[Recorded by Electronic Apparatus]
Tuesday, November 28, 1995
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[English]
The Vice-Chair (Mr. Campbell): Resuming our pre-budget consultations in Halifax this morning, we have our second morning panel. I'm going to introduce the people who are appearing with us this morning and then we'll proceed.
From ABT Building Products Canada Limited, Peter Hatt; from the Halifax County Regional Development Agency, Mr. Wilde; from the Lunenburg Industrial Foundry and Engineering, Mr. MacDonnell; from the Metro Committee for the Employment of Persons with Disabilities, Charlie Macdonald; and from Real Expectations of Communities Against Poverty, Stella Lord.
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We are expecting a couple of more witnesses from the Dalhousie Student Union, the Nova Scotia Federation of Agriculture and Saint Mary's University. I anticipate that some or all of them will join us in progress.
The procedure we follow at these round-tables is to ask each of you to make an opening statement of four or five minutes' duration, with the salient points of your presentation and hopefully responses to the questions we sent out to you to stimulate your thinking about the issues that confront us as a committee. When that round of opening statements is done, we'll provide a chance for you to respond and react to each other's comments, and then we'll open the discussion to the MPs who are at the table from all political parties in the House.
Let's begin, then, with Mr. Hatt.
Mr. Peter Hatt (Purchasing Superintendent, Canexel Hardboard Division, ABT Building Products Canada Limited): Thank you.
On deficit reduction and how it can best be achieved, my interpretation is that economics will rule no matter what we do. How we appear in the world community will decide what we pay for interest, which will consequently ``pre-emanate'' any decisions we might want to make on a short-term basis.
I don't say our deficit should be zero. We should have a working deficit that is perceived by the G-7 and the rest of the world as being at a level where we can sustain growth.
Government's role in private industry should decrease. Private industry should be allowed to do what they do best. Government should be a facilitator.
No government area or body is exempt from review. One of the reasons we are in the situation we are in is governments have been allowed to grow too big over the years, especially since 1975. It's time all government agencies be reviewed and audits be done on every department. The public should be more exposed to what goes on behind closed doors and the arrangements that are made, whereby five years later we find out that x million dollars have disappeared and there are no answers for it.
In private industry you have to answer for your decisions. In government you do not, for the most part, and that is wrong. If you make a decision, you should have to answer for it. There should be a level of measuring instituted whereby people's progress is measured and reviewed.
Thank you.
The Vice-Chair (Mr. Campbell): Thank you.
We'll move next to the Halifax County Regional Development Agency.
Mr. Peter F. Wilde (Treasurer, Halifax County Regional Development Agency): Thank you for the opportunity to be here. I'm treasurer of the RDA in a volunteer capacity, with which I'm involved in the community.
I want to praise the way the three levels of government have gotten together to create a Regional Development Agency, not only for Halifax County, but for other districts of Nova Scotia.
My philosophy is that this is the way governments should work to encourage community development and business development, and to really encourage people to take ownership of their own future. Instead of allowing people to say, ``Let the government pay'' or ``Let the other guy pay'', this encourages people to say, ``I am responsible for my own well-being and for my community's well-being''.
So I'm very pleased to be involved in a volunteer capacity in this dynamic area of community development, funded and supported by all three levels of government.
In my business capacity, I'm a chartered accountant. My self-imposed mandate is to provide accounting, taxation and financial services to mom-and-dad family businesses, and that's where I've put my life since I was lucky enough to come to live in this great country of Canada way back in 1974.
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I would note that 1974 was the last year we had a balanced budget, but I'm not going to take any credit or blame for the fact that federally and provincially we've totally lost control.
The Vice-Chair (Mr. Campbell): I knew one day, Mr. Wilde, we'd get to the bottom of the source of this deficit.
Some hon. members: Oh, oh.
Mr. Wilde: With the best will in the world, government has tried to involve itself in all commendable areas of expenditure, but unfortunately the expenditure has gotten away from us.
I've seen levels of taxation increase dramatically, particularly in the last five years. In the 21 years that I've been lucky enough to be self-employed in this part of the world, I've looked after family businesses. It is of great concern to me as an individual that in the last one and a half years in this community I've had more clients seeking protection under the Bankruptcy Act than in any of the previous eighteen or nineteen years. Something is very seriously wrong right now with taxation and with the economy.
My personal opinion is the reason we're short on money is the government's spent it all, and not very wisely. I include all levels of government, not just the federal government. I believe the country should be run on the same basis as a family business. You can't borrow money to fund operating expenses. You can borrow money for capital expenditures that create assets for the good of the business or the community, but you shouldn't be borrowing money to fund your day-to-day living expenses. You can't do that and you can't continue to do that. That's one of the reasons we're in the desperate straits we apparently are in now. So I'm very much in favour of finding ways to balance the budget as soon as possible.
As to budgetary measures to create an environment for jobs and growth, government has proven consistently in my life in Canada that they're unable to create jobs. Many billions of dollars have been expended by government departments in job creation programs. I don't believe we have any less unemployment now than we ever did. Government must find ways to free up money for the private sector, because small business especially is the prime creator of jobs in the Canadian economy. In fact, in the Atlantic region, since 1992 small business is the only area where any jobs have been created. All other levels of business have been in job reduction mode.
One of the biggest beefs small business people have as far as the federal government goes is the goods and services tax. We don't say it shouldn't be applied, but we are very concerned that one of the direct results of having the goods and services tax is people aren't buying stuff any more. If you go out and spend $100 in this province of Nova Scotia, you have to pay $7 to the federal government and then 11% of $107 goes to the province. Between federal and provincial sales taxes, we're looking at approximately $18.70 of tax every time you buy something for $100. That is an unacceptable level of taxation.
The other main concern small business people have is the GST has driven too many business people underground. Too many small businesses trying to conform to the regulations of the GST find themselves unable to attract work because they're directly competing with non-registered traders and service-providers.
We therefore strongly urge that measures be taken so small business is put on a level playing field. We don't care very much whether you make everybody register for the GST, which is perhaps very cumbersome and difficult, or whether it would be more appropriate to raise the exemption level below which businesses don't have to register and be involved in this cumbersome system of the goods and services tax. Maybe it would be effective to bring the GST in at the wholesale level rather than at the retail level.
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As well, for those businesses that are required to administer the GST system on the part of the government, maybe a $250,000 annual revenue level would be more appropriate than a $30,000 level, for registration purposes. We feel that would address the concerns of the underground economy, as well as perhaps encouraging people to invest and grow their businesses and create more employment.
On the question about what areas of federal activities should be considered for further cuts, before you get into cutting specific areas perhaps we could ask the government to take a very close look at the overlapping jurisdiction. There are too many federal and provincial agencies trying to provide the same service to the same sections of the community.
Particularly, recently we've been looking through the RDA at the TAGS program, the Atlantic Groundfish Strategy, which involves HRD Canada. We find that not only is HRD Canada involved in trying to help these fishermen, but so are the federal and provincial departments of fisheries. There's just too much overlapping of involvement.
I was very encouraged to hear a member of the previous panel suggest that maybe there should be one agency for the delivery of all these services for Atlantic Canada.
With that, maybe I should pass it on to others.
The Vice-Chair (Mr. Campbell): Thank you very much.
Mr. MacDonnell.
Mr. Ralston E. MacDonnell (Lunenburg Industrial Foundry and Engineering): Thank you very much, Mr. Chairman and panel members.
My opening remarks are as follows. On the deficit, I believe strongly that we have to forge ahead to reduce the deficit at the earliest opportunity, but I also think some of the targets that have been established by government to date have been reasonable insofar as achieving an objective without upsetting the process as well.
I think the means to do that, however, are more on the proactive side than on the reactive side. We must do this by developing economic instruments that promote economic activity in the country and develop wealth we can use to reduce our deficit.
I specifically want to address a few items that revolve around a theme of making certain that measures in our budget reflect the differences that exist across the country and that they would be sensitive to the regions.
One specific measure I would like to suggest to create an environment for jobs and growth is to create taxation and fiscal policy measures to support growth, specifically in export-oriented and technology-based enterprises. In particular, I'd like to suggest that we consider defining tax reduction for those enterprises that generate employment in technology-based enterprises, particularly in the small to medium-sized enterprises, which are most prevalent in Atlantic Canada.
I would like to recommend that we promote tax reduction specifically for employment generated by companies in export areas, again targeting the small and medium-sized enterprises, where I believe we see a tremendous amount of potential for growth in the future.
I would also like to suggest measures to encourage strategic procurement, particularly in the regions. That's not to say that the Government of Canada has not identified strategic procurement as a way to generate economic activity, but the time that the notion goes out of favour is about the same time it's hitting Atlantic Canada. I would suggest that we look very carefully at these in our budgeting process to advance the public need and the small and medium-sized enterprise growth potential at the same time.
On the matter of commercialization of government activities, again, I would like to encourage government to minimize its role in activities that are conventionally able to be done by the private sector. I would speak specifically about those areas of technology and consulting services because I believe there's a tremendous amount of duplication, not only among various levels of government but also among the government and the private sector in this country. We are overcapacity in many areas in terms of our need. It turns out that some of the strongest capacity is actually within the government, and it's not earning us very much money.
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So I would suggest we get out of certain areas and allow that to occur in the private sector. This provides a great amount of potential for revenue to be earned in the private sector. Our consulting industry alone exports $6 billion, which is probably the tip of the iceberg if we continue to use our Canadian need as a support mechanism to grow it. The Quebec provincial government has been a tremendous supporter of these types of policies and you can see international-class enterprises such as SNC and Bombardier as the results of it. Federally, we have to look at this.
I would make the point about overlap and duplication of services that Bill C-52, which is currently being considered by the government, is not a good example of how to get out of doing what the private sector does. It is a bill now being considered and it allows federal government technology, enterprises, to provide services on a local and regional level to other levels of government, essentially in direct competition with the private sector.
I think what we ought to be looking at in the measures you're putting forward is specific policies and opportunities that will drive the technology and consulting services component of the economy, which is forecast to have a tremendous potential for growth, and to utilize government opportunities to maximize that potential. I think the result will be a growth in our ability to tax business and people, or at least to get effective revenue from them.
The Vice-Chair (Mr. Campbell): Thank you very much.
Charlie Macdonald.
Mr. Charlie Macdonald (Member, Metro Committee for the Employment of Persons with Disabilities): Thank you, Mr. Chair, for the opportunity to make a presentation. I'm no relation to the previous speaker. Welcome to Nova Scotia; there are a few of us Macdonalds around.
I'm representing the Metro Committee on the Employment of Persons with Disabilities. We're here to express our concerns regarding the budgetary process.
Certainly the recent presentation by Lloyd Axworthy to the Standing Committee on Human Rights and the Status of Disabled Persons was somewhat encouraging, and the review of some of the federal initiatives that will impact positively on persons with disabilities. We believe such mechanisms as a special opportunities grant for students with disabilities to access support services, some of the changes to the Canada Pension Plan that reduce disincentives for individuals to return to the workforce.... Some improvements in the areas of employment equity certainly are seen as positive. The extension, at least in the short term, of the vocational rehabilitation of disabled persons program, which is clearly an effective mechanism to provide for the employment of persons with disabilities after becoming disabled.... Some of those announcements that were made were certainly seen as positive.
We held a meeting of our counterparts across the country in October, though, and I think the finance committee has received a copy of a common position statement on the impact of the Canada health and social transfer on persons with disabilities. I have some copies available to leave with you. All those still point to concern about the impact of the block funding on needed services for persons with disabilities, particularly in provinces such as Nova Scotia which don't have the fiscal capacity the Ontarios, the Albertas, and the British Columbias have.
We certainly see that a leadership role is required of the federal government. It is required from the perspective of requiring national standards for services, whether they be in health care, post-secondary education, social services, or job training. If the funding is going to be devolved to the provinces, there maintains a requirement for national leadership to ensure the patchwork quilt of services that does exist across the country does not exacerbate.
One of the concerns with a policy such as the Canada health and social transfer is widening the gap between the haves and the have-nots, creating an atmosphere of seeing people as being worthy for and seeing people as being worthy for and others as being unworthy for, the deserving and the undeserving, with the gap widening between the rich and the poor, both across the country and within the province.
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So block funding, in and of itself, would not be as bad if the national standards were enshrined and the appropriate amount of money for transfer was provided to particularly needy provinces.
In our brief we talked about the need to maintain a level of sufficient cash transfers to provinces that have fiscal concerns, but as a mechanism to ensure that national standards are continued even to the ``have'' provinces so that the cash transfer doesn't disappear and basically, for instance, the Canada Health Act becomes a meaningless document.
We see a role for the federal government in adopting a policy of full employment - that should be the guiding light, so to speak - and, through the achievement of full employment, providing flexible incentives to business to hire persons with disabilities and to provide training opportunities on the job for persons with disabilities and, basically, job opportunities. That could be done through some flexible incentives to private industry, or direct grants, or some kind of transfers, particularly to the needy.
Nova Scotia has a population of 189,000 persons with disabilities. That's about 21.3% of our population. By the year 2016 we expect that figure to grow by 75,000 persons.
Not only is a job important, but the support services that maintain independent living are critical. So interpreter services, respite services, attendant services and so on are critical, and they are going to become more important.
Without a federal fiscal capacity, provinces such as Nova Scotia are going to have more and more difficulty in providing that level of service. It's critical.
In the area of deficit reduction, we do not agree with the concept of cutting the deficit basically through cuts to social programs. The deficit is an issue and it must be addressed, but through tax reform.... There are areas where the payment of taxes by many corporations, very profitable ones, is certainly at a very low ebb. I think you are getting a lot of the reaction from the community of middle-income earners, who have really taken the burden of the tax system. A fairer and more equitable tax system must be achieved, and through achieving that you can increase your revenues.
Certainly there is the concept of an inheritance tax, the concept of looking at some of the RRSP contributions that are basically a bonus, as opposed to a requirement for income, and basically providing that people who can pay do pay, and pay their right share.
As well, there should be a concurrent change in the way in which tax dollars are spent. We heard about duplication, but program fragmentation also has a cost. If services are available only in a patchwork quilt and people are falling through that safety net, then that imposes additional costs on the social assistance rosters, or on crisis management, or whatever. If there was an elimination of program fragmentation through strong federal leadership, then that in itself would be cost effective.
The Vice-Chair (Mr. Campbell): I'm going to suggest that you stop there. We have one more intervener, one more witness to speak in opening remarks, and then we are going to give panellists a chance to react to each other's comments.
Ms Stella Lord.
Ms Stella Lord (Committee Member, Real Expectations of Communities Against Poverty): I am here representing a group called RECAP, which stands for Real Expectations of Communities Against Poverty. This was a group of women, actually, formed in the summer in response to the fall-out from last year's budget and the massive cuts to social programs and block funding and the demise of national standards for social services.
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Our members and many groups we work with believe this change that occurred in the last budget will impact on people, as Mr. Macdonald has just described, but will in fact create a social deficit in this country, the primary impact of which will be felt by poor adults and children, primarily women, people with disabilities, and people from marginalized groups, especially in poor regions of the country such as Atlantic Canada.
I'd like to make three points about why I'm here, apart from the obvious reason.
One reason is I'm concerned about the two solitudes that seem to be created by this process of hearings. Last year I was very much involved with the social security review process and at the same time was not made aware this committee was meeting around the country. I was told the day before the committee met in Lunenburg. As a consequence, I don't think you heard very much from any of the groups that were involved in the social security review process last year.
So I'm very concerned about the process of this finance standing committee. I heard about this meeting on Friday. I was unable to prepare a proper brief. Other groups I know in the social service field also didn't hear about it until Friday or Monday. They had very little chance to make a proper brief, to prepare properly. Yet the real decisions that are affecting social services are being made by the Department of Finance.
This was very clear last year. Despite all the energy the work groups put in, trying to find some solutions to the social security reform process, the whole thing was undercut by the Department of Finance.
I just want to register that -
The Vice-Chair (Mr. Campbell): Ms Lord, I can't speak to that other process, but as a participant in the finance committee consultations last year as well as this year, I would like to respond to this extent. Last year we heard from a great many groups across the country and in Ottawa, groups that were also part of the social security review process. Indeed, many of the briefs filed with us were exactly the same briefs as were filed with that committee. I apologize if in the case of your group you were not part of the finance committee process last year, but you are this year.
As for the other point, about impact, again, I can only speak to the impact these interventions had on the budget last year and this year. They do get reflected in the views we develop and the recommendations we make.
Ms Lord: Yes, I appreciate that some national groups did make presentations in Ottawa. But there was no means by which groups in the rest of Canada were able to go to Ottawa. Most groups don't have money. In fact the finance committee did meet in Nova Scotia, I believe in Lunenburg, and we weren't told about this until the day before.
The Vice-Chair (Mr. Campbell): Again, just for the sake of the record, we do provide for expenses of groups that cannot appear regionally and do want to come to Ottawa. We did that last year. We've done that this year.
Ms Lord: That's fine. I'm talking about the process. People have to know about the process. Social service organizations have to be informed when the finance committee is meeting. If the finance committee is going to be making these decisions, they have to be informed in order to make input.
The Vice-Chair (Mr. Campbell): Then let me make this suggestion before the witnesses who are here. This pre-budget consultation process is now a permanent feature of the budget-making process in this country. These cross-Canada hearings and hearings in Ottawa will take place in the fall every year. That was made known last year. It was made known this year. I'm telling you now, in response to the frustration you've expressed - and I appreciate your sharing it with us - that people who want to weigh into this process should know that this is now part of the budget-making process, and they should accordingly turn their attention to that, so every fall they're in a position when we come to various regions, or when we hold our hearings in Ottawa....
I suppose when we begin a new process it's inevitable people are not as well informed as we'd all like them to be. I think we can all learn from that and move forward.
I just wanted to clarify that.
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Ms Lord: Thank you very much. I would like to say, however, that I think there is some onus on the government, perhaps through the finance committee, to make sure that information will get out to social agencies. It is not getting out at the moment.
The other reason I'm here is to express my concern about the growing social deficit, particularly the problems that will arise as a result of the finance committee decision last year. We ought to be thinking about what we can do about that.
The third concern I have is that the finance department should start to look for alternatives to addressing the fiscal deficit other than cuts to social programs.
I would like to talk a little bit about the social deficit. We don't have an audit of the social health of this country, but we do have some indicators to suggest that there is already a social deficit in Canada. This will get worse as the impact of last year's budget cuts becomes realized.
We've seen a growth in food banks over the last 10 to 15 years, and growing income gaps between the rich and the poor. There has been a shift of $5 billion in income from low- and middle-income earners to high-income earners during the 1980s.
There have been increases in the numbers of working poor, a 30% increase since 1981.
A large percentage of single mothers live in poverty. Eight out of ten young families headed by single mothers are poor in this country.
Social problems are not being addressed adequately. There are not adequate resources, for instance, to address issues affecting women, in particular problems of women abuse and violence. Despite all kinds of promises that have been made for the last 10 or 15 years, child care has not been addressed.
Those are some of the gross indicators of a social deficit, but we need to look at trying to figure out how we can do a better analysis of what's happening to our social infrastructure with the cuts.
The Vice-Chair (Mr. Campbell): Ms Lord, before you wrap up your opening statement, you began by saying there are other alternatives to address the deficit, but you didn't tell us what those are. Would you share those with us?
Ms Lord: Yes. In terms of the three questions you've asked here, we need to look at growth in a different way. We need to think about investing in our social infrastructure - in education, social services, and child care - instead of cutting in these areas. These are potentially areas of job growth. We need to look at that in terms of jobs and growth.
As far as further cuts are concerned, in question three, we need to turn our attention to cutting the cost to the government of tax expenditures and look at tax reform instead of cutting social programming.
Many recommendations have already been made by many national organizations, and I'm just drawing on some of them here.
Close the growing gap between revenue generated from income taxes and revenue generated through corporate taxes. This gap has been growing for a number of years.
Ensure that corporate profits and dividends are properly taxed. Many profitable companies do not pay any tax, yet shareholders of these same companies are subject to special tax breaks on the assumption that the companies have paid the taxes. The CCSD estimates that about one-third of the profitable companies do not pay taxes.
The Vice-Chair (Mr. Campbell): Do they give any indication of why that is or what reasoning there may be?
Ms Lord: I assume it's because of taxpayers' tax breaks or deferred taxes.
The Vice-Chair (Mr. Campbell): Using losses from prior years -
Ms Lord: Yes.
The Vice-Chair (Mr. Campbell): - or taking advantage of other opportunities.
Ms Lord: I don't know -
The Vice-Chair (Mr. Campbell): You don't know. This is just a statistic that they don't explain.
Ms Lord: - but I think it needs to be examined.
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The Vice-Chair (Mr. Campbell): The other point you made, about the assumption that they are paying taxes....
Ms Lord: The assumption that shareholders get breaks on dividends is that the companies have already paid their taxes, but the CCSD has raised questions as to whether this is always the case. There are companies that have deferred taxes and have not paid. That needs to be looked at.
I think we need to re-examine the RRSP tax limits and the capital gains tax to ensure that fairness is maintained between income groups in these areas.
The Vice-Chair (Mr. Campbell): If you've covered most of your information, I suggest that we end here in order to allow time for discussion among the panel members and questions from the MPs.
Ms Lord: I haven't. There are several other points.
The Vice-Chair (Mr. Campbell): There'll be some opportunity, because we have a small panel. There will be an opportunity to wrap up, even after the discussion.
Let me ask the witnesses in this second panel discussion whether they'd like to comment on anything others have said, not to add to what you've already said but rather to react or comment upon what you've heard. Would anyone like to weigh in?
Mr. Wilde.
Mr. Wilde: I'm going to address the situation about corporations not paying the tax.
Corporations are made up of people. Corporations provide employment. The people who work for the corporations all pay tax. The shareholders of the corporations receive dividends on which they pay tax. The thought that corporations don't pay their fair share....
By the way, I've worked with tax systems. The Canadian tax system is structured in such a way that income flowing through a corporation bears the same amount of tax when it finally arrives at the individual level as it would if the income were earned directly by the individual. In fact we have now a situation where for certain corporations involved in investments the overall tax load is greater on that income by the time the dividends are paid than it would be if the tax were paid on an individual basis.
I think it's a myth that corporations don't pay their fair share of tax. The entire system is designed in such a way that this is very difficult to achieve, if not impossible.
Ms Lord: Then perhaps you could explain why the proportion of tax revenue that goes to the government from corporations has declined in relation to income taxes in the last twenty years.
Mr. Wilde: Personal taxes have increased. The probability is that the total overall ratio of revenue retained by the corporations to reinvest is a lower percentage of the total income earned by corporations and individuals on an overall basis.
The Vice-Chair (Mr. Campbell): Other witnesses have said to us that we should not look just at corporate income taxes compared with individual income taxes. Corporations pay other taxes as well, whether they're real estate taxes or capital taxes, and they've suggested we have to look at the whole amount. There have been changes there as well over the years.
Do others want to weigh into this issue or another issue?
Mr. McDonnell.
Mr. McDonnell: First, I absolutely support all I've heard with respect to strengthening the social fabric of the country and the opportunities that exist there, because I think there are many in terms of job creation and growth.
However, I also suggest that corporations, while the appearance may be one way, still find it very difficult in this country to build and to grow, and the taxation system doesn't help that at the moment. It may well be that the shift in terms of where the ratios that were mentioned are is that more and more of the enterprise in the country is small to medium-sized enterprise, which can be defined as corporate or personal. A lot of personal taxes paid by small business owners today may have been recognized as corporate in yesterday's economy.
In the final analysis I feel quite strongly that we need to continue to monitor sensitively what taxes do to business enterprise because it is a necessary component of our country.
The Vice-Chair (Mr. Campbell): Are there others who wish to weigh in, perhaps Mr. Macdonald or Mr. Hatt, who have not spoken to this issue or in this round?
Mr. Macdonald.
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Mr. Macdonald: I'm not an expert on corporate financing and all that, but in a quick perusal of the annual announcements of profit levels in our banking or insurance systems certainly one would expect that at least there should be a minimum level of tax that corporations of a certain size do pay directly. This is seen as their social responsibility.
A lot of mechanisms are used in accrual or depreciation, or whatever the technical terms are called, but certainly there has to be a minimum level that should be expected of very profitable organizations for them to pay their fair share.
The Vice-Chair (Mr. Campbell): Some would argue, Mr. Macdonald, that this is what capital taxes do. It always leads to a minimal level of taxes. I just throw that out. Others have said that in fact it is built into the system. We must look just at taxes on profits. There are taxes on capital, as well.
Do you have any reaction to that?
Mr. Macdonald: Maybe the corporations could show us a little bit more intelligently what they do pay in taxes. Maybe it is smoke and mirrors, but certainly the reporting of financial statements, whether it's balance sheets or income statements, could be more appropriately done. What are they paying?
The Vice-Chair (Mr. Campbell): Okay, fair enough.
Mr. Wilde, then we'll move to questions.
Mr. Wilde: I just wanted to say that because I took issue over the relative size of personal and corporate taxation, it doesn't mean I don't believe we have a responsibility to do everything we can to support the less-advantaged members of our society. Far from it. I think that's a very crucial part of what we have to do as Canadians, which is to make sure that the less-advantaged people are not penalized as a result of our trying to deal with excessive expenditures in the past that have caused the deficit we're faced with now.
The Vice-Chair (Mr. Campbell): Thank you.
Let's move to questions. I'm sure some of the members of the committee will pick up on some of these themes, which are consistent themes with other panels. Are corporations paying their fair share, whatever that might be? Are individuals paying too heavy a burden? As we move to address the deficit, what measures should be taken to do that? Are we focusing on the wrong deficit? Should we focus on long-term goals, as a society? Rather than how we pay for them, should we figure out how to pay for them later? All of these questions have come up this morning in the earlier panel, and again now.
Let me turn to questions. We'll begin with Dianne Brushett.
Mrs. Brushett (Cumberland - Colchester): Thank you, Mr. Chair.
Welcome, witnesses, before our committee here this morning in Nova Scotia. I'll just pick up on the last point that was discussed among the witnesses.
People go back in time to the 1950s to show the spread that began to broaden between the taxation of corporations and that of the individual. If you go back to the fifties, when corporate tax was much higher, there wasn't enough money to generate the economy, so we started taxing individuals. As we did, the taxing of individuals became higher while that of the corporations was a little lower.
But if you kept corporations today at that high level of the fifties, while reducing individuals' tax, corporations would be taxed more than 100%. There are not enough profits in the system today to maintain it, so the economy would actually cease in that regard.
The other point I wanted to make, when we talk about corporations and taxation, is that we're looking at flat taxes and other opportunities today. I think you'll remember that Bob Rae, in the Government of Ontario, some time back commissioned the Fair Tax Commission to look at what is reasonable. He didn't do that on behalf of big business; he did it on behalf of individual taxpayers.
He found that corporations were paying their fair share, if you want to use those terms, but they were getting what appeared to be breaks because they were carrying losses forward from years when they did not make any profits. They were having the investment tax credit because they were trying to create more jobs. There were also profits from dividends that represent individuals. Those people have been paying as well.
So I think it is a misconception, to some degree, but taxation is an area in which we know we cannot proceed to very many limits that are really higher.
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I just want to make a couple of points. I'll go back to my witnesses here this morning.
Mr. MacDonnell, you talked about Bill C-52 and how it is competing with private enterprise. In what way is that bill competing?
Mr. MacDonnell: A number of representations have been made to the House on Bill C-52 from numerous associations across the country. What I referred to is a provision in the bill that allows for the federal government, specifically Public Works Canada and its agencies, to provide services to the provinces and to local municipalities. In some cases those services would be in really any field, with technology related to architecture, engineering, or accounting, for instance.
The private sector sees this as a clear change in what occurs presently and that the possibility exists at least for the federal government to compete in local markets, at the provincial and municipal levels, with the private sector.
Mrs. Brushett: Was it CAMEX...rather, SIS we used to have where Supply and Services tried to compete with small wholesale outlets and these types of things? We put a stop to that because we thought it would be a problem.
Mr. MacDonnell: I guess the basic structure of the government in the regions you would pick is that Public Works Canada has operating enterprises in real estate, architecture, engineering, and a whole fleet of services that are presently provided by the private sector as well. The argument is that this is currently provided to the federal government, which is maybe a reasonable argument if you believe you have to do everything you do in-house.
However, Bill C-52 does provide for the opportunity for the federal government to provide those same services to provinces and to local governments, which presently is not done.
Mrs. Brushett: So your recommendation might be that, for example, the real estate arm of Government Services be eliminated, abolished, that we get out of some of these sectors.
Mr. MacDonnell: In general, most of the areas I've referred to here are quite well provided for by the private sector. In terms of the strategic need analysis and the requirements definition, by all means I believe expertise is required in the government. But the provision of services is certainly not required to be internal, because the private sector can not only provide the services but can grow as a consequence of having the baseload to work from.
Mrs. Brushett: Thank you.
I have one more question, Mr. Chairman, and it's to Stella Lord.
You talked about poverty and the process. I would just like to remind you that I am a Nova Scotia MP. I did put an advertisement in the newspaper myself to indicate that the finance committee would be in this province, in Halifax. I invited citizens at large or organized groups to come before the committee, and if they couldn't come before the committee, to let me know personally so that I might take their views forward.
Although you're not in my constituency, I want you to be aware that I am available to hear your views, as most of our MPs are, and we can take them any day of the week before the budget process. As the chairman has indicated, this is an ongoing process until we get this deficit and debt under control. I just want you to always be aware of that.
You mentioned that 8 out of 10 single mothers are in poverty. I can go back about 20 years in this province to when we actually encouraged single girls, 16 and 17 years old, to go on their own and live in isolation in old apartment houses where there was no guidance from a mature person to ensure that the girl, who was actually a child with a new child, could manage on her own. There was no one to give them guidance and good nutrition. They stopped their schooling and had little education.
We kept firing money at the problem, and we're still doing it today. But we are encouraging the problem rather than helping it, so I'm saying money doesn't solve it. Do you have ideas on how we can solve that problem of child poverty, help these people get an education, and help these children? Money doesn't seem to have solved it.
Ms Lord: I appreciate your comments about getting the word out to people. On that and in relation to our last conversation about corporate taxes, I think this whole process has to be more open and transparent. We have to know what the corporations are paying in taxes. We have to be a bit more aware of how that is happening.
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The banks are making billions of dollars in profits that are headlines in The Globe and Mail, and at the same time you're reading about cuts to social programs. It's not a way to create social cohesiveness.
The Vice-Chair (Mr. Campbell): But in fairness, Ms Lord, those headlines speaking about profits don't refer to the taxes they're paying. They're reporting on profit.
Ms Lord: What I'm saying is we need to know what taxes they're paying, how the taxes on the corporations are structured, which corporations are paying and which aren't, and how that whole thing.... Maybe there needs to be a different tax structure for different kinds of corporations. I don't know. The whole process needs to be out in the open and above board.
The Vice-Chair (Mr. Campbell): The last comment about ``above board'' suggests it is not. That information is generally available. All sorts of people get access to it, find it to write articles for magazines and newspapers and make suggestions. If you want information you're having trouble getting, let us know, let the clerk of this committee know, and if it's publicly available we'll make it available to you. Look at it, study it, and come back with suggestions.
It's not all easy stuff. As Mr. Macdonald said earlier, none of us are corporate finance experts. Few of us around this table are experts in this field either, although some of us have had a little more exposure to it than others.
We have to read it, get our minds around it, ask questions. That information is generally available; certainly enough information from which to make suggestions about how you would change it if you had your way.
You can talk to the researcher on the staff here and he'll tell you generally what's available on the budget material last year. All sorts of information was made available about corporate tax expenditures, corporate tax levels.
Mrs. Brushett: Mr. Chairman, may I make just one comment so that Stella has a little more peace of mind here? On average, the personal income tax of the individual in this country - now, this is on average - is around 9%. On the corporation it's 23%.
Ms Lord: Well, we go could go on and on producing statistics. There are all kinds of other statistics that refute that kind of viewpoint.
To get to your second point, about throwing money at the poor and whatever, I don't think that's been the case. If you look at what is spent on social programs it certainly is not out of line with most other OECD countries. In fact it's at the bottom end of what other countries spend on social programs.
I think if you spoke to Sister Joan O'Keefe, who was here at the earlier session this morning, and asked her if her agency was rolling in money and didn't know what to do with it, she would have a different view on that.
Mrs. Brushett: Let me pose a new model to you. If we put the young girl who is 16, for example...if we insisted she stay at home, where there may be a mother, an aunt, a grandmother, someone to help nurture that new baby, and let the young girl go back to school or go to work, and gave money to that family to help, might that not be a better model than isolating that 16-year-old girl in an apartment house by herself?
Ms Lord: I definitely agree that young single mothers need a lot of support. Whether that support is going to be able to come from family members, relations, and neighbours, as seems to be the view of the Harris government in Ontario, is a real question. We're in a situation in Canada now where most families need two income-earners. Where is the support coming from in the family? Again, it's throwing the burden of this on the backs of women, mainly.
This is not the case just with the suggestions of the Harris government but with the situation of health-care cuts and cuts to social programs. The fact is that the burden of these cuts is going to be borne mainly by women in communities; and I'm not sure women have the capacity to do this any more. Most of us have to be out at work earning a living as well.
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At the same time as we want to support single mothers getting back to work - there has been this whole push on employability programs and so on - we're not willing to put the money into the social supports to allow women to do that, particularly into child care.
The Vice-Chair (Mr. Campbell): We're going to turn another question here, but let me just add something from the perspective of a member of Parliament from Toronto. I support the comments that Ms Lord has made suggesting that the model we've been discussing here, of turning to friends and family and relatives, may work in some regions of the country, may work in some towns, but it doesn't work in a great metropolitan region like Toronto where that kind of support network does not exist for a whole host of reasons that lie in history and movements of population. It's a concept worth considering, but there are different regions of this country and different areas that have vastly different realities. We have to be looking at a myriad of solutions.
I'm going to turn to Mr. Loubier next.
Mr. Loubier (Saint-Hyacinthe - Bagot): I have a brief comment, Mr. Chair. Members around the table talk about the fiscal policy and the companies in Canada and gave the illusion that there is no problem with it. In my opinion there is a problem with it because up until 1990 the finance ministry provided data on profit in Canada realized without paying taxes, and after that the data was not available. There is a problem, because the last data in 1990 said that $26-billion worth of profit avoided federal taxes.
I think we have to examine the problem and I think it's our responsibility, especially when you look at the problem of the debt of the federal government, to examine the data, to analyse the data, and to explore the possibility of reforming the fiscal policy for business people in Canada.
[Translation]
The Vice-Chair (Mr. Campbell): Do you also have a question, Mr. Loubier?
Mr. Loubier: No, not necessarily.
[English]
No questions.
The Vice-Chair (Mr. Campbell): Ms Lord.
Ms Lord: One of the recommendations the Canadian Council on Social Development has made is that the government should set up an annual tax expenditure account as part of its public accounts to demonstrate or evaluate the various tax expenditures that happen in this country. This would be part of the openness and transparency that I was talking about before, that people do have some evidence of what is actually going on around tax deferrals, credits and other kinds of deductions.
Another suggestion they have made is to look at inheritance tax, which already has been mentioned this morning. Apparently they estimate that a trillion dollars will be transferred between generations over the next 15 years and that a 5% tax rate will produce $50 billion. As I understand it, Canada is one of the few countries in the western world that doesn't have an inheritance tax. I think it's something we should look at.
The other suggestion, which doesn't come from CCSD but out of the social development summit held in Copenhagen last year, is that Canada should be looking at the Tobin tax, a new tax on financial transactions that cross national borders. This would fit in more with the globalized economy we're facing. They were suggesting a 1% tax.
The Vice-Chair (Mr. Campbell): It's not Brian Tobin.
Ms Lord: No, it's not Brian Tobin.
The Vice-Chair (Mr. Campbell): It's that economist.
Let me respond that this issue of the Tobin tax was raised at the G-7 summit right here in Halifax a few months ago, and one of the complications with it of course is that while there are big numbers we can talk about out there, the degree of international cooperation that would be required to make it effective makes it almost unworkable.
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It's an interesting concept, but extremely difficult to execute, and it would have this downside: if you believe in the free flow of capital investment flows, which Canada depends on - and dramatically so - it would tend to interfere. The hardest thing the critics have said about the Tobin tax is, how could you set it at a rate where it would generate enough income but not interfere with the decisions that people would make about capital flow?
So it's an interesting concept, but like many others, when you peel back the layers of the onion - or the rose, depending on which analogy you want to use - it gets very complicated.
Ms Lord: Responding to that, I think many people were quite disappointed by the way in which our government responded to this suggestion at the social development summit, that in fact the suggestion was put forward as something that should be looked at and worked upon and was immediately rejected by our finance minister here as being anything that we would be interested in doing. I'm not saying that this could happen overnight. What I'm saying is that we should be looking at it. After all, Canada was one of the leaders in developing the UN, which many people fifty or sixty years ago thought was an impossibility. Why can't we think in terms of a new vision and work on it instead of just putting it by the -
The Vice-Chair (Mr. Campbell): We did raise it at the Halifax summit.
I also want to respond to one other comment you made and then turn to Mr. Solberg. We do have a form of inheritance tax in this country. We have a deemed disposition on death, a capital gains tax that applies on death, in essence, a valuation of your assets on death. It is not like an income tax because it's not at the same level, but we do have a form of inheritance tax. We did have a different form of inheritance tax before we had a capital gains tax on death.
So to say that we're the only country in the world that doesn't have inheritance taxes is not quite the case. Those countries that have inheritance taxes do not have a capital gains tax on death.
Mr. Wilde.
Mr. Wilde: A lot of the discussion that's taken place so far appears to imply that not enough taxes are paid in Canada. I think this is probably a fallacy. Canadians are already one of the highest-taxed peoples in the world, and if you increase taxation what is going to happen inevitably is that those people who do pay tax - and most of us consider that we pay more than our fair share - are going to vote with their feet and they're going to leave the country and take with them the related economic activity that produces tax.
I had a three-hour meeting yesterday with a client who's an orthodontist, and he said he couldn't afford to buy an RRSP this year because of the amount of tax he has to pay on the income he's earning. He said if that continues, he won't be in Canada any more.
That's a very grave concern; anybody who thinks we should increase taxes.... It would have a very negative effect, because the people who create the wealth in this country are just going to leave.
Mr. Macdonald: Certainly I don't think we're saying increase income tax on individuals or the middle class, but rather we're talking about a fairer tax system and ensuring that it's fair, both in reality and the perception that it is fair. It's not the doctor, the lawyer, the chartered accountant, the bureaucrat who should be targeted for tax increases. It should be those areas that pay disproportionately less or not their fair share of taxes.
The Vice-Chair (Mr. Campbell): Could you give us an example? Help us out here. We hear that a lot. I don't know what that means. It's a concept that's appealing, but what is that level, who are those people, where are they, how do we identify them?
Mr. Macdonald: I would assume the federal government has the statistical capability and the expertise.... I work right next to an insurance building. There continually are federal government, Revenue Canada, individuals in there to try to see where the heck the money is going. Certainly there are creative accounting methods and accounting rules that are providing an advantage to large corporations.
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What I'm trying to say is that the target of reducing the deficit is important, that the target of increasing our fiscal capacities and creating economic growth is important, but what's happening in the discussion is that there are extreme positions on all sides, so that there's no room to cut and there's no room to raise taxes. So you folks solve it.
I think there's a pragmatic way of identifying those areas - and we heard it this morning - of program duplication, of identifying excessive expenditures that are inappropriate, of redefining government priorities to do those things that are critical and not do those that are not of benefit to Canadians, of looking at the source of economic growth pragmatically, inch by inch.
I'm not an expert on tax policy, but it has changed since the fifties. They were paying taxes in the fifties and that was an incredible time of growth regardless of that.
Corporations are not going to leave Canada because of some incremental increases in taxes. This is a wealthy country. We have an incredible amount of wealth, and we should be utilizing that and encouraging its utilization.
Even our immigration policy should be looked at to encourage more people to come and create opportunities.
Obviously, we're in a fiscal crisis, and everybody sees the need for block funding and cutting back on services. But let's do it in a smart way.
The Vice-Chair (Mr. Campbell): I'll leave this with you for you to think about and come back to before we turn to Mr. Solberg.
Even if we increased the take from corporation taxes by one-third and took away all tax expenditures related to the corporations, including the small business deduction, we'd still be running about a $10-billion-a-year deficit.
Mr. Macdonald: That's a good start.
The Vice-Chair (Mr. Campbell): Yes. It wouldn't be a great start, but it would be a good one.
Mr. Macdonald: And then let's develop -
The Vice-Chair (Mr. Campbell): Sorry. I said $10 billion, but I meant $20 billion. I misspoke. It would take care of only a third and a $20-billion deficit would remain.
Mr. Macdonald: Okay. Would you take that? Isn't a one-third cut an excellent start?
The Vice-Chair (Mr. Campbell): I wouldn't take any of that without looking at the impact on jobs and growth in this economy.
We're going to turn to Mr. Solberg, because he particularly wants to speak to the immigration question you raised.
Mr. Solberg (Medicine Hat): I want to put something in perspective. It's my understanding - and maybe the researcher can nod if this is correct - that the top 1% of income-earners in this country already pay 10% of the income tax. He's confirming that. So the suggestion that we have to have more taxes and people aren't paying their fair share is just not borne out by the facts.
The Vice-Chair (Mr. Campbell): Mr. Solberg, I can respond to that for the record.
This comes from the Department of Finance. The top 10% of tax filers, who account for just one-third of taxable income in Canada, paid half of the total income tax.
Is that what you were getting at?
Mr. Solberg: I guess that confirms it further. So the top 10% pay half of the total income tax.
Further along the path the chairman was suggesting on the outflow of people when it comes to the raising of taxes, just a few years ago we saw an absolute exodus of companies and people, particularly from central Canada, because of high tax regimes, particularly in Ontario. We heard the old quip about Bob Rae being voted man of the year in Buffalo, New York, because these people were going like crazy to the United States. So we have to be mindful of the fact that these companies and individuals can move and have moved and are considering moving even now.
I want to ask Ms Lord about some of the comments she was making about the social deficit and investing more in social programs.
It's a fact, I think you'd agree, that over the last 25 years we have increased our social spending very dramatically in this country. Yet - and Mrs. Brushett was pointing this out - we still have all kinds of social problems. It would be hard to argue that all that money has had a dramatic effect in improving the social situation. The question I have is should there be some accountability with respect to how this money is spent?
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We're asking corporations to be accountable. We're asking politicians to be accountable. We're asking everyone to be accountable with their funds. But what I haven't heard is that we should be taking a good, hard look at which social programs have proven to be effective - which ones have actually helped people get out of situations where they were becoming dependent on social programs and get back into the workforce.
Shouldn't we be counting on your industry or the people who are involved in social programs to, for their own preservation really, come up with a list of the programs that actually work and the ones that don't and hold their own industry accountable so the money that is available can go to programs that actually work?
Ms Lord: First of all, I don't think our social standing has been out of line. It depends on how you read the statistics. Certainly what a lot of people who work in the social service field found offensive last year was that the social programs were being blamed for the deficit. That is not case.
Mr. Solberg: Well, I don't want to suggest that, but I want you to respond to the question I'm asking about being accountable. Again, the researcher can nod if this is correct, but I think the three levels of government spend something in the order of $150 billion a year on social programs right now in this country. If that's the case, that's a tremendous amount of money.
People want to get value for their money and they want to know it's having some effect. If it's not having an effect, then people have to ask why they bother. If it is having an effect, then we shouldn't have some of the social problems we have.
Mr. MacDonnell: Mr. Chairman, could I interject for a moment? I'm going to have to leave.
I would like to make a comment on this discussion, although I also would like to emphasize as I leave that we are facing some really serious changes in the funds that are going to be coming to our region in the next four years. It's to the point of being scary.
There probably isn't any other short-term alternative than being certain that we ramp up employment in this area to the maximum extent possible. Having said that, I believe all of us have to work as a team to focus on that potential and use our tax mechanisms to encourage it.
On the discussion that's occurring at the present time, I do not believe it is the responsibility of the agencies and volunteer groups that support social welfare in the country to justify or design the social welfare program the government is delivering. That's the responsibility of the government.
Mr. Solberg: Well, I would like to respond to that, because although it may be the responsibility of the government to design it, what's the purpose of having these hearings you're attending, Mr. MacDonnell, if we're not asking for people's input on these programs? Part of the reason we're having these hearings is to set some priorities. If programs aren't effective, it's in no one's interest to encourage them to continue.
Mr. MacDonnell: I absolutely agree. I think the hearings are wonderful and I believe that's what they should be doing on a consultative basis, but I think it's clear where the responsibility lies. If the programs don't work, then let's use our good elected representatives to determine the ones that are working and the ones that aren't working and make good decisions on them.
Thank you.
Mr. Macdonald: Certainly in our discussions and our briefs, accountability is key. Whether it be through the Canada health and social transfer or through other block funding, certainly public accountability is critical, as is proper program monitoring and program evaluation.
But I agree with Mr. MacDonnell's comment that it's the responsibility of the funding agency to ensure the moneys are spent on what they're intended to be spent on. Direct funding, providing a choice of individuals, putting the money in the hands of individuals directly is an efficient way of doing it and has been shown to be effective.
I don't think it's a case of throwing money at people. It's not helpful to frame it in that sense. In Nova Scotia there are 32,000 persons receiving provincial family benefits. About half of those are single mothers.
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It is certainly the case that some individuals could be looked after in a family setting, but for the vast majority of cases it is a necessity for them to go out and to leave a family setting. The money transfer supports the employment resource centres, the retraining and the support services that are essential for the single moms to get back on their feet, to get to work and to support the child in the home.
We certainly can improve our delivery systems. We can improve the effectiveness of programming, but they're not living in the lap of luxury, that's for sure.
Mr. Solberg: I just want to follow up on that. I certainly didn't say we were throwing money at the problem. That didn't come from me. Again, though, I really do think if you are receiving funds from the government you should be regulating yourself to the greatest possible degree with respect to how effectively the money is being used and how effective the outcome is of the spending of that money.
If the goal of spending this money is to relieve the country of some of its social problems and that is what you're attempting to do, shouldn't the measure of whether or not you're being effective be whether or not some of those social problems are disappearing? Over and over again, I've heard from people who say that if we just had more money, we could get rid of unemployment and we could get rid of all these social ills. But we keep spending money and the problems remain. I think someone has to respond as to why that is if they truly believe the answer is to spend money on these things.
Ms Lord: I'd just like to give a little bit of a response to that.
First of all, I don't think you can argue that our social programs haven't worked, which is what you seem to be implying: where is the evidence that they are working?
Mr. Solberg: So you think they have worked, then?
Ms Lord: If we compare Canada with the United States, for instance, we don't see too many people having to sleep on the streets. We do occasionally; there are people who have to do that - indigents and so on - and that is still a problem that we haven't really addressed.
But we don't see as many people living on the streets. We don't see the same kind of poverty that exists in the United States. We don't see people bankrupted by having to spend money on their health and so on. I think we have to be aware that in a certain sense our social programs have worked.
On the other hand, with the economic changes that are taking place - globalization and so on - we are facing a situation in which unemployment has increased massively in the last few years, to such an extent that 8% unemployment sounds low, whereas 25 years ago we were talking about 4% as the standard unemployment rate.
In a period of change like the one we're going through in most western countries, it parallels what was happening in the industrial revolution. Many commentators have drawn that parallel, yet the middle of the industrial revolution in Canada - around the 1880s - was the beginning of our social programs. That's when people and communities got together and started saying, we cannot leave this to the individual and we cannot leave this to the family, so we have to develop organizations and programs that will address this from a public perspective. That was when Canadian social programs began, even though they were very tentative until after the Second World War.
The fact is that we are going through these massive changes, and I'm not saying there isn't need for change in our social programs and reform of our social programs. Nobody would say the Canada Assistance Plan worked really well or responded to the needs of a large contemporary society. But I think what we are saying is that you can't reform social programs simply by cutting and slashing and by putting the money in one block fund and saying, go after it, try to figure it out for yourselves.
I think governments have some responsibility to pick up on all those things that were said around the social security reform process, which has suddenly gone onto the back burner and nothing has been done about it.
I think there is room for change, there is room for reform, but we have to look at the broad social context that we're living in.
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The Vice-Chair (Mr. Campbell): Thank you.
We'll conclude with a question from Ms Skoke.
Ms Skoke (Central Nova): Thank you, Mr. Chairman. I'll be very brief, because time is getting on.
I would just like to focus a little bit on what Mr. Wilde said, that being that a country should be run like a family business. Small business is the prime creator of jobs, particularly here in our Atlantic region. Bearing that in mind, I'd like to ask the panel: If you were the Minister of Finance, what specific initiatives or incentives would you introduce in this upcoming budget to assist our small and medium-sized businesses? How would you go about giving them the boost that they need and deserve at this point in time?
Mr. Wilde: In the time that I've lived in Canada, and particularly in Nova Scotia, it has been a constant puzzle to me when I see the potential for economic growth and activity in Nova Scotia and throughout Canada. It has been left alone because people just don't seem to want to take any action. Here in Nova Scotia, we're midway between two of the biggest economic markets in the world. We're halfway between the European Economic Community and the North American free trade zone. Why we aren't taking advantage of that as a province and as a country, I don't know. I don't know why we don't have all kinds of corporate headquarters for international companies right here in our gorgeous province of Nova Scotia.
It's a fabulous lifestyle here. We have a wonderful climate. We have great people. We have the best-educated people anywhere that I know of, and we have a wonderful resource base of universities. But even with these things, for whatever reason, the public will or the general will doesn't appear to be.... I don't know why it's not happening. There are opportunities there, and I think government has a responsibility to encourage a more positive thought process about this great country.
Every time we look at the newspaper or we see a television report or we get involved in these meetings, we're all obsessed with the fact that we're all broke and we're all overtaxed and there's not enough money to go around. Why can't the government - and this is not just for the finance department, but the government as a whole - be a good deal more positive about this great country? There are all kinds of opportunities here. We have to encourage people to take responsibility and ownership of their own lives. We have to encourage the development of the resources and the people and the brilliant ecological-geographical situation that we find ourselves in. But please, let's be positive about the future of this country.
The Vice-Chair (Mr. Campbell): Thank you. I haven't met a Canadian who didn't feel overtaxed.
Mrs. Brushett: I just want to make one final comment.
I would agree with Peter that this is really a great province and a great country. The challenge is ours to accept to ensure that we do maintain those social programs to some level of degree that's affordable while generating those jobs in the meantime.
For those people who seem to believe that corporations are not taxed, like Stella Lord, according to Peter, Nova Scotia should then indeed be a tax haven. They should be coming by the thousands to settle here. As far as the reason why they're not just flocking here in great numbers is concerned, it is because they are indeed taxed. So let's put that to rest.
The Vice-Chair (Mr. Campbell): Let me ask our panel members to sum up in a few minutes each - if you want that much time - some parting advice for us, and particularly specifics or a sort of overall theme, so that we can take away some very direct messages from you this morning.
We'll begin with Ms Lord.
Ms Lord: Just to reiterate what I said, when we're talking about deficits, we do need to think about the effect of our dealings with the fiscal deficit on the social deficit. We need to think more cohesively of society as a whole, rather than just one part of it.
I think we really do need to look at tax reform in a broad sense, and that issue needs to be open and transparent. There are big differences between large corporations and small businesses. I would really support small businesses. They help to build communities. Maybe there are ways we can promote that.
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But I do think instead of focusing our attention on cutting social programs we need to look at how we can support them. Tax reform would be one way of doing that.
The Vice-Chair (Mr. Campbell): Mr. Macdonald.
Mr. Macdonald: Full employment should be the goal, and that can be achieved for all segments of society through such things as providing flexible funding for job opportunities for all individuals; providing incentives for entrepreneurship, particularly for persons with disabilities - because that's my mandate - to encourage, train and foster the entrepreneurial spirit, providing the support services that will lead to employability. That may require some investment in funds. It may require investment in funds for independent living. But be rational in budget-cutting.
Good luck in your process.
The Vice-Chair (Mr. Campbell): Thank you.
Mr. Wilde.
Mr. Wilde: As I said already, the government has a responsibility to inspire enthusiasm about the taking of the opportunities that are out there.
About the federal bureaucracy, I'd perhaps like to see the government take a leaf out of the book of New Zealand and require accountability on the part of the bureaucrats, where a minister says to his deputy, this is what you're going to do next year and if you don't do it, then you're out of work. There are too many civil servants in there as a career just to be in the civil service, rather than actually to do something and achieve something.
The Vice-Chair (Mr. Campbell): I'm sorry our representative of the public service who was here on our earlier panel is not here to respond to that.
Mr. Hatt.
Mr. Hatt: My first comment would be that I totally agree with accountability for government employees.
I believe with the size of this country we should encourage immigration. When I say ``immigration'', I mean immigration of the types of people who will help to promote small business.
The family is most important. A lot of our problem in this whole country is erosion of the family unit. We all know it. It doesn't have to be said. Anything the government can do to encourage a return to the family unit is ultimate. I think we'll eliminate a lot of our social problems, a lot of our drug problems, and the rest of it if we can encourage the family unit as we knew it when we grew up, or as I knew it.
Education is most important for our young people. However, I believe our young people need better guidance before they go into a field, so they don't end up with a degree where there is no job.
The Vice-Chair (Mr. Campbell): Thank you, Mr. Hatt. I might just observe that the two issues you've raised are really related. One of the problems we have run into in the Toronto area is that while we have encouraged immigration, to the extent that we don't allow families or family reunification...we find in my city of Toronto, in the greater Toronto area, a tremendous number of communities that have made Toronto home because of our immigration policies but that don't have the kind of structures we were talking about to support them as families. They don't exist as families.
It's the history of Canada over and over again, as wave after wave of immigration has occurred. Typically it has been the breadwinner or the worker, and then eventually the family has come. Somehow that has broken down.
Mr. Hatt: I would like to interject that there are only two things I'd like to see strongly looked at. One is the Senate; and I haven't heard that mentioned. My personal feeling is that the Senate has outlived its life.
The second thing I would like to say is some years ago a former PM was in a campaign that mentioned mortgage interest as being income-tax deductible. Such a proposal as that I think would increase the housing market and the building trade quite extensively.
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The Vice-Chair (Mr. Campbell): Thank you all. It's been very interesting, as these panels always are. I want to thank you for taking time out of busy days to come and share your thoughts and your observations with us. It's much appreciated. Thank you on behalf of all the members of the finance committee.
That brings to a close our morning session and our second panel here in Halifax.