FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 2, 1999

• 0904

[English]

The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this morning.

As you know, the finance committee has been travelling across the country seeking input from Canadians from coast to coast to coast. This is our second-last session, and I must say it's been a great experience. People have really added a great deal of value to the pre-budget consultation process, which of course makes our job very difficult, because there are choices to be made.

This morning we have the pleasure of having with us the following organizations: the Canadian Centre on Substance Abuse, the Canadian Automatic Merchandising Association, the Canadian Professional Sales Association, the Income Protection Working Group, and the Ontario Municipal Employees Retirement System.

• 0905

If I recall correctly, many of you have appeared in past years, so you know how this committee operates. You can take five or maybe seven minutes at the most to make your introductory remarks, and thereafter we will engage in a question-and-answer session.

We will begin with the Canadian Centre on Substance Abuse, Michel Perron, executive director, and Jacques Lecavalier, associate.

Welcome.

Mr. Michel Perron (Executive Director, Canadian Centre on Substance Abuse): Thank you very much, Mr. Chairman.

Mr. Chairman, distinguished members of Parliament, my name is Michel Perron. I was recently appointed by the Governor in Council as chief executive officer of the Canadian Centre on Substance Abuse, commonly known as the CCSA. I'm accompanied by my predecessor, Mr. Jacques Lecavalier. We are here to talk to you about a very serious issue, that being substance abuse in Canada.

I believe the clerk has distributed copies of the presentation I will be referring to.

First I'd like to touch on who we are. The CCSA was created by an act of Parliament in 1988 with all-party support. As an arm's-length agency, the CCSA was created to provide national focus on substance abuse in Canada and to provide visibility and credibility to the field.

The CCSA provides a national clearing house on substance abuse that links 23 organizations across Canada and makes optimum use of the Internet as a means of collecting and disseminating information and achieving knowledge transfer across Canada.

We also provide economy of scale and unity of purpose through our partnerships and networks, such as the Health and Enforcement in Partnership network, the Canadian FAS/FAE Information Service, and the Canadian Community Epidemiology Network on Drug Use. We provide a critical mass for research on emerging substance abuse issues, such as quantifying the social costs of substance abuse. We also provide advice on policy issues for government while acting as a risk management tool for controversial issues.

In sum, we have the ability to get things done quickly and effectively in a non-threatening environment.

Why are we here? The annual cost of substance abuse to Canadians was estimated by the CCSA in 1992 at $18.4 billion—this at a time when drug use was at its lowest level. We know that today youth drug use is back to levels we have not seen since the 1970s and that their attitudes towards drugs generally are softening. For instance, the 1999 Ontario Student Drug Use Survey shows that 66% of high school students drink alcohol; 29% use cannabis, which represents a 100% increase from 1993; and one in ten students has tried a hallucinogen such as LSD. These results are reflected across Canada as well.

Half of the estimated new HIV infections are among heroin and cocaine injection drug users. In fact our study shows that substance abuse is responsible for nearly one in four deaths in Canada and that there is a 60% chance that someone in a family of four will die from substance abuse.

Another cost to society is the loss of our finest minds. The brain drain of our best researchers is very real. Consider the fact that the U.S. government spends six times more on research in Canada than does the Canadian government itself.

At this point you may be asking yourselves what is required. We have a document that was published last year, in 1998, entitled Canada's Drug Strategy, by the Government of Canada. What we see missing from it, when compared with similar documents from other countries, is a clear expression of federal leadership coupled with long-term commitment to address this issue.

Canada requires immediate federal reinvestment in substance abuse programs. We know the provinces and the Federation of Canadian Municipalities want the federal government to take the lead and look forward to working with you in this area, which is why we also need a comprehensive and coordinated national drug strategy.

We've heard that the government is prepared to invest $115 million in the RCMP to address drug trafficking and that the Solicitor General recently announced the creation of a $3 million research unit on substance abuse for the Correctional Service of Canada. We applaud these efforts but note that they need to be part of a greater overall, more visible, coordinated strategic effort that sets out specific goals and objectives.

Why does this challenge lie with the federal government? Because this is a national issue that affects the health and safety of Canadians and the economy of Canada.

Where to invest? Our network of addictions workers, police, community groups, and all levels of government would strongly support a federal government reinvestment in prevention programs, treatment programs that are cost-shared with the provinces, research by investing in the proposed Canadian institute of health research on addictions, knowledge transfers so that lessons learned in one part of Canada can be used by others across the country, and national and international coordination. Finally we propose that you capitalize and build on credible organizations such as the CCSA.

• 0910

Finally, Mr. Chairman, we come to the issue of how much to invest. Rather than giving you a specific figure, we have developed a chart, which is included in the presentation that was handed to members, to provide a means of comparison with three countries with similar socio-economic conditions to our own. You will see by the chart that we've outlined the annual national anti-drug budget for the United States, the United Kingdom, Australia, and Canada. More specifically, we were unable to quantify the annual national budget for Canada simply because there is no known figure for that at this point. We can tell you, however, that the per capita expenditure by the U.S., the United Kingdom, and Australia is reflected in the chart.

What we do know is the national addictions agencies' annual budgets. On the chart you can see that in the United States $1 billion has been budgeted for a national addictions agency very much like the Canadian Centre on Substance Abuse. You can work your way down to the United Kingdom and its per capita investment, and at the bottom is Canada with an annual core budget for the Canadian Centre on Substance Abuse of $575,000, which represents a 2¢ per Canadian investment.

The bottom line, Mr. Chairman, is that the federal government needs to reinvest in the area of substance abuse and to reinstate in the next budget CCSA's original budget allocation of $2 million. Among the competing causes before you, we submit that you view this not as a cost but as an investment that all Canadians will support and understand.

Thank you very much for your attention.

The Chair: Thank you very much, Mr. Perron.

Now we hear from the Canadian Automatic Merchandising Association: Dan Stewart, president; Jean-François Marchand; and Don Braden. Welcome.

Mr. Dan Stewart (President, Canadian Automatic Merchandising Association): Thank you. Good morning, Mr. Chairman, committee members, and other witnesses.

The Canadian Automatic Merchandising Association is a national association representing the vending industry across Canada, and we are really the only national voice of the vending industry in Canada. We have been around since 1953 representing the interests of the industry.

We are humbled to be here among the very important social issue groups appearing before the committee.

We are a business group, however. We are not here to seek funding or subsidies, but rather, compensation for costs resulting from an unintended consequence of a government action to save the Canadian taxpayers hundreds of millions of dollars. In July 2000 the Royal Canadian Mint will be introducing new coins in the nickel, dime, quarter, and fifty cent denominations. These are examples of these new coins. Basically, the mint has developed a process to manufacture these coins at a much lower cost. Rather than the solid alloy coins we now have, these are steel coins that are plated, and they significantly reduce production costs.

The issue the vending industry faces is that our coin mechanisms, of which I have a couple of examples here, validate coins by taking electronic readings off them, but the different metal gives off different readings, so these coins will not be recognized by our machines. This applies, for all intents and purposes, to virtually all of the vending machines in Canada. So our industry is faced with a cost approaching $90 million to upgrade our machines to take these new coins.

The projected savings to the mint are quite substantial. We're talking here about $12.5 million per year. Over the life of the coin of 20 years, that's projected to be $190 million. So there are significant savings.

The point the Canadian Automatic Merchandising Association would like to make is that this cost will not be borne by any sector other than the vending industry, so for the sectors we compete against traditionally, such as the convenient stores, the fast food restaurants, and the cafeterias, these coins will be a totally transparent issue, and they will incur no costs to handle them. However, we will.

We're predominantly made up of small business people, and to us this represents a very significant cost. It could very much hurt our businesses and our employment situation. It's not possible, of course, for us just to raise prices. We have to be competitive, and this is going to put us in a very uncompetitive situation.

• 0915

I think that pretty well sums it up. We've put together a three-point recommendation: compensation should be paid for the direct equipment, hardware, software, and labour costs incurred by an operator in making modifications to coin acceptors required as a result of the changes in the content; the compensation should only relate to costs required by the metal change; and the compensation should be for costs incurred during the period of September 1, 1999, through to December 31, 2000, which represents the timeframe when updates will become available to accept these new coins.

We estimate this package to cap out at around $21 million. I mentioned earlier a cost approaching $90 million. Some of our coin changers will have to be replaced. They are not capable of being upgraded. We feel it's fair and reasonable to seek compensation for a portion of that cost because that replacement will happen because of the metal content change. Those changers would have otherwise given us years of usefulness. So we've allocated a figure of about $80 per machine to upgrade.

At this point I would like to have my colleague, Jean-François Marchand, who is a vending operator in Trois-Rivières, say a few words.

[Translation]

Mr. Jean-François Marchand (Member, Canadian Automatic Merchandising Association): Good morning. My name is Jean-François Marchand and I have a vending machine business. My company owns 650 vending machines. We have estimated the cost per machine at approximately $80. I will let you do the calculations.

We are a small business, with 13 employees. These expenditures will most certainly prevent us from expanding, hiring more people and purchasing new trucks.

For us, this is a real problem. We will also be under the gun time-wise, given the number of machines we have. We will have to convert 650 machines over a nine-month period. We will have to spend several minutes on each one of these machines to make the necessary changes.

A lot of changes have been made to coins over the years, including the launching of $1 and $2 coins. As these new coins were put into circulation, we had to make the necessary updates to our machines. We have known since 1995 that these new coins, with a different metal composition, were going to be introduced, but we were not able to begin making the changes until the end of September given that manufacturers were not ready before. We have nine months left and we want to be ready for July 2000. For all of these reasons we believe it would be only fair to compensate us. Thank you.

[English]

The Chair: Are there any further comments?

Mr. Jean-François Marchand: That's it.

The Chair: Thank you.

Now we hear from the Canadian Professional Sales Association, Terry Ruffel, president. Welcome.

Mr. Terry Ruffel (President, Canadian Professional Sales Association): Thank you, Mr. Chairman, and yes, it's our opportunity to come back again, and we appreciate that.

On behalf of the 32,000 sales professionals comprising the membership of the Canadian Professional Sales Association, thanks for inviting us to share our pre-budget submission with the standing committee. This marks the fifth consecutive year the CPSA has participated in the hearings, and we've found this over the years to be highly useful and highly productive.

Our members represent all sectors of the economy, from the sales and marketing executives of larger corporations to the entrepreneurs who operate small businesses across Canada. Regardless of size, however, our members all know that a key ingredient to sales success is a buoyant economy in which businesses and individual consumers alike have the confidence to purchase goods and services.

When I mention to you that I'm speaking on behalf of our membership, I can make that statement with confidence. As part of our internal pre-budget preparations each year, we conduct a survey of our members, and their views form the basis of our submission. Certainly our views today are a little bit broader in nature than what you've heard.

I want to share two highlights with you of our survey results. First, 93.5% of the respondents stated that a tax reduction would serve the goal of economic stimulation among this group. Almost three-quarters favoured a personal income tax reduction. So there's strong support for tax reduction.

• 0920

Second, only 4.3%, right down to the bottom of them, replied that the surplus should be used to increase spending on national programs and services. The remainder were almost equally split on using surplus to lower the national debt and to reduce tax burden.

I say that, Mr. Chairman, in the context that I know you've heard from other groups, including my associate here. As you've said before in your second-last hearing, certainly there are very valuable causes. That said, we as a business organization believe there are a couple of other priorities first.

Obviously the vast majority of our members do not accept the government's position that only 50% of the surplus should be applied to debt reduction and tax relief. The CPSA has two major reasons for opposing the 50-50 formula.

First, as the standing committee itself has reported, about 27¢ of every dollar of Canadian government revenues goes towards interest on the debt.

Second, in its most recent report on household spending, Statistics Canada indicated that in 1997 personal income taxes made up the largest share of household spending. With personal income taxes at high levels and the cost of servicing the debt consuming 27% of every personal income tax dollar, our members find it difficult to understand why taxes should be redirected to more spending.

The finance minister indicated that the consensus of the private sector forecasts was for real growth to be around 3.6%. Our members are not quite as optimistic about the economic outlook; 41% said the respondents in our survey believed that Canadian consumers lacked confidence to keep the economy healthy next year. There are some valid reasons they feel this way.

In an August report on retail trade, Statistics Canada noted that from the third quarter of 1998 to the second quarter of this year, consumer credit increased by 5% while the rate of personal income advanced by only half of that amount. At the same time, gasoline prices are advancing so rapidly that they are placing considerable pressure on the consumer price index. I guess we're all aware of that now.

If the Bank of Canada's inflation target of 3% is to be maintained, the bank may have little alternative but to increase interest rates, as it has already been forced to do. With Canadians deeply in debt, the prospect of higher interest rates becomes somewhat alarming within the context of economic growth. In addition, higher interest rates will surely have a dampening effect on the residential building industry. I think you heard from our associates in an earlier presentation.

In summary, Mr. Chairman, our pre-budget submission, which we have filed with you among a number of other associations, focuses on some straightforward messages. They are: reduce personal income taxes, continue to attack the debt, resist the temptation of increased program spending, and take steps to ensure the continuation of economic health.

There's one more comment we might make, and that is to do more than pay lip service to tax simplification. We've talked about it a number of times over the years and we've seen very little done in that regard.

I look forward to discussing these positions with you today. Thank you.

The Chair: Thank you very much.

We'll now hear from Sarah Shartal, coordinator of the Income Protection Working Group.

Ms. Sarah Shartal (Coordinator, Income Protection Working Group): We're probably one of the more unusual groups that you'll hear from. The Income Protection Working Group is a group of volunteers, members of all three parties, working out of Toronto. We came together because of rising homelessness in the city of Toronto, asking a very simple question. If we have social safety programs, this sacred trust that we're told about, then why are so many people homeless in the first place?

We've given you a brief, which includes a lot of different things. I'm only going to be referring to the top portion of this.

I'm now bringing some graphs from the city of Toronto. You'll have these in there. As you can see, the rate of increase began to rise dramatically towards the end of 1996 and the beginning of 1997. We now have an estimated 5,000 individuals on the street. Between two and five people a week are dying on our streets. Seventy percent of all homeless people in Toronto have been exposed to tuberculosis.

What we did is complementary to the Golden report. Golden has accepted our report and it is in Golden II, which came out last week. We went down and asked people in the shelters how they had ended up there. What we found was that over 70%, huge numbers, had work histories before they became homeless and that overwhelmingly what had happened is they had lost a job, gotten sick, been hurt at work, or had a family crisis. What was common to all of them was that when that crisis occurred, they had no money, which is why, when we presented these numbers to the Toronto Star, we could see that the connection was very straightforward.

• 0925

No benefits doesn't mean that people go away; it simply means they have no money: no money, no rent; no rent, no housing; and a proportion fall through to homelessness.

What we were looking at to complement our own study findings were the national findings. Working with Statistics Canada, we have found that the two biggest programs whose cuts have affected Toronto are employment insurance and Canada Pension disability.

It's really simple. The single most common reason people gave for ending up homeless was that they lost a job and they had no money. When 76% of all of the people who pay into EI in Toronto get no money—you will also see this number in there—and when half a billion dollars is drained from the pockets of poor people by the EI cuts, it does not take a rocket scientist to understand.

When the people who are poorest get no government help when they lose a job, they are the people who are most likely to lose their housing. When they lose their housing, they have very few resources. Commonly, the scenario is that they go sleep on somebody's couch, but eventually they end up on the street. If we want to end homelessness, yes, we have to have affordable housing, but to be able to afford housing, you have to have an income. Without income, no housing is affordable.

The other side, which has been completely forgotten in the debate, is that for the overwhelming majority of Canadians, unemployment sick benefits are the only sick benefits they have. Of the four people who died last week on the street, two died because they were discharged from hospital. We know, and again it doesn't take rocket science to figure out, that if you get sick, you lose your job and you have no money. Then in addition to no housing, you have no prescription drugs. The fact that unemployment sick benefits are denied people means they get sicker.

In addition, even without cuts to EI, there is something that is really quite extraordinary: EI sick benefits end after 17 weeks. Canada Pension disability, which is the long-term disability plan, doesn't kick in for about four more months.

Some cancer patients have been writing in to the papers asking what they're supposed to do. Unfortunately I didn't bring it; it would have been in your package. So someone who has cancer, someone who has a serious and chronic illness, ends up going on general welfare. Well, unfortunately, in this province general welfare is not enough to pay your rent.

What we're finding with that 70% who are exposed to tuberculosis is that if you trace their histories back, many of them worked. When they began to get sick, they had no money because they didn't qualify for EI. If they don't qualify for sick benefits, they don't pay their rent, they don't eat, they don't buy drugs, and they fall through. If they do qualify for EI, they can't get on Canada Pension because the two programs don't bridge, and they lose in the middle.

What we've given you here is our own brief with our proposals to Canada Pension, which say at a minimum at least bridge between sick benefits and Canada Pension. If not, if you're not prepared to reconsider changes to the whole EI structure, at least please consider changes to the sick benefit portion so that people who get sick get some money.

The thing that actually drove us in part to come here was a letter from Minister Bradshaw, which you'll see two-thirds of the way through. With great respect, we can't start to fix our social programs if we don't acknowledge that there is a relationship between the failure of our social programs and homelessness.

The letter from Minister Bradshaw, while very polite, doesn't acknowledge this. We know that she's not responsible for these programs, but what we need is an acknowledgement that there is a relationship between income support programs, which is why we're called the Income Protection Working Group, and homelessness. At this point, our federal government does not acknowledge that. What we wish to bring to your attention is that the dramatic rise in homelessness in Toronto coincides, at least contemporaneously, with the cuts to unemployment insurance.

John Jagt, who is the head of the shelter system and who actually gave us these statistics as part of the homelessness advisory committee we participate in, has pointed out two things. Not only did it mean that more people in Toronto lost their jobs and had no money, it also meant that people in other parts of Canada who lost their jobs and had no money came in larger numbers to Toronto, and we saw a dramatic rise in homeless young men, which we continue to see.

• 0930

At a really simple level, one of the basic responsibilities of government is to keep citizens from dying. If you are at all interested in keeping citizens from dying and from getting sick with things like tuberculosis, please consider the employment insurance and Canadian pension programs. The rest of it you'll see in the submission—our own history, our own surveys, the kinds of findings we've come up with, and we have included a small amount of the press that's been covered in Toronto.

We are in fact the first group that has actually said, how did people get homeless? Most of the studies, including the Golden report, which is quite wonderful, look at people from the point at which they're homeless. We asked the question, what happened before you became homeless? And what we found was, almost universally, people were not totally disabled when they lost housing. But by the time we interviewed them, somewhere between months and years later, 60% were unemployable. The rise in chronic illnesses, the aggravation of mental health issues, exposure to diseases are really very dramatic.

Thank you.

The Chair: Thank you very much.

We'll now hear from the Ontario Municipal Employees Retirement System: the chair, Susan O'Gorman, and Michael Beswick, senior vice-president, pensions. Welcome.

Ms. Susan O'Gorman (Chair, Ontario Municipal Employees Retirement System): Mr. Chair, honourable members, thank you for this opportunity to speak to you today about how some relatively simple changes in government policy can help ensure that many thousands of Canadians will enjoy a comfortable, secure future.

As a provider of pension services and an institutional investor, we are concerned with maintaining a strong social infrastructure and a strong prosperous economy. As Canada's third-largest pension plan, serving more than 270,000 members, we have more than 35 years of experience in planning for the future. OMERS was established in 1963 to provide pension services to local government employees, and our jointly governed board now manages more than $33 billion in assets on behalf of our members.

I'd like to talk to you today about the three recommendations we submitted to you in our written brief. These concern the policy on surplus limits for pensions, foreign content limits, and the benefit and contribution limits for registered plans. First, I'll address the surplus limits for pension plans.

Current law on pension surpluses hinders the prudent management of pension plans and therefore threatens the future well-being of those who depend on them. The Income Tax Act imposes a 10% limit on pension plan surpluses. At that point the act requires that employer contributions cease. This arbitrary rule means that pension plans, which are in the business of planning for the long term, are forced to make short-term decisions that may be detrimental to the plan. The requirement to cease contributions when the surplus rises above 10% is of particular concern.

OMERS' legislation requires that when employers stop contributing, so must employees. Our projections predict that if the contribution holiday continues until the surplus dips below 10%, then the momentum will be too strong to resist. The funded ratio of the plan will fall below 100% with the ironic result that contribution rates will have to be increased, inflicting hardship on employers and employees.

We therefore urge the government to raise the surplus limit to 20%, which our projections show would be much more workable. Alternatively, legislation should allow Revenue Canada staff to accept a long-term surplus management plan from pension plans that would spell out a course of action to gradually lower the surplus below the limit imposed by the Income Tax Act.

I'd like to turn to our second area of concern now, the foreign content limit.

As you know, the Income Tax Act prohibits more than 20% of the book value of the assets of a registered pension plan or RRSP from being invested in foreign assets. This is known as the foreign property rule and applies to all registered pension plans as well as the Canada Pension Plan. While the FPR may have made sense in the past, it makes no sense today for many reasons. It inhibits the development of a Canadian-based global investment capability and is inconsistent with evolving competition law and the spirit of NAFTA. More specifically, Canada's major institutional investors now have difficulty finding places to invest their dollars as they become disproportionately large in relation to the size of Canada's stock and bond markets. OMERS is one example. The new CPP investment board will soon become another example. With the continuation of the 20% FPR, this may cause unnecessary illiquidity and market impact risks in Canadian financial markets.

• 0935

Canadians are losing income because of the rule. Some have estimated the future annual cost of the FPR at about 0.2% of the Canadian pension fund and mutual-fund-based RRSP assets. This amounts to more than $1 billion a year in pension wealth forfeited by Canadians. In a typical pension plan, this translates to a 3% to 4% decrease in pension benefits or increase in cost.

The FPR prevents Canadian investors from effectively diversifying their pension assets and achieving the best possible return on their investments by forcing them to hold at least 80% of their assets in the securities of a market that represents only 3% to 4% of the global portfolio. At the same time, the rule prevents Canadian pension fund managers from properly carrying out their prime obligation—maximizing return for pension stakeholders.

We therefore urge the government to remove the 20% limit on foreign property held by pension plans and RRSPs. Effective immediately, it should be raised by 2% annual increments for a period of five years until it reaches 30%. The government should then look at eliminating it completely to provide maximum opportunity for institutional and individual investors.

Our third recommendation concerns benefit and contribution limits for registered plans. The current contribution limits for RRSPs and registered pension plans discriminate against hundreds of thousands of middle- and upper-income Canadians by preventing them from contributing enough to maintain their standard of living after retirement. Through their taxes, they pay towards programs like guaranteed income supplement and old age security so that others can afford to retire with a reasonable income. Yet they themselves are denied this opportunity.

The maximum pension payable from a registered pension plan has been frozen for 22 years, and the RRSP deduction limit has not yet reached the $15,500 level. These limits have not kept pace with inflation. Had they been indexed, pension plans would now cover earnings up to $250,000 and would deliver pensions that are equivalent to RRSP contributions of about $45,000 per annum. These limits would be similar to those found in both the U.S.A. and the United Kingdom, where retirement systems and living standards are similar to Canada's.

We believe the government should commit to at least double the RRSP and pension contribution limits to $27,000 per year. It should also increase the defined benefit pension limits from $1,722 to $3,000 per year. These changes would produce a more competitive retirement income tax system that would treat all Canadians fairly, regardless of income.

OMERS has outlined three simple ways the government can revise tax policy to deliver an enhanced quality of life to Canadians. Pension plans and individual savings play a key role in ensuring Canadians continue to prosper into the new millennium, and the federal government must ensure their continued viability.

Thank you.

The Chair: Thank you very much.

We'll now proceed to the question-and-answer session. It will be a seven-minute round starting with Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Ref.): Thank you very much, Mr. Chairman. Thank you to the witnesses for appearing and for their testimony.

I want to start by asking a question of Ms. O'Gorman with respect to the issue of foreign content rules. OMERS represents municipal workers, is that right?

Ms. Susan O'Gorman: Yes, they do.

Mr. Monte Solberg: And if I remember right, a lot of these people, as municipal workers, probably didn't have big incomes when they were working—

Ms. Susan O'Gorman: That's correct.

Mr. Monte Solberg: —so they're obviously very interested in getting the best possible return they can get on their retirement savings.

In the context of what's going on, for instance, in Seattle today, where we have a lot of concern about investment across borders, is it fair to say that the workers you represent are in favour of allowing more investment in markets outside of Canada?

Mr. Michael Beswick (Senior Vice-President, Pensions, Ontario Municipal Employees Retirement System): I think in the first place it's a misnomer to say that we represent the workers in the municipal sector in Ontario. We are trustees on their behalf and we have a fiduciary duty to look after the assets of their pension plan.

• 0940

Mr. Monte Solberg: Sure.

Mr. Michael Beswick: Part of that fiduciary duty is to seek the best return we can get on those assets. Social commentary, social values, social agendas—we try not to get involved with that in the investment of those assets.

Strictly from an economic point of view, this committee in an earlier year, the Senate committee, and all the leading financial commentators in this country have been urging the government for years to raise that foreign limit, and have made very persuasive arguments as to why it should be done, beyond just increasing returns on the money. It provides increasing expertise for Canadian investors in a world that is increasingly global and so on.

So, yes, the social values and the opinions of the municipal workers are important, but we are in a different position from that of elected officials, for example, who represent those members. We are fiduciaries and trustees and must take a different perspective.

Mr. Monte Solberg: Right.

Having said all that, you have people sitting on your board who represent labour, obviously. I'm curious to know, is this never a factor or are they simply concerned about getting the best possible return, or, putting it another way, ensuring that they don't have all their eggs in one basket in Canada's markets, which are obviously a pretty small part of the total world market?

Mr. Michael Beswick: Yes, we do. We have a lay board. We're quite proud of the fact that we can point to many years of effective and efficient operation of that board.

Yes, the board from time to time has very lively debates on such issues as South Africa, Talisman Energy Inc., and various other issues, but I think it's an achievement of the OMERS board that, in the end, the hats are put aside and the board acts as a fiduciary for the good of the whole. I think we can point to many years of operation that exhibit this.

Mr. Monte Solberg: Just for the record, I'm very supportive of what you're proposing. I think it's a good idea. I think it's also important to point out, however, that free trade in investment is helpful to Canadian workers. This is a very good example of it if we can urge the government to move off their 20% foreign property rule.

I'd like to address the issue of the government's 50-50 promise. I'll open this up to anyone who wants to address it.

The government has argued strongly that we need to reinvest—and perhaps Ms. Shartal would agree with this—and put more money into social programs, for instance. I also note, looking at the national accounts of Canada, that program spending in Canada, when you look at the federal and provincial levels of government, is at a record high. It peaked in 1990-91, during the recession, and has stayed at that level in real terms since that time. Despite the fact that unemployment has gone down dramatically from that period, we still have the same level of spending.

On the one hand, we hear from Ms. Shartal that the social safety net is frayed, that people are falling through the net and left on the streets, and on the other hand, we have people arguing that we need to see major tax relief and major debt reduction, things I'm very sympathetic toward, frankly.

I wonder if people would care to address those observations.

As well, maybe the business community can tell us if they have some ideas on solutions to the types of problems Ms. Shartal is talking about.

Ms. Sarah Shartal: The first responsibility of government is to see that its citizens don't die. Cutting aside all of the nonsense, two to five people a week are dying of exposure on the streets of—

Mr. Monte Solberg: They're dying of exposure?

Ms. Sarah Shartal: Yes.

Mr. Monte Solberg: Freezing to death?

Ms. Sarah Shartal: Two to five John Does, as they're called, or street people, die a week. Exposure is one of the issues. Two of the people who died last week had recently been discharged from hospital. When you get discharged from hospital, except for St. Mike's centre, which opened last night, you have no place to go.

Mr. Monte Solberg: Right. Well—

Ms. Sarah Shartal: Just hold on a second. This is not something people are making up. This is not an impression. You can call the coroner's office in Toronto.

• 0945

The paradox is this: While unemployment has gone down, homelessness has risen dramatically from about the same date. We're simply saying that when a social safety net leaves the most vulnerable dying, there is something wrong with it. Are there no poorhouses? Are there no prisons? Or is it us sitting down to ask how we see to it that people don't die on the streets of Toronto?

I'm a new Canadian. When I came to Canada twenty years ago, I came from a country with a great many beggars. I loved civility. Cars went up the street on one side, down the other, and we didn't have beggars. There is not a street corner in Toronto now without beggars.

The first responsibility of government is to see that its people don't die. When 70% of the street people are exposed to tuberculosis; when people are dying and showing up as John Does on the street when we know they tried to get in; and when we're at 100% capacity in the shelter structure, we can't keep creating shelter beds. We have to stop creating homelessness.

Mr. Monte Solberg: I think it's important to get to the bottom of the figures, though, because if we don't know, for instance, how people are dying, then we can't develop appropriate solutions.

Ms. Sarah Shartal: We know they are dying. Actually, those things are known. You can call the coroner's office. They are dying from combined diseases and exposure. They are not dying because of murder; they are dying of disease and exposure.

We find people dead in alleys. That is the overwhelming pattern.

The graph I showed you actually comes out of hostel services. It doesn't come out of any other agency. We have had a dramatic rise in the number of people sleeping in hostel beds and we know we have another 2,000 people in the parks. Those aren't made-up numbers. Those people weren't there ten years ago. They are there now.

If you don't want to have 4,000 people sleeping in the streets in another two or three years... because the numbers keep compounding exponentially. You'll see that on these graphs.

We're not a special interest group in this. Members of our own committee come from all three parties. We just want to know why, if we have a social safety net, so many people are on the street.

Mr. Terry Ruffel: From the business community perspective... and obviously it's tough to respond after that. I also live in Toronto, and I'm also aware, as I work in downtown Toronto, of the problem. They're real concerns.

I have a couple of observations. I guess part of our concern is what is at risk here if we don't deal with our national debt. We have a mortgage on the country. It's rather substantial. If interest rates perk up again, I think all of the progress we've made in the years of getting the deficit under control will be at risk.

We heard from the committee and noted in our own submission that 27% of your budget goes toward interest payments, and to my mind, that is a crime. If we pay down the mortgage and eliminate that, I think some of the interest payments and some of the budgetary spending that could be freed up would go to these causes, including this cause over here.

So I really do believe it is a crime that we're paying interest payments like that and that a substantial part of the budget and a substantial part of what Canadians pay in their personal taxes goes toward interest payments.

If we get our national debt under control, pay the mortgage down—and I don't believe $3 billion is going to do it if the number is $580 billion or $590 billion—then I really think we could start to do that. If we don't address the national debt, then I think other things are at risk. So I do think there's an opportunity to redirect funds.

I also heard from Ms. Shartal earlier that programs at work would help. She also raised the issue of the EI funds. I don't think the EI fund should be a surplus accumulation fund. I've never heard of that. Operating from an insurance term, if we pay the premiums sufficient to do whatever causes and to protect employment, then as our other witness was saying earlier, there are other needs for it too.

• 0950

What if you had a hard look at yourself and said “Are we in the surplus accumulation business?” Let's get the premiums sized down to what the purpose of the fund is, the real purpose. And I'm hearing other evidence that other “real purposes” could be involved.

The Chair: Mr. Ruffel, I hear what you're saying about the debt, and that's a very important issue, but you're not suggesting the debt issue and taking care of homeless people are mutually exclusive?

Mr. Terry Ruffel: No, they aren't. If you pay down the debt and free up interest payments, there's a tremendous opportunity to do other things

The Chair: But for the immediate problem we face, do we wait until the debt is... In other words, how many people are going to be found in the alleys of Toronto?

Mr. Terry Ruffel: That's a tough decision. I also heard that programs at work would help, and I also heard about fixing the EI fund and the purpose of the EI fund and sizing it properly. There are gaps in there. So there are solutions, immediate solutions. I don't know what the answers are, but accumulating surplus within the fund is not the right answer. Things can be done immediately.

The Chair: Okay, thanks.

Monsieur Loubier.

[Translation]

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): Ms. Shartal, you said that every day between two and five people die...

Mrs. Sarah Shartal: No, not every day; two to five persons die every week.

[English]

We know from the coroner's office that before the snow, we average between two and five John Does showing up a week—homeless people. The John Does are the people who can't be identified. In fact one of the ones who died, I think it was three weeks ago—we'd been trying to get a room for him, but the shelters are at 100% capacity, and during the night, when we didn't get a room for him, he died.

[Translation]

Mr. Yvan Loubier: I am trying to tie this in with what Mr. Terry Ruffel was saying earlier. Let's say we will need 25 to 30 years to pay back the debt. If a minimum of two people die every week and you multiply that by 52, it starts to amount to a lot of people.

[English]

Ms. Sarah Shartal: In one city. By the way, the same numbers are repeated in most of the major cities, because there has been a differential impact to the major cities in the unemployment insurance cuts and in the number of people coming looking for work.

We are a rich country. This is not a third world country. I come from a third world country, and I admit that I am shocked. We have shantytowns in Toronto like in Sao Paulo, Brazil. This country is rich enough to take care of its most vulnerable.

It took me seven months to get benefits for somebody who was both severely physically disabled and schizophrenic. I have Canada Pension decisions coming back saying “Yes, your doctor says you're disabled, but he never sent you for a CAT scan. Therefore you can't possibly be disabled enough to get Canada Pension.” The guy has $100 a month without CPP. You don't pay the rent on that.

The point of EI and the point of Canada Pension is to pay the rent. If people pay into it, they should be able to collect out of it. It's not complicated. I wouldn't have Tory members of church congregations working on this project if it weren't that simple. And I mean, really, I never thought I'd be working so closely with the Salvation Army.

It's really simple. We want people who lose their jobs to have enough money to pay their rent. We want people who get sick to have sick benefits. That's part of unemployment insurance. We want women who give birth to be able to collect maternity leave. It's not a complicated question. Homelessness is about no money; it's not about the buildings.

[Translation]

Mr. Yvan Loubier: Mr. Ruffel, you said it was necessary to reduce employment insurance premiums. As you mentioned, this fund is accumulating an enormous surplus, as high as $6 or $7 billion a year. In view of what Mrs. Shartal said earlier and since only 42% of unemployed workers who pay the premiums are entitled to benefits, don't you think that after four consecutive years of premium cuts for employers, in particular, the time has come to fix the shortcomings of the system in order to no more have only 42% of the unemployed getting benefits and to bring that figure to at least 75 to 80% of all people without a job?

As Mrs. Shartal mentioned, people fall through the gaps right now. They get marginalized. Their benefits are cut off and very often they are not eligible to welfare. They fall into poverty before getting back into the work force and this is why we have such homelessness. There is one thing we see more and more in Toronto and Montreal: it is not only individuals who are homeless, whole families are sleeping in the streets. What do you think of this?

• 0955

[English]

Mr. Terry Ruffel: Obviously I share your concerns. My only comment is to size the premium versus the benefits you're paying out. My understanding is now there's a huge surplus within the fund. If you want to expand your programs and cover some of the obvious needs, I don't know what the costs of that are. I think what you have to do, from a government perspective in your role, is to make sure the premiums cover the benefits.

To have a huge surplus accumulating in there going into consolidated revenues is not the proper purpose of the EI fund. So it's the role of government to figure out what should be covered and what limits there should be. I'm not going to tell you today whether these needs are valid. I'm sure there are others. But I would think if you at least get the premiums matched to the coverage and then cap the surplus, I would presume there's more than enough to cover the valid uses.

My only comment is, yes, there are lots of uses, but don't go into the surplus accumulation business. That's not right for government.

[Translation]

Mr. Yvan Loubier: My last question is for Mr. Perron or Mr. Lecavalier or both.

As you know, the day before yesterday, the Bloc Québécois moved a motion in the House of Commons asking that an order of reference be given to the Justice committee to look into better ways to fight organized crime. One of the most lucrative activities of organized crime is producing and distributing illegal drugs. So, over the coming year, the Justice committee will look at this issue, among others, which is in my view the major one. If you clip the wings of organized crime in the area of drugs, you cut it down overall. I have one question for you since you deal extensively with drug dependency. It is extremely difficult to get exact and recent figures on the evolution of drug use: drug trafficking, multiple addictions, age of new addicts. Would it be possible over the coming few months for an organization like yours to compile data on the evolution of this problem? We hear everywhere that heroine addicts are becoming younger and younger—they talk about 12 or 13 year old children—, but we are unable to put any figures on this in order to show the importance of taking effective action at this level and to invest the required amounts to do so. Would you have these statistics or do you plan to compile those statistics over the coming month? It will be of fundamental importance next year.

Mr. Michel Perron: Mr. Loubier, I will start answering your question and I will ask my colleague to jump in if he wants.

We fully support the emphasis on organized crime in Canada. However, we also recognize, as do the police who are our partners in this struggle, that in order to fight against the problem of addiction in Canada, we need a balanced approach.

We will need to focus on drug trafficking, as you envision. We will also need to anticipate the needs of addicts and to put into place better prevention and research programs, modelled on those that are recognized as the most effective.

That being said, the issue of statistics you raise is very relevant. It is a very good question. This is one thing on which we would like to focus next year. We have at the present time a network called the Canadian Community Epidemiology Network on Drug Use. It is a rather long title.

Mr. Yvan Loubier: You can spell it out later.

Mr. Michel Perron: I will get for you the French title. It is a national network of 14 centres located throughout the country, where we have various professional groups, coroners, people who work in the area of addiction, police forces and health services in order to get a handle on the evolution of addiction in our communities. What are the new drugs? How powerful and how pure are these drugs?

• 1000

It is mainly a voluntary community network. However the CCSA, our organization, is the overseer. We try to coordinate this network of 14 groups. If we want to have good policies in the area of drug use, in order to know where to invest our money, it is absolutely essential to invest in this network.

I fully support your suggestion. This network which is presently in place but which is very fragile since we lack funding, could do a lot to provide the statistics we require in order to determine where to invest.

Mr. Yvan Loubier: You understand that if we want to adopt a balanced approach between repression, changes to the Criminal Code and prevention, we require this type of statistics. We may have an intuitive knowledge of the problem, but we also need to measure it correctly in order to take appropriate measures.

I would like to ask a final question if the Chairman will let me.

You say in your brief that the level of drug use among youth is back to 1970 levels and that attitudes toward drugs are softening. I quite agree with you, but this is a rather misleading statistic. Even if the level of use is the same as in the 1970s, what was being consumed back then was rather benign pot, containing 1 or 2% THC, while the cannabis being grown today in the fields of Quebec and Ontario especially contains 7% THC, seven times more. It can go as high as 30% in hydroponic cultures.

So when you talk about the level of drug use, I believe you, but this leaves out one essential piece of information. What drugs are young people using and why is legalization a jump into the dark? Is it because of this? Today, so-called soft drugs have become hard drugs. Tell me what you think, but if we legalize so-called soft drugs, which are not soft any more, like cannabis, prices will drop and we surely will shut out organized crime out of this lucrative activity. However, what organized crime will lose in terms of price, it will get back in terms of quantities sold. If the price of cannabis drops, the price of heroine and cocaine will drop also, because these drugs have almost become substitutes.

What do you think of this analysis? In your view, should we look at legalizing so-called soft drugs or do you completely reject this in view of your experience with substance abuse?

Mr. Michel Perron: First of all, I fully agree with you on the present level of THC in cannabis. We are seeing very high rates. Cannabis is being exported from British Columbia to the United States and is being exchanged pound for pound for cocaine, which fully confirms what you say.

We also have a problem. There are many reasons why more and more young people become drug users these days. It is because we have a more liberal attitude, because drugs are becoming banalized in Canada, which does not take into account the strength and the purity of these drugs, as you mentioned.

The term "legalization" can mean many different things to different people. Leaving aside the needs of addicts, which are an essential part of this discussion, the concept of legalization is mainly a red herring, in my view, that plays well in the media, while we should first of all invest in things we know and which will benefit the addicts. Supply is only one side of the coin. There are also social problems which lead people to use drugs. We must look at this in the context of public health and not imprisonment.

In my view, the priority should not necessarily be to change the law, but rather to invest in prevention, in treatment and research programs proven to be effective. The present law leaves us a lot of room to manoeuvre. It allows us to do all sorts of things.

Mr. Yvan Loubier: I was talking about changing the Criminal Code in order to deal with criminals and not with addicts.

Mr. Michel Perron: I beg your pardon? I didn't hear.

• 1005

Mr. Yvan Loubier: When I talked about legislative changes I meant changes to fight against criminals, not addicts.

Mr. Michel Perron: We are on the same wavelength.

Mr. Yvan Loubier: Yes, thank you, Mr. Chairman.

Mr. Michel Perron: Thank you.

The Chairman: Thank you, Mr. Loubier.

[English]

Mr. Szabo.

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

This is for the vending machine operators. When the toonie came in, there were similar problems. I have a constituent who is a vendor with only a small number of machines. The indictment at that time, though, was that the industry had been catering to the majors like the Coca-Colas and all the other major vending players and had not adequately represented the interests of the small business, the owner-operated type of arrangement. Is that still the case? Are those small players still being ignored when it comes to cooperating with the federal government on changes to coinage?

Mr. Dan Stewart: I'm not sure I fully understand your question, but if you're indicating that the change to the $2 coin was made to accommodate big business or big vending operators, I think that's a misnomer. The introduction of the $2 coin was done for one simple reason: cost reduction.

The vending industry lobbied for the dollar coin back in the early mid-1980s, I would say. We lobbied the government because we felt the need for that dollar coin as our prices approached a dollar. Part of our lobbying campaign was to point out to the government the cost savings of producing the dollar denomination in a coin, which lasts 20 years, versus a bill, which has an average lifespan of six months. That dollar coin initiative, which was introduced in 1987, I guess, produced cost savings to the government of $160 million over 20 years.

The $2 coin initiative was not lobbied for by the vending industry, large or small. It was born purely of the government's desire to save additional costs. By replacing the $2 bill with the $2 coin, the government saves $12.7 million every year, contributing another $254 million over 20 years to savings.

The metal content issue was the same reasoning. By reducing the cost of the coins, we've contributed another $190 million over 20 years, plus a potential additional $100 million because these coins are very marketable now. The Royal Canadian Mint has done a terrific job in developing a coin that they can market around the world.

The point I'd like to make is that sitting here today and listening to these witnesses, and I'm sure the witnesses that the committee hears throughout its travels... There are a lot of just causes out there, people needing funding, needing money. As I said earlier, we don't come before the committee with our hand out. We understand that any responsible government has to go through a budget process, and this committee is a key part of that. Decisions have to be made—and not always easy ones—that balance revenue-creating initiatives against cost-reduction initiatives.

What we'd like to point out here is that the total coinage initiatives over the last 12 years or so have created a savings, over 20 years, of $784 million to the government, by the government's own estimates.

The vending industry has spent a substantial amount of money to accommodate those changes. We have never appeared before the finance committee or before the government seeking any compensation for the cost of that, because it could be argued that there was some benefit.

This change is different because there is absolutely no benefit, and it puts us in an uncompetitive position. We're actually looking at it like a small investment on the government's part to save $784 million over 20 years; that money can be put to very good use by some of the other witnesses that the committee meets.

Mr. Paul Szabo: Thanks very much.

Mr. Perron, I was pleased that you mentioned fetal alcohol syndrome as one of the areas we have to be aware of in terms of substance abuse issues. I am aware that something like 5% of birth defects are FAS related. The Canadian Paediatric Society and Health Canada have a joint statement on consumption of alcohol during pregnancy, which is, basically, “abstain”.

• 1010

The Minister of Justice recently spoke in Edmonton to an annual meeting of teachers' associations, I think. She made the statement that about 50% of our incarcerated youth are FAS, which tells me that there's something happening out there in terms of awareness.

I know that your work involves statistics, etc. Are you aware of any work that has been done in terms of the lifelong costs in regard to FAS children?

Mr. Michel Perron: I'll have my colleague answer that question, if he may.

Mr. Paul Szabo: Sure.

Mr. Jacques Lecavalier (Associate, Canadian Centre on Substance Abuse): Thank you, Mr. Szabo.

As we all know, the statistics regarding FAS are very difficult to obtain, because it's difficult to have a formal diagnosis of fetal alcohol syndrome. That's one of the issues. Certainly when the Canadian Centre on Substance Abuse, along with a number of other organizations in Canada, estimated the cost of substance abuse, that was one of the issues that was tackled. Unfortunately, we use very conservative numbers because that's all we have to go by.

At this time we don't have an overall figure for Canada, but certainly there have been studies conducted on individuals in terms of a lifetime cost. The estimate that had been made in the past was in the millions of dollars per individual.

Mr. Michel Perron: If I may add something, Mr. Szabo, also one of the major issues, as you well know, at the centre with our fetal alcohol syndrome information service, which is jointly funded with industry, is to get out the prevention message. This is a situation that is 100% entirely preventable, one which, as you suggest, has long-term consequences and which very much affects the youth and the future of our country, so certainly we fully support...

Mr. Paul Szabo: It's very appropriate, certainly with regard to the growing concern about healthy outcomes of children and the kind of attention that's being paid to the children's agenda.

Lastly, Mr. Chairman, I have a point for Sarah.

Thank you for your passion. It's good. I know that people are sometimes frustrated by what's going on, but the Minister of Labour, who is responsible for at least carrying the file on homelessness, has consulted very widely. There are some realities that have to be dealt with. Toronto is not reflective of Canada. Toronto is reflective of a major urban centre.

Ms. Sarah Shartal: Absolutely. Of course it is.

Mr. Paul Szabo: The facts out of the Golden report, Golden I—

Ms. Sarah Shartal: Golden II came out last week.

Mr. Paul Szabo: Yes. Golden I didn't include a summary chart of who in fact are the homeless. I've forgotten the numbers. Either 42% or 47% of the homeless in Toronto don't come from Toronto. They've migrated from right across Canada, quite frankly. Thirty-five percent, according to Golden, are those who have some sort of mental illness.

Ms. Sarah Shartal: Thirty-five percent of the men and seventy-five percent of the women.

A voice: Seventy-five percent?

Mr. Paul Szabo: Yes, it's very high.

Ms. Sarah Shartal: Seventy-five percent of the women.

Mr. Paul Szabo: We all know that Mike Harris has closed about ten mental health units since his government was first—

A voice: He's your premier—

Mr. Paul Szabo: Well, he's not my... well, he is. I live in that province, unfortunately.

Ms. Sarah Shartal: Yes.

Mr. Paul Szabo: The other one that got me, which I wanted to ask you about because my interest is primarily children and youth, is that Golden identified that about 28% of the homeless in Toronto were youths who had been alienated from their families. Of those, 70% had experienced physical or sexual abuse. They're the ones who really are very mobile and do migrate. In fact this is the urban magnet problem: if you build it, they will come. Let me see if we can't focus on those youths.

Ms. Sarah Shartal: Okay.

Mr. Paul Szabo: We have those young people, many of whom have had no work attachment.

Ms. Sarah Shartal: That's a different set of issues.

I would turn your attention to looking at families, because many of them are coming out of the family system. I don't have the huge chart of the family system, but you have a small chart of the family system. It's in the package, and it also comes from hostel services. What we see is a dramatic increase in the number of families on the street after 1997. If you look at Golden II, which came out last week, one of the primary sources that Golden identifies as forcing families onto the streets is cuts to employment insurance.

• 1015

It's really simple. Just let me get back to the way it deals with kids.

Mr. Paul Szabo: I'm sorry, but you've made me ask this question. In your statement, you said 76% of the people paying into the EI system do not qualify for benefits.

Ms. Sarah Shartal: These are people who pay into it. We are only dealing with these people.

Mr. Paul Szabo: But your statement said that 76% of everybody working—

Ms. Sarah Shartal: Everybody who works and pays in doesn't collect, that's right.

Mr. Paul Szabo: —don't collect.

Ms. Sarah Shartal: They can't collect benefits.

Mr. Paul Szabo: No, you said “do not qualify”.

Ms. Sarah Shartal: They do not qualify for benefits because they don't have enough hours.

Mr. Paul Szabo: That means only 24% of all employed people in Canada—

Ms. Sarah Shartal: This is exclusively Toronto.

Mr. Paul Szabo: Okay, then what this says is that only 24% of all employed people in Toronto have more than 700 hours of work history in the past year.

Ms. Sarah Shartal: You've got it. Bingo.

Mr. Paul Szabo: It's just not true.

Ms. Sarah Shartal: The numbers of people who pay in—

Mr. Paul Szabo: I think if you—

Ms. Sarah Shartal: I have actually checked these with StatsCan, and it is in fact true.

Mr. Paul Szabo: All right, I would simply ask you to check again.

Ms. Carolyn Bennett (St. Paul's, Lib.): Isn't that for the unemployed?

Ms. Sarah Shartal: No.

Mr. Paul Szabo: This is just not right.

Ms. Sarah Shartal: What's happening is that there are a number of issues here in terms of who's covered and who's not covered. What we find in Toronto is the dramatic rise of part-time work. We have a number of categories of people—women, youth, contract workers, day workers—for whom the growth in part-time work in Toronto is enormous, so what we're seeing—

Mr. Paul Szabo: The fact is that the vast majority of people who pay into EI never collect in their lives, and many businesses and industries and sectors collect far more out of the system than they ever put in.

Ms. Sarah Shartal: But the point here, and what we found—and I think the thing that we complement Golden with, and which was not asked before when we went down to the shelters—was what had preceded the loss of housing. The single most common answer given when we went to the shelters and asked why they ended up there—because we work from the bottom up in our work—was that they lost a job and had no money.

Mr. Paul Szabo: My time has run out, but I want to plant something with you. I want to ask you whether or not you would also help to bring to the attention of people you deal with that if 35% are mentally ill, if 28% are youth, if 18% are aboriginals off-reserve, thus accounting for 90% of the homeless in Toronto—

Ms. Sarah Shartal: No, because those categories overlap.

Mr. Paul Szabo: No, that's right out of the Golden report.

Ms. Sarah Shartal: I thought you were adding them up. I'm sorry.

Mr. Paul Szabo: If I look at those people and characterize them, I would characterize them as people whom no one loves. They have no attachments. There's nobody in their entire family tree, whatever it might be, who cares enough about them to get them out of the situation that you've described to us today. I would therefore raise with you that the social issue here has to do with family breakdown and family dysfunction. In over 90% of the cases of homelessness in Toronto, it has to do with the fact that there's not a family member is this world who cares enough about them to take care of them.

Ms. Sarah Shartal: It's quite possible, but the other side of it is that poor people tend to come from poor families. One of the things that we found overwhelmingly when doing our own research in the work we've done in the shelters is that it's really about money in the sense that people didn't go directly from losing a job, to having no benefits, to the street. The pattern tended to be that people slept on people's couches, stayed with friends, or stayed with relatives for a while. At some point in this, the family system breaks down because people can't keep that many people in a house indefinitely.

I'm not entirely sure how much that works. What I saw mostly, and what I continue to see in my own work, is that it's poor people who don't have the resources to cover that many people. I think this is different from the kids on the street.

Mr. Paul Szabo: I'm just suggesting that many of the solutions to homelessness are to deal with it after you have the problem, but there's very little attention given to how to prevent it before it happens.

Ms. Sarah Shartal: I have no question there. We have more battered women in the municipal shelter system than we do in the entire provincially funded shelters for battered women, absolutely.

• 1020

The point is that we have people on the street. These processes are occurring, and they are social. We're not going to fix the families from that standpoint. All we're saying is that people who lose work or get sick should have some money to pay the rent.

Mr. Paul Szabo: Thank you, Mr. Chairman.

The Chair: I'll just piggyback on Mr. Szabo's questions.

What percentage of the individuals to whom you're referring would you term “unemployable”?

Ms. Sarah Shartal: In our definition of “unemployable”, we're going to be including a larger study. We work from the people who are currently on the street, from that 5,000. First, our standard was whether or not we could expect a person to hand out flyers at the corner of a major intersection in Toronto every Tuesday. Did we think this person could commit to be there every Tuesday to hand out flyers, at a really minimal level? We found that 60% of the people we interviewed couldn't.

The Chair: They could not.

Ms. Sarah Shartal: They could not.

Now, what we found was that they were probably not unemployable when they lost housing. There are two points in time here. When they lose housing, they've lost a job at which they had been working, or they're sick but they're not chronically sick. The point is that by the time they end up on the street—and for the people we interviewed, this was between three months to three years later—the process of being on the street makes physical, emotional and cognitive problems worse.

The Chair: If I could, I want to get to the bottom of this. How do we help these individuals eventually? You're saying 40% may actually one day get a job and support themselves.

Ms. Sarah Shartal: I don't know. I'm just saying they could in the right circumstance. I can't even get that far, because I don't know what kinds of jobs are created.

The Chair: Well, you know that 60%—

Ms. Sarah Shartal: Are unemployable, as in nobody could hire them to hand out flyers on the corner of University and Dundas every Tuesday.

Ms. Carolyn Bennett: So how could the EI system and the CPP system help them?

Ms. Sarah Shartal: First, let's start with CPP.

Ms. Carolyn Bennett: But you have to have paid into CPP.

Ms. Sarah Shartal: Yes, but the point is that these people paid into it in the past. You see them after they've been on the street for three months to six months. They don't start like that. The easier ones for people to see are those like cancer patients, chronic asthmatics, or people with progressive disabilities. If you don't get covered, you have no money and you fall through to the street.

The fact is that with cognitive and psychological health issues, people may be functioning fairly well as long as they have some stability around them. The moment they end up on the street, though, mental health issues get worse.

Ms. Carolyn Bennett: Okay, I want to go back a little.

Ms. Sarah Shartal: We're actually doing retroactive adjudication on CPP right now.

Ms. Carolyn Bennett: I chair the subcommittee on persons with disabilities, and getting that tidied up is a huge interest of ours.

Ms. Sarah Shartal: We want CPP back to what it used to be. It's odd that the last set of cuts made the old system look good, which is something I never thought would happen.

Ms. Carolyn Bennett: My issue with your presentation is that you've written off the welfare system.

Ms. Sarah Shartal: No.

Ms. Carolyn Bennett: You have actually said...

I'm a family doctor. My experience was that there were people who were working, they lost their jobs, they ended up on EI, and then they ran out their EI. Even the people who qualified ran out their EI, because it only works for 17 weeks. But they were still in the apartment that they were in when they were working, and there was no affordable housing for them. There were no choices for them because there was no cheaper place to live. They then started getting depressed, they started drinking, and they started getting into trouble. But there were 30% cuts to welfare. I had a patient for whom we were paying her rent at source after the welfare cuts, because she'd had a previous drug addiction. She had $25 left to live on each month.

Ms. Sarah Shartal: Actually, more of our work is provincial, because the easiest system to access is in fact the Ontario disability support plan, oddly enough. The hardest one is Canada Pension.

We started as a citizens' group. All we asked was why we have social safety programs but we also still have so many people homeless. What really struck us when we started this work was the order of magnitude. We were shocked by it.

When you look at the number of people who don't qualify for EI when they lose work, in Toronto it is enormous. When we're looking at trying to stop the slide into homelessness, we have this window in which we can pick people up. In that window, when they're still employable and recoverable, if they get some support, they don't get as chronically sick and, in layman's terms, as crazy and depressed and suicidal as they do once they've lost housing, had their lives fall apart, and been on the street. Now, if we picked up more of the people on the front end, we'd have fewer people on the back end, and in fact Golden II, which came out last week, supports these findings.

• 1025

[Editor's Note: Inaudible]

Ms. Carolyn Bennett: ...written off. You said, well, of course nobody can live on welfare.

Ms. Sarah Shartal: No, you can't live on OW. You could live on ODSP.

The Chair: Dr. Bennett, I think Mr. Loubier wants to ask a question here.

Ms. Sarah Shartal: I'd just like to remind you that we're here presenting on federal programs. We spend a great deal of time fighting with provincial programs, but here we are focusing on the section of the problem that is federal. I am not writing off welfare. But the responsibility of this government is to federal programs.

What we forget is that EI is both employment insurance and our sick benefit plan. For the overwhelming majority of the people of Canada, it is the only benefit plan to cover people with short-term sickness and chronic disability—people who work. I mean, just think about your story. Why is there that gap between the end of EI and the beginning Canada Pension? There's an interesting case study in here.

Ms. Carolyn Bennett: This wasn't somebody who was sick.

Ms. Sarah Shartal: Oh.

Ms. Carolyn Bennett: This was somebody who lost his job.

Ms. Sarah Shartal: Absolutely. The problem of the long-term unemployed is a major issue, and our social programs, in my own opinion, don't address it.

The Chair: We'll go on to Mr. Loubier.

Ms. Sarah Shartal: I'm sorry.

[Translation]

Mr. Yvan Loubier: For your information, Mr. Chairman, we had last week the singers of Accueil Bonneau, who are all homeless people. We had a chance to talk with these people all morning. We even had lunch with some representatives of this choir. When you ask these people some questions, it is amazing how they came to be homeless. You really start to see human frailty. It is striking. Sometimes, they simply had in their life a psychological shock that made them completely lose touch with reality, or else they lost their job. Two among the twelve that were there applied for employment insurance but were denied because the criteria had changed or because they didn't have enough hours. These people had already undergone quite a shock. It does not take much for some people to lose ground. So they tried for welfare, but they were not eligible. They were totally lost in the face of the bureaucratic complexity of our programs. They were distressed and this is how it started. They started drinking. It does not take much time. It only takes a few weeks to become addicted to something.

Multiple addictions are even worse. Some sniff glue. I have seen them standing in line at Accueil Bonneau, in Montreal. I worked for two years next to Accueil Bonneau. It is extraordinary. When you sniff glue, it does not take long: after six months, you have become completely crazy. As they say, people lose their marbles.

These people are left to themselves. There is a lack of resources. There are street workers who do wonderful work, but there is a lack of resources for information, for placement, for social housing, for example, which require investment.

I have great respect for Mrs. Bradshaw, but I would like her to tell us the results of her consultations and to say: "Well, here is how one falls into homelessness, here are the needs, and here is where we, as governments, are lacking".

[English]

Ms. Sarah Shartal: I started working on homelessness because I had been on the supreme court of a provincial system for many, many years. If I had to get up every morning between 6 and 7 o'clock, stand around all day without enough money to get coffee, walk all across the city to get food, stand in line from about 3 o'clock in the afternoon to see if I might be able to get a bed for the night, or a mat for the night, and if this wasn't one or two days, if this was what I expected for the rest of my life, number one, I wouldn't have time to look for work. But I would probably get severely depressed. I am always astonished at anybody I come in contact with who isn't. It's not fragility, it is just that it is so unbearably miserable.

The Chair: Thank you Ms. Shartal. Thank you, Mr. Loubier.

Next we have Mr. Nystrom, followed by Mr. Brison, then we'll go back to Dr. Bennett.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): I have a couple of follow-ups. As you were saying, some of these people are working full-time just surviving and existing, going from place to place, and it's amazing that more people aren't even more depressed than they are.

I have a couple of questions to help understand the situation a bit better. Of the people who are homeless, what percentage have been there basically all of their lives? You mentioned a lot of kids that come into it, and mentally ill people. Are there some people who are just basically on the street all the time?

• 1030

Secondly, I come from Saskatchewan, and we have some homeless people there too. But is there a radically different profile outside of Toronto? We have a lot of aboriginal people in the city centre in Regina and Saskatoon, but is there a radically different profile in other parts of the country, or does it radically differ province to province? Vancouver might be a different game, because of the warm climate attracting people there. Montreal, of course, is the centre of the francophone part of our country. Maybe you could just give us a bit more information to try to complete the picture.

Ms. Sarah Shartal: First, a very small number of people have been on the street all their lives. Overwhelmingly, people are on the street for a number of years. There are people who have been on the street all their lives and never worked, but they are a small number relative to the total. We found in our own initial phase of research that over 70% of the people we interviewed in the shelters and drop-ins had work histories—that they could remember. I mean, the 25%... it's not that they don't have work histories, it just that sometimes we can't figure out what they're saying to us at all, so we write them off in the 25%. But at least 70% had work histories.

Secondly, I don't know enough about any place outside of Toronto to tell you. It would be irresponsible. I can speculate, but it would be speculation and based on my own particular centre of the world biases. I can't really tell you anything else.

All I can tell you is that I have seen the EI numbers. Toronto, Vancouver, and Montreal have about the same level of denials on EI.

That's the answer to it. This brief is about the federal programs. It's depressing when under our Tory government in Ontario it is easier to get Ontario disability support than it is to get Canada Pension disability. Canada Pension disability is the worst. My own doctor complains to me about lay adjudicators calling her from Ottawa because she's written in that somebody is unemployable, and they say, but you never hospitalized them, so how can they be so unemployable? This didn't happen 10 years ago.

The Chair: But why do you say that? Have you done a comparative analysis of... I guess you're referring to around 1988-89.

Ms. Sarah Shartal: No. Actually, I've been representing people for almost 20 years, and all of us have seen the same problems with Canada Pension. You'll see in the expanded brief—we did not go into it today—that one of the major changes in the Canada Pension system has been the escalation of the demands for elaborate medical documentation. They require somebody now... it's almost that if you don't have a specialist's report and you don't have a CAT scan, by definition you're not disabled enough. Well, someone whose doctor doesn't want to send them, or who doesn't have disabilities that qualify for that, who lives in a rural area, who doesn't articulate well, or who's poor often doesn't get these things. Canada Pension has dramatically changed.

The Chair: The reason I say this is because in 1988-89, around that time—just, ironically enough, post free trade—there was an escalation of CPP. When you see it on a chart, all of a sudden in 1988-89 it goes up. If I were really cynical, I'd say that probably would have been Mr. Mulroney's workers' adjustment program.

Ms. Sarah Shartal: What we looked at was... One was the beginning of the recession, with increasing numbers of older people who were laid off. We have done work that shows that Canada Pension should have been increasing because of the increasing age of our population. We know that the physical and mental health disabilities that qualify under Canada Pension are more common. The older we get, the more fragile we are. And what we have found is that in fact the numbers have gone down in a period when, by our demographics, they should have been going up. That's not even in our statistics. All we did was say these are the numbers where they went down. This is the proportion for Toronto.

The Chair: Mr. Brison.

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

I have a couple of quick points, Ms. Shartal.

I represent a rural Nova Scotia riding, and the issues relative to Canada Pension Plan disability are, I believe, even more pervasive in the riding.

Ms. Sarah Shartal: They're monstrous.

Mr. Scott Brison: To give you an idea of the criteria and how they impact someone in my riding, this is an actual case of someone who's 55 years old, who's been a physical labourer throughout his life, because he has a grade 5 education. He has chronic back problems to the extent that he can't do any more physical work. He's had surgeries; they've tried to do everything to assist him. And the response from Canada Pension Plan, despite doctors saying that this guy can't work any more, is that he can work at something and is retrainable.

• 1035

Ms. Sarah Shartal: That's right.

Mr. Scott Brison: And it's naive at best to expect that we can retrain someone at the age of 55, someone with a grade 5 education. So there needs to be a revisitation of some of the criteria that go into this.

But there is a standing policy, I understand, with regard to Canada Pension Plan, that all approvals are systematically declined at the ministerial level and then have to go through the process one more time.

Ms. Sarah Shartal: Put it this way: it's not official policy. We used to think it was. It's the joke among legal workers.

Ms. Carolyn Bennett: It's just that over 60% get turned down the first time.

Mr. Scott Brison: But actually our office has been told within the bureaucracy that they know everything they approve the first time will be turned down.

Ms. Sarah Shartal: If I could, just for a moment—

Ms. Carolyn Bennett: It's just what it feels like.

Ms. Sarah Shartal: It feels like that, doesn't it?

Mr. Scott Brison: Yes. It's an unofficial policy.

Ms. Sarah Shartal: An unofficial policy, yes. The two things that have changed dramatically in the legal side of Canada Pension—also, by the way, in Workers' Compensation in Ontario, which is the only other place I could comment on—is the growth of two forms. One is what we call denial by process—which is, you know, send us another doctor's report, fill in yet another form—and people simply give up because they can't do that. The other is denial by legal fiction. It's the deeming, yes, you live in rural Nova Scotia, you've got a bad back, and you're 54, but you could be retrained to be a parking lot attendant. It's the creation of legal fictions.

When we talk about why the social safety net doesn't work, the Canada Pension side—and it's not here in the brief, because I was told that I had five minutes, and I didn't bring the legalese—

The Chair: But you're making up for it.

Ms. Sarah Shartal: Yes, I'm making up—somebody asked me.

What we found in Canada Pension is that the cuts were not predominantly because of the statutory changes. They were policy changes that have been cutting people out. So our proposal for Canada Pension, which you will see in our first pages, is to tell lay adjudicators they can't take the place of treating physicians. If a treating physician says somebody is unemployable and unable to work, lay adjudicators should accept that report. They should not be in a position in which a lay adjudicator, with no medical training, is saying to a treating physician, you're not good enough. Give me a specialist.

That would help already. Tell them to stop.

Mr. Scott Brison: But the system has changed dramatically.

Ms. Sarah Shartal: Dramatically.

Mr. Scott Brison: The difficulty with government programs is that the pendulum rarely stops in the middle. It's usually too far one way and then it's too far the other way. And I can tell you this as a—

Ms. Sarah Shartal: Canada Pension is a nightmare. It's the worst.

Mr. Scott Brison: Yes, but in rural Nova Scotia 15 years ago, a person could get a Canada Pension Plan disability pension for a nose bleed.

Ms. Sarah Shartal: I didn't do it in rural Nova Scotia 15 years ago.

Mr. Scott Brison: No, but in rural Nova Scotia 15 years ago there was a sense of systemic abuse that occurred.

Ms. Sarah Shartal: All right.

Mr. Scott Brison: Now it has gone to the extent that people with real need and real disabilities that prevent them from participating in the labour market to any extent cannot get them. So rarely does the pendulum stop in the centre. This has been the case.

Ms. Sarah Shartal: But what we're seeing is that a significant number of the people we see in the homeless system should have been on Canada Pension, because that is what picks up chronic disabilities. Think about cancer treatment. It simply never occurred to us before, but why do sick benefits end before Canada Pension starts? In private benefit plans, when you finish one program, you move on to the other. What we've got in our public system is this gap in the middle. So what is somebody supposed to do? How do they pay the rent? And how do they pay the rent when they're sick, they're depressed, and they have problems? Do you then force them to try to move to another system, which they may or may not qualify for? It doesn't make any sense.

The Chairman: Thank you very much.

Mr. Scott Brison: Thank you.

The Chair: Ms. Shartal, you're really focusing on this EI and CPP stuff.

Ms. Sarah Shartal: Yes.

The Chair: But you can't believe that this is the only solution.

Ms. Sarah Shartal: No, no, we do the same thing to the provincials. We're here talking to you because those are your programs. We do the same thing to the provincial guys, but we want you to take care of your programs.

The Chair: Do they give—

Ms. Sarah Shartal: I don't care that you don't like the Harris government. I just want you to take care of your programs. We will fight with them about taking care of their programs. We accept the federal-provincial jurisdictions; we can't fix that. All we want is for you to fix your own programs.

• 1040

The Chair: When you go to Queen's Park, do they give you as much time to answer questions as I do?

Ms. Sarah Shartal: Yes, they usually do, actually, but there are usually a lot more of us. The only reason I'm in Ottawa is because the fax machine didn't work to Toronto.

The Chair: Dr. Bennett.

Ms. Carolyn Bennett: I'm sorry I missed the substance abuse presentation. I guess you're duking it out to be one of the institutes. Is that correct, in terms of the CIHR?

A witness: Correct.

Ms. Carolyn Bennett: Obviously it's important that there be research in health service delivery and programs that work and programs that don't work. You must have a pretty good sense from what you're doing in your organization on what works and what doesn't work. Are there any joint projects, whether that's homelessness or whether it's fetal alcohol effects and syndrome? Is there a way in which you feel you can impact on policy development, or do you feel that you're off somewhere by yourself and you're listened to or not listened to? How do you influence policy once you've got good research on what works and what doesn't work?

Mr. Michel Perron: I have some views, and my colleague feels he would like to make a comment.

Mr. Jacques Lecavalier: Thank you very much.

That's a very important question, particularly as regards research. Yes, probably the substance abuse field is one of the areas of research in Canada—where there is research, because there's very little of it, unfortunately—that has learned over the many years to work sort of on a horizontal way, to bring in other issues that are important determinants of substance abuse. Certainly we heard about homelessness today, and a lot about poverty, etc., all of which are determinants of what I would call substance abuse.

One of the problems we're having is that there's not sufficient investment in that type of activity that links researchers across different fields as applied to individual Canadians who are afflicted by substance abuse. You will see in the presentation, for instance, that the United States government funds six times more research on addiction in Canada than the Canadian government does. So if we want money to conduct these types of research we've got to go to the United States. Our point is that this should be changed, and certainly we can. We have the networks, we have the people, we have the talent in Canada to address these issues, but we need an investment.

Mr. Michel Perron: May I just make a supplemental to that?

You spoke about the broader issue of homelessness and how it figures in. Certainly this again speaks to the need for a comprehensive and coordinated drug strategy, one that addresses the corollary effects of substance abuse: homelessness, AIDS, hepatitis C, child abuse, child neglect. Mr. Szabo made reference to this with the fetal alcohol syndrome.

This is a role that where the Canadian Centre on Substance Abuse, in its very meagre budget... I think we have been characterized as doing excellent work for the money we have. We have received $575,000 as our core funding. We in fact have been able to lever that through our services by getting investments from the United Nations, the Organization of American States, the United States government, and others to invest up to where we are now 75% cost-recovery of our total budget. But again, we have to look externally for some of this investment on some very core issues.

The Canadian community epidemiological network on drug use is in fact very much at the core of some of these research issues that you suggest. It's a very fragile network. Speaking of fragile, these are professionals such as yourself who are giving of their volunteer time to try to find out what is happening with regard to substance abuse: first of all, how their data can be compared to other regions across the country, and secondly, how that can best influence policy at the national, provincial, and local levels.

We also have the infrastructure within the policy side to listen to this and to make those decisions jointly—not only health on their own, but health with enforcement with the judiciary. So the infrastructure is there. It's lost a great deal of momentum because of the lack of investment over the last few years. This is why we're saying that without a serious commitment of investment and long-term commitment, because this is a generational issue... It's very much like a vaccination program: every year we get a new set of Canadians that have to be looked after. Without that investment, the very structure that was put in place a number of years ago by the government will fall apart.

• 1045

Ms. Carolyn Bennett: Within the Solicitor General... Obviously drug abuse in prisons is a huge problem, and the link between learning disabilities in young offenders—

Mr. Michel Perron: Literacy.

Ms. Carolyn Bennett: —literacy, all of these things... Do you do anything on harm reduction, or do you just do the whole addiction piece?

Mr. Michel Perron: Harm reduction comes loaded with a number of definitional sorts of issues.

I see Mr. Szabo sat up.

From our perspective, our goal is to reduce the harm caused by alcohol and other drugs to Canadians, families, and the communities. There is a tremendous amount of hype around very specific issues related to harm reduction. We are finding that there is a tremendous amount of common ground and consensus among the various stakeholders to address these issues commonly, instead of having intersectoral rivalries and territorialism. We've moved beyond that, quite frankly, as a result of the budget reductions. That was one of the positives that came out of it. But now that that's done, we'd like to see the ebb turn the other way.

The Chair: Thank you, Dr. Bennett.

On behalf of the committee, I would like to express to you our sincerest gratitude for the input you have given to us. We really appreciate it.

As I said earlier, this is our second-last session. It's been a great tour across the country. People's input has been extremely valuable, particularly the last few presentations, which spoke to the issue of some of the challenges we need to meet. While we may come at it from different points of view, I think what we really share in common as Canadians is a deep belief that we have to make sure that for the people of Canada tomorrow can be better than today. More importantly, we have a responsibility to make it so, as legislators and individuals who belong to various groups.

You certainly added great value to the debate as to how we allocate our surplus, and for that we're very grateful. Thank you.

The meeting is adjourned.