are already in place in some of the emerging markets.

I think the key here is a co-ordinated interest rate reduction and much more. The key here is political will and co-operation amongst the leadership of the industrialized world, because I think that's where it starts. Canada, and Paul Martin as finance minister, is well placed to play a role and probably should advocate more forcefully and more publicly for those kinds of measures.

[Translation]

Mr. Yves Rocheleau: To what extent do you believe that we can truly deal with the Canadian problem without quickly overflowing onto the international arena? To what extent are the concepts of program privatization, modernization or rationalization Canadian concepts? What links should we be establishing between what we are studying today and the awaited multilateral agreements on investment? Are these separate issues or should they be lumped together?

[English]

The Chairman: Who would like to answer that question? Mr. Campbell?

Mr. Bruce Campbell: Sure. I think they are linked, and I think the push towards deregulation and privatization of the world economy and of national economies that has been going on with a vengeance for the last two decades is not something that has come out of nowhere. I think it's been occurring voluntarily with the compliance of national governments.

• 1920

I think we've reached the stage now where deregulation and privatization of everything—the financial system, the systems of investment, environmental regulation, and so forth—has reached the stage where it's starting to impact on the very stability of the system itself. I think it's throwing into question the model. I think more and more there is questioning of that in the upper reaches of power, at least in some quarters, and I think that's a good thing. I only hope that reason will prevail and sensible action will be taken, whether it's on the financial side or on the real side of the economy, before it's too late and before the financial crisis gets to the point where the global economy is thrown into recession. The IMF predictions for the global economy are pretty well flat in terms of economic activity for the world as a whole. In some parts of the world they're undergoing major depression. That could spread and we could all be affected by that.

That being said, there are many things under the current system that national governments could do. I think it's a mistake to take the position that we're powerless to do anything in the face of this. There is a whole range of policies that governments can take to protect and insulate themselves from the worst of the international storm.

The Chairman: Merci, M. Rocheleau.

Mr. Szabo.

Mr. Paul Szabo: Thank you, Mr. Chairman. I'd like to ask for a comment from Mr. Maloney and then from Mr. Campbell.

Mr. Maloney, you stated that EI dollars should be used for EI benefits, and I think it's nice and catchy. But if there were no EI system to speak of, if there was absolutely no income fallback, chances are that construction industry wages would have to go up simply to reflect the economic reality. If you want this service at this time on a sporadic basis, on a standby labour force type of thing, we have to compensate these people. So over that period you get a fair and reasonable annual income level commensurate with the skills and effort, etc. If that's true, then theoretically the construction industry as a whole would look for ways to be efficient and productive so that passing on the price of that increased wage wouldn't be cost prohibitive.

The question to you is, if you believe that scenario, and since we do have an EI system that allows wages to be lower in the construction industry than they would otherwise be, how do we deal with the statement you made that EI dollars should be used for EI benefits when I understand that the construction industry as a whole takes more out of EI than it puts in?

Mr. Joseph Maloney: First of all, Mr. Szabo, I said EI money should be used for EI purposes, not only benefits. Benefits are part of it.

The last numbers we looked at from the federal government show that in 1992 or 1993, I think it was, the construction industry actually took out more money than it put in. I think the ratio was 3:1 or 4:1. We don't know what the ratio is in 1998 or 1999. We don't think it's that high. It's probably even. But when we go back into the seventies and the sixties and even part of the eighties, when construction was at a boom across this country, construction workers put a lot more into the EI system than they ever took out.

• 1925

When you look at the one year, and that's the last chart that was available, we always get that thrown at us. We just say those numbers are skewed to a large degree because there is nobody who can tell us exactly how many people work in the construction industry. Stats Canada says there are approximately 850,000 people in the construction industry. HRD data tell us there are about 600,000. In the unionized sector, we know we represent about 425,000 construction workers. We know there's a non-union element out there, but we know it does not mirror the unionized element. So those numbers are skewed at the best of times.

We even said, back when they passed Bill C-12, if that's the case, if you're going to do this to the employment insurance program and you're accusing us of taking more money out than we're putting in, then throw us out of the employment insurance system and we'll take care of ourselves.

Mr. Paul Szabo: We'll look for those numbers next year or whenever they come out.

My final question is for Mr. Campbell. Just as an aside with regard to the whole tax equity situation in our tax system, I was thinking immediately about the $100,00 lifetime capital gain exemption that we had for a short while, which presumably was only to the benefit of high-income earners. You can imagine the tax savings, or the capital that was earned without any tax. It would be awfully difficult for lower-income earners to ever recoup that through lower taxes.

Also, the two items on deductions, child care expenses and RRSPs, are worth more to high-income earners versus low, even though you may have put the same amount of money in. It's kind of interesting, if you did the mathematics, tax equity and fairness is really going to be an important issue. I hope that at one time your organization will start recommending tax reform in the broadest sense. Maybe it's time to look at equity and fairness issues, and you've got to start now, because it takes a little while to do that.

My question for you has to do with this chart on your handout, page 19, measures to reduce poverty. I added up the numbers, and it was $13.21 billion worth of measures to reduce poverty, all of which appear to be on an annual basis. When you add it with a whole bunch of other things, I did some quick calculations, and it appears that even the average person living in poverty would be put up to an effective level of income of somewhere about $20,000 minimum.

This makes me ask the question, have you ever thought of guaranteed annual income? And if you have, have you been able to rationalize the job loss that would occur because you basically shut down social services and agencies, which have been necessary to take care of all the people who are in poverty and need those social services?

Mr. Bruce Campbell: Well, the notion of a guaranteed annual income has been around for a while, and we've kicked it around for a while. There are those who think it should be very seriously considered, especially in light of the fact that we're living in a world where there is, as Jeremy Rifkin would say, the end of work, where we have a chronic shortage of work and in such cases we should look more seriously at guaranteeing an annual income.

It's not an approach we've adopted or that we've really carried forward that far. Our emphasis in our budgets has been on full employment, on creating jobs, on measures that would systematically reduce the unemployment rate on a year-over-year basis, and also on strengthening, on beginning to rebuild social supports, labour market supports, and so forth. So we've really gone that route, and not the route of the guaranteed annual income.

I just want to make a point with respect to fairness in the tax system, because fairness in the tax system has been a hallmark of our alternative budgets. Most of the measures in the last one were very much oriented toward redistribution. I think the direction we're heading in this year is for no overall increase in the global tax rate, but redistributive measures.

• 1930

In the last budget, to his credit, Paul Martin did bring in measures that were aimed at greater fairness in the tax system, or targeted tax relief. One of the problems I would have with it is that he financed those by program cuts. We wouldn't have done that; we would have financed by increases on those groups that could afford them. The example of a wealth tax is one.

The Chairman: Thank you very much, Mr. Szabo. Mr. Gallaway.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Thank you, Mr. Chairman.

Mr. Maloney and Mr. Belleville, you raised a number of interesting points I just wanted to cover with you.

We often hear in this country about construction of world-class facilities, yet it's difficult to build these large facilities and manufacturing production sites when we don't have the skilled trades to do it.

I was very interested in your number with respect to apprentices. You said that if we were to move to extend the coverage that was removed on April 30, 1996, it would only be $10 million a year. When one considers the type of money we spend in post-secondary education—which I'm certainly not opposed to—$10 million is a mere drop.

I attend a number of apprenticeship graduations every year, and I wonder if you have any statistics on the average age of an apprentice who completes their term these days. Is it up or down or is it holding its own?

Mr. Joseph Maloney: It pretty well holds its own, depending on the craft. On average, when an individual completes an apprenticeship program, they're about 24 or 25 years old.

Mr. Roger Gallaway: Secondly, with respect to the clawback, it's very apparent that you've studied this. I was wondering if you have any numbers, if in fact the ceiling were raised from $39,000 to say $45,000, what that would likely cost—and cost is a relative term in this place, as you know—in terms of the federal treasury.

Mr. Joseph Maloney: There are no cost factors out there right now, due to the way legislation was blended in. The clawback threshold dropped to $48,750 on July 1, 1996. So then after 20 weeks it really takes you into 1997. That doesn't get dealt with until you file your 1997 income tax, which would be in 1998. So there wouldn't have been a whole lot of people in that trap then, but as they work in 1998 and they file income tax in 1999, that's when the big pinch is going to start to come, and every year thereafter.

Mr. Roger Gallaway: The lowering of the threshold to $39,000 would appear to me—and certainly in my riding I'm hearing about this a lot now because it's starting to work its way through the system—in many respects...I won't call it a disincentive; it's more than that. People are not filing for EI simply because they regard it now as a loan fund, as opposed to an insurance fund. What other effects are there, in terms of the economy, when people refuse to participate in programs because they can't afford to participate in them?

Mr. Joseph Maloney: The big problem we're going to see when these clawbacks really start taking hold. Half the problem is they're not going to take jobs and they're not going earn over $39,000, so they don't have to pay back any EI moneys. The other problem is the underground economy. The person is just going to say “Okay, Mr. Employer, I'm at $38,000 in income. Lay me off, then hire me in the underground economy and I'll double dip. I'll collect unemployment insurance and I'll get a cash cheque every week and I'll drain one system and I won't pay into more systems.” That's a very real problem. That's why we got involved in the underground economy with five federal departments inside the government to try to clean it up. We bared our soul in the construction industry to try to clean it up. We've got the recommendations there.

All this piece of legislation does is take it back and ruin what we're trying to clean up. You're going to see in a few short years, especially in the plumbing trades and the civil trades, where they can operate as an independent contractor, they're just going to say at the end of the week, “Give me a straight cash cheque in the carpentry trades and then I'll take care of myself”. But they don't pay their taxes. You're going to see double dipping, underground economy, and then the system is going to be in worse trouble than what we're trying to fix.

• 1935

Mr. Roger Gallaway: I wasn't on the committee when it occurred, but can you tell me how the magic number of $39,000 was determined? It seems to me that the mythical group out there called the average Canadian family, when you hit $39,000 and you're running into the territory where you may have to pay it back.... In this day and age, $39,000 isn't a lot of money, especially if you have a dependant or two. How was this $39,000 limit arrived at?

Mr. Joseph Maloney: I don't know where they came out with $39,000, but the threshold used to be $63,000. If you were following the debate when Bill C-12 was going through the House, Minister Axworthy at the time was having a major feud with the auto industry. I don't want to pick on anybody, but auto workers were being laid off every summer for eight or ten weeks at a time when the places were being refitted for new cars, and they were collecting unemployment insurance. They were making very good money all year round and weren't paying a whole lot of it back—only 30% of it. He wanted to put an end to that, but he just couldn't pick on auto workers. So they made the rule go from $48,750 down to $39,000.

Where they came out with those numbers, I don't know. But the incentive behind the clawback was to try to get at one particular industry, and that was the auto industry. There's a major feud going on there, and now we're all in it.

Mr. Roger Gallaway: I was also interested in your recommendation about the Cape Breton Island older workers pilot project. One of the vagaries of the skilled trades is that.... For example in my riding there are 3,500 skilled trades people, and the average age at the moment among that group is 48, I believe. So there's this pressing problem in a sense of an aging workforce. I never used to think that 48 was that old, but now I'm beyond that.

In any event, we're presented with this problem of an aging workforce, yet when the work hits.... For example, I've had people in my office who are 66 and are back to work because we're presented with the problem of there's no one to do the job and these guys are still quite happy to go back to work.

Can you tell me a little more about this transition into retirement project? This is the first I've heard of it.

Mr. Joseph Maloney: I've got an executive summary I can leave with you.

The older workers in Cape Breton Island have set up a group they call the Third Force Volunteer Corps. There are approximately 300 older construction workers who have volunteered for the program if it goes through. Over ten years they would volunteer approximately one million man-hours. In volunteering those man-hours they would go around to houses and hospitals and whatever and offer their talents and skills, whether they're a plumber or a carpenter or a bricklayer or whatever, and they would take an apprentice with them and show the apprentice how to learn the trade and stuff along these lines. In turn, the government would give them a bridge from age 55 up until their Canada Pension Plan or something kicked in.

So they could actually remove themselves from the active workforce and de-bottleneck it so existing younger workers could take those jobs that are there. That's really how the thing works.

Mr. Roger Gallaway: Okay.

I'm also interested in your recommendations with respect to travel, going often from one side of the country to another side of the country to work. I'm certainly aware that there are good times and we've been through some bad times in terms of construction trades.

For example, right now in Joffre, Alberta, there's a $2 million project ongoing at NOVA. Joffre is not the most accessible place in the world. It's 40 or 50 kilometres from Red Deer and it's tough for people to get there.

• 1940

Have you had any dealings with HRD with respect to some sort of interim program or interim financing for people? What Mr. Belleville described with respect to stainless steel welders is that there aren't a lot of those people around, yet at the same time they've been through a bad period where there hasn't been a lot of work for them, but the cycle seems to be turning.

Mr. Joseph Maloney: Right now, on the books, there's an anticipated $40 billion worth of construction activity to take place in the oil patch in Alberta over the next three to four years. We approached HRD through a joint committee of construction contractors, owners, and ourselves in the building trades, to ask for a pilot project for a one- or two-year period, where construction workers could access temporarily a pool of money for transportation costs to take these jobs. Apparently it has been reviewed by HRD and we've been told verbally, no, that's not possible; it's not going to happen. Why? We don't know yet. We haven't gotten a written report back as to why it has been supposedly rejected. So we are waiting on that.

We think it's a very good incentive versus a disincentive to take a job. If you can prove that you have a job in hand and the job is good for anywhere from eight weeks up to a year, depending on the work out there, and if it only costs $400 to $500 to get a flight out there to get you off unemployment insurance and working, it just makes sense to try to something like that.

We're not asking to put in place a carte blanche program that has unlimited access for people; we're just asking for a pilot project so we can put some parameters around it and measure it and see where the thing is going.

Mr. Roger Gallaway: My final question deals with your last recommendation, with respect to the foreign construction worker provisions.

I recently arranged a meeting, which I attended with an American congressman, who happens to be directly across the river from me, in Michigan, and the local business agent of the IBEW.

At the moment, in the state of Michigan there's a great demand for electricians, yet there's an absolute wall that exists in terms of Canadian electricians simply driving for five minutes to a job site on the other side of the border. It seems to me, from reports I get in my riding, that we make it somewhat easier.

The Americans take the position that you're just not going in. Yet we seem to have a different interpretation, especially around things such as that, which I thought was a reciprocal agreement in terms of having workers enter Canada.

A case in point is a job that occurred at St. Thomas, Ontario, with Magna Corporation or a subsidiary of it. I have reports that there were about 45 Americans there as “consultants”, who had suddenly visited the local Canadian Tire store and bought a lot of tools. The reports were that they were working, yet we didn't appear to be able or willing to respond to that type of protection of Canadian jobs for Canadian workers.

This is more of a comment, but where do we go on this? What's your experience in reciprocal flow of workers? Have you had any experience on that?

Mr. Joseph Maloney: First of all, right now under the present rules, if a Canadian is caught working illegally on a U.S. job site, they're immediately ejected from the country and the contractor that hires him gets huge fines assessed against him.

Here in Canada, if we catch a U.S. worker on a construction job site, all we can do is say, listen, when this job is over you go home and don't come back again.

It's pathetic. You can't do anything about it. The legislation doesn't allow for their removal once they've had the validation process.

They come across the border, and they're going to visit relatives, or whatever, or they're coming over for a hockey game, and they just stay. They go buy their tools and stuff like that, and in a lot of cases the contractor supplies the tools for them.

So that's a problem. We'd like to see some teeth in the HRD legislation or immigration policy so that when you catch people you can remove them. We have no problem with reciprocity with the United States when it comes to a north-south movement of workers. If we need extra workers and we can't get them in Canada, then yes, by all means. We're international unions. We have American brothers and sisters in the same union who we'd love to welcome over here to work, but on our terms, not for them to come over here illegally and take jobs from unemployed Canadians. We'd love to get into something like that.

• 1945

Mr. Axworthy was supposed to put something like that in Bill C-12, but I don't think it ever saw the light of day. A reciprocity arrangement would be fine with us, but we first have to tighten up the provisions of NAFTA.

The Chairman: We'll move on, but I do want to have a follow-up question to Mr. Gallaway's question in reference to the $39,000 and where you got that.

You have to look at the average industrial wage, and you need to connect EI benefits to the average industrial wage simply because of the fact that if the employment benefits that individuals on employment insurance receive are way above the average industrial wage, then you set up a situation in the marketplace where employers are competing with employment insurance for workers. That's certainly not a situation you want an economy to be in. You simply cannot have employers competing with employment insurance.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you, presenters. I have a question for Mr. Campbell and a couple for Mr. Goldblatt, but I'd just like to pick up on a point made by Mr. Gallaway, Mr. Maloney, and Mr. Belleville.

It may be off topic in terms of the budget, but what progress has been made with respect to breaking down the barriers for internal trade in services, particularly in the construction trades between Ontario and Quebec? I know it was an issue. I expect it's still an issue. Can you report on progress or what the status quo is there?

Mr. Joseph Maloney: The Ontario-Quebec construction committee was set up to work out those problems. They have a deal in place where they are working out those problems. The construction workers in Quebec have a simple policy that before Ontario residents come over to Quebec to work, they'd like to see Quebecers employed first. So that is out there.

The other provision in Quebec is that they have probably the most unique and I'd say up-to-date labour relations system in the entire world, where you must be in the union to work in the construction industry. So when the rest of the provinces adopt those kinds of far-thinking policies, it might be a little easier. Non-unionized Ontario workers try to go into Quebec to take jobs and that causes a little confrontation.

To my knowledge, after talking to the Ontario and Quebec parties, there is a deal in place where they have a formula worked out, and some of the tensions are easing.

Mr. Roy Cullen: So you see that there might be some light at the end of the tunnel. Maybe our colleagues from Quebec will comment later. Thank you for that.

Mr. Campbell, something has come to my attention, and maybe you can give us the benefit of your knowledge and experience on it. When the federal government increased federal transfers to individuals for social policy purposes—and I'm thinking in particular of the child benefit, where we've committed about $1.7 billion or $1.8 billion—it's my understanding that if you're in Ontario, for example, and you're in receipt of welfare and suddenly you have the benefit of this new child benefit increase, that is deducted from the welfare payment you otherwise would have received from the Ontario provincial government. Is that the case? Are people like yourself and other NGOs bringing that strongly to the attention of the Ontario government, that that shouldn't happen?

Mr. Bruce Campbell: I think you're right. I don't think I can illuminate things beyond that.

One of the concerns we had about the child tax benefit is that it did discriminate against children in welfare families. That's an inequity that we've not wanted to see perpetuated. I guess I would defer to those in the social policy community who have appeared before you previously and have a more detailed knowledge of those items.

Mr. Roy Cullen: I missed the opportunity with them, but maybe we can get back to them, Mr. Chairman, to pose that question.

Mr. Goldblatt, I was very interested in your presentation. I've been working on an initiative to encourage our government to introduce tax policies that would encourage employers to introduce ESOPs, employee share ownership plans. As you rightly point out, with the exception of Quebec, Canada is the only jurisdiction among the OECD countries not encouraging worker ownership.

• 1950

While attending a conference in the United States, I was actually amazed to learn of the amount of movement down there on this issue, such as tax policies that encourage it. The data are very clear in terms of added productivity and job growth. I should say that there has been a warm reception amongst my colleagues, and the initiative perhaps will gain some momentum.

You're talking here mostly about Canadian worker co-operatives. Maybe you could just draw a distinction between the Canadian worker co-operative and an ESOP and how they integrate with what you're proposing here.

Mr. Mark Goldblatt: The worker co-op system we're advancing involves a way of structuring a business so that on the basis of one employee, one vote, the employees control the business. So that's the model we're advancing.

The ESOP program is basically an incentive system for both firms and individuals to invest in their businesses. But only in the minority of ESOPs is there the combining of both the encouragement of investment in the business and control of the business. Whereas our proposal combines both components, the ESOP program is basically an incentive for investment, and only in a minority of circumstances do the workers on a participatory basis take over ownership and control of the business.

On the other hand, as you say, it's fascinating to study the ESOP program in the States, because it now covers literally millions of American workers. It has been very successful in stimulating business and improving productivity by giving the workers a greater, direct stake in the financial performance and success of the business in which they are employed. It has really quite a track record. Their studies down there show that as you combine that incentive for investment with information and participation in the actual operation of the business, productivity climbs even higher as they go from being passive to more active in terms of the information they're getting on how their business is performing. So, yes, they are very relevant.

Mr. Roy Cullen: They're called the open book approaches. I think it has huge potential. People who are involved with the company at that level feel more committed and more comfortable in the workplace. I think it has some real potential.

You alluded, Mr. Goldblatt, to the debate going on in Canada right now with respect to bank mergers. I think that's what you were alluding to.

Mr. Mark Goldblatt: I was.

Mr. Roy Cullen: It seems to me that one of the issues and one of the challenges even if the mergers don't go ahead—if the mergers go ahead, it becomes even more important—is to create a kind of secondary market and more competition in financial services. I'm wondering what kind of role you might see for Canadian worker co-operatives in trying to fill some of that void, if you like, or in creating more competition.

Mr. Mark Goldblatt: I was alluding to the financial services sector and the role financial co-operatives play in that sector. I was pointing out the enormous success we've had in Canada in terms of the co-operative model.

Just to digress for a minute, because I know your committee is dealing with this, next year we'll celebrate the 100th anniversary of the founding of the first caisse populaire/credit union in Canada by Alfonse Desjardins in the year 1900 in Lévis, Quebec. As the history goes, about 80 people attended that meeting in Lévis, Quebec, in the year 1900, and together they deposited about $25. Today the Desjardins caisse populaire system in Quebec has slightly over $80 billion worth of assets and a market share in certain parts of the financial services industry of between 30% and 35%.

We in the worker co-op section use it as just one example where Canadians have seized on the co-operative model and have made a fantastic success of it. Other examples would be the co-ops in the agricultural sector, in dairy, grains, and so on. The market share in those cases is as high as 60%. We are encouraged by that, we who are promoting the employee ownership co-op approach. It is relatively new in Canada compared with other kinds of co-operative activity.

• 1955

I guess we look at the other sectors and say if they could do it there, we can do it again here. It was in that sense that I was alluding to the financial co-operatives. Your committee is going to be looking at the role of the caisses populaires and credit unions and their future potential in terms of financial services to Canadians.

Mr. Roy Cullen: Often ESOPs, employee share ownership plans, have had a reputation for emerging in failing situations. You can think of examples in the steel industry and others. But there's also a huge opportunity, in my mind, to implement the policies that would really help and nourish growing companies as well. So it's not just a case of everyone putting water in their wine and solving some failed situations. It's a matter, it seems to me, of providing a good environment for growing companies and nourishing them and helping them grow.

Mr. Mark Goldblatt: What's interesting about the employee-owned co-op model is that it's so flexible. So it actually can be utilized in a variety of situations, like the Algoma situation, which was a massive turnaround situation. But also, as I said, the Quebec jurisdiction so far is the only political jurisdiction in Canada that has had a program in the last 10 years to invest in worker co-ops. I even have the figures. Since 1989 Investissement-Québec, an arm of the Quebec provincial government, has invested $55 million in worker co-ops in Quebec.

Yes, the vehicle is extremely flexible. Part of the Quebec picture that's growing the fastest is what they are calling worker co-op shareholder co-operatives, where they form a co-operative as a vehicle for the workers to directly buy shares in the business in which they work. Often over a period of time their portion of the total shares of the firm increases through things like payroll deduction and further investment in the firm. So yes, it's being used there, not just in the rescue type of situations but in growing businesses as well.

Mr. Roy Cullen: If I could comment, I'm working with Senator Hervieux-Payette from Quebec, and yes, we need to acknowledge that Quebec has been very progressive on this whole front. I think we could all perhaps learn from that.

Mr. Mark Goldblatt: The job numbers are there to show the investment the government has undertaken.

Mr. Roy Cullen: Good. Thank you.

The Chairman: Thank you, Mr. Goldblatt.

Mr. Martin, the final question

Mr. Pat Martin (Winnipeg Centre, NDP): These were three absolutely excellent briefs. Of course I'm clearly biased in that regard with all three of your issues and situations.

I'd like to start with Mr. Goldblatt. I'm very heartened by what you have here, and the whole issue, of course. I'm very interested in the co-op movement. I noticed you mentioned Mondragon here. I've seen some films and things on that and it's very exciting stuff.

Regarding employee ownership in Winnipeg, it's a big problem in a lot of mom and pop plants in the garment district. The mother and father may have worked very hard to develop the shop and get about 20 or 30 employees, but the kids don't really have any interest in working that hard for a living. Frankly, maybe they grew up with a silver spoon or something, that next generation. So many of these companies, which I think would be perfect opportunities for your type of employee owner ventures, although they are actually profitable...it's just that there's no heir; there's nobody to take it over. So rather than fold up the doors, this type of initiative would be very welcome.

Another example in Manitoba is Pine Falls Paper Company. Abitibi-Price was ready to walk away from it, and the employees took it over, ran it for three or four years, and have now sold it to Tembec, I believe, at a huge profit. The employees as shareholders got about $80,000 each, and they still have their jobs because this new company is now running it.

A lot of companies shut down plants for lots of reasons. They might be profitable or not profitable enough, or it doesn't fit in with their overall plan, and the intervention by the employees is really exciting.

You mentioned the shareholders movement. A lot of the larger unions in the U.S. are getting very active in using their employee benefit plan funds to take an equity position at a certain company to achieve other objectives. It's kind of interesting. It's like we could own the means of production; it would be like Marxism realized, and we would pay cash for it. It is kind of a neat concept.

• 2000

Anyway, I am very heartened. I don't really have a question; I just want to say how excited I am.

Mr. Mark Goldblatt: I would like to throw in a comment or so on your comments.

As you point out, retiring owners who don't have family members to take over the business, owners in the so-called mom and pop operations, although they can grow to some size, often have a large commitment to their workforce and a strong commitment to their community. That's part of what those entrepreneurs have brought to the workplace, the job market. Therefore, if we can solve the capitalization problem of worker co-ops, or sort that out, then we can facilitate those transfers from those outgoing entrepreneurs to their employees. That's the focus of our proposal, to try to straighten out the capitalization side of the equation.

Specifically, on trade unions and worker co-ops, we're proud that an associate member of our Canadian Worker Co-operative Federation is the Canadian Labour Congress. Certainly, although there is tension back and forth among various unions in the labour movement about worker co-ops. Unions like the United Steelworkers, which not surprisingly was the union with employees at the Algoma Steel situation in Sault Ste. Marie, throughout the United States now have backed a whole series of employee ownership buyouts of businesses in trouble. So there certainly is a link there.

We've even held talks, too, with the Public Service Alliance of Canada here about situations where the government is so determined to privatize jobs. That option of keeping them in the public sector has been exhausted, so the union, still trying to represent its affected members, can look at a unionized employee buyout as an alternate sort of privatization strategy. That's another situation in which we've tried to make direct links to the Canadian labour movements.

So those are two comments on your comments.

Mr. Pat Martin: Yes, excellent. As a matter of fact, when you mentioned the steelworkers, I am actually working with them now on the Dominion Bridge plant closure in Winnipeg. We've gone to the Crocus Fund looking for some money to try to do just what you're recommending.

Mr. Bruce Campbell: I wonder if I could intervene and make a general comment in the discussion.

We're supportive of the concept of workers co-ops and, in general, ownership structures and investment vehicles that would route capital in job-creating activities and in communities.

It would be heartening to see a finance committee report that recommended some major changes, for example, in the structure of pension funds and worker control over pension funds. It would be wonderful to see a finance committee report that made those kinds of changes. In fact, a colleague of mine is currently writing a book that we'll publish in the spring of next year. It will be called something like Turning Money into Jobs. It looks at the failure of the paper economy to really provide job-creating investment.

I want to make a final point with regard to footloose capital. I have mentioned it before, but I think it is worth reiterating. One of the few capital controls that the government has now is the 20% ceiling on investment abroad of pension funds, tax-subsidized funds; it's not other capital. I would urge you to recommend in your report, at the very minimum, that those controls be maintained, and if you really get ambitious, to set in place a schedule that would see those ceilings gradually lowered over time.

The Chairman: Mr. Martin.

Mr. Pat Martin: Joe and Bob, I know you guys are probably at the leading edge of the whole EI issue. I don't know anybody who knows more about it than you, and I've seen some of your touring dog and pony shows, where you were trying to raise the issue even back when Bill C-12 was first going on.

I think everybody is starting to realize two things. First, the system is completely broken when only 37%, or whatever the figure is, of people who pay into it can get any benefits out of it. It's not working; it's busted.

But the larger and more timely issue is the surplus. I understand your point to mean that the surplus is paid solely by employers and employees and that it should go towards benefits or to the traditional designated usages of EI rather than even cutting premiums. That's the debate that's going on in the House, whether we should cut premiums, raise the eligibility criteria, or increase the benefits. Perhaps you could comment on that in a second.

• 2005

The other thing I'd like you to elaborate on, which didn't come through quite as clearly as it might have, is the divisor rule, where dead weeks are included in the calculation and as a result unemployed people's benefits have really suffered. We have one example of that. Angela Vautour, who's one of my colleagues with the NDP, had a woman come into her office with a UIC cheque from the previous year. One year ago she was making $350 a week. Now that same woman with the same type of seasonal job is back on UIC and she gets $38 a week. That's how dramatic the effect has been. Nothing's changed in her personal life, even the number of weeks she works, but those weeks are spread out such that with the divisor rule.... Maybe you could elaborate on that, Joe.

Mr. Joseph Maloney: Sure. On page 6 of our brief we refer to the divisor calculation as the short week problem. With the way the legislation is written right now, an individual has 52 weeks to qualify and to become eligible to file a claim. But when that person files a claim, the CEC only looks at their immediate past 26 weeks of earnings, because it goes to a dollar value now and an hour system versus a weekly system. So when you file a claim, they look at your immediate past 26 weeks of earnings and then do a calculation to determine what your benefit rate will be. This chart shows that one individual earned their income over 15 weeks, so their income was spread over 15 weeks. The other individual earned their income over 19 weeks, so their income was spread over 19 weeks.

Sometimes there are weeks that involve, for example, only eight or four or twelve hours, which is very common in the construction industry. You can start a job on a Friday unloading tools and whatever to get ready for the next week, or you could wrap up a job on Monday morning. But somebody has to do it. So for that week you would have short hours. The way this calculation system is right now, it punishes people for doing that. So people have said, “I don't want to work 10 or 12 hours a week. Don't call me, because I'm not going to go into work.” So they're not taking every available hour that's out there.

It's a major problem. That chart shows that a person living in the same town who actually worked 28 more hours than the other individual received lower benefits. So where's the incentive for him to do that the next time around? If they're losing that kind of money, about $48 dollars over the life of a claim, the next time they're not going to take that short job. It's as simple as that.

The draw-off point is approximately 15 hours a week. Our recommendation is very clear: don't include short weeks of 15 hours in the calculation of benefits unless you need them for eligibility. If a person has enough hours to file a claim and also has a few small weeks, don't count them, because the person already has enough hours. But if you need them for eligibility, then, yes, use them.

Now as far as the EI surplus and all this kind of stuff is concerned, we discussed this when we were going through the debate on Bill C-12. Somebody outlined earlier that when the government took over, there was a $42 billion debt. The EI account was in a $6 billion deficit situation, so it had to be financed by the federal government. That's true. That $6 billion has been paid back with interest, as legislation stipulates.

We in the building trades are all for what we call a rainy day fund. We agreed with Minister Axworthy at the time. We didn't get a chance to agree with Minister Young because he wouldn't meet with us, but that's a whole other story. But we agreed to a rainy day fund and that there should be some kind of surplus in there for when recessions hit again. What that surplus should be, I don't know. I don't think it should be $20 billion or more, but it should be dedicated for EI purposes. There should be an annual cap on the fund so that when you hit that surplus amount, the money would go toward premium reductions, benefit improvements, or something along that line. That's what we're going for. The money should just not be allowed to be taken for deficit reduction or debt reduction along these lines.

• 2010

The Chairman: Mr. Maloney, as a point of clarification, this all happened during the social security review. Perhaps it's also important to state that the reform was also motivated by the fact that the cost of UI back then had gone in 10 years from $8 billion or $10 billion to $20 billion. I think any individual who's going to look at the books would say, at that rate, it was really becoming unsustainable and reform was indeed required.

I remember discussing the issue with you, and I think there was a sense out in the country that in fact some modifications had to be made. That's correct, right?

Mr. Joseph Maloney: You're absolutely right, and we in the building trades were very big supporters of switching from a weekly system to an hourly system, and we participated in the review.

The Chairman: I remember clearly, and I want to be on the record, that it's not that the old system, as it was, was catering to much more the old economy than the present-day reality.

Mr. Martin.

Mr. Pat Martin: One of the things that much of the labour movement is calling for is to have the EI fund separated altogether, not just a separate accounting but a bona fide separate fund, and maybe even a board of commissioners or trustees from labour and management and government to oversee it. Do the building trades share that opinion?

Mr. Joseph Maloney: Yes, we endorse that very much. We think labour and management should control and set EI policy.

If you recall—I think it was sometime in 1980—there were three constituents contributing to the EI account: employers, employees, and the federal government. Then under Prime Minister Mulroney, I think it was, the federal government's portion of contributions to the EI account was withdrawn.

What we're saying is since labour and management contribute to that account, they should have a bigger say in how that account is managed, and there should be a separate accounting of EI dollars and not just have it thrown in with central government revenues.

Mr. Pat Martin: As a last thing, if I could, for Mr. Campbell, your idea is that the real problem with the debt is the debt-to-GDP ratio, and I know the AFB—alternative federal budget—has always advocated the way to reduce that ratio is.... Or there are two ways you could go about it. One is to pay down the debt; the other is to grow the GDP. You advocate the latter, at least in these times. I'm interested in that, if you want to comment on it.

One thing you didn't raise, but I've heard you talk about in the past, is what I feel is a very cruel concept, of NIRU, the non-inflationary rate of unemployment, which we here have heard bantered around. We feel that still has an influence on economic policy here, and I wonder if you could talk about that a little bit.

Mr. Bruce Campbell: Sure. That's one of the reasons why in my presentation I specifically mentioned the inflation issue and the fact that the Bank of Canada, supported by the government, has been obsessive—not only the current government but also its predecessor. I suppose it reached its hysterical height or depth, depending on how you perceive it, back in the late 1980s and early 1990s with John Crow.

The inflation targets that have been in place in this decade have been, as you know, between 1% and 3%, which is very low. But even given those targets, the government or the bank has never once exceeded that target, and it's missed the bottom end of that target 40% of the months during which the targets have been in operation.

That is to say, I think there is an unreasonable preoccupation with inflation. It's premised on the notion that once unemployment gets down to a certain level—and that level is always somewhat mysterious. It's been variously pegged, depending on who you're talking to, whether it's economists in the Bank of Canada or economists in the finance department, at anywhere from 9% to 8.5% to 7.5%. But whatever it is, once you get close to that level of unemployment you have to take strong monetary measures to slow down the economy and throw, literally—well, not literally, but force the economy to lay off hundreds of thousands of people.

• 2015

There are all kinds of empirical examples of where that relationship hasn't been proven to hold, including in the United States, where they're down to a situation where they have basically less than 5% unemployment, and their inflation rate is not a whole lot greater than ours. So I think the preoccupation with inflation at the expense of mass unemployment, for far too long, has really got to stop.

Finally, policy makers need to free themselves from that orthodoxy that there is this link, and when it comes to a contradiction, inflation or zero inflation or close-to-zero inflation always has to take precedence.

The Chairman: That's it?

Well, on behalf of the committee, I'd like to thank you very much. It was a very interesting panel.

Mr. Campbell, thank you for bringing the alternative budget to us.

Thank you, Mr. Maloney and Mr. Belleville particularly, for the employment insurance component. It was very interesting.

And Mr. Goldblatt, we're always looking for innovative ways to strengthen our economy and you certainly provided us with some ideas. I'm glad Mr. Cullen is already working on some new things to do, new co-ops to establish, so that we can in fact bring about economic growth in our economy.

On behalf of the committee, thank you very much for sharing this Monday evening with us. We look forward to many more evenings until December. Thanks again.

The meeting is adjourned until tomorrow morning.