EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 2, 1995

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[English]

The Chair: Our witnesses on Bill C-76 are from the National Federation of Nurses' Unions, Kathleen Connors, president, and Carol Richardson, executive director.

Thank you very much for taking the time to come before us. We look forward to your presentation.

Ms Kathleen Connors (President, National Federation of Nurses' Unions): Thank you. We are pleased to be here. As you can appreciate, appearing before the finance committee is an important part of the work we do, but preparing these briefs -

The Chair: Probably the most important thing that any Canadian ever does in their entire life.

Ms Connors: Let's say it this way, I would hope that the appearance is going to be worth while.

The National Federation of Nurses' Unions was founded in the early 1980s, and we now represent over 50,000 unionized nurses in a federation of provincial nurses' unions. Our members are those who provide hands-on care to the consumers of health care services. We work as nurse educators in acute and chronic care in the community through public health and home care and in long-term care facilities across the country. Our members are intimately involved in the Canadian health care system and care deeply about what is happening to the system as a result of federal decisions.

Part of the NFNU's reason for being, also as expressed in our constitution, is to provide a national voice for promoting progressive legislation and policy on matters of national importance to unionized nurses. In pursuing this objective, we address a broad range of issues related to Canada's social security system. When we refer to the social security system, we consider medicare and the social programs a very important part of Canada's social security safety net.

The National Federation of Nurses' Unions believes the federal budget, presented in February 1995, represents the political values and priorities of the current government. The budget is a tangible expression of a political vision and must reflect the values and concerns of the majority of Canadians. It should meet the needs for decent and secure jobs, incomes, housing, child care, health care, education, and a clean and safe environment. This is our vision for our country and for its people.

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The Budget Implementation Act being considered by the Standing Committee on Finance falls short of this vision. We have examined the budget as presented by the federal finance minister, as well as the modifications and elimination of various pieces of legislation that will take place through the Budget Implementation Act.

The guidelines of the 1995 budget, the analysis of the economic conditions in which the country finds itself, are faulty. This problem, coupled with a problematic analysis of government finances, had led the government to an economic plan that is inconsistent with our vision of a just society.

It is not our intention to propose amendments to the budget implementation legislation but to state that we do not accept the budget implementation legislation or the budget from which it flowed. Our purpose is to point out the current problems in health and social services and to demonstrate to you that there is a better way.

I'll just highlight the recommendations that are contained in our brief.

Recommendation 1: Rather than eliminate the Established Programs Financing Act, the Budget Implementation Act must reinstate the base escalator clause under EPF, with an end goal to return the formula for determining the federal share of medicare funding to what existed in 1977 under the EPF.

Recommendation 2: Bill C-91, which gave multinational drug companies a 20-year monopoly on the sale of all new drugs, must be rescinded. The consequent restoration of competition among drug suppliers will reduce the prices of most new drugs by 25% to 30% and reduce the cost of health care by $4 billion to $7 billion over the next 20 years.

I want to spend a bit of time prefacing our health care recommendation.

Canada's public health system is being dismantled. Changes in the EPF formula and provisions in the federal budgets of 1982, 1986, 1991, 1992 and 1993 have put the federal funding for health care on a path of diminishing cash transfers, to the point where they will end in less than a decade. The loss of federal cash transfers will mean the loss of federal enforcement powers under the Canada Health Act and the subsequent death of medicare.

Since 1982 the provinces have lost almost $41 billion from transfer cuts, resulting in major health care cut-backs by provincial governments and further off-loading onto municipal governments, voluntary organizations and families. Downsizings of hospitals through bed cuts, staff lay-offs and contracting out are accelerating. The list of de-insured medical services and drugs grows longer. As provincial governments withdraw from these areas of drug and dental insurance plans, private companies are moving in to fill the vacuum. Piece by piece, health care in Canada is being privatized. This is an insidious erosion of the system that is the greatest threat to medicare and to our public, single-payer, universal health insurance system.

While it is impossible in one budget to redress a decade of decline in health care in Canada, it is important to set the stage for future action by demonstrating firm and unequivocal support for medicare and opposing its privatization.

That brings us to the recommendation that a federal fund must be established to help shape the improvement and restructuring of health care, recognizing that health care comes under provincial jurisdiction.

Recommendation 4: It is important not only to maintain the current level of support for the women's program, but to restore the funding to its previous level.

Recommendation 5 is that the public implementation legislation be set aside and a royal commission, which would travel across Canada, be established to determine how much Canadians value their social safety net, because the opportunities to discuss what is happening to health care as a result of the Budget Implementation Act were not part of the discussion that happened under the social security review.

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With those recommendations, we would be pleased to entertain your questions and discussion.

The Chair: Thank you, Ms Connors. Do you have a position on what percentage of our GDP should go to health care in Canada?

Ms Connors: I think it is very important as one of the issues that became apparent following the comments by the Prime Minister on what is spent in Canada vis-à-vis members of the OECD. I think it is significant, and that's why we included in our brief that when we talk about social services we see that health care and social services are intrinsically linked.

To say that Canada spends more on health care than other OECD countries is true. However, if we look at what other OECD countries spend on social programs, they spend considerably higher amounts. If we fold it all together, I think Canada has room to spend more, putting in place the kinds of social supports that allow for the expenditures not to come on the health care system.

As a nurse, for example, I know that higher unemployment levels lead to higher health care costs. Some excellent research has been done that talks about the cost of unemployment to the health care system. The availability of sound post-secondary education, clean water and environment, adequate housing, and adequate nutrition all impact on what kinds of health care services are being utilized.

If there's a social security system in place that provides for those sorts of things, yes, our country could cut what we spend on health care, because people would tend to be more healthy through the type of strong social safety net that exists in other OECD countries. We could be more competitive in what we spend on health care. Let's talk apples and apples and oranges and oranges and bring the level of Canada's spending on the social programs up to that of OECD countries, and then we'll talk about what percentage of health care is there.

The Chair: It would be nice if we had the money.

Mr. Crête.

[Translation]

Mr Crête (Kamouraska - Rivière-du-Loup): In your brief, you indicate that, in your opinion, Canada's health care system is collapsing. If I have understood correctly, you are saying that if measures are not taken to reach the goals we set ourselves 20 to 25 years ago, you propose, as a course of action, setting up a royal commission on Canadians' perception of what they are prepared to put into education and health. Wouldn't it have been more appropriate for the government to ensure that the provinces participate in the national forum on health and to have guaranteed consultation between those who manage the health care system on a daily basis and those who provide the funds? Would the national forum on health be an appropriate place for this type of debate?

Furthermore, are you familiar with the amendments to the bill announced by the Minister this morning in the House? If so, do they seem satisfactory to you?

[English]

Ms Connors: On the first question, my response is that we talked about this because we were aware as an organization of the existence of the national forum on health. But I want to say that we are somewhat disillusioned and very concerned about the proposed national forum because we see the make-up of the forum, and nowhere are there hands-on providers as members. We see many academics and lawyers. We see representation from the private insurance interests there, but we do not see hands-on health care workers sitting as members of the national forum. We have to question what kind of consultation....

This government was elected many months ago; we haven't seen any consultation with Canadian people who work in health care delivery and who have a vision of what kinds of health and social services are necessary. So that is why we say no to the national forum and why we say yes to a royal commission.

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The two previous royal commissions that happened in this country had very important recommendations, many of which remain unimplemented. I think we need to look at that. They are not acceptable, because we want the removal.... We say quite unequivocally that this Budget Implementation Act will not meet the needs of the Canadians we care for and we ourselves see.

[Translation]

Mr. Crête: If you had to define a few key principles in relation to the continuity of the Canadian health care system, what would they be?

[English]

Ms Connors: I think the defining principles are already in existence. They are clearly defined as the five principles of the Canada Health Act. Those principles quite clearly are universality, comprehensiveness, accessibility, portability, and not-for-profit public administration of health care services in Canada.

[Translation]

Mr. Crête: Therefore, according to you, in light of the cuts announced, the federal government cannot continue to impose national standards if it does not have the necessary funds.

[English]

Ms Connors: Absolutely. Our concern about the budget implementation legislation is that one part of that legislation allows the continuing downward slide of the cash transfers that have to date allowed the federal government to say to provinces this should not be privatized, we will withhold dollar for dollar the money that is used in facility fees, etc. We've heard Ms Marleau's announcement about facility fees being charged in several provinces, Alberta being the most blatant in imposition of this sort of thing.

I think the other important part of the Budget Implementation Act is the fact that the Canada Health Act is amended. One portion says that the imposition and the ability to withhold the word ``mandatory'' have been changed such that it is no longer mandatory or compulsory, it is discretionary with the cabinet.

I would have to question who will have power in making decisions at the caucus table. Will it be the Department of Finance people or the Department of Health people? Clearly in this budget we have seen who has won the scrap over what kind of a social program and health system we want in this country. It's been Finance, not Health. With that kind of imposition of no longer having ``mandatory'' in the Canada Health Act, I think Canadians need to fear for what kind of leadership role the federal government will play in making sure those five principles are maintained as the principles under which we receive health care.

The Acting Chair (Mr. St. Denis): Mr. Grubel.

Mr. Grubel (Capilano - Howe Sound): Why do we need a government in Ottawa to tell the people of Alberta or Nova Scotia what kind of health care they need? Why can't they decide for themselves, in a democratic fashion, that they want a mixture of public and private care, they want user fees, they want to do these kinds of things? If the people of Nova Scotia don't like what their government is doing, they can always throw them out in the next election. I find that eminently democratic. Why do you insist that the federal government has to set these standards?

Ms Connors: I guess this comes to where we are going to disagree fundamentally. When we allow any government, be it federal or provincial, to set up the kind of system that puts in place a two-tier system, then we have one for the rich - the people who can afford to pay, the people who can bump the queues - and we have one for the poor. We are moving very much toward an American-style system.

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I've had the opportunity over the last number of years to spend considerable time talking to health care workers and health care recipients from the United States. The people I talked to said they would like the kind of system we have, where a federal government would clearly define the standards, the principles under which the health care is delivered, the basic standards for everywhere in the country.

We see what is happening in Alberta right now. We see what is happening with the availability of facilities of private MRIs. Who is to say the poor are not equally important in receiving the MRI test or the surgical procedure?

Mr. Grubel: I beg your pardon. I agree with all of this. This is not at stake. I asked you a question. If you have such a persuasive case that in fact everybody should have all these wonderful goodies for free - no two-tier system - then why do you insist that the federal government does it rather than the Government of Alberta? Could you address that question, not the other questions?

Ms Connors: I think the issue is one of political persuasion. If we had let the Province of Alberta run things, we know what kind of system there would be in the province of Alberta right now. It wouldn't be universal, comprehensive, accessible, portable, and not-for-profit or publicly administered, because already they are defying -

Mr. Grubel: How do you know? This may be one government.... If the people of Alberta don't want it, they throw out these bastards and they bring in others.

Aren't you fundamentally undemocratic to say the people of Alberta don't know what they want? You have to tell the federal government to use coercive methods to have the Alberta government do what you think is right rather than what the people of Alberta think is right.

Ms Connors: Quite clearly the people of Alberta don't want the kind of health care system they have.

Mr. Grubel: You don't have to worry about it.

Ms Connors: When you have 15,000 people turn out for a demonstration on closing a community hospital in Edmonton, surely to God the government should listen. But they are going on in an undemocratic fashion.

The other issue is that we need to look at the fact that Canadians clearly articulated many years ago that they wanted a national health care system.

Mr. Grubel: Maybe they changed their minds.

Ms Connors: I don't think they have. I think that the polls show the level of support for health care in this country.

Mr. Grubel: Are you going on record and saying the Government of Alberta is acting undemocratically?

Ms Connors: We certainly have shared that view when I've been in Alberta.

Mr. Grubel: Thank you.

The Acting Chair (Mr. St. Denis): Mrs. Brushett.

Mrs. Brushett (Cumberland - Colchester): Thank you for coming this afternoon. I did enjoy your presentation.

I've spent a lot of time in health care, science and research through my earlier life, so my questions I think are a little different from the previous questions.

First, I would like to present to you.... You brought the case forward about the drug companies, but I might add that the drug research moneys that are required to do modern-day research are quite phenomenal. And if we did not extend that bill and have that research.... And I'm very familiar with some of the new drugs for schizophrenia, for example, that are doing wonderful things for mental disorders and disabilities, which are giving people some life in the real world today. So how do you feel research would be carried out if we didn't extend that bill?

Ms Connors: I think we go back to the debate that happened around the legislation that led to Bill C-91 being passed. The end result is we know that Canada will never be a country where a lot of the research and development of new pharmaceutical products occurs. Much of the research and the development that occurs now has been related to me too. The sorts of drugs where minor modifications are made, a new patent is obtained extending protection and higher prices to the company that modifies this in a minor way....

I think there's a great deal of the reality that what the drug patent legislation did was not necessarily to increase the research and development happening in Canada with pharmaceutical products, but substantially to increase the profits of transnational drug companies. That is where we fundamentally are opposed to the existence of such patent protection. We see the cost of pharmaceutical products is escalating rapidly.

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As nurses we know that drugs are an important part of improvement of levels of health restoration to certain levels of health - they're important - but the prices we are paying for these drugs we really have to question. You know it was all part of the GATT and the NAFTA. Wasn't this supposed to make everything more competitive? But what we have as a result of this kind of legislation is a creation of monopolies for transnational drug companies, and I'm fundamentally opposed to those sorts of things.

Mrs. Brushett: We will probably have to keep our answers shorter. We have a long session here ahead of us.

I think Canada still does a lot of research. We don't patent as many things as we should and could in our research community in this country. I must go on record to say that our universities are doing wonderful research in small sections, in compartments throughout this country.

A second point, in terms of MRIs or CAT scans and the high technology that is available in diagnostic imaging, we see many dental services and other such professional services coming into shopping malls, for example, and working through the night or on to Saturday, so that the public is more accessible to that professional service.

Have you any thought from your professional union with regard to taking the MRI or the CAT scan into the shopping mall so that you get better use from the multi-million-dollar piece of equipment, rather than letting it sit idle, to better utilize our facilities and our resources that we have?

An hon. member: Is that publicly owned or is that privately owned?

Ms Connors: With respect - before I move on - I think that one of the important things we have to say about research and development is that the budget implementation legislation, because of the creation of the Canada health and social transfer, and where post-secondary education fits in...the kind of money that will be available for research probably will be fundamentally affected by the creation of the Canada health and social transfer. So I would have to question what kind of research and development will continue in our universities, which I agree are world-class, under this kind of budget implementation legislation.

The National Federation of Nurses' Unions believes that there are different and better ways to provide health care in this country. We've said for some 20 years that we believe in the existence of community health centres that are store-front and that have multiple entry points so that you don't always need to see a physician first. You can see multiple health care practitioners.

I guess the issue we're so enamoured with as Canadians is all the bells and whistles, the MRIs and things like this. We need to look at the kind of analysis about what kind of quality outcomes result from many of the testings and procedures that are done. I would agree that there are better ways of utilizing the equipment we have.

For example, I did a visit to my school of nursing training and we had a tour of the new MRI; it was some 20 years after graduation. It was a Saturday and the door was locked, the lights were off and there wasn't one person working, and I'm thinking that there are waiting lists for MRIs and where are the people who should be providing the testing services for these people on the waiting list? Do you know what the answer was? The physicians didn't want to work on the Saturday, the Sunday, or the evening and the night shift, so it was not open.

I think there are fundamental problems in the set-up of the system and we need to be able to address those issues. I'm not saying that we need all the fancy tests necessarily that many of us believe are necessary, but we certainly believe in the implementation of more cost-effective and accessible kinds of health care, one of which is the community health centre concept.

Mrs. Brushett: Mr. Chairman, I have just two more questions but I will pass and come back.

The Acting Chair (Mr. St. Denis): Maybe we'll go to Mr. Bonin and if there are no objections we could come back, Mrs. Brushett.

Mr. Bonin (Nickel Belt): Thank you, Mr. Chairman, and I will try to be brief.

We are in an age of efficiency and dollar value, as everybody knows, and no one is in a better position than the professionals who are self-regulated to tell the administration of hospitals that have health care how to be efficient, but I don't see them doing that. I see one profession blaming another.

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I'd like to know what your profession is doing to lobby provinces, like in Ontario, where you can still get a sex change paid by OHIP, where you get an ultrasound to find out if it's a boy or a girl, the series of tests that we go with the family physician that is repeated with the specialists. I think you have a job to do and lobbying to help the federal government be more cost efficient.

I've been very involved in the health field and I don't see that happening. I see a lot of blame cast from one profession to another but I don't see results. You are on the front line and I believe that you're able to recommend things. I'd like to know if you're doing more than I think you're doing.

Ms Connors: I think one of the issues for nurses in this country is that we use every opportunity that is available to us, as organized nurses' unions in this country, to articulate our vision of how health care should be delivered. Unfortunately for us, quite frequently the door is slamed in our face.

The fact that we very seldom have an opportunity and an invitation to provide the kind of input into discussions.... For example, in the creation of the national forum on health there is no a unionized staff nurse present, someone who lays their hands on patients every day in the health care system, to share the kinds of visions and values that we have about what kind of a health care system there is and how care should be delivered.... So at the federal government level there are some nurses, but they're academics. They are not staff nurses who work every day in the health care system.

We have submitted to the Minister of Health and to the Prime Minister names of individuals who could play that role, but the door was closed and subsequent things happened at provincial levels. At community levels, we have asked for years as nurses to be allowed to sit as board members on health care facilities and the door is slammed in our face. While we have very much to offer, one of the resistances has been to letting us through those doors to the table to have the kinds of discussions that need to happen around the health care system, including the kind of funding and legislation that need to be in place at the federal level.

Mr. Bonin: I understand the efforts you have made to have representation on forums and boards, but what did you do? We have media. You have all kinds of resources available to you to make a community aware.

In this hospital we're doing so many ultrasounds compared to others. These studies are being made but there's no reaction from the front-line people. If we're going to self-regulate, as governments we need your help at all levels.

Yes, it would be nice to be on forums and boards. I'm on a hospital board that accepted having representation from nurses on the board. I believe in the representation. But there are other ways of doing things and I believe we could get more help from the front-line people.

Ms Connors: I want you to know that last week we had ads running about a nurses' vision, asking people to call us about our vision for what kind of a health care system we need. They were shown on Newsworld. I think we have to acknowledge that those kinds of efforts are very costly. So what limited resources we have for these kinds of promotional things are done.

If you would look at the kinds of efforts that have happened in many provinces, the fact that health care was the number one issue in the provincial election in Manitoba is no accident. It happened because nurses, through their union, took the issue of health care through an infomercial, through ads, through speaking out clearly.

We have to recognize that the media cover only the issues they want to cover. We try to use whatever avenues are open to us. We have done a video talking about our vision of health care and we'll be talking about getting that out more widely. Perhaps we need to send a copy to each and every MP. It's only six minutes long and people could watch it. It clearly articulates what the nurses' vision is for the future of health care delivery.

The Acting Chair (Mr. St. Denis): Thank you, Mr. Bonin.

A short question for Mr. Crête.

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[Translation]

Mr Crête: Your presentation and the questions asked make us realize that it may be necessary to conduct an inquiry or clarify the situation. Correct me if I'm wrong. On the whole, Canada's health care system does not have a cost control problem. Compared with the American system or other systems, it does not have a cost control problem. Salaries are very reasonable and total expenditures are considerably lower than elsewhere. It is more a question of recognizing the real operating cost of the system. Do you share this point of view?

[English]

Ms Richardson: In terms of the real cost to make the system work, we believe the system is working, but one of our major concerns is what has been happening recently within the provinces in terms of health care reform. We have found that health care reform and restructuring have been changed into things where hospitals are being closed and where beds are being closed. When we look at what we want to see as health care reform, in fact it means that we don't have as high a rate of institutionalization of the elderly for example.

So the system is working but the system certainly does need reform. In both videos we have produced, we talk about how we have a better way and we actually talk about that in our brief as well. We realize there is need for reform, but the way to reform is not cutting back holus-bolus and eliminating the beds for people who actually need them in acute and chronic care. That's why we're talking about a royal commission. Certainly there needs to be some study, but it's not just that federal funding should be cut back.

Mr. Peterson (Willowdale): Very briefly, what percentage of the services performed by physicians today, under the Canada Health Act, could be performed by non-physicians such as nurses?

Ms Connors: There's a lot of research out there that talks about how anywhere between 20% and 40% of the services performed by general practitioners could be carried out by other professional care providers, including nurses.

Mr. Peterson: Thank you.

Mrs. Brushett: You mentioned repeatedly there is no real representation from nursing on what you call the health forum, but I think it's the Canada Health Council. In this regard I come back to the point that occurs in many hospitals I'm familiar with, which is we're in a trend now where all of our nurses should have a BSc in nursing or a masters in nursing. Once they come to this level they then do administrative work and we're left with no one doing hands-on bedside care. This is a phenomenon that's happening across Canada.

I'm wondering, as you make that remark, if it's an administrative nurse who's being representative rather than a real hands-on nurse, how do you think that has played on the cost of health care? Are we going in the right direction by doing that?

Ms Connors: A couple of comments. Because of the reductions - and I firmly believe this - in the federal commitment through the cash transfers to health care over the years, we have seen provinces respond with different initiatives. I want to talk about the issue of patient-focused care, this American model that has crept into Ontario, into Manitoba, into Alberta. What we have seen in facilities where they have instituted this sort of model of health care delivery and it is totally budget-driven is that there has been elimination of one-third of the registered nursing positions or the licensed practical nurse positions in institutions.

At St. Boniface Hospital, as a result of patient-focused care being initiated there every licensed practical nurse who lost their job...the job that was being done by educated unionized workers is now being done by people who are called patient care attendants, who are paid much less money, who have a few weeks of quick on-the-job training. Then nurses, registered nurses, are expected to be responsible, because legally we are responsible for the kind of care that is being delivered by these unlicensed care providers.

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We see a downward slide in the quality of care that is being delivered, and we see these sorts of initiatives as being totally budget-driven.

I think the whole issue of an education is extremely important. I agree, people always need education, but with the change as a result of the Canada health and social transfer tax promoted by the budget implementation legislation, the opportunities for increasing education of nurses are going to be lost, because where is the money going to come from?

The social assistance people, the post-secondary education people and health care are going to be arguing over how that pie gets split up in the provinces - just a washing of the hands and saying to the provinces you run things however you want, so the educational opportunities for nurses will be lost. I think we will see more and more of these kinds of American-style initiatives. Canadians need to be concerned about who is at the bedside delivering the care, because who you think might be a nurse probably won't be in a few years.

Mrs. Brushett: Just one final question then. In terms of the overall care of health of Canadians, the well-being of Canadians, you made a point earlier that social impacts, unemployment, financial stresses, etc., all cumulatively add to the well-being of the individual and take a toll on the health care system. So if we could generate better employment then we would have less cost on the health system, which is probably true, but this is a world phenomenon, which we really have very little control over, in terms of saying that there will be more jobs, when high technology and technological revolutions bring us fewer. So how do we fit into that global picture, then, to maintain the quality of health care that Canadians want?

Ms Connors: I have to say that one of the other pieces in the Budget Implementation Act is the fact that there are a number, a considerable number - 45,000, I believe - of federal government employees who will lose their jobs. So when we talk about the impact of unemployment on health, I think clearly that is something this government is going to have to realize is happening to the health of those people, who are concerned about their employment opportunities, because just as the public sector is downsizing, there isn't suddenly an increase in the private sector.

So where are the employment opportunites going to be for federal civil servants, who are going to lose their jobs as a result of the budget implementation legislation? What kind of impact is that job loss going to have on the health of Canadians? It's going to have a spill-over effect with respect to stress, chemical and alcohol dependence, the increased incidence of heart problems as a result of the stress of unemployment. So I think that's an important part that has to be articulated.

Canada has a world-class health care system and we don't have to take a back seat to any country in the role we play. I think we can get our house in order with respect to health care delivery, and I don't think the federal deficit should be reduced on the backs of the health care system and the people who work in the system.

The Acting Chair (Mr. St. Denis): Thank you very much, Ms Connors, Ms Richardson - excellent questions. I suggest that the Prime Minister probably could use you some time to make a speech for him. Your eloquence in support of Canada's health care system is remarkable. So thank you for that. Thank you again for appearing today.

Ms Connors: Thank you.

The Acting Chair (Mr. St. Denis): We'll need a couple of minutes before we hear from our next witnesses, who are from the International Association of Machinists and Aerospace Workers.

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PAUSE

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The Chair: Could we come to order?

The next witnesses are from the International Association of Machinists and Aerospace Workers.

[Translation]

They are Mr. Bourgeois, General Vice-President; Mr. Vincent Blais, Administrative Assistant; and Mr. Louis Erlichman, Canadian Research Director.

We welcome you and look forward to your presentation.

Mr. V.E. Bourgeois (General Vice-President, International Association of Machinists and Aerospace Workers): Thank you, Mr. Chairman.

[English]

We wish to thank the committee for giving us the opportunity to appear and present our views on Bill C-76.

The International Association of Machinists and Aerospace Workers represents approximately 52,000 Canadian workers across Canada in a broad range of industries.

Bill C-76 is a very important piece of legislation. It represents a major step away from national standards in medicare and social services. It could be said to represent a major change in the constitutional division of powers. Because of this, we and several of our locals across the country have asked the committee to hold hearings across the country. We are disappointed that the committee has decided not to do so.

Before speaking directly to the bill, we would like to talk briefly about what we see as the economic background to the budget and this legislation.

Over the last two decades Canada has been in the grip of a radical neo-conservative economic program, which has focused on holding down workers' incomes and increasing workers' insecurity, to the benefit of big business. The main components of this program have been regressive tax policies that shift the burden from corporations and the wealthy onto lower-income earners; trade agreements that emasculate democratic governments in their dealings with private business; tight fiscal and monetary policies, which dampen economic growth, maintain high levels of unemployment, and produce the pressure to force workers to accept stagnant or declining living standards; and the creation of a public debt crisis, which gives international finance even more leverage over democratic governments.

As recent Statistics Canada studies have shown, it is the federal government's high interest rate policies that are the source of virtually all of the federal debt. Over the last decade in particular, short-term real interest rates have been kept at unprecedented high levels.

Federal program spending and transfers to the provinces have been continually cut over the last decade, with no lasting positive effect on the deficit, because the impact of the cuts has been more than offset by high interest rates and stifled growth.

While the neo-conservative program seems to have served narrow corporate interests, Canadian workers have grown steadily poorer and more insecure over the last two decades. The living standard of the average Canadian family is no higher now than it was two decades ago, even though more members of the family now have to work to make ends meet. On the other hand, the owners of capital at home and abroad have grown fatter on high interest rates and currency speculation.

Mr. Martin's budget of February 27 shows him clearly to be like Mulroney and Wilson and the rest of that gang - a good soldier in the legions of international capital. The players in the band change, but they are playing the same tune.

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In the budget, Mr. Martin promised further attacks on the security of Canadian workers, with more cuts in unemployment insurance benefits and an assault on the public pension system coming in the fall. You could almost hear Brian Mulroney singing harmony in the background.

As for Bill C-76, it provides three main components of the neo-conservative program: an attack on the federal public service, further dismantling of our national transportation system, and reductions in our national standards of social welfare and medicare.

While we want to speak most about the attack on welfare and medicare, we want to touch briefly on the other two areas dealt with in Bill C-76. Bill C-76 once more arbitrarily changes the terms of the agreements bargained with public service unions. While we have only a handful of members in the federal public service, the disdain for free collective bargaining once more shown by the federal government is an insult to all of our members.

The government tries to present the loss of 45,000 federal jobs as simply trimming some bureaucratic fat in Ottawa, but the impact of Bill C-76 is going to extend far beyond Ottawa. The federal government is directly and indirectly a major source of employment across the country, and these cuts will hurt everywhere, most particularly in the part of the country I come from, Atlantic Canada.

The attack on the federal public service is an attack on all workers. The federal public sector has been the target of continued attack over the last decade. These cut-backs progressively undermine the capacity of the federal government to fulfil its responsibilities.

We will only offer one example from an area with which we are familiar. Over the last fifteen years there have been in Canada two judicial inquiries and numerous reports from the Transportation Safety Board, which all said that Transport Canada lacked the resources to fulfil its mandate to do effective safety audits and follow-up for airlines in Canada. With increasing privatization in the air transport sector, regulatory resources are even more important, and what is required is a substantial increase in resources, not the cuts that will come as the result of Bill C-76.

Despite a lot of rhetoric in the National Transportation Act about safety being the number one priority, regulatory resources continue to be cut while the stresses and hazards for our deregulated airlines continue to rise. We can only come to the conclusion that one of the goals of the government is to discredit the public sector by withholding the resources essential to do the job that is required.

Bill C-76 puts an end to the Atlantic and western Canadian freight subsidies that have been essential for the maintenance of our national rail system. It is not just my background as a railway machinist that makes me lament the government's obvious determination to destroy our national rail system. It is nothing short of criminal that we are doing away with an energy-efficient and environmentally sound rail infrastructure that could serve us well for the next century.

Bill C-76 and the privatization of Canadian National announced by the finance minister are the final nails in the coffin of our national rail system.

Finally, we want to turn to the ``fiscal arrangements and other matters'' section of Bill C-76. This is another chapter in a long story of retreat from national standards and federal responsibility. Over the years we have moved from shared-cost financing to block funding, with declining federal transfer for medicare and education and caps on federal welfare contributions to certain provinces. Now with Bill C-76 we do away with the Canada Assistance Plan, CAP, and roll it and the established programs financing, EPF, into the Canada health and social transfer, CHST.

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The amounts to be transferred to the provinces, particularly the cash portion, will shrink substantially. Transfers under the proposed CHST will be almost $7 billion less over the next three years than under the current system. So we are transferring responsibilities to the provinces but not the corresponding level of resources.

The promise of further unemployment insurance cuts makes the reduction in welfare transfers even more devastating. As the result of the successive cuts to UI benefits in recent years, over half of the unemployed were already ineligible for UI benefits in 1994. Further UI cuts will push even more of the unemployed onto welfare at a time when provincial capacity to provide welfare benefits is being eroded.

In spite of all the talk from the federal government about the need for active labour force policies to create a more educated and trained workforce, they continue to reduce education funding. What little is going into training has been taken from the funds that had been contributed by workers and employers to provide UI income support.

It seems that what the federal government means when it says it is giving the provinces welfare flexibility is the flexibility to starve the poor and unemployed so that a few of them can receive inadequate training and education.

The provinces have widely divergent economic capacities. As federal transfers decline, poorer provinces will lack the resources to maintain national standards. We will see a steady erosion of national standards in medicare, education, and welfare.

The Chair: Excuse me. On that point, what are the national standards on education that apply now?

Mr. Bourgeois: Well, if you don't mind, I will continue and then we'll respond to that.

The Chair: I want to understand what you're saying to us, and I'm not sure I do. You're talking about a decline in the national standards of education. I'm not sure I understood that, so it's a point of clarification.

Mr. Louis Erlichman (Canadian Research Director, International Association of Machinists and Aerospace Workers): Well, specifically what we're talking about is the reduction, through this new Canada health and social transfer, of the overall sum of money being transferred to the provinces.

The Chair: But your brief talks about a decline in the national standards of education.

Mr. Erlichman: That's right.

The Chair: What are the national standards of education? Who sets them now?

Mr. Erlichman: We're not suggesting that there is a fixed set of national standards. What we're saying is that the standard of post-secondary education will be reduced because there will be less money going to post-secondary education across the country.

The Chair: Oh, okay. I see. I didn't understand, I'm sorry. Thank you.

Mr. Bourgeois: Bill C-76 removes all national standards for provincial welfare programs, except the prohibition on a minimum residence requirement.

Part V of Bill C-76 provides that the Minister of Human Resources Development will consult with the provinces on ``shared principles and objectives'' for social programs. But as the federal cash contribution disappears, how is the federal government going to maintain national standards?

The same holds true for national educational standards and particularly for the principles of the Canada Health Act. If the federal government is not providing cash, how can it stop a dilution of the quality of health care, first in some provinces and then all across the country? In fact, Bill C-76 leaves the enforcement of the Canada Health Act to the discretion of the current federal cabinet. None of this is academic speculation.

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We are already seeing attacks on social assistance through workfare schemes in violation of the principles of the Canada Health Act. Bill C-76 promotes an acceleration of the destruction of our national social programs. I guess we shouldn't be surprised.

If the government wants to increase the insecurity of Canadian workers and their families, why stop at cuts to unemployment insurance when you can also undermine welfare and start people worrying about whether they will start facing major costs for medical care? That's one of the added bonuses from the free trade deal with the U.S.A.

Perhaps we will soon get to share the average American's justifiable fears about the financial devastation a major medical problem could bring to their family. Of course that's what the North American Free Trade Agreement, NAFTA, was all about, reducing our social programs to the U.S. or Mexican level. Now we are seeing it happen courtesy of the Liberal Party, who were going to protect us from the nefarious trade deal.

The fundamental change to federal-provincial transfers presented in Bill C-76 has almost constitutional implications. The principles of equity and sharing of resources that are at the core of the federal system are being steadily undermined. Canadians rejected the decentralization and breakdown of national standards presented in the Charlottetown Accord. Bill C-76 produces almost the same result. It can only give ammunition to those who are questioning the basis of the Canadian federation.

As the committee can see, we see fundamental problems in Bill C-76, but the problems are far deeper and broader than this bill. For over a decade our governments have been digging us deep into a hole. The hole was not created by reckless spending on social programs, most of which had been steadily cut back. Figures from the Organization of Economic Cooperation and Development, the OECD, show that Canada trails every western European country but Spain in the share of total social spending as a percentage of gross domestic product.

What created our debt problem were the fiscal and monetary policies that serve only the interests of the owners of capital. The rest of us have paid the price of these inappropriate policies. If we are not to pay an ever greater price, we must begin to reverse these policies.

We do not have a lot of room to manoeuvre and the recovery will not take place overnight, but we urge this committee to bring back a message to the government that this bill is inappropriate. We wish you had been able to travel across the country to hear that more graphically presented.

Instead of the measures presented in Bill C-76, the government must bring forward a new set of economic policies aimed at employment creation and improving the lives of Canadian workers and their families. The government must return to free collective bargaining with federal public servants and base its expenditures on the resources that are needed to effectively fulfil the government's role, not some primitive notion of an ever-shrinking government.

Instead of hastening the demise of our rail system, the government needs to come forward with proposals to make effective and expanded use of our rail network within the transportation policy that focuses on sustainable national economic and social development.

The first priority for real economic recovery is lower real interest rates. We also need a more progressive tax system, including a reduced reliance on sales tax, fairer corporate taxes, a more progressive income tax and a tax on large accumulations of wealth.

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We must put a priority on the maintenance of medicare and a commitment to improve social welfare programs, including the red book's promised national child care system. We ask you also to tell the government not to bring in further cuts to the unemployment insurance system and to keep their hands off our public pension system.

We have a lot of work to do to repair the damage of many years of radical neo-conservative policies. We hope this committee can lead the way in starting that for us. Thank you.

The Chair: Thank you, Mr. Bourgeois.

Mr. Grubel: Yes. I found it a surprisingly ideological, an almost ideologically absolute statement that's constantly referring to the wealthy, to corporate class, to the class of capital owners and that kind of thing. I thought that had disappeared a few years ago with the demise of socialism in the Soviet Union.

I'd prefer not to go into ideology. I'd just like to know some of the basis of the facts you assert. You say here that regressive tax policies have shifted the burden of tax from the wealthy to lower-income earners. Just answer my question please. In 1993 what percentage of all personal income tax did the top 10% of income earners in Canada pay?

Mr. Erlichman: I don't have the figures for you here.

Mr. Grubel: Well, make a guess.

Mr. Erlichman: I'm not here to make a guess. There have been regressive changes over the last 15 years in the income tax system, which is the point we're trying to make.

Mr. Grubel: Tell me what it is roughly.

Mr. Erlichman: I have no idea.

The Chair: You tell us, Herb.

Mr. Grubel: Fifty percent. What was it in 1992?

Mr. Erlichman: You obviously know.

Mr. Grubel: Fifty percent. You go back 15 years. It was always 50%.

Where do you get your numbers? Tell me in what sense it was regressive.

The Chair: They listened to the Liberal Party in the last election; that's what we said.

Mr. Grubel: Tell me how it was regressive.

Mr. Erlichman: How the change had been regressive? Through the reduction to the top marginal rates.

Mr. Grubel: That's not correct. They're still collecting the same amount of the total income as they did before.

Mr. Erlichman: But you make the tax less progressive by reducing the top marginal rates, by going down to basically two or three levels. So you have flattened the tax system.

Mr. Grubel: I would have thought that if the top 10% continuously pay 50%, that indicates that they're carrying their burden. In what sense has it now become less fair?

Mr. Erlichman: All right.

Mr. Grubel: What other evidence do you have? Is there any other evidence?

Mr. Erlichman: In terms of regressive tax -

Mr. Grubel: That's right, that it has become progressively more regressive.

Mr. Erlichman: The primary evidence is that the system has been flattened out and that we've also been shifting to sales taxes, which are less progressive. In fact they're regressive.

Mr. Grubel: Oh, I thought the sales taxes were all replacement for the general excise, manufacturers excise tax. It was insisted it was revenue neutral and it was revenue neutral. The general excise tax was in the product prices, and therefore it was affecting people the way it was affecting the GST. On top of that, they went and gave a GST refund credit to all the bottom people. In what sense was that more regressive than it was before?

Mr. Erlichman: Sales taxes, as you're well aware, are -

Mr. Grubel: GST, yes.

Mr. Erlichman: Well, sales taxes, GST, provincial sales tax, whichever sales -

Mr. Grubel: We're talking about the federal government. You go to the provinces to talk with them. Tell me how it was made more regressive.

Mr. Erlichman: The sales taxes.

Mr. Grubel: Yes, how did the switch from the manufacturers excise tax to the GST make the system more regressive?

Mr. Erlichman: I didn't suggest that the switch from manufacturers to excise tax -

Mr. Grubel: Then how was it made more regressive in the last 15 years or 10 years?

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Mr. Erlichman: I didn't say that the sales tax was made more regressive in the last 15 years. The system has become more regressive overall.

Mr. Grubel: In this document you assert that the neo-conservative program was to have made the taxes more regressive by putting less on the wealthy and more on income tax earnings. That isn't true, because the top 10% have continued to pay 50% of all the income taxes. Clearly, the GST was designed not to be regressive, because the poorest people are getting GST refunds and otherwise it has just replaced excess taxes.

Now, let me just ask one last thing. I see also that the monetary policies have served the interest of the owners of capital. Who owns most of the capital in Canada?

Mr. Erlichman: That's a good question. There's a huge chunk of it that is in pension funds. There has been a transfer to pension funds, which I think makes a major distortion, practically speaking, in the fact of very high rates of return. Real interest rates - in fact, short-term real interest rates - being so high means that there is a very high rate of return and very low risk. It's a distortion of investment patterns, if nothing else.

Mr. Grubel: You were just saying it was a very negative and critical thing that the high interest rates - and we're all unhappy about high interest rates - served only the interests of the owners of capital. In fact, the vast majority of capital is owned by mutual funds and pension funds, which in turn are owned by workers and the middle class.

Mr. Erlichman: And the wealthy, as well. The wealthy have a bigger chunk of the capital, a much higher proportion. It's by no means distributed in a -

Mr. Grubel: Nevertheless, they pay 50% of all income taxes that they put in when they get their return on capital.

At any rate, I've made my point. Thank you very much. I now see what the ideological ideas are based on: fiction.

The Chair: As always.

Mr. Bonin.

Mr. Bonin: I'm interested in an area you address in your brief, privatization of railroads. You represent railroad workers, as you represent airline workers. I'm an Air Canada retiree, so I have some insight into the effects of privatization.

I believe the best job is a job working for somebody who makes money and does things efficiently. Air Canada privatized during a recession. Because of their success, last year they made a profit and the people you represent are more secure in their jobs. It is the people you represent who tell me this. I believe Air Canada would be darn close to bankruptcy right now had it not been privatized.

I think we'll all agree that the private sector does a better job of managing than the government does. In CP Air they didn't have sixteen people doing the work of five, like we had in our office at Air Canada. So if CN is heading the same way Air Canada was heading, I don't see any security for workers in the future, especially when the competition is trying to buy them over.

If Air Canada was able to make a profit by privatizing during a recession, do you not agree that if CN is to do something similar, now is the time to do it, while there's a recovery?

Mr. Vincent Blais (Administrative Assistant, International Association of Machinists and Aerospace Workers): I don't think the results of Air Canada and the way they are being successful today, as you say, are exclusively as a result of them being privatized. I think it's as a result of the change of attitude at both the airline management and the worker representatives level, whether you're talking about the union that represents the flight attendants, the union that represents the pilots, or ourselves, the machinists.

Being an Air Canada retiree, you're very well aware of the efforts that are ongoing at Air Canada today between the company and the union, between the company and especially our own union, to ensure that the company retains their position and as a matter of fact improves their position by being more competitive, getting more work inside the company. So I don't think you can credit only privatization for the results that have taken place at Air Canada. There was a change in attitude, and that is a prerequisite to being successful.

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Mr. Bourgeois: Our workers, along with the other groups, also had to take cuts in pay to do that.

Mr. Bonin: Yes, that's true. I'm a retiree because of the privatization and downsizing, and I still support it, because the people who are there have security.

The people I represent in Capreol for CN have no security at all. Every three or four years there's a threat of closing down the lines. That is not a way to keep workers going, and privatization is security for those who stay. You have more efficiency; it's been proven in the airlines, and I believe it's the best thing that could happen for CN. If you don't agree, I'm sincerely interested in your arguments why it shouldn't occur, because the proof is in the pudding for the airline industry.

Mr. Bourgeois: First of all, we don't represent workers on CN any more because of the section 18s requested by the railways. In the vote, we lost.

Even having said that, the way they're going to privatize CN is going to be by chunks. There will be really no more national connection on CN. As I understand it, they intend to do it by pieces, be it Atlantic Canada, etc. Central Canada will probably get the best of it, and you'll probably have most of it going south and back into Canada on the west coast.

Mr. Bonin: I don't know where you get that. If that is correct, I'm interested in finding out, because of course if they privatize in pieces they have no chance of survival. Do you have information that is credible, or are you making that up?

Mr. Bourgeois: We get the same sort of information we've been trying to get about the possible closure of the shipyard in Newfoundland. We just found out yesterday that as of Thursday there will be no more employees at the shipyard in Newfoundland. We're trying to get information from the local member of Parliament in St. John's, and we're still waiting for a call from Mr. Baker. We're told that if we want to get the audit that was done by Marine Atlantic, we'll have to go and get it through the government.

Mr. Bonin: I wouldn't want to use too much time on the wrong issue. I'm talking about the railroads.

Mr. Bourgeois: Well, this is changing. We can go just by the rumours we get from the people working within some of the offices who give us this information. If we had any more concrete information, I'd be more than glad to pass it on, because we are concerned about the people in places like Capreol. I think it's been one of the aims of Canadian National to eliminate some of those places.

Mr. Bonin: I thank you for your response. I just wanted to get on record that your position in your paper is based on rumours. That has to be said.

Mr. Blais: No, I don't think it's exclusively rumours. When we were still representing the workers at CN, for example, CN had one repair shop that we understood was quite successful. That was carved out of CN, that was privatized, and it's now called the AMF shop, which you're probably familiar with. If you take every lucrative operation away from CN, carve it away, privatize it, do whatever, then obviously what you'll be left with won't be worth much.

When Air Canada was privatized, if they had given away the golden triangle to other companies, how do you think Air Canada would have managed without the Montreal to Toronto and Toronto to Ottawa routes? I think it's the same thing with CN. If you start carving away at it.... If you'd done the same with Air Canada, Air Canada would not have had a chance in this world to survive and do what they have achieved.

Mr. Bonin: I agree, but the unions have to cooperate as well as the employers.

Mr. Blais: Yes, but we can't cooperate to dismantle it.

Mr. Bonin: No, but you made reference to the shop in Capreol. We all know that the employees wanting to buy that shop wanted a commitment from CN to give them work. CN was prepared to give it, but then the unions said that would be contracting out so that their own members couldn't get work from their former employer. There are many unions, and only one said that, so we can't blame them all.

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When you privatize, everybody has to work together, because the competition is not CP Rail, it's in the States and it's all over the world.

Mr. Blais: The union and Mr. Bourgeois referred to the Newfoundland dockyards, the IAM along with the other unions on site. As you know, we're in a union council there. We offered to cooperate in the privatization effort of the shipyard. Openings were made to the employer to the dockyards, but the end result is today we find out that 350 to 400 workers will be out of a job on Thursday. The foremen are all being let go tomorrow and Thursday the rest of the dockyard are being let go. They don't know if the dockyard is closing. They don't know if some of the prospective buyers are still interested. Nobody will tell us anything. In the meantime, you've got all these unemployed who will be joining the ranks of the rest of the people.

Yes, as unions we're prepared to work with the employers. In certain cases, even if our backs are up against the wall and privatization is the only option, obviously we'll sit down and look at that. But it's got to be done together, not the way it's being done in the dockyards today.

Mr. Bonin: Over at Air Canada you made it happen. I give you credit. There's no doubt.

[Translation]

The Chair: Mr. Brien, please.

Mr. Brien (Témiscamingue): There may be some things that are based on theories which are not always verified, but there are nevertheless some hard facts. The 7 billion cuts to the Canada social transfer funds are the latest budget figures. That is a fact.

You say , in your second paragraph, that this legislation is extremely important and that it takes us far away from national standards in health insurance and social services.

My understanding of this paragraph is a bit different. The standards will still exist; they may even, in some cases, be reinforced, depending on what the federal government decides. It is talking about signing an agreement. The government still has the long end of the stick in negotiations. It's always difficult to negotiate with a knife to one's throat. Why do you think national standards are going to be reduced when, on the contrary, they could still exist, but without the provinces having financial resources to meet them? That is our objection.

Mr. Bourgeois: I would say that one of the major reasons is that the provinces to which transfers are made will not have the amounts required to cover the costs, because of reductions in the transfers to the provinces.

Mr. Brien: You say that the standards cannot be met because the financial resources will be insufficient. Very well. We agree.

[English]

Mr. Erlichman: The baseball bat is shrinking. If the cash transfer is shrinking, which is what has been happening, what will happen and will disappear, depending on what you forecast in another 10 or 15 years.... While the standards may be there on paper and they may even add another couple of points for the Canada Health Act, there's no way for the federal government to enforce those standards. So they may be paper standards only.

The Chair: You've asked on page 6 for economic policies aimed at employment creation. Which ones? Which policies do you want?

Mr. Erlichman: The first thing would obviously be substantial reductions in interest rates.

The Chair: That wouldn't create any problems.

Mr. Erlichman: Oh, it would create all sorts of interesting things that will happen, with effects on the the Canadian dollar and a whole range of other things. It will not be easily done. The hole has been dug, as the brief says, over a long period of time. That's one obvious way, that's one very direct way.

The Chair: Why would any country in the world pay higher interest rates than it has to?

Mr. Erlichman: Because, as has happened here, there was a desire -

The Chair: You, as a debtor, would not.

Mr. Erlichman: - to suppress possible.... Let's go back to 1989-90-91. The GST was coming in. The government had some concern apparently about there being an inflationary take-off.

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The Chair: Let's talk about what we're doing today, not historically.

Mr. Erlichman: I guess the question then is why do we have real interest rates.... You're talking about short-term real interest rates of close to 6%. Right now you're looking at higher than 6%, but over the last decade they've averaged something like 6%.

The Chair: Do you think we could simply, very easily, without adverse consequences, lower the short-term interest rate? I would love to do that. We all want lower interest rates.

Mr. Erlichman: There would be consequences for the dollar. You would have to deal with that.

The Chair: Would there be consequences for long-term interest rates?

Mr. Erlichman: Oh, there would be.

The Chair: So they would go up.

Mr. Erlichman: Not necessarily in the long run. There'd be a shift in the curve.

The Chair: So all we should do is tell the minister to go and lower the short-term interest rate and we'll save millions and millions of dollars.

Mr. Erlichman: Billions.

The Chair: Billions, sorry. Sounds good to me.

Are there any other questions? No?

On behalf of all committee members, we have unanimously decided not to travel because we think it's a very expensive proposition. We would urge you, if you feel that you do not have adequate representation, if you feel that your local members have not been adequately represented by your appearing before us, to have them go and talk to their local members of Parliament and make their voices heard there. I'm sure you welcome us saving very dollar we can in terms of our expenses.

On behalf of members from all parties, I would like to thank you for your presentation before us. I don't think you will have unanimous agreement on the feasibility of a number of these solutions, but let me assure you of this: the thing that struck me as most important was your discussion with Mr. Bonin, on the necessity of management and labour to be open with one another, to share their experiences and their strengths, and to continue on a path of cooperation rather than confrontation. In that manner we will achieve a great deal more. Thank you very much for being with us.

Our next witness is the City of Calgary, Alderman Barbara Scott.

Ms Barbara Scott (Alderman, City of Calgary): I'll try to be quick. I know you have a vote.

The Chair: No, take your time. We can come back after the vote.

Ms Scott: The City of Calgary appreciates very much this opportunity to have input into the critically important decisions you'll be making in respect of the Canada health and social transfer. Unfortunately, our mayor, who was in town this morning, had to get back for an early morning meeting tomorrow. He had hoped to be with you and make our presentation and he does send his apologies. So I apologize on his behalf.

Our city has been deemed one of the most desirable in all of Canada in which to live. Our clean air and water, our transportation system, our parks, opportunities for a variety of cultural and recreational activities, and our voluntarism all contribute to a high quality of life in Calgary. We are a very wealthy community, for we stand fourth among the 25 cities of Canada in income levels.

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Yet despite these wonderful attributes, there's another side to Calgary. We have 45,000 youngsters under the age of 18 who live in poverty. That's enough to populate a city the size of Red Deer. Our food banks have to help about 7,300 people a month. And there are - at a very conservative estimate now - about 500 people who are without permanent shelter, and these include women and children.

You can see why, then, the City of Calgary has a profound interest in the Canada health and social transfer and particularly the social component. Already substantial provincial cuts to social funding have occurred. When these are compounded by the reductions in federal funding to come - that is the $7 billion over the three years - we fear that the challenge to meet the needs of vulnerable Calgarians will be beyond the reach of local government and voluntary organizations.

We know the federal budget has been set. We know the government has considered a variety of ways in which to meet needs for social service funding. We don't like taxes any more than you do. Nevertheless, because of our concern for the impacts of cuts in social spending, we can't refrain from asking the federal government to consider the possibility of increases to income through, for example, certain taxes that may be acceptable to Canadians - maybe a small inheritance tax or a slight reduction in the RSP limits. This we see as a way of enhancing social spending.

I want to be absolutely clear that we are not asking you to levy more taxes. We're saying would it help reduce the drop in the social spending if the federal government were to consult with Canadians and find some ways of enhancing income and are these ways? That's all we are saying, and don't necessarily levy it.

Mr. Chairman, the reason we are here, the fundamental purpose of this most -

The Chair: You don't want us to use the property tax, of course. Is that right?

Ms Scott: We have the same problems as you do, on a different scale.

The fundamental purpose of this most unusual trip to Ottawa to make a presentation to you is to ask that you build into the Canada health and social transfer a recognition of municipalities and provision for a partnership with all three levels of government.

As the government closest to the people, municipalities are faced with people in social need in growing numbers. We are necessarily involved in and committed to local socio-economic policy development, and with our property taxes we partner with you now. We help fund certain social services in partnership with the federal and provincial governments, primarily under the Canada Assistance Plan. For these reasons we would ask that you recognize and support a partnership between federal, provincial, and municipal governments in planning and developing and resourcing social services.

To be specific, we would ask that representatives of municipalities be invited as partners to participate in the consultations of the Minister of Human Resources Development to develop principles and objectives for the social component of the Canada health and social transfer. So we are requesting an amendment to proposed subsection 13(3) of part V to incorporate representatives of municipalities in partnership in this policy formulation phase.

Partnership is a theme that runs through our submission. Particularly clear is the partnership now under the Canada Assistance Plan whereby municipalities help fund necessary social services. For example, the City of Calgary allocates about $20 million in property tax dollars to social support programs. About half of these mill rate moneys are used in partnership with the federal and provincial governments to fund preventive social services under the present Canada Assistance Plan and our provincial act, the Family and Community Support Services Act.

These are programs that are usually under voluntary auspices, for we partner with our community as well, and programs that are designed to prevent social problems from arising or from becoming worse. Some examples include home help for frail elderly or disabled persons, outreach programs for isolated people, or before- and after-school care for young children who are usually the kids of single working moms.

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For certain programs, municipalities may with provincial concurrence access Canada Assistance Plan funds directly. Such a relationship results in funds in hand to be put to work in short order. And that means a streamlining of intergovernmental processes and streamlining bureaucratic systems means saving dollars. It reduces costs.

We would therefore ask that the tripartite financial partnership continue and that in addition municipalities be permitted to access Canada health and social transfer funds directly, as is the case now in the Canada Assistance Plan.

Our request is for an amendment to proposed subsection 13(1) and proposed paragraph 13(1)(a) in part V so as to permit direct access by municipalities to social funding. That's on page six.

Fundamental to the Canada Assistance Plan is the standard of need and likelihood of need, and we would urge that this basic standard be retained under the Canada health and social transfer. We know that you have one standard with respect to the social programs, the prohibition against a residency requirement. But we are asking that you reinstate the fundamental standard that pertains now under the Canada Assistance Plan: need and likelihood of need.

We fear that without separate envelopes for the components of a transfer equalization, health, advanced education, social services, the draw of programs with widespread public appeal could weaken the social component. Additionally, need and likelihood of need are the fundamental national criteria for accessing social service funding and should serve to enhance fair use of the fund across the country and facilitate provincial and municipal funding requests.

Accordingly, we are requesting a revision of paragraph 1(c) in order to build in the criterion of a standard of need and likelihood of need and leave open options for other standards as they may develop as the Minister of Human Resources Development undertakes his consultations under clause 3.

Mr. Chairman, we municipalities do not exist under the Constitution, but we do exist in a very real fashion for the people who are in need. Across this country there are burgeoning urban social needs that can most effectively be met through cooperation and collaboration, sharing among all three levels of government and the voluntary social services. We urge that you support those partnerships of municipalities with the provinces and the federal government, and that you retain need and its likelihood as the fundamental national standard under the Canada health and social transfer.

Thank you very much.

The Chair: Thank you, Alderman Scott.

Since municipalities are closer to the people and we as the federal government have the broad national perspective, do you feel that we might eliminate the provincial level of government and deal directly with you?

Ms Scott: That would be fine if all municipalities were metropolitan municipalities like Edmonton, Calgary, Toronto, and Ottawa - large municipalities. But there are small municipalities as well, and I think that the concept of a city-state, which is really what you're talking about, is very attractive to us from the City of Calgary, but it's not practical across the country.

The Chair: Agreed.

Mr. Brien.

[Translation]

Mr. Brien: In your first recommendation, you ask the government to consider a tax reform. We are still waiting for it, too, and I know that municipalities are particularly concerned, but that is not what I want to discuss with you.

In your second recommendation, and in fact the government tabled an amendment today in this vein, you mention getting the Minister of Human Resources Development to come to an agreement with other parties involved, such as municipalities and the provinces, in order to define national standards.

You are talking about the initial definition, but don't you find it rather inappropriate to say that the federal government will continue to define national standards, when it will be providing less and less of the funding for social programs? Couldn't some standards be the responsibility of the provinces instead? If Herb and I have to discuss and define some standards, we may have a lengthy discussion and not come to an agreement. If he can set his own in his area and I can set my own in mine, that will be much faster and more efficient. So, don't you think that this kind of flexibility should be permitted?

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[English]

Ms Scott: I think the bill does allow for that kind of flexibility now.

I guess what I'm saying is that there are two very basic standards, one need and likelihood of need, the other the residency prohibition. It seems to me that beyond those are the additional standards that the provinces, hopefully in consultation with the municipalities and along with the Minister of Human Resources Development, can develop. It seems to me there's a floor that should go across Canada in standards, and in my opinion quite frankly need is such a straightforward one.

[Translation]

Mr. Brien: You are asking them to agree on a division of social programs. Standards would then still emerge from a type of agreement. Some people would undoubtedly be dissatisfied, and in that case, the federal government could always impose... You know, when you have money, you can always negotiate as you please; and there are types of taxes looming and other things. The federal government still has the upper hand in negotiating with the provinces. There may currently be only two basic principles, for health and assistance, regardless of place of residence, but the door is open to other national standards and there will certainly be additional standards. Doesn't it bother you that they want to institutionalize that, after what you are suggesting? These standards are going to be discussed, established and then institutionalized.

[English]

Ms Scott: I see no problem whatsoever with institutionalizing the basic standard of need. That is so self-evident in my mind that I'm having difficulty understanding why you would even have concerns about that being the basic national standard.

Beyond that, individual provinces and municipalities will negotiate individually, and yes, there may be some common threads that all ten provinces and the two territories will agree upon so that there may develop from the grass roots, as it were, additional standards.

In my opinion, proposed subsection 13(3), once you add in municipalities, is a very positive part of Bill C-76, because it does allow for exactly the kind of thing you're talking about, the flexibility within individual provinces, the flexibility to develop standards or criteria or whatever you want to call them that reflect the local needs and local conditions at any given time.

At the same time, though, we are one nation. My Canada includes Quebec. Without being too political about it, we are at the moment one nation and it seems to me there is one floor that can be effectively retained throughout this one nation that the federal government can, with the support of the provinces and the support of the municipalities, build in right now.

The Chair: Mr. Grubel.

Mr. Grubel: Alderman, you have tendered a very spirited presentation, and I thank you so much.

I am very interested in understanding the size of the problem of poverty in Canada. I would like to ask you a very precise question. You have mentioned here a number. You said there are 152,000 Calgarians, of whom 45,000 are children, living below the poverty line. How exactly did you derive this number?

Ms Scott: We took the Stats Canada LICOs, the low income cut-off points.

Mr. Grubel: I see. Now what is the relationship between low income and poverty?

Ms Scott: I think the poverty we have in Canada is not the poverty of horrible, horrible deprivation that you see on the television screens in Rwanda or places like that. The poverty we have is a poverty of funds, financial resources, such as to make it impossible to have either adequate shelter or adequate food.

Let me stop there. I think there's more to it that I'm having some difficulty in formulating.

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Mr. Grubel: I think you'd better check up on this, because while you call it the poverty line, Statistics Canada in every release says this is not a measure of poverty. What they're saying is it's a measure of low income. It says that in every country there will be, by definition, unless it's a completely level distribution, 20% of the people at the bottom. What they are saying again and again, in every press release, is that this is not poverty; this is low income.

I am personally very unhappy that you are coming here and saying that there are in fact 152,000 poor Calgarians. I will not accept that number on the basis you have supplied it to me. Maybe you know something I don't know, but the information you gave to me makes me very unhappy to accept this number.

Ms Scott: We do accept the LICOs, the low-income cut-off points - that's what they are - as the indication of low income and poverty. Poverty is deprivation from the mainstream of society, if you want to call it that.

Yes, I think some people are able to feed themselves, some people are able to shelter themselves, but fundamentally they're outside the mainstream of society. The fact that we have in Calgary - in Calgary, a very wealthy city - at a minimum 500 people without permanent shelter suggests to me that we have a problem of poverty.

Mr. Grubel: How did you arrive at the 500?

Ms Scott: At my request our research department does a census once every two years. The last one we did was in May 1994, and the experience of the drop-in centre, which is a horrible place, is an increase of about 70%. So it's a very conservative estimate.

Mr. Grubel: How did they find these people?

Ms Scott: We had outreach workers going under bridges in May 1994. We do a census of those in the drop-in centre. The drop-centre is a place where you can put your mattress on the floor and your mattress is right next to everybody else's mattress. There's no room right now between them. We did a census of the Salvation Army and we had half a dozen outreach workers looking under bridges, looking in parks, looking next to building vents.

So you can argue with me over whether that figure is 502 or 495. Yes, you can argue with me on that point, but that figure is substantially correct, and I think it's a damning indictment of our city and our society that we even tolerate homelessness.

The Chair: Thank you, Mr. Grubel.

We're going to have to leave here in a couple of minutes. Mr. St. Denis, could you start, please?

Mr. St. Denis (Algoma): Thank you, Ms Scott, for being here. Before I get to my question, which is on standards, a very important subject, I think, I feel the need to comment on the issue of poverty and poverty lines and what not.

I'm afraid the Reform Party has got itself in the position of defining poverty on the basis of caloric intake, where if somebody is basically alive but has little flexibility of income to pay $5 for their son's boy scout overnighter, I think -

Mr. Grubel: The Reform Party has no position on that.

Mr. St. Denis: Okay, well I'm sorry if I'm -

Mr. Grubel: I asked a question on how it was defined. There's nothing else to.... That was totally uncalled for.

Mr. St. Denis: I think the C.D. Howe paper produced by Chris Sarlo is a fair -

Mr. Grubel: It was a Fraser Institute book.

Mr. St. Denis: I'm sorry, Herb, Fraser Institute. Nonetheless, I don't think we can define poverty on the basis of minimum inputs. In our society there has to be a certain minimum quality of life that goes into the definition of poverty.

Let me get to the question of standards, Ms Scott. It sounds to me as if you, like a lot of Albertans, believe there is a need for a floor where standards across the country make it possible for Canadians to be treated equally from one place to another. Do you feel this budget is pushing the provinces or the municipalities into a new regime of standards they're not looking for, or do you believe that fundamentally the provinces and municipalities expect and appreciate some federal leadership in the establishment of reasonable standards in social and educational areas, as well as health?

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Ms Scott: I'm focusing solely on social. Clearly, I wouldn't be here suggesting the addition of at least one standard if I didn't believe that municipalities and provinces in general would accept and indeed want federal leadership in the establishment of standards. At the same time, however, this bill does allow for a great deal of flexibility, because I think that's the other aspect.

The federal government in effect is decentralizing the standards by proposed subsection 13(3) of part V, and that does allow for the flexibility and the individual needs. I think if you accept need as a fundamental standard then that flexibility and that local decision-making are appropriate.

Mr. St. Denis: Thank you.

The Chair: Alderman Scott, from politicians to another politician, it's been a pleasure to have you with us. You're very forceful and articulate. Thank you very much.

Ms Scott: Thank you very much. But I ask you not to forget our major point, and that is please build in municipalities. Please amend that bill.

The Chair: Thank you.

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PAUSE

.1809

The Chair: We continue our hearings on Bill C-76.

We're happy to have with us this afternoon, from the Canadian Federation of Agriculture, Jack Wilkinson, president, and Sally Rutherford, executive director, people who are no strangers to us.

Welcome. We look forward to your brief presentation.

Mr. Jack Wilkinson (President, Canadian Federation of Agriculture): Thank you very much. We apologize for missing our time slot. We were actually early at the other meeting room, but we found out it had changed and we had not been informed.

The Chair: Did you feel we were trying to avoid you?

Mr. Wilkinson: No, we did not think that at all, but I would just like to make it clear that we weren't avoiding you either.

We basically have a relatively short presentation that we would like to run over. Probably about 15 minutes will cover off the points, and then whatever questions you may have...

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I think most of the people at the committee know a bit about CFA, that it's a national farm umbrella organization. Through membership, around 200,000 farmers belong to our organization.

In relation to transportation we have more than one part of the presentation. One is on what we suggest for things that need to be looked at and queries around the changes in the act. There's a further part to the brief that we won't go into unless there are questions on it. It deals with some of the ramifications the pay-out on the WGTA and the change in transportation policy will have, both in relation to the feed freight assistance in the east and how it can impact on safety net programs, farm income support programs, as well as adaptation measures. We'll limit our comments on the first to the changes to the WGTA.

As I'm sure you're aware from other presentations, there's a significant impact on the farm community in western Canada with these changes. It varies substantially, depending on where you live in the prairies, in the cost that will be transferred over to an individual farmer.

As to how this impact will occur, we have a number of farmers close to the Saskatchewan-Manitoba border or places within Manitoba who could be looking at increased transportation costs of from $12,000 up to a $25,000 price tag. As we did speak to the lawyer in the break.... I think the whole question of how this will impact on the pay-out is important - the fact that the legislation is fairly clear that the pay-out will be to the landowner, so there will be individuals who are in a lease arrangement where they may receive none of the benefit of the pay-out and yet obviously have the full impact of losing the WGTA when it comes to offsetting transportation costs. So there may be significant differences even within the farm community as to how that impact is going to affect individuals.

As well, one of the concerns we have in this issue is the whole item of how the $300 million in the adaptation fund is going to be dealt with. It is clearer at this point. The minister has indicated a number of areas he thinks should be part of the package of where and how those dollars from the $300 million could be utilized. There may be some degree of flexibility that still exists there, but it appears from a number of our organizations that the benefit may be dramatically different in whatever province one is speaking about.

For example, when you talk about upgrading of light rail, road upgrading or dealing with the alfalfa dehydration industry, that varies dramatically. In some provinces, such as Manitoba, our concern is they will see very little benefit of that $300 million.

Also, by not addressing the question of pooling and the loss of pooling at the same time as the announcement of the change...their concern is that should have been available as part of the discussion over the $300 million, because they view that they will have substantial increases in transportation costs by the loss of pooling yet they will have no ability at all to access some of that increased loss for a number of years within the $300 million. So we would like that whole issue to have some degree of flexibility and be broadened in the way it's addressed. And we hope those individual provinces will have an opportunity to take part in those discussions.

The area we would like to speak on as some suggestions we think need to take place within the act is first of all that the cap on freight rates indicated in the legislation not necessarily be lifted within the five-year time period and that it be left as an open question to see how that process is working.

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We think it should be an optional situation. Depending on the performance and what the situation is, the time period, it would be analysed as to whether the cap should disappear, or there should be some methodology and some degree of that staying in place. We think that needs to be amended. Otherwise it will just be automatic.

As well, with the review in 1999, proposed subsection 181(18) should be amended to ensure that the review includes a determination of whether farmers share equally in the benefits or the cost saving, and this review should also include a review of freight ceilings, with a view to establishing an ongoing ceiling if necessary. As well, proposed subsection 181(19), which repeals a provision of Bill C-76 concerning the freight ceiling, should be removed.

The question, then, is about rail line abandonment. There is obviously a concern that railroads will move relatively quickly to eliminate a number of the lines, particularly if the only use of a line is for grain transportation, and farmers really should receive the benefit of those cost efficiencies that are passed on to the railroads as well.

Currently it's a relatively high-cost system, and the excuse has been made that to a great extent inefficient lines have been maintained. So the assumption should be then that as railbed is eliminated, the overall cost per tonne of transportation should go down. We think that is something that needs to be looked at very carefully to make sure that those benefits attributed to the railroads under their cap formula are passed on to producers, so that they have a lower-cost system in place.

The whole concept of moving grants from grain transportation into the National Transportation Act should only be undertaken if it's proven that moving to the NTA will adequately protect the captive grain and oilseed producers. We don't think that it should be automatic. It should be evaluated at the time to see whether in fact the whole situation is responding as projected, and only move it if in fact it is.

We've already commented on the $300 million.

On the question of pooling, I would like to go a little further on that. It appears that there have been some suggestions made as to how the whole pooling question should be dealt with, that we would have regional freight rates - apparently a suggestion made by the Canadian Wheat Board - depending on how close you are to the U.S. border, depending on which side of the line you are on, as to whether it would be traffic destined for Thunder Bay or western ports, and, as well, the whole question of Churchill.

So we're concerned that with the changes coming so late, and the pooling coming even after that, we're going to have a number of producers who are going to be caught in the situation of effectively not changing their cropping patterns or not having adequate time to deal with cropping pattern changes before they have the full impact of this issue. It's just further to the comment of allowing some of those issues to be dealt with in the adaptation fund.

When it comes to pay-out of benefit, there have been some suggestions made and we're just putting it on the record that some people have suggested it be paid through the NISA or GRIP, current farm income support programs that are in place. We view that as not the appropriate way to deal with the pay-out of the benefit. There are a number of reasons for that. For example, not all producers and all commodities are covered under the NISA. It's a voluntary system that farmers are in. We feel there would be people outside both of those programs. One would have to find a way in fact to make the payment, and instead of having two different systems occurring it would make sense just to develop the system for the pay-out and not use the current system of a NISA or a GRIP.

Again, then, there's the whole question that apparently there has been a decision made or some announcements in relation to what grain would be covered under the 1994 crop year. Because of the strike, it's more of a concern that there's going to be a fair degree of grain in storage at the time period at the end of the 1994 crop year. It's our feeling that all that grain should be covered as it moves through the system. It was not the producers' fault that there was a transportation strike and that grain was tied up for a number of days or weeks within the system.

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Circumstances should be made available to make sure that the 1994 crop year is moving through the system under the support, and not leaving that grain in the elevator system. Under what appeared to be the normal scenario, most of that would have been through until the strike came, but it's more critical with the strike.

Other than a number of comments we have on safety nets, and the more global issues of how we see the transportation affecting a number of other programs and the costing of those, those are in fact our concerns and recommendations around the actual Western Grain Transportation Act.

The Chair: Thanks, Mr. Wilkinson, for being very direct and precise. It's very helpful to us.

[Translation]

Mr. Brien: I missed the beginning of your presentation. Compensation is provided for in view of the decisions made by the government in relation to the Western Grain Transportation Act. There have been other cutbacks in the agricultural world, but compensation, especially in the dairy sector, has been considerably lower. Do the Union des producteurs agricoles and the Canadian Federation of Agriculture share the same position?

[English]

Mr. Wilkinson: We were concerned about the cutbacks to the WGTA that have occurred over the last number of years. There were three years in which there were reductions to the WGTA and the FFA. They had started before any reductions in the dairy subsidy. Obviously we were concerned about reductions in both areas.

It's our sense that they are different questions. What has been a government decision on the pay-out of the benefit of WGTA is a relatively small compensation for what people view to have been a long-term commitment of the federal government in relation to transportation and grain.

As to the dairy subsidy, we would be supportive of the dairy farmers of Canada in the sense that they should be able to recover any cost of reduction of the subsidy through their pricing formula. They view the subsidization paid in the industrial milk sector as a subsidy to consumers, and if there are going to be any further reductions in that area they need to be made up in the pricing formula they have, so they don't find themselves in the same sort of situation.

Is that a fair response to the question?

[Translation]

Mr. Brien: I have a more general question. When compensation has been paid and the technical details have been settled, what, in your opinion, will the agricultural picture be like in five years, especially in Western Canada, following these changes? What will it look like?

[English]

Mr. Wilkinson: I think there are a number of outstanding questions yet to determine what agriculture will look like in the prairies. We know, with the proposed changes, the dramatic impact that can take place. Maybe the best way to explain it is in the scenario that, for example, in some areas of Manitoba individual producers will look at $25 a tonne more in transportation cost. To a great extent it will depend on the price outlooks in a number of those commodities, as to whether they can have enough net income to still be able to produce that crop profitably.

Let me give you an example. Canola, which I grow, is a major crop on the prairies. Three years ago it was $250 a tonne; this year you could form a contract for $425, $416. If that price stays there, obviously in many parts of the prairies you can absorb the additional transportation cost, whereas if it moves back to $250 it's a very basic question, because that's very close to if not a few dollars below the cost of production.

A lot of people made some very definite statements that as the transportation support changes from moving raw product to points of export there will be a great deal of activity in value-adding - flour mill production, pasta, oilseed crushing, a livestock sector that will now flourish because of the changes. As of yet it has been to a great extent talk. The next year or two will determine how much of that takes place.

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For example, If I'm within 200 miles of a pasta plant and I'm a wheat producer, you can probably truck to that at no greater cost than you're currently paying to move that product to a point of export.

We probably won't know for a number of years to what extent a lot of that production is absorbed in value-adding and how much of it is still sent out as raw product or how much the impact will be on the individual farmer. It's fair to say it is going to be a major transition, and depending on where you live and what happens, it will vary with how much the efficiency on the railroad side helps to drive down the cost of transportation and what regulatory changes come in place. A host of issues are now critical and must be resolved if we're going to offset some of the impact of the loss of transportation support.

Mr. Brien: Merci.

The Chair: Mr. Discepola, please.

Mr. Discepola (Vaudreuil): I think there's been a false debate from a...[Inaudible - Editor]...perspective especially, trying to imply that we gave preferential treatment to the farmers out west, even though out west through the subsidy program it was actually eliminated, and the dairy producers, especially in Quebec, where the program was substantially reduced.

You also state in your brief, and referred to it in your presentation, that it actually means somewhere between $12,000 and $25,000 in lost revenues for the producers. In the dairy farmers' case, in your response to Mr. Brien you indicated that ultimately the consumer will probably pick up the extra cost through pricing adjustments. Does it not mean that in both cases the farmers don't have to absorb the whole cost, that it could be the consumer?

Mr. Wilkinson: I would like to clarify. On the reduction of dairy subsidies, what I thought I said - maybe I didn't - was the dairy industry has always considered that the dairy subsidy has really been a consumer subsidy. That has not been allowed to work its way through a pricing formula and it's been an offset in that subsidy, which has kept the farm gate price lower for milk than it would have normally been if that subsidy hadn't been in place.

Mr. Discepola: Is that because of legislation or because of the natural process?

Mr. Wilkinson: Well, any benefit under the pricing formula that goes to the dairy industry is subtracted out of the pricing formula. So because this subsidy was available, it in fact has really to a great extent psychologically, if not in fact, been netted back out of what they've been able to charge for industrial milk. All I said was if in fact that program is going to continue to be ratcheted down, the dairy farmers of Canada have indicated that they want then to receive full compensation within the pricing formula so they in fact can pass it on to the consumer.

Mr. Discepola: So it really has not very much impact.

Mr. Wilkinson: As of yet, though, there has not been agreement to do that, and we're hoping there will be.

Mr. Discepola: I have two other quick points. You say that in the compensation package the compensation has been directed at the landowner. Under the lease arrangements existing right now, is there any provision in there where the person who operates or farms the land could receive the compensation? It doesn't seem to be rational that you should give it to the landowner or the property owner.

Mr. Wilkinson: This is a concern we have. Number one, the legislation is fairly specific as to where the benefit of the pay-out will go. But apparently the minister has announced in various speeches that he wishes to put some sort of arbitration system in place to have people renegotiate those leases and what not where benefit would be shared.

Mr. Discepola: What I was getting at was are there any direct clauses in leases, the standard leases that you would sign, that would allow that, or do we have to provide for it in an amendment?

Mr. Wilkinson: I would suggest there probably are not, because most of these leases would be working under the scenario of the assumption that even though there may be some further reductions in the western grain benefit because there had been ratcheting down over a number of years, it was not obvious to a lot of people that there would be elimination, and if there was elimination what the compensation package would be.

On the question of how you deal with where the benefits should go, a lot of people were saying that if you have devaluation of land because of the change in the WGTA, which I think it's clear will take place in some areas, then it's appropriate to pay the landowner the benefit. But it is going to be a very mixed bag as to how people are affected, depending on where they live.

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Maybe a good way to do it is to give an example. If you're a grain producer, very close to a large and aggressive feedlot industry in Alberta, you may be able to move your production on your grain farm into a feedlot industry that's relatively close. The reduction of payment may not affect you very much because you're not moving much to a western port, for example, and most of your production may be 15 or 20 miles down the road to a large feedlot. Well, there may be very little change that occurs to that individual on their farm operation, even though they will be receiving pay-out under this legislation.

Yet there are areas on the Saskatchewan-Manitoba border and other places where there could be a very substantial change, because most of that product was either moving through Thunder Bay or at higher cost, and obviously to the west coast at a substantially higher cost, because of the transportation distance and the lack of a livestock industry.

All we are pointing out is that there's going to be a great degree of variation in the impact on different farms, both where they live and whether you're an owner or lessee. We're just bringing to the attention of this committee that the legislation is very specific on paying the landowner, even though the Minister of Agriculture has suggested other systems may be put in place that are going to try to share the benefit. We are not sure how that's going to be done. It's a question in our mind whether in fact it can be done legally if this legislation is passed as is, stating clearly it will be paid to the landowner. It's hard to imagine how you can put any other arbitration system on top of that to force sharing of the benefit.

Mr. Discepola: My last point is on the question of CAP. In your recommendations to section 181 especially, is there any effect of costing the government money to implement some of those measures, and if so what areas?

Mr. Wilkinson: There is a pricing formula listed as to how it would operate effectively - as we understand it, a guaranteed return of investment and some profitability to the railroads under their CAP formula.

I guess our concern is not to have it implicitly within the legislation - ``the removal of'' - without waiting and seeing how the whole system is evolving, because there may be reasons in the fourth year or whatever in which you would want to look at something different. But if you have the absolute elimination by legislation of that system, you don't have a great deal of flexibility in that time period.

So we don't think there will be a financial obligation by the government. Our sense is there may need to be some other policy option looked at for the time period, but you have to leave that flexibility in the legislation or it's very unlikely that there will be any flexibility to rethink and look at it again as you approach the fifth year.

The Chair: The railways, of course, say competition will ensure that a cap is not necessary and the prices will be kept down. Has that been your experience in dealing with the railroads in the past?

Mr. Wilkinson: I think it's very difficult to have actual proof of. Transportation costs have continued to escalate over the last number of years.

The farm community in the prairies has expressed concern about the inefficiencies in the rail handling system, within the terminals, within the arbitrated system of labour settlements that have occurred, and the lack of addressing some of these concerns of keeping the terminal open 24 hours a day to deal with volume and what not. I think there's a fair degree of concern that all the benefits are going to be here for the railroads, and they are going to have much more flexibility in abandoning their unprofitable branchlines. I would say it is safe to state that people are a bit jaundiced as to whether the rail companies are going to be aggressive in moving towards an efficient system that passes the benefit on versus the shareholder.

The Chair: Prairie Pools, when they were before us, told us that the cost of transporting a tonne in Canada will be about $24 or $25. In the States it's about $54 Canadian a tonne. Doesn't this give us a tremendous competitive advantage over the Americans?

Mr. Wilkinson: I'm not sure of those numbers. I can only take what you say as factual in reporting it. I didn't realize the cost differential was that substantial. It's interesting why for example the potash producers in Saskatchewan are planning on buying a terminal in Seattle and running product down through the United States to that terminal. That's a substantial difference. I'm unaware of that degree of difference. I'm sorry I can't comment.

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The Chair: I'd be interested, if you want to get back to us, if you do have figures on what our competitive position is, because that'll be to a great extent one of the determinants of the income of farmers and the future of our agricultural industry in this very new and very different regime, a regime which has been not without controversy in the past. I remember when we made the changes back in 1984 or 1983 it was very gut-wrenching for the farm community and for us as politicians.

Mr. Wilkinson: CFA remembers it well. We almost ceased to exist at that time because of the infighting of our member organizations on that particular policy issue.

The Chair: Whether the compensation went to the farmers or to the railways, or the impact on Quebec, the impact on the west, it was a very difficult time.

You've obviously had a lot of input into this provision. You've given us some more ideas here that we shall bring to the attention of the minister as to how to smooth this transition so that it works for the benefit of not only the farm community and the producers but also the entire country.

On behalf of all members I would like to thank you very much for yet another excellent presentation to the finance committee.

Mr. Wilkinson: Thank you very much. We appreciate that.

The Chair: Thank you for being with us.

The next witness is PIPS, the Professional Institute of the Public Service of Canada, Mr. Bert Crossman, president.

Thank you for being with us, Mr. Crossman. Would you care to introduce those who are with you?

Mr. Bert Crossman (President, Professional Institute of the Public Service of Canada): Yes. Thank you very much, Mr. Chairman. Sally Diehl is a compensation analyst with our research section at the professional institute. Bob McIntosh is the manager of collective negotiations and employment relations at the institute.

What we will be doing this evening is addressing particularly the concerns we have on Bill C-76 with respect to public sector employees, particularly the members of the Professional Institute of the Public Service of Canada. On February 2, 1995, there was a package presented to all 16 bargaining agents who bargain with Treasury Board, and you see listed on page 3 the terms and conditions that were in that package.

If you go to page 4, most of the bargaining agents had agreed to this package, although it would result in the outright suspension of the workforce adjustment directive in many departments and concessions to the employer where the revised workforce adjustment directive would remain in effect. The bargaining agents felt it was preferable to negotiate a package than to have one imposed by legislation.

Since consensus is required in the bargaining process, the package was subsequently rejected because all the parties did not agree. However, such an impasse should not have precluded further attempts at bargaining to seek a resolution that would satisfy all concerned.

The Chair: How close were you to unanimity?

Mr. Crossman: With respect to all of the bargaining agents who had been briefed, all the presidents had agreed to recommend it to their respective decision-making bodies.

The Chair: How many bodies subsequently turned it down?

Mr. Crossman: There was one body that turned it down at their board of directors meeting.

The Chair: Out of 17.

Mr. Crossman: Yes. There are actually 16 bargaining agents who could vote in this because there's one bargaining agent at the National Research Council that this would not have applied to.

The Chair: Which one turned it down?

Mr. Crossman: It was the Public Service Alliance of Canada at their board of directors meeting on February 2, I guess it was, that afternoon.

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On pages 5 and 6 of the report we demonstrate a disturbing sequence of promises to restore the bargaining process and promises that have not been kept. This, of course, has been a great source of frustration to our members in the public service.

On page 7 we note that the international body governing labour relations, the ILO, has again condemned legislation that unilaterally removes the rights of public service employees. We conclude by saying that a private sector employer would not have a right to walk away from bargaining, so why should a public sector employer have that right? Legislating away employee rights is, in effect, an abuse of power.

If we go to page 9, the legislation that we have in this Bill, C-76, prevents the utilization of a process that would allow both parties to address these workplace concerns. On page 10 the Professional Institute urges you to recommend alterations to this legislation that would return the negotiation of the workforce adjustment directive to the proper forum, the bargaining table, a forum that this government purports to champion.

[Translation]

On page 11, the adverse impact on the remaining employees is discussed. Considerable harm has been done to public servants. The results of surveys conducted by the Institute among employees in 1992-1993 showed that morale was already very low. Salary restrictions and threats of cuts have only heightened the already considerable stress in the workplace.

Employees feel powerless and entirely at the mercy of unilateral decisions made by managers and the government.

In his article entitled The Impact of Layoffs on the Survivor, Dr. Joel Brockner explains that layoffs may cause a wide range of emotional reactions among survivors, especially anxiety in connection with their own job security, guilt because they still have jobs and anger at the process which led to the layoff of colleagues.

The psychological effects of layoffs can impact on performance, motivation and commitment toward the organization. A negative workplace may also lead to the loss of the best and brighest employees.

[English]

To discuss some of the inequities that are embodied in the legislation as it's written, this legislation will target certain portions of the public service facing lay-offs while leaving others without access to the same benefits. It is our belief that broadening the application of the proposed incentive programs to the whole public service would introduce a more equitable system in a number of ways, voluntary departures versus forced lay-offs.

The Treasury Board has informed the bargaining agents that no substitutions for either the early departure incentive or the early retirement incentive would be possible, that to do so would create an administrative nightmare. There may in fact be certain administrative difficulties; however, these pale in comparison to the advantages of matching those employees who wish to stay with those who wish to leave. Forcing employees to resign while other colleagues willing to resign are not given these options is a tragic waste of human resources. In many cases both those who leave and those who stay will be resentful. Short-term administrative convenience will be achieved at a high price for the Canadian taxpayer.

On page 14, proposed paragraph 7.2(1)(a) of the legislation limits the application of the incentive programs to departments or portions of the public service designated by the Governor in Council. Opening up the departure incentives to all departments could greatly reduce the number of involuntary lay-offs. The institute has undertaken to constitute a list of employees interested in being considered as substitutes for those in surplus situations and this list could be used by the employer in the administration of substitution.

I bring to you something I retrieved from my office just before I left. We sent out a request to members to see if they would be interested in substitutions. It got to them probably eight or nine days ago. We already have 150 responses back from people.

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The Chair: Out of how many?

Mr. Crossman: I don't know how many.

Bob, do you know?

Mr. Bob McIntosh (Manager, Collective Bargaining and Employment Relations, Professional Institute of the Public Service of Canada): It went pretty well to the whole membership of 30,000.

Mr. Crossman: About 30,000 would have received it by mail. So these are very early returns on this.

The Chair: It's 100 after 10 days.

Mr. Crossman: Yes; and that was 10 days since mail-out.

The Chair: You would expect the people would have to take at least a month in order to be able to make that type of very important life decision.

Mr. Crossman: I would think that, yes, and that 30 days would be reasonable to expect a response. I'm just giving you what I've got as early returns. This would be up to and including stuff that arrived yesterday. I didn't have it earlier but it's late in the piece.

The Chair: Would you let us know through the clerk one month after exactly how many positive indications you've had?

Mr. Crossman: Yes. And we can have a breakdown for you by the departments as well on that if you're interested. That's how we're keeping track of it.

To continue, employees currently on surplus status are covered by the current workforce adjustment directive. However, the proposed legislation provides that on the coming into force of proposed section 3 of the act, these employees will become subject to the new program. So this has the effect of retroactively changing their status.

An important loss will be the 15-week separation benefit applied to those opting for early retirement under the current workforce adjustment directive. It is inconceivable that this government would change the rules mid-stream for its employees. It is particularly disturbing in light of recent observations made by the Prime Minister in Parliament in addressing the issue of MPs' pensions. On February 27, 1995, the Right Hon. Jean Chrétien stated:

Mr. Speaker, I think members of Parliament who were elected previously have some rights. There is a rule in democracy that we do not pass retroactive legislation. When people have acquired some rights we respect the rights that have been acquired.

Employees declared surplus under the existing workforce adjustment directive must retain their rights if they wish. However, this should not preclude their having access on a voluntary basis to the proposed separation benefits. I wish to add that the implementation plans of some departments will worsen an already bad situation. For example, Industry Canada has targeted for a reduction of 1,250 positions over the three years of program review, but the department will eliminate 1,100 of these positions in the first year.

[Translation]

Early retirement programs for other employers: The Early Retirement Incentive is currently offered to surplus employees under the Public Service Staff Relations Act, Schedule I, Part I. Access to the Early Departure Incentive is reserved for employees in the most affected federal deparments listed in this schedule. This constitutes discrimination against public servants from other agencies who have been subject to the same restrictions under the Public Sector Compensation Act and who contribute to the Public Service Superannuation Plan.

In most cases, these federal employees don't have the same job security as their colleagues whose employer is Treasury Board. These agencies are no more immune to cuts and layoffs than the rest of the public service. For example, at least 50 people or 8% of employees will lose their jobs at the National Film Board this fiscal year.

The National Research Council will again have considerable funds slashed ($76 million). Employees at the museums who are laid off are protected only by an older version of the WAD, because of the date they became Crown corporations.

It appears that various separate employers will ask to be targeted by the ERI and that, at the appropriate time, a decision will be made in this regard. For the moment, we would like to stress the importance of extending this program to all employees in the name of justice and equity.

In addition, their employers must have access to the $2.6 billion transition fund announced in the 1995 Budget so as not to be obliged to finance the cost of cuts out of their current budgets.

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[English]

Employees will be faced with one of their most important lifetime decisions when the choice is placed before them to remain employees under the conditions of the revised workforce adjustment directive or to accept the offer of the early departure incentive and resign from the public service.

If this legislation is passed, the details of the EDI may not be known until the legislation is proclaimed. This leaves little time for potentially surplus employees to assess the final package before making this very difficult decision, particularly if in rushing to meet required reductions to operating budgets departments issue surplus notices within days of the coming into force of the legislation.

If time is taken to evaluate personal circumstances carefully, it will be done so under jeopardy of a diminishing paid surplus period. For these reasons, the Professional Institute of the Public Service calls upon the government to establish the 60-day period as exclusive to, and not part of, the six-month paid surplus period. Alternatively, the 60-day period could be extended to include an additional 30 days in advance of the commencement of the six-month paid surplus period.

[Translation]

On page 20, another work system is discussed. Public servants currently have access, through their collective agreement, to different work arrangements which enable them to temporarily or gradually reduce their hours of work and, in so doing, also reduce the Public Service's payroll.

A suggestion made by several members of the Institute deserves to be examined. Many highly specialized professionals, especially in the scientific groups, who have devoted their careers to the Public Service, are facing layoffs. The nature of their work and the specialized character of the research often limit them to government organizations. In other words, the private sector is neither able nor willing to conduct these reserach and development projects. In the present economic context, the current and potential value of these activities could be overlooked in spite of the benefits for the public.

As a temporary solution to the problem, these employees might be prepared to continue to work part-time, while receiving only part of their federal government salary. This way would allow them to proceed with their projects and continue to use the skills and experience acquired over the years.

Additional funds could be obtained through partnership with industries, universities or other public administrations. The details would have to be worked out with the parties, but these arrangements have proven viable in several Canadian universities.

[English]

I believe it's imperative that the bargaining agents be kept fully apprised of the administration of the three-year program of cuts. Managers are being given enormous authority to implement the extensive changes to the workforce and they must be held accountable.

A mechanism must be established for information and, where feasible, consultation. We propose the establishment of a joint union-management committee, which would monitor and facilitate the program review adjustments affecting the membership of the Professional Institute of the Public Service. The functions of this committee would be to maintain a national inventory of departmental plans to displaced employees represented by the Professional Institute of the Public Service; to exchange information on the implementation of departmental plans; and to identify and enact measures designed to facilitate workforce adjustment.

The intent of the committee would be to create a cooperative atmosphere whereby practices, problems and inconsistencies in the implementation of workforce adjustment within departments would be reviewed. The parties would be committed to just and fair procedures that respect the interests of employees and achieve program review objectives.

It is our firm belief that if all parties work together to achieve public policy objectives, change can be achieved with a minimum of disruption and individual dislocation. It is essential that employees be treated with dignity and respect under these trying circumstances and that their individual and collective rights be protected. Fair and equitable treatment of employees is a prerequisite to good management of the public service. The legislation fails this goal in important ways, as we have been describing to you.

We offer alternatives as we seek to adjust to our changing workplace, and we would certainly like to work with you to draft amendments in detail to this bill, which would address the concerns we raised in our submission.

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I will capsulize for you the recommendations as you'll find them listed on pages 24 and 25.

[Translation]

One, we recommend eliminating the parts of Bill C-76 which deal with the Public Service, especially changes to the Public Sector Compensation Act and the Work Force Adjustment Directive, and referring these questions to the appropriate parties so that they resume negotiations.

Two, we recommend that the costs of the Early Departure Incentive be covered directly under the $2.6 billion in restructuring costs announced in the budget. If the department has to assume these costs in its operating budget, this situation will cause many problems and will result in further layoffs.

Three, we recommend that the 60-day period granted to employees to choose between the Work Force Adjustment Directive, as amended, and the EDI not count in the six-month paid surplus period. Employees will not be able to make this important decision until they have in hand all the facts concerning the options offered. Furthermore, the 60-day period could be extended to 90 days and the six-month paid surplus period could start on the 31st day.

[English]

Four, retirement and early departure incentives should be extended to all surplus employees under schedule I, part II of the Public Service Staff Relations Act, as well as employees at the museums, which are now crown corporations. Fairness would require their access to these incentives.

For example, employees at the NRC have contributed to the pension account, have had their wages and benefits frozen by the Public Sector Compensation Act, and do not even have the reasonable job offer protection of the current workforce adjustment directive. This separate employer will endure another major funding cut of $76 million, which amounts to about 500 positions. Employees at the museums, caught under the old authorities at the time when they became crown corporations, are still covered by that salary freeze and have continued to contribute to the pension account.

Five, and I think this is a very important one, a substitution program should be established whereby an employee who wishes to leave the public service may exchange positions with an employee identified as surplus, providing the surplus employee is qualified to perform the duties of the volunteer. This is particularly important for specialized professional positions, which are few in number and are found in more than one department.

Six, a joint committee should be established to monitor and facilitate the program review adjustments.

Seven, employees declared surplus under the existing workforce adjustment directive should be enabled to retain their rights if they wish and this would not preclude their having access, on a voluntary basis, to proposed separation benefits.

[Translation]

Thank you very much. I'll be glad to answer your questions.

Mr. Brien: Your presentation was very clear and very well organized. Thank you.

Obviously, the goal is not to eliminate positions, but there is a budget concern there. People are saying that when cuts are made, contracting out is often a result and, in that case, the desired savings are not as significant as they could be. Do you have any fears in this regard?

Mr. Crossman: It is highly probable that in eliminating a job, a manager could replace it through contracting out. It is my understanding that, according to the current regulations, that should not happen. If positions are eliminated, the position will not then be filled by contracting out.

I believe that is the way to do things, but we have no prior experience, since the program is new.

Mr. Brien: Okay. In my region, a worker who could probably qualify for early retirement explained to me that some people who had accumulated a certain nomber of sick leave days were considering relocation within the structure. Some may tend to do that to try to use up their credits, but not necessarly in order to leave.

In the Early Departure Incentive, the number of sick leave credits is not taken into account. Is there any way to take them into account? Are these people justified in wondering or feeling they've been had? They were good employees for a number of years and now they find themselves in a situation where they will never be able to use this leave.

I don't exactly know the situation of those concerned, but major changes often cause stress. I'm certain that there are some employees whose doctors could recommend that they take a leave.

.1900

I don't think that stems from Bill C-76, which we are discussing here today. I don't think that necessarily applies to the recommendations made to the Committee. It is another part of the collective agreement.

I would like you to explain something for me. You mention surplus employees. You say that those who wish to leave must be able to do so voluntarily in order to enable surplus employees to be reclassified. Could such a measure be readily implemented?

Mr. Crossman: I can give you an example in engineering. In the most affected departments, there are people who are declared surplus. In the departments not most affected, there are engineering positions that can be filled by these surplus professionals.

It's easy to see. We are already receiving forms in the various departments. It is obvious that there are people who are interested. That could cause administrative problems for Treasury Board and for Public Service Commission officers. It means that managers are forced to work a little harder to manage the system, but if the program is opened to all Public Service employees, very few people will be displaced or obliged to take early retirement or early departure against their will. It is therefore very important to set up such a system.

The professional Institute of the Public Service of Canada is prepared to give the employer a hand and explain how it sees such a system operating.

Mr. Brien: You also recommend that a work committee be set up to exchange information and look at how your suggestion could be implemented.

Mr. Crossman: Exactly. Senior managers have an enormous responsibility, since they have to make very important decisions. They must be accountable for their decisions.

We can be part of the process. We could be there to supervise and to provide information. We know our members and their situation. We often talk to employees in other departments. Sometimes, senior managers do not have the opportunity to know what is happening in the other areas. We are the ones who have experience.

The Chair: Thank you, Mr. Brien. You asked a good question.

[English]

Mrs. Stewart (Brant): Mr. Crossman, Ms Diehl, and Mr. McIntosh, thank you for such an excellent presentation.

I'd like to start by saying that in the conversations we've had over the course of the last couple of months I have always found the Professional Institute to be exactly that: professional, very positive, very structured in their thought and constructive in their submission. I applaud you for that.

I find your argument extremely compelling. As you know, we've had conversations before about this. Something I'm interested in, however, is how different is the legislation as it's tabled from the package that was agreed to by the bargaining agent?

Mr. Crossman: About the things that were changed - I'm just trying to see if I can go back - on page eight of the brief you will see the things that were changed on the workforce adjustment directive near the bottom of the page. There are two bullets. The suspension of the separation benefit, which was the 15 weeks of pay for surplus, that -

Mrs. Stewart: [Inaudible - Editor]... something you had seen before.

Mr. Crossman: That's right. That came out.

On the geographical limitations with respect to guaranteed offers of appointment made as a result of privatization or contracting out within the meaning of the directive, we at the table had talked about it going up to 40 kilometres, but in the announcement it went to within the entire province, which we had felt was a bit discriminatory. If you come from a province as large as Quebec and you compare it with Prince Edward Island, your chances of being moved were substantial. Then it put 40 kilometres within the adjoining provinces as an additional boundary. So it had expanded that scope substantially.

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The thing we lost out on, which was the most attractive thing about the workforce adjustment package that was on the table, was that we had been offered a return to collective negotiations, to look at everything except salary and wages and increments, and it would have allowed us third-party arbitration - no right to strike for that period while the legislation was in effect, but at least it would have let us talk about the terms and conditions of employment for our members.

We have members of the computer systems administration group who have not had a signed collective agreement since 1988. There have been a lot of changes in informatics technology since 1988. I would think there are many departments that could benefit from a return to the table to talk about some of these things.

This was very attractive, and of course that is no longer there, because it's been substantially reduced. We could go to the table, but you get to talk about cost-neutral things and it really has shrunk down the definition of that. That was a big disappointment to see that disappear as well.

We worked very long and hard to get this when we were at the table, and what we started off with was not at all like what we wound up with. I would have hoped the government would have seen fit, after all the hard work we put in at the table, to legislate what we had done, even though we couldn't get consensus with the other union. But it seemed there were these additional punitive measures, I will call them, that were added at the end. It was like, well gee, we really didn't do anything to try to jeopardize the process, we worked as hard as we could to reach consensus.

The events as they unfolded on February 3 with a story appearing in The Ottawa Citizen about what the details of the package were meant that there really wasn't the opportunity to carry on discussions, but we had been set to work right through the weekend, for four days around the clock, with our teams. The NJC executive were there, and we were prepared really to get this thing down to working language and that sort of thing. So I was very disappointed when those punitive things came out on February 21, when the President of Treasury Board announced the package to us.

Mrs. Stewart: When we had officials from the Treasury Board here speaking with us, I asked them particularly about their strategy and the philosophy they took to identify specific jobs, as opposed to offer the package more broadly, and they said it was deemed to be the most efficient way to manage, to provide efficiency. When you're thinking about the actual notions of substitution in a broader offering here, how do you respond to that - the notion of efficiency?

Mr. Crossman: I guess I have probably a little different vision from the one the managers would have, who would eventually be responsible for doing the nuts and bolts of the substitution program.

When I look at the professional employees we represent, they are the knowledge-based employees of the federal sector. Many of them have multiple degrees, years of experience, some very brilliant minds, who I think have the ability to adapt and move from department to department. If you're working in a specific scientific area and you have the background, you can move from one department to the other. It may take you a little while to get up to speed, but are you going to lose what you've invested in that employee over 20 or 25 years and let them go, when there would have been an opportunity to plug them in somewhere else in another department?

We were talking about engineers earlier, commerce officers. Industry Canada is going to be severely impacted by this downsizing. They have an incredible diversity of skill sets they can bring to a variety of professional positions. Some of them have backgrounds in engineering. They may very well be able to compete for an engineering position in another department if there's an engineer who wants to retire.

There are all kinds of possibilities for this to occur, and I think the legislation, the way it is right now, severely restricts that possibility. I think we could wind up at the end of the day with wins for almost everybody in this. I think the government, if you would consider making changes to this, would be able to demonstrate that there is a humane and caring compassion for these individuals, and you could wind up getting the 45,000 you have to get at the end of the day without anybody going away disgruntled or dissatisfied. You may have just a handful, instead of what I think you're going to have - several thousand now.

Mrs. Stewart: Are you thinking the ultimate client, the taxpayer who benefits from the services, will be the entity that suffers with a process like that?

Mr. Crossman: I don't think so. The one thing the taxpayers are concerned about is the bottom line - what it's going to cost if we do this.

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There is money identified for training in these programs, and that sort of thing, and in many cases I believe you can do this transfer without it adding a lot to the bottom line. If you balance it out, in some cases you may even be able to save a bit of money in some places with the skill sets some people may be able to bring in with them.

I don't know, but it seems to me right now we're set on a course that shows very little creativity. There's very little lateral thinking in the process. We're getting tunnel-visioned on reaching that 45,000, because it's going to do something on the deficit line down the road, and I think in the long run what we wind up doing is selling the taxpayer short on some tremendous expertise we may be losing if we let them go.

Mrs. Stewart: On the issue of substitutions and on the issue of creative and lateral thinking, I'm wondering if what you're finding is in fact that the managers that do have this difficult task, this significant level of accountability, are perhaps being more creative and less tunnel-vision-like than might be anticipated, and if in fact we are seeing and finding a significant degree of flexibility - thank goodness - as a result of the quality of the personnel that we have doing the task of implementing the program.

Mr. Crossman: I'm really glad you raised that, because I was led to believe when this idea of substitutions was first discussed, when I was still hopeful that we might be able to keep the workforce adjustment talks going, that basically most departments turned it down, thumbs down. I have since spoken with senior managers, at their conferences and that sort of thing, and there are all kinds of managers out there who have asked why there isn't the opportunity - you know, we support the Professional Institute - to be able to have some interdepartmental transfers.

I spoke to almost 100 senior executives from Agriculture Canada a week and a half ago, and there was support there for this particular approach. I told them I was going to be appearing before the committee at least to put my two cents' worth in on it.

There are managers out there who would not only like to see that flexibility within their own department but to take it beyond, to broader scopes. Certainly in those departments where we have a lot of members employed in the scientific sectors, they realize the benefits there could be in being able to broaden it that way. So you do have managers who support it too.

Mrs. Stewart: Certainly as I have talked to some of the managers I'm closely in contact with I have been very pleased with the expansive view they're taking and the flexibility they seem to be finding in the context of this.

I would say as we look at that and see what's happening I suppose the notion of your information committee becomes even more important, as there is flexibility in terms of the application, and the information on how people are finding the flexibility needs to be shared in an effective way, which may be reflective of your proposal on non-information.

Mr. Crossman: Yes.

A couple of years ago, in 1992, 1993, when we did our surveys and the institute published its red book that we released on March 17, 1994, one of the things that came home strong and clear from professional employees was that very often they're not consulted or don't have the opportunity to provide input into decision-making.

I can tell you that the Professional Institute of the Public Service is interested in setting up this type of committee, not to hinder the process or put a stick in the wheels anywhere. We're interested in providing our collective experience and expertise that we've developed over the years in this to be able to help people out.

I believe we're in an era when we have to work cooperatively to solve problems, because the manager who winds up having a problem...it's his employee who winds up being our member and it winds up being our problem to solve. It's something we have to work together towards, and that's how I would see this committee - as being constructive. I would hope we're going to have some managers with some lateral-thinking capability on those committees, who are not just focused on reaching that number target and that sort of thing. I realize that's the objective they have to reach eventually, but there's more than one way of arriving at that bottom line, and what you may start off with in the game plan can very well change as the process unfolds.

When I hear things like what's going to happen at Industry this year - they want to get rid of almost the entire 1,250 so quickly, and we're just left with a couple of hundred - how are you going to have time to do some flexibility? You may wind up losing people there who, if you could have kept them for one more year because of some arrangement with another department or whatever, could actually get a good deal in terms of leaving, and it doesn't wind up costing the taxpayer any more if you do it that way.

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Mrs. Stewart: Thank you very much. I certainly appreciate the work you have put into this initiative. I'm sure your membership does as well.

Mr. Crossman: Thank you very much.

The Chair: What makes you think that if we went back to the table PSAC would agree to something that would be acceptable?

Mr. Crossman: I'm going to go out on a limb and say that I recall the week after the negotiations came to a halt we both went to the President of Treasury Board and talked to the media about the substitution program, about how we felt that would be something that would get us back, get us on track and would be acceptable. I'm hearing a positive response here in this committee toward the idea of substitutions. I think that may very well be something that would be able to influence the decision.

I'm not going to speak on behalf of the alliance. Far be it for me to do that.

The Chair: Oh, go ahead.

Mr. Crossman: Definitely not. But this was the issue we were trying to discuss the week of February 6 and 10, to try to get that resolved. It was thumbs down at that time, but if we can get some receptivity to that concept I think it may be able to help us to choose something.

I certainly think this government would stand to benefit a lot if we could reach a negotiated settlement. It would say something about the government as an employer and the tone you want to set for future relations with the employees.

There's such a difference between having something agreed to at the table.... Even if it's almost the same thing that somebody legislates, it's the fundamental right that has been taken away here. I think there could be nothing more that could send a stronger signal than to reach this as a collective agreement.

The Chair: Do I recall correctly that when Treasury Board was before us they said we could not do a substitution-type approach because the Auditor General said it wouldn't work or it wouldn't be effective?

Mr. Crossman: I think I will defer to Bob.

Mr. McIntosh: I think the issue the Auditor General was raising was in fact where you are declaring people surplus yet the job remained after the person was declared surplus and exited the public service and attempts were made to fill that job with another person within the public service or the service person was contracted in to provide that service. In other words, it wasn't really a legitimate lay-off situation. So this is not the same issue.

As Mr. Crossman has pointed out, we have here in this roughly 150 people. If those qualifications match up to 150 surplus people we will be saving 150 people from being forced to be laid off. That's how significant it is. I'm sure when you multiply that over the whole public service we could be into many thousands of jobs.

The Chair: Do you have a way within your own union of informally finding out where substitution could be made?

Mr. Crossman: Well that's what this list shows us here today.

The Chair: They're prepared to go.

Mr. Crossman: Yes. They're giving us information on themselves, their name, their address and that sort of thing.

The Chair: Who would carry out this substitution program? Who would have the computers, who would have the qualifications, and who would be referring thousands and thousands of names back and forth?

Mr. Crossman: I would think we would want to make use of a central agency. I don't know if the Public Service Commission would be a good target for this.

The Chair: We have lots of people who were at our hearing this morning and who didn't seem to have too much to do, so I'm sure they would be delighted to do it.

Mr. Crossman: We could certainly give them some ideas about how we would like to run it and that sort of thing.

I think it has to be done cooperatively and I think the expertise is there to be able to do it. We've had central clearing houses before to do these things. It's a bigger scale, but we've been through it before, and I think we've learned some things about workforce adjustment over the years and we would like to share our expertise.

The Chair: On behalf of all members here.... It's an excellent brief. You make some very strong and compelling arguments. You have not argued with the government's decision to do something very brutal to you. You've accepted it. You said there are other ways to go about it. You have presented very strong arguments and I think have received approbation from all sides of the table here.

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I, as chair, of course, cannot get involved in this because I have a conflict of interest. My clerk is a member of your union and I am extremely dependent on the wonderful clerks we've been provided. I thank you for the efforts you've made and for your excellent presentation to us today.

Mr. Crossman: Thank you, Mr. Chairman. It's been an honour for us to appear before you and thanks for listening.

The Chair: Bert, congratulations on your French.

Mr. Crossman: Thank you very much, Mr. Chairman.

The Chair: We will now adjourn until tomorrow at 3:30 p.m.