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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, October 30, 2003

0905

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

Mr. Pat Fiacco (Mayor, City of Regina, Trans-Canada #1 West Association)

The Chair

Mrs. Marnie Gladwell (Executive Director, Saskatchewan Arts Alliance)

The Chair

Mrs. Marnie Gladwell

The Chair

Mrs. Marnie Gladwell

The Chair

Mrs. Marnie Gladwell

0910

Ms. Brenda Niskala (Executive Director, Saskatchewan Publishers Group and Treasurer, Saskatchewan Arts Alliance)

0915

The Chair

Ms. Donna Shire (Member, Saskatchewan Action Committee, Status of Women)

0920

The Chair

Mr. Dale Ripplinger (Political Action Representative, Association of Regina Realtors)

0925

The Chair

Mr. David Malcolm (President, Mid Canada Research Institute)

The Chair

Mr. David Malcolm

0930

0935

The Chair

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

Mr. Pat Fiacco

Ms. Maria Minna

Mr. Pat Fiacco

Ms. Maria Minna

0940

Ms. Brenda Niskala

Ms. Maria Minna

0945

Mr. Dale Ripplinger

Ms. Maria Minna

Mr. Dale Ripplinger

Ms. Maria Minna

Mr. Dale Ripplinger

Ms. Maria Minna

Mr. Dale Ripplinger

The Acting Chair (Ms. Sophia Leung (Vancouver Kingsway, Lib.))

Mr. Roy Cullen (Etobicoke North, Lib.)

0950

Mr. Pat Fiacco

Mr. Roy Cullen

Ms. Donna Shire

0955

Mr. Roy Cullen

Ms. Donna Shire

Mr. Roy Cullen

Ms. Donna Shire

Mr. Roy Cullen

Mr. David Malcolm

Mr. Roy Cullen

Mr. David Malcolm

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

1000

The Chair

Mr. Gord Archibald (Executive Officer, Association of Regina Realtors)

The Chair

Mr. Roy Cullen

The Chair

Mr. Dale Ripplinger

The Chair

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP)

Mr. Pat Fiacco

Mr. Lorne Nystrom

Mr. Pat Fiacco

1005

1010

Mr. Lorne Nystrom

Mr. Pat Fiacco

Mr. Lorne Nystrom

Mr. Pat Fiacco

Mr. Lorne Nystrom

1015

Mr. Dale Ripplinger

The Chair

Mr. Lorne Nystrom

Ms. Donna Shire

The Chair

Ms. Sophia Leung

The Chair

Mr. Pat Fiacco

1020

Ms. Sophia Leung

Mrs. Marnie Gladwell

Ms. Sophia Leung

Mrs. Marnie Gladwell

Ms. Sophia Leung

1025

Mr. Gord Archibald

The Chair

Mr. Pat Fiacco

The Chair

Ms. Sophia Leung

Mr. David Malcolm

1030

The Chair

Mr. Dale Ripplinger

Mr. Pat Fiacco

The Chair

Mr. Dale Ripplinger

The Chair

1040

The Chair

Mr. John Keen (As Individual)

The Chair

Mr. Ron Cameron (Vice-President and Chief Financial Officer, Saskferco Products Inc., Canadian Fertilizer Institute)

1045

Mr. Darrell Zwarych (Controller of IMC Potash Ltd.; Canadian Fertilizer Institute)

1050

Mr. Ron Cameron

The Chair

Dr. Jim Tomkins (Vice-President, Administration, University of Regina)

1055

1100

The Chair

Mr. Rupert James (Co-Chair, Finance Committee, Saskatchewan Chamber of Commerce)

1105

The Chair

Mr. Norm Halldorson (Co-Chair, Finance Committee, Saskatchewan Chamber of Commerce)

Mr. Norm Halldorson

1110

The Chair

Mr. Norm Halldorson

The Chair

Mr. Ralph Pilz (Director of Education, Northern Lights School Division No.113)

1115

The Chair

Mr. Ralph Pilz

The Chair

Mr. Ralph Pilz

The Chair

Mr. Ralph Pilz

1120

1125

The Chair

Mr. John Keen

1130

The Chair

Ms. Maria Minna

The Chair

Ms. Maria Minna

Dr. Jim Tomkins

1135

Ms. Maria Minna

Mr. Rupert James

1140

Ms. Maria Minna

The Chair

Ms. Maria Minna

The Chair

Ms. Maria Minna

The Chair

Ms. Maria Minna

The Chair

Mr. Roy Cullen

1145

Mr. Ron Cameron

Mr. Roy Cullen

Mr. John Keen

Mr. Roy Cullen

Mr. Ralph Pilz

1150

Mr. Roy Cullen

The Chair

Mr. Bruce Ruelling (Area Board Member, Northern Lights School Division No.113)

Mr. Roy Cullen

Mr. Bruce Ruelling

Mr. Ralph Pilz

Mr. Roy Cullen

Mr. Norm Halldorson

1155

The Chair

Mr. Rupert James

The Chair

Mr. Rupert James

The Chair

Mr. Lorne Nystrom

Mr. Norm Halldorson

Mr. Lorne Nystrom

Mr. Norm Halldorson

1200

Mr. Lorne Nystrom

Mr. Norm Halldorson

Mr. Lorne Nystrom

Mr. Norm Halldorson

Mr. John Keen

Mr. Lorne Nystrom

The Chair

Mr. Darrell Zwarych

1205

The Chair

Dr. Jim Tomkins

The Chair

Dr. Jim Tomkins

The Chair

Mr. Ralph Pilz

Mr. Lorne Nystrom

Mr. Ralph Pilz

The Chair

Mr. Bruce Ruelling

The Chair

Mr. Bruce Ruelling

The Chair

Mr. Lorne Nystrom

Mr. Bruce Ruelling

The Chair

CANADA

Standing Committee on Finance

NUMBER 092

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, October 30, 2003

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): The order of the day, pursuant to Standing Order 83(1), is pre-budget consultations. We are in Regina today, and I want to welcome all of those who have come out to be with us this morning on our panel. We will have two panels of the morning.

Before I start, I should mention that Rick Casson from the Canadian Alliance Party was here, but he had a family emergency. He wanted me to convey his apologies, because he had intended to be here this morning with you. But we will make sure he gets all your briefs, as will all the other members of our committee who have to be in Ottawa today and are still working there.

So we have part of our committee here on the road travelling, and we're pleased that this panel consists, among others, of the Trans-Canada #1 West Association, with the mayor of Regina, Pat Fiacco, and Bruce Anderson, who is the manager, presenting. Both of you, welcome.

We also have, from the Saskatchewan Arts Alliance, Marnie Gladwell, who is the executive director; and she is joined by Brenda Niskala, who is the treasurer and the executive director of the Saskatchewan Publishers Group. Welcome to the two of you.

Next, from the Saskatchewan Action Committee, Status of Women, we have with us Donna Shire, who is the chair, welcome, and Tracy Stevens, a board member of that association.

From the Association of Regina Realtors, we have Gord Archibald, who is the executive officer, and Dale Ripplinger, political action representative. Welcome.

The final group in this panel is the Mid-Canada Research Institute, represented by its president, David Malcolm. Again, bienvenue.

[Translation]

Welcome everyone.

Let us begin.

[English]

We'll go in the order of the agenda.

We'll go to the Trans-Canada #1 West Association.

Mayor, would you like to commence? You have up to seven minutes, the time is yours.

Mr. Pat Fiacco (Mayor, City of Regina, Trans-Canada #1 West Association): Thank you very much, Madam Chair and committee members.

Welcome to Regina. Unfortunately, we had some snow yesterday, but I'm sure by the end of the day it will be gone.

We are certainly grateful for the opportunity to participate in your pre-budget consultations. With me is Mr. Bruce Anderson, who is, as you've indicated, Madam Chair, the manager of our Trans-Canada #1 West Association.

The Trans-Canada #1 West Association represents municipalities, businesses, attractions, and tourism organizations in the three prairie provinces.

As you are aware, I wear two hats today. First, I'm the mayor of Regina, one of the communities located on the Trans-Canada #1 Highway, and as mayor, I once again welcome you to Canada's Queen city. However, I am also president of the Trans-Canada #1 West Association. It is in the latter role that I am addressing the standing committee.

The Trans-Canada #1 Highway is a critical linkage for Regina and many Canadian communities. The #1 is part of a national highway system that includes only major highways such as the Yellowhead Highway, Highway 401 in southern Ontario, and Quebec's Highway 40. In fact, the national highway system has 25,000 kilometres of highways, and most of Canada's population is located on or near these highways.

For several years, our association has called for the federal government's full participation in a national highway strategy. We are asking the Standing Committee on Finance to, number one, recommend that the federal government make a bold commitment to a national highway strategy, and number two, recommend that the federal government prioritize sufficient resources to upgrade and expand the national highway system.

We are looking for the federal government to recognize that it has a substantial role in funding interprovincial highways. Specifically, we recommend that 1.5¢ per litre on the federal fuel tax be designated to the national highway system.

Transportation is a federal issue, not just a provincial priority. Highways should be a key focus on a national transportation priority. After all, our highways move 70% of all manufactured goods, supporting the Canadian businesses that employ Canadians. Of course, Canadians use national highways to get to work, visit friends and families, and to explore other parts of Canada.

Likewise, the majority of our tourists use the same highways to visit all areas of Canada and, in doing so, create a positive and significant impact on our economy.

As in health care and other national issues, the federal government must provide leadership for the benefit of all Canadians.

We are aware that the Federation of Canadian Municipalities and the Big City Mayors Caucus are asking for a share of the federal fuel tax on urban infrastructure, and as one of those big city mayors, I feel our cities need improved urban infrastructures. I could probably provide another presentation on that, but Paul Martin has already recognized the need for that and I won't go there.

However, good highways are needed to safely and efficiently move people and goods to and from our communities. In other words, it is not an either/or question. Both the urban infrastructure and the highways infrastructure are needed.

In the standing committee's call for input into the pre-budget consultations, three themes were mentioned. Our view is that a federal government contribution to our national highway system would be an investment yielding dividends in economic growth from the investment itself and from improved trade and tourism. As well, safe highways improve the quality of life for Canadians through reduced accidents, reduced fuel consumption, and reduced vehicle wear and tear. Finally, our national highways link the majority of Canadians for the benefit of all Canadians.

In closing, thank you to the standing committee for allowing us to make a presentation to this hearing. Have a great Regina day.

The Chair: Thank you very much, Mayor.

We'll move now to the Saskatchewan Arts Alliance.

Before we start this, colleagues, I don't believe there's a written brief. Can you confirm that to me, that there's no written brief?

Mrs. Marnie Gladwell (Executive Director, Saskatchewan Arts Alliance): No written brief.

The Chair: Do you have written speaking notes?

Mrs. Marnie Gladwell: Yes.

The Chair: All right. Perhaps at the end, if you would give them to our clerk, we'll make copies and circulate them. That way there's a written record of them.

Mrs. Marnie Gladwell: That's been done.

The Chair: All right.

Go ahead, please.

Mrs. Marnie Gladwell: Thank you, Madam Chairman, for giving us the opportunity to discuss our recommendations for the next budget year.

The Saskatchewan Arts Alliance is an inclusive, member-driven coalition of Saskatchewan arts organizations that provides a collective voice for the provincial arts community. Our coalition includes 60 organizational members representing performing, visual media, and literary arts. In turn, our members represent hundreds of artists and cultural workers who reside throughout the province.

Today we appear before you to discuss two issues critical for our sector: stable multi-year funding and the socio-economic conditions of self-employed cultural workers. You have heard recommendations on these issues from the Canadian Conference of the Arts as well, whose brief we've reviewed and endorsed in our letter to your committee.

We highlight these issues based on the assumption that all of us around this table support Canadian ownership of cultural products, both at the creative and producer stage; agree with the concept of regional support; and support the right of artists to gain equity with other members of society through status of the artist measures.

Saskatchewan has a vital and energetic arts sector that provides exemplary services to the public. Our artists and cultural workers are very dedicated—a quality demanded of people who work in the sector. Our arts organizations have learned well the art of stretching dollars while maintaining the highest of standards. But in our sector exists an uncertainty that makes it vulnerable to voices of whimsy, a recent notable example being the unexpected changes in funding occurring with the Canadian Television Fund. This must be corrected.

Challenges facing our sector are reported in a study commissioned by the Voluntary Sector Initiative, entitled The Capacity to Serve. The report showed what those of us in the arts sector have known for a long time: challenges such as a tendency for funders to support short-term projects rather than long-term activity, and the fact that continuous changes in funding priorities and the lack of support to organizational infrastructure limit our ability to build capacity. Surely it is in the best interests of everyone for our sector to become stable and sustainable, and to build capacity, attributes that Heritage Canada has promoted with its new programing—with positive results, I believe.

Key to building these attributes is a capacity to plan effectively and over the long term, and for this to occur, guaranteed multi-year funding is of critical importance.

The Saskatchewan Arts Alliance recommends that the funding announced for the cultural sector in 2001 with the “Tomorrow Starts Today” investment be extended indefinitely and be augmented at an appropriate level.

We also recommend that adequate, stable, multi-year funding be provided to Canada's cultural institutions and agencies, such as the Canada Council, to improve their stability and ability to build capacity in the arts and culture sector.

Furthermore, from a provincial perspective, we recommend that the federal programs and policies be regionally sensitive, with criteria that are inclusive of small and medium-sized organizations and industry.

I'll now pass it over to my colleague, Brenda Niskala, who will talk about the socio-economic conditions of self-employed workers.

¿ (0910)

Ms. Brenda Niskala (Executive Director, Saskatchewan Publishers Group and Treasurer, Saskatchewan Arts Alliance): Thank you.

Last year Saskatchewan followed the lead of the federal and Quebec governments in passing the Status of the Artist Act, which recognizes the rights of artists to, among other things, enjoy the same economic and social benefits available to other workers. However, many of the socio-economic issues facing our artists are in the federal jurisdiction. So no matter how progressive the provincial legislation is, artists need measures at the federal level that recognize the unique characteristics of their profession, a profession marked by fluctuating income levels, seasonal and unpredictable hours of work, and an average income much below the Canadian average.

Concurring with the Canadian Conference of the Arts' recommendation in their pre-budget submission, the Arts Alliance recommends that the Department of Finance take the lead in studying Canada's self-employed workers in today's labour market with the view to building Canada's social benefit program to include the self-employed workers. This would have a huge impact on artists.

An important and much needed first step is to immediately extend, for instance, the employment insurance program to include self-employed cultural workers.

We also urge the Government of Canada and the Canada Customs and Revenue Agency to recognize the dual status of artists and presume them to be independent contractors. This is a growing concern for artists and arts organizations that is compounded when one understands that artists would lose the presumption of ownership for both copyright and moral rights of their creative works and, hence, future income from their own creations if they are deemed employees by the CCRA for income tax purposes. This has huge implications on their ability to make a living.

The criterion currently used by the CCRA in determining status needs to be updated to address the self-employed artist or cultural worker. While the Canadian Conference of the Arts and the CCRA have been working to find a solution, we urge government to quickly resolve this matter in a way that it is equitable to the artistic profession.

Further, we urge that the Government of Canada implement measures to temper the economic situation of artistic income. This can be achieved through measures such as income back-averaging and allowing an exemption of income tax on a portion of artistic income.

These and the recommendations my colleague mentioned are critical to sustain and develop the arts in Saskatchewan and in Canada. The arts sector makes a significant contribution to Canada and its citizens, economically and socially. Given Canada's innovative strategy, it is even more important that the federal government invest in our artists and the arts sector. The benefits of investing in that will be generously returned in the future.

Thank you.

¿ (0915)

The Chair: Thank you very much.

Now we have the Saskatchewan Action Committee, Status of Women.

Go ahead, Ms. Shire.

Ms. Donna Shire (Member, Saskatchewan Action Committee, Status of Women): Thank you, Madam Chair.

The Saskatchewan Action Committee, Status of Women thanks the chair and all members of the committee for this opportunity to present. I would just make note that the paper tabled will have substantially more information, more detail, than I'm presenting at this time.

The Saskatchewan Action Committee, or SAC, was established in 1971. It represents a cross-section of women and women's groups in Saskatchewan. We are an inclusive, multi-issue, multi-cultural, equality-seeking women's organization representing grassroots women in this province. We actively promote the equality of all women and women's human rights and justice issues at all levels.

The Saskatchewan Action Committee brings women together to work towards economic, social, cultural, and political justice. We do this by identifying barriers to women's equality, by identifying changes in policy that would remove discrimination against women and thus would enhance the quality of their lives and their children's and families' lives.

However, after all these years, like many other equality-seeking women's groups right now, we are on the brink of extinction. The reason for this is loss of funding that has in the past enabled us to support women in the most vulnerable situations.

Since 1971, SAC has evolved from a mainstream women's organization that was almost exclusively Caucasian into an inclusive, well-represented women's organization.

The purpose of this brief is to provide you with a window to view what the elimination of women's groups like ours means to grassroots women.

In 1973, the women's program fund was created to provide support for equality-seeking women's organizations to promote the status of women in Canada. Core funding was provided to these organizations in recognition of the fact that discrimination against women was an inherent injustice that would require intervention and resources if it was to be brought to an end.

Women's equality-seeking organizations were established to promote the status of women and are the very foundation of Canadian women's equality. Since 1990, however, there have been substantial funding cuts. In 1996, the criteria changed from program funding to project funding, and women's equality has been challenged in a major way. Over the last three years, the criteria established have proved to be rigid, demanding, and time-consuming. We have seen organizations struggle to stay alive, and many have given up and disappeared. The enormous time spent in developing a project proposal, the time factor spent from the time the funding application is submitted until approval is finally given is staggering.

Another barrier is that groups cannot have new proposals looked at without the final report of their last project being accepted. This is problematic because there can be a gap in funding between initiatives of several months, and it reduces the organization to survival mode. Looking for money takes precedence over work that needs to be done.

Project funding reduces women's equality even further, because women at the grassroots level are not being supported to work for real change in women's lives. Progress towards equality requires consistent and stable resources from year to year.

As a direct result of the current system of funding, women's groups no longer receive regular funding. We ask that Treasury Board take responsibility for the way this fund is managed by bureaucrats. The current criteria are creating further inequality for women and have resulted in the systematic elimination of grassroots women's organizations both regionally and nationally. They are forced to shut down due to lack of sustainable or predictable funding.

On a human level, this is a serious loss to the well-being of our society because the women most affected and hardest hit are the ones who are the most vulnerable and in desperate situations and have nowhere else to turn.

The disappearance of SAC would be a huge setback for the progress of women in our communities. SAC right now has 12 open cases of harassment that women have come forward with. They have approached SAC not because they are women who need counselling or sheltered help, but they need intervention so their cases may be resolved.

We not only identify the problem but suggest policy changes to remove barriers to women's participation. We have daily requests for assistance from women and women's groups. We are well recognized in the community as being a strong voice and advocate for women who are facing discrimination and other injustices. We are a last resort for many women who find themselves in desperate situations. If SAC is forced to shut down, it is not only a disservice to women but a sad commentary on the values that government promotes within our society.

We are requesting that the federal government restore core funding to equality-seeking women's groups that have a long-standing history of working with women, particularly organizations that do not have access to other sources of funding. We reiterate the consultation demands made by women's groups in 1996 and 1999, that core funding must be restored for infrastructure and equality work.

¿ (0920)

We are also asking that more money be injected into the women's program fund to allow sustainability for women's groups. Without adequate resources, the status of women in Canada will continue to backslide. Hopefully, that is something we can all take action to prevent.

Thank you.

The Chair: Thank you very much.

Next is the Association of Regina Realtors.

Who will start your presentation? Go ahead, sir.

Mr. Dale Ripplinger (Political Action Representative, Association of Regina Realtors): Thank you, Madam Chair, and welcome to all committee members to our beautiful snowy city. It's a dry cold.

We appreciate the opportunity to speak to you this morning. We are here today to represent the members of the Association of Regina Realtors and to speak in support of the submission provided to this committee last month by the Canadian Real Estate Association, or CREA.

The Association of Regina Realtors is comprised of 25 member companies and over 300 individual member realtors. Our members facilitate the vast majority of property transactions in the Regina area and the association operates with a local multiple listing service. In 2002, over 2,900 property sales representing over $300 million in dollar volume were handled through the Regina MLS.

As I have mentioned, we are here speaking in support of the CREA submission to the committee. In doing so, we will be addressing four issues: one, RRSP contribution limits; two, affordable housing; three, municipal finance; and four, brownfield development.

In its submission, CREA brought forward a national perspective to these issues. We will be bringing a local perspective in our remarks.

Realtors have been calling on the government to increase RRSP contribution limits for several years. We were encouraged to see the increase to contribution limits in the government's 2003 budget. However, it was very modest.

When it comes to saving for retirement, realtors as independent business people must rely on their own resources. Realtors do not have the benefit of employer-sponsored pension plans. Some realtors invest in property in preparation for retirement, but most, like many other small-business people, rely on the individual RRSP system as their means for retirement planning.

Many of our members are baby boomers in their peak earning years and are now at a point when they are able to maximize on their private retirement savings. However, current maximum contribution levels limit the savings that may be placed in the tax-sheltered plan.

We would encourage the government to immediately raise maximum limits to $19,000, followed by annual increases of $2,000 until reaching $27,000, and then index to inflation.

It is important to recognize that an increase to limits is not an outright tax savings or a loss of revenue for government, but a tax deferral that will generate revenue for the government in the future. We believe that making more contribution room now will allow many small-business people to plan for their retirement through their own resources and will reduce reliance on public pension plans in the future.

Affordable housing. Although Regina has a reputation for having one of the most affordable residential real estate markets in Canada, we also have our challenges in providing affordable housing to many.

There has been virtually no new residential rental construction in the city for over 20 years. This, coupled with demolition of some rental buildings and the conversion of other rentals to condominiums, has reduced the supply of affordable housing in the city. It has led to low vacancy rates and upward pressure on rents, marginalizing those on the edges of affordability.

Approximately 85% of all rental housing is owned by the private sector in Canada. Consequently, we believe that the solution to the affordable housing supply issue lies in leveraging private sector investment through taxation policy reform rather than through direct government expenditure in the construction of housing, which is very expensive and may not be sustainable.

The current taxation policy discourages the free flow of investment capital in the private rental housing market, including new construction and upgrading.

Investment in rental housing by small investors is treated as a passive investment by current tax policy. As a result, investors who have realized a capital gain on a property and wish to dispose of that property to invest in another rental property are not able to roll over the capital gain. They must first declare the capital gain and use capital cost allowances income before reinvesting in the second property.

To avoid paying the tax on the capital gain, investors tend to simply hold on to the property. This has the effect of locking capital into the current investment and inhibits the flow of new investment into affordable rental housing, whether it be to acquire existing rental units, to upgrade existing rental stock, or for new construction.

We would propose that the Income Tax Act be changed to, one, allow capital gains and allowance rollovers so the proceeds of the sale of an income property can be reinvested in another income property; two, allow owners of rental units to qualify for small-business deductions; and three, allow all investors in rental housing to utilize capital cost allowance losses in determining income for tax purposes. We believe these proposals will bring more private investment into affordable housing in Canada, increasing the supply of affordable rental housing and improving the quality of existing stock.

I would now like to speak to the acute fiscal situation that exists with many municipalities in Canada, including ours in Regina. I know the mayor supports our position on this one.

¿ (0925)

During the 1990s when the federal and provincial governments were facing significant deficits, action was taken to reduce government expenditures, and rightly so. This resulted in a downloading to municipalities, many of which stepped up to the fiscal challenge of bringing public sector financing into balance.

Over the past 10-year period, this has had the effect of placing upward pressure on the regressive property tax, which is the primary source of revenue for local governments. This is straining the revenue-generating capabilities of municipalities, and particularly Canadian cities.

City councils have had to make difficult decisions to reduce city services and they have had to cut back to balance budgets and minimize mill rate increases.

In many cases, budgets are balanced by postponing much-needed upgrading and fixing of infrastructure. This has led to substantial backlog deficits in maintaining infrastructure and it has led to deteriorating roads, sidewalks, water systems, and other infrastructures in many communities. In our city there is now over a 30-year backlog to repair road infrastructure.

Cities are now the economic engines of the Canadian economy, and they should be recognized as such by having access to sustainable funding to meet their needs. We believe the federal government must take a leadership role in addressing this issue, and we urge you to support the recommendations of the Liberal task force on urban issues, as outlined in the CREA submission.

I would like now to turn to another challenge facing many urban communities, that of brownfield remediation costs and tax policy.

Remediation of brownfield sites is an opportunity for many communities to reclaim land for redevelopment and investment. In many cases this would permit the leveraging of the existing infrastructure currently servicing these sites and it would create additional sources of revenue for government by the use of the land for productive economic purposes.

The National Round Table on the Environment recognizes that tax changes are required to kick-start the redevelopment of these sites. We would recommend that the government treat the cost of remediation as a deductible expense rather than as an upfront capital, with the expense to be amortized over subsequent years. We believe this will create an incentive for property owners and prospective investors to remediate contaminated lands.

We urge the committee to continue to support brownfield site remediation.

I would like to conclude by thanking the committee for the opportunity to speak to you today, and I would be pleased to answer any questions at any time.

The Chair: Thank you very much.

From the Mid-Canada Research Institute, we have Mr. Malcolm.

Please go ahead.

Mr. David Malcolm (President, Mid Canada Research Institute): Thank you very much.

Bonjour, good morning, Madam Chair and ladies and gentlemen.

It is going to be very difficult for me to collapse three years of work on this project into seven minutes, but I will do my best. I made some rough notes on things I wanted to elaborate on in the handout this morning, and I realized that would take 20 minutes. So I'll do my best.

The Chair: If you need a couple of more minutes, I think we have them.

Mr. David Malcolm: Thank you very much.

First of all, I'd like to emphasize that what we're talking about here is an initiative that involves all of mid-Canada. And what is mid-Canada? It's the entire boreal region of Canada that goes from Newfoundland and Labrador all the way across the northern regions of the provinces up into the Yukon and Northwest Territories and northern British Columbia. It covers a length of greater than 10,000 kilometres. For most of its length, it's wider than 1,000 kilometres. There are 1.4 million people living in this boreal region, often referred to as the “forgotten north” because of all the emphasis that has been placed on the High Arctic over the last few years, which has only 100,000 people.

I'd also like to mention that, politically, I believe, the mid-Canada region is important because there are 36 constituencies in mid-Canada out of 301 in Parliament. This means 12% of the constituencies are in mid-Canada, but only 5% of the population.

Politically people often think of what the population is in the region they're serving. Here the Government of Canada is serving 5% of the population but, through 36 of 301 constituencies, 12% of the constituencies.

The Mid-Canada Research Institute idea is not new in the sense that back in the late sixties Major-General Richard Rohmer advocated the mid-Canada corridor concept, a national development strategy that would encompass the entire boreal region from Newfoundland to the Yukon. There were three years of task force meetings, symposia, and numbers of volumes of proceedings, and important data and policy work done on this initiative. But, unfortunately, it seemed that the time was not right.

In 2001, Rick Laliberte, member of Parliament for Churchill River, had a similar idea. He could see that northern Saskatchewan desperately needed sustainable communities, and wondering how to do that, he decided that the best thing to do was to promote a national initiative. That's where the mid-Canada initiative came from. He got together with Major-General Richard Rohmer and several of those who had worked back in the late sixties.

One thing I would like to mention is that back in the late sixties, one of the key requirements that were recognized by communities and all of the people who were involved, from industry and government and so on, was that research was required. When we talk about research, we don't necessarily mean academic research, we mean knowledge acquisition.

The Mid-Canada Research Institute concept is a focus for the mid-Canada initiative. It is to allow communities, through community-based, community-driven research priorities, to establish their own future, to put the knowledge together that they need for sustainable development. That's the purpose of the Mid-Canada Research Institute.

I should say how I become involved. Over the last 40 years or so, at the University of Alberta, there has been the Boreal Institute for Northern Studies, which became the Canadian Circumpolar Institute in 1990. I was asked, actually, before I went to the University of Alberta, to lead this initiative, so it seemed quite fitting that I would begin this initiative through the University of Alberta. That's how I became involved.

The objectives of Mid-Canada Research Institute. It's a virtual institute, meaning that it concentrates on community-based research and people and human resources, not on bricks and mortar facilities, and it maximizes the use of modern communication technology and so on.

The Department of Western Economic Diversification received a proposal from us, and approved it several months ago, to undertake a planning study in three phases. First of all was the incorporation of the institute; then the development of a business plan, which is now available; and then a community consultation phase, which we are just going into on November 1, carrying through till the end of February.

This consultation process will take place all across the boreal region.

¿ (0930)

The business plan has just recently been reviewed, as mentioned in the outline I passed out, by an interdepartmental working group in Ottawa—that was yesterday morning—and they approved our draft business plan, which calls for $1.1 million of startup funding. Of that amount, $250,000 is already committed by the Department of Western Economic Diversification.

Because this initiative is spread all across the country, the other federal agencies for development—FedNor, ACOA, and the agency for Quebec—are all interested in contributing to this initiative as far as startup is concerned. Of course, we need to see the dollars on the table as well as the moral support, shall we say.

Just for your interest, members of the committee yesterday included three people from the Prime Minister's Office, one from Minister Goodale's office, Minister Mitchell, Minister Owen, Minister Rock, and also General Richard Rohmer himself as a special guest. This initiative has really gained momentum and will be very important to the 1.4 million people who live in remote communities in the north.

¿ (0935)

The Chair: Thank you very much. You were just over seven minutes. You succinctly stated your plan.

One of the questions we had asked was about sustainable communities in rural areas, which we wanted to consider with this investigation this time, so I'm glad you have presented to us.

Now I'm going to turn it over to 10-minute rounds from every individual here.

I'll start with the Honourable Maria Minna.

Ms. Maria Minna (Beaches—East York, Lib.): I'm sorry, I'm not used to going first. Thank you, Madam Chair.

I will start off with Mayor Fiacco. I think our government has talked about the need for trans-Canada highways and trans-Canada roads for transportation, but with respect to your fuel tax, would you envision that going only to the trans-Canada system in terms of roads, or being solved through the revitalization of rail transportation? The reason I bring that up is that, since we've signed the Kyoto Accord and want to look at both sustainable, in terms of environmental...and also access to roads, I would personally love to see a lot more trucks on trains, especially when they are going long distances. Within small communities, as they are delivering to customers, obviously not, but I would love to see a lot more of what is called dual modal transportation.

I'm wondering whether your group or other municipalities that you work with have looked at that possible model of integrating both expansion or improvement of roads, but also rail in order to keep trucks off the roads.

Mr. Pat Fiacco: Thank you for the question. I would suggest that any funding would make a difference, and if it's a combination of funding that would be for both purposes, obviously it would be beneficial. Our particular presentation simply does focus on additional funding for the highways. We really haven't had further discussion beyond that.

Ms. Maria Minna: I would suggest that you might. From my perspective, I know there are a lot of members and a lot of other people thinking of the dual approach, simply because you can't sign Kyoto on the one hand and then just build roads. But you cannot not build roads, because, of course, our country is massive and you need roads as well. I think that looking at both, to try to accomplish what's best for society, would be the best.

Mr. Pat Fiacco: Thank you for that. It's something we will certainly take back to our membership.

Ms. Maria Minna: I'd like to now go to the Saskatchewan Arts Alliance.

First, I support both your suggestions with respect to self-employed workers and the need to look at the unemployment insurance act, or EI as we call it now, including self-employed workers. I think it's time. We've done a number of studies over the last 10 years--I know I was part of one some time ago--but it's still not a reality, and I think it's something we need to do.

With respect to being considered either self-employed or a contractor for the purposes of CCRA--and I agree with you that you should not be treated as an employee, because that causes all kinds of problems for you--maybe you could explain for us in a little bit more detail exactly what that means, more for the record and to make sure people understand exactly what you mean by that. I understand it and I support it and I have written letters to that effect, but I wondered if you could explain exactly what impact that has on people.

¿ (0940)

Ms. Brenda Niskala: Most artists have a number of engagements that they work with in an average month, let alone year. The traditional way that has been dealt with is that they have been seen as independent in that they have provided their own instruments in the case of musicians, or their own books and materials in the case of literary people, depending on the discipline, of course. They're providing their own materials, they're providing their own creative input, and whatever creative input they do provide remains with them traditionally in terms of ownership.

Artists are threatened with the changes. Let me give you an example. If an artist were to be acting as a mentor in a studio situation and the studio was paid for by an artist organization rather than by the artist, they would be considered an employee of that organization even though they were the ones providing the curriculum, providing materials, and organizing the event, simply because the financial outlay was put up by the original organization. So the CCRA rules are moving quite strictly against artists being interpreted as independent in any way, shape, or form.

What has happened, for instance, in the case of many of the larger organizations.... Of course, you've all heard of the situations where the symphonies, and so on, have suffered greatly because they have been treating their people as independent and have had to go into very serious financial debt in changing that, as CCRA has been looking at it over the previous years. The problem for performers, for instance, is that they, as independent people, are providing their own instruments, their own equipment. They're paying for that, and for an independent person, that is a deductible expense. As an employee, of course, that's not. They're still expected to provide them, but they would not be credited for that under the Income Tax Act.

Ms. Maria Minna: I appreciate that. I understand the issue.

I'll go over to the Saskatchewan Action Committee on the Status of Women group for a moment.

First, I want to say, having done a great deal of work with immigrant women in particular in the Toronto area, I understand your dilemma with respect to project funding versus core funding. You spend a great deal of your time chasing projects and redefining yourself according to the latest criteria as opposed to delivering the services that you are trying to deliver. I know the problems, so I am very sympathetic.

I just wanted to state that, because I don't disagree with what you are saying. I understand the vulnerability. The most vulnerable women's groups in the country are probably the most affected when it comes to that, because they are the least capable of keeping up with all the project funding that's required. I think we ought to take another look at that, and I agree with you that we should review women's programs in this country from that perspective.

I just wanted to say that, because I don't want to take your time in questions.

But I do have a question for the Regina realtors.

On RRSPs, I have to tell you I was not supportive of the increase, the recommendation that was in the last report. So that should tell you where I'm coming from, and I'll tell you why.

All the data we have show that less than 10% of Canadians used the full space of RRSPs that was there before the increase. We have increased it in the last budget, and probably even fewer people are going to use the full space.

Given the fact that we have about 647,000 single Canadians, most of them women living in poverty and not getting enough to pay rent, we have huge problems in that field. We should really be reviewing the whole of the pension system. In fact, there is a Prime Minister's task force looking at seniors' issues right now. But increasing the RRSP is spending more money in a very small percentage of population that can well afford, I think, to invest also in other ways.

When there is a huge chunk of Canadians in the middle.... Even if you're making $60,000 or $80,000 a year and you have a mortgage and children, you cannot put aside very much in RRSPs. Most Canadians put aside very little in RRSPs--in fact, $2,500 to maybe $5,000, if that. So the RRSP system does not really work well for the average Canadian in terms of retirement savings, except for a very small percentage at the high end.

I do not understand your request. I quite frankly do not support it. Maybe you can shed some light on why I should, because I still have not been convinced after two years on this committee.

¿ (0945)

Mr. Dale Ripplinger: I would make a couple of observations.

Because the public system is underfunded is no rationale for penalizing those who are trying to save privately. That would be one comment.

Secondly--

Ms. Maria Minna: How far do we go? How far does the government go to assist?

Mr. Dale Ripplinger: Our position is that it's not a tax cost; it's a tax deferral. This is government money that is coming back, and you are seeing that now as people are cashing in RRSPs and paying tax on that money rather than pulling money out of the public system, which is underfunded. We don't disagree that there are people out there who are marginalized and need help and that those people certainly should be supplied with a proper public system, but for me as an individual, as a self-employed business person who has a cyclical income, in order for me to properly fund my pension privately and not be a drain on the system...and this means that in the lean years, of course, I am not going to maximize my RRSPs.... There are years when a realtor doesn't make enough money to put food on the table. But if the nature of a business is cyclical, as the nature of their business is for many small-business people, in those years when they are able to maximize their contributions, we don't see it as a drain on the system to allow them to do so, thereby allowing them, in the long run, to be paying tax on those funds when they withdraw them.

Ms. Maria Minna: First, it's true that you would be paying taxes at the end, but you never pay to the full numbers. Your income is lower than it was, so you defer--

Mr. Dale Ripplinger: Not necessarily.

Ms. Maria Minna: But in the meantime, with the deferral, the tax is still costing the treasury today, and there's only so much to go around. We're talking about possibly going back into deficits and we have a whole lot of other demands.

What I'm looking at--and I wouldn't mind if your organization and others that are asking for increases looked at this--is how high should a government go to subsidize, to help Canadians to save? What should they be able to save if they have $60,000 in income a year? What would that be the equivalent of? I'm asking at what point we stop, and then people can invest in other ways. There are other systems of investment that they could choose.

This is something I would be interested to hear about, maybe at a future date. Are there some calculations? What is the upper end, where the government no longer needs to assist? Is it to help someone to put aside an income of $60,000, $70,000? Because if you save 75% of your income, and you're making $500,000 a year--there has to be a limit where the state doesn't continue to assist.

Mr. Dale Ripplinger: Well, we do say that the limit ultimately would be $27,000 annually, and then indexed to inflation in terms of an actual absolute dollar contribution limit.

The Acting Chair (Ms. Sophia Leung (Vancouver Kingsway, Lib.)): Excuse me, you have to wind up. We are three minutes over time. Perhaps another member will continue that.

Thank you, Maria.

Roy Cullen, for ten minutes.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Madam Chair. And thank you to all the presenters.

Mayor Fiacco, the idea of renewing our national highway system is something that is again on the radar, I think. One of the concepts being discussed is to have an arm's-length agency that would try to lever funding from various stakeholders, the federal government included, and the provinces, and perhaps even other stakeholders that might have an interest in seeing our national highway system renewed.

One of the issues being looked at in that discussion is the question of public-private partnerships. I think we're concluding that in the context of a national highway system it is sometimes overstated what PPPs can do. It tends to be simplified in terms of toll roads or shadow tolls, and we know that in a province like Saskatchewan toll roads are probably not going to work.

I had a couple of questions on that. One, is there a way at all in Saskatchewan for toll roads if you have some cross-subsidization between those areas where there is high-density traffic, or higher-density traffic, and the lower-density traffic areas? And secondly, what are the opportunities for including the private sector in maximizing their contribution or their participation by scoping in a lot more private benefits? That could be real estate concessions. It could be using the concept of design, build, operate, and maintain, and that leads to certain cost efficiencies.

What do you see as the role for the private sector in renewing our national highway system?

¿ (0950)

Mr. Pat Fiacco: Thank you for the question, Mr. Cullen.

I agree with your comment with respect to private-public partnerships. This is something I think we need to spend more time looking at. I think there's a tremendous opportunity out there. In this particular case there's a benefit to all—anything ranging from a reduction in travel time, in fuel consumption, in injury accidents and simply in property damage. All those stakeholders that are going to be affected I think would be more than interested in a discussion to see how that would work.

With respect to tolls, that's an interesting question. In the Toronto area there's a new highway using the toll, and from what I understand—I've been told, I don't know the facts on this one—it's not exactly the first road of choice. People do use it, but from what I understand, it's not nearly getting the return it expected to get.

I think we would have to be very careful with that, especially in Saskatchewan, where we have so many back roads that you can use to get from point A to point B. Our objective is to reduce that, unfortunately. The reality is that's what people are using. I can't imagine what it would be like to have that perfect highway system we talked about.

Mr. Roy Cullen: Thank you.

As for the toll road in Toronto, that's where I come from. That's a long story, but that is one of the highest-density areas you could probably find in Canada. They started off slowly. I think they are getting the traffic up now, but truckers certainly don't like it. That can be a good thing, too, if you are driving a car.

I want to ask a question to the Sasktachewan Action Committee. I've discussed this aspect with Minister Jean Augustine. One of the problems she is dealing with from before her time is that the department wanted to discontinue core funding. My understanding of it is she is trying to explore ways to reach a similar objective. I think she was talking about strategic multi-year funding as a concept. But I can appreciate the difficulty you are facing just chasing projects.

My understanding was that she was trying to address that. Have you had any discussions with her on that point?

Ms. Donna Shire: To date, the funding is in place on the current project funding criteria. Many women's organizations across the country have definitely voiced similar concerns to ours, so the pressure from the grassroots is certainly there to make some changes, but in terms of the specifics of that, no, we haven't had any communications in that regard.

¿ (0955)

Mr. Roy Cullen: Have you taken this up with Minister Augustine?

Ms. Donna Shire: Yes, we have taken it to very many levels of government.

Mr. Roy Cullen: Okay. When I go back to Ottawa, I'll follow up and see where it's at. I have many groups in my riding as well that struggle with this concept.

Ms. Donna Shire: Perhaps I could comment on the multi-year funding idea. That has been proven to be a myth, because our organization, for example, was given approval for funding that would extend for 16 months, but due to the delays in the reporting process at the department end--not getting back to us, changing the criteria--it was actually extended to about three years. Therefore, the initial amount of money of $100,000, instead of being funding for 16 months, was for three years. It really strains the organization even further when you're looking at keeping offices open, paying salaries and conducting your day-to-day business.

Mr. Roy Cullen: Thank you.

Mr. Malcolm, can you give me a sense of the sorts of research questions that would be of interest to your organization as they pertain to the area your mandate covers? What kinds of unique research questions would you be pursuing? Simply give me a sense of it.

Mr. David Malcolm: From the list of priorities in the handout, people in the north have already told us that they are interested in economic development, environment, climate change, health services, education, training, energy, housing and governance, and then in the business plan we added communication and knowledge exchange. They have expressed all those kinds of interests.

But we've already had a request from northern Alberta and northern Saskatchewan--we're just talking about roads--to look at a northern corridor between Fort McMurray and La Loche, because La Loche is a community that has 90% unemployment, incredible need of skills training, and you have the Fort McMurray area, which needs people.

So that's a very multidimensional, multidisciplinary research area where we need to look at the pros and cons of building such a road, the impacts on the community, and whether or not it's realistic to provide the kinds of skills training and capacity-building in the La Loche region. That's one example.

Another one from northern Saskatchewan that we have been asked to deal with as soon as we can is in the energy sector, to look at co-generation, considering the vast forest resources. A lot of it is burned in northern Saskatchewan to produce electricity from forest biomass and to provide additional energy through steam and heat for kiln-drying of lumber, secondary manufacturing, and so on. So those are two examples.

There are also great opportunities to partner with organizations in the north in different provinces--and again, I mentioned northern Saskatchewan because this thing got going in Rick Laliberte's riding--to partner with organizations, the health regions that are interested in various aspects of research.

Mr. Roy Cullen: Okay, so when we talk about research, it's not scientific research necessarily?

Mr. David Malcolm: No, it's knowledge acquisition for the benefit of the communities. It's community-driven and utilizing the capacity that's already there.

We often talk about capacity-building in northern communities. There is a lot of capacity already there. It needs to be encouraged and directed.

Mr. Roy Cullen: Thank you.

Do I have time for another question?

The Chair: Yes, you do.

Mr. Roy Cullen: Thank you.

To the Regina realtors, one of the difficulties I've had for some time, frankly, with proposals coming from the real estate sector and the builders is that you are looking for policies that will encourage more building and more development of housing, but it's not really targeted to affordable housing. It seems to me that the challenge we're facing as a government is to respond to the needs of people who are looking for affordable housing where there is a deficiency. It depends on the city, but there certainly are deficiencies. You've indicated that even here in Regina there are some challenges.

The argument seems to go that if you encourage homebuilding, it will cut through all levels; it will be at the high end, the medium end, and the low end. I think a bunch of us haven't been convinced by that argument. Yet we still see people seeking these policies that aren't targeted at affordable housing.

Is it that there is no way of realistically doing that, or that you're absolutely committed to the idea that if the policies are good, you're going to hit all levels? What am I missing here?

À (1000)

The Chair: Go ahead, Mr. Archibald.

Mr. Gord Archibald (Executive Officer, Association of Regina Realtors): In our presentation we cited some actions that we think will address the affordable housing sector as well. They may address others, but we believe they will address the affordable housing sector.

As mentioned in the brief, 80% of all rental housing in Canada is owned by the private sector. That existing tax policy does not allow small investors, and we are talking about small investors here, to be able to roll over their capital into other rental housing does have a limiting effect. It tends to lock capital in. Therefore, we're not seeing that capital being placed in the affordable housing sector. Certainly if there is a demand there, there will be investment by the private sector.

We think a great deal of that capital would flow into affordable housing.

The Chair: You may follow up, Mr. Cullen.

Mr. Roy Cullen: Yes, as a comment, in Toronto we have stacks of high-end multi-unit accommodation going up. We don't have much in the way of affordable housing. Any differential policies you can come up with I think would fall on good ears. Certainly I'd be interested.

The Chair: And just to follow that up, yesterday we heard about the land trust idea that was put forward by another board appearing in—where were we yesterday?—Edmonton. That was a Calgary land trust, I believe.

Mr. Dale Ripplinger: We have some local initiatives. We've talked to the mayor and to Minister Goodale about them. They are not addressed specifically in here. Our proposal today was just to confirm our national board's position on national and federal issues.

If Mr. Cullen and any other members of the committee would be interested in receiving some of the suggestions we've made locally to improve the housing situation locally that are more specifically targeted than anything we've talked about here, we can certainly supply those to you. We do have some very workable and effective suggestions, and some of them do relate to national issues, because they do go to CMHC issues.

The Chair: I invite you, if you have anything specifically addressing affordable housing that you have piloted in the area, to send it to our researcher. That way it is part of our body of knowledge also.

Thank you very much.

Now we'll go to Mr. Nystrom. Mr. Nystrom, it's very nice to have you back with the committee. For many years you served as finance critic, so I'm pleased that you are here with us today. Go ahead. This is your home area, correct? So I'm going to give you a couple of extra minutes.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Madam Chair. I'm glad to be back. I'm now in the justice committee. I was in finance for many years.

I want to welcome the committee members to Regina. You are currently in Ralph Goodale's riding and about three blocks from mine. There's just as much snow on my side as his.

Welcome to all of our witnesses here as well.

I think my first question goes to the mayor. I notice you didn't mention the Grey Cup, by the way.

Mr. Pat Fiacco: That was my closing comment.

Mr. Lorne Nystrom: I noticed that when Dale Ripplinger was talking about balancing municipal budgets across the country and that this is done at the expense of needed infrastructure programs, you were nodding your head quite vigorously. I wonder if you could elaborate for us on what are some local examples of what could be done with more federal funding in terms of infrastructure and aid to municipalities.

Also, could you comment in terms of what form that assistance should take? Should it be a share of the gasoline tax? Should it be a share of the income tax? Should it be some direct funding that's conditional, or tied, or unconditional?

This is a big debate now in the country, and I certainly want to say at the outset that I favour more tax revenues for municipalities. I think it's a general consensus across the country, Pat, that we need to do this. The question is how and how much. Could you give us some local examples of what could be done?

Mr. Pat Fiacco: Thank you very much, Mr. Nystrom.

As most of you are aware, the big-city mayors caucus and Federation of Canadian Municipalities requested 5¢ a litre from the current federal fuel tax, and we understand that Paul Martin has clearly indicated that he would vacate a portion of the federal fuel tax. He certainly is not committed to the 5¢, but he has indicated that his government would vacate a portion of the federal fuel tax.

Our infrastructure deficit, for example, in Regina is approximately $31 million. So it would take us $31 million just to catch up to what we need to get done today, and that's strictly on streets and roads. That has nothing to do with anything else. Those are the basic streets and roads.

In 2003 we increased our streets and roads capital budget by 17%, and it's made an incredible difference. Unfortunately, and you're going to hear this argument right across the country, over the years we have seen the roles and responsibilities of municipal government grow for various reasons, whether it's the downloading that has occurred by the other orders of government, or other factors. But there is no question that we've had to increase our responsibilities, whether it's affordable housing or whether it's health care. And when you think about what is the real purpose of property taxes, why are people paying property taxes, it's to service the property they are living on. So we have our core responsibilities.

It's interesting, because we went through a planning session as a city council three years ago, and we are going through it again next month with our new council. We talked about what is our primary responsibility, our secondary responsibility, and then everything else that falls under that. Unfortunately, our primary function has suffered, which is our streets and roads, the services that we need to provide to municipalities, because we are doing a bunch of other things. We are trying to be all things to all people. Consequently, we are not being really good at what we should be doing. Thus, the lack of funding.

Our only source of funding is property taxes and user fees. Our user fees are minimal, so with this high reliance on revenue from property taxes we need to find other ways.

I think if you look at what Mayor Marie has suggested in Manitoba, in Winnipeg, there is no question that it's a model we have looked at right across the country. But again, I think if you look at the perception there, it's simply more taxes being paid. Yes, you'll see a tremendous reduction. It's the American model. There is no question that it's the U.S. model on increasing user fees.

We are of the belief for the most part that there are already enough taxes being paid in the country. Some 90% of taxes collected in the city of Regina go to either the provincial or federal governments: specifically, 38% to the provincial government and 52% to the federal government, leaving us with 10%. And of that 10%, 4.5 % is actually what goes to the City of Regina; the other 5.5% goes to education and libraries.

Consequently, when we are putting together a budget as a municipality, we are sensitive on mill rate increases. We already have one of the highest property taxes in the world here in the country, and there isn't a mayor out there who can say anything different. The issue, though, is we have talked about economic development, and you see this great growth and you would think that this obviously is broadening the tax base so you are increasing revenue, but it takes a tremendous amount of growth to make up that difference.

The reason I say that is when you take the first year of a new development, for example, the tax distribution is equal: a third, a third, and a third. In other words, for example, we'll take a Wal-Mart. When a Wal-Mart is being built in a municipality, the taxes collected on that property for the year of development are equal: a third will go to the federal government, a third will go to the provincial government, a third will go to the municipality. As soon as the construction is over and the door is open, that's when things change. That's when the reality sets in where the 90%, as I suggested, goes to the other two orders of government.

We have to find a system that is going to provide funding, and it has to be dedicated to infrastructure. The Prime Minister's caucus task force on urban issues clearly indicated the infrastructure deficit across this country in the form of approximately $52 billion. If you provide a portion of the federal fuel tax that is collected today, what municipalities have asked for is that it be dedicated to transportation infrastructure. So it has to be a dedicated source. And that transportation can mean anything, from the needs in Toronto, which are certainly different from our needs.... As long as it's going towards transportation infrastructure, it would do a tremendous amount of justice to what we need in our municipalities

À (1005)

À (1010)

Mr. Lorne Nystrom: I wonder if you could tell us, Mr. Mayor, roughly how much 5¢ a litre would mean to Regina. Do you have any of those estimates as to what that would mean on an annual basis?

Also, what share of your revenue is now from user fees, and what was it like say 20 years ago in terms of where the money came from municipally?

Mr. Pat Fiacco: A 1¢ a litre fuel tax dedicated to the City of Regina is approximately $1 million, so 5¢ would be equivalent to $5 million.

Mr. Lorne Nystrom: Per year.

Mr. Pat Fiacco: Per year.

This year we spent $8.5 million on streets and roads, so we're talking about a significant increase. Even 1¢ or 2¢ or 3¢, whatever that is, is a tremendous increase. As I suggested, we added $1.2 million to our budget this year, which was a 17% increase.

With respect to user fees, we have seen an increase in user fees. I don't have the exact number. However, I will tell you that we have the lowest user fees in western Canada here in the city of Regina for our facilities. We've increased them, but they are.... We're very sensitive to that. Our recreational facilities as well as our transit system, the majority of that is subsidized by the property tax base. There's an imbalance there that's unfair.

Mr. Lorne Nystrom: My next question goes back to Dale Ripplinger.

Perhaps you could elaborate a bit more on Roy Cullen's question. We are only a few blocks from the inner city here, what we call north-central Regina, and I wonder if your proposal, in terms of the capital gains, could be targeted a bit more toward inner-city types of problems.

The other question I had is whether the national real estate board has done some mathematics on the costs of implementing their program, and on the other side of the equation, on the benefits of it down the road. It might be useful to have some figures on it. I'm not sure if you have them, but if you do, if you could share it with the committee it might be helpful, Dale.

À (1015)

Mr. Dale Ripplinger: Unfortunately, I don't know if CREA has any numbers. We have limited resources, so it takes a little bit of time, but they are in the process of getting some of those numbers together. I know we've discussed this with you before as well, and your suggestion was that we do that, and we are. So we will have those numbers available.

In terms of targeting specific areas, again that's something that as an industry we've looked at locally, and we have some ideas that will specifically address issues such as inner-city housing in north-central Regina.

On a national level, though, our affordable housing initiative has been pretty much limited to the capital gains exemption suggestion that's in the report. And that's just one small part of the picture; it doesn't mean that's where it ends or that this initiative is solely going to solve the affordable housing issue. There are other issues that go along with that suggestion.

Just to give you an example of our thinking in terms of applying that to affordable housing, there's a shortage of supply. Mr. Cullen mentioned it. There's a lot of upper-end construction going on, because that's where the money is. But there is a shortage of rental supply. There's been no new rental construction in Regina for 20 years.

Part of the reason is the people who have the money and invest in real estate have that money locked into their properties and they can't get it out without serious tax consequences. My accountant mentioned to me the other day--I buy revenue property--that I should stop. He said he had clients who were 60, 70 years old with revenue property portfolios, and they can't sell them because of the tax implications. He said don't even invest in real estate any more; it's not wise.

So what happens is I'm a 55-year-old investor and I have money to spend, and maybe I would build a new apartment building, except I can't get my money out of my existing building without serious tax consequences. So it stays locked in the existing bricks and mortar, and there's nothing new constructed.

The government could, if it wanted, come along and spend a bunch of money, build some new houses in inner-city Regina. That's fine. But we think you could leverage that money by saying to the private sector, okay, we're not going to collect your capital gain; we're going to defer your capital gain to allow you to go ahead and do it. We think that would be a more effective way of using government resources.

Ultimately, at the end of the day, will new construction occur? We think it will. Will it benefit inner-city redevelopment? We think it will. Will it lower rents? It probably will, by increasing the supply. We have a shortage of supply--there are not enough good places to live in.

If there's an initiative that's in place from a tax perspective that allows that capital to flow to new construction, that's going to fill that supply void.

The Chair: Thank you very much.

Do you want one final question?

Mr. Lorne Nystrom: Just a quick one to Donna Shire, if I could.

Could you put on the record, Donna, what you would like to see as core funding from the federal government, what you get from the province, and what the action committees in other provinces get from their provinces? Is there a patchwork of contributions that might be useful to have?

Ms. Donna Shire: Since project funding was established, action committees in other provinces have actually folded and been eliminated. Saskatchewan is fortunate to still have a structure of an organization, even though we don't have a budget or staff at the moment. But the demand for the work is still there.

Are you talking about historical funding that SAC has received over the years? I don't have the numbers at my fingertips, but in the 1970s the organization was, I believe, funded to the extent of something like $150,000 annually. It covered four or five staff as well as the work that was being conducted. It's been since then that.... I mentioned the $100,000 that was supposed to be a 16-month project and ended up being three years. While there was funding for the project, we had one, occasionally two, staff people continue to try to meet the demands of the whole province, in terms of women, that didn't fit elsewhere.

I guess the problem I see is that SAC has the reputation of being the advocate. We have that name recognition, if you like, throughout the province. But what has happened now is our feet have been taken out from under us because there are no resources. There is no access.

The Chair: Thank you very much.

Ms. Leung, for a final found.

Ms. Sophia Leung: Thank you, Madam Chair.

I want to thank you all for your very interesting presentations.

First to the mayor, I think you are going to have a very exciting time with the election and then the Grey Cup. Your city will be very much noticed.

I just want to say--and I think most of my colleagues would agree--in our government, we're very interested in transportation infrastructure. In the past we have allocated a lot of funding, especially for highways. I'm from B.C., and I know that's a concern. I have stressed its importance. I just want to assure you this government definitely knows that. The needs of the municipalities also need to be addressed. So we just want you to know we heard you loud and clear.

I just want to know a little bit about Regina. Did you have an increase in population? What kind of economic change or potential has there been? I'd like to know.

The Chair: Go ahead, sir.

Mr. Pat Fiacco: Thank you very much.

We have, frankly, been stagnant for the past number of years in respect of growth and population; however, over the past couple of years we have seen growth. We've seen a tremendous increase in development. For example, over three consecutive years, we've seen increases, year over year, in the value of our building permits. For example, in the first eight months of 2002 the value of building permits was $80 million. In 2003, for those same eight months, the value of those building permits was $162 million.

We're seeing growth both on the residential side and the commercial side. We're seeing, obviously, an increase in population. It's interesting, we're seeing a tremendous number of people moving back to Regina from places like Calgary, Edmonton, Vancouver, and elsewhere, but we're also seeing a lot of people moving into urban centres from rural Saskatchewan. Essentially, what we're seeing is a shift from rural to urban growth.

We have been very fortunate to see some significant growth in a number of areas. We have been very focused as a city council on community capacity building. We've provided a brief to both our provincial and federal governments on what Regina is going to be focusing on with respect to community capacity building.

We're happy, and we want to thank the federal government that we were able, three weeks ago, to make a major announcement on two very important projects we're working on. One was, of course, Wascana Lake, which is a man-made lake that hasn't been deepened since 1930. It needs a lot of work. It's an $18 million project, a revitalization of the whole park, and 50% of that is coming from the strategic infrastructure fund from the federal government.

We also have Exhibition Park, located in north-central Regina, an area of the city we're very much focusing on for a $12 million multi-purpose facility that is going to meet the needs of families within our inner city with respect to sports, culture, and arts, which is very important.

Those are just two particular areas that are important. We are seeing growth, and we've seen the growth, actually, in the past couple of years.

À (1020)

Ms. Sophia Leung: Very good.

I want to turn to the Action Committee on the Status of Women. Donna, thanks for the presentation.

I want you to know that Parliament.... The three of us here are very interested in supporting.... We have a women's caucus, a group of MPs and senators. Once a week we discuss concerns. We may not share them with you, but I just want you to know that. I also want you to feel free to send us any information, any concerns. This is its purpose. We'd like to encourage more participation of women in different sectors, and of course we want them to join us in Parliament, too. So in that respect, I'd like to encourage you so we can open up more dialogue.

And I know the Secretary of State for the Status of Women is a very supportive person and a good friend. So if there's anything we can do--and I agree with Roy--I could speak to her too. I think we would like to do more for women, especially at the grassroots level.

On the arts issues and the concerns about the self-employed artists and their status with the CCRA, I think that should be cleared up. If you have a query, or any suggestions.... I've worked as a PS with CCRA. They are open for any.... Have you made any contact with them?

Mrs. Marnie Gladwell: There has been some contact with them through the Canadian Conference of the Arts. We're hoping there will be a joint committee set up with representatives of both them and CCRA. We have not heard yet whether that will actually happen or not.

Ms. Sophia Leung: Good. So you have already made some progress.

Mrs. Marnie Gladwell: Certainly our concerns are clear to them.

Ms. Sophia Leung: Another thing, as you probably already know, is that you have a very capable local MP sitting right across from me. He can also help to push and facilitate your ideas.

I'm very interested in art, so I would like to see if that could be considered for you.

As for the realtors group, unfortunately, I'm from B.C., where real estate is just booming right now. Maybe that will bring something for you. From what the mayor says, there's some potential.

Your shortage of rental real estate, which you already mentioned, puzzled me. Of course everybody is afraid to have too much capital gains tax. In the meantime, in B.C. we have many, many developers. So you have to take some risks; if you want it to snowball bigger, you have to take off. In other words, I'm saying that's an easy way to save, so they don't therefore want to invest.

But I think that investment incentives can also be added if there's a need. Development is important for the growth of a city, and so is the attraction of tourism. I think they are probably all attached.

Another thing is affordable housing, which is very important to me. It really shows compassion and concern from a city and all of its citizens. Do you have affordable housing groups? Because we had many such inputs in other cities. By this I mean partnerships or joint efforts between the business sector and government. In the meantime, there are other community organizations who join together, because this is something important for a city. How many groups or projects do you have? Even the CMHC can give you a hand. I'd just like you to tell me a little bit of what kinds of projects you have been developing in affordable housing.

À (1025)

Mr. Gord Archibald: Addressing the affordable housing issue takes a multi-sector approach. In fact, as far as the ideas on affordable housing are concerned, which we came up with locally here in Regina and which Dale mentioned earlier, we have talked to CMHC locally. We've talked to the City of Regina. We plan on talking to Minister Goodale's office about it, because we see all three levels of government being involved. We've also talked to the community association in the north-central part of Regina, an area that Lorne Nystrom mentioned, which we think is a critical part of the solution to that. There's support there for some of the initiatives. It does take a multi-sector approach towards addressing the issue. We just started this process in the last six months or so.

Quite frankly, one of the issues we're encountering is how do you bring all these various groups together, as far as trying to find a solution? We at the real estate association don't have the means or resources or horsepower to do that. So one of the things we're looking for is someone to take the leadership role in making some of these issues happen.

The Chair: Thank you.

I'm sorry, go ahead.

Mr. Pat Fiacco: I just wanted to elaborate on that.

Actually, it's a partnership with the three orders of government, the municipal government, the provincial government, and the federal government, which Mr. Goodale had a lot to do with. We created the north-central community partnership, which was really a community-driven project looking at making north-central a better place in which to live, work, and play. It was a report that was actually put together by the community itself.

One of the pillars we are focusing on is affordable housing. There is a steering committee that has just been put together, and obviously the realtors are very much going to be part of this. So that is one of the things we have done to help increase affordable housing, whether it's home ownership or rental.

The Chair: Thank you.

Go ahead, Ms. Leung.

Ms. Sophia Leung: Mr. Malcolm, I'm very interested in your project.

Can you just tell us a little bit more about your business plan? You mentioned developing a business plan.

Mr. David Malcolm: Yes. The business plan that we have put together looks at how we would actually run the research projects in the communities. I've talked a little bit in the handout about the financing requirements, but we would like to see the communities being responsible for their own research. That's the essence of the business plan. In other words, communities would come forward with projects and would present those projects to a regional committee.

I don't know whether you're aware of a successful program called the northern contaminants program of the Department of Indian Affairs and Northern Development. The northern contaminants program has been very successful all across Canada because it has regional nodes. It has committees in different parts of the country reviewing the research proposals that are put forth.

In this case, the regional nodes will have committees that are controlled by the communities affected. It means that the communities are now empowered to get their own knowledge for sustainability, and to partner with experts at the university as the need may arise.

There are may areas. For example, one key area of concentration that we see the communities being interested in, and the academics on the partnering side, is monitoring for cumulative effects in an environmental impact.

The whole monitoring area is not covered by the research granting agencies to the universities. Ongoing monitoring of impacts and so on is something the communities and the academics are interested in, but there is no funding at all. By providing the funding to the communities, we would be able to make sure that happens.

This idea of having regional nodes and then a central organization with Mid-Canada Research Institute, which will act as facilitator and banker and provide resources to the communities to help them develop their projects, is in essence what the business plan is all about.

I'd like to quickly say that I personally really like this Mid-Canada Research Institute initiative because it goes all across the country; it speaks to Canadian unity, and it speaks to the need for policy to develop that great part of our country where resource development has taken place and provided a standard of living for Canadians for decades. I think it's a very important area. This research institute can help government to optimize the results of their various development programs in those regions.

À (1030)

The Chair: Thank you very much.

We have our next panel with us, but I have a couple of quick points that I want to address.

As you know, in its report last year this committee recommended a very aggressive policy on brownfield redevelopment. In your city, do you have brownfield redevelopment being done, or it is in a holding pattern waiting for new policy? Could you very quickly answer that?

Mr. Dale Ripplinger: I think it's probably in a holding pattern. I don't know of any brownfield sites that are currently being readied—maybe the mayor does, or maybe Lorna does, but I don't know. There are some problem sites. They are sitting there and nobody has touched them, to my knowledge.

Mr. Pat Fiacco: We've actually established what is called Communities for Tomorrow, which again is with the help of the federal government. One of the initiatives of that particular organization is to look at things like brownfield development.

The Chair: To the real estate board again, in my community of London, our real estate and political action group is a very active partner in not only affordable housing initiatives, but in homelessness initiatives. I want to know whether you are involved in homelessness initiatives specifically, somewhat helping with some of the SCPI work that is being done now across the country with the federal government. Is that part of what you are working on?

Mr. Dale Ripplinger: As discussed earlier, affordable housing is a big issue we're involved in. Homelessness is not something we've really looked at, as an association. To be honest, I don't know whether the problem is more acute in London than it is here. We do have a homeless issue.

The Chair: All I'm saying is that all the partners need to address the problem, so maybe you should have some conversations with your colleagues in my home city. I think they've added some value to the process.

To the arts community, thank you for testifying. You saw the part of our report that dealt with arts. Your voice has been heard in other centres, and in Ottawa, specifically. I thank you again for bringing up the issue around some of the TV issues of last year. We had some excellent presentations on those. I think we're listening, and hopefully there'll be better action.

Mr. Mayor and your group on transportation infrastructure, again, we had echos of that presentation in all the places we've gone to. It's going to be interesting next week as we go across, because last year we voiced in our report the issue of the potential of the taxes to municipalities and we endorsed the urban task force at that point. But we've raised it. We're hearing more and more evidence, and as we gather evidence across the country, I think it's the chorus that speaks the loudest.

Mr. Malcolm, it's an interesting proposal you've put before us today. I'm glad you traveled here to put your views on the table.

To the Action Committee on the Status of Women, two days ago in Vancouver there was another eloquent address. Thank you very much for contributing here. It's really important when a committee does this outreach that we hear the voices from across the country.

All of you have helped us today in our deliberations. Thank you for taking the time, not only with your presence and answering our questions, but also with your briefs.

We will suspend for a couple of minutes to set up the next panel.

À (1040)

The Chair: Pursuant to Standing Order 83(1), we will continue with pre-budget consultations with the second panel in Regina, Saskatchewan, this morning.

We have with us, from the Canadian Fertilizer Institute, Ron Cameron, vice-president and chief financial officer, together with Darrell Zwarych, controller of IMC Potash Limited. Welcome to both of you. Thank you very much.

From the University of Regina, we have Jim Tomkins, vice-president of administration. Welcome to you, sir.

From the Saskatchewan Chamber of Commerce, we have Rupert James and Norm Halldorsen, co-chairs of the finance committee. Welcome to both of you.

From the Northern Lights School Division No. 113, we have Bruce Ruelling, who is the area board member, and Mr. Ralph Pilz, the director of education. Welcome to you both.

And we are very pleased that Mr. John Keen could join us this morning for an individual presentation. Thank you very much. Mostly, this committee hears from national organizations and groups, but we welcome the input of individuals and we thank you very much for joining us to put your views.

Mr. John Keen (As Individual): I represent the great forgotten.

The Chair: Well, I think you are going to tell us what your views are, and we very much welcome them.

We will go in order of the agenda. We will start with the Canadian Fertilizer Institute. Colleagues, you have their submission before you.

I will give you seven minutes, and you can use your time as you wish. Go ahead, Mr. Cameron.

Mr. Ron Cameron (Vice-President and Chief Financial Officer, Saskferco Products Inc., Canadian Fertilizer Institute): Good morning.

The Canadian Fertilizer Institute is an industry association representing manufacturers and wholesale and retail distributors of nitrogen, phosphate, potash, and sulphur fertilizers.

Our member companies currently employ 12,000 Canadians, mainly in rural communities. The total economic contribution to the Canadian economy is over $5.5 billion, and Canadian fertilizer manufacturers produce 22 million metric tonnes annually. Of this, we export 18 million tonnes to over 70 countries.

Canada's fertilizer industry competes successfully for markets around the world, and increasingly our industry is facing new challenges from foreign competitors. We believe there are a number of things the federal government can do to keep Canada's fertilizer industry competitive, particularly in the areas of taxation, natural gas supply, energy, and environmental policy.

The fertilizer industry supports the goals of greenhouse gas emission reductions, but we believe it must be done in a way that protects the competitiveness of our industry and does not transfer production to less efficient plants in foreign countries, thereby increasing worldwide greenhouse gas emissions. The Canadian Fertilizer Institute supports the development of a framework for a fertilizer sector covenant that would allow for continued growth of the sector without penalizing the industry for that growth.

Reduction targets for the industry must be reasonable, cost-effective, and achievable in practice. Governments in Canada need to adopt policies that will enable our industry to make the investments necessary to continue reducing greenhouse gas emissions. Government should facilitate investment by eliminating barriers to trade, continuing to move to a more competitive corporate tax system, and providing new investment incentives to accelerate technology change.

Tax write-offs and other credits related to Kyoto should be retroactive to avoid penalizing companies that have already taken action to reduce greenhouse gases.

Another important economic issue for our industry is the high cost of natural gas. High North American gas prices are putting our industry at a global competitive disadvantage. Natural gas is essential to the production of nitrogen fertilizer, both as a raw material and as an energy source. The essential feedstock typically accounts for 70% to 90% of cash production costs. When natural gas prices increase, production costs increase to levels where reductions in plant production can result, impacting the supply of fertilizer.

Other fertilizer production is also affected. For example, potash is the most significant user of non-natural gas in the non-metals mining sector. The natural gas used by the Canadian fertilizer industry represents approximately 9% of total Canadian gas consumption.

Nitrogen fertilizer is a significant value-added product, which generates $4 to $5 more for the economy than exporting $1 of natural gas does. Federal and provincial governments should recognize that unlike oil, there is currently no global pricing mechanism for natural gas.

An increase in gas costs--a phenomenon isolated to North America--impacts Canada's fertilizer production costs and its ability to compete on the world market. A growing demand for natural gas in North America has been a trend for a number of years, and one reason for the increase is the increase in gas-fired electrical power generation.

Canada must support natural gas exploration and development. We need a streamlined regulatory approval process for energy and pipeline projects while we continue to achieve social and environmental objectives.

In our brief we've outlined specific measures that could be taken to better manage the supply of and demand for natural gas.

Royalties and taxes on natural gas are a particular burden on the fertilizer industry, which uses natural gas as both a fuel and feedstock. Government should look at options for reducing the burden and study the downstream impact on Canadian industry and agriculture.

I'd like Darrell to discuss our concerns on taxation.

À (1045)

Mr. Darrell Zwarych (Controller of IMC Potash Ltd.; Canadian Fertilizer Institute): Thank you, Ron.

An internationally competitive tax regime is critical for the fertilizer industry, given our dependence on exports and the intense competition in our global markets. The fertilizer industry supports and appreciates the policy direction for resource taxation set out in the 2003 federal budget and Bill C-48. We would like to specifically thank this committee for its work on this issue last year and for supporting Bill C-48. This is a good-news story for our industry.

These measures will bring the corporate tax rate for potash into line with other industries and will help to restore our competitive tax regime once they are fully implemented. Our concern is the five-year phase-in period. Five years is still too long to end the double taxation the potash industry has suffered.

CFI also believes the government should accelerate the phase-in of the corporate tax rate reduction to 21%. Even under the Bill C-48 formula, our tax disadvantage with other sectors actually widens in 2004. The federal government should reassess this timetable and look for every opportunity to accelerate it.

We agree with many other industries that the general income tax burden on corporations will still be too high, despite planned reductions. We support calls for a move to a 17% rate.

In addition to these measures, CFI believes the federal government could further improve the investment climate in Canada to meet the demands for capital. Depreciation and inventory deductions that are less generous than in many other countries create a burden on the fertilizer industry. As Ron has mentioned, this is particularly worrisome at a time when the federal government is requiring major new investment to achieve greenhouse gas emission reduction targets under the Kyoto Protocol.

The federal government should also consider measures such as an accelerated elimination of capital taxes and accelerated capital tax allowances to erase this burden and to help keep our industry competitive. Industries such as fertilizer that have already acted to reduce emissions should not be penalized. Measures such as capital cost allowance and other credits related to the Kyoto Protocol should be retroactive.

Lastly, I'd like to talk about the impact of the agricultural policy on our industry. Through the agricultural policy framework the federal government is playing a leadership role with the provinces in developing new policies for the environmental management of fertilizers and other crop inputs. These policies will be critical to the future of our farms and to the industries that depend upon them.

The government must take care that there is a balance struck between the need to ensure the stewardship of our land, water, and air and the competitiveness of the agrifood industry. This is a critical issue for the stability of our rural economies.

CFI has developed principles that we believe federal and provincial governments should follow in implementing these policies so they are effective and cost-efficient. For example, we believe that the government should encourage the voluntary adoption of best management practices through education and that any intervention should be science-based and commensurate with the risk.

Farm groups have emphasized that producers cannot afford to bear the full burden of implementing environmental and other issues under the APF that will benefit society as a whole. We support that view. In addition to the monetary incentives being developed under the APF, the government should also develop research and other credits, capital cost allowance, and other taxation measures to ease the burden on the agrifood sector.

À (1050)

Mr. Ron Cameron: In conclusion, the federal government can take the following steps to improve the competitiveness of the fertilizer industry. One is accelerating the phase-in of the resource tax measures in Bill C-48, especially full royalty deductibility. The second is accelerating the elimination of capital taxes. The third is encouraging capital investments to reduce greenhouse gas emissions through accelerating capital cost allowance and other tax measures. The fourth is providing tax credits and other measures to assist farmers in managing nutrients. And the fifth is studying the royalty and tax system and environmental policies affecting natural gas and other energy sources.

The fertilizer industry has seen many positive signs that federal economic policies are recognizing the importance of our industry. We firmly believe that competitiveness can be compatible with environmental and other public priorities.

The Chair: Now we'll go to our second presenter: from the University of Regina, Dr. Tomkins. Go ahead.

Dr. Jim Tomkins (Vice-President, Administration, University of Regina): Thank you very much, and welcome to winter.

You have copies of the brief. I'm just going to speak to it.

The University of Regina is going through a very interesting boom phase. As someone who has been around the place for 35 years, it's very interesting and is actually a lot of fun. It's a lot better than not being in a boom.

Our enrolments keep going up. This semester we have registered over 12,500 students.

Our research work continues to grow, one measure of which is research funding. Of course, it depends on what you pick as your start date, but over the last three years, research funding is up about three-quarters. It has more than doubled in the last four years. We have over $70 million worth of construction going on, and the provincial government recently approved approximately another $30 million worth of construction.

We have had a really significant turnover in faculty numbers in the last few years. We had an early retirement program five or six years ago. I think we were a bit ahead of the pack nationally, to the point where over half of our faculty has been hired in the last five years. We have a really amazing mix of younger recent graduates, who are really enthusiastic, and older people who have been around for a while and know how things work. A lot of good things are coming out of that.

We have been promoting, on the research side—we don't like to talk about priorities—areas of emphasis for research. We are doing research in culture and heritage, environment and energy, informatics, health, and social justice. These are areas we have chosen as areas of focus.

It appears that the interdisciplinary focus is starting to work well. We think these are areas of importance to the province and to the country, and we are going to keep pushing in these areas. These are areas where we have expertise and think we can make a contribution.

Our president, David Barnard, likes to talk about stewardship of place. While every university has a responsibility to the broader disciplines to teach, pass on what is known, and do curiosity-based research, there is also a need to recognize that this university exists in the southern part of Saskatchewan. We have particular problems and challenges here, and the university can help.

The other part of this is that, as far as we know, there is no good example anywhere in a western democracy of where there has been cultural, social, and economic progress without some kind of partnership involving the public sector, the private sector, and the universities.

In summary, things are really booming at the U of R. It's great. People who know me know that I like to quote Stein's Law, which says “If something cannot go on forever, it will stop.” We know that the rate of growth is unsustainable, but we are determined to keep things growing.

Certainly one area that has been growing rapidly, as I said a moment ago, is the research area. This has been assisted immensely by longstanding federal government programs, through the three research granting councils and initiatives over the last six or seven years, like the Canada Foundation for Innovation, the new scholarship program, the Millennium Scholarship Foundation, Canada research chairs, and indirect costs of research. I could go on. There are a number of great programs that have really been helping us out.

Interestingly, even though there have been so many good federal programs, it's research that actually is the basis for the three areas that the brief draws your attention to.

One area of concern to us is research support for work in the social sciences and humanities. I speak as a scientist and as somebody who holds a grant from the Natural Sciences and Engineering Research Council.

À (1055)

Many of our problems, as you know better than I do, relate to social issues: homelessness, aboriginal communities, the ethics of reproductive technology, and things like this. The list is long.

While there has been a sizable increase in funding to the Social Sciences and Humanities Research Council over the past few years, as there has been to the other research councils—and these are all welcome—my university is very much in favour of a disproportionate increase to the social sciences and humanities. The research in that area tends to be less expensive, generally, than it is in the sciences and engineering. The proportion of faculty at Canadian universities in the social sciences and humanities tends to be higher than it is in sciences and engineering. We think there could be a really good bang for the dollar if a disproportionate amount of funding were to be put into the Social Sciences and Humanities Research Council.

It's interesting, in that I don't think we're alone. In the way the research council works, it will actually approve a grant. If there's no money, you're told that your grant is good enough and your application was good enough, but they don't have the money. This is the dreaded 4A list. If you have a 4A, it means that you have a good proposal, but there's no money. We'd love to see an additional infusion of money into the Social Sciences and Humanities Research Council to fund those 4As and other meritorious programs.

Secondarily, it relates to indirect costs of research. This is a program that, as you know, was introduced a couple of years ago on a one-time basis. In the most recent budget, it has been made permanent, or at least it's part of the base budget or is in the process of being put into the base budget of the government. This has been a very timely, very useful program, because there are so many entailments of an increase in research activity.

For every financial services unit, the purchasing people, the research services office, or the physical plant that has to renovate labs for people as the research activity increases, all of those units have an increase in activity, a need for staff, and a need for money to do these things. The indirect costs of research programming has been a boon and a very welcome innovation.

At the risk of sounding ungrateful, because we're certainly not, I want to point out that the actual indirect costs, the costs of supporting the research, not actually doing it, are typically estimated between 30% and 75% of the actual direct cost of the research, depending on the particular project. We would encourage the committee and the government to look at putting more money into the indirect costs of research program to try to get us up into the 30% to 75% range.

Finally, something that has been in the media with increasing frequency, it seems to me, is discussion about how the universities are becoming more focused on research, at the expense of teaching. There's probably little doubt that, in proportion, there has been a shift. There's a lot more research going on. Some people infer that it means there's less teaching going on. That's not true.

Every university in the country, I think, has had increased enrolment, so there's more teaching going on. There's more undergraduate and graduate teaching going on. There's more research going on. It's the capacity that has gone up, it's not that one area is driving out the other. But the perception is there, and as more and more money comes into the research side, it reinforces that perception.

There's a bit of reality, too, in the sense that, like everybody else or any other institution, we are opportunistic. If we get an opportunity to spend twenty-cent dollars, we're going to look at doing that. The difficulty is that those dollars, to make up the university share of something, may have to come from an allocation that was intended to be used for something else. It might have been used in support of teaching. This sort of thing internally within the university can be problematic.

This morning one of my vice-presidential colleagues mentioned an opportunity to me. With a relatively small amount of money, we can lever something by a factor of ten. This is happening all the time.

One way that we see to redress the perception at least is to look at an infusion of federal funding into the operating grants of the universities via the Canada social transfer. We'd encourage the government to look at that.

Thank you very much.

Á (1100)

The Chair: Dr. Tomkins, I'm sure you're aware that this committee, in its report last year, recommended a 40% raise of indirect costs to research. We've had much evidence that if that were done, it would solve a lot of the problems you're talking about with the perception right now. That's good.

Okay. We will now move to the Saskatchewan Chamber of Commerce. Mr. James, go ahead.

Mr. Rupert James (Co-Chair, Finance Committee, Saskatchewan Chamber of Commerce): Good morning. My name is Rupert James. I'm a member of the board of directors of the Saskatchewan Chamber of Commerce and co-chairperson of the chamber's finance committee. I and my fellow co-chair, Norm Halldorson, thank you on behalf of the chamber for the opportunity to appear before your committee this morning.

The Saskatchewan Chamber of Commerce provided a written submission to your committee in September. We will not cover the full content of that submission, but will comment on some areas we believe are worthy of further elaboration and will acknowledge the progress that we believe was made in the 2003 budget relating to matters contained in our 2002 submission.

In 2002 we recommended the full elimination of federal capital taxes to enhance Canada's competitiveness in a world in which all other major economies either do not levy such a tax, or their capital tax rates are significantly lower than Canada's. We acknowledge the phasing out of the federal capital tax, which was acknowledged in the 2003 budget. However, to do so over a period until 2008 is an eternity in the context of enhancing Canada's competitiveness in a global context. Indeed, I make reference to today's front page of The Globe and Mail, which refers to Canada slipping from third place to 16th place in the World Economic Forum's index of competitiveness. We encourage the federal government to accelerate the phase-out.

I would like to comment on the chamber's position on the employment insurance program. In our submission we made reference to the employment insurance premium rates being unnecessarily high. We also point out that this program is being used to support government spending in a variety of areas that are completely unrelated to its original purpose.

The original purpose of the EI program, then known as unemployment insurance, was to provide employed Canadians with insurance against unintended periods of unemployment. As a result, in the years immediately following its inception, more than 90% of total payouts were to cover the regular benefits of partial income replacement for stipulated periods while a person sought employment. Over the last three decades, items such as training grants to provinces, earning supplements, family-related benefits, and HRDC programs have now reduced regular benefits to approximately 60% of the total payouts.

To the extent that the EI program has strayed from its original purpose, the premiums dedicated to purposes other than those generally understood by most employers and employees amount to an additional source of taxation. This diminishes the amount of disposable income available to employers and employees, which would otherwise be used for investment, spending, or savings.

We encourage the federal government to ensure that employment insurance premiums are used only for the insurance of employment, and to ensure that the level of premiums reflects this purpose in accordance with sound actuarial practice.

My colleague Norm Halldorson will now make more comments on some other areas of concern.

Thank you.

Á (1105)

The Chair: Mr. Halldorson.

Mr. Norm Halldorson (Co-Chair, Finance Committee, Saskatchewan Chamber of Commerce): Thank you, Madam Chair.

I will also comment on areas where we are appreciative that your committee made recommendations the government, through their last budget, have acted on.

The first such area is federal taxation of small business. We submitted that in our view, the extension of the small-business deduction offered by provinces to the third $100,000 of earnings annually was being followed by the federal government, and we encouraged last year that the federal legislation get in step with the provinces by extending that full small-business deduction to the third $100,000 of earnings. We're very pleased to see that was acknowledged in the 2003 budget and is now scheduled to increase from $200,000 to $300,000.

We are somewhat disappointed that it's only being phased in over four years rather than all at once. The reason for that concern is that private business is recognized as the primary engine of growth in our economy, and the practice of most business owners is not to leave earnings in the company if they're going to be penalized with double taxation. As you're aware, we have a two-tier tax system, where there's one level of tax at the corporation and a second level of tax personally. If the corporate tax level is at the low rate, then the dividend tax credit, when they pass on the dividend, compensates for that, and we essentially achieve integration and there isn't double taxation.

Right now, in 2003, the federal limit has been increased to $225,000. There's the full deduction provincially, but only the partial reduction federally. There are an extra nine percentage points of tax that would be a penalty to a business if they left their earnings to be taxed in the business. So those earnings get bonused out and get taxed at personal rates, which may be as much as 24 points above the corporate rates. That means 25 cents in the dollar that the business can't use to finance its own activities, and it slows down the reinvestment and economic activity that otherwise is available.

Again, we thank you for the movement that has occurred, but we encourage you to get fully in step with the provinces, and I think we will see a big dividend through investment in and expansion of private business.

Mr. Norm Halldorson: The second area I'd like to comment on is the competitiveness of personal taxation. There have been moves to lower our levels of personal tax, and they are welcomed, but we are in a globally competitive market. I want to highlight, as our written submission indicates, that Canada is still quite different from our major competitor to the south in the level of income to which the top rate of tax is attracted. In the U.S. the top rate of tax kicks in at approximately $156,000 U.S., and in Canada our top rate of tax kicks in at approximately $104,000 Canadian, or approximately $76,000 U.S. So the top rate kicks in south of the border at an income level about twice as high as it is here. Second, our top rate is still about 4% higher than for our neighbours to the south.

So we would encourage the federal government to seriously look at what needs to be done to maintain our competitiveness on the international scene, and I believe continued reduction in personal income tax is essential for that.

The third area I want to briefly comment on is discipline in spending. The 2003 federal budget contained the largest increase in spending in 21 years. We believe more discipline is required in challenging every dollar of spending, to ensure that taxpayers get value for what is being spent. We would like to see spending contained at the level of growth in population and in inflation, which is approximately 3% a year. Over the last three years it has been substantially more than that.

So we would encourage you to recommend to the Department of Finance that they increase diligence in challenging the value of every program, to ensure that the overall level of spending is contained.

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The Chair: We have moved in that area.

Mr. Norm Halldorson: Yes, you have, and we are encouraged by that. We simply feel it is such an important issue to maintain our competitiveness going forward that we cannot relax on that front. It must continue to be at the forefront.

The Chair: Thank you very much. We appreciate your comments.

Now we'll go to the Northern Lights School Division 113.

Mr. Ralph Pilz (Director of Education, Northern Lights School Division No.113): Thank you very much. I want to start out by thanking the committee for allowing us this opportunity to present.

I'm the director of education for Northern Lights School Division, and my colleague, Bruce Ruelling, is the board member for the La Loche area.

What I'd like to do first is give you a little overview of Northern Lights. It is one of three provincial school divisions in northern Saskatchewan, the largest school division in the north provincial system, in the north. We comprise 23 communities with 25 schools throughout the upper half of the province. Our student population is about 4,500 students, and about 85% of those students are of aboriginal ancestry. We have a staff of over 600 employees, and approximately 300 of those employees are teachers.

We've had some challenges in the area of recruitment and retention of teachers, and I'd like to talk a little about that with the committee. I'd also like to talk about some communication challenges we face and also about some issues in aboriginal education.

I'd like to begin by sharing with the committee the challenge we have in recruiting teachers. The chart I've included in the packet gives you a little preview of the past eight years and some of the challenges we've had in maintaining staff. I'll speak in particular about one year, 1998-99. During that school year we had to fill about 110 positions, which was about 33% of our teaching staff. As you can see, in the other years it's been significant, and that always has been the case.

So we're challenged with recruiting and retaining teachers, and it's not just in the teaching profession, but it's across all the other professions in the north as well, health, justice, social services. And we'd like to suggest some areas the federal government might review in terms of helping to address those challenges we face, and particularly the northern residents deduction.

I'd like to refer you to the pages in my packet. On page 4 it gives you a little overview of the situation as it currently is. The yellow, blue, and green area comprises the upper half of Saskatchewan, and in the province that's called the northern area district. Presently, what we have in the north is a situation where the people who live up in the green area get the 100% resident deduction, and those who live in the yellow area get 50%. And then we have three communities that lie within our school division that don't get anything.

In light of those three communities, if you were to look at the same latitude in the sister province, right across Manitoba there are communities that lie in that latitude that are getting the full deduction. So we would like to ask that this be reviewed. We feel that would be one major way that would help us to retain teachers.

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The Chair: Can I have some clarification? What ministry does that decision come under? Is it Indian and Northern Affairs Canada, or would it be the Department of Finance?

Mr. Ralph Pilz: I would think it would be the finance department.

The Chair: Okay. It's a deduction under the Income Tax Act.

Mr. Ralph Pilz: That's correct.

The Chair: Thank you very much.

Mr. Ralph Pilz: What we're proposing is on pages 5 and 6. If they could look at those three communities that lie outside of the deduction, it would be helpful. Ideally, we would like to see what we've proposed on page 6, so that the whole northern area district would be considered for a 100% deduction. That would do wonders in helping us to retain teachers, not only in our profession of teaching, but in other professions as well, which have the same challenges. It's something we would ask the federal government to review.

We also have some other challenges in the north. Type-2 diabetes is a rising epidemic in the north; it's significantly higher than anywhere else in Canada. We're wanting some consideration in terms of.... We know that healthy eating is an important part of a healthy life for the northern people. Many northerners feel that the price of feeding their families is much higher in the north than in the southern communities. Food costs are a factor in determining what we eat. And if it's healthy food, these more perishable foods are more expensive. What we're saying is there are significantly higher food costs in the north.

This has been reviewed and stated through the healthy food costing assessment project done in northern Saskatchewan. What they did was to compare the cost of food between different sizes of communities in various regions across the province. This involved doing surveys across various regions in northern Saskatchewan, to reach an approximate average cost for a specified healthy food basket. For each northern region, this survey was done in coordination with a similar food cost survey across the southern part of the province.

If I could refer to page 6 in the handout, it summarizes the costs and what they found. If you look at the map on page 8, it is clear that the farther north one lives, the more it will cost them to feed their family. The cost of a healthy food basket for four people in the far north is about 70% higher than in southern large cities.

Again, if people don't have the money to buy healthy foods, it does affect their health in the long run. That's a concern for us.

I'd like to just build on that a little more on page 9. If you look at some of the specific staples and the cost comparisons between La Ronge, our northern administrative capital, and the Athabasca area, which is far north, you'll notice the variance in some of the staple foods. Overall, the survey showed that many foods were more costly in fly-in and remote communities in the north than in other regions. Some of the increased costs could be due to transportation and the increased costs of operating a store, such as storage, heat, and refrigeration in remote areas.

There may be ways in which prices could be lowered and northern people could have healthier foods for their families. One thing I'd like to commend the federal government for is the food mail program, funded and administered by Indian and Northern Affairs Canada. This program helps to reduce the cost of food transportation to various communities across Canada. We would certainly recommend that it be continued—and maybe expanded.

It is hoped that this food costing comparison within the province will stimulate further discussions regarding federal, provincial, and local policies that could assist in reducing the costs of healthy foods in remote northern communities. Again, this would certainly help recruitment and retention as well, and the overall welfare of our northern people.

In the area of communication, I would like to start by commending the federal government for its attempt to connect Canada. This initiative of the federal government has been very beneficial to the north. In particular, our school division has made effective use of the federal infrastructure grants, the community access initiatives, and the computers for schools program. All of our schools are community access sites, and we've really appreciated the vision the federal government has demonstrated. We would ask that it be continued and be built upon as well.

Á (1120)

However, there are some challenges that remain, and I'd like to just refer you to page 12 of the handout. That's the existing situation, the connections we have in our communities throughout the northern part of the province. You'll notice that high-speed phone lines are in just a few of the larger communities and satellite Internet one-way setups are in many of the communities. That just doesn't do the job in terms of distance education and bringing the world a little closer for the northern half.

We've come a long way. We still have a long way to go. What we'd like to recommend is on page 13. The high-speed phone lines all have road access--the yellow legend for high-speed phone lines. In the far north, where there is not road access, we would like to see two-way satellite at least. We feel that would very much move connecting the north....

In terms of aboriginal education issues, as I mentioned, 85% of our students are of aboriginal ancestry, so many of our students come to school with English as a second language and English as a second dialect. It's a real challenge. One of the areas we've always focused on is the area of language. It's very important that the aboriginal students maintain their aboriginal language for their self-esteem, knowing who they are and feeling good about their culture. At the same time, it's very important that they learn English. It's the universal language. In today's world you need both.

We would like to ask for some assistance in the whole area of best practices, how we might be able to do a better job with the language area and the language challenge we face in northern Saskatchewan.

A lot of the research that has been done at the university level has focused on an immigrant ESL situation, and it hasn't really looked at the situation we have right here in our own country. We would like to see more capacity in that regard, in the research of best practices, for our situation here in the north. That would be very helpful in addressing achievement levels for our students.

I also want to commend the federal government for their aboriginal head start and kids first programs. That has been very important in helping us put together a culturally affirming education. In the home to school transition it's been a very beneficial initiative, and we want to commend the government and encourage them to continue with that.

Last, I want to share with you the community development model on the very last page. We have a situation in one of our communities, La Loche. It's the second largest community in the north. There are socio-economic challenges in that community. We've been given good news that we're going to have a capital project there.

What we're trying to do there is develop a seamless system, from kindergarten to post-secondary, where we can look at providing more opportunities at the post-secondary level and partner with our post-secondary partners and other agencies.

The Honourable Allan Rock was in La Loche this summer and was talking to some of the people up there. He said our capital project may qualify for some of the infrastructure funding the federal government has. We're excited about that. We would like to tie into this project with the adult training. What can be done to access some of that support and funding for that infrastructure grant?

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We haven't heard back from the feds on that, and we would like to ask if you could help us out there, because we are excited about the opportunity we have.

The Chair: Thank you very much. We appreciate your coming to us today.

Now I'd like to go to our final presenter in this panel, Mr. John Keen. Sir, the floor is yours.

Mr. John Keen: Before I start I'd like to say I really like government. I like good government better than bad government, but I really like government. If you wonder why, look at Iraq.

When I got up this morning I was looking at about five different levels of pensions and various things. I was looking at health care, I was looking at decent roads. All of these came about because we had activist, interventionist governments. I was born in 1930. If I had been 73 in 1930 I'd have been looking forward to choking out my life in the back bedroom of some slightly better-off relative.

Now I'm going to start. Good morning. My name is John Keen, and I'd better get my glasses out in case I forget what I said.

This is John Kenneth Galbraith, and I'll introduce you to him a little later, but now I wish to discuss housing.

The 2003 budget offered about $350 million for housing in various programs, but we needed about $4 billion. So let's go look for it.

We can raise $2 billion annually from the Canada Pension Plan by selling 50-year bonds bearing interest at 2% plus inflation, guaranteed jointly by Ottawa and the provinces.

The employment fund also has money. Let's join an annual $2 billion grant from the EI with the CPP bond and put $4 billion into housing each year. CMHC can handle the project offering long-term fixed-rate mortgages. If they collect interest and principle on the $4 billion and only pay interest on the $2 billion the program should grow like a mushroom. The repayment of the principle could be recycled to other loans to other homebuyers.

Both these programs are funded primarily by working people. Actively using their money to improve their lives makes sense. Building, renovating, and repairing housing is a great creator of wealth. Most of the resources are found in Canada, and changing sand, gravel, timber, copper, and silica sand into a store of wealth for a working family is a miracle. Wages are paid, thus leading to taxes paid. Good jobs lead to better health and less crime.

When the $4 billion is spent, well over $1 billion will be returned as the money finds its way through our society, half to go to Ottawa, half to the provinces, and that money can be used to reduce debt or repair infrastructure and so extend the chain of benefits. Any government could be proud to do that much good for that many people.

If this is so simple, why don't we do it? It's not a shortage of money. We are in the middle of a $100 billion tax giveaway, and we still have cash on hand, so we'll soon hear from Mr. Galbraith.

But first let's talk about the attempt to end child proverty in the nineties. It was strange we failed. On average there were around one and a quarter million poor children in that period, and there are even more today. NGOs were looking for $2,000 per child per year. That's about $2.5 billion a year, $25 billion during the decade, which is an imposing sum. But during that decade we moved over $750 billion to those who held government paper. Three pennies out of each of those dollars would have cured child poverty. Why didn't we do it?

We can ask Mr. Galbraith. In an article he wrote in the New York Times in 1985 he gives what could be the answer. He says the relationship between the rich and the rest of us cannot be frankly discussed. The rich, says John Galbraith, in our time have become a dirty secret, and the dirty secret is we are giving those rich folks money, money the budget-makers need to create a better society. Over the last 30 years, under seven prime ministers and five governments, we are creating again a society that forbids both rich and poor to sleep under bridges.

No one says that out loud. All those tax remissions, tax incentives, tax cuts, all the transfer pricing and offshore financing, and all the funds sheltered in RRSPs, trusts, and foundations seem to be beyond reach. No one seriously proposes taking back any of that money, but those in government, people like you, you have to start dipping a few pails into that stream of wealth that's flowing up to the cloud dwellers.

People complain this means a return of tax and spend government. It's just about time. The illusion of surplus we use to justify imprudent tax cuts can only be maintained for a little longer. We need to tax and spend about $40 billion more each year. That would cure the very real deficits in housing, health, education, infrastructure, agriculture, foreign aid, military, and so on and so on.

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Anyway, why is it a problem if governments tax and spend? That's what they do. People don't complain that birds fly. What we need is a government that taxes and spends wisely, and to do that, we must recover some money from those most recent tax cuts.

The Chair: Thank you for your input.

Just to remind people, we'll have an economic update on this coming Monday. Minister Manley will appear before our committee in Ottawa from 10:30 until 12:30 Monday morning. So you might want to pay attention to what he has to tell us on that day on where we are fiscally in reality. That's a good starting point when we discuss these issues.

Now I'm going to go to a round of questioning. Ms. Minna, would you like to start again?

Ms. Maria Minna: Sure. Thank you, Madam Chair.

The Chair: Ten minutes.

Ms. Maria Minna: I'll try my best to stay within that.

I'll start off with the University of Regina. On the increased research dollars for social sciences and humanities I'm biased, as I came from a social sciences and humanities university. I think the majority of graduates comes from those faculties. We, as the chair said, are sympathetic to that. I still am, and I hope my colleagues will be in this report.

I'd like to go to your recommendation that addresses transference of education dollars to the provinces. I don't have a problem with that, but we've agreed to have a Canada health transfer in order to have more accountability in the health care system, and there is some discussion going on right now in the social policy committee of our caucus on what do with the social transfer. Should we hive that off into streams as well, with an education transfer and a social transfer, to try to have the same sort of accountability, strings attached, that we are hoping to create with health? Can you give me some suggestions on that, so that I can feed them back to my colleagues?

Dr. Jim Tomkins: I guess that depends on how much you're going to put into the post-secondary piece. My immediate reaction is that it would be a good idea.

I think back to the mid-1970s, when the old 50-50 provincial-federal split on funding post-secondary institutions disappeared and was replaced by the established programs funding, EPF--I think that's what it stood for--where the federal government just transferred a block of money for health and education. At the time that started, if I remember correctly, it was about two to one for health, at least by federal figures, 67% to 33% roughly. If you look at where money's going today, it's probably more like five to one, off the top of my head, at least provincially; something like five times as much is spent on health as on post-secondary education. So there's been a sense within the universities in particular that we've lost in this. There's no question, when it comes to public priorities, that everybody's in favour of education, but if you give them a choice between health and education, they take health, and that's what's been happening.

With that background, my thought would be that if we had a separate envelope for each of these areas, it would be a lot easier for us to lobby, and perhaps for governments to set their own priorities, but do it in a very transparent way.

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Ms. Maria Minna: Thanks, I appreciate that. It's an issue we're looking at, and I must admit, I prefer the separate lines, because that allows us a great deal of transparency for future allocations and accountability of dollars as well.

I'd like to go to the Chamber of Commerce now, and there are a number of things I want to touch on. One is the EI program. You're not the only organization to point out that EI should not be used for things other than strictly insurance of employment. I'm assuming that you're suggesting that the parental leave should not be part of that, nor other social benefits and social programs that come out of the EI. Maybe you can clear that up for me in a minute.

The other question I have for you is to do with the recommendation--and I think it was made by another presenter-- with respect to corporate tax cuts. My understanding is that our corporate taxation will be either the same as or lower than that of the U.S. by 2005. I don't know how low we can go, who can get to the bottom fastest, and how we can handle that. At the same time, you say personal tax cuts at the high end need to happen, because we're not competitive enough. I believe a lot of the talk about brain drain and people going south has more to do with higher incomes than people can make here, and that is to do with taxation. Nonetheless, we are in the middle of a $100 billion tax cut that's working its way through our system. I think that's a whopping tax cut that does benefit the high end. I don't understand how you can square corporate tax cuts and personal tax cuts within the discipline of spending. Aren't tax cuts spending? It's a tax expenditure after all, and it is another form of spending, and that reduces the government's ability to address some of the other pressures we are hearing about. I'll go to Northern Lights in a minute, but that's one example. I have some difficulty with your position, and I'd just like to see if we can get this peg into a hole first.

Mr. Rupert James: Perhaps I can respond first on the employment insurance question. I believe you have interpreted our comment correctly: employment insurance should be for the insurance of employment. I believe, if you ask most people when they are paying through their employer their employment insurance premiums, and I'm sure if you ask most employers what they are paying for, they would think, from the very nature of the term insurance, they are insuring the possibility of their becoming employed, no differently than if you purchase life insurance, where you are insuring against the event of your death. I know the Auditor General has commented on the imbalance and the need to create something more stable. What you collect you spend on insurance, and if you want to spend money on other social programs--and I'm not suggesting they are not good programs--the place to take it from is not the insurance program.

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Ms. Maria Minna: I happen to disagree. I believe the employment insurance program should be used as well as a labour management tool. It benefits the employees as much as the employers, assisting with retraining and enhancing skills, with a lot of the country for labour management, as well as assisting employers. I know with some small companies, parental leave has been very beneficial. It allows for continuity of their employees. So I don't quite see it as a problem as much as I know some companies do. When I talk to individuals who benefit, their position is not quite so clear. So I think we will agree to disagree on that one.

The Chair: While we're at it, we might as well clarify that it will also include the compassionate leave element, because that's also coming out of that fund.

Ms. Maria Minna: That's right.

This country needs, I believe, a proper labour management policy to assist employees to retrain, upgrade. Also, parental leave and compassionate leave help employers as much as employees. Doing it through the EI, which is a contribution that comes from employer and employee, where both benefit, both pay, makes a great deal of sense to me.

The Chair: One more question.

Ms. Maria Minna: I want to congratulate Northern Lights for their excellent presentation. I was very impressed. There are things I was familiar with, others I was not, and I appreciate it. I am certainly going to try to convince my colleagues and the government to address the issues, especially with respect to the northern allowance. I think it makes a great deal of sense.

Distance learning is something that is very close to my heart. I was involved with international development for a while as minister. I have seen it and tried to push it in other countries. I know in Canada, given our geography, it's extremely important.

The other part that touches me--and I really can relate and understand your need--is the ESL for aboriginals. Being someone of an immigrant background who went through an ESL program when I first arrived--no, actually, I didn't, because they didn't exist at the time I came. They do now. You sank or swam then. But anyway, I understand that of course, we need to tailor the program to the needs of the aboriginal community, you can't just transpose an immigrant ESL program. I was very impressed with your presentation.

So I really don't have a question for you, but would only say I think the points you made are very strong, and I certainly intend to work on them.

The Chair: I was just going to commend you for your initiative in coming. Most people think education is a provincial jurisdiction, and what would we have to say? Well, you said a lot to us today, so thank you.

Ms. Maria Minna: Distance learning is very.... I will be talking to Mr. Rock and whoever else. Thank you.

The Chair: Now we will go to Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair, and thank you to all the presenters.

I'd like to go first to the Canadian Fertilizer Institute. I'm glad to hear you acknowledge that Bill C-48 helped your industry considerably, but let's look at the issue of natural gas. It has so many positive attributes, and there's a lot of conversion going on. We had a presentation in Ottawa recently by the Canadian Natural Gas Association, and they presented this picture of supply and demand; the supply is barely keeping up with demand. They talked about the regulatory environment as well in respect of bringing more natural gas on stream, and I think you mentioned the Mackenzie Valley situation. I gather there are so many different agencies involved that getting approvals can be somewhat complicated. Obviously, we need to protect the environmental and aboriginal issues at stake here, but would it be possible to set up one agency that could coordinate the development of that area, or is that not feasible?

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Mr. Ron Cameron: I think that is something we would support. When dealing with issues, it's always easier if you have a champion or one area that can work with it and then work with other agencies as well. We acknowledge the many issues and many parties that come into play with this, so I think that would be a benefit.

Mr. Roy Cullen: I think it's something we should look at, because getting more natural gas into the pipelines is very important for your industry, and I think it's very important for Canada, because of its environmental attributes. So thank you for that.

Mr. Keen, I just wanted to thank you for your presentation. I've read a lot of Mr. Galbraith as well and have a lot of respect for his views. I agree with you that we need to do work on housing. I'm not sure, though, the way you propose to finance it is realistic. The Canada Pension Plan is jointly administered by the federal government and the provinces, and we were in the position of having some actuarial deficits. To put the fund on a sounder footing, it was given the opportunity to invest in equities, and basically they're required to maximize their return. I'm not sure that 2% plus inflation would be seen as maximizing their return. Also, the EI fund of which you speak doesn't exist. There's no fund; there's a notional fund, but there's actually no money in the fund. I don't know if you want to comment on that.

Mr. John Keen: What I was pointing out is that there's no damn reason not to do these things except that we don't want to do them. As far as the Canada Pension Plan goes, it is a myth that they were in some difficulty. What we did was create a make-work project for some stockbrokers. A return of 2% over inflation over a period of time is an excellent return, and almost anybody with large sums of money would take that investment. We also have to recognize that the government, if there's a shortfall in the Canada Pension Plan, will eventually make it up, and we can make it up better if we have economic activity, if we have housing, if we have other activities.

It was a fraud to say the Canada Pension Plan didn't have any money. Right now we're overfunding it by about $10 billion a year, which means we're taking $10 billion a year principally from people who need spending power right now in their lives, because most of the money comes from people earning under $30,000. We're also removing about $2 billion to $2.5 billion from the tax stream that could be used to further improve their lives. So yes, I'm a little bit rude, but it saves time and I know these things.

Mr. Roy Cullen: Okay. We could spend a lot of time debating these points, but I hear what you're saying. With a lot of these issues, it comes down to political will, but as to whether the mechanisms you proposed are feasible or not, maybe we'll agree to disagree at this point.

The Northern Lights group, I thank you also for your presentation. A northern allowance is always somewhat arbitrary. Someone draws a line, and then people on one side of the line are always very concerned. Whether the line is in the right place is a very good question, and you are suggesting it isn't. I'm sure that's something we can go back to the Department of Finance with and query.

One of the things you talked about is connectivity. What is meant by one-way Internet versus two-way? I don't understand what that means.

Mr. Ralph Pilz: The one-way Internet brings down the information from the satellite. It is very quick, and when we have to send the information out, it has to go through land lines, which are very slow. So what we are asking for is two-way, which has significantly more cost. We would really appreciate it if it could be reviewed in the Industry Canada initiatives. The vision you had for connecting Canada was just great, and I really commend you for it. It's just something we'd like some more consideration of.

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Mr. Roy Cullen: Connectivity for northern areas of Canada, how does that stack up in the overall scheme of priorities? I've had some say, we talk about this northern connectivity, but we have so many other priorities that in the overall scheme of things, it doesn't even come on the radar screen. Obviously, you see it differently. What does this connectivity do for people in the north?

The Chair: Mr. Ruelling.

Mr. Bruce Ruelling (Area Board Member, Northern Lights School Division No.113): It gives opportunity to our students. If they're in a small community or not, it gives them access to technology. Also, it helps small communities with access to the internet. It not only helps in programming, but it helps to demonstrate to these remote communities that there are other opportunities out there and perhaps encourages involvement, business plans, or what have you, whether it be in tourism or anything. It's like opening a door.

Mr. Roy Cullen: If you had to choose between cheaper, healthier food and connectivity, where would you put your choice? I'm not suggesting it has to come down to that, I'm just trying to get a sense of the priorities.

Mr. Bruce Ruelling: Obviously, food is very important. That's why we try to have nutrition programs. But I think I would prefer the connectivity, if that came in, because of the school division. However, if the food prices dropped, we could take some money back that we're putting into food service programs for the students and put it into programming. You've kind of got me between a rock and a hard place here, but that's the way I feel.

Mr. Ralph Pilz: If I could elaborate a little more on the importance of technology, many of our high school programs in the north are small high school programs, and we're limited in courses. This is another means for bringing in more courses and more opportunities for our students. As well, there is a real opportunity to partner with our other agencies. As I said, all of our schools are community access, which means we've opened them up to the larger community, and as Bruce mentioned, it allows them opportunities for commerce and entrepreneurial kinds of things. It's been a tremendous boom for the whole north, and as you know, we cover the whole upper half of northern Saskatchewan. It brings the world much closer, so it's something that is very commendable.

Mr. Roy Cullen: Okay. Thank you, that's helpful.

To the Chamber, I agree with you, and probably many of my colleagues would agree, that we need to find some way to constrain federal spending. If we look back over the last couples of budgets, there were huge investments in security and reinvestments in health care and education, but I think we need to get back on track. You've suggested spending in line with inflation and population growth. Given that suggestion, would you suggest that's the criterion in moving forward, or do we need to go back and say there's been a bump in the last couple of years and we need to factor that in as well? How would you deal with that bump in spending in the last couple of years, just ignore it and move forward with the new sort of criterion?

Mr. Norm Halldorson: I think a number of programs need to be challenged for their effectiveness and a very deliberate decision made as to whether they should be continued or not. Our point is that government program spending should not be growing faster than the economy. Also, we make a distinction on expenditures. I think Ms. Minna mentioned that tax expenditures were the same as other program expenditures, but with all respect, we see it differently. Tax expenditures are a facilitator of economic activity and growth, and savings that are made available through reduced taxes that are then redirected into investment and economic growth provide ongoing tax strings to increased employment that enhance our ability to meet the requirements of the social safety net. I think that is a very important distinction. The long-term viability of all our programs is dependent on our economic activity in this country, and we are competing on a global stage.

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The Chair: Can I just do a quick follow-up on that last comment? I would like to understand whether the objections are merely to the fund? If compassionate leave and parental leave and active measures were funded through HRDC and other programming activities, essentially they're all still coming from taxpayers, but it would be spread a little wider. Are you in favour of the activity, just not the location of the activity, or are you not in favour of the activity?

Mr. Rupert James: Without getting into the list of everything that's there, but to make a general comment, I would say, on the assumption that the political leaders and the general public accept the validity of those programs, fund them in a more transparent way, as opposed to saying to people, we have an insurance program here. I'm sure you'll find most people, when they're paying their fund insurance premiums, believe they're paying them towards the event that they lose their job through no fault of their own. Yet we've added on a whole lot of other programs to that, which they are funding unwittingly. I don't think you'd find most people understand they were coming out of that. I'm sure a lot of the programs they would assume are coming out of income tax, or fuel tax, or wherever else.

The Chair: We are getting some requests, for instance, right now from some of our presenters-I don't have to name them--to have more apprenticeship programs through this fund. Again, would your position be that if a new program were to be established, it should come outside the fund and under the umbrella of HRDC policy, as opposed to inside this fund? Is that a fair statement of what you're saying to us?

Mr. Rupert James: Yes.

The Chair: Good. Thank you very much.

Now I will let Mr. Nystrom have the final round.

Mr. Lorne Nystrom: I also welcome everybody here this morning; I'm glad to have you here.

I'd like to start with the Chamber of Commerce again. With tax expenditures, what amount are you asking for? We already have a $100 billion cut, which is enormous. What is your recommendation for adding to that?

Mr. Norm Halldorson: The first component of that would be in regard to the small business that I spoke to. That would be to get in step with the provinces, and the cost would be the 9% tax on the $75,000 this year, the 9% tax on $50,000 next year, and the 9% on the $25,000 in the third year. I don't have a calculation of what that extends to. We can attempt to do that and provide it in follow-up to this committee if you wish.

Mr. Lorne Nystrom: But tax expenditure is not quite the same as spending money on a government program. You said tax expenditure would be facilitating economic growth. I can see where some of it obviously does. But wouldn't you also agree that a government program can stimulate economic growth? Investment in housing is a good example of that, investment in health care is another. We heard about the university this morning. Doesn't that also stimulate economic growth?

Mr. Norm Halldorson: Yes, we do acknowledge that. I think in our written submission we've said government program spending should be on areas that can be demonstrated as improving competitiveness and helping our economy grow. There are some other programs we're suggesting be challenged as to whether they in fact do that.

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Mr. Lorne Nystrom: Such as?

Mr. Norm Halldorson: Such as the federal gun control program, which initially was introduced at a budget of, I believe, less than $40 million. Costs spiralled out of hand more than tenfold, to over a billion, and yet there wasn't any apparent willingness to really say, is this program effective, is it contributing to the growth of our economy, or is it something the brakes should be put on and should be constrained? That's the type of program we're challenging, not housing, not infrastructure, not others that do in fact contribute to economic activities.

Mr. Lorne Nystrom: I certainly agree with you on the gun registry as an example.

But I wanted to ask you why the 3%. We heard this morning from the mayor about the infrastructure, the universities, the health care system. We have immense poverty all around the country. We've had mad cow disease, we've had SARS, and so on. If you limit it to 3%, won't you actually be cutting back what we are actually spending today and ignoring a lot of the major problems we do have? The mayor was here saying, we need a lot of money right in this city for infrastructure, and the money has to come from somewhere. Don't forget that when you invest money, you are also creating economic activity. So why 3%?

I'd like to also have Mr. Keen respond to what he thinks of your ideas in respect of limits.

Mr. Norm Halldorson: The 3% came simply from an estimate of the growth of our community. If our population, plus inflation, is growing at approximately 3%, we believe there is the ability, with the current role government has played, to provide the services you are talking about by deliberately challenging programs, not increasing the proportion of our total economic activity or gross domestic product government spends on our behalf. So we feel that you can meet those types of funding challenges without increasing the government's proportion of gross domestic product beyond the level it's currently at.

Mr. John Keen: Kenneth Dye in 1986 said “Tax expenditures have become the preferred form of patronage in this country, because they leave no tracks in the sand. They've reached the dimension that can destroy our economic system.” That is pretty florid language for an accountant. At that time there was about $36 billion, and about 40% of that could not really be justified. What he proposed was that people who want money from government should pay their taxes and apply for grants, and they get a cheque. The money comes in and the money goes out, and it's visible. So many of these tax expenditures over time get institutionalized, and even if they're not really of any benefit, they're still there.

If you want to see how they can go wild, just go to Alberta. Peter Lougheed took a province with oil and put $13 billion in the bank, at roughly the same time flying through tax expenditures, and put them $12 billion in debt. That's a difference of $25 billion out of sight of the public. Tax expenditures are a bad idea.

Mr. Lorne Nystrom: Very quickly to the other groups, Northern Lights, I think your northern allowance is something we should take a serious look at. Roy makes the comment about a line drawn as an arbitrary thing. Can you assure us that people would be satisfied with your line?

Then I want to ask a question of the university as well. It might be worthwhile for the committee members who are here from out of town to talk a little bit about the First Nations University.

Finally, to the fertilizer folks, tell us a little bit about the importance of potash in this province. Sas. Potash is a huge company in the world. We have others as well. I know IMC very well from the Esterhazy area. I think it might be worthwhile to hear about the importance of that industry in our province.

The Chair: We will go in reverse order. Last year in our report I think we wrote more about potash in volume than I thought I'd ever write about potash in my life. Anyway, I'm glad you are happy with it.

Mr. Darrell Zwarych: Potash--and certainly I'm biased--is a wonderful industry. It employs people in the rural economy in Saskatchewan, creates high-paying jobs, maintains skilled employment here for finance people, human resources, engineers, trades people. Trades people are put through an extensive training program at IMC. We have people who are trained for at least 10 years. So potash is very important to the Saskatchewan economy. It pays taxes, it employs approximately 6,000 people directly or indirectly. We are also very active in donations, for example, towards MRI in Saskatchewan, the University of Saskatchewan, the FSIN, and numerous other organizations throughout Saskatchewan. It certainly is a building block for our economy.

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The Chair: Mr. Tomkins, on the aboriginal question.

Dr. Jim Tomkins: It's actually a timely moment to talk about the First Nations University, since it just changed its name last summer. It was formerly called the Saskatchewan Indian Federated College. The First Nations University is still a federated college of the University of Regina, which means they are academically integrated, and their students get University of Regina degrees with a designation on them. They have a separate administration, and they now have a separate building, at long last. It's spectacular. I would encourage anybody who's got the time to go and have a look. Just drive by or go in. It's just a wonderful building.

It's interesting that in this province the two universities have taken different approaches to post-secondary education for aboriginal peoples. At the University of Regina we've followed the federated college model, so we've got an Indian-owned and Indian-administered institution on campus, integrated with the rest of the campus. The University of Saskatchewan accepts aboriginal students like other students, but has special programs in place to help them. There's no one right model, and it's going to be interesting over the years to see how these unfold. But we're certainly proud to have the FNUC on campus, and the new building is just a great addition to the campus.

The Chair: Does that model include doing on-line courses for other institutions across Canada?

Dr. Jim Tomkins: They do some of that. Actually, for a relatively small institution, they do an amazing number of things. About a third of their students are in Regina, a third in Saskatoon, and a third in the north, all over the place up there. They do have an office in Prince Albert. They are offering on-line courses into Quebec and Ontario. I don't know how many, but there's certainly some of that going on, and they expect it to increase, just because of their prominence in the system and the aboriginal communities.

The Chair: Thank you very much.

Mr. Pilz, how credible is your line?

Mr. Ralph Pilz: I think it's very credible. The grant we receive for educational funding from the province has a northern factor in it that is added to the recognized expenditure side, and all communities that fall above the NAD line are entitled to that northern factor. So I think that would suffice if it was reviewed and changed.

Mr. Lorne Nystrom: So people are very happy with the line.

Mr. Ralph Pilz: Yes, sir.

The Chair: Mr. Ruelling.

Mr. Bruce Ruelling: In northern Saskatchewan we are not alone. You look at the health districts, and they have difficulty maintaining staff. They have huge expenses, and you can check with them. Obviously, they must have when they are bringing nurses and doctors in from places like Saskatoon to work for them a week or two. A tax incentive would help people to establish a home in those communities and contribute.

The Chair: It can't be so great in that region. I wouldn't think the cost is going to be huge here.

Mr. Bruce Ruelling: No. The numbers are small in the north. Our student population is 5,000. Northern Lights employs roughly 600 employees. I don't know about the band schools in the north. First nations, of course, on reserve, those that are treaty, would not be paying taxes, so it would have zero effect on them. You can't claim a tax credit if you are not paying tax, I would assume.

The Chair: Well, I'll give you some good news. Finance officials read the transcripts of these hearings. So you are actually making your pitch. Whether it's in the report that we try--

Mr. Lorne Nystrom: They want to be assured that the line is--

Mr. Bruce Ruelling: I think, as Ralph mentioned, that was the line that was used by the Department of Northern Saskatchewan quite a few years ago. It's been maintained, and it seems reasonable.

The Chair: Thank you very much.

Thank you, all of you, for participating today. Even though we can never finance putting all our members on the road, we take turns coming out and joining this committee as we travel across the country, and we certainly appreciate our dialogue with you and the time you've taken to be here, to put together your presentations, and to answer our questions. I hope this has been something you value, because we certainly do.

We will adjourn until this afternoon, colleagues.