FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 22, 1997

• 0810

[English]

The Vice-Chair (Ms. Paddy Torsney (Burlington, Lib.)): I'd like to call this meeting to order. We are the Standing Committee on Finance and we're very happy to be here in P.E.I., particularly to be back in Charlottetown after being here earlier in the fall. I feel very lucky to be here and to hear from our witnesses today.

Our first witness is Brian Curley from Alert. Welcome, Brian. From Colonel Gray High School we have Leo Broderick. I have to say when I saw your name last night I thought you might be a student, and you might, actually. From the Prince Edward Island Health Coalition we have Mary Boyd, and from the P.E.I. Council of the Disabled, Anne Lie-Nielsen. Welcome.

The procedure this morning is that you will have about five minutes to make a presentation. After you've been speaking for four minutes, I'll put my finger up so that I don't interfere with your presentation. If you can look up every so often and look for the finger, you'll know you have one minute left. At five minutes I will ask you to stop speaking.

If you have a presentation that you've given to us, there is not necessarily a need to read every single line. We do have it in front of us. We all have a tendency when we read to go quite quickly through and it sort of blows the translators' minds.

After you've made your presentations, we'll have five-minute rounds of questioning from the members of Parliament. As we did in New Brunswick, I will introduce them. Gerry Ritz is here from Saskatchewan representing the Reform Party, Mr. Perron is here from Quebec representing the Bloc Québécois, and Scott Brison is here from Nova Scotia representing the Progressive Conservatives. Mr. Gallaway and I are both from Ontario and are both Liberals, and Mr. Iftody from Manitoba is also a Liberal member. He's not here yet. I guess he's on Manitoba time; he's two hours behind. So that's us.

Mr. Curley, I will hand the floor over to you. You have five minutes to make your presentation.

Mr. Brian Curley (Member, Alert P.E.I.): First we'd like to thank you for the opportunity to be here.

I'll attempt to read through this slowly. Alert is an association of social welfare recipients and some other people who are supporters but not recipients. Our major aim is to improve conditions for welfare recipients as a whole. Our main concerns regarding the federal program of debt reduction are the direction of cuts and the effect of the cuts; the absence of a fair taxation program; the abdication of the central bank from its responsibilities to the economy; and the pace of the change.

On the direction of the cuts, the deficit has not been caused by overspending on social programs, but largely by decreases in tax revenue and high interest charges. Reputable social analysts have established that Canada, when compared to other industrialized countries, has neither overprovided nor overspent on social programs. In fact, from Statistics Canada figures for 1991 we know that 50% of the deficit was due to tax avoidance by wealthy people and corporations, 44% was due to high interest rates, 4% was due to general government spending, and only 2% was due to social programs.

Those who want to reduce the deficit by cutting social programs are attacking the wrong segment. The federal government has cut funding for health, education, and other services and has slashed government programs and jobs that Canadians value and are prepared to pay for. To fix the economy, we have to make the tax system more fair, control interest rates, and create jobs.

• 0815

We recommend that the deficit reduction should not focus on cutting social programs. The federal government should restore and enhance those programs it has already cut.

Some of the effects of the cuts are: Canadians out of work; cuts to social transfer payments for those unable to work and for those for whom there are no jobs; cuts in unemployment insurance benefits; and the increase in child poverty. Children are poor because their families are poor. When members of their families are unemployed or underemployed, poverty results, the worst of which is child poverty.

They have replaced social program funding with reduced transfers in the name of CHST and eliminated the Canada assistance plan, and altered the unemployment insurance program and cut benefits. Elimination of the CAP and cuts in transfer payments are felt most by the poor, and most severely by unemployed and low-income people in the poorest provinces of Canada.

A study done by the Canadian Public Health Association in March 1997 showed that poverty is a major factor in contributing to poor mental and physical health and adds to the cost of health care in Canada. We believe the government should read the old adage that an ounce or gram of prevention is worth a pound or a kilogram of cure.

We think cutting back on program funding adds extra burden, stress, and misery to the lives of low-income citizens of our country. It is a waste of taxpayers' money now and in years to come. More importantly, it is a waste of thousands of people who could be happier and more productive members of society if all their energies were not sapped by the rigours of living day to day in poverty.

Accessibility to health care has been jeopardized by cuts to the provinces. Most notably, a shortage of doctors, bed and hospital closures, and user-pay for medical supplies have caused hardship on much of the population, especially those who are poor. We recommend that the federal government increase health care funding to the provinces.

Regarding unemployment insurance cuts, we feel that the federal government ignores the employment/unemployment reality of the Atlantic region. Our economy is largely seasonal, with little opportunity for full-year work for much of the population. The unjustified changes in UI or EI discriminate against a large portion of the population who are necessary to employers in our seasonal economy and who depend on seasonal work year after year to support their families.

The national goal of 9% unemployment for Canada is unacceptable. Studies by NAPO, the National Anti-Poverty Organization, show that there is a high correlation between literacy and employment, and between literacy and poverty. Basic literacy training and job-related education would contribute to a higher level of employment. We recommend that EI benefit levels be restored to at least the previous levels, that the penalty against those forced to draw benefits year after year be eliminated, and that employment levels be targeted at 3% rather than 9%.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Curley.

Unfortunately, we have run out of time, but there will be an opportunity to elaborate on more of your points in the question and answer time.

Next we have Mr. Broderick, for five minutes, please.

Mr. Leo Broderick (Individual Presentation): Thank you very much. At the outset I would said that I do work at Colonel Gray High School, but I do not represent the Colonel Gray staff or students. I am here as a member of the Council of Canadians, being a board member, and as a member of many activist groups in the province.

I want to begin—

The Vice-Chair (Ms. Paddy Torsney): Are you appearing as an individual or on behalf of the Council of Canadians?

Mr. Leo Broderick: I am speaking as an individual, but I also express the Council of Canadians' concerns.

The Vice-Chair (Ms. Paddy Torsney): Okay, thank you.

• 0820

Mr. Leo Broderick: I want to limit my comments to very specific areas of grave concern in this country. These are the Canada Pension Plan and seniors' benefits, as one topic, and the deteriorating conditions in this country that many Canadians face with respect to the lack of food.

In response to your question on the process of deficit reduction, there is no question that the process this government has followed over the last four years—and the previous government, but particularly since 1993—has been far too callous. There has been tremendous indifference towards people in this country who have been and will continue to be abandoned. The notion that social spending has caused the deficit and the debt in this country is an absolute lie. Politicians in this country, as well as many corporate leaders, have promoted that idea.

I stand here to tell you that programs such as unemployment insurance, welfare programs, old age pensions, protection of persons and property.... Although it does account for a larger percentage of the debt—and particularly with respect to the military and prisons it's on the increase—family benefits have not contributed to the deficit and the debt. In fact, family benefits have actually contributed to the erosion of the debt, sad to say. Both the Conservative government of Brian Mulroney and the present Liberal government have continued to cut family benefits. Cuts to the environment and health care have not contributed to the debt and the deficit.

The real cost has been unemployment, and the government has shifted its focus of creating jobs, which would remedy many of the problems I've mentioned, to fighting the deficit. The process has been devastating to many Canadians and to many Islanders: 30% to 64% of Island families, nuclear families, make $30,000 or less.

You can imagine the impact of the cuts to health, education, and unemployment insurance. We can only expect, given the thrust of the government, that these cuts at the provincial level due to the Canada health and social transfer will continue to deteriorate. In this province we spend the least of any government in the country on education, and our health costs are close to the bottom as well.

I want to focus on what the government is attempting to do in this Parliament to Canada's seniors and to those who pay into the Canada pension fund, the old age security, and other seniors' benefits. There have been many myths promoted by government and corporate leaders in this country about the Canada Pension Plan. The Canada Pension Plan is not going broke. The Canada pension fund has not been abused by provincial governments. What is wrong with the Canada Pension Plan in its proposals is that it is being privatized by a board that is going to handle the Canada pension fund and it will be turned over to the private sector.

I will remind you of what happened in Orange County when a similar situation occurred. The entire 7.4% budget, the public's money in Orange County, was lost through bankruptcy. The similar scheme that the Liberal government is proposing to handle the Canada pension fund, $40 billion, is a very critical issue and it should not.

• 0825

I will say—because I haven't put this in my notes—that with respect to seniors' allowances, the fact that for women and the disabled, the death benefit...the fact that these cuts are going to hurt most in these areas is an absolute crime.

This Parliament of Canada, in conjunction with the provinces...and two provinces, British Columbia and Saskatchewan, have disagreed with the proposals and have in fact proposed a very workable solution. We do not need to go down the road of increasing costs and reducing benefits to workers for the Canada pension fund, and we do not have to go down the road of reducing seniors' benefits.

With respect to hunger in Canada, in this province we have more people using the food banks than ever before, children especially. Of all the users it's up to 60%, and it is a direct result of what the federal government's attempt at reducing the deficit has caused. It is a direct relationship, and we'll get into this in a few minutes.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Broderick.

Ms. Boyd, please, you have five minutes.

Ms. Mary Boyd (Chairperson, Prince Edward Island Health Coalition): Thank you, Madam Chairperson. I'll try to be brief in this first part and will just say yes, the cuts have been too drastic.

I concur with what Mr. Curley and Mr. Broderick said. When we talk about unemployment insurance we must remember that it is one of the determinants of health and that billions of dollars have been literally stolen from this fund by the federal government. This has caused tremendous hardship.

I'm going to focus now on the closing down of the bureau of drug research and the continuing concept of closing the food research labs, because this is chilling evidence that the cuts are not over, no matter what Mr. Martin says.

The process now under way to close down the entire health protection branch would save only $2 million annually but could lead to a health disaster. From 10,000 to 300,000 Canadians could die prematurely from the closure of the drug labs. Between one million and ten million Canadians could acquire illnesses that are presently prevented through food safety research. The costs to our health care budgets will far outweigh any savings. Furthermore, the social cost to people, families, and the economy will be enormous.

It seems almost Orwellian to have to make the case in this day and age that our food, water, and medicine do need the scrutiny of public labs or that bacteria in our seafood needs to be publicly monitored.

The federal government is reneging on its obligation to the people. It is determined to deregulate.

England's mad cow disease should serve as a warning that a similar type of outbreak in Canada without our food labs could lead to an epidemic before a surveillance team and research capacity is in place.

The real agenda for cutbacks is to give all to individuals, to privatize. While the government talks about health dividends it is dismantling Health Canada and dismantling health care. The $150 million transition fund to be administered over three years for private projects is nothing but smoke and mirrors. Federal cuts are ripping things apart and commercializing health care. The transition is really from public health care to commercial health care.

This forces us to ask who runs our government and for whom does it exist besides industry, which is calling the shots. Whatever happened to the concept of the common good?

With respect to priorities, how should the government set its priorities?

Billions of dollars have been taken from social programs. It is now time to reinvest in these social programs, in Canada's social structure. This government talks a lot about social union. Is it not time to pay for that union? It is the federal government's responsibility to assure the determinants of health. It can't do so by giving out crumbs of transfer payments and destabilizing medicare from coast to coast.

The deficit was reduced primarily on the backs of the poor and the sick, the most vulnerable of all Canadians. The attack must stop.

When food banks consider feeding carcasses of animals found on our roadsides to those in need, we can only say that Canada has become a shameful place. Canada is now sixteenth out of 24 OECD countries in financing its public health care system.

• 0830

We do have choices. That's what the Alternative Federal Budget has said three years in a row. Governments have choices in the priorities they set. The Alternative Federal Budget has also set out a credible format for overcoming debt and deficits that would actually strengthen our public services, not cause them to deteriorate, not harm people, as has happened in this country over the past few years under the Mulroney and Chrétien governments.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Boyd.

For the last five minutes we have Ms. Lie-Nielsen.

Ms. Anne Lie-Nielsen (Executive Director, P.E.I. Council of the Disabled): Thank you. The P.E.I. Council of the Disabled is an advocacy organization representing people with disabilities, the more than 20% of Islanders who live with some kind of disability.

In response to the question about whether the progress to date has been too fast or too slow, I can't really answer that. All I can say is the impact on the lives of people with disabilities has been devastating. We have seen a great increase in the number of people seeking individual advocacy to try to restore some of the social benefits or social subsidies that have been cut from them. We've seen a great increase in the number of people living in poverty in our community. We've seen an increase in hardship generally. But some of the impact of the measures that have been taken by the government are yet to be felt. The full impact of the reduction in EI benefits, for example, hasn't come into play yet. Once that happens it's going to be much worse here than it already is.

There seems to be a real blame-the-victim or blame-the-poor approach. For example, about the CPP, we see a lot of media reports about the need to increase contribution levels. The reason the CPP is costing so much is the increase in people claiming CPP disability. I can tell you there seems to be an automatic refusal of CPP on disability. The number of people seeking our assistance in trying to manoeuvre their way through this lengthy, tortuous system of appeals is increasing daily.

In the area of access to employment and training, a lot of artificial barriers are being created by regulations and a savings-to-the-system approach instead of a service-to-the-people approach. People with disabilities want to be able to participate fully as equal members of society, to have the opportunity to work and to contribute. That's our bottom line. The impact of the deficit reduction measures in the area of the social infrastructure in this country has been devastating. My recommendation in terms of priorities is let us restore that social infrastructure, let us repair some of the damage we've done to the social sector in this country.

I don't know what you're hearing about in other parts of the country. I guess you haven't heard too much yet. But with the reduced funding for the service sector, the increased demands on the service sector, we're reaching a critical point where we're going to lose that social infrastucture in the service sector, and I think this is a very serious loss.

One of the areas of real concern is not really about deficit reduction, it's about the devolution of programs and services to the provinces through the Canada health and social transfer and labour market agreements. When that happens the provinces decide priorities, and whoever has the sharpest elbows in the province gets the attention. Organizations like ours, representing other organizations that represent people, often get left behind.

The other thing that happens with devolution of programs and services is rights are also devolved. For example, access to employment, support measures, or training measures, rights that formerly were offered by programs, are no longer there. This is a serious concern to us.

We would also recommend that with anything you do you attach a disability lens to it and examine what the impact of that is going to have on the lives of people with disabilities. Is it going to ameliorate their condition or is it going to make it worse?

• 0835

I will add one more to the question period later.

The Vice-Chair (Ms. Paddy Torsney): Madame Vautour is with us now. Welcome. We did some introductions earlier. Madame Vautour is from New Brunswick. I think she drove over the fixed link. She represents the New Democratic Party.

Mr. Ritz, for five minutes, please.

Sorry, I did not add that if any of the members of Parliament ask a question to someone specifically and another person would like to take it on, you can just raise your hand. I will keep a speaker's list, but we will try to keep the whole thing to within about five minutes.

He is generally very good at that.

Mr. Gerry Ritz (Battlefords—Lloydminster, Ref.): You are just trying to butter me up.

The Vice-Chair (Ms. Paddy Torsney): I am trying to set an example for the others.

Mr. Gerry Ritz: I would like to thank you folks for coming out this morning. I have listened with interest to your presentations.

I have a couple of questions for Mr. Broderick, on a couple of items in his presentation.

I am just wondering where you got the statistics or how you came up with the numbers. On the first page you are talking about how the interest earned on the CPP fund overall is 11% per year.

Mr. Leo Broderick: I received those from the research staff at the Council of Canadians. You know it is true.

Mr. Gerry Ritz: I will have to take your word for it. Absolutely.

Mr. Leo Broderick: No problem.

Mr. Gerry Ritz: On the second side of the sheet you are also talking about the arrangement we have with the provinces with that CPP fund. Correct me if I am wrong—your research staff must be exceptionally good—but it is my understanding there is about $32 billion that is outstanding and not repaid and that the interest to the provinces is in the 3% range. I would just like a bit more information on that.

Mr. Leo Broderick: The interest is on the average of the interest on the Canada savings bonds. I said that overall it was approximately 11%. In the days when interest rates were extremely high, some of those provinces did borrow, and that accounts for the average. But on the actual interest on some of them you may be quite correct.

The information that is being put out to the public is that these provinces, in borrowing it, are irresponsible in paying it. And your idea suggests that. I think that is inaccurate. The fact is that provincial governments do loan and they will pay. They are government loans. They are responsible.

What I am saying is that the private sector is very anxious to have the control totally of lending these dollars to the marketplace, and governments of the provinces will take their place in line with the market. Whatever interest the market demands, that is what the provinces....

But while I refer to this in my presentation, it starts with the present arrangement of the potential, the creation of the Canada Pension Plan investment. That means, if I can read what the government's proposal is, it will be handed to unelected and appointed officials, who in turn will hand it to the private sector, the banks, the investment industry. I am saying that this increases the risk of very poor investment such as the Bre-X scandal.

I am saying in my presentation that it is a huge bonanza for Bay Street, and a huge bonanza in the long run for the Liberal Party. Contributions will follow. It's handing over the public pension fund to the private sector, and I'm saying it's wrong. I'm hoping at least that in Parliament there's debate on this question, because it is in line with what Mary Boyd said, with privatization and deregulation and opening everything up to the market.

• 0840

Mr. Gerry Ritz: So you have a direct correlation between...government pensions are much more stable than private sector pensions.

Mr. Leo Broderick: There is a relationship. Absolutely. The Canada pension, at the moment, is pay as you go. Our government will always exist and will always have the ability to pay. But if you turn it over to the private sector, as in Orange County or the Barings Bank, there's the same problem. You have a great potential for losing public dollars.

Mr. Gerry Ritz: Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. Broderick and Mr. Ritz.

[Translation]

Mr. Perron, you have five minutes.

Mr. Gilles-A. Perron (Saint-Eustache—Sainte-Thérèse, BQ): Seven billion dollars have been stolen from the EI fund. This money belongs, as we all know, to employers and employees.

Why is the government not proceeding with a comprehensive and global reform of the tax system? Since 1962, nothing has changed, and businesses as well as individual continue to pay to balance government revenues.

I would like to hear your comments on the idea of a tax reform. Is it a good time to do it? How should we go about it?

We could start with Ms. Boyd, since she talked about taxes in her presentation.

[English]

Ms. Mary Boyd: Thank you very much for giving me the opening for this, because in the alternative federal budget we have certainly outlined the need for tax reform in this country. Mr. Curley mentioned the low rate of corporate tax. And low-income people are certainly paying far too much tax.

In the changes that are taking place right now, we don't want to see just a general lowering of taxes. We want the money to go into the social programs that are important. Indeed, in this region, they are extremely important.

At the same time, our debt is due, and has been due to a large extent, to unpaid taxes and an unfair tax system, and it is especially due to the corporations not paying their fair share. This could indeed be overcome by tax reform. It would certainly require changes. For instance, it would have to reduce tax-delivered subsidies such as write-offs for meals, entertainment, and lobbying expenses to the wealthy. Even the International Monetary Fund, when looking at the extent of that in Canada, thought it was overblown and there was huge privilege given in that area in this country.

• 0845

We need to adopt a minimum corporate tax to force all corporations to pay their fair share, because one of the problems is they're not paying their fair share. We need to tax excess profits such as those earned by Canada's six major banks, with $6 billion in excess profits in 1996 alone. We need to remember too that because of the way the federal government is handling the debt and deficit, an awful lot of the profits of those banks is coming right out of our own federal public coffers.

We need to eliminate the exceptions in the capital gains tax and eliminate the tax credits for dividend income that have benefited wealthy investors. We need to take a cue from other OECD countries by introducing these types of taxes and a financial transaction to curb speculation, which will bring us more income.

We could go on and on about the ways taxes need to be reformed. We remember when we had a number of categories and they were much fairer. Now we have three categories. The corporations' share is reduced, the share poor people pay in this country has escalated out of proportion, and the middle class is being hard hit.

A few years ago, going through this exercise and preparing for the finance committee hearings, we went through step by step how much could be saved by changing these tax items. Really and truly, the federal government's deficit problem would have been overcome right there and then by that kind of reform of the tax system.

Mr. Brian Curley: On recommendation number four, we recommend that a fair tax system be established whereby the people with higher incomes in corporations pay higher taxes. Any tax relief should be limited to those who are living below the poverty line. All of the income these people have is needed for living expenses. Taxes are collected from them through the GST, PST, and BST, and are probably more than their fair share. It seems to me a bit ridiculous that a family where both parents work can still live in poverty here and may still end up paying income tax. I think anybody living at that low an income should not pay any income tax.

I think the government should have a goal of zero poverty, not zero deficit.

Ms. Anne Lie-Nielsen: Tax reform should also include measures to recognize the extra costs of disability. This could be a way to level the playing field. There are significant additional costs that are associated with disabilities and many of them are not currently recognized in the tax system.

We would recommend that the disability tax credit be a refundable tax credit. It would recognize that more than 80% of the people with disabilities live with incomes below $10,000 a year. A refundable tax credit would help in this area as well.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Lie-Nielsen.

[Translation]

Ms. Vautour, you have five minutes.

[English]

Ms. Angela Vautour (Beauséjour—Petitcodiac, NDP): Good morning. I want to apologize for being late. I got lost and went to the wrong hotel.

The Vice-Chair (Ms. Paddy Torsney): We changed, actually.

Ms. Angela Vautour: Again, I want to apologize. I'm sure all your presentations were very good.

I understand what you're talking about, having come from that part of life that has been extremely affected by cuts by the Liberal government. So you certainly don't need to convince me.

• 0850

I want to ask a question that anyone can answer, and to make a comment. We've heard that a lot of cuts are going to solve a lot of the problems in this country. I moved to Charlottetown from New Brunswick in 1981 to work. I would like your opinion. When Veterans Affairs was moved to Charlottetown, do you feel that was a better boost to the economy than to slash all the programs we're seeing now? We seem to be getting a lot of feedback from some groups that it's cuts and it's tax cuts that are going to create jobs and what not. I would like your feeling on that.

I'd also like to know what you'd like to see in the 1997 budget. Maybe you want to speak a little bit about the 12.5 billion surplus we're going to have, and what we should be doing about that.

Mr. Leo Broderick: There is no question, I would think, that Veterans Affairs' move to Charlottetown has contributed to the economy. The whole thrust of the federal government over the last four to eight years to downsize, to get rid of public servants, and to diminish the importance of public institutions in this country has certainly worked to the disadvantage of all Canadians. That in no way contributes to improving the debt and deficit situation. In fact, I think the research will indicate that it not only contributes greatly to the continued debt and deficit problem of provinces but also causes debt.

If we balance the public debt with private debt as a result of the major cutbacks, private debt has escalated. So it's very much in tune with what's happening around the world and in the country. Everything is being moved to the individuals, to the private. There is increasingly little ownership by government and by politicians who have become elected to ensure that we have a high level of public service.

You can't, for example, cut billions of dollars out of the Canada pension benefits and old age security without diminishing benefits to people. It does not work that way. The government at the moment is saying that with all these cuts to the Canada pension and to old age security it's going to improve the situation of the country, but it's not going to improve the situation for the majority of Canadians.

So I think there still must be a tremendous demand for public institutions and public service. They have been devalued over the last eight years. Not only that, the employees have been devalued. We need those services. We must continue to have them. They have contributed, by the reduction of the public sector at all levels, at the federal as well as the provincial level, to simply shifting the debt to individuals.

Ms. Mary Boyd: I'd like to say that certainly we need to spend the surplus on social programs. In this region social programs have always been a lifeline for us, because we've struggled with high unemployment. The cutbacks in EI, for instance, are devastating. As Anne pointed out, not all the information is out yet, so it's hard to get a handle on just how bad it is.

I do know of some cases in P.E.I. where someone who couldn't get enough hours within the 26 weeks receives now $33 every two weeks for unemployment insurance. I mean, this is unbelievable. These are draconian cuts, and they're killing people. We have to do something about the kind of hardship that's being created. Many part-time workers can't even qualify for EI. There's no way, when you're getting a little contract here and a little contract there, making a living that way, that you can even qualify. The worst thing about all of this is that the cuts are ideological. As I mentioned before, the corporations are the ones who are calling the tune, and they're being listened to. That's why the Alternative Federal Budget is so important.

• 0855

With the unemployment insurance, we have to get back to giving benefits to people. We have to recognize that in provinces where there's a high incidence of seasonal workers, unemployment insurance is extremely key to the livelihood and well-being of these people.

Also, the alternative federal budget says we do have to create jobs and make a conscious effort to create jobs. Paul Martin's purple book killed Chrétien's promise of jobs, jobs, jobs. We've pointed out that in order to spend or create jobs, instead of having cuts, wherever government spends on creating jobs.... I'm not sure whether I have the figure right now; I'm trying to remember it. I think it's that if you cut in order to create jobs, you create 14,000 jobs; if you spend $1 billion on goods and services, you create 28,000 jobs; and if you spend $1 billion in direct hiring, you create 56,000 jobs. That's the kind of direction we need.

I agree with Brian; we have money in the unemployment insurance fund. We have surplus money in the budget now to work at zero poverty in this country. This is the richest country in the world, and the way we're falling down the ladder in the OECD countries with our health, our unemployment insurance, our welfare payments, and everything like that, there's absolutely no excuse. There's total mismanagement. Ideological things are putting people down and favouring corporations. The country's in a mess. There's too much suffering.

We're pleading with you to hear us, to hear the people at the base, and to know that fewer and fewer people are getting all the money and more and more people are being impoverished.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Boyd.

Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC): Thank you very much for your presentations and for being with us this morning.

I am an MP from Nova Scotia and I understand the clearly negative impacts of many of the cuts on Atlantic Canada, but I also am one of those much-maligned people from the business sector who entered politics after a career in business. I contributed to the building of three companies that employed almost 30 people, and it was that work and that private sector involvement that helped better their lives and the lives of everybody. And I paid a lot of taxes to help make that happen. So there are a lot of people in the business community who are doing their part as well.

Being in the business of opposition, sometimes we find ourselves in a position where we should provide some constructive criticism but also clarify some points. On the Orange County debacle, I wanted to clarify something. Essentially the investment adviser, the person who made that decision.... The criticism I understand of the Orange County situation was that there was one person who dealt with one stock broker, Dean Witter. They were investing in futures and options and they lost the money.

Mutual funds are based on the premise of diversification. Typically a mutual fund will have 150 to maybe 300 stocks, and they're globally based. For a retirement mutual fund, typically they look at security, so in the Bank of Nova Scotia, for example, they would look at investing in banks, they would look at some resource sectors, some growth stocks, but typically they go with long-term securities, not things like Bre-X or Barings Bank exclusively.

So I think some of what you're saying, Mr. Broderick, can be a little bit alarmist from that perspective. A lot of my constituents would prefer to invest in the Bank of Nova Scotia rather than in the government, which will lend it out to the Province of Nova Scotia, which has a 97% debt-to-GDP ratio, for 3%.

I just wanted to clarify that investment strategies vary for things like—

Mr. Leo Broderick: May I interrupt? Are you suggesting that after the appointed officials hand the Canada pension fund over to the investment community, the potential for some very bizarre investment derivatives, or whatever they wish to call them, is not there?

• 0900

Mr. Scott Brison: In fact I would say I feel absolutely secure in saying no, I do not feel the potential is there. With a group of well-qualified investment advisers with the mandate of long-term pension security, no, I do not think derivatives would form a large part of the....

Mr. Leo Broderick: Why then, even with the very secure pension funds across the country, was there so much investment even in Bre-X?

Mr. Scott Brison: Those same pension funds—

The Vice-Chair (Ms. Paddy Torsney): Ms. Boyd.

Ms. Mary Boyd: Not to be alarmist, but we do have to be pretty wise about things. We've just passed the tenth anniversary of—what was it?—Black Monday or Black Tuesday, the big stock market crash. In the Financial Post and different places, they're saying many things are lining up in the same way again and that people ought to be careful.

If you go to somebody who's in a mutual fund.... I had to go on behalf of somebody recently, and the broker himself said, “Yes, it's quite risky”. There's always the potential of a crash, of people losing.

Governments don't go broke in that way, and also, governments have a responsibility for the common good and the public good. That's what we're trying to say: we want governments to take responsibility for the common good. It's not the corporations, it's not the private sector that has that responsibility; it is government. Please, governments, play your role on behalf of your people.

Mr. Scott Brison: Part of responsible government is maximizing pension returns and at the same time combining it with security, but you can't have security without some sort of return. In Canada we do have those very pension funds you were speaking of that had invested in Bre-X. Most of them have still, in 1996 and so far in 1997, shown positive returns in excess of what we've been earning on our Canada Pension Plan lent out to the provinces.

Mutual funds typically balance equities with secure bonds and non-equities, and over the past 20 years you could throw a dart at the Dow Jones index or at the TSE and hit any stock and you would have beat the return we've had from the Canada Pension Plan. I'm in opposition, but this is one area where I do feel we need to be very clear: a lot of Canadians want a better return from their Canada Pension Plan than what they're getting.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Brison.

Mr. Iftody.

Mr. David Iftody (Provencher, Lib.): Thank you.

I too was struck by some of the comments that were made. I certainly want to say that if not the absolute content of your presentations is accepted, certainly the spirit and intent are, particularly Mrs. Boyd's pleas on behalf of the poor and the suffering. It's been communicated quite well what's going on out there, particularly in Atlantic Canada. That's understood, and certainly as a government we have an obligation to work toward making those lives better for those folks.

I want to say very clearly that I appreciate what you're saying and where you're coming from, but I find I'm growing a bit frustrated, frankly, with some of the comments I have been hearing, not just from this group, but from others as well. I heard this yesterday in Fredericton about the alternative federal budget, and I mentioned that I knew one of the primary authors, John Loxley, who was the architect of that, and his work in Manitoba. I studied at the same university where he was teaching.

I have to say, and I must put it on record, that I found a number of the presumptions and assumptions in the so-called alternative budget extraordinary. I used the word “naive” yesterday in Fredericton. These assumptions, while they certainly sound good and would alleviate much of the suffering that both you and I care about, I just don't see happening.

• 0905

As for some of the comments made by Mr. Broderick, that the Canada Pension Plan is not in financial trouble, I find that absolutely extraordinary when we have, of course, a $600-billion liability owed to Canadians, which we can't pay to folks we owe right now. They are the ones we do owe. That is just not a realistic place to start in terms of trying to address the real hurt and the problems there.

The second thing is this. Ms. Boyd, you said that the federal government had stolen—that was the word you used—surplus out of the UI fund because of the funds there. Would it follow then that from 1989-1993, when the fund was running a deficit of $20 billion a year and there were high rates of unemployment of close to 12%, that the federal government stole from the people of Canada to pay that fund? Those are a couple of the questions.

To summarize then, as for the Alternative Federal Budget, I find the presumptions terribly unproven. Certainly, when it was tried in Manitoba in the 1970s, it left us with terrible consequences and debt.

The Canada Pension Plan—this is my understanding from the actuary—is $600 billion in debt, and we have a lot of folks out there who are owed money but we can't pay them. Third, under the UI fund, if it does go into a deficit again and Canadians have to pay, then what kind of a relationship is there in terms of who owes whom what? So I'll start with that.

The Vice-Chair (Ms. Paddy Torsney): Well, it gives new meaning to a four-minute intervention.

Mr. Broderick and Ms. Boyd, and then if anyone else would like to comment. Mr. Broderick, you're up first.

Mr. Leo Broderick: I think you're absolutely wrong on both counts. You have not stated, first of all, the assumptions for the Alternative Federal Budget. These are assumptions that you find to be unacceptable and untrue. I would like you later to be more specific.

But with respect to the Canada Pension Plan and the actuary's study, the actuary is using the principle that there must be total funded liability in the fund. In other words, the unfunded liability for a public pension plan should not be the same as that in the private sector. If you have a business that might go bankrupt tomorrow or the next day, there must be the funding there for it.

Consider what the actuary said. If we need to pay out all of what is demanded, in terms of those contributing, there would not be enough funds there. No pension plan is like that. But governments have, in some provinces at least, moved to improve the unfunded liability.

But for a public plan, it simply is and should be “pay as you go”. It's a deal between the contributor and the employer. So in terms of having no money to pay what is required, that's not true. There are funds to be paid.

Now with respect to ensuring that there is this huge cache—I think we go up to about a reserve of billions and billions of dollars—I believe the investment community that wants to move directly to have control, not government, sees a tremendous windfall in handling the huge reserve of public funds. They will handle it, and maybe wisely, but they're getting it free to use as they wish, and they will get a tremendous return. This is the investment community that handles the public funds.

We're saying that the actuary said there was no real need to increase the contributions so rapidly. The contributions will be increased: they will double within the next six or seven years. Look at each individual. This is a tremendous tax in itself. It's a tax on the poor, because at $3,500, you begin to pay.

• 0910

It was not necessary to move so rapidly to increase the payment. We would be paying, if $35,000 is the maximum, close to $1,700.

Mr. David Iftody: May I respond?

The Vice-Chair (Ms. Paddy Torsney): First we have Ms. Boyd.

Ms. Mary Boyd: I'd like you to put your mind back to two years ago in terms of debt and deficit. Remember that there was an awful lot of hype. There were a lot of scare tactics. We were deeply in debt, we were going to be challenged, we were going to have our credit ratings cut off, we had to cut everything. Remember that?

I appeared before this committee, and I had been talking to Mr. Loxley before I made my presentation. He gave me some things, which I shared, including that in two years' time, and certainly before the year 2000, we would be over our deficit problem and we would even have funds to start paying on our debt. When I said that two years ago I distinctly heard “bullshit”. That's what I heard.

There are obviously skeptics, but I want to remind you that 150 very good economists, credible and critical economists in this country, have endorsed the Alternative Federal Budget. It's not just a bunch of people who don't know. We predicted correctly what was happening with debt and deficit and what would take place.

If you look at what is happening as far as when there's a deficit in the UI fund, it's the federal government, or people stealing from the federal government, or vice versa, or whatever. I think we need to remember too that we're only getting the value of about 75% of the taxes we pay now. There are more deficits than just the UI fund. Where is that other 25% that could be well used right now? We're hoping that this is what's going to happen.

We talk about the common good and responsibilities, and certainly when there's a deficit and high unemployment among hard-working people in this country—very often because government policies create high unemployment—then of course the people of this country who favour social programs, who favour health programs, who favour fairness with unemployment insurance would want the federal government to top that up to make sure we don't have hungry and destitute and homeless people in this country.

I don't remember ever having an alternative federal budget in the 1970s. It's just three years now that we've had an alternative federal budget—that's all—and each time it comes out stronger. Remember, too, it is not John Loxley and a couple of people who do it; it's a broad-based Canadian budget that comes from the people. It comes from their experience and it lays down.... One of the most important things about the Alternative Federal Budget is the principles on which it's based. I would ask you, as a finance committee, to take another look at those principles and respect them.

The Vice-Chair (Ms. Paddy Torsney): Thank you.

A very quick intervention, Mr. Iftody.

Mr. David Iftody: I want to say here that I know John Loxley and I have great respect for him as a person.

I just feel that many of the things suggested are so grandiose and unworkable that it makes it very difficult to implement.

Another point I wanted to make was to Mr. Broderick. By the year 2014 there would have been no money in the CPP account to pay benefits if we had not made these changes. By that time, due to the shifting demographics, which are largely known and understood now by I think all governments, all Canadians, and all pension plans, in the not-too-distant future there would have been no reserves, no money to pay those good folks out of the fund had we not made these changes.

What would you propose in the alternative?

Mr. Leo Broderick: We certainly knew of the need to increase payments in the future, but they did not have to be as drastic as they are in the short term. We agree with that. They probably did not have to go as high, even though it was projected—because it's reviewed every five years by federal legislation—that they would be higher in the year 2010—

Mr. David Iftody: We would have had to go to 20%.

Mr. Leo Broderick: But there were proposals from British Columbia and Saskatchewan that said raise the levels from $35,000 to higher, to have those who can pay, who can afford to pay, pay more, not those who are making minimum wages and who probably now will be able to receive only a little pension, because many of the new jobs are part-time and, in this province, seasonal. The more we invest in golf courses as infrastructure the more we're going to have poverty and less access to the Canada Pension Plan.

• 0915

So I'm not disagreeing. You said it was broken. In terms of the actuary study it would have been down the road, not this year, not next year, and not even the next. But the major increase and the reduction in benefits.... How can we justify reductions in benefits to the disabled, the death benefit reduced by $1,000? How can we justify that? How can we reduce the amount such that seniors living in poverty at the moment are going to get 33¢ a day by this increase? And this is being hailed as a major achievement for the government. It's scandalous.

There are ways to address the issue. This is simply making the situation much worse. We'll eventually move to total privatization of pensions in this country, which will be the Chilean model. I know the Liberals are looking seriously at it. The Conservatives had looked at it.

Public pensions are for people. They are for the common good. These proposals are going to impoverish people, even workers at the moment, even more so. It's totally unnecessary.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Broderick. Of course we will be having full CPP hearings starting on October 28, if you have comments. We'll make sure your comments now are entered into the record for that process as well, but if you have additional comments or ideas you are more than welcome to get those in to us.

Mr. Gallaway.

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

I've heard your comments across the broad spectrum, and one of the things it strikes me I'm hearing this morning is that there are systemic problems in this part of the country. That's probably not a very profound observation, but you're talking about 64% of P.E.I. families with an income of less than $30,000, you're talking about a workforce that is seasonal, and you're talking about the problems in the social net. You've made a lot of comments and critiques on what the government has or hasn't done.

Let me ask you what you would propose, then, to change the nature of the economy. Is it simply social programs that are going to change the economy in this province? What action is being taken to change the approach broadly, to changing the workforce from seasonal to full-time? What action is the community taking? Obviously there are a lot of community groups on this island. What are you doing about the economy?

The Vice-Chair (Ms. Paddy Torsney): We have time for each person to have a quick intervention on this. Mr. Curley, would you like to go first?

Mr. Brian Curley: There's not a lot you can do to solve the problem of a seasonal economy immediately. Steps are being taken here on the Island to recruit more industry. We must remember that for years and years, ever since the war, all major industrial development has been supported by the government in Quebec and Ontario, and the maritimes were left a bit behind on that issue.

On your question about whether social programs affect the economy, I would like to say it is very wise to remember that every damn cent you put into social programs goes right back into the economy. None of our money goes to the Cayman Islands or anywhere like that. It all goes right back into the economy.

• 0920

You have a jobless recovery under way now. We hear such things as consumer reluctance to spend, but if people who are living under the poverty line have more money to spend on necessities, not on frills and luxuries necessarily, but just on necessities of life—they may need a fridge or something.... It's got to be consumer spending that's going to boost the economy. You've got to have consumer spending first. People who are living in poverty are potential consumers.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Curley, and Ms. Boyd. I apologize—I do have that 64% figure written beside your note.

Mr. Broderick, and then Ms. Boyd.

Mr. Leo Broderick: Okay, very briefly. The ex-premier of New Brunswick said the other day, in fact in his parting words, that he wanted Atlantic Canadians to become less dependent on government, but he didn't say dependent on what.

I say we need a strong federal government, we need strong provincial governments, and we need strong economies. There is a role for governments, still, in economic development.

We need a new kind of development in Atlantic Canada, there is no question. We need a new kind here in this province. If we are based in agriculture, fisheries still plays a significant role in this province, but probably reaching close to the top is tourism, in this province.

Wherever you have tourism as a major means of economic growth, you will find increased poverty. That's right. That's a fact. Resources at the provincial and federal level are going more and more into tourist development in this province.

I see no future in this province for workers who can have year-round employment in large numbers if we continue with this development, but that is a government-directed development. Community development is not supported in this part of the world. It should be. There have been many proposals, but the dollars do not come forth for community development economic activities.

If we pursue economic development of a seasonal nature, then there must be some social safety net to pick people up in the months they are not working. We have federal programs, which is really the unemployment insurance—we talked about it. But we will continue to see this devastated unless there is a major, major backlash, and there is going to be.

We have public pensions that are being decimated. That should be there. As I said to Premier McKenna, and would say to any other politician in this country, I would prefer to become dependent on government than on corporations that come in here and provide $5.10 an hour or $5.40 with no benefits. I say, take those jobs and go someplace else. That's not a development. Call-in centres, which we've seen a proliferation of in New Brunswick, and we've seen a lot of dollars being spent on in this province—that's not the kind of development we want.

Some will say they are jobs and they will get people off welfare. There is a quality of life that we need to ensure workers have. Unionization—and I can get into that, but I won't.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Broderick.

Ms. Boyd.

Ms. Mary Boyd: I'm going to say something as a maritimer that I think is very important, and I think people from outside this region need to know this.

This was once the wealthiest and most advanced region in Canada. We had a railway system that was flexible, and worked for the people like nothing else. We had responsible government first. We started the banking system—Scotiabank and a number of the banks that ended up in central Canada started here. We had flexible ways in our communities of giving loans to people to start up businesses, before everything got standardized and homogenized in such a way that it crippled the people. We had vibrant communities and we knew how to make them work.

• 0925

By the 1870s central Canadians had their eye on this prosperity and wanted to buy into it. We had a time of economic warfare and we lost in this region. Then the migration started out of the region. We were depopulated. Our industrial base, which was a high percentage of the Canadian average, went down to 3% and 4%. Stagnation set in, and we're still dealing with stagnation. We've been defeated by powers bigger and stronger than ourselves. As Canadians, if we don't watch out, we're going to be defeated on another level by the way we're buying into globalization. Our politicians don't seem to be able to see this.

I agree with Leo about tourism. We've been monitoring that. Our minimum wage in this province is only $5.25 an hour, which is really low. These call-centre jobs shouldn't even exist. They're a vexation to everybody who comes home and tries to have some quiet at supper time, with all these phone calls, etc.

I think we need to listen to the people. There are ideas among the people, but nobody is listening. Nobody is assisting the people when they have a good idea to take it from A to B to C, so it can be realized.

In my work over the years I have wanted to set up some things that are going, and I can tell you what a struggle it is. If it wasn't based on my faith and my belief as a Christian that we have this obligation to one another to be brothers and sisters and practise love and justice, I would have given up, because the obstacles are really too great. We have to overcome that. We have to set up things that will help people.

This EI program is devastating. It's giving a certain small amount of money to some groups and some consultants to set up some kinds of jobs and leaving the people without the rest of the funds or the know-how or help to take the next step. We're just fooling around in this country. As they say on This Hour Has 22 Minutes, we're goofin' around. We have to get over the goofin' around.

There should be a minimum income for every Canadian. Once we establish that's only fair, we'll have a base where creativity can take off. But we need help from government. There has been bragging that we had a million tourists last summer, that millions want to cross the bridge and this is great for P.E.I. Sorry, but I don't think so. I think we should take a very critical look.

Without the support and without listening to the wisdom of the people I don't see us going too far in the near future. The alternative budget does have ideas about community development and empowering the people.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Boyd. We've come to the end of the question period.

I'd like to offer each of the panellists a one-minute wrap-up, and I mean one minute. When this thing goes on, it really means it's my turn.

You're more than welcome to send us additional information. You're more than welcome to speak to members of Parliament afterwards or just send your information to our clerk, who will make sure we all get it. After the one-minute wrap-ups we can call this round table to a close.

Mr. Curley, for the first one minute.

Mr. Brian Curley: The finance part of the Government of Canada is only one small part. In the next deliberations they should remember they are affecting people. The cuts that have been made were made to people who were already living in poverty at a subsistence level, and it was very unjust and unthinkable for those cuts to be made.

I hope in future, in the next budget or whatever, the adequacy of living conditions for people in poverty will be considered before any steps are taken. I certainly hope funding to the provinces for welfare will be tied to some social standards, such as those that were in the CAP program we lost, and that adequacy will be ensured for all people in Canada. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much Mr. Curley.

Mr. Broderick, your minute.

Mr. Leo Broderick: Thank you. The Canada assistance plan, which we had until 1996, created humane and compassionate standards of which all Canadians could be proud. But having abandoned the Canada assistance plan in 1996, government has simply allowed the rights of people to deteriorate. We have lost in this country the right we had for more than 30 years when people were unemployed. We will not have income when we need it. We have also lost the right in this country to not have to work for welfare.

• 0930

The end of national standards has led, and continues to lead, to increased hunger. We are reverting to an age when charities were the best and sometimes the only hope for unemployed and low-income Canadians to be properly fed and cared for. That is clearly wrong.

We must restore public services, and that means people. Restore jobs. We need increased funding to health care, social services, and education, because clearly education is an investment in our children, in our families, and our country. You have a big job to do; now go and do it.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Broderick.

Ms. Mary Boyd: I'd like to make a strong case to stop the cuts and to restore the drug lab research and the food research. There's nothing in the private sector.

I want to also make a strong case that we keep our medicare system healthy. It is extremely vulnerable right now and under great pressure from American privatized corporations to take over.

I want to say that the dignity of the human person has no price, and human beings and sick people should not have to pay for health care. We need to give more dollars to health care to safeguard the five principles of medicare.

We need a conscious job creation program in this country that will ensure well-paid, long-term jobs, under good conditions.

We need to reverse the trends in this country of cutbacks and withdrawing, and we need a strong welfare system that helps poor people out of their poverty and guarantees them a certain income. In turn we will have fewer health cuts. We all know the statistics: the wealthier you are, the healthier you are, the longer you live. It's pretty unfair, isn't it?

I want to say that people are being milked dry in this province by collections around health care and other things that should be a government responsibility, and there's nothing left over to give to other things. It's really wrong.

In relation to that, our ODA, overseas development assistance, is disgracefully low right now. When I listen to the news and people expressing concern in Canada about this, they're saying Canada's reputation overseas is at stake. It's not Canada's reputation that's at stake. It's not at the level of reputation that we give ODA; it's at the level of justice, of concern for our brothers and sisters here at home and abroad, and we can afford to be more generous. So I ask that you practise justice, please.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Boyd.

Ms. Lie-Nielsen, please, for the final minutes.

Ms. Anne Lie-Nielsen: Thank you. I would like to remind you that you're the Government of Canada. You have a responsibility to provide leadership. You have a responsibility to ensure that Canadians from coast to coast to coast have access and opportunity....

I think in recent years we've seen an abandonment of that responsibility and the devolution of programs to the provinces. I think restoration of standards is really important.

I picked this up this morning, and I would reverse it: I think if we have a strong society we will have a strong economy. I think if we have opportunity we will have security.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Lie-Nielsen. I didn't see the document you held up. Was that the minister's statement?

Ms. Anne Lie-Nielsen: This is the—

The Vice-Chair (Ms. Paddy Torsney): Perfect, thank you.

That brings to a close our first round table here in P.E.I. I want to thank all the participants for sharing their ideas, their energy, and their commitments with us. It's good to hear from you, and I can assure you that our ears are open and we are listening.

I will adjourn the meeting for a couple of minutes so that we can step across the hall and get our new panellists here.

Thank you, and I hope you all have a good day.

• 0935

• 0951

The Vice-Chair (Ms. Paddy Torsney): I will call this meeting back to order.

We are very pleased to be here in P.E.I. for the second of our round tables today on our pre-budget consultation process.

I will note just a couple of things before we start. Each group or person has five minutes to speak. When you have used four minutes, I will put up one finger so that you will know that you have one minute left. When you have used up all five minutes, I will turn on my mike and ask you to stop speaking so we can move on to the next group.

It seems that most of you have given us presentations. If you haven't, don't worry, but if you have you do not necessarily have to read the whole thing, because we have it in front of us. If you are going to read from it, I encourage you to speak slowly, more slowly than I actually usually speak, so our translators will be able to translate.

After we have heard from all the presenters, we will go to five-minute questioning rounds from each of the members of Parliament who are here. I will quickly introduce them.

Mr. Ritz is here from Saskatchewan representing the Reform Party; Mr. Perron is here from Quebec representing the Bloc Québécois; Madame Vautour is here from New Brunswick representing the NDP; Mr. Brison is here from Nova Scotia representing the Conservatives; Mr. Gallaway is here from Ontario representing the Liberals; and Mr. Iftody is here from Manitoba, also representing the Liberals. My name is Paddy Torsney and I am from Ontario.

At the end of this we will have, hopefully, one-minute summaries. As long as our question rounds are brief and to the point, we will have one-minute summaries from each of the panellists. If the question is directed to you, hopefully you will choose to answer it. If you want to tag on an answer at the time of questioning, please so indicate and I will keep a speaker's list. If I can encourage both the questioners and the answerers to be brief, then we can get through and hear from more people.

Mr. Greene, you have the magic seat. You will be the first, for five minutes.

Mr. John Eldon Green (President, Smith Greene Associates): I ran all the way here.

The Vice-Chair (Ms. Paddy Torsney): Just take a deep breath and you will be fine.

Mr. John Eldon Green: Madam Chairman and ladies and gentlemen, I have a three-page paper, double spaced, but I will trim it back and try to get the gist of my comments in quickly.

The Vice-Chair (Ms. Paddy Torsney): Mr. Greene, I forgot to introduce our panellists. I am sorry.

Very quickly, I will introduce the panel: Mr. John Eldon Greene is from Smith Greene Associates—

Mr. John Eldon Green: I know the panellists.

The Vice-Chair (Ms. Paddy Torsney): No, they are not our guys here.

Ms. Crystal McDonald is here representing the Prince Edward Island Federation of Agriculture; then we will hear from Mr. Regis Duffy, who is representing Diagnostic Chemicals; Jimmie Gorman, who is representing himself; Mr. Robert O'Rourke, who is with the School of Business Administration, but is also from Simscape Development Corporation; Mr. Francis Reid, with the Construction Association of P.E.I.; Mr. Roger Perry and Mr. MacLauchlin from the P.E.I. Road Builders and Heavy Construction Association; and Mr. Moorehead, from M.F. Schurman Co. Ltd.

• 0955

Mr. Green, the clock has started ticking now.

Mr. John Eldon Green: That didn't come off my time, I take it.

The Vice-Chair (Ms. Paddy Torsney): Not at all.

Mr. John Eldon Green: I'll make my comments very brief. I'll also have to abandon my notes in the interests of time.

I have to say at the beginning that I think it would be very presumptuous of me or anybody else to suggest priorities at this point in the deficit battle without knowing whose lives were most affected or most hurt by the deficit reduction process the first time.

I've read many articles and many editorial speeches praising the federal government for its fiscal ability and the prudence of its course, all written by people who have been well protected from the worst effects of the deficit battle, as have my wife and I. I can tell you that apart from losing the benefit of the old age security pension, we have emerged unscathed from the deficit battle. In fact, we're a little better off than we were three years ago. So we're not about to ask for more.

I'm concerned that you may hear from people who will do so, who will ask for more, and for more of the deficit reduction medicine for others, and that the committee will misinterpret those voices as the voices of all Canadians rather than the voices of those who are well positioned and well served.

I think the committee should pay less attention to those who have uncritically praised the financial revolution within government while asking for more of the same, now including, according to the Globe and Mail, a reduced minimum wage. The committee would serve the Canadian people by reporting to us all the downstream impacts and the cumulative effects of the deficit reduction battle and of the changes in government programs that the fiscal revolution has brought, because in the meantime we seem to be steering blindly. The kind of advice you'll get in five minutes from all of us here will not be totally informed, based on what has occurred in the last five years.

So I think we should know, before determining priorities, what damage has been done, if any, to the various population segments by the dramatic changes, and what have been the specific impacts on the economy and the social structure of Atlantic Canada to the extent that we are still an important part of the country.

I've mentioned in my paper that the downsizing at DFO has had significant impacts on the industry's response to the current new situation. We don't know what changes in national transportation policies and programs have done to the agrifood industry. We won't know for awhile. We don't know what will be the effect of the changes in ownership and policy regarding seaports and airports. There may be more damage yet to come, so you may be here two years too early for us to tell you whether the government has moved in the right direction, and what your priorities should be.

More importantly, we don't know the impact—we haven't seen any numbers—of EI reform. We don't know the reported impact on markets in the seasonal industries, which is what drives our economy. We get advice from outside the province that we should be changing to a more stable economy, but that can't be done in the short term. In fact, the whole country seems to think, “Give me 40 acres and I'll turn this thing around”. Well, it'll take us more than one or two years with the deficit reduction program.

I think the urgings and prescriptions of the Financial Post, the Globe and Mail, C.D. Howe, the Fraser Institute, the Federation of Independent Business, and even the Atlantic Provinces Economic Council, would benefit me personally, benefit my wife and I, benefit my peers, and benefit my business. But we've been doing okay, a lot of us have been doing okay, but an awful lot of people have not been doing okay on the strength of what's happened. I don't think we know who they are, and how badly they've been served.

The whole reason I came here was not to help you, because I can't, but to ask what the government should now know: what have been the downstream impacts of some of these changes? Who has been hurt the most? If you want to talk about the issue of priority, I think the priority should be to provide relief in the next round for those who paid the price in the first round, those who are already at the lowest end of the economic ladder. They should have their turn.

• 1000

The last thing I would like the committee to do is to take back to Parliament a better understanding than we hear of the nature of the maritime society and maritime society. We have a traditional industry that is seasonal in nature and we can do nothing about it.

The Americans seem to take pride in their small states. In Canada we can't stand small provinces. We want to bunch the four small provinces to get a big province, one we can compare to the others. The Americans would leave us as we are, and I would like Parliament to endorse that: accept that we are a small province and that is all right. There is no problem with that. They go back and understand the nature of our economy and our society.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. Green.

Ms. McDonald.

Ms. Crystal McDonald (Prince Edward Island Federation of Agriculture): Thank you. I would like to thank Mr. Green, because he has said a lot of what we have been saying since at least the summer, if not earlier, last year, when the agriculture community started feeling the cumulative effects of the cost-recovery measures that were taken in the last budget.

The P.E.I. Federation of Agriculture prides itself on representing the agricultural community on P.E.I. on issues of concern, and this is definitely one on which we have spent a lot of time. We have noticed some very major problems with it, and as Mr. Green has said, there are still more we are feeling our way through. We thought it was of a nature serious enough to require a study and to analyse the problems that are coming out of this. For that reason we are looking not only at P.E.I. but at all of the Canadian agricultural industry and the cumulative effects of not only the cost-recovery measures that have gone in but some of the policy changes, the lapse of FFA, some of the different programs that were available. They have all hit the agricultural industry at the same time.

If we look at our farm sales and value-added production, they combine to make agriculture our number one private sector industry here on P.E.I. We are no stranger to belt tightening. We know what it is to do without and to cut corners and to get by on fairly slim profit margins. In fact, it should be noted that P.E.I. has one of the least subsidized agricultural industries across Canada. It is our contention, though, that our industry is being drastically hurt by, as I said, the cost-recovery measures that have been put in place, whether the Pest Management Regulatory Agency, the Canadian Food Inspection System, or any other thing that is happening. We need to take a closer look at other ways industry can do the service cheaper and just as well, if not better, although services are being provided that are simply not required any more, given the nature of the industry.

If we look at the responsibility of the federal government, is it just to make sure the books balance and the bills get paid? I don't think any of us here today believe that is the case. We need to ensure a safe and secure food supply for Canadians.

One of the things we do have to take into account, then, is whose back is that going to rest on? Is it going to be farmers who have to ensure that entire cost? Our contention is that should not be. As Canadians, whether we be single mothers or business men and women or whoever, we all have a responsibility to ensure that secure food and safe food cost.

Farmers are already working on very slim profit margins, if any. You have a lot of very small family farms that contribute largely to the community but do not necessarily get a large amount back as far as the business goes, and they are being asked to pay progressively more and more.

With the PMRA they are going to be looking at cost recovery on their services and on the registration of new products. They are saying that's fine, because we're hitting the chemical companies. Well, guess what, folks, who are the chemical companies going to recover this from? It will be the farmers; and we have no way of passing on that price to the next person in line, which is all of us sitting around this table as consumers.

So I agree with Mr. Green that we have to look very closely at what the cumulative impacts of this past budget have been. Since about 1990 or so we have really been experiencing some concerns about what is going on. We agree that the deficit has to be reduced and that we are moving in the right direction, but there are some areas of concern out there.

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One of the other areas we expressed concern about is the fact that the Green Plan funding is gone. Environmental projects and programs are GATT green and yet are being eliminated. This is at least one area in which farmers could be helped as they try to meet the new challenges and adapt to the new changes in the industry. Yet these programs are also being deleted from the budget. I think it's one area that needs to be strengthened. There are others out there that I am sure you'll hear about in the next few months.

As Mr. Green stated—and it's kind of nice speaking after you, Mr. Green—it's something that we have to look at very closely. We can't just slice it off the top and think that everybody's paying for it, because unfortunately it is usually the lower-income people who pay for it. When a farmer walks in to see you at the end of his year, has done his income tax, and has paid over $17,000 in inspection fees alone for his crop in a year when he's having a hard time to make ends meet because of high input costs, it's very difficult to tell him that it's okay because we're all helping the Canadian deficit to come down.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. McDonald.

Mr. Duffy, five minutes, please.

Mr. Regis Duffy (Chief Executive Officer, Diagnostic Chemicals Limited): Madam Chairman and members of the committee, thank you for inviting me to speak to you this morning.

Deficit reduction in Canada, as all of us know, has not been an option. When the federal government is spending 45% of its total budget on interest costs on an annual basis, it has pretty much lost control of any options it had. If you consider the government's statutory obligations to the provinces and to the people, you probably have already chewed up 90% of the budget. There were no options.

However, it is useful to remind ourselves that because of this whole process of deficit reduction, Canadian households have paid a price because of higher mortgage rates over the past 20 years caused largely by government deficit spending and government competition in the money markets.

Average after-tax incomes of Canadian households have decreased 8% since 1989, in part due to large tax increases. No wonder we do not have a consumer-led economic spending boom. Universities, colleges, and school systems, as well as the health care system, have experienced significant and substantial cutbacks. Transfer payments to our poorer provinces, such as P.E.I., have caused hardships.

Geological processes pooled oil in some places and not in others. We should not claim to be better economic managers just because we are able to pump it to the surface and sell it at $20 U.S. a barrel.

On the subject of priorities, there is a growing suggestion for 50% of the surplus for deficit reduction, 25% for tax decreases, and 25% to increases in education and health areas. That's probably an acceptable model. However, if it is introduced as an initial model, it's certainly not crystallized in stone. The model should be looked at on a continuous basis and monitored over time, with plenty of public discussion and input.

With respect to lessons from history, there are questions we should ask ourselves. Why did Canadians permit their politicians to run our national debt to $585 billion over a 20-year period with very little outcry? What if interest rates had not come down and the country was in an extended recession? Would we have hit a fiscal wall? Why have Canadians become cynical about politicians and the political process to the detriment of all of us? The passivity of Canadians during two decades of unparalleled deficit increases, which were combined with substantial new taxes, is worthy of study.

I'll finish with a personal recommendation. I recommend that federal legislation be enacted that would require the government to balance the budget every year over a two- to three-year cycle. This would restore fiscal and political integrity to the system. It would be a great day for all of us.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Duffy, and thank you for being so succinct.

Mr. Gorman now, for five minutes, please.

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Mr. Jimmie Gorman (Individual Presentation): First I would like to welcome you and your committee to Charlottetown, Madam Chairperson. It's good to have you here, and I hope that you will get something here in Charlottetown that you can take back that will benefit you in your process further down the road.

The Vice-Chair (Ms. Paddy Torsney): Yes, lobster.

Mr. Jimmie Gorman: I hope so.

I'd also like to congratulate the finance minister on his deficit reduction claim.

He asked, in some material that we received, that we comment on a couple of things. One of them was if the process was too fast or too slow. I'm not going to stand here and say the process was right, because I know Mr. Martin wants to get on CBC television and say he talked to everybody across Canada and everybody said that he was right on the mark, that it was the proper thing to do.

I will say, though, that it was one of the results that the minister predicted himself. Whether that was too fast or too slow I don't know. The thing is that we can see the light at the end of the tunnel.

Also, he asked us to comment on the methods—were they appropriate? I still believe that there's a great deal of waste in many federal departments in Ottawa. I think this has to be corrected, and I think this money must be applied to deficit reduction or to social programs, whichever the case may be. The deficit has been reduced basically by increasing tax revenues, by user fees, and by downloading onto the provinces.

Transfer payments have been cut by 35%, and those are our health and education and social programs here in P.E.I. that we're talking about.

Health care costs are going to increase as the population grows older.

Students' tuition fees are increasing yearly and many cannot find jobs after they graduate. Flipping hamburgers at McDonald's is not really a good job for a university graduate.

I believe there are better ways to deliver health and education programs, and I believe that governments have to work together to find these and implement them. I believe we need to put money back into these programs. We do not want new programs, such as pharmacare, until we get the old ones fixed properly. Spending on new programs when we didn't have the money to do it is what caused our financial problems in the first place.

Also, farmers and fishermen face increased user fees on a yearly basis. I believe that the provincial and federal governments should join forces to provide these services at the lowest possible cost. Right now, I believe they're being charged exorbitant sums, more than it costs to carry out the programs.

We hear a great deal of talk these days about the fiscal dividend. Well, we don't have one yet. It is on the horizon, and I hope it will be used wisely when we reach that point.

I believe as well that there should be a law to balance the budget on a yearly basis.

There's one thing the federal government could do right now, and that is to raise the basic tax exemption from $6,459 to $10,000. This will help all Canadians, but the ones it will help the most are the lower- and medium-income Canadians. I think they need it most.

Taxes must be reduced to offset the Canada Pension Plan increases. If we do not reduce taxes in a similar area, then as the weeks go by we are going to take home less and less in our paycheques.

Farming, fishing, tourism, and forestry are the four main industries here in P.E.I. Three of these industries are seasonal, so we need to maintain a seasonal workforce. To do that, the intensity clause and the EI program, which reduces benefits from 55% to 50%, must be eliminated. If we don't keep these workers here, they're going to move on and we will not have them. The industries will suffer, as they have already.

Two weeks ago the Prime Minister was at the Atlantic Vision Conference in Moncton. He said that Atlantic Canada was the hardest hit of any place in Canada, and he's right, we were. At the same conference, Pat Binns, the Premier of P.E.I., said that the declining population of Atlantic Canada was one of the main problems, and he's right too.

How can we keep people here to create jobs in Atlantic Canada? I believe the federal government should establish a tax credit system whereby new and existing companies who create new jobs would receive a tax credit over a period of five years. This would entice new companies to locate here and existing companies to expand and create long-term, meaningful employment for Atlantic Canadians.

I appreciate the opportunity to speak to you this morning and I thank you for listening.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. Gorman. You were exactly within your five minutes.

Mr. O'Rourke, please, for five minutes.

• 1015

Mr. Robert O'Rourke (President, Simscape Development Corporation): Thank you, Madam Chair and members of the committee. I was asked if I would comment, as part of my remarks, on both the process of deficit reduction and the methods used. I'd like to make just a few comments on that first before I talk or speak about priority planning.

I think as far as deficit reduction is concerned, there are really two aspects of it. One was the rate of progress and the second was the methods used to achieve it.

I think the progress on deficit reduction is appropriate. I think it moved at a reasonable pace. The timing was appropriate in light of the options that were available, which weren't very great, quite frankly, as far as the federal government was concerned.

I do believe that deficit elimination must remain the priority of the government. I do not believe that we can be talking at this stage about dividends from fiscal prudence until we have achieved what we are attempting to achieve, which is a balanced budget.

I do believe, at this stage, that planning for debt reduction should now become part of the priority of government. I don't think we should be waiting until we have eliminated the deficit before we do some serious planning about how we are going to address the debt issue.

With respect to the methods associated with deficit reduction, I would make one overall comment. The primary engine in deficit reduction over the last several years has been revenue increases; it has not been cost reductions. These revenue increases have come in the form of taxes. They've come in the form of increased revenues because of increased consumer spending that has taken place more recently.

I think it's important for us to understand that this process of deficit reduction was achieved largely through revenue increases, because it's going to have some impact on what kind of planning the government is going to have available to it when it talks about either deficit reduction or increased expenditures.

The government, with regard to addressing program spending, clearly had to focus on major program spending. There was no real benefit to be achieved by looking at minor items that were not going to yield much benefit. You had to focus on the major items, which were clearly issues like health and education. This is where curbs on expenditures had to take place.

With respect to priority planning, rather than talk about specific programs, I'd rather ask the committee to consider, and perhaps take back to Ottawa itself, more of a philosophy, rather than looking at particular programs. By that, I mean largely that I think you need to have in place a program for debt reduction. This program has to look at what resources the federal government can put into play to reduce the debt.

The debt is entirely too high. Getting ourselves to a balanced budget is not going to do anything with respect to the debt at all. I think we need to be able to put in place a plan now. It should be strongly suggested to the minister that indeed this should be part of future budget planning.

I think tax relief is a longer-term objective. Tax relief is something that I don't believe should be a major part of the so-called fiscal dividend until we have at least begun the program of debt reduction. Furthermore, tax relief deals with more than just tax levels; it must also deal with an issue of tax reform. It has to look at the issue of the comparability of tax burdens on both individuals and corporations across countries to assess what tax is doing in terms of competitive advantage or disadvantage for corporations. I think it's necessary to assess the total tax burden on both individuals and corporations.

• 1020

Finally, I think spending increases, which we hear more and more discussion about, have to be focused on priorities, and there need to be clear objectives and accountability with respect to this. We don't want to get back into the situation where the government is throwing dollars at programs without some sense about what the benefit is going to be in doing this. Let me just briefly allude to some of the programs that I am particularly concerned about with respect to this.

One of them has been an infrastructure program.

The Vice-Chair (Ms. Paddy Torsney): Sorry, Mr. O'Rourke, you might need to be more specific in the answers at that point. You have used your five minutes. I was trying to signal, but you didn't look at me. We didn't give you the benefit of the one minute; we tried.

Mr. Reid, for five minutes, please.

Mr. Francis Reid (General Manager, Construction Association of Prince Edward Island): Thank you very much, Madam Chair and members of the committee.

The Construction Association of Prince Edward Island, along with many other Canadians, felt that for many years Canadians enjoyed a financial benevolence. We were spending much more money than we were taking in. We were probably not spending wisely. We found ourselves spending a large portion of our tax dollars for the payment of interest on debts and deficits.

A few years ago many of us wondered if we were going to fall into the same trap New Zealanders had and if we were going to take the same tough medicine.

I think Canadians, and the Canadian government, took the right options that were available to them in reducing the deficit. We commend the government for reducing the deficit as much as they have. It appears that they are enjoying some success, and we hope they continue in this success.

Our feeling, though, is that deficit-debt reduction, as beneficial as it is, is not enough. We know it's tough medicine. I grew up in a small community where, if you had a little cold or something, you had some medicine that was really tough, but it was effective. I think we need the tough medicine. We need it to be effective. We need not only to eliminate the deficit but to work on reducing our debt.

I think while we're reducing that debt we also have to think about building a strong economy for Canadians and our Canadian people. I certainly can't go into all the details, but some of the areas that I would suggest the government consider to build a strong economy while doing debt reduction.... I believe our government has worked very hard in reducing waste and overspending. I think there's much more that can be done. I would urge that government look at ways of reducing waste and overspending.

I do not want to get into specifics, but if we have government moving personnel from one department to an area 30 miles hence, it doesn't seem to make a lot of sense to me, other than perhaps it was for the benefit of the member—it looked good in his area—but I think that's one of the areas we could work at.

The Canadian Construction Association, as our national body, has recommended that the infrastructure works presently in existence be looked at and be improved upon, when and where if possible, so that it can be beneficial to the economy of our area.

The second area we look at is the fact that much of our infrastucture is now in a state of disrepair. I really don't know the figures, but probably 25% or 30% of our bridges are in a state of disrepair where they probably could be condemned. Those have to be repaired if we are going to have an economy.... If we're going to move goods from the market to the sales, we must have that.

In winding up, then, I would suggest that we must not only reduce and eliminate our deficit, but we must reduce our debt. We must also have no tax reductions until such time as we have reduced that debt to an acceptable level.

Thank you very much, Madam Chair.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Reid.

Mr. Moorehead, please, for five minutes.

Mr. Terry Moorehead (Treasurer, M.F. Schurman Co. Ltd.): Good morning, Madam Chair, members of the committee.

• 1025

I come from a business background. I'm a financial officer with M.F. Schurman Co. Ltd., and I'm also a chartered accountant. That is to give you some background.

I believe the government should be run in the same way as we would run a household or a business. We talk about the fiscal dividend, but we haven't even got there yet. We should really be trying to live within our means, keep going, and get the deficit down.

We haven't even balanced the current year yet, and we're talking about the fiscal dividend that's going to be divvied out. I object strongly to that. I think we have to keep going with deficit reduction.

As an example, I have a salary and I try to live within my means. Occasionally, I don't, and I spend more in a month than I take in. I have an economy drive at home with my wife. When we get together again I don't say, oh good, we're living within our means now, so let's spend again. That's not the way it works. You have to do what you can do with what surplus you have to pay down your debts.

People keep talking about the deficit. The deficit is almost down to zero. No one ever talks about the $600-billion debt we have out there, and I think we seriously have to come to grips with paying that down.

As sure as I'm sitting here, part of the reason the deficit has come down so quickly is that we've had such a great economy in the last couple of years, and it looks like we're going to have that for the next few years. I really feel we should be saving for a rainy day, because as sure as I'm sitting here there will be another recession in the next few years, and we've all lived through the last one.

We've been through two recessions while I've been at Schurman, and it's not very pleasant, with downsizing and laying off people. So I think there's a lot still that the government should be looking to cut back, even in fact getting its own house in order.

I had an example a few years back. I went to hire a girl to do some clerical work in our office, and I was going to pay her a little more than the minimum wage, which is where private business tends to be. She made the comment that she could work 10 to 12 weeks picking up garbage on Cavendish Beach, which is a federal employer, and then she could be off the rest of the year drawing unemployment insurance, or EI as it's called now, and she'd be better off than what I could pay her.

To me, something is drastically wrong in that scenario. Our minimum wage is $5.15 or $5.25. That's what a student would expect to be paid in the summer. If they got a part-time job with the federal government, it would be $11 to $16 an hour. Something is wrong there. Why, because you work for the government, are you paid three times more than the private sector?

As a similar example, we had a girl who went to work for the GST office in Summerside. She went on maternity leave, and normally you get your maternity unemployment benefits. I must confess this is hearsay, but the report came back that she also had her salary topped up from the unemployment to what she would have got if she hadn't been on maternity leave. The private sector can't afford to do these things, and there's something drastically wrong.

Those are just a couple of things.

As an accountant, I have to talk a little bit about taxes and taxation. I don't believe we should be cutting tax rates and giving taxes back, but I think there should be some thought given to cutbacks. I would drastically increase the pension contributions. At the same time, we cut back on RRSP deductions, and I think it's time they seriously looked at increasing the RRSP levels in this country. I think it's way too low. It was supposed to have been $15,500 by 1995, and we're still at $13,500 in 1997.

The personal deductions were supposed to be indexed, as someone over there said. In 1985 they cut that back and said they would only be indexed for about 3% inflation. We haven't had much inflation for the last few years, and consequently our personal deductions have stayed very low compared to our salaries. Again, it's an abnormality.

• 1030

The small business deduction for corporations, which is a big help for small business starting up and continuing, has been at $200,000 ever since 1971, when the Income Tax Act first came into being in its new format. It's time that was worked out to help small business get going.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. Moorehead.

Mr. Perry, I believe you're going to speak on behalf of the association.

Mr. Roger Perry (Secretary-Manager, P.E.I. Road Builders and Heavy Construction Association): Yes.

Good morning, Madam Chairman and members of the Standing Committee on Finance. My name is Roger Perry. I am the secretary-manager of the Prince Edward Island Road Builders and Heavy Construction Association. With me is Blair MacLauchlan, president of the Prince Edward Island Road Builders and Heavy Construction Association.

Our association represents contractors that are, applicably, involved with road-building and heavy construction projects throughout Prince Edward Island and other parts of the Atlantic provinces. We also represent associate members who are involved in the supply side of the road-building industry, for example oil companies, equipment companies, construction aggregate suppliers, engineers, consulting companies, banks, accounting firms, etc., and all types of petroleum products, including liquid asphalt, Portland cement, and other products related to the road-building and heavy construction industry.

I should have a heading in here, “The need to balance debt reduction with key infrastructure investment”.

It is no secret that the nation's economy depends on its transportation. This means, in most cases, the excellence of its highway system. We are referring to the transportation of goods and services as well as the general travelling public, being residents and/or tourists who use the highway system. It is a tragedy that some states are making it known to Canadian truckers that their highways are superior to the equivalent routes in Canada.

The same thing applies to our tourism. Some agencies are advising tourists and motor coach companies not to go to certain provinces because of the condition of their highways. This affects many sectors of the economy and does not tend to leave valuable dollars in the Canadian economy.

The idea of a national highway program is not new, and we are aware that you have had many presentations imploring this committee to revisit the financing of this policy.

Canada is the only nation among all modern nations not to have a national highway program. Most are funded through road-related taxes. Canada's fuel tax is much higher than that in the U.S.A. and other countries, yet they return a much higher percentage to the upgrading of their highway systems. The Government of Canada returns approximately 4% to the system. The balance goes to fund other programs.

We know the government does not like the term or the notion of “dedicating” funds. We feel the term “allocate” would be better. If 2¢ of the 13.5¢ of fuel-related tax were used to fund such a program, we could have a sustainable national highway program. Such an investment would create jobs, make us more productive and competitive, make our highways safer, and help unite our country.

We'd like to thank the House of Commons Standing Committee on Finance for this opportunity to express our views on what we feel are priorities.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. Perry.

We'll now move to five-minute rounds of questions.

At the very beginning of your question, Mr. Ritz, there might be a possibility that we have a photographer come in. I hope that won't bother the member.

Mr. Gerry Ritz: No.

The Vice-Chair (Ms. Paddy Torsney): You don't have to pose if you don't want to.

I apologize. Normally we don't allow media in, but I think the person needed to get on to their next assignment. So we will allow a photographer to come in briefly and take a picture, and then keep moving.

Mr. Ritz, I hope that's not a distraction. You have five minutes.

Mr. Gerry Ritz: Thank you, Madam Chair.

Thank you to all the presenters this morning. You've done a terrific job of getting your ideas across.

The one issue that popped into my mind as we went around the table talking was infrastructure, which was kicked around. Mr. O'Rourke, I think you were just starting to get into saying you were on the negative side of that program. Mr. Moorehead, the accountant, maybe has a different viewpoint. Of course the construction people come at it from a different term or a different exposure. Targeted infrastructure was mentioned; I can certainly agree with that type of program.

I'd like your comments, gentlemen, if you could.

The Vice-Chair (Ms. Paddy Torsney): Mr. O'Rourke, I think the question was put to you, and if anyone else wants to speak, they should.

Mr. Robert O'Rourke: Thank you.

First of all, I'm not opposed to infrastructure investments. They are appropriate. But I do believe that a clearer articulation of the goals of these and the degree, where possible.... The federal government should be taking the lead and insisting on standards with respect to infrastructure investments themselves.

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Perhaps I can give you just one illustration of a point I am trying to get at here. Among the infrastructure investments that have taken place over the last number of years has been funding of expansions for water utility systems, among other things. And yet Canada lags behind a number of other countries in insisting that water metering is one of the things that should be done, particularly if you are interested in water conservation. You can't conserve water as a scarce resource if in fact you don't meter it. Yet no sort of lead has been taken here in insisting on linking infrastructure investments like water and waste water utility investments to something longer-term in terms of issues like conservation, appropriate pricing, and so on.

I think the same sort of thing could also be held true for other investments in other programs, but I'll leave that comment, perhaps, to others.

The Vice-Chair (Ms. Paddy Torsney): Mr. Reid or Mr. Perry, did you wish to comment?

Mr. Francis Reid: Yes, I would like to make a comment.

Certainly I think that as far as the construction industry is concerned, and particularly the Construction Association, the need for infrastructure works certainly has to have some design made to ensure that we are getting the best bang for our buck. On the other hand, if you have a bridge or a road that's deteriorating, it's probably—and not only probably—it is much cheaper and much more effective to repair today than to wait until it eventually breaks down completely. Then you have to pay three, four or five times the amount of dollars that you would have three or four years ago.

It makes good economic sense to spend now to fix up your infrastructure works so that you can divide the service Mr. Perry talked about of transporting goods to markets of sale that will benefit not only industry but all of the people who are buying and selling. I believe it is very important that government gets down to the business of determining what needs to be repaired, how much it is going to cost, and how it is going to be paid for.

Mr. Terry Moorehead: Again speaking as an accountant, I would like to know if anyone in government has ever done this. If you put in an infrastructure program there is a certain cost to doing that. There are also certain benefits in the fact that you are employing people who would have been on unemployment insurance, presumably. I'd like to know—is there a gain in doing this or are we still just adding to our deficit? I am not clear on that.

Mr. Blair MacLauchlan (President, P.E.I. Road Builders and Heavy Construction Association): I'd just like to speak for a second on the infrastructure program, Madam Chair, first of all.

In a lot of ways the infrastructure program was the best use of the federal contribution I have seen in 20 or 25 years, in that it was shared by the provincial component and the municipal component on a one-third basis. It came down in a lot of cases to the municipality having to decide if it could raise the one-third through additional user fees and taxes, which provided a screen for the contribution by the federal and provincial governments. In fact recently there was a community that turned back the offer of receiving the federal and provincial portion because it was deemed in the long term that the cost of maintaining the facility that would have been provided by the funding was such that it wasn't a good investment.

I think if that approach had been taken since 1970 we wouldn't have had as many poorly planned projects. We wouldn't have wasted so many dollars. We wouldn't have had so many facilities that are today draining money, just to maintain them without an appropriate payback. I don't think we have a better program to create a proper cost-benefit analysis, if you will, of government spending without outside parties like the federal and provincial governments having to get directly involved. From that point of view I think it worked perfectly.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. MacLauchlan.

[Translation]

You have five minutes Mr. Perron.

Mr. Gilles-A. Perron: I would like to address you in French.

• 1040

There is only one way to stay in business. It is to make profits and specially not to lose money. Unfortunately, government makes some people lose money and still remain in business. Or governments should I say.

Therefore, the only two ways to make profits and to stay alive are to increase your revenues and cut your expenses. It is a simple theory that you all know about. Mr. O'Rourke, I would like to make a comment on your report. You say in your report

[English]

that there are limited options for dealing with deficits: one, revenue increase; two, selective cuts to or freezing of the program expenditure. I think, my friend, you missed one shot. You missed the shot of clean or straight or good administration. That's also part of cutting.

Mr. Martin was telling us a few years back that he will cut lousy spending in this government by 19%. If he cut it by 9% only, there's something missing—and there's lots of dough over there.

Tell me one thing, my friend. Do you believe there's room to cut in lousy spending, as I'm saying?

[Translation]

Is there room?

[English]

Is there room to give the Auditor General more strength? I ask this because that guy is crying every year that there's nothing to be done.

One more thing: is there room in this government, the provincial government, and the municipal government, way down, for us to install anti-deficit laws?

Mr. Robert O'Rourke: In response to that, if we're looking forward rather than to the past, at least for a moment, what I'm suggesting in terms of priority planning includes a serious examination of the benefits and costs associated with the federal government being involved in a number of programs, be they infrastructure programs, be they transfers for education, health, welfare, and so on.

I'm simply saying that these things have to be managed and they have to be planned. That is largely what I am suggesting.

I'm not sure that I can comment on whether or not the most efficient exercise has taken place internally in the federal government, so that we can be assured that they are where they're supposed to be in terms of efficient management and delivery of programs, but I am suggesting that before we start talking about spending increases we most certainly need to get our planning priorities straight. This is because if we do not do that, then the risk clearly is what you have pointed out: that there will be no more efficient management of new programs than there was possibly of older programs, which led to the kinds of deficit situations we've had.

I don't know whether I'm speaking clearly to the point you have. My interest is more forward looking, rather than trying to identify whether or not we've extracted all of the efficiencies that we can out of government administration. I'm really concerned that we not get ourselves into new spending without some clear and definable goals and objectives and some measurable standards that we can use to determine whether or not these dollars are in fact beneficial, that they're being used in the most appropriate way.

Mr. Regis Duffy: I think the government has the luxury of time. One of the problems that I think all governments face is that in our experience, in our lifetime, governments in Canada have never had to go through a downsizing process. This is the first time I can remember governments cranking back in this way. There are no mechanisms covered by the institutions to facilitate this process. We have the traditional ways of going about it, which are simply budget cuts, but in times of, let's say, reducing government employees, the government has the luxury of taking a 10-year look at a program to downsize programs within the government. Private sector people don't have that kind of luxury. They have to make a decision in 6 to 12 months, or 3 months, or what have you. Government has the luxury of time on its hands. It should facilitate the downsizing process over a period and perhaps have some external review of federal departments that is not part of the political process, especially since we're all going through this for the first time in our lifetimes.

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The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Duffy.

Ms. Vautour.

Ms. Angela Vautour: Good morning. I want to thank everyone for your presentations. It was really interesting. I want especially to thank Mr. Green for his honest brief. He is the first person I've—I'm assuming here we're talking probably about a middle-class or upper-middle-class category, and he is the first one—

Mr. John Eldon Green: We're well represented.

Ms. Angela Vautour: He is certainly the first I've heard in the last two and a half years during my time as an activist and now as a member of Parliament on the cuts and the real impact. There are some who have had less pain, or no pain whatsoever, with the cuts. I'm very concerned with what I hear, because as I said yesterday, there is such a difference between the business community and the people who need help from the government in the direction you want us to take. There is such a big difference.

I find it very unfortunate that again today—and I would like to be noted on this—except for a few here, from whom it seems to be a different direction—this morning we have mostly social groups together, and now we have the other group. I think it's very important that the two be put together to hear what is really happening, because there are a lot of concerns out there.

I'm very concerned at hearing that the Globe and Mail had mentioned the minimum salary going down. I have been saying this for the last three and a half years. My husband being a labour person, I can understand in construction or other businesses if the minimum salary goes down, certainly it's going to be a great help for the owner of the company.

To get to a question, what really is the balance here? Is anybody concerned about the people who are really not getting any income at all because of these cuts?

I believe it was Mr. Moorehead who mentioned that when there's a crisis in a family you cut. But I myself have been a single parent, and when there was a crisis I went out and got more revenue. I did not take the breakfast away from my son in order to survive. I found a way to get more revenue. I do believe there are ways to do that, but I'm not hearing that from that end of it. I'm hearing it from the social groups and from Mr. Green here. Can anybody explain on your side—and I would like Mr. Green to reply, if he chooses to—why we do not choose to go get more revenue in order to make sure everybody in this country is surviving well and make sure the minimum salary is not going to decrease?

The Vice-Chair (Ms. Paddy Torsney): I've made a note of your comment, Ms. Vautour, and there are copies of the presentations that were made earlier this morning, and copies of your presentations will be made available to any people in our audience or to groups who appeared earlier. There's still an opportunity for dialogue in our comments back and forth, so I hope you will also take a copy of the four presentations made this morning and the ones made this afternoon.

Mr. Green.

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Mr. John Eldon Green: I want to make a brief comment on the debt. I'm not a specialist. I'm not an economist or an accountant. I don't believe most of them, because they disagree with one another.

On the matter of the deficit, I think we're soaked in the deficit. The deficit is partly recycled debt. As the interest rate comes down, the deficit and the debt will come down and the interest rates will come up.

For a more scholarly study of that, Linda McQuaig's book, Shooting the Hippo, explains a great deal, and tells some pretty horrible stories coming out of the financial community.

All I want to say on that is that we need to understand more about the deficit and debt. There are very few governments in the world that don't carry both a deficit and a debt. Part of the deficit is a recycled debt, borrowing to pay; it will come down the less we boost interest rates, which helps increase my work.

Mr. Terry Moorehead: I use the example of a well-sold economy as a very naive example of the way in which any government, business, or household works. You talk about increasing revenue. The only way government could increase revenue would be to increase taxation. That to me would be the worse possible thing they could do.

Mr. Blair MacLauchlan: As a summary of what I've seen, Canadians don't want government to increase revenue, at least not through taxes and probably not through too many more user fees. On the other hand, we are barely getting down to the deficit target, let alone getting to any debt reduction.

I think the clear answer is that we have too much government. We expect too much of our economy to come through government. There's a big cost to doing that. We need to ask at some point whether going through a federal government is the most efficient way to deliver some of the services.

I was involved in a government reform committee provincially a few years ago. It was evident that a lot of the regulations and legislation on the books require public servants to administer and manage. They've been in place, in some cases, since the beginning of time. I think what needs to be done is to have a look at everything the government is doing and ask ourselves if we need it, if we want it, and whether we're prepared to pay for it today, and to try to plan the system to look for things that we may or may not want. I don't think people know sometimes how much something actually costs. In fact, even if they do know how much it costs they don't even think they are paying for it. They think it's coming from another pool.

Until we analyse every expenditure and ask whether in fact we do need it, we won't have any free money for anything new, or for any expansion. Let's face it, we're tight on the revenue end and we're tight on the expense end.

Thank you.

Ms. Crystal McDonald: I was trying to point out that in the agricultural community that's exactly the same type of thing we're saying. If we're going to have user-pay, we need to have user-say. We need to look at how with these services we can better provide for ourselves through accredited labs, etc.

We're starting to see that move. P.E.I. has recently started a project where they're going to be looking at the privatization of some of the potato inspection services for quality. I think that's something we have to follow further down the road.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. McDonald.

Ms. Vautour, just so you know, my intervention was not at your expense in terms of time. It was an eight-minute round, and I think I took about a minute.

Mr. Brison.

Mr. Scott Brison: Thank you for your thoughtful presentations this morning. I enjoyed them immensely. I'm an Atlantic Canadian from Nova Scotia. I entered this business from the private sector, so I share some of your opinions.

The comments Mr. Moorehead made relative to a system that actually competes with the private sector for workers and in fact encourages dependency and encourages a rejection of the private sector as a means for self-betterment were quite accurate. Over the past thirty years federal and provincial governments have collectively punished initiative and rewarded dependency in Atlantic Canada.

When you punish one type of initiative and reward another, you're going to achieve what they set out to do; that is, we have a cycle of dependency in Atlantic Canada that has done more to hurt us than help us.

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Mr. Green, I enjoyed your comments about 40 acres, because over a period of four years we tried to undo a lot of the damage that was inflicted over a thirty-year period, and I think in some ways that was too fast. The costs inflicted on health care and education, which are the tools Atlantic Canadians need to access the machine of free enterprise, were devastating, especially in health care and education. In fact, we will pay the costs for that in the long term.

Mr. Gorman, I listened intently to your comments on EI premiums. I recognize that there does seem to be a consensus at this table that broad-based tax cuts are not necessarily a good idea, but I also hear a rejection of tax increases. I'm pleased to hear that.

In terms of payroll taxes, there seems to be a consensus internationally among most economists and business people that payroll taxes kill jobs. The higher the payroll taxes the more difficult it is to hire. Only so much money is coming in and you can only pay out so much. The net result is there are only so many people you can hire. Payroll taxes damage that hiring.

I'd like to get your feedback. I've heard Mr. Gorman's support for a reduction in the EI premiums, especially in light of the $11 billion increase in CPP premiums, but I'd like to get some feedback from you on reductions in EI premiums. It's very controversial now with the surplus that exists and the impediment to employment that they provide.

The Vice-Chair (Ms. Paddy Torsney): Mr. Perry, I'll have you answer first.

Mr. Brison, you also mentioned Mr. Moorehead, Mr. Green, and Mr. Gorman. I don't know if they wish to comment.

Mr. Scott Brison: This is directed at any of you who wish to comment.

Mr. Roger Perry: Let me read you this from the CCA summary. CCA strongly opposes allowing the EI fund surplus to grow to an amount well in excess of any reasonable reserve. The reduction in the current employee premium of $2.90 per $100 of payroll to $2 per $100 would go a long way towards reducing the tax burden and freeing up capital for further investment for job creation as well.

The federal government's own estimates project the cumulative EI fund surplus will reach $12.8 billion by the end of 1997 and $14 billion in 1998. Even with the recommended reduction, excessively high EI premiums are a tax on jobs and stifle both economic growth and job creation.

Mr. John Eldon Green: I have two observations. I've heard this argument for a long time about payroll taxes being job killers. First of all, payroll taxes are the only taxes many businesses pay. Secondly, on the committee on unemployment insurance and seasonal work, I have quite a number of employers. I asked what would happen if the UI contribution were reduced and what effect would it have on their investment plans, and I was told none.

A reduction in payroll taxes drops directly to the bottom line. In making investment decisions, people look at the total payroll cost as one factor among others, and across the top it's the UI tax. A reduction in the UI tax is a kind of economist fiction. It's like “if this money could all be pooled, we'd have billions to put into investment”, but individually, it drops into the bottom line, as it would in my business.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Green.

Mr. Brison, that's the end of your five minutes.

Mr. Gallaway, please.

Mr. Roger Gallaway: I want to say what an interesting morning this has been for us. This is the last stop on our across-the-country leg of this exercise.

We're hearing very common themes, many of which we've heard this morning, but you should also know there are some regional differences, which have become apparent to us in the last couple of days.

I know you were not here for the earlier presentation this morning.

Mr. Gorman was talking about the need to keep seasonal workers and was saying that the nature of the economy here is that there's a great seasonal workforce, with tourism appearing to be the new one on the horizon that has great growth potential. But earlier this morning we heard from witnesses who said that tourism was not a good thing for this island, this province.

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At the same time, we're hearing criticism of the surplus in the EI fund. I think there's certainly a consensus in the country that the EI fund surplus has grown to an excessive amount, yet we heard earlier this morning that it's not fair that seasonal workers don't appear to be able to tap into the EI fund for as long a period of time as before.

What has become apparent this morning is that the nature of the economy here needs to change. I certainly don't know in what way that can change it, but my question to any one of you is: what can the government do in terms of budgeting—the next budget is the first step on that road—to in fact change the nature of the economy so it's no longer having people who are reliant upon social programs and/or employment insurance programs for income? How can one fundamentally change the nature of the economy here so that there is less dependence upon government programs and more dependence upon employment? How do you change the nature of employment in this province?

Mr. Jimmie Gorman: I need to clarify one thing here. When I spoke of the EI program, I realized that I used “surplus” there, and that's a problem. It's a good problem to have, but it also hurts. When you cut EI payments—I didn't mention this before, by the way—to companies, you're also cutting them to individuals, which puts a little bit more money back in their pocket too. I didn't mention that part of it in my presentation this morning. What I said was that the intensity clause, which reduces seasonal workers from 55% to 50%, should be eliminated.

The other part of your question was how to get people back to work. I also mentioned in my brief this morning—I don't know if you were here for it—that we're still going to have our tourist seasons, farming, fishing, and all that kind of thing. That has to go on if the province is to survive at all, but there are a lot of businesses out there.... I run a business that employs anywhere from 6 to 20 people. We export equipment around the world, basically.

Having said that, I think there are new areas for employment in Atlantic Canada, P.E.I. in particular. To help that, to encourage companies to come to Atlantic Canada from upper Canada or wherever, outside the country, wherever it happens to be, or for new companies starting up, we need to do something on the tax side. If you give a company a tax credit, it tends to attract profitable companies; if you give a company a grant, sometimes it doesn't attract profitable companies. People do things sometimes for the grant, but if it's a tax credit, the people who are interested will say they're going to make a profit, so this is going to be a saving.

I think you can entice more people in that way to start up new companies in Atlantic Canada and therefore ease the dependency we have on Ottawa at the present. It has to be the objective of everybody in Atlantic Canada and in Ottawa to ease that dependency so that we're not as dependent upon the central government. It's not a short-term thing; it's a long-term thing.

I heard some of the presentations this morning, including the one about the call centres. We have call centres today that are paying very good wages. I do agree that some of them don't pay good wages, but if you're into the technical calling centres, which supply technical expertise, they do provide good wages.

The Vice-Chair (Ms. Paddy Torsney): Thank you for clarifying that you were here this morning, because I thought I had seen you. Mr. MacLauchlan, you have the final comment in this round, and then we'll go to one-minute statements by each of the participants.

Mr. Blair MacLauchlan: I think the biggest changes in the last few years—again, this relates back to infrastructure, especially here in P.E.I.—are the construction of the Confederation Bridge, the twinning of the highway through New Brunswick, and the twinning of the highways through Nova Scotia. I think these infrastructure investments will do more to level the playing field. They will bring our geographic area closer to the major population areas and hopefully long-term growth will emerge from them, although it's slow and will take time. I think they are the most important things to happen in recent years. They're a sound investment and will create growth into the future.

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The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. MacLauchlan and Mr. Gallaway.

This concludes our question and answer round. There is an opportunity for each of you to take one minute—no more—to make a final statement. It can be additional information, it can be a plea or it can be a reiteration of what you've already said. It's your minute, so you choose.

Mr. Green for the first minute.

Mr. John Eldon Green: I'd just like to pick up on the last comment I made asking the committee to take back an improved view of Atlantic Canada. I think the majority of obsessive-compulsive college graduates wind up in Ottawa writing policies and program manuals for use across the country. One size fits all and everything is neat in the box.

We don't need one size fits all. Countries are different, provinces are different, and regions are different. Our region is different. We're not the beggars, as the Fraser Institute will describe us. We have very solid industries that just happen to be seasonal. We are as different in our ways as Quebec is different in its ways. I would like that to be recognized in national programs and policies.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much Mr. Green.

Ms. McDonald.

Ms. Crystal McDonald: Thank you again for having us here. I hope you have a safe trip home and that it has been a worthwhile experience for you.

I would express one concern, and that's the short timeframe. Mr. Green talked about taking 40 acres to turn it around, and we're getting five minutes and one minute to try to give input. It has taken so long to put the comments together and then to try to make sure you're putting them adequately across....

There are some concerns out there and some good things have happened. The CARD Fund was established. As far as agriculture goes, it's a work in progress, but it has also had some successes. We'd like to see that continue after the 1999 deadline when it finishes.

I know the problems with the EI situation are not easily rectified. There were some changes made to it, and the first thing we heard were farmers saying “You can't do that because now we have nobody willing to work for us”. So you have to take into consideration that we are seasonal and we need seasonal labours. There has to be some way to keep those people willing to work in agriculture. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you Ms. McDonald.

Mr. Duffy.

Mr. Regis Duffy: Thank you, Madam Chairman. In answer to the last question, what has changed in the whole country, and in the whole world, is the information tools. Some tools are available today to change things in Atlantic Canada.

It wouldn't have made any sense for the Bank of Canada's main office to be in downtown Charlottetown 30 years ago, but today it wouldn't make any difference if it were in downtown Charlottetown or downtown Ottawa. With the capabilities of moving information around the world today, you don't have to have people centralized. This is a message to government; you can be decentralized.

Government should also encourage banks and insurance companies...there is no reason today for all of them to be in Montreal and Toronto. Maybe we need incentives; maybe we need the education to move some of these institutions into a different part of the country. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much Mr. Duffy.

Mr. Gorman.

Mr. Jimmie Gorman: Thank you. As well as reiterating what Mr. Duffy has just said, I think the point is very well taken. The way we can move information, we certainly can run any business from Atlantic Canada. I think that message must be put out there, and supported by things I suggested, such as tax credits.

I also believe we have to reinvest in health and education. They are the cornerstone of our country. We have to look after those areas. I find it alarming that people can suggest we should raise the limits of RRSPs but we can't give people making $10,000 a year a break. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much Mr. Gorman.

Mr. O'Rourke.

Mr. Robert O'Rourke: Thank you, Madam Chair. I have just a brief comment touching on some statements by Ms. Vautour and Mr. Gallaway on how we can reconcile the solitudes of health and welfare, and of low-income people. At the same time, how can we address the issues of disparity that exist in this region, in particular with respect to the differences in the programs?

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Might I suggest that part of the problem, and possibly part of the solution, has to be that we treat business and individuals in a different way. We should treat them with different programs and speak to them with different programs. With respect to development, we speak to different.... There's no co-ordination, if I can put it simply, with respect to what kinds of support programs and transfers we have with the notion of regional development. I think if we address the need to co-ordinate these it will go a long way towards speaking to how we bring together individuals and improve their welfare, as well as big businesses, while at the same time getting this region on the road toward economic development, which I think it needs. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. O'Rourke.

Mr. Reid.

Mr. Francis Reid: Thank you, Madam Chair. First I'd like to thank you and the committee for allowing us to make a presentation. In my opinion, it's certainly very important that government does come to the people to listen. You can get much more information when you're going to the kitchen of the person who owns the home than asking him to go to Ottawa.

Having said that, I would just like to make a comment. I'm sure in your hearings around the country you have heard many different points of view, and I think this is healthy. I remember once there was a little discussion and a person was wondering why we had different points of view. He said if we didn't have different points of view you'd probably want my wife.

Some hon. members: Hear, hear.

Mr. Francis Reid: So it's probably healthy to have different points of view.

Let me summarize by saying that the Construction Association of Prince Edward Island would suggest to government that we eliminate the deficit and reduce the debt to an acceptable ratio between debt and GDP while at the same time building a strong economy for Canadians.

Having said that, Madam Chair, thank you very much. It's been a wonderful opportunity.

The Vice-Chair (Ms. Paddy Torsney): I wasn't sure. Are we being invited to lunch at your house?

Mr. Francis Reid: Yes. There's a small fee attached, but it's user-pay.

The Vice-Chair (Ms. Paddy Torsney): Thanks. We were all given $5 for lunch.

Mr. Moorehead's story, for one minute.

Mr. Terry Moorehead: I should say that there are no free lunches in this world.

I'd just like to reinforce what I said earlier. I think the fiscal dividend is a net. We've not even balanced the budget yet. It's far too early to think about spending again. We should just remember deficit is not debt. We have to keep the brakes on the politicians. They're so keen to start spending and make themselves look good. We have to avoid that.

On the EI fund, I probably agree that the seasonal workers, particularly in this province and New Brunswick, need a lot of help, but there must be some system other than EI that can do this. I think the EI system as it is today needs a tremendous amount of work and a lot of political guts to clean it up. I think we all know there is tremendous abuse in the EI system. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thanks, Mr. Moorehead.

Mr. Perry, and then Mr. MacLauchlan.

Mr. Roger Perry: I'll expand briefly on what Blair said in connection to the opening of the Confederation Bridge. We experienced a 30% increase in tourist traffic this year, and I think a lot of it is due to the bridge. We're the only province in Canada that does not have a four-lane highway, and we have information that every vehicle that comes here has to travel through Nova Scotia or New Brunswick to get to Prince Edward Island. They are very busy in twinning their highways, and we're hoping that eventually, if a national highway policy was put in place, it would help pay for twinning the Trans-Canada Highway between Charlottetown and the Confederation Bridge.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Perry.

Mr. MacLauchlan.

Mr. Blair MacLauchlan: I'd like to thank you people for coming to P.E.I., as others have. I think it's healthy that you leave Ottawa and your other respective provinces and come across the country to hear the concerns on a local level. Hopefully, it's been educational and time well spent. Presumably, we'll see the fruits of your efforts.

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I would add that, just as a perception, I get the impression that maybe Paul Martin is one of the main pushers of the reduction of the deficit and then the elimination of the debt, while the rest of the Liberals—I do not know about the opposition so much—tend to be on the bandwagon, wondering what we are going to do with this money, or what we are going to do now that we have almost got to the goal line. I just want to tack that on as an impression that I personally have that we are jumping the gun a bit.

I am talking about what we are going to do with the fact that we are going to eliminate the deficit maybe a bit early. I think we have to continue on this track. We have to eliminate not only the deficit but also, gradually, the debt.

With respect to the elimination of the debt, we must also consider other productive investments during that time. There is a cost to having debt, but there is also a benefit to investment. So hopefully there will be the right mix and we will not necessarily say that we are not going to spend any money on new investments. If new investments come along that will generate a rate of return that exceeds the cost of paying down the debt, then fine, I would suggest that we invest in new investments. But if they add sums equal to or greater than the cost of paying down the debt, then I would say that we should pay down the debt.

It is a business decision. We cannot afford to have money on the books that is not productive. At the same time, we cannot afford not to take advantage of productive investments where the return would exceed the cost of paying the debt.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. MacLauchlan.

Colleagues, panellists, thank you very much for such a productive meeting.

I encourage you to make sure that you have received a copy of the minister's statement about our priorities and values and the framework for this consultation. If you have not already picked that up, there are copies on the table.

I also encourage you, if you have not had the chance, to share in reading the proposals that were given to us this morning, if you are interested in coming back this afternoon to hear from us.

This committee will probably be starting to write its report on November 7. If you have additional comments, you can certainly forward them to us and we will make sure that they form part of the document. Each of the briefs that you have given us will be looked at very carefully.

To your point, Ms. McDonald, about the timing, there are lots of other ways to elaborate on the points if there is something that is missing.

If something arose this morning or you see something in the newspaper or you hear about it and you would like to comment, I encourage you to get those comments to us. It is certainly with a diversity of views that we will find the best solution.

Also, for the information of those of you who are interested in the changes to the CPP, the committee will be considering the consultations on the bill that is before the House starting on October 28, and I believe our report is going to the minister.... We will start writing something around November 17, so if you could get something between now and perhaps November 17, that would be terrific. Remember, it is free to write to your member of Parliament, so do not miss that opportunity. I suppose there is a cost somewhere, but it is still free to the individual. Hopefully it is a good investment.

Colleagues, I remind you that we will come back at 1 p.m. to hear from our last panel. We are fairly tight on time.

We are adjourned.