FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 24, 2001

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[English]

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

We have the pleasure to have with us the following organizations and individuals: from the Nunavut Association of Municipalities, Keith Peterson, vice-president, and David General, CEO; from the Cement Association of Canada's western region, Keith Meagher, manager of constructs and technical support, and Ken Pensack, vice-president for the western region; and from the Northern Alberta Institute of Technology, Sam Shaw and David Janzen, president and vice-president of finance, respectively.

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Gentlemen, you have approximately five to seven minutes to make introductory remarks, and then we'll engage in a question-and-answer session.

We'll begin with Keith Peterson.

Mr. Keith Peterson (Vice-President, Nunavut Association of Municipalities): Thank you for having us here today, Mr. Chairman. It's a pleasure to be invited to appear before the Standing Committee on Finance as part of the federal government's pre-budget consultations. We'll try to address the objectives outlined in the letter of invitation that was sent to us.

The Conference Board of Canada was recently commissioned by Nunavut Tunngavik Inc., the Government of Nunavut, and the Department of Indian Affairs and Northern Development, to study the current and longer-term prospects for Nunavut's economy. The study was released a number of weeks ago. In that report, it was acknowledged that Nunavut's basic infrastructure is of serious concern and is in very critical condition. Even more concerning was its mention of basic structural deficiencies in education and health care, which are indeed essential elements for meaningful economic and social development. In my opinion, since I've lived there for four years, the report understates the seriousness of our situation in the north.

The report states, “The health status of Nunavummiut is much lower than that of other Canadians”, and it offers a stark reminder that “health-related services and education...are in desperate need of attention”. Those are statements that unfortunately reflect reality. Failure to improve our health conditions and to upgrade our education levels is seen as one of the greatest risks to our future development.

In a recent meeting with Finance Minister Paul Martin in Iqaluit, it was pointed out that Nunavut has never had the investment in basic infrastucture that has been realized in other Canadian jurisdictions over the past century, yet we compete in the same economy while struggling with social and economic issues that result, in large part, from inadequate infrastructure—and I've been in the newspapers on this in the last couple of months, so I'm sure you guys have read some of the stories.

It is imperative—in fact, urgent—that the upcoming federal budget begin to address many basic issues for Nunavut. Otherwise, our municipalities cannot realistically be included when indicating any degree of success with the objectives the standing committee is targeting.

I must say here that I've been the mayor of Cambridge Bay, Nunavut, for the past two years. It's one of the toughest jobs I've ever had, and I'm only a volunteer mayor. I don't get paid.

The federal government operates on the basic principles of fairness to all Canadians, ensuring that no one individual group realizes an undue benefit. Nunavut, as a territory, has an inherent right to contribute to Canada's place in the new economy in the same way that the provinces do. With realistic investment in basic infrastructure needs and appropriate policy responses by the government, Nunavut can make a strong contribution in the years ahead. At least, we hope we can.

Without a proactive federal response, much of the incremental economic development that occurs in other Canadian jurisdictions, and the benefits of productivity improvements and technological innovation in these jurisdictions, will be significantly offset by Nunavut. Again, that's an understatement.

Our communities are in desperate need of assistance not in terms of continued handouts, but in terms of real investments in basic infrastructure, stimulative investment policies, tax breaks, and economic development strategies. These municipalities continue to be almost 100% dependent on government transfers—and I'd like to say here that I'm not here today begging for money; I'm looking for help to develop our territory, and I take great offence when people down south say Nunavut is a drain on the Canadian society.

While many of our communities may never become entirely self-sustaining, it is imperative that we reduce our reliance on transfers from other more productive regions. We require development strategies and federal programs and investment to allow our communities to become more economically viable.

More specifically, Nunavut desperately needs an economic development agreement with Ottawa. Without this, most major investments required to stimulate economic growth will be inefficient or totally ineffective. While we are assured that such an agreement is in the works, we have strong doubts and have seen no indication of progress. We have been waiting six years now for an EDA for the entire north. Other jurisdictions in Canada have them.

In order to achieve the objective of ensuring that Canada remains a major player in the global economy, it is imperative that immediate steps be taken to ensure Nunavut has an economic development framework in place to support this objective. A strategic framework must provide the basis for additional federal, sector-specific investments and for the stimulation of economic growth at the community level. This will help to ensure that Nunavut can make a meaningful contribution to the Canadian economy and to our country's positions in the global marketplace.

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The importance of skills development and the creation of an economic environment where Nunavut's residents—especially our youth—can develop these skills was emphasized in a report by the Conference Board:

Without healthy communities and healthy, skilled citizens, a jurisdiction's economic growth [will] be limited. Similarly, without a solid economic base, it [will] not be possible to financially sustain health and social programs that are important to its citizens.

All Canadians deserve an equal opportunity to succeed. The unemployment rate among Inuit in Nunavut is 36%. Among those aged 15 to 24, it's 48%. The average income for a family is lower in Nunavut than the average for the rest of Canada, and the health status for our residents is known to be substandard to that of other Canadians. Objectives are not being met in Nunavut. Many of Nunavut's health statistics are comparable to those of developing countries, and this obviously detracts from other important priorities like economic development.

Housing deficiency in Nunavut is another factor that detracts from the opportunity for our residents to succeed. Not only is there a significant shortage in stock—the Government of Nunavut estimates that $100 million per year will be required in the next five years to meet housing demands—but the operating costs, resulting in large part from the elevated costs of utilities, further diminish the territorial government's capacity to address this situation.

The housing crisis in Nunavut is leading to high suicide rates and alcoholism. There is crowding, with three and four generations of families living in the same house. Suicide among young men is five times the national average. There's a lot of hopelessness and despair caused by crowding.

In order to achieve the objective of providing our residents with a fair and equitable opportunity to succeed, the upcoming budget will need to increase budgetary allocations for improving health care and educational standards in Nunavut.

We don't have any universities in Nunavut, so we have to send all our kids down south. Substantially more dollars are required for ongoing skills development, as this pertains to participation in key industries such as minerals exploration and development, fisheries, and tourism.

The quality of municipal infrastucture has a direct bearing on our environment, on the quality of life in our communities, and on our overall standard of living. Success in managing the environment is often seen as a proxy for performance in other areas and as a foundation for socio-economic development. It is unfair that Nunavut cannot meet environmental standards achieved elsewhere in Canada, in large part because of inadequate funding for infrastructure.

Nunavut's basic infrastructure needs greatly exceed the capacity of existing initiatives and funding agreements. Nunavut's allocation of only $2 million under the Canada Infrastructure Works Program is inappropriate. As stated in Nunavut's recently published Report of the Standing Committees of the Legislative Assembly, in reference to capital spending requirements,

This reinforces the need for the Government of Nunavut to aggressively push for federal infrastructure investment that genuinely takes into account the cost of providing services to Canadian citizens in the most challenging geography to be found in the country.

And that's a huge understatement. The only way we get around in the north is by airplane. None of the communities are connected. We have two million square kilometres to cover.

The formula financing agreement with Ottawa, which is theoretically meant to fill the gap between Nunavut's spending requirements and the revenue it can generate on its own, is inadequate. If basic human needs are not being met especially in terms of housing, health, and education, creation of the socio-economic environment outlined above will never be achieved in Nunavut.

In order to achieve the objective of creating a socio-economic environment in which Canadians can enjoy the best quality of life and standard of living, the upcoming budget must take take steps to address Nunavut's infrastructure requirements at the community level, the implementation of an economic development strategy for Nunavut, and the inadequacy of Nunavut's formula financing agreement.

In short, Mr. Chairman, we would like to be treated as equal Canadians in our own country, not like second-class citizens in our own country.

Thank you for the opportunity to address you today.

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

We'll now hear from the Cement Association of Canada, Western Region, and Mr. Keith Meagher, the manager of constructs and technical support, and Mr. Ken Pensack, the vice-president.

Mr. Ken Pensack (Vice-President, Western Region, Cement Association of Canada): Thank you for the opportunity to make this presentation to the Standing Committee on Finance as part of this year's pre-budget consultations.

The Cement Association of Canada's western regional office is presenting its own pre-budget submission to the finance committee hearings in Edmonton today, as this permits us to focus on one of our key environmental messages, that being concrete solutions for agricultural waste management. Rather than simply read our submission, I'd like to take you through a few brief slides.

The Cement Association of Canada represents 100% of Canada's producers—and that's something quite unique among associations. Many producers also own concrete ready-mix facilities, or they supply cement powder to independent ready-mix operations that are present in virtually every community across Canada.

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The Cement Association serves its member companies in three key capacities: to market cement and concrete solutions; to provide technical engineering support to users of concrete and other cement-based solutions; and to provide a vehicle for our member companies to participate in public affairs. The Cement Association is a national association, with its head office in Ottawa. Regional offices are dedicated to regional concerns and issues related to our industry.

The cement and concrete industries contribute significantly to the Canadian and Albertan economies. Here in Alberta, there are two cement plants, the cement and concrete industries employ close to 4,000 people in this province, and they generate nearly $750 million in annual sales. Alberta exports about 375,000 tonnes of cement annually. Nationally, the cement and concrete industries contribute 22,000 jobs and $4 billion in sales to the Canadian economy. As a significant exporting industry, anything affecting Canada-U.S. trade affects the vitality of our industry.

The need for agricultural waste management solutions is particularly acute in western Canada, where average farm size continues to increase. In the wake of a year in which drinking water crises emerged in communities across Canada, citizens are becoming increasingly wary of intensive livestock operations, or ILOs.

Environmental groups and concerned individuals alike now frequently raise environmental and health concerns related to ILOs, ranging from odour to full-scale groundwater contamination, and provincial governments are beginning to take action. For example, the Government of Alberta is re-examining provincial regulations governing ILOs. Quebec has banned establishing new intensive livestock operations outright, and the Ontario government is proposing tighter control over manure management.

Improved technological alternatives to deal with waste containment and disposal are required. As such, in the interest of developing new markets, the cement industry has been exploring the potential of concrete solutions to address this critical public health, agricultural, and environmental challenge. For example, manure management systems based on anaerobic digestion of livestock manure and other organic waste is one of the potential solutions being evaluated.

This technology has many potential environmental benefits, including harnessing the resulting biogas for use in heating and in powering generating plants; production of electrical and thermal energy to meet various community needs; water conservation; and fertilizer production. This technology offers the potential to produce economically viable and environmentally sound products from noxious, biologically hazardous agricultural waste, all while eliminating odour and providing farmers with an alternative to increasingly inadequate and expensive current manure management systems. This is just one example of how positive results can be derived from an innovative industry committed to research and development.

However, like all new technology, this method must be tested, proven and demonstrated to potential users before being adopted by ILOs. This government has a strong record for developing and promoting public-private partnerships. The cement industry has already forged ties to the private sector, including waste management technology firms, agricultural producers, and utility companies, as well as some local municipalities, to develop these kinds of cutting-edge, sustainable solutions. In addition, the Government of Alberta supports sustainable agricultural projects that add value and contribute to job creation in the province. The federal government would be a valuable partner in further developing this technology.

Moving to the second part of our submission, the Cement Association has other concrete solutions for meeting government environmental and infrastructure objectives, particularly in regard to highway renewal. The 1997 Standing Committee on Transport reported that

the renewal of the National Highway System will not happen unless the federal government takes the lead and responsibility.

The Cement Association of Canada agrees. However, we suggest that rather than focusing on the 25,000 kilometres of the national highway system, the government should approach highway modernization more strategically, while recognizing that provincial governments cannot realistically be expected to finance these projects on their own.

Specifically, the Cement Association urges the federal government to focus on the key trade corridors within Canada and between Canada and the United States. We encourage the Government of Canada to take a closer look at all possible funding options for highway renewal, including dedicated long-term federal funding, dedicated taxes, or a user-pay approach, as recommended by the CTA review report.

In addition, research demonstrates that concrete is a superior investment for the construction of major highways. Concrete highways are stronger and last longer. According to a 1998 life cycle cost analysis by ERES Consultants, a concrete highway lasts 34 years, as compared to seventeen for asphalt. Concrete highways require less than half the maintenance required by an asphalt highway. The ERES report concluded that asphalt highways require maintenance every three to five years, while concrete only requires initial minor maintenance after twelve years.

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Concrete highways improve fuel efficiency for heavy trucks. A National Research Council study found that trucks travelling on concrete highways use up to 11% less fuel than the same trucks travelling on asphalt. Less fuel consumed means fewer GHG emissions released into the atmosphere.

Concrete highways improve nighttime visibility. White concrete highway surfaces reflect more light, therefore contributing to a more illuminated highway.

Concrete highways enhance road comfort, quality, and safety.

In closing, I would just like to reiterate the recommendations we have made to the committee in our written submission.

First, the Cement Association of Canada recommends that the Government of Canada support innovative, private-sector research and the development of environmentally sustainable agricultural technologies by helping to finance the initial capital costs of demonstration projects.

Second, the Cement Association of Canada encourages the Government of Canada to explore ways to compensate provinces for the increased initial costs of concrete highways, as a trade-off for the positive environmental and economic benefits they generate.

Finally, I would again like to thank the committee for coming to Edmonton and for taking the time to carry out the very worthwhile pre-budgetary consultation process. Thank you.

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

We'll now hear from the Northern Alberta Institute of Technology, and its president, Sam Shaw, and vice-president of finance, David Janzen.

Welcome.

Dr. W.A. (Sam) Shaw (President, Northern Alberta Institute of Technology): Thank you, Mr. Chairman, for the opportunity to have input.

Funded with Government of Canada funding in 1963, NAIT has become a global leader in applied education. More than 2,200 staff work at NAIT's six campuses, delivering over 190 programs, including apprenticeships, certificates, diplomas, and applied degrees. NAIT serves over 59,000 students annually, with more than 15,000 full-time and apprenticeship students, as well as 43,000 continuing education registrations in a year. We are active in nineteen countries around the world.

Technical education prepares students for high-quality jobs in this fast-paced, global market. The pace of technological change will continue to demand agility in the marketplace. Graduates of technical institutes like NAIT are critical to meeting the economy's need to continually adapt and fully exploit economic and social opportunities.

More than ever, technical institutes are particularly important in providing the technically skilled workforce to innovation in business and industry through applied research, and in helping to advance our global partners in the application of theory.

There needs to be an investment in infrastructure and equipment. As new technologies rapidly appear, workers need to continually upgrade their technical expertise. In fact, 42% of NAIT's students in their first year come to us already with post-secondary education.

NAIT is responding to today's challenges through measures like Internet-based learning materials. But while online learning will be important, it cannot fully replace hands-on learning in technical fields in which skill acquisition can only be met through practical learning methodology.

Today, if you were to forecast out to the year 2015's workforce, 50% of those workers are already working. To be competitive, lifelong learning must be a way of life. To be successful in a knowledge-based economy, incentives must be in place to encourage lifelong learning. We applaud the lifelong learning plan whereby individuals can withdraw from their RRSPs to support full-time studies. However, we would make the comment that part-time study is one of the most important routes to lifelong learning. We recommend allowing RRSP withdrawals in support of part-time learning.

Another measure would be to recognize computers and other technology items as legitimate expenses for the purposes of student loans. Again, as we have become the most wired country in the world, this becomes more of an imperative.

With a focus on technology and close relationships with business and industry, technical institutes are well positioned to play a greater role in applied research. They should be strongly encouraged to contribute more to economic development and be targeted to provide innovations for business and industry. Applied research funding should be enhanced to develop the innovations Canada needs to be more competitive.

NAIT provides innovative and community-based programs essential to self-reliant and strong aboriginal communities. These programs are very successful in helping aboriginal students succeed in sharing the economic benefits of technological advancements. We applaud the efforts of the federal government, and ask that you continue to focus on maths, science, and technology, so that aboriginal students have the opportunities to participate in technical careers.

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Federal infrastructure priorities need to be directed to post-secondary institutions generally, and to technical institutes in particular. The importance of technical education to economic development and prosperity needs to be a higher priority. Because of the capital-intensive nature of technical training, technical institutes are particularly prone to capital depreciation. Tax incentives or matching programs would enhance the opportunity for technical institutes to get industry to provide modern equipment or monetary donations.

It was through the forethought of federal funding that NAIT was created in 1963. This kind of forethought is needed again today. Canada and Alberta enjoy one of the best educational systems in the world, and NAIT is proud to be part of it. We thank you for the opportunity to present our thoughts on how to make this system even better.

I'll ask David Janzen to summarize the recommendations.

Mr. David Janzen (Vice-President, Finance, Northern Alberta Institute of Technology): In summary, Mr. Chairman, we have six recommendations that we believe should be taken into account in the upcoming budget deliberations. First, fund infrastructure maintenance and renewal for technical education institutions commensurate with other infrastructure programs. Second, allow RRSP withdrawals under the lifelong learning plan, in support of part-time learning and publicly funded post-secondary institutions. Thirdly, enhance applied research funding earmarked specifically for colleges and technical institutions through vehicles such as the Canada Foundation for Innovation. Fourth, increase and enhance support for the aboriginal outreach programs of colleges and technical institutes. Fifth, enhance tax incentives for business and industry to make in-kind donations of modern technology equipment for training purposes. Sixth, create matching funding programs to leverage private donations.

Thank you very much.

The Chair: Thank you very much, Dr. Shaw, Mr. Janzen.

We'll now proceed to the Q and A, and we'll have a ten-minute round this time, beginning with Mr. Epp.

Mr. Ken Epp (Elk Island, Canadian Alliance): Thank you very much, Mr. Chairman.

Thank you, witnesses, for being here. It's interesting how you have brought me back to my youth. As soon as I hear the word “cement,” I remember that I worked my way through university driving big rigs and delivering bulk cement. I hauled it a lot from just east of Edmonton and into all different parts of Saskatchewan, where I was living at the time.

I want to start with the Nunavut guys, and we'll get back to the others. I want to ask you how things are different now that you are a new territory. Are they different? You used to compete with the rest of the Northwest Territories for the same kind of federal funding. Has that funding increased now, has it decreased, or is it the same? You obviously think it should be increased.

Mr. Keith Peterson: Thank you, Mr. Epp.

As the mayor of Cambridge Bay, I'm glad we have our own territory. There have been some difficulties in the first three years, but we're working on legislation and on programs to deliver to Nunavut. Our problem is that a lot of the funding that we require is not making it down to the community level, where basic human needs are to be met.

I believe the Government of Nunavut is underfunded by the Government of Canada. To offset their deficit, they're passing down—I'd say downloading—their programs to the community level, without adequate funding. We're struggling at the community level to provide social services, health, and education to our citizens. We've been asking the Government of Nunavut for additional funding for the last two years, but we get the same story all the time. We're told the formula funding is not providing the funding they need to pass on to us.

As communities, we're now in a situation in which we want to be enabling our communities. In other words, we want to look to the future and set the policy direction to steer our communities. We're finding, though, that we're reacting, we're rolling, we're going backwards. I'm standing up at public meetings to help people, to comfort them about suicide, alcohol problems. Where does it say the mayor has to take on the responsibilities of the Government of Nunavut? It's bad for all of us.

Mr. Ken Epp: Among other things, you're saying you need housing, to the tune of $100 million per year for five years. If you want that money, obviously it's is going to give employment to a lot of people and it will give you a temporary boost. What happens when that's over? What are your long-term plans?

Mr. Keith Peterson: Housing is required to improve the quality of life in our Nunavut communities. Right now, most funding that comes into Nunavut is from the government. We have an artificial economy up there. Everything pretty much depends on government funding from the federal, territorial, and municipal levels.

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We would like to start developing our own economy through mining, arts and crafts, and tourism, so that we're not depending on government funding. When the government funding runs out, the gist of what you're asking is what we will do. We have to have a sustainable economy in Nunavut.

Mr. Ken Epp: But you're making a presentation to the finance committee, which is going to make a recommendation on spending to the Minister of Finance. Right now, what you want is more government funding, not less. Your objective is that by getting this, you have a long-term plan that's going to remove you from the necessity of asking for more federal money because you will be self-sufficient. That's your dream. Is it a reality?

Mr. Keith Peterson: We believe it's like anything. If you invest in a business, if you invest in your children, if you invest in your country, you're going to become self-sustaining. Eventually, you will not be required to go back to a parent or your government for funding all the time. I said in my presentation that I don't like begging. I've never been a beggar in my life, but here I am before you guys today practically begging for your sympathy.

Mr. Ken Epp: No, not really. You're making a case for your people, and we accept that.

Mr. Keith Peterson: Okay, well, I'm begging on behalf of the people. How does that sound?

Mr. Ken Epp: No, don't demean yourself.

What's your regular job up there? You said you were a volunteer mayor, and that you don't get paid for that. What do you do for a living? You must pay your bills, too. That's just as a personal thing.

Mr. Keith Peterson: I work for the Kitikmeot Inuit Association as a negotiator on land claims and on money agreements. I'm also into business development with Qikiqtaaluk Corporation, the Inuit birthright development corporation. It's business, basically.

Mr. Ken Epp: Is a fair amount of exploration taking place there right now?

Mr. Keith Peterson: In our region, in Kitikmeot, which is about 800 miles north of Edmonton, we gratefully accepted a donation, a contribution from DIAND, to look at a deep-water port in Bathurst Inlet that will stimulate exploration and development in our region. There is a lot of mineral development potential in our region, in Kitikniat, and it could benefit Nunavut overall.

Mr. Ken Epp: I would like to talk to you more, but I need to get to these other people.

I'll go back to my old days when I was hauling cement. I don't know whether I particularly like cement, because I have some bad memories of it, too, like those 87.5-pound bags. When we did bag cement, they seemed to weigh about 400 pounds by the end of the day. I used to haul 40,000 pounds a day. It's big work, and a lot of work—which is why I'm in such fine shape, Mr. Chairman.

You mentioned that there are two major Alberta plants. Where are they?

Mr. Ken Pensack: One of the plants is located just in Edmonton, on the western side of the city. The other one is located at Exshaw.

Mr. Ken Epp: The Lafarge plant is a plant, but Canada Cement—well, it used to be Canada Cement—out here, just north of Sherwood Park, is a distribution point, is that it?

Mr. Keith Meagher (Manager, Constructs and Technical Support, Western Region, Cement Association of Canada): Region): The plant at the east end of the city used to be a grinding plant. It was only a partial process. They used to bring the raw materials in from Winnipeg or Exshaw, but now it's strictly a distribution station.

Mr. Ken Epp: Yes, I thought I was right in that.

You indicate that concrete maintenance costs are half of what asphalt maintenance costs are—I read this or you said it, one or the other; I don't remember which, but I wrote it down—but what is the comparison in the construction costs?

Mr. Ken Pensack: We believe constructing roads out of concrete versus asphalt costs anywhere between 5% to 10% higher on the initial capital costs, albeit that it does vary from region to region in the country. In all of those regions, it depends on...it is site-specific, I should say.

Mr. Ken Epp: Is there a difference when you construct roads with a concrete base? Is there a difference in the preparation that needs to be done before you actually lay down the final surface?

Mr. Ken Pensack: Actually, that's a very good question. The concrete roads require a lot less aggregate, and are therefore less demanding on the environment.

Mr. Ken Epp: Really?

I also remember that when I was trucking, among other things, I did some driving down into the States, hauling combines. One trip to Fargo still hurts my gut, because I was on a concrete road in North Dakota that was done in sections of about a hundred feet. It wasn't bad when the truck was loaded, but when I was going down empty, I took a jolt every hundred feet. Do they still build concrete roads like that, or have you solved that problem?

Mr. Ken Pensack: I think we've solved that problem. The jolting is an issue that happens with joints. Old technology allowed those joints to separate, causing that impact. What we do now is dowel the joints, or put steel bars through them to hold them together, and we have new or much more sophisticated jointing material to help to smooth that over. If you were to ride on the Deerfoot Trail in Calgary, for instance, it has a concrete section on it that is very smooth. You couldn't tell the difference between travelling on the concrete section or the asphalt.

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Mr. Ken Epp: I could talk to you a whole bunch more about this. I like your agricultural waste initiative. That looks very promising. Of course, we have a huge agriculture industry in western Canada that is very important.

I want to focus on this whole question of why you are here, though, because we are the finance committee and we're going to make a recommendation to the finance minister on a upcoming budget. But I can't really tell from your presentation exactly what it is that your association specifically wants to see in the budget. Maybe I missed it because I wasn't paying close enough attention, but I was trying.

Mr. Ken Pensack: I think we're looking for two things here. One is some federal money to help to promote pilot projects for these ILOs. The ILOs require some help to get going. There is technology out there that we think can solve the problem. It's new technology for Canada, so we need to form some sort of catalyst to bring it in, to set it up, and to get it going and running. So we're looking, first of all, for some funding support for pilot projects for the ILOs.

Secondly, we're also addressing the infrastructure issue in Canada. We're looking for the federal government to provide some leadership and some funding alternatives, because we know the provinces are having a difficult time putting in infrastructure on their own. This province, Alberta, has had to delay some major work because of budgeting issues. Very important to this province is a north-south trade corridor that we want to get built. Again, we're looking to the federal government to provide some innovative funding solutions for infrastructure in the provinces.

Mr. Ken Epp: Okay, thank you.

Again, I must rush on, Mr. Chairman. May I please, sir?

The Chair: Yes.

Mr. Ken Epp: To my colleagues from NAIT, I worked there for 27 years. I don't know whether you guys were aware of that. At the time when I was elected, I was 54. Having been at NAIT for 27 years, it was exactly half of my life that I'd given to NAIT, and I enjoyed most of it, I'll say to you.

Anyway, I had the privilege of meeting Dr. Shaw, the president, just a couple of weeks ago. I stopped by and we said hello. He wasn't there when I was there before I was elected.

I have a question with respect to one of your recommendations. You want tax incentives for businesses and industry for in-kind donations. I think you're thinking about equipment, and you're probably thinking of your new business centre with the computer labs and everything.

Which company is it again?

Dr. Sam Shaw: Compaq Canada.

Mr. Ken Epp: It's Compaq, not IBM, but they give donations.

From a tax point of view—and this is a very legitimate question, because I'm asking it out of ignorance—when these guys give you equipment, whether it's new or used, surely it's a write-off on the tax system as far as they're concerned anyway. What more do you want in terms of what should be in the budget?

Mr. David Janzen: In terms of encouraging more of it, there's always an opportunity if we can get cost sharing or matching contributions or that type of thing.

Essentially, a big part of our focus at the moment is on trying to bring as many organizations to the table as possible to help maintain the infrastructure. For example, in NAIT's situation, we have $65 million in capital equipment in our capital-intensive labs and shops. We're looking at some creative ways of perhaps motivating more companies to participate in the contribution side of equipment. That's what we're interested in.

Dr. Sam Shaw: If I could just add to that, the present system works well when you get equipment, but typically that equipment is not what we call modern. Our recommendation is to enhance the modern equipment that makes the training for the workplace more relevant. Having those incentives would inch that up a little bit.

Our capital depreciation two years ago was lowered to 69%. We're now back up to 72%. For a technical institution, we really need to lower that dramatically. What we're really asking for, then, is some incentive that would allow business and industry—particularly the manufacturers—to donate the equipment that's relevant today, not yesterday.

Mr. Ken Epp: So you're actually tying your last two recommendations together, then, in terms of the incentives, the matching grants. It's more than just a zero-sum game for them, because they actually stand to gain.

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Dr. Sam Shaw: Right. There would be an incentive for them to do it in terms of looking at that donation to technical institutes.

Mr. Ken Epp: I have one more question if I may, Mr. Chairman, and then I will defer to the others—but come back to me if you have time.

With respect to support for aboriginal students, I remember that when I was an instructor at NAIT, I had a number of aboriginal students. Many of them struggled because of a lack of training up to the point when they came to us. Actually, I was involved in helping to develop what was then called the pre-technology program. I don't know if you still have it, but we did the math part of that, and we had a number of aboriginal students. Even then—and I believe it's still the case now—through the Department of Indian Affairs and Northern Development and other supporting agencies, these students already get a lot of support. Are you asking for more support specifically for them? Or are you simply saying to keep the level of support the way it is and to not cut it? What's your message there?

Dr. Sam Shaw: I guess it's twofold. One is that you are doing a good job in terms of the support that's out there. My suggestion to you is that maybe some of that support should be really focused on maths, science, and technology.

I've been in a number of provinces, particularly Manitoba, in which we've been involved in social work programs, teacher ed programs, and so forth, but the amount of emphasis being placed on maths, science, and technology is not as high. That's why the pre-tech had to occur.

Again, when we start looking at funding, we typically look at programs we're trying to duplicate. Well, with the HRDC funding that we had in Manitoba, we created a forestry program. Typically, the forestry program would be two years at the college. We created a three-year program to ensure that there was the opportunity to get the math and science skills up.

What I'm really talking about is redirecting some of our thinking about how we fund those programs, in order to pick up on the deficiencies in maths, science, and technology.

Mr. Ken Epp: Mr. Chairman, I have more questions, but I think we should go to the other side of the table for a while.

The Chair: Go ahead.

Mr. Ken Epp: Do you want me to keep on going?

The Chair: Yes.

Mr. Ken Epp: Okay.

With respect to funding, we know the federal government plays a considerable role in post-secondary education. I would like to know from you whether or not, in the province of Alberta generally and for your institute specifically, the administrative mechanism that takes the money that comes from the federal taxpayer via Ottawa gets it to you in an efficient manner. Do you have to fight and struggle for it? Is the provincial government here prone to taking that money into general revenues, using it for other things instead of for what it's intended? Do you have any response on that part of it?

Mr. David Janzen: On the interchange between the federal flow to the province and ultimately to the institution, we don't get a whole lot of insight into exactly how that conversion takes place. Provincially, with the Alberta economy and the need to respond to the labour market demand that ensures success or ongoing growth in Alberta and across the country, what we have seen is that the provincial grant has substantially declined over the years as a proportion of our total revenues. At the present time, in terms of our base funding in relation to our total funding, our total revenue, we're at about 48%. We make up the balance through other aspects such as tuition and business development, or through continuing education and international education. So a percentage drop has occurred over the years, but I'm really not in a good position to comment on whether or not those dollars are in fact flowing through.

Mr. Ken Epp: I've observed that, from the time NAIT started—and I was there within three years of that; it was just a new institute when I was first on staff—the money seemed to flow quite freely. It was wonderful. It was a new institution, so we had to have all new equipment. It was very exciting in those early years.

Now, though, I see the institute spending a lot of time on private fundraising, which is fine, because it involves the community, it involves local business, and it hopefully connects them to the place and makes them more prone to hiring our graduates. It's a win-win situation in that way. But the necessity of that seems to have been derived from the fact that you have more difficulty squeezing money out of the provincial government. That is indeed between you and your provincial minister, but from a federal point of view, we're interested in making sure the money allocated for post-secondary education actually gets there. From some of the other witnesses, we have heard concerns that the CHST is basically an unaccountable transfer, so I just wanted to know whether you had a lot of difficulty getting money. Be that as it may, I won't ask you to answer that, because that's provincial.

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I do have another question, and that is with respect to the future. Presuming we don't all get blown to smithereens with all this terrorism and everything, our country will continue to grow because our population is growing and so on. How well positioned are you for the future? Have you done your demographic studies? Do you have a reasonable finger on how many students you can expect in the various programs? Are you able to get money to plan for that, to build for it, for ten, fifteen, or twenty years down the road?

Dr. Sam Shaw: We have done campus development and academic plans that look at the enrolments over ten years. We've focused on the year 2010, and they run hand in hand. What we've looked at are the responses that are needed to service the marketplace for technical graduates, and they require the space to do it. One leads into another.

Certainly, with what we have seen with the more recent events of September 11, if you look to the north of us, clearly there hasn't been too much of a damper in regard to looking at the expectation of some of those mining projects going ahead. In fact, even in today's paper you see talk about a couple of billion dollars more in terms of expansion for Syncrude. Again, one of the driving forces for those kinds of companies is the technical graduates, and we're working hand in hand on that.

So, yes, we have done all of that targeting and we've looked at the space allocations.

One of the things you certainly can't imagine is what the impact of individuals coming into Alberta and so forth will be. Again, that will be putting stress on the health side, so we then have to train more medical lab techs and so forth. We've tried to do some work on that, but labour market estimates are really estimates, and sometimes they go up and they go down. But we do have that plan, and we do have the campus development plan that says we need to have this kind of space in order for these kinds of programs to grow. But it's a controlled growth.

The other thing that we have looked at is alternative deliveries and where those make sense. Some of the innovative programs that we've done on multi-skilling, looking at welding at a distance, and some of those things, are really starting to pay off. In fact, we're now starting to deliver across North America for some of those programs.

Mr. Ken Epp: Thank you.

Thank you, Mr. Chairman.

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

Mr. Cullen, then Ms. Barnes.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you, presenters.

Mr. Pensack, on your concept of these concrete silos, in just looking at the photographs, it sounds like a very interesting one. If you look at the problems we've been having with drinking water across Canada, I don't know if the jury is totally out, but there seems to be some connection to agricultural waste. If you also recognize that methane is probably more damaging—in fact, it's twenty times more damaging—to the environment in terms of green house gases than carbon dioxide is, this seems to have a lot of potential.

I have a couple of questions. One, is this technology proven and demonstrated? Have you actually run one of these things? It's one thing to talk about collecting methane, but it's another thing to do it and then turn it into power.

As a federal government, through Technology Partnerships Canada, we're supporting a fund that takes municipal solid waste, turns it into methane, and then turns that into electricity. Basically, their business model is such that it's self-financing, because they generate revenues from electricity. Have you run the business models? What is it going to take to make this work? Is this technology proven, or does it still need some technical support to demonstrate it?

Mr. Ken Pensack: To answer your question, yes, the technology exists and is proven. We have actually been to Europe and have toured facilities in Europe that are doing this.

Number two, yes, methane is a huge issue, and the methane recapture that results through this technology is a huge benefit for us.

Three, we've run the business models the best that we can in terms of importing the European technology into Canada in order to see if it works for us. We're well down the road toward doing that. Again, though, because it is in an embryonic stage, we are still going to encounter unknowns. We're hoping to see a pilot project get built—one that is of less than total magnitude—so that you can establish some of these guidelines.

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Mr. Roy Cullen: Maybe we can speak after the meeting, but Technology Partnerships Canada is a program I would strongly recommend to you. This particular plan in Guelph, Ontario, is helping to demonstrate the technology in a commercial setting, so it might be something you might want to consider.

Now, can I ask a really dumb question?

Mr. Ken Pensack: No question is dumb.

Mr. Roy Cullen: I guess it's implicit in another dumb question. If it goes into a big concrete silo, presumably air and water don't get in and nothing leeches out. That's obvious, isn't it?

Mr. Ken Pensack: Yes, that's one method of storage. You're absolutely right. It would be completely self-contained. You can isolate it so that there is no air movement and no water or moisture movement.

Mr. Roy Cullen: Okay, thank you.

Mr. Peterson, I was shocked when I saw that Nunavut's allocation was $2 million under the Canada Infrastructure Works Program. I guess that's one result of doing things on a per capita basis. As Canadians, we often shoot ourselves in the foot by trying to be so equitable, when we in fact end up being inequitable.

My question has two parts. I'm aware of the formula financing agreement in very rough terms. I know its main intent is to make programs in Canada roughly equivalent wherever you might be. That implies not only the program delivery, but infrastructure. For Nunavut, though, it must be a bit of a stretch, because you have a bit of an infrastructure deficit. What are your main infrastructure needs, in a kind of thematic sense, and what would it take? How much money do you need to get ramped up over a period of five years, let's say, in order to get into the ball game?

Mr. Keith Peterson: I'll just answer one part of the question, and then I'll ask David to answer the question on the formula funding.

To give you an example of what it costs for infrastructure, you're quite correct on the per capita allocation. Our population is only 27,000 people, which is 0.1% of the total Canadian population.

Our water supply line in Cambridge Bay is over 22 years old. To replace the line, which brings our fresh water in from the lake to the town, the cost is $1.3 million. That's for just one community, and there are 25 communities in Nunavut.

We also have other things that we need, like sewage treatment plants. We need buildings. We need hospitals. We need all of that kind of infrastructure. We need upgraded airports. I could go on, and the list would be endless.

I'll let David answer the other part of your question on formula funding.

Mr. Roy Cullen: Maybe if you could just expand on that, have you ever put it out on a chart in terms of what programs are needed and what they would cost?

Mr. Keith Peterson: We haven't yet, but we're looking at developing computer models to do that kind of stuff—if we can get some money to do that.

Mr. David General (Chief Executive Officer, Nunavut Association of Municipalities): Thank you. I hope I answer the correct question here, and that I answer it correctly so that my ticket gets paid for.

A voice: Oh, oh!

Mr. David General: Actually, you've hit on an interesting point. We've pushed the fact that it's very difficult for us to say with any precision what our needs are going into the future. We've drafted a letter that was sent to Secretary of State Andy Mitchell not too long ago, specifically asking for assistance and trying to get the Government of Nunavut to work with rural secretariats in order to help us to put that together. We realize that if we come to the federal government and say we need more money, the questions are going to be how much more money and whether or not we can justify it.

The estimates vary widely. If you talk with the Government of Nunavut, it might say that to hit basic needs, another $5 million a year is needed. However, obviously the FCM just put in an application. I think their submission was $4.3 billion annually or something along that line. Certainly their estimates would be much higher than those of the Government of Nunavut, and we would tend to agree that the latter needs are much greater than what the Government of Nunavut is estimating.

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Mr. Roy Cullen: As far as the formula financing agreement is concerned, implicit in that are capital costs and operating costs in the sense that the agreement aims to bring you up to a certain level of comparable programming. It's not broken down in terms of capital and operating, it's just a formula-driven thing to bring comparability. Is that right? I've never looked at it in detail.

Mr. David General: Yes, that's correct.

Basically, it is theoretically meant to bridge the gap between the operating expenditures for the territory and what we can generate in our own revenues, which are quite small right now, of course. It comes to us basically as a sum of money. I think the estimate for 2001-02 as about $563 million, and the Government of Nunavut would then have the option to break that out in terms of whether they put it into capital or operating.

Right now, the percentage that goes to capital is much smaller than it was when we were with the Northwest Territories. I think that's what is happening. What we need for operating is much greater than what we're receiving, so what we can allocate to capital is ridiculous, basically.

And you are correct. The $2 million under the Canada Infrastructure Works Program wouldn't pave the road outside my office, basically. When I looked at the figures behind that, I was just astounded actually. Nunavut, a new territory, is in a start-up stage, so our needs greatly exceed that.

Mr. Roy Cullen: If that would pay for the road to your office, does that mean you're driving back?

Voices: Oh, oh!

Mr. David General: That's about a hundred yards worth of road, I think.

Actually, I'm on Baffin Island and Keith is in Cambridge Bay. We're maybe a couple of thousand miles apart. We communicate very well via e-mail, though, so that's our saving grace.

The Chair: I'm glad you got together today.

Mr. Roy Cullen: Could I just ask one quick of Mr. Shaw and Mr. Janzen?

The Chair: Yes.

Mr. Roy Cullen: On lifelong learning and part-time learning, in our platform in the last election, we came out with this registered learning account concept. Given the events of September 11, frankly, I don't know how fast that's going to get out of the blocks. Who knows? Is that something we should be doing? How does it fit in with your priorities? If you were asked to participate in the design of it, what kinds of features would you incorporate?

Dr. Sam Shaw: Certainly, there are a couple of things. I would certainly encourage the government to look at the part-time learning side. That's the fastest growing portion in Canada, and it has been so in the last fifteen years.

Part of it is looking at the opportunity for adults in this country to keep their skills up to speed while they're working. That was my reference in terms of looking at the year 2015: 50% of the 2015 workforce is already working, so we have to maintain those skill sets if they're going to be competitive.

In terms of designing that, I think the other component is that it should be referenced in terms of publicly funded institutions, as we indicated. But, again, I think what you want to look at is the direct application to the skills required in the workforce, so that you have some accountability and responsibility for that, particularly on the part-time side.

So there are mechanisms and measures that you can incorporate into that, and they would give you the safety net to say it is money being well spent.

Mr. Roy Cullen: If you had any ideas that you could submit to the committee in writing, I'm sure someday—and work on it is going on now somewhere, I'm sure—we'll need to design a program that makes sense. You people are well positioned to advise this committee on how that should be structured.

The Chair: Thank you, Mr. Cullen.

Ms. Barnes.

Mrs. Sue Barnes (London West, Lib.): Thank you very much for the time and effort it has taken for you to put your presentations together, and for coming here to discuss them. I'm just going to make a couple of suggestions before I start with my questions.

Dr. Shaw, Mr. Janzen, with the skills and learning agenda being done through HRDC, I think you should pursue these concepts of the learning accounts and the part-time learning accounts. Push that agenda there. If it doesn't end up in a budget, it could be incorporated into an overall view of the future, because that's where the focus is going to be in terms of preparing Canada's demographics for lifelong employment and learning. That's where I see a real fit.

• 1400

To the Cement Association of Canada, one of the reasons for why Canada has historically not used or has rarely used dedicated taxes is exactly the situation we find ourselves in right now. When you need to pull back or change priorities, if you have a dedicated tax system, funding might be going out to a lower priority. In actual fact, it's very difficult to dismantle things when you cannot shift your tax resources to meet a different, new, and perhaps unexpected priority. I'm certainly one who feels very strongly that we should never go into dedicated taxes. We should use our general revenues and try to accomplish things in as many diverse areas as we can. And I don't mean that as a criticism, I mean it more as an explanation about what's going on right now, because our job is difficult right now. It's certainly not easy.

I spent ten days in Nunavut this summer. I chose to do that with some of what was supposedly my time off. I managed to get to four Baffin Island communities. When I was there, I visited the town administrators, the mayors of those communities, the interpretative centres, the libraries, and the health centres. I stayed with Inuit families or at bed-and-breakfasts if they were available, and I looked at Nunavut through new eyes. I think that was a better learning experience for me, and I think more federal MPs need to do that. If anything, if you can entice your federal legislators to get up there to take a look around, I think it would be beneficial for you.

Interestingly enough, it was through a parliamentary association that I belong to that I started talking to your legislature and did follow-up. I learned a little bit, and I have come to different conclusions, even though I know I'm no expert on the north after that short period of time.

When you talk about resources above the treeline, most of the resources you're utilizing in the infrastructure are actually dollars sent back down south to different provinces and different economies inside Canada so that you can build in the north, because you're above the treeline and you have the permafrost and all of those things. You don't need to make apologies about where the money comes from, because other economies benefit when you spend money. That point has to be emphasized.

There are so many things here.

I firmly believe that the way in which we have funded infrastructure in the north—and not just necessarily in your territory, but maybe a couple of others—is wrong. Your $2 million, as was explained to me by one of your own legislators, was the equivalent of eight houses, and you weren't going to get much from that. As one member of this committee, I will be very strongly suggesting that we fund infrastructure programs differently in the north, because a very real need exists in terms of how far that money stretches.

I wouldn't have been able to say that if I hadn't seen it. That's why I'm saying this. And when you encourage people to go north, it can't just be to Iqaluit. In ten days, Iqaluit started looking like the big city to me, I can tell you.

Let's also talk some about where you do have a need with your infrastructure—and it's not just in the normal infrastructure. You need recreational infrastructure, because your population is very young. A lot of the problems you are alluding to in terms of your health, which also actually incorporates mental health, along with some of the other issues that affect the population, could be assisted by activity that is beneficial to the youth. I was in communities where it was very difficult just to put up a baseball diamond.

Right now, neither our federal programs nor your programs, has enough money. Your minister doesn't have enough money to do the infrastructure to support things, and our sports program money at the federal level is for programs, events. No dollars are going into the infrastructure right now. So we have to look at that.

I'm surprised you mentioned hospitals, because you didn't have doctors in the communities I was in. You had nurses doing a lot of what...but you have the technology to e-mail back and forth, just as you say.

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I was in Pond Inlet, for instance, and I toured its health centre. They're doing a lot of “telehealth” programs. I don't know if that's the correct word, but it was basically distance communication on health issues.

As for social service spending, I'm sure you could use more. I'm going to let you respond, but I do have some other questions that are totally unrelated. Something was brought up to me just this morning, and that's the food mail program of the Canadian government. I'd like to know if either you or anybody in your community is using food mail, and why it's not being used more extensively. Can you recommend anything that would make it a better utilized program? I can tell you that some of the communities I was in didn't even know the program exists.

Mr. Keith Peterson: Thank you. I'll just respond briefly on a couple of things.

You mentioned hospitals. Most communities have what are called health centres, but they're twenty and thirty years old. Iqaluit has the only hospital in Nunavut, and it's fairly old. The Government of Nunavut, through the Department of Health and Social Service, tried to develop an arrangement with three regions and the birthright development corporation to build hospitals in Cambridge Bay and Rankin, and to replace the one in Iqaluit. That's been in the works for six years now, and it will probably take a couple more years. It's going to cost $70 million, and they're scrambling to figure out how to pay for it.

Part and parcel of the hospitals and health centre issue is where to get the nurses and where to get the doctors. Currently, in our region, if anyone is seriously ill or is going to have a baby, they have to be flown to Yellowknife. Sometimes the ladies have to be sent out a month in advance. If you have a heart attack or break a leg, you have to be medevaced. It costs $16,000 on a charter to Yellowknife, and you're away from your family. We need hospitals in our own regions so that people can have their friends or relatives caring for them.

You mentioned the Internet. In Nunavut, we estimate that 60% of the communities are not connected to the Internet. In our region, David and I worked on this a few years ago, when he lived in Cambridge Bay. We set up the Internet in Cambridge Bay and we expanded it to our entire region. We only have satellite Internet in each community, uplinked to Yellowknife. People in communities like Grise Fiord have to dial long-distance to Iqaluit to get the Internet. We don't get high-speed Internet, cable, or digital signal lines. I think the fastest speed we get is 33,000 kilobytes per second, when it works.

So even though we talk about the Internet, not everybody has the Internet. In our region we're trying keep fairly advanced. We've provided it in all the schools so that the kids can use it. But different regions have different priorities. And it is expensive if you have to dial long-distance. We have two telephone companies in Nunavut, and their long-distance charges are astronomical. We don't have Sprint or any of those kinds of deals like people have down here.

As for social services, yes, we have a lot of alcohol problems in the north. We have a lot of suicide issues in the north. We have family issues, wife abuse, child abuse, and things like that. Our social services systems are under tremendous pressure. The folks in the communities are always looking to our hamlets, to the mayors, and to the councils to solve the problems. I've had to stand up in public meetings and tell the people we can't do it on our own, that we need their help, but we are underresourced.

In some communities, they don't have RCMP in the north. I think that's going to be corrected soon, but it's tough. RCMP officers are on their own in many communities. Social workers are on 24-hour days, seven days a week, to deal with issues. On what the root cause of all of it is, I'm not the right person to answer that question, but I can tell you we need help. We need that kind of funding and those kinds of people to help the people overcome some of the problems.

I can ask David to talk about food mail. I think he probably has checked that out.

Mr. David General: I'll keep it short, because I don't know a lot about this program. I'm as guilty as those you met in the communities.

• 1410

My impression was that it was primarily being used by the larger food outlets, because a question came up as to whether or not those savings were being passed on to the consumer. With what we see in high food prices, we didn't think so.

I'd have to do a bit more research on food mail. I really don't know that much about it.

Mrs. Sue Barnes: Just for information purposes, this is a program whereby you, as an individual, take your grocery list and just order what you want. It's not all frozen stuff. You're ordering from a grocery store in the south—I think it's in Montreal—and it's mailed up to Iqaluit or wherever. You pay the Montreal prices, and the government subsidizes part of the cost of that flight for your food. So you're actually then avoiding...it's not going into the grocery stores, it's going directly to a family. But there is paperwork involved, and there is a whole pile of other things.

What I'm saying is that maybe some of you who are mayors should be looking into this. If it's not working properly, you can then tell us how we can fix it so that it does work better.

Mr. David General: Thank you.

Mrs. Sue Barnes: I'm going to move over to Dr. Shaw and Mr. Janzen for a second.

Is your institute currently involved in any of the research opportunities together with universities? In my area, the colleges are doing stuff with the universities and are successfully getting research grants, but their issue is that they want to do it by themselves.

Dr. Sam Shaw: We're not working on any current projects with the universities. We have made submissions to the Alberta funding mechanisms in cooperation with some of the universities, to take a lead role in looking at simulation. But what I'm really talking about is not looking so much at pure research or looking at some of the research that's currently going on. I'm suggesting that we start focusing on applied research.

Applied research is not well defined in Canada. I used to do diabetic research when I was with Dalhousie.

What I'm talking about is a truck going down the highway. It has some volatile material. It stops. What do you do in order to get that truck going? Some of the applied research in mechanisms that NAIT has done to solve that issue is really what we want to take a look at.

In terms of applied research, other things are as simple as looking at the forest industry to see if we can change the moisture content in a truckload, and to see if that brings about a savings in terms of gas prices as we look at shipping.

Again, some of the applied research is very targeted to a very specific problem. That is not well understood.

Mrs. Sue Barnes: Where's your roadblock with the federal government right now? What's preventing you from making the application?

Dr. Sam Shaw: A couple of things are. I think one is a recognition that there is a role for applied research. But how do you define applied research? Again, you will typically get funding mechanisms saying that if you can get private enterprise and a university together, and so forth.... Some of the university research is not in line with looking at applied research. Applied research is sometimes very mundane, and it doesn't warrant the kind of rigour you would have at a university. So there are those kinds of issues.

The other issue is that there isn't any specific funding, even if you look at CFI funding and the allocation for the colleges and technical institutes. Again, it's more along the lines of research as opposed to applied research.

Mrs. Sue Barnes: But to your knowledge, no act is preventing you from doing things, nothing needs amendment, it's just a matter of procedures and funding. Nothing is preventing you right now from going to CFI and asking for something, or to NSERC or to any of those things.

Dr. Sam Shaw: That's right, no.

Mrs. Sue Barnes: It would be merit-based along with everybody else's.

All right, thank you very much, and thank you for your time.

The Chair: Do you have any further questions?

Mrs. Sue Barnes: No, thank you.

The Chair: On behalf of the committee, I want to thank you very much.

We hear literally from thousands of people who participate in this process. It's not just the finance committee, because members of Parliament also hold town hall meetings. This year, we're actually also going to have input from other standing committees vis-à-vis the assessment of the national security issue.

Of course, we always face trade-offs. For example, many people who have appeared in front of our committee in many of the cities wanted us to remain on a sound economic and financial footing, which means they don't favour going back into a deficit. Of course, if there's an economic slowdown and you don't want to go into a deficit—depending upon the numbers, this is all premature right now; I'm just speculating—you sometimes have to delay, defer, or cut expenditures.

• 1415

By the same token, as a committee, we have always been very much committed to the long-term view of nation-building in the sense that, while we have this national security issue that is immediate and that we have to deal with—Canadians want to have a sense of security restored—we also need to look at long-term issues. By that, I mean issues like the standard of living, productivity, or Canada's place within the North American community, just to cite some. But then you, Mr. Peterson and Mr. General, also bring to light many of the issues that are nationally important and need to be addressed.

At the end of the day, the recommendations we make in this committee address improving not only the standard of living of Canadians, but also their quality of life. This is the challenge that we always face. We try to balance all these needs. We try to approach this task in a very open and fair manner, but, let me tell you, it's challenging, particularly since September 11. Nobody actually was counting on that, but I can tell you that Canadians throughout Canada share that concern.

One thing I can tell you in reference to that is that the issue national security has risen in national importance quite dramatically during these hearings. As a matter of fact, before they've made their presentations, many people have had a preface about the fact that September 11 has occurred and that they want this committee to also respond to that particular event.

Needless to say, as always, you provide us with great insight into what your issues are. We're very grateful for that, because it does give us a sense of a broader view of what Canadians from coast to coast to coast want not only from this committee, but from their government.

Thank you very much.

The meeting is adjourned.