Skip to main content
EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 28, 1995

.0804

[English]

The Vice-Chair (Mr. Campbell): Good morning and welcome to the finance committee pre-budget consultations.

.0805

This morning we have two panels. The first panel will conclude shortly before 11 a.m., and we will have with us a number of people, some of whom have not yet arrived.

I will introduce you quickly: from the Atlantic Provinces Economic Council, David Amirault; from the Canadian Pensioners Concerned Inc., Myrna Slater; from Chandler and Davis Chartered Accountants, Mr. Harry Davis; from the Forest Group Venture Association of Nova Scotia, we are expecting Mr. Roblee; from the Nova Scotia Confederation of University Faculty Associations, John D'Orsay has just joined us; from the Nova Scotia Family and Child Welfare Association, Yvonne Blanchard; from the Nova Scotia Union of Public Employees, Ronald Stockton; as an individual, Bruce Stephen; from the Health Action Coalition and the Coalition for the Support of Canada's Social Safety Net, Joan O'Keefe; and from the Nova Scotia Printing Industries Association, Paul Fitzgibbons.

The format, as you know, is brief opening statements. We will follow those opening statements with some dialogue among the witnesses, followed by questions from the members of Parliament who are here. We will have all parties represented, and as often is the case, all members have interesting questions to ask you.

Please, in framing your opening remarks, endeavour to keep them short, perhaps to three or four minutes. This will allow plenty of time for dialogue among yourselves and between yourselves and the MPs who are here. We would like to reserve most of the time for this exchange of views, and we do have a later morning panel. So we're going to have to be quite rigid about the time.

We will begin starting with the Atlantic Provinces Economic Council, David Amirault.

Mr. David Amirault (Economist, Atlantic Provinces Economic Council): I'll try to be as brief as an economist can be.

I think your questions were fair, but they might have been a bit leading. In terms of the target, the 3% target stated by the Minister of Finance seems to me to be a fair one. However, we need to keep in mind it is based on the point that 3% is required to keep the debt-to-GDP ratio stable over time.

With a GDP rate of growth of 2.2% to 2.5%, that actually won't happen. It should be at 3% for that to occur. I guess my only point there is the slower rate of growth expected in 1996 could have an impact on that.

I don't want to talk too much, but I am going to talk about two of my major concerns here. One is I think there needs to be an easier monetary policy stance by the Bank of Canada.

If you check the figures in the budget, all of the deficit is due to interest on the public debt.

Currently, there is actually a sizeable operating surplus. Due to this, we have to consider one thing here. Because we have a large operating surplus and the deficit is basically due to interest charges, we should at least consider what a lower interest rate policy could do when even page 77 of the budget plan in the budget documents recognizes the degree to which faster growth and lower interest rates could have a dramatic impact on the deficit over time.

My pitch this morning is that if possible - and I believe lower interest rates are possible with the lower interest rates in the United States - there should be lower interest rates. The fundamentals are right for this in Canada. This is one of the major points I want you to bring to Ottawa. Lower interest rates would help.

If you look at the New Zealand situation, there's actually significant devaluation of the dollar at a lower interest rate. There has to be at least some consideration of that. There's quite a bit of pain going on in the economy if you don't consider that.

.0810

The other point I want to make is this. Probably your only areas of large savings left - the nut to be cracked, in my opinion - are going to be areas in which provincial and federal governments currently share and duplicate. This is the one nut, I think, the finance minister has to crack in this budget. There is duplication in federal-provincial efficiencies and duplication at federal-provincial levels in certain areas.

I want to make one point about the current situation in Atlantic Canada. To a degree there are initiatives currently under way. Atlantic economic cooperation and Atlantic economic union are currently being played from the table and they are two issues APEC is certainly pushing for.

There also may be a role for the federal government to bring in their own services in this whole union issue. There could be some duplication eliminated. If we went to economic union, we might as well bring in a few federal government departments. I'm thinking more along the lines of areas of job training and social assistance. Thank you.

The Vice-Chair (Mr. Campbell): I'm going to follow the order on my list here. It's a little different from how you're sitting but it helps me keep track of appearances.

We're going to turn, then, to the Canadian Pensioners Concerned Inc., Myrna Slater.

Ms Myrna Slater (National President, Canadian Pensioners Concerned Inc.): Thank you for the opportunity to attend this pre-budget conference again. I was privileged to have attended a previous one - I think it was in Lunenburg - where it poured rain all day and we cried, too, about the things that were happening.

In the main I would like to address some of the trail of paper sent to the government from our organization and others.

I would like to make our concerns clear from the outset, as national president of Canadian Pensioners Concerned and as a member of the Nova Scotia division, and also as a member of the coalition of seniors' organizations addressing the issues and concerns of seniors and the intergenerational programs that are afoot.

We would especially like to indicate we have already been trying to reach through to the government with some of our concerns.

I was very pleased to hear a few of the proposals Mr. Amirault has suggested for helping correct the great issue of the debt. I would also like to say we have submitted many proposals we think would help and we have evidence to prove it in the position paper we presented to the government about a year ago.

In that paper, we exploded four of the frequent myths about seniors.

Those myths are, first, that seniors should receive no special benefits simply because of age. This paper indicates there are indeed many good reasons why seniors need to have some assistance because of age. When we all get there I think we'll know. I think I'm there now, but I hope I can maintain things on my own, which is what most seniors try to do.

The second myth is that as a group seniors are wealthy. We hear this all the time. We have yet to find out where those wealthy people are. A small proportion are wealthy, but this seems to be the claim for all people of the seniors' organizations. They are supposedly wealthy.

The third myth is that the old age security program is excessively costly. This has been proven to be wrong. And we know if we dismantle it further we will then also have a much, much larger group of people who would have to resort to the guaranteed income supplement. This can be estimated, and our position paper tells you that. It would be almost as costly. We all know that.

Finally, it is said old age security is an inefficient program. We have explored this and we know it is not true.

I would urge you to perhaps take a look at the material we have already sent you. I call it a trail of paper to the Prime Minister and to the Minister of Finance, to whom we have very clearly and with respect and understanding of the problem made our case for some of the questions that we have to ask when the social safety net is attacked.

.0815

I think you're all aware, too, that the history of the dismantling of seniors programs and benefits has been going on since 1986, and in the last eight years there have been many dismantlings that we must take a look at.

In 1986, we had the loss of full inflation protection in the tax system.

In 1988, we had the loss of the [Inaudible - Editor] investment income deduction. Also in 1988, the conversion of income exemptions to tax benefits was dismantled.

In 1989, old age security was clawed back, and that should be certainly reversed. This does destroy the universality of our old age security system, something on which people have at least their retirement-age livings.

In 1991, the GST was imposed, and it indeed affects seniors and people in those kinds of groups with fixed incomes who have to spend their consumption tax.

In 1984 to 1994, we witnessed the restriction and ultimate elimination of the roll-over of pensions into RRSPs.

And finally, in 1994, we had the income testing of age tax credit.

These have all taken their toll on the incomes of seniors such as me and many others. You must know some of them, I think.

At the same time, Canadian Pensioners Concerned -

The Vice-Chair (Mr. Campbell): Excuse me, Ms Slater, but before you run out of time - bearing in mind all of the other witnesses - do you have any responses to the three questions that we asked witnesses to consider?

Ms Slater: Mr. Chairman, I really was quite shocked and overwhelmed by those questions because I had hoped - -

The Vice-Chair (Mr. Campbell): They're difficult questions.

Ms Slater: I did a master's thesis on less, and I wondered if you really expected us to do some kind of thesis or doctoral dissertation when I saw them.

The Vice-Chair (Mr. Campbell): No, just take a stab at it.

Ms Slater: Well, we didn't answer those. All I'm doing is using this opportunity to bring to you a reminder of what we have already done and what our concerns are. In relation to those questions, I think they do fit. You can fit them wherever you wish, because you have lots of people to do that sort of thing.

The Vice-Chair (Mr. Campbell): So if I can summarize what I think I've heard, then, it is - -

Ms Slater: I'm not finished.

The Vice-Chair (Mr. Campbell): Well, we're running out of time. We're going to have to move on.

Ms Slater: I'm watching my watch, too.

The Vice-Chair (Mr. Campbell): Okay.

Ms Slater: I have two more points I'd like to make.

The Vice-Chair (Mr. Campbell): You have about one more minute, so would you please make them.

Ms Slater: I can do it.

The Vice-Chair (Mr. Campbell): Thank you.

Ms Slater: I would like to say that one of the two areas we are very concerned about,Mr. Campbell, is the family group program that has been promised. As you know, putting the spouses together in their pensions will mean many women will not receive pensions any more, will not receive their old age security cheques, which in many cases has been the only one they've ever received in their lives.

Furthermore, we do believe we have to take a look at the whole attack on the social safety net, because it is affecting not only seniors but all intergenerational groups. We resent very much the inference of the business community and the media to drive a wedge between seniors and young people, because that is not what we grandparents feel we want to do. Most of us are keeping our young people because they can't get jobs under the present scheme.

The Vice-Chair (Mr. Campbell): Thank you.

Ms Slater: Thank you very much.

The Vice-Chair (Mr. Campbell): Thank you very much.

Can I then conclude that your answer, on behalf of your group, to the three questions is that seniors have endured enough cuts over these years, and that whatever we do in trying to answer those three questions, we shouldn't do it on the backs of seniors?

Ms Slater: Thank you very much. That's a very good summary.

The Vice-Chair (Mr. Campbell): Thank you.

We'll move on to Mr. Davis, of Chandler & Davis, Chartered Accountants.

Mr. Harry Davis (Chandler & Davis, Chartered Accountants): Good morning. Thank you for the opportunity to be here again. I was at the session in Lunenburg last year, as well.

In dealing with the three questions as set out in a letter of November 21, I would say first that our present 3% target for deficit reduction is probably all we can handle, and I'm not sure we can handle that. Ideally, I think it should be less. Our debt-to-GDP is approximately 73% - I believe it's in excess of $550 million - and it's much higher than the majority of the countries of the G-7. Ideally, we would like to get that down. Getting it down can be achieved, I believe, with job creation and, as Mr. Amirault has said, by creation of jobs that will help to increase our GDP.

.0820

As far as budget measures as they relate to achieving both jobs and growth are concerned, contrary to what Mrs. Slater says, I do believe there is a very unequal distribution of tax burden in this country.

We have systems in place whereby as many as 1 million senior citizens - and this is not to dump on them specifically - are earning in excess of $25,000 a year. They are receiving a benefit when we have families out there earning $25,000 a year and effectively paying income tax of $4,000. That is a concern.

I have a major concern about the fact that child tax credits in support of young families, GST credits, get clawed back at a level of $25,000, whereas old age security doesn't get clawed back until we reach $53,800, albeit the age credit does get clawed back at $24,000 or $25,000.

I believe in redistributing, not to make it hard on the senior citizens who really need it, but Canadians today.... I am in an accounting practice and I deal with senior citizens quite a bit. Many of them say they have never had it so good. I think many of them would be happy to see a redistribution of our tax system.

I don't believe any funds, if they were to remove them from those of high-income senior citizens, should be used to reduce the deficit. I think they should go into helping support low-income families, who then would have them in terms of non-taxes. I think it is very difficult for a family of three that makes $20,000 a year to give the government $3,000. I don't think $20,000 can support a growing family.

Instead of saving moneys that senior citizens are putting in the bank or are using to take off to Florida to spend there, I do believe redistributing this would put it into the economy. The dollars would revolve and jobs would be created. With the GST and sales tax instead of savings - and just income tax on these dollars - I believe real growth would come from this $6 billion to $8 billion a year. This fund - old age security, unfunded pensions - is a $20 billion a year cost. That's greater than half of our deficit.

In terms of dealing with further cuts, I agree with Mr. Amirault. I think further cuts are difficult in these times, yet the government has to balance its budget. It must do so with consideration of privatization of government organizations. I believe government should facilitate this and not participate in the form of partnerships.

I believe there is a large duplication of services. I know that in my area a lot of people are in the fishing industry, but it is very, very difficult for them to even know who to deal with. Do you deal with federal fisheries or do you deal with provincial fisheries? Who do you send your letters to? Often when you correspond with a person, you end up getting the answer from the other part.

In summary, I would say we can reach our targets. I think we have to look at a fairer distribution of the taxes that are paid in this country, and I think we have to make further cuts to government where there is duplication of services.

The Vice-Chair (Mr. Campbell): It's only 9:23 a.m. and the issue has clearly been joined.

I'll turn to Mr. Roblee, from the Forestry Group Venture Association of Nova Scotia.

Mr. John W. Roblee (President, Forest Group Venture Association of Nova Scotia): Thank you very much, Mr. Chairman.

Similar to what the seniors have brought forward, my remarks relate back to the fact that when I was in Lunenburg two years, I mentioned that the federal government should not be out to kill the golden goose that lays the golden dollars that keep this country going.

Since that time, we have seen the dismantling of the federal government's involvement in forestry, which reflects on forest management activities on the ground. We also have a trail of paper in the form of proposals that were sent to the minister, Anne McLellan, to the Prime Minister, and to just about every senior cabinet position in the country. To this point, they have been to no avail. We are now living off a provincial program, a resource enhancement fund.

I have copies to circulate to the committee as well.

.0825

We have to be concerned about this deficit, but we also have to be very wise about what a man by the name of Charles Franklin Kettering said: ``We should all be concerned about the future because we will have to spend the rest of our lives there.''

There's one aspect I represent and that is the forest. The trees can't speak, so they need people to speak for them. The organizations that I represent are owned and controlled by small private woodlot owners. In the province of Nova Scotia, we own 52% of the resource. We supply 60% of the raw fibre to industry - the pulp mills, the sawmills, and all the other industries that are in this province.

To this point, we have more opportunities than enough to get into sustainable forestry. We have to start looking at integrated forest management. We can look at the certification process that's going on across the country. We can look at ISO 14000 that the federal government is involved in to show other countries of the world that we are sustaining our forests.

There are opportunities here to make dollars for this economy. There is an opportunity here to have a sustainable forest for future generations that are going to have to pick up what we leave behind. For example, in the last year the organization I represent, the Forest Group Venture Association, has spent $5,240,510 in taxpayers' money to do forest management on the ground. From that $5 million, we have generated $15,860,000 in spin-offs.

There are roughly 400 people working under the forest group venture management system in this province right now, and we could have the opportunity to expand to double that figure. Yet here we are at a point at which no one really knows where we're going. There are 1,700 people working in the forest industry in Nova Scotia. Not too far down the road, they are eventually going to be running short on the supply of fibre. In my opinion, we have to replace what we're taking out. We need to do better than we are doing.

As I indicated before, within integrated forest management all the other profits that we're looking at would be a really benefit to this country. The deficit is a real problem. We in the forest community cannot do it all, but we can put our heads together with Lloyd Axworthy and the people in Human Resources Development to work towards solving the problems of this country.

If they're worried about duplication of services, we could come up with some kind of a scheme of working together. Provincially, the Forest Group Venture Association would be prepared to work with the provincial Human Resources Development Association. Federally, we're prepared to work with the Human Resources Development Canada through the Canadian Federation of Woodlot Owners. We're prepared to go to work. We have our oars in the water and we don't expect Canada to do it all. We want to pay down that deficit, but you have to have resources to do that, and forestry is just one small component.

Thank you very much for your time.

The Vice-Chair (Mr. Campbell): Just to make sure I understood you, we have to pay it down. Did you have any specific recommendations about how to go about that?

Mr. Roblee: The best way that I can see to do it comes from the expression ``The proof is in the pudding''. We've put $5 million worth of taxpayers' money into doing forest management in Nova Scotia, with a return on investment of over $15,860,000. That says it all. It pays to do silviculture.

The Vice-Chair (Mr. Campbell): But you must bear in mind that we have to take that $5 million from somewhere else.

Mr. Roblee: That's right, but you do get that back in the first year.

The Vice-Chair (Mr. Campbell): Thank you very much.

We now turn to John d'Orsay, from the Nova Scotia Confederation of University Faculty Associations.

Mr. John D'Orsay (Executive Director, Nova Scotia Confederation of University Faculty Associations): I won't bother to repeat my name. That will save me a minute or so of my presentation time.

My organization continues to take the view that the federal government, in its budget, ought to be approaching the economic development parts with a strategic objective of fostering the development of a knowledge-based economy. Priority in that process - and the steps in that process - requires that you identify and promote fiscal and tax expenditures that enhance knowledge, and that you identify those fiscal and tax expenditures associated with other development strategies based on access to other forms of economic development. You then phase out one in favour of the other.

Secondly, when we look at the overall federal policy framework, it has in fact been hostile to knowledge and knowledge development for a long time. Your unemployment insurance scheme actually penalized and restrained people who sought education after they lost their jobs. Even people who were most vulnerable because of their low education were restrained from dealing with the root cause of their problem as individuals and the root cause of our problem in the nation collectively, that we have an undereducated workforce.

.0830

The second area you could look at are things like the less favourable treatment for the cost of human resource investments that are embedded in a tax system that relies on income taxes and taxes paid by individuals, rather than taxes on other forms of income.

If I went to the last federal budget, I would say it included some elements that were steps in the right direction, like eliminating the transportation subsidies and the private utilities income tax transfer, this deferral of business income tax, and especially the reducing of grants to businesses.

The first priority in further expenditures and tax expenditure reduction should be the other hold-overs from those development strategies such as the capital gains exemption, the dividend tax credit, exploration and development, royalty depletion, and credit deferral. I went through the list of these things and it goes on for 20-some pages. But those are the types of things where money is given back to business or business-related income and is not targeted to knowledge-based development, knowledge-based initiatives by business.

Another aspect of this is that we could recast some of the discussion of some of the other items that are usually discussed in an equity or social utility context. You think about the discussion of the business entertainment expenses. As is famously known, businesses get to write off a substantial portion of those expenses. But the person who receives the free tickets to the ball game and all that entertaining doesn't have to declare it as a taxable benefit.

Employers can also claim, as an expense, education costs for employees if they support employees getting an education, but that is a taxable benefit to the person subject to an exemption. That's unequal treatment of the positive type of thing people and employers could be doing.

On the issues on which the committee asked for input - for example, what should the deficit target be - again I have a sort of strategic way of pursuing this. It's very much like Mr. Amirault. I think interest rates have to come down. I look at the tremendous amount of debate that has been generated on this subject in the last year or two, and the question of whether the interest rates can be determined in Canada or outside Canada.

I was clear that if you got to the point where government borrowing fell within the range of public savings in Canada, you could certainly have sovereignty over your interest rates again. The question of international markets would cease to be the type of crutch, excuse or maybe obstacle it really is.

It's clearly an important issue, because interest rates that are greater than GDP growth are just not sustainable. For one thing, interest on the government's debt grows faster than its income if you have that situation. You don't want that situation, so you want to take steps to reverse it, and there's reason to do that.

That led me to the view that your deficit target ought to be somewhere in the range of $25 billion. That's looking at the material that was -

The Vice-Chair (Mr. Campbell): Excuse me. That's where the 3% takes us, so you are saying we should go no further than that - maintain a deficit of $25 billion.

Mr. D'Orsay: I think when you get there you can start using your monetary policy to lower interest rates substantially and then lower your deficit more. You have to get to a point, and one of the objectives of getting there has to be that it will give us control over our interest rates and will let us get our interest rates down to the rate of GDP growth.

When I look at the next question about how that can be done, all the areas I identified.... I wrote a nice memo, which maybe I should send you all, to the Minister of Finance last year adding up all those expenditures on grant programs, business programs and other areas that I thought were anti-knowledge parts of the economic development envelope. My recollection is that the total savings in that area were in the order of $10 billion. Some of those have been cut, and my recollection at the moment is - I didn't do a reconciliation of that for this presentation - you still have $6 billion to $7 billion of room left on the items I identified.

.0835

The Vice-Chair (Mr. Campbell): If you want to send that to us again it would be helpful,Mr. D'Orsay.

Mr. D'Orsay: Your next question was how budget measures may be used to create an environment for jobs and growth. My preamble answers that in the sense that you want to look at building in incentives for knowledge-based development and work in that area rather than propping up an old economy. Secondly, you want to reduce interest rates, which will indeed be better for all forms of business and all people than any program of incentives based on borrowing money to give to some other people in selected incentive programs.

The other area on that side is that it also matters how the federal government spends its money. This brings us into the federal-provincial agreements and the rather more disappointing side of last year's budget - the creation of the Canada health and social transfer.

From my perspective, you took a program, EPF, that was reviled for not allowing provinces to be accountable for the money, and you haven't created accountability. The new program you're creating will be even less accountable than the one before. So you have to do something to cure that accountability problem.

It is my submission that you have to create a responsive program. You would say the federal goal in providing this money is to encourage knowledge-based enhancement, and provinces that do that well will gain. It's to encourage measures to improve the health of Canadians, and if provinces do that well they will gain. It's to eliminate poverty for people of all ages, and provinces that undertake programs that do that will gain. It must be very clear why the federal government is spending that money.

The Vice-Chair (Mr. Campbell): Thank you, Mr. D'Orsay. Let me suggest we stop here to give other witnesses a chance, and save some of the other comments for the discussion period.

Mr. D'Orsay: You cut off my penned quip, though, about the short-term disappointment I had about the federal support for the Atlantic expressway, where you're going to be inducing the Province of Nova Scotia to borrow enough money to build those roads, but it will equal the amount by which it will reduce the grants for universities. I want to know which path that's leading you down in terms of developing a knowledge-based economy. Thank you.

The Vice-Chair (Mr. Campbell): Thank you.

We'll move next to Yvonne Blanchard from the Nova Scotia Family and Child Welfare Association.

Ms Yvonne Blanchard (Executive Director, Nova Scotia Family and Child Welfare Association): Our organization is made up of 35 members from rural and urban settings across Nova Scotia. Our concern is related to issues for children and families.

Today I want to try to bring forward some of the issues related to children and families in Nova Scotia. I find your terminology of ``witness'' very interesting, because we have had the opportunity to witness many very difficult situations of families, young children and youth.

It's important that in this whole discussion around deficit reduction we encourage the committee to try to look at indicators of social well-being and link them with traditional measures such as GNP and others, to balance the social cost of the decision. This is not an easy situation. I don't come today pretending to have a simple solution for that. It's a very complex situation; however, there are other approaches.

Dr. Fraser Mustard of the Canadian Institute for Advanced Research has other material I would encourage you to consider in your deliberations. I think Paul Romer, an economist, has also brought forward different models trying to balance our analysis of our wealth and our deficit in our country.

I also think, in terms of deficit reduction and setting the targets, we should take the opportunity to learn from the New Zealand experience. As you'll know, New Zealand implemented a number of changes some years ago. Some of the results of those changes are becoming known, particularly some of the social costs, and that's often an area we find difficult to really put a finger on.

.0840

New Zealand, for example, now has the highest rate of teen suicide in the world. There's a dramatic increase in crime. It is still maintaining a two-digit unemployment rate, even though it was really felt that the market would balance it out. There's a widening gap between the rich and the poor.

These are some experiences I think we need to look to and learn from so we don't follow the same path. Of course, our concern is that those types of paths create such an impact on children, and after all, they are our future. When we talk about investing, we're talking about investing in a financial sense and we're also talking about investing in a human sense.

In terms of the question of the environment for jobs and growth, I'd like to stress a point made by David Amirault about the whole sense of improved cooperation between the various levels of government in areas of training, and also in relation to UI reform.

One of the great struggles for communities and families today is really the lack of cooperation and coordination between levels of government. Traditionally, each sees itself as its own entity, and power struggles exist and priorities are set. We're talking now about trying to do more with less, and this is the time to also try to marshal that sense of cooperation. It is a message we hear again and again that communities are to function that way and communities are to rally and provide that support, but we need to take that same message.

I think of it particularly in relation to training programs, the whole sense of unemployment, and the downloading and shifting of people from UI to social assistance. In Nova Scotia, you're aware that we have two levels, although that's changing. It's a very turbulent time, and if we try to fragment ourselves as levels of government and don't see ourselves as interrelated pieces it will not help us through this very difficult time. That area needs a lot of work.

We must try to create mechanisms that really encourage and allow staff members - not only the political parties - who are trying to implement these programs that need to complement one another, to really work together and not against one another.

In the third area under the question of further cuts, my message is to go slowly. In Nova Scotia we are living somewhat in fear of what the impact of the block funding change will mean. Current statistics tell us that one in five children in Nova Scotia lives in poverty, and we know that will increase.

I'm sure you are all aware of the impact of poverty on children and how critical those first few years of development are for a child. In fact, some of the studies indicate that $1 spent in the early life of a child gives you $7 back in the long run. Perhaps it's difficult for political parties and financial models to plan for the long run and think of our investment in children beyond four years or so, but those are the realities.

Currently, as an indicator of our situation in Nova Scotia, 100 calls a day are made by children in Nova Scotia to the Kids Help Phone. That's 36,000 calls a year. In 3% of all those calls children say they're considering suicide. That's the environment we currently have.

We're very concerned about what the impact will be when we move to tax credits. We're concerned that federal goals of standards and the whole sense of accountability will be lost.

Interestingly enough, in the block funding changes some standards were maintained in the field of health, but no standards were maintained in the field of social programs. That's a serious concern.

.0845

We are members of the community. Our membership comes from the fields of health and child welfare, and from churches and corporations. It's a mixed group. We understand that there will be a partnership with the communities and we're interested in helping the transition. We're interested in being part of it, but we do need some help. We do need to be part of that economic development solution.

We need some considerations around donations to charity. It seems reasonable to expect that people who make donations to charities would be treated in the same way as they are when they make donations to political parties.

I thank you for the opportunity to make these comments.

The Vice-Chair (Mr. Campbell): Thank you. If you have other comments, there will be a chance during the discussion.

I have just one comment. Your interest and the interest of other witnesses...I hesitated earlier when I used the term. We did have a round table discussion in Ottawa a couple of weeks ago on the charitable sector. There were many good and creative ideas about how to make that sector more effective at a time when we are pulling back and expecting the charitable and voluntary sector to do more.

Next, we will hear from Mr. Stockton, from the Nova Scotia Union of Public Employees.

Mr. Ronald Stockton (Business Agent, Nova Scotia Union of Public Employees): Thank you, Mr. Chairman.

The Nova Scotia Union of Public Employees represents about 1,000 employees in the local area, mostly employees of civic government and local school boards, although we do represent a very small number in a hospital. Our employees are very familiar with the downloading and the results of deficit reduction.

I want to preface my remarks by saying that when Mrs. Slater said the questions astounded her, you indicated that, yes, they were difficult questions. Mr. Chairman, with due respect, I beg to differ. I don't think the questions are difficult to understand and I don't think they're so difficult to answer. I think the difficulty, the astounding part, is what appears to be the government's deliberate framing of the questions so that alternatives to the cut-and-slash policies of our governments can't be discussed.

Before I go on, I must commend the previous speakers on two counts.

First, they got back to what I want to deal with, the human factor. I think that is a critical message you have to take back to government. I think it's the one that was given last year. This is beginning to look and sound like the first annual reunion of this round table, because it appears half or more of us were in Lunenburg last year.

Second, I must commend them on their measured and calm tones. I have difficulty doing that. I'm getting angry. I'm getting angry at our government. I'm getting angry at the rhetoric. I'm getting angry at the questions we're not being allowed to discuss, and so are our members who are suffering and who are suffering job loss, not just wage cuts.

With the questions that have been posed, it seems to me that we're not starting at the beginning. For instance, what should our deficit reduction target be? I don't know. I'm not an economist. I'm sure you'll receive lots of advice on that. I think we first have to ask some fundamental questions about the nature of our society and our Canadian community.

We should be discussing, first and foremost, what kind of a country we really want, what kind of a community we want to live in, what our responsibilities to one another should be and then how we achieve the goals we set.

To put it briefly - and here I'll quote loosely from Dalton Camp on Morningside the other day - we should get back to the human factor; instead, everything today has been assigned and judged by an economic factor.

The Vice-Chair (Mr. Campbell): Mr. Stockton, the questions are meant to elicit some discussion and to focus discussion. Nothing precludes you from posing the questions you've posed, answering them, and then moving on from there to the question this committee has to concern itself with.

Now that you've stated that vision of the country, how do we go about paying for it and striking the bargain among stakeholders at this table? Who is going to give up something to pay for what you think needs to be done?

Please proceed. We would be happy to hear those ideas.

Mr. Stockton: Yes, I will, Mr. Chairman, although the questions and the framing of the discussion preclude a lot of that discussion I've just talked about.

.0850

What I can say about the deficit reduction is that if Canada is to mean anything as a community, we've got to slow down, step back and engage in a real discussion of those human factors before we continue the cutting.

In that sense, with respect to the areas that the government has been cutting, it has cut too much, too fast, with too little thought. It's cut and deregulated in too many areas it shouldn't have and has avoided the other areas.

The second question is about budget measures that might be used to create jobs and growth. There may be many - again, I'm not an economist - but it seems to me that a fair tax system might help. Our community must not only begin to make every one and every organization pay its fair share, we must have a tax system that is perceived by the populace to be fair.

It's clear that many people, if not most, do not believe we have a fair tax system now. I submit to you that it's not so much the amount of taxes that people object to paying, it's the fact that they don't perceive the system as fair, so they don't want to pay any taxes. If the system were perceived as fair, I suggest that people would be much more comfortable with the paying of taxes.

A further measure that can be used to create jobs and encourage growth is to reverse the present policy of the destruction of full-time decent jobs with benefits and the creation and substitution of part-time, casual, no-benefit jobs.

Such a policy - and that includes the public service - would not only create more confidence in the country and more taxes returned to the various levels of government, it would generate more rotation of that money.

We heard earlier the discussion of the GDP. Well, if the GDP is largely concentrated in a few hands, a lot of it gets taken out of the country or salted away and not rotated. When you put that GDP into the hands of all Canadians through fair wages and benefits, that money is spent right in the local community. It isn't spent in Florida. It isn't spent in Europe. It is spent in the community, over and over. That's what makes an economy viable.

The third question is about other areas for cuts, commercialization, privatization or devolution. As you might expect, I suggest that we essentially don't need to look for any other areas. Those areas that might naturally fall to the for-profit sector will become apparent as we develop our community by focusing on what our community should be, what it should stand for, what our priorities are and how we want to pay for them.

Let me stress that for all the rhetoric about the new age, the 1990s and the 21st century, there's nothing new about budget-cutting or having for-profit operators provide services to the public. This is what we had before we had government. This is what we had before we decided that as a community we owed things to one another and had to provide services to one another. So it's not anything new. It's a step backward.

In my view, a more modern approach is to truly assess our community needs and desires and then decide how we're going to pay for them. I believe that if we had real, open and frank discussion and allowed for real imagination and innovation, Canadians would decide on a fair and compassionate country, they would decide on a cooperative, sharing country.

Unfortunately, I'm not optimistic. It seems to me that our government is leading us down the path to a very mean society, one that our children will pay dearly for.

Thank you.

The Vice-Chair (Mr. Campbell): Thank you, Mr. Stockton.

We'll now hear from Bruce Stephen.

Mr. Bruce Stephen (Individual Presentation): Thank you, Mr. Chairman. This is going to be my one kick at the can. As I explained to your staff, I have a meeting that I'm chairing in Truro in 65 minutes, so I'm going to talk rather quickly. I appreciate the opportunity to be here.

There seems to be some confusion in this country regarding the deficit and the debt. If I read your first question correctly, you talk about deficit reduction. It's my understanding that's the amount this country will fall behind this year, as opposed to the debt, the accumulative amount we've fallen behind over the years. I wonder how many people in this country realize there is a debt to go along with the deficit.

.0855

I'm also concerned about the recently released figures that show that for the last six months the deficit was reduced by $1.3 billion and revenues were up by $3.1 billion. That's an ominous sign. More money is coming in and we're not reducing the deficit by a corresponding amount.

My reaction to the reduction of the deficit is that it should be done a.s.a.p. I think that has to be brought under control immediately.

As far as the debt is concerned, I think perhaps if there are some other things we do - which I'll touch on in a moment - that would hopefully take care of itself. But that's something that really should be, if not our top priority, at least second on the list, behind job creation.

I think one reason we're not solving the deficit and debt problem in the country is that we have some problems, like the Quebec situation and the native problem. These really have to be addressed and some hard decisions have to be made.

I compare the situation in Canada to that of a family where the father has lost his job and the mother has been cut back to part-time service. Is there really any point in the children fighting over what the allowance should be or what the increase should be? I think not. I think that's the situation we're in now.

The country has some real financial problems and we're all fighting over what increases there might be in UI benefits or whether they should be decreased, and what social assistance should be or whether it should be decreased, or how many new prisons we're going to build and what luxurious surroundings we're going to place those who are incarcerated in.

I think we have to take a strong look at these items and make some hard decisions and say that we just can't afford this. If we're really going to get this deficit and debt under control, we have to make some hard decisions.

Having said that, I think, quite frankly, that the real answer is job creation. The Prime Minister, speaking in Quebec on September 18, 1994, said:

Well, I certainly agree with him, but I'm not seeing it. For example, if you change 10,000 people who are currently getting unemployment benefits to 10,000 who are working and contributing, it really is startling. If we can multiply that 10,000 to 20,000, 30,000, 40,000 or 100,000, the difference is staggering as far as the amount of money coming in to support this country.

So that's the question. How do we put people back to work? That is one of the reasons I wanted to be here today. I have a couple of suggestions.

One is a thing called JobNet. I will leave you a copy of this, Mr. Chairman. JobNet is a suggested program that takes advantage of cable television in this country. It's a television program that would be produced to help people get jobs, to tell them where the jobs are or where they're not, and perhaps more importantly, to help educate those who are preparing for the work force in high school and university.

It would be a half-hour program to start with. There would be holes in this particular program, three segments of three minutes each. The program could be beamed via satellite to every cable station in the country. As we all know, cable television is free. The human resources offices in the regions where it's beamed to could then produce candidates, tape them and insert them into the holes. These candidates would be on JobNet to explain their qualifications for employment to the viewing audience and to explain the reasons why they should be employed.

.0900

There are a lot of good people out there who really want to work, and who have tremendous qualifications, but they have no soapbox to get up onto to tell prospective employers who they are and why they should be hired. This should be only a forerunner to an actual Canadian jobs network.

With all due respect to the women, we have the Women's Television Network and that's great. We have the Vision TV network in this country, which produces a series of religious shows, and that's great. For those of you who are concerned about what the weather is going to be like tomorrow, we have a weather channel in this country. You can tune in and find out all about the weather.

If we have these and many others, don't we have to ask ourselves why we wouldn't have a Canadian jobs network? A Canadian jobs network could deal with everything from ``Are there really jobs in the Arctic for Nova Scotians to try to get?'' to ``Should people go from Cape Breton to a particular Ontario location because there really are jobs there?''

It could also lead to the education of our children in high school and university - give me thirty more seconds - because we have to create a world-class workforce in this country and we're turning out students now who really don't know if there are going to be jobs in the future.

There is another item I'd love to talk about and it has to do with NAFTA and what we're not doing because we signed a NAFTA agreement. Can anybody here tell me what the U.S. market is going to need in the next year or what the Mexican market is going to need in the next year? Mr. Chairman, this is another item. We must find out these things and prepare the people in this country to produce these things to take advantage of those markets.

Thank you.

The Vice-Chair (Mr. Campbell): I'm sorry you won't be able to stay with us for some reaction to those ideas. You can certainly send them along to us. Indeed, the Minister for International Trade might appreciate the comments on NAFTA and business development.

Mr. Stephen: I will leave you this copy.

The Vice-Chair (Mr. Campbell): Thank you very much.

Next is Joan O'Keefe, of the Health Action Coalition and Coalition for the Support of Canada's Social Safety Net.

Ms Joan O'Keefe (Representative, Health Action Coalition and Coalition for the Support of Canada's Social Safety Net): Thank you, Barry. Drive carefully, Bruce, so you'll be around to help them with the JobNet.

Mr. Stephen: Thank you.

Ms O'Keefe: We found it difficult to answer all three questions. We focused a bit on the second one about an environment. We come before you today because we do believe that government can make some decisions, and that it has some courage and foresight to make decisions that are fair to everybody. I represent groups - and individuals - that at times certainly feel very much that the deficit is joined to them because they are poor.

When people talk about cutting, in many circles it is the social programs that we talk about cutting. Some people see social programs as a frill. I think if people worked with those families and individuals everyday, they'd wonder how they do what they do on so little.

I'm not an economist. I listen and I read a lot. High interest rates have been mentioned this morning. I think those drive the deficit more than our care for those who are low-income, those who are disabled and those who need health care does. When we talk about creating an environment for jobs and growth, we need people who are trained, educated and skilled to take the jobs when we have them. We need people who are healthy. We need people who have some feelings of self-esteem and confidence. I think further cuts to the social programs rip that away.

When making your decisions about finances, I think it's really important for you to know that you may have some messages for big business and for those who are wealthy. You may be able to make some assurances to those who have low incomes that they can live wholesome lives.

There is a real question in my mind about the changes in UI, because I already see people on social assistance now who have never been on social assistance in their lives. There are people who have lost their homes, people who have had to take in unemployed adults, their sons and daughters, and who do not have enough to live on because social assistance has cut and cut in this province. We would see families of disabled and of very low-income people, the working poor, who get caught in the shuffle with no benefits in their jobs. We know families that work two part-time jobs, and if a child gets sick, they have to stay home a day, so that's one less day of salary.

.0905

I probably will have more to say when we discuss this. I was warned to take only three minutes. The people who sent me know how I talk.

The Vice-Chair (Mr. Campbell): Thank you. We're going make you an honorary member of the finance committee. We try to do everything here on time and under budget, so we appreciate that very much.

Ms O'Keefe: By the way, I am a Canadian. People may hear my Boston accent, but I have become a Canadian. I'm always conscious of that in public; people make statements about those vile Americans. The thing is that I want to preserve in Canada the things that make me love Canada.

The Vice-Chair (Mr. Campbell): I assume that anyone who is here with an accent from somewhere else has chosen to be here for a lot of good reasons.

Mr. Paul Fitzgibbons is from the Nova Scotia Printing Industries Association.

Mr. Paul Fitzgibbons (President, Nova Scotia Printing Industries Association): The Nova Scotia Printing Industries Association is a member of the Canadian Printing Industries Association, and we represent 75,000 jobs. Most of the companies we deal with have fewer than 20 employees. I think a lot of people recognize that the real economic growth in Canada is in small business, although I think the government tends to forget that's where the money is being generated for these tax dollars.

Your first question was how much we should reduce the deficit and how to go about doing that. I think the mind-set of the government has to change. The 5% carry-over from one budget year to the next doesn't go nearly far enough to change the attitude that you have to spend every tax dollar you have as quickly as you can in order to renew your budget for the next year. I don't think there is a successful business in the country that uses that measure to allocate funds.

If I sound a little nervous, it's because I think I'm outnumbered by people who are either spending our tax dollars or would like to.

The Vice-Chair (Mr. Campbell): Just to level the playing field and help to put you at ease, do any of the businesses you represent take advantage of the small business tax credit on less than $200,000 of income?

Mr. Fitzgibbons: That's certainly a tax credit and that is money they're not giving to the government as opposed to money that is being given to them by the government to spend.

I think it was K.C. Irving who felt that he could do more economic benefit by holding the money himself than by turning it over to the government.

The Vice-Chair (Mr. Campbell): Okay, fair enough. Go ahead.

Mr. Fitzgibbons: Non-government and paragovernmental organizations should come under the same scrutinies as government. I could be corrected here, but I don't believe they come under the same Freedom of Information Act. Their tendering and policy procedures don't come under the same scrutiny as the provinces do.

There are a lot of cases where non-government organizations are competing against the private sector, more particularly in printing. Thanks to David Dingwall's audit of the CCG, they recognized that although the CCG thought it was saving government money and creating jobs through its practices, it was determined that in fact it was costing the government a great deal of money to keep it going, and it is in the process of being disassembled.

I believe the same attitude is felt about Canada Post, which is also getting involved in printing now, although I'm not sure if it's called a paragovernmental or a non-government organization. It's not a government organization, but if they're going to compete against printers using tax dollars they have accumulated, that doesn't make for a very level playing field.

As far as the funding is concerned, I think small business doesn't require funding for starting up their business. I think what they would like is protection within their business.

I guess the point is that when governments intervene in a business, when they start up a small business, more often than not they end up creating an atmosphere where a successful company now has to compete against a new company that may not even have a very good business plan and that was funded by the organization that tends to bring both companies down. Again, this happens quite often in the printing industry.

.0910

As far as job training is concerned, people and business need to be trained a bit more on how to improve on-the-job training. I don't think it's easy for any government to predict where the jobs are going to come from and what specific training is needed.

When I have people apply to jobs for me, I don't really care if they're academics, I don't care if they know how to use a specific computer program. What I care is about is if they have a willingness to learn and if they have been suitably trained to learn on the job.

Governments would like to think that they can create jobs, but I believe that businesses are where jobs are being created. When the government intervenes to create jobs, often it creates an uneven playing field for the businesses that are successful.

By and large, most businesses that are successful right now got there on their own. They didn't require a lot of government assistance, certainly tax credits. The most successful companies got there using their own money, and more often than not the companies that have been created strictly by government funding have been less successful than those that have not.

The only other thing I wanted to mention is that when it comes to privatization - I mentioned this earlier - any government organization that is competing directly with private organizations should be considered for privatization. I think you'll find that more tax dollars are going to be generated and fewer spent if that happens.

I've pretty well covered all the points I would like to make.

The Vice-Chair (Mr. Campbell): All right. There will be an opportunity for more.

At this point we have about 50 minutes left in this morning's session, which should allow us time first for members of the panel to react, respond to each other, and then we'll turn immediately to questions. So let me start by asking if, rather than elaborating on what you've already said, you want to react to anything you've heard.

Ms Slater: I would like to react to my neighbour here when he talks about the seniors going to Florida. Why can't they go there just as much as anybody else? He didn't mention how many people of other ages go there - just seniors. I don't think he had very good statistics. I didn't hear any statistics.

Furthermore, one of the reasons why seniors go to Florida is that they put some of their savings into a place where they can live without paying the earth to heat their homes in the winter, which we do in Canada. It's very expensive, especially in Nova Scotia.

So I object to your statements, without any evidence of your statistics.

As for the number of people who might say to you that they've never had it so good, maybe you're not old enough to realize how bad it was before they had it good, because good is under the poverty line.

The Vice-Chair (Mr. Campbell): Let's give Mr. Davis a chance to respond.

Ms Slater: I'll respond again.

The Vice-Chair (Mr. Campbell): You don't even know yet what he's going to say - or maybe you do.

Ms Slater: Yes, I do.

The Vice-Chair (Mr. Campbell): One of the advantages of your experience is that you probably do know what he's going to say.

Mr. Davis: In all fairness, the time limits prevented me from dealing specifically with statistics.

By my comment about senior citizens going to Florida, what I meant is if we're giving unfunded dollars, free money, from the Government of Canada to senior citizens, then I would prefer to see those dollars at least spent in this country, where we would get the sales tax benefits, the GST benefits, and the benefits to the economy, rather than see those dollars that are given freely being taken to Florida and spent down there to enhance their economy.

Ms Slater: I would like to respond to that again, Mr. Chair.

The Vice-Chair (Mr. Campbell): I just want to give other people a chance.

Ms Slater: Just one point. I would like to say that this is not free money. We've all paid our taxes. Seniors pay a lot.

The Vice-Chair (Mr. Campbell): One witness said to me that if we had paid enough taxes over the past 25 years, then we wouldn't have a $500 billion deficit. There's some connection, if anyone wants to pick up on that.

Mr. Davis, we'll just hold off. I want to see if anyone else wants to weigh in.

.0915

Mr. Stockton.

Mr. Davis: It has nothing to do with that issue, sir. It has to do with interest rates, which was brought up by a number of people and which I would like to address. And I'm not sure whether -

The Vice-Chair (Mr. Campbell): Could you just hold for a moment?

Mr. Davis: Sure.

The Vice-Chair (Mr. Campbell): Mr. Stockton hasn't spoken. Then I'll come back to you.

Mr. Stockton.

Mr. Stockton: Thank you, Mr. Chairman.

I have two quick comments. I only had one but you made me come up with another one. I agree totally with Mrs. Slater that the seniors did pay their taxes and I think they paid enough. I think that our government gave it away to the wrong people, gave it to the wrong businesses, and spent it in the wrong places. It created interest rates and an economy that wasted the money our seniors paid.

Having said that, I want to address Mr. Fitzgibbons and tell him that in fact he's not surrounded by people who want to spend all his tax dollars. In fact, I think if people in small business would make a true assessment of the situation, take a good hard look at who the real threat is, they'd find that most of the people here are the friends of small business and that small business should be aligning itself with the unions and the working people of this country and not with the big business, not with the vultures who want to take them over and take all those tax dollars and take them out of the country. Small business should align itself with ordinary public servants, for instance, who spend the money in the local community, which enables those retailers, those shops, those car dealers, those home builders, those real estate agents to go to your clients or to your members and get things printed up. It's the local economy that counts.

We could get into a really long debate about who creates the best tax-paying jobs. I would just say that anybody making $5.15 an hour with no benefits and working part-time is not paying much in the way of taxes because they can't and shouldn't.

The Vice-Chair (Mr. Campbell): Thank you.

Mr. Davis.

Mr. Davis: Thank you.

In terms of the industry question, I'm not sure that everybody is aware of the fact that this country has 80% of all its debt offshore. A reduction in interest rates in Canada would not do anything to lower the interest on our national debt. What we have to do is create an environment where we can bring those offshore debts back to Canada, and I'm not sure there is presently enough savings in Canada to do that. Clearly, I think it's a misconception to think that by lowering rates in Canada we will lower our rates offshore.

The Vice-Chair (Mr. Campbell): That number I don't believe is correct. You're referring to debt of the Government of Canada held offshore. It's more in the range of 40%.

Mr. Davis: Yes, 40% of the GDP.

The Vice-Chair (Mr. Campbell): It's 25% at the federal level. And you're referring to GDP - I'm sorry.

Mr. Davis: No, I was referring to -

Mr. Loubier (Saint-Hyacinthe - Bagot): ...42% of the debt by foreign investors - of the Canadian debt, federal, provincial, overall.

The Vice-Chair (Mr. Campbell): That's right. Overall, what's held offshore is in the range of 40%, the number I first cited. Let's continue on.

Mr. Amirault.

Mr. Amirault: I have just one comment. There's actually an estimate in the budget plan that suggests that a 100 basis points decline in interest rates would actually lead to a $3.6 billion decrease in the deficit over four years. I, for one, have said that interest rates, while they're not a silver bullet, they're not going to eliminate the deficit overnight, do have an impact. There's a significant impact there and it would be a long-lasting one.

The other point about interest rates is that it would also create an environment for jobs and growth. Consumption currently in Atlantic Canada and across Canada is pretty weak. That leads me to the second point.

The other point that needs to be made, I think, and this is one point I made with you earlier, is that in terms of cooperation between provincial and federal governments one of the first areas has to be PST-GST harmonization. I'm completely, 100% for the concept of harmonizing them into one sales tax and am not completely against actually broadening the base and lowering the tax.

In my opinion, to the degree that we have to collect taxes to pay the deficit, it has to be done. If we could at least do it in the way that's less confusing and creates less bureaucracy for small businesses, which also means we may be able to lower the administration size of the government, then I'm completely for....

A lot of people here have mentioned that they think we're going too fast. We still have a significant deficit, and personally I think we really need to stick to those targets. Without them we are just not going to be able to get through this. I think we need to stick to our short-term targets.

.0920

The Vice-Chair (Mr. Campbell): Thank you.

Is there anyone else who has not spoken in this round, where we were just commenting or reacting?

Mr. Fitzgibbons.

Mr. Fitzgibbons: I would just like to make a comment to Ronald Stockton.

The printers across the country pay on average between $17 and $28.50 per hour, and for the most part it's not a unionized workforce. Being in private business without a unionized workforce does not mean you're paying $5 an hour. I think responsible business people know if you want to have good employees you have to pay them well, and they don't need to be legislated into doing that.

Thank you.

The Vice-Chair (Mr. Campbell): Let me, just before I turn to my colleagues, ask one question for some reaction.

A number of you have raised the issue of interest rates and what I'll call, for lack of a better phrase, a made-in-Canada interest rate policy. I wonder if people would comment on the extent to which you believe this is a closed system, that we can do that and that it doesn't have an impact on what foreign investors do, or what Canadians themselves do with their savings. I wonder if anybody would comment on that, and then we'll turn to my colleagues.

Mr. Amirault.

Mr. Amirault: The degree to which we can lower the interest rates is limited. It's limited by basically what's happening south of the border. However, I and most other economists expect the Federal Reserve Bank in the United States to lower its rate, and I personally think that the Canadian rates will lower this year. There's ample evidence that they should.

I don't want to dwell on the interest-rate issue. I don't think it's a silver bullet, by any stretch of the imagination. But I think a slower, easier interest rate policy would certainly alleviate some of the problems.

Mr. D'Orsay: On that side, I'm looking at a number of things. One is that there's still a substantial gap between our interest rate and the American interest rate. That's the 1% that could get you the $3.6 billion in savings. After that there's a huge gap - it's on the order of 2% to 3% - in our real interest rates versus the American interest rates.

The fact is that the fundamentals of our economy - take away our debt compared to the American debt situation - are stronger than theirs. So the question, then, on that side...and then one of the reasons that I was focusing on the $25 billion target was that it was the point at which it was conceivable that Canadian savings could meet the need and you wouldn't have to rely on the foreign....

I think that brings you down to what's going to be the response of Canadian savers to lower interest rates. There are already movements offshore, but there's a bit of an obstacle, because there are huge risks in sending your money out of the country in terms of currency exchange risks and your not having as much knowledge about those other economies, and all this sort of thing.

It's not a perfectly permeable system. There are non-pure factors that encourage people to invest at home, not to mention that you couldn't develop other instruments that would make people feel more secure about lending and the interest rate situation in Canada. Ultimately, I suppose, the other part of this is that it's going to do things for all of the people who use borrowed money, it's going to help them all.

The Vice-Chair (Mr. Campbell): Thank you.

We're going to just finish with Ms O'Keefe, and then we'll turn to questions.

Ms O'Keefe: I would comment that I think Canada is affected a lot by what goes on internationally and money going across borders. I don't understand it, but I know it impacts on us in terms of interest rates.

I was at a meeting Monday, and I think it was said that something like a trillion dollars a day travels around the world, and somehow interest rates get caught up in that. I don't know how much control or influence Canada has to equalize those, or to be fair.

The Vice-Chair (Mr. Campbell): We're going to begin questions, then, with Dianne Brushett.

Mrs. Brushett (Cumberland - Colchester): Thank you, Mr. Chairman.

Since we are in my home province this morning, I would like to welcome each one of you and thank you for coming here to present before this Standing Committee on Finance of the Government of Canada.

Just to pick up on the last conversation, we have some people.... Yvonne said go slower on the cuts; Mr. Amirault has said go faster. Maybe a few of you could tell us at what rate you think we should reduce this deficit and at what year we should we aim for a balanced budget. Who has a thought on that?

.0925

The Vice-Chair (Mr. Campbell): I think one of you has already said we shouldn't go beyond $25 billion, except allowing for interest rates, growth, monetary policy. So I just want to clarify it in your question.

Mr. D'Orsay: My basic thing is that if you get to $25 billion as your deficit, then that lets you use monetary policy more. That, in fact, will reduce your deficit further. We are talking of in the order of $10 billion within four or five years to reduce the deficit there.

Mr. Amirault: Just on that point, the important point here is that the debt itself is not the important fact; it is the debt-to-GDP ratio.

On the point about the 3% as a target for deficit, the whole mathematics of deficit reduction suggest that the 3% is what we require in order to keep the debt-to-GDP ratio stable.

What we basically need is 3% growth to get that 3%. If that's the case, then we are not going to get 3% this year. The Canadian economy won't grow by 3%, so the debt-to-GDP ratio probably will continue to rise slightly this year.

My feeling for a long-term solution to the point is that by the end of your mandate you should have the debt-to-GDP ratio declining for at least two years. If we could have the debt-to-GDP ratio stabilized in 1996-97 and actually start coming down in 1997-98, that would be a reasonably good target.

Mrs. Brushett: So you'd focus more on the debt than on the deficit, essentially? Or is it tied?

Mr. Amirault: They're completely tied. You can't have one without the other.

The macro issue here has to be the debt-to-GDP ratio. The idea is that if we can finally get to this 3% - or maybe it's 2.5%, if the economy is going to grow by only 2.5%.... The target has to be one in which there's at least one or two years in your mandate in which the debt-to-GDP ratio actually stops growing and starts stabilizing and coming downwards. That seems to be a reasonable target.

Mrs. Brushett: I have a question for Mr. Fitzgibbons regarding small business. We realize the value of small business in this country. It is the backbone of the economy, particularly here in the Atlantic region, with some 90,000 small businesses. They are the job creators today.

What can this government do to help small business create more jobs?

Mr. Fitzgibbons: I feel that the training that is required for small business from the government should be focused not only on in-house training but also on improving small business practices. A lot of small businesses balance their books.... Basically, they use cheque-book financing. They are not making financial forecasts, and a lot of companies find themselves in trouble because they've started a business without a business plan.

Consulting people on these types of issues is a better way to stimulate those -

Mrs. Brushett: Are you saying that the new program for small business is useful in that sense?

Mr. Fitzgibbons: The new program, which is for low-interest rates.... I've seen that -

Mrs. Brushett: Business development.

Mr. Fitzgibbons: Yes. I've seen applications for that in some cases where they haven't been particularly factual. They've made a lot of promises to ACOA to bring jobs in when in fact all they would like to do is get more equipment so they can compete better within their own marketplace. Unfortunately, the fellow who has the job across the street might have just purchased the same piece of equipment using his own money or paying interest on it. So it creates an unfair advantage.

ACOA's money should be spent in getting involved with showing successful businesses how they can do better or how they can become more successful. With that success, they are going to be creating more jobs.

Mrs. Brushett: I have a question for John Roblee, although I'll leave it open for answering.

I know John very well in the forest industry. It's certainly a vital part of our economy.

We talked about how the investment of $5 million generates $15 million back in the economy, but, as the chairman has pointed out, we've got to borrow that $5 million. We have to get that $5 million somewhere to start with.

.0930

We talk about duplication and overlapping. It comes up repeatedly through our hearings that we want the federal government out of certain sectors. David Amirault said that in the maritime union concept, this is one way we can really streamline and get better efficiency.

Why don't you have the confidence that, with all the elected provincial members we have, you can hold them accountable and get this resource moving with those standards and the development and the forest regeneration the way we should have it in a booming time in the forest economy?

Mr. Roblee: I'll answer just a few questions to get started.

One is about the fishery. We've exploited the fisheries to the point where we have absolutely no resources coming in to pay to the federal government or to the provincial government. Is that an asset or a liability to us now? At one time it was a major asset.

At one time forestry was a booming industry for this country. It still can be, but time is running out. With the dollars you're looking to pay for your deficit or your debt as a federal government, what is the provincial government going to do when those resources are gone? It is a depletable resource and if we do not put something back into that resource, for sure you're not going to have anything for the printing shops, the stores, or whatever. People will not be working. We'll all be sitting around twiddling our thumbs.

Mrs. Brushett: But my question is why can't we hold the provincial people accountable? They're elected, too. Make them accountable for these resources and give them full responsibility there and let us at the federal level concentrate on certain areas.

Mr. Roblee: Well, they do have the jurisdiction. It is their jurisdiction, but even at this time there's not enough money from the province of Nova Scotia to carry that.

Mrs. Brushett: Okay. So it's money.

My final question is for Ms Slater. She talks about the seniors as being pinned against the youth of today or being at odds with our youth, our young people. If we had to make choices in cutting our deficit and dealing with finances - and we've heard Yvonne say how desperate some of our youth are and how much they need - what would you recommend that we do if we really have to deal with some financial cutbacks? Do we let our youth be neglected, or can we make some alterations at the seniors level without hurting anyone?

Ms Slater: Hurting is exactly what I'm explaining the government's doing. You're putting one against the other and neither of those groups are able to speak for themselves; they're either on fixed incomes or they're seniors.

You have to get out of those groups and look at all the other alternatives we've suggested to find your money. We've heard them around this table.

We want the young people to have their share too, and we must not cut from them. You've heard the dire straits children are in. As grandparents, we don't like that at all. Why do you have to look at one or the other? There are other areas you haven't touched, and that's what I'm talking about.

Mrs. Brushett: Thank you.

The Vice-Chair (Mr. Campbell): We'll move to Mr. Pillitteri.

Mr. Pillitteri (Niagara Falls): Thank you, Mr. Chairman.

I don't have much of a question. This morning I was talking to Mr. Solberg here and we were having a discussion on natural resources, which Mrs. Diane Brushett just touched on. I wondered how much input the federal government would have in the forestry industry and natural resources if we set a national standard. Since most of it is provincial anyway, maybe we should have left that field.

Mr. Roblee, you did talk about the golden goose who lays the golden egg.

The Vice-Chair (Mr. Campbell): He said don't kill the goose that laid the golden egg.

Mr. Pillitteri: Tell me, sir, with a $500 billion deficit from the federal government, what golden eggs can we put into the natural resources, into forestry, to create more jobs if it's being exploited to the best it can right now?

Mr. Roblee: The thing is, to the federal government right now it's $46 billion in last year's accounting. That's what came from the forestry sector Canada-wide. It brought $800 million to the economy of Nova Scotia.

What you can do is this. The federal government is sponsoring the ISO 14001. This is one avenue where we guarantee to the rest of the world that we have a sustainable force in our country. We're going to supply the newsprint for the print shops of the world and the lumber for the world on a sustainable basis. How do you create jobs there?

.0935

You go to work and have silviculture and ecosystem tourism. There are unlimited challenges before us we can tap into. That's why I mentioned the human resources development. Those are avenues we haven't even touched on yet. Certification of the industry itself is going to be a major portion of it.

One of the problems we're facing in Nova Scotia is that we're the lowest paid for our stumpage in North America, and yet we will still be expected to be certified as a sustainable force. How do we do it?

Mr. Pillitteri: That was exactly my remark. Your stumpage is not a federal issue, it's a provincial issue.

Mr. Roblee: That's right, but that $46 billion a year you're getting for the Canadian government is an issue. If you don't put something back, you won't get that $46 billion and the $500 billion debt will keep escalating. Once you've taken it all, there is an 80-year period to wait for this harvest to come back again. It doesn't just work like Kodak - take a picture and it's there. It takes a long time.

Mr. Pillitteri: The fact is it's mostly under provincial jurisdiction, and if they have the [Inaudible - Editor] they don't want federal money now to totally fix it.

We're asking here how we can best work towards this budget. We asked the question this morning, and eventually the finance minister is going to be asking how long it will be before the Canadian people want a balanced budget.

We just addressed the issue of 3%, but how far down the road will we be looking for a balanced budget? It seems none of you this morning have committed to saying when we'll be looking for a balanced budget. You just say the maximum you will accept is 3%.

Of course, some of us who are getting closer to a pension have to look at how much we put in and how much we take out. If you don't address the seniors issue, I wonder whether the 20-year-olds and 30-year-olds who are paying taxes and CPP today will be entitled to pensions tomorrow.

I don't so much want to jump on the bandwagon and talk about a $53,000 clawback, and say all those seniors are suffering. There is more money being put away in RRSPs by people who are earning less than than $40,000 than by people who are earning more than that. So if the clawback is $53,000 or even lower, that's not living in poverty. I think if anyone is living in poverty it's the younger people, not the seniors.

The Vice-Chair (Mr. Campbell): Ms Skoke.

Ms Skoke (Central Nova): As the member of Parliament for Central Nova, I would also like to take the opportunity to thank you very much for your input.

I'd like to touch on what Mr. Stockton, Ms Blanchard and Ms O'Keefe have raised. They've addressed the issue regarding the human factor - the balancing of economics with social costs - and the price our people have to pay.

Mr. Stockton, you began by saying you felt the questions framed here today limited your discussions and did not allow discussions regarding the alternatives to the cut-and-slash approach. I'd like to ask you what the alternatives are to this so-called slash-and-cut approach. Let's talk about the human factor and the price our people have to pay.

Mr. Stockton: I think we have to determine first what kind of society we want. Do we want a sharing society like the one we've built up, particularly since the Second World War, or do we want to get back to being a mean society? Do we want to go the way of New Zealand and some of those areas?

If we make the determination that we want to be a fair, compassionate, sharing society, that means we have to share our resources. That means we have to stop the concentration of wealth in fewer and fewer hands. It means, from a practical point of view, if we want to get right down to the economics of it...what everybody talks about but the government seems intent on not doing, while saying it's doing it, and that is job creation. Job creation not only is good for the economy but it provides tax dollars, it provides businesses with money. It also provides that self-esteem and confidence the human needs.

.0940

To be specific about the way the government is going right now, the cut and slash I'm talking about, or the blind ``we have to reduce, we have to reduce, so let's reduce our budget by $1 million''. Never mind that it may cost us $2 million because we've reduced jobs, we've put people out of work, which puts a heavier load on the social safety net, which means people making those good jobs aren't going to be spending. We've had record bankruptcies in the last few years in the private sector, particularly in the small business sector and retail sector. I can tell you when public servants are seeing their jobs cut, they're not going to be spending. Even if their job isn't cut, they're not going to spend.

It's people who make that kind of wage, and the wages Mr. Fitzgibbons' association members pay, at $17 an hour, who create a really vibrant economy. It's not the McJobs that create that economy, and it's not the part-time jobs. It's the public service sector and those better-paying jobs in the private sector that create jobs and a vibrant economy.

Those are the things we have to realize. For some reason it seem the finance department, the bookkeepers under Paul Martin in Ottawa, are saying we will not do this. We're simply going to look at how we take away, not how we build.

Mr. Amirault: May I respond to that? I think there's a general belief that job creation is the right way to go, but there's a bit of a discontinuity here: how does the government create the jobs? In my opinion the government shouldn't be the direct creator of jobs, because in that type of environment you are actually draining out of the economy. What the government should do is create an environment for jobs in the private sector, just as Mr. Fitzgibbons and my colleague here mentioned.

I think over the last two decades we have got a bit taken by the concept that government can create the jobs directly. Personally I think the government can create an environment for job growth, but the job growth has to come from private sector firms.

Mr. Davis: Could I quickly respond to what he said? I'm not suggesting the government should create all the jobs. What I'm saying is that if it creates public sector jobs or, more to the point, maintains those jobs it has and has had, that's good for the rest of the economy. It allows the private sector then to create jobs, because it has that initial base of customers.

The Vice-Chair (Mr. Campbell): But you're not suggesting those public sector jobs are exactly the right number of jobs, no more, no less?

Mr. Stockton: No. But I suggest when you throw people out of work who are trained in those fields, you create a drain on the economy.

Mr. D'Orsay: I have this concern that you can create an environment for jobs, and I think you have to do a little more than that. You have to slant the field in terms of what types of jobs you're going to create. You have to care about how the structures are going to do that.

Actually - this will make Mr. Fitzgibbons feel even better - I'm a tremendous admirer of the printing industry, because it is very much a knowledge-intensive industry. If you look at the kind of changes they've made in the last ten years in introducing new methods of work, and the types of equipment they've introduced and the types of employees' skills that are required to operate that equipment, it is very much a knowledge-based industry. I know that because one of my institutions keeps trying to keep up with them in terms of introducing new technology for educating people to work in the industry - the graphic design type of industry.

That's part of this, and that's where the strategic choices have to be made. What is the type of jobs you want to have in the future?

You can certainly do things that will create a low-wage economy. You can certainly create things that will create a resource-based economy. If the resources are not sustainable, then the jobs aren't sustainable and the growth isn't sustainable.

.0945

Even in those sectors you can do things to target the application of knowledge to those industries and much of this is what Mr. Roblee refers to. He wants to focus on forest management practices. All right. And you're thinking about educating business people to make better decisions about planning their business. Those are knowledge-intensive interventions rather than capital-intensive interventions.

This is where you come to the idea of having consultants helping people develop business plans. You do not give them the money, but you give them a solid basis for going and getting somebody else to give them the money.

The Vice-Chair (Mr. Campbell): Thank you.

Mr. Davis, then Ms O'Keefe. Then we have to move to the other side of the table. Thank you.

Mr. Davis: Job creation was an area which was in my preamble but I didn't deal with it. It deals not necessarily with the social network that's out there, but it has to do with abuse.

I think there's a great opportunity to create jobs in Canada. We have tremendous regulation in this country, and I realize the government has worked very hard. I understand 116 or more regulations have been removed because they weren't being enforced. I believe that if we're going to have regulation we should have it enforced. I believe it can create a positive revenue source, both in terms of income coming into the country and putting people to work.

I will deal with some of the social programs - workers' compensation and unemployment insurance are two, and the fisheries is another example I could cite, where I could say there are tremendous abuses. I think most of us feel we're paying our way but many people out there aren't paying their way fairly. If we were to hire people either on a commission basis or on a direct basis to enforce regulation, we would ensure people are not abusing the system.

I think we can cut the cost of these programs. I look at our area and see one fishery officer, one man responsible for ensuring people aren't overfishing in our bay outside the area of Chester. Whether it be lobster or salmon - I don't care what it is - he can't do that job.

So I think if government is looking for ways of creating employment, they can create employment and it can be revenue-positive.

The Vice-Chair (Mr. Campbell): Thank you.

Ms O'Keefe.

Ms O'Keefe: Some of what I wanted to say has been said, but I'd like to respond to your question. When we look at cuts, we have to look at the real impact of those cuts. I wonder if there can be a ceiling on salaries at the other end of the scale. We talk so easily of people getting $5.15 or $6 an hour. Who is making profits and how can we look at things in a real way so people are not burdened?

The Vice-Chair (Mr. Campbell): Thank you. Other hands are up, but we must turn to this side of the table. If we have time, we'll try to get everybody in.

Mr. Solberg.

Mr. Solberg (Medicine Hat): Thank you very much, Mr. Chairman. I want to go to something Mr. D'Orsay mentioned before with respect to the incentives in place right now in the taxation system for a lot of resource-based industries and that sort of thing.

I guess it's your position that those incentives probably create distortions in the economy. So you're advocating they be removed to save a certain amount of money and other incentives be put in place for knowledge-based industries.

Mr. D'Orsay: Not just knowledge-based industries. Even in the resource sector, there is a need for knowledge-based applications.

One of the Nova Scotia mining companies, for example, has done a lot of work with one of the universities in the province. The research is on ways to use new methods for extracting minerals from old heaps and old mines, for example, rather than simply investing in the things like depletion allowance which reward the scale of operation. The more you dig out of the ground, the more you benefit from it.

So the idea is to target it on people who want to work selectively and do high quality or extract as much as they can from the resource, those types of things. Those are knowledge-based applications. Even in all those industries you figure out ways knowledge can be better applied.

Mr. Solberg: You're aware there is quite an outflow of mining companies from Canada right now to other parts of the world, particularly to Chile and places like this, because they feel taxation levels are too high and they can prosper in other regions. If you removed something like the depletion allowance, isn't it going to drive people and jobs out of the country?

.0950

Mr. D'Orsay: Yes, you may have some mobile capital, but eventually you've kept your resource. And if they want to deplete theirs first and not have a future, then that's fine with me. As long as we have the resource in the ground, we'll have a future, and if we figure out how to exploit it with better knowledge and better applications, then we'll be better off in our future.

In fact, I went through this a number of years ago with the oil industry. There was a tremendous drive in this industry to get the product out of the ground and across the border as quickly as you could in order to get it onto your bottom line as quickly as you could.

That's not the type of incentive you want to create. It doesn't use the resource as well as it can be used, it doesn't create a sustainable approach. It's a destructive approach. We've been through that.

The one example down here we cite constantly is the kind of incentives and resources you put into the fisheries. These were put in by government to put people into that area and create a lot of part-time jobs and a lot of support for equipment, boats, and all that type of thing so people could haul the fish out of the ocean as fast they could. Then you discovered you destroyed the resource. You're doing the same thing there. The rationale at the time was that if we don't do this, somebody else will. Companies will invest their money somewhere else where it's easier to pull the fish out of the water.

Mr. Solberg: Wouldn't it make more sense, though, at the end of the day, to just have a system with very few incentives of any kind so the capital flows to where it makes the most sense to the people who want to use it? Isn't this better than somebody on high dictating that we think it's better used here or there? In other words, get rid of all of the loopholes and simplify the taxation.

Mr. D'Orsay: The grant-type system that tries to pick the winners and losers and pits the new people against the old ought to go. But I do think you can, on the basis of what kind of strategy you think will ensure a future for all industry, say what the strategy will be.

We've reached the point where the belief in the need to promote capital has defeated the purpose of developing in those areas of the economy. Then you promote speculation and you promote real estate investment that you don't need, as people could take a tour of downtown Halifax and discover. For example, if you think real estate investment is a good thing, and you say let's have buildings and let's increase the incentives since people are building less because they can't rent the buildings, then you can end up with even more. You have to stop that and move into looking at where the future is.

Mr. Solberg: The whole point, though, is that people don't really know where the future is. When in the past governments have tried to predict where the future is, they've failed.

For instance, we had the research program of the early 1980s where people built in the order of billions of dollars. That was through the taxation system, and we've had other programs people have really abused. We've also had all kinds of tax incentives, such as the MURB program, where people overbuilt as a result of that.

The point I'm making is it's very difficult for government to make those predictions. And isn't it better for people who have something to actually risk and for the people whose money is involved to make those predictions? They have a vested interest in ensuring it's not wasted.

Mr. D'Orsay: No, I don't think they have a vested interest in ensuring it's not wasted. They have a vested interest in ensuring they get a quick return. That's one of your problems and why you got into the MURB type of thing.

The other part of that is, I suppose, you can do things where you target specifically, where the outcome you want, for example, is more units of apartments buildings and then, yes, you'll have a program generating units of apartment buildings.

What I am saying is you can go broader than that and say across all industries the strategy that's going to work and what we want to pay attention to is to developing human resources and developing the knowledge-based side. You want to pay attention to things like the need for training internally in an industry like Mr. Fitzgibbons'. You want to pay attention to this and you want to make sure you're not creating obstacles to training. Things like unemployment insurance create obstacles to training.

The Vice-Chair (Mr. Campbell): I want to say a couple more words and I think Mr. Stockton also wanted to get a word in here.

Mr. D'Orsay: Okay, I also wanted to point out that the wheat economy did work. It was a government intervention, and it did work; it worked for 40 years. The point is there was a phase at which it was an effective intervention to develop a transportation system to create a wheat economy. Then you had another phase at which another set system of interventions worked to create a manufacturing economy. Now we have to have a system of interventions that will create a knowledge -

.0955

Mr. Solberg: I've got another question and I'd like to ask it, but I need Mr. Stockton to respond first.

Mr Stockton: You raise an interesting point, because you said let's just leave it to capital to decide where it wants to go. That brings us right back to my first point. Who's running the joint - capital or human beings? What do we care about - money-making or human beings?

It's not what capital wants. It's not what the people who own or amass capital want. It's what humans wants, what the people of our community want. I submit that it's fair ball for those of us in our community, the taxpayers, the citizens, to use our money, to invest our money, through our government if that's the way in which we choose to do it, in the economy and in development, to do and to achieve the goals that we collectively want, not just what some sole capital owner wants.

The Vice-Chair (Mr. Campbell): Mr. Solberg, before you go to your next question, some of the members on this side want to weigh into this interesting discussion as well. I don't know if you want to respond to Mr. Stockton.

Ms Slater: I haven't had a chance to answer Mr. Pillitteri.

The Vice-Chair (Mr. Campbell): Mr. Solberg, do you want to reply to Mr. Stockton? Then I'm going to turn to Mrs. Brushett.

Mr. Solberg: The only thing I want to say to Mr. Stockton is that capital, of course, has human beings behind it. In many cases it's people who have RRSPs, people who are just regular folks, and they want to get a return on their investment so they can retire without having sometimes to rely, for instance, on a government pension system that obviously is not going to serve people very well.

I could indicate to you many examples of where people have made much better decisions with respect to their own social security, for instance, than the government has made, and I think people would like to have that option.

The next question I want to ask - and I would open this up to anybody -

The Vice-Chair (Mr. Campbell): Mr. Solberg, Mrs. Brushett wanted to weigh in on your first question.

Mrs. Brushett: I'll make just one quick comment to Mr. Stockton on this discussion on human resources as opposed to capital flow. In the 1970s and 1980s we were increasing the public service. We were increasing the programs in this country. This is where we are today. It's time to look at the capital resource that we made. Increasing the public service and the programs generated a big deficit. It didn't build the economy so that it balanced the budget.

Mr. Stockton: That deserves a long response.

The Vice-Chair (Mr. Campbell): I don't think we have time. Mr. Solberg has another question, and then we're going to have to wrap up.

Mr. Solberg: Several people have spoken about overlap and duplication. I'm wondering if people are saying that because they're concerned about this, they favour decentralization and allowing the provinces to assume the role that is theirs in the Constitution, in most cases, to run particular areas, including the resource industries. It also has implications in other areas, including social welfare and health care. I wonder if that's what people are indicating.

Mr. Amirault: When I made the point about harmonization, or bringing together the federal and the provincial, there are a few areas in which there are both federal and provincial roles and they become very confusing. The Department of Fisheries was one example that was mentioned.

Another area is that of the GST and the PST. To the degree that we can harmonize those, that would be a very efficient way of approaching a source of revenue generation.

To the degree that there can be some harmonization at other levels, I don't care if the federal government or provincial governments do it. In fact, I would prefer to see a system in which we separate the rowing from the steering and the delivery services that the government offers - for example, health and social assistance - are delivered by one agency in Atlantic Canada. In the theme of Atlantic cooperation, if we had one social assistance agency that had federal dollars coming in and basically had the responsibilities of HRDC or Health Canada and also had the responsibility of social assistance on the provincial side....

.1000

Everything in Canada seems to be phrased in terms of the idea of whether it is a provincial or a federal responsibility. I think you could basically set up a unit unto itself and have both sides put money into it in terms of delivery of services. It doesn't have to be a situation of one or the other.

Mr. Solberg: Then are you saying one level or the other wouldn't have responsibility for calling the shots? Someone still has to determine how that money is spent.

Mr. Amirault: Exactly. You're absolutely right. They should determine together how to call the shots.

The Vice-Chair (Mr. Campbell): Thank you.

I have to give everybody a few seconds to wrap up. If you look over your shoulder, you will see a panel assembling behind you that is as eager and as interested in speaking to these questions as you have been. I want to thank you for your interventions.

One of the problems we have is that we don't have an entire day to thrash out these issues. A fresh batch comes in to beat us up a little more, but we're still the same people at this end of the table.

This really has to be a less-than-thirty-seconds, last-shot, wrap-up response from each of you. Because Mr. Amirault already spoke, let me start with Mr. Davis.

Mr. Davis: Just keep working to cut the deficit. Try to get to a balanced budget in the near future.

The Vice-Chair (Mr. Campbell): Thank you.

Mr. Fitzgibbons.

Mr. Fitzgibbons: I think the year 2000 would be a perfect date. It's a nice round number for a balanced budget. I also think that if you keep money in business, business will rotate that money and keep it in the economy.

The Vice-Chair (Mr. Campbell): Ms O'Keefe.

Ms O'Keefe: Please don't balance the budget on the backs of the poor.

The Vice-Chair (Mr. Campbell): Ms Slater.

Ms Slater: I'd repeat that, and I'd also ask you to give us back our Canada assistance plan. We're going back thirty years if you take it away.

And let's remember to read Shooting the Hippo.

The Vice-Chair (Mr. Campbell): Mr. Roblee.

Mr. Roblee: If the federal government insists on getting out of natural resources, there should be a tax system put in place that small private woodlot owners could use. It should be similar to that used by the farmers, fishermen and small businesses. There should be tax deductions for culverts, roads, silviculture, surveys and whatever, in order that they could be written off.

The Vice-Chair (Mr. Campbell): Mr. Stockton.

Mr. Stockton: Thank you, Mr. Chairman.

I say that we need to keep the money in Canada. Keep it in the pockets of Canadians not by reducing taxes, but by not giving it away to large business and by giving people decent wages. They'll then do the job.

The Vice-Chair (Mr. Campbell): Thank you.

Mr. D'Orsay.

Mr. D'Orsay: In his last question, I think Mr. Solberg had us on the really crucial question for government at the moment: the is design of the CHST. I agree with Mr. Amirault that it's separating the rowing from the steering. You really do have to get the accountability measures built in there. If the federal government is going to be supporting provinces, it has to be directing the money to provinces that are pursuing the desirable federal goals: increasing educational attainment, improving health and reducing poverty.

The Vice-Chair (Mr. Campbell): In keeping with the tradition of letting youth and the young - or their advocates - speak last, a tradition that we began yesterday in Charlottetown, I'm going to end with Ms Blanchard because it is youth's future that we are most of all concerned with. When we look way down the road, they're going to have to deal with all these problems for many years to come, so they are going to have to help us with the solutions.

Ms Blanchard.

Ms Blanchard: Thank you.

Our message is that we're in this together. It takes government, it takes business, and it takes the community. By working together, we're going to ensure a better future for our children and youth. Let's try to look at them as assets and not liabilities.

The Vice-Chair (Mr. Campbell): Thank you very much, ladies and gentlemen, members of the panel, for an interesting and stimulating discussion.

As I said, the next group is assembled and is ready to continue the battle with us. While the next group of panellists comes to the table and the name plates are being changed, we'll take a short break.

;