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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, September 25, 2003

0930

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

Dr. Doug Owram (President, Canadian Federation for the Humanities and Social Sciences)

0935

La présidente

Mr. Robert Blakely (Director of Canadian Affairs, Building and Construction Trades Department, American Federation of Labour and Congress of Industrial Organizations—Canadian Office)

0940

0945

The Chair

Mr. Kirk Howard (Vice-President, Association of Canadian Publishers)

The Chair

Mr. C.A. Pielsticker (Chair, Retirement Income Coalition)

0950

0955

The Chair

Mr. Monte Solberg (Medicine Hat, Canadian Alliance)

1000

Mr. Ian Markham (Retirement Income Coalition)

Mr. Monte Solberg

Mr. C.A. Pielsticker

Mr. Monte Solberg

Mr. Robert Blakely

Mr. Monte Solberg

Mr. Robert Blakely

Mr. Monte Solberg

Mr. Robert Blakely

Mr. Monte Solberg

1005

Mr. Robert Blakely

La présidente

Mr. Pierre Paquette (Joliette, BQ)

Mr. Robert Blakely

Mr. Pierre Paquette

Mr. Robert Blakely

1010

Mr. Pierre Paquette

Mr. Robert Blakely

Mr. Pierre Paquette

M. Robert Blakely

Mr. Pierre Paquette

Dr. Doug Owram

Mr. Pierre Paquette

1015

Mr. Ian Markham

Mr. Pierre Paquette

Mr. Ian Markham

Mr. Pierre Paquette

Mr. Ian Markham

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

1020

Dr. Doug Owram

Mr. Paul Ledwell (Executive Director, Canadian Federation for the Humanities and Social Sciences)

Mr. Larry Bagnell

Mr. Robert Blakely

Mr. Larry Bagnell

Mr. Ian Markham

1025

Mr. Larry Bagnell

Mr. Kirk Howard

Ms. Krys Ross (Vice-President and General Manager, McClelland & Stewart Ltd., Association of Canadian Publishers)

Mr. Kirk Howard

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

Dr. Doug Owram

1030

Mr. Bryon Wilfert

Mr. Robert Blakely

Mr. Bryon Wilfert

Mr. Robert Blakely

Mr. Bryon Wilfert

Mr. Robert Blakely

Mr. Bryon Wilfert

Mr. Robert Blakely

Mr. Bryon Wilfert

Ms. Krys Ross

Mr. Bryon Wilfert

Mr. C.A. Pielsticker

Mr. Bryon Wilfert

Mr. C.A. Pielsticker

Mr. Bryon Wilfert

1035

The Chair

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Mr. Robert Blakely

Ms. Judy Wasylycia-Leis

Mr. Robert Blakely

1040

Ms. Judy Wasylycia-Leis

Dr. Doug Owram

Ms. Judy Wasylycia-Leis

Mr. Kirk Howard

Ms. Judy Wasylycia-Leis

Ms. Krys Ross

Ms. Judy Wasylycia-Leis

1045

Mr. C.A. Pielsticker

The Chair

Mr. Gary Pillitteri (Niagara Falls, Lib.)

Mr. Robert Blakely

1050

Mr. Gary Pillitteri

The Chair

The Honourable Maria Minna (Beaches—East York, Lib.)

Mr. Robert Blakely

Hon. Maria Minna

Mr. Robert Blakely

Hon. Maria Minna

Mr. Robert Blakely

Hon. Maria Minna

1055

Mr. Robert Blakely

Hon. Maria Minna

The Chair

Mr. Monte Solberg

Ms. Krys Ross

Mr. Monte Solberg

Ms. Krys Ross

Mr. Monte Solberg

The Chair

Mr. Pierre Paquette

Mr. Kirk Howard

Mr. Pierre Paquette

The Chair

Dr. Simon Hanmer (Chair-Designate, Partnership Group for Science and Engineering)

1110

The Chair

Mr. Paul Lansbergen (Director, Taxation and Business Issues, Forest Products Association of Canada)

The Chair

Mr. Paul Lansbergen

1115

1120

The Chair

Dr. Sunil Patel (President, Canadian Medical Association)

1125

1130

The Chair

Ms. Marie Lemay (Chief Executive Officer, Canadian Council of Professional Engineers)

Ms. Marie Lemay

1135

1140

The Chair

Mr. Monte Solberg

Dr. Sunil Patel

Mr. Monte Solberg

Dr. Sunil Patel

Mr. William Tholl (Secretary General and CEO, Canadian Medical Association)

Mr. Monte Solberg

1145

Dr. Sunil Patel

Mr. Monte Solberg

Ms. Marie Lemay

Mr. Monte Solberg

The Chair

Mr. Pierre Paquette

1150

Dr. Sunil Patel

Mr. Pierre Paquette

The Chair

Mr. William Tholl

Mr. Pierre Paquette

Mrs. Marie Lemay

1155

Mr. Pierre Paquette

Mrs. Marie Lemay

Mr. Pierre Paquette

The Chair

Dr. Howard Alper (Chair, Partnership Group for Science and Engineering)

The Chair

Mr. Bryon Wilfert

1200

The Chair

Mr. Paul Lansbergen

Mr. Bryon Wilfert

Mr. Paul Lansbergen

Mr. Bryon Wilfert

The Chair

Mr. William Tholl

1205

Mr. Bryon Wilfert

Mr. William Tholl

The Chair

Mr. William Tholl

The Chair

Mrs. Marie Lemay

Mr. Bryon Wilfert

1210

The Chair

Mrs. Marie Lemay

The Chair

Hon. Maria Minna

Dr. Sunil Patel

Mr. William Tholl

Hon. Maria Minna

1215

Dr. Sunil Patel

Hon. Maria Minna

Mr. William Tholl

The Chair

Mr. William Tholl

The Chair

Mr. William Tholl

The Chair

Ms. Judy Wasylycia-Leis

1220

Dr. Sunil Patel

Mr. William Tholl

Ms. Judy Wasylycia-Leis

Dr. Sunil Patel

1225

Mr. William Tholl

Ms. Judy Wasylycia-Leis

Mr. William Tholl

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mrs. Marie Lemay

The Chair

CANADA

Standing Committee on Finance

NUMBER 072

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, September 25, 2003

[Recorded by Electronic Apparatus]

¿ (0930)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Bienvenue à tous, welcome to everyone.

Pursuant to Standing Order 83(1), we are in pre-budget consultations.

We have two panels this morning. We'll commence with our first panel, and we'll do the presentations one after the other, in the order on the agenda.

First of all, I'd like to say welcome to all of you. From the Canadian Federation for the Humanities and Social Sciences, we have Doug Owram, president; and Paul Ledwell, executive director. Welcome to you both.

From the AFL-CIO Building and Construction Trades Department, we have Robert Blakely, director of Canadian affairs. I saw you over there, so welcome, sir. You've been around the Hill this week, I understand.

The Association of Canadian Publishers today is represented by Kirk Howard, who is the vice-president. Welcome, Mr. Howard.

Krys Ross, vice-president and general manager of McClelland and Stewart Ltd. Krys, welcome to you also.

From the Retirement Income Coalition, we have the chair, Mr. Pielsticker, and today you are assisted by Ian Markham. Welcome to you both.

First of all, I'd like to thank all of you for preparing your briefs in advance. We had them translated if they didn't come in two languages, and we distributed them to all members. So we have your briefs with us.

Today we'll start with Mr. Owram. Please go ahead.

Dr. Doug Owram (President, Canadian Federation for the Humanities and Social Sciences): Thank you.

Thank you to the committee for hearing us. I should perhaps briefly introduce myself and the federation.

My name is Doug Owram, and in my day job I'm a Canadian historian at the University of Alberta. I've just finished a term as provost and have been vice-president, academic, for eight years at the university. This position as the president of the federation is a volunteer position, which I'm very much enjoying, and it's introducing me to committees like this.

The federation itself represents some 30,000 researchers, practitioners, and scholars in faculties of arts, business, education, law, and social work across Canada. It is supported by universities as well as by the national associations of various disciplines, such as economics, history, English, and so forth.

We open the written brief to the committee by thanking you for your assistance in the past. I want to emphasize that thank you verbally as well, because the work of your committee has really been invaluable to us in our efforts to improve funding for post-secondary education and for the humanities and social sciences. Because you were involved so much in previous decisions, I will not take you through the brief in detail--it is there for you to read--but, of course, I'll speak to anything if there are questions from the brief. Rather, I want to make three points.

First, I'd like to emphasize that the federal government has made a real difference to universities in Canada and to our international research competitiveness over the last five years.

As I said, I was provost and VP, academic, of one of the largest universities in Canada, and in a province that underwent--and it wasn't the only province--severe cuts in the mid-nineties. The Alberta government took 21% out of our budget over a period of three years. Morale was bad, the strain on academics was bad, the ability to teach students was bad, and it was beginning to look worse because we knew that by the end of the decade we would see considerable retirements by a whole generation of people, who had been hired to teach the baby boomers in the sixties, at the same time as the so-called echo boom would be reaching university age. Canada risked losing its competitive edge, its ability to innovate, even to educate its next generation in an internationally competitive fashion.

But things like the CFI, indirect costs, the Canada research chairs, and most recently the graduate scholarship program have really turned the tide. It is something--and I really want to emphasize this, because I think governments and politicians deserve thanks when they deserve thanks--that will have a long-term impact. It is a structurally important thing. That is why we have our recommendations that the government continue and enhance that involvement--recommendations 4, 5, and 6 in our brief.

The second point--and remember that our recommendations are focusing on the missing piece of a puzzle, not starting from a blank slate--is that we need to build our capacity in the social sciences and humanities. The committee is well aware of this issue, but let me just say two things.

First, if you look at the groups that follow me this morning, or for that matter if you pick up any newspaper and look through the headlines and the issues, it's hard to find one that isn't related to expert understanding and research in these areas: matters like the issues of aging and the quality of life; and corporate governance and the way in which business schools, ethicists, and lawyers can all fit into trying to understand the best means of carrying on corporate governance. The environment, seen many times as a technical issue, is a hugely political and social issue, as values clash, as cultures clash. It's a major economic issue, as debates rage over the distribution of costs on environmental issues.

And there are international issues, which is something I say over and over again. It's the obvious, but it's really important because it goes to the issue of foundational research and to the humanities. Five years ago, very few people would have thought understanding Islamic culture was relevant to Canada. Recent events have shown, of course, that having a good understanding of that area is crucial to current policy development. If we are to ensure that social disruption does not harm us, we have to have capacity and understanding, what I call breadth and depth of research; hence, recommendation two.

My third and final point is that the federation has carried a strong message to our community, and that is that there is no entitlement to taxpayer dollars. Now, the community is an academic one and discussion will always be lively, but the message is that if we're going to have greater support, we have to be accountable. People have accepted the message and are engaged in how best to serve Canadians.

That led to our recommendation on the Social Sciences and Humanities Research Council transformation--recommendation one in the brief. It is in a way a part of the process of ensuring maximum return on investment by the federal government to ensure that we have a granting council that is efficient, accountable, and relevant to Canadians.

¿ (0935)

I'd also like to conclude by making a commitment on behalf of the federation as members. We will work to maintain this sense of responsibility. We will work to retain this sense of accountability within our community to ensure that our society has the understanding necessary to deal with the shocks that have been a part of this current era.

So thank you very much for your time. As I sad, later I'll be happy to take any questions.

[Translation]

La présidente: Now over to Mr. Blakely.

[English]

Mr. Robert Blakely (Director of Canadian Affairs, Building and Construction Trades Department, American Federation of Labour and Congress of Industrial Organizations—Canadian Office): Thank you, Madam Chair.

It's probably bad advocacy to start by giving up some of your time, but I'd like to support something that was just said.

I'm a graduate from the University of Alberta and I was always very proud of that. I was somewhat less proud when I found out my university got rid of all the nice ladies who had a $14-an-hour cleaning job and had worked for the university for 35 years in order to contract it out to people at minimum wage. The reason was that the university didn't have the money.

The infrastructure of things that support the arts, the humanities, and everything else we have here is an infrastructure that needs to be funded. And the people who work at the least popular and least attractive jobs are the people who carry the can when things go funny in a province or in a nation. So give some more money to the universities, but just make sure some of it trickles down to those ladies who are now working for $8 an hour instead of actually supporting their families at $12 or $18 an hour.

We've put a brief before you. The brief has a number of former positions that we've had before you as well. I would like to emphasize one of those.

Spend enough money on the Canadian Forces to make certain that it at least meets the criteria set out by the parliamentary committee that said to put more money into the Canadian Forces. We work in the dockyards and we work in the various establishments of the Canadian Forces on a regular basis, and we're partners in the defence team. They're hurting for money. Their infrastructure is also in rags.

Our brief talks about four major points, and our members, as you pointed out, were here lobbying over the course of the week on those points.

The first is mobility assistance. Workers, highly trained people in which we have a large sunk cost in training, are unemployed in places in this country, and in other places we have shortages of people. It is axiomatic that the construction worker must go where the work is. So if you're a construction professional in New Brunswick, Newfoundland, Nova Scotia, or British Columbia, you need to go to Alberta, where the work is.

Our work is cyclical and it's transitory, both for employers and employees. Unemployment in one area, shortages in the other--we need to be able to balance that. If someone is on employment insurance in New Brunswick and he can go to a job that will pay him $1,200 a week in Fort Saskatchewan, he might be quite happy to go there. But if he has to pay his own way there, has to get an apartment, pay his meals, pay his own way back, and maintain his home in New Brunswick, he's at a zero-gain position. If the job lasts two months, he isn't in a zero gain any more, he's in the hole. If those people were travelling salesmen they could deduct against their income. If they were construction company officials going out to pursue and bid the work, they would get a tax deduction. If they were professional engineers on the same job, they would be able, working as consultants, to get a tax deduction.

Fairness says you should treat these highly skilled professional people in the same way as you treat others. It can be through the EI system, either as a subsidy to a worker or to an employer, or through the tax system, allowing them some reasonable deductions when they have to travel.

Hand in hand with that is the workforce I talked about. Through a federal government program called the interprovincial standard, called the red seal program, we are able to ensure that the boilermaker who comes from St. John's, Newfoundland, to Fort McMurray, Alberta, has the threshold skills necessary for him to undertake the dangerous and difficult tasks he's going to be doing. We need to maintain those national standards. Your government transfers large amounts of money to the provinces to provide for apprenticeship training. If those provinces do not meet the agreed-to national standards and do not work within the current model, we would urge you not to fund them for apprenticeship.

¿ (0940)

We need a workforce that moves from province to province. We have a red seal, which is a guarantee of quality. We don't need a patchwork of partially skilled people across this country.

We would ask you to continue to support the labour market partnerships, which have been very successful in our industry. They're in the budget for HRDC, and HRDC is very supportive of things like the Canadian Apprenticeship Forum and the Canadian Construction Sector Council. We would ask that you consider to continue funding those partnerships.

There is an underground economy in this country. It is thriving within our industry. Basically, smaller work, renovation and revamp, small contracts everywhere are done by people for cash. In Atlantic Canada, according to CCRA, 60% of all construction contractors report that they have no employees. How can you be a construction contractor and have no employees? A significant number of these people in the underground economy work on Government of Canada jobs.

We don't mind paying taxes and we're in favour of competition, but when you're competing against the underground economy, you're competing against someone who starts off with a 17% advantage by not paying CPP, EI, and compensation. They get another 7% advantage by not paying the GST and, depending on the province, another advantage by not paying PST. The advantage is further compounded by the fact that they don't pay income tax.

In a study done by KPMG with the building trades and a number of government departments, we were able to successfully conclude that billions of dollars each year are lost to government. We would like to be able to go out and catch the people who do not pay their taxes. They generally don't support the apprenticeship system or the other infrastructure system. Those people who play by the rules are disadvantaged. We are prepared to work with CCRA and any other revenue agency there is to help sort this problem out.

My last point deals with something that went into the budget last year, which was the deductibility of tools. Auto mechanics, one of the 52 trades that are accredited across the country, get to deduct the cost of their tools. And we support that. But, you know, there are heavy-duty mechanics who have a $200,000 investment in their tools who don't get a deduction. There are welders who have $150,000 welding rigs who don't get to deduct it. There are millwrights who bring a $75,000 set of dials and indicators.

A lawyer can deduct his books. A dentist can deduct his tools, and they are like our tools; they're just made out of a little better steel. Why not us? Let us deduct the cost of our tools.

Thank you very much. Those are my submissions.

¿ (0945)

The Chair: That is a very comprehensive submission from the Building and Construction Trades Department. We appreciate that.

Now we will go to the Association of Canadian Publishers, Mr. Kirk Howard.

Please go ahead, sir.

Mr. Kirk Howard (Vice-President, Association of Canadian Publishers): Thank you, Madam Chair.

My name is Kirk Howard. I'm the president of Dundurn Press and the vice-president of our trade association, the Association of Canadian Publishers. With me this morning is Krys Ross, who's the vice-president of the distinguished publishing company McClelland & Stewart, the treasurer of the ACP, and also the president of the Organization of Book Publishers of Ontario. Krys and I will be delighted to answer any questions your committee might have in the question-and-answer period.

I won't read the brief that we submitted a few days ago, but I'll try to highlight its main points.

The ACP was founded in 1971. Its purpose has always been to promote Canadian books to Canadian readers and to expand Canadian-owned publishers' market shares, both domestically and internationally. Our mission is to develop a strong and diverse Canadian-owned and Canadian-controlled publishing industry. Our member publishers include literary publishers, trade publishers, children's publishers, scholarly, educational, professional, and reference. We represent the cultural diversity of this country in all its regions. The membership includes large publishers and many small ones. We have approximately 130 member publishers in all 10 provinces and one of the three territories. In 2002-03 Canadian publishers published 5,500 new titles. These new books brought Canadian stories to a world audience.

Our brief addresses two of the committee's three suggested themes: first, what taxation, spending, and other measures should be taken to ensure progress in investing in and caring for all members of Canadian society; and second, what measures should be taken to ensure that urban, rural, and remote communities are desirable places in which to live and work and to maximize their contribution to Canada's prosperity.

The ACP strongly agrees with the implications of these two themes. Canada should indeed invest in and care for all members of Canadian society and do so in the communities in which they choose to live. Such investment in all types of communities will help maximize the contributions of individuals to Canada's prosperity, as noted in theme three.

We suggest that the next budget should continue the positive elements of previous budgets, which include retaining the book publishing industry development program, which we call BPIDP; the funding from the Canada Council; and the funding from the Association for the Export of Canadian Books. In 2003 BPIDP provided $31.8 million to Canadian publishers for program components, which can be found on page 3 of our brief. The AECB provided $4.8 million for export programs. The Canada Council provides $9 million in assistance to Canadian-owned publishers through five program elements, as outlined on page 4 of our brief.

The Tomorrow Starts Today program, which was announced by your government in May 2001, augmented these core programs and enabled Canadian publishers to reflect Canada back to Canadians.

The committee's second and third themes address the essence of what Canadian book publishers have set out to do. Books published by our members describe urban, rural, and remote communities, as well as providing jobs in all of these areas. The federal government's publishing programs help us to accomplish the goals of these themes. We ask that the next budget retain the current publishing programs and maintain the current levels of support.

We acknowledge that the next budget is important to all Canadians. The themes that the committee chose indicate its recognition, while perhaps not specifically intended, that programs currently directed at Canadian book publishing meet the intent of those themes.

I want to thank your committee for the opportunity for us to appear before you. Krys and I will be happy to answer any questions.

The Chair: Thank you very much.

Before questions, we'll go to the Retirement Income Coalition. Go ahead, sir.

Mr. C.A. Pielsticker (Chair, Retirement Income Coalition): Thank you very much, Madam Chair. It's good to see you again.

My name is Charlie Pielsticker and I am chair of the Retirement Income Coalition. With me today is Ian Markham, who is a pension actuary with Watts & Wyatt and is representing the Association of Canadian Pension Management.

We have appeared before you on three previous occasions to ask you to support raising the contribution limits of registered retirement savings plans and registered pension plans.

We are a diverse coalition of 14 members, including several national organizations. Members represent plan sponsors, professional associations, business groups, and seniors. They range from the Canadian Teachers' Federation to the Canadian Association of Family Enterprises to General Motors of Canada.

Right off the bat, Madam Chair, we acknowledge a series of increases in the RRSP limits and pension plan limits that were announced in the 2003 budget. The schedule proposed in the budget amounts to a total of $4,500 over four years, followed by indexing to inflation. That's an increase of a little more than $1,000 a year. This is progress. We fully understand that in any one year a budget has to adjudicate among the many demands for funds. We're here today, though, to focus on the future from the perspective of the past.

We believe we still have a problem, and the problem is that the increases are building on an outdated and artificially low base. We can go all the way back to 1984, when Finance Minister Marc Lalonde outlined a framework for retirement savings, including RRSPs. He projected a contribution limit for 1987 of $14,000, and it's only this past year that we have finally achieved that level, now, at $14,500.

As for the pension limits on defined benefit pension plans, they have remained frozen for 27 years, from 1976 until this past year. The recent budget has proposed modest increases, which is definitely a step in the right direction.

Madam Chair, we think this background is essential to understanding where the members of our coalition are coming from. It's clear that a lot of catch-up is needed to restore the RRSP and pension plan program as an effective pillar of the Canadian retirement system. The 2003 budget points in the right direction, but we are not yet caught up.

You've asked us to tell you, and I quote, “what taxation, spending and other measures should be taken to ensure progress in investing in, and caring for, all members of Canadian society”.How is raising contribution limits investing for all members of Canadian society? The government has worked hard to eliminate the deficit and pay down the debt, and I think that has been an enormous task and contribution. As a result, the basics are sound. But there's another risk associated with an aging population. Who is going to pay taxes when 40% of the population is retired? Those who are able to contribute more to RRSPs today are taxed at a 30% marginal rate, ignoring provincial taxes. After they retire, their withdrawals will be taxed at rates between 26% and 40%. Therefore, the government's investment will be recovered with interest when the baby boom generation retires and the pension and health-related demands on the public purse are then at their highest. As many baby boomers are now at their peak earnings, now is the time to encourage them to maximize their own retirement savings.

But ensuring a healthy system of future tax revenue for the government is only one aspect of the investment. Fully 70% of all funds invested in RRSPs are reinvested back into Canada by Canadian companies and governments. This investment contributes directly to employment and to maintaining current personal and corporate taxes.

Yes, Madam Chair, every single dollar that is invested in RRSPs and pension plans will not only assist Canadians in providing for their own retirement, but will also create employment today and, in the future, a significant tax base for governments.

¿ (0950)

A pension of 70% of earnings for a full career is a commonly accepted measure of adequacy, both within government and within the private sector. This is an amount a family needs to maintain its pre-retirement standard of living. Many middle-income Canadians are unable to reach that 70% target.

The misconception still exists that it's only the rich who are affected. In fact, our research has produced a list of professional and administrative positions that are constrained by the current limits. Chief librarians, school administrators, senior registered nurses and plumbers are on the list. All together, more than 600,000 Canadians are affected. Yes, many of them are earning more than $100,000 a year, at which the new RRSP pension limits kick in, but clearly one doesn't have to be rich to be affected.

When they retire they will receive relatively little from public pension plans and they are prevented by the limit from contributing as much to their RRSPs as they are able. Through taxes, they pay toward programs like the guaranteed income supplement and old age security so that others can afford to retire in a manner that maintains their standard of living, yet they themselves are denied this opportunity.

It is true that this group only covers 3% of all taxpayers. But it's also true that they contribute more than 33%--that's fully one-third--or more than $40 billion of all tax revenue.

Madam Chair, our submission provides updated numbers on tax-sheltered savings in the United States and in the United Kingdom. We continue to lose ground to these major trading partners. Why does this matter? It matters because Canadian employers of highly skilled, mobile workers face a constant challenge to retain qualified staff, especially with our current shortage of skilled workers. One way to address this is through increased compensation, including savings and retirement plans.

While the new RRSP limit in Canada is $18,000 in 2006, in the U.S. the maximum annual contribution to a tax-sheltered savings plan is $56,000 in Canadian dollars. In the U.K., that ranges from $38,000, rising to as much as $87,000 per year, depending upon the contributor's age. Yes, the Labour government in Britain is currently looking at ways to raise their ceilings even higher.

These are our main reasons for recommending that the government revisit the plan it outlined in this year's budget. We recommend going to the $19,000 level immediately, with stepped increases to $27,000 over the following two years, with commensurate increases in the pension plan limit.

Thank you, Madam Chair. We look forward to your committee's questions.

¿ (0955)

The Chair: Thank you.

And thanks to all of you for respecting our time limits. I'm sure my colleagues will do the same as we commence our seven-minute round of questions with Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Canadian Alliance): Thank you very much, Madam Chair. Welcome to all of our witnesses.

I want to start with Mr. Pielsticker. It's good to see you again; it's good to see all the witnesses.

First I want to thank you very much for putting the MP pension grid in there to show people how much MPs are paid. That's very helpful.

I do want to say that many Canadians are very concerned about their ability to save for their retirement and the constraints placed on them by the current RRSP levels. I think what normally occurs in many families is that after the children are out of the house and have gone through university, it's at that point where many families can start to play some catch-up, because they haven't been able to contribute to their RRSPs for a long period of time, or at least max them out. Now is the time they're trying to play catch-up and they're very much constrained by a level of $14,500. I would simply say that I am very sympathetic to that and I will certainly argue for going in the direction you are talking about.

A question I have, and I don't see it on your recommendations, has to do with the idea of prepaid retirement planning; in other words, like a Roth IRA in the U.S., where you pay the taxes at the outset and then the contribution accumulates tax-free in your retirement account. You're not advocating that, and I'm curious to know why not. It seems to me that it would be a pretty popular idea if Canadians were aware of it. I'm simply wondering what your views are on that.

À (1000)

Mr. Ian Markham (Retirement Income Coalition): You're talking about the tax-free paid savings plan, which is something where people put money in, don't get a tax deduction, the investment income is tax sheltered, and then when the moneys come out there isn't any tax paid on it. In itself that sounds like a good idea, and we see that it's a very useful vehicle for people at the low-income end of the scale where, frankly, if they're going to end up receiving the guaranteed income supplement they simply should not be saving for their retirement through an RRSP, because the marginal tax rate when they finally get their GIS is 75%, and of course the tax deduction they got upfront was rather minuscule. A TPSP would be a great vehicle for lower-income Canadians.

What we do not want to happen is have the TPSP come in as a replacement for what we're advocating, which is a much more effective way of increasing the tax sheltering for upper-middle- and higher-income Canadians. The way the ACPM—the Association of Canadian Pension Management, which I represent—sees it is that if one placed, say, a limit of $2,000 on the TPSP, then it would be worthwhile and would still allow us to put more pressure on increasing the tax limits.

Mr. Monte Solberg: Right. Thank you.

Mr. C.A. Pielsticker: If I could just add one point there, everybody is a winner except for future governments when they lose future taxation base. Future governments are the only losers in that foundation.

Mr. Monte Solberg: Well, perhaps governments can afford to lose once in a while. Thank you.

Mr. Blakely, thank you, first of all, for your presentation. I wanted to ask you a question about something you didn't actually address in your remarks, although it might be in the paper—or if you did, maybe I didn't quite catch it.

It has to do with the interprovincial trade barriers that people in your trade typically run into. I'm thinking of the difficulty between Ontario and Quebec sometimes, where you have skilled tradesmen who are blocked in moving from one province to the other. Obviously that doesn't just hurt those individuals but hurts our ability as a country to be as productive as we possibly can be. Do you have any remarks on that?

Mr. Robert Blakely: I didn't address it in our submission. In nine out of ten provinces we have mobility with the red seal. Quebec has bought into the red seal and we don't have a problem with Quebeckers moving to New Brunswick or to Alberta. The problem is Ontario and Quebec—the “fairness is a two-way street” act in Ontario and the decree in Quebec governing the way the CCQ controls things.

Is it a problem? The short answer is yes. I didn't make a submission on that because I didn't think it was a budget issue. But as something to grapple with, that is an issue that must be wrestled to the ground. An electrician on this side of the river can look at the job he can't go to. There's something dramatically wrong with that.

Mr. Monte Solberg: Could you expand a little bit, too, on the proposal with respect to moving expenses? If I remember correctly, there's already the capacity, under the Income Tax Act, to deduct some moving expenses if you're moving across the country for a job, for instance.

Mr. Robert Blakely: If it's a permanent move, yes.

Mr. Monte Solberg: Okay, I see what you're saying. This would be to deal with people who are going to take up work—

Mr. Robert Blakely: It's for the guy who lives in Moncton, goes to Fort McMurray, works there for six months, and comes home hoping there will be a job in the pulp mill for him.

Construction isn't a cottage industry any more. We're not making chairs; we're building huge plants. You have to go where the work is. And if you look at the myriad of smaller communities in this country that have suffered from the concentration of industry in a couple of places.... People want to live at home in New Brunswick, and if I were them I'd want to do that too. They're living in one of the best parts of the world, but they're going to have to travel to get a job, and we're asking to make it easier for them to be able to maintain their community and family home and be treated the same as other professional people who have to travel.

Mr. Monte Solberg: I just have to follow that up. I'm not quite sure how to say this, but if people are moving, for instance, from New Brunswick to Fort McMurray, and we make that easier for them, and then they return to New Brunswick—and you say, hopefully they'll end up working in the pulp mill or whatever it is, and I share that hope—I must say that what I worry about is that people will return to be on benefits.

In a situation like that, if you're going to make it easier for people to move, isn't it appropriate also to begin some of the reform—and I know this is a contentious issue—of employment insurance, so that we're not just making it easier to return to benefits, so that we're ensuring that it's possible to find work in places like New Brunswick, where sometimes it's very difficult to find employment?

À (1005)

Mr. Robert Blakely: No argument. We want our people to work as many hours as they can work.

One thing that happens now is that if someone is on benefit in New Brunswick and can go to Alberta for 60 days, when he totes up all the costs and says, “I'm not going to gain any money anyway”, he sits at home on benefit. If he goes to Alberta and works those 60 days, he contributes to the various benefit plans: he contributes to EI, he contributes to his pension, and he contributes by paying income tax.

Regarding the submission that was made with respect to pensions, in our industry we're stuck at the 18% level. But if you're working in Alberta today, you have had four good years and made $100,000 a year, and you may have been able to put something away; but for the 10 previous years, if you made $45,000, you were “happy as Larry”. So we certainly need a higher limit there in order to be able to provide for retirement.

[Translation]

La présidente: Mr. Paquette, you have seven minutes.

Mr. Pierre Paquette (Joliette, BQ): Thank you, Madam Chair.

My questions are for the representative of the Canadian office of the Building and Construction Trades Department. I was Secretary General of the CSN for a few years, and I can tell you that we're very attached to our job security system in the construction industry.

[English]

Mr. Robert Blakely: Give me half a second. I'm trying to learn French and am not doing very well, so I do have to—

[Translation]

Mr. Pierre Paquette: You're like my mother. She says she speaks English very well, but she doesn't understand it.

[English]

Mr. Robert Blakely: I'm afraid there's a great deal of truth in that.

À (1010)

[Translation]

Mr. Pierre Paquette: So I was Secretary General of the Confédération des syndicats nationaux. I appreciated your answer because we're very attached to our system for employment in the construction industry. The same is true of the FTQ. As you know, it's a system we put in place after experiencing a lot of placement problems. Mafia groups were involved in placement. Now the unions handle that and things are going very well.

However, I was very interested in your proposal regarding the deduction for the cost of tools, equipment for construction workers. Can you tell us the average cost of the tools construction workers need, no matter whether they're independent or employed?

[English]

Mr. Robert Blakely: It depends on the trade that someone's in. A welder shows up with a welding machine on the back of a truck, or a cutting outfit with a plasma arc and probably a $150,000 investment. If someone is working as a labourer or a cement finisher, he might show up with a shovel and a trowel.

The average worker has a substantial investment in his tools. It is very easy for the average worker to be able to invest $10,000 to $20,000 in a kit of tools. It doesn't take a lot of money...and you have to replace those tools on a regular basis; they wear out, they break, and there's nothing you can do about that. You know, I think, as well as I do that good tradesmen actually spend money on their tools and are proud of them. They deserve to be able to have those tools recognized as a legitimate business expense, just like a lawyer can recognize his law library.

[Translation]

Mr. Pierre Paquette: Very good. The Bloc québécois previously tabled a bill concerning mechanics. So I'm pleased that you're making us aware of this situation. I believe the situation with mechanics who work in garages and have to pay for their tools is somewhat the same. They should be entitled to a tax deduction.

[English]

M. Robert Blakely: Car mechanics do have the right to deduct their tools. In the last budget, car mechanics got that right.

[Translation]

Mr. Pierre Paquette: Now I turn to the Canadian Federation for the Humanities and Social Sciences. I always ask this question because I'm a bit surprised that people in English Canada think that an education act will make the federal government accountable for its education transfers.

Let's talk about your recommendation 6. There is a Canada Health Act, but that's never prevented the government from making cuts. The future Prime Minister, Mr. Martin, was the man behind $24 billion in cuts from 1994 to 2001, including $8.7 billion in Quebec. That merely placed constraints on the provinces in their areas of jurisdiction. We're particularly sensitive to that in Quebec.

I would understand it if there were a postsecondary education or health act that imposed an obligation on the federal government to transfer money, but that's not how the Canada Health Act is made. It imposes obligations on the provinces with respect to the federal government. In my view, that raises an accountability problem because the provincial governments should be accountable to their citizens, not to the federal government.

However, the federal government should be responsible for the transfers it makes to the provinces. For example, Mr. Romanow proposed in his report that the federal government transfer the equivalent of 25 percent of health expenditures.

If there were a federal statute stating that the federal government has an obligation to transfer 25 percent of health expenditures to the provinces, I would have no problem. But, in my opinion, an act that gives the provinces responsibilities without guaranteeing them the necessary resources in education or other sectors is simply useless. It's even harmful because it poses a problem of democracy, as I was telling you: it changes accountability.

I would like you to explain that recommendation to us a little.

[English]

Dr. Doug Owram: Certainly. I have four brief comments.

First, of course, any post-secondary act should respect provincial jurisdiction. The federal government has had a huge role on the research side of education, not in the actual teaching of students, and so we want to focus on the research side in any post-secondary act.

The second thing, though, is that there's already a very large federal presence in research and granting councils. I'm looking at some kind of post-secondary act and at things that will allow the federal government to focus some of those activities, to frame its own area. I think that would strengthen the system.

As to the separation of the CHST into separate components, one of the difficulties the universities have faced in the provinces.... I can speak very much from the Alberta situation. By the way, Quebec is somewhat of a model, and we would like to see in other provinces the treatment that the Quebec government has given to universities in recent years, but that hasn't been the case in many provinces.

One of the problems is that the bearing of the education transfers into the health system meant in effect that they disappeared. The health budget is such a huge demand on the provincial governments that the money came across as one block and disappeared into the black hole, as some people put it, of health transfers; therefore, we had no way of at least questioning the flow of money. I agree with you that there's no guarantee the money will not be cut, no matter how we structure it. That's a decision for the Parliament of Canada. But at the very least, we'd like it to be transparent so that we can see what is going on and make our case within provincial jurisdictions to the provinces receiving the money.

[Translation]

Mr. Pierre Paquette: Thank you.

I'll now address the Retirement Income Coalition. I read your brief and I'll tell you quite frankly that I don't find it very balanced. You emphasized one component of the savings necessary for retirement. I agree with you that in the financial preparation for retirement, there must be a large portion of individual savings. In that context, the government should definitely put the necessary tax mechanisms in place to promote that saving.

However, there can't be just private saving or saving through retirement savings plans or private pension funds. Here you're talking about defined benefit pension plans. There also has to be a public pension plan. Canadians' average contribution to registered retirement savings plans is $3,000. You can raise the limit all you want, most people won't be able to pay more than $3,000 to $5,000 a year.

There's also all the insecurity caused by the stock markets. There was a period of euphoria in the mid-1990s, and we realized that the stock market, like all markets, could rise, but also fall. Many retirees lost a lot of money in the stock market and had to postpone retirement or go back to the labour market. In the United States, for example, we saw that the 55 and over segment of the labour force increased by two percentage points in recent years because people could no longer make ends meet with their private retirement pensions.

In that context, I would have expected your recommendations to include one designed to ensure that the old age pension is kept at acceptable levels to provide the resources necessary to live and that the guaranteed income supplement be known to the public. You know that we had to conduct a campaign to make that income supplement known. Despite that, there are still 6,000 individuals in Quebec—that's our assessment—who are entitled to the guaranteed income supplement but don't receive it because they don't even know it exists.

In that context, I would have liked your brief to be a little more balanced between private savings, be they from registered savings plans or private pension plans, and collective savings from our taxes.

Do you simply want to emphasize one aspect, when you're aware of the fact that there is a range of ways to ensure seniors' financial security?

À (1015)

[English]

Mr. Ian Markham: Thank you for those very good questions.

The first one was that people are contributing maybe $3,000 to $5,000 on average, and you feel it's impossible for many people to contribute more than that. That is, of course, an average. There are many people not contributing anything, and there are many who are maxing out. Probably half a million people are actually contributing the maximum they can, either at the $14,500 level—or, because they belong to a pension plan, they're limited significantly in what they can contribute to RRSPs.

[Translation]

Mr. Pierre Paquette: MPs' pensions make it so they can't contribute to a registered retirement savings plan.

[English]

Mr. Ian Markham: Well, the MPs, I think, are fairly well looked after—

[Translation]

Mr. Pierre Paquette: You do.

[English]

Mr. Ian Markham: —so I don't think your average there included the MPs.

To look at your points, I think it's important for all Canadians to be able to save for their retirement. I made the point earlier on about those people who will be eligible for the guaranteed income supplement. Despite the fact that you say 6,000 Quebeckers didn't know about it, well, we have to make people aware of it. Similarly, we have to make them aware of how to save for retirement. As I said earlier, there are people who are destined, sadly destined, to receive only the guaranteed income supplement and who will not have enough other money to live on in retirement. They should not be saving for the RSPs.

So if those people are aware of it, that drags the level down. We're simply asking for a fairness across all income levels, number one. Two—and this is not necessarily a position of the Retirement Income Coalition, but it's definitely something that's out there—working families start paying tax at a much lower income level than today's seniors start paying tax. So we have a situation where people simply can't afford to save for their retirement because they don't have enough money to save, and yet finally, when they get into retirement, they will get some reasonable standard of living from the government. We have to look at something across all income levels.

The fact is that the Retirement Income Coalition represents 14 or so associations, and the one focus we have decided to make is on the limits. We haven't yet focused on these other elements you've raised.

Finally, you mentioned that the stock market has fallen, which indeed has had an impact on many people's retirement savings. Many people are going to have to delay their retirement. We don't know yet whether that's a permanent feature of the whole pension system or if it's something that will recover. We've seen some of the recovery in the last few months.

Again, it comes down to awareness and giving people the opportunity to save for their retirement. That's one of the reasons why our second recommendation was to delay the age of 69, as the age at which you must mature your RRSP and pension plan, to age 71. It effectively gives people more time to save.

The Chair: C'est tout.

Mr. Bagnell.

Mr. Larry Bagnell (Yukon, Lib.): Thank you all for coming. It's great to have your input.

I think the first speaker was very right, that this committee, although I wasn't on it last year, has a very great effect on the budget. You have a good mechanism here.

My first question is for Doug, on the federation. I was in Washington on September 11, when the planes hit the Pentagon. One of the things I said an hour after is that we have to increase understanding in the world of religious intolerance and remove that to stop these things in the future.

You mentioned Islam in your presentation. Sometimes governments are slow to react in emergencies and in changes like this because we're big, massive structures to move. How quickly has the federation moved on that, and what have you accomplished in that area of promoting understanding of Islam since September 11?

À (1020)

Dr. Doug Owram: The federation is an umbrella organization, so Islamic studies is one of the groups under us. We haven't specifically focused on that group as such, but the message across the country, to governments and to universities, is that we have to be very careful to have a broad understanding of what humanities and social sciences is.

One of the key points about Islamic studies is that, as I said, if you went back five or six years, people would have thought it was a kind of esoteric area that nobody cared about, and wonder why you would fund it, that type of thing. And yet after September 11, my university, the University of Alberta, arranged a forum downtown at Edmonton city hall. It was quickly thrown together by four or five people and was on international issues, Islamic studies, and that type of thing. We got 500 citizens out to that with three days' notice. That's the kind of forum, I think, that really begins to show how people need this kind of interaction and communication.

So I guess my message would be that the federation has certainly tried to promote and preserve the issue of religious studies, humanities, and cultural understanding as part of a broad umbrella. It's really important to us that we not say that the federation is just a bunch of economists looking at how to increase GDP—not that I don't have respect for economists increasing GDP—but that we say it has a broad understanding of what society is about and what culture is about. We don't know what's next. We can't predict what's next, and we have to have strength across the areas.

It's not a specific answer to your question, but the nature of our association requires that kind of broad approach.

Mr. Paul Ledwell (Executive Director, Canadian Federation for the Humanities and Social Sciences): If I may, I can tell you about something specific we did. You may know that the federation organizes something called “Breakfast on the Hill”, where we bring in a researcher who's working on something that we think is of consequence to public debate and public policy. Several weeks after September 11, we had one of the leading Islamic scholars in the country come and give an address to MPs, senators, and their staff about the issues related to September 11 and what was behind that.

Mr. Larry Bagnell: I'd forgotten about that. Thank you.

Robert Blakely, you mentioned at the beginning of your presentation supporting the Canadian Forces. As chair of our defence caucus, I'm curious as to whether your executive passed a resolution to that effect.

Mr. Robert Blakely: Oh yes, sir. As I indicated, we work in the dockyards on both coasts. We're integral in the defence team. We believe Canada needs a shipbuilding policy, and we support the most recent recommendations of your committee to put some more money into defence.

Mr. Larry Bagnell: Thank you.

Charlie, following up on what my colleague from the Bloc was saying, basically, I agree with your presentation, I have no problem with it. I'd like to do that personally. As you said, that applies to 3% of the population. I'm wondering if you have any recommendations for the vast majority of the population who have lower incomes and how we could help their retirement.

Mr. Ian Markham: Your question relates to the other 97%. There are really two major elements of it. One is, again, the disparity of the income tax system, where you have the 75% marginal tax rate for those who are going to receive GIS. We should be looking at the level at which GIS is paid and the amount of clawback. There's a 50% clawback that causes that marginal tax rate to be so high. That would be one stage, which would encourage more people with lower incomes to save. Mr. Solberg referred to these tax prepaid savings plans, another means that would help them to save without actually having to deal with this confiscatory system of taking away much of their retirement savings, when they finally get to retirement, because of their receiving GIS. So there's one element there.

Further, there are a lot of people who are not able to save at the 18% limit, which is the limit that applies to people earning less than $100,000. You have to look at the reasons they can't afford to save, and assuming that they have a job, it comes down to the tax levels at which they're paying. So we have to continue to work those tax levels down, so that people will have more discretionary income that they can then put aside for their retirement.

À (1025)

Mr. Larry Bagnell: Thank you.

Mr. Howard, as you know, we have a large national debt in this country. I'm hoping we're going to continue to pay it down. So I was quite appreciative of your presentation. I just want to make sure I understood it correctly. You haven't asked for anything more for which you haven't given us the means of funding. So it's good under those circumstances: if we're asked for more, we also find a means of funding it. I just want to make sure you're just asking for the existing programs and funding to continue to your industry at a status quo level.

Mr. Kirk Howard: Yes, that's correct, Mr. Bagnell. In fact, Canadian publishers feel that they are the most successful of the cultural industries we have. As one of my colleagues said, we've delivered the goods. We've done that with the funding of the federal government. So we're quite happy with the levels of BPIDP funding and with the Tomorrow Starts Today program that augmented that.

Ms. Krys Ross (Vice-President and General Manager, McClelland & Stewart Ltd., Association of Canadian Publishers): I would like to add that while we are the most successful and internationally recognized cultural industry, we do compete with the largest market for English-language books, the United States, which come freely into this country. We are a fragile industry in that because of that competition we're obliged to price our books to compete with books that are produced for a much larger market and consequently have a much smaller unit cost. So it's a very precarious balance, and the assistance is very necessary.

Mr. Kirk Howard: If I could add just one point, we often see the subsidy that we get from the federal government as a subsidy for the consumer of the book, for the reader. If you take countries with comparable population but a single language, like Holland or Denmark, books are twice what they are in Canada. We've priced our books in order to compete, as Krys said, with American books and British books.

The Chair: Thank you very much.

Mr. Wilfert.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Madam Chair.

In reading the briefs, I was pleasantly surprised. Usually we have groups come in that don't realize that building a budget is about building on what's happened in the past. Obviously you don't build a budget in a vacuum, so we need to have some strong fiscal anchors--no deficit, continuing to pay down the debt, interest rate issues, looking at R and D, taxes, all of those things. In the presentations you at least acknowledge that there have been advances made by the government, which is always important, because I can tell you that it's obviously one step at a time.

With the Canadian Federation for the Humanities and Social Sciences, my great concern about transferring money to the provinces at any time is that it goes into some great black hole, and it does get moved around. I think you've pointed out very clearly the problems we've had in the past in the CHST with health, social services, and education. The fact is that we get very little credit for that, but it's always more, more, more, without the accountability strings. I think accountability, for the taxpayer, should not only be for health, it should be for other federal transfers to the provinces.

I'm interested in your recommendations. You talk about this tri-agency cluster development program, and also about the support for the three agencies. As Parliamentary Secretary to the Minister of Finance, I always like to know how much this is going to cost us. What is it you're actually looking for, and are you looking for it to be phased in, over what period? We can't do everything, so what is your priority and what's the costing?

Dr. Doug Owram: The priority, I would say, is funding of the Social Science and Humanities Research Council in an asymmetrical way, to bring it to the level of support we have for those communities in the CIHR and in the NSERC envelopes. There's really been an imbalance over the last 10 to 15 years in the way those agencies have increased their budgets. SSHRC, in the last budget, got some increase, and of course, on the graduate scholarship got a significant one. I suspect SSHRC would be better at giving detailed numbers, but it's our rough estimate that to build it to the kind of capacity level we need to provide research and graduate support would mean about a $200 million increase over a period of three to five years from its current budget in the research grants area.

If you're talking about the transfers--that is recommendation five--that would take it back to the 1993-94 fiscal year. That's a little larger. It's about $1.5 billion to take it back to those levels. The year 1993-94 was actually the great deflation year, if I can put it that way, at both the provincial and the federal levels, as you know, dealing with the recession and the debt. The money tended to fall out to universities at both levels, and so that's often the baseline they use.

À (1030)

Mr. Bryon Wilfert: Thank you.

Turning to the Building and Construction Trades Department, on page 5 of your brief, I'm somewhat sympathetic on the issue of allowing construction workers to accept temporary work, but on this issue of deductions there's no figure. I assume there would be a maximum figure you're looking at, because obviously it's going to vary, so it would be up to a certain amount. What are you looking at?

Mr. Robert Blakely: We hadn't really addressed the issue of what the levels would be. Conceptually, we would like to get this accepted, and we'd be quite prepared to work with your department to come to what a reasonable level would be. There are some levels that are currently now set for people like travelling salesmen and other people who are required to travel. What we'd like to do is be basically on par.

Mr. Bryon Wilfert: So you could do some modelling and maybe provide some of that.

Mr. Robert Blakely: I don't know that we have the resources to do that, but I'll try to find a way to make that so.

Mr. Bryon Wilfert: I'm sure this committee would be most interested.

As far as deductibility goes, I certainly supported the deductibility of the mechanics' tools, but I said at the time and I say it again, it's a dangerous slope. I think you mentioned 52 or 53 other categories where we could be doing this. and I'm sure they're all worthy. The difficulty is, in doing so, there's going to be an impact. We address those kinds of issues, obviously, one step at a time. In doing it for one, I knew we would get others coming back.

Mr. Robert Blakely: Let me put it this way. The auto mechanic has basically the same set of wrenches, the same tools, the same gauges as the heavy-duty mechanic. One guy works under your car, one guy works on the 450-tonne rock truck at Syncrude.

Mr. Bryon Wilfert: Maybe they were out of the gate first.

Mr. Robert Blakely: Well, that's true. The slowest always have to take what's left.

Mr. Bryon Wilfert: That can happen.

With the Association of Canadian Publishers, you won't get any argument from me. I'm very sympathetic in that regard, and I see again you're talking about extending the Tomorrow Starts Today program, going to 2004-05, building on this. One of the things I'm always interested in is looking at the outcomes: if dollars are allocated, what are the outcomes, what are we actually seeing from those dollars that are being contributed, and how does that affect the industry? You're right, you're in a North American market. It's important. We want to get Canadian voices and Canadian stories told, and I'd rather it be done by Canadian publishers than by others, because it probably won't be done by others.

Ms. Krys Ross: In fact, according to the most recent Statistics Canada data, the Canadian-owned publishers were responsible for 86% of Canadian-authored titles published in 2000-01. So while there are multinational plants here that do publish Canadian authors, a very small percentage of Canadian books are produced.

Mr. Bryon Wilfert: As you know, if you get success one year and that's reviewed, then the next year comes along--this is very important--and some people come to us and want everything at once. It just doesn't happen that way. It's not very helpful, particularly if they don't have the figures.

To the retirement coalition, I'm glad you acknowledge that at least we've taken a step in the right direction. I'd be very sympathetic about moving it faster. I'm not necessarily worried about the 3%, but I am concerned how that would impact on us. Are people taking advantage currently? There's always the complaint that people are not taking advantage of the limits they currently have, for whatever reason. That is often used in opposition to raising the limit.

Mr. C.A. Pielsticker: In looking at the percentage of those that are used, you have to take a look at both the number of people involved in pension plans and the number involved in RRSPs. There is a blending there. I think you'd find, in going back, that well over 80% of all people max out on their RRSP contributions when they are able to do so.

Mr. Bryon Wilfert: That's the key phrase: “when they're able to do so”.

Mr. C.A. Pielsticker: That's correct.

Mr. Bryon Wilfert: You all seem to at least be realistic enough to realize that we're not going into a deficit again. We have been buffeted this year, as you know, by a number of major crises, and that's why the contingency fund is so important. It's not that we want to go back to zero. We want to make sure we continue to have money to pay down the national debt. The $1 billion a year you're able to save in interest charges can go to some of these very worthwhile other activities. Again, it's a matter of making sure we don't slide back--and I think it's very easy to slide back.

Last year we had over 430 presentations. I think if we had agreed with everybody here, we would have a national deficit that no one would be very happy with. They're all very worthwhile, but again it's a matter of prioritizing. I appreciate the nature of the briefs I've seen here today, so thank you.

À (1035)

The Chair: Thank you.

You're very right, Mr. Wilfert. I think there were 437 presentations, and 279 national organizations appeared before the committee. It looks like it's going to be something like that this year, so we're trying to be fair to everybody in the time.

Now it's time for Mrs. Judy Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Madam Chairperson.

I'd like to thank all the presenters. This has been a fascinating discussion this morning.

I'll try, in my seven minutes, to pose a question to each of the presenters. Let me start with Robert Blakely.

I admire your willingness to do some of the work of government in developing models for mobility assistance, but it strikes me that we're really talking about skills shortage in this country. Addressing that kind of serious problem suggests a serious role for government in looking at options and doing the work to address the problem. I would like to hear from you to what extent doing something in the area of mobility assistance would actually help address that skills shortage in Canada.

We talk a lot about immigration, and I'm certainly the first to want to open our doors to new immigrants, but I'm wondering to what extent we could actually address the skills shortage in this country. If we found ways to put all unemployed skilled tradespeople to work in this country, what would it take and what would the benefits be to our economy?

Mr. Robert Blakely: That's a tall order. Let me try.

At any given time, a significant portion of the construction workforce--people in whom we have sunk a huge investment cost in training and experience--isn't working somewhere in the country. Construction isn't in your backyard; you have to go to where someone is building something.

We managed to man the projects in Alberta. At the peak of the Shell job, they originally told us they were going to need 3,500 people in Scotford and 1,000 people in Fort McMurray. We ended up with 12,000 people in Scotford and 3,500 in Fort McMurray. Anyone whose sister had been scared by a steam fitter from Sardinia was working. We found people everywhere. We were able to man those jobs because there were people who were prepared to move and do the work. If they went to Fort McMurray, they lived in a camp; if they went to Fort Saskatchewan, they caught their own rabbits.

Do we have a skills shortage? I suppose the answer is that on any given day we can probably man the work, but the average age of a pipefitter is 52, the average age of a bricklayer is over 60, the average age of an ironworker is in the 50s, the average age of a millwright is 57. Those people are all going to exit stage left in the next 5 to 10 years—and we have a skills shortage. Who is going to get their kids into jobs that are definitely fowl today and feathers tomorrow?

We're not going to replace the existing construction workforce until and unless there is some guarantee of continuity of employment and some sort of stability. Mobility provisions like this will create that. The benefit is that we'll be able to continue to build the things we're building and maintain them.

Ms. Judy Wasylycia-Leis: So an investment in this area would pay dividends in the long term for economic growth, GDP, the whole—

Mr. Robert Blakely: Let me answer it as basically as this. People who like to have the lights on and be able to get water out of their taps should pay attention to the fact that if the plumbers, ironworkers, and electricians aren't there, it's not going to happen any more.

À (1040)

Ms. Judy Wasylycia-Leis: Thank you.

To Paul Ledwell and Doug Owram, I know that Brian Wilfert tried to suggest it would be nice if you would acknowledge some of the good works of government. I appreciate that sentiment. However, you made the point that you've been trying for some time to raise the issue of asymmetrical funding for the Social Sciences and Humanities Research Council. This committee actually did support it, but it still isn't in the budget. We've discussed this before with a previous presenter. What would it take for us to make it happen?

Dr. Doug Owram: First of all, there was an important precedent in the last budget on the graduate scholarship side, because the government did fund proportionate to the population of the faculty and the students out there, as opposed to giving a bias to health or engineering. We saw that as a principle statement and a really important breakthrough. We saw it as step one of two steps.

I have this strong feeling that the awareness of the issue of social sciences and humanities as an important investment, not just as some sort of luxury, is growing. I've often said that sometimes I see a pendulum. I'm an historian, so you'll have to forgive the tendency to speak in sweeps of time. But through the eighties and nineties, we were really worried about what I would call technical innovation and building the nanotechnology--the health systems and those sort of things--to compete with the world south of the border, in particular, but also internationally. More and more, as people put investments there, they realize that you need the full spectrum of science. You need the social sciences and the humanities as well as the technology, engineering, health, and others if it's going to work.

Again, September 11 brings home how much social disruption can lay ruin to the best-laid technological issues. The whole Kyoto debate brings home that it's not just a technological issue; it's an economic issue, a social issue, a cultural issue, and a political issue. So I have this tremendous optimism that there's a broad community out here in the world of politics that has to adjudicate these balances, and it's beginning to realize this is one piece that is missing. So in my optimistic way I think we're getting there.

Ms. Judy Wasylycia-Leis: I share that optimism. That brings me to Canadian book publishing, because I think there is a swing in the pendulum toward appreciation for the role of supporting writers and indigenous book publishers.

You mention in your brief that currently, with support, there are 6,000 Canadians employed in communities in the book publishing industry. It seems to me that if we could only tap into this area and explore the potential, we could grow that number exponentially.

What would it take to do that? Do you see that potential? When we talk about communities and quality of life, this is as important as addressing, say, the tax regime across Canada.

Mr. Kirk Howard: There's no question but that our membership is very diverse and scattered across the country. They're able to take stories from Moncton and interest people in Kamloops. There are 6,000 full-time employees among our members, but on top of that there are probably an equal number of freelance editors and freelance designers plus 16,000 writers who received a royalty statement in the previous year, not to mention printers as well, of course.

Ms. Judy Wasylycia-Leis: Thank you.

Did you want to add anything?

Ms. Krys Ross: Our colleagues from the humanities and social sciences referred to the years 1994 and 1995, when funding levels were decreased. Support for publishers was decreased at that time as well, and we did see that the industry did contract. There were fewer titles published and we lost a couple of publishers. As funding levels have been restored, we've seen the recovery, so there's a very direct correlation between the levels of support and the degree of activity.

Ms. Judy Wasylycia-Leis: Retirement income is an issue I, like my colleague from the Bloc, have some difficulty with in terms of increasing the RRSP limit. In this time of tough choices, does it make sense to actually do more in that direction when in reality, I think, we're only affecting a small percentage of Canadians? I understand that with going from $13,500 to $18,000 in the last budget, by the year 2005 it will have cost us $295 million, yet it will only be used by people earning more than $75,000 a year, and that's about 5% of Canadians. If we go further in that direction, again, it seems to me you're putting a lot of money where it affects a very small number of people.

Wouldn't it be better to invest that money in an area like apprenticeship programs, where we get a huge bang for the buck, or into research involving Canadian students and the book publishing industry? If we have to make hard choices, wouldn't that make sense?

À (1045)

Mr. C.A. Pielsticker: I'll take a look at it, and I'll go back to comments made earlier. First of all, the 3% it does impact will have paid 33% of the total income taxes paid in Canada this year; in 2001 those 3% did pay over $40 billion in taxes.

The second thing is that every dollar that does go into RRSPs and pension plans contributes to employment in Canada through the reinvestment of those moneys, both into governments as well as into corporations. Every single dollar is going to be reinvested in the economy.

The third thing is that what that is going to be doing is laying a foundation for a future tax base at a time when the baby boomers are retiring en masse, so governments are going to need every nickel they can get. First of all, every dollar that goes in will be taxed on the way out. Second, 70% of those dollars will be redeployed back into Canada to create taxes and income at the time. This will provide for adequate retirement for people at a time in the future when the baby boomers are retiring.

The Chair: Thank you very much.

Now we'll have Mr. Pillitteri, and I understand you're going to share some time with Ms. Minna.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you very much, Madam Chair.

Welcome, witnesses. I'm sorry I was late. I did not hear all the presentations but I'll be able to read them.

I have one short question for Mr. Blakely. It's good to see you back here again after previous years.

You all know that most of our skilled tradespeople in Canada are a by-product of immigration, which started right after World War II, and it's never really relented. One group of immigrants or another always keeps this on. We've never really had this void in skilled tradespeople before, and we've never really had a good apprenticeship program in Canada to create or develop our own skilled tradespeople.

The question I want to ask you is this. I've seen the building tradespeople in my office, and they do get the mobility now that is just for one move and so on. How do you see this? Do you want to see this as a charge... I understood that just maintaining a home... if the skilled tradespeople were to move, let's say, from North Bay to Toronto... is it that he's maintaining another home, or is it that you want to see the whole charge? How can we grapple with this on how much of an expense it would be for that individual? He could maximize, and how much charge could be made, let's say, for the individual moving? Would it just be for the rent of an extra apartment if he had another home he was keeping, or would you want to see him living in a hotel? Just give us an idea of how much it would entail for that move.

Mr. Robert Blakely: It's going to depend on the job and it's going to depend on the distance involved. If someone leaves North Bay and goes to Toronto, there's a reasonable period in which he ought to be able to deduct some travel expenses and some living-out expenses, meals and some accommodation, that he wouldn't be put to if he was able to work in North Bay.

If it's clear someone has become a Toronto worker, then actually moving is probably in the cards. As it stands now, we provide through the tax system some temporary relocation assistance to salesmen and that sort of thing. We're asking for the same sort of treatment.

I'm not asking for the Government of Canada to give someone the cost of temporary accommodation, but let him take some reasonable amount and deduct it from his income tax. As to the actual dollars, I told Mr. Wilfert I would put something together with maximums and that. I will do that and I will send it along.

À (1050)

Mr. Gary Pillitteri: Thank you. I'll just follow up on this.

It is becoming, even for my colleagues, more and more evident day after day that it's about skilled trades especially. I represent Niagara Falls, and almost half of the skilled tradespeople come from either Hamilton or Toronto now to fill those jobs, and that's the reason why.

Thank you.

The Chair: Thank you, Mr. Pillitteri.

Ms. Minna.

The Honourable Maria Minna (Beaches—East York, Lib.): I'm sorry for missing the presentations this morning; I had another commitment. Actually, I read some of the briefs and will do so again.

On the construction aspect, I have a fair amount of understanding of the field, apart from the fact that my father was in the business, because of work I did as a volunteer. I volunteered for about twenty years in dealing with new immigrant settlement programs. Most of them were construction workers in the Portuguese and Italian communities in the Toronto area. My connection was primarily with the Laborers' International Union of North America, which I'm still connected to through a small committee to try to assist in regularizing people who are working here in Ontario illegally, trying--

Mr. Robert Blakely: They're the undocumented workers.

Hon. Maria Minna: —not to lose them. You probably have that document we were working on. This is just by way of letting you know I'm up on the issues with respect to the shortage and the problem. In fact, when I was volunteering at the agency called COSTI in Toronto, we were talking in the late 1980s about how the construction industry average age was 50-something and it was time to start looking for replacements.

The other thing I want to say to you is that I believe firmly that the construction industry is probably the only sector in our economy that does true apprenticeship training. There aren't too many other industries that do a good job of it, and I think you're to be congratulated for that, because I would love to see that elsewhere.

Mr. Robert Blakely: Thank you.

Hon. Maria Minna: On training, I understand your comments with respect to coverage under EI for expenses of people transferring and so on, but I'm curious about the area of labour management transfer of training to the provinces, which you mentioned in your report.

On page 6--apart from the fact that transfer has vulcanized the system--you make reference to B.C. and you say:

Recent developmentsintroduced by the Government of British Columbia virtually gutting the wholetraining and apprenticeship system under the non-interventionist stance of thefederal government but with the use of federal funding obtained through bilaterallabour force development agreements are disquieting.

Could you expand on what that means exactly?

Mr. Robert Blakely: Well, we call ourselves Liberals, but we're actually another party in British Columbia. They basically came into power and one of their first acts was to demolish the existing industry training and apprenticeship commission. There's no longer apprenticeship in British Columbia. There is now a system called training, which teaches people little bits out of a skilled trade. A carpenter learns to be the lock installer, or the door hanger, or the door sash putter-together. He isn't a carpenter who has broad-brush skills, who can do everything in his trade.

As you alluded to, we had a number of people in talking about those issues over the week, and one of the largest purchasers, Syncrude, showed up and said, look, we don't need track-trained people. When someone comes to work for us, we need a carpenter who can do the breadth and width of his trade. We need a boilermaker we can put on the work and be assured that he has the safety skills and the trade skills to do whatever work we want.

What's happening in British Columbia with their destruction of the apprenticeship system means partly trained people are going to be going across the country. That is disquieting for us.

Hon. Maria Minna: I appreciate that. I think I should tell you the transfer was not made in Ontario.

À (1055)

Mr. Robert Blakely: I understand that.

Hon. Maria Minna: The reason for that is there wasn't one MP from Ontario who would support it, basically. The agreements were made for five years, then to be reviewed, and the last request those of use who were opposed to the transfer made was that the government review—because the five years were up—all of the transfers, and maybe retrench.

We need to have a national labour management in this country in cooperation with the provinces. If we don't have an ability to pull together and be involved in national labour management, then I don't know how we can possibly address the national needs and mobility of the skilled trades, which is another issue, of course. Mobility of trades is another issue for which barriers exist within different industries in our country.

But I'll leave it at that. We'll talk some more. I apologize to the rest.

The Chair: Thank you very much.

I'm going to take one question from Mr. Solberg, one question from Mr. Paquette, and then finish this panel.

Mr. Monte Solberg: Thank you very much, Madam Chair.

Just quickly, as an aside, first of all I would say to my Liberal colleague, Mr. Wilfert, that I think the take-up on RRSPs would be a lot higher if people weren't taxed so heavily on the portion of their income that they can't protect in RRSPs.

My question is for the Association of Canadian Publishers. Your document doesn't really talk about how viable the industry is right now in terms of the profits you make and that sort of thing, and whether or not the industry is expanding or contracting. Maybe just say a little bit about that so we can get a sense of how important this support is that you're asking for.

Ms. Krys Ross: Well, we are losing market share to multinational publishers, gradually. We're challenged always for capital investment, particularly to keep pace with technological changes in the industry. The distribution system is in the process of being overhauled in the country. That is with assistance from this government. That's something that Canadian publishers on their own would probably not be able to afford, to implement the technology that's necessary to go to an electronic ordering and delivery system, for example. The margins for profit levels in the industry are very low. On average, we're looking at a 2.9% margin for Canadian-owned publishers.

Mr. Monte Solberg: Net profit.

Ms. Krys Ross: Yes, compared to profits in the order of 9% or 9.5% for the multinationals that operate in this country. So there is a great disparity.

Mr. Monte Solberg: Thank you.

[Translation]

The Chair: Mr. Paquette, one final question.

Mr. Pierre Paquette: As a matter of fact, there is a question I didn't have the time to put to the Association of Canadian Publishers.

In certain circles, people advocate abolishing GST on books. In Quebec, the QST, the provincial tax, is not charged on books. Has the Association considered abolishing the GST?

[English]

Mr. Kirk Howard: Yes, we certainly have. When the GST was introduced 10 years ago, we lobbied strongly against imposing GST on books. In fact, an industry-wide association, consisting of publishers, librarians, booksellers, and authors, set up the Don't Tax Reading Coalition. Canada is one of the few countries that actually tax books. So we would certainly lobby as much as we can to either reduce it or eliminate it completely.

[Translation]

Mr. Pierre Paquette: Thank you.

[English]

The Chair: Thank you very much, all of you, for giving us your evidence today and making yourselves available to answer our questions. We hope you have found this experience useful, as we wanted your evidence on the record for these hearings, our pre-budget consultations.

I'm going to suspend, colleagues, just for a minute, so we can say goodbye to our guests and set up for the second panel.

À (1059)

Á (1105)

The Chair: Pursuant to Standing Order 83(1), we are in pre-budget consultations.

We'll continue now with our second panel of the morning. Our witnesses with us today are from the Partnership Group for Science and Engineering, Howard Alper and Simon Hanmer; from the Forest Products Association of Canada, Paul Lansbergen, director, taxation and business issues; from the Canadian Medical Association, Sunil Patel, president, and William Tholl, secretary general and chief executive officer; and from the Canadian Council of Professional Engineers, Marie Lemay, chief executive officer. Welcome to all of you.

With those changes to your agenda, colleagues, I will start presentations in the order that we have them on the agenda. First of all, we'll go the Partnership Group for Science and Engineering.

Dr. Simon Hanmer (Chair-Designate, Partnership Group for Science and Engineering): Good morning, ladies and gentlemen. Thank you for the opportunity to speak to you this morning on the subject of science and engineering in Canada.

We represent the Partnership Group for Science and Engineering, a cooperative association of more than 20 national organizations, but it's the principal voice collectively representing the Canadian science and engineering community, with responsibility also for the Bacon and Eggheads science and engineering breakfast meetings regularly held here on the Hill when Parliament is in session. We had one this morning.

The Partnership Group reinforces its endorsement of recent federal initiatives, including the Canada Foundation for Innovation; the Canada research chairs program; Genome Canada; the Sustainable Development Technology Fund; graduate scholarships; significant contributions to the indirect costs, principally infrastructure, of scientific research; as well as increased funding provided to the granting agencies--NSERC, SSHRC, and CIHR.

In this submission that you have before you, we're recommending new initiatives in five areas: a PMO office of science and innovation, the setting of priorities for research in Canada, the commercialization of university-based research, the international dimension of Canadian research, and research cluster development. I'll just briefly address these in turn.

The Partnership Group recommends the establishment of an office of science and innovation within the PMO in line with similar institutions in the U.S., U.K., Japan, and Australia. Such an office would represent and provide a coordinated and cohesive approach to issues relevant to research and innovation at the highest political level, thereby addressing a major gap in science governance in Canada.

Let me now turn to setting priorities for research in Canada. Following up on recent federal initiatives in the realm of science and engineering, the time has now come to evaluate how these new initiatives fit with existing programs--for example, the granting agencies, the centres of excellence, and NRC--in addressing research and innovation in Canada. Accordingly, the Partnership Group believes that determining the priorities of science and engineering research in Canada for the next five to seven years will be of enormous value, demonstrating a reinvigorated and coordinated approach across all sectors of research and innovation, including academia, government, and industry.

Regarding the commercialization of research, we point out that technology transfer and business enterprise are now important elements of the outcomes of much university-based research. Many universities need to build capacity for the commercialization of their research, and the business sector needs new instruments to ensure success in transferring new research ideas into the commercial realm, as well as increased access to venture capital. We recommend that the Canadian government allocate new resources to these different aspects of the commercialization of university-based research, such as a commercialization office reporting to Industry Canada or a similarly mandated NGO, as well as to minimizing barriers to industry-university partnerships.

In addition to accelerating the facilitation of commercialization, we recommend that the government ensure that graduate students and post-doctoral fellows working in small and medium enterprises be paid regular salaries as opposed to the lowest stipends and that these researchers be supported by NRC's industrial research assistance program.

Furthermore, we suggest that government should extend the scientific research and experimental development tax credit program to companies regardless of their current profitability.

Moving now to the international dimension, we recognize that research is a global enterprise and that Canada can profit from international collaborations in terms of alliances and access to facilities not available domestically. Therefore, the Partnership Group recommends the creation of an international innovation fund of $30 million a year to support research partnerships, potentially involving academia, government, and industry.

Finally, I would like to address the issue of the granting agencies and cluster development. We congratulate the government on the increased funding attributed to NSERC, SSHRC, and CIHR in recent years. However, we note that major challenges remain for these agencies, including unexpectedly large numbers of new applicants and the requirement for higher levels of support for trailblazers and rising stars to support their global competitiveness. The Partnership Group believes that the granting agencies, industry, and NRC should partner to build new research and development clusters to serve as springboards for economic growth. Therefore, we recommend the creation of a new industry-driven tri-agency cluster development program and an increase in support to the three granting agencies.

Thank you for your time and attention.

Á (1110)

The Chair: We'll now go on to the second presentation, and that is from the Forest Products Association of Canada. Go ahead, sir.

Mr. Paul Lansbergen (Director, Taxation and Business Issues, Forest Products Association of Canada): Thank you, Madam Chair and committee members.

Before I start my presentation, I guess I should clarify my position at FPAC. I am on staff. The way you portrayed my role at FPAC may have implied that I was on the board of directors, and while I appreciate the attempt at my promotion, I'll talk to my boss when I get back to the office about that.

The Chair: Maybe he'll agree. We'll see.

Mr. Paul Lansbergen: There's a handout provided to you that will summarize the presentation and our written submission.

Simply to give you a bit of an overview of the association itself, FPAC is the national voice on public policy matters for Canada's wood, pulp, and paper producers, both at the national and international level. Our members together represent or have responsibility for over 75% of Canada's working force, and as an example of our strong environmental performance, FPAC has a condition of membership that all our member companies be third-party certified for their sustainable forest management. This is a world first within the forest industry.

Some of the big names in the industry that you may recognize are Abitibi Consolidated, Canfor, Tembec, Kruger, West Fraser and Warehouser, to name a few.

The industry overall is a key contributor to the Canadian economy. It represents 3% of GDP and is the largest single industrial sector. It operates in 1,200 communities across the country from coast to coast, and employs approximately 1 million Canadians directly and indirectly. As such, it is a vital component to the economic base of rural Canada, in particular, since the industry operates in 350 rural communities, most of which are largely dependent on the local operations for their economic base.

The wages in the industry are higher than the national average by some 70%, and the industry, unlike some of the image that it has, perhaps, is a large user of high technology. We are no longer simply lumberjacks with chainsaws. In fact, the extensive use of high technology in the industry for control operations and systems is the foundation for our competitiveness and our overall sustainability.

The current economic climate for the industry is less than favourable. Some have characterized it as a perfect storm. We face a number of challenges that limit our investment in technology, and this carries negative implications for our overall productivity, competitiveness, and level of employment further down the road.

The highest challenge we face is intensified global competition. We export 80% of our product, and the number of countries that are now competing for those markets has grown substantially over the last 10 years. In fact, some of our former customers are now competing against us, both in the U.S. market and in offshore markets.

Low commodity prices continue near or at cyclical lows, and that obviously presents a challenge in terms of profit margins and supplying the capital needed for investment.

The softwood lumber dispute, as many of you know, still lingers. The amount of duties that the industry currently pays has a crushing effect. The current amount is in the order of $1.5 billion to $2 billion, and there really is no end in sight in terms of resolving this, despite our best efforts working with the federal government and the provincial governments in trying to negotiate or resolve the dispute.

I should say that the legal mechanisms, while they do play an important role, move very slowly, and that does have a very tremendous impact.

The rapid rise in the dollar earlier this year also erased some of the industry's best efforts in trying to manage the challenges. Companies who were cutting back on costs to better adapt to some of the other challenges in the market saw those cost reductions wiped out when the dollar rose very quickly. For companies that have hedging programs, that just wasn't enough. Now the dollar has stabilized, and although it is still painful, companies are trying to adapt.

Á (1115)

Looking forward, we'd like to think there is still a lot of bright sunshine ahead. In terms of market opportunities, North America is a mature market, and we are moving towards value-added products both on the pulp and paper side and on the solid wood side.

As for offshore markets, there are some emerging markets. Although they currently represent a very small portion of our overall sales, there is growth potential there as those countries gain affluence.

In terms of the industry's entrepreneurial spirit, it is alive and well. The fact that industry is doing as well as it is during this current climate speaks to that very much, showing that they have a very strong will to succeed and adapt.

The innovative attitude of the industry is very strong as well. As I mentioned, we are moving towards more value-added products, bringing new wealth to the industry, and also strengthening our best practices, which will bring benefits farther down the road.

In terms of moving forward and accelerating the renewal within the industry, we need government partnership. We take the view that the federal government can play a leadership role. In terms of what that role could represent, we see it as working with the industry to develop a comprehensive strategy to facilitate the accelerated renewal of the sector. Part of that is a vision to guide development of more supportive public policy and regulatory mechanisms, and also specific actions to address priorities of the sector, maintaining that the industry has its job to do as well in making sure it is taking every opportunity that exists.

In terms of some policy mechanisms to encourage further investment and innovation, we would like to suggest that there are some mechanisms for reform of tax policy. We very much welcome the legislated phase-out of the capital tax that was announced earlier this year in the budget; however, we would like to suggest that the phase-out can be done much more quickly—over three years.

Another key limitation of the industry is how the competition policy is applied to the industry. Particularly on the pulp and paper side there is a strong need for further industry rationalization and consolidation. The current belief of the Competition Bureau is that the industry concentration is too high as it is, but that does not reflect that most of the production is for the export market, and there won't be a strong impact on the domestic consumer.

In terms of innovation, part of the vision we see as needed, going ahead, would also include some measurable goals and require an aligning of our existing research capacities so that every opportunity is realized.

I mentioned earlier the softwood dispute. Aside from that major trade dispute, there are other areas for trade liberalization, and there are more details in our written submission. They include tariff and non-tariff barriers. As well, a strategic component to trade policy would be very useful. An example of that is that our communications programs targeted the U.S., emphasizing the strong economic relationship the two countries have.

In the interests of time, I will just mention that climate change policy is very important to the industry. We are working with the government as best we can, but the main thing I would like to suggest is that the policy follow three main principles: that it consider economic efficiency, regional and sectoral equity, as well as environmental effectiveness.

To conclude, the industry is very much a strong part of the Canadian economy, and with a stronger or renewed partnership with the government it can be even stronger in the future.

Thank you.

Á (1120)

The Chair: Thank you.

Now we'll go to the Canadian Medical Association. Who will do the presentation? Mr. Patel?

Go ahead, sir.

Dr. Sunil Patel (President, Canadian Medical Association): Thank you, Madam Chair.

On behalf of the 56,000 colleagues of mine across this country that the Canadian Medical Association represents, it is my pleasure to address the Standing Committee on Finance today, as part of your pre-budget consultations.

[Translation]

I'm pleased to be here to express the views of Canadian physicians.

[English]

While I can understand that in some quarters, perhaps even among parliamentarians, there is a sense of health fatigue, if this year has taught us anything it is that we must remain vigilant to ensure the health and safety of Canadians. SARS and other emerging threats have clearly illustrated the dangers of being complacent.

The CMA brief contains a number of important recommendations that address long-term issues and challenges of accessibility, sustainability, and accountability—issues that are essential to the care and treatment of patients. However, since the committee is focusing on immediate priorities, I will focus my remarks on three areas: first and foremost, addressing the number one health care crisis, which is the shortages of health providers; second, protecting public health and safety; and third, delivering on the health accord promise.

Madam Chair, let me reiterate that the shortage of health providers is the single most important challenge facing health care in Canada today. All other investments are irrelevant if you do not have the qualified people available to provide care and treatment to patients. Whether it is physicians or nurses or other health care professionals, shortages persist among every provider group at every level of the system.

Some would argue that the answer lies in passing the work from one set of hands to another. This is demoralizing to front-line health care providers. The simple fact is that we need more hands on deck.

The government response to the critical shortage of health care providers has been to play a shell game. Responsibility has been shuffled from one level of government to another and from one department to another. No jurisdiction seems to be willing to take responsibility.

While we were encouraged with the $90 million provided in the 2003 federal budget to improve health human resource planning and coordination, we are extremely disappointed that we have not been consulted on how this money will be allocated and for what purposes. We know that various federal departments are vying for funding, but no one department is coming forward to provide leadership with clear proposals. Our brief includes initiatives to respond effectively to this issue. They're not radical. They require only that the federal government supply as-yet-unseen leadership on the issue of health human resource planning.

We urge the committee to ask why the CMA's proposals and other health human resource initiatives have not been acted upon. The CMA would like to know what it is going to take for governments to take this critical issue to task.

Second, moving now to “protecting public health and safety”, here is a top-of-mind issue for Canadians. I would like to read a few short quotes pertinent to public health and emergency preparedness.

There's a strong possibility that public health officials will be overwhelmed... It's also possible that the event is so massive that even the provincial or territorial resources are besieged.

Health Canada must help facilitate efforts to rationalize preparations and make it easier for jurisdictions to assist one another in a time of disaster.

Madam Chair and committee members, you may be forgiven if you assumed these quotes were taken from a national newspaper at the height of the recent SARS crisis. In reality, however, they were made by the CMA in its submission to this very same committee during your 2001 pre-budget consultations. The CMA sounded the alarm that our public health system was stretched to the limit two full years ago, before the SARS crisis hit. Unfortunately, this warning went unheeded by all governments. Instead of their addressing the issue, things have gone from bad to worse.

Á (1125)

[Translation]

In June of 2000, the Laboratory Centre for Disease Control was eliminated. Equally concerning, future outlays of public health funding by Health Canada are scheduled to decline. This summer we paid a tragic price for our collective complacency.

[English]

Bolstering our capability to deal with emerging disease threats is critical, but public health must go much further. It also includes non-infectious and chronic diseases.

[Translation]

No single level of government can tackle these pan-Canadian problems.

[English]

Public health is a responsibility for all of us. In the CMA's submission to the National Advisory Committee on SARS and Public Health, we recommended a comprehensive approach to deal with the public health issues and emergency preparedness. The total incremental cost of these recommendations is $1.5 billion over the next five years. The CMA believes this is a small price to pay relative to the massive personal and financial costs of another SARS outbreak.

As the founder of the Canadian Institutes of Health Research, Dr. Henry Friesen, has so eloquently told us, we must stop treating the funding of the health care system as a liability. It is an investment in all our futures. Today's health research provides tomorrow's treatment, and with regard to health research, the CMA once again calls for federal government spending on health research equal to at least 1% of national health expenditures.

I would like to highlight two specific components within our recommendations that Canada's physicians believe we need the federal government's immediate action on.

First, create a rapid, effective, accessible, linked--otherwise known as the REAL--health communications and coordination initiative.

Second, invest in an emergency medical supplies and equipment supply chain. In times of emergencies, communications in real time and immediate access to appropriate safety gear is essential. This is critical to ensuring patients receive the best in care.

Let me focus on my third point, delivering on the health accord promise. Turning to the last item, while the CMA applauds the federal government for its leadership in achieving the 2003 health accord, it is now time to follow through. The federal government must honour the commitment it made to provincial and territorial governments and deliver the contingent $2 billion for health care promised in the accord and the federal budget.

Health cannot ever be seen as a residual priority to be dealt with only after other concerns have been addressed. Fulfilling the promise would substantially enhance Canadians' access to critical health services. This funding is key because it would support critical core health services, those services directly affecting patient access to care and treatment. We urge this committee to recommend in the strongest possible terms that the Minister of Finance immediately honour this funding commitment made by the Prime Minister.

To conclude, while the first ministers' health accord was critical to moving us forward, there remain some priority areas that require additional attention and action, and therefore the CMA recommends to this committee to instruct federal departments to work together to fund key health human resource initiatives as proposed by the CMA and other health provider organizations.

Second, endorse a rapid, effective, accessible, linked health communications and coordination initiative, and an emergency medical supplies and equipment supply chain.

Third, direct the finance minister to honour the $2 billion in core funding commitment.

The CMA appreciates and values the opportunity to discuss with the committee issues that are important to the health of our patients and the sustainability of our health care system.

Mr. Bill Tholl, secretary general of the CMA, and I look forward to answering any questions you may have. Thank you.

Á (1130)

The Chair: Thank you very much.

Now from the Canadian Council of Professional Engineers, we will hear from Ms. Lemay.

Ms. Marie Lemay (Chief Executive Officer, Canadian Council of Professional Engineers): Madam Chair, thank you very much.

[Translation]

Thank you, ladies and gentlemen.

[English]

My name is Marie Lemay. I am the chief executive officer of the Canadian Council of Professional Engineers. CCPE represents the 12 provincial and territorial regulatory bodies that issue licences to 160,000 engineers in Canada.

Of foremost concern to CCPE and the engineering profession is the protection of the public. Our code of ethics requires us to put public welfare above all other interests. Last year we presented a series of recommendations to support innovation as a vehicle for improving safety and elevating our quality of life.

We're pleased to report that with the support of the federal government we are making progress in crucial areas such as integrating skilled workers into the engineering profession and improving credential recognition for skilled immigrants.

Today I'd like to speak to you about three core issues that we believe require financial resources and long-term strategies to ensure public safety and economic prosperity for all Canadians. These issues are climate change adaptation, infrastructure renewal, and drinking water quality.

[Translation]

Ms. Marie Lemay: CCPE appreciates the financial commitments made by the federal government in the last budget respecting infrastructure renewal, improvements to treatment facilities for drinking and waste water on reserves and the question of climate change.

However, in our view, federal government funding for these issues lacks long-term vision.

[English]

I would like to begin by discussing climate change. Recent weather-related disasters include the Saguenay and the Red River floods, the ice storm, and the forest fires in B.C. and Alberta. We can collectively hope that similar events will not occur again, but it is unrealistic to make these assumptions.

Managing new climatic realities will in many ways fall to the professional engineers who design and build civil works and other elements of our infrastructure system capable of adapting to the new extremes. One example of adapting to a threat posed by the local climatic extremes would be the flood water diversions projects. I believe we have a member of Parliament here from Winnipeg. I don't have to tell anyone on this committee that Winnipeg has found ways to adapt to seasonal threats of flood waters by building the Red River Floodway.

To facilitate a planned approach for climate change adaptation, this year CCPE assembled experts and put forward what we called the climate change action plan. What this plan does is define the role of engineers and identify policy and gaps in funding.

To address climate change will require an intensified effort to fund the research that supports development of regional climatic models. These are essential for engineers to accurately design for new extremes and link engineers and scientists. We used to design with historical data, and we used to be able to look at what happened in the past and predict the future. That's not true any more. So we need that data. We need to be able to predict.

Therefore, we recommend increased federal funding for climate change research to enhance the reliability of scientific data used by engineers, and commitments of funds to create a formal body that will facilitate dialogue between the climate change experts, including the engineers, the scientists, and the decision-makers. It should also perform an advisory role with the government to assist in setting research, legislative, and expenditure priorities for the climate change action plan.

Our second concern lies with our infrastructure deficit. Our infrastructure represents $1.6 trillion assets. It is the pillar of our society's safety, health, and economic prosperity. However, our national infrastructure debt now totals $60 billion, and 50% of Canada's infrastructure system will have reached the end of its serviceable lifespan by 2027. The federal investment level in the last two budgets unfortunately failed to address adequately the $60 billion infrastructure deficit.

Á (1135)

[Translation]

Failing sustained and large investments in Canada's infrastructures, without a planned method and distinct long-term strategy, or if we do not resort to innovative technology, our economy cannot grow, and Canada will cease to remain competitive internationally.

[English]

CCPE has been particularly active on this issue. We recently partnered with other stakeholders to form a technology road map for Canada's infrastructure system. The TRM is a comprehensive action plan that contains 10 objectives, 10 recommendations, that would vault Canada to the forefront of innovation in civil infrastructure systems in the next 10 years.

So we feel that infrastructure rehabilitation should be viewed as necessary to protect the lives of Canadians and to ensure strong economic growth in the future. We also feel that the infrastructure deficit should be tackled with the same rigour that this government used to eliminate the fiscal deficit.

Therefore, we recommend a sustained and predictable federal investment, accompanied by a well-coordinated strategy for renewal, including funding for things like cataloguing and assessing infrastructure inventory, identifying priorities, supporting life costs for maintenance and repairs of critical infrastructure, innovative solutions to promote greater longevity, and the creation of a national round table to bring all the stakeholders together so that we can develop a national infrastructure action plan.

What we're talking about here is a new approach to infrastructure funding, and a holistic approach. Funding infrastructure is a great tool for the government to promote economic growth and it creates jobs, but we believe it should be carefully used, well planned, and we would be able to use that money, using new technologies and a holistic approach, in a much better fashion.

Secondly, we believe that an increased portion of the revenue collected from our taxes needs to be directed to the infrastructure deficit. So we recommend that the federal government direct funds from the federal excise tax on gasoline to address the infrastructure deficit in Canada. The fuel excise tax represents roughly $4.8 billion in annual revenue for the federal government. It could go a long way toward rehabilitating Canada's infrastructure.

[Translation]

Lastly, I would like to briefly address the question of drinking water quality. The work of engineers plays an essential role in the design of water treatment plants and distribution channels, as well as in the management of facility construction and start-up and the development of innovative new technologies to improve water quality.

CCPE believes that a holistic approach to improving water quality is also based on adequate levels of research, protection, assessment of the risks respecting distribution sources, compliance with rules and enforcement of ethical regulatory standards.

[English]

The CCPE recognizes the regulatory authority of provincial and territorial governments for drinking water. However, we also recognize that the federal government has an important role to play in drinking water policy, and we urge the government to create a national drinking water code similar to Canada's national building code, which would include non-binding provisions for the provinces and territories to use as the basis for legislation.

The proposed code would extend beyond water quality requirements to include the entire water system. Supporting the national code will require funding for research, monitoring, and developing an innovative system and technology that enhance the overall health and safety of Canada's drinking water system.

The CCPE sees tremendous value in federally supported water research. Research is an essential part of setting guidelines for the provision of safe drinking water. The government needs to ensure that water research organizations are equipped with the financial capacity to undertake applied research for drinking water quality. Therefore, we call for the increase in funding, and predictable funding, for water research.

In conclusion, investment in the areas like climate change adaptation, infrastructure renewal, and implementation of a national drinking water code will reduce the costs associated with health care and disaster relief while ensuring that the Canadian economy is best equipped to grow and prosper.

On behalf of Canada's 160,000 professional engineers in the CCPE, we welcome the opportunity to assist the federal government in building a better country, and we thank you for this opportunity.

Á (1140)

The Chair: Thank you very much. For myself, I appreciated the organization of your brief. It was very clear.

We'll go now to the questions. We'll start with Mr. Solberg, seven minutes.

Mr. Monte Solberg: Thank you very much, Madam Chair.

I'm going to apologize at the outset for not being able to stay through the whole session. I have to go speak in the House here pretty quickly. But I do want to direct a couple of questions to the CMA, Dr. Patel.

In your brief you make reference to the SARS outbreak. It sounds as though you're saying, when I read through your remarks here, that the outbreak could have been avoided if the Laboratory Centre for Disease Control had been still there or if more money had been put into the health care system. Is that basically what you're saying?

Dr. Sunil Patel: Thank you for that question.

SARS could not have been avoided, but it could have been managed in a much better way if there had been a national infrastructure and search capacity, serious issues that currently Canada's health care system lacks. If there had been a better managed system, with a central office for public health, we would have been able to manage the outbreak in a much better fashion.

Let me give you an example of how the CMA embarked on contacting physicians and set up a volunteer network as well. These are key communication issues we've identified that do not exist and that require really only modest investment.

Mr. Monte Solberg: The first point in your presentation had to do with the shortage of workers. The amount of money that's being put into health care every year has been rising fairly dramatically over the last few years. Can you put some kind of price tag on what would be necessary to deal with this problem over the next few years, to maintain the number of people we need as the population grows, for instance?

Dr. Sunil Patel: Let me start off by saying, first of all, that without the right number of health care providers, the system is going to be in a crisis today and probably in the next five to ten years.

As to the actual numbers, I'm going to ask my colleague, who is an economist, to give you the exact figures.

Mr. William Tholl (Secretary General and CEO, Canadian Medical Association): We would be happy to provide more detailed statistics following this, if you like, but what we've basically asked for is the number of physicians in Canada to be self-sufficient. That would require that our medical school output rise to approximately 2,200 physicians per year. We're getting close to that, but we're still living with the aftermath of the 1991 through 1993 cuts in medical school of at least 10%. While we're not here to speak to the nurses' plight, it was even worse for nurses in that period. So we're still playing catch-up.

We were pleased to see in the federal budget that there's an amount of money set aside--I believe it's with the citizenship and immigration department--to look at fast-tracking of physicians and other health care providers who are in the queue in the wake of the changes to the immigration laws that give a higher premium on training as opposed to the points system. We think the number needs to get up to 2,200 physicians per year to be at the level of sustaining our own needs.

Mr. Monte Solberg: One of the points you made in your presentation was that there should be clearer accountability with respect to the funding and the overall rule-setting surrounding health care in Canada. Do you have some recommendations?

First of all, I decry that. I'm very upset myself, and I think most Canadians are, about health care being a political football, kicked back and forth between the provinces and the federal government. Do you have some recommendations on how we can deal with that? This is a provincial jurisdiction in the Constitution, and the federal government's involved in it. Isn't that to some degree unavoidable if we have that kind of a set-up, or is there something specific you can propose?

Á (1145)

Dr. Sunil Patel: I'm glad you bring that point up, because we have been very forceful in recommending to the federal government to establish a national health council that is independent, credible, and arm's length. Really, we need that. Canadians have identified it in an overwhelming manner, and that is what we see as the overseeing body to recommend to Canadians how we can fix the gaps and solve some of the problems we have in the health care system.

Mr. Monte Solberg: Mrs. Lemay, you've touched on the drinking issue. It's a hugely important issue, and of course after Walkerton and North Battleford people are very concerned about these things, and obviously there's pressure on the federal government to come to the table and start to fund the infrastructure that's necessary to make these repairs. Those two communities are the tip of the iceberg, I'm afraid.

You've mentioned there's a $60 billion infrastructure deficit in Canada today. Do you have any figures you can provide on what we might need to do in terms of money to fix just the drinking water component of that?

Ms. Marie Lemay: I don't have with me just the drinking water component, but if you're looking at the overall civil infrastructure system, which would include roads, highways, drinking water, treatment of this water, this government has put in money in the last years. We're looking at, I believe, the equivalent of about $1 billion that is dedicated for the next 10 years to the infrastructure.

But when you're looking at the $60 billion deficit, to be able to tackle it with some rigour and not just be playing catch-up, it has to be in the order of about $4 billion if we want to catch up and not end up having this deficit increase to numbers we won't even be able to control.

To get back to your water quality issue, that's why we're strongly recommending the national drinking water quality code, because we believe that's a role the federal government can play. You have the jurisdictional issue of provincial and federal, and we all know what that's all about, but you can show leadership and actually look at a code that would look at the entire aspect of the system--not just the water quality and the testing of the quality, but how it is built, who's involved, and the training of the people involved in these plans. You can take a holistic approach.

We're talking about change in paradigm here. You can show leadership and bring the different people to the table and set that code. That would be a code.

Mr. Monte Solberg: Thank you very much.

Madam Chair, I'm going to have to run, but thank you again, and I'll take the time to read your briefs.

The Chair: There's a finance debate in the House, I understand, so we're having some of our members go back and forth.

Go ahead, Mr. Paquette.

[Translation]

Mr. Pierre Paquette: First I would like to congratulate you for your presentations, which were all of excellent quality.

I would like to start with the Canadian Medical Association. You have observed, as I have, that the future Prime Minister stated a certain number of priorities in the speech he made to the Board of Trade of Metropolitan Montreal last Thursday, his priority being to reduce the debt to 25 percent of GDP. We know it currently stands at approximately 40 percent. A few years ago, it was roughly 70 percent. So he announced that to us as his first priority. His second priority is to reduce taxes and his third to preserve social programs.

I understand from your brief that you don't have the same priorities. In your opinion, if the federal government achieves surpluses, those surpluses should first go to investments in health. More specifically, this year, Mr. Manley announced that there would be surpluses of at least $3 billion: that's his reserve for contingencies. You agree with me that it would be somewhat illogical to use that $3 billion reserve for contingencies if there were no contingencies to absorb it, to repay the debt, as he previously announced? Logically, pursuant to the arrangements of 2002, if there was a $3 billion surplus, $2 billion of that surplus should be reinvested in health, as the commitment was made at that meeting, and $1 billion could be used to repay the debt, although I think that's a politically dubious choice.

So I would like to have your opinion on this matter because our report is going to come out and the new Prime Minister, Mr. Martin, will be at the helm. We should place ourselves somewhat in the context of the priorities he has set thus far.

Á (1150)

Dr. Sunil Patel: Thank you very much, Mr. Paquette.

[English]

Indeed, I was at that same speech that Paul Martin gave. I was heartened to learn today that he's being quoted as saying that health is a number one priority for him. He identified it as one of the issues he'll be tackling if he becomes Prime Minister.

Canadians have been continuing to tell us that health is their number one priority. As a practising family physician, I hear that every day in my practice. Surely health has to be appreciated as a common good, as opposed to being a liability. With a healthy population, we can provide more competitive manufacturing in the global environment—which Paul Martin also referred to. So certainly it's an investment.

Debt reduction is very important. At the same time, how do we juggle this? This is your responsibility.

[Translation]

Mr. Pierre Paquette: Your brief is very well designed, and I took a copy for my colleague, Réal Ménard, who is our critic...

[English]

The Chair: Sorry, Mr. Tholl also wanted to add something.

Mr. William Tholl: Perhaps I could just add two points. We've already made a lot of progress in reducing the debt-to-GDP ratio over the last seven years. In fact, I think we now have surpassed the United States in terms of our debt-to-GDP ratio. Maybe it's time to take a pause and look at the progress that has been made.

The key point we're trying to make here is that current estimates are $4.4 billion to the end of March 31, but we need to service the health care needs of Canadians before we service the debt. That's the key point we're trying to make in our brief. We believe the federal government has an obligation to hold up its end of the February 2003 accord—as do the provinces, who should stop playing political football with the Canadian health council, and stop using the $2 billion as an excuse not to proceed with a meaningful council.

That's the essence of what we're trying to say in the brief.

[Translation]

Mr. Pierre Paquette: Yes, I understood what you said. I said I thought your brief was excellent and very well prepared; I took a copy for my colleague, Réal Ménard, our health critic.

For example, in Appendix A, on page 13 of your brief, you set out the investments announced by the federal government and the discrepancies relative to the needs you've identified. We see that, as of next year, there will be a shortfall which you estimate at $2.2 billion for the health system as a whole. In addition, based on your estimates, by 2007-2008, there will be a shortfall of nearly $7 billion. In my opinion, that should catch the committee's attention in the context of its work or in that of the recommendations that will be made to the future Minister of Finance, or at least to the future Prime Minister. Thank you very much; I will definitely reread this document.

I also very much appreciated the brief by the Canadian Council of Professional Engineers, in particular your proposal to establish a long-term infrastructure program in the foreseeable future. In my region of Joliette, where there are a few engineering firms, very good ones incidentally, when the federal government announces an infrastructure program, the municipalities rush to submit projects. They have a lot of priorities, and bottlenecks are created. In other words, there are peaks of activity. I imagine that must increase costs because of the demand for materials.

If a long-term program were announced, instead of rushing, we might perhaps be in a position to plan the work better so as to avoid the bottlenecks that we have observed. Have you at the Council also observed these problems, which are caused first by the fact that funds are announced and that you then have to agree with the provinces? Obviously, it's essential for us that the provinces be the project leaders. Thus, a large number of projects are suddenly accepted and engineering firms and the construction industry in general are busy.

Mrs. Marie Lemay: Thank you for your question, Mr. Paquette. You're entirely right. In the infrastructures field, there is without a doubt a lack of long-term planning. Furthermore, it's impossible to introduce new technologies in the programs. Those technologies must not be disregarded because they could enable us to save money, to use different approaches and sometimes even to create work that lasts longer, which would protect investments.

A sustained, long-term program would permit this kind of planning. Then we could determine where the priorities are. To really plan and evaluate the situation, money will have to be spent on inventories. Right now, we absolutely don't have the time to do that.

Earlier you mentioned the surplus as opposed to the debt. It's been proven that money invested in infrastructure provides a return. It's easier to say we're going to spend it, but why not do it in a planned and sustained manner?

Á (1155)

Mr. Pierre Paquette: Yes, all the more since the funds that were announced in the last budget are quite ridiculous. I mentioned that to the Parliamentary Secretary moreover. I sent him a series of documents in which the Quebec municipalities complained about the program. We're talking about $1 billion over 10 years, which means $100 million a year for Canada and $25 million at most for Quebec. I don't imagine you can do much in the way of infrastructure with $25 million.

Mrs. Marie Lemay: No, you're completely right. As I was saying earlier, if the government wants to be serious about the deficit, it has to consider the deficit in infrastructures with the same rigour it would consider a budget deficit. It's the same thing. Our debt is there and it's going to catch up with us. You have to consider that as a debt and attack it.

Mr. Pierre Paquette: Thank you very much.

Now I would like to speak to a representative of the Partnership Group for Science and Engineering. I believe that's you, Mr. Hanmer. I find your documentation extremely interesting because innovation, research and development, education and a healthy population are guarantees of successful economic growth. However, we don't have any information on the current state of research and development in Canada relative to our main economic partners. For example, what percentage of Canada's gross domestic product do research and development represent? How do we stand relative to others? Are we in the lead group or at the back of the pack? I would like to have a quantitative and qualitative assessment so that we can form a better judgment of how urgent your recommendations are.

[English]

An hon. member: A short answer.

Mr. Pierre Paquette: You want a short answer to a big question like that?

The Chair: Go ahead, Mr. Alper.

Dr. Howard Alper (Chair, Partnership Group for Science and Engineering): Thanks a lot. I'll try to be very brief.

Canada used to rank about 15th on the R and D scale. It has moved somewhat to between 12th and 13th, pretty well tied for 12th.

The Prime Minister made an announcement a number of times about two years ago to try to elevate the investment in research and development—including investment in industry, not just government investment—to enable us to achieve the status of fifth worldwide. That is going to take an enormous effort. Nevertheless, in certain areas I would say that Canada is a trailblazer on a global basis. These include certain areas of health, certain areas of engineering, and within sectors such as nanoscience and nanotechnology, etc.

So I think the key to the future is setting priorities. I'll just say that when the Government of Australia set national research priorities last year, I was the foreigner involved directly with the Minister of Science, Peter McGauran, and a committee to set those priorities. I think that within three to five years it will make an enormous difference to Australia

The Chair: Thank you very much.

Now to Mr. Wilfert.

Mr. Bryon Wilfert: Madam Chairman, I thank everyone for their presentations.

Ms. Lemay, on the issue of drinking water, I certainly support the notion of a national code. If you could provide us with some costing, it would be helpful.

On the infrastructure, I want to be very clear about the myth that was presented today, and it is a myth. The federal government does not have a long-term strategy for infrastructure. That is completely false, and it is completely false about the billion dollars. I don't know, I'm a bit surprised.

The word “leveraging” comes to mind. In the last ten years, over $30 billion has gone into infrastructure. This government created a Department of Infrastructure we never had before. We have four major streams. The national infrastructure program lay dormant under the previous government for ten years, and the initial down payment that the finance minister set was for a 10-year program.

I would point out to you that the FCM, which I used to be president of, screamed for years for a long-term program. Now they have a long-term program, and the minister said that when, obviously, resources permit, more money will go in. But we are looking for our partners from the provincial and the municipal orders of government as well as from the private sector.

So I take great exception to hear that there is a billion dollars only and that we have a $60 billion deficit. It would give me the impression that we're doing very little. In fact, we've done more than any other federal government has done in the history of the country on the issue of infrastructure. I know how important it is and so I am quite taken aback on that notion.

Also, Mr. Patel, on the issue of the $2 billion, I suggest that you wait until the finance minister makes his fiscal update, sometime next month, presumably. The fact is that we need to have accountability.

I'm suffering not from health fatigue but health frustration. I am frustrated beyond belief that every time we think we have an agreement with the provinces and they say it is what they need, six months later it's never enough. I don't know, I want to see more accountability. I want to see the tracking. I want to know where dollars are going, because we're putting more money than ever before into it but we seem to be getting fewer and fewer results.

You may want to comment on the Minister of Health's proposal for an infectious disease control centre, which may alleviate one of the issues you addressed. I'd be interested in that.

On the forestry sector, you might want to comment on the issue of the accelerated phase under the capital tax allowance. As you know, we've made some progress in that regard. Again, because we're not going to go back to a deficit and because we want to maintain our strong fiscal anchors, what are we looking at in that regard? We get these proposals, but I need to know the numbers.

I guess I'll leave it at that, Madam Chairman, and go from there.

Â (1200)

The Chair: I'll start with the last one first, Mr. Lansbergen.

Mr. Paul Lansbergen: Thank you.

On the issue of capital tax, the way we were recommending a three-year phase-out is, recognizing that the fiscal position of the government is tight for certainly the next year because of the commitments made in the budget, the 2004 change, as announced, would stand and the rate reduction in 2005, instead of going down to, I think, 0.175 from 0.2, would go down to 0.125 and in 2006 it would be reduced to 0.

In terms of costing, we have done some preliminary analysis that I guess will give an indication of the impact for the sector, but that's not complete. I'd certainly be more than willing to send it to you as soon as it's done.

Mr. Bryon Wilfert: If you would send it to the committee, I'm sure we'd all appreciate that information.

Mr. Paul Lansbergen: I'll just let you know, in terms of the total capital tax under the current structure, the industry pays $70 million a year in capital tax. I have done some analysis on what it means to certain companies or individual mills, and I'll do my best to provide that very shortly.

Mr. Bryon Wilfert: That will be most helpful.

The Chair: Go ahead.

Mr. William Tholl: Thank you, Madam Chair.

On the issue of $2 billion, and whether we believe there ought to be more strings with more money, fundamentally, yes, we believe the provinces need to hold up their end of the bargain too and get on with the Canadian health council. It was supposed to be done on May 5. They're holding that hostage because of the $2 billion. If it were me, what I'd be doing is saying any province that buys into the Canadian health council and signs on now... And we're at a critical juncture; the minister announced they had seven weeks to sign on or not. I'd be making that condition--you sign on; you get your share of the $2 billion. You don't, and it's put in a bank in trust to the people of Canada.

We don't think, however, that investing in the health of Canadians, servicing the health needs of Canadians, ought to take a back seat to servicing the debt, for the reason I just said. We've already met and exceeded the target set five or six years ago.

As for the minister's suggestion about an infectious disease centre, in principle we strongly support it. We only wish we had the Laboratory Centre for Disease Control, which was closed in the summer of 2000, to build on rather than having to rebuild that capacity before we start to build the new capacity.

The minister, in her main estimates to the committee of the whole--and I ask you to look at it--has projected outlays for emergency response going from $362.5 million next year to $307 million. We don't think they get it if that's the kind of track they're putting in terms of infectious disease. It's going to take more than an announcement of this centre. It's going to take the money to back it up. We've dug ourselves a hole and we're going to have to fill that hole before we start to ramp up for the future.

But coming back to your basic point, we think it's time to get on with it. To the federal government, do your part with the $2 billion, and to the provinces, fulfill your commitment, too, on February 5.

Â (1205)

Mr. Bryon Wilfert: And I appreciate that other side of the equation, because without the provinces...and I don't know, the $2 billion has come to light in the last little while, but the provinces were already getting agitated about the health council well before May 1. The ink was hardly dry. I would certainly agree that if in fact we do advance money, it will only be to those who have signed on. And maybe we need to be more of a stick in some cases, because all I ever hear is how much they want from the federal government, but then they never acknowledge the moneys they get, particularly those famous tax points, which of course, if they don't want, we should eliminate.

Mr. William Tholl: Madam Chair, perhaps I could add just one other point in that regard.

The Chair: Go ahead, and then I'll let Ms. Lemay go.

Mr. William Tholl: I think part of that accord had to do with establishing health indicators, benchmarks, so we could start to improve the health care system. That's an integral part of this in terms of more money, more strings. We have to start setting those targets realistically and then monitoring progress, and again, the council is instrumental to doing that.

The Chair: Ms. Lemay.

Mrs. Marie Lemay: Mr. Wilfert, I do agree with your numbers to a certain extent--$1 million a year; 10 years, $10 million. You're talking about leveraging $30 billion. You will recognize, though, that it's not all new money from the municipal side, so the $30 million, if you consider the provincial, is probably not $30 million.

I do agree with you that this government is taking a longer-term approach, but it's not a sustainable...it's a longer-term approach. We welcome the new Department of Infrastructure that was created by this government. We're starting to work with them and we really welcome their being there.

But I have to tell you there is no planned approach in how we manage the investment of infrastructure in this country, so what we've been calling for.... And we didn't sit idle and just complain. When I was telling you that we got the groups together to develop a technology road map, that included town hall meetings--250 people involved in infrastructure across Canada--to build a consensus on what things we could be doing, what suggestions we could make to this government, and different approaches and innovative technologies. We have that. And one of those recommendations was to create a national round table on infrastructure so we could get together and plan how we manage that money and how we manage the investment of this government in infrastructure.

There will be need for more, but the crucial part is to invest it better and in a planned approach.

Mr. Bryon Wilfert: There is an inventory, I think originally through Public Works and the FCM. We did fund to look at inventory of infrastructure across this country. We have asked associations like yours and others to participate very fully. The fact is, in this discussion, the word “leveraging” must be there and there must be accountability by the provinces, which in many cases, when they make these agreements with the Government of Canada....

The only government in the country that I would give any marks to is Alberta, because it actually does have the province, the municipality, and the federal government at the table. It's very hard, you know. You pay a third of the money for the project but you only get...two-thirds of the say is with the federal government and the province, and the municipality is left out. All of them should be at the table.

The reality is that the program, as you know, is municipally driven. They're the ones who make the decision. Also, I would point out that the strategic infrastructure fund is a major component as well--another one added by this government, another one through which more money has been added in that regard.

There is a tremendous deficit. Yes, it has to be dealt with. But had we dealt with it in 1983 when it was first proposed, it was only $17 billion. However, you might ask the Conservatives what happened in that 10 years. Had it been done, we wouldn't be in this shape today. Now, we have a lot of “johnny-come-latelies” to tell us all about infrastructure, but I was fighting the battles for many years when there was no infrastructure program.

So I find it very, very important that we keep in mind that a 10-year program at least says we are committed, we are going to try to accelerate where we can, but we're not going back into a deficit. And as far as debt reduction is concerned, you say $3 billion a year in interest, which helps everyone at this table.

Â (1210)

The Chair: Thank you very much.

Okay, one last point, but then I have to get the rest of the questioners in.

Mrs. Marie Lemay: Okay. I really understand where you're coming from. My background is municipal engineering. I was 15 years as a municipal engineer so I know what you're talking about.

The really important recommendation, the point about bringing in a national round table and bringing in the stakeholders, is try to avoid all this bickering between the provinces and the federal government. We have to get those technical people, the expert people and decision-making people, together. Then they can come back to different levels of government and tell them how we agree we should work and invest. The inventory should be linked to getting money on an infrastructure project.

I mean, there are things—

The Chair: Thank you.

Now, the Honourable Maria Minna, followed by Judy Wasylycia-Leis. Thank you.

Hon. Maria Minna: Thank you, Madam Chair. I'm not going to be too long.

Dr. Patel, I want to address a couple of things. First of all, I agree with you. The shortage in health care is just.... I had occasion of being in hospital for my mother-in-law and for other reasons a couple of times this last summer. All I got from the specialists was “We need more nurses.” It was a desperate need. Not that there isn't elsewhere. I understand that. The shortage is everywhere.

That brings me to a question. We've talked about the health council and the constant back and forth of whether there's going to be one, there's not going to be one, who's supporting it, which provinces are for it 100%, what shape it will be, what mandate it will have, what powers it will have, if any. The reason I bring this up is that you mentioned, and quite rightly, that the medical schools were trying to make up for the medical schools in 1991, when there were cuts of output for NLs, and for nurses it was even worse.

Those are provincial decisions. The health council is reporting to Canadians, not to governments. In your mind, does the way it's being structured give the health council enough clout, if you like, to morally somehow put the feet of the provinces to the fire who knew, when they were cutting the output of students, that there would be a shortage? It was the same with the technicians for cancer treatment and so on. They knew that at the time. None of this was new. It was just a matter of....

I am simply trying to get some idea of the negotiations back and forth in this council. What powers will it have, how will it be structured? Constantly, people are trying...everybody tries to water it down to the absolute minimum possible funding for short-term, not long-term. I'm quite frustrated with it. I want to see a strong health council à la Romanow, basically.

Dr. Sunil Patel: Absolutely. We're in sync, and I'm glad to hear that.

We see a council that has a broad mandate. I pointed it out to the Minister of Health in Alberta when I was there only two weeks ago. He was looking for a narrow mandate, yet we look at it as a broad body that looks at not only the funding that is allocated by the federal government, but also the areas in the health care system that are under crisis and need to be fixed.

Canadians have indicated that they do not want any more studies; they want action. I believe the politicians will have to listen to the public. Otherwise, as you say, they're at their own peril. So really I see a broad....

Mr. Tholl, do you want to add something?

Mr. William Tholl: I'll make two quick points. One is that in the negotiations it's amazing how long you can spend discussing one word, “through”, versus “to”: “through” the conference of health ministers “to” Canadians. It's vitally important that we keep our eye on that ball.

The second one—and we're distressed right now, because many conversations have occurred, as a matter of fact even this morning, about how you're going to populate this council—is that where we started in our thinking on this was with the question, why is it that those who have the most invested, the most to give and, next to their patients, the most to lose have no seat at the health policy planning table: physicians and other health care practitioners? That's what this council was supposed to be all about. Yet behind closed doors we're having conversations about how this is going to be populated. I would use the term “Maoism gone wild” to describe reaching out to populate this council, yet those who invented the concept and those who want to contribute to the planning are being left again in the dark as the planning process unfolds.

So we're frustrated, and I think a lot of people are frustrated.

Hon. Maria Minna: I can agree with you. This is something I had hoped would be well on the way by now, and certainly I want to see it happen.

With respect to the Laboratory Centre for Disease Control, which I understand was disbanded in 2000—and at the same time, or not too long before, Ontario disbanded the emergency network response, just four years ago—when SARS hit we did not have a network in Ontario at the provincial level and not a disease control centre at the national level, which of course.... Now the Minister of Health nationally has announced a centre for disease control, and as you say quite rightly, it needs to have infrastructure and money put behind it to make it work.

What I want to ask you, though, is since the delivery is provincial and we have sometimes bodies that are national, yet provincial delivery—and they don't always connect well—would you recommend a re-establishment of the emergency response network at the provincial level as well to work with the national agency, or not?

I'm just looking at the vacuum. Sometimes these bodies we have at the national level don't have the power to direct the provincial level, much like the emergency response team Mr. McCallum has that came up with SARS. But it was different, under a different jurisdiction. Again, it exists, but an emergency response team in that context is provincial and municipal and doesn't really have a directive role.

My concern is that, yes, I'm very much in support of establishing a centre for disease control, but at the provincial level do we also need to re-establish...? I know B.C. still has its network, for instance, and I think it probably came in very handy during SARS, when Ontario didn't. I don't want to get to the point where we have a vacuum yet again and we still have problems.

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Dr. Sunil Patel: Thank you.

I believe we need to move fast on this issue. We published a report that we call “Answering the Wake-up Call” and have submitted it to the Naylor commission. We are waiting for the Naylor report, whose recommendations will be coming, and they will detail our recommendations.

When you distinguish between health and public health, public health crosses all jurisdictions. It is for all Canadians, all provinces. Really, we have recommended a chief officer of public health who would be responsible to Parliament and have broad, sweeping powers. In our brief we've also recommended an emergency measures act pertaining to health care crises. There are many different ways of dealing with a crisis—establishing not just a centre for disease control but a public office that has the ability to coordinate care across the nation.

Hon. Maria Minna: But to dictate to the provinces? You see, it's provincial jurisdiction. That's where they—

Mr. William Tholl: If ever there was a case, Madam Chair, of thinking globally but acting locally, it is when it comes to infectious diseases. These viruses don't ask for visas as they go from one jurisdiction to another.

Hon. Maria Minna: Exactly.

Mr. William Tholl: And that's what was happening: they were fighting over whether this is federal or provincial and territorial—classic kinds of stuff. The role of this chief public health officer—not chief medical officer of health; there's an interesting but I think important difference there—would be to facilitate the work of the chief medical officers of health across the provinces. We think the medical officers are the backbone of the system. This would not emasculate their role, but facilitate their role.

We think it's wrong to have our chief public health officer, Dr. Paul Gully, report not through one but three deputy ministers to get to the minister.

I'm being told that you want to move on. Thank you.

The Chair: You can finish your sentence.

You referred just now to a report, “Answering the Wake-up Call”. If you could, if it's—

Mr. William Tholl: It's already there.

The Chair: Okay, good. Thank you very much.

Mr. William Tholl: Madam Chair, I agree with the last point; that is, the special powers conferred on the federal government according to our proposal would be extraordinary, but temporary. It would only be when we get into a situation like SARS, where we're worried about community spread, that there would be some criteria imposed. That's when the chief public health officer would exercise these special powers, but they would only be for a prescribed period of time.

The Chair: Thank you very much.

Now the final round of questioning goes to Ms. Judy Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.

The first thing I'd like to do is congratulate Dr. Patel for being recently elected president of the Canadian Medical Association and point out, Madam Chair, that Dr. Patel is from Manitoba, the heartland of progressive thought in this country.

I have to ask some questions of Dr. Patel. I shouldn't let Bryon Wilfert get to me, but finally he is doing so. He likes to rewrite history. He fails to mention that in the last exchange between the federal and provincial governments the provinces didn't sign the agreement because they were so concerned with the way in which the federal government handled it and so concerned about the shortfall in what was needed for, as you would say, “shoring the core”. There are different estimates, but there's around a $5 billion shortfall over a period of time.

The $2 billion is not a new issue. It was there to help give some assurances to the provinces back then that in fact if there's surplus money it will go to do precisely what was needed and what the federal government promised. So let's be clear about where we're at. It's not provinces asking for more money and everyone agreeing and then saying “Can we have more?” This is a fundamental disagreement about what's needed to shore the core.

My questions are as follows on that. How important is the $2 billion in your mind to stabilizing the system and shoring the core? Isn't it ironic that the $2 billion in surplus may in fact end up going supposedly towards the SARS epidemic and the crisis, when in fact it would have been important in terms of managing the system to begin with and helping prevent the spread of SARS? Finally, I know money isn't everything, but what is your view of what is roughly required from the federal government over a period of time to stabilize the system? That, of course, impacts on the planning for next year's budget.

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Dr. Sunil Patel: Thank you, Madam Chair.

Judy, thank you for those kind words.

Let me talk about the SARS issue and the fact that there was not the infrastructure. Had it been there, it would have saved the human cost and the valiant efforts of health care providers. Unfortunately, although it was centred in Toronto, certainly the number of lives lost could have been avoided if there had been a coordinated approach. Really, we think we need to move on that.

As for the $2 billion you're asking us about, “shoring the core” means living up to the principles of the Canada Health Act. My patients look towards me to provide timely access to care. We have also recommended that the waiting list project and the waiting list problems that are ballooning are the core issues. The provincial health ministers look towards that money for targeted reasons. The public do not want to get into this debate as to how the money gets there; they just want the problem fixed.

I will ask Mr. Tholl to give you the financial details.

Mr. William Tholl: Well, I have just one point, and that is that our brief details what we think is the shortfall. There's the so-called “Romanow light”. There's what we've detailed, as has already been pointed out in our brief, about what we think the longer-term reinvestment ought to be. On the other hand, we think that if they stick to their deal on February 5, it's a really important stabilizer for the health care system.

In short, the $2 billion is vital to ensuring that we stabilize a traumatized medicare patient.

Ms. Judy Wasylycia-Leis: Going back to SARS for a minute, isn't there a direct correlation between the unnecessary loss of so many lives in the spread of that epidemic and the critical human resources issue you've identified?

I think some of this is now getting documented in Ontario before the special inquiry. But isn't it the case that in fact when you have hallway medicine and an epidemic like this, and someone who's vulnerable is placed in the hallway next to someone who actually has SARS and can't be isolated because of the lack of resources, and there isn't the staff there to deal with it, you end up spreading a disease that could have been avoided? Wouldn't the investment in a human resource strategy, an investment in ending hallway medicine, the investment in terms of shoring the core—isn't that critical in terms of the SARS issue?

That's separate from and above the fact that Canada does not have a national public health strategy. It's really both things, isn't it?

Dr. Sunil Patel: You've identified what we've identified in our briefs both to Naylor and to you: the lack of surge capacity, of the ability to provide, as you say, the hospital beds and the human resource component, whether it be front-line physicians, nurses, or health care workers, and also the capacity to look after them. The public health system in Canada has not been looked at and examined. The emergency response we have includes 40,000-odd cots that are probably pre-war. They have not been looked at. Surely that's not how we want to practise medicine today. Those are the kinds of issues you have identified.

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Mr. William Tholl: I wouldn't want you to leave here thinking we think there are unnecessary deaths because of the lack of investment. That may be the case, and I think Dr. Naylor will look at that. I think it's important to understand two really important points.

One is, on February 23 when that grandmother came back to Toronto, she could have landed any place in Canada. Thank goodness she landed in the flagship of our health care system, because had she not, we might be talking about a whole different scenario. We did contain it, and it was contained relatively well. That was done because of the front-line workers, who went to the wall and were told each ten days, “Just wait another ten days.” On day 51 they finally said, “We've had enough; we need some reinforcements.”

That kicked in another whole set of challenges, which we met, but our point is, that could all have been in the can. That could have all been there on the shelf ready to go, as opposed to trying to invent these things as we went along. That's our key message. But I think we'll leave it to Dr. Naylor to determine whether the number of deaths could have actually been reduced through pre-emptive action.

Ms. Judy Wasylycia-Leis: Fair enough, but would you agree then with the finding of other reputable organizations that in fact no other country in the industrial world is as bereft of a public health strategy as Canada is, and isn't that a factor in what we're talking about?

Mr. William Tholl: Madam Chair, I just came back from the World Medical Association meetings. Let me tell you, everybody is paying attention. This isn't just a wake-up call for Canada; it's a wake-up call for the world. I don't think a whole lot of other countries are in a heck of a lot better position to handle it, sadly to say, than maybe Canada is.

Ms. Judy Wasylycia-Leis: Would I have time for one more question?

The Chair: Your time has elapsed, but we'll allow one more question.

Ms. Judy Wasylycia-Leis: Thank you for your generosity.

I would like to ask Marie Lemay a question, because I think she has identified also the other big dilemma facing us as we approach the next budget, and that is the shortfall in investment in infrastructure and what we can do as a committee in terms of recommendations, given the $60 billion debt in infrastructure.

Despite what the Liberals say in this room, in the last budget there was really only, as far as we've been able to tell, $150 million invested in new money year by year. Don't we have to look much beyond that? I think you said $4 billion a year. To me that seems out of reach. Is there a compromise? I think the municipalities recommended $2 billion a year. What would be your advice for our committee on that front?

Mrs. Marie Lemay: We're talking big numbers no matter what number we use. We're far from the point where we can say we have stabilized it and are actually starting to recover that debt. We're not there. The $4 billion I talked about would be, with all the numbers available, an ideal scenario to be able to start working at reimbursing or solving the issue of the debt of infrastructure.

Now, there is the money issue, definitely, but there is also the other approach I was talking about: changing the way we look at how we invest that money. That is just as important.

There's an investment part. The money needs to be there, obviously. As I was saying in answer to Mr. Paquette, the federal government gets back that money, so it's not a very tough choice to make in terms of investment. But at the same time, it's not just a question of more dollars, of just putting in more money. We have to stop and think about how we want to invest this money.

There are things that have been put in place. As Mr. Wilfert said, creation of the new infrastructure department is a step in the right direction. We now have people in the federal government who can oversee and maybe coordinate some of the activities, because many initiatives have been put forth by different groups at different levels of government over the years, but it's now time to consolidate all that. We need to bring together the players who can make a difference in setting the criteria and developing an action plan for this country to address the infrastructure deficit.

That's why our recommendation and, as I was saying, the exercise we did with the other stakeholders to bring the technology road map together and bring solutions should not be left unheard. We have to move on this. The national round table is definitely one of the issues we should move on, so that we can actually advise properly on investment.

The Chair: Thank you very much.

Thanks to all of you for your excellent briefs, for your presentations, and for answering our questions.

Colleagues, there are no notices out for next week because of the tabling of the report, but as you know, we will be having meetings next week. Just check that.

We are adjourned.