STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Tuesday, October 28, 1997
The Chairman (Mr. Maurizio Bevilacqua
(Vaughan—King—Aurora, Lib.)): I would like to call
the meeting to order and welcome everyone.
As you know, pursuant to Standing Order 83.1, the
finance committee is holding hearings to get input from
Canadians. You may also know that we have travelled
across the country to seek input and have received some
very insightful analysis as to what we should be doing
with the fiscal dividend and how we should in fact
create jobs in the new economy.
We have the pleasure this afternoon of having a number
of people participate in this round table. We will
begin with the representative from the Coalition for
Biomedical and Health Research, Dr. Barry
Dr. Barry McLennan (Coalition for Biomedical and
Health Research): Thank you, Mr. Chairman.
I would like to thank the committee for inviting the
coalition to appear before you.
The Hon. Paul Martin, a few days ago, on October 15,
clearly identified the task: to make Canada a leader in
the modern knowledge-based economy as a national
priority, to generate jobs and growth, and to support
our cherished social programs, particularly our
health care system, in the 21st century. He recognized
clearly that government has a leadership role to play
in promoting knowledge and innovation through basic
The Medical Research Council, the Natural Sciences and
Engineering Research Council, the Social Sciences and
Humanities Research Council, Mr.
Chairman, are the three federal granting councils
supporting the majority of basic research at
universities, teaching hospitals, and research
institutes across this country. They are the
gatekeepers of Canada's standard of excellence in
scientific research. Their external, independent
peer review system is renowned internationally and
respected at home.
However, they are more than granting agencies. They
are the key to making Canada a leader in the modern
knowledge-based economy now and in the 21st century.
They are positioned well to address the task identified
by the Hon. Paul Martin.
The relationship between publicly funded research and
economic performance has been studied in depth by
others. This is important, because it's not
a self-serving enterprise on our behalf. I refer you to
page 2 of our brief, which lists the forms
of economic benefit from basic research
as identified by Her Majesty's Treasury
in the United Kingdom.
As stated by the former Minister of Health, the
Hon. Diane Marleau, and by our current Minister
of Health, Canada must set priorities to address
critical research funding gaps that threaten
internationally our competitive health research
capacity. The starting point for this exercise for
applied research and the commercialization activities
is basic research. Basic research is the fuel
for the engine.
As illustrated on page 3 of our brief, every
national government in the G-7 community except
Canada is playing a dominant and increasing role.
I refer you to the graph on page 3. Look at what's
happening in Canada and look what our competition is
As a fundamental economic tool in an industrialized
society, intellectual property protection is essential
to provide the financial incentive necessary to turn
ideas into reality. The chart illustrating this
is clearly shown in appendix I of the brief.
I want to give you a Canadian example of how this
works. The University of British Columbia recently
released a unique report tracing the 13-year history of
local economic activity generated by companies created
from initial basic research activity. The University of
British Columbia reports that for every $1.25 million
invested in basic research, they yielded one disclosure.
That's even better than what's shown on
the graph in our brief, which suggests that one
disclosure arises from every $2 million of investment.
UBC has done even better than that. They get one for
every $1.25 million.
I don't think this competitive advantage
is unique to UBC. It could happen everywhere
across this great land. This is Canada's
basic research advantage. The link
between research and job creation is most evident
in the life sciences, predominantly the health sector,
which in 1996 employed 70,000 people compared with
60,000 in, for example, the aerospace sector.
There are other examples now coming to light
in Canada showing the benefits that are reaped
by investing in basic research. I refer briefly
to BioChem Pharma in Quebec, TerraGen in B.C., and
Vascular Therapeutics in Hamilton, only three examples
of many that illustrate that initial basic investment
research has now resulted in very significant economic
activity. BioChem Pharma, for example, grew from a
few people in a university lab to 1,000 employees
in ten years. Over 700 of these are Canadians.
So without the federal government fulfilling its role
as the principal supporter of basic research in Canada,
none of this would have been possible. We must keep
priming the pump; that is, keep funding basic research.
A few years ago Canada had strong basic research and
weak commercialization activity. We've improved in
that latter component. I commend the government for
making permanent funding for the national centres of
excellence. I applaud the work Dr. Friesen
and others have done with the PMAC-MRC health program,
the Technology Partnerships Canada program, and more
recently, the government's Canada Foundation for
These are excellent activities. However, they focus
more on tech transfer and updating infrastructure
than they do with priming the knowledge-generating pump
by investing in people, Canada's intellectual infrastructure.
Why is Canada the only G-7 country heading in
the wrong direction? What is the point of
having a sophisticated commercialization engine
if we've no gas to run it? The impacts of MRC cuts
are devastating. We are hemorrhaging. In the
resulting exodus of Canadian scientists....
Appendix IV of our document, which demonstrates
the scarcity of grants approved in the
last couple of competitions, shows what's happened.
Right now morale is so low among Canadian researchers
it's absolutely depressing.
Recently, CBHR conducted a poll of our 16 academic
health centres to survey the damage caused
to basic research funding by successive budget cuts.
The results are clear. Three examples are illustrated in
The same story is true at all sixteen
academic health centres, but the report, on pages 8 and
9, identifies specifically the situation at Alberta,
Dalhousie, and the University of Toronto.
Internationally competitive investment targets must be
set on the basis of an objective to determine the basic
research. In Canada we're very fortunate. We have an
excellent, highly regarded peer review system in place
in all three granting councils. We need to make use of
this mechanism to attract further investment and to
increase our economic activity.
This brings me to our recommendation on page 10, Mr.
Chairman. In order to solidify the scientific platform
needed to make Canada a leader in the modern,
knowledge-based economy and to build an enduring
foundation for employment, it is recommended—as
outlined in detail in the proposal—that the committee
urge government to increase the budgetary allocation to
the three federal granting councils, MRC, NSERC, and
SSHRCC on a priority basis and to levels
competitive with other G-7 countries. Specifically,
we're asking for an increase of $240 million annually
for the MRC, and since the life sciences health sector
accounts for 54% of the total, that amount would need
to be doubled to apply this proposal to the other two
granting councils, NSERC and SSHRCC.
Finally, Mr. Chairman, I'd like to commend the
government for the activities and measures that have
been taken so far in reducing the deficit and in
keeping interest rates low, and for beginning the
process of the virtuous cycle of basic research,
growth, and jobs. But the time is urgent. The academic health
centres are hemorrhaging. We need investment now to be
in place in the federal 1998 budget.
Thank you for the opportunity to present these
comments, Mr. Chairman.
The Chairman: Thank you very much, Dr. McLennan.
I would like to express our gratitude to Dr.
Clément Gauthier, who is also from the Coalition for
Biomedical and Health Research.
We now move to the second presentation. Here from the
Natural Science and Engineering Research Council of
Canada is Dr. Tom Brzustowski. Welcome, sir.
Dr. Thomas A. Brzustowski (President, Natural
Science and and Engineering Research Council of
Canada): Thank you
very much for the invitation to appear before the
committee at this extraordinarily important time.
Mr. Chairman, I would like to thank you for this opportunity
to appear before the committee. With your permission I will make my
presentation in English.
Mr. Chairman, my brief presentation will address
particularly the third question of those posed in the
invitation that we received: What is the best way
that government can help to ensure that there is a wide
range of job opportunities in the new economy for all
That's a tremendously important question, and we have
developed the answer in our short paper. That paper
has been distributed, Mr. Chairman, and it's entitled,
“A Focus on Young People”. That's a very
deliberate choice of words, because our presentation
will follow along those lines.
In brief, our answer to the question is this. Give
our young people the opportunity to obtain the best
skills and knowledge and the incentives to put them to
productive use in Canada. We propose that as the
answer to the question, but in light of our particular
mandate to support research in the natural sciences and
engineering in the universities, what we mean
specifically is the following.
Regardless of their economic means, regardless of
their location in the country, regardless of their
origin, make sure that all young Canadians who have the
talents and aptitudes for science and technology have
the opportunity to develop their skills and knowledge
to the fullest, and in that way to develop the
capability for world-class scientific and engineering
work. They will then be able to engage in value-added
activities in all sectors of our economy, including
some that don't exist today or some that we perhaps
would have difficulty predicting today. To sell the
goods and services that they produce in Canada and
around the world, we must make it possible for them to
do this successfully in this country, to do it in
Canada. This success will then create wealth and
produce good jobs for many more Canadians with a great
range of skills.
The point is that if we allow our young people with
these aptitudes the opportunity to develop to their
fullest capabilities, they will be the lever, the
catalyst, for a great deal of value-added economic
activity and provide opportunities for others as well.
This is a great example of a strategic investment of
public funds, and I use the words “strategic
investment” with great care. I think these are words
that should be precisely defined. In our case, I would
say they mean to invest now to enable our young people
to acquire the knowledge and skills to create wealth
and produce prosperity for all Canadians in the future.
Invest now to give them the skills so they will create
wealth in the future.
If we're going to attract more talented young
Canadians into careers in science and technology, we
must remove the economic barriers that steer their
choices in other directions. We've provided an example
at the bottom of page 1 in our paper of the economic
barriers faced by students contemplating post-graduate
studies. Perhaps if you'd like me to expand on the
details of that I can do so later. Let me just say
it's there in one paragraph.
NSERC, the Natural Sciences and Engineering Research
Council, supports university research and the advanced
education of young people in research, and I stress the
word “in”. This prepares some of them for research
careers, but it is also a wonderful preparation for
many others who will be solving the most challenging
modern problems in many other areas of activity in our
economy and our society in the sectors of business,
industry, and government.
In our three-page paper for the committee we have
traced the progress of young Canadians who have talent
and aptitudes for science and technology. We start
with their undergraduate studies, follow them through
post-graduate studies into placement in industry or
post-doctoral research, and for some, into a university
career where they in turn will teach others and of
course do research themselves.
In that last case the challenge is to provide them
with adequate support for getting started in research,
and in this we happily acknowledge the infrastructure
for research that will be provided by the Canada
Foundation for Innovation. But there will still remain
the cost of operating that infrastructure and all the
direct costs of the research projects.
We've identified some pressing needs in our paper at
all points in the progress of these young people toward
expertise in science and technology, and we've proposed
some realistic targets for improvement. In all cases we
address two kinds of needs: the first is to provide our
young people with more opportunities to develop their
talents in science and technology; the second is to
equip them with better tools. We think we need both if
Canada is to compete successfully in the new economy in
which modern, up-to-date knowledge is more important
We estimate it would take an addition of $160 million
a year to the budget of the Natural Sciences and
Engineering Research Council to meet the targets that
we proposed to improve the opportunities for young
Canadians in science and technology. The cost of
meeting those needs, the ones we've identified in
this paper, is a large part of the financial challenge
faced by NSERC, but it's by no means the whole story.
Today we've chosen to emphasize the needs of our young
people. Research in science and technology is an
activity for young people. I'm not the first to say
this; many others have said this, and a look around the
laboratories of the most advanced high-technology
companies will support that in spades.
We have chosen to emphasize the needs of young people
because it is urgent that they receive encouragement at
this time. They must come to believe that their
country will not let them fall behind. Young Canadians
must see that if they have the talents for science and
technology they will be able to develop to their full
potential and use their skills and knowledge for the
benefit of their country, as their counterparts in
other countries do. The nation too cannot afford to
obtain less than the maximum return on its investment
in their education.
We've also identified other pressing needs, and we
would be pleased to discuss them if more time were
available. I'd be happy to elaborate on any of these
points for you, Mr. Chairman.
That is our
presentation. Thank you.
The Chairman: Thank you very much, Mr. Brzustowski.
We'll now move to the Canadian Dental Association.
Two representatives are here, Dr. Toby Gushue and Dr.
Ray Wenn. Dr. Gushue will be making the presentation.
Dr. Toby Gushue (President, Canadian Dental
Association): Thank you, Mr. Chairman.
Mr. Chairman, committee members and round table
participants, I am the president of the Canadian Dental
Association. I am a practising dentist from St.
John's, Newfoundland. With me is Dr. Ray Wenn from
P.E.I., who is our representative on the Health
Benefits Coalition and the RRSP Alliance.
The Canadian Dental Association represents 16,000
dentists across Canada. It is on behalf of our
membership and the health interests of Canadians that
we are here today.
CDA is a participant in the Health Benefits Coalition,
which is working on solutions to concerns about
health and dental plans. You will be hearing from
other participants on these same issues. We also
participate in the Retirement Income Coalition and
the RRSP Alliance.
The Canadian Dental Association is pleased to meet
once again with members of the House of Commons finance
committee as participants in the pre-budget round
table. I'm sure it will be no surprise to either
continuing members or to new members that in appearing
here today CDA is once again presenting its
recommendation of the past two years.
The Canadian Dental Association recommends the
maintenance of the tax exemption on employer-sponsored
health and dental plans and the extension of this
provision to include plans for unincorporated
We are grateful to this committee for again
recommending at the conclusion of last year's
pre-budget round table sessions, as it had done the
year prior, that the government extend the tax
exemption on employer-paid health and dental plans to
unincorporated self-employed Canadians. These
Canadians would certainly be more equitably treated by
the tax system if this extension could be accomplished.
According to the Mercer study presented to your
committee, this recommendation covers approximately
1,080,000 Canadians who do not have supplementary
coverage and who cannot deduct the cost of coverage
premiums as a business expense.
According to the Canadian Life and Health Insurance
Association, as cited in your committee report, the
cost to the federal treasury in foregone revenue caused
by allowing this deductibility would be about $35
In Canada the quest for affordable and accessible
health care historically has been a partnership of
professionals, governments, business, and labour. This
partnership has helped shape a private sector system
that creates an incentive for prevention and oral
Provincial dental associations are hard at work in
their own areas, and you will be hearing from them in
your consultative travels throughout this country.
However, they tell us that very limited public health
care spending is allocated to dental care and that
reductions in provincial government support have had
damaging effects for many Canadians who are most
We trust that the recently demonstrated spirit of
federal-provincial co-operation may see some
improvements in the overall public sector
responsibilities for ensuring adequate dental care
support to Canada's needy, particularly children.
CDA sees the exemption status of employer-paid health
and dental plans as a tax incentive to help Canadians
take some private sector control of their own oral and
general health. The government's decision to support
the provision of tax exempt dental benefits to
employees has proven to be among its most effective
health measures. It has served to increase access to
dental care, it has encouraged Canadians to seek
necessary treatment on a timely basis, and it has
resulted in dramatic improvements in the oral health of
In your report for 1995 you asked CDA and the
insurance industry to seek ways to help those beyond
the reach of existing public and private programs.
Other than our position on extending the tax incentive
to the unincorporated self-employed, CDA has written to
the Minister of Finance to signal its intent to begin
exploring with the finance department and with Revenue
Canada the possibilities for wider promotion and use of
the tax code provisions for private health service
plans. We have written to the minister on this topic.
The letter is appended to our brief.
The Chairman: Dr. Wenn, please.
Dr. Ray Wenn (Member, Government Relations
Committee, Canadian Dental Association): Thank you.
Our brief also touches on the need for a comprehensive
review of Canada's system of public and private
This has a particular interest for us in relation to
our members' ability to use RRSPs to an optimal extent.
We are actively involved with the Retirement Income
Coalition, which concerns itself with all components
of the retirement income system.
We believe it's
essential to look at the whole picture when considering
future policy. We strongly oppose isolated and
patchwork changes to individual components.
The Canadian Dental Association is deeply concerned
that inadequate income among seniors adversely affects
proper dental care. Research definitely indicates
there is a direct relationship between oral health and
income. The pension and retirement income system is
therefore an important determinant in assisting
Canadians to maintain a healthy quality of life in
their retirement years.
We recognize the need for participating governments to
take action on CPP and QPP funding
stabilization, but we do seek some assurance that at
the federal level this initiative will be made part of
a truly comprehensive and public, open review of the
whole retirement income picture.
On the private pension side of things, CDA's position
remains that any future fundamental changes to the RRSP
system should not be made before a formal process of
inquiry and public debate has been undertaken.
We seek your committee's endorsement of this approach
and we trust we have seen the last of the
government's tinkering with RRSP contribution levels.
Dr. Toby Gushue: CDA has expressed its strong
support for the government's resolute campaign to deal
with deficit and debt, and we congratulate you as
parliamentarians on your valued leadership in this
campaign. We know Canada still has considerable debt to buy
down, but we also believe judicious and selective
tax cuts in today's environment can have a salutary
effect on Canadians in their everyday lives.
It is in this spirit that we seek your continued
support to extend fair treatment in the tax system for
the unincorporated self-employed. As things stand,
they cannot deduct their own coverage costs as a
business expense. The unfairness of this situation is
magnified by the fact that these entrepreneurs
characteristically represent not only the smallest of
Canadian small business entities but the fastest-growing
sector in the Canadian economy. It is time to
correct this inequity.
In conclusion, I want to restate our
recommendation. The Canadian Dental Association
recommends the maintenance of the tax exemption on
employer-sponsored health and dental plans and the
extension of this provision to include plans for
unincorporated self-employed Canadians.
Mr. Chairman, I thank you for the opportunity to
present here today.
The Chairman: Thank you very much, Dr. Gushue and
Dr. Wenn, for your presentation.
We will now move to the Council for Health Research in
Ms. Audrey Vandewater (Executive Committee Member,
Council for Health Research in Canada): Good afternoon.
It's a pleasure to be here today
on behalf of the Council for Health Research in
Canada. I'm Audrey Vandewater, and I'm the
volunteer president of the Heart and Stroke Foundation
of Canada. We are a founding member of the council and
one of Canada's largest health charities.
We and the other members of the council represent
literally hundreds of thousands of volunteers across
Canada who believe in the future of Canada and its
potential to lead the world in health research. Our
objective is to grow Canadian health research funding
through the promotion of excellence in health research
and the enhancement of health research funding.
We appeared before the committee last year and at this
time would certainly like to commend the government for
having taken three important steps last year: first of
all, stabilizing federal-provincial cash transfers under
the Canada health and social transfer; second, helping
to level the playing field between provincial crown
corporations and charities in terms of large donations;
and finally, the establishment of the $800 million
Canada Foundation for Innovation, under the chair of Dr.
These are very important early initiatives towards
realizing Canada's true health research potential for
the next millennium, but they are first steps. There is
certainly more to do. We would like to bring forward
today a series of three specific strategic initiatives
and recommendations based on the belief
that health research saves lives, saves money, and
That health research saves lives should be abundantly
clear. We have only to think about the discovery of
insulin and the discovery of vaccines for polio and
smallpox, vaccines that have virtually obliterated
those fatal diseases.
The evidence that health research saves Canadian tax
dollars is somewhat more complicated but equally
persuasive. For example, our understanding of and the
ability to control factors such as high blood pressure,
elevated blood cholesterol, smoking, and other
established risk factors in heart disease saves the
Canadian health care system $3 billion each year, and
this represents only the direct
cost to the system.
Finally, our cadre of world-class health researchers
has already helped promote growth in three critical sectors
of the economy: biotechnology, pharmaceutical, and
Relative to others, however, we are underachieving. In
the U.S., for example, recent developments in the
biotechnology sector alone have created a $25 billion
industry, employing 150,000 skilled people last year,
and with sales growing at a rate in excess of 25% per
year over the last six years.
There's extensive documentation that the basis of this
industrial explosion lies in the research sponsored in
American academic institutions by the National
Institutes of Health in the U.S., which are comparable
in function, if not size, to our modest efforts via the
Medical Research Council.
The recent success of the Canadian Medical Discoveries
Fund, a venture capital fund, gives us a strong
indication of our untapped potential.
The CMDF was created for the specific purpose of
developing a health-related industry in our country and
has now made strategic investments in 25 companies, with
a total dollar amount invested in excess of $200
million over the past 12 months.
Indeed, the federal granting councils constitute the
discovery pipeline for industrial development in
Canada. This pipeline is being seriously threatened by
the cumulative cutbacks to the granting councils over
the past four years.
This brings us to the first of the three initiatives
we wish to present today. As Dr. McLennan
mentioned earlier, Canada now lags well behind its
major trading partners in overall health research
efforts. Indeed, relative to our G-7 peers, we're
barely in the health research race.
I don't think I need to remind everyone around this
table just how fragile our position is. Venture
capital can shift from one country to another with
lightning speed. While people are somewhat less
mobile, there are already worrisome trends in, for
example, the number of clinical
scientists engaged in research.
We submit there is time—just enough time now if the
government acts—to reverse these worrisome trends and
indeed begin to repatriate some top health scientists
back to Canada.
Therefore, as part of a concerted intersectoral effort
to achieve a minimum international standard of
investing 1.5% of output in research, it is respectfully
recommended that the federal government increase the
Medical Research Council base budget by $60 million per
annum over the next four years, resulting in a doubling
of the current core budget by the year 2002.
Let me now turn to matters more specifically affecting
Canada's health charities and our role in building a
stronger Canadian health research effort.
In a recent speech to the Coalition of National
Voluntary Organizations here in Ottawa, the Minister of Finance
called upon charities to speak up or lose funds. This
admonishment was couched in terms of demonstrating the
value of what we do in support of the longer-term
economic viability of Canada internationally.
This challenge requires some clarification. Since
many health charities such as the Heart and Stroke
Foundation don't currently receive any direct
funding from government, it's impossible for them to
From the standpoint of some of our smaller sister
charities, however, many have already had the support
grants reduced to one-third of the previous levels.
The remaining $3.1 million annually seems to hang
precariously by a bureaucratic thread.
Mr. Martin's remarks also seem to suggest that some of
the good thinking on tax policy changes recommended
last year to this committee but not incorporated into
the budget could still be acted upon.
I'm thinking in particular about the discussion
surrounding the so-called stretch proposal that was put
forward by the Coalition of National Voluntary
Organizations, which our council
continues to support in principle.
Therefore, in the interest of fairness and equity, and
with a view to encouraging the average Canadian to
give, or give more to registered charities, the council
respectfully recommends that the federal government
consider ways and means, including building on the
principles set out in last year's stretch proposal, to
give those with more modest means more reason to give.
Turning now to our third and final area of concern,
the one we touched on last year, the council
believes that Canada is in dire need of an overarching
health research vision. We seem to be moving headlong
into the next millennium with many good ideas but no
coherent health research plan.
If such a plan exists, it has been developed without
having input from the wider health research community,
but I don't believe there's a plan in place at this
We've seen a series of positive federal initiatives
over the past two years aimed at strengthening our
overall research efforts, such as the Canada Foundation
for Innovation and the $65 million Health Services
Many if not all of those
initiatives depend on the ability to effectively
partner to achieve ultimate success. They are also
fundamentally dependent on the broad-based and shared
vision of our role in the global efforts to harness
science in the service of health.
We recommend an immediate improvement in the long-term
base budgets for the granting councils and a
corresponding change in tax policy to help recapture
the basic critical mass of Canadian health research
efforts. At the same time, we need to have all the
significant players from government, the private
sector, and the so-called third sector pulling in the same
direction. This will require a hard-nosed assessment
of where our comparative strengths and weaknesses lie
in an increasingly competitive global health research
Therefore, to fulfil Canada's potential as a world
leader in health research, the council respectfully
recommends that the Medical Research Council of Canada
and Health Canada work with the national voluntary
health agencies on a priority basis to hold a
first ever Canadian health research summit. Its
purpose would be to take stock of the full range of
current strategic health research initiatives being
undertaken across Canada, to clarify the terms of
health research partnering, to identify further ways in
which tax policy and expenditure policies might be
harmonized, and to develop a viable five-year health
research plan for Canada.
To conclude, this committee has an early opportunity
in this Parliament to help strengthen and clarify our
health research platform for the next century. The
Council for Health Research in Canada believes that the
committee has demonstrated an ongoing and strong
interest in the health of Canadians and the integrity
of our collective health research effort.
The clerk of your committee asked me to consider ways
for strategic reinvestment in Canada. We believe we've
responded to this challenge and the challenge of Mr.
Martin to speak out. We're at a critical crossroads in
terms of reinvesting in Canadian health research and
know that this committee will carefully consider our
specific recommendations for building on one of our
real strengths: health research.
Thank you, Mr. Chairman. Dr. Poznansky and I
would be happy to answer questions at any time.
The Chairman: Thank you very much.
We'll now move
to the next presentation. From the Canadian Academy of
Engineering, Mr. Pierre Franche, welcome.
Mr. Pierre Franche (Executive director, Canadian Academy of
Engineering): Thank you very much, Mr. Chairman. To begin I would
like to thank the members of your committee for inviting us once
Some of you may be wondering what is the Canadian Academy of
Engineering. Created in 1987 to serve the country in all issues
regarding engineering, the Academy is an independent, self-managed
and non-profit organization.
Our 223 members—one of them is here today—are imminent
engineers working in all fields who were elected by their peers
because of their distinguished career and their contribution to
society, to the country and to the profession. The total number
must never exceed 250.
The Academy mandate is to improve the well-being of Canadians
and generate wealth in Canada by applying and adapting engineering
and scientific principles.
On the question of the process of deficit reduction we
were requested to address, the progress achieved to
date has been satisfactory; however, it is timely to
consider a new strategy. Canada needs a fresh stimulus
to adapt to what we call the new economy. While
deficit reduction has made excellent progress, it
remains that the overall debt is still too high and
consequently must be reduced.
To free up funds for the priority programs required
for stimulating the adaptation to the new economy, the
government must further reduce its expenses by
instructing all departments and agencies to align their
core staff with their basic mandates and
responsibilities. Their non-core staff with unique
expertise should be available to assist the private
sector on a full cost-recovery basis through
public-private partnerships or other means but where
the private sector is in the lead. This should apply
to initiatives in both our domestic and international
On fiscal priorities, the first priority remains the
reduction of the present national debt, which is too
high. The next priority for the academy is the
reduction of traditional expenses in order to free
funds for the promising innovative sectors of this new
Beyond the reduction, some part of the forthcoming
fiscal surplus must be used to enhance the climate for
technological entrepreneurship in Canada. The most
important measures in this respect would be tax
To achieve a major shift in goals and attitudes
toward this new economy, we must not only rethink
our priorities but also establish a more inventive,
innovative, and entrepreneurial culture in Canada.
Canada has long benefited from its vast wealth in
natural resources. This should continue. Every
attempt must be made to maintain that privileged
position. This calls for sustained infusions
of vision, talent, skills, experience, capital,
and especially investment in and effective use of
The challenge now is to refocus our creative talents
and energy on developing high-value-added products and
services and to make full use of the country's human
resources and engineering and related fields.
As I will mention at the end of this presentation, the
academy will be able to follow up further on the issue
of priorities for the new economy through a series of
recommendations that will be included in a report to be
published in the first week in March.
Let me now speak more on this issue of the new
economy. The new economy I refer to is the result of
the massive introduction of the new information and
communication technologies that are now shaping the
world. It is characterized by the almost instantaneous
flow and exchange of information, capital, and cultural
communication. It is also characterized by the
accelerating pace of innovation and applications.
In this vein, the academy welcomes the creation of the
Canada Foundation for Innovation as a step in support
of the new economy. However, it is only one step.
Despite its name, the foundation's declared purpose is
to increase research capability rather than innovation
in a direct sense. New research infrastructure of and
by itself will not increase wealth creation. New
programs are needed to facilitate the efficient
transfer of research discoveries to innovative
applications on an ongoing basis.
Research must lead to discoveries, but research
discoveries are not sufficient by themselves. They
must lead to innovations by technological entrepreneurs
through the development of new firms' SMEs
or through new business endeavours within larger firms.
The benefits of scientific, and most particularly,
engineering research, depend on the effective transfer
and innovative application of new scientific knowledge
and technology to the Canadian new economy.
In this new economy, international competitiveness can
only be achieved through productivity growth by:
developing new technology more efficiently and making
full use of technology transfers; being more
innovative in management, marketing, and finance;
being more innovative in technology, shortening the
innovation cycle, and especially, nurturing technological
entrepreneurship; continuously improving labour
skills and promoting lifelong learning; and increasing
financial government incentives to encourage
industry to be more innovative and to develop new
According to an OECD report of 1995, Canada is
afflicted with a serious innovation gap. This gap is
rooted in a number of major deficiencies compared with
other major industrialized countries. These
deficiencies include: a lower overall rate of
adoption of high technology; a lower level of
high- and medium-technology goods and services exports;
an annual deficit of about $20 billion
in our international balance of payments for high-
and medium-technology manufactured goods;
SMEs that are technically understaffed; a proportionately
much smaller number of engineers compared with
other advanced countries, but proportionately more
scientists; a lower share of research and development
financed by industry; a smaller number of
researchers per capita; a smaller number
of inventions per capita; proportionately fewer
entrepreneurship education programs in our universities
as compared with the U.S.; also compared with the U.S.,
a financial community less prone to investing
in technological innovation; a venture capital
industry must less deployed than in the
U.S.; a lack of knowledge of the global environment;
and finally, too small a number of global alliances by
In order to maximize for all Canadians the benefits derived
from the new economy, the government must be responsive to the
needs of Canadian technological entrepreneurs. The Canadian Academy
of Engineering offers its assistance in this regard. During
National Engineering Week, March 1-8, 1998, the Academy will be
presenting to governments and other stakeholders recommendations to
further develop technological entrepreneurship in this country.
It will also publish next month a report on lifelong learning.
Meanwhile, with your permission Mr. Chairman, I would like to table
here the academy's background report entitled Technological
Entrepreneurship and Engineering in Canada which was published this
month. I brought 39 copies with me.
The objectives of the report are to explain how the process of
technological change has laid new economic foundations in
industrialized countries leading them toward the new economy; to
explain the nature and the importance of technological
entrepreneurship and, finally, to encourage constructive thought
and debate on the subject of technological entrepreneurship. This
document will also be a basis for consultation with members of the
academy and other stakeholders.
I must emphasize the fact that this report was produced by
volunteers in the academy. I must also mention the support received
from Industry Canada, the National Research Council of Canada, and
the Natural Sciences and Engineering Research Council of Canada.
Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Franche.
The next presentation will be made by Dr. Victor
Dirnfeld of the Canadian Medical Association.
Dr. Victor Dirnfeld (President, Canadian Medical
Association): Thank you, Mr. Chairman.
The Canadian Medical Association is pleased to be here today.
I'm proud to say that the CMA is in its 130th year as
the voice of organized medicine in Canada.
The CMA is committed to a strong, publicly funded
health care system. The CMA is pleased that the
federal government has pledged to reinvest in health
care. We are encouraged by measures introduced in
recent federal budgets, such as the Health Transition
Fund and the Health Services Research Fund,
which recognize the need to maintain quality health
Nevertheless, Mr. Chairman and members
of the committee, Canadian physicians today find it
increasingly difficult to access health care services
for their patients—and I can give personal testimony
to that. Individual Canadians also perceive that
access to services has further deteriorated over the
past year. CMA surveys undertaken by the Angus Reid
Group clearly demonstrate that Canadians perceive
a decline in many critical areas of the health care
If one looks at indicators such as waiting times over
the past two years, it is quite clear that Canadians
have felt the cutbacks in the health care sector in
this past year: 65% reported that waiting times in
emergency departments had worsened, and that was up
from 54% in 1996; 63% reported that waiting times for
surgery had worsened, up from 53%; 64% reported that
availability of nurses in hospitals had worsened, up
from 58% a year earlier; and 50% reported that waiting
times for tests had worsened, up from 43%.
In the CMA's dialogue sessions with the public this
summer we consistently heard this message from
Canadians: Will the health care system be there for
me, for my family, for my loved ones, if needed?
The deterioration of our health care system continues
due to a lack of commitment and the withdrawal of
funding on the part of the federal government. In
January of this year, the provincial and territorial
ministers of health stated:
Federal reductions in transfer payments have created a
critical revenue shortfall for the provinces and
territories which has accelerated the need for system
adjustments and has seriously challenged the ability of
provinces and territories to maintain current services.
CHST cash entitlements are currently at $12.5
billion, which is a drop of 33% from the $18.5 billion
it was at in 1995-96.
This represents a cumulative withdrawal of
$15.5 billion of funding over the three-year period
from 1996 to 1998. According to government plans,
these cash entitlements will remain at $12.5 billion
for the next six years until 2002-2003. However, factors
such as technology change, aging, population growth, and
inflation will cause further erosion in the federal
government's funding commitment—erosion of this $12.5
billion in the absence of an escalator mechanism to
preserve the real value of that cash entitlement, and
to date we have heard no language, no commitment by the
federal government to build in such an escalator.
Health research, as you have heard and I will
emphasize, is a critical component of the health care
system. According to the OECD, the United States,
France, and yes, even the United Kingdom invest three
or more times as much as Canada does on a per capita
basis in health research and development. The Canadian
Medical Association supports increased investment
in this area. It is crucial.
Program funding should be made available for the
development of clinical tobacco intervention programs.
Research has shown that physician-led smoking
prevention and secession programs are indeed very
successful, and there must be co-operation between the
federal, provincial, and territorial governments on the
meaning and application of national standards and
principles. Canadians look to you, our government, our
members of Parliament, to protect our health care
system and not to destroy it.
To restore access to quality health care for
Canadians, the Canadian Medical Association recommends
these four points: first, at a minimum, that the
federal government restore CHST cash entitlements to
the 1996-97 levels, that is, back to the $18.5 billion
from the current $12.5 billion; second, beginning
April 1, 1998, that the federal government fully index CHST
cash payments through the use of a combination of
factors that would take into account technology,
economic growth, population growth, and demographics
such as aging; third, that the federal government
establish a national target, either in per capita terms
or as a proportion of total health spending, and an
implementation plan for health research and development
spending, including the full spectrum of basic
biomedical to applied health services research, with
the objective of improving Canada's position relative
to the other G-7 countries, where we now rank a shameful
last among the five recent G-7 countries for which
recent data is available; and finally, the Canadian
Medical Association calls upon the federal government
to fulfil its promise to invest $100 million over the
coming five years into the tobacco demand reduction
strategy, and as well, to increase excise and export
taxes to their previous level to decrease tobacco
consumption in the most price-sensitive segments of the
market: our children, teens, and pre-teens, who are most
sensitive to price.
We thank you, Mr. Chairman and members of the committee, for
allowing us to participate in this pre-budget consultation.
I remind you that health cuts have hurt, and they
truly hurt everyone, either directly or indirectly,
sooner or later. None of us is immune. I implore you
to take action now to prevent further damage to our
system. Thank you.
The Chairman: Thank you very much, Dr. Dirnfeld.
We will now move to the next presentation. From the
Social Sciences and Humanities Research Council of
Canada, Mr. Marc Renaud.
Mr. Marc Renaud (President, Social Sciences and Humanities
Research Council of Canada): Mr. Chairman, ladies and gentlemen, I
am the new president of SSHRC, the Social Sciences and Humanities
Research Council of Canada. I have been in Ottawa two months only
but I felt that although I don't know every detail about my
organization it was still important for me to come and tell you
what has been accomplished and what our priorities are for the
As I'm sure you know, SSHRCC is one of the three
granting councils. We allocate money to the best
research projects and to the best graduate students in
Canadian universities. It's important to recall why
Canada has created granting councils. Since the Second
World War Canada has muscled an enormous amount of
energy to provide the country with a university system
that would be the equal of the systems created over
centuries in England, France, and Germany. We've tried
to develop universities—what some people call
knowledge factories—that we could all be proud of and
that would bring some of Canada's unique experience and
perspective to bear. We've tried to develop what
others call an intellectual army that we could draw on
not only to build better computers or better
submarines, but also to help deal with problems such as
crime, poverty, economic stagnation or citizens'
University research is one of the key engines driving
the creation of knowledge. This knowledge is then
passed on via teaching though all levels of our
education system. One of the tools the
federal government has developed to help the
universities is the granting councils.
SSHRCC, as you probably know, is the smallest among
the three granting councils. It receives 12% of the
total funds devoted to the councils, yet it covers 55%
of the total number of full-time professors and
graduate students in Canadian universities.
Specifically, SSHRCC's clients are 20,000 university
professors and 40,000 graduate students in the social
sciences and humanities.
The social sciences and humanities community in Canada
is one of the most dynamic and competent in the entire
world. In my previous work at the Université de
Montréal, at the Canadian Institute for Advanced
Research, and at the National Forum on Health, I
had occasion to travel the planet. I have always been
extremely proud of my Canadian colleagues, what they
were doing and their reputation.
The social sciences and humanities community covers an
extremely wide range of fields, including economics,
business, ethics, education, law, history, literature,
philosophy, anthropology, psychology, sociology,
environmental studies, religious studies, etc.
If I have to summarize in a few sentences what social sciences
specialists do, I would say that in someway or other they all work
on those great transformations that are affecting human beings and
societies at the end of our century. Some say that we are living
through the third greatest change of the millennium—not of the
century but of the millennium. In fact, the transformation will be
such that our great-great-grandchildren might not have the
slightest notion of what our world is like.
After the Renaissance and the Industrial Revolution we are now
living the Communications Revolution. Beyond technological tools
such as the World Wide Web, for example, and beyond the abolition
of distance and of geographical borders, this revolution has
resulted in an absolutely incredible phenomenon, i.e. the
globalization of financial markets, business, technologies,
immigration, employment, ideas, viral diseases, etc.
This globalization has now given rise to a series of extremely
important social phenomena: dissociation between the creation of
wealth and job creation, a restructuring of the manufacturing
sector, a weakening of the middle class, a loss of solidarity in
communities, a reduction in power of nation-states, the rise of
nationalisms, the resurgence of authoritarian regimes, etc. In fact
the 90s are reminiscent of the 1860s when people in the western
hemisphere tried to adapt to the Industrial Revolution.
We are confronted by a series of problems that force us to
reexamine our needs, our values and our expectations. Look at the
enormous economic gaps between regions of Canada. Look at the
increasing income gaps between the richest and the poorest: look at
the enormous difficulties young people encounter in entering the
labour market. Look at immigration. Look at the poor and the
destitute in many of our cities. Look at the violence surrounding
The key challenge addressed by social science and
humanities alike is to develop the knowledge base to
maintain a cohesive society in the context of an
increasingly diversified cultural fabric and in the
face of enormous competitive pressures brought about by
globalization. In a way we need new knowledge to
reinvent society and its institutions. We need to do
so in order to survive the tremendous pace and breadth
of change now taking place on
a global scale.
It is in part because of the knowledge developed by
social sciences and humanities researchers in Canada
that we've been able to move forward in several areas.
For example, it's partly owing to research in these
fields that reinvesting in our children has been
recognized as a national priority, that all provinces
have now undertaken the challenge of restructuring the
hospital sector, and that various provinces are
undertaking a major overhaul of their school
Research has given us knowledge that is enabling us to
fine-tune our immigration policies, to develop new
tools for community empowerment, and to give our sons
and daughters the tools to bond with each other through
the information highway while staying in their own
I'm basically trying to say that Canada benefits a lot
from having top-notch universities and world-class
social scientists and humanists within them. As a
developed country we're now moving into an
economy—everybody has said it before—that is not
based on our natural resources as much as it was in the
past. We're moving into a knowledge-based economy. We
need new ideas incorporated into new products so as to
capture market share and maintain our standard of
But at the same time we need to invest in those tools
that will help people adjust to this technological
progress. We need not only a knowledge-based economy,
we need a knowledge society.
While much of the current debate focuses on hardware,
wires, and fibre, there is more to becoming smart than
just plugging in the machine. We have to focus on the
people behind these machines and on the institutions in
which they live.
Now let's talk about money.
In the last few years, the government of Canada has tried,
with a certain degree of success, to put its fiscal house in order.
SSHRC, like others, has done its share to reduce public spending.
We feel that the time has come to take a new direction in order to
motivate the intellectual army working in our universities. Last
year, Parliament decided to make a major investment in the Canadian
Foundation for Innovation. We welcome this initiative, although it
will fund mainly infrastructure in natural sciences, engineering
and biomedicine, and do very little in the end for the social
sciences and the humanities.
The Throne Speech this year announced a millennium foundation
to help Canadian youths. We welcome that initiative also because we
really believe that the new generation is threatened. We hope, in
fact, that the government will call upon SSHRC to help it ensure it
invests in the most talented students, those who will complete
their academic studies.
Presently the Social Sciences and Humanities Research Council
funds only 5% of graduate students in those areas of study, while
NSERC funds 20% in theirs; we fund only 15% of university
professors in our areas while NSERC funds 60%.
With such a low level of support for academic endeavours, we
run the risk that the new generation will be dispirited and we will
miss the boat when it comes to those social innovations that are
necessary today and we may not obtain good returns on the massive
investment we have made so far in our academic institution.
Mr. Chairman, the demand out there for social research
is tremendous, much higher than the government is
capable of or ready to subsidize. This is why we do
not expect a spectacular budget increase tomorrow
morning. We're fully aware that the cleaning up of
public finances is not yet finished and that there are
several competing priorities for funding. Further, we
don't expect the government to do everything for us.
Our written brief has many more details about this.
But as for next year, we do believe at SSHRC that
the proposal put forward by the AUCC and several
others makes a lot of sense. We really, desperately
need new money to accomplish our mission. This money
would be invested in areas that I and the board of
SSHRC feel are the most pressing.
First is investing in the next generation. Again, we
finance only 5% of the 40,000 graduate students in
Canada in social sciences and humanities. First we
want to invest in the next generation of researchers
and highly qualified personnel to ensure the renewal of
excellence in universities and to bring a high level of
expertise to our communities and to our workplaces.
Second, we want to develop new partnership initiatives
to generate policy-relevant knowledge in several
Discussions, for instance, are under way to create
chairs in social entrepreneurship in our universities,
to develop requests for proposals on social cohesion
and community development, more evaluation projects on
our social programs, targeted research on the social
and economic determinants of health, on the changing
nature of work and our cultural heritage, and on Canada's
place in the changing world order, etc.
Thirdly, we need to increase our support for world
class so-called curiosity-driven research. The
number of projects we were able to fund has gone down
by more than 35% over the last 10 years, with an
extremely devastating impact on university professors'
capacity and will to do ground-breaking research.
Ladies and gentlemen, we're living in a unique period
of human history. It's a changing epoch, and for many
of our fellow citizens it's also a very tough period of
history. Knowledge is the key to adjust to this changing
environment. SSHRC, and beyond SSHRC, the universities and
their students, are key tools to help Canada respond to
these changes effectively. We need your help to
preserve what we have accomplished with our
universities. We also need your help to provide our
best and brightest the tools to innovate and
contribute to the fullest extent possible to shaping
Canada's future. Thank you very much for your
The Chairman: Thank you, Mr. Renaud.
begin this time with Mrs. Redman.
Mrs. Karen Redman (Kitchener Centre, Lib.): Thank
you, Mr. Chairman. My question is to Dr. Dirnfeld.
One of the things we heard when we went across the
country was that wrestling down the deficit has had
human costs, and you mention that in your brief. One
of the things Mr. Martin mentioned in his pre-budget
discussions was the fact that partnerships are the way
of the future.
You talked about the CHST grant being
lowered. My statistics say that it was $1.2 billion
and that equated to a $4.9 billion tax cut in Ontario.
In certain provinces we heard a real skepticism and a
real disquiet with the kind of partnership we've had in
health care between the federal and provincial
governments. In other provinces we heard testimony for
a similar kind of standard being set for both social
and welfare—different aspects of the social
I represent Kitchener, which is in Ontario, so I can
speak to the trials and tribulations that my
community is going through. We've seen the
amalgamation of our district health council for
Waterloo region as well as with Wellington county. I
would tell you that I think we're going through a
massive restructuring of how health care is delivered.
We're redefining the role of professionals in
delivering that kind of health care. Cambridge, which
is part of Waterloo region, has been officially declared
as being an underserviced area despite the fact that we
are a very attractive, economically vibrant area.
My question to you is, in view of the fact that
partnerships are the way of the future and an
acknowledgement that these issues aren't just about
money, although money is part of it, has the Canadian
Medical Association discussed its role in forging out
with the government, as one of the partners, a new
reality for health care in Canada?
Dr. Victor Dirnfeld: Thank you for the opportunity
to address that issue. In fact, as you are probably
aware, Allan Rock, in his first speech as
health minister, spoke to the annual meeting of the
Canadian Medical Association in August in Victoria. He
formed it in the manner of a
challenge to meet with him and to work with him to try
to indicate areas of need, areas of shortfall, and
methods of improving the allocation of funding for
those areas in health care in particular.
We were most pleased to hear that invitation. We
I personally, as well as other individuals
from the Canadian Medical Association, have met with Mr.
Rock. We had been in communication prior to that, and
we are in the process of ongoing discussions to develop
precisely that, areas of need and how allocation can be
made to meet those needs for decreased access and
diminished quality of care.
The Canadian Medical Association, however, is forming
alliances with other groups in the delivery
of health care. We have formed alliances with the
Canadian Nurses Association with respect to the
treatment of HIV/AIDS for the complementary and
co-operative management of this disorder.
We have formed an alliance with the Canadian
Pharmaceutical Association with respect
to the respective roles, the complementary
and reinforcing roles, in pharmacotherapy
between physicians and pharmacists.
At provincial and community levels we continue this
dialogue and form bridge-building alliances.
I agree with you that in this new environment
and new reality it's important that there be a
co-operative venturing forth in the delivery
of health care.
But that must not diminish the reality, as
expressed by Health Minister Allan Rock, and the
perception by Canadians that there has been an
incredible impact on the accessibility and the quality
of health care as a result not only of the
restructuring and downsizing but also because
of funding shortfalls in large part because of
the transfer payment decrease from the federal government
to its provincial counterparts.
How the provincial governments choose
to allocate their resources, of course,
is up to them. What we plea for, though, is
adequate funding in total to meet the health
care needs of Canadians.
Mrs. Karen Redman: I do appreciate that. I guess
I would again point out the fact that we're looking at
a $1.2 billion reduction that translated,
in the province of Ontario,
to a $4.9 billion tax cut. That's a huge magnification
of the kind of reductions you're referring to.
Dr. Victor Dirnfeld: I understand your point,
and I understand that each province will keep its own
fiscal house in order and use its own approaches
to how it deals with its finances and the finances
of its population. Far be it for me to say
that reducing taxes generates business
and generates purchasing power by the citizens
of a province, and that's why, perhaps, the
province of Ontario did that.
I am here only to point out, and to plead against,
the decrease in availability of funds
to do the critical things Canadians need—that is,
to get their health care needs met.
Mrs. Karen Redman: Thank you.
The Chairman: Mr. Szabo.
Mr. Paul Szabo (Mississauga South, Lib.): I would
like to pursue this a little bit further.
Dr. Dirnfeld, you're quite right, but as we go around
the country and talk to Canadians, to groups
coming here before us, there seems to be a lot
of discussion about the CHST with regard to the cash
component, isolated from the tax points associated
with the transfers.
Mrs. Redman raises a very important point,
that last year the reduction in the CHST value
to the province of Ontario was only $1.2 billion.
In the same period, the Ontario government
reduced taxes at a cost of $4.9 billion.
So out of the $6.1 billion decrease in provincial
revenue, only $1.2 billion was the CHST.
I think you've made an excellent presentation
on behalf of the CMA. I think you've said exactly
what you should say on behalf of the health care
of Canadians, particularly
with regard to tobacco.
Dr. Gushue, I have a very quick question for you.
It wouldn't be a budget if we didn't get our fax
machines overloaded and overheated from faxes
sent by dentists across the country
telling us not to touch the tax...but you
and I both know there is an inequity here
because of the taxation of employer-paid benefits.
You also have made it very clear
as an association that roughly 80% of Canadians
are directly or indirectly covered by plans.
So to the extent that you tinker with this, you may
in fact inadvertently have the adverse effect
of reducing Canadians' motivation to maintain
good dental health.
In view of your acknowledgement of the inequity
of the current system, you have asked for the dentists
to have the same, or similar, or an equivalent,
tax treatment with regard to your own costs.
So I don't blame you wanting to share in that nice
little pie that insured or covered employees have.
Would you think it would be
equally important to extend that fairness and equity to
the rest of the 20% of Canadians who have no insurance
and who have only the non-refundable tax credit,
subject to a 3% deductible of income? They should
receive possibly some sort of equivalency break, for
instance, by waiving the deductible and allowing them
to have the full amount eligible for a non-refundable
Dr. Toby Gushue: I'll ask Dr. Wenn to reply to
that because he has been more active on the health and
benefits coalition, the group that has been studying
Dr. Ray Wenn: Well, let's see if I can answer that
in ten minutes or less.
First of all, according to our studies—the Mercer
study we did about a year and a half or two years
ago—almost 88% of Canadians have some form of health and
dental benefit coverage, so it's considerably higher
It seems to us that the inequity falls in the tax
system more than in trying to extend the coverage. If
only about one million Canadians have no access to the
deduction, those who are self-employed and
unincorporated—and that's the key word,
“unincorporated”—are seen by us as being penalized.
They have to pay up front out of after-tax dollars to
provide the same health and dental benefits.
We have to realize in this country today—and I
certainly wouldn't argue with the CMA about the cost of
health care—that dentistry is part of health care, and
there are many other things outside of health care that
take the dollar out of the health care pool, if you
look at it all. About 28% of the health care dollar is
outside of medicare, and it's very important that
whatever happens to medicare that affects the 72% will
affect the 28%. The more people have to pay on
one side, the less they can afford to pay on the other.
So we're trying to develop a system where more and
more people can afford those things that they have to
pay for out of their pocket, which not only includes
dental care. It's health and dental benefits; it's
If the government could see their way clear to extend
that benefit to the self-employed, the unincorporated,
who are very quickly growing in number...that's where
the small business people are and that's what's
happening in today's society. People are being put out
of work by big companies and are going to work for
themselves. So we can see that expanding. I think it's
a very good opportunity for government to show
compassion for the ordinary Canadian and take this
The Chairman: Thank you very much.
Are there further questions? Mr. Ritz?
Mr. Gerry Ritz (Battlefords—Lloydminster, Ref.):
Thank you, Mr. Chairman.
I'd like to thank the ladies and gentlemen for their
very interesting presentations. There's one subject on
which I'll kind of throw a red flag out there.
As we see our medical services being harder to come by
and waiting lists getting longer and longer...in my area
of the country we see alternative and
preventative medicine coming to the
fore. Is there a place in Canada's overall health
package for that type of venue?
They're privately funded. They're readily available.
There seem to be enough success stories out there,
whether you believe them or not, to fuel that demand.
I'd like your thoughts or your comments, please.
Dr. Victor Dirnfeld: With respect to
alternative therapies, the medical
profession, the Canadian Medical Association, is well
aware of these. Our patients sometimes access these
for various reasons. The greatest reason, I think, is
because conventional or traditional medicine hasn't
served their needs, either because they have a disorder
that just isn't amenable to conventional therapy, is
beyond our capacity to treat, or because there's a
disorder that we don't have a therapy for or they just
want a greater control over their lives, and that's
their choice. The doctors of Canada have
no objection to that.
We do have several concerns, however, and several
fundamental requirements, we think, for alternative
care. Those are that they be based on evidence,
that they be shown to do something good,
something beneficial, and that this evidence be at the
same standard that the practice of medicine today is
held to: good science with good evidence at a
standard. The second is, above all, that they, as we
say as physicians, primarily do no harm, that the
therapy is safe.
With those two fundamental standards, there's one
correlative, which is that the use of such
alternative therapy should be done in an informed
manner so the individual is not denied potentially
beneficial therapy that we know works. But with those
considerations, we would have no difficulty with
In fact I spoke at the opening ceremonies of the
Tzu Chi Institute in Vancouver, which
was funded—perhaps Mr. Riis will remember—to the tune of $6
million by the Buddhist association for just that:
alternative medicine with the understanding that we
would support it on the basis of evidence and safety.
Those sentiments certainly were accepted by the
principals of Tzu Chi.
The Chairman: Dr. McLennan.
Dr. Barry McLennan: I'd like to echo the remarks
Dr. Dirnfeld made, but add one other.
The 16 medical schools in Canada constantly are
looking at their undergraduate curriculum. I can tell
you from the recent ACMC annual meetings that
increased emphasis is being put in the curriculum on
training our undergraduate medical students in these
However, you hit it right on the head when you said we
need the evidence. We need the research to be done so
we know whether these alternative therapies are useful
or not. This is the missing equation in this whole
issue. We know many Canadians are spending as much money
out of their own pocket on alternative therapies as the
conventional system is spending on health care. This
is an alarming number, and it underscores the desperate
need for more money to be put into health research.
I have one other point on that. The MRC, the
NCIC—that is, the National Cancer Institute of
Canada—and I believe the Heart and Stroke Foundation
have recently broadened their mandate to expand their
traditional areas of research into a broader definition
of health: health outcomes, population health, and
things such as alternative therapies. They've done
this somewhat at their peril, because their base
budget has been cut in the meantime. So they've
essentially been kneecapped for their efforts, but
their intentions are valid, and I applaud them for
doing that, because we need to look at this additional
area of health research, and alternative therapies are
just one area.
The Chairman: Thank you, Doctor.
Mr. Gilles-A. Perron (Saint-Eustache—Sainte-Thérèse, BQ):
Dr. Dirnfeld, I am glad you set the record straight. You are one of
the few people who have dared to talk about the cumulative cuts in
social transfers to the provinces that did so much harm to every
provincial government in the areas of health and social services.
Your numbers are exactly the same as mine so we are on the same
I would like to add that the cumulative cuts to the provinces
by the year 2000 will reach a total of $42.4 billion. That's a lot
I'm not prepared to pass judgement and to say who, of the
provinces or the federal government is in the right or in the
wrong, but I can say that $42.4 billion is a lot of money.
What is your view on the idea that instead of constantly
cutting back on social transfers and targeting healthcare, we could
look at how we tax businesses and individuals? It hasn't been done
since 1962. We might also better manage our business and stop
wasting taxpayers money, whether those taxpayers are Canadians,
Quebeckers or Ontarians.
I would like you to give us your views. How should the
government fight the deficit without imposing too heavy a tax
burden on Canadians?
The Chairman: Merci, Monsieur Perron.
Dr. Victor Dirnfeld: I agree it's important that
in the management of our health care system we be as
efficient as possible, that we be using only effective
therapies, and that the therapies we choose be based on
evidence. It's hard to be sure, but there are
estimates that between 15% and 25%, some say 30%, of
the treatments we administer are not based on evidence.
extent that this is true, we are continually, always,
trying to find evidence to see that whatever treatment
we're using, whatever investigation, is based on
evidence. Until that evidence is available, we do the
best we can on anecdotal experience from our senior
physicians and from younger physicians who are trying
new therapies and new investigations.
For the most part, however, I think the health care
system has become very efficient through these very
dramatic cuts, these lean years, these downsizing and
budgetary constraints on us. We have used innovations
in many fields, and I could give you many examples,
like ambulatory surgery, like laparoscopic surgeries
instead of the traditional opening up of the
abdomen—which has cut down the hospital stay from two
weeks to 24 hours. There have been dramatic
improvements in all areas of medical care, and it has
become more efficient and cost-effective. I'm proud of
that, and I think we will continue to find efficiencies,
but I think we've gone a long distance. Now the cuts
are not cutting the fat, they're cutting the muscle and
bone, and I fear for that.
With respect to your question about the tax system and
how it could be addressed, I share your concern about
the massive decrease in transfer payments. As you say,
some have estimated that decrease to be of the order of
$42 billion over the six- or seven-year financial
cycle, the fiscal framework of the government. That is
not just in the province of Ontario, where they have
done their own taxation manipulation, changes and
alteration, but right across the country. As I travel
this country, patients, doctors, other health care
providers, nurses and physiotherapists in every
province are consumed with the magnitude and degree of
change and the difficulty in accessing quality care,
and I hear very serious stories right across the
country about patient-poor outcomes because of
I wouldn't want to venture into how to change the tax
system to remedy the situation because it's not an area
of my expertise. I have personal thoughts, but they're
The Chairman: Thank you, Doctor.
Mr. Nelson Riis (Kamloops, NDP): Thank you, Mr.
Chairman. I have just two quick questions.
The first is to Mr. Renaud in regard to
the 5% funding now for the social sciences and
humanities area. You mentioned in your report that you
are working hard to leverage new sources of funding for
research. I appreciate that it's probably much easier
in some other fields to leverage private sector support
and so on. How successful do you think that will be?
I'll just say the other question right off. Dr.
Dirnfeld, in regard to what you called
the alarming trend in federal government funding for
basic biomedical clinical and health research, you
presented some graphs. We've seen these before, and
the difference between our country and the United
States is appalling. Is one of the reasons for that the
fact that over the years those working in the research
areas involved haven't been lobbying as well as others
in other sectors? In other words, there seems to be
such an appalling gap here, whereas in other areas the
gap is much less—and I'm thinking of comparing
Canada and the United States in, say, the financial
industries. Is it because you haven't put in enough
effort—I'm not sure how to say this, but I don't mean
it in a negative way—into lobbying people like members
of Parliament, MLAs, MNAs, and so on?
The Chairman: Whose response do you want, first?
Mr. Nelson Riis: Monsieur Renaud.
Mr. Marc Renaud: There are several funding sources that we can
try to leverage.
There are several sources of funds. There are
basically three sectors: other governmental agencies,
community foundations, and the private sector.
SSHRCC has been quite successful in the recent
past in leveraging the funds from other governmental
agencies—Immigration, Archives. They're basically
coming to us and saying they would like this thing
looked at and that we should join forces in order
to get there, in order to develop post-doctorate
programs, particular fellowships or research projects
or chairs, all kinds of things. On that front, it
goes pretty well, but what we still have to explore is
a better collaboration with provincial bodies.
The foundation world has practically not been explored
thus far, and that has to be looked into.
The private sector is a very touchy issue. For six
years I was the president of the Quebec board of
social research, and I will always remember an
experience I had there. The Quebec government had
organized a conference on consumption of drugs amongst
the elderly, and there were several drug companies
there, as well as researchers.
The basic conclusion was
that we had a problem on our hands because the elderly
were taking three or four times more pills than 10
years ago, without the pills having changed.
After the meeting I talked with the drug people and
said we had a problem on our hands. I suggested we
find a means with government money and their money to
look at psycho-social behaviour around drugs or
pharmaceutical vigilance or pharmaceutical economics.
The drug companies agreed with me it was a priority but
they wanted a tax exemption.
There's no possibility of any kind of tax exemption
for social research, and that doesn't help to leverage
funds from the private sector. That's very different
from the biomedical world or the engineering world.
Dr. Victor Dirnfeld: If we have to
lobby more—and I take your point—then
we'll do it. There has been strong, consistent, and
long-term lobbying by the bioscience industry and the
academic and research communities for research funds
and adequate funding.
I point out again that we're at the bottom of the
heap. In front of us are Japan, France, and the United
States—not just the United States. It's too easy to
dismiss our position by comparing it to the Americans
because they're very rich. But even the United Kingdom
surpasses the United States and Canada in per capita
contribution and investment in research.
I take your point, and we'll redouble our efforts if
that's what it takes. Hopefully, it will fall on ears
that will listen to us.
The Chairman: As always, Doctor.
Mr. Jim Jones (Markham, PC): Thank you very much,
First of all, I think the health care industry is an
excellent industry. I used it a
couple of years ago and the doctors and nurses...the whole
experience was outstanding.
To Ms. Redman and Mr. Szabo, I suggest if we want
to attack Mr. Harris and Mr. Eves on what they have
done, maybe we should have them appear in front of this
committee to justify what they have done, because I
think they've done a good job.
Have you folks done any research on the preventative
side to show that if you did outbound programs to the
schools and educated people on proper health care and
diet, we could probably get by with considerably
less than what we spend on health care today?
I was at a function on Friday night and one of the
doctors—I can't think of his name but he was a
leading physician—said if we spent more time educating
people on diet and controlled obesity we could save
one-third of our health care costs. Do you have any
comments in this area?
Dr. Victor Dirnfeld: I've been practising for over
three and a half decades. Much of my practice time,
both in my office, with patients directly as well as in
the communities where I practice, and neighbouring ones
has been dedicated to talking about that, lifestyle
modification. My colleagues, medical organizations, and
other health care professionals have also done that for
20 or 30 years.
We agree with you on the basis of the evidence that
with lifestyle change such as proper diet, lipid fat
reduction, and salt reduction we can control and
diminish significantly the incidence of heart attack
and stroke. In fact, the incidence of deaths from heart
attacks in the last 20 to 25 years has decreased by
about 40% to 45%, and deaths from strokes have
decreased even better than that by about 50% to 60%.
That's in large part because of behaviour modification,
lifestyle alteration, diet, exercise, cessation of
smoking, but also due to intervention with medications
and other treatments.
There is a problem I find with the
prediction that if you prevent enough and pour
enough resources into prevention you're going to
ultimately, down the road, end up with very little
First of all, compliance is very difficult with
patients. As you know, getting patients to stick to
diets is very hard. In fact, there is a burgeoning
diet industry in the world, particularly in North
America, which wouldn't be alive and economically so
healthy today if people simply stuck to the diets
we gave them and lost their weight. People have great
difficulty doing that; in addition to which, there are
many disorders for which lifestyle changes can't
produce improvement: degenerative diseases, certain
cancers, trauma, accidents, and those sorts of things.
To the extent that we can do it—and we follow the
trends and we look for the evidence—we invest a great
deal of time and resources in doing just what you're
speaking about, but there are limits to what that will
deliver in the future.
Dr. Barry McLennan: I
would like to address Mr. Riis' question on the
lobbying issue. I'd like to refer you to page 10 of
our document. I believe you have a copy.
You can see that we weren't doing too badly until
1994. We were the bottom line on the graph, but at
least we were headed in a positive direction.
In response to our recommendations for the last two or
three years, this committee—and I applaud you and your
predecessors for doing so—has recommended to cabinet
that there be substantial increases in health research
funding, so the lobbying has been effective up to that
point. However, the increase has not come at the
cabinet level and as a consequence we're falling off
Now with respect to your comment about other
countries, it's always a bit difficult to compare what
we're doing here with other countries because the
systems aren't exactly the same. For example, in the
United States, the NIH—the National Institutes of
Health—is the major funding agency, and at first blush
you might want to compare that with the Medical
Research Council of Canada. There's one very important
difference. They're funded differently.
Secondly, the NIH pays the salaries of the
researchers, which in Canada is not permitted; that is,
the MRC does not pay the salaries of the primary
investigators. So there are differences. I would point
out, though, that many of these other countries shown
on this graph have gone through recessions, just as
Canada has, so I submit to you that it's really a
question of priorities. Where do we want to put our
investment and where do we want to spend on things that
matter to Canadians?
As I said in my remarks, and I'll elaborate on it
if you wish, there is a lot of evidence in Canada now
as well to show that if we invest in health research we
get a double win.
We get not only the health research benefits that will
help the situations my colleague on the right here has
been talking about, but we also get the economic
return. The CMDF activity is very admirable. It's
fantastic. But let me remind you that it's at one end
of the continuum. We are now reaping the benefit of
investments in health research made in this country 15
and 20 years ago. We have to keep priming that pump or
there won't be any venture capital investments in
Canada in the next decade. That's why it's so
important to keep the cycle running.
Dr. Mark J. Poznansky (Chairman, Council for Health
Research in Canada): We have an expression that
the plural of anecdotes is not data, and one of the
problems we have in the prevention area, quite frankly,
is that there's no level of government in this country,
either provincial or federal, that is expending a
significant amount of money on doing research on how to
prevent and whether we've prevented. That's one
The second deals with the issue of lobbying. Barry
and I and others spend ten days and more in Ottawa
lobbying. I've been back in Canada now for 20 years,
and I can name you 20 or 30 American senators and 20 or
30 members of the House of Representatives of the
United States who are continuously strong and vocal
supporters for medical research in the news media and
in Congress. I'm sorry to say that I can name barely a
single member of our Parliament over the last 20 years
who has been a strong and vocal supporter of our
So it's really a two-way issue here.
Dr. Toby Gushue: I'd
just like to respond to the questions regarding
prevention. For at least the last quarter of a century
the dental profession in Canada has been a leader in
prevention. We have been able to educate our patients
in routine oral hygiene. We have been able to educate
our communities in the use of fluorides.
We have been
part of the support for tobacco legislation
over the last number of years because of the effect of
tobacco on gum disease.
As far as prevention is concerned, the dental
profession is proud of its contribution to the health
of Canadians, and we will continue on with that emphasis.
Thank you, Mr. Chairman.
Dr. Ray Wenn: I would like to add a couple of
comments to help drive that point home.
Over the past 20 years the rate of decay in this
country has dropped by 50%. That's dramatic.
Just imagine how much money would have to be spent on
dentistry today if that rate hadn't gone down by 50%.
There'd be an awful lot more dollars being looked for
to fix kids' teeth.
About 70% of children who hit 17 and 18 years of
age now have no decay, and the ones who do
have very little. So their outlook on life,
when they're the same age as the group sitting around
this table, is going to be entirely different. They
will not fear the dentist the way most of you
The Chairman: Thank you, Dr. Wenn.
Ms. Vandewater, do you have a final comment?
Ms. Audrey Vandewater: I do, Mr. Chairman,
although I know time is running out.
In the area of prevention, I want to say
that the health charities have a very
major role to play in the area of prevention.
I can talk primarily from the perspective
of the Heart and Stroke Foundation.
Through research we have identified a number
of risk factors that contribute to heart disease
and stroke. Part of our mission is to educate the public
and to promote healthy lifestyles. We have a great
deal of literature and information that we
continually strive to get out to the public to help them
identify risk factors, look at their own lifestyle,
and modify that lifestyle in order to be healthier
and to stay away from some of these
very debilitating diseases.
The Chairman: Thank you very much.
This concludes this round table. On behalf of the
committee, I would like to thank you. You provided us
with thoughtful, insightful presentations
and provided us with important information
about ways to establish priorities as we
write our report and make recommendations to the
Minister of Finance.
Thank you very much.