SCYR Committee Meeting

SUB-COMMITTEE ON CHILDREN AND YOUTH AT RISK OF THE STANDING COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITIES

SOUS-COMITÉ SUR LES ENFANTS ET JEUNES À RISQUE DU COMITÉ PERMANENT DES RESOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, March 22, 2000

• 1615

[English]

The Chair (Mr. John Godfrey (Don Valley West, Lib.): With your much anticipated and eagerly awaited arrival, Paul, I think we're now in registration mode.

I would like to welcome Frances Woolley in a more formal sense. As we were chatting more informally, Frances, we would now like to take up that particular point. I think our official beginning will be the rather more philosophical point you would like to begin with, for the record.

Ms. Frances Woolley (Associate Professor, Department of Economics, Carleton University): Okay.

I think the fundamental question for this committee is how should the cost of raising children be divided among members of society? Support for families with children ranges from the extremely generous to the minimal. A single-earner family with an income of $70,000, while not exactly in a situation guaranteed to generate sympathy, may receive absolutely no recognition of their caregiving responsibilities.

I think this question of balance is one that the committee needs to think about, and whether or not there's a possibility of having a more rational program and less of a patchwork of programs for families with children.

Thank you.

The Chair: From the point of view of a statement on record, that's one of the shortest that has ever been noted. It's almost haiku-like in its brevity.

[Translation]

Ms. Gagnon, are your questions the same as before?

Ms. Christiane Gagnon (Québec, BQ): Yes. You talked about the importance of a balanced approach to family assistance. As I see it, this balance is tenuous at best. Increasing the child tax benefit was a good move, although the government failed to take into consideration all of the other forms of family assistance that are needed. I'm thinking among other things about day care services. As I've said, Quebec has already instituted $5 a day child care, but it receives no financial support from the federal government to run this very costly program. The federal government does not invest one red cent in child care services. In order to fund a portion of child care services, the provinces turn to the child tax benefit, which ensures fairness between the federal and provincial governments, and in so doing they address some of the essential needs that they have identified. Quebeckers who expect to receive a substantial amount in the form of a child tax benefit are left with the impression that money is being taken out of families' pockets and that family allowances are being cut in order to redirect funds to child care services. The federal government should establish a fund to help provinces that provide child care services, so that families receive the full child tax benefits to which they are entitled.

I would also like to discuss with you the policy respecting parental leave. You appear to support this policy which doubles the amount of parental leave a person can take. I am, however, critical of one aspect of this policy. It lacks vision and flexibility in so far as EI eligibility criteria are concerned. Persons are required to work an unreasonable number of hours, 700 hours in the case of part-time female workers. Very few women can qualify for EI benefits and those who do are entitled to only 55 per cent of their salary. Furthermore, the policy fails to take into account self-employed persons. Moreover, young persons make up 15 per cent of Quebec's workforce. I'm not certain whether the proportion is the same in other provinces. This policy appears to be out of step with the reality of the marketplace. Before announcing that it was extending parental leave from six months to one year, the government should have considered other measures geared to the reality of today's marketplace.

Taxes also have an impact on the family budget. As soon as a family earns $14,000 and change, it must pay taxes, whereas the cut off point in Quebec is $32,000. If the government truly wants to help families, it must strive to balance all of the measures in place so that a young couple or single parent can benefit from child care services, receive a higher child tax benefit and benefit from a slightly higher tax threshold so that ultimately, they have more money left over at the end of the day. While the government did make some efforts in its budget to cut taxes, the savings are minimal for those earning between $13,000 and $20,000: a mere $2 a month over the next year and, if my memory serves me correctly, $40 a month within three years.

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If the government had truly recognized the urgency of the situation, it would have acted on these four fronts. Do you agree with me? I'm certain that you do.

[English]

The Chair: That was a question?

Ms. Christiane Gagnon: I have too many mikes on here.

Ms. Frances Woolley: There's an awful lot there. I don't know if you're aware, but B.C. has just announced that it too will be following Quebec's lead with the $5-a-day child care.

The Chair: That's starting with older children and working down.

Ms. Frances Woolley: That's how Quebec has done it.

The Chair: They're talking about eight-year-olds and seven-year-olds. It's after-school care.

[Translation]

Ms. Christiane Gagnon: In Quebec, the program initially targeted children between the ages of three and five.

[English]

Ms. Frances Woolley: The $5-a-day child care is a very complex issue. There's no doubt it has benefits in terms of allowing parents to go back to work if they choose. It certainly makes it much easier to choose whether to return to work or stay home. It's also very expensive. Whether or not it's a good investment depends really on how one views a couple of different issues.

First is the relative benefits of home care versus care by others. Now if you say home care has all sorts of benefits, you're not going to buy the policy. If you say kids do well in day care, you're going to be much more in favour of it.

It also depends on how one views female labour force participation—how important it is to encourage female labour force participation. Again, that's something where people disagree.

I think it's an absolutely fascinating experiment because it's going to be very interesting to see what happens in the long run to women's earnings. I think the issues involved are too difficult for me to come down on it one way or the other.

The Chair: Is it on that—

[Translation]

Ms. Christiane Gagnon: Would you recommend that the federal government provide further assistance to the provinces or to families? The National Child Credit goes directly to families. Here we have a province that establishes a child care program and uses a portion of the federal funding earmarked in the last two budgets to partially cover the cost of running this program. I'm not certain whether special consideration should be given to in-home child care or to child care outside the home. I think this comes down to a personal choice and to women's work situation.

What can be done to make the federal government more aware of the costs incurred by the provinces, in this instance Quebec and British Columbia, since the latter is set to launch a similar program, and of the importance of the child tax benefit to families? Families who qualify for $5 a day child care find themselves with less money in their pockets when the province is forced to use some of the child tax benefit to fund child care. However, when provinces fail to implement a policy of this nature, even though families may be left with more money in their pockets, they end up having to pay more for child care - approximately $20 a day for in-home or outside child care.

The federal government enters into agreements with the provinces and assigns them responsibility for administering the child tax benefit. The provinces are free to spend this money as they see fit, provided it goes to children. However, people's perception of the situation is altogether different.

The Fédération des femmes du Québec is demanding that families receive the full child tax benefit to which they are entitled and that they be allowed to keep the extra amount allocated by the federal government this year. However, in order to provide child care services to families, Quebec requires a certain level of funding. British Columbia will face the same perception problems this year, with people believing that families are being denied the additional funding awarded by the federal government.

This situation is extremely frustrating because Quebec is working hard to provide child care services, even though politically, this initiative has not been to its advantage. This year, the province wants to extend the $5 a day child care program to all children up to the age of five years.

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Families don't seem to realize that even though they may be receiving less money directly, they are receiving an additional service. Without this program, they would have to pay more for child care. I think we need to take a hard look at this if we really want to bring in a family policy.

[English]

The Chair: End of small intervention.

Ms. Frances Woolley: There's a very interesting study, and I can give the reference to your researcher, done by Baril and...anyway it's from the IRPP looking at Quebec day care. One of the issues that's addressed in the study is whether it is best to give money directly to families or provide services.

This study argues that families in Quebec have a wide range of child care options, and it would make more sense to give money directly to families. It would certainly be much more expensive to give families $25 a day and allow them to choose what to do with it than to provide day care places, because the number of day care places is limited.

The fundamental question I think you're asking is should the money go to families or should it go to the provinces? To a certain extent, I think that's largely a political rather than an economic question. As an outsider, I can say what my view is. I was surprised not to see more money going into the national child benefit in this budget. I thought there would be more money going into it. The national child benefit, you know, is the program that gives money to the provinces for various programs. I thought that would be enriched, and it hasn't been. It's basically a political issue—a matter of finding coordination, and so on.

You also raised some issues about parental leave and taxes. Do you mind if I take some time to answer those?

On the parental leave, you're absolutely right about the question of eligibility. There's no doubt that the switch to the hours-based system has reduced the number of people eligible for maternity leave. There is a change in the budget that reduces the number of hours required, so that seems to be some recognition. We know that only about 48% of births result in claims for benefits. What we don't know is how many people are self-employed or working less than the required number of hours. We don't know why people are not getting it.

[Translation]

Ms. Christiane Gagnon: Benefits equivalent to 55 per cent of a woman's salary are inadequate. What woman can afford to take parental leave if she receives no more than this for a period of six months?

Eligibility is also a problem. The number of hours of work required for EI entitlement has been reduced from 700 to 600 hours. We recommend that this be further reduced to 300 hours of work. Quebec has proposed a family policy which would do away with the two-week waiting period for people taking parental leave. Parents would now be entitled to receive EI benefits immediately, without having to wait. We have also recommended that benefits be equivalent to 70 per cent of the person's salary and that EI eligibility be extended to anyone who has earned $2,000 and worked for 300 hours.

We are still a long way off from the measures that Quebec has recommended. It wanted parental leave to be extended by three or four weeks, not up to one year. Maybe women would rather go on parental leave for seven months and draw 70 per cent of their salary, instead of leaving for one year during which they receive only 55 per cent of their salary. The issue here is whether a parent can afford to stay home while drawing only 55 per cent of his or her salary.

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[English]

The Chair: Perhaps we could make this the last answer in this round and then move over to Paul Forseth.

Paul, as your group is now departing, it has no relationship to the fact you're going to be asking a question. They don't work for me. This is the Forum for Young Canadians. Don't take it badly.

Goodbye, everybody. Thank you very much for coming, everybody.

Now if we may return to Paul Forseth, welcome, and thank you for saving the meeting too.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Ref.): I was at another meeting, unfortunately.

Ms. Woolley, thank you for coming. I understand you analyse, you might say, the child friendliness of the federal budget with a more reflective, detached point of view.

Purely from my perspective, of course, looking at the general family friendliness of the last budget, I think it was an utter failure, especially when you compare it to what I would characterize as a very family friendly alternative in what we put forward as solution 17.

I'm just wondering if you have looked at some of the items within solution 17, such as restoring a $3,000 standard deduction for children; raising the basic exemption to $10,000 for anyone; the equivalent-to-married exemption also going to $10,000; and a single rate of 17% for all income tax above that, which eliminates the disparity between one-earner and two-earner families. It goes on and on and still retains the current child tax benefit regime, the child care expense reduction, and all the rest of it.

When you look at our package, and we would still be able to balance the budget and increase government spending and do all of those things, the big question is, what in the world is the government doing with our money, especially in view of a family context or a family friendliness vetting? From our perspective, we look at all pieces of legislation and vet them through how family friendly they are, because that's a perspective we use.

First of all, have you looked at comparing what we are saying is possible and can be done? It's very doable; the computers have run all the numbers. Also, you could talk about, maybe philosophically and from an efficacious point of view, getting back to somewhat the old style of providing the standard deduction of what we've outlined as $3,000 per child, regardless. Every parent would get that. I think that's enough at this point for you to respond to.

Ms. Frances Woolley: Unfortunately, I briefly discussed the Alberta model. Basically, in answer to your question, I didn't compare the federal budget to alternative 17. Just without looking at it, I'd have to look at the numbers very carefully to see how it would be possible to increase the exemptions, reduce the rates, and still get the same amount of revenue. Clearly there must be something else there. So I don't know.

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In terms of a $3,000-per-child deduction, a $3,000-per-child deduction would be worth an awful lot less to a low-income family than the current child tax benefit. For a family earning $20,000 under your scheme—

Mr. Paul Forseth: But what I'm saying is it's on top of.

Ms. Frances Woolley: On top of the child tax benefit?

Mr. Paul Forseth: Yes.

Ms. Frances Woolley: Okay. I really don't see how you could do it, because the C.D. Howe proposals have proposed a $2,000 deduction—

Mr. Paul Forseth: What I'll do is I'll supply you the material, because it's so....

As you know, once you start paying taxes, you pay at 17%, 26%, and 29%, the three rates. Well, we eliminate the three rates and everyone pays 17%.

Ms. Frances Woolley: Yes, so your revenue goes down.

Mr. Paul Forseth: No, it doesn't. What I'm saying is the computer models and the independent people who do the finance minister's stuff did our stuff as well, so it stands up and all the rest of it. Look at that material.

Ms. Frances Woolley: Yes.

Mr. Paul Forseth: I want to get back to the more philosophical thing of—

The Chair: Paul, could I just make a procedural suggestion that I think would be of assistance to the committee? First of all, it's important to take these ideas seriously. It's hard to do when you don't have the documents in front of you. I wonder if we can ask this of our guest, understanding that there's no money involved and she is a busy person.

Would it be possible, when Paul forwards to you—what was it?—alternative 17—

Mr. Paul Forseth: We call it solution 17.

The Chair: Solution 17. Would it be overly burdensome to ask that when you've had a chance to mull it over and think about it and perhaps get back to Mr. Forseth, if there are some ambiguities that seem unclear, you could give us a quick and dirty response, which we could receive and distribute to the rest of the committee? Would you be comfortable with that idea? Because that would help us all the way around.

Mr. Paul Forseth: But I wanted to get at, besides that, the more philosophical look at providing a standard deduction, which was somewhat the old model, and how various governments moved away from that. Did you see any deleterious effects? What are your comments on perhaps wanting to go back there, all around that?

Ms. Frances Woolley: I'm an advocate of universal benefits. If you look at the history of child benefits, what happened in the 1980s and 1990s is we saw a big increase in the number of families in poverty and we also had a tight financial situation. So what we did was really quite sensible given the circumstances. We said, “Okay, we have all these families with children. They're having a really rough time. We don't have any money to take from anywhere else. Let's take the money from the upper- and middle-income families with children and give it to the low-income families with children.” That essentially is the history of child benefits for the last ten or fifteen years.

The problem with that is it leaves out one thing. It leaves out your family that's earning, say, $70,000—which is comfortable, right? It's a nice income. But there are lots of families around that income level. Your average two-parent family is actually earning close to that income level. So there are a good number of families out there—not the majority, but a good number—and they are paying exactly the same taxes as people in the same situation without children. If they're living in Vancouver or another high-income city, they're having problems running a car and they're having problems buying a house. That's a problem.

The deduction solves that problem. My view is it's not the best way of solving that problem. It's not the best way of solving that problem, because...well, not within your thing, but it doesn't necessarily put money directly in the hands of the person who's looking after the child. If you have a traditional family and you have one person staying home and looking after the child, you want to put money directly in the hands of that person. So I would favour universalizing the current benefit over putting in a deduction.

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The Chair: To the prime caregiver?

Ms. Frances Woolley: Yes.

Mr. Paul Forseth: Essentially, that's the old family allowance model.

Ms. Frances Woolley: Yes, and it's the model that's adopted in the majority of countries. If you look internationally, that's the most common model.

Mr. Paul Forseth: What are some of the other issues you looked at—ensuring that there's no tax on food and clothing for children, GST exemptions, and other types of benefits? What other things do you feel the federal government should be looking at?

Ms. Frances Woolley: What do I think the federal government should be looking at? Right now, the federal government is doing an exercise to evaluate the national child benefit. I think that's very important, and working in cooperation with the provinces to see what's happening that doesn't make a difference.

As I said in my opening statements, my concern with the current system is the patchwork of benefits. It's very generous in some respects and not at all generous in others. The child care expense deduction is extremely generous, and I think a lot of the dissatisfaction with the tax system, particularly in the west, is what one Albertan termed to me “deduction envy”. I like the phrase.

Mr. Paul Forseth: Well, as I understand it, most families are not able to use up the child care expense deduction, and the participation rate in that program isn't all that great. Lots of people are choosing not to use it when they could.

Ms. Frances Woolley: Yes. If you look at the family expenditure survey and figure out how much money is spent on child care expenses, and you look at the income tax and at how much is claimed in child care expenses, it seems that about 30% of what people spend on child care expenses is claimed under the income tax. So it seems to be that there are some people who are spending more than the maximum amount allowed, but my guess is that for the vast majority, the caregivers are being paid in cash under the table.

The Chair: That's the informal economy.

Ms. Frances Woolley: Yes.

The Chair: Therefore, they can't issue receipts.

[Translation]

Welcome, Ms. St-Jacques. You may proceed.

Ms. Diane St-Jacques (Shefford, PC): First of all, I'd like to...

[English]

Do you speak French? Not at all?

[Translation]

Ms. Frances Woolley: A little.

Ms. Diane St-Jacques: I'd like to apologize for being late. I had to make a quick visit to my riding. That's a six-hour round trip. I thought I would make it back in time, but unfortunately, that wasn't the case. Thank you for coming here today.

Before I begin, I'd like to know if I could get a copy of your notes. I don't know whether you tabled a brief or some other document that we could get our hands on, but I would like to stay informed.

My assistant informs me that several of the questions I had in mind have already been put to you by my colleagues. Nevertheless, there are two things that I would like to discuss with you.

I was appointed to a task force on poverty which toured the country and met with agencies and people living in poverty. We drafted a report containing a great many recommendations, several of which had to do with the national child benefit. Among other things, the task force recommended that the government consider the possibility of introducing a guaranteed minimum income for families.

I'd like to know how you feel about this particular recommendation. I think we need to consider whether this is a good or bad idea and to weigh the proposal's merits. However, if you have some idea... This proposal could improve living conditions for families and children.

Perhaps I should put my second question to you immediately. It concerns the clawback of the National Child Benefit by the provinces. As we know, the provinces, with the exception of New Brunswick and Newfoundland, take back the benefit from families on social assistance. The funds are then used to provide other services. In the meantime, the poorest of the poor are deprived of the benefit. One government giveth, while another taketh away.

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The task force also recommended that an agreement be negotiated with the provinces to ensure that any future increases in the National Child Benefit are not clawed back from those on social assistance.

[English]

Ms. Frances Woolley: If you were to do a guaranteed minimum income for a family, how much per year would it need to be for, I don't know, maybe a single parent with one child or a family of four?

Ms. Diane St-Jacques: We didn't go there. We just said we have to examine that, because we heard a lot about it. It's not the first time it's on the floor. We heard a lot about it, but we have to go and see. First we have to see if it's a good thing, how much money would be involved, and how we would make sure it didn't encourage people to stay home and do nothing. All those issues we are going to have to look at. Did you ever look at that? Did you ever go and see if something could work, if we could arrive at that solution?

Ms. Frances Woolley: This is a solution that's been around for a long time. The problem you have with any of these proposals is there are at least two things you want. First you want to have an adequate minimum income so that it's enough for somebody who is completely dependent upon that minimum income to get by. You also want to have a reasonable tax-back rate so that as soon as a person goes in to work, they don't just simply lose that income.

The way traditional social assistance programs in Canada have worked is they solve the first problem but don't do anything about the second. So there's a reasonable level of income.... Well....

Ms. Diane St-Jacques: It depends, yes.

Ms. Frances Woolley: There's some level of income, which hopefully is going to be enough for people without any other source of income to get by on. But the tax-back rates are very high; they're typically 80% to 100%.

Now what's happened with the child tax benefit initiatives is the tax-back rates have been reduced, so instead of a person losing a dollar of benefits for every dollar they earn, those rates have been reduced. But the trade-off has been that the tax-back rates now go much further up the income scale.

Under 1980s-style social assistance, yes, as soon as you worked, for every dollar you earned, you lost almost a dollar in social assistance, so there was really no point in taking a job if you were only going to earn $16,000 or $20,000. But once you got above $20,000, you were okay. You got to keep what you earned.

Now, with the child benefit, it's tilted, so there's some point in getting off social assistance, but for up to $20,000 of income—and now, with the new budget, even up to about $32,000 of income—you're paying tax rates, when you look at income tax, employment insurance, Canada pension plan premiums, and loss of the Canada child tax benefit, that are right up at 60% or 70%.

Ms. Diane St-Jacques: Yes, but they took the money back from the ones who are on social welfare.

Ms. Frances Woolley: Yes.

[Translation]

Ms. Diane St-Jacques: The provincial government is taking money away from people on social assistance. It has the right to claw back a certain amount from National Child Benefit recipients and to transfer these funds to other services. However, these persons never receive any additional services. Either I didn't understand your answer, or I didn't make myself very clear, because I don't believe people on welfare are earning $30,000.

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Ms. Frances Woolley: Of course they aren't.

[English]

Again, this is in a sense a political question rather than an economic question. The provinces could have chosen not to take that money back, and they didn't.

Ms. Diane St-Jacques: Because they were allowed to. But what if we try to, not negotiate, but make arrangements to say, “No, don't”? They have the right to do that.

Ms. Frances Woolley: My understanding from talking to people who were involved with the initial negotiations on the child tax benefit is that this was on the table at the beginning, and the provinces' position at the beginning was, “We want to take it back.”

Ms. Diane St-Jacques: It was on the table at the beginning, but with the new investment now, can we try to make an arrangement with the provinces and say, “Stop that clawback to these people”? In Quebec they give les garderies....

Maybe it's better if you put your earphone on, because my English is not good.

[Translation]

In Quebec, the money goes to provide child care services. However, persons on social assistance often have no need of day care services or, if they do, it's usually outside normal business hours. These persons often work evenings or nights. I'm not criticizing Quebec's network of day cares; I think the system is a good one, even though there is still room for improvement. I just don't see how social welfare recipients can benefit from these other services.

During the course of our consultations, we observed that social welfare recipients who were deprived of this money did not necessarily receive the additional services that might have helped them improve their lot in life.

Therefore, to get back to my question, should the federal government endeavour to reach an agreement with the provinces so that these and future benefits are no longer clawed back? We can't turn back the clock. What's done is done. However, couldn't something be done about new funding in this area?

[English]

Ms. Frances Woolley: I would say yes, it's a good idea to negotiate. The difficulty is if the child tax benefits aren't clawed back, then the level of earnings at which it's better to....

The philosophy behind the child tax benefit was to have a portable benefit to divorce support for children from welfare, so that whether you were working or whether you were on welfare, you had that benefit for children.

Ms. Diane St-Jacques: Yes.

Ms. Frances Woolley: I don't know if you can see that in a sense the philosophy of separating support for children and allowing it to be portable suggests you would want to claw it back.

I don't know what the best.... There are so many different claims. There are drug plans and child care. There are so many different things that could be done to help families at risk. I really don't know what the best answer is.

• 1655

I'm not sure that this is really answering your question; it's partly because I just don't know what the answer is.

In terms of one of the things you were saying about the $5-a-day child care not necessarily helping people on welfare, it does seem to make a difference when child care is available. HRDC has done this self-sufficiency project in New Brunswick, and what it did is it gave people very generous wage subsidies. So it basically doubled the earnings people got from going out and getting a job. Not that many did. And the major problem was the lack of child care. It is true that a lot of the jobs that unskilled workers get are part-time, evenings, irregular shifts—

Ms. Diane St-Jacques: Nights.

Ms. Frances Woolley: Yes. It does help to have day care available.

Ms. Diane St-Jacques: But you have to be more flexible then to adjust to the needs of the parents because some—

Ms. Frances Woolley: Yes.

The Chair: Paul is interested in getting in, and perhaps I might say something on the way through. It strikes me, first of all, that this is, as you've indicated, a fascinating area. There are the challenges of understanding the economic benefit of what we do as opposed to social benefit and making trade-offs, if need be, of prioritizing, of deciding what this is mostly about. Is the primary focus the child as opposed to the parents? In some ways, many of these things we do in effect take children hostage. They say the really important thing is to get these parents back to work and we're going to bribe them, reward them, threaten them—whatever. We're going to make it easier for them by essentially making it better for their kids.

There was a famous statement in the budget last year, which said that the child of somebody who worked should essentially always be better off than the child of somebody who doesn't work, as if somehow it was the child's fault that the parents weren't working. When you think about it, it's really quite perverse; it doesn't actually respect the child as a human being very much.

Then there are the trade-offs—which I think we've really been discussing here—between income and services, because income and services are interchangeable in many ways. That is to say, if the service isn't available and you need it, you'll have to pay for it. And for some services in our society—such as health care, such as public education, such as parks—we have decided that it's a lot more efficient to organize those on a public basis and make them available to people rather than giving people more private income and saying, go get your own education, health care, and park.

This is the challenge, and this is where I would also like to receive a copy of what I keep wanting to call proposition 17; I know it's not that, but you know what I mean. Any solution that somehow does not take into account what actually happens in communities and neighbourhoods where people live, go to skating rinks and to recreation centres, have health care, schools, parks, child care centres, drop-in centres, parenting centres, all that stuff—or should have—has a map of society that is almost reduced to two units: the family unit and government.

I'm going to take a shot here at Paul, because I was intrigued by his leader's response to the Speech from the Throne, where there was a very compelling passage on family. It was very personal; he talked about his own family and so on. But what was missing from the diagram was what I would call community capacity building or social cohesion. It's not that it's alien to the tradition of anyone who lives in Canada to have neighbourhood recreational and all sorts of social facilities that allow us to get together with people of all income groups.

So to overly focus on income issues to the exclusion of service issues, first of all, has an impact on income because it means you have to substitute the services when you don't have them in place. And you have to have more income to do that.

Secondly, it also ignores the magic of community and neighbourhood, which in any theory of social development, where there are particularly cohesive communities, can prove, both in the aggregate and in the single case, to be more powerful a determinant of good outcomes for children and families than income. Disposable income is not the be-all and end-all. It's also what we do at the level of social services in communities.

• 1700

So the task we have, and really it's going to be the work of this committee to try to get that balance right, is to say what is it? What are the values that we start from? The tax system simply reinforces a set of beliefs and values—first of all, values about what ought to be and a sort of undergirding of how we think things work, of how we think productivity is created or enhanced, or how we think we motivate people to get back to work, or how we think we get better performance out of kids going to school. It's only after you've sorted the value piece that you get to the tax versus services piece and all the rest of it.

I think what I derive from you, which I suspect all of us would agree with, is the fact that when you add up what we do federally and provincially, it does not represent a coherent strategy, an integrated family strategy. It is inconsistent. It's counterproductive. When Quebec has a $5-a-day day care strategy, which means that parents who could, if they went to more expensive day care, be getting back a child care credit don't have to, that's nuts, because it penalizes Quebec for installing an infrastructure that is probably a more efficient way of arriving at that end. So I have some sympathy for Madame Gagnon when she says that.

It's getting our values right at the beginning as to why we should worry about children, and if we put children first, what does that actually mean from a service and income point of view? How do we think child development works in optimal fashion? What are the various routes to get there, and what's appropriate? For instance, you indicated that it was a generous thing to put a lot of money into the first year of life. One might say that according to the latest theories of brain development, this is exactly the time you would have maximum attachment with a primary caregiver who would preferably be your parent. You really want to emphasize that, but as we now know through development theory, as the child starts to reach out and socialize and need the presence of other children, the very thing that was desirable in the first year of life, which is close bonding and contact, and sensory pathways, as Fraser Mustard would say, all of that stuff then becomes less important relative to the need of children and the parents to work in groups, both in groups of children and groups of parents. That would suggest that another set of incentives and institutions would be appropriate as the child gets to two, three, four, five, and six.

We're trying to balance a whole set of social values about the general importance of families and children in the scheme of things with our latest understanding of different development pathways while honouring in a free and democratic society the choice that men and women as adults make either to work or not to work outside the home, to work part-time, and to make sure whatever they do kids aren't hurt. Somehow we've set up a system that works to the maximum advantage of those most vulnerable members of our society.

Your presentation has produced this flood of thought, but I don't know whether out of all of that mess you could name one thing. I'm getting it off my chest.

Ms. Frances Woolley: Should I take off my taxation hat and put on my social cohesion hat?

The Chair: Yes.

Ms. Frances Woolley: I've actually been involved with a study that Lars Osberg at Dalhousie University has been—

The Chair: In a previous life I was at Dalhousie, by the way.

Ms. Frances Woolley: I'm not surprised to hear that.

Heritage Canada has sponsored him to put together a number of studies on social cohesion that's coming out with the University of Toronto Press. It's fascinating, and I can help your research staff get hold of them.

It is certainly true that community makes a difference. It's also very hard to know how to build a community. One can take the OECD perspective, which is to say let's cut government. If we cut government, we'll get voluntary activity, and with voluntary activity, we'll get people building trust. There will be trust, there will be reciprocity, and there will be community-level solutions for a whole variety of social problems. Right? So that's one possible direction of this logic.

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The Chair: Otherwise known as the perversion of Robert Putnam.

Ms. Frances Woolley: Another way you could take this is to look at some of the work Shelley Phipps has done, who's also at Dalhousie with Lars Osberg. She's looked at the effects of moves on children and found that one of the most traumatic things for children is to move. That really calls into question some of the types of economic policies we have that encourage.... Then there's a real tension between having a mobile labour force and having good outcomes for kids.

Paul Bernard, who I think is at the Université de Montréal, and also Jane Jensen, have done some work for the CPRN that is more critical of the social cohesion idea. We used to live in very cohesive neighbourhoods. Those were those neighbourhoods where everybody looked out the window to see who had done their washing and whichever woman didn't have her washing hung up on the line by 10 o'clock or 11 o'clock was sort of a disreputable....

The Chair: A scarlet woman.

Ms. Frances Woolley: Exactly. You know, sometimes it's nice not to live in quite such cohesive societies. Cohesion is a very Protestant notion too. People measure social cohesion by looking at trust. If you look at the Quebec numbers, all these cohesion measures are way lower in Quebec because volunteering and trusting strangers tend to be Protestant. They are lower in Catholic countries. They're lower in Spain, Italy, France, and they're higher in the Scandinavian countries.

I'm not really prepared to buy the idea that Quebec is not a cohesive society.

The Chair: They're not.

Voices: Oh, oh!

Ms. Frances Woolley: Maybe they aren't, I don't know. In some dimensions they seem to be cohesive.

Those are just sort of rambling thoughts. When you began this.... Canada has taken an international lead in using child policy as labour market policy.

The Chair: I'm not sure I like it.

Mr. Paul Forseth: Can I ask you this? In looking at the international scene, are there some jurisdictions that are doing it right, or almost doing it right, that we could look to as the leaders? Can you perhaps cite some studies about social cohesion and other psychological adjustment or success rates in education or some kind of inferential measures? On paper, they appear to be doing so much more for the family in supports. What are the social outcomes of that? Can we look someplace to say we need to measure ourselves by what this jurisdiction is doing, where there are studies to show that there are certain social payoffs? Maybe you can talk about that.

Ms. Frances Woolley: Look at Norway. That's what I'd suggest. Shelley Phipps did a huge study for CPRN that looked at, not a lot of countries, but a range of countries.

The Chair: Six.

Ms. Frances Woolley: Yes, six. She actually looked at outcomes in terms of children's well-being. Are children happy? Do they get sick? She then tried to correlate those with social policy measures. One of her findings was that Canada just spends less on kids. If you look at the taxes paid by people with kids as opposed to the taxes paid by people without kids, if you forget about all the programs and just look at the end-of-the-day bottom line, Canada directs fewer resources to families with children than the other countries she studied.

• 1710

The other thing she found was that the kids in Norway did the best. On the other hand, that may be to do with all sorts of demographic issues, such as religion or the nature of Norwegian society, that we couldn't duplicate. She did conclude that countries with universal programs do better. This would fit in with the 17% solution, inasmuch as if you changed that deduction into a universal benefit, then you'd be there.

Mr. Paul Forseth: What about some other studies, just in general, to say why should we do this, to ask the larger question about why government should really concern itself at all with a “family policy” or whatever?

The Chair: Well, there's the study that Mike Harris asked Fraser Mustard and Margaret McCain to do in Ontario called the “Early Years Study: Reversing the Real Brain Drain”. There's a variety of arguments, ranging from ones of fundamental human rights for all people to reach their maximum fulfilment to ones of economic efficiency, which is that the better prepared kids are for school, the better they'll do in school, the better they will eventually be in terms of flexibility in the workforce, and the less drain they'll be on major social systems.

In the research, there is a direct correlation to developmental outcomes. For kids who start the first six years of life in a way that makes them copers, their adult health outcomes are better. There are better results in terms of their being less likely to be high school dropouts, be unemployed, be criminal, all that stuff.

In other words, you actually get a double benefit from these investments, according to what I think is pretty established research. That not only means you don't have as much of a strain on the social system down the road, including the health care system or the justice system, but in fact you get the double effect because they're on the asset side as contributors to taxes and all the rest of it.

What's interesting is that through instruments like the national longitudinal survey on children and youth, we are starting to get a photograph that is comparable to international data, like in Norway and so on, about how our kids are doing generally. One of the things that emerges from that data is that we perhaps make a mistake in targeting and focusing overly on at-risk populations, so-called poor kids or anything else.

In Canada the situation is that while the kids in the lowest socioeconomic brackets are the most at risk—that is to say, those from the 40% of families in the bottom fifth of income are at risk of either behavioural problems or cognitive problems when they hit school—it's a gradient. Even in the top 20% of earning families, still 20% of their kids are having problems. In between you have a perfect gradient. Because relatively more people in Canada are middle class, there are actually more middle-class kids in Canada experiencing problems in school, either behavioural or cognitive. This suggests that if we're going to go around and keep on targeting, as we have with CAPC, the national child benefit, and all the rest of it, we are missing the problem.

• 1715

So the problem is not simply one of income, by definition. The problem is more profound. There are measures now being undertaken to study, using a thing called the readiness-to-learn measure, how various neighbourhoods do in preparing their kids for school. They measure the kids when they hit the school and see whether these kids are ready for school. It's not a measure of the school, because they just got there. It's a measure of—

Mr. Paul Forseth: I would like to interject here. I guess there is a fair amount of studies about various Head Start programs in the United States. A member of our caucus, Keith Martin, keeps promoting his particular Head Start program, but he's very careful in singling out some of the successful ones. I understand there are some studies where essentially billions have wasted in so-called Head Start programs where the later studies showed they had absolutely no benefit and can even show there might have been some harm. That's a debate; it's not an official part of our party.

The Chair: It's a good debate, but the real challenge, which comes back to the argument for universality and flexibility, is that on a kind of international comparison, all of our kids and all of our families need help, whatever choices they make. It's not that we should have a notion that some of us are exempt from this problem.

For instance, some of the readiness data I've seen for Toronto schools, where they've actually measured all the incoming kindergarten kids, indicates that families who live in very affluent neighbourhoods actually do worse than some who are living, not in poor neighbourhoods, but more middling income.... It may be because these hard-working, dual-income families are turning their kids over to nannies, who live relative lives of isolation and who do not, through that system, allow the kids to socialize, to have preschool, to have all that stuff.

So it's not a question of disposable income; it's a question of choices people make, which certainly should not be... I mean, you can't tell people not to work.

All of this is to say that when it comes down to taxation and taxation issues, we have to have a pretty good sense of a kind of developmental, societal theory and some values as to what we hold dear before we can say we want the tax system to help us do this.

I think that's the bell summoning us to the sweet hour of prayer. Well, actually not; it's the vote. It's not angelus.

We thank you very much for what has been a rather unusual meeting. It started out with a kind of education for the Forum for Young Canadians, which I thought Madame Gagnon and I improvised pretty darn well until some other folks showed up. It's been a bit of a rolling show, but somehow I think we've put a number of very useful things on the record.

I want to thank you for coming. We'll obviously be seeing more of each other, and we look forward to hearing the results of your analysis. Actually, it would be nice too if Madame St-Jacques' recommendations were also.... You have to look at what they were suggesting to get some feedback on her work as well. On that note, thank you.

The meeting is adjourned.