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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Friday, November 8, 2002

0855

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

Mr. Roy Culpeper (President, North-South Institute)

The Chair

Mr. Roy Culpeper

0900

0905

The Chair

Mr. Rick Casson (Lethbridge, Canadian Alliance)

Mr. Roy Culpeper

0910

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

Mr. Roy Culpeper

The Chair

Mr. Roy Cullen (Etobicoke North, Lib.)

Mr. Roy Culpeper

0915

Mr. Roy Cullen

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Mr. Roy Culpeper

0920

The Chair

Mr. Dale Kendel (Executive Director, Association for Community Living (Manitoba))

0925

The Chair

Ms. Debra Mayer (Director, Manitoba Division, Child Care Advocacy Association of Canada)

0930

0935

The Chair

Mr. Al Cerilli (Member, Executive Council, Congress of Union Retirees of Canada)

0940

0945

The Chair

Mr. Don Giesbrecht (President, Manitoba Child Care Association)

The Chair

Ms. Pat Wege (Executive Director, Manitoba Child Care Association)

0950

The Acting Chair (Mr. Roy Cullen)

0955

Mr. Verne McComas (Coordinator, Manitoba Schizophrenia Society Inc.)

The Acting Chair (Mr. Roy Cullen)

Mr. Rick Casson

1000

Mr. Dale Kendel

Mr. Rick Casson

Ms. Pat Wege

The Chair

Mr. Roy Cullen

1005

Ms. Debra Mayer

Mr. Roy Cullen

Ms. Pat Wege

Mr. Roy Cullen

Ms. Pat Wege

Mr. Roy Cullen

Ms. Pat Wege

1010

Mr. Roy Cullen

Ms. Pat Wege

Mr. Roy Cullen

Mr. Al Cerilli

Mr. Roy Cullen

Mr. Al Cerilli

Mr. Roy Cullen

Mr. Dale Kendel

Mr. Al Cerilli

1015

The Chair

Mr. Pat Martin

Mr. Dale Kendel

Mr. Pat Martin

Mr. Dale Kendel

1020

Mr. Pat Martin

Mr. Dale Kendel

Mr. Pat Martin

Mr. Al Cerilli

Mr. Pat Martin

Mr. Al Cerilli

Mr. Pat Martin

Mr. Al Cerilli

The Chair

Mr. Shawn Murphy

Mr. Dale Kendel

1025

Mr. Shawn Murphy

Mr. Dale Kendel

Mr. Shawn Murphy

Mr. Dale Kendel

Mr. Shawn Murphy

Mr. Al Cerilli

Mr. Shawn Murphy

Mr. Al Cerilli

1030

The Chair

Mr. Al Cerilli

Mr. Shawn Murphy

Ms. Debra Mayer

Mr. Al Cerilli

The Chair

1040

The Chair

Mr. Stu Brièse (President, Association of Manitoba Municipalities)

1045

1050

The Chair

Mr. Garry Loewen (Co-Chair, Policy Committee, Canadian Community Economic Development Network)

1055

The Chair

1100

The Acting Chair (Mr. Roy Cullen)

Mr. Geoffrey Elliot (Vice-President, CanWest Global Communications Corp.)

1105

The Acting Chair (Mr. Roy Cullen)

Mr. James Clark (President, Manitoba Organization of Faculty Associations)

1110

1115

The Acting Chair (Mr. Roy Cullen)

Mr. James Clark

The Acting Chair (Mr. Roy Cullen)

Mr. Kenneth Clark (Winnipeg Real Estate Board)

1120

1125

The Acting Chair (Mr. Roy Cullen)

Mr. Rick Casson

Mr. Stu Brièse

1130

Mr. Rick Casson

Mr. Stu Brièse

Mr. Rick Casson

Mr. Geoffrey Elliot

Mr. Rick Casson

Mr. Stu Brièse

1135

Mr. Rick Casson

The Acting Chair (Mr. Roy Cullen)

Mr. Pat Martin

Mr. Geoffrey Elliot

Mr. Pat Martin

Mr. Kenneth Clark

Mr. Pat Martin

Mr. Kenneth Clark

Mr. Pat Martin

Mr. Kenneth Clark

Mr. Pat Martin

Mr. Garry Loewen

1140

Mr. Pat Martin

Mr. Stu Brièse

Mr. Pat Martin

Mr. Stu Brièse

Mr. Pat Martin

Mr. Geoffrey Elliot

Mr. Pat Martin

The Acting Chair (Mr. Roy Cullen)

Mr. Pat Martin

Mr. Peter Squire (Winnipeg Real Estate Board)

Mr. Pat Martin

The Acting Chair (Mr. Roy Cullen)

Mr. Shawn Murphy

1145

Mr. James Clark

Mr. Shawn Murphy

Mr. James Clark

1150

Mr. Shawn Murphy

Mr. James Clark

Mr. Shawn Murphy

Mr. James Clark

The Acting Chair (Mr. Roy Cullen)

Mr. Garry Loewen

The Acting Chair (Mr. Roy Cullen)

1155

Mr. Geoffrey Elliot

The Acting Chair (Mr. Roy Cullen)

Mr. Geoffrey Elliot

The Acting Chair (Mr. Roy Cullen)

CANADA

Standing Committee on Finance

NUMBER 026

2nd SESSION

37th PARLIAMENT

EVIDENCE

Friday, November 8, 2002

[Recorded by Electronic Apparatus]

¾ (0855)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Good morning. Bienvenue. Pursuant to Standing Order 83(1), we're in pre-budget discussions. We have a panel from 9 a.m until 10:30 a.m., and we're very happy you could join us.

From the North-South Institute we have Roy Culpeper, who is the president; from the Association for Community Living, Dale Kendel, executive director. Welcome, sir. From the Child Care Advocacy Association of Canada we have Debra Mayer, who is the director of the Manitoba division; from the Congress of Union Retirees of Canada, Al Cerilli, president of the Manitoba Federation of Union Retirees. It's nice to have you here, sir. And from the Manitoba Child Care Association we have Don Giesbrecht, president, and Pat Wege, executive director. Welcome.

We're going to allow up to eight minutes for the presentations. At seven minutes I'll lift my pencil; I won't say anything to you. If you see me swirl it around, you'll know that it's a good time to wrap.

Now, I understand you have a plane to catch a little earlier, Mr. Culpeper. What time could you stay until, sir?

Mr. Roy Culpeper (President, North-South Institute): At your pleasure. But I suggested to the staff that since my presentation is quite different from others, if there are questions and answers, we could do that initially.

The Chair: I think we can accommodate that. We'll go to your presentation first, and I'll allow one question from every member here. The floor is yours.

Mr. Roy Culpeper: Thank you very much for inviting me here. It happens that I'm attending another conference in Winnipeg. That's why I have to rush off after this, and I wasn't able to attend your meeting in Montreal, to which I was invited. So I thank you very much for permitting me to present at this meeting in Winnipeg.

We circulated a brief to your members, and I'd just like to try to summarize the main points. They're under the four headings of foreign aid, foreign trade, financial flows, and debt. All these pertain to Canada's relations with the developing countries.

Let me say first that when you look at the huge disparity between the standard of living of almost half the world and the standard of living most Canadians enjoy, there's not only an opportunity for investment and commerce to improve the lot of half of the world, there's a huge moral imperative. I don't think it's just for such disparities to persist, and for those who are wealthy, including most Canadians, not to do anything; I think we should do more. That's basically the message that underlines our recommendations.

There are four ways in which we can help. The first way is through foreign aid. The last year has been a very significant one for Canada, in terms of reaching out to the developing world. Earlier in the year, there was a conference in Monterrey on international financing for development, at which many of the donor agencies, or donor countries, including Canada, announced they would increase foreign aid. The Prime Minister announced at that time that the foreign aid budget should increase by 8% a year for the next decade. He reiterated that subsequently in the year, including particularly at the G-8 summit, which we hosted in Kananaskis, and at the World Summit on Sustainable Development in Johannesburg, just a couple of months ago.

This would have a budgetary impact, of course. We're looking at increases in the aid budget of $200 million to $250 million a year in the early years, going up to $400 million a year in the later years. So we would effectively increase the absolute size of our aid budget from $2.5 billion to $5 billion.

I should point out that I think it's rather lamentable, if not pathetic, that we've allowed our aid program to dwindle to the level it's at today. One stark illustration of that fact is that the size of our aid budget is only very slightly larger than that of Denmark, a country of 5 million people--one-sixth of our size. If we can't do as well as, or considerably better than, Denmark, something is rotten in the state of Canada. So that's my first recommendation on the aid front.

On trade, I welcome the announcement made at Kananaskis by the Prime Minister to give greater market access to the developing countries, particularly the poorest countries. This is something we've been pressing for at the North-South Institute for many years, so we are delighted that the government has finally agreed to do this. Trade can be an engine of growth and betterment for the poor, as much as and even more than aid, so this is a very welcome initiative.

However, we shouldn't rest content with the measures that were announced in Kananaskis. There are a lot of things wrong with the trade system, as we see it, that block the possibilities for developing countries. We call these systemic issues. Although the opportunities are there for developing countries in theory, in practice they are not.

¿ (0900)

Just to give an illustration of that, we've thrown open our markets to sub-Saharan African countries, but very few of them can really take advantage of these markets because they don't have the industrial base on which to produce and send us exports in order to take advantage of those markets.

The areas of strength they have, for example in the agriculture sector, are confounded by all kinds of problems, especially the fact that there are such huge agricultural subsidies, particularly in Europe and the United States and to a lesser extent in Canada. These really make it less than a level playing field for agricultural exporters in the developing countries. That's a systemic issue we need to think about.

You'd also argue that we should be very careful about forcing a program or an agenda of trade liberalization onto the developing countries because of distortions in international markets. Just a small illustration of that having budgetary implications for the developing countries is that it's fine to think about reducing obstacles to trade on their side by abolishing tariffs, but we should remember that tariff revenues are one of the main sources of government revenue these countries have. They don't have developed sources of income or sales tax, so if we wipe tariffs away, then suddenly you're looking at governments with much less revenue with which to mount public programs in health and education. That's something that should give us pause.

They also need time in which to develop their industries and not be open to the whims of competition, particularly when these competitors, for example agricultural competitors in the north, are favoured by these heavy subsidies and can dump their agricultural produce in a developing country's market. That's my second point on trade.

Third, on finance, we welcomed the announcement at Kananaskis that there would be support for the private sector to invest in the developing countries. This is consistent with what I just said about opening trade markets. It's fine to open trade markets, but if these countries don't have any basis on which to export, there's a problem, so we did welcome that initiative at Kananaskis.

Finally, I'd like to say a couple of words on debt. A few years ago there was an initiative to bring debt relief to the poorest countries. At this point in time the consensus is that those relief measures are simply not enough. Some countries actually pay more after so-called debt relief than they did before. We would urge the government to revisit this problem and examine the need for greater debt relief. This might have some budgetary implications for Canada.

And finally, going beyond the poorest of the poor countries to the more advanced developing countries, there's a very important set of discussions going on in which Canada has actually played a leading rule along with the U.K. , and that is to set up a sort of bankruptcy mechanism. Technically, it's called the sovereign debt restructuring mechanism; that was announced a year ago. We would urge that Canada support those discussions with a view to creating this new mechanism so countries like Argentina, Brazil, and Turkey, countries that are in crisis or have been in crisis, can be helped over time.

Those are my four points, Madam Chair, and I thank you for letting me make them.

¿ (0905)

The Chair: Thank you very much.

Mr. Casson, go ahead, please.

Mr. Rick Casson (Lethbridge, Canadian Alliance): Thank you, Madam Chairman.

I'll deal with your comments here that financial aid is not the only solution, that other things have to be done as well to bring these countries along. Now, you're suggesting an increase in the funds. Do you have any suggestions on what form this aid should take? What vehicle should be used, and under what conditions should a country receive funds to make sure that they are put to the proper use?

You made a comment on agricultural subsidies to the effect that $1 billion a day is spent around the world in agricultural subsidies, and I think that's a key issue our country and many others have to face.

I recently had the opportunity to travel to Peru, and there we visited a large development by a Canadian firm. They had spent many millions of dollars that went into housing, schools, and that type of thing in the community. For firms that go in there to develop, how much onus should be put on them to contribute to the growth of the country?

Mr. Roy Culpeper: Thank you. Very briefly, first of all, with respect to the kinds of forms or conditions by which we should make our aid available, actually the consensus on how aid should be tied to conditions has evolved considerably. The conclusion, looking at 50 years of development assistance, is that if you tie a lot of conditions to it, it simply doesn't work. The conditions are either flouted or end-ran around and so forth. The conclusion is that basically there has to be buy-in and ownership for the recipient if the aid package or the aid program is going to work.

In other words, there should be a meeting of minds between donors and recipients as to what we are trying to achieve, and that might result in greater selectivity as to which countries one actually helps. In my view, only countries that have a determination to eradicate poverty should be given high priority for Canadian assistance, and then they should take ownership for delivering on that. It shouldn't be a case of the aid donors actually producing results; it should be a case of the aid recipients producing results, because they are the ones who are living with the problem. So that is our view on conditionality.

On the role of Canadian firms, I'm glad to hear what you said, and I think, generally speaking, the larger firms tend to be quite responsible, the multinationals. They tend to put a lot of store in corporate social responsibility, and there is more and more emphasis on codes of conduct and so forth. The problem is more with the smaller firms, and you see this particularly in the mining sector with junior firms, exploration firms, and so forth, that some of them are engaged in fairly reprehensible activity.

There was a report filed in the UN, for the Security Council, on natural resource exploitation in the Democratic Republic of the Congo. Some 85 firms--mining firms, for the most part--some of which were Canadian, were named as part and parcel of the instability and violence, and the exploitation without any benefit for the Congo or the people of the Congo. So on that end of the spectrum of the private sector, I would say there is a long, long way to go for any kind of corporate social responsibility to be manifested.

¿ (0910)

The Chair: Mr. Martin.

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

That was an interesting brief, and I thank you very much for it.

As much as I would like to talk more about international trade, globalization of capital, etc., there is one question I would ask. Your recommendation for increasing overall development aid calls for an increase of 8% in the aid budget. The UN recommendation is 0.7 of 1% of GDP. In recent years, Canada has fallen to, I believe, 0.25 of 1%. With your recommended formula of 8% per year, wouldn't that take us another decade to get back to even what the UN recommends as a bare minimum?

Mr. Roy Culpeper: Yes, you're quite right. For a long time we have urged Canada to go after the UN target of 0.7 of 1%. The 8% figure is not our figure; it's the Prime Minister's figure. We are endorsing that not because we think Canada shouldn't do better, but simply because we have cut our aid budget so much that, now that the government is actually talking about an increase, we would like to make sure they keep to it.

Unfortunately, the rider that Prime Minister Chrétien put on it when he first announced it was that he would see to it that the aid budget is increased by 8% as long as he is around. Now we know he's not going to be around more than a year or a year and a bit, so I would like to insist that his successors, whoever they may be, take up the torch and carry on in this respect.

The Chair: Go ahead, Mr. Cullen, please.

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

I'm happy to see you acknowledge the work former finance minister Martin has done on the HIPC initiative. I've taken your words to heart in terms of how the World Bank and IMF may have got it wrong perhaps again; perhaps it's something we need to look at.

I believe we need to have some new paradigms with respect to overseas development assistance. In fact I'm writing a book on the topic, so I'll be coming around to see you. I'm on page 36--it's tough getting to it--but it's on poverty and corruption.

Spreading risk and getting local capital involved in some of these issues are, I think, some things we need to look at. There's been a lot of talk of public-private partnerships in relation to the New Africa Initiative. As well, Mr. Hernando DeSoto, whom I'm sure you know and probably have met, talks about how we need to release--for those who haven't read his book--the intrinsic capital in a lot of these developing countries by having better property rights. The amount of capital that's tied up in property in underdeveloped countries is enormous, but because there are no formal property rights in many countries it can't be used as equity or for leverage, etc.

I'm wondering if you could comment on some of these new approaches and whether they have merit.

Mr. Roy Culpeper: Thank you. You raise a bunch of very key issues.

Let me just start with a new paradigm for development. I remember hearing a talk by a Bangladeshi development economist, Rehman Sobhan, a couple of years ago when he talked about “paradigms lost”--a tongue-in-cheek reference to the fact that we go from one paradigm to the next; it's the paradigm of the month as opposed to the flavour of the month. I'm expressing some skepticism, as you may note, about finding the right paradigm.

My own inclination is to say that every country is actually different--it's different economically, it's different socially, it's different culturally, and it's different politically--and it should, with its citizens, fashion what's best for it in its historical circumstances. Of course, learning can be done from the experience of other countries, but ultimately each country has to find its own way.

With respect to risk, I think this is actually a key area. One of the things we tend to overlook--we in the development research community and development assistance community--and tend not to think enough about is how to get private actors, whether they're in the industrial sector or in the agricultural sector.... I put a lot of emphasis in the institute on getting agriculture going in the poorest countries, because that's where most of the people live and where most of the poverty is. If you don't do anything for agriculture, I'm afraid you're not going to do very much for the poor or for the poorer developing countries.

So a lot has to be done, and I don't think anyone has any good answers. We've rather abandoned the agricultural sector over the past two decades, thinking it's a backwards sector. But that was totally the wrong approach.

With respect to Mr. DeSoto and his book, The Mystery of Capital, I've actually written a review of this: it's on our website, and it's a fairly critical review. In fact I met him and confronted him with some of his positions. The basic problem is that in many countries there are large numbers of landless people, and his approach is simply to entitle those with any property, whether or not they have any formal right to it. If someone has a property as big as the hollow in this hollow square, that would be their title; they would then own that amount of land. Meanwhile, someone who's landless would be entitled to nothing under his scheme.

I find this rather unjust. I think instead we should be thinking about land reform, so that those who own this much land should own a plot at least as big as this room in which to sustain themselves and their families, and not simply stay content with the hollow square--or still completely forget about the landless who have nothing at all.

So I think he raises some interesting issues, but his solutions, I think, fall rather short in terms of really addressing the problems of the poorest people in the poorest countries. That's my own position. But I go into this at greater length in the review on our website. I can send you a copy, if you want.

¿ (0915)

Mr. Roy Cullen: Thank you.

The Chair: Mr. Murphy, please.

Mr. Shawn Murphy (Hillsborough, Lib.): Just going back to a point that Mr. Casson raised on the issue of conditionality and paradigm shifts, or whatever you want to call it, it seems to me—though I'm not an expert in this area—that to have sustainable improvement, there has to be a democracy, rule of law, respect for human rights, and the curbing or elimination of corruption.

While I know that every country has a different culture and different background, and that no one size fits all, looking back in your institute's experience, who out there are the poster boys for the foreign aid program? Who are the poster boys of foreign aid over the last 25 or 30 years, where aid has actually worked exceedingly well? I know this doesn't happen overnight; it's a long-term proposal.

Mr. Roy Culpeper: Let me say a couple of things about this. First, I haven't mentioned this in my remarks so far, but in the fall of 2000 there was a very important meeting at the UN, the Millennium Summit. It produced an agenda for development over the next 15 years, the millennium development program, which articulated a series of eight goals and eighteen targets, the principal among which was to reduce the level of poverty by at least one-half by the year 2015. This charter or program of action has actually evolved over a number of years.

What was achieved at the Millennium Summit was agreement among both rich countries and poor that this was something the countries of the world should be going after, each in their different ways, as either donors or recipients. Many elements of that charter dealt with reducing mortality of infants under age five and mortality of mothers, and so forth. I refer to this because it gives us something that the international community has not had in the past, which is a set of achievables that we have all agreed to go after. I think this is very important. All of the agencies and organizations like us are stressing this a great deal.

So these are the kinds of things that we are trying to promote. What are the conditions that facilitate them? It's democracy, human rights, rule of law, for sure. But saying these things is actually easier than doing them, or defining them. What constitutes democracy? What constitutes rule of law? You can have rule of law and have the wrong rule of law. The Nazis, as an extreme example, had rule of law.

As for the poster boys of foreign aid, I have to be honest that there aren't many. People nowadays refer a lot to Uganda. But just seven or eight years ago, people used to refer to Ghana in Africa. Now Ghana is not doing nearly as well as it was seven or eight years ago. So things change quite a bit.

But I would say my bottom line on this is that it's not foreign aid that is going to turn these countries around, it's actually their own efforts. Foreign aid can be a catalytic force. It can assist people and governments in these countries to achieve sustainable and equitable development. But we shouldn't really kid ourselves as donors that we are the great white saviours who are going to change things; it's the people in these countries. We should work with those who are working for sustainable and equitable change.

¿ (0920)

The Chair: Thank you very much. We will excuse you whenever it is you have to leave.

Can we next hear the presentation from the Association for Community Living. We will go through all of the presentations, by the way, and then have rounds of questions from everybody.

Go ahead.

Mr. Dale Kendel (Executive Director, Association for Community Living (Manitoba)): Thank you very much. My name is Dale Kendel, and I'm executive director of the Association for Community Living here in Manitoba.

My presentation is in essentially three distinctive parts. One is an introductory background, then I have a short story to tell you about an individual, and then I have three recommendations that I'd like to make and that are in my presentation.

You have before you a pamphlet that tells you a little about the Association for Community Living and the range of work we do here in Manitoba. You should know that we are part of a cross-Canada organization that is striving to improve the life of mentally handicapped people in this country and provide support services to families.

In Manitoba we're connected with 4,000 individuals who live with a mental disability in about 45 communities, where we provide direct services. Birth to death, across all ages, gender, racial, ethnic, and cultural boundaries, our mission is to build a dignified lifestyle for people who are seeking full inclusion in our communities.

Our vision is guided by a series of principles. We believe each individual is capable of making decisions affecting him or herself unless otherwise demonstrated; children nurtured within a family enjoy the benefits of family life; children should go with their friends to neighbourhood schools where they can grow further and develop together with the appropriate supports; persons should aspire to have a worthwhile career doing real work for real pay and fair recognition for accomplishment; in adulthood, a person should have access to a decent and appropriate home that they can call their own; and a person should be able to some day retire and enjoy a lifestyle of activities of his or her choosing.

As you can see, our goals are not very far away from probably what every member of this panel aspires to.

I'd like to share with you a short story, just to give you a personal glimpse of a person's life. I've chosen one individual. His name is John. He's 29 years of age. John currently lives in an apartment in downtown Winnipeg, as he has done for the last four years. He shares this apartment with his friend, Bob. They have the support of a part-time community worker who assists them with meal preparation, shopping, banking, and planning of their participation in recreation and social life in the community. John has worked at Pace Plastics on assembly there for five years. Under a work incentive option that is available, half of his income comes from income assistance and half from his actual work. He gets paid for what he does.

The important part of this story is that you need to know that five years ago John and Bob both lived in an institution run by the provincial government at a cost of $52,000 per year per person. John simply had a place to sleep, little personal space, and was given three meals a day. He wasn't expected to have a job, but he did participate in recreational activities. He was given a new lease on life through a strategic investment program so that essentially his services in the community now cost about $20,000 a year.

I use the story because it sets up an obvious contrast in terms of where and how we invest in people. One involves taking the person out of the community at fairly high cost, and one involves giving the person a dignified lifestyle in the community.

With this in mind, I'd like to reinforce several major issues that arise from the federal government's paper, In Unison, which states that we should work together to secure a vision of citizenship. We should invest in disability supports, income security, and employment opportunities to make this vision a reality. We should recognize the roles of individuals, families, and communities in advancing citizenship, and abide by the principles of self-determination, equality, independence, inclusion, and participation in our community.

With this in mind, again, the federal, provincial, and territorial governments need to commit to an action plan--a practical and dynamic investment in people. I'm going to make three suggestions. One is a little longer than the others.

¿ (0925)

The first is that we commit financial resources to a national agenda of disability support. In my presentation I've included an excerpt, pages 22 and 23, of Opening Doors, a little booklet prepared by the Roeher Institute in Toronto, a research institute. It details the range and topics a disability support program in Canada should have. Given that I have only eight minutes to talk, and this topic alone could take 10 or 20 minutes to describe, I have chosen just to hand it out and perhaps answer questions about it.

The area I would like to concentrate on is the second recommendation, which is the disability tax credit mechanism. In our research across the country, we have so far proposed four options, and I would like to talk a little about each.

The first is a disability supplement to the Canada child tax benefit, with eligibility determined through the disability tax credit. This, however, is not a preferred option because the aim is to recognize the additional costs of disability supports; the integrity of the Canada child tax benefit as an income support measure should be retained, so we don't propose that as a favoured option.

A refundable component of the disability tax credit is a measure that, again, goes back to the contrast between refundable and non-refundable credits. If we are to target low-income families through the tax system, refundability is essential. We would advise not using this mechanism, again, unless the disability tax credit were made available to all recipients. We think that it would seem there was discrimination on the basis of age alone and that under the Charter of Rights there may then just be a challenge.

The third option we are proposing is a direct cash transfer to low-income families. The federal government could introduce a direct cash transfer to families who meet eligibility requirements outside the tax system. But our preferred option would be to introduce a new benefit under personal income tax, a Canada disability benefit, a refundable tax benefit for which the disability community has been calling for some time. Low-income families could be the first plank of this new benefit, with eligibility being determined through the disability tax credit.

What we are also encouraging in terms of longer-term investment is to invest in innovation and demonstration projects in six different areas, including disability supports, respite care, and programs to enable people to leave institutions.

My conclusion to our presentation is that we should be urging the Government of Canada to strategically invest in the lives of people with disabilities, and we believe that a failure to invest will actually increase costs because of more reliance on the child welfare program with more kids in the care of the state, increased institutional custodial care costs, greater family breakdown, increased demands on our social allowance systems, and a widening gap in the participation of people in the economic life of communities.

Thank you for listening, and I'm certainly prepared to answer any questions about the lives of people with mental disabilities. Thank you.

The Chair: Thank you very much.

Ms. Mayer, go ahead, please, for the Child Care Advocacy Association of Canada.

Ms. Debra Mayer (Director, Manitoba Division, Child Care Advocacy Association of Canada): Madam Chair, members of the committee, good morning. My name is Debra Mayer, and I'm a volunteer with the Child Care Advocacy Association of Canada. I represent the province of Manitoba on the board of directors. Thank you for this opportunity to discuss with you important policy directions for the upcoming federal budget.

As you will note from our written submission, the Child Care Advocacy Association of Canada is a non-profit, membership-based organization dedicated to promoting quality child care accessible to all. The CCAC works for the right of all children to access publicly funded child care; a child care system that's comprehensive, accessible, affordable, high-quality and non-profit; a range of child care services for children 12 and under, including full- and part-time care, group, family, school age, preschool, nursery school, and in-home care, rural care, care for children with extra support needs due to special needs, and culturally sensitive care; child care that complements other policies and services for families, including those with a parent at home; and improved parental rights and benefits.

Our brief highlights the reality across Canada for the majority of children in families. We are one of the few highly developed industrialized countries in the world that does not have a federally led, publicly funded child care policy or a sustainable child care system. Access to high-quality, regulated child care depends on where you live, the type of care you're seeking, and your socio-economic status.

With the shortage of available quality spaces in many communities and high monthly costs, only one in ten children has access to regulated child care in Canada. Poverty remains a major problem in our country, with one out of every five children living below the poverty line. Access to affordable, high-quality child care, a key component of an effective anti-poverty strategy, remains impossible for many children whose families are poor. Many children who could most benefit from access to the enriched experience offered in high-quality, inclusive child care settings are the least likely to receive them.

I have in front of me highlights of the Government of Canada activity and expenditures report for 2000-01 with respect to the early childhood development agreement. I understand that the 2001-02 report will be released later this month, on November 20, National Child Day, the day Canada first signed the UN Convention on the Rights of the Child, which does speak to accessible child care for children in Canada.

The early childhood development initiative was an important first step, and in some parts of the country, such as right here in Manitoba, the federal funds were used to support and improve regulated child care. Overall, however, it falls far short of meeting its stated objective. Without adequate and sustainable federal funds, an agreement that requires each province or territory to allocate ECDI funds to develop services in all four key areas, most provinces and territories did not contribute their own dollars or use the federal money to make publicly funded child care a cornerstone of a comprehensive range of supports and services.

Extensive research confirms that the quality of care received by children in their early years affects them throughout their lives, and an adequate income and healthy start in life have positive long-term impacts and promote the healthy growth and development of children. Effective child care services that meet the needs of families, communities and society supports families in raising their children; supports healthy childhood development and readiness to learn; enables adults to participate in the labour force and access educational and training programs; contributes to women's capacity for a more equitable role in society; and contributes to reduced levels of family poverty and Canada's economic well-being when combined with adequate employment.

The Child Care Advocacy Association of Canada strongly urges your committee to respond to the 90% of Canadians who believe high-quality child care is important to ensure Canada's social and economic well-being and to the 81% of Canadians who believe government should develop a plan for a comprehensive child care system.

Advocates for children and family have done some of the number-crunching--actually, this part's not in your brief, but it's all publicly available information--and when the Canada assistance plan was replaced by the CHST in 1995, federal government funding at that time for child care subsidy was $320 million a year. Last year the ECDI funding was less than that, only $300 million for all four areas of action. The Caledon Institute, a public policy think-tank, states that an investment of at least $7.5 billion over five years is needed to start a comprehensive program, with the allocation growing to $2.5 billion annually in the fifth year.

¿ (0930)

If we look at Europe, the European economic union has recommended that 1% of GDP be spent specifically on child care for member countries. The University of Toronto's child care resource and research unit estimated that it would cost $10 billion annually, 1% of Canada's GDP, to fund fully all four areas of the ECDI, not just child care. So you can see how very inadequate the current allocation really is.

We therefore recommend that the finance committee develop a federal budget that includes a reinvestment of tax dollars to implement a federally funded universal child care system that will, in the long term, enable all children to access a range of regulated, high-quality, financially sustainable child care services right in their community.

We recommend that you ensure that a minimum of $2 billion a year is specifically designated in each of the next five years, with a commitment to maintain the cumulative funding after year five. We recommend that you develop a policy framework to establish a pan-Canadian child care system, in partnership with provincial and territorial government, who will work with the municipalities and community-based non-profit organizations to design and implement a regionally responsive child care system. The Government of Manitoba has indicated that it cannot grow our province's child care system without significant contribution by Ottawa.

We encourage you to establish key principles for a publicly funded child care system that must be met by each region's child care services--comprehensive, inclusive, high quality, non-profit, and accountable for all public funding. We would like you to ensure that these funds are targeted solely for child care and made available to the provinces and territories that commit to the policy framework time lines and key principles.

Finally, we would like you to allocate additional funds to expand eligibility criteria for maternity and paternity leave provisions.

On behalf of the Child Care Advocacy Association of Canada, I encourage you to deliver on the throne speech commitment through significant investment in Canada's children, families, and communities.

Thank you for the opportunity to address your committee.

¿ (0935)

The Chair: Thank you very much.

Mr. Cerilli, from the Congress of Union Retirees of Canada, please go ahead.

Mr. Al Cerilli (Member, Executive Council, Congress of Union Retirees of Canada): Thank you, Madam Chairperson. Good morning and welcome to Winnipeg.

In our last number of presentations to this committee, we have zeroed in on child poverty, obesity, hunger, diabetes, education, health care services, pension reform, and so on, but we've seen very little improvement.

Diabetes is one of the key issues in sickness. It has really ballooned in the child population and in adults, and I want to talk about that for a bit in regard to prevention of diabetes and its cost for health care in Canada. Presently this cost is about $9 billion per year. Experts are of the view that at this present rate the dollars will double in ten years.

We want to talk about the cost of the $23 billion cut back from the federal transfer payments between the years of 1986 and 1996, years that have witnessed the youth of that time period and the school systems going from nutritional, value-added, healthy education programs to a non-nutrition system, resulting in a ballooning number of young people and an inactive, obese generation, a generation of extremely unhealthy girls and boys and men and women, all with a ticket to a life of diabetes, high blood pressure, heart failure and all the related sicknesses, and low self-esteem.

CURC strongly recommends that your committee propose that the federal, provincial, and territorial governments restore the funding programs in the education system that created a more healthy environment for the control of obesity and diabetes. I think that this would stand to prevent this debilitating epidemic.

There are still children in Canada who go to bed hungry. Reports say that the figure of one in ten today is higher than figures from ten years ago. Hunger in children is a serious social problem. Food banks have now replaced the corner store, and the churches that have food banks hide the real problem, not intentionally, but they do it for the sake of the 718,000 or so Canadians who use the food banks. Certainly that helps them to stave off hunger. As well, unless the federal government re-enters public housing and provides it, the next generation will also have no roof over their heads. The provincial and territorial governments can't do it alone. I think the federal government has to get in there and get back into the public housing field. Canada needs a federal government presence in the Feed the Children program and the shelter of the children.

The federal government also needs to reinvest in the unemployment of Canadians, not with the present system whereby only 40% of Canadians qualify for EI benefits. It must at least go back to the level of 70% of people helped out by the federal government program. In this day and age where poverty and the like is first and foremost in the minds of many Canadians, I think this has to be a concrete change to alleviate that problem.

I want to talk a little bit now about pensions and the pension reform that we've advocated. As you are aware, more than 50% of Canadians do not have private pensions at work, and those who do are getting less and less. Many have to rely on the Canada and Quebec pension plans and the old age security supplement. Health Canada informs us that informal caregivers in the volunteer sector contribute $3 billion a year with nothing that would give them any enhancement towards the Canada Pension Plan or the Quebec Pension Plan or would even continue their contributions to their private plan at work. In 2000, one million Canadians were enrolled in home care, with each province having its own patchwork of home care standards. I think this has to be seriously looked at if we want to do anything about that area. Retirees in Canada continue to contribute. Some 58% of all seniors volunteer informally outside their homes, with a 1997 figure of 23% who formally volunteer. The hours averaged 202 per year. Other contributions of volunteer time by Canadians not yet retired total about $6 billion per year.

¿ (0940)

So retirees and non-retirees contribute a considerable amount to our economy, and yet they get no credit whatsoever for that time. We have some recommendations for you in this area, and I think we should be looking at it.

Food banks are not doing the complete job; a family needs $160 per month for each person to survive and get over the hunger pangs of that month. The recommendations we are making on employment insurance, to break the cycle of poverty due to bad pensions, is to start looking at that area, so people who are thrown out of work and spend time volunteering are able to contribute, or the federal, provincial, and territorial governments contribute for them, because they are making contributions to society worth billions of dollars.

People out of work have reduced contributions to the Quebec and Canada pension plans or private pension plans, so they need to pay those volunteers for their time until they return to work. The federal, provincial, and territorial governments should pay both contributions on behalf of these Canadians, who are not able to work and are volunteering their time to Canadian society.

There is a provision for mothers, after giving birth, and I think that has been extended to males who stay home. If they have been contributing to the Quebec or Canadian pension plan, the drop-out provision can be extended for this period. This time off is compounded as a contribution time for Canada and Quebec pension plan benefits at retirement. This should be extended for the volunteer time of men and women who are out of the workforce.

Hopefully, in my lifetime, the federal, provincial and territorial governments will see to it that our grandchildren's children have decent affordable housing. I want to talk a little bit about that, simply because I think affordable housing is needed in this country, and we should be seriously looking at it.

The other area we have talked about in our brief is maintaining the quality of the water, air, and soil for these generations. In our view, Kyoto is a start.

Education must be and must remain a right for all children and their future generations.

On the other side of the street lives the obscene side of humanity--the chief executive officers of corporate Canada. The November issue of the National Post business report calls them, and I quote, “The good, the bad and the overpaid: With their companies underperforming and their office in disrepute, CEOs are not having much fun these days. But they have one consolation: they're making more money than ever.”

There are other areas we can maybe pick up on, particularly on pension reform. The CPP and the surpluses that are being abused by these CEOs and corporations should go back to the pensioners and future retirees so they can provide for their families.

Thank you.

¿ (0945)

The Chair: Thanks for your presentation.

Now we'll will go to the next presenter, the Manitoba Child Care Association. We are also adding a presenter from our audience.

Go ahead, Mr. Giesbrecht.

Mr. Don Giesbrecht (President, Manitoba Child Care Association): Good morning, Madam Chairperson and members of the committee. This morning you'll be hearing from both myself and Pat Wege, the executive director of the Manitoba Child Care Association.

The Manitoba Child Care Association is a non-profit, membership-funded organization that was incorporated in 1974. Our mission is to advocate for a quality system of child care and advanced early childhood education as a profession, and to provide services to our members.

It is worth noting that we are the largest provincially-based child care organization in Canada. We represent over 2,800 members, including the boards of directors of full-time child care centres, part-time nursery schools, early childhood educators, child care assistants, licensed family child care providers, academics, researchers, and other organizations.

The Manitoba Child Care Association is pleased to have this opportunity to present this brief. The purpose of our brief is to help the members of the House of Commons Standing Committee on Finance learn about the importance of early childhood care and education service for children and families; the enormous shortfall in the availability of this service across Canada; and the link between quality early childhood care and education and healthy child and societal outcomes. In my other job as executive director of the Lord Roberts children's programs, I know the importance of these all too well.

We hope to encourage your support for enriched and ongoing investment into early childhood care and education services. The next portion of our presentation will be based on the seven recommendations, which you will find in your brief, and Pat Wege will look after that.

The Chair: Go ahead, Ms. Wege.

Ms. Pat Wege (Executive Director, Manitoba Child Care Association): Good morning.

You've already heard from our colleague, Debra Mayer, that there is an enormous gap between the need for child care and the availability of regulated spaces right across Canada. In order to work or attend school, families need a range of services for children 12 and under, which includes full and part time, days, evenings and weekends, and statistics are striking. Close to seven out of ten mothers with children under the age of six and more than three-quarters of mothers with children ages six to fourteen are in the workforce. Who is looking after those children?

Close to 1.4 million children are in paid child care services in Canada, but there are only about 500,000 regulated spaces. This means that over one million Canadian children are in child care arrangements right now, today, where there is no monitor on safety or how the children are spending the hours that they are there.

So when Debra told us that 90% of Canadians believe child care is important, this is why--because we are talking about your children and about my children. We're talking about your niece, your nephew. We're talking about your grandchildren and possibly your great-grandchildren. This is everybody's issue, including our youth sitting up there--probably paying absolutely no attention--who eventually will be workers who, if they don't need it already, one day will need child care. I just want to point that out. As I speak, I invite you to keep in mind the face of a child under the age of 12 with whom you are connected, because we all have one.

Economists from Statistics Canada project that the labour force participation of women aged 15 to 44 will rise from the current rate of approximately 71% to about 80% in the year 2011, and what this says is that the demand for child care is ever-growing. Workers need reliable and affordable child care, and where are they going to find it? Will it be safe, healthy, and developmentally stimulating?

We know that brains grow during the first six years of life in a way they do not at any other time in a child's development. That brain development will set the foundation for lifelong learning, behaviour, and health. So remember that what happens to your child during the first six years of life will set the stage for future outcomes, and it does matter.

A child entering care at six months of age will receive 10,125 hours of care by the age of five. Contrast that with the hours that a child spends in the classroom between grades 1 and 12--barely more, at 13,680 hours. So remember that the years from zero to six are important, because they are the first tier of a child's education.

Canada has an ongoing report card that measures our success in the areas of early childhood care and development, and we see it reflected in school readiness, crime rates, poverty statistics, degree of economic self-reliance, health care costs, and competence of each crop of new graduates and workers.

Given the wide range of statistics and information we have about the well-being of children, about adults, seniors, families, and outcome reports from education, justice, and the workforce, are we satisfied that we have dedicated enough attention, energy, and resources to our children at the most critical stage of their development? Are we confident that all our children, those who live in cities, towns, and villages, on reserve and in remote and rural locations, have equal opportunities to develop age-appropriate social, cognitive, emotional, and physical skills? Do we know that our children's foundation will provide them with the knowledge and personal qualities needed to contribute to a strong, vibrant economy and society? I'm thinking we don't, because we don't know where most children are during the day when moms and dads are at work or in a training program. I think, because we can't answer that question with a resounding yes, we're missing a critical window. We are failing in our obligation to put our children first, and we must resolve to do better.

We have several recommendations to make related to this issue. The first one is this: Always make the needs and issues related to children and families the first and the most important priority. The work of the national children's agenda must always remain on the agenda and must be enhanced and expanded annually.

Our second recommendation is that in partnership with the provincial, territorial, and local governments and other local partners, please work quickly to activate the promises that Canada has already made.

¿ (0950)

As part of our handout to you, we have brought information on five agreements that the Government of Canada has signed in the period between 1989 and 2002. The first one was the UN Convention on the Rights of the Child. Article 18 says that children and families have the right to child care services. Then we have the national children's agenda of 1997, the social union framework agreement of 1999, the first ministers early childhood development agreement of 2000, and most recently the document called A World Fit for Children.

So remember, there are already agreements in place that speak to this issue; there are already covenants that have been signed by our political leaders covering what I'm talking about today. All I'm really doing is asking you to please do what you can, because you have an obligation to activate these agreements, to give them life, and to ensure that they are followed through.

The MCCA supports the outcome document , A World Fit for Children, the one most recently signed, which states: “Implementation of a present Plan of Action will require the allocation of significant additional human, financial and material resources, nationally and internationally.” So part of that document speaks to a consultation process. We are looking forward to being part of that.

We are looking for national guidelines for early childhood care and education service delivery. That has been talked about for many, many decades now, and it is time. We are looking for dollars and action, beginning with the 2003 federal budget. We are looking for work with the provinces and territories to develop regional action plans, targets, and timetables towards universal availability of high-quality, affordable, and accessible early childhood care and education programs.

I ask you to remember that children are our future, but they are also our today. The information that you have heard today will help put in place a system that ensures good things happen for kids and families—my kids, your kids, your niece, your nephew, your grandchildren, and your great grandchildren.

Thank you.

The Acting Chair (Mr. Roy Cullen): Thank you very much, Ms. Wege and Mr. Giesbrecht.

Our next presenter is Mr. Verne McComas, coordinator of Lifelinks, Manitoba Schizophrenia Society.

Please, the floor is yours, Mr. McComas.

¿ (0955)

Mr. Verne McComas (Coordinator, Manitoba Schizophrenia Society Inc.): Thank you for allowing me a moment or two.

I want to draw attention to the effect the Income Tax Act has on people with serious mental illnesses like schizophrenia, and I'll talk about that particularly because I know that best from long experience.

Most caregivers--and I'm talking about parents, families, brothers, sisters--are overwhelmed by the illness. They are dealing with it on a day-to-day basis, then they look for aid to help them support their child in some place other than an institution, and they are caught in a catch-22 situation. Whether they bring the child home or put the child in another place of residence, which has always been a problem with the mentally ill, they find that they don't have the resources to pay for it on their own. They're forced into a situation where they have to put their child on social assistance, and the province picks up the tab.

Now, in cases of block funding, the money comes to the province on a per capita basis, so there's no extra money to pay for this. The province tends to get burdened by a very extensive, costly program. The province not only takes care of the person's health concerns, they take care of the dental, all the other medications, and so on. Most of these are paid for now, but there are glitches here and there where the parents or someone else has to pick up the tab.

Most people with schizophrenia, for example, and some other serious mental illnesses do not enjoy...they've worked for a few years maybe, and then they come down with the illness when they're in their twenties. Then they find that they are not able to work, so they end up on the streets or with their families, and the families do the best they can.

Now, the point I'm trying to make is that the families need tax relief, and the recent change in the disability tax credit--I heard what was said earlier about that--really affects the people with mental illness because their disability is not visible; we have great difficulty making our case.

I'll take that one step further and point out that 10 years ago I worked at the University of Manitoba, where I was a close friend of someone who helped people with more visible illnesses. Even the Special Olympics get a lot of support, but the people who have, let's say, schizophrenia don't want to come out. They tend to get away from society, so they aren't able to speak for themselves. Their illness isn't visible, so it's very difficult for families to make a case for a disability credit.

I want to say one more thing. My brief mentions the question of doctors. We find that psychiatrists tend to not get the same status as regular physicians.

Next, I believe that if you give a little more help to families, you can save money in the long run for the both federal and provincial governments.

I want to say one more word about psychiatrists. We are desperately in need of research, and it's not easy to generate funds for research into mental illness for some reason or other. Anything that can be done to encourage the Canada Customs and Revenue Agency to be a bit more understanding and to help us will, I think, benefit everyone in the long run.

Thank you.

The Acting Chair (Mr. Roy Cullen): Thank you, sir.

We'll start with a seven-minute round, beginning with Mr. Casson.

Mr. Rick Casson: Thank you all very much for your presentations. We've been receiving some excellent and very well-prepared ones, and it's good to see.

Mr. Kendel, I have a question for you. With respect to the options you presented, the preferred option you have is to introduce a new benefit into personal income tax. I would like you to explain exactly what you mean there, what that would do to a family or to an income. If you could give us a for instance and maybe mention some dollar figures, it would sure help.

À (1000)

Mr. Dale Kendel: Part of the reason for not having a lot of the dollar figures is that it's a relatively new option in our own minds, in terms of working through how the disability tax credit could benefit people. But families are faced with situations of what Verne just told you about, of providing informal supports and things like respite care and special equipment and sometimes food supplements and specific things that just make living with the child they are supporting easier.

If we were putting a ballpark figure on this, it would probably be in the range of $5,000 to $6,000 per year per family. That is probably an average cost; for some families it would be far less and for some quite a bit more. We think it should be an individualized kind of thing; that people should be able to apply for this disability support benefit on the basis of the need of the family. The disability tax credit tries to establish that, but then puts in lots of stipulations. Our belief is that families can tell people what they really need.

Sometimes it is very minor kinds of costs. The government program that might be available might only go two-thirds of the way, and they would put in the balance, and that would make life really stable. I think our national association's brief says this could be done incrementally, starting with about a $1,200 benefit introduced in the first year, growing to $5,000 to $6,000 over five years. That would make a huge difference in the lives of people.

Mr. Rick Casson: Yes.

Mr. McComas, I want to thank you for your presentation. As you indicated, mental health is something that sometimes doesn't get to the forefront, because the people who suffer from it sometimes don't have the capability to speak for themselves. I think it's something that has affected many of our lives, and some system or program in place that would help people work through that would be tremendous. I just wanted to comment to you that I appreciate what you are doing, and your comments here today.

But I have a question for Debra Mayer and maybe for Pat Wege. We had a presentation yesterday in--where were we?--Saskatoon. When you wake up in the morning you have to look out the window to see where you are.

But I ask the question whether child care and what you are proposing extends into the home. Are you proposing just daycare centres or are you talking about teaching young families and families how to take care of children better in their own homes, about some kind of help in that area?

Ms. Pat Wege: What we are talking about here is a range of services for families. I don't know if any of you are familiar with what they have done in Quebec, but they have a package of programs there, and parents have the opportunity to choose what best meets the needs of their family. This is not about snatching three-year-olds out of the home and popping them into institutional day care. I just want to clear that up. If the family chooses to use a program because they are working or in school, it might mean full-time or part-time; or it could be the at-home mom is looking for a nursery school program for early childhood development purposes only. We are talking about a range of services.

The Chair: All right, thank you.

Mr. Cullen, please.

Mr. Roy Cullen: Thank you, Madam Chair, and thank you to all the presenters. I will put something to the Child Care Advocacy Association and the Manitoba Child Care Association.

I think one or both of you mentioned the early childhood development agreement. I think it was $2.7 billion, or something in that order, nationally. One of the things we get accused of sometimes in Ottawa is trying to dictate to the provinces what their priorities should be. I know a lot of members of Parliament fought for the early childhood development agreement having the flexibility to include child care. Province by province, if the province and our government agreed on a set of priorities, there was room for child care to sit within that framework.

In my riding in Toronto, for example, when people come to me and say we need more child care, I say, “Well, I kind of agree with you. Let's talk to the provincial MPP, and together we will feed that back to the negotiators to fit it in with the framework.”

Now, what we are hearing across Canada, and we heard it in Vancouver as well, is it doesn't seem to be popping up as a priority. There is a whole range of programs. I'm not an expert in this field by any stretch, but there are child nutrition programs, prenatal programs, breakfast programs--all these type of activities and programs--that are meant to deal with the issue around early childhood development. I'm sure there is a much longer list than that.

So if child care is not popping up as a priority, if we are saying we will allow the flexibility but at the provincial level it's not popping up as a priority, other groups like yourself are saying, “Well, the federal government should take the lead and say it will be a priority.” We have made the room, but the signal I'm getting is it doesn't stack up as a higher priority than some of these other interventions.

Maybe you could shed some light.

À (1005)

Ms. Debra Mayer: I think it's all about leadership. We're certainly not wanting to compete with other very important services that are receiving funding through the ECDI. And Manitoba is a province that has chosen to target significant dollars towards enhancing the child care system. But in a province like Ontario, there's a little catchphrase going around that the ABC model--anything but child care--is happening there.

So you have different ideologies being expressed in how those funds are being utilized. In the meantime, there are thousands and thousands of families right in Toronto that are on a waiting list for subsidy for child care, and the provincial government is choosing really to say it's not an issue for them. We think there is an important and critical role for the federal government to play in taking the lead on that.

As well, the National Council on Welfare said in their brief to you, several years back, that many programs support healthy families, but child care is the cornerstone of them all. That is the attitude, that is the principle, that we really encourage the federal government to hold dear.

Mr. Roy Cullen: Did you want to anything, Ms. Wege?

Ms. Pat Wege: I have the statistics that show provincial spending allocations to child care from the ECDI, and most provinces are allocating in the area, even over the top. Quebec is putting millions into child care. So I think we're seeing more examples of success through the ECDI where provinces are choosing to spend in child care than not.

Mr. Roy Cullen: Can you share that with the committee?

Ms. Pat Wege: Well, this is 2001-02, and my numbers show that Newfoundland is spending 44% on regulated child care. I don't have information from P.E.I. It's 65% in Nova Scotia and 41% in New Brunswick. And Quebec, as you know...but I'm not real clear on Quebec, on whether they're getting ECDI money and putting it all into child care, as I've heard--

Mr. Roy Cullen: So it's province by province.

Ms. Pat Wege: Absolutely it's province by province.

So when you say “priority”, please understand, it's not priority from my kids, your kids, his family using his child care. From the grassroots level people need the service, but the political will isn't there.

À (1010)

Mr. Roy Cullen: But if the federal government, in its great wisdom or lack thereof, said that out of this early childhood development agreement the provinces must commit xamount to child care--and you are child care advocates, right?--would we not then hear from the other stakeholder groups that are child nutritionists or pre-natal program experts and so on? Where do we draw the line with this?

Ms. Pat Wege: I think one is about boldness. One is knowing about what an entire country needs in terms of services. People need child care to work and go to school. That's pretty fundamental, and that's what we're talking about.

That's the only answer I can give you. I think there's a way for the federal government to show leadership in this area, to make those dollars available to the provinces and for the provinces to do the uptake on it. I too would like to see it as a separate pot of money, but you guys need to know that Manitoba is doing it right here. We're a really good example of how it can work really well.

Mr. Roy Cullen: I have the same frustration in Ontario. I think there should be room for child care, but it doesn't seem to pop up.

I'd like to move now to Mr. Cerilli on the issue around affordable housing.

I wonder if you could give me your views on this. If any others want to comment on this as well, they can. One approach to the affordable housing issue is to create more inventory, more stock, federal government interventions, cost-shared capital programs, etc. I've had a couple of people come to see me in Toronto and tell me that the issue around affordable housing has to do with the percentage of one's income that goes to accommodation--we hear the benchmark of 30%--and that really we don't need to build a whole pile of additional stock, we need to increase the subsidies. It actually might be a more cost-effective approach.

Now, I've heard debate around this both ways. Would anyone like to comment on that, starting with you, Mr. Cerilli?

Mr. Al Cerilli: First of all, I think the federal government has to re-enter the field of affordable housing. They have pretty well given it to the provinces to deal with--

Mr. Roy Cullen: Is that the most cost-effective approach?

Mr. Al Cerilli: I think so, simply because there is no control with the provinces of where the dollars go. You have just heard a good example in child care where you have a patchwork of regulations and laws and everybody's doing their own type of thing. This is happening more so in all fields in Canada. It's a disastrous approach, in my view.

We have an aging population that needs affordable housing. We need low-income housing. We need welfare housing. We need housing for people who are on social assistance and so on. We have the developers now stepping into the field with condominiums for the rich retirees, if I can put it that way, and I'm a retiree. But at the same time, we're forgetting the people behind us.

So I think the federal government has to revisit that area and say, hey, this is a field where we can dictate to the provinces and territories and work with them and say, we need these housing units, so quit building all kinds of high-cost housing for people who can afford it.

I referred to the business section of the National Post. Those people, who are up to a certain level of hundreds of thousands of dollars of pay, they're good. People under that, though, even up to a hundred thousand dollars, are finding it difficult to raise families and contribute to their pensions and to society and to have housing as such.

We need a new perspective on affordable housing as such. We need to say what it means for those people. That's where I would go, and I recommend you guys go there too.

Mr. Roy Cullen: Anyone else?

Mr. Dale Kendel: I'd like to just briefly comment on that. In terms of people with mental disability, I think the whole area of social housing is a critical piece as we move into the adult program area. It's an affordability issue, not necessarily non-existing stock. Under social allowance, between $285 to $300 per month is the allowable rent to purchase supposedly decent housing. It's impossible in most circumstances. Lots of very creative ways of getting around that are now implemented, but basically you get a suite in a guest house, or you encourage slum landlords. That's the fate of people with disabilities to live independently in our communities.

I tried to make a point about disability supports, and that is a key point. You should be able to have a decent place to live. That's one of the pieces. And income assistance has to be increased so that you can get into a much better place in life. Then the other things fall out.

When we've looked around, the housing stock that Manitoba Housing has available in Manitoba basically is bachelor suites, not one-bedrooms. They can't necessarily accommodate people with appropriate supports or in having a roommate. That becomes impossible. But that is the affordability. So it is a combination of increasing the stock and increasing the range of options.

There is a caution, though, about just increasing on one side. If you make $500 a month available for housing for an individual, there is a concern that slum landlords would just increase the price on their properties. That's not what we're after.

Mr. Al Cerilli: I have one additional point on that. When we're talking about affordable housing, we have to remember that many of these folks, such as those we've just talked about, don't have cars, nor are they able to drive a car or even buy one. We have to have housing that is closer to public transportation so they can accommodate themselves by going shopping and so on and participate in society. I think transportation ties into that field with regard to the development of a social housing policy in general.

À (1015)

The Chair: Mr. Martin, go ahead.

Mr. Pat Martin: Thank you, Madam Chair.

I also would like to thank all of the witnesses. Unfortunately, the time is so brief that I'm going to have to be quite narrow in my line of questioning.

But Debra, Pat, and Don, your case was very well made, as it was yesterday through your national organization. It just seems to me that you could fill a room this size with studies and reports, that all the empirical evidence is in to show that if you want good outcomes as an adult, the early intervention is so necessary. Thank you for reinforcing those points again today.

As far as the dollar figure goes, people almost fell off their chairs yesterday when they heard $2 billion. But I made the point that the UIC fund alone is showing a surplus of $750 million a month--not per year, per month. So your call for $2 billion for a national child care program is not too out there, in my opinion; it's just a priority issue.

I'd like to focus on the disability tax credit, which was raised a number of times. I don't know if people realize that in the last year Revenue Canada not only raised the bar for eligibility--it pretty much eliminates the idea that persons with mental illnesses will ever be able to qualify--but they also sent a letter to every person collecting it demanding that they reapply with new clinical evidence at their own expense: go to a doctor and prove that an amputee still doesn't have any limbs, or a person who is blind is still blind. It is one of the most cynical and meanspirited things I have witnessed since I have been in Ottawa. I would ask whether those of you who are involved especially in that field might be interested in commenting on that and giving some direction to government.

But in contrast, I would like to point out that while they are cracking down on the disabled, the business community is allowed to write off fines and penalities as a tax deduction. They are willing to forgo revenue by allowing businesses to write off fines and penalities and are spending their time and energy going after disabled people, trying to cut them off from the paltry disability tax credit.

Would anybody like to talk about that contrast in tax deductions?

Mr. Dale Kendel: Sure. The crackdown in the country was, I think, on a random selection of 30,000 individuals with disability.

Mr. Pat Martin: No, it was 130,000, of whom 30,000 were cut off.

Mr. Dale Kendel: Oh, okay.

In terms of mental disability, again, the cynical reaction to it was, gosh, we found the cure for Down's syndrome, and all of a sudden we have no more worries. But, oops, tomorrow we do have worries, because we still have to support this child.

I guess the assumption was that people with disabilities were trying to rip off the system. I think there was probably a more humane way of trying to look at that. We probably would have chosen individual planning with families and with individuals to look at what the real needs happened to be. And it probably wouldn't have involved cutting off; it probably would have been adding to.

That really was the stimulus for us to look at the Canada disability benefit in terms of what families really need. If you ask families, they are going to tell you in relatively modest terms. They are not going to ask for the most extreme, the most extravagant; they are going to ask for the basic support to help them support their child or support an adult to live a reasonable life. I know very few families that would ask for the upper end. When you ask families about respite care, they are talking about a few more hours per week as opposed to taking over the care of their child. A modest investment in people is what is called for.

À (1020)

Mr. Pat Martin: Thank you, Dale.

Would anybody else like to speak to this contradiction in tax deduction priorities?

Mr. Dale Kendel: Just to continue, interestingly enough, the disability tax benefit was modelled after the business model for those kinds of deductions: what would be reasonable deductions for the parallel in business and the parallel in the lives of people? If you need a special piece of equipment, you should be able to get a deduction for it. If you need a piece of equipment that enables you to have communication--for instance, to purchase a computer simulator or to purchase a computer because it gives you language--why couldn't it work? I mean, you can do it in business because of the capitalization of your equipment for your firm, but you can't do it for a family.

Mr. Pat Martin: If I could be a little more narrow and focused, in 1969 the United States specifically eliminated from their revenue code the ability of businesses to write off fines and penalties as a tax deduction. In other words, it's bad public policy if breaking the law is considered to be a tax-deductible business expense.

Would you give me your views on this? I'm trying to get snapshots from around the country on how people feel about that. It is allowed in this country.

Mr. Al Cerilli: You're referring to write-offs by businesses in regard to fines?

Mr. Pat Martin: Fines and penalties--if you injure a worker in the workplace, for example.

Mr. Al Cerilli: Well, I think we sometimes get confused about taking advantage of the disadvantaged. For example, when a worker gets injured at work, he has enough problems trying to convince someone he had a disability to begin with and having doctors support that position so he can collect something to sustain that development.

As we pointed out in our brief, it's a two-pronged hit they get. They get hit by contributions to the Canada Pension Plan, contributions to their own pension plan if they have one, disallowance of benefits, and so on. I think we have to revisit that whole field, and that's what we're suggesting. Somewhere along the line we have to take a look at that and ask, what gives anybody the right in the business community to receive these benefits and at the same time hit the hell out of the other side of society that is probably carrying the load in taxation anyway?

I think we have a real task ahead of us in saying here's where we're going to go with this thing, and in getting the provinces and territories onside to review that whole area and say that something has to be done to make accommodation. That's why we're suggesting, for example, the use of volunteer time to have contributions paid by the provinces, the federal government, and the territories to the Canada Pension Plan and the Quebec Pension Plan. This is because those pension contributions are reduced at a crucial time, when these people should have their best five years, yet they're being injured, laid off, or otherwise thrown out of work. We have a whole field of activity to do with everybody in Canada.

Mr. Pat Martin: If I could, I'll narrow it down just a little further, then. I don't think people are getting the point.

In 1994 we stopped the practice of allowing businesses to write off bribes as tax deductions, but we left in the Income Tax Act the ability to write off fines and penalties. Do you agree that it undermines the value of a fine to allow a person to have it reduced immediately by writing it off on their income tax? Do you think this is good public policy, to allow businesses to write off fines and penalties?

Mr. Al Cerilli: It flies right in the face of reality. It doesn't deter them from stopping the areas of erosion of whatever they're being penalized for. It only encourages them because they're not paying the shot.

The Chair: Mr. Murphy, for our last round of questioning.

Mr. Shawn Murphy: Thank you very much, Madam Chairperson.

My first question is to you, Mr. Kendel. I'm quite familiar with your organization, and certainly I think your organization has made tremendous strides. When you look back 40 years to the way the population your organization represents was treated by society, I think there have been tremendous strides made by society, and your organization should take a lot of the credit. I'm sure you're looking at the miles you have to go, but again, you've come a long way.

The question I have--and it may not be a direct finance question--concerns a certain movement to bring this population into the mainstream, particularly the academic stream and the workforce. I know the federal government has the equity program, and I believe certain other companies may have programs, though I'm not aware of them. Could you elaborate on that and also elaborate on whether there is anything you think the federal government should be doing with public policy perhaps to move that initiative further?

Mr. Dale Kendel: Sure. Thank you.

We've seen over the last five years the introduction of the Opportunities Fund at the federal level, which was seen as one of those innovation and demonstration project areas to give a tool to provincial jurisdictions and non-profit groups to experiment with new ways of involving people in the workforce. I think it was in 1997 that we hosted here in Manitoba a national conference on the first three years of the Opportunities Fund and all the lessons learned therein. It was an unbelievable exchange of experiences in, again, innovation and demonstration.

The issue is that there's a need for more demonstration, more experimentation, and more incentive with respect to the business community in order for them to do something in terms of employment for people with disabilities.

If I can try to hook two thoughts together, when Pat was asking the question about businesses being able to write off certain expenses, I thought that an innovative proposal to try in a demonstration project would be to allow businesses to write off the extra, special costs of accommodation for people to include them in the full marketplace. If a business has to purchase special equipment and/or has to adapt the workplace to accommodate the needs of somebody with a physical disability or whatever, it should be able to do that more readily than it can now.

À (1025)

Mr. Shawn Murphy: I would have thought that would be readily deductible.

Mr. Dale Kendel: Not readily available.

Mr. Shawn Murphy: Is that right? I'm surprised to hear that.

Mr. Dale Kendel: Yes, and there is an item that we would call a disability support which certainly isn't part of that: it is if they need a job coach, which would be an intensive support for a period of time. Our technique has been to develop, to fade out of the person's life, and to develop co-worker relationships, but it may be over a six- to ten-month period. That becomes a very critical support. That is funded by these special one-time grants that make the stability of the non-profit organizations very fragile, and we would like to see some experimentation so that industry would be able to hire those folks and really take up the challenge of hiring people. There is also a challenge in front of the Public Service Commission for the federal, provincial, and municipal governments to hire more people with disabilities.

Mr. Shawn Murphy: Thank you very much.

My next question is to you, Mr. Cerilli. You raised a very important public policy issue facing Canadian society, and that is child obesity and juvenile diabetes, but I have to challenge you on your remedy.

I agree with you on the elementary and high school physical education programs. That would be a very small step in solving the problem, a very small step, but I don't think we are going to buy our way out of this problem. This is a lifestyle issue. You could make a strong argument that perhaps there is too much money going into situations. I sense it's the TV, the Internet, the lack of walking, and too many organized sports versus spontaneous sports, too much elite sport, you name it. It's a serious lifestyle issue, and I don't think at all that money is going to solve very many of those issues.

I accept the issue you raised about physical education in school. I accept that and I think it's a worthwhile recommendation, but the problem goes much deeper than that. I think that the approach certainly would have to be much more multi-faceted than money, and I think a strong argument is that there is too much money going into it right now.

Mr. Al Cerilli: I would like to respond to that. Don't narrow in on just physical education, because I think we have dropped a hell of a lot out of our education system for our children in regard to nutrition, to healthy food in lunch rooms. What we have replaced it with is coke machines--or pop machines, if you want, rather than designate one company, because they are all involved--and chocolate bars, chips, junk food, and everything else. I think we have to get back to the five principles of nutrition and the rest of it: exercise, healthy food, rest, and so on and--

Mr. Shawn Murphy: But looking at it from the federal government's point of view--

Mr. Al Cerilli: I think the federal government needs to look at the transfer payments, the $29 billion or whatever figure I quoted, between 1986 and 1996, in those ten years. I think that's what started the downhill slide. I think we have to reinvest in that area. The federal government has to play a role. You know, we just can't say “Oh, we have health care”, and charge it to that. That's BS. I think we have to take a look at the whole issue of what we're suggesting around that. Diabetes is just one area that is really going on. How about the high blood pressure and everything else that creates? I'm just putting it to you that it's a prevention issue, and I think we can do better as a society to prevent that stuff and those diseases from happening.

It's not just money, you're right. But if we take away the money for the provinces and the school boards so that they can't have those programs and the teachers who do all that work, where are we going as a society? We already have arts and sports. We have organized sports in school, but that's it. Physical education is gone. That is just one part of the issue, of what we are recommending. I think it takes the whole umbrella of prevention.

We made this presentation to the Romanow commission and finally everybody came out of the woodwork across the country, saying “Hey, prevention is a big issue”, and we can do better when we say prevention. It's the same as healthy water, as filtration for the cities. We have to help them out so that it creates a better environment. As well, what are we doing for our native people up north? All of these things get into the shell and I wish I had a half an hour here to just spiel off. I can tell you--

À (1030)

The Chair: Mr. Murphy has one more question.

Mr. Al Cerilli: --though, it's not just money, you're right, but we need those bucks to be able to say here's how we're going to use them and how we're going to prevent this disease. I can tell you that it's a worthwhile issue, believe me, and I think you guys will stand high about everybody else if you go out and do it.

Mr. Shawn Murphy: We'll agree to disagree on that particular issue.

I have one last question for the Child Care Advocacy Association on one of your last recommendations. I've seen it before here, and I just want a little clarification, if I may, on your recommendation to expand and enhance maternity-paternity benefits. Some fairly major changes have been made in the last year, and I just want a little more clarification on what you mean and what you're looking at.

Ms. Debra Mayer: Thank you. Forgive me, this isn't my real area of expertise, but my understanding is that there are many women who are not qualifying for the expanded maternity leave. When I first heard about it I was quite jealous. When I had my children, I took my 17 weeks and went back to work. But I think I've read that as many as 60% to 65% of women are not eligible to actually get that full year.

I think we really want to look at the criteria that are in place, making sure that women who are working part-time.... Women don't always have uninterrupted work careers, so we should just make sure that women can actually take advantage of it, and possibly look at some ways of extending it more fully for fathers as well.

I think we really want to look at the Scandinavian countries as really good role models for how young families are supported through these kinds of initiatives, so they can make the choice to stay at home longer with their own children. So again, when we talk about a child care system that supports families, we see expanded parental leave as a key component of that.

Mr. Al Cerilli: If I could add to that, we recommend that the federal government revisit the employment insurance set-up, to take into account the billions of dollars of surplus in this fund, and look at the qualifying periods for working people. There are more and more people working part-time, and that shortens the window to qualify. Believe me, I have a lot of good friends who are employers, but after so many hours a day they'd rather have double the part-time workforce than a full-time workforce, and that contributes to the problem.

I think we have a real challenge. That's why I enjoy coming to these presentations. Your challenge is to look at Ottawa and say “Here's what we're going to do with it”.

Thank you very much.

The Chair: Thank you very much.

A lot of the women you refer to are actually self-employed women, because they cannot get into that scheme of benefits either.

I was in the east part of the country earlier this week, until last night, and a lot of the themes I've heard you talk about have been echoed in other places. So it's going to be interesting when all of the members have their input into this report.

There are some thematic things you hear and some common concerns. I don't know if it came up here, but in Toronto the OECD report on childhood education was noted as being a contributing factor to economies.

All of the members will get all of the material from both sessions.

Thank you for taking the time to present, answer questions, and prepare your reports.

Thank you, sir, for joining us as one of the walk-in presenters. We certainly welcome that.

Hopefully we'll see you again in another year at another pre-budget consultation.

À (1035)

À (1040)

The Chair: This is our second panel of the morning in Winnipeg. We're at pre-budget discussions, pursuant to Standing Order 83(1).

I welcome, from the Association of Manitoba Municipalities, Stu Brièse, president, and Garry Wasylowski, vice-president. From the Canadian Community Economic Development Network we have Garry Loewen, co-chair of the policy committee. From CanWest Global Communication Corp. we have Geoffrey Elliot, vice-president. From the Manitoba Organization of Faculty Associations we have James Clark, president. Also presenting are Peter Squire and Kenneth Clark from the Winnipeg Real Estate Board.

We'll go in the order we have you in the agenda. You have up to eight minutes each. We'll start with the Association of Manitoba Municipalities

Mr. Stu Brièse (President, Association of Manitoba Municipalities) Thank you, Madam Chairman.

I'm Stuart Brièse. I'm the president of the Association of Manitoba Municipalities, which represents all 201 municipal corporations in Manitoba.

We presented our brief to you earlier in the summer, and I'm going to highlight some of the things out of that brief. Chief among our concerns are infrastructure issues and infrastructure renewal.

We are members of the committee that selects some of the infrastructure projects in Manitoba. We know the numbers and the intakes of the infrastructure program, and we're very appreciative of the program, but it's falling fall short on some of the infrastructure renewal things that we need.

In Manitoba there have been, through two intakes, 335 applications for northern and rural infrastructure projects, worth a total of $350 million in need, and the fund we are administering has $54 million in it from all three levels of government.

Another issue we want to make sure is understood is that we believe there should be an ongoing national infrastructure program rather than periodic announcements. It makes it far easier for us, and I know this was a recommendation of the Sgro report too. It makes it far easier for us to plan into the future on our infrastructure needs.

There are about four areas of infrastructure that I'd like to touch on. One is a national highway program. I'm sure you've heard the figures before, but we urge the federal government to support a national highway program financially by dedicating revenue from the federal fuel tax to this program.

At the present time, some $155 million is taken out of this province in federal fuel tax per year, with a return back to the province of roughly $20 million a year. To us, there is a very major deficit there, and we think there are certain roads that are critical to the national highway program in Manitoba that should be supported to a greater extent by the federal government.

The second area in infrastructure renewal is airport funding and the changes that were made to the capital assistance program for airports. We have something like 11 regional airports in the province of Manitoba, which are recognizing higher costs. The capital assistance program has not kept up with the increasing costs, and they create a huge problem for the municipal corporations that are in charge of these airports.

The second aspect of that is the CAR 308 bill, which I understand has been partially implemented. It's based on the number of flights in and out of an airport, and at the present time it affects only one of our regional airports in Manitoba--that's Thompson, Manitoba. We have concerns that it may be expanded; it's a bill that addresses safety issues at the airports, with fairly substantial costs that are putting quite a load on our municipal corporations.

The third area I'd like to touch on in infrastructure renewal is the rural water infrastructure. Once again, under the applications for the Canada-Manitoba infrastructure program, we received a total of $222 million worth of demand for rural water extension. In this day of concerns about safety of water supplies and contamination of water supplies, the people of rural Manitoba are falling further and further behind on the safety of their water supplies. We need these rural water infrastructure programs.

At the present time, some funding is done through the Prairie Farm Rehabilitation Act and the Manitoba Water Services Board on a tripartite agreement. To us, it is very inadequate. About $1.1 million a year comes from the federal government into that program. To address the need, we believe we have to get that funding to $3 million to $4 million a year, which creates, with tripartite funding, about $10 million to $12 million going into those projects, and then we can start to address the deficit that's out there.

À (1045)

The fourth area that is very noticeable in Manitoba, and probably is in other provinces, is recreation facilities. We have been unable to fund either the rural water or the recreation facilities out of the Manitoba infrastructure program simply because of the need for sewer, water, waste disposal, and recycling programs, and those are all the programs we have funded out of our particular pool of money.

Most of our recreation facilities were centennial projects, 30, 45 years old or 35 years old. They are starting to need major repairs or replacement. And for the viability of our communities, if you want people to live in those communities you have to offer certain services, and recreation facilities are a very huge cost. We believe that there should be a separate recreational component to the Canada-Manitoba infrastructure program.

One other area I would like to touch lightly on is the agricultural and rural community crisis, and we choose to approach it always as a rural community crisis because most of our province is very dependent on the agricultural industry. We are aware of the government's long-term plan that is in place now. We think there are some aspects that need to be touched. The continuing subsidies out of Europe and the American Department of Agriculture are having a devastating effect on our farming community.

The other aspect that I think should be touched on is some way, shape, or form of a disaster program that covers specific incidents like the flooding in 1997 in western Manitoba and southeastern Saskatchewan, where crop insurance would not cover those costs because the crop was never sold. Once again this year in western Canada, not a lot in our province, but in western Canada with the drought, you do not have good coverage of crop insurance because there is no point in storing the crop in some of those acres.

We have been informed that there has been a discussion document circulated on disaster financial assistance and changes the federal government was intending to make. We urge you to leave the current level of funding in place. As global warming takes place, and various things go on, I think there are going to be more of these incidents. In Manitoba we do count on the disaster financial assistance funding. So we would urge that there be no reduction in the levels of that funding and that it be done on a percentage basis. It's very important in Manitoba. It puts a load on to the municipal corporations once again.

I'll cut it off there. Thank you very much.

À (1050)

The Chair: Thank you very much.

We did hear from the Federation of Canadian Municipalities yesterday in Montreal. All of the briefs, by the way, that you have prepared are circulated to all the members of the finance committee, and we appreciate the fact that you got them in to us earlier; that allowed us to translate and circulate and have all of the members up to speed. As you know, we are going in different cities up there simultaneously right now.

So we will go now to the Canadian Community Economic Development Network. Mr. Loewen.

Mr. Garry Loewen (Co-Chair, Policy Committee, Canadian Community Economic Development Network): Thank you.

Our network is a national network of a little over 200 member organizations. We're the people who tend to work in urban, rural, northern communities that usually see high levels of poverty and unemployment and very strong social stresses. We're the people who provide programs that construct or renovate housing to make it affordable for the people who live in these communities. We're the organizations that run business development programs, micro-enterprise development programs, and that kind of thing to assist low-income people who start their own small businesses.

Our members are the kinds of people who establish worker cooperatives and other worker-owned businesses, usually to fill gaps in the community, whether they're service gaps, product gaps, or employment gaps. They're the people who do skills training for people who are looking to make a transition from unemployment or welfare into the workforce, who assist these people to make that transition into the workforce, and who make the match between the employer community and the job-seeking community to ensure that the right kinds of gaps are being filled.

Our sense of what the challenge is in terms of striking a new budget for Canada is that the focus needs to be on these kinds of communities. Our sense of working in these communities is that there is a whole cycle that takes place, one of neglect, disinvestment, and deterioration. It becomes a self-perpetuating cycle, and before long you have communities like the north end of Winnipeg, where I work, where you have crime rates that are two to four times the rate of other places and where half the population--11,000 households in the community I'm in--is living below the poverty line. There's a need to somehow move into communities like that and do an intervention that is going to alleviate the conditions there.

We feel that any kind of budget geared at economic growth that doesn't consider the economic growth of those kinds of communities is not worth pursuing. When we're looking at economic growth, we need to be asking, economic growth for whom? So there's a values piece here.

We feel that the challenge in these communities is a developmental challenge. It's not a charity challenge, it's not to have more food banks, it's not to have more clothing clubs; it's to have development that actually creates jobs, creates homes, creates businesses, and does all that in a way that ensures it's the folks who typically get left out of the economy who are in fact now participating.

What we'd like to suggest to the federal government is that it consider the possibility of implementing a communities agenda. I know there's been a lot of conversation lately about implementing an urban agenda, a cities agenda, or something of that nature. We feel that what's really needed is a communities agenda. We think that there needs to be a fair bit of emphasis on that in the urban communities but also in rural and northern communities.

The good news in terms of all that cycle of disinvestment, poverty, and social stress I've been talking about is that there is a whole industry of organizations right across our country that know how to make a difference in these kinds of communities, and they know how to make a difference in terms of creating economic growth that is linked specifically to poverty reduction. They know how to do economic growth or economic development in a way that targets social and cultural goals.

There's an industry of organizations that know how to do this in a cost-effective way and that know how to do it in a way that ensures that there's good return on investment, particularly on taxpayer investment. They know how to do it in a way that creates partnerships between government, the private sector, and the communities this takes place in, and they know how to do it in a way that creates a level of citizen engagement, a level of civic participation that increases social capital at the same time.

So the good news is that there is a body of knowledge about how to do that and that there's some capacity to do it already. What we need now in Canada is the opportunity to scale that up to the point where it has the kind of impact it has the capability of making. It has already been done in many places in the United States, where it has contributed particularly to the revitalization of quite a number of urban communities there.

À (1055)

The kind of activity we are referring to is not activity that is new to the federal government. The federal government is already involved in all of the areas I just talked about, whether it's housing, job skill training, business renewal, etc. The federal government is involved in all that kind of stuff. What we're suggesting is there is a need to scale that up, and there is particularly a need to do that in a way that provides power and control and influence to the local community. There is a need to work at this. We think that the fundamental insight of community economic development approaches is that it finds a way to marry the disciplines of the business community with the social needs and the social goals of the communities that are in trouble across the country.

Among some of the specific things that we think would be helpful in that regard, number one, one of the things that has worked very well in the United States has been a tax incentive program, a tax credit program. A lot of our members are at the point where they would love to be engaging with the business community in a bigger way. They would love to be able to develop partnerships with the business community. One of the vehicles that has been very helpful in that regard in the United States has been, instead of providing grants to these community-based organizations, to provide them with a shopping bag full of tax credits that they can go and shop around to organizations, business organizations, particularly those that are prepared to make donations in exchange for a tax credit. That has been found to be a more positive way of financing this kind of work than simply using agreements.

We think also that despite that there is a need for some kind of a flexible long-term grant program for community development organizations across the country, and we would suggest that within a community's agenda that would be money well spent. We feel that is investment, that is a good investment, and we feel that we can show you the evidence that says in fact the return on that investment is a very positive return.

We feel that the government has been putting a strong emphasis on innovation over the last year or two. Despite that, most of the R and D tax credit programs don't actually apply to the community sector. We feel there is a need to expand the R and D tax credit to the community sector.

We feel that the government needs to be looking at the possibility of moving the community futures program that is run by all of the economic development authorities across the country into the urban context. Many of our communities would really appreciate the kinds of vehicles and resources that are made available through the community futures program. It would have to be changed a bit if it were brought into the urban context, but we think it would be worth bringing into the urban context.

We also feel that there are some changes that need to be made to the charitable regulations to make it possible for some of these organizations to do a more multi-faceted kind of a work, a less restricted kind of a work, but to expand their work to a point where it's clearly making a difference in marginalized communities.

The Chair: Thank you very much for the presentation.

My apologies to the panel. I'm going to have to leave because of a personal situation. I leave you in the capable hands of my colleagues and ask Mr. Cullen to take the chair over. Thank you very much.

Á (1100)

The Acting Chair (Mr. Roy Cullen): Yes, thank you very much.

We will now go to Mr. Geoffrey Elliot, CanWest Global Communications. Please proceed.

Mr. Geoffrey Elliot (Vice-President, CanWest Global Communications Corp.): Thanks very much, Mr. Chairman.

Good morning. As you know, I'm here on behalf of CanWest Global Communications, owner of, among other properties in Canada and overseas, the Global Television Network, the National Post newspaper, and a chain of other newspapers in many of Canada's major cities.

My brief formal remarks today supplement the written brief to the standing committee that was submitted on September 9. Since then we've had an opportunity to read the economic and fiscal update delivered by the Deputy Prime Minister and Minister of Finance on October 30. Nothing in that excellent update changes the basic messages we delivered to the standing committee on September 9.

There is of course no shortage of financial and other economic and social challenges facing the Government of Canada in the budgetary process. Its essential task of maintaining and improving the quality of life and the economic prospects of Canadians has certainly become more complex in the last year.

External threats of global terrorism and possible armed conflict in Iraq have understandably heightened U.S. concerns about border and other security, and as a result the U.S. has taken steps that appear to detract from the traditional openness of our cross-border relationship. Last year substantial and unforeseen Canadian government investment in improved border security was necessary to ensure that Canada is perceived as being on the inside rather than the outside of the U.S. security perimeter. We need to continue to do whatever is necessary to keep border controls open and efficient for the conduct of commerce, including the easy and convenient movement of Canadians and Americans across the border in both directions. All that speaks to the importance of the Minister of Finance's maintaining the provision for contingencies in his budget planning.

We now have the controversy over Kyoto, whose implementation will also be costly. Whatever side you're on regarding the debate about the integrity, environmental and otherwise, of that multilateral agreement, there's no doubt that achieving the emission controls reduction targets will be costly and will have far-reaching economic consequences for Canada, including consequences for our competitive position. In fact, the impact will probably be greater on Canada and Canadians than on most other countries.

The government also has a major and potentially expensive challenge to fix our health care system. Many also believe we've shortchanged the defence budget over the years and in so doing have limited our capacity to pull our weight as compared to our allies.

I could go on to name other challenges that each make increasing demands on the public purse. The core message of our submission is that the Minister of Finance should stand firm and resist immediate pressures to increase spending. All these demands for spending become more manageable if the government maintains a fiscal policy geared to encouraging macro-economic growth so a progressively smaller proportion of each revenue dollar is siphoned off each succeeding year to service debt accumulated in the past.

Choices between conflicting spending priorities will always be easier to manage when the Canadian economic pie is growing than when the government is required to address demands for bigger slices of a pie that remains the same size. Clearly, the government is to be congratulated for the strong growth performance and for the solid and so far consistent improvement in Canada's public finances over the past six or seven years.

Looking ahead, we believe the Minister of Finance is also absolutely correct in identifying important external risks to the fiscal framework. A strong U.S. economy and America's huge appetite for Canadian exports were an important factor in Canada's high rate of economic growth over most of the past decade.

It's evident that the current economic environment has become more fragile and more uncertain. We're concerned that an economic recovery in the U.S. may have stalled and that the unprecedented cut in the U.S. bank rate on Wednesday is evidence that the U.S. Federal Reserve is of the same view.

Canada exports about half of what we produce, and about $4 out of every $5 of those exports goes to the United States market. If U.S. demand for our exports fails to grow, there will eventually be a negative effect on Canada's rate of economic growth as well. That's inescapable.

All this reinforces the recommendations we made in September for the retention of tight discipline on government spending and for the government to stay the course on tax reduction, avoid budgetary deficits, and continue to whittle away at the huge federal debt, which remains among the largest among OECD countries as a ratio of GDP. That's the formula that has the best prospects for stimulating sustained economic growth based on private sector investment. That's the way to make the other priorities, some of which were mentioned today, easier and more affordable.

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We are encouraged by Mr. Manley's recent observations that government must become more flexible and more adept at reallocating resources between government departments and programs. We agree with the concerns of many Canadians about the integrity of our health care system. Incidentally, we are not impressed with the recommendations of the recent Senate report, which would tax Canadians more in order to support greater spending within an existing system that is obviously struggling with structural problems. Hopefully the Romanow commission report will be more thoughtful and more innovative.

We believe that fixing health care will require more than just money, but incremental federal funding will likely be required. We don't believe that the government should be offended by consideration of need delivery innovations such as the contracting out of private sector providers for diagnostic and other specialized services, provided that such services remain within the universal access system. That would enable the marketplace to respond to at least some of the huge capital investment needs of the health care sector.

The persistent and apparently secular decline in the value of the Canadian dollar is another problem. The low dollar makes Canadian assets cheap for foreign investors while making foreign assets prohibitively expensive for Canadian firms seeking to establish a global presence. For individual Canadians, the declining dollar represents a tax on wealth as the life savings of all of us are diminishing over time. Obviously there is no short-term fix for the dollar. It got to where it is through the accumulation of a quarter century of imprudent fiscal management by government. Again, the only sure way to fix it is for governments to focus on the fundamentals and to press ahead on debt reduction and working towards a competitive tax environment for individuals and for the business sector.

Canadian productivity is important. And productivity is not about how hard people work; it's about the quality of the tools they have to work with in comparison to the competition in the United States and elsewhere. The corporate tax system needs to be competitive in terms of the extent to which it encourages private sector investment in productivity improvement.

While acknowledging the important progress made in recent years in cuts to both corporate and personal taxes, taxes in Canada remain too high in comparison to the United States and other OECD countries. Our written submissions to the standing committee over the past two years provide examples of comparative tax levels between Canada and other countries.

Finally, CanWest raised three specific issues of direct relevance to the company in our written submissions. One is the system of government support for the production of Canadian content, television programming, and film production. Canadian support programs have been very successful in fostering creative and technical competence in the Canadian film production community. However, we believe that Canada would derive greater benefit from this public investment if the criteria to qualify for government support were geared more to projects that demonstrate the potential for commercial success from export as well as domestic consumption. The reality is that successful export distribution is the key to commercial success. Products that can be exported are also more likely to be popular on Canadian television and movie screens as well.

Another issue we raised is the inconsistent and we believe inappropriate tax treatment of costs associated with the procurement of Canadian content and programming by Canadian television broadcasters. It's really a question of amortization rates. I'm pleased to say that since we sent in our report, our submission in September, we seem to be making progress with the CCRA in resolving that issue.

Our last point relates to fees collected by the CRTC to cover the cost of regulation of broadcasting. We don't quarrel with the concept of user pay, but the CRTC fees are far in excess of the cost to government of operating the CRTC and a broadcast regulatory system. We believe the fees should be related more directly to the recovery of the reasonable costs incurred, or alternatively that the surplus should be channelled back into the industry in some way.

That concludes my remarks. I hope I stayed within the eight minutes.

The Acting Chair (Mr. Roy Cullen): Thank you, Mr. Elliot. It's good having you back with us again this year.

I should give a plug for my private member's bill on cost recovery and user fees, but I can see my colleagues wouldn't support that, so I will go directly to Mr. Clark, from the Manitoba Organization of Faculty Associations.

Mr. James Clark (President, Manitoba Organization of Faculty Associations): What we would like to address primarily is what we perceive to be growing inequities in the funding of Canadian universities. I would think it's a matter not only of the amount of funding but also in the changes in the way moneys get from the federal government to the universities. We think that these inequities are ultimately going to interfere with the achievement of what you have stated as being the current goals of the current budgetary process: greater levels of economic prosperity widely shared by all Canadians and the highest quality of life for all.

I'm going to start by talking about economic disadvantage. Stats Canada last year documented what's been known for decades, that people from well-off families are much more likely to have a university education than are children from less-well-off families. It was several times more likely for the top 20% of the population than for the bottom 27% of the population. There was no similar inequity for graduates of community colleges, which suggests to us that it has to do with financial matters to some extent, not only direct cost but also the forgone earnings because of the much longer programs a university education entails.

Part of this, we think, is a product of a growing dependence on tuition fees over recent decades, and there seems to be a tendency to start looking at education as a service consumers are purchasing than as an investment of all Canadians in future growth.

Just on that particular issue of students paying their own way, I think there are a variety of things that get ignored in this, and I'll just mention a couple. One is that universities serve a wide variety of functions aside from teaching. For example, much of the research that is carried out in Canada, including virtually all the basic research, occurs in that particular context. Universities also provide a lot of community services. For example, a city like Antigonish in Nova Scotia would be much different without St. FX there from it is with that university being present.

We're also concerned about the long-term consequences of asking students to pay their own way. We think that the likelihood is that people who graduate after such a situation are going to feel less loyalty, if you will, towards Canada and less of a sense that they need to pay something back to the country. If anything, they're going to be even more resistant to taxes, and perhaps they're going to be less likely to stay in Canada when there's competition from the States, where they're going to find much better jobs and be paid more. Perhaps they'll also be less likely to stay within the university system, as opposed to going into research in the private sector, where, again, the pay is at much higher levels.

We'd like to see the federal and indeed all governments viewing university teaching and research more as an investment than as a service, and this is an investment that is known to pay off in terms of higher incomes and lower use of services such as employment insurance. I heard earlier about lifestyle changes with respect to health, and these are known to be associated with, again, higher levels of university education.

Now, I'm a psychologist, and if I were on your side I'd be a little jaundiced perhaps about someone who could be seen as speaking in their own self-interest. I'm a professor, so I obviously have some interest in getting more money for universities, but I'm also somebody who has benefited from Canada's university system. I went through in the 1960s, when it was more affordable. I came from a very modest background, but I was fortunate to have support from Veterans Affairs because of my father's death early on in my life. I surely and sincerely believe that if I were in the same circumstances today, I wouldn't have a PhD and wouldn't be a professor, given the changes that have been wrought in the way the system is funded.

I'd just like to mention another couple of kinds of inequities more generally, and they have to do with the increasing tendency to transmit some funds to universities through targeted research programs. So they have a wide variety of programs that have really expanded. The federal government has been investing in these over the years. The universities do benefit from these particular kinds of programs, but they too produce inequities.

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For example, if you look at funding in Manitoba from a variety of granting agencies—with the possible exception of the Canadian Institutes for Health Research—you find that we get much less than 3.8% of the moneys that are distributed, 3.8% being the proportion of the population of Canada that lives in Manitoba. They produce these kinds of inequities because of a variety of factors. The rich essentially get richer because of the competitive nature of the process, the requirement for matching funds, and the lack—with a few notable exceptions—of head offices in Manitoba of a lot of companies to partner with, and the like.

There are also what I call disciplinary inequities. The targets are primarily for things that have some short-term application or direct economic or health-related benefit. Now, it's natural, I think, that these would be seen as desirable, but in essence it means that basic research tends to get undervalued in the natural sciences. Or perhaps research in social sciences and humanities gets ignored, despite the fact that many of our current problems probably have as much or more to do with culture, history, psychology, and the like than they have to do with the actual physical sciences.

Yes, we need to defend our borders. But perhaps by understanding why cultures conflict with one another we'll have less need to invest in that kind of protection of borders. I think this longer-term sort of perspective is getting lost somewhat in this investing in short-term kinds of benefits.

I'll just give one other example from what I heard in the earlier presentation. What companies are going to come forward and invest in prevention of...when there's no product at the end of it? You can see how they would invest in drugs or things that are going to lead to a product, which is going to lead to some kind of profit down the road. But they're going to be less likely to invest in prevention.

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The Acting Chair (Mr. Roy Cullen): Mr. Clark, just a suggestion. As you've got about a minute left, you might want to get straight to your recommendations.

Mr. James Clark: Yes, for sure. I just want to make one more point. Then I'll just do the recommendations very quickly.

The other point is to appreciate that the vast majority of students don't benefit from these funds, because they're registered in the arts and sciences that aren't benefiting as directly from these kinds of targeted programs. Many of the funds go to research institutes, which only have a pretty loose affiliation with education.

So our recommendations essentially are that we think we need to go back to more dependence on core funding for universities, both to support teaching and research activities. We do think there needs to be additional support for research, but it needs to be ensured that it's broadly achieved—not just short-term applied research, but longer-term objectives as well. And finally, I think that rather than having things like the Canada Millennium Scholarship, funds for students need to be more needs-based to reduce what we see as financial barriers.

The Acting Chair (Mr. Roy Cullen): Thank you very much, Mr. Clark.

Our last presenter is the Winnipeg Real Estate Board. Who will be giving the presentation, Mr. Peter Squire or Mr. Kenneth Clark?

Okay. Mr. Clark, please proceed.

Mr. Kenneth Clark (Winnipeg Real Estate Board): Thank you, Mr. Chairman.

Good morning. You've obviously saved us for last because the topic we are going to talk about affects absolutely everybody in the room and pretty well everybody in the country, and that's housing.

There are four key areas we would like to address this morning: one, the federal government's fiscal policy, including some comments on that; two, the recent initiative and announcement regarding affordable housing, including some comments on our local experience with the housing opportunities program and how we translated that into a real Winnipeg success story by rehabilitating very dilapidated housing in various areas of the city; three, some recommendations on tax incentives that might encourage private enterprise and investment in the rehabilitation of housing stocks throughout Winnipeg; and four, just a general comment on how organized real estate might participate in bringing that into effect.

I'll just make a quick comment about our board. We'll be a hundred years old this coming year, celebrating our centennial, so we're having lots of fun. For the first time in our history we are driving towards $1 billion in turnover in real estate sales in Winnipeg.

We have come through a very difficult period, where as recently as three years ago the property values in some parts of our city were declining so rapidly that one could, if you remember seeing a series of TV programs, buy a house in our north end on a Visa credit card. There were some prices that were that low. We have made a serious effort here at the real estate board on the basis of our members being involved in bringing about a change in both ownership and pride of ownership in some of these areas. I will tell you later in our presentation about a couple of streets that have been absolutely reorganized, revitalized, and rebuilt as a result of our efforts.

First I have just a quick comment on both the Canadian Real Estate Association and the Manitoba association's support for the federal government's fiscal policy. In our budget submission from CREA we made a statement that we saw debt repayments as an integral part of the budget, one that should be followed with great discipline. As Mr. Elliot mentioned, we see the $3 billion contingency reserve fund as an absolute priority of the federal government' s budgeting process. We feel confident that the government has made progress in this area. We've gained some benefits, and we would like to see those benefits maintained, not squandered through excessive spending in the next budget process.

The total value of all real estate sales in Canada in the last 12 months is up 16%. There is a tremendous level of economic well-being out there in the housing market. Our total this year will likely exceed $73 billion, and the economic spinoff benefit in sales of various other support products, such as home renovation, carpeting, and appliances, and in employing lawyers, surveyors, home inspectors, and the like, is tremendous.

We applaud the government' s recent initiative in establishing the affordable housing program, and we see that as a key part of bringing some of the other.... I think Mr. Loewen mentioned the north end of the city, where there is a fairly large population of people who are left out of the mainstream of housing when it comes to being able to buy. They can't make a down payment, afford a mortgage, and move into something where they can enjoy the pride of ownership probably most of us around this table have experienced. It's encouraging that the government has this back on the national agenda.

Of course there are a tremendous number of competing priorities for funds. I will talk about Manitoba specifically. We have a fund of $67 million from the combined levels of government, and if all groups had their way, we would probably need a fund of about $267 million. What we're trying to do is focus the government's sense of priorities on where this money could be best invested.

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The local experience we've had with the housing opportunities program run through the Winnipeg Real Estate Board is a good one. It's run by two individuals on a budget that out of the total income consumes only 11% of the funds. It's a very economical, low-cost way of translating dilapidated housing stock into affordable, livable, or occupied property that develops areas such as Spence Street and Young Street and various other areas around the West Broadway and University of Winnipeg areas.

In the north end we have a small group of realtors who have taken it upon themselves to tackle the acquisition of homes that until recently were boarded up. In combination with the city government, who have targeted several areas in the city, there's a tremendous revitalization going on in Winnipeg now. If you visited any one of those streets and some of the people who are fortunate enough to have put sweat equity into these homes, you would smile and be encouraged by the absolute pride of ownership you see and the revitalization that's taken place.

In terms of tax incentives to make some of these things easier to accomplish, on page 5 we've listed a number of such things that could be helpful. I'm not a tax expert, and neither is Peter, but CREA has a well-developed position paper on some of the tax incentives we've recommended the government consider.

There's been a program in housing renovation for some years called RRAP. I don't know if the committee members are familiar with that, but it's the residential rehabilitation program. What's been happening recently is that the majority of the funds in this program have not been allocated to individuals, possibly because some of them are unaware of the program. The money has been going to groups that rehabilitate homes. We'd like to see low-income, qualifying homeowners and landlords access that program to bring the housing stock up to minimum health standards, safety standards, and fire codes.

The RRAP dollars have been declining, and if there were some way the federal government could consider enhancing that program.... We saw some tremendous results from that back in the late seventies, the mid-eighties, and the early nineties in terms of making property values climb and making sure that the homes being renovated were up to code.

In summary, Mr. Chairman, we would like to see the housing assistance program continue. We'd like to participate in deciding how those dollars are directed at a local level, and we'd like to see the real estate board and all its members generally participate in directing the rehabilitation of the homes.

Thank you.

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The Acting Chair (Mr. Roy Cullen): Thank you very much, Mr. Clark.

And yes, congratulations on the work on the inner city. I think many of us would have seen the documentary, and that's been really a great turnaround, so congratulations.

We're going to go to eight-minute rounds, starting with Mr. Casson, please.

Mr. Rick Casson: Thanks, Mr. Chairman.

Thanks too to the real estate board. Your national association does a good job. They come to Ottawa every year and lobby; they're very concise and they give us good input.

I'd like to ask Mr. Brièse about the airport issue. From what I understand, when some of these airports were taken over by municipalities, agreements were made and certain things happened. But now with the threat of 308, fire protection, and some of the other things going on, this is going to really put a huge burden on some of the municipalities that have taken over the funding of these smaller airports.

Certainly, where I am from, Lethbridge, that's the situation that exists there. I'd like you to comment on that, if that is indeed the case, and also say if you have seen any improvement in the security in the smaller airports since the implementation of the $24 tax on air travel.

Mr. Stu Brièse: Firstly, a number of these airports were turned back over to communities, along with some funding. The airport capital assistance program was put in place. Some of the communities fought long and hard enough that they had their airports upgraded before this took place; others maybe didn't make as good a deal. The funds available under the airport capital assistance program are not enough to cover the costs of upgrades. As airports are very costly to maintain, it then falls back onto the communities, the municipal corporations.

What I'm specifically referring to is that under this program, there are some 11 regional airports in Manitoba that are more or less the hubs. I think this is common in most provinces across Canada. We also have 22 so-called small airports. They access some different funding. I'm not sure what the program is called.

The CAR 308 program is a safety program aimed at upgrading the firefighting equipment and these type of things in regional airports. A lot of them thought they had adequate protection with their own municipal fire department, which were within two to three minutes' range. There was a certain range they had to be in.

There's no documented proof that this increased fire protection in regional airports has ever saved one life in Canada. Yet they're getting this very costly requirement. It's based on the number of flights in and out of an airport. At this point it only affects Thompson, Manitoba, but it will get expanded, I think.

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Mr. Rick Casson: Have you seen any change in the security equipment at some of these airports because of this?

Mr. Stu Brièse: I haven't personally, but I'm not in a lot of them very often, so I really shouldn't comment on this.

Mr. Rick Casson: As you know, many of us travel a lot. We don't have an X-ray machine in Lethbridge; I count on the people that check my bag every week to tell me if I've left anything at home—how many pairs of socks, my shaving equipment—that I should have....They're that familiar with me.

Mr. Elliot, a question for you. You indicated that you were encouraged by the finance minister's comments about reallocation of funds. You mentioned defence, health care, the Kyoto protocol, and a number of issues that are coming forward that are surely going to put some strain on finances. Do you feel that through a process to examine existing programs and reallocation, there's enough funding there to take care of all the issues that Canada's facing, without increased taxes?

Mr. Geoffrey Elliot: I don't think I have any illusions that you can do all that you have to do through reallocation. I think our point is that the system isn't very good at sunsetting programs that are not providing adequate value to Canadians. Programs start, and then they tend to carry on. The bureaucratic system should be incentivized to sunset programs as well as to launch new ones. That would be a source of additional resources for government to meet spending priorities—or additional spending priorities.

We don't expect that the government is going to be able to hold the line to the cent on new spending. There'll be pressures on new spending, and there'll be some flexibility, presumably to spend more money. But the main message is that the government should certainly resist entering into new programs that will require a great deal of investment in future years, before continuing to make progress through a reduction in the federal debt, making programs more affordable.

Additionally, we believe that the affordability would be enhanced through ensuring that the Canadian economy continues to grow. We think fiscal restraint—and tax reductions—are necessary to have the kind of competitive business environment that will stimulate the investment that will provide the growth and provide the revenues to government, so that it can spend them eventually on some of these other important priorities.

Mr. Rick Casson: Thank you.

I'd just like to come back to you, Mr. Brièse. You mentioned rural water and the ability to supply clean water to people, and you also mentioned the PFRA. For me, that should be one of the main bodies driving some of these projects, but they are critically underfunded. I know about the applications they have for projects; within weeks any funds they've received are all gone, and many projects go undone. Are you looking in this area at regional systems where water is piped long distances and issues like that--in southern Alberta the lack of water is a serious problem, and these types of systems are put in place--or is it more about water treatment and the ability to create clean water?

Mr. Stu Brièse: Both. We are looking at regional systems in Manitoba. There are a number of them now and we're looking at expanding them. There's a very large one in the southern part of the province called the Pembina Valley Water Co-op. We've identified about $180 million worth of need. This is what is backed up on the water service' desk or on PFRA's desk.

We can't solve this in one year, but let's do a ten-year program with a little bit of increased funding, a program that's doable, and address that infrastructure deficit over ten years. That's why we're saying that we feel, instead of $5.5 million across the prairies with $1.1 million in the Manitoba tripartite funding, let's get it into the $3 million or $4 million a year range. Our own province has already indicated that they will match that, but that's easy enough to say when it isn't there.

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Mr. Rick Casson: Thank you.

The Acting Chair (Mr. Roy Cullen): Thank you, Mr. Casson.

Mr. Martin, please.

Mr. Pat Martin: Thank you, Mr. Chair, and thank you to all the witnesses for very interesting briefs.

It's such an interesting opportunity to hear the different views from two camps, and we have been hearing the business community say fairly consistently across the country to resist increased spending on programs or at least to resist getting into new national programs, whether it's a national child care program or a pharmacare program. But then we have witnesses such as Mr. Loewen and many others come before us pointing to the enormous social deficit that's been left in the wake of the current fiscal policy or ideology that's dominated thinking for the last 15 years. It's an interesting contrast.

I'd like to use what little time I have to actually canvass the witnesses on a specific issue, given that we're going to need new revenue. It's come to our attention that we're willingly forgoing revenue by allowing a certain tax loophole that exists today. The issue is that in 1969 the United States stopped allowing business fines and penalties to be legitimate business expenses under their act, and the United Kingdom did the same thing. This was under the logic that it's bad public policy--that a wrongdoer shouldn't be rewarded in any way for doing wrong.

Now, the current law in Canada is that we do allow business fines and penalties as tax deductions as long as they were incurred in the course of gaining income. So my question is, in light of the need for more revenue to deal with the many social deficits that have been identified, do you agree that our Income Tax Act should allow business fines and penalties as business expenses?

I would ask each of you to comment briefly on it if we have time.

Mr. Geoffrey Elliot: Frankly, I was not aware of the issue until you just raised it. Clearly, there's an ethical dimension to your question as well as a financial one. While I'm sure that there can be arguments made on both sides of the issue, given that the U.S. and, as you say, the U.K. have addressed it, it seems to me that there's no reason why it shouldn't be addressed and discussed to determine what is the right course for Canada. I certainly wouldn't exclude following the same path as the U.S. and Britain have done if it makes sense to do that, but I think we need to have a fulsome discussion of what the implications in moving in that direction would be.

Mr. Pat Martin: Thank you. Anyone else?

Mr. Kenneth Clark: Mr. Martin, just as a personal aside, on a number of occasions Revenue Canada has refused to allow me to deduct parking fines--

Mr. Pat Martin: Yes!

Mr. Kenneth Clark: --and I'm an independent small businessman.

Mr. Pat Martin: Yes, that could be a good argument in your case.

Mr. Kenneth Clark: It's an interesting personal aside, but at the same time the ethical question of allowing someone to break the law and deduct the cost of it from their income I think is completely wrong. If it's in our act now it should be reversed and removed.

Mr. Pat Martin: Thank you. Just to be clear, violations of the Income Tax Act are not tax deductible, if you get fined for breaking the Income Tax Act. That was clarified in 1994. And in 1990 they stopped allowing illegal bribes as tax deductible business expenses. I think that was a good move too.

Does anyone else have a view on the moral or ethical or financial implications of this?

Mr. Garry Loewen: Our association hasn't taken a position on this issue, although our association is hugely concerned about issues of social equity. I think that's what you're bringing up: that there is a sense of privilege in some quarters that doesn't get extended to other quarters.

We think you're on the right track in terms of examining where those conditions exist and working from a value base of social equity. I was just thinking that where we're looking for a tax credit we could offer to businesses--to support our work and receive a tax credit in return--maybe we could just redirect the fine money into--

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Mr. Pat Martin: A designated use for it. That's an interesting idea.

Mr. Brièse, do you have any opinion on that?

Mr. Stu Brièse: Our organization has no opinion on it, but from an ethical point of view individually I would agree that profiting on taxes from something you did illegally isn't very right.

Mr. Pat Martin: It's also a public policy issue that one of the court's justices raised, that it would undermine the deterrent value of a penalty if it can be reduced by automatically writing it off on your taxes.

Okay, thank you for that rebuke.

Mr. Stu Brièse: I think Mr. Elliot wanted to....

Mr. Pat Martin: Oh, I'm sorry.

Mr. Geoffrey Elliot: This is just another point on the same issue. It sort of makes the government a co-conspirator in the crime.

Mr. Pat Martin: Thank you for that. I'm going to use that; it's very valuable.

Do I have a minute left?

The Acting Chair (Mr. Roy Cullen): Yes, you do have more time.

Mr. Pat Martin: Concerning the Winnipeg Real Estate Board and the housing initiative, it's in the area I represent, Winnipeg Centre. Peter and I have met and talked about this, and I very much appreciate all you've done in making a real difference to that very low-income neighbourhood, where the average selling price for a house--in my riding--was $19,500 for one period.

I think the efforts you've made in certain neighbourhoods have actually helped elevate the whole neighbourhood. If you take the 12 most derelict homes in a six-block area and turn them into the nicest homes in the area, you've changed the character of the whole community. It's really a tangible difference.

Is there anything you want to expand on about your program, the HOP program?

Mr. Peter Squire (Winnipeg Real Estate Board): I think the common theme is to be careful on our spending so we can put more money in much-needed areas. But in terms of the housing, we're just saying we think you have to look at the outputs and where you can get the best results for your dollars. As Ken indicated concerning our program, we're basically a volunteer organization with two contract people who are pretty much full-time. They're really driving the staffing of the program, with input from the real estate board and a lot of market savvy, because obviously our realtors know where the pricing is in these areas, and what you can likely achieve in terms of the necessary refurbishments, and what can....

We're getting prices up to $70,000 now where we've picked up a lot of homes for $5,000 or $10,000. Some are tax sales from the city. We are significantly improving them and have brought up the average resale price over 60% in three years. Now we're seeing an average price in the area of about $33,000, up from $19,000.

So we're definitely going in the right direction, but we're saying in overall terms don't lose sight of the importance of RRAP, because its original intentions are still based more on individual people with low incomes who definitely need to maintain their homes. There's a lot of older housing stock, as you know, Pat, in Winnipeg. I think we're the second highest next to Montreal.

If you're looking at other needed dollars for not-for-profits, programs like the new affordable housing initiative could be directed there. And really, these can complement each other.

Again we're coming back to how many dollars are available, but we think the payback is quite significant, in that we are starting to see these areas stabilize. Hopefully we'll arrest, as HOP has done in our area in the west end, a lot of other further decline that would have happened if we hadn't intervened.

I think that's the significant part: what are the costs if you don't do anything? That's part of what you have to grapple with as a finance committee. If we have to forgo some things, what would be the cost down the road? I think that's why it's important to have groups like HOP that are rolling up their sleeves and getting involved now before it is too late, as has happened in some other areas where we've just let it go too far. Then it becomes very prohibitive and expensive to try to bring those areas back.

Mr. Pat Martin: That's a good point. Thank you.

The Acting Chair (Mr. Roy Cullen): Thank you, Mr. Martin.

Mr. Murphy, last round.

Mr. Shawn Murphy: Thank you very much, Mr. Chairman.

First of all, I'll just perhaps make a statement to Mr. Brièse and the Association of Manitoba Municipalities. I agree with much of your submission that there is a need for a long-term infrastructural program. I am heartened by the remarks from the Speech from the Throne; hopefully, they will address that need.

From a parliamentarian's point of view, the infrastructural program is basically one of the more successful programs we have to work with. Hopefully it will certainly address some of the recreational needs that you see right across Canada.

I don't think you're going to see any appetite for a dedicated tax in Ottawa. I don't see it there now, and I don't expect to see it.

On the airports, I agree with your submission. I chair a committee dealing with regional airports in Atlantic Canada, where the very same issues arise. I'll give you a copy of our report. It does address your concern about the change in the new airport tax, which is supposed to be tabled this fall, and that any changes that add any costs to these small regional airports—which are under tremendous pressure and are so important to the economy of the regions they serve—should be borne by the federal government. They cannot pass it down to the travelling public any more. Hopefully the change in the airport tax will see the light of day.

My question to you, Mr. Clark, which I guess maybe is an unfair question, is that you heard the tail end of the last submissions. I've been on the road for so long—five days—that I don't even know what city I'm in any more. Winnipeg.

We basically hear a lot of the same comments, including by Dr. Peter McKinnon yesterday, that post-secondary education is so important. It's got health issues, it's got societal issues, and it's got economic development issues. How we educate our children is what we are as a society, and what we're going to be. I'm not disagreeing with them at all. But the same argument can be made by the people who addressed us on early childhood education. It's an important issue also.

As a country, we don't have a lot of flexibility here. Finance Minister Manley gave his economic update last Wednesday. According to his numbers, we've got about a billion dollar surplus to work with. The gentleman on your right doesn't want us to raise taxes. I believe the two gentlemen on your left don't want us to raise taxes. So I guess I throw out a philosophical question: what do you think we should do? I agree with your problem, but where do you think the money should come from?

Á (1145)

Mr. James Clark: I'm not an economist. I've heard rumours that the surpluses have tended to be underestimated by the federal government for quite a few years, and then the money gets distributed—some to that, and some apparently to other kinds of programs. The estimates of the surpluses.... I don't know whether you refer to an actual or a predicted surplus.

Mr. Shawn Murphy: This would be the predicted surplus for this fiscal year.

Mr. James Clark: So these figures—at least by Paul Martin—have pretty dramatically underestimated what the surpluses have indeed been.

But I guess I would just come back to a similar sort of question or point that was made earlier: what's the consequence of not doing everything? Do we want all the doctors to be children of doctors and lawyers? Do we want all of the professors in the universities to be children of the affluent people? Do we want all of the researchers to come from a certain segment of society? Do we want to take a certain segment of society and put them into shorter-term programs that would make them fodder for industry and the like? Or do we want them to be allowed to move up as well?

Yes, we can say that it's too expensive, but I suspect that if you looked at it that baldly, people would say that there are in fact good grounds here for investing in education. My understanding is that post-secondary education does tend to rank quite highly in national surveys as something that Canadians would be willing to invest in.

You've got the big push for innovation, and so on, going on. I would say we should ensure that the funds don't end up getting diverted away from things that are not only going to help innovation but are also going to do a public good as well. So for me part of the problem is that funds are getting diverted into things that are going to benefit drug companies and the like, as opposed to things that are going to benefit the citizens and the country as a whole.

Á (1150)

Mr. Shawn Murphy: I agree with your comments on the Millennium Scholarship Fund, where the $2 billion that was put in could have been directed in a different way; I agree with you 100%. In the last three years the federal government has put a lot of money into universities, but they have been directed towards boutique programs, to the granting councils. I'm quite aware of the.... The University of Prince Edward Island is in my riding. You represent what I would classify as a smaller university, one that isn't getting its share of CFI NSERC grants.

Now, we did try to rectify that a bit. We pushed for this hard, to fund the indirect cost of research on a sliding scale that would benefit the University of Manitoba, the U of P.E.I., Dalhousie, and UNB. I know your statistics, and I'm quite familiar with universities such as McGill, the U of T, and UBC coming in and grabbing the lion's share. We're working on that very hard.

Do I take it from your representation this morning that perhaps it would have been better...? I should also add that we're getting very strong and equally capable representation from your student population on the accessibility issue. Do you think this money should have been directed more to the front door rather than to some of these programs?

Mr. James Clark: Yes. Personally, I think that universities do know what to do with the money, which they get through the regular agencies and the like. The other part of it of course is the need to build another bureaucracy for each of these special programs that end up being developed.

Then the other thing, just to put it in perspective, is that the CFI is a nice thing to have, but estimates of the infrastructure deficit of universities across Canada are that it is just huge. It's not specific to a few particular areas that have been targeted for research funding, which is the way you get the CFI funds.

Again, I think what's happening is that these programs dictate where the money could best be spent in universities, rather than the universities themselves, which are perhaps better aware of the full range of needs of the institution.

Mr. Shawn Murphy: Thank you very much.

I see there's no simple or easy solution.

Mr. James Clark: No.

The Acting Chair (Mr. Roy Cullen): Thank you, Mr. Murphy.

Because we're thin on the ground here, I'm going to use the prerogative of the chair and ask a couple of questions.

I should mention that Ms. Barnes was hoping to be here, but a family emergency came up. We are getting some fresh troops in this afternoon. Mr. Alcock has rearranged things, and he and Mr. Raymond Simard will be here for our afternoon session.

I have a question for Mr. Loewen. I should know this but I don't, and it's with respect to the western diversification program. Are you or organizations like yours able to qualify for anything out of that program?

Mr. Garry Loewen: Hardly. There has traditionally been a fair bit of flexibility in the funding that has been available in the western economic diversification program, although typically, to access any of that funding, we've usually had to work at the political level. Where Mr. Duhamel or Mr. Axworthy worked, they were able to find a way to increase flexibility so we'd be able to access programs that wouldn't by themselves be targeted towards our kind of work. I think that the criteria for western economic diversification programming are becoming more rigid right now. It's becoming harder for us to access it, and it's not structured in a way that provides any certainty around that. It's not interpreted consistently across the four western provinces.

It would be easier if there were a program like a community futures program, where it's very clear what it does and how you access it, where criteria are applied consistently, and where it's clearly available for the kind of work we're talking about in an urban context.

The Acting Chair (Mr. Roy Cullen): Thank you.

I have one for Mr. Elliot, if I may. In your brief you talked about the support the government provides in terms of encouraging Canadian content in television and film. You talk about the need to perhaps place a greater orientation on programming content that has an export market as well. My mind took me to programs like Air Farce, This Hour Has 22 Minutes, and the Trudeau series, and there are others, obviously. I'm just wondering to what extent, if you're trying to encourage Canadian content, does a lot of that have a market only in Canada and no export market potential?

Á (1155)

Mr. Geoffrey Elliot: Certainly that's true. Often there isn't. The buzzword phrase “Canadians telling Canadian stories to Canadians” tends to.... That story doesn't normally travel well. An easy example would be to produce a one-hour series that may cost in round figures $1 million. It may have a revenue value in terms of its exhibition value in Canada of maybe $100,000 or $150,000. Somebody has to pay for the other $850,000, because you're not going to get it from international distribution.

That's really what we're talking about. The funding programs do encourage.... I mean, there is support for programs in what they call industrial products that are capable of being marketed internationally. But much of the programming support is geared to the kind of production that doesn't make sense from an economic point of view or a commercial point of view.

The Acting Chair (Mr. Roy Cullen): Good. Thank you.

Mr. Geoffrey Elliot: It all relates to the ten-point criteria for qualification.

The Acting Chair (Mr. Roy Cullen): Okay. We should have a look at that.

I'd like to thank all the presenters for your input. We have a difficult task in weighing all these different priorities, but that's our job. You make it easier in a sense by coming here and putting time and effort into your briefs and presentations. We can hear directly from you what your priorities are, and that helps us make some of the decisions that we need to make in terms of what we put in our report.

I would ask for your indulgence just for a moment before we adjourn. There are some housekeeping items for the committee members.

Lunch is going to be located in this building. It's going to be in the conference centre offices in the executive boardroom.

We're going to reconvene sharply at 1:30. In fact, if we have the witnesses here, I'd like to start a couple of minutes earlier, because we all have flights to catch, etc.

Thank you all very much for coming.

The meeting is adjourned.