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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Tuesday, October 7, 2003

0935

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

Ms. Danielle Shaw-Buchholz (Government Relations Director, Salvation Army)

Ms. Mildred Jarvis (Long Term Care Consultant, Salvation Army)

Ms. Danielle Shaw-Buchholz

0940

The Chair

Ms. Ellen Russell (Senior Research Economist, Canadian Centre for Policy Alternatives)

0945

0950

The Chair

Ms. Ellen Russell

The Chair

Ms. Margaret Fietz (President and Chief Executive Officer, National Children's Alliance)

The Chair

Ms. Margaret Fietz

Ms. Dianne Bascombe (Director, National Children's Alliance and Social Policy Issues, National Children's Alliance)

0955

1000

The Chair

Ms. Suzanne Sabourin (Executive Director, Government Relations, Insurance Bureau of Canada)

1005

The Chair

Mr. Glen Tully (President, Canadian Co-operative Association)

1010

1015

Mr. Jean-Yves Lord (Executive Director, Canadian Co-operative Association)

The Chair

Mr. Rick Casson (Lethbridge, Canadian Alliance)

Ms. Mildred Jarvis

Mr. Rick Casson

1020

Ms. Ellen Russell

Mr. Rick Casson

Ms. Jane Voll (Acting Vice-President, Policy and Development, Chief Economist, Insurance Bureau of Canada)

1025

The Chair

Ms. Pauline Picard (Drummond, BQ)

Ms. Diane Bascombe

Ms. Margaret Fietz

Ms. Pauline Picard

1030

Ms. Dianne Bascombe

Ms. Margaret Fietz

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

The Chair

Ms. Ellen Russell

1035

Mr. Bryon Wilfert

Ms. Mildred Jarvis

Mr. Bryon Wilfert

Ms. Mildred Jarvis

1040

The Chair

Ms. Dianne Bascombe

The Chair

Mr. Roy Cullen (Etobicoke North, Lib.)

The Chair

Ms. Jane Voll

1045

Mr. Roy Cullen

Ms. Ellen Russell

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.))

Mr. Bruce Campbell (Executive Director, Canadian Centre for Policy Alternatives)

1050

The Vice-Chair (Mr. Nick Discepola)

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

Ms. Ellen Russell

The Vice-Chair (Mr. Nick Discepola)

Ms. Ellen Russell

The Vice-Chair (Mr. Nick Discepola)

Ms. Ellen Russell

Mr. Bruce Campbell

Ms. Judy Wasylycia-Leis

Ms. Ellen Russell

1055

Ms. Judy Wasylycia-Leis

Mr. Glen Tully

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Suzanne Sabourin

The Chair

Ms. Maria Minna (Beaches—East York, Lib.)

1100

Ms. Margaret Fietz

Ms. Maria Minna

Ms. Ellen Russell

Ms. Maria Minna

The Chair

Ms. Ellen Russell

The Chair

Mr. Lawrence Cannon (General Manager, Société de transport de l'Outaouais)

1110

1115

The Chair

Ms. Maura Volante (Coordinator, Alliance to End Homelessness)

1145

1150

The Chair

Mr. Gilles Vaillancourt (Mayor of Laval; President, Coalition pour le renouvellement des infrastructures du Québec)

1155

1200

The Chair

Mr. André Bergeron (Executive Director, Association of Canadian Airport Duty-Free Operators)

The Chair

1205

Ms. Amelia Shaw (Manager of Public Affairs, Canadian Urban Transit Association (CUTA), National Task Force to Promote Employer-Provided Tax-Exempt Transit Benefits)

The Chair

Ms. Donna-Lynn Ahee (Secretary-Treasurer, Amalgamated Transit Union Canadian Council, National Task Force to Promote Employer-Provided Tax-Exempt Transit Benefits)

Ms. Amelia Shaw

1210

Ms. Donna-Lynn Ahee

Ms. Amelia Shaw

The Chair

Mr. Rick Casson

1215

Mr. Gilles Vaillancourt

Mr. Rick Casson

1220

The Chair

Mr. Rick Casson

The Chair

Mr. Lawrence Cannon

Mr Georges O. Gratton (Director, Société de transport de l'Outaouais)

Mr. Rick Casson

The Chair

Mr. Pierre Paquette (Joliette, BQ)

Mr. Gilles Vaillancourt

Mr. Pierre Paquette

Mr. Gilles Vaillancourt

1225

Mr. Pierre Paquette

Mr. Lawrence Cannon

The Chair

Ms. Amelia Shaw

Mr. Roy Cullen

1230

Mr. Gilles Vaillancourt

Mr. Roy Cullen

Ms. Amelia Shaw

Mr. Roy Cullen

The Chair

1235

Ms. Maura Volante

The Chair

CANADA

Standing Committee on Finance

NUMBER 078

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, October 7, 2003

[Recorded by Electronic Apparatus]

¿ (0935)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): The orders of the day, pursuant to Standing Order 83(1), on pre-budget consultations shall continue.

We have five groups for our first panel this morning.

From the Salvation Army, we have Danielle Shaw-Buchholz, associate legal adviser, and Mildred Jarvis, long-term care consultant. Welcome to you both.

From the Canadian Centre for Policy Alternatives, we have Ellen Russell, who is the senior research fellow. She is joined by Bruce Campbell, who may answer questions later.

From the National Children's Alliance, Dianne Bascombe, director, is also joined by Margaret Fietz, who is the president and CEO of Family Service Canada. Welcome to you both.

From the Insurance Bureau of Canada, we have Suzanne Sabourin, executive director, government relations, joined by Jane Voll, acting vice-president, policy and development, and chief economist. Welcome to you both, again.

From the Canadian Co-operative Association, Glen Tully is the president and Jean-Yves Lord is the executive director. Welcome.

[Translation]

Welcome to you all.

We will now begin to hear from our panelists

[English]

in the same order as the agenda.

We'll start with the Salvation Army. You have seven minutes. If I hold up my pen, you'll know that you've hit the time.

Go ahead, please.

Ms. Danielle Shaw-Buchholz (Government Relations Director, Salvation Army): Thank you. Good morning. Bonjour.

My name is Danielle Shaw. I'm actually serving as the government relations director for the Salvation Army and no longer as in-house legal counsel. My colleague Mildred Jarvis is the Salvation Army's national long-term care consultant. We thank you for the opportunity to make this presentation this morning.

We are here to speak to spending measures that we believe are necessary to ensure progress and caring for all members of Canadian society. More specifically, we are here to encourage the federal government to invest in the provision of quality end-of-life care. Care for the dying has been the subject of significant studies by the Senate and the Commission on the Future of Health Care in Canada. Those studies have stressed the importance of investing in quality end-of-life care.

The Salvation Army, which is an international branch of the Christian church, is one of the largest providers of social services in the world. Guided by the commitment to serve others with respect and compassion, the Salvation Army in Canada serves over a million people per year, including 1,500 who are receiving end-of-life care.

The Salvation Army currently owns or operates 23 facilities across the country in which end-of-life care is provided. These include hospitals, long-term care facilities, and community-based hospices.

Ms. Mildred Jarvis (Long Term Care Consultant, Salvation Army): The Salvation Army supports an integrated model of health service care delivery that allows terminally ill persons to remain in their homes as long as possible. An integrated model of service delivery provides a continuum of service that includes home care, day care, parish nursing programs, in-service and in-home volunteer support, respite for caregivers, and residential hospice care.

While we highly endorse an integrated model of service delivery, dying at home is not an option for everyone. The Salvation Army, therefore, urges the federal government to invest in end-of-life care across the entire spectrum and to include both home-based and community-based hospice care in its funding priorities.

The Salvation Army endorses the recommendations of the Standing Senate Committee on Social Affairs, Science and Technology, which we will refer to as the Kirby committee, that the federal government contribute $250 million per year toward a national palliative home care program that will be designed with the provinces and territories and co-funded with them on a fifty-fifty basis.

Investment in home-based care would allow for better end-of-life care. It would respect the wishes of Canadians who prefer to die at home. It would reduce demands on acute care beds and emergency departments in hospitals, thus saving money.

Long-term care facilities increasingly have to address the needs of terminally ill and palliative residents. The demands placed on staff and other resources are significant, with the result that it is difficult to provide quality care to both terminally ill and non-terminally ill residents.

The two key studies conducted to date tell us that most Canadians wish to die at home. For many Canadians, long-term care facilities are home. The Salvation Army, therefore, strongly urges that long-term care facilities be included in the national palliative home care program.

As indicated earlier, dying at home is not an option for everyone. Unhealthy family dynamics, the absence of a caregiver at home, caregiver exhaustion, care requirements that exceed resources and capacity at home, as well as cultural factors make it impractical or impossible for some to die at home. Funding of residential hospice care is, therefore, necessary to ensure that those who cannot or do not wish to die at home are cared for.

Ms. Danielle Shaw-Buchholz: The level of funding that's tied to care services varies considerably from one province to the next, and from one setting to the next. The Kirby committee has noted that palliative care in hospitals is usually paid for by a provincial health plan that typically covers professional care and drugs, medical supplies, and equipment. In long-term care facilities, however, residents may be required to pay varying amounts for care and supplies.

The Canadian Hospice Palliative Care Association has noted that few provinces have designated palliative care as a core service with a specific budget. Resources required to provide good community care, either in a person's home or in a specialized residential hospice, have not been made available even when access to hospital beds has been reduced.

These realities reinforce our belief that the federal government must invest in a national palliative care program that provides designated dollars for end-of-life care, and provides funding across the entire continuum of home-based care, long-term care facilities, and residential hospices. Ideally, the Salvation Army would like to see end-of-life care services identified as medically necessary under the Canada Health Act.

One model that we have found particularly successful is the one adopted by the Regina Qu'Appelle Regional Health Authority in Saskatchewan. The Salvation Army's William Booth Special Care Home is an 81-bed long-term care facility that includes six fully funded palliative care beds. The Regina Qu'Appelle Regional Health Authority has a single point of entry into the system and coordinates resources across the continuum to ensure that people receive the services they need when they need them most.

Terminally ill residents who stay at the William Booth Special Care Home receive care in a home-like setting during their final stages of illness. They have access to the core services of a long-term care facility, as well as the services of the regional palliative care team. This model of service delivery is a cost-effective alternative to short-term, high-cost home care and hospital care.

In addition to designated funding for end-of-life care, we believe there is a need for further research to be conducted with respect to the needs of terminally ill persons, as well as some of the challenges presented by current funding levels and funding models. Our specific recommendations are set out in pages 11 and 12 of our brief. We urge the government to take a leadership role in this area—the federal government, that is—and to invest in further research so that Canadians can receive the best possible end of life care.

In closing, we would like to thank you once again for the opportunity to appear before this committee to urge the federal government to invest in quality end-of-life care. This is the time for the government to increase its investment in end-of-life care to make high-quality, community-based end-of-life care a reality for all Canadians.

Thank you.

¿ (0940)

The Chair: Thank you very much.

Now we'll go to the Canadian Centre for Policy Alternatives. Ms. Russell, please go ahead.

Ms. Ellen Russell (Senior Research Economist, Canadian Centre for Policy Alternatives): I am worried. I am worried that outdated thinking is having damaging consequences on public debate about the federal budget. I want to urge you to re-evaluate this thinking, to abandon the anachronistic aspects of this thinking, and to embrace a new set of ideas that will help Canada's economy meet the next set of challenges before us.

Here is the old paradigm. Back in the days when the federal government was wrestling with the question of federal budget deficits, there emerged a sense that fiscal prudence obliged the federal government to cut program spending. That was done, the deficit was conquered, and that battle is now over, and it has been over for several years. Not only were deficits dealt with, but the federal debt has been steadily declining as a percentage of GDP each and every year since then.

Now a new problem has emerged. The sorts of ideas that were relevant during the times of persistent federal budget deficits started being applied in perverse ways. It mutated into demands to continue to neglect program spending, despite the fact that the deficit monster was already slain. It mutated into demands for what I will call “the small government”, that is to say, if you do your darndest to diminish program spending, and better yet, institute tax cuts, the federal government has less revenue to work with, and then you can shrink the role of government.

This prolonged attack on program spending started out as the battle cry of fiscal responsibility in the 1990s, but today it has become just the opposite. Today it is becoming fiscally irresponsible to continue on the path of under-performance in program spending. Today, if you continue to neglect program spending, you actually jeopardize the prospects for Canadian economic growth. Vigorous economic growth requires economic infrastructure, and government is the only actor in the economy that is in a position to undertake and maintain this infrastructure. If we continue to neglect program spending, we risk jeopardizing the infrastructure that provides the foundation for Canadian economic growth.

I speak here of hard and soft infrastructure, the large and complex projects and systems that all economic activity depends upon. Economic infrastructure includes the wide variety of transportation, electricity, all manner of public services that keep Canada open for business, as well as the health care, education, and other social infrastructures that create an effective workforce. It also includes the automatic stabilizers that insulate the Canadian economy from unavoidable economic shocks.

Now, granted, the provision of economic infrastructure falls in multiple jurisdictions. Some of these responsibilities fall within the federal jurisdiction, and even when they fall in other jurisdictions, cost sharing arrangements involve the federal government indirectly in their provision. So the federal government undeniably has a leadership role in both funding economic infrastructure and in demanding coherence and high performance standards from the economic infrastructure we have in place.

The federal government is increasingly unable to play this leadership role. If we divert money away from program spending, and worse yet, if we institute tax cuts that reduce the government's wherewithal to do the heavy fiscal lifting that is sometimes required, we are painting ourselves into a corner. Ultimately, all Canadians will suffer, because the federal government is no longer in a position to exert the necessary economic stewardship.

So how bad a state is program spending in?

Last year's budget was celebrated because it called for program spending equivalent to 12.2% of GDP, and that was certainly an improvement over recent times, since program spending has been coming in at about 11.6% or less of GDP for the three consecutive years prior to last year. But 12.2% of GDP is very modest by historical standards.

Historically, program spending has averaged 15.9% in the 40 years between 1961 and 2001, and at no time did program spending dip below 14.1% in those decades, up until the focus on deficit elimination in the 1990s. Moreover, this level of program spending was sustainable. In the 1970s, for example, program spending varied between 16.2% and 19.5% of GDP, but by the end of that decade, the debt-to-GDP ratio stood only at 27.6%, which is really in the ballpark of the goal that Paul Martin has recently advertised.

So given that from 1961 to the mid-1990s, 14.1% of GDP was the minimal expenditure on programs, 12.2% on program spending is not spectacular by historical standards.

¿ (0945)

Moreover, the Liberal government promised that the fiscal dividend resulting from the elimination of the deficit would be allocated fifty-fifty, meaning half allocated to increased program spending to deal with social priorities and half to reduce taxes and repay debt. Our analysis suggests that the federal government is nowhere near allocating 50% of the fiscal dividend to restoring federal program spending. If you take as a baseline the program spending in fiscal year 1997, when the budget was balanced, adjusted forward for inflation and population growth, in the first five years after balancing the budget, new program spending received about 10% of the fiscal dividend.

This neglect of program spending is coming home to roost. There is no free lunch, and if we want quality infrastructure, we need to pay for it. Health, education and a variety of social programs have suffered enormously from this neglect. In addition, the basic physical infrastructure the Canadian economy relies upon has been neglected. For example, gross government fixed capital formation as a percentage of government outlays used to hover about 16% to 18% in the earlier 1960s. Through the 1990s until the present, it's been hovering at around 6%.

As program spending has been neglected, we compromise our economic infrastructure and we will ultimately pay a price for this neglect. Case in point, the capacity of our economy to weather economic shocks is undermined when our economic infrastructure is neglected, as SARS, the forest fires, the electricity blackout, the mad cow disease, and now the maritime hurricane have all illustrated. Public services of all sorts need to have the capacity to both undertake preventive action to avoid these crises and respond effectively when unexpected events do occur.

The Canadian economy suffers more than it might otherwise need to because an underfunded infrastructure cannot respond adequately to these shocks, which means that these problems ramify further through the economy and inflict greater damage on the economy as a whole.

Our recommendations are as follows.

First, increase program spending. At the moment I'm not going to go into details of how you should allocate that program spending. The Canadian Centre for Policy Alternatives has been producing an alternative federal budget for years that addresses that question in detail, and you can consult our plans for renewed program spending at our website, www.policyalternatives.ca/afb.

Second, resist the pressure for tax cuts. Further tax cuts are a luxury the federal government cannot afford. There are tax cut ideas being discussed that are purported to help low-income Canadians, which I find a particularly bad idea, and I can elaborate further on that question if you wish.

Third, de-prioritize debt repayment. Debt is already diminishing as a percentage of GDP, and we need to focus on economic growth to steadily reduce this ratio. Reaching a goal of debt to GDP, such as 25%, in any kind of short-run or even medium-run timeframe will necessitate draconian budget cuts that will put Canadian economic infrastructure in further jeopardy.

Thank you.

¿ (0950)

The Chair: You had a fourth point, I think, on your paper. If you wanted to express that, I'll allow you. No?

Ms. Ellen Russell: That's fine, thank you.

The Chair: Okay, thank you.

We'll go now to the National Children's Alliance, Ms. Fietz.

[Translation]

Ms. Margaret Fietz (President and Chief Executive Officer, National Children's Alliance): Good morning. Thank you for this opportunity to submit our recommendations.

Our apologies for the fact that our presentation is not yet available in French.

[English]

The National Children's Alliance is an alliance of 56 voluntary sector member organizations--primarily national, some provincial, some local--across Canada who are interested and advocate on behalf of children's wellbeing in Canada. The list of the member organizations is on the first page of the brief and there is a description in the brief about the National Children's Alliance and how it works.

It is an alliance. We do reach policy positions through cooperation and consensus, and that's one of the reasons we didn't have time to get the brief translated, because some of the feedback from member organizations did not come in until late yesterday afternoon.

The Chair: We sent your brief in this morning for translation and we'll circulate it in both languages as soon as possible to all members.

Ms. Margaret Fietz: Thank you.

I'll now ask Dianne Bascombe to go through our recommendations.

Ms. Dianne Bascombe (Director, National Children's Alliance and Social Policy Issues, National Children's Alliance): I'll focus this morning on the recommendations that we're here to make to you, and I would certainly would like to thank you for the prior years, when some of our recommendations have made it into reality in the federal budget. We look forward to that happening again today.

I'd also like to start out by referencing the national children's agenda, signed by the federal, provincial, and territorial governments in 1999, which still provides an excellent foundation for moving forward, and by recognizing the government's policy movement in the area of children's issues over the past number of years. We look forward to continuing to build that foundation for a sustainable, coordinated policy frame.

We've put our recommendations into three areas. We're looking at sustaining families through the income support programs; and we are looking at services and have put some priority areas on them, which we think will make a huge difference in terms of investment; and we have a recommendation looking at how we're going to monitor outcomes of policy and also children in Canada.

I'll focus on the recommendations during my remarks, and I would be pleased to speak to them in more depth in the question and answer period.

First of all, we certainly recognize the progress that has been made in reducing child poverty through the national child tax benefit, and we are recommending a further investment of up to $4,200 per child, which would really raise the bar in terms of child poverty. We're also continuing to be concerned about the clawbacks at the provincial level to families on social assistance, and would like to see that negotiated out in the future in the national child tax benefit.

We certainly have come here before to make a case for extending parental leave and we are pleased that it's up to a year. We also recognize from the research that 55% of income generated provides a hardship for many, many low-income families. We would like to see the parental leave benefit increased to 75% of earnings.

We'd also like to see eligibility requirements increased to be inclusive of part-time and self-employed workers, recognizing that many women on low income are self-employed and part-time workers.

Also around parental leave, I think we need to revisit the provisions for adoptive families and equalize them, as well as taking a look at eliminating the waiting period, which is really difficult for families.

Certainly the compassionate leave that was announced in the last budget through the EI program is helpful, but we would like to see it expanded to include paid leave for families with children with special needs. When you look at the statistics around families with children with a disability, and the economic impact that has on family, we'd like to see paid leave for parents who must temporarily or periodically care for a child with disability-related needs.

Those are all of our recommendations around the EI program, which we feel would have a huge impact on the well-being of children and families, if they were instituted. Those are the main recommendations we had within the income-related support part.

In terms of some of the services, we'd certainly like to agree with the position of the Centre for Policy Alternatives. This is not a time to continue to cut programs and services in Canada. I think we have seen enough; the impact on children and families over the past decade has been very detrimental. We know through the research that you can't address the negative impacts of poverty simply through income support programs. We need those programs and services for vulnerable children and their families in the community.

We would like to see the federal government continue its excellent work with the early childhood development initiative, through the multilateral framework agreement to develop a coordinated national strategy on child care. To this end, I would like to reference the United Nations' report that came out last week, on October 3, which certainly called Canada to task, as one of the wealthiest nations in the world, about the lack of coordination on a child care strategy. We think great progress has been made so far through the ECDI and the multilateral framework. There's huge potential to move at this time on a coordinated national child care strategy.

¿ (0955)

Also, recognizing the work the federal government has been doing on the policy side in moving toward a strategy for healthy, active living, we would like to see included in that specific programs and policies for children. We're very concerned about the increases in diabetes and obesity among kids in Canada, and we feel that through the healthy living strategy there could be a children's infrastructure fund.

We've certainly done some work with the Federation of Canadian Municipalities around this, and would like to see public spaces and family places as an investment through the healthy living strategy to establish a children's infrastructure fund. We're looking at $300 million a year to increase access for play and recreational opportunities in our communities, in partnership with municipalities and voluntary sector organizations, particularly to address issues of access for vulnerable children, youth, and their families.

The other area we have concerns about, using the lens of how children are doing in Canada, is housing and the numbers of families who are living in housing-induced poverty, with rents in excess of 30% of their income. To that end, we would like to build on a strategy you've invested in and ask for an increase in the social housing initiative to $625 million over the next four years, which would assist in the development of 25,000 units annually—again targeted at families and children who are living in poverty.

The other area we are continuing to do some work on is aboriginal children. On October 29, the National Children's Alliance is meeting with aboriginal organizations in Canada to begin a strategy to look at policy around aboriginal children. We brought this to your attention, and we know it's on the government screen. We're very concerned about the numbers of aboriginal children in care of the state. Funding formulas through INAC need to be revised immediately in order to increase the amount of funding available for aboriginal agencies serving aboriginal children and families.

Our last recommendation looks at all of the government's commitments, both international and domestic, recognizing the accountability piece in all of that, including around how we monitor outcomes at the community level, how we monitor how our children are doing, and how we monitor how our policy is doing for our children and families.

Over and over again, we've looked at this. In 2001, we certainly appreciated this committee's recommending that funding be given to the third sector for monitoring. This has not happened yet, so we hope that the recommendation can be revitalized. And we're asking for funding for the development of a sustainable monitoring mechanism to track the health and well-being of children in Canada in order that we can collectively meet Canada's international and domestic agreements.

À (1000)

The Chair: Thank you very much.

I'll go to the Insurance Bureau of Canada.

Commencez, s'il vous plaît.

Ms. Suzanne Sabourin (Executive Director, Government Relations, Insurance Bureau of Canada): Thank you, Madam Chair. Good morning, ladies and gentlemen.

My name is Suzanne Sabourin. I'm executive director, government relations, for the Insurance Bureau of Canada, the national trade organization that represents the private companies that insure cars, homes, and businesses across Canada. With me today is Jane Voll, acting vice-president, policy development, and chief economist.

To begin, I wish to convey to you the regrets of our president and CEO, Mr. Stan Griffin. He was scheduled to appear before the committee this morning, but unfortunately an unexpected schedule conflict prevented him from travelling to Ottawa today. Mr. Griffin values the work of the committee and asked Jane and me to represent IBC on his behalf.

IBC commends the government for restoring the nation's finances. Sound finances are essential. They provide the foundation for innovation and growth. Equally important, they provide the base for the public and private investments we need. A blend of tax relief, debt reduction, and targeted program spending have helped Canada enjoy its longest period of economic expansion since the 1960s, with low inflation and interest rates. It's important that Canada stay the course.

IBC's pre-budget submission, tabled with the committee in August, emphasized risk management as part of a healthy economy. This morning I'll focus our comments on risk management initiatives that we are pursuing to foster a more supportive environment for citizens and businesses alike. They are natural disaster mitigation and crime and injury prevention.

Disaster payments by insurance companies and taxpayers have doubled every five to ten years throughout the 1980s and 1990s in Canada and abroad. Losses are rising because of the rapid growth in major urban centres, our aging infrastructure, and the increase in frequency and severity of extreme weather events. In Canada, more recently, the Kelowna wildfires have been the most costly disaster, with an estimated cost of $250 million in damages. We have yet to determine the devastating effects of Hurricane Juan. The other devastating natural event was, of course, the ice storm of 1998, which caused 28 deaths and $5.5 billion worth of damages for governments and insurance providers.

IBC and the members of the House of Commons finance committee have been leaders for a number years in advocating actions that we can take to better manage extreme events. For its part, the industry has invested in disaster loss prevention research through the Institute For Catastrophic Loss Reduction at the University of Western Ontario. The institute has produced 60 research papers, hosted more than 95 workshops, and sponsored public education initiatives.

The institute, recognizing the need for a multi-disciplinary and multi-sectoral approach to research, recently submitted a proposal under the networks of centres of excellence program to improve the resilience of Canadian cities. The Research Alliance For Disaster-Resilient Cities proposes to advance disaster prevention science and deepen research capacity within Canada to address the specific concerns of cities and critical infrastructure lifelines.

In the past, this committee has expressed its support for investments in disaster prevention. This has led the federal government to introduce a natural disaster mitigation strategy in 2001. We welcome the committee's continued support in urging the government to turn commitment into action by providing dedicated funds to implement the strategy and supporting other projects, such as the Research Alliance For Disaster-Resilient Cities, to promote sustainable and competitive cities.

I've just described one area of risk management that can greatly contribute to creating an environment where Canadians can enjoy the best quality of life. There are others, including crime and injury prevention, where the pay-off in terms of lower program delivery costs is potentially enormous.

As you know, the industry spends about $4 billion a year on health care. By far the largest portion of our health care expenditures is for rehab services for the quarter of a million people who are injured in motor vehicle collisions on a yearly basis. We know from experience that the single most effective way to reduce these human and dollar costs is through injury prevention programs. We've been leaders in the battle to reduce drinking and driving, in the use of seat belts, and more recently in the proper use of headrests. Our programs have produced tangible results.

À (1005)

For example, the introduction of graduated driver licensing in Ontario resulted in a 27% decline in fatalities and injuries of novice drivers, with an estimated overall saving of $59 million. We know that injuries do not occur at random; they are preventable. With a $600,000 funding commitment from our industry, we have partnered with SMARTRISK to develop a Canadian injury prevention strategy. Our efforts have focused on forging the necessary partnerships with workplace safety organizations, health agencies, NGOs, private insurers, consumer product manufacturers, academics, and governments to provide the federal government with the necessary impetus to champion a permanent, national initiative to prevent injuries from all sources, including falls, motor vehicle collisions, sports injuries, as well as consumer product use. Our efforts are paying off.

We will report on the development of an integrated Canadian injury prevention strategy here in Ottawa at the Canadian injury prevention and safety conference being held on November 23, 24, and 25. The conference is co-hosted and co-sponsored by SMARTRISK and IBC. We're encouraged that injury prevention was added to the federal government's population health agenda as an emerging national issue. We urge the federal government to embrace the private-public partnership model established by IBC and SMARTRISK, with the federal government committing to a five-year, $250-million allocation framework to strengthen the capacity in Canada for more effective injury prevention.

The committee has vigorously promoted greater security and expanded opportunities for Canadians through sound financial management, economic innovation, and growth. As we're meeting here today to discuss these issues and review the objectives, representatives of the insurance industry and law enforcement agencies are meeting here in Ottawa through the auspices of the North American Export Committee to tackle vehicle theft and exportation of vehicles. Why are we doing that? It's because organized crime involving stolen vehicles is a phenomenon that should be taken into account in any discussion to enhance the security of Canadians and their economic well-being.

We've been leaders in the area, and what we find is that there is a link between organized crime and vehicle theft and insurance fraud, and there are signs now that the globalization of organized criminal activities such as the export of stolen vehicles is facilitating the financing of the international terrorist network. This being said, one area where the federal government can be helpful is in amending the Criminal Code to make sure that insurance fraud and vehicle theft are specific, indictable criminal offences in Canada. This would greatly assist in reducing the economic burden of Canadians who foot the bill for these expenses and would cut into organized criminal activity.

Madam Chair, this ends our formal remarks. Thank you for the opportunity to participate in these consultations.

The Chair: Thank you.

Now we'll turn to the Canadian Co-operative Association. Mr. Tully, go ahead, sir.

Mr. Glen Tully (President, Canadian Co-operative Association): Thank you very much. Good morning.

My name is Glen Tully. I am the president of the Canadian Co-operative Association, or CCA. I'm pleased to be here today to participate in the House of Commons finance committee's pre-budget consultations. I'm joined by Jean-Yves Lord, our executive director.

The Canadian Co-operative Association is a national association of cooperatives and credit unions. We are a not-for-profit cooperative. We exist to promote the growth and development of the cooperative sector for the economic and social betterment of communities and people in Canada and internationally. We work closely with our sister organization, the Conseil Canadien de la Coopération.

The cooperative sector is distinct from the public, private, and volunteer sectors. Cooperatives are involved in a multitude of economic and social activities. What makes us different is that cooperatives are organized, owned, and controlled by the people who use their products or services.

Cooperatives are democratically controlled, member-owned business incorporated for the purpose of meeting the needs of their members. The cooperative model recognizes the importance of communities' defining their own needs in building upon their existing capacities. It facilitates the coming together of individuals and communities to strengthen the quality of life in regions and communities in which they live and operate. Collectively there are over 10,000 cooperatives, credit unions, and caisses populaires in Canada, with over 15 million memberships, 150,000 employees, $160 billion in assets, and 70,000 volunteers.

CCA's members are drawn from all geographic regions and are involved in a wide range of activities, including finance, agriculture, insurance, retail and wholesale, housing, and health. Many of you have probably purchased insurance, gas, groceries, dairy products, or Inuit art from our members, who include among others: Federated Cooperatives, an organization of which I am vice-chair; Co-operators Insurance; Co-op Atlantic; Scotsburn Co-operative Services Limited; Gay Lea Foods Cooperative Limited; and Arctic Co-operatives Limited. You may very likely be among the one-third of Canadians who get their financial services from credit unions and caisses populaires.

We have left copies of our annual report with committee staff. Our members include the Co-operative Housing Federation of Canada and Credit Union Central of Canada, and they've already appeared before you to discuss their specific interests and recommendations.

We believe the finance committee's pre-budget consultations are an important vehicle to allow Canadians to have a voice in the development of the federal budget. CCA has a tradition of appearing before you, and we are pleased to be here again today. You have previously received a written copy of our brief, and we would like to highlight a couple of points contained in our written brief during our remarks today.

One of the themes identified by the committee for this year's pre-budget consultation involves measures to ensure Canada's economic and social success and the success of its inhabitants, as well as measures to ensure vibrant communities, whether in urban, rural, or remote areas of the country. These themes resonate with the CCA mission and with our sector's recognition of cooperatives as the most effective vehicle to allow communities to own and shape a better future for themselves.

We are pleased that the federal government also views cooperatives as an important people-owned, community-focused tool to allow Canadians to shape a better future for themselves. We congratulate it on demonstrating this commitment through its June 2002 announcement of federal funding, in the amount of $15 million over five years, for the cooperative development initiative.

The cooperative development initiative includes two components: research and innovation, and the advisory service. The research and innovation component is being managed directly by the federal government's Cooperatives Secretariat and will allow Canadians to research and test innovative ways of using the cooperative model. The advisory services component is being managed by the Canadian Co-operative Association and the Conseil Canadien de la Coopération on behalf of the cooperative sector. Through advisory services, groups who want to start new cooperatives or who need help to manage existing ones will be able to access expert assistance.

À (1010)

As a cooperative sector, we're motivated to make the most of this partnership opportunity. History has taught us that cooperatives do not usually spring up on their own; rather, they're built by communities, the existing cooperative sector, and the government, working together. We believe the cooperative development issues will result in a critical mass of new cooperative startups in Canada and a concrete opportunity for our federal government to help Canadians succeed and support the ongoing development of vibrant communities everywhere in Canada.

While we appreciate the federal funding for the cooperative development initiative, we are cognizant of the fact that it's less than half of what we had initially deemed necessary by the co-op sector. We also recognize that there are many other opportunities for the federal government and the cooperative sector to partner to the benefit of Canadians. We would therefore encourage the finance committee, as it provides input on the development of the forthcoming budgetary plan, to explore potential new funding programs to consider how it could partner with the cooperative sector.

À (1015)

Mr. Jean-Yves Lord (Executive Director, Canadian Co-operative Association): Another specific example of the cooperative sector working together with the federal government to achieve common goals is the worker co-op fund, a pilot project funded by HRDC and administered by the Canadian Worker Cooperative Federation, one of the CCA's members. This pilot project has been successful in investing $1.25 million in worker cooperatives for the creation and maintenance of jobs. These investments have supported the creation of approximately 145 jobs across Canada. Twelve of the 20 projects funded to date are investments in the rural economy.

This pilot will soon come to the end of its three-year period. The Canadian Worker Cooperative Federation projects that this pilot job fund, if capitalized at $20 million, would be self-sustainable and support the creation of thousands of jobs.

Given that cooperatives can provide virtually any product or service, that they exist in every sector of the economy, and that they can either be non-profit or for-profit enterprises, almost every time the federal government acts, cooperatives can be affected.

In concluding, we would like therefore to encourage the federal government, as it develops and adopts new policy direction, programs, services, and regulations, to apply a cooperative lens in order to consider how these projects may impact on cooperatives. When such changes are considered, we also encourage the federal government to consult with the cooperative sector.

Madam Chairman, thank you for your time this morning. We look forward to answering any questions.

The Chair: Thank you.

I'll immediately go to questions up to seven minutes. We'll go with Mr. Casson and then Madame Picard.

Mr. Casson.

Mr. Rick Casson (Lethbridge, Canadian Alliance): I'd like to start by thanking you all for coming this morning. I'll start with the Salvation Army and some of your requests.

In our communities, I think it's pretty much the same. We have seniors' lodges, we have extended care, we have active care, we have home care, assisted living. It seems to me that the foundations and boards and regional health authorities are all trying to work together to supply the best care for everyone. There have been some changes. There's been assisted living put into lodges, and some of these things in the staffing areas have changed.

Are you saying, then, that there are still holes in that system whereby people aren't receiving the care they need, or that some of those areas have priority over others in terms of where the funds should go to meet the needs of Canadians?

Ms. Mildred Jarvis: We acknowledge that there has been very significant increase in community- based supports given to people and that communities are trying to work with the health authority in their area to bring about these services. I think our point is that there is not a similar pattern in place in all provinces.

We recognize that health is provincial and that the responsibility is there, but we also realize that with the federal grants to the provinces perhaps there could be some designated funds that would bring increased supports to community-based hospice palliative care that enabled people to stay in their homes longer if that's what they wished to do, but to provide other alternatives that are funded, because some provinces do fund community-based initiatives to a much greater extent than other provinces do.

When we look at quality end-of-life care, it's the right of all Canadians, and yet the same patterns are not in place in each province. So we thought it might be helpful if there could be some designated funds to help support those infrastructures in each respective province.

Mr. Rick Casson: Very good, thank you.

We seem to have a difference of opinion here between the Canadian Centre for Policy Alternatives and the Insurance Bureau. The Insurance Bureau says that further tax cuts would be beneficial to all, and certainly the Centre for Policy Alternatives claims that tax cuts are not what we need.

In your point four, Ms. Russell, you indicate that program spending must be tied to concrete results. This I agree with, that each program should be analyzed and checked periodically to find out if it's still reaching the purpose.

I like your other comment, that when these cheques get passed around from the province to the feds it's “fiscal theatre”. I don't know if I've seen that before, but I agree with you there, to some degree. There seems to be a great flourish when money changes hands, but nobody follows up to see what it's doing.

I'd like you, the policy alternative folks, to indicate how you back up the fact that tax cuts are the wrong way to go, and then maybe I'd ask the Insurance Bureau why they feel that it's a good thing to do.

Maybe I could start, Madam Chair, with Ms. Russell.

À (1020)

Ms. Ellen Russell: If I interpret the question correctly, are tax cuts the wrong way to go or not, you mean do they promote economic growth, for example? Let's take that for starters.

It's an open debate at the moment. There are both pro and con forces that muster arguments saying that taxes do or do not promote economic growth. Our position is that the economic infrastructure that supports economic growth needs tax revenue in order to support it. And we believe that actually makes a very undervalued contribution to economic growth.

On the question of whether tax cuts promote economic growth, when you compare us with other OECD countries in terms of our tax revenue per share of GDP, we're in the middle of the pack, so in terms of competitiveness we're comparable. The average tax revenue per GDP is about 35%. We are at 35.8%, so we're competitive with other countries.

If we use our tax revenue wisely, of course, and accountably, as you mentioned, then we can direct that tax revenue towards the economic infrastructure that's going to have the most positive spinoffs towards the promotion of economic growth.

Mr. Rick Casson: All right. Maybe the Insurance Bureau would like to state how they feel tax cuts can stimulate the economy and help Canadians.

Ms. Jane Voll (Acting Vice-President, Policy and Development, Chief Economist, Insurance Bureau of Canada): To begin with, we are overall very pleased with the tax policy the government has introduced, in particular, the accelerated timetable for corporate income tax cuts. Making the adjustment from 28% to 21% by 2004 has been a very important initiative to maintain competitiveness with businesses south of the border, and we applaud that.

It is important that we monitor Canada's corporate tax burden relative to other industrialized nations. It's important for us to continue to attract capital to our country and to fuel economic growth. At the same time--and I want to build on points made by the Centre for Policy Alternatives--it's not an either/or situation. We have to maintain our tax competitiveness, but at the same time, our brief also speaks about the importance of investment in infrastructure, social and hard capital infrastructure, to support our communities; and we're looking for a balance there.

With regard to specific tax cuts, we spotlight the insurance industry. Our research was conducted by Professor Jack Mintz, whom some of you know as the president of the C.D. Howe Institute. He studied the Canadian property and casualty insurance industry and G-7 nations around the world, finding that the tax structure applied to home, car, and business insurance is far out of line compared to other G-7 nations. And at a time when consumers and businesses are struggling with the cost of insurance, at this difficult time, we need to be looking at the tax burden that's placed upon this product. So we're encouraging a greater spotlight on that.

Under the most recent round of financial sector reform, the MacKay task force called on the federal government to conduct a review of the taxes applied to home, car, and business insurance, and many of those are levied at the provincial level. That review has not yet been conducted, although we've commissioned and conducted academic and other supporting research to shed light on it. I'd like to spotlight that as an area for action at the same time as applauding the government for steps it's taken to maintain corporate competitiveness and draw capital to the country at the same time as supporting the points made by my colleague that we do need to look at infrastructure. It's an important fuel for productivity in Canada.

À (1025)

The Chair: Madame Picard.

[Translation]

Ms. Pauline Picard (Drummond, BQ): Thank you, Madam Chair.

My question is addressed to Ms. Bascombe. I listened closely to your presentation. You are pleased about the new tax credit that the government has introduced to eliminate or reduce child poverty. I think we all agree that where there are poor children, there are necessarily poor parents. We also know that families living in poverty do not pay taxes, because their income is not high enough, and recent statistics show that there are still a million and a half poor children in Canada. What are your reasons for saying that the new tax credit has had a major impact in terms of reducing child poverty in Canada?

[English]

Ms. Diane Bascombe: I didn't say it had a major impact, but I said that it had an impact and that by raising the limit to $4,200 we would increase the impact. We certainly have not eliminated child poverty through the national child tax benefit.

The way we are viewing it through the National Children's Alliance is that it's but one small piece of the policy mix that we need to address child poverty. But certainly when we look at some of the statistics on child poverty, it appears that it has had positive impact on family income and child poverty.

Ms. Margaret Fietz: The other addition to our recommendation is the clawback for social assistance families. Most of those one million children in Canada who are well below the poverty line are living in families who have to be on social assistance. That is not their choice; in fact, it is not an alternative to not be on social assistance.

In those provinces where the federal government's program and dollars are being clawed back and have not been available to those families, those families are not able to really exist. They are the families that are using the food banks monthly, regularly, and do not have the opportunities for their children to take part in public education systems that now depend on families being able to pay extra for field trips, for books, for pencils and paper, which used to be provided through the public education system.

The poverty issue is such a complicated issue. We would urge the federal government to take leadership with the provinces and to demand accountability from the provinces for the federal government's tax dollars. That is something we haven't stressed in our brief, but it is certainly something that in all our meetings with ministers and with political parties we have talked about all the way down the line, that our provinces need to be accountable for federal tax dollars spent on the social programs.

On the other question about having a balance between tax reduction for individuals and probably less so for corporations, from our point of view--that's another whole issue--certainly social program spending should not be the victim of tax reduction. I think we have to have a balance; we have to invest in our individuals, our families, our children, now, not the next generation.

[Translation]

Ms. Pauline Picard: I think we are talking at cross purposes.

A tax credit is provided to families that pay taxes. If you don't pay taxes, if you are on social assistance, even though the government may raise the tax credit, it won't benefit you.

Would you be in favour of transferring the money earmarked to be invested in tax credits to the provinces, to allow them to implement a family policy such as the daycare services program we have developed in Quebec, for example? Every province knows what its population most needs, and with the money the federal government could provide them, the provinces could implement policies such as the one for daycare to provide support to poor families. Also, provincial organizations that provide assistance to families living in poverty or on social assistance are greatly in need of financial support, because we are seing a marked increase in poverty. The gap between the rich and the poor is widening.

So, rather than providing a tax credit that does not necessarily help those most in need, wouldn't it be better for the federal government to increase its transfer payments to the provinces for social programs?

À (1030)

[English]

Ms. Dianne Bascombe: We don't see it as a trade-off or a decision point. We see them both as important policy levers. Using the federal income tax system to assist families through a tax credit is a good lever. We also support increasing the funding going to social programs through the federal transfers to the provinces. We see both parts as an important piece of looking at an integrated family policy.

Ms. Margaret Fietz: We also know that some federal government programs have been very effective, such as the CAPC program, which has contributed direct dollars into communities. This has allowed those communities to then design programs that are helpful to families and may help a single parent to get off welfare, or to help reduce violence and abuse.

One of the biggest contributors to poverty in Canada today is still violence and abuse that results in the adults in families separating or divorcing, and the parent who is looking after the children--and it can certainly be a father--being in poverty because they are on one income. This is a very complex issue, and we need programs as well as we need tax structures for when people can return to work. Then the tax credits really do help the very low-income working families.

The Chair: Thank you very much.

We'll go to Mr. Wilfert, seven minutes.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Madam Chairman, and thank you, everyone, for coming today.

On the issue before us, the minister will be doing his fiscal update on November 3, and really everything until then is up in the air. We have to get a sense of where we are in terms of the dollars. Also, the minister will be meeting with his provincial counterparts on the issue of equalization, which is very, very important in this country and, even during program review, was not cut back. Obviously, keeping a comparable level of services across the country is very important to the government and to the minister in his deliberations that will be taking place later in the week. At the same time, we have to be conscious of the fact that we're not prepared to go back into a deficit. Therefore, we have to really make things balance.

On the policy alternatives, you talk about the issue of there being no strings attached. I would agree with you that the federal government gets very little credit for many of the programs and many of the transfers it makes. The fact that there are no strings attached often amounts to spending in the wrong places by some of the provinces. Do you have any thoughts of how, other than getting more airtight agreements--about which, of course, the provinces complain bitterly--we could initiate that in order to ensure that we don't have that kind of situation?

I would question your comment about the issue of debt reduction, since we saved $3 billion a year in interest, which goes to social programs.

The Chair: Ms. Russell.

Ms. Ellen Russell: On the question of performance requirements that you would like to attach to federal spending, I appreciate that this is a very complicated and sensitive issue and I know you have a lot of fine lines trying to work out how best to accomplish this. Presumably each jurisdiction does share some joint goals in terms of the economic rewards that we hope come from this infrastructure of spending, so I would hope that forms at least some sort of starting point to build a consensus about how we might design programs with a sophisticated sense of the incentives that will be involved in those programs, and then come up with ways of better achieving the design of the programs, once we have those shared goals.

À (1035)

Mr. Bryon Wilfert: I hope we would have some shared goals, but it seems that often the only shared goals among the provinces is looking for more money. The difficulty is that while we are trying to cooperate and collaborate with provincial colleagues, for some of their shortfalls they come to us for additional dollars, and at the same time, we have to fund our own programs and our own expenses. We also have other orders of government that are looking for dollars as well.

When we talk about program spending, I think program spending is at a reasonable limit, personally, at the moment. It's certainly down, but I think part of our commitment is, obviously, areas such as reallocation, which is very important. The government's commitment on that billion dollars, I think, was a very important development, not only for this year but as an ongoing commitment for every year. It is not program review; it's to look at the dollars that we're currently spending and whether we are spending them in the most effective way and how we might reallocate those dollars that may benefit many of the people here today.

The Salvation Army puts forth an interesting position with regard to national palliative home care, but no dollars. What are we looking at and how would you see that instituted?

Ms. Mildred Jarvis: There is a recommendation from the Kirby report that $250 million per year toward a national palliative home care program should be designed with the provinces and territories and co-funded with them fifty-fifty. Of course, that raises that amount of money to $500 million.

Our point is that that amount of money has been identified and recommended by the Kirby report. In the state of the whole economy of health care, it will be a more cost-effective model if designated dollars go toward community-based hospice palliative care. What it will do is reduce the palliative care beds that are funded in acute care hospitals and provide a community-based, very appropriate model of service delivery more cost-effectively. Thus, in the system it saves dollars rather than our asking you for additional dollars.

Mr. Bryon Wilfert: That, I assume, is contingent upon getting the provinces in. Unlike with the issue of home care, where they ask for the money but they would design the program, you're looking for national standards and you're really asking for a buy-in from everyone concerned.

Ms. Mildred Jarvis: Yes, but we feel there is a role for the federal government in the allocation of this $250 million, to indicate to the provinces that some of this money should be designated for community-based hospice palliative care. There are models of service delivery in some provinces that are actually working very well in terms of cost-effectiveness for the health care system. They are models that, if studied by other provinces, would work well in terms not only of funding within the provinces but of making your federal dollars go further as well.

À (1040)

The Chair: Mr. Wilfert, Ms. Bascombe had a point to add.

Ms. Dianne Bascombe: I was also going to speak to the issue of monitoring and accountability, which we speak to briefly in the brief. Certainly, we can look at it through some of the agreements we've had on children over the past couple of years through the early childhood development initiative and the consequent multilateral framework agreement. We certainly have a raft of goals that were FPT set through the national children's agenda, and although I wouldn't sit here and say it's the perfect model, what I would say is that there are commitments throughout those agreements for tracking and accountability.

It's not happening up to its potential, and I think part of the reason--and that's why we're here today with our recommendation--is that we really need to address the role of the third sector in the issue of accountability around public expenditures for our programs and services in Canada. We don't have the kinds of resources necessary to be able to track as well as we could some of those expenditures and the impacts they're having at the community level. We have a recommendation looking at it through the children's lens of the role of the third party in these issues of monitoring and accountability so it doesn't just become a no-strings-attached thing with, who knows where the money went? We want to be able to find out how those early childhood dollars and those child care dollars are spent.

The Chair: Thank you.

I'm afraid we're into overtime. I have three questioners left in roughly the next twenty minutes. We'll go to Mr. Cullen next, and I would ask if you'd shorten your questions and answers.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you very much, Madam Chair and all the presenters.

Ms. Sabourin, many constituents across Canada are faced with increasing insurance premiums for property and casualty insurance, and that is a problem for many people. Of course, it is to some extent or maybe to a large extent a global problem, driven by a number of factors, natural disasters, terrorism, etc. One of the things I've noticed in following up on some of the increases in insurance premiums for my constituents is that they've gone back to their insurance companies and discovered that some companies are differentiating their risk. The companies say they're just not going to insure that type of risk profile; they either say that or they price it such that the customer will have to go shopping, and they will often find another insurance company that will take that kind of risk. I think constituents are at least able to find alternatives if they know the ropes. You could confirm whether that's happening or not and whether you think that's a good thing or a bad thing.

I'm wondering if we could look at this global phenomenon that is affecting the reinsurance markets. They've dried up to some extent, although I gather they're coming back somewhat. Is there a way we could contain our risks in Canada so, by good loss prevention and risk management programs, it would allow the Canadian market to be differentiated and we could keep our premiums lower? Or are we just subject to the vagaries of the global reinsurance and insurance markets no matter what we do in Canada? I'm thinking about some concrete ideas around the floods we've had, the hurricanes, and the terrorism. If we put in loss prevention, loss control programs--and I know there was a proposal circulating a year or two ago--to do that, could we actually get some advantage in terms of insurance premiums for Canadians? That's my question.

The Chair: Go ahead, Ms. Voll.

Ms. Jane Voll: Thank you.

I appreciate your question, and I'm delighted with your observation that constituents who do shop are able to find coverage. It's one of the strengths of the property and casualty insurance industry, namely the home, car, and business insurance industry in Canada, among others in the financial services sector; it is the most competitive financial industry we have. There are over 200 competitors competing actively in Canada and offering a diverse range of products and services. We believe that this is in consumers' best interest, that there is product diversity and that there is competition among brokers and companies to serve consumers' needs. That's a strength I would like to spotlight.

In terms of global issues, you mentioned loss prevention and how that could help Canada. That's obviously one of the key themes in our brief: prevention on the disaster side. Making our communities more resistant to disasters is the way of the future. We are hoping that we can compel the federal government, cooperatively with the provincial governments, municipalities, and the research community, to take what we already know about how to make communities safe and put it into practice. This will result in reduced losses and, in due course, in lower premiums for communities and for businesses and individuals in those communities.

Right now the cost of a disaster--the potential cost of a hurricane ripping up the east coast, the potential cost of a wildfire, the potential cost of an earthquake--has to be built into the premiums that are charged so there is enough ready and available to pay those claims. Obviously, if we can have less damage by taking steps now to make sure there is less damage, less injury, and less death resulting from these events, the projection for costs will go down, as will premiums.

À (1045)

Mr. Roy Cullen: So there would be some concrete results.

I notice you refer to the national disaster mitigation strategy and the Canadian injury prevention strategy, and it might be useful to dust those off and give them to the committee. We could revisit how we could become more engaged federally to isolate ourselves to some extent from the global trends and achieve these kinds of breaks for Canadian consumers. Thank you.

We could spend a lot of time on that, I'm sure, but I want to move on now to the Centre for Policy Alternatives. In your brief, Ms. Russell, you talk about perhaps reversing some of the 2000 tax cuts, and you said there are some tax cuts you'd particularly be interested in reversing. While I agree with you that in the short run tax cuts aren't terribly stimulative, in the medium to long run it seems to me that structurally they create a better investment climate, and that creates jobs and economic activity. You wanted to expand on that, but you ran out of time. Could you comment on the kinds of tax cuts you think are particularly troublesome?

Ms. Ellen Russell: Well, I'm aware of one tax cut proposal advanced by the Canadian Taxpayers Federation, and that is a proposal to increase the basic personal income tax exemption. It's currently at about $7,756, and they would like to increase it to, say, $15,000. The benefits of that as it's advertised are that it will help get low-income Canadians off the tax roll. They claim, in the information I've been able to get my hands on, that this would help as many as 2.1 million low-income Canadians get off the tax roll.

Now, by my calculations--and I admit that I'm only working from their numbers and everything is not yet published on their website--an individual taxpayer earning about $15,000 would save about $697 as a result of that proposal, that is, after factoring in the GST credit. Of course, it depends on the assumptions you make about spouses and dependants and so forth, but $675 per person is about the maximum they would save from that tax cut. The Taxpayers Federation estimates it would cost about $17.8 billion to put that tax cut into effect. If you average it out, it works out as costing the federal government $8,476 per low-income Canadian taken off the tax rolls, yet that low-income Canadian will save only a maximum of about $675. I really can't think of a less efficient way to help low-income Canadians with a tax cut.

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): Very briefly.

Mr. Bruce Campbell (Executive Director, Canadian Centre for Policy Alternatives): I'd like to address the question about taxes and growth. Mr. Cullen raised it, as did Mr. Casson.

My comment would simply be that there is no correlation between tax cuts and growth. You have high-tax countries like the Netherlands and Denmark that have a really strong record of growth and productivity. You have some low-tax countries that have a similar record, but you have some low-tax countries that have a very poor record.

Canada had a very rapid rate of growth in the 1960s and 1970s, much greater than in the 1990s and into the 2000s. The rate of growth between 1950 and 1980 averaged 5%, and the last few years only look good because the 1990s were so bad.

In the United States, Ronald Reagan, with Reaganomics, made some very big tax cuts, but if you look at the growth performance in the 1980s compared to the growth performance in the 1990s under Bill Clinton, when he raised taxes on high income, you'll find that the growth record was superior in the Clinton years than in the Reagan years.

So there simply isn't a correlation between low taxes and growth or high taxes and growth.

À (1050)

The Vice-Chair (Mr. Nick Discepola): Ms. Wasylycia-Leis.

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

I, too, would like to direct some questions to the Canadian Centre for Policy Alternatives and, at the outset, just note that Bryon Wilfert has suggested that we have to wait for the Minister of Finance's economic forecast before we can really know where we're at and where we're going.

I would suggest to Bryon and others that in fact we may have the expertise right in this room, given the fact that the CCPA has been far more accurate in forecasting the fiscal dividend federally than the federal government has, which has been out by some $80 billion over the last 10 years. Perhaps we should be looking at asking for funding to CCPA to help out the government in this difficult time.

What you're really talking about today, which is so important for our discussion, is that paradigm shift. The old paradigm shift is to cut spending and get a balanced budget, but then that wasn't enough. Then it was tax cuts that benefited the wealthy and large corporations. Now it's the debt fetish.

I'd like to begin by asking how you respond to Paul Martin, who is probably going to be the Prime Minister, who, in his major economic address, is clearly preoccupied with the debt, even though we have a reasonable debt-to-GDP ratio in this country. He's suggesting that we go back to the 1960s. What do you say in response to him, and what can you do to help us refocus the next Prime Minister of Canada?

Ms. Ellen Russell: I'm somewhat at a loss to respond, in the sense that I don't know the rationale for 25% debt-to-GDP as being a magic number that is worthy of single-minded pursuit. Our historical record is such that we just don't have that as a debt-to-GDP ratio for much of the post-war period. In the early 1960s, which was considered a high-growth time...the debt-to-GDP ratio in 1961-62 was 35.9%. Throughout the majority of the 1960s, it was higher than 25%. I don't get why that becomes--

The Vice-Chair (Mr. Nick Discepola): Do you have a recommendation for the committee as to what we should be recommending as the target?

Ms. Ellen Russell: I think economic growth takes care of your problem. If we focus our attention on sustaining a climate that promotes economic growth, the ratio takes care of itself because of what happens to the denominator. So I don't think we need to have that as our entry point from which we determine--

The Vice-Chair (Mr. Nick Discepola): But in that case, you could have it lower than 25%.

Ms. Ellen Russell: Well, we're not at that stage now.

Mr. Bruce Campbell: I would simply ask, if you have a leaky roof, do you pay off the mortgage at an accelerated rate or do you fix the roof?

I think we're at the stage where our house is in disrepair, and we need to focus on the social reconstruction, the repairing of our infrastructure.

Ms. Judy Wasylycia-Leis: Just to follow up, given the fact that we can't seem to get any attention on this new paradigm, what is the real agenda at play here?

For example, it can't be balanced budgets any longer. The same people who cried blue murder before the cuts were made to social programs are now silent when it comes to the Americans ringing up a $488-billion deficit. Why aren't those same people squealing about that kind of deficit?

What's the real issue? What's really under attack here? What is so important in terms of the work that lies ahead?

Ms. Ellen Russell: Clearly these standards of fiscal prudence are very variable, given that they say one thing and then, in the next instance, they seem to say another. What it really seems to accomplish is to debilitate the federal government from taking positive action in the economy to do a number of the things that we and some of the other groups here have been mentioning today. It's about the federal government getting their hands tied so they can't do any of the things that social groups have been demanding for some time.

À (1055)

Ms. Judy Wasylycia-Leis: I'm wondering if really the bottom line here is to diminish the role of government and attack the public sector, which seems to be the corporate agenda. So I don't know, I think that's something we have to contemplate.

Related to that, of course, is the whole question of the cooperative movement in our society today, which, to me, is part of that new paradigm shift. I know in my own constituency, a hard-pressed north end neighbourhood in Winnipeg, if it weren't for the cooperative movement, we wouldn't see any kind of hope for the homeless or help for the economy. But it seems to me that the cooperative movement is alive and well in spite of government, not because of government, and I want to know how we can make it part of government.

Mr. Glen Tully: I appreciate the comments. Certainly we've had a good relationship with the Government of Canada, as well as the provincial governments, on the development of cooperatives. We see some real opportunities, using the cooperative model.

When we talk about value-added with the egg industry, certainly as a farmer I look back and say I don't know where I'd be today if it weren't for my local cooperative, my local credit union, and Co-operators insurance.

Certainly we see that the big development for cooperatives in the near future is around the social cooperatives. I think the message we're trying to leave here today is that when the government makes a decision, it sometimes affects how cooperatives can build and grow. So we look forward to consultation as to how we, as an industry, as a cooperative sector, can assist in the government's agenda in the future. As I say, it will probably be around those social cooperatives.

We have a great history of cooperative development internationally, and we work very closely with CIDA. What we hear all the time is, boy, wouldn't it be great if we could take that international cooperative development and bring it home and use it as a model for cooperative development in Canada? That's right; it's a wonderful model, but we need the help and the assistance of government to make that happen.

As I said, we got half of what we asked for. We're doing what we can, but it's not enough. We need more help to assist in the development of new cooperatives.

Ms. Judy Wasylycia-Leis: Could I ask one more question? The chair actually took a minute of my time.

The Chair: I understand that, but we're a minute over right now. Be very brief.

Ms. Judy Wasylycia-Leis: Very quickly, when we dealt with this issue of the priority of children at a previous session, there was a child care advocacy group, the Investment--something--of Canada. I asked the business group, why don't you or can't you forgo further reduction in the capital tax in order to ensure that the children's agenda is enhanced and we put children at the top of the agenda? What did I get back? Well, we have to eliminate the capital tax; it's the only way to save the country, and then we'll worry about children.

I don't get it. If Canadians are willing to say they'll forgo a tax break if it means you put the money into child care or health care, why won't business? Why won't the private insurance companies say they'll forgo the capital tax to build and secure a future for our children?

The Chair: Very briefly, then, because I have one more questioner.

Colleagues, that's a 30-minute bell. There will be a vote in the House. We will finish up this round with Ms. Minna in a second, and then I'm going to ask the panels to change quickly so that we can hear some presentations before I release people for the votes and then return.

So I'd like a quick answer here, please.

Ms. Suzanne Sabourin: I promise to be very quick.

I would just reiterate the fact that we've already committed $600,000 for an injury prevention initiative. That's getting back into child care, because the greatest cause of debt before 45 is children, and then after that it's across the lifespan of the individual. So we're making a contribution to meet some of the requirements on the social agenda of this country.

The Chair: Ms. Minna, please.

Ms. Maria Minna (Beaches—East York, Lib.): Thank you, Madam Chair.

I want to go, first of all, to the National Children's Alliance. I apologize for missing some of your submissions, but I have your written documents--although there wasn't one for the National Children's Alliance. But I do want to ask something.

I was very involved initially with the child benefit, with the initial start-up. I think it was I and about eight MPs who lobbied that one through, to get the Prime Minister and the Minister of Finance to commit, and then after that, we just continued to improve it.

We're now at about $3,200 for the first child. The goal last year that the community was talking about was $4,200. Is that still the same, or has that figure been reviewed one way or the other?

Á (1100)

Ms. Margaret Fietz: I believe that is still the goal. We've asked that it be increased to a maximum of $4,200 per child, and this would be obviously for the next year, but also that it be without a clawback for families on social assistance.

Ms. Maria Minna: A clawback was never part of our intention when we started in that process, and we've been fighting it ever since. I'm hoping that at some point, somewhere along the line, we'll get rid of that.

The other thing, of course, is child poverty. I believe it's a three-pronged thing. It's the income, but it's also housing, because 50% to 60% of your money goes to housing if you make a low income, and of course child care. Those are the three things that have to come together for poverty to really be affected for children.

I thank you for your submission.

I know we don't have much time, but I want to move on to Ms. Russell. I supported your budgets all the way through, so in 1995 I was one of the few who went public against our own budget.

I've read your submission, and from my perspective, I agree that not investing in social and other infrastructures is a debt of its own, a deficit of another kind. It depends on how you choose to define your deficits. And I define them on the other side of the ledger, as opposed to necessarily on the GDP ratio side.

I agree with you, so I'm not going to get into a whole lot of questions. However, we keep hearing a great deal, specifically in submissions from various organizations and business groups, about lowering the corporate tax further because that is going to make us more competitive. The Americans now are lowering it further. My point is, I don't want to race to the bottom, necessarily, and when is enough enough?

Can you give us some indication of your perspective with respect to our corporate tax vis-à-vis the Americans, from a competitive perspective, and any other industrialized nation, if you've done an analysis on that?

Ms. Ellen Russell: I don't think we're that far out of line. If you look at the World Competitiveness Yearbook, we're ranked second of all the countries, behind the United States. Our corporate tax structure isn't wildly out of line.

In terms of the location decision of businesses, for example, that's largely driven by infrastructure, a skilled labour force, and access to markets. Well, guess what? The program spending that we do helps in the infrastructure, as I've been arguing, and the skilled labour force. That enhances our position.

Ms. Maria Minna: What about personal tax cuts? That's always being used as the bogey. Our taxes are too high and that's why we're losing young people and that's why the brain drain. I don't believe it, but perhaps you can set me straight, that it is either having an impact or not. These are the themes we keep getting on a regular basis, and I would like to have your input on that, if I could.

The Chair: This will be the last answer of this panel.

Go ahead.

Ms. Ellen Russell: We think the brain drain is largely about the income-earning potential that people have, as opposed to their personal tax situation. The personal tax situation is only really a discrepancy on the very high end of the income scale, in which case I question whether that's really driving their location decision.

The Chair: Thank you very much.

On behalf of all the colleagues here, I'd like to thank all of you for participating, for getting your briefs in, and for taking our questions today. We'll take all of this work under advisement. I'm going to suspend for a moment to allow you to leave the room, so our next set of panellists can start.

Thank you very much, everyone.

Á (1104)

Á (1107)

The Chair: Ladies and gentlemen, would you kindly take your seats.

We have with us the Alliance to End Homelessness, and Maura Volante is the coordinator. Actually, I do not see her at present, so we'll go to Société de transport de l'Outaouais, and Lawrence Cannon is the general manager. Bienvenue. And Georges Gratton is the director. Welcome to you, sir.

Also, from the Coalition pour le renouvellement des infrastructures du Québec, we have Gilles Vaillancourt, the mayor of Laval and president of the coalition organization. Bienvenue, monsieur.

From the Association of Canadian Airport Duty Free Operators, we have André Bergeron, who is the executive director. Welcome.

From the National Task Force to Promote Employer-Provided Tax-Exempt Transit Benefits, we have Amelia Shaw, who is the manager of public affairs of the Canadian Urban Transit Association, and Donna-Lynn Ahee, who is assisting her. Welcome to you both today.

As you no doubt can hear, the bells are ringing, which means that we are less than half an hour away from a vote. I'm going to start hearing from you and then we will suspend the meeting to allow us about 10 or 12 minutes to vote. I would ask that you make yourselves comfortable with tea and coffee in the room and we will rejoin you as quickly as possible to continue our meetings.

With that, I'm going to ask Mr. Cannon to commence.

[Translation]

Mr. Lawrence Cannon (General Manager, Société de transport de l'Outaouais): Thank you, Madam Chair.

Ladies and gentleman, I want to begin by expressing our sincere thanks for the warm welcome this morning. I would like to begin our presentation by saying that as members of the Canadian Urban Transit Association, we endorse the role and contribution it has identified for Canadian transit service operators, given the considerable research that has been carried out to that end. We therefore fully support its positions.

In Chapter 2 of our brief, you will also note that as members of the Quebec Urban Transit Association, we exchange information and findings with respect to the importance of transit services in Quebec.

Á (1110)

In Chapter 3, we discuss the current funding crisis affecting transit services. I can tell you that we have been suffering from a lack of government funding for 12 years—to be precise, since the Ryan reforms of 1991, which officially marked the Quebec government's withdrawal of financial support for public transit operators.

That same year, the federal government, and particularly the National Capital Commission, took away STO's annual subsidy of $1 million, which allowed us to maintain reciprocity with the OCTranspo network. However, integrated downtown services were maintained. The STO therefore ended up with a shortfall of $6.145 million and was forced to take the following actions to spread that amount over the entire budget, namely by reducing services by 11 per cent, increasing rates by 39 per cent, and finally, increasing the municipalities' contribution by 50 per cent.

In concrete terms, that action resulted in layoffs in March 1992, a reduction in hours of service, an average increase of 17 per cent for transit pass users, and an increase of almost 50 per cent in the municipal contribution. Our customers were quick to react, since in 1992 the STO saw its ridership drop by 7.78 per cent.

From 1993 to 2002, the STO experienced a 50 per cent increase in its ridership. It was through the additional revenues generated by that increase that the company has been able to expand services in recent years. However, since both users and municipalities have done their share in terms of revitalizing urban transit services, it is imperative that higher levels of government step up to the plate if we want urban transportation to play the role we would assign it. The STO is no longer capable of self-financing new projects, because it no longer has any productivity margin. It would be unthinkable, Madam Chair, to expect users and municipalities, even through property taxes, to continue to contribute enough money for the development and maintenance of the urban transportation network.

Overall, operating and capital budgets for transportation services can be broken down as followed for the year 2000: users funded 46 per cent of the budget; the city provided 32 per cent; the provincial government assistance program involving infrastructure subsidies provided 7 per cent; the Para-transit Government Assistance Program provided 3 per cent; taxes on registrations covered 9 per cent; and self-generated revenues represented 3 per cent.

Our contribution to the Quebec Ministry of Transport's debt servicing has decreased by an average of 8 per cent since 1995. That realization gives us pause in terms of the mix of revenue sources for the STQ's total budget, particularly given its vulnerability with its ridership in terms of maintaining services, especially since system users are contributing 46 per cent of its total funding.

In addition, the STO is facing issues related to: its ability to introduce new services given that the Quebec Ministry of Transportation's contribution through its assistance program is limited to 9 per cent of the budget; its ability to provide services that are fully in keeping with the needs of the population, when the municipality is contributing 32 per cent of the total budget, particularly in terms of new needs arising from the municipal merger; and finally, the inadequacy of other funding sources that have otherwise been stable over the years—registrations at 9 per cent, and paratransit at 3 per cent—in terms of making urban transit services more attractive.

I just want to point out that our findings in this regard have been the subject of a number of studies carried out by our company, other operators in Quebec, and government departments and agencies. The only possible conclusion that can be drawn is that urban transit is very much in danger.

By way of conclusion and recommendations, Madam Chair and members of the Committee, the Société de transport de l'Outaouais is proposing that the federal government develop an investment strategy to support urban transportation systems across Canada. In terms of investment, the STO is proposing the introduction of a program aimed at investing in major urban transportation projects. That federal contribution should be an ongoing one and be made as part of an urban transit infrastructure program that would be managed in cooperation with provincial and municipal governments. No residual expenses should have to be paid out of the transit company's operating revenues.

Á (1115)

The following recommendations cut across several areas.

With respect to demand, we are recommending that the Income Tax Act be amended to remove the inequity that currently exists between drivers and urban transit users in terms of employment benefits; that employer-provided urban transit passes be tax-free; that an amount of $5 million be invested on an annual basis in measures aimed at raising public awareness of urban transit services, as well as in research and developing new ways of improving the efficiency and effectiveness of the urban transit system.

With respect to supply, we are recommending that the government take tangible action, in the form of incentives such as a user tax credit program, to encourage citizens to use urban transportation.

With respect to operations, we are asking that you ensure that the resources needed to provide services benefit from the appropriate financial support through tax credits, such as GST rebates on inputs and gasoline taxes.

In terms of technological innovation, we are asking that urban transport operators be supported in the area of technological innovations that will help to turn Canadian society's vision into a reality.

And finally, at the local level, we are recommending that financial assistance be reintroduced that would allow for interchangeability of transit tickets and passes between the Société de transport de l'Outaouais and OC Transpo.

Thank you for your kind attention, Madam Chair. We are of course available to answer your questions.

[English]

The Chair: Thank you very much.

I'd like to welcome Maura Volante, who is the coordinator for the Alliance to End Homelessness.

As we have less than seven minutes to the vote right now, I think it would be reasonable, not to interrupt the presentation of the next presenter, if we suspend right now. We will go to do this vote and come back here. I will add 10 minutes to the closing time, to allow those who can stay to continue the questions. I think that would be fair to our next presenter.

We will suspend, and I invite you to stay.

Á (1117)

Á (1142)

The Chair: We will continue with our panel, and I will return to the Alliance to End Homelessness.

Go ahead, Ms. Volante, for up to seven minutes.

Ms. Maura Volante (Coordinator, Alliance to End Homelessness): Thank you.

The Alliance to End Homelessness exists to coordinate strategies and services to put an end to homelessness in Ottawa. Our number one goal is to promote more affordable housing, but we also recognize that various kinds of support are needed for people to keep housing. Last year, our submission focused more on rights to adequate housing. While affordable housing remains an issue in Ottawa, we would like to focus at this time on the issue of ongoing supports, the other main branch of the work of ending homelessness.

Very few people can lift themselves up from the negative circumstances that would precipitate loss of housing without support from somewhere. The lucky ones rely on family and close friends to put them up temporarily, help them with job search, child care, education, and, not least in importance, emotional support to go through such a crisis. It can take years to recover, even with this kind of network. Unfortunately, there are many who do not have the support of family and friends and whose problems are far more complex than simply a temporary economic setback. For these people, the help they receive from social services is crucial to survival.

Many people who are in the greatest need of social service supports have layers of obstacles to overcome in order to obtain and maintain housing. Some suffer from mental illness and/or physical disabilities. Some have substance abuse issues, or a combination of mental illness and substance abuse problems. Some are too young to succeed without adult guidance, and others are emotionally scarred from violence in the home or conditions of war. In addition, many people in these kinds of circumstances also lack education and employment skills.

Some of the supports required by such people are provided as core government services, but a large proportion of these services are provided by non-profit agencies that rely on an increasingly uncertain combination of funding sources. Ottawa is just one of many cities in Canada in which non-profit agencies are living with a new funding reality.

According to Funding Matters, a study undertaken by Katherine Scott for the Canadian Council on Social Development, non-profit organizations across Canada have noticed certain alarming trends in the way they are now funded compared to the reality a decade ago. For one thing, there has been a marked shift away from a core funding model, which funds organizations to pursue their mission.

The new model is project-based and is characterized by contracts that give funders increased control over what the organization does and how it does it. Funders are reluctant to fund administrative costs that cannot be directly tied to a project or a program. Funding is being provided for shorter periods of time, and it is increasingly unpredictable. Reporting requirements have increased. Funders are increasingly required in organizations to make joint submissions with project partners and to demonstrate that they have secured funding from other sources--financial or in-kind contributions--before extending their support.

Scott identifies several trends that people are seeing as a result of this changing reality, including, in her terms, volatility; a tendency to mission drift; loss of infrastructure; reporting overload; and what she calls a house of cards, which is characterized by the tendency for projects to collapse due to interlocking funding arrangements, so that if one pulls out, the whole thing falls.

Here in Ottawa, agency directors report frustration with the temporary funding streams that have become the norm in the homelessness sector as in many others. While several people have offered their perceptions, Valerie Davis of the Pinecrest-Queensway community centre sums it up with the following:

One of the greatest challenges associated with project funding relates to the recruitment and retention of skilled staff. Continuous interruptions and uncertainty with human resources interfere with planning processes and disrupts continuity of service delivery.

While this reality operates at all levels of government, this committee's responsibility is at the federal level, and it is therefore important to speak of the supporting communities partnership initiative, or SCPI, as we call it. There have been many positive aspects to the federal homelessness initiative. There are some problems with SCPI, one of which is the expectation of sustainability through other funding sources.

Á (1145)

Although our network is called Alliance to End Homelessness, no one seriously believes that the end is in sight any time soon. Even when we reach the goal of a home for every citizen of Ottawa, there will always be citizens who need help to maintain their tenure in a home of their own. The need is not going to go away in three years or even, with the renewal of SCPI, another three years.

Some projects approved for SCPI funding were naturally time limited in nature, but others were approved for work that is valuable and necessary on an ongoing basis. Even if agencies have some success with private partnerships or other government grants to continue their work, they are almost always more of the same--short-term project grants.

Another concern with SCPI is the long waiting time between passage in the federal budget and dissemination of funds. After it was first introduced in 2000 as a three-year program, considerable delays were experienced in setting up the funding system. The result was that the money was not actually distributed until 2001. This meant that some projects were impossible to carry out as planned due to shortened timelines.

We were encouraged by the announcement in February's budget that SCPI would be renewed. There has been a large gap in service between the end of the first SCPI funding, March 31, 2003, and the beginning of a new program, which is unknown but will speculatively be sometime early in 2004. Once again, the first year of a three-year program will be sliced off.

This is an not an attempt to blame anyone. Government officials take time to accomplish their work because of the complexities and the need for accountability for public funds. While it may not be possible to curtain this process, it would be far more efficient to go through it less often with longer timeframes for the funding streams.

The 1% solution is that there also needs to be ongoing investment in affordable housing, building on the present affordable housing framework agreement.

We, at the Alliance to End Homelessness, support the submission of the National Housing and Homelessness Network, with its framework of a 1% solution. While we do not need to outline the plan here, we want to reiterate that whatever framework is chosen, whatever amounts are spent by the federal government, continuity of funding will lead to continuity of support.

Thank you.

Á (1150)

The Chair: We'll go to the Coalition pour le renouvellement des infrastructures du Québec.

Monsieur Vaillancourt, s'il vous plaît.

[Translation]

Mr. Gilles Vaillancourt (Mayor of Laval; President, Coalition pour le renouvellement des infrastructures du Québec): Thank you, Madam Chair.

Ladies and gentlemen, members of the Committee, my name is Gilles Vaillancourt. I am the Mayor of Laval and I am currently President of the Coalition pour le renouvellement des infrastructures du Québec.

With me today are Mr. Marc Couture, Engineer and Chair of the Coalition's Technical Committee; Mr. Jean-Guy Frenette, representing the FTQ; Ms. Patricia Devine, National Director of Public and Government Affairs, Canadian Concrete Association; Mr. Alain Robert, Vice-President of the Association des constructeurs de routes et grands travaux du Québec; Mr. François Lalande, President of the Association québécoise des entrepreneurs en égout et aqueduc; Mr. Clément Bélanger, President of the Association nationale des camionneurs artisans; Mr. Marcel Guibord, President of Groupe Aqua Data, also representing Gaz Métropolitain; Mr. Gilles Taillon, President of the Conseil du patronat du Québec; Mr. Pierre Vincent, General Manager of RÉSEAU environnement; Ms. Karine Oscarson, Technical Director of RÉSEAU environnement; Mr. Jean Audet, representing the Association des ingénieurs municipaux du Québec; Mr. Pierre Gaudreau, CEO of the Centre d'expertise et de recherche en infrastructures urbaines; and Mr. Michel Langelier, Director General of the Canadian Society for Civil Engineering.

Madam Chair, we are part of a coalition of 21 organizations that represent groups and individuals with expertise in municipal infrastructure: builders, union and employer organizations, chambers of commerce, engineers, as well as elected officials and managers of a variety of Quebec municipalities. This is the largest coalition ever forged in Quebec with a view to raising awareness of the importance of investing in water management and road systems.

First allow me to thank you for this opportunity to identify our expectations with respect to the role we believe the federal government should play as regards the renewal of Quebec's urban and road system infrastructure. We have three basic points to make today.

First of all, our basic infrastructure, including the water and sewer systems and urban and local roads, is in a very bad way and renewing that infrastructure should be one of our top priorities.

Second, the way in which monies are currently allocated for infrastructure programs should be reviewed to make it more effective and efficient.

Finally, new monies should be invested in upgrading our infrastructure in order to arrive at a long-term, viable solution.

Local and regional infrastructures are one of the best indicators of our quality of life and the extent to which we have developed as a society. Judging by the current state of our infrastructure, it is clear that we are very far from where we should be. And that does not only apply to Quebec. This is a common phenomenon all across Canada, but what sets us apart it is the very poor state of repair of our infrastructure.

It is important to remember that on average age, our urban areas in Quebec are much older than in the vast majority of other urban areas in Canada, because it was there that large-scale industrialization began in Canada.

At the same time, if our infrastructure is in such a dilapidated state now, it is not for lack of effort—indeed, our efforts have been considerable—aimed at preventing that from happening. In the last three years, in Quebec alone, some $2.6 billion have been committed by the three levels of government, to varying degrees, for programs that will be implemented between now and 2006. But we are now obliged to conclude that those efforts have been and remain inadequate.

In 1999, our research showed that $1 billion needed to be invested every year for 15 years just to upgrade Quebec's current infrastructure. Thus far our efforts have covered only 33 per cent of requirements, and even then, some of those investments were not allocated for basic infrastructure, which is our focus—in other words, the water supply and sewer systems and urban and local road networks.

The under-investment in infrastructure represents a true hidden deficit that ultimately threatens our productivity and standard of living. Investment is important. According to a recent Conference Board study on Quebec, the required investment is no longer $15 billion, as we had determined it to be at the time, but rather, $17.9 billion.

Á (1155)

That study also makes it clear that if we don't take action, that deficit will grow exponentially.

Sooner or later this neglect will take a heavy toll on our country, and particularly our children, not only because of the size of the investments that will have to be made, but because of their negative impact on the development of our economy and our environment. The obstacle that deficit represents is not insurmountable, however. Why not tackle it as we did when we set out to eliminate budget deficits in the provinces and at the federal level here in Canada? Of course, this will take determination, but what will especially be needed is the ongoing effort to finally resolve this problem. How should we go about doing that?

First of all, by going beyond the financial side of things. Our Coalition believes that discussions between the Government of Canada and the provinces will now have to include the municipalities. In Quebec, for example, more than 30 per cent of various joint infrastructure programs have been used for purposes other than maintaining and renewing the existing infrastructure.

In order that the municipalities' needs be adequately considered, the Coalition is recommending to the Committee this morning that a conference bringing together the three levels of government be called to discuss the infrastructure deficit, and that this conference be held as early as 2004, based on a common action plan that will ensure that the necessary effort will be made, first and foremost, to renew the existing infrastructure, and also to include the objective of tripartite funding for infrastructure renewal in upcoming negotiations between the federal government and the provinces on new fiscal arrangements.

From the financial standpoint, a major effort will be required. According to our studies, rehabilitation alone of the current infrastructure would take almost all of the monies now available under the current federal infrastructure programs. But because that program funding also covers a lot of other investments, such as for fishing ports, water purification systems for Aboriginal communities, or wide-band communication systems in rural communities, the money available for urban and highway infrastructure improvements is inadequate and will have to be increased.

In that respect, the Coalition is suggesting the following: first of all, that monies earmarked for the Canada Infrastructure Program be revised upwards by 150 per cent—in other words, $900 million a year starting in fiscal year 2004-2005; that the impact on the Treasury of that significant increase be mitigated by spreading the allocation of that increase over two budget periods starting in 2004-2005, so that the total increase allocated to Infrastructure Canada would be available starting in fiscal year 2005-2006; and, that the government ensure that these monies are available over a 15-year period.

I am quickly coming to my conclusion, Madam Chair. Thank you for your patience.

While it is significant, this new financial contribution being requested of the government would not be made without there being a return, and indeed, it is important to consider the return on investment from work undertaken to improve the urban and highway infrastructure. According to tax experts that we have consulted, and based on assessments made by the Auditor General of Canada, the federal government can expect to recover almost 92 per cent of its basic investment in such improvements.

In our opinion, this is a winning proposal both for the country as a whole and for our province. Investing in infrastructure is no longer a matter of choice. It has become an obligation. The future of our society and the quality of life of our citizens depend on it. I would therefore ask you to take another look at this.

Thank you, Madam Chair.

Â (1200)

[English]

The Chair: Merci beaucoup.

From the Association of Canadian Airport Duty Free Operators, Monsieur Bergeron, please go ahead.

Mr. André Bergeron (Executive Director, Association of Canadian Airport Duty-Free Operators): Good afternoon. Thank you for having us today.

My name is André Bergeron. I'm the executive director of the Association of Canadian Airport Duty Free Operators.

I am appearing today on behalf of the Canadian duty-free retail industry, land border and airport operators. We appeared before your committee last year and the year before, so we do not intend to review our earlier submission again today. I will only summarize.

As you know, for the first time in history, the federal government imposed taxes on the Canadian tax and duty-free retail industry starting in April 2001. This could not have happened at a worse time. While the product in question happens to be tobacco, the important consideration is this. The principle of keeping our tax and duty-free retail industry truly duty and tax free was lost. It was lost overnight. It was lost by the stroke of a pen.

What happened? Consumers were confused and stopped coming into our stores. After the tax was imposed, business started to fall off. This tax has affected businesses and jobs in many federal constituencies across the country.

Very quickly after this tax on duty-free was imposed, the problem was compounded. We had the tragic events of September 11, 2001, which depressed travel and tourism, further impacting sales. This year we had the war in Iraq, which again caused great difficulties. We all remember the sequels of the Gulf War in 1991. It took quite a few years before we reattained the previous level, and it is not expected to be that different this time.

Then we had the SARS crisis, with its impact on travel and tourism, which had a greater negative impact due to its timing, due to its second phase, and due to the tremendous uncertainty that it caused travellers. It is estimated that losses by land border operators, as well as airport operators, due to SARS were in the range of 15% to 25% over and above the other impacts.

What help have we received? Your committee acknowledged the problem that this tax is causing in its report last year on the 2002 pre-budget consultation. Your committee urged that this matter be taken up by the finance department with a view to implementing its recommendation. We agreed with your recommendation, and your support for the principle of keeping duty-free really duty-free.

Although the damage caused by this tax is clear, we are here one year later not seeking a handout. We never have, as a matter of fact. We are only asking once again for your assistance to undo the damage to our sector caused by taxing our duty-free industry.

This is my presentation today. It is brief, but let me conclude with a few key points.

This tax was there to support a health issue and protect, amongst others, the youth. The minister's goal was a 30% reduction in 10 years. In our industry, the 30% goal was achieved in 12 months. In regard to the youth market, the international and transborder travellers that make up the youth segment represent only 3.5% of the market. The duty-free industry represents only 1.4% of the Canadian tobacco market.

In regard to the smuggling issue, this tax was there to protect us against smuggling. I will quote Brian Willis, senior chief, excise act, sales tax division, tax policy branch, in an answer to Senator Banks. Mr. Willis replied that “the Canadian duty-free industry has not been a source of contraband. They are tightly controlled.” Therefore, the issue of contraband cannot be used to justify taxes in tax- and duty-free stores.

I'd like to thank you for the time you've allowed us on this presentation.

The Chair: Thank you very much.

Now we'll go to our final presenter, Amelia Shaw, from the National Task Force to Promote Employer-Provided Tax-Exempt Transit Benefits.

Ms. Shaw.

Â (1205)

Ms. Amelia Shaw (Manager of Public Affairs, Canadian Urban Transit Association (CUTA), National Task Force to Promote Employer-Provided Tax-Exempt Transit Benefits): Thank you.

My colleague Donna-Lynn Ahee is going to start.

The Chair: Go ahead.

Ms. Donna-Lynn Ahee (Secretary-Treasurer, Amalgamated Transit Union Canadian Council, National Task Force to Promote Employer-Provided Tax-Exempt Transit Benefits): Madam Chair, I would like to thank you for the opportunity to present today. We're asking the federal government to amend the Income Tax Act and make employer-provided transit benefits income tax exempt. We call this initiative TEI.

Employer-provided parking and employer-provided transit benefits are both considered taxable under the federal Income Tax Act. However, tax preferences included in the act allow many employees to receive their free parking income tax free. Surveys show that free or subsidized parking is a common benefit provided to almost 80% of auto commuters. Employer-provided transit benefits in Canada, however, are practically non-existent.

Most commuters compare only the operational costs of using a vehicle, the gas and the parking, to the cost of using public transit. Employer-provided parking then becomes a very significant financial incentive to drive. One way to compete with free parking is to encourage employers to offer transit benefits. A tax exemption is an incentive for employers to offer the transit benefits to their employees. Transit benefits, in turn, motivate drivers to switch their mode of travel.

The United States has already implemented this change. The U.S. government studied the impact of this tax exemption in their GAO report, finding ridership increases of 25% among employees offered a benefit of only $21 per month. The survey again predicted much larger ridership increases should the amount of the benefit increase.

At the $21 per month level, ridership increases had a relatively small impact on total ridership. The goal behind the U.S. increasing the maximum allowable tax benefit was to encourage more business to offer transit benefits to their employees. In 2001, the allowable benefit increased to $100 per month. In the San Francisco Bay area, this translated into a 100% increase in the sales of transit benefits. Employer participation rose from 3% in 1992 to 27% in 2001.

There remains widespread support for this initiative across Canada. In 1998, it was the only early-action item unanimously recommended by the transportation issues table of the national climate change process. In 1999, a survey of Vancouver businesses found that 75% of respondents favoured TEI. Motion 360, sponsored by Nelson Riis of the NDP, passed 240 to 25 in the House of Commons in 1999. In 2002, it was a recommendation of the Prime Minister's urban affairs task force. In 2003, it has been endorsed by the National Round Table on the Environment and the Economy in their report Environmental Quality in Canadian Cities.

It's supported by hundreds of organizations representing workers, seniors, students, health care professionals, businesses, municipalities, and environmentalists. It's supported by several standing committees of the House. It is supported by Canadian businesses, such as the Saskatoon Chamber of Commerce, the Ottawa and Toronto Boards of Trade, and the London Chamber of Commerce.

Ms. Amelia Shaw: Over the years, a number of concerns have been expressed by the Department of Finance. For example, taxes are not an appropriate tool to change people's behaviour, yet in Canada taxes are already used for this purpose, such as the excise tax on cigarettes or alcohol. We also enjoy tax deductions that encourage charitable donations, retirement savings, and political contributions, so why not public transit?

Another concern is that it would be an administrative burden on the federal government. Administration comes from tax collection, not tax exemptions. Other than a small change in legislation, no ongoing effort would be required. Most necessary work would be done by transit companies, municipalities, and the private sector.

Another concern is that there would be no benefit to students, seniors, the unemployed, and those who walk or bike. But benefits already exist for both seniors and students. Both of them have the ability to receive discounts. From a student perspective, many of you may be aware of the new U-Pass program that's currently in place in a number of universities and colleges across the country. That also provides significant discounts to students.

Increased ridership leads to increased levels of service, which is what we hope for with TEI coming into place. That means frequency of service and an increased number of routes; therefore, all will benefit. Any efforts to improve public transit will impact the other sustainable modes of transportation, such as walking and biking, because it will lead to improvements in sidewalks, lighting, and all other things. You may not know that as public transit increases, so do walking and biking. We tend to go in tandem.

Another concern is that this measure would be ineffective, as the majority of benefits would go to existing users. Finance agrees that it would lead to 25% new ridership but does not see any environmental benefits. Instead, they prefer to focus on the 75% of existing riders.

Ladies and gentlemen, there is no such thing as a guaranteed rider. In Canada, we have an extremely large group of people who can choose to ride transit or not. An existing rider, as they're defined, may also only use transit once or twice a week. With TEI, we're hoping they will increase their level of usage to three or four times, potentially more, again decreasing their own emissions.

New riders are likely to be single car users, which will have significant environmental benefits. There is no other way for public transit to get that level of increased ridership of 25% at this time.

We're often told that Bill C-209, brought forward by the Bloc, was defeated at this finance committee. Yes, it was. But it is different from the employer-provided tax-exempt transit benefit. Many of you may remember that the finance department said it would cost about $500 million for Bill C-209. TEI is significantly less expensive.

We're often told, “Amelia, and Donna-Lynn, you're coming to us and you're asking for infrastructure funds as well.” We're well aware that we do come before you and ask for infrastructure funds. We normally ask for them to the tune of $700 million to $900 million. There's no doubt that public transit requires that infrastructure money. But this is significantly different. It's an incentive program, and it's priced at about $20 million.

Â (1210)

Ms. Donna-Lynn Ahee: The cost and the impact of TEI can actually be manipulated by the legislation enacted. If it's the will of the committee or the government to start off small and reduce costs as much as possible, this can certainly be done just by designing legislation to reflect the early U.S. legislation. For example, by capping the benefit at $21 per month--as in the U.S.--the federal cost in year one would be limited to only $670,000 and would grow to about $3.35 million in year ten. The cost per new rider would remain at $202, with an increase in ridership of 25% to 35%. Employer participation, however, would remain small at 1% in year one and 5% in year ten.

We hope, however, you will take advantage of the lessons learned in the U.S. and model legislation on current U.S. programs. In other words, have no cap on the benefit and no eligibility restrictions. In that case, federal costs for year one have been estimated at about $20 million, increasing to about $118 million in year ten. The cost per new rider would still remain small, at $264 for the federal government; and employer participation is expected to be anywhere from 10% in year one, growing to 60% in year ten.

Ms. Amelia Shaw: It should be remembered that these costs are not true costs, but forgone revenues. The financial benefits will remain with the employees and the employers. It will be up to them to spend the money as they see fit.

Incentives do exist through the Income Tax Act. The amount allowable in RRSPs was increased, allowing 5% of Canadians to now take advantage of them. In the recent climate change announcement, we heard about incentives to retrofit homes for energy efficiency. We also heard about incentives to oil companies.

By changing the Income Tax Act to allow TEI, transit properties would have a tool to encourage increased ridership and participation by Canadian businesses. TEI represents a rare opportunity for the federal government to affect public policy at a local level. TEI is one of the few financial instruments available to support employers' efforts to change the commuting habits of their employees. The time to act is now.

Thank you very much.

The Chair: Thanks to all of you.

I will go to rounds of six minutes. We'll start with Mr. Casson, and then we'll go to the Bloc and Mr. Paquette.

Mr. Rick Casson: Thank you, Madam Chairman. Thank you all for appearing and bringing forward your issues.

I'd like to start with Mayor Vaillancourt and talk a bit about the municipal aspect of infrastructure and their responsibility. I spent a few years in that field myself before I got here. We first tried to establish capital reserve accounts--a small town, not a large one--for every area of our budget, so when the time came to improve we had some funds. Some were easier than others. Water plants and sewage systems are, of course, very expensive.

We also tried to recover those capital reserves and the operating expenses, particularly in water and sewer--you can't do that for roads and sidewalks--through user fees, to cover the operating expenses and put a few bucks aside for future expansion and upkeep. I want to hear your comments on that, and the possibility that municipalities have that room to move, manoeuvre, and put that into their budgets.

When we worked on three levels of government agreements, where the feds, the provinces, and the municipalities each had to put up so much, at times we had trouble coming up with even two-bit dollars to fund some of these major projects, even if there was a three-way split or a fifty-fifty split. At times we just had trouble trying to find the dollars to be involved. Perhaps I could get your comments on that.

On this hidden deficit, I agree that a huge amount of money will be needed to bring everything up to speed, particularly public buildings and institutions--that aspect. Perhaps you could talk about the water and sewer issue. Can that be separated and be a user-fee, user-pay system?

Â (1215)

Mr. Gilles Vaillancourt: Thank you very much for your question. If you don't mind, I will answer in French. It's a lot easier for me.

[Translation]

Should we be taking steps to ensure that Canadians pay for the water they use, by using meters or in some other way? That's an interesting question, but there is another important reality. Let's look at the city that I am currently the mayor of. For 30 years, no water meters were installed. Since 1988 it has become mandatory for any new construction to have a water meter, even though the entire commercial and industrial sector is already charged on the basis of consumption.

Installing meters would cost $22 million, according to an estimate that is four years' old now, and that is therefore somewhat out of date. How could I explain to people that $22 million needs to be spent to develop environmental awareness and ensure greater environmental fairness amongst citizens, when 45 per cent of the water produced by the City of Montreal never ends up in people's taps? That water is lost in leaky water mains that need to be replaced.

So, imposing user fees for water to ensure equity among citizens in terms of the environment and in order to raise environmental awareness is a very attractive idea, but there is something far more urgent to be attended to upstream. The first thing we have to do is rehabilitate our public systems, and also educate citizens all across Canada to instill greater respect for our water resources. People who have grown accustomed to water always being readily available may not have the awareness that those who have been deprived of it have in terms of showing greater respect and, especially, conserving it better.

To answer the first part of your question, I would say that it's an interesting idea, but it would require very significant investments that we are not currently in a position to make. If tomorrow you gave me the choice between investing money in water meters or taking that money to repair leaky water mains, I would say the top priority is to repair those leaky mains in both the water supply and sewer systems, before moving on to develop pricing policies.

It is not particularly surprising that Quebec and Canada have not adopted usage-based water pricing policies, because Canada was one of the last Western countries to develop a water purification program. As long as water was not being purified, there were no costs for final treatment of water going out in the return line; that is a recent policy. So, it would be quite a challenge to try and gain acceptance for the idea that our top priority is charging for and monitoring water use, when everybody knows that we are losing water all over the place because of the bad state of repair of our completely outdated system.

[English]

Mr. Rick Casson: Do I still have some time?

Â (1220)

The Chair: Yes, you have a few seconds, if you'd like to make a comment.

Mr. Rick Casson: Maybe I'll switch over to Mr. Cannon.

Your first recommendation was to implement a program and invest in major public transport projects. How much money on an annual basis do you think is going to be needed to do that?

The Chair: Mr. Cannon.

Mr. Lawrence Cannon: I'll ask Mr. Gratton to answer that question, if you don't mind.

[Translation]

Mr Georges O. Gratton (Director, Société de transport de l'Outaouais): If we're talking about 1.5¢ on gasoline, that would amount to about $6 million, or 12 per cent of our budget. So, a federal investment plan that allowed us to receive benefits of that magnitude would give us the necessary leeway to build a significant amount of infrastructure in our municipalities, and particularly in our area.

[English]

Mr. Rick Casson: Thank you.

The Chair: Colleagues, that's a 30-minute bell. I'm going to take three more sets of six-minute questions, and we will finish this panel before we go to vote.

[Translation]

Mr. Paquette, it is your turn.

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

First of all, Mr. Vaillancourt, I want to tell you how impressed we are by the delegation you have brought with you and just how important the Coalition pour le renouvellement des infrastructures du Québec really is. It is quite remarkable to see the President of the Conseil du patronat and a representative of the FTQ sitting together. I can tell you you don't see that very often. So, what that means is that a significant proportion of Quebec society is represented through this extremely important proposal you are making.

I know that you were very disappointed by what you saw in last year's budget. Indeed, we discussed that at one point. I remember that at the time, the government had announced an investment of $1 billion, which seemed to jibe with what you were requesting, but over a 10-year period. This year, however, only $100 million has been paid out so far, and the figure being discussed for the next two years is $250 million. So, we are far short of the target.

I want to be sure I fully understand your recommendations 1 and 2. Is this a new way of presenting the numbers announced in last February's budget? You are now talking about $900 million a year over a 15-year period; that is your second recommendation. But your traditional demand was for $1 billion over 15 years. My understanding is that you are expecting to receive the $100 million yearly that has already been announced, and that you are asking the government to add another $900 million, to arrive at an amount of $1 billion over 15 years.

Mr. Gilles Vaillancourt: Yes, that's correct.

Mr. Pierre Paquette: How should that be spread over time, in your opinion, based on the point you raised—which I see as a very important one—with respect to planning? Are you talking about amounts that should be paid out year after year, or of a commitment to spend the equivalent of $1 billion a year over 15 years, to avoid bottlenecks and also to take advantage of these programs to invest a little more in a period of economic slowdown?

So I wanted to hear your comments on that and be sure that what you are asking for is the same thing as last year.

Mr. Gilles Vaillancourt: Yes, it is the same request we made last year, but expressed in a different way. We need money to come on stream fairly quickly. We need a fairly significant amount initially so that we can stop our systems from deteriorating any further. If we don't invest enough, if we simply wait until the economy slows down to use this as economic stimulus—of course, that is also beneficial and it certainly could be used to do that—but if we don't have the guarantee, right from the beginning, that the money will be coming on stream and that we will be able to develop our programming, we will fall victim to two things. First of all, while we are waiting, our problems will deepen and the hidden deficit will increase at a pace of about 10 to 12 per cent, whereas the Canadian government is funding its operations at the rate of only about 3 per cent. So, we would be accepting the idea that this hidden deficit will grow three times faster, rather than taking action to rectify the situation.

Also, if we condense the work over too short a period, we will also be inflating the cost of this kind of work, and that inflation will be extremely difficult to control. As I said earlier, in order to be able to work effectively and efficiently, municipalities must have a guarantee that the program will be a relatively permanent one, because otherwise, everyone will be waiting for the program to get underway, everyone will be starting off at the same time in the program, and we will simply create bottlenecks in the system, thereby causing costs to rise; then when the program is completed—which is the case with the current programs in Quebec—nothing more will be available to us. The municipality managed to secure approval for projects worth some $12 million to modernize our drinking water plants, but then I received a nice letter from the government saying that even though our projects had been approved, no funding is actually available, and that we would be given priority once those funds do become available. The problem is not whether or not there is an issue and what the solutions are. The problem is simply that there is no viable funding solution for the municipalities.

Municipalities are also facing another difficulty. I am very pleased that the Government of Canada has developed road and border infrastructure programs for the First Nations, but we had not in fact done any analysis of the specific issues facing the First Nations. So, the numbers we have given you do not include those figures. In Quebec, the rural municipal infrastructure component will resolve some minor problems, but that funding also includes an amount not only to rehabilitate the existing infrastructure, but to develop new infrastructure. So, when you take away all the money that is earmarked for other purposes, it is clear that we will not have adequate resources.

This hidden deficit—we have leaky pipes all over the place, but you don't see them—is nowhere to be found on the balance sheets of either the federal, provincial or municipal governments, but it is a huge deficit, and every day that it continues to grow, we are mortgaging the quality of life of all Canadians, whether they live in Quebec or elsewhere in the country.

Â (1225)

Mr. Pierre Paquette: Thank you very much. Rest assured that we will be insisting that the Finance Committee include that recommendation in its report.

I've already raised this, but I would like to discuss it again. Mr. Cannon and Ms. Shaw, you are making a proposal here that I obviously agree with, when you talk about providing the same benefits to employees who use urban transit as are currently enjoyed by drivers. At the same time, this does seem unfair to those who pay for urban transportation systems, but are not employees.

Would it not be better to tax the benefits given drivers, rather than broadening the benefit of non-taxation? Take the example of retirees or self-employed workers, groups that are becoming larger and larger. They also travel, and yet they would not benefit from such a program. So, out of a desire for equity, should we not instead be suggesting to the government that it take into account all these benefits, as it has in recent years in a number of areas? It seems to me that would be fairer. But I put the question to you.

The Bloc québécois actually proposed something broader, to ensure that all citizens would be treated fairly.

Mr. Lawrence Cannon: Mr. Paquette, I remember having the opportunity to discuss this at length with your colleague, Ms. Bujold. We had of course assured her of our support for that proposal.

It is important to realize that another initiative was brought forward by Ms. Marois when the last budget was brought down. In Quebec, we were delighted to see that happen, because this action would have made it possible to increase supply to a certain extent. Every one of the initiatives relating to the report of representatives Bernard, Angers and Grégoire was approved by members of the Quebec Urban Transit Association.

What I can say is that at this stage, any action aimed at expanding supply and supporting our economic demands in this area is welcome. A few minutes ago, I was listening to Ms. Shaw and her colleague as they talked about what is being done in the United States. Because we are members of that Association, we obviously are strong supporters of the position they have set out today.

What you are hearing today is truly a cry for help. We are appealing to you for assistance. As a municipal official, I am very much alive to the representations made by Mr. Vaillancourt. As an official of the Société de transport for the City of Gatineau, my findings are exactly the same. We have truly reached a dead-end and need support from somewhere.

[English]

The Chair: Thank you very much.

Ms. Shaw, did you want to add just a brief comment? Then I'm going to go to Mr. Cullen.

Ms. Amelia Shaw: Absolutely.

From our perspective, we consider this to be a foot in the door. We'd love to see a broader application of people being able to claim it on their income tax, but we have a very targeted approach at the moment. We need to walk through the door with business; we need to have business on side and to move this forward. We consider this the first stepping stone.

Hopefully, that gives you a bit of an idea.

[Translation]

Mr. Roy Cullen: Thank you very much, Madam Chair. I also want to thank all the witnesses for their presentations.

Mr. Vaillancourt, in order to attain the goals that you have so aptly described, how can we go about encouraging the private sector to play a role in renewing Quebec's and Canada's infrastructure? What are the options and are there any limitations on the private sector's commitment to infrastructure programs? Can you describe those limitations and options?

Â (1230)

Mr. Gilles Vaillancourt: At the present time, the private sector has a direct interest in all of this, because practically all across Quebec, infrastructure rehabilitation work is being carried out by the private sector through the tender process.

There are other possibilities for smaller communities, where somewhat different problems can arise—for example, assigning responsibility to the private sector for rehabilitating a plant and funding that rehabilitation work. Of course the funding could be handled by the private sector, and a transfer made to the municipality by means of an agreement.

Those things are all on the table at the present time. The private sector is getting involved at different stages. As a general rule, the cost of funding municipalities in Canada these days is quite attractive. I issued bonds yesterday, and the cost of the money over five years is about 4 per cent per year. I don't think the private sector could offer the municipalities a better deal at the present time.

Some small communities that are not used to borrowing regularly and don't have a credit rating may have trouble obtaining financing. But if you look at the overall requirements, you will see that that segment represents an extremely marginal portion. The private sector is very much involved in rebuilding our sewer systems, our water systems and our drinking water supply plants, and carrying out highway and pavement rehabilitation. In some cases, the municipalities have reached the point where they are calling for tenders, not only for rehabilitation work, but for maintenance as well.

So, the private sector is making a contribution which is steadily increasing. I would say that in that respect, things are moving in the right direction.

[English]

Mr. Roy Cullen: Thank you.

I have a quick question for anyone on the panel. I believe we need to use public transit more. If the government had to decide whether to go with the tax-exempt transit benefits or to make more direct investments in public transit, which would you choose?

Second, I'm wondering if there are any fiscal policies or tax policies that would discourage urban sprawl that we should be looking at, because it seems to me, certainly in Toronto, we have this growing urban sprawl requiring more infrastructure--public transit, or in the absence of that, more cars. It seems to me we should be looking at fiscal policies and tax policies that would discourage urban sprawl. I'm wondering if you have anything to suggest to us.

Ms. Amelia Shaw: I'll respond to the tax-exempt benefit versus infrastructure question. I think there's no doubt that infrastructure is required for public transit, and we certainly talked about that. The Canadian Urban Transit Association has estimated approximately $700 million to $900 million a year needs to be invested in Canada. For the employer-provided tax-exempt transit benefit, you can start small. You totally have the ability to determine the cost, so you could actually start at potentially a forgone revenue of $1 million a year, or potentially less--it's totally within the legislation.

I guess what I'm suggesting is you can really do both, but you need to get it moving from the incentive side, because it will take a while to build.

To go back just a little bit, you asked about private sector involvement in the previous question, and of course, in the United States it is the private sector that actually runs this initiative. So this is a wonderful opportunity for public transit to have a public-private partnership in advancing ridership.

Mr. Roy Cullen: Is there anybody else?

Okay. Thank you, merci.

The Chair: On a last point for Ms. Volante, if you had your druthers, over what type of time span would you like a SCPI program spread out?

Â (1235)

Ms. Maura Volante: Well, I would like us to examine what ways would be best to fund these needs on an ongoing basis. It might not be a specific homelessness initiative; it might be mainstream services taking over--Health Canada or other kinds of supports. I would like to see the needs being filled on a long-term level rather than necessarily trying to fix homelessness in this short-term way, without recognizing that the need of the people who are now homeless, even when they are housed, may still be there for some of these services.

The other part of that is an ongoing housing strategy that includes yearly minimums for affordable housing building.

The Chair: Thank you.

On behalf of my colleagues who had to leave early--they were going to other meetings and wanted to give their apologies--I certainly thank you for giving us that extra time, which allowed us to finish this meeting. I'm sorry for the interruption of our votes, but that is the procedure of the House and it's certainly within the rules of this place.

Thank you very much on behalf of all my colleagues. Merci.

We are adjourned until 3:30 this afternoon, colleagues. You have about six minutes to the vote.