STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Wednesday, October 21, 1998
The Chairman (Mr. Maurizio Bevilacqua
(Vaughan—King—Aurora, Lib.)): I'd like to call the
meeting to order and welcome everyone here in Winnipeg.
The finance committee, as everyone knows, is here to
consult with Canadians as to what the priorities should
be vis-à-vis the 1999 federal budget.
It's a pleasure to have with us this morning
representatives from the Canadian Federation of
Students, Manitoba; the Canadian Federation of
Students, Manitoba Component; the Council of Canadians
with Disabilities; the Manitoba Association of School
Trustees; the Manitoba Federation of Labour; the Manitoba
Federation of Union Retirees; and the Manitoba Medical
We will begin with the Canadian Federation of
Students, Manitoba Component, Ms. Kemlin Nembhard, field
Ms. Kemlin Nembhard (Field Worker, Canadian
Federation of Students, Manitoba Component): Hi. If
I can just clarify, the Canadian Federation of
Students national office have already made their
presentation. There's no one else here to make a
presentation from the national office.
It's just me from the component.
The Chairman: Okay.
Ms. Kemlin Nembhard: My name is Kemlin. That's
like “Kremlin” without the “r”, and I'm the field
worker for the Canadian Federation of Students here in
The Fed is Canada's national student organization.
We represent over 400,000 post-secondary education
students across the country at over 60 colleges,
universities, and technical institutes in Canada.
In Manitoba, the federation represents
approximately 14,000 students at the University of
Winnipeg, Collège St-Boniface, and Brandon University.
Across the country, our post-secondary
education system is in crisis. Students across this
country are in crisis, and there is a lack of
government leadership, vision, and commitment to a truly
high-quality, universally accessible, and nationally
planned public system of post-secondary education.
There is an overall feeling that the federal government
is abandoning its responsibility to students and to the
Canadian population as a whole in ensuring that our
public system is truly accessible.
The 1998 federal budget was dubbed the “education
budget”, but in reality it did little to deal with the
issues students are facing these days and the situation
confronting our post-secondary education system.
While the federal government claims to recognize the
dismal position students are in nowadays, there has
been no meaningful action to change the situation.
Students across this country believe that the federal
government has failed to address in any significant way
the issues and situation they now face.
What follows are our recommendations to the federal
government to make our public post-secondary education
system more accessible.
Our first recommendations are on funding
post-secondary education: increased dedicated funding
being transmitted to the provinces and funding a
national tuition fee freeze.
Since 1993, the federal government has cut $2.3
billion from transfer payments to the provinces for
post-secondary education. The result of these cuts has
been skyrocketing tuition and other fees, staggering
levels of debt, decreases in educational quality across
the country, and decreased accessibility for all.
As the government has cut huge amounts of money from
the transfer payments to the provinces, very few
provincial governments have been making up any of the
difference; therefore, at the institutional level, to
recoup the losses in resources, tuition and other fees
have been used to replace government funding. The
majority of the burden, which is a burden that can
easily be carried if shared, has fallen on the backs of
individual students through higher user fees.
Drastic increases in tuition fees have translated into
significant increases in student debt load. Across the
country, over the last five years, on average, tuition
fees have increased by approximately 60%, while
inflation has only increased by approximately 6% over
the same time period.
Since 1990, debt loads for full-time students across
the country, after graduating, have gone from an
average of $8,675 to a national average of $25,000 in
this past spring of 1998. As well, over the same time
period, enrolment has been on a steady decline. In
this province, over the last five or six years, each
institution has lost students at the rate of between 3%
and 6% every year. It's a huge amount.
We should be ashamed and appalled when we consider
those facts and the fact that approximately 50% of
full-time post-secondary education students in Canada
are forced to get a loan to be able to go to university
or college, and that doesn't even touch the people who
can't even go, for whom the rising costs of tuition are
too formidable a barrier
for them to even step through the doors.
If the federal government is seriously committed to a
high-quality, truly accessible public post-secondary
education system and to ensuring that the needs of
students are addressed, one of the most important steps
the government must take is to make a massive
financial reinvestment in post-secondary education and
other social programs, dedicated funding to ensure that
the money is spent by provincial governments where it
is meant to be spent.
Skyrocketing increases in tuition fees must be halted
immediately, and the federal government must also fund a
national tuition fee freeze to bring all the provinces
in line with British Columbia and Quebec, which are the
two provincial governments that have shown more of a
commitment to accessibility for post-secondary
education by freezing fees across their provinces for
the past three years.
Our second recommendation is for a national strategy
for financial assistance that will enhance and improve
accessibility, not worsen it.
In the 1998 federal budget there were a few
nasty surprises for students. Through the federal
budget, the government passed several regressive
changes to the Canada student loans program and to the
Bankruptcy and Insolvency Act that will and have
had definite effects on students and on accessibility
of education in this country. I'll just go through
some of those.
First is the change in the Canada student loans
program. Basically, the new changes mean decisions
about who can get a loan, who's eligible for a loan,
are no longer done by a set of rules. It can be done by
politicians behind closed doors, where banks and other
financial institutions that have money to gain from
students' indebtedness can have an impact on that
decision. That's the first thing.
The second change is that credit
history checks have been introduced into eligibility
restrictions for student loans for anybody who is over
22 years old. That is a real change from the program
itself. In 1964, when the Canada loan program was
created, it was created to ensure the most needy
students, who couldn't afford to go to school, could be
able to finance their education.
Student loans are not the same as bank loans at all.
From the inception of the program until 1995, the sole
basis for assessing eligibility was need, which is not
at all like most loans. Although there are several
problems with the current restrictive needs-based
criteria and unbearable debt burdens, the program's
exclusively needs-based assessment ensured the
neediest students received loans. That's in peril
right now with the new measures. The new measures go
against the principles of needs-based loans. Students
in financial need are being punished for high student
debt—the high student debt situation that has been
caused primarily by government cuts to programs, not
because students want to be in debt.
As well, there's no evidence to link past bad credit
ratings to future default or bankruptcy rates on
student loans. In fact, since the beginning of the
program, a full 93% of borrowers have repaid their
loans. I'm a perfect example. I put myself through
school and I got a loan in my last year. But up until
then, there were times when I was living on my credit
card to buy groceries. That's a reality for
students. To do credit checks would definitely
eliminate some people, the neediest people, from the
In addition, students should have access to a clear
loan approval process that doesn't include
decision-making by politicians behind closed doors.
So we'd like to see that those regressive changes in
the Canada student loans program are reversed in the
next budget, that the program upholds the principles of
needs-based loans, and that a fair, clear, publicly
accountable approval process is in place.
The second change that happened was through the
bankruptcy laws. In February 1998, buried in the
federal budget, the Bankruptcy and Insolvency Act was
amended for the second time in less than a year to
extend from two to ten years the prohibition period during
which individuals are not allowed to discharge their
student loans in the event of personal bankruptcy,
which basically means you can't declare bankruptcy, you
can't charge bankruptcy on your student loans, until
after ten years after you graduate. These changes are
discriminatory against student debt holders.
Until recently, debtors were provided the same
protection for student loans as any other consumer
debt. This legislation has created a two-tiered law: one
for student debt holders and another for every other
consumer debt holder. Bankruptcy protection was put in
place to ensure those who are destitute and are in
debt can, as a last resort, apply for bankruptcy and
discharge the remaining debt.
Although we've seen a drastic increase in student
indebtedness in the past decade, coupled with high
youth unemployment, high poverty, and inadequate
financial assistance, students are continuing to repay
their loans conscientiously. Since the inception of the
Canada student loans program, the percentage of loans
that have never been repaid has
never gone above 7%, and that's for the last 24 years.
That's a really high percentage when we compare with
other forms of bankruptcy rates in other sectors.
A person has no need to declare bankruptcy unless they
acquire a debt. They will, and are obligated by
legislation to, repay a debt if they have the financial
ability to do so.
Students don't take on debt lightly. Students have
debt loads primarily for three reasons: an
inadequate student aid program that is solely based on
loans and lacks grants for students, a lack of federal and
provincial funding for post-secondary education, and
user fees for education.
Students are also unable to pay their debts for a
variety of reasons, including underemployment and unemployment,
high bank interest rates, and a lack of federal and
provincial interest in debt relief programs. Instead
of providing useful solutions to high student debt, the
federal government's response to the student debt
crisis has been to cater more and more to the banks
rather than to the needs of students.
In terms of the bankruptcy legislation, we'd like
to see the federal government repeal the ten-year
prohibition for the discharge of student loan debt and
supplement the current debt reduction programs
offered by the federal government to make them
available to student debt holders in their first year
The second section on student financial assistance is
around the Canadian Millennium Scholarship Foundation.
While we applaud the federal government's intention to
address the student debt crisis, we have some serious
reservations about the Canadian Millennium Scholarship
Foundation. As stated before, since 1990 the average
graduating student debt has almost tripled. With nearly 50%
of full-time students being on student loans, this
appalling situation must be addressed immediately.
As well as some of the issues touched on above, to
effectively deal with student debt in this country the
federal government must commit to the creation of a
universally accessible, nationally planned national
grants program that is based solely on need. Currently,
student aid is a responsibility that is shared by both
levels of government. Approximately 60% of the loans
come from the federal government and 40% come from the
provincial governments. On the federal level the only
debt reduction measures consist of small federal debt
remission programs and very limited grants to offset
the federal portion of students' debts.
I just want to clarify the difference between a
scholarship and a grant, because that's one of the
questions I've heard from different people, whether I'm
talking to MPs or people in the community. There is a
big difference, and I'd like to explain that difference
and highlight that. Traditionally, scholarships are
awarded to students who achieve some high degree of
academic excellence. They're offered on an
institutional, faculty, department, or community basis.
Grants are based on the financial need of the
individual and are offered by governments. Canada is
one of only two industrialized countries in the world
without a national system of grants. The only other
one is Japan. Even the States has a very comprehensive
system of grants they offer their students.
Students from all academic achievement categories are
graduating with high levels of debt and require relief.
Scholarships don't meet the needs of all students.
They only meet the needs of those with the highest
Debt reduction programs should be targeted to those who need it
the most, but at the same time they should be widely
available to ensure high participation rates in
post-secondary education. Canada needs a national
grants program. Scholarships serve specific purposes
for institutions and organizations in the
The goals of government and the role government plays
in post-secondary education are much different. The
federal government has a responsibility to ensure
Canadians have an opportunity to pursue post-secondary
education, regardless of economic background. This
includes those Canadians with above average, average,
and even below average grades, not just the few at the
top of the class.
The millennium foundation should be
transformed from a merit-based scholarship to a
needs-based grant program, which is designed to promote
the principle every Canadian, regardless of social
and economic background, has the opportunity to pursue
lifelong learning without taking on lifelong debt. The
grants should be widely available to students enrolled
in any public post-secondary education system in Canada
in any year of study and in any program, faculty, or
department, including graduate students. The fund
should be administered publicly and should be harmonized with
the provincial loans and grants programs.
Another problem we have with the millennium foundation
is the current disbursements made by it, which
would amount to 1,000 scholarships at an average of
about $3,000 per year for up to 32 months, are clearly
inadequate. The foundation itself would only help
about 7% of students.
Approximately 50% of full-time students are on loans,
so 7% does nothing to even touch the amount of people who
are in serious need.
The third section is on tax measures. In June 1998,
part 5 of Bill C-36 was passed, adding a new part to
the Department of Human Resources Development Act that
provides for the payment of grants to encourage savings
under registered education savings plans, RESPs, called
the Canada education savings grants. Through this
the government will contribute 20¢ for every dollar
contributed to a registered education savings plan, not
to exceed $400 a year.
We have some serious concerns about that, and I'll
just highlight some of them. First, the RESPs
savings grants are made with no needs assessment, while
a student in need must fulfil eligibility requirements
before they can get a loan. There's no dollar limit on
how much the federal government will put into this
grant. The grant is about criteria and therefore can't
be budgeted for. The savings grant entrenches a
two-tiered system of education, which gives more money
for some individuals to pay user fees and less money
to those who can least afford user fees.
Public money given out in the form of these grants
takes away from the money available to transfer
payments to the provinces for post-secondary education
and for needs-based grants, which are of far more
importance. The RESP program provides money to wealthy
families and individuals who can afford to save in
RRSPs. Clearly this program will benefit those
individuals with higher-than-average incomes because
they're the ones most likely to take advantage of RESPs
and RRSPs. To reward mostly high-income families with
yearly savings grants will further disadvantage middle-
and low-income families. This program will in no way
help those who are denied access to post-secondary
education due to economic barriers.
As well, the tax measures that are contained in this
section of the budget are really tax expenditures,
which will deprive the federal government of revenue
that could be used to restore programs.
Another section of the tax measures we'd like to see
is that currently a student is allowed to deduct about
$1,000 from his or her income for scholarship funds.
This is inadequate. Canada is one of only a few OECD
countries that doesn't allow scholarship funds to be
tax-free. It's particularly important for graduate
students, who get a lot of fellowships and grants but
also have to work to put themselves through school. So
we'd like to see the federal government implement a
specific tax measure to make scholarship funds
The fourth section is on a national employment
strategy for youth and students. One of the key issues
of influence on student debt is under- and
unemployment. These have a direct impact on the
ability of students to pay to go to school, on living
expenses while in school, and on repaying their loans
once their schooling is completed.
Unemployment for young people cannot be overcome
without setting specific targets. Targets for the
number of new jobs for young people and students must
be developed in consultation with youth and students'
organizations, such as the federation, labour unions,
government departments, business, and provincial
governments. The federal government must provide a
comprehensive national strategy to create meaningful,
well-paying jobs for youth and students.
Public funds shouldn't be used to provide training
subsidies to corporations that have no intention of
investing in hiring new workers, but rather the money
should be used for the direct benefit of youth and
students. The federal government must also stop the
discriminatory restrictions on unemployment insurance
benefits to youth.
I'll just give a conclusion and summary of the
recommendations. A society that aspires to overcome
social and economic inequalities must provide education
opportunities that break societal barriers and bypass
economic disadvantages. A publicly funded education
system that is universally accessible is an integral
part of a democratic society, helping people become
more full and active members of society as a whole.
The federal government must provide leadership, vision,
and commitment with regard to quality and accessibility
of our public post-secondary education system.
Instead, the federal government has consistently, since
reneging on its responsibility by handing over control
of our public post-secondary education system to
private and corporate interests. If the federal
government is sincere in its desire to deal with the
student debt crisis and to ensure that our public
system is truly accessible, it must begin to take
serious steps to change the climate students are facing
now and can expect in the future.
The best means by which to guarantee that all
Canadians who have the desire and ability to go can
afford to attend university or college without
having to mortgage their future is to ensure that the
system is funded adequately. Institutional dependence
on tuition fees as funding can only be decreased by
increasing the level of government funding.
Given that tuition fees constitute the largest single
education-related expense, it comes as no surprise that
a significant decrease in tuition will therefore bring
about a decrease in student debt. In addition, of the
utmost importance is ensuring adequate employment and
providing grants for the most needy students while in
Again, just to go over the recommendations, the
federal government must reinvest in post-secondary
education and other social programs by restoring the
transfer payments to the provinces, and implement a new
formula based on dedicated funds for post-secondary
education, health, and social assistance. That way the
federal government will also be getting recognition for
the money they actually give to the provinces.
The federal government must fund a national tuition
fee freeze, reverse the regressive changes to the
Canada student loan program, uphold the principles of
needs-based loans, and ensure a fair, clear, and
publicly accountable approval process with regard to
student loan eligibility.
The federal government must repeal the ten-year
prohibition for the discharge of student loan debt.
They must also supplement the current debt reduction
programs offered by the federal government to make them
available to student loan debt holders in their first
year after graduating from school.
The Millennium Scholarship Endowment Fund must be
transformed into a needs-based universally accessible
national grants program that is administered by Human
Resources Development Canada and not by a private
foundation, and would come into effect immediately to
provide resources not only in the future, but for those
in need today.
The federal government must also implement specific
tax measures to make scholarship funds tax-free. As
well, the federal government should acknowledge the
active role that all levels of government play in
direct and indirect job creation; reinvest in public
sector jobs; increase funding for job creation
programs; and set targets for reducing unemployment and
provide a comprehensive job creation strategy.
That's it. Thank you very much.
The Vice-Chair (Mr. Nick Discepola): Thank you
very much, Ms. Nembhard.
We will now hear from the Manitoba Medical Research
Council, Dr. Gary Glavin, regional director of the
Medical Research Council of Canada. Welcome.
Dr. Gary Glavin (Regional Director, Medical
Research Council of Canada, Manitoba Medical Research
Council): Thank you.
Mr. Chairman, ladies and gentlemen, my name is Dr.
Gary Glavin. I'm the associate vice-president for
research at the University of Manitoba, the regional
director of the Medical Research Council of Canada, and
a member of the departments of surgery and pharmacology
and therapeutics at this medical school.
Last year I appeared before this committee as part of
a larger and nation-wide effort to alert and educate
members of Parliament, and this committee in
particular, about a health research funding crisis in
Mr. Martin and his colleagues on this committee, as
well as throughout the House of Commons, clearly
listened and heard the argument. Your action to
restore the budgets of the Medical Research Council of
Canada and the other major granting councils to 1994
and 1995 levels was welcome news, and the research
community in this country is grateful. However, from
the point of view of the MRC, last year's budget action
on your part represents a beginning.
To continue the very positive trend you began, we need
to now consider ways in which health research, the
foundation upon which health care is based, can move
into the new millennium. One way to do this is to
embrace the innovative and forward-thinking concept of
the Canadian Institutes for Health Research or CIHR, as
envisioned by Dr. Henry Friesen, the president of the
Medical Research Council of Canada.
The CIHR concept envisions partnerships between all
three national granting councils, the existing networks
of centres of excellence, and has the very real
potential to eclipse the current health research
funding concept and organization as we know it in this
This dramatic reorganization in health research is
necessary to ensure that Canada realizes its commitment
to be at the forefront of international health
research. Last year I told you that the University of
Manitoba alone lost 22 scientists, primarily to the
United States. We lost their innovative minds, their
patents, and their intellectual property to the United
States, where the per capita spending on health
research is eight times what it is in Canada.
Let me give you an example. There is, as I speak to
you, a prominent Canadian scientist working in Kenya on
HIV, which we all agree is an important and
significant health problem in the world, as well as here in
Canada. This individual has identified a genetic locus
for HIV resistance. Think about the implications of
that. If you can figure out what
product that gene produces that confers HIV resistance
and where it is on the gene, it
is a very short step to a vaccine, to a prevention.
He is at the world forefront of HIV research.
At the same time as I'm telling you about his work
that's going on in Kenya, we are doing everything we
can to prevent this individual from changing his
address from the University of Manitoba to the Aaron
Diamond AIDS Research Center in New York. They're
after him, and we're struggling to keep this individual
in Canada who will, I'm sure, one day win the top
prizes in the world for medical research.
The CIHR concept will provide an environment in which
health research is fully integrated into health
care—they're fundamentally and inextricably linked
together. It will provide a link for investigators
across the country to coordinate and focus our
The Canadian Institutes of Health Research isn't
bricks and mortar; it's a virtual centre. About 10 to
15 research centres across the country will link and
coordinate research in all areas and disciplines
throughout the country. Each institute will link and
support researchers with common interests in aging,
degenerative diseases, hepatitis C, HIV, chlamydia,
immunology, neuroscience, and spinal injury, just to
name a few.
An example is important. There is the issue of the
so-called mad cow disease that struck in Britain a
couple of years ago and could only be eliminated by
eradication of the current beef stocks in the entire
country. I need only raise the spectre of mad
cow disease hitting the Canadian beef industry and the only
solution being to eradicate the current beef stocks in the
country and you can begin to imagine what that would
do to the economy.
You need only raise the spectre of another blood
contaminant. There is an unusual blood contaminant of
Creutzfeldt-Jakob disease that has struck in
various locations throughout the world and is
transmissible through ingesting tainted meat and
through blood transfusions. I don't think we need to
remind this committee about the difficulties associated
with tainted blood.
The overall objective of the CIHR is to restore
Canada's position as an international leader in health
care and research. The National Advisory Board of
Science and Technology has established a benchmark that
the federal government ought to be spending 1% of
Canada's total health spending of $76.5 billion on
medical and health research. Thus the CIHR should be
funded at about $25 per capita or $750 million a year,
versus the current funding of $267 million a year.
In summary, the CIHR will result in greater efficiency
and synergy of Canadian health care researchers—and I
say health care researchers because the link between
basic health research and health care is now firmly
established. It is an investment in Canada's future
and in the well-being of our children and our
grandchildren. The reality is that the time taken from
the molecule to the bedside is shrinking. The CIHR
concept, as envisioned by Henry Friesen and the Medical
Research Council of Canada, will effect that change.
The Chairman: Thank you very much, Dr. Glavin.
We'll now hear from the Council of Canadians with
Disabilities, Mr. Laurie Beachell, national
Mr. Laurie Beachell (National Coordinator, Council
of Canadians with Disabilities): Thank you.
We have submitted an initial presentation. We are
currently doing some work around income support systems
in Canada, and we'll provide that to the committee at a
later date. We hope to complete that within the next
couple of weeks.
I'm pleased to be here before the committee once
again. The CCD, for those of you who don't know, is a
national umbrella organization of persons with
disabilities that basically monitors federal
legislation and programs to improve the status of
people with disabilities. The CCD has been around for
some 25 years now, and we have continued to see
incremental progress in improving the status of persons
Today I'd like to give you some very brief comments on
what we currently see happening to our community, some
general recommendations on initiatives we would like to
see within the federal budget, and identify a couple
of areas where we believe further discussion is needed.
While I mentioned we have continued to see
incremental improvements over the years, I would have
to say that in the last few years we are, frankly,
treading water, if not sinking below the water.
As cuts to transfer payments to provinces have been
made, the social services side of that equation, which
is the essential component that assists people with
disabilities to participate in community life, has been
We've seen reductions in home care programs. We've
seen reductions in transportation programs. We've seen
reductions in services to the point where we
actually had to initiate litigation to take various
governments to court.
The most prominent of these cases was the Eldridge
case. Interpretive services for medical
services in B.C. were wiped out, so we had to take the
Government of British Columbia to court. We won a
unanimous decision from the Supreme Court that said
access to medical services for people who are deaf does
require the provision of interpretive services.
Unfortunately, that decision is a year old, and the
Government of British Columbia is still not quite in
compliance with the order of the court. So things are
Let me just say that at this point, our community
is dismayed by the lack of progress. It feels that it has
innovative solutions but finds governments unwilling
to take risks or invest in new innovations to address
the significant disadvantage they face.
So that's the current state. What do we want
in the next while? What's critical to our community?
An employment initiative remains the critical element.
As the federal government has devolved labour market
training responsibility to the provinces, no
accountability criteria or mechanisms have been built
into those agreements to ensure that those who are not
EI-eligible have some access to labour market
For our community, this is critical in that most of
our members are not EI-eligible. Most of our members
have not made it into the labour market. Without a
targeted labour market initiative, we will not see our
community gaining access to those services. The labour
market agreements that the federal government has
negotiated remain totally silent on this issue.
The federal government did recognize the need for
addressing employment to some extent, so it created
the opportunities fund in the 1996 budget. That
program is now two years old and it has another year
left. It is $30 million per year.
We would like to see this budget extend and reaffirm
that program. Without it, we would say that the
federal government has abandoned people with
disabilities. Not only in their negotiations with the
provinces did they not assure that the concerns of
people with disabilities were addressed, but the
targeted initiative comes to an end within the year.
This budget needs to reaffirm that program and reinvest
in it so that we do not see over the next year a
wind-down of many initiatives that are actually having
an effect and getting people jobs.
Second, while there have been incremental improvements
in tax fairness for people with disabilities over the
years, there has not been a systematic review of the
tax system as it addresses the additional costs that
people with disabilities bear. We would urge that
department of the government to look at the definition
of disability within the Income Tax Act to
see who is actually eligible.
Some of the tests now being imposed to determine
eligibility for disability tax credits are quite
bizarre. You need to have a medical certificate. The
determination says things like, can you walk 50 metres
unaided? Many of our members could walk 50 metres, but
they would do virtually nothing else that day if they
did that. The energy that would be required to do that
would wipe out any energy to go to work or continue
functioning for that day. So I think we have to look
at how we define both the definition within the Income
Tax Act and the interpretation applied by Revenue
We would encourage the refundability of the disability
tax credit and medical expense credit. Refundability,
however, requires that the federal government negotiate
with the provinces to ensure that this refundability is
not treated as income and deducted from social
assistance. Present tax benefits are only for those
persons who have a taxable income, yet many people with
disabilities experience additional costs even though
they have no taxable income and live on social
If we made the
tax credit refundable, those on social assistance would
have benefits, but only if agreements were reached with
the provinces not to treat it as income and have it
deducted dollar for dollar from their income from the
social assistance benefits, which we've seen in other
Frankly, some years ago the federal government
increased the disability benefit of $150 through the Canada
Pension Plan, and not one Canadian with a disability got
that benefit because the provinces grabbed it all back.
So we would encourage looking at the tax system, both
those two initiatives and a more fundamental review of
tax in offsetting additional costs of disability. In a
broader initiative, our community now talks about what
we call the Canadians with disabilities act, a
mechanism for...not entitlement but for
ongoing review of policy as it is created. In an
analogy, we would compare it to an environmental impact
survey. As social policy
initiatives go forward there would be a process imposed upon
those initiatives that they look at the impact upon
persons with disabilities.
In the United States you have the Americans with Disabilities
Act, which is civil rights legislation. We do not believe
we need that, in that we have the charter of protections
and guarantees, but we do need a process to ensure that
things like the negotiation of labour market agreements
somehow are made to address the impact upon the
community, and it is not an afterthought that our
community then is addressed.
Those are initiatives we see coming forward at
this point. As mentioned, we have some concerns around
income support programs, in particular the rather
devastating changes to the Canada Pension Plan
disability program. We have seen thousands of our
members cut from CPP disability benefits with the new
system of review. With a new system of eligibility you
will be penalizing those persons who are young
who become disabled, because they will not have
significant attachment to the labour market to be
eligible for disability benefits.
On the health side, our community, as I mentioned, was
concerned with the change in the structure of transfer
payments with the establishment of the CHST. The
discussions about reinvestment in CHST seem to focus on
health. While our community has issues in the health
mode as well, primarily we're looking at social
services. If there is a targeted initiative in the
federal budget to reinvest in health, it will not
necessarily address those issues of social services.
This is probably the fundamental issue we have, in
that we believe the federal government must ensure the
citizenship rights of Canadians, must ensure equal
access and benefit to all Canadians. Block
funding systems with no accountability measures or
conditions attached to them do little to promote that
and in fact leave various communities abandoned by the
Government of Canada and left to the discretion of
What we see happening is greater disparity among the
provinces and a lessening of service. We still have
people who purchase their wheelchairs. We still have
people who cannot get the drugs covered for various
treatments; for multiple sclerosis, for example, or
persons with AIDS. We have great disparity across the
country in attendant care provisions—some universal
programs, some means tested, some with no programs at all
and dependent upon family. These things restrict both the
mobility of people with disabilities and their access to
be full citizens in their community.
In summary, the last number of years, frankly, have not
been progressive. We have found ourselves arguing for
targeted programs rather than access to generic
programs, because the generic programs have been
exclusionary or have disappeared. We believe the tax
system can do much to assist our community, but it needs
a fundamental review, looking at definitions in
particular. We believe the federal government must
assert its leadership to ensure standards
of service provision across the country.
The Chairman: Thank you very much, Mr. Beachell.
We'll now hear from the Manitoba Association of School
Trustees, Mr. Len Schieman, president, and Jerry
MacNeil, who is the executive director. Thank you.
Mr. Len Schieman (President, Manitoba Association
of School Trustees): Thank you very much, Mr.
The Manitoba Association of School Trustees welcomes
the opportunity to make this presentation to the House
of Commons Standing Committee on Finance.
We believe that the architects of the 1999 federal
budget need to keep children at the forefront of their
thoughts as they chart Canada's financial course for
the upcoming year and beyond. We know you share
this fundamental belief. Our purpose in making this
presentation is to underscore the urgency of the
Our association represents Manitoba's public school
boards, but we believe that our responsibility extends
to all children, not only those who are school-aged.
We share a social responsibility with other levels of
government—communities, churches, and families—to
ensure that all children are provided with the physical
and psychological supports they need to flourish both
as individuals and as members of society.
One of the greatest obstacles we have to overcome in
our quest is poverty, because its effects on the
well-being of children are so insidious. This is not a
new realization. In 1989 the House of Commons passed
unanimously a resolution to eliminate child poverty in
Canada by the year 2000. Yet, by 1995 1.5 million
Canadian children, 21%, lived in poverty, an increase
of 58% since the 1989 resolution. And Manitoba fared
worse than the nation as a whole in this respect.
What does poverty mean to children? Its effects often
take hold even before birth. Babies born to mothers
living in poverty more often have a low birth weight.
Research has shown that a low birth weight can cause
serious costly and life-long disabilities and that good
nutrition during pregnancy can often prevent these
conditions or these problems.
As well, a number of health conditions in infants and
children have been tied to the inadequacy of specific
nutrients in the mother's prenatal diet. Ensuring that
mothers-to-be and infants have the nutritional building
blocks they need is critical in giving children the
best possible start in life. Strong and healthy babies
grow into strong and healthy children, children able to
reach their full potential.
In July, Manitoba announced a new program, Woman and
Infant Nutrition, which will provide nutritional
education and nutrition benefits to provincial
assistance clients who are pregnant or who have
children under one year of age. This year, some 1,800
families are expected to benefit from this program.
But without action on the part of the federal government,
many more will fall through the cracks.
Earlier this month, a committee with representation
from federal and provincial governments and the Manitoba
a group that represents 26 northern Manitoba first
nations communities, released a report detailing aspects
of life in these communities. According to that
report, food allowances fall an average of 35% short of
covering the cost of dietary essentials. In 20 of the
26 communities studied, total welfare payments did not
cover food expenses. With as much as 90% of
the population in some of these
communities dependent on welfare, problems associated
with malnutrition are pervasive.
The committee made two recommendations to address
this problem: a 20% increase in the food allowance in
remote communities that do not have an all-weather
road; and a subsidized transportation program that would
allow food to be shipped at mail rates, that is 30¢ a
kilogram, rather than cargo rates, which are 80¢ a
kilogram. The report estimates that the transportation
subsidy would save a family of four some $600 on their
food bill, which could be used to increase the quality
of the family diet.
The other group that requires federal assistance to
ensure their dietary needs are met is the working poor.
A large number of the 1.5 million Canadian children
who live in poverty are not of families dependent upon
social assistance, but in working, often single-parent
Clearly, to change social assistance programs such as
Manitoba's WIN initiative and those recommended
for northern communities will not help these children
and their families.
We need to explore alternate ways of ensuring they can
enjoy the most basic human right of an adequate diet.
The most effective and expedient way of reaching all
children is through an enhanced national child benefit.
The challenge of meeting the nutritional needs of the
children continues for families in poverty as their
babies grow into toddlers and then move on to
At the same time, they are faced with new and equally
difficult obstacles. One of the greatest struggles
faced by many parents, not only those in financial
straits, is making appropriate child care arrangements.
For many parents, the cost of care is beyond their
means. For others, the hours of operation of child
care facilities may not coincide with their work
schedules, or there may be no available spaces. As a
result many parents are forced to resort to makeshift
or inadequate arrangements, or to restrict their
participation in the workforce.
In a recent Canadian policy study, The Benefits and
Costs of Good Child Care: The Economic Rationale for
Investment in Young Children, Gordon Cleveland and
Michael Krashinsky highlighted the economic
benefits of supporting comprehensive child care.
The human benefits of providing quality care for all
children should be self-evident. For this reason, MAST
joins the Canadian School Boards Association in calling
on the federal government to develop and implement a
national child care strategy that will ensure all
children requiring care outside the home have access to
affordable, licensed care by qualified individuals in a
safe, stimulating, and nurturing environment.
All children can benefit from quality child care and
preschool education, but none more so than those at
risk. Research by neuroscientists indicates intensive
intervention in the early years can make a dramatic
difference for these children. The brain is not fully
developed at birth. There are vital neural connections
to be made in the first two years of life. But if these
connections aren't made soon enough, some windows of
opportunity slam shut. Without help in the preschool
years, some children will never catch up to their
peers, even after years of special education and
Studies such as the High/Scope Perry Preschool Project
have clearly illustrated the human and economic
benefits of quality preschool programs. But programs
such as these cannot exist without the support of
government and community.
While the start of a child's school years may alleviate
some of a parent's child care concerns, although they
are often replaced by new ones, other challenges emerge
to take their place.
Although access to public education is the right of
all Canadian children, there is a cost associated with
fully exercising that right. Some of those costs are
nothing new. Children have always needed school
supplies and suitable clothing to attend class.
However, changing economic realities have resulted in
some costs that were traditionally born by government
or the school division being assumed by individual
schools or families. For the families of children
living in poverty, finding the money to meet these
expenses is especially difficult.
A recent front page story in the Winnipeg Free
Press highlighted some of the ways school
communities are raising funds to support programs hit
by budget cuts. Through time-tested ventures such as
candy sales and walkathons, and new initiatives like
corporate sponsorship and the sale of advertising,
schools are raising enough money to pay for services
and supplies they could not otherwise afford.
In some schools, those funds are used for new
playground structures and computer upgrades, but in
some schools, and for some students, the needs are more
basic. One inner city principal recently decided
for the first time he was going to allow drink machines
in the halls of the school. His goal was to generate
funds to buy bus tickets to help his students reach
school safely. The few dollars required to avail
themselves of public transportation were beyond the
reach of many students living in poverty.
Poverty means that many young children are not
physically or intellectually prepared for school.
Poverty continues to take its toll on these same
children as they move through the school years.
Children need hope. They need to see their own future
in a positive light, but poverty robs many children of
that hope at an early age. The loss of hope is
reflected in their behaviour.
As they get older,
children who live in poverty often require assistance
from a variety of government departments and social
service agencies. Health problems associated with poor
diet and other lifestyle issues may increase. Many
children fall further and further behind in school,
requiring intensive and expensive special programming.
Children who live in poverty are more likely to be
involved in gangs and engage in other criminal
activities. These children can become all too familiar
with our police and court system.
One of the greatest
tragedies associated with children and poverty,
however, has to be the rate of teen pregnancy. Too
many poor teenagers, still children themselves, are
having babies of their own. The cycle of poverty and
all the problems associated with it is in this way
being perpetuated. As a society, we cannot afford to
let that cycle continue unchecked.
As a just and caring society, we must find the answer
to two basic questions. First, what can we do to
reduce the number of Canadians, particularly Canadian
children, who live in poverty. Second, what can
we do to mitigate the circumstances of those
individuals who continue to live in poverty?
In answer to those questions, the Manitoba Association
of School Trustees makes the following observations and
Poverty impacts on children and their families in many
negative ways, but never more fundamentally than the
effect it can have on diet and nutrition. Diet affects
a child's physical, intellectual, and emotional
development. Poor nutrition prenatally and in infancy
can be reflected in a child's readiness to learn once
he or she begins school. Poverty can have long-term
physical, intellectual, and social effects that
seriously compromise a child's chance of growing into a
healthy, happy, contributing member of society.
Therefore, the Manitoba Association of School Trustees
recommends that the federal government take those
measures necessary to ensure that all Canadians, and in
particular children and pregnant women, have the
resources to avail themselves of a healthy,
well-balanced, and nutritionally adequate diet. For
some families, this goal may be achieved through changes
to social assistance programs; for others, however, we
need to adopt a different approach.
Families living in poverty are often working families
who depend on the national child tax benefit
wages that are inadequate to meet their basic needs.
However, that benefit is often not enough. Therefore,
the Manitoba Association of School Trustees recommends
the federal government allocate an additional $850
million to the national child benefit in 1999 and a
similar amount in the year 2000, thereby doubling the
amount to which the government previously committed.
Young children need more than decent food and clothing
if they are to thrive. They also need to be cared for
in a loving, nurturing environment. They need to be
challenged and encouraged if they are to enter school
ready to learn. Whether children are being cared for
by their parents or by outside caregivers, these
needs remain constant. Unfortunately, many parents are
unable to access high-quality care for their children
when necessary. This is especially true for families
in poverty, where the costs can be prohibitive.
Therefore, the Manitoba Association of School Trustees
recommends that the federal government develop and
implement a national child care strategy that will
ensure that all children requiring care outside the
home have access to affordable, licensed care by
qualified individuals in a safe, stimulating, and
Despite our best efforts to nourish and nurture
children so that they will not feel the impact of
impoverishment, the reality is that there are over one
million children in this country who are already caught
up in poverty's web. We must explore ways of helping
these children more effectively and efficiently.
For years, government departments and other social
agencies working with children have compartmentalized
their services. Their individual focus is on the
health, education, or family life of children, or on any
of the myriad of subcomponents
of these service areas.
What government agencies need to do, however, is focus
on the overall physical, emotional, social, and
intellectual well-being of individual children with
whom they work. Such a holistic concern does not meet
the narrow criteria of their mandates.
Therefore, again, the Manitoba Association of School
Trustees recommends that the federal government provide
increased financial assistance to the provinces in
support of the development of integrated service
delivery models to meet the needs of children who are
at risk at an early age.
The Chairman: Thank you very much, Mr. Schieman.
Now we'll hear from the Manitoba Federation of Labour,
Mr. Rob Hilliard and Mr. John Doyle. Welcome.
Mr. Rob Hilliard (President, Manitoba Federation of
Labour): Thank you very much, Mr. Chair.
This morning we'd like to direct our remarks to three
subject areas: first, the pay equity liability of the
federal government; second, the surplus in
the EI account; and third, the fiscal
surplus, particularly within the context of an economic
On the pay equity liability, there has been an awful
lot of talk since the summer ruling that directed the
federal government to make the corrections to their own
workforce. An awful lot of the talk has been around
the issue that the amount is too large, that there is
too much of a liability here, and that there has been too
large a financial amount owing that has been built up.
That's pretty hard to take, frankly, because the
sole reason that there's a large amount of money owed
to the federal workers is due to the fact that the
federal government itself, through several
administrations, has resorted to foot-dragging and
legal manoeuvring, all designed to avoid what even Mr.
Chrétien acknowledges is the government's legal and
moral obligation to make adjustments to their pay
To recap in a very general way, the process began
way back in 1984, and it only began at that point after
an unsuccessful attempt by the federal government
unions to negotiate an agreeable settlement with the
federal government at that time.
After filing the
complaint with the Canadian Human Rights Tribunal,
the federal government and the unions involved agreed to a
joint process and embarked jointly on a comprehensive
study of the wage rates within the federal civil
service. In that process, literally
thousands of jobs were assessed and analysed. The
process took four years. All the parties were involved
in it on a voluntary basis and agreed that was the way
to go—the federal government, the unions, everybody.
After the study had been completed and the data were
being analysed, the cold hard fact
that there is significant,
systemic discrimination in the pay scales of the
federal civil service became known to everybody, and it
is creating quite a large liability
for the federal government. Instead of meeting that
obligation, the federal government began to withdraw
from the process and to challenge it. Instead of working
with their own workers, there were countless numbers of court
appeals and appeals on court decisions. It was back to the
human rights tribunal, and so on. There was a whole series
of legal manoeuvres all designed to drag the process
out and to enable the federal government to not meet their own
obligations to their own workers.
That is really the sole reason the liability has
been built up to the very large number it is now.
Continuing the past tactics of foot-dragging, of
legal manoeuvring, and of simply avoiding the day of
reckoning is increasing that amount every day and
it makes it even more difficult to deal with.
I'd like to contrast the federal government's approach
to this topic with the Manitoba government's approach,
which came about at the very same time.
In the early 1980s, the Manitoba government was
similarly advised by their union that they had
significant discrimination in their pay scales. The
two parties sat down together and negotiated an
agreeable method of assessing their pay scales. They
assessed them together. They agreed on the final
result, and they implemented the final result years
and years ago, in the early 1980s.
the pay scales, they paid people accordingly, and
life has gone on just fine ever since.
No liability has
been built up by the Manitoba government. You have a
workforce that does not feel their employer has ripped
them off or continued to use legal manoeuvres and every
trick in the book to avoid making the payments owed.
The Manitoba government has proceeded without any of
these issues or problems, and everything has gone on
The federal government could have reacted the same way
at the time, but didn't. Unfortunately, it continues
to not react that way, even to this day, some 14 years
We would urge the federal government to meet their
obligations, stop the foot-dragging, and make the
payments that even the Prime Minister and previous
prime ministers have acknowledged are owed to their own
workers. Stop what you've been doing, pay what you
owe, and get on with things.
Before moving on to a different
topic, I would like to pose a question on that topic to the
committee. I'm somewhat puzzled by statements that
have been made by different governments. It began with
the Mulroney government and it continues today even
with Mr. Massé, who has said that the money has been
set aside to meet these pay equity obligations. If the
money has been set aside, then what is the impact on
the daily operational deficit? Is there one? I don't
know. I don't understand what those statements mean.
If the money has been set aside to do this, why don't
you do it?
Is there going to be an impact on the operational
deficit if the payments are made now? I don't know the
answer to that question, but I do get confused by
statements made by ministers and prime ministers when
they say the money has been set aside. If it's set
aside, then pay it.
On the topic of the EI surplus, first of all, we'd
like to point out that the unemployment insurance
account or employment insurance account—whatever it's
being called these days—was set up to deal with the
problems of unemployment. It was set up to cover off
income loss for people who are temporarily unemployed
during a period of time when they're seeking
employment somewhere else.
We believe that objective is a laudable one and
ought to be maintained. We do not agree with using
surpluses from that account for other purposes. In
fact, if one looks at the budgets of the last few
years and at the surplus of the EI account, if
it were not for that surplus that Mr. Martin brags
about in terms of balanced budgets and now of
fiscal dividends, it would not be there at all if
he were not pillaging the EI account.
We believe that government surpluses, fiscal
dividends, ought to be paid
by the entire tax base, not just by
workers and employers. This is a misuse of a targeted
tax that is being used to cover off all programs. We
don't believe that's fair. That's not the original
intent. That's not what it should be used for. We
would support the management of the EI account at arm's
length for government so that those transfers back and
forth no longer occur.
I'll just demonstrate again where this surplus comes
from. The surplus in the EI account is not due
primarily to the fact that unemployment has fallen in
this country; it's due primarily to legislative
changes that have taken place, first with the Mulroney
government and second with the Chrétien government, that
have reduced eligibility and benefits
levels, which have had the effect of cutting off a lot of
unemployed people from the benefits of unemployment
I'll just quote a couple of figures. While 87% of
jobless workers received unemployment insurance
benefits in 1989, that number today is between 36% and
37%. The surplus is owed to those workers who have had
benefits cut from them.
If benefits were restored to the levels they were
prior to the last legislative change made by this
government, coverage could be increased. By maintaining
premiums at their current level, without raising
premiums at all, coverage could be increased from the
current level of 37% of the unemployed to approximately
The benefit level could also be returned to 60%,
and the surplus would be maintained. You would not be
going into a deficit situation. You would be balancing
the books. The amount of revenue every year
would be equivalent to the amount of expenditure every
year. You would not be putting the account in any
jeopardy. You could raise the benefit levels, and you
could restore eligibility criteria that had been there
Moving on to the fiscal surplus, I think the
appropriate way to look at the fiscal surplus would be
to ask the question, what is the maximum benefit we can
derive from this amount of money? What is the maximum
benefit to Canadians? To get the biggest bang for your buck
with this amount of money, what is the best way? Many
in the business community, and many others as well,
are saying pay down the debt; that's what we need to
I'd like to refer to a Globe and Mail
editorial of last year that really talks about the
value of putting money on the debt. I shouldn't have
to remind members of the committee that the Globe and
Mail isn't exactly a left-wing organ. It said that
debt in the abstract is not a problem. Its relative
size is what matters, and as the relative size of the
debt to the Canadian economy diminishes, that's what
the issue really is. So in dollar terms, with the
relative size of the Canadian economy, the debt's
weight will fall precipitously, as will the interest
burden, as a proportion of federal revenue.
That relative measure,
the ratio of debt to gross domestic product, is the
only one that really matters. Just holding the debt
constant while the Canadian economy continues to grow
sends the debt-to-GDP ratio spiralling downward. At
the same time Ottawa would have money freed up to spend
on new programs or tax cuts.
By the end of the next federal government's mandate,
approximately 2002, even if the federal government does
not put one dollar of surplus on the debt, the
debt-to-GDP ratio falls, and they assume an annual
economic growth rate of 2.5% after inflation. But even
if that number were overly optimistic, there's no
question we're talking about economic growth. Without
putting one penny directly on the debt, the debt-to-GDP
ratio would fall from 74% to 59%. Ottawa could then
simultaneously increase program spending by up to 4.5%
a year and offer Canadians a substantial,
multi-billion-dollar tax cut, or Ottawa could throw its
energies into debt reduction, defer the tax cut, and
watch the debt ratio fall one measly additional
percentage point to 58%.
It seems to me that simply isn't a good way to spend
your money. It doesn't accomplish much. Putting it
directly on the debt may make some sense to people who are
looking at their own personal debt and saying, I have
to get out of debt, but, frankly, that analogy doesn't
hold very well when we're talking about government debt
and the relative size of the economy. That's the issue
we really need to be looking at.
Paying down the debt directly doesn't
gain us much at all. It could, however, gain us quite
a bit through tax cuts or direct government
We would advocate that an across-the-board tax cut isn't
the most advantageous way of spending that fiscal
dividend either. The difficulty with across-the-board
tax cuts is the money that gets put into Canadians'
pockets can wind up being spent in a lot of different
ways. Particularly when we talk about upper-income
Canadians, that money doesn't often get circulated in
the local economy. It doesn't get used for buying Canadian
goods and services or for promoting job
growth within Canada. People can spend it on
imports, people can travel, people can save it, people
can make investments overseas—people can do a lot of
things with that money.
For low-income Canadians much
of it gets spent in the local economy. If there
were a targeted tax cut aimed at low-income Canadians,
that would probably benefit the Canadian economy the
most. It would also, in our view, be far more
equitable and would be helping those Canadians who
need it the most. But it also has the most positive
spin-off on the Canadian economy.
However, we feel that the best way of using the fiscal
dividend—and it is a fiscal dividend. We're talking
about a surplus here; we're not talking about raising
more money through additional taxes, and we're not talking
about government deficits. We're talking about what to
do with the fiscal dividend, and the greatest benefit with
that fiscal dividend can be derived by spending
it directly on the Canadian economy, by direct government
We would advocate putting that money into health care,
because we feel that health care has suffered the most,
due to the focus on dealing with fiscal deficits by all
levels of government over the last number of years. I
think there is no question in almost every Canadian's
mind that health care has suffered significantly as a
result of that focus. Now that we have a fiscal
surplus, money needs to be restored to the health care
That would have a variety of benefits. First, I think
it deals clearly with the deterioration that has been
going on in health care. This week we witnessed a
panel of people from all sides of the political
spectrum talking about their experiences in health
care. Almost everybody in Manitoba has had either a
direct or indirect experience with deteriorating health
care over the last few years.
I thought the most telling quote I saw from that panel
was a gentleman who talked about bringing his elderly
mother into the hospital and having her sit in the hallway
for four days, and the indignity she felt as a result
of that and the outrage he felt—in fact, the shock
he felt—that this could go on in our country, a
prosperous country. He described the hospital as
reminiscent of third world health care.
I don't think
that's an overstatement, in some cases. In
fact, I think that's the direction in which our Canadian health
care system has been going, and money must be restored
It would have the added benefit of stimulating
the Canadian economy. Mr. Martin has expressed
concerns about the financial crisis in the global
markets and the impact that will have on the Canadian
economy. There is something his government can do
about that, and that is, to use that money to
stimulate—albeit not in a massive way but in some
way—the local domestic economy by putting that money
directly in investment into Canadian goods and services
like health care. It will be good for job creation,
for health care, and for a general economic
In summary, we would like to say that if the
government doesn't respond in some way by putting this
money back into the Canadian economy—and Mr. Martin
continues to be concerned, and I think for good reason,
about the impact of the global economy on the Canadian
economy. We could have an exaggerated contraction going
on here in Canada if he reacts by contracting the
government rather than using that money to stimulate.
If in fact there is a contraction going on in the
private economy and in the
government economy, the public economy, as well, the
whole recession will be amplified and exaggerated,
unemployment will begin to climb again, we will have
concerns about the federal public purse, and we will
begin to go back to the spiral we had of worrying about
government revenues, worrying about deficits, and
worrying about cutbacks. This doesn't have to happen
if this surplus gets used wisely to restore services
that have been cut and to stimulate the Canadian
Thank you very much for the opportunity to present on
The Chairman: Thank you very much, Mr. Hilliard.
Now we will move to the Manitoba Federation of Union
Retirees, Mr. Albert Cerilli, president.
Mr. Albert Cerilli (President, Manitoba Federation
of Union Retirees): Thank you and good
morning. Welcome to Winnipeg, again.
We welcome the opportunity
to share with you our views on what we see as the most
depressing areas of our country that need the federal
government's attention. As members of this
committee, you can have an influence on what direction the
federal government can take to stake out a new
direction for Canada and set new directions for the
Yesterday, October 20, we made our presentation to
the Manitoba Minimum Wage Board, as you can see in
our first attachment. In researching our case to
sustain our position for a higher minimum wage for
Manitoban workers, we found a number of similarities
for this presentation, and we wish to highlight the
areas that stuck as obscene and a danger
to our democracy.
As pointed out in our brief to the Manitoba Minimum
Wage Board, the rich-poor gap is becoming
so wide that all resemblance to equality and fairness
is lost. In fact, the United Nations human development
report measuring poverty in rich countries gives Canada
a failing grade, and our federal government keeps
towing the line of the powerful transnational
corporations that threaten our democracy as a free and
I want to take you to the bottom of page 1 of that
brief, and I quote:
On September 8, 1998 the Winnipeg Free Press reported
that “Rich-poor gap means we're no longer No. 1.”
The article is attached, and it is worthy to
further quote “There will be a lot of commentary on
where Canada sits on this new poverty index.” The
United Nations report is finally driving home the fact
that we as a Province and a Country can no longer gloat
about being number one.
The control of these super-powerful corporations over
the global economy has been and is leapfrogging federal
and provincial governments worldwide. The governments
are more likely to pass laws that give these
corporations a legal and legitimate right to strangle
human rights and workers rights, and all of the other
rights of the economy that we can think of, rather than
stand up and say these are the new rules, on an even
playing field basis, for all countries, for all
Our Canadian government is in fact seen by Canadians
as no different from the government of a dictatorship.
The recent humiliating APEC Vancouver summit fiasco
will haunt Canada's role before the world stage as a
failure in standing up to the likes of Suharto,
who is estimated to have amassed some $40 billion
during his 32 years in power in Indonesia, and that was
reported in the recent September issue of the
I would like to refer back to our Manitoba minimum
wage brief and review with this committee the wages and
benefits of CEOs and their corporate profits as related
to taxes and the non-tax of the movement of
international money transfers. First, I wish to quote,
from pages 1 and 2, the poverty line of some five
million Canadians versus CEO income and benefits, while
finding new ways to cut jobs—and all you have to do is
read the headlines this morning in regard to what CN
intends to do after privatization and deregulation and
I'll quote a short paragraph from page 2
of that brief:
The Jesuit Centre for Social Faith and Justice [based
in Toronto, Ontario] produced a poster of Corporate
CEOs and Presidents salary and total compensation for
1995 and I will quote a summary from the poster:
“These are the real special interests—the 100 largest
companies in Canada. Collectively, they have made
record profits in recent years—over $65 billion in
1995—while 1.5 million Canadians remain without
Those figures are still true today.
“The CEOs shown below were paid an average of
$2,654,116 in 1995 nearly 90 times the average wage of
working Canadians at $29,835.” May I also add to you
in the matter before you that this means that many CEOs
employ minimum wage workers in those Industry,
creating up to 200 times the Manitoba [$5.40] minimum
wage disparity between those that have and those that
We make some obvious recommendations to this
committee as follows, but before I do that, I want to
quote from a special report that I received from one of
our members who volunteers her time at the Red Deer
Food Bank. I'll read this into the record, because
it's really stunning about what is happening in our
wage structures in this country and our workforce. Some
5.5 million people are either underemployed,
unemployed, on social assistance, and so on.
The proportion of working people who need to turn to the
food banks has been rising steadily over the years.
Since 1993, when 10% of our applicants were employed,
the proportion has risen to 18% in 1997. The majority
of those jobs are full-time, with the next being
part-time, and the fewest of the employed seeking food
help are casual.
Where are people who are not receiving a living wage
working? The answer may or may not surprise you. In
this report we will not name names, only the types of
employment. One reason is to avoid embarrassment. The
other is that some of the businesses are supportive of
food banks. It lists a number of companies, including
government, whose workers use food banks.
This kind of pressure on our society has to stop. The
volunteers of these communities, and this is Red Deer,
are at their wits' end in regard to helping people and
noticing people who are trying to feed their families
and are starving. We heard just now from the school
trustees in regard to the development of young children
when they suffer from lack of food and nourishment.
We've heard from the disability people in regard to
what is happening with the Canada Pension Plan and
disabilities. Well, we can't tolerate this kind of
stuff any more in this country. I just say to this
committee, it's about time we change their systems for
a more equitable means of society.
The recommendations are very simply put. Oftentimes I
come before this committee and give out a whole slew of
figures and facts about who's getting what. I just
wanted to make it brief and simple this time so that
you get the message that there's something wrong with
this picture. Society will not stand still for these
kinds of disparities to carry on. You're going to have
a civil uprising in this world like you wouldn't
believe. Canada has to stand up and say enough is
One of the recommendations we put to you is to
put into Canadian law something that changes the
requirements to tax international money transfers,
referred to by some as the Tobin tax. You'll probably
hear this afternoon from some of the other presenters
in regard to moving trust funds out of the country,
where $750 million in taxes was not paid
by a large corporation. We can use the new
taxes to create decent-paying jobs so that they don't have
to go to food banks and beg.
I'm pushing 70 years of age and I've
seen plenty. We're reverting right back to
dictatorships, where nobody gives a hell until
something really starts strangling us in regard to what
we want as a democracy.
In relation to recommendation 2—you just heard from
the Federation of Labour, and believe me, we didn't get
together to write this thing—allow labour and business
communities to meet with government to set up a new
system of meeting the needs of the unemployed and
underemployed through the employment insurance fund.
That's an arm's-length administration, where they'll
decide on things like the amount of training and where
to create the jobs, and pay the people who are
suffering. Meanwhile, the federal government reduces
the qualifying period so incomes can be paid to the
affected workers. You heard the figures from the
federation here so I won't repeat them. And the
federal government should stop any move to raid the EI
fund. That's all it is: a raid on funds that don't
belong to this or any other government.
By the way, there are some good experiences in the
field in Germany and Holland in regard to
Recommendation 3 is to amend the tax bracket to purely
reflect the zero to CPI increases year after year,
calculating the personal tax credits to increase in the
percentage amount of the consumer price index,
resulting in full indexing. I thought we had done
something about that, but apparently my accountant
didn't tell me.
I was watching The Money Show on
CBC the other Sunday, and the chap from KPMG
talked about tax bracket creep. He gave us examples,
and I want to read them into the record so that you can
do something about it, because we're recommending to
vote at zero, not 3%.
Tax brackets and X Files are both
creepy. So you think you've made it more than half way
through 1998 without being hit with a federal tax hike.
Think again, because the inflation rate hasn't
increased by more than 3% in each of the last five
years. The federal tax brackets and amounts used to
calculate personal tax credits have not been adjusted
for inflation since 1992. Limited indexing adjustments
to the amount over three points result in an additional
hidden tax as your cost of living increases, something
called bracket creep.
For example, if full indexing had been in place since
1988 when personal credits were introduced as part of
the tax reform, the basic personal federal tax credit
would be $260 more than the current $1,098.
Not only that, the lack of full indexing since 1988,
when the number of tax brackets was reduced to three,
has caused about $14,070 of income to creep from the
middle tax bracket to the highest tax bracket, with the
result that the higher income earners are subject to a
higher rate of tax of about $14,070 more than they
would have been if the bracket had been fully indexed.
The result is your taxable income is between $36,624
and $59,180. Bracket creep will cost you $1,339 in
1998. If your income is over $73,000, your bracket
creep cost will be $1,972 this year.
So there's an obvious need for the change to the
taxes, to the bracket creep, as it's referred to.
Four, restore the federal transfer payments to the
provinces and territories in order to rebuild Canada's health and
social programs, post-secondary education, retraining,
and so on.
I think it's becoming obvious we're falling
apart at the seams for the sake of reduced
budgets, debts, and deficits. I say there's
nothing wrong with that, but we have to look in the
mirror and say when is enough, enough.
Five, put in place a program that will deal with child
poverty and poverty as a whole by way of a child
benefit increase, and implement a program that will
provide shelter for the homeless. In the United States
there are 2.5 million homeless people. If we take the
percentage used in
different forums of Canada's size being 25%, you're
going to have close to 0.5 million or 0.25 million
people who are homeless in this
country. That's a shame.
Last and foremost, report to the federal
government that Canadians will not tolerate any
politician or person who thinks the rights
and protections of our democracy are trivial or for
sale. That politician or person is committing a serious
mistake. Two world wars were fought to protect our
democracy and the rights of free people.
The APEC Vancouver summit interference with our
freedoms of thought and expression will not be allowed
again in this country. You can take it home to the
federal government and report that. I'm telling you
Canadians are fed up to their eyeballs in fighting
all the other battles, and now we have to fight for our
I say to this committee that together we have a
responsibility to put this country back on track.
Thank you very much.
The Chairman: Thank you very much, Mr. Cerilli.
We'll now move to the question and answer session.
We'll begin with Mr. Epp. It will be a 10-minute round.
Mr. Ken Epp (Elk Island, Ref.): Thank you, people,
for coming here today to enlighten us with regard
to your views. I appreciate very much the dedication
of all of the witnesses we're hearing from as we travel
across the country, yours included.
With your permission, I'd like to just go down the
list, hopefully approximately in the order you gave
your presentations, although when I say something, if
some of the rest of you want to jump in with a comment,
I think that might be in order, if the chairman
First of all, I'd like to talk about student things.
I taught for 31 years before I got into this business.
One of the things I say is that when I was teaching at
the college level, I had some success. My students
usually learned a little bit every day. Most of the
time I learned too. Where I work now, that doesn't
This has given me a perspective on education. Of
course, having worked with college-age students for
some 27 years of my 31-year teaching career, I have a
lot of empathy and concern for the way
students go through life these days.
I think most of the people on the panel, Kemlin being
the exception, will remember that when we went to
school, things were a lot different. I know that as a
student I could make enough money in the summer to pay
my way through school. In fact, I consistently made
50% more than I needed every year, so I had a lot of
spending money in those years as a student.
When I see what students are going through nowadays,
very frankly, I'm very concerned about it, because what
we're having is a change in the way we think
nationally. Our governments are in debt. As
individuals, we're in debt.
Now, when students graduate from university or college
and they're beginning their careers and professions,
we're arranging our affairs so that they too have a
maximum amount of debt at the beginning of their
careers. I'm very empathetic with your presentation,
and I wish it were different.
Here's one of the things I'd like to ask you about. You
indicate that well over half of the cost of education
comes from tuition fees. I question that.
It seems to me that tuition fees, excluding books,
just the fees themselves, have to be considerably less
than half, I would think, of the total cost of a
student going to university these days.
Can you just explain that?
Ms. Kemlin Nembhard: I don't think I ever said
that 50% of the cost of education is covered by tuition
fees. Of full-time students in Canada, 50% are on
students loans. In terms of the amount that tuition
fees cover, if we take a regional example, at the
University of Winnipeg, tuition fees cover
approximately 39% of the cost of education. It has
been that way for years, which was an anomaly up to the
early 1990s, but that's no longer the case. Across the
country, there are a lot of universities especially
where about 30% to 40% of the cost of education
is covered by tuition fees.
Mr. Ken Epp: Okay. So you have tuition fees,
books, and living expenses. I think those would be
three broad categories for your budget. At least those
were the ones I used when I was a student. Included in
the cost-of-living fees, of course, would be any social
Do you think the government should do anything
more than perhaps help with the tuition component? Is
that taxpayer under any obligation? I'm speaking not of
a legal obligation but of a moral, desirable, or social
obligation to provide more for students than their
Ms. Kemlin Nembhard: Yes. I didn't cover this as
fully in my presentation because it would have been a
lot longer, but I think the Canadian population, the
Canadian government as a whole, has the responsibility
to ensure that our education system is equally
accessible to any Canadian who has the desire and
ability to go.
The best way to do that is for the federal government
to fund education directly. It would not be by funding
individuals, but let's say it would be by giving
vouchers or scholarships. The best thing is to ensure
that the system is adequately funded, and that can be
done through the transfer payments to the provinces.
Yes, I do think that morally, as a Canadian society, we
should be providing to ensure that all Canadians can
I think it's an inherent part
of a democratic society that people in the society can
have equal access to post-secondary education—and
that doesn't mean just university, it means
colleges, technical institutes, and universities—and
that those who have the ability and the desire can go
and do that.
Canada is actually one of the very few industrialized
countries that doesn't provide that for their students.
A lot of countries actually don't charge any tuition
fees, and in those that do most of them are much lower
than in Canada. Apart from that, Canada is actually one
of only two countries that doesn't provide grants for
their students. The only other one is Japan. Every
other industrialized country actually provides grants
to help cover the cost of living expenses,
the cost of tuition, if they do charge it, as well as
Does that answer your questions?
Mr. Ken Epp: Yes, I think it gives me a point.
You were going to say something.
Mr. Rob Hilliard: Yes. I think there are a couple
of other ways governments can look at the needs of
students, and certainly the areas of providing direct
assistance and those kind of things are important.
But, Mr. Epp, you made reference to the fact that when
you were going to university some years back, you were
able to work and earn 50% more than you actually
Mr. Ken Epp: At $1 per hour.
Mr. Rob Hilliard: That was my experience as well,
but I think one of the reasons why that's no longer
possible—it's not the sole reason, but it's a
contributing one—is the fact that minimum wages in
this country, from coast to coast, have been eroded
significantly over the course of the last 25 to 30
years in terms of their purchasing power, in terms of
their relative standing with everybody else.
Mr. Cerilli made reference to the fact that here in
Manitoba there's a review of the minimum wage going
on. Many of us made presentations to that review
yesterday. One of the things that was notable was that
in 1976 the minimum wage in Manitoba was 102% of the
low-income cut-off line for a single individual. Today
So when we're talking about students going out there
and getting part-time jobs and getting work, generally
speaking at or near minimum wage levels, the value of
that pay cheque relative to everybody else's has
diminished significantly over the course of the last 30
I think there's a role for the federal government to
play in trying to bring that floor up. One of the
difficulties that has arisen with the federal
government's decision to peg the federal minimum wage
at the same level as whatever it is in that province is
that there is a competing pressure back and forth
between provinces to keep the minimum wage low in order
to attract investment. That's where the pressures are,
and if you look at what has been happening to minimum
wages right across the country, it's that year over year
over year the purchasing power of the minimum wage
pay cheque diminishes each year.
Something needs to be done to take that negative
competition factor out of the minimum wage from
province to province, and I would suggest that there's a
role for the federal government in there.
Mr. Ken Epp: Okay.
Mr. Albert Cerilli: You mentioned working in
your area. In fact, when I was working on the railway,
I think some very serious politicians came
to work on the railways—CNR, CPR—before their
political careers started, to work themselves through
university. It was a tradition for employers in this
country to hire students in the summer. I don't think
you'll find that is a tradition any longer.
In fact, the minimum wage structure in this country, as
just referred to, plus the fact that these students
want the employer to hire them on the basis of
part-time casual hours, leads to a result that the
employers who do want students are not giving them
full-time, even at minimum wage. If you do the
statistics on this, you'll find that the percentages are
very serious. You'll find that students will not
respond to that kind of employment, simply because it
costs them to go to work just to earn two or three
or four hours, whatever the minimum is, in the
provinces for that work.
I think you make a valid point in regard to our
generation, my generation and yours, which had an
opportunity to see a lot of students from university
come and work, and become doctors, lawyers,
politicians, and so on. But that's not the norm any more.
I think that it's something we should be
addressing with the federal government in a more direct
way with post-secondary education, toward job
creation in that regard.
Mr. Ken Epp: It seems to me—and we should
be listening to you instead of you listening to
me—what I've been gathering, not only from my
experience, from my observations, but also now on this
committee, is that one of the reasons employers
don't hire students in the numbers they used to is
because the costs of employment are much higher than
just the cost of the wage.
Mr. Albert Cerilli: I have to disagree with you,
simply because each employer now is in a rollback
situation. They're cutting back. CN has just
announced 3,000 people will be laid off. The
spin-off effect of laying off 3,000 four times....
That's an additional 4,000 people, if you like, across this
country. It's not only 3,000 from CN; it's an
additional 4,000 in support services—that's an
estimate—who are going to be out of work. Those
spin-offs are contributing to our problems.
I think this is why in the presentation I made I
wanted to show this committee the difference between the
haves and the have-nots. The CEOs and the corporation
profits are like this, and we're going down this way. I
think there's a danger in that, and it's going to affect
our democracy. Sooner or later you're going to have a
bloody revolution—and we've seen it. There were two
world wars over the same kind of principle.
When people are starving and the kids
are not going to university and can't find jobs,
they'll react, and it doesn't matter who we are.
Mr. Ken Epp: Thank you.
I'd like to ask one more question to Ms. Nembhard.
She made a specific statement about not applying money
to individuals. Yet student loans go to individuals.
You made the presentation that there should be a
rollback on the length of time before they can declare
bankruptcy, thereby effectively converting their loan
into a student grant, which is basically what happens
if you declare bankruptcy or if you have a loan where a
portion or all of it is forgiven. You did talk
about grants, that what we need is more grants and probably
fewer loans so that the students don't rack up the
debt. I would agree with you on that. But you
have this little statement about funding the system,
but not giving money to individuals.
I have heard from quite a few people a very
positive response to the idea of having the funding
actually follow the students so the students have a
total choice in which institution they go to—and that
would be the federal government's role. Really,
strictly speaking, education is a provincial jurisdiction.
Post-secondary education, of course, is partially
funded by the transfers from the federal government,
but they're administered by the provinces.
I wonder what your response would be if we had some
sort of a system.... If you are against a voucher
system for individual students, I would like to know
Ms. Kemlin Nembhard: First, I want to comment on
one of the comments you made in terms of rolling
back bankruptcy. If someone is declaring bankruptcy, it
should never be considered a grant. When someone actually
declares bankruptcy, they've started to pay back their
loan anyway. So they are paying stuff back. The fact is
that most students don't want to declare bankruptcy.
It's a huge process. It takes a long period of time
and it costs you money. It affects you for a long
time. For instance, for seven years you can't get a
credit rating. It's a huge process that people don't
go into lightly. I personally find it really offensive
that claiming bankruptcy should be equated
with receiving a grant, because it's not.
Mr. Ken Epp: If it comes from the
taxpayer and the money doesn't come back from the
person who took it, then it lands up being effectively
What I'm trying to say is that
perhaps we ought to be giving the grant in the first
place, thereby giving the provision for
the students to go to school and not give them the debt
load. This is what I'm saying.
Ms. Kemlin Nembhard: I'm just going to finish.
I'll touch on that next.
The other thing is that
since the inception of the program, only 7% of students
have actually declared bankruptcy, and that's usually
after years of paying stuff on your loans, right? So
at the end they've paid for their loans.
Often they're just paying the interest, because you have it for a
long period of time. So there's that.
What I'm saying is I think the most important
thing to do is to fund the system. The most important
thing the federal government can do is to ensure that
there's adequate funding in the system. If you have
adequate funding in the system, you won't have
ever-increasing amounts of tuition fees, and when you
have tuition fees that aren't skyrocketing, your
level of student debt won't be skyrocketing. They're
directly related. That's why the most important thing
is that you have a system that is adequately funded.
Currently, because our system is not adequately
funded, we have institutions that are becoming more and
more dependent on tuition fees as funding. That means
because they're dependent on it, tuition fees are going
up and student debts are going up. That's why it's of
the utmost importance to have adequate funding of the
When you look at things like having a voucher
system—and we can see it in our system
already—institutions are becoming more and more
dependent on tuition fees. Institutions don't focus as
much on quality of education any more. They don't
focus on their programs, diversity of programs, and
choice of programs; they focus on marketing. They
focus on trying to get more and more students into
their institutions. They are spending more and more
money on resources trying to get students into their
institutions, instead of focusing on quality and choice
in the programs that are actually there, because
they're being backed into a corner trying to get as
many students as possible into their institutions.
Mr. Ken Epp: I would tend to differ with you on
that, because it seems to me you're shortchanging
Ms. Kemlin Nembhard: That's what's happening.
Mr. Ken Epp: Most of the students are much better
able than you're suggesting to see the difference
between advertising a program that doesn't have value
and isn't a quality program and one that is. If you
gave vouchers for tuition to students, they would tend
to reward the universities or colleges that provide
good programs, because they would have built a
reputation in the first place.
Ms. Kemlin Nembhard: As I said, these are things
that are happening right now. Institutions are
spending more and more money on marketing and trying to
get students to their institutions. That's having an
effect on the quality of the programs and the choice of
Mr. Ken Epp: So you're saying the choice goes down
when the marketing goes up?
Ms. Kemlin Nembhard: Hang on, let me finish.
Mr. Ken Epp: No. I want you to clarify the
sentence you just made.
Ms. Kemlin Nembhard: I'm about to do that.
Mr. Ken Epp: Are you saying the quality of the
program goes down?
Ms. Kemlin Nembhard: If you can just let me
finish, in terms of choice, institutions are putting
less money into programs that aren't as marketable,
like fine arts and different liberal arts courses.
They aren't necessarily considered as marketable as
something like management degrees or business degrees,
currently. Those programs that aren't considered as
marketable are getting fewer resources.
You can see it across the country. The University of
Manitoba is a really good example. If we compare the
differences between the management department and the
fine arts department or the biology department, in terms
of the equipment and the resources that are in those
departments, there's no comparison. A lot of it has to
do with the fact that management is more marketable.
That's what happens when you have a system based on
a voucher system instead of being based on
actually funding the system itself.
You will find that institutions will try to market
their products, and more and more that's what they're
doing. They're marketing their products and centring
less on the actual quality of the product, the
accessibility of the product, the choice they have
of the institution, and the programs that are there. You
can see it all over the place in any jurisdiction,
whether it's in colleges or universities.
Mr. Ken Epp: Mr. Chairman, I'll come back to the
others in the next round, if I may.
The Chairman: Your 10-minute round turned out to
be a 20-minute round.
Mr. Ken Epp: That's your definition of 10 minutes,
as I've observed in the last couple of days.
The Chairman: Right.
Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): It's
a very liberal definition, which is okay.
The Chairman: That's what the people of Canada
say, anyway. Keep going.
Mr. Lorne Nystrom: I want to welcome the
presenters this morning. I appreciate all your points
of view. I want to say to Mr. Cerilli that I am one of
those who worked at a good union job on the CPR as a university
student. I remember starting at $1.98 an
hour and about two months later getting $2.06 an hour.
I thought I had gone to economic heaven in those days.
I want to start off with Rob Hilliard and say to him
that I agree with the direction he's going. I think
the government now should look toward investing again
in the country, in terms of stimulating the economy,
and health care is the priority field.
The government has made a couple of mistakes over the
years. Back in the 1980s, when John Crow decided to
really slow down the economy with high interest
rates—at one time five points higher than the
Americans—that really sent us into a downspin that has
added to the national debt and the deficit problems we
all have. Mr. Martin made a mistake in his budget of
February 1995 when he was persuaded by the Finance
bureaucrats to have massive cutbacks, the most massive
in the history of our country.
In effect, the federal government now is smaller than
any time since the late 1940s, after the Second World
War, before medicare. I think that was just the wrong
direction to go in. It may have paid off the deficit a
little bit sooner, but at what cost, and who is paying
off the deficit? In the long run, it has made our
economy less productive and the growth has been slower.
It has compounded the problem of the national debt.
This year we have a $3.5 billion surplus, and some of
that money could have been spent on growth rather than
on just bringing down the debt.
More importantly, next year there'll be a surplus
again of several billion dollars, depending on the
world economy—and we don't know what that'll be. I think
most of that should be spent right in this country to
stimulate the economy, on things such as child poverty,
transfers to health, and emergency aid to western grain
farmers. By the way, in my province there was a drop
in net income of 84% last year in terms of the grain
Things like that will be more beneficial for the country in
terms of stimulating the economy and creating jobs.
About 20% of that or more comes right back to the
federal coffers anyway. So that might be the best debt
reduction problem there is.
I generally agree with what you're saying, but want
to ask you what other priorities you would have in
addition to health, in terms of how we spend that money
at this time.
Mr. Rob Hilliard: First of all, I didn't get my
question answered, and perhaps it's because nobody here
knows the answer to the question about the pay equity
liability of the federal government. One thing that
would help me answer that question is knowing whether
or not that amount needs to come out of the current
operating budget or whether it has in fact been set
aside. If it has been set aside and current revenues
aren't going to be affected by that expenditure, then
we don't need to look at that. But I would like to
emphasize again that it is a liability the federal
government has. It is a moral and legal obligation, and
the sooner it meets it, the sooner it can get on with
things. If that doesn't come out of current revenues,
then we can look at other ways to spend it.
The whole area of the transfer payment cuts Mr. Martin
implemented a few budgets ago has had a huge impact on
the provinces. It's had a larger impact on the
have-not provinces, generally speaking. It's not just
health care that's funded out of that pocket; it's also
education. The experience here in Manitoba has
certainly been that the public education system has
been eroded. What can be thought of as core activities
and core needs for the school system are now subject to
The fundraising issue, as the gentleman from MAST
indicated, winds up creating a system where
neighbourhoods that are better able to raise funds from
the corporate community, because there's an advantage
to the corporate community, wind up having better
services, more computers, and more infrastructure than
inner city schools the corporate community doesn't see
an advantage in making donations to, contributing to,
or advertising to. So the area of education also has a
I would agree with some of the points made from the
MAST presentation. Manitoba is the child poverty
capital of this country. That's a shameful thing.
Something like one out of four children in this
province lives in poverty. They live in poverty at a
time when unemployment has been going down and the
economy has been growing in Manitoba. Over that very
same period of time, the child poverty rate has been
To say the issue of poverty will be taken care of
through economic growth and
marketplace mechanisms is simply false. The evidence
doesn't support that; in fact, the evidence says
exactly the opposite. I would advocate putting
money into poverty programs, public education, and health
Those are the areas where the greatest social deficit
has been built up as a result of the government's focus
on dealing with the fiscal deficit. I would say those
are the greatest needs that need to be met in the short
Mr. Lorne Nystrom: Children's poverty is extremely
important. As I told the committee yesterday, I was
with my sister on the weekend—she teaches in the
inner city in Regina. She told me about one of the
students who's between six and nine years old and
having tremendous problems in the school. This child's
mother is a prostitute and the father is a pimp. They
sell drugs. The child was born with fetal alcohol
syndrome. What chance will that child ever have in
life? The human costs are extremely sad and
depressing, let alone the cost to the economy of
someone who's not going to make a contribution, in
terms of productivity, to our economy. It doesn't make
any sense in terms of a long-term investment, so I
certainly agree with you.
I want to shift to the EI fund. About two weeks ago,
before it got lost in all this controversy over Andy
Scott, we had a phenomenon in Ottawa that is extremely
rare—I can't recall it happening before. The
four leaders of the opposition parties, Preston
Manning of the Reform, our party, the Bloc Québécois,
and the Tories held a joint press conference in the
same press theatre at the same time and announced a
united front on the unemployment insurance fund. They
want it as a separate fund. That's really rare to see.
But there is some difference between the parties as to
what should be happening with the money. Most of the
momentum now is on the side of reducing the premiums
for the employers and employees. You take the approach
about expanding the benefits, and I agree with that.
I wonder if you can give the committee some more
arguments as to why that is the right way to go and why
you would not support a reduction in premiums to
employers and employees. The momentum is on that side,
and I'd like to hear more arguments as to why that is
not the right way to go.
Mr. Rob Hilliard: I agree with you that the public
debate seems to be focused more on that area. I've
been participating in some of those public debates, and
when I have raised the issue in those discussions that the
primary reason for the surplus in the account is not
due to a reduction in unemployment but is in fact due
to a restriction in eligibility for unemployed workers
and a reduction in the benefit levels paid to
unemployed workers, the focus of the discussion tends
to shift. Very often people look at the tax side of it
and go on with that without paying attention to some of
the historical context that led to this.
On the benefit of the tax reduction, under current
legislative requirements and covering approximately 37%
of unemployed workers, the EI account would balance
itself at something in the neighbourhood of $1.85 to
90¢ for employees, rather than the current $2.70. I
don't think anybody, even those in the business
community advocating for a full cut, realizes there
needs to be some cushion. You can't strictly cut down
to a level where revenues are equivalent to
expenditures now because we have to put something in
the bank in the event of a downturn in the economy and
so on. But even if you reduced the premium for workers
by 60¢ or 70¢, it wouldn't put a huge amount of money
in workers' pockets. It would put some, but it
wouldn't be a huge amount of money. There wouldn't be
a tremendous spin-off as a result of that. So I would
argue the benefit of that is exaggerated.
When we look at what is happening to unemployed
workers, if you really want an economic spin-off, most
unemployed workers are having a tough time financially.
If you put more money in their pockets, they will
spend it in the local economy and it will have the
economic spin-off that is necessary.
In this country a lot of economic policy has been
geared to putting more money into rich people's
pockets. We can recall a former finance minister in
the Mulroney government saying “We need more
millionaires in this country.” Frankly, that theory is
based on the fact that if you put more money in rich
people's pockets, they will wind up making investments
in Canada and that will have the trickle-down effect.
In a globalized economy, that is clearly a tenuous
argument, because the money winds up going other places.
Aside from the fact that I believe government ought to help
those who need the help the most, there's a much
greater economic benefit to putting money in the hands
of very low-income Canadians because they spend it in
the local economy and there's a greater spin-off
To get back to your original question, I would say
increasing the benefits to the levels they were prior
to the legislative changes, and increasing the
eligibility, restoring the eligibility, to the levels
it used to be would provide a greater economic benefit
in addition to greater fairness.
Mr. Albert Cerilli: I would make just one point on
that. Picking up from what has
just been said in answer to that, I think it's worthy
to note the other side of the argument. And this is
where seniors like myself, once we get into these
forums and discussions.... As long as the federal,
provincial, and municipal governments keep cutting back
because of all the cutbacks from financial inputs, and
the corporations follow suit with cutbacks, rollbacks,
and wanting everybody to give it back to them, the
workers in particular, what we then find is that the
workforce, because of the conditioning of restraint and
“you're not getting any” being made through the
media, fall prey to buying into this kind of an
argument and say, “I'll take whatever I can get, and
one of the ways is to reduce my UI premiums.” But in
reality, it's not true.
Have the economic pride shared more equally and more
productively by everybody by having them pay their fair
share of taxes—corporations, high income CEOs, and so
on. I think you'll find once you put that across, the
trend and the argument fall apart in regard to shifting
from our side to the other side of saying, “Hey, give
us that back.”
When you argue about putting money into the pockets of
middle-income and lower-income workers, other than by
trying to convince them they should ask for a decrease
in what they're paying in UI premiums, for example, I
think you'll find if there's a tax break across the
board for them, they'll buy into the tax break because
these are the benefits that go directly into the
pockets of the middle- and low-income workers.
Mr. Lorne Nystrom: I wonder how Mr. Hilliard
responds to the argument Paul Martin will make, in case
the question doesn't come up this morning, that the EI
fund is there as a contra-cyclical thing. When
there are lots of unemployed, it runs into a deficit.
Revenue comes out of the consolidated revenue fund to
subsidize the fund. Now we're into a surplus because
the unemployment rate is down, and therefore some of
the money should be used in terms of the consolidated
revenue fund for general spending.
What is your response to that argument? That's the
argument the Minister of Finance is making, and some
other premiers support that—not all of them, of course.
Some economists obviously take that line as well.
We've had to subsidize it as taxpayers. Now that the
fund's in surplus, some of that money should be coming
back to the taxpayers in terms of having a balance over
a number of years. I don't subscribe to that, as you
know, but I just wondered what your argument against
that is. It seems on the surface to be very logical.
Mr. Rob Hilliard: The first point is that I
disagree fundamentally, and the facts don't back up the
claim that the surplus is there because unemployment is
lower. That simply isn't the case.
If you go back over the last three legislative changes
made by the federal government, they have clearly
reduced the number of unemployed workers who are
eligible, and they have reduced the benefit levels. If
you go back prior to those legislative changes and you
do your calculations on paying out benefits at the
prelegislative levels to the same number of workers,
your surplus disappears. You don't have it any more.
So the surplus is not there due to a reduction in
unemployment. The surplus is there simply because the
rules have been changed to make more unemployed workers
ineligible to access those benefits. The argument is
based on a fundamentally false assumption.
On the issue of the taxpayer having to subsidize the
fund when times were hard, frankly that was a choice
made by the federal government at that time. They
could have done it in other ways. They could in fact
have raised the premiums to keep the fund solvent. That
would have been a more legitimate way of doing it.
The fact that it is a cyclical fund to the degree that
there are cycles in the economy, cycles in unemployment
levels, downturns in the economy, and increases in the
unemployed numbers, means that clearly there is a
greater need to have more money in the fund. Counter
to that argument, obviously there is less of a need in
However, it would be our position that the fund ought to be
maintained on its own. It ought to be a self-funded
operation through employers and workers. And there is
no reason to suggest why that can't be. The reason it
didn't happen in the past and the reason it's being
pillaged now is through choices made by the federal
government. It doesn't have to be that way.
Mr. Laurie Beachell: I have one very quick
comment. I think it's important to remember when you
talk about consolidated revenue funds and the change
in the program that it also used to be an insurance
Now, however, we have created a program that
is the funder of labour market training in Canada. For
those persons who are not eligible to access the fund,
there are no consolidated revenue funds being applied
to those persons to get labour market training. So
we've taken the fund and penalized workers. We've made
them less eligible for benefits. At the same time, in
our labour market training policy, we've excluded whole
segments of the population from access to the labour
Mr. Albert Cerilli: I just want to add that I
think this is where the recommendation comes in
with our brief in that I don't think labour in the
workforce was ever consulted on those changes for the
training and so on. But I think we can now put in place
a new system that involves labour, business, and the
government as partners with regard to an arm's-length
administration of the funds. This is so that training
and all the rest of it can be really looked at
seriously rather than on a piecemeal basis.
Mr. Lorne Nystrom: This has become a very big
issue. It's unique when you see the allies in this,
from a Mike Harris or a Bob White or the four
opposition parties, basically wanting a separate fund
and separate accounting for the fund so that the money
there belongs to the unemployed. We have some
differences, of course, as to how we want to rectify
the problem, but in principle, it's a very unique
situation. So I'm glad you're commenting on that.
I want to ask Mr. Cerilli a question that's a little
more of a look into the future. You referred to the Tobin
Mr. Albert Cerilli: Yes.
Mr. Lorne Nystrom: It hasn't been announced yet,
but I was very fortunate a couple of weeks ago to get
the private members' business committee in the House of
Commons, which represents all parties, to agree to one
of my motions in the House on the Tobin tax. So that
will be coming to the House of Commons as a votable
motion in the next few weeks after a few hours of
debate. So MPs will have to take a look at the Tobin
tax for the first in terms of actually having to vote
on it in the House of Commons.
It's something that we should look at very seriously.
We have $1.3 trillion now in financial transactions
every day. The Tobin tax is an idea of putting a
very small tax on it, maybe 0.1% or even less than
that. That would do something to try to dampen down
some of the speculation and moves around the world. It
would also create a big development fund of billions of
dollars to spend on Chernobyls, third world
poverty, and so on.
I wanted to ask a bit more about why you think this is
a good idea. I wonder whether or not your association
is reaching out across the country to other union
people who are retired, the steelworkers and so on, and
whether or not you would be interested in being part of
a lobbying campaign on this to make it a higher-profile
issue in Canada?
Mr. Albert Cerilli: I'll answer the last question
first. We would certainly be happy if we could involve
ourselves in any high-profile lobbying on Parliament
Hill in the same fashion we did with the health
coalition with regard to all the partners coming into
Ottawa to lobby political parties and
individuals to bring about some of the promises that
were made on health care during an election.
You can rest assured that if you
contact us in regard to lobbying to make this a
I think it's a worthy cause because it's starting to
deal with the problem of globalization. In the brief, I
said we need to have new rules on a level playing
field. That means not only the corporate rules whereby
they dictate to governments, like from an auction
block. They say that if you give me this break, then I
might come into your province, city, or country to
invest, but if you don't give me these breaks, I'll go
next door to the next country.
I think this is becoming ridiculous. I think
the sands of power have shifted.
Governments have to take control back in their
hands, not only in Canada but across the globe,
to really set forward a fair distribution of wealth,
income, and investment so that the speculators....
That's why I mentioned in the brief that here is a
dictator, Suharto, to whom this government
kowtowed, who amassed an estimated $40 billion during
the time he was in there, but nobody in that country was
able to say that they wanted to share in some of that
So if you want to stop this kind of fluctuation of
someone coming here and investing billions of dollars
from this speculator to that, and moving this around and
causing chaos, then I think we need to have a Tobin
It would not only be in Canada, but we can start in
Canada. I think then the world stage has to take over
with our representatives in Parliament, along with an
all-party representation at these conferences, so that
all views are put forward and watchdogs are watching
the government, saying here are the
rules we see in a fair and equitable society on this
If we don't start moving toward that end....
in my last presentation to you I said that George
Soros, a billionaire financier, said
capitalism is at risk because of all these things. I
repeat it again. Now other people are writing and
England's recent high commissioner to Hong Kong wrote
a book. I think it's worth reading—read it.
These are not socialist, left-wing radicals, like
myself maybe, but the fact of the matter is that people
worldwide are concerned about our democracy. They
don't want to go to war again. It could be disastrous.
Everybody has an atomic bomb.
So we have to put in these rules to say that we're the
government and you're the ordinary citizen, the voter
called Mr. Corporate Citizen. You're going to have
to abide by the rules we've laid down for you on
investment. So a Tobin tax is a good area to start
Mr. Rob Hilliard: Could I just elaborate a little
further on that point? I think the issue now with
the globalized economy and the financial markets is
that huge amounts of capital flow in and out of
countries in very short terms.
That capital is no
longer used for direct investment in the local economy,
for creating jobs, for developing enterprise, or for
doing any of those things. That capital is used to
discipline governments and allow unelected people
outside of the country to determine what's going on in
When the Mexican peso crisis hit a couple of years
ago, foreign speculators pulled money out of Mexico at
huge rates. It put the country in crisis. There were
other Latin American countries that had similar
Chile was one of them at the time. Chile had a policy
whereby they applied a 50% tax rate to any capital that
moved into the country and didn't stay at least 12
months. That prevented the speculators from moving the
money in and out of Chile.
Chile today is a better place because of that policy.
They did not have to devalue their currency. Their
economy was not thrown into turmoil.
I think it's instructive to note that this is one of
the provisions that the MAI wants to do away with that
clearly helped Chileans. It clearly helped the Chilean
economy, and it didn't allow foreign speculators to
determine what was going on inside of Chile.
That's a very sensible provision. Frankly, I think if
more countries in the world had a provision similar to
that, they would be less subject to all of these
instantaneous capital flows that really aren't
investing in the local economy.
Mr. Albert Cerilli: I think that's key to some of
the things we're recommending. Do we really want an
improved economic situation in this country in the
global sense? Do we need this mobilization of funds by
computerization? It's going to get worse as the
financial institutions and Internet are deregulated,
and so on. It's going to get a lot worse.
Mr. Nystrom, I think we need this now. Four years
from now may be too late to fight an election over
Mr. Lorne Nystrom: Thank you very much.
The Chairman: Thank you, Mr. Nystrom.
Ms. Carolyn Bennett (St. Paul's, Lib.): I'm
curious. I recognize that Ireland has free tuition for
university students. You said there were lots of
countries. I just didn't know of any other
Ms. Kemlin Nembhard: That have zero tuition?
Ms. Carolyn Bennett: Yes.
Ms. Kemlin Nembhard: Of all the OECD countries,
there are about 20 or so that have zero tuition, such
as Sweden, Germany, and Spain. I didn't bring the list
with me, but I could get that for you.
Ms. Carolyn Bennett: That would be great.
One of our concerns has been
accessibility as an issue, as well as debt. I
guess I'm thinking of a tuition fee freeze. Do
you think the federal government should have a say with
transfer payments in terms of some sort of
accessibility component, as with the Canada Health Act
in health care? When we asked the president of
the University of Toronto last week about this, he felt
that the University of Toronto had an ability to.... Even
though the tuition is high, they actually have set up a
specific system with those students to ensure
What does your federation have to say about
Ms. Kemlin Nembhard: What we would like to see is
a national act similar to the Canada Health Act
that doesn't micro-manage, but ensures there
are certain principles that are enshrined nationally
and ensures that the quality and accessibility of an
education you can get would be the same whether
you're in Newfoundland, Ontario, or
I'm trying to remember one of the other questions you
asked. It was about....
Ms. Carolyn Bennett: That's okay.
I was quite concerned when you said
the amendment gave the politicians the power to
set criteria behind closed doors. I think that's quite
worrying. Is there an example of that, or how do you
see that this could happen?
Ms. Kemlin Nembhard: It has just changed. It will
actually come into effect at the end of August.
The legislation itself just passed, and what it
basically means is that now the Governor in
Council can actually have an influence on who is
eligible for a student loan.
Currently, the way the program works is that there's a
process set out whereby you can go to your student
loan office and find out what the process is right
there, what the eligibility criteria are, and then if
you don't fit those criteria you don't get a loan.
If you do, then you do.
With this, it actually gives power to politicians to
change those criteria, just for whatever reason they
want. It's no longer a set process. It can
be influenced by people, for instance, like financial
institutions. It could be influenced by them if they
lobbied the Governor in Council. As I said,
it's not a set process any more.
Ms. Carolyn Bennett: I would hope that the
reason the provision was there was that if banks were
being too strict it would be in the public
interest if the government would be able to say no,
you have to give these loans.
Ms. Kemlin Nembhard: I think if the government was
truly interested in stopping banks having control over
things like that, they would stop giving more control
to banks. That's not what's been happening. The
federal government, since about 1985, has continuously
been giving more and more control over student loans to
banks, whether it's the risk sharing or
things like this change—there are lots of examples.
The eligibility criteria are now being changed, whereby,
as I mentioned in the brief, we're going to be having
credit checks and things like that. They're giving more
and more power to the banks.
If the government were truly concerned about that
control, they would take that control back; they would
take that power back.
Ms. Carolyn Bennett: On the Canadian
millennium foundation, I think your
recommendation would mean that the government just had
to give the per capita dollars to Quebec and let them
administer it in whatever way they wanted, including
not using it on student loans.
Ms. Kemlin Nembhard: I think there are ways that
the federal government can ensure it is used as a
grants program, as opposed to anything else. If
not, then don't give them the money, because that's what
it should be for.
Ms. Carolyn Bennett: I guess the reason the
foundation was set up was to make sure Canadians
across this country, students, had equal access to the
With regard to your recommendation around scholarship
deductions, we've been trying to figure out a way of
looking after the most people possible. One of the
ways would be to raise the personal exemption for all
Canadians on their taxes. Do you think there
would be very many students, with their part-time work
or tutoring plus their scholarships, if just the
personal exemption was raised, who would exceed that?
Ms. Kemlin Nembhard: In terms of scholarships it's
really important to have it tax free. An example is if
you have a student loan and you get a scholarship; in
Manitoba if you get more than $600 worth of
scholarship, anything above that gets deducted off your loan,
dollar for dollar, whereas if it were tax free that
wouldn't happen. So it's things like that.
As well, it would be I think especially
important for graduate students. You may find one or
two undergraduate students who will get a lot of
scholarships, but generally they don't.
Ms. Carolyn Bennett: Amongst your federation, do
they think that's reasonable? On the needs versus
merit people, the merit people—or so I gather from the
students I've talked to—are pretty well looked
after with scholarships, and the reason we wanted a
needs-based system for students was so that kids who are
smart enough to get into university will go. And I guess
you're saying that if somebody's smart enough to get
a scholarship, they should also be able to get a
Ms. Kemlin Nembhard: No—
Ms. Carolyn Bennett: Isn't that giving
more money to one student where
it might have been able to cover two students?
Ms. Kemlin Nembhard: We would
like to see grants, which is why we would like to have
the millennium scholarship funds changed to a grants
program, not a scholarship program. It's for exactly that
reason. Because grants help the neediest
students, regardless of whether they're above average, average or
Ms. Carolyn Bennett: I submit that any kid in this
country who can get into university should get to go.
Ms. Kemlin Nembhard: Yes. And that's exactly what
Ms. Carolyn Bennett: That's merit, to me.
Ms. Kemlin Nembhard: Yes.
Mr. Albert Cerilli: Just on this point,
since I've retired I've been involved in a lot of
school-to-work programs. In fact, I went to Ottawa and met
with the deputy ministers, and trades, and all that
start off some pilot project here. And through my last
eight years, I found that many students were dropping
out simply because they knew that the cost of
university was prohibitive, and they couldn't go any
further. And they were bright students.
In fact, I volunteer my time now by going to high schools
and universities and speaking to students about the
real world and also encouraging them to stay in school
and do it. This afternoon I'm going out to speak at
some workplaces to raise funds for United Way, for
example, that looks after students in crisis and
But I think what's happening is that students will
give up even before high school and drop out simply
because they know that down the road they can't afford
to go to university.
I think we have to change
this system to make it more equitable for that purpose.
Otherwise, you're going to have a lot of bright
students who will give up on the system.
Ms. Carolyn Bennett: I have one little question
around the brain drain. If our brightest students
are then going to a hugely
lucrative position in the United States, do you think
have to pay back their tuition—all of it? If they go
straight from our universities to a position in the
States, particularly the
medical students, do you think they
should have to pay back all their tuition?
Ms. Kemlin Nembhard: I would say no. I think the
most effective way of dealing with the brain drain is
for the federal government to actually
reinvest money into the research councils.
I have a really good example. A friend of
mine is doing AIDS research for the University of
Manitoba at the health sciences centre. He's
incredible; he's doing his PhD, but that's also his
research. He doesn't finish until the spring. He's
had at least three or four offers from firms in the
United States that are going to be paying him a lot of money if
he wants to go there for a job. His view is that he
doesn't want to go to the United States. He would rather stay
in Canada. But the fact is, there is no money for
him in Canada.
Ms. Carolyn Bennett: I obviously am a big believer
in investing properly in the research councils, and that
those are jobs; 85% of those budgets are jobs.
I taught in the Department of Family and Community
Medicine at U of T. It's difficult to track,
but the rumour was 50% of our graduates were going
south of the border. I think that's a lot of our
government-subsidized dollars leaving. Shouldn't you have
to work in this country for a certain amount of time
before you could go?
Ms. Kemlin Nembhard: We have a lot of graduate
members in the federation, and what they say is if the
jobs were here and if they paid a living wage, people
would rather stay here. They would rather not have to
be uprooted and go to live in the States. They would
rather stay in Canada. But the fact is, there are very
few jobs for them.
With regard to your previous question about
scholarships, as I was saying, grants are most
important. But in terms of having a scholarship be tax
free, it's particularly important for graduate
because their tuition fees are a lot higher, and a lot
of times they will get a lot of fellowships and
scholarships but they will also have to work at the
same time. Having tax measures that ensure they can get
funds that are tax free would be specifically good for
graduate students, because they are really dependent on
scholarships and fellowships.
Ms. Carolyn Bennett: Laurie,
is there a consensus on what a more appropriate
definition of disability would be?
Mr. Laurie Beachell: “No” is the simple answer.
The difficulty with disability and definition is that
people tend to try to define it in relation to the
medical condition, and disability isn't yet defined in
relation to the environment.
The disability is the barrier to prevent your
participation. It is not the fact your left arm
doesn't work properly.
So defining it is very difficult.
This is one of our biggest problems.
Everybody looks for one definition, and on the
disability front everybody looks for one solution, and
there is no silver bullet in the disability policy
initiative. It is creating systems that are flexible
and co-ordinated that can look at individual need and
respond to that. I think the biggest challenge we face
in this country is how to develop social policy
within a framework where the federal government has
so diminished its levers of influence that it can have
little role to play in defining social policies in this
country. That is not what Canadians with disabilities
expect from the federal government around leadership on
issues of equality and equitable access to service.
Many of you, I'm sure, have been involved in the
debates around what is the new social union. To us, the
social union must be assured by somebody being
ultimately responsible for citizenship rights of
Canadians, and to us that is the Government of Canada.
Ms. Carolyn Bennett: A lot of the initiatives of
your council have been in terms of employment and
trying to get away from the idea that people want to be able
to stay at home. They actually would prefer to go to
Obviously, this last labour market agreement was
disappointing. Do you think a Canadians with disabilities act
could help rework that? How do we make sure that
the lens of disability is applied to all future negotiations,
including the social union?
Mr. Laurie Beachell: To us, the Canadians with
disabilities act is that mandatory process,
the application of an analysis to initiatives that looks at
disadvantaged groups, such as persons with
disabilities, so that it is not an afterthought, so
that we don't have negotiated labour market agreements
and then the Minister of Finance and the Minister of
Human Resources Development saying, oh, we missed
something here; now we'd better create the
opportunities fund that is targeted
for people with disabilities.
We're not interested in being
separated out—you know, this is for people with disabilities and
this is for the rest of the population. We want to be
part of what's going on. We want into the generic
program and we want a process of social policy
development in this country that includes rather than
Unfortunately, what everybody's gone
for, as universal programs are diminishing
significantly, is the targeted initiatives to try to get
the best bang for the buck. But what that does
ultimately is to set people aside, to marginalize
further and ghettoize people.
Students with disabilities used to be able to depend
upon the university through the designated funding to
get their interpreter services so they could
participate in the class. Now they have to apply for a
special opportunities grant through the Canada Student
Loans Program so they can pay their interpreter
directly. I mean, that puts the responsibility for the
accommodation and for the access on the individual, not
on the system. So when the Federation of Students
talks about adequately funding the system to respond,
that's our preference as well. We want generic systems
that can respond to the needs of the various components
of the community, not setting up systems where
individuals somehow become responsible for their own
Ms. Carolyn Bennett: Is your specific
recommendation on the $10,000 limit on attendant care
mainly for people who are working, meaning that they
have to have somebody come to help them get out of bed?
You're saying take this ceiling off, period, but what
number are we actually looking at? What's an average
amount of attendant care for somebody—for example,
a quadriplegic—who is able to work, to get to work?
Mr. Laurie Beachell: For a lot of people it's your
basic services: some assistance getting up in the
morning; maybe some support at work for using bathroom
facilities, etc.; or going to bed at night. And the
system across Canada....
A friend of mine just accepted
a job in Vancouver, a very well-paying job. This is a
person who is paraplegic. One of the considerations he
had to figure in was that in B.C., attendant care is
means-tested. So he has to be earning....
his attendant care needs were covered. It was a
universal program and he didn't pay anything for it. In
B.C. he pays $1,000 a month. So he needs a good job
paying good wages to pay for his attendant, in moving
from Manitoba to B.C. That's no equity of access.
Ms. Carolyn Bennett: So with this present tax
system, he would then be able to deduct only $10,000 of
the $12,000 he had to pay.
Mr. Laurie Beachell: That's correct. And he'd get
a portion of that, a percentage of that. It's not 100%
refundable. It's that 17% or 19%; it doesn't
give you dollar for dollar.
Ms. Carolyn Bennett: And you feel there
should be a wash, because that's
part of what we as Canadians should be doing.
Mr. Laurie Beachell: That's what we've done
through other systems like medicare. We've ensured
that we don't bankrupt people because they have an illness.
We're saying the same thing around support services,
that we don't bankrupt people or prevent them from
doing things because of their situation in life.
Ms. Carolyn Bennett: Thank you.
I have one
more little question.
As we are looking at accountability in social union
negotiations, and perhaps the ability to measure
certain things, I guess I am wondering whether this
readiness to learn.... I think the priority of a lot of
people is something that you think there should be
national standards on, where provinces could be
accountable. I guess I'm thinking about things like
FAE, FAS, and learning disabilities, and certainly in certain
parts of this country, settlement in terms of English
as a Second Language, and whether some of the kids who
enter school not able to speak English then need a lot
of special care later on.
Is that a direction in which you think we should be
is that something
that's too big a task?
Mr. Len Schieman: We need to walk before
we start to run, and the area of early of
intervention in dealing with young children is
something that's a relatively new concept in
We have seen, certainly, the Perry Preschool Project.
The Hawaii Healthy Start project
is another one that
has received a lot of attention, and these projects have
proven to be very useful and very helpful. So we think
certainly anything that helps a child get ready for
school and be ready to learn when that child enters
school can only benefit the whole system.
I don't know whether we need to develop national
standards. That's certainly something that would be
worth looking at.
First of all, though, I think we
need to make sure that all jurisdictions are agreed
that this is a project that needs attention, and that's
why we, as an association, have certainly pushed for
early intervention activities for a number of years.
We're pleased to say that in Manitoba, for example,
the children and youth secretariat, which is part of
government, has introduced the Baby First program
this year, which will do just that, deal with or help
parents who need help at that very early age. I think
it's a start, and we certainly hope that can be
The Chairman: Ms. Bennett, do you have a
Ms. Carolyn Bennett: On your
first recommendation, on prenatal nutrition, the
federal government does have a prenatal nutrition
program, and certainly the food banks have come
to us with some concerns that because of the cutbacks
in various local public health programs, the
prenatal program dollars from the federal government
are being used to hire an extra staff member and
then the women are just being sent to the food bank. I
wonder if you have any feedback on that
Mr. Len Schieman: I'll ask Jerry to answer
Mr. Jerry B. MacNeil (Executive Director, Manitoba
Association of School Trustees): I have a couple of
observations, and maybe my first reaction is to the
notion that we need to pursue further standards.
There's no question that we need standards on a whole
variety of funds across our country, but on the other
hand, sometimes we get lost in that malaise of
establishing standards around those things about which
we already know lots.
We know a tremendous amount about the condition of our
children at this point across this country with respect
to poverty, and I want to make a couple of comments, if
I may, about that. I'll make an assumption and then an
observation, and then try to conclude the question.
Around this whole question of child poverty—which we
acknowledge is not just child poverty but also family
poverty, community poverty, poverty of the
disabled, poverty of the university students; so it's
much bigger than that—there is an assumption that
I am convinced of, based upon my own experience as a
member the Canadian School Boards Association
on Parliament Hill. That is, this is an issue that
transcends politics, transcends partisan issues, which I
know you have to deal with on a whole variety of other
fronts, but we have been told by every party on the
Hill that this issue of child poverty in our nation
transcends partisan issues. So that's my assumption.
My observation about the discussion circulating this
morning and the reports that provoked those
discussions, as well as those other hearings that are
going on across the country, is that we're talking
about the fundamental economic principle of the
distribution of wealth; it isn't a question,
in my mind
nor in my experience, that wealth is really the issue
in our country. I heard Robert Hilliard and Albert
Cerilli speak about this issue with respect to their
jurisdictions. It is a question of the distribution of
wealth, and yet the rich are getting
richer—StatsCanada can prove that—and the poor are
If that doesn't make us sit up and take notice,
particularly as it relates to our children, then I
believe we are heading down. I'm not a harbinger of
doom, but I do listen to what has been told to us by
our member from the retirement community. We are
heading down a very dangerous road.
I say that
for this reason. I was too young to fight in the last
war, but I do recall it well, and I remember its
aftermath. I'll tell you, we don't have to go back
that far to ask ourselves the fundamental question
we do not deal with this issue of child poverty
confronting our nation today, we are into some very
serious social difficulties in the very near future,
has been in the very recent past.
For those of you who followed the Headingley riot
of two years ago here in our city, which is the worst
prison riot we've had in years across our country, in the
report by Judge Hughes on that riot he said—and this
is almost a direct quote—that this riot did not occur in
April 1996; this riot occurred when practically every
single one of these inmates were living in poverty 20
and 25 years ago.
He said that we should acknowledge this fact, because
it was not going to get any better unless we asked
ourselves a fundamental question.
I would ask you to
take this question back to your colleagues on
Parliament Hill, because we will be raising it again in
two weeks when a group of us will be on the Hill and
may be meeting with some of you.
That question is,
where is the rage in our country regarding the issue of
child poverty? How do we stimulate within our own
agencies a controlled anger about what's happening to
I'm a father of six and a grandfather of eight. The
other evening, as I was holding my own grandchild, who's
three now, I asked myself the question, what will he
be confronted with in 35 or 40 years? He'll probably
be okay—please God—but many of his age group will
So I ask you to consider that in addressing what I
believe to be one of the most critical social problems
facing our country. It's not only me, but Martin said it last
year in the development of his budget. Prime Minister
Chrétien is on the hook as well, as are some of your
other leaders, for saying this is the greatest social
issue confronting our country.
I plead with you to listen to what has been said to
you about the minimum wage. Ten years ago a single
mother living on minimum wage had to work about 44
hours to get up to the low-income cut-off point.
Today—and Rob can correct me on this—it's 72. No one
in their right mind could expect a society that is
rapidly growing in numbers to sustain that kind of
MAST over the past few years has taken child poverty
on not because we see we have the answers but
because we think we can provoke enough people to that
controlled rage I talked about so that it just won't go
We are now in the middle of a project to prevent teen
pregnancy in this province. We have the highest rate
of teen pregnancy in Canada, with 504 children born
last year to teenage mothers as young as 15. There were
484 born the year before, and you can take it from
there. You know it but sometimes we lose sight of the
fact the statistics show unequivocally the relationship
between that one element and the crime rate and the
When I speak to business people about these
things—and you can tell I'm a bit of a
humanist, that's my orientation—I say to them if for
no other reason than greed, be concerned about the
poverty issue among our children, because it's your tax
dollars. We spent $10 million to rebuild Headingley
prison in the same year we cut $10 million out of the
public school funding. I think we have to ask
ourselves this question.
Mr. Albert Cerilli: I just want to add a little
bit to that.
That's why I attached a minimum wage
brief that was presented yesterday, which showed how
this impacts men and women downstream and commented on
the adverse effects on children, as it is our opinion
low income speaks to the child poverty issue.
We want to point out that workers at that level of income
have very little opportunity to invest in pensions,
such as RSPs. In fact, most of the time the only
pension they'll receive is from the CPP contribution at minimum
wage, which will leave very little as a
benefit. Old age security is another one they will get.
So all of these things are interrelated, and that's
why when we were researching our presentation on what
was just said might happen downstream and the adverse
effects, I thought we'd better start paying attention.
It's just shocking what's going on, and if we do a
little research and pay some attention, we'll seriously
start fighting this thing together, and not with each
The Chairman: Mr.
Mr. Laurie Beachell: I support all of the comments
that were made.
One other factor I'd like to bring to your
attention is that social policy in this country
used to be debated much more in open forums.
As we have moved to this new
social union model, the policy is being debated behind
closed doors in manners that leave very few people
Next week the ministers of social
services from across the country, along with Minister
Pettigrew, meet in Toronto to discuss a document called
In Unison, which defines the framework for
initiatives around disability.
We're pleased to see federal and provincial
governments working together, but we have no idea what
goes on in those discussions, nor is the community ever
invited in as a partner in the new social union
So it's all ministers of finance who meet now.
There's no way for citizens to know what goes on in
those meetings. There's a communiqué at the
end, but there's no public participation in the
process. There has to be a means in defining and
seeking solutions to the issue of citizenship
If we do not do that and if we continue to exclude
organizations like ours and others from the table, I
don't believe we will find the best innovative
solutions, nor does the public have confidence in
solutions that are promoted, nor do community groups
help to support their governments in promoting those
ideas to a broader community as well.
So I just want to say that social policy generally,
not only in the cuts and the impact it has on people,
but in the process in which we are now defining social
policy in this country, disengages citizens from
participation, and that is ultimately dangerous and
ultimately will not get us good solutions.
The Chairman: Mr. Valeri.
Mr. Tony Valeri (Stoney Creek, Lib.): Thank you,
Mr. Chairman. I have a couple of questions, and then
I'd like to come back to the theme that has emerged
Mr. Hilliard, you talked in your
presentation about what in fact one should do with the actual
surplus. You started off the presentation with the
pay equity issue. You made the comment that if the
money is set aside, then just pay it. You're looking
for an answer to that; if in fact it does not affect
existing revenues, then let's just pay it.
My question to you would be that if in fact
affect current revenues, are you then saying that
should go into the mix to decide what the
priorities should be with which the government should
invest, or are you just saying the budget should read a
one-liner basically saying “pay equity”?
Mr. Rob Hilliard: No, I wanted to know if there
was going to be an impact on current revenues. If
there isn't an impact, I don't know why there is so
much time being spent on debating whether or not to pay
it. If, however, there is an impact, then obviously
that has to be balanced with a whole lot of other
concerns, but in doing that balancing, I'm not
suggesting that the government not be prepared to meet
its obligation. The government must meet its
obligation, and it must make those adjustments.
If in doing so the bank account gets depleted in the
short term, then it will obviously affect the ability
of government to do other things. This first
obligation, however, must be met. It's a debt owed to
its own workers, and it's a debt that has been going on
for 14 years, so that debt must
be paid and that obligation must be met.
However, if in doing all of that it reduces the fiscal
surplus a significant amount, then clearly other
decisions might have to come into play, realizing that
there just isn't as much surplus as we had before, but
that is an obligation that government has and must meet
both legally and morally.
I'm still very much in favour of stimulating the
local economy and doing
that stimulation in a way that addresses health care
needs first and other transfers that have been lopped
due to federal government cuts.
Mr. Tony Valeri: So if in fact
this issue becomes one that does impact any
dividends significantly or perhaps eradicates the
entire dividend, you would suggest that it has to
be then considered in the context of the other
priorities. But at the same time, you're suggesting that
there is an obligation to deal with this, and if it's
not possible in the short term, then you're suggesting
that this be done at some point.
I'm just trying to reconcile the two. You say it
needs to be paid and needs to be done, but at the
same time you're concerned that if it impacts any
surplus and prevents any sort of other investment, it
will have to be sort of rolled into the mix.
Mr. Rob Hilliard: I'm saying that obligation must
be met, period. In meeting it there may be some
rational discussions made about how much can be
afforded out of any one fiscal budget, but they must be
met in the short term. It has just gone on too long,
and the longer it goes on the greater the liability grows.
If in doing all of that we reduce the fiscal surplus
to a very small number—and frankly, I don't think it
would eliminate it, because even in the recession
scenario it's expected that there will be government
surpluses—perhaps it will leave a smaller amount of
money to stimulate the local economy and the Canadian
economy. But if that stimulus will be too small to be
effective, government ought to look at other areas and
reprioritize to ensure there is enough money—a few
billion dollars—left to put back into health care and
stimulate the local economy, in order to offset cuts
that have happened already and offset the effect of the
financial global crisis.
Mr. Tony Valeri: Jim Stanford was in front of the
committee, I believe in Toronto, and talked about his
recession scenario. He essentially put forward an
approximately $6 billion surplus for 1999-2000.
Included in that $6 billion surplus was a $3 billion
contingency reserve. That would essentially leave, for
all intents and purposes—the way we've been planning
budgets—about $3 billion with which to do anything.
Under that recession scenario, based on the numbers out
there today, a pay equity payment would essentially
eradicate an entire dividend.
I'm just trying to reconcile in my mind and understand
your position. You're saying pay equity needs to be
paid, but if it affects the dividend to the point where
government is not allowed to reinvest in any other
Canadian priority, you feel it needs to be paid—unless
getting a mixed message here—but not necessarily in
the short term.
Mr. Rob Hilliard: No. It should be paid in the
Mr. Tony Valeri: It should be paid in the short
term, so it will be paid at the cost of any other
reinvestment in health care or anything else we're
Mr. Rob Hilliard: No, I don't think that
accurately describes what I said, although I can
Mr. Tony Valeri: I'm trying to understand. I can
appreciate you want it both ways. I'm just trying to
say that we have a trade-off here, unfortunately.
Mr. Rob Hilliard: But I'm not sure the trade-off is as
you present it. The trade-off isn't necessarily
meeting the federal government's obligations under pay
equity or investing in health care.
I'm saying the number one priority is to meet your
obligations under the pay equity decision. That must be
If in doing that the surplus gets reduced to a
level where there isn't enough left to stimulate the
economy and put back into health care, then I'm saying,
look, reprioritize all the other things you're doing
to make sure you do find that.
Mr. Tony Valeri: Okay. So what you're saying,
essentially, is finding another
$2 billion somewhere in government operations
to invest in health care.
Mr. Rob Hilliard: If, in meeting the pay equity
decision, that's what results, yes.
Mr. Tony Valeri: Fine. That's what I wanted to understand.
So if you are completely depleting the fiscal dividend,
then your suggestion is to find an additional $2 billion
within government operations with which to fund health
Mr. Rob Hilliard: That is correct.
Mr. Tony Valeri: Okay. I just wanted to make sure
I understood that.
Mr. Laurie Beachell: I have just a quick comment
What I see underlining your question is sort
of “deserving poor”. That's not our theory of
equality. If there has been inequity in the system, and
workers have been penalized, we believe the obligation
must be met. We also believe the Government of Canada
has an obligation to equality across the board and to
understand what equality means for all Canadians. We
as communities seeking equality do not want to be
pitted against one another, nor will we allow that to
We don't want to say, okay, if you give to workers, then the
disableds are out. That's not what we're saying.
We're saying the government has an
ultimate responsibility to ensure the citizenship
rights and the equality of all Canadians, and must find
ways within its system to manage that. It is not a
debate about who's the most deserving, because as
soon as you
get to the most deserving, it means you have adopted a
policy of discrimination.
Mr. Tony Valeri: That's a fair comment. I
think government would love to do all these things, and
no one is intending to pit one against the other. It's a
very noble thing to be able to do all these things, but
the unfortunate part of this thing....
I guess I should ask this question. Unless there
is disagreement with the underlying
principle that governments maintain balanced budgets,
would agree with you, but if there's an agreement at
the table that governments maintain balanced budgets
and that we do not want to go back to a situation
where we have this ongoing deficit—in fact, today we
paying $40 billion or so a year in interest because of
a debt that's accumulated because of budgets that have
not been balanced—then
you're faced with
these types of decisions.
I don't want to put it in terms of a trade-off of one
against the other. I would love to be able to do
everything that's been discussed here this morning.
The reality of it is that if you have an obligation
that has been put on the table of a magnitude that may
eradicate the actual number we're talking about with
respect to a surplus to reinvest, when you get to the
table that's the trade-off in choices you have to make.
I don't want to put it in that context, but I would
love to be able to hear from you what government should
be doing in order to meet these other obligations.
We heard about the Tobin tax. We'll be able to debate
that in the House, and I look forward to that, but is a
position being put forward that we should be increasing
taxes or doing something to bring in additional revenue
in order to do the things everyone around this table is
saying we should do?
Mr. Albert Cerilli: The framework is the $3
billion we have to work with. That's a fair comment.
That's why we suggested that if you look at
equalization of taxes and a level playing field, not
only for me as a senior, or Rob in his work or you as
an MP, and start looking at the taxation of the
corporate world, I think you'll find there will be some
equity there to supply some funding for that.
You'll probably hear about the $750 million that
escaped our treasury because of a trust fund that was
allowed to escape the country. So if there's $750
million that has eluded the tax man, we should be
plugging up those holes. That's where this money will
come from. You're going to debate the Tobin tax in the
House and I'm really glad to hear that. The reaction
of the citizens of this country will be interesting
when when all of a sudden we have a debate on why
corporation X is moving billions of dollars around
the world and the countries are not receiving one cent
of tax from that money and that profit.
I think that's where this debate will wind up, and
that's a legitimate comment you've made to create that
kind of reaction from this group because certainly
there is money out there. That's why when we mention
there's $60 billion or $40 billion made by some foreign
dictator, that's money circulating around the world
that was invested in that country by corporations and
everything else. So our country deserves a better
playing field in regard to receiving a tax dollar from
the corporate world.
Mr. Tony Valeri: So tighten the tax rules
and find the money and the revenue.
Mr. Rob Hilliard: Your comment broadens the
discussion tremendously here—
Mr. Albert Cerilli: Absolutely.
Mr. Rob Hilliard: —and it will be difficult to do
justice to it in a short period of time, but I
guess I would reinforce the statement made earlier. I
don't see the choice being made between meeting your
legal and moral obligations with your workforce and/or
restoring service levels that had been there before.
If that's the kind of choice you're looking at, I'm
saying it's the wrong choice. I say you meet your
obligations and then if you don't have enough to do
those other things, you take a look at the big picture
of the whole range of things, including the tax
structure and all of the expenditure decisions of
I can't give you a quick answer to that
very broad question right now, but I think there are
ways of addressing it, and there are ways of
Mr. Tony Valeri: Well, outside of the comment about
tightening the tax structure and increasing revenues,
essentially there are three large expenditures that
government is involved in: transfers to the provinces,
transfers to persons, and the interest on the debt.
the exception of those three, you can look at
government—and I'm sure Mr. Epp will come up with a
bunch of examples—and at the things that go on in
government that will give you a whole bunch of money,
but it would not provide you with the kind of money to
deal with the magnitude of the kinds of issues we're
Earlier today, Mr. Nystrom talked about government
program expenditures being at
the 1949 level as a percentage of GDP. There have been
real cuts in government operations, no one denies that.
I'm not sure that a comment that says you can go and
look at the bigger picture and find reallocation within
existing programming to provide for more somewhere else
is something that a lot of people look forward to
doing, given what's been done already.
I want to move on, though, because I do accept what you've
Mr. Albert Cerilli: Don't leave that alone, though,
because again you've broadened the debate, which is very
interesting. I think it's very important.
Now is the time, then, to sit back and look in the
mirror to reflect where we want to go. Where do we
want to take this country? Where do we want to take
I agree, that's why we have never chosen
the words to separate this group or anything else. We
refer to the corporate world as an auctioneer going to
provinces and saying, you give me this tax break and I
will locate in your province. That's auctioning, and
that's not fair. Rules have to be made.
commenting on the fact that, yes, this debate can go on
all day, and I would love to stay here with you, but as I
said, I have a commitment.
It's a very interesting
point you've raised in broadening the debate.
There are ways and means of doing it. Let's look in
the mirror and reflect out first so that we can say,
what we have to stop”.
Mr. Tony Valeri: Okay.
Mr. Hilliard, the other point I
wanted to bring up is about your comment on
supporting an arm's-length structure with respect to
the employment insurance program. I want to make sure
I understand this correctly. The arm's-length
structure in running the employment insurance program
would involve employers and employees on this board that
would essentially set premiums, set benefits and
essentially manage the program. In that structure,
you're also advocating that government no longer stand
behind the employment insurance program, that it
essentially be brought out of government and set out as
an arm's-length type of organization.
Is that what you
are suggesting with employment insurance?
Mr. Rob Hilliard: For the most part, yes.
Mr. Tony Valeri: So if in fact there is
any sort of shortfall or an unexpected downturn in the
economy, and this program might run into any
sort of deficit position, you see that government would not be
there to ensure that benefits are there for those who
Mr. Rob Hilliard: I believe that if the fund was
managed by a bipartite group, they would ensure that premiums
would be set at a level to take care of that. It may
be that the occasion arises where some unforeseen event
happens and there's a deficit created, but the group
managing the fund would then have to respond to that to
deal with that deficit and find the money either by
raising premiums or borrowing in anticipation of an
upturn in the economy or some mechanism like that.
basically, yes, I see no reason why it can't operate
Mr. Tony Valeri: You would accept a situation with
an independent-type commission and program where, if you see a
downturn in the economy and a deficit in the program
where one would not be able to pay benefits, you
would see an increase in premiums? That would be at the
worst time in an economic cycle.
Mr. Rob Hilliard: That could be a response. It
could also be a response to borrow money in the short
term and pay it back in the expectation of an upturn in
the economy. There are a number of responses—
Mr. Tony Valeri: Borrow money from whom?
Mr. Rob Hilliard: Perhaps from the federal
government, perhaps from banking institutions.
Mr. Tony Valeri: Oh. So government would still have a
role to play.
Mr. Rob Hilliard: I'm talking about possibilities
here. You're talking about a hypothetical situation—
Mr. Tony Valeri: Oh, no, I'm not, actually, I'm talking
about a proposal that's been put on the table. This is a
proposal that's being promoted out there, that
because of the so-called lack of transparency, individuals
are coming forward saying they want more
transparency in this, and a separate fund and a
separate program. Along with that separation from
government comes other types of risks so that you have
a completely separate arm's-length situation.
is any connection to the government standing behind the
program, then the Auditor General would not allow that
program to be sitting outside of government. It would
have to sit inside consolidated revenues if the
government is going to, in any way, provide an
agreement to stand behind the program. That's the
challenge we face.
I just want to make sure I understand that if it
is out, it's out completely, and government is not
Mr. Rob Hilliard: I understand your point. I
guess if that's the choice to be made, yes, I believe I
would have to stand on the side of that.
Mr. Tony Valeri: You would support that.
Mr. Rob Hilliard: Yes, I would.
Mr. Albert Cerilli: In addition to that—
The Chairman: Laurie Beachell.
Mr. Albert Cerilli: Sure.
Mr. Laurie Beachell: I have a very quick comment.
mentioned transparency. The reason we may have gotten to
this point is the lack of transparency. The reason we
may be at this point is the lack of citizenship
engagement in determining policy around EI. The reason
citizens may be calling for arm's length from
government is because they don't believe the
government has listened to them.
I guess that's
what I think is resulting in social policies, whereas if
we had a process, a partnership, where we began to work
around some of these things, and people felt engaged in
the process, in finding solutions, I don't think you'd
be seeing the same calls for separate and
autonomous and away from government. But you reap what
The Chairman: Mr. Cerilli, a final comment.
Mr. Albert Cerilli: Yes, it is a final comment.
Again, you've broadened the debate, and I
think this is great. I think what we have to do is
say, okay, since....
What's in the fund now, $20 billion, estimated?
Mr. Tony Valeri: There's actually no separate
Mr. Albert Cerilli: Okay. In general revenue
Mr. Tony Valeri: It's consolidated revenues.
Mr. Albert Cerilli: Of course.
In addition to what has been said, people see
that, as I said earlier, as a means of reducing
their input into this thing without any benefit. I
think if the transparency shows that there is a
benefit.... That's why we're saying the
triparty situation—labour, business and the
government—should set up those rules.
If the government
has to take a role in that, because of what's being
said, I think that's part of the debate as well.
Mr. Tony Valeri: I fully agree with what you've
said in terms of government having to take a role. The
challenge I find there is that in terms of this issue
of consolidated revenue—it's in consolidated revenue
or it's in a separate fund—in order to get it to a
separate fund, the government can't have a role, because
the Auditor General will not allow you to have a role.
Mr. Albert Cerilli: We understand that. But I
think those are the mechanics of the debate
[Inaudible—Editor]...and if there
has to be a
designated fund, you can have a
designated fund from fuel taxes to repair all the
highways and roads of this country because they're
deteriorating. We've been promoting a designated
fund for that for years, but nobody's listened. I think
some people now are looking back and saying maybe we
should have listened, because we need to fix our
infrastructure, our sewers and water systems.
there are all kinds of mechanics out there, and I think
on the point being made, to get the public involved, I
think some of the experts may surface in regard to
what can really be done.
The Chairman: Thank you very much.
behalf of the committee, I'd like to thank you. As you
know, as we travel across the country it's quite clear
that we have many challenges and choices we have
I was just adding up some of the promises. If
we were to keep everything that everybody's asking for
around here, it would cost us anywhere between $20
billion and $25 billion. The challenge is quite
But I think Mr. Cerilli—actually, everybody—spoke to
the issue of vision as well, that it's important to
really start painting a picture of the future, of
what type of future you want for your grandchildren and
future generations of Canadians. This is a point
that needs to be stressed over and over again as we
deal with this budget and future budgets.
quite difficult for any country to move forward without
a sense of direction. That is not to say that this
country lacks a sense of direction, because quite
frankly, when you compare this country to the vast
majority of countries, we have done extremely well.
So on behalf of the committee I'd like to thank you
very much for bringing your point of view. You can
rest assured that as in all the other previous
pre-budget consultations, your points of view are taken
quite seriously and are usually embodied in the report
to the Minister of Finance.
The meeting is suspended.
The Chairman: I'd like to call the meeting to
order and take this opportunity to welcome
representatives from: the Union of Manitoba
Municipalities; the Infrastructure Council of Manitoba;
the Jacks Institute; Brandon University; the Canadian
Association of the Non-employed; Ramboc Enterprises;
and the Shamray Group. These are the scheduled
participants of this panel.
As you probably know, you have approximately five to
seven minutes to make your presentation, and thereafter
we'll engage in a question and answer session.
We will begin with the Union of Manitoba
Municipalities and its president, Jack Nicol, and
vice-president, Wayne Motheral.
Mr. Wayne Motheral (Vice-President, Union of
Manitoba Municipalities): Thank you.
The Union of Manitoba Municipalities represents 172
municipal corporations, including 118 rural
municipalities and 54 urban municipalities. The
mandate of our organization is to act on behalf of our
members to bring about changes, whether through
legislation or otherwise, that will enhance the
strength and effectiveness of municipalities.
We appreciate the opportunity to meet with you today
to highlight two issues we believe should be
priorities for the Government of Canada's next budget.
The first is the national infrastructure program.
Approximately 18 months ago, the federal government
and the provinces signed an agreement which provided
additional top-up funds to the original 1994 Canada
Infrastructure Works Program. The partnership between
the federal, provincial, and municipal governments
resulted in an extremely effective program that met
the goals of creating employment opportunities and
improving Canada's infrastructure.
In Manitoba, we were particularly fortunate that
municipalities were given representation on the
infrastructure program management committee, which
recommended projects. In addition, municipalities were
the proponents and equal funding partners in a large
portion of the project. We believe this contributed to
Manitoba having one of the most successful programs in
the country. In fact, in their assessment of the
infrastructure program, the federal Treasury Board
concluded the local component was one of the key
factors in the program's success, because priorities
were established by those closest to the real problems.
And, at a time when there is a high level of cynicism
government activities, the infrastructure program is a
good example of government investment and co-operation,
providing both short-term and lasting benefits for
In total, there has been an infrastructure investment
of $245 million in Manitoba, which has resulted in 600
projects and more than 4,200 jobs. Over 50% of the
projects have been in the area of traditional
infrastructure, specifically, roads and bridges, sewer
It is also important to point out all three
levels of government received a return on their initial
investment through increases in tax revenue. In fact,
of the three levels of government, it is only the
federal government that receives a full dollar back in
revenue for every one dollar spent on the program.
Despite the success of the first program, there
remains a critical need to continue to invest in the
repair and maintenance of Canada's core infrastructure,
such as roads, bridges, sewer, water, and extension
of natural gas. For these reasons, we strongly support
a new major infrastructure program being launched by
the federal government, which would include an equal
role for provincial and municipal governments in the
funding and selection of projects.
Now, in regard to the national highways program,
nowhere is the
impact of federal policy decisions more visible in
rural Canada than in the area of transportation. Roads
of course represent one of the most important areas of
municipal responsibility and are a primary concern for
our membership. In the past number of years, roads and
highways throughout Manitoba and the prairies have been
significantly affected by increases in truck traffic
due to trends such as branch line abandonment, elevator
consolidation, and the elimination of the Western Grain
In recent years, there has been significant growth in
both the number and weight of trucks. This trend has
been exacerbated by accompanying increases in truck
weights and the haul distance of trucks. In fact,
during a recent meeting with the University of Manitoba
Transport Institute, it was confirmed that increases in
truck traffic are the major transportation
infrastructure issue facing the Canadian prairies.
The effect of these increases in trucking is becoming
increasingly evident in the state of our road
infrastructure. A road previously estimated to last 20
years will now last only 8 years. As well, over
one-half of the asphalt- and concrete-surface roads in
Manitoba have exceeded or are exceeding their design
The four western provinces have estimated that the
cumulative impact of changes in trucking patterns and
distances on provincial and local road maintenance
costs $30 million to $50 million annually. Further,
the provinces estimate that the road network would
an upfront investment of between $600 million and $1
billion to accommodate the increased traffic
requirements over a 20-year road lifespan.
these road impacts are a result of federal government
decisions related to agriculture and transportation
policy. In addition, the impacts are
occurring at a time when
federal support for transportation infrastructure on
the prairies is decreasing. For instance, the UMM—the
Union of Manitoba Municipalities—and other
stakeholders have expressed our concerns about the
spending projections of Transport Canada. The
projections to the year 2003 estimate that over 98% of
their funding will be directed toward eastern Canada.
The changes in agricultural transportation are
producing impacts that are greater than the ability of
local municipalities and even provincial governments to
address on their own. We strongly believe there
is a need for the federal government to assume greater
responsibility for prairie Canada's transportation
Therefore, the Union of Manitoba Municipalities
supports the development of a national
transportation fund, which would be financed
by federal fuel tax revenue. The federal
government raises over $5 billion per year
in fuel tax revenue across the country. Of that $5
billion, the government spends about $13 million
in western Canada.
In Manitoba, the estimated federal tax revenue on road
fuels is over $140.7 million, while the federal
contribution to highways in recent years has ranged
between $3 million and zero.
In the past, the federal government has stated that
fuel taxes go to general revenues and are not a
dedicated revenue source. However, this position
simply does not address the serious state of Canada's
It is ironic that a
country such as Canada, which relies on transportation
infrastructure to overcome vast distances, is the only
major industrial country that does not have some type
of national highways program. This becomes a
particularly significant issue when considering the
massive investment in highways that is occurring in our
neighbour, the United States, our major economic
Highways will play an
increasingly vital role in our economy as changes
continue to occur in the areas of value-added
processing and the transportation of agricultural
products. We strongly believe that infrastructure
not be viewed in competition with other government
funding priorities. Rather, it should be viewed
as a crucial
element of a successful, competitive Canadian economy.
We therefore urge the federal government to consider
the implementation of a national transportation fund.
The Chairman: Thank you very much, Mr. Motheral.
Now we'll hear from The Infrastructure Council of
Manitoba, with Mr. Chris Lorenc, president, and Mr. Dave
Harrison, chairman of the board.
Mr. Dave Harrison (Chairman of the Board, The
Infrastructure Council of Manitoba): Thank
you and good afternoon.
I'm going to take a moment to introduce ICM
and what we represent and tell you basically
why we're here.
The ICM is a council of associations, if you like.
It has quite a variety of associations and is quite a
diverse group. We have the engineering people, the
various contracting groups, the heavy construction
people—Winnipeg Construction Association, Centra Gas,
and CP Rail, to name a few—and the trucking
associations. We represent about
40,000 jobs and about 1200 employers in Manitoba.
The ICM mandate is to develop and promote greater
public and government understanding, acceptance and
support for socially, environmentally and financially
responsible infrastructure maintenance, renewal and
We have a very broad definition
of what infrastructure is. It's not just the roads and
streets and sewers. Of course they're a major
component, but we think infrastructure also means
buildings, the schools and the hospitals. It's really
anything that affects the day-to-day existence of the
citizens of this country. It's very important to this
To paraphrase for a moment what the Prime
Minister said about five or six years ago—and I can
remember him coming on television and saying how
important he thought infrastructure works were to this
country—when people see trucks full of concrete
down the street, it makes them feel good; when
people see their bridges and their streets and their
buildings well maintained, it makes them feel good. It
affects how people think and the way they
spend their money, and it helps the economy generally. We
believe that to be true.
If the Prime Minister still believes that,
and if you people also believe that to be true, then
it's very important to take this message back to Ottawa
and get some money to make sure these programs can be
maintained in an effective manner.
Now I'd like to turn the microphone over to
Chris Lorenc, who is going to talk about some of the
specifics in our brief.
Mr. Chris Lorenc (President, The Infrastructure
Council of Manitoba): Thank you very much.
afternoon, Mr. Chairman and members. It's a pleasure
to be in front of this committee.
Approximately a year ago we had the
opportunity of making a
similar presentation to the Standing Committee on
Transport wherein we addressed the whole notion of
a national infrastructure policy.
You have had two documents circulated to you. The
first is a rather large document at first blush
entitled National Infrastructure Policy (NIP): A
Sustained Commitment, dated January 1998. My first
comment is, don't be intimidated by the bulk, because
there are some 10 or 12 attachments that serve to
reinforce the message contained in the 11-page
The second document is
entitled simply National Infrastructure Policy:
A Sustained Commitment, and it is targeted for
presentation to your committee.
As Mr. Harrison has indicated, the Infrastructure
Council of Manitoba is a non-profit organization that
seeks to work with governments—regardless of political
stripe—and with the public to encourage a better
understanding of the need to invest in Canada's
We applaud the federal government, which has, to its
great credit, successfully eliminated the budgetary
deficit and is now projecting surpluses exceeding $5
billion—and growing—within the next few years on a
As much as it's important for the
federal government and all levels of government to deal
with and come to grips with budgetary deficits, we
that the infrastructure deficit, the second deficit, is
of equal significance. The infrastructure deficit
gap between what this country invests in
infrastructure as compared to what it ought to invest
in a prudent fashion.
Since prior to 1993 when the program was
first announced, premiers and ministers of finance, as
well as ministers of highways and transportation, have
consistently made the case that there
must be a national infrastructure program. That
particular position, expressed in the guidelines adopted
at successive annual premiers' conferences, has the
support of national stakeholders, and those include: the
Federation of Canadian Municipalities; the
Transportation Association of Canada; and the Association of
Consulting Engineers of Canada. And the list goes
on; it's identified at page 2 of the shorter brief.
So really, the issue before you as parliamentarians and
before the nation is not whether we have a
national infrastructure policy, but rather, under what
arrangements do we have it and how do we get it going?
In our judgment, the country is no longer in a
position of simply trying to ignore the issue. No one
can estimate with any degree of precision, as in a
science, the size of Canada's infrastructure deficit,
but in a
report in 1996, the Federation of Canadian Municipalities
estimated that the municipal
infrastructure deficit is in the vicinity of $44
billion. An article written by Dr. Mirza, a civil
engineer out of McGill, suggests that could easily
climb to $300 billion within the next 5 to 10 years if
we don't do something as a nation.
With respect to highways, a recent report
updating the 1988 studies, done by the Transportation
Association of Canada jointly with the federal,
provincial and territorial governments, moves that
number up from the previous estimate of $12 billion to
now $17 billion.
So the issue is not whether or not we do it; it's how
we do it.
Quite often, regrettably, one hears from federal
politicians that highways are a matter of provincial
jurisdiction and that the federal government should
not, goes the argument, contribute substantial
resources on a national scale to a sector under
provincial jurisdiction. With the greatest of respect,
we disagree. This is not an appropriate rationale for
federal government absence.
All members of this committee, all members of
Parliament and all students of Canadian history
recognize that jurisdiction has never interfered in
addressing national needs. This country was built and
her many attributes established as a consequence of
leadership and financial partnership involving the
federal government, quite irrespective of
Canada's first national transportation system, the
coast-to-coast CP main line, cemented the ability of
this country to form. This massive project
involved federal funding and federal government
Canada's first national highways system,
the Trans-Canada Highway, was built with federal
funding and leadership.
The establishment of
Trans-Canada Airlines, succeeded by Air Canada, the
Canadian National Railway, the Crow rate, the health
care system, unemployment insurance, the Canada Pension
Plan, federal funding for education, the social safety
net programs, the Strategic Highways Improvement
Program, the Canada
Infrastructure Works Program and many more programs,
provided a federal response to a national need, which,
without federal funding and leadership, would never
That is true today with the need for a national
infrastructure program focusing on three elements: the
municipal infrastructure deficit; the need for a
strategic national highway system; and strategic
infrastructure investments. They collectively
represent an enormous actual—not invented—national
need that can only be properly addressed if the
federal government takes the lead, establishes the
program parameters and challenges the provinces to come
on board, as it did so successfully with the nationally
popular Canada Infrastructure Works Program.
Challenge the premiers not to participate if they
choose. They will have to explain to their
constituencies why their respective provinces choose
not to participate in a federal
program aimed at establishing national
So the issue, respectfully, is not jurisdiction. It's
all a matter of political will and leadership, and we
believe the federal government must demonstrate it.
The best way to demonstrate that is through the federal
The Chairman: Thank you very much, Mr. Lorenc.
We'll now hear from the presenter from the Jacks
Institute, Ms. Evelyn Jacks.
Ms. Evelyn Jacks (President, Jacks Institute):
Thank you very much.
I'd just like to take a moment to tell you what the
Jacks Institute is. We are known as Canada's leading
trainer of tax industry professionals. Our students
are tax accountants, tax consultants and financial
planners across the country who deal with individuals
having problems with regard to their tax preparation
and also do investment tax planning.
Our presentation today has followed quite closely the
four questions you have asked.
The first question asked for thoughts with regard to
priorities on the fiscal dividend, and we have several
thoughts there. First, $45 billion in
annual interest payments on the federal debt is an
unacceptable amount. These payments cut into program
spending and place potentially large tax burdens on
future generations, which are a smaller tax base.
Should interest rates rise, there would be even greater
pressure on a government already challenged with
aging baby boomers.
The solution is to reduce the debt we have
accumulated over the years, which is over a half a
trillion dollars, but this must be done gradually over
the next 10 to 20 years. We feel that future deficit
spending should not be allowed, and that this should be
Any leftover fiscal dividend should primarily
be invested into
health care research, in the best people to
look after our sick and disabled and the latest medical
technology to be able to do so.
Global communications should be continued and
encouraged throughout the economy and the educational
system. It must become easier for Canadians to access
such technology from their homes for business,
education and personal finance purposes.
Finally, Canada, with its unique cultural heritage,
should be a world leader in art, theatre and music.
Year 2000 initiatives would be a good place to start to
encourage both the young and the old in particular to
contribute their time, energy and creativity to a
cultural renaissance in Canada.
Next, you asked how we might use tax and investment
strategies to accomplish those things. We had several
thoughts there. First of all,
in order to continue to assist
with medical care costs, to encourage increased home
care of the ill and the elderly, and to continue to
enhance tax credits, as the government has done over the
past several budgets, to caregivers and those with high
medical expenses, you may wish to consider, for
example, allowing the claim for the disability tax
credit and full-time nursing-home care at the same time
on the same return, and removing the 3% net income
limitation for medical expenses.
In addition, doctors and other medical personnel,
whether they are employed or self-employed, should be
able to claim tax deductions when they use medical
supplies in the line of duty or on private time.
In the future, palliative care will be a very big issue
as baby boomers age and die. The federal government
should assist provincial governments in providing
better health care for the sick and the dying.
Cost sharing should be initiated
to provide hospitals with
funding over the next 10-year period, to recruit
doctors who specialize in palliative care in the home,
and to enable these people to work directly within the
community. Doctors and nurses specializing in
palliative and home care should be recruited and
trained, and training should be provided to families
assisting in palliative care or care of a chronically
In the line of preventative medicine, health spas and
other types of care are used extensively in Europe to
assist the ill in returning to their normal life
patterns. Private industry should be encouraged
through tax incentives such as accelerated capital
cost allowance to participate in the care of the sick
and the disabled.
In terms of the year 2000, a great milestone, perhaps
the federal government would like to bring forth a new
fiscal vision for the year 2000 and beyond. Some ideas
for “society building” include the following.
No tax for
the poor: does it make sense to tax the poor?
Currently, our basic personal amount is $6,456, or about
$538 a month. Does it make sense to tax moneys earned
above that? And how far above that?
In terms of relief for the middle class, the federal
government's millennium initiative might be clear on
issue of putting new money into the hands of consumers.
One way to do that is to restore the full indexation of
tax rates, personal tax credits and refundable tax
credits above certain income thresholds.
To encourage the creativity of young entrepreneurs, we
might consider a young entrepreneur business loan
program that would be available
to top graduates of business and
technology programs in post-secondary institutions
across the country; this might be paired with a mature
entrepreneur mentorship program. We may also wish to
encourage socially responsible business enterprises and
employee ownership, possibly through some increased
direction with the labour-sponsored venture capital
We're also finding, within the tax industry in
particular, that senior citizens are being squeezed by
the combination of high tax rates and low interest
rates. The government might want to consider
a $1,000 interest tax credit to give some relief
We may also wish to consider providing tax assistance
to those who give back to their communities by allowing
a refundable volunteer tax credit for every hour logged
in community service. This would be a way for the very
poor to give back to society.
We may also want to consider an initiative called
something like Renaissance 2000, which would
provide a tax deduction for those who contribute money
to cultural education, the arts, hospital research and
other centres between now and 2001.
Finally, we may wish to promote tax fairness through
tax treaty changes. We may want to negotiate an
increase in the adjusted cost base of assets subject
to the new departure rules in Canada to ensure that no
double taxation exists in the future when non-residents
actually sell their Canadian assets.
For question 3—helping Canadians take advantage of
the new era created by our balanced budget—basically
our thoughts are the following. A barrier to such a
worry-free society that the new era may create is the
burden of unmanageable debt. Perhaps the government
can best help Canadians prepare to take advantage of
future opportunities by taking steps to manage this
debt and at the same time making a commitment to its
taxpayers that a fully supported modern health care
system awaits our aging majority.
To ensure a wide range of job opportunities in the
new economy, which was the subject of question 4, we
suggest the following.
The new economy is in the
information technology age. Canadians, with their
well-educated society, are poised to be world leaders
within that new age. Our isolation, in a way, has helped
us to embrace technology, and our innovation and
creativity can help us create work within Canada and
around the world. International trade opportunities
should continue to be promoted to become a natural
networking opportunity for all of us.
Thank you very much.
The Chairman: Thank you very much,
We'll now go to Mr. George Harris, from Cho!ces:
A coalition for social justice.
Mr. George Harris (Representative,
Cho!ces; A coalition for social
justice): Good afternoon. I come from an
organization called Cho!ces. We're a social justice
coalition here in Manitoba.
The name itself, just for the information of those of
you who may not know, comes from the fact that we
recognize that governments, no matter how difficult the
circumstances are, are making choices and doing so on a
One of the things I found rather
interesting in the previous presentations was the
reference to the infrastructure deficit.
What I'm going to do first today is
talk about deficits and the fact that, the way
we see it, the government has looked at deficits
from one dimension only, from the fiscal deficit.
It has not
looked at the whole variety of deficits that we have
within our country.
It's certainly not something you ignore. You
don't ignore a fiscal deficit, but if you focus your
attention entirely on the fiscal deficit and ignore
other deficits, this brings about tragic results. The
example of the infrastructure deficit is a good one,
but I'd like to give you one more to consider. You
can extrapolate and continue looking at other forms of
We talk about the social deficit. To illustrate, I
want to give you a fairly simple example,
something that is very close to the field in which I
work. In my day-to-day life, I work with people who
live with HIV and AIDS. This government, with great
reluctance, finally agreed to put money into the next
phase of the national AIDS strategy. Some people
say that's an awful lot of money to put into a national
I want to illustrate the
consequences of not doing anything. Last November,
a report came
out which was called The Economic Burden of HIV
and AIDS. That report identified that for each
new diagnosis of an HIV-positive person within our
society, the future cost in terms of an economic burden
to our society would be $0.75 million.
So when you're talking in terms of 50,000 people
within our society who are HIV-positive, you're talking
in terms of a horrendous future economic burden. So
the longer we sit and do nothing—and I'm talking more
in terms of prevention—the heavier our future economic
burden will be.
So while we focus on the fiscal deficit, we should be
very careful not to ignore the other forms of deficit.
I gave you a specific
example of HIV and AIDS, but I could carry on and go
into health, education, and other programming.
Each year we go through an exercise with the
Canadian Centre for Policy Alternatives. We
talk to people right across this country. We have
workshops from coast to coast. We talk to people who
live in poverty and to people who are looking at the
various needs in the areas of health, education, and so
on. We develop what we call an alternative federal
budget. What we provided for you today in our
documentation is a copy of the alternative
Time won't permit going through all of this, but I
would just like to focus on some of the things we pay
attention to in all of this. Just so you are
aware, one of the things we pay attention to is
maintaining a balanced budget.
A lot of people have
been very critical of some of us, and they look upon
the work we do as that of just another special
interest group. Generally speaking, our work has been
dismissed. I don't see too much of it making its way
into government policy.
I'll go on to the other things we pay attention to:
sustaining economic growth; freezing the aggregate
special federal taxes; restructuring
taxes so that they become fairer
overall, and here we we do a fair amount of work;
reducing the federal debt burden; reducing the
official unemployment rate; and reducing the poverty
We're urging this
government to do more in terms of trying to look at the
many different facets of our society. This year
is the 50th anniversary of the Universal
Declaration of Human Rights. Most people are
aware of that. If you were to look seriously at
the Universal Declaration of Human Rights, you would
see that it goes far beyond the civil liberties we very
often think of as human rights. The rights enshrined
are the right to decent health and education and the
right to work and have enough leisure time. Young
people today are working incredibly long hours because
they have to work longer and longer in order to support
We're looking at this from a much broader point of
view than what I would say is the very narrow focus on
fiscal deficits. The track record over the past few
months has indicated that even
though the government of our country has focused its
attention on the fiscal end, when we look at the global
economy and the track record over the past little while
we can see that it's pretty shaky.
And as the capitalist
system goes through its boom-and-bust cycle, many of us
are very fearful of what's going to happen during our
next bust cycle, because, on a day-to-day basis, we work
with people who are in fact dealing with poverty that
is—even during our so-called boom period—grinding
I'd like to leave it at that. I urge you to
consider carefully the recommendations that have come
forward in our alternative federal budget. I
want to emphasize that we have put forward an
alternative federal budget to show that there is one
alternative. But it's not the only alternative. There
are many others, probably as many
as there are people in this room.
I hope you
will look at the recommendations that are contained
The Chairman: Thank you very much, Mr. Harris.
We'll now hear from Dr. C. Dennis Anderson, president
of Brandon University.
Dr. C. Dennis Anderson (President, Brandon
University): Thank you. I apologize for being
late. It's about a two-and-a-half-hour drive
from Brandon and I was just informed mid-morning that
the time of this meeting had changed.
I appreciate the opportunity to address the committee.
My perspective is the university community's
perspective. I won't be
talking about specific ideas on tax measures and
and I apologize for that. I'm
happy to listen to them, but my specific focus is the
university sector, and I hope you'll understand that.
While I will be quoting some statistics from my
university, I also will be sharing some on the
national and international perspective. Many of the
ideas I have presented in my brief are, I'm
confident, shared by my colleagues across the
It's nice to see Canada in a position of surplus
budgets with a committee coming around asking questions
about what we should do with the fiscal dividend. I
appreciate that the dividend is dwindling daily with the
current international financial situation, but there
still is some sizeable potential for helping
I have given you a handout that's available for
your researchers and recorders. In my brief time
here, I wanted to emphasize the key recommendations
I've included in the material.
The first three relate
to the social transfer to the provinces, the
Canadian Health and Social Transfer or CHST.
The fact of the matter is, in the 1990s, and mostly
in the last three or four years, the CHST—or the old
established programs funding transfers to the
provinces—has declined by about 20%, from roughly $30
billion to $25 billion. That has had a direct impact
on reducing the core funding of universities, because
under the established programs funding arrangement,
notionally at least, those funds were intended
for health, education and social services.
The first recommendation is that the federal
government do whatever it can to remind itself that the
social transfer, the CHST, is for post-secondary
education as well as for health and social services.
Marketing is my area, my academic discipline, and often
labelling and branding are extremely important topics
in marketing; the design of the acronym “CHST”
health at the forefront of the social transfers. No
doubt there's a reason for that, but there's no
reference to education.
The acronym should really be CHEST, the “E”
referring to “Education”. What we're appealing for
in the first recommendation is for the federal
government to be cognizant of, in all our
communications, that the CHST is indeed for
post-secondary education as well as for health and
social services. Post-secondary education doesn't get
mentioned frequently enough when there is reference to
The second recommendation is that the provinces also
need reminding by the federal government that the
CHST is indeed for post-secondary education,
not just for health, and that any increases to the CHST
transfer should not result in equal withdrawals on the part of
the province in their own internal funding of the
sectors, particularly the education sector.
So the first two recommendations are really an appeal
for heightened awareness that education, post-secondary
education, is an integral part of the CHST. It should
be there on this label. It isn't. I don't expect that
to be changed in the short term, certainly, but it does
need that kind of emphasis, at both the federal and
As for the level of the CHST, there definitely is a
need to restore, on a staged basis over a number of
years, the funding erosion that has occurred in the
past four or five years. That funding erosion is as
much as 20%.
The next two recommendations relate to our view of
priority for investment, and that is, investment
in research. You may well know that research and
development is a driving force for economic growth, for
quality of life and for employment.
It's interesting to reflect on Canada's relative
positioning internationally on research and
development in terms of gross economic
expenditures on research
and development. The statistics are not favourable to
Canada. Among the top seven OECD countries, Canada
ranks ahead of only Italy and is behind Sweden, Japan,
the United States, Finland, France, Germany, the
Netherlands, the United Kingdom, Denmark, and Norway.
In Canada, only about 1.5% of the gross domestic
product is spent on research and development, compared
to as much as 3% in Sweden and 2.5% in the United
States, for example. Canada is far behind. The
total size of the research and development investment
in Canada is low. We need to do whatever we can to
increase that investment.
For your information, in regard to the share of what
investment there is in Canada, universities contribute
a disproportionate share of research and development in
Canada compared to our OECD partners. The university
sector's role in generating research and development in
Canada is about twice as important compared to the
other countries. The total level of research and
development is insufficient, but of what is done in
Canada, I want you to know the universities do play a
dominant role, hence the appeal that the research
resources made available to universities be increased
in this country.
There's a new proposal, which is being presented in
Ottawa. It's endorsed by the Association of Colleges
and Universities of Canada. The proposal is to create
a national virtual network of health researchers.
We are appealing to the federal government to look at
that and perhaps look to a staged funding of that over
a number of years.
It's important to realize that health research is more
than microbiological medical research. There are many
policy aspects to health. There are many other social
and socio-economic determinants of health. The
disciplines at our universities that relate to health
research, in short, are more than what you would see if
you went to only the universities that have medical
doctoral schools in health, or to only the biomedical
science disciplines within our science faculties.
Our social sciences, our humanities people, have an
awful lot to say about the health area, and in
the funding of the new proposal for a
virtual health research institute across this country,
encourage the government to have a broad view
of what the
determinants of the health of the nation are. They
are more than microbiological. They are certainly
socio-economic. They are policy-related and political
Specifically, in addition to creating funding for this
new concept of centres for health research, in the
funding of research there is a need for increasing the
funding for the existing federal granting agencies. The
funding for federal granting agencies has eroded
significantly in this last five years.
I mentioned earlier that universities are
important sources of research and development in this
country, and the primary source for funding of that
research is from the Natural Sciences and Engineering
Research Council, NSERC, from the Social Sciences
and Humanities Research Council, SSHRC, and from
the Medical Research Council.
The budgets of NSERC and SSHRC have eroded tremendously
over the last few years. They've stabilized and
increased slightly in this last year, but
there's an awful lot more to go.
For my particular
university—and it's a very small one, with some
graduate programs but primarily undergraduate
ones—research is still very important. Since 1993,
been an 80% reduction in the research funds available
to my small university from a combination of SSHRC and
NSERC—an 80% reduction!—at the same time that we're
hearing in many sectors that research is extremely
That gives you an idea of the erosion to
funding of research in our sector, hence my appeal
that as a strategic investment, despite the importance
of funding hospitals right now in the health-care
sector, don't forget about the universities. Please
don't forget about the importance of funding research
in that sector.
In summary, we need shoring up of the transfers to
the provinces, but with specific reference to those
transfers that are for post-secondary education as well as
those for health and social services. And within
post-secondary education, there's a major federal role
in supporting research at universities. It's in all of
The Chairman: Thank you very much, Mr. Anderson.
We'll now begin the question-and-answer
session with Mr. Epp.
Mr. Ken Epp: Thank you very much, Mr. Chairman, and
thank you, ladies and gentlemen, for coming here this
afternoon and giving us your insights with respect to
the federal budget.
As you know, we're here in order to try to shake down
what the priorities of Canadians are, not only in
regard to the
expenditure half of the budget, but also in looking at
revenue sources and taxation fairness and things like
that, all of the things that the finance minister
normally includes in his budget speech in February. I
was very interested in hearing from, first of
all, the municipal representatives and the
It's a theme that we have heard very loudly. Since,
as you know, the Reform Party is based largely in the
west, the message we're hearing loudly from the west
is that with railroad abandonment the demands on our
highways are increasing. One of our members put in a
private member's bill to require that tax revenues from
the fuel tax be designated for providing the roads that
those taxes should presumably be paying for—instead
of going into general revenues.
Those are some of the things that we keep hearing,
and to have you reinforce that is actually rather
encouraging, because it says, at least from this part of
the country, that we're on the right track in terms of
representing those views.
One thing you didn't mention, though—and
obviously it's not part of your responsibility because
you're looking at it in terms of the infrastructure and
highways and roads—is that the impact has to be huge with
respect to the loss of railroads. You didn't talk
about this at all, but do you think that an increasing
priority of the government should be to maintain a
strong rail system in order to decrease the loads—a
little pun there—on the highway system?
Mr. Wayne Motheral: Thank you for the question.
This is something that our organization, along with the
Saskatchewan Association of Rural Municipalities and
the Alberta Association of Districts and Counties,
brought up in our presentation to Judge Estey.
Everybody's really concerned about the quickness of the
abandonment. But our position at the time was that
this is happening, the railroads and grain companies
seem to know what their direction is, so we were
almost saying that
if this is happening, there is going to be an awful road
impact; it is something that's real, that is going
to happen. So we concentrated our efforts on road
Mr. Ken Epp: Do you in Manitoba have any hope at
all of being able to stay on top of this? Because what
you're doing is replacing farm trucks, which
normally were the two- or three-ton trucks until a few
years ago, and now we're talking of large units
carrying upwards of 100,000 pounds or more. Can you
actually envision yourself building a road structure
throughout rural Manitoba that will actually sustain
that kind of load?
Mr. Wayne Motheral: We, in cooperation with
Keystone Agricultural Producers, are trying to form an
agency that possibly would look into this problem,
because we do feel that there needs to be
designated routes for heavy traffic and, no, we can't
repair all the roads. But we need designated
routes. And this is something that organizations have to
get together on—with the elevator companies, etc.—in
order to find
out exactly where these routes are going to be.
We met with the Transport Institute of the
University of Manitoba and with all the technology
there is today we can certainly find this out and put
in projections through computer modules and all that to
find out where this traffic should be. This is what we
are actually going to be presenting to our own
provincial government, hopefully; we are going to say
that there is going to
be a problem and we have to attack it soon because this
is a devastating problem in western Canada, the
devastation of the roads—and also the weight, as you
mentioned, the heavy trucks. We don't know where the
limit's going to go.
The trucking industry want to be able to haul the
loads and yet—
Mr. Ken Epp: So do the farmers.
Mr. Wayne Motheral: Yes. I know. I avoid that.
I'm a farmer myself. I don't like to put blame on
farmers themselves, but they are certainly overloading
Mr. Ken Epp: What I'm hearing from farmers
is that with the federal government subsidy
and their transportation going down the tubes, combined
with the loss of the railroads, they now have to either
hire trucks or buy their own, and unless they are able
to carry substantial loads their costs to get their
product to market will simply drive
them right out of business.
So I think it's a much greater problem than generally
we're aware of. At least, I'll put it this way: I think
it's a much greater problem than the government in
Ottawa is aware of, because I think those of us from the
west are probably more aware of it than they are.
So, to me, that's one of the messages we have to
Mr. Chris Lorenc: If I may, those are all very
good questions because they touch upon something that,
quite frankly, is lacking in this country, and that is,
the whole notion of a national transportation vision.
What's the strategy of investment by the federal
government jointly with the provinces as it relates to
creating a national transportation system that allows
this country not only to remain competitive
domestically, but to compete with the opportunities
that are presented to our country through NAFTA and
And the first steps were really taken by the
Transportation Association of Canada and the national
highway system studies, which identified not all of the
highways in this country as being of strategic
importance to the country but 24,000 or 25,000
kilometres, principally following routes east-west and
strategic connections north-south. And why is
that important? It's important
because those sections of the Trans-Canada plus
provincial highways, if you will, carry the bulk of the
traffic, allow our trucking industry to be competitive,
and allow the costs of goods to remain competitive as
opposed to losing their competitive edge.
In terms of the technology, there's a bit of a tragedy
in this country. On the one hand, the federal
government invests in programs like NSERC, which was
referred to by President Anderson, which is a very
good program, and one of the programs that flows from
it is the NCE program, the networks of centres of excellence.
One of the networks of centres of excellence is ISIS
Canada, which stands for Intelligent Sensing for
Innovative Structures, which happens to be headquartered
in Manitoba but has research nodes in, I believe,
almost every province in this country.
And that research area is extremely important to the
future of the country because it deals with advanced
composite materials. It deals with using different
types of reinforcement materials in concrete. It talks
about the use of carbon fibre or metal fibres the size
of probably less than a quarter of an inch to reinforce
the concrete, which allows us to use less than half the
volume of concrete as compared to traditional
construction techniques which use rebar, etc.
And this is an area where the government is making
an investment in order to allow ISIS Canada to remain a
The problem is, the federal government stops
there, and instead of providing an opportunity to
showcase that technology, which is required—not just in
Canada but internationally—to address a $3 trillion
infrastructure deficit, we don't showcase it.
So there's a way of being able to invest in research
and to create technologies that are considerably more
cost effective, whether it's life-cycle costing,
repair, or new construction, which will not only
benefit the country nationally and enable us to address
the kind of standards you spoke of but will also create
market niches for Canada.
If we're not going to be the
builders of the space shuttle, let's be those who
design the best infrastructure and repair it best.
It's an opportunity for this country that we're
missing because we're not investing where we ought to.
Mr. Ken Epp: You're saying, then, that the
combination of research and using the new
technology developed by it would probably, in total,
cost the taxpayers of the country less than just
hanging on with the old technology and trying to keep
our roads and highways from falling apart.
Mr. Chris Lorenc: I would encourage you to take a
look at this brief, which consists of only 11 pages. An
entire section is devoted to the application of ISIS
Canada technology. The projects are found from
coast to coast. There's a carbon wrap material ISIS
Canada is pioneering that allows us to fix bridges
without shutting them down and to give them a greater
weight-bearing capacity than they were originally designed
for. There's a project in Winnipeg involving the
application of that carbon wrap
technology that will cut the repair costs by 50%—from
$10 million to approximately $5 million. That allows
that other $5 million to be used for other purposes.
But the kind of bridge deterioration we see in this
country is no different from what you see in Japan, the
United States and elsewhere. Those countries are
coming to Canada to take a look at the technology, and
instead of our nation showcasing it and positioning
our engineers and design community to have the
experience and know-how in its application, we're
sitting back and saying that all we're going to
do is invest
in the research and the rest will take care of itself.
It won't. It might work in the United States, which is
capital rich. It might work in Britain, Germany,
Japan, and other countries, but it can't and won't work
in Canada, because we're not anywhere near as wealthy.
We don't have the same level of risk capital and
Mr. Ken Epp: And we're spread out so far.
Mr. Chris Lorenc: Exactly.
Mr. Ken Epp: Very good.
I have one more question with regard to
infrastructure. I think probably the four of you,
at least in this area, are supportive of the federal
government's infrastructure program.
Mr. Chris Lorenc: Absolutely.
Mr. Ken Epp: You were all nodding your heads
That's quite different from what I hear in Alberta.
The thesis there is that there's only one taxpayer,
and that it's
best for the taxpayer to have as close to local control
on total spending as is possible. If the federal
government comes up with a program like this, basically
what they do is they suck into Ottawa all of the money
from across the country in the form of tax revenue, and
then they mete it out according to their prior
So we landed up in Alberta, for example, with
provincial government approval—I'm not going to blame
the feds for this—and we helped build skyboxes in the
stadiums for guys like Peter Pocklington. That's how
that money was spent, and many people have said to me
that it was just an obscene thing to have happen.
Also, representatives of several municipalities,
including the major one in my riding, said they would
not have spent this money now because they have other
priorities, but the other priorities didn't fit under
the program, so they had to reverse that. So here we
have distant Ottawa—and in our case distant
Edmonton—imposing on the municipalities what their
programs should be and turning their own priorities
upside down. There was some resistance to the
And of course the Liberals, as always, said there was
total acceptance in Alberta. Of course there was,
because they take our money, and if we don't involve
ourselves in the program, then we just lose it. So we
had to adjust and accept it. But it shouldn't be
interpreted just because you take the money
that you really think that's the best way of running the
program in terms of administering the taxpayers'
Now, I'm giving you a little speech here about some
feelings I've had expressed to me by persons
in my riding and in other parts of Alberta. Is
that feeling at all present in Manitoba? I suspect it
isn't, but I want your answer on this.
Mr. Chris Lorenc: Mr. Epp, I guess in a perfect
world every province would have a billion-dollar
surplus, as enjoyed by Alberta, and we
wouldn't have to rely on the resources going to Ottawa
and then coming back.
But the real world is different. The real world is
that we have only a handful of provinces that are
showing a surplus. We have the federal government
finally showing a surplus and finally making an attempt
to pay down the national debt. We have only one
province that's resource-rich and resource-lucky:
This country has been built not on the notion
that what's mine is mine and I'm going to keep
it and apply it as I determine, but on the basis of a
national vision. When you talk about infrastructure,
national highways, and strategic infrastructure
investments, those are all intended to make this
country equal. It's to give all of us an opportunity
to benefit by the economies that we can take advantage
of, as opposed to sequestering ourselves within the
boundaries of a particular provincial region and saying
that we don't really care how much money they have in
Saskatchewan, Manitoba, or Prince Edward Island. So I
would urge you to resist that kind of approach to
nation-building, because it doesn't approach nation-building.
Mr. Ken Epp: Okay, I hear what you're saying, but
at the same time, say we had a proper
federal-provincial system of equalization payments
based on a combination of population—education and
health care costs are largely a function of the size of
the population—and an additional factor with respect
to geography. Certainly I know that Manitoba is very
unique in the sense that your population is so largely
concentrated in a very small part of your province and
then it's very sparse in the rest. Some of the other
provinces are more equally distributed.
If there were
such a system devised, then the provinces and
municipalities would have a greater freedom to
administer the money that, quite admittedly—you're not
getting any argument from me—is pooled from all
taxpayers and then distributed outward.
But when you have programs imposed by Ottawa as sort of
“one size fits all”, then there are large inefficiencies
introduced. That's what I am hearing.
But I appreciate your answer. I expected that, and I
think it's probably valid for this province. So that's
Mr. Dave Harrison: If I may just comment, it's a
little bit disconcerting to hear the naysayers out
there. Look at the media response to the
infrastructure program. Unfortunately, what you
hear about are skyboxes, or something that was built in
Quebec that was not appropriate.
Look at the impact it had here. It was extraordinary.
Talk to anybody who was involved in the infrastructure
program, particularly in Winnipeg, which I'm familiar
with. The rural people will tell you the same thing.
When that program was announced, the city already had
their ducks in order. They couldn't wait to get
I think it really comes down to a question of
leadership. If it's a pooled resource and a
proper administration of transfer payments and all the
rest, there's still federal leadership required, in my
mind, to really get some of the strategic programs
under way, such as a national highways program,
the north-south trade corridors, and things of that
nature. There is a place for Ottawa in that, and I
don't think it is an imposition for the country. I
don't think it's imposing a program. I think if
it's looked at in the proper way, it's a real
opportunity. It was an opportunity, and it was well
received in this province, I can tell you that.
Mr. Ken Epp: It's as if somebody were to take
all my money from me and then say they were now buying so
many lemon pies of which we will all get a certain
portion. I can't eat lemon pies, because I'm on this
strict diet. You can tell by looking at me.
You see, that's what I mean when I say this.
Mr. Dave Harrison: Yes, I know.
Mr. Ken Epp: There were definitely municipalities
in my part of the world whose priorities had to be
turned around in order to participate in the program.
We did it, fine, but we ended up with some things
undone that should have really taken priority ahead of
I think that's all I want to say on that area.
I'd like to ask you something with respect to taxation and
fuel revenue. This goes into the general revenue, the
consolidated fund of the government. You indicate
correctly—this is true across Canada—that a very
small proportion of the money collected by the federal
government on fuel taxes is actually returned to the
transportation infrastructure. We get big complaints
from airline and railroad companies who also have to
pay the fuel tax,
example, the railroad companies largely maintain their
own roadways, although they're increasingly using the
public highways as well.
Are you supportive of some formula that says a
proportion of that tax should be returned to
transportation, or maybe the tax reduced and all of
it used and the tax adjusted as the needs for
transportation infrastructure are increased? Are you in
favour of that kind of an idea? How would you handle
Mr. Chris Lorenc: We have consistently suggested
to the federal government that they look at the model
of the United States. In our five-page brief, on page
3 we provide a contrast in the approach between
the United States and Canada.
In the United States, investment in highways is seen
as an economic tool. There's a recognition that
highways are a key component, part of American capital
infrastructure, and they support economic competitiveness.
They've just adopted legislation, T-21, which injects
an additional $160 billion into their interstate
highway system. A national highway system—the same
thing we're talking about in this country, and it's
still a pipe dream. They're investing $160 billion
over the next six years.
The economic impact of that $160 billion investment in
the United States, based on an analysis done by the
Wall Street Journal, is $450 billion. The reason
they are able to have the kind of system they have,
minimizing their life cycle costs and replacement costs,
is that they have a national highway trust fund.
Of every gallon purchased in the United States, 18.3¢
is invested in a national highway trust fund. Those
moneys, based on that legislation, can only be going to
repair, rehabilitation, and construction of their
interstate highway system. That's what makes America
competitive, and that's what makes us uncompetitive.
The short answer to your question is, we believe there
ought to be the principle of dedicated fuel taxes
applied at the federal level. Every government member
we've spoken to, every administrator in the finance
department we've spoken to, says this is not the United
States, we don't do it that way. All right, if you're
not going to do it that way, then tell us, please, how
you're going to fund a transportation system that meets
Canada's needs short and long term, because right now
you're not doing it.
Over the next five years, the federal government will
recover $25 billion in road-use field taxes. Of that
$25 billion, $900 million goes to Quebec, Atlantic
Canada. None of it, not a penny, comes back to western
Canada. That's unacceptable.
Mr. Ken Epp: I agree with you 100%.
Now, Mr. Chairman, I'll still full of questions, but
I've used 20 minutes—
The Chairman: Keep going.
Mr. Ken Epp: Why don't we give other members a
The Chairman: Keep going. You have
questions, ask. Take another five minutes.
Mr. Ken Epp: Oh, do you want me to carry on? Then
I won't get back?
The Chairman: Probably not.
Mr. Ken Epp: Okay, that's fine, just as long as I
I would like to talk a little bit to the Jacks
Institute and taxation. A large
part of the solution, in your view, is that interest
payments are rather overbearing on us, and if I read
your report right, you're recommending that the federal
government should spend any achievable surplus on debt
reduction in order to reduce interest payments. Am I
right in reading that?
Ms. Evelyn Jacks: Yes, I believe we mentioned two
priorities, debt reduction as the major one, and any
remaining fiscal dividend on, primarily, health care.
Mr. Ken Epp: Okay. You don't see a general tax
reduction as a valid goal?
Ms. Evelyn Jacks: I believe in my brief I
mentioned any such measures to reduce the debt
have to be done over a period of 10 to 20 years. We
don't see this as an either/or situation, because
obviously there's also another very important component
in the brief, which is the consumer power of the middle
We mentioned in there that the middle class
should in fact receive some kind of tax break on a
broad-based basis, but not at the expense of what we feel is
really the root cause of reductions in program
spending, which is the $45 billion interest payment
on the debt.
I remember quite clearly in 1985, when we went into a
period of tax reform, that resulted in us having
de-indexation of tax brackets and tax credits, the
introduction of the minimum tax, and the conversion of
personal exemptions to tax credits. At that time,
Canadian taxpayers were sold on that concept, because
the finance minister of the day said that $35 billion
in interest payments on the debt was simply
Now—what is it, ten, fifteen years later—we're
finding we're paying $45 billion in interest on the
debt. I'm surprised, personally, that governments
have not pointed to this recently as a major deterrent
to program spending.
Mr. Ken Epp: Yes, it is a fact—little known
because of the spin that's put on the story. We need to
commend the government for resisting the temptation to
spend all of the surplus. If it weren't for that,
they would have added over $100 billion to the debt
since they came into power, and with more debts you have
more interest to pay.
Ms. Evelyn Jacks: I think it's particularly
important to point out that, as to future generations,
the kids coming up underneath us are fewer in number.
That means the tax base is going to be less broad. I
believe it's irresponsible of our generation to leave
them with this kind of a mess.
Mr. Ken Epp: Yes, I agree with you.
One of the ways of achieving relief for both
middle-class taxpayers and those we're actually taxing big
time who are by definition living in poverty in
our country would be to just increase, rather
substantially, the basic exemptions. I'm just wondering
whether you or the people who you talk to would be
supportive of this as a means of achieving some tax
That way, many of those who are at the lower level of
income would end up paying no taxes at all. Those who
are in the middle level of income would have a greater
portion of it that wouldn't be taxed at all or at a lower
rate. Up above that level, it could probably remain
the same. Would you be supportive of a move like that?
Ms. Evelyn Jacks: In our brief we mentioned two
items. The first one is we didn't feel it made sense
to tax the poor. That all surrounds the definition of
what poor is and what the poverty line is in
Canada. It is a fact that households with two people—a
young single mother and a baby, for example—are
amongst the poorest in the country. Therefore, it
doesn't make sense when someone is making around the
threshold level of $7,000 a year that taxation starts
at a rate of about 27% here in the province of
Manitoba. At what threshold level does it really
make sense to tax the poor? I think that's an
But also in this country we have an invisible tax.
It's called bracket creep, and it exists because we do
not have full indexation of our tax rates, our personal
credits, or even the thresholds at which we pay the
child tax benefit. So, for example, if you've got
someone retiring and they've got combined pension
income sources of around $29,000, if they are
withdrawing money they've been saving over their
lifetime out of their RRIFs or RRSPs, they find that
those withdrawals are now taxed away at 42%. Now as
Canadians we have to ask ourselves, do we want to tax
people whose incomes are purely middle class at 42%,
especially seniors, who perhaps have a tax credit of
27% for those very same income sources they're now
Mr. Ken Epp: I get those comments a lot from
seniors who skimped and saved to look after their old
age. Now they're sometimes quite distressed because
their income level prevents them from getting the
maximum benefits from the old age security system, and
at the same time they're taxed to the hilt on the money
they did save as they withdraw it. They're finding
also, in my province—and I presume this is true right
across the country—that there's been a substantial
reduction in the benefits seniors have enjoyed. Now
they're ending up paying more property taxes, and that
has to be paid with after-tax dollars, and it just
really erodes their savings.
The Chairman: Thank you, Mr. Epp.
Mr. Lorne Nystrom: Thank you, Mr. Chair. Maybe
I'll just continue on in the same order here. I
think Mr. Epp asked a lot of questions about
infrastructure, so I'll continue on.
Ms. Jacks, you were saying there should be legislation
to make the deficit illegal, or to prohibit a
government from deficit financing. Over what period of
time would that be? Each year, each cycle, each
Ms. Evelyn Jacks: Well, again, our general
feelings...and certainly, we spent a lot of time
talking to other tax practitioners and financial
planners across the country, so some of the comments
that have come out today are comments and observations
these people get directly from their clients. I think
overall Canadians understand the challenges of the
deficit and the debt. They also understand that they value
their social programs and the spending that has to go
together with that.
So I think our main message is you can't do this
overnight, but there should be a plan in place. You
know, certainly there some generations in Canada who've
never in their working lifetimes known a deficit-free
year. There are some generations in Canada who have
never in their working lifetimes ever heard the word
“surplus”. Those are the people who are going to
be the broad tax base 20 years from now. So I
think...no, we can't do this overnight. But to see a
plan in place to reduce not just deficits but debt in
general is what we're looking for.
Mr. Lorne Nystrom: But a comment you made was you
wanted legislation to make, I think, the deficit
financing illegal or against the law.
Ms. Evelyn Jacks: Right.
Mr. Lorne Nystrom: We now have a surplus.
You could do that if you wanted as a priority today.
But I asked that in a positive way. I come from
Saskatchewan, and the NDP government there historically
has been one that balances books. The party's been in
power for 38 of the last 54 years, and that's
the legacy of the NDP in Saskatchewan with Tommy
Douglas or Allan Blakeney. In more recent times,
in 1994, it was also the first government in Canada to
balance its books under Roy Romanow. So I asked that
in a very supportive way.
But I've always been a little bit nervous about having
a piece of legislation that says you must balance your
books every year, because that can handcuff a
government in times of an economic downturn. Over a
cycle might be a different thing, over the course of a
Parliament, or a four- or five-year period. But you're
not advocating to do it absolutely every year and that
come hell or high water the books must be balanced, are
Ms. Evelyn Jacks: That's correct.
Mr. Lorne Nystrom: This would be over a period of
time then, not every year.
Ms. Evelyn Jacks: That's correct.
Mr. Lorne Nystrom: Okay. I'd like to ask Mr.
Harris a few questions, if I may. Welcome to the
I like the title of your organization: Cho!ces. I
think that tells us what it really is. It's a matter
of choice. As we've heard again today in Winnipeg,
there are a number of possible choices: infrastructure,
medical research, R and D. This morning we had a very
moving presentation on behalf of child poverty and
hunger, and I think in Manitoba you have the highest
rate of child poverty anywhere in the country, at least
in the city of Winnipeg. In Saskatchewan farm incomes
dropped by 84% in the last year—this is net farm
income. And we heard a plea for some emergency
assistance. So there are a lot of different competing
positive choices out there that we'd like to fulfil.
One interesting thing you've said to us that others
haven't said is that there is more revenue out there.
Can you explain to us where this revenue is? Would you
take it in terms of a taxation system that is different
from what we have today, or would you talk about more
wealth creation in terms of growing the economy and
taking some from that, or is it a combination of both?
And what is the rough balance between the two?
I've been looking at your figures here, and there's a
considerable difference in terms of several billions of
dollars between the projections of Paul Martin and the
projections you are making in terms of your alternative
Mr. George Harris: I'd like to speak to the last
part of what you asked there. Regarding the growing
the economy aspect, one aspect of growing the
economy—and we did hear a little bit before about the
infrastructure deficit.... At times when people
look at money spent on infrastructure, they look at it
as a waste. If you look at spending and you look at it
as an entire waste, it's a problem, because the thing
is that's an investment that does return—it does
return. The moment business does not have roads on
which to move its goods and perform its services,
business is going to suffer appreciably. So you've got
I'll stick with the infrastructure because there has
been so much talk about infrastructure today. There is
a growing economy when you put money in there and
you're paying people. People are not unemployed;
they're not drawing different forms of assistance.
That investment in infrastructure, if it is wisely
chosen.... I'm not talking about these boxes that
happened for Pocklington. I'm not
talking about that kind of investment, the SkyDome
kind of thing. I'm talking in terms of spending in
areas that are important to meet a national
infrastructure vision, that kind of thing, something
that is clearly designed for the benefit of all of us,
not just a sinkhole for pouring money down.
So you look at that, and it doesn't end with that
individual who receives the money; that individual has
the resources to spend it again within the economy, and
it goes around. So growing the economy by spending is
one thing. The multiplier effect the economists talk
about is there.
With the spending in areas that are not as
tangible, one of the big problems we have within our
country is that when something is not very tangible—and I
gave one example earlier—that does not readily get
support, although even tangible items like the
infrastructure program are not necessarily getting a
So you have spending in areas such as
preventative health care. Spending there is not
spending that is entirely lost, because if that's going
into the hands of people, that again can contribute to
the community, but there is also the other side, which I
mentioned. One simple example is what the future
economic burden of not spending would be. So there's
There is lots of potential for growing the economy,
because there are spin-off effects, and that does have
the effect of reducing dependence on the unemployment
funds or the EI pay-outs, the reliance on social
assistance, and so on. There is a revenue end, of
course, because people who are working are paying
taxes, and so on.
As to other revenues, some of you may or may not be
aware, but I'm personally involved in a lawsuit that
involves the federal government. It is a lawsuit over
which a very wealthy family trust moved money out of
the country against
the provisions of the Income Tax Act, according to
what the Auditor General reported. This is something
that governments can act on and take a serious look at.
In this case, it's not specifically tax expenditure,
but we should look very carefully at tax expenditures to
see that those are bona fide. I'm not all out against
tax expenditure, but I'm certainly against something
that is not bona fide tax expenditure.
Mr. Lorne Nystrom: I wonder if you want to put on
the record the family trust and roughly how much money
we're looking at.
Mr. George Harris: It's hard to estimate.
The amount that was moved out of the country was $2.2
billion. This was during the previous government.
Mr. Lorne Nystrom: Was that $2.2 billion?
Mr. George Harris: That's $2.2 billion.
It's estimated there was
between $500 million and $700 million in terms of tax
revenue that was foregone.
Mr. Lorne Nystrom: Who is the family?
Mr. George Harris: The Globe and Mail
identified the family, but I don't personally know
them. I'm sure a lot of people have heard the
So there's a fairly large area of tax expenditure, and
I think there are good areas where tax expenditure can
in fact be very effective. But I personally would like
to see tax expenditure undergo the same level of
scrutiny as direct expenditure.
Unfortunately, tax expenditure doesn't often undergo
the level of scrutiny that direct expenditure does,
because it's just done; it's just tax forgone. The
person who's been given the tax relief is, of course,
happy, and income tax is regarded to be a private matter
between the taxpayer and the government.
Mr. Lorne Nystrom: I notice in your paper you talk
about global spending in 1999. Paul Martin's
projection is $152 billion, the alternative federal
budget is $166 billion, and the difference is about $14
billion. Is most of that made up through different
sources of income, in terms of taxes? That's a very
short period of time to grow the economy that much
faster to make up for $14 billion.
Mr. George Harris: There is the growth in terms of
direct expenditures and the spin-offs. In terms of
generating these figures, just so you're familiar, we
try out a few different ideas. One of the things we're
trying out right now is setting up a web site where
people can try different things. I'll use the
infrastructure example—put a bunch more money into
infrastructure and see what happens to the overall
budget figures. Put so much into education and see
what happens. Put so much into health care—and so on.
People can adjust the figures and turn out results.
This has been done successfully in the United States,
where people are able to take a look at the federal
government and look at what the results are.
So to explain what happens here, we come up with
ideas and throw things out. Informetrica does their
Mr. Lorne Nystrom: Michael McCracken.
Mr. George Harris: Yes. So it's not simply that
you spend so much money and automatically get so much
back. There is this whole area of the various
multipliers and so on.
Mr. Lorne Nystrom: I want to ask the gentleman
next to you a question in his capacity as a farmer,
more than in his capacity as an official
representative. The Prairie Pools made a recommendation
to us to have an emergency farm program, in terms of
the crisis now facing agriculture, particularly in
Saskatchewan, where net farm income has dropped by 84%
in 1997 and is down again in 1998.
I know it's not as severe in Manitoba, where it's 30%
to 40% because of the different crops you have. But do
you think the time has come when we need some emergency
aid? We've done this a few times in the past as a
country—you remember Diefenbaker's deficiency payments
and $1 billion during the Mulroney days, and so on.
Can you tell us whether or not you're facing a similar
crisis in parts of Manitoba, as we are in Saskatchewan?
Should that be part of the budget? Part of Manitoba,
of course, is similar to Saskatchewan, but....
Mr. Wayne Motheral: I can give you a personal
opinion on this, of course. I'm not representing the
Union of Manitoba Municipalities in this case.
The family farm is in jeopardy right now, and that is
certainly evident in Manitoba, as it is probably in
Saskatchewan, and possibly Alberta too; I don't know. I
realize there is a small crop insurance program that
our particular government says is supposed to cover
things, but we're in a situation in Canada right now
where we depend, of course, on the export of grain.
With the world situation the way it is, with the
European Union and the American government, we are left
as a kind of have-not country at this stage.
On the rules with the free trade and NAFTA and the
whole thing, we've kept up with those situations, but
it's been at the expense of the farming industry.
So on your question of whether I feel there should be
assistance in the short term, I would definitely say
there's more of a need for it right now than there was
in the past.
Mr. Lorne Nystrom: This would also fit in with the
idea Mr. Harris was talking about of the injection of
cash into a program, where the farmers, the poor ones
in particular, would spend the money right away. They
would have to spend it. It would certainly not be a
violation, in my opinion, of any trade rules. The
Americans have just passed a bill through Congress to
subsidize their farmers by $6 billion a year.
The Europeans subsidize wheat producers there now by
about $200 a tonne. So there's no level playing field
It's not the fault of the farmer who is very
productive in this part of the world and works very
hard. It's just the fault of the international trading
partners and what's happening to the world market,
compounded by what's happening in Asia in
terms of the fewer exports now going to Asia and the
affordability question of purchasing our goods and
I think our committee has to look very seriously at
recommending something specific in terms of injecting
some money into the economy to help a lot of farmers
stay on the land, and provide some growth spin-offs in
terms of the economy in general.
Mr. Wayne Motheral: Certainly I agree with that.
I'm a farmer myself. Any time a farmer gets $1 in his
pocket, he'll spend it. That certainly would be a lift
to the local economy.
Mr. Lorne Nystrom: I know when a farmer gets $1 in
his pocket, he spends $2. Or is that only in Brandon
Mr. Wayne Motheral: I could comment on that. I
have to watch the way I'm talking because I am
representing the municipalities today and I know it's
just a personal comment. I'm sure the Keystone
Agricultural Producers, the farm lobby group, would
have a bigger comment on that.
Mr. Lorne Nystrom: Sure, or Manitoba Pool
Dr. Anderson, in terms of the present university in
Brandon, I have a couple of questions on research and
development. We had a very graphic presentation
yesterday in Saskatoon, complete with overheads, on the
need for more investment in medical research, and
certainly you're reinforcing that today. You're
telling us our R and D budgets or expenditures in
general are down to about the level of—was it Ireland
Dr. Dennis Anderson: Italy is the only one in our
league. All the other G-7s are well ahead of us.
Mr. Lorne Nystrom: Can you tell us what's happened
in the last 20 years in terms of the relative
expenditures in this country compared to the G-7? Have
we been dropping more rapidly than a lot of them? Are
we doing better than anyone?
Dr. Dennis Anderson: I don't have the figures for
the rate of decline in research and development
expenditures. I do have some figures for the rate of
decline in total funding of education in Canada
relative to some other countries. For example, over
the last 20 years there's been a 43% reduction in the
federal funding per student for education. Half of
that reduction has occurred since 1993.
There's been a very rapid rate of decline in those
overall expenditures on education. That's government
support—I'm sorry, I said federal, but it's
government support in Canada. Obviously the federal
government doesn't fund education directly other than
through research, but through the transfer payments
they do. So over the last 20 years there's been a 43%
reduction in funding. In 1978 there was total
government funding per student of $8,900, and in 1998
it's $5,100. Again, half of that reduction has occurred
in the last five years, so the rate of decline has been
Mr. Lorne Nystrom: Is that in constant dollars?
Dr. Dennis Anderson: That's in 1986 constant
dollars. In comparison, in the United States during
the same 20-year period, there's been a 15% increase in
the funding dollars per student by all governments for
On the research and development side, the thing that
is most relevant to the universities is the decline in
funding to the federal granting councils—SSHRCC,
NSERC, and the Medical Research Council. There was a severe
decline in that over the last four or five years. It
was corrected slightly in this past year, but the
funding levels in 1998 are still well below what they
were in 1993. There is a tremendous shrinkage there.
We all know—and there was a discussion here in terms
of the infrastructure program with the highways, the
bridges, coming up with new types of materials and new
construction procedures—that just doesn't happen by
chance. It happens through targeted programs of
research and development—people with white coats on
sitting in labs who you don't see in the general
public very much. It's that basic research. It is
moving to applied research, pilot projects, and
demonstration. A lot of that basic research and some
of the applied research occurs in universities.
That's why we're so concerned.
Mr. Lorne Nystrom: I think in general what we've
seen is a radical downsizing of the federal government.
It's now the smallest federal sector that we've had
since the Second World War. That's before medicare
came in back in the late 1940s.
What we're hearing
across the way is that we have to do a lot more
investing in the economy. Your sector is certainly one
of them. I think the United States spends eight times
as much in medical research than we do as a country.
Dr. Dennis Anderson: The overall expenditures on
research are certainly different by a factor of two or
three at least, if you look at the kinds of research
that are funded at universities.
Mr. Lorne Nystrom: So we have a lot of those
fields in terms of having a vision for tomorrow and
where we want our country to go. I think your message
is to start investing in the future. This morning was
invested in kids and child poverty and issues of that
sort that are extremely important as well.
Mr. Chair, Ms. Bennett has been champing at the bit to
get on, so I had better give her the floor.
The Chairman: Good idea.
Ms. Carolyn Bennett: Thank you. Maybe I'll continue
with Dr. Anderson.
One of the things concerning the students we
heard from this morning was the accessibility issue.
Certainly, universities have a problem if there has
been decreased funding, as you described. One of the
responses has been increased tuition.
Dr. Dennis Anderson: Yes.
Ms. Carolyn Bennett: One of the parallels that has
been articulated has been accessibility as one of the
tenets of the Canada Health Act. Do you
think there would be a place in terms of post-secondary
education for some national standards on accessibility
that might include some sort of limit on tuition?
Dr. Dennis Anderson: There's no doubt that tuition
has gone up. There has been approximately a 20%
reduction in federal transfer payments to the
provinces. There has also been a parallel 20%
reduction in the core funding of universities on
average in the province. So there's a direct relation
there. This has made it necessary for universities to
look to their other revenue source, which is tuition,
and then increase that. It has gone up many times the
rate of inflation over the last four or five years.
It creates accessibility problems. We hear about it
every day, being a regionally based university serving
rural northern and remote Manitoba. About 25% of our
students are aboriginal and with major accessibility
The national figures on the proportion of the
university-age cohort, which is 18-year-olds to
25-year-olds, that indeed goes on to university is
something around 20%. In Manitoba, it's 16% or 17%,
among the lowest in the country. So we do have an
accessibility issue here.
I don't know about the national standards on that.
Ms. Carolyn Bennett: I guess my question is this.
Some of the universities that are the best at
fundraising seem to have the highest tuition. It seems
that in an effort to be world-class as an academic
institution, should there be a say that the federal
government has in maintaining accessibility
particularly for these kids? I think the kids who
have the most difficulty thinking about going
to university are the most likely to be deterred
by high tuition or the potential student debt.
Dr. Dennis Anderson: I think there's a role for
the federal government. I wouldn't say it would be in
setting any national standards. I think they can
choose the positive side, which is providing incentives
and assistance. They have done so with the Canada
Millennium Scholarship Endowment Fund. It
will take effect a year from now and will be assisting
students. That's a major, positive move. They're
going to make an individual's need the primary basis for
allocating those funds. They will have merit such that
5% of the fund will go out on that basis. So that will
It's important to clarify something when you're
talking about tuition and student debt. Tuition
overall is only about one-quarter of the cost of
providing the education. When talking about student
debt, the media often get it wrong. They refer to the
average student debt as $25,000 or $30,000.
Well, that's not
true. Depending on the university, between 10% and
25% of their students have any debt at all, so the
average figure of $25,000 is of those who have debt.
That is often missed.
So tuition is still a bargain in this country. It's
among the lowest in the world. Internationally, we try
to attract students and we are successful, even though
we're located in Brandon and we're a small university,
because university education is still a relative
bargain here in Canada compared to other countries.
Our international student fees also position us as one
of the cheapest, if you like, places for an
international student to come and study.
Ms. Carolyn Bennett: To repeat that again, the
tuition is what percent of the cost?
Dr. Dennis Anderson: Tuition on average is 25%
of the total operating costs of the university at our
place. It is lower at some of the major graduate
school places. The average figure across the country
would be somewhere in the low twenties, as the proportion of
the total educational cost provided through tuition.
Mr. Lorne Nystrom: Just to ask a little
supplement, this morning on your microphone we had a
representative from the Manitoba Federation of Students
or the Canadian Federation of Students. I think she
was saying fees represented what, 38% or 39%? So her
figures are quite different.
Dr. Dennis Anderson: Yes, my figures are more
applicable to this province perhaps, and I know in some
jurisdictions the fees are a higher proportion. In some
institutions, though, they are lower. Mine are more a
provincial figure than a national figure.
Ms. Carolyn Bennett: So if an institution decided
to double it again, do you think that should be okay
with the federal government?
Dr. Dennis Anderson: No, I don't think so,
though I have difficulty envisaging what role the
federal government could take in that. I think the
Ms. Carolyn Bennett: I guess what people are
saying is accessibility in the Canada Health Act is one
of the levers government has in terms of the transfer
Dr. Dennis Anderson: Yes.
Ms. Carolyn Bennett: I think what the students or
the people calling for some sort of national standards
are saying is there should equally be an accessibility
standard the federal government could have on
Dr. Dennis Anderson: Well, I don't have
particularly deep knowledge on the matter of standards.
I do, though, want to emphasize the—
Ms. Carolyn Bennett: But say you could take it as
a percentage of cost, that you couldn't ever go more
than 50% of your costs on tuition—
Dr. Dennis Anderson: Well, some provinces have
done that. Alberta has said tuition fees can be as
much as 30% of the costs, and they monitor that quite
closely. I think there's more of a provincial role, and
we see it in Alberta. It may be in existence in some
other provinces, and it may spread.
So there would be standards, if you like. They would
vary by province, and I would think it would be the
provincial governments that would implement them.
Ms. Carolyn Bennett: I was interested in the
support you had for the Canadian Institutes for Health
Research, and I guess there had been some concerns
that in the virtual set of institutes only the medical
schools had been linked in the early part of the
proposal. If we are going to deal with the social
determinants of health, like poverty and violence in the
environment, and actually do research in health care
delivery as well as population health and everything
else, there are many universities or academic centres
that don't actually have a medical school in them. We
would hope this institute for health research would
have the broadest possible sort of definition of
Do you at Brandon feel comfortable that this new
proposal has been sufficiently broadened that you think
this committee should support it?
Dr. Dennis Anderson: I think we need to watch
and ensure it is broadened. The Association of
Universities and Colleges of Canada has endorsed the
proposal, but with a number of qualifiers, and they are
along the lines you have mentioned. You expressed it
Statistics that would underline the comments you made
indicate there are 89 universities and colleges in
Canada. Only 14 of them have medical schools. Those
aren't the only places where there are researchers who are
doing research that is relevant to population health.
That needs to be understood. So the terms of
reference for any expenditure that goes toward this
virtual health research network have to be broad enough
to incorporate the full spectrum of the institutions.
At my little place—and we have about 3,000 students
and a $20 million operating budget; it's one-fiftieth the size
of the University of
Toronto and one-tenth the
size of the University of Manitoba. We provide
students who enter medical school and virtually every
Research is very important. We have researchers who
are working in the areas of health care ethics
and the aging population, particularly in the rural
regions. We have psychiatric nursing. They are
interested in doing some clinical research on the
mental health side. We don't have a medical school,
but even in our small place we do have faculty members
in science who are doing things close to what could be
done in medical schools. But in our arts faculty, our
health studies faculty, and even in our faculty of
education, people are doing research that would fit
very well within the population health definition, not
necessarily the narrower definition of a biomedical
approach to health.
Ms. Carolyn Bennett: Mr. Harris, with regard to
the AIDS strategy, some of us have been concerned that
only the diseases that have been politicized have ended
up being treated separately from the regular MRC
funding. As you are well aware, the prostate cancer
people are very upset because the same number of people
are dying per year as from breast cancer. The breast
cancer people are upset that although ten times as many
people die of breast cancer in a year than die from
AIDS, the funding is ten times the other way. We've
ended up with this rather nasty little competition,
which I don't think you meant in your presentation from
Cho!ces. It shouldn't depend on how successful a
lobby group is or how many deaths occur per year. That
“we or they” approach probably isn't a good way to
health research funding. Do you have a suggestion
as to how we could do this better, or is it always
going to be that the diseases that get most politicized
get the most money?
Mr. George Harris: I certainly hope
it's not that way. I gave the example because it
happens to come from my workplace. Even
within Cho!ces I may not have
wholehearted support, because people believe very
strongly in support in other areas.
What the illustration was intended to do is show this
is a critical matter for all of us, and we have to look
at many of these things not so much as a sinkhole for
spending but more as an investment. When we're talking
in terms of education, we need trained people to
effectively work in the various fields in our society.
So that's an investment. I'm quite
distressed when people look upon these things as simply
sinkholes and wasted money.
Certainly, you are correct that the conditions that are
most politicized tend to get more. The reality is at
the moment we're terribly underfunded for all
conditions. I think that is the reality, not just in
terms of identifying it as AIDS, hepatitis C, breast
cancer, or whatever, but even in general health.
I come from a process where people speak with
considerable authority in different areas, and I'm not
the best person to speak about the health area. Rather
than talk about remedial intervening at that point, I
would like to see a lot more in terms of preventative
health care, which is an investment that is a lot
better for our society as a whole.
The tragedy of a
person who comes in the door of my office and wants to
talk to me because they say, I am scared, I was just
That's whether you're talking about
breast cancer or something else. I'd like to see the
investment more up front and not leave things to the point
where we are.
Ms. Carolyn Bennett: I would like to
say that in terms of not only what we do, but how we do
it, we've learned a great deal from the AIDS
initiative. I think when Gordon Floyd spoke for
the Canadian Centre for Philanthropy he was very
positive about the way the AIDS dollars have been
spent. It has been a collaboration with the
stakeholders, so we have seen an appropriate and
good buy-in for how much is on public education,
prevention, community support, and how much is on
research. I think it's a good example for
government to follow in lots of areas.
My last question is for Ms. Jacks. I do want to just
say that your brief has been one of the most
interesting and thought-provoking we've seen. I
think it's the kind of thing I love to see on
paper because they are things that I think
some people think about in terms of fairness or
My one question was about something a lot of us have
talked about for a long time, and that is, people who
write cheques to charities get tax breaks, but the people who
spend hours and hours of their time don't. Do you
think that's something that's doable? There are some
charities that are able to keep hours. I think some of
the hospital auxiliaries are ones that actually do
clock the time. Do you think the volunteer
sector is ready for this in terms of being able to give
somebody a voucher for how many hours they've put in,
which they would then attach to their tax form, or is it
something that will take us a while to get there?
Ms. Evelyn Jacks: When we were putting this
together, we weren't thinking of the administration. I
think it's just as easy to give a voucher as it is to
give a tax receipt. So I really don't see that as a
Ms. Carolyn Bennett: But I'm thinking, what if keeping
track of all of those hours might be yet another thing
that charitable organizations are asked to do?
Ms. Evelyn Jacks: I personally don't see that as a
problem. I see it as a bigger problem to waste the
energy of youth, for example, particularly disadvantaged
youth, for one reason or another, who truly want to
give back to society, and also, on the other side, perhaps
people who are ready to retire in the commercial sense
but not in the giving back sense. Certainly, these
thoughts are more for the disadvantaged and the poor in
society who still feel the need to self-actualize.
Ms. Carolyn Bennett: So some of these people who
actually are helping at their local community could
actually end up paying less tax.
Ms. Evelyn Jacks: Certainly there would have
to be a lot of thought put
into this, but in terms of the whole issue of what is the tax-free
zone, perhaps the tax-free zone could be raised in
conjunction with time given back to the community.
Ms. Carolyn Bennett: Do you know offhand how much
it would cost for us to raise the tax-free zone? I was
trying to figure out if there's somebody earning minimum
wage who really makes not much more than $10,000 a
year. Is that—
Ms. Evelyn Jacks: I don't have the figure of what
it would cost you to do that. I think you'd have to
look at two things, first of all: the tax rate
structure versus the refundable tax credit structure.
Then the two together would have to be computed.
We often see erroneous information with regard
to the products
of the tax system. The reason
it's erroneous—for example, why marginal tax rates
are often coded incorrectly—is that they don't always
take into account the refundable tax credit structure,
which actually brings down marginal tax rates for
One thing that's very interesting, for example, about
the new supplement—the basic personal amount—is it
creates a new marginal tax rate structure for low-income
people. If your income is under $20,000,
between $6,456 and $20,000, for
example, you actually have a clawback zone of this
increase in the basic personal amount. The same is
true with the new 3% surtax reduction. We actually end
up with a new clawback zone.
We have a very complicated tax structure where it's
really difficult, because it depends not just on your overall
level of income but where your income comes from, to
really accurately say what your bottom line tax rate
That's why we have difficulty with those numbers.
Ms. Carolyn Bennett: I think one of the calls on
the government has been to increase personal
exemptions, something that we could do that would help
Ms. Evelyn Jacks: In particular, because we
haven't had indexation, if we have a single mother
making $8,000 a year, I really have to question whether
it's fair to take away by virtue of taxation one-third
of the difference between $6,456 and $8,000.
Ms. Carolyn Bennett: I think people on disability
pensions are falling about there, too.
Ms. Evelyn Jacks: Yes.
The Chairman: Thank you, Ms. Bennett.
Mr. Valeri has a question.
Mr. Tony Valeri: Thank you, Mr. Chairman. I have
a quick question for Ms. Jacks.
In your presentation you talk about the debt and the
interest payment on the debt. When I go through the
presentation, am I correct in interpreting that
essentially what you would do with any surplus would be
to pay down debt first? So would you attach the entire
surplus to paying down debt or a specific percentage of
Ms. Evelyn Jacks: My personal view would be to do
this over time, to put the majority of the fiscal
dividend into debt reduction over the next 20 years,
because you have a large base of taxpayers who are
still relatively productive who can produce the tax
revenues that allow you to do that.
I believe 20 years from now you're going to have a
problem as a government in terms of the size of the tax
base to allow you to make any effective run at that
debt. So I believe we have a 20-year window on really
making substantial gains in paying down the debt.
For that reason, the broad base of productive taxpayers
with—the majority of fiscal
dividends should go towards debt reduction, in my view,
but certainly not the entirety, because in that same
20-year period of time you're going to have increasing
social needs. So there has to be a balance of some
Mr. Tony Valeri: If we were to take a 20-year
period, essentially you could probably assume that any
sort of fiscal dividend that might appear, at least
within the realm of the numbers we're talking about
right now, would go entirely to pay down debt. But
you're saying, let's take a longer approach to debt;
let's ensure there's a commitment to pay down debt, but
at the same time make sure there's some reinvestment.
Ms. Evelyn Jacks: Correct.
Mr. Tony Valeri: Okay.
I want to get some
feedback on the proposal for infrastructure and the
argument that was put forward, which essentially is the
argument of a dedicated tax, dedicated revenues. I
wouldn't mind hearing perhaps a comment from the
On the concept of dedicated tax, you argue that there
should be specific revenues dedicated for roads. But
others would argue, why stop with roads? Why don't we
have a dedicated tax for health care, for education,
for roads, for employment, for whatever you can think
of, to buy staples and staplers? Why don't we earmark
all of the revenues for specific things? I'd like to
hear some feedback on that.
How would we then deal with any sort of catastrophe
that might present itself, like the floods, like
hepatitis C, like other things?
Underlying my question is this. With the earmarked
concept, the concept of dedicated taxation, you really
eliminate any kind of flexibility. If you run out of
money in a particular envelope, what do you do? If you
run out of money for roads in the envelope of dedicated
revenue, you no longer fix roads until there's money in
that envelope. If you run out of money in health care,
you run out of the possibility of doing anything for
So if you're going to dedicate it coming in, do you also
dedicate it going out, which means that what you have
are essentially expenditures that are strictly on a per
capita basis, or strictly on a money coming in, money
going out basis, which would mean the way it's presently
configured, Alberta, Ontario, and British Columbia
would do a lot better than other provinces that are not
as well off in this country?
that speak to any sort of nation-building?
Mr. Chris Lorenc: I'd like to try to answer that
question. First of all, on the history of the gasoline
taxes, if you examine the record of the House of
Commons, Hansard, and take a look at how they
were introduced at the time they were first considered
by most of the legislatures of the provinces, you will
see the tax was implemented specifically for the
purpose of reinvesting in the transportation system.
When over the
ensuing decades it became convenient for government
to apply those funds to general
revenues, that's where they were applied.
The reality is we have an
infrastructure deficit in this country that is—
Mr. Tony Valeri: I'm not arguing that. But others
will point to the fact that the taxes were there to fund a
Mr. Chris Lorenc: Yes.
Mr. Tony Valeri: So you can make that argument about
a lot of things.
I'm not attacking what you're saying.
What I'm trying to do is to get some feedback on the concept of
dedicated taxation. There's an argument going
on in this country right now where some say there
should be more dedicated taxation and others argue there
needs to be greater flexibility so that governments can
respond. Those on the side of dedicated
taxation are saying there needs to
be more transparency, we need to know exactly what
the government is doing, and we want to know where the
money is going and how it is going to be spent.
I'm saying that with this concept of dedicated
taxation, you get the flip side as well. When
the fund runs out, you basically don't fix roads any
more. You don't do anything with health care any more.
In fact, you don't really have this sort of pre-budget
consultation, because essentially, if you were to come
to me and say, we want to do an infrastructure program,
I'd flip to page 20 and say there's no money left in
the fund, or there is a lot of money left in the fund
and you can go ahead and do it. Then someone comes in
for health or for post-secondary education and I say,
sorry, we spent all the earmarked money in the last
budget and now we really don't have a lot of money.
We know there's a need, but sorry, we don't have any
Mr. Chris Lorenc: First of all, the whole issue of
funding infrastructure repair is not something the
country is going to be able to do overnight in five years, ten
years, or even twenty years, simply because of the
problem that has been left to our and successive
generations. That's point number one.
Point number two, we have said in our brief, although we
didn't verbalize it in the presentation, that we
subscribe to the notion that 50% of the surplus ought
to be used to retire the debt. The remaining 50% should
be used for strategic investments that propel economic
development and growth and the generation of wealth.
Third, we have not said the $5 billion that was raised
by the federal government should all go back to
highways or to infrastructure. What we have said is
there needs to be a reinvestment in the
transportation system of the funds that were
initially earmarked for the purpose of transportation.
The dollar amount we're talking about in our brief is
$800 million matched equally by the provinces. We have
not suggested to the federal government the notion of
pure dedicated taxation, as is the case in the United
States, where 18.5¢ is dedicated specifically for that
Mr. Tony Valeri: But in your brief you do say that
of the $5 billion, $13 million is spent in western
Canada, and in Manitoba the estimated federal tax
revenue from road fuels is over $140 million. When I
read that through, what I get is that Manitoba is
spending a lot more than they are getting back, and so
in a sense you're saying we're spending it and we want
it back for roads. That's where my comment is
If you agree with a 50-50 split, or any sort of split,
then you're really not pointing to a dedicated tax
structure. You're saying, let's look at priorities and
in a list of priorities let's include infrastructure.
Let's argue that infrastructure is the king, and
let's do something about infrastructure. So you're not
actually advocating earmarked taxation for roads.
Mr. Chris Lorenc: We're suggesting the
federal government recovers $5 billion annually from
the users of the system and that appropriate funding
for the system should come from those who use it.
We're not suggesting $5 billion.
In a beautiful world I
suppose that's what would happen, but we're also
realistic enough to understand the approach in Canada
has not been to go the route of dedicated taxation, the
way it has been in the United States. That is an
emerging theme for the reasons you've given.
The public, I would suggest to you, are more prepared
to pay taxes if they see there is a connection
between what they pay and service delivered, as opposed
to a general increase in taxation that goes to the
general pot over which they have no control.
So what we're suggesting is there needs to be some
discipline in terms of understanding that infrastructure
underpins the economy, which allows us to fund health,
education, and social safety net programs. You can't
fund those things, and the fund will dry up, if you don't
have an infrastructure that allows economic activity to
continue to expand and to generate wealth through
revenues, not only to
employees but also to government. So
we're urging the government to move in that direction.
Municipalities do it all the time. They do it with
dedicated levies for sewer and water main renewal. If
you talk to municipalities, they will tell you that where
they discipline the amount of money received and where
it's applied, there is success in redressing problems
that were ignored in the past. We're saying that is
a lesson we ought to learn from. We ought to look at
other jurisdictions that use the principle of dedicated
taxation for those purposes.
But there's nothing in that brief that suggests the $5
billion must absolutely be reinvested in
transportation, because we understand there are other
problems. That's why we take the view that 50% of the surplus
that's received ought to go to retiring the debt so that
we can free up additional government revenues to do
other things society deems are important and 50%
ought to be invested in what the nation determines are
priorities. We think a portion of that 50% surplus
ought to be reinvested in what keeps the economy going,
that is, the infrastructure.
Mr. Tony Valeri: But you don't support dedicated
Mr. Chris Lorenc: We support dedicated taxation.
If you're asking if we support a system where every
single dollar received is dedicated for a specific
purpose, we haven't dealt with that issue and so we
have no specific position on it. We've talked
about it in the context of an identified pool that is
contributed to by users, and we feel a portion of what
those users contribute ought to go back to the system
Mr. Tony Valeri: When you say contributed to by
users, are you referring to the fuel tax or to something else?
Mr. Chris Lorenc: We're referring to the fuel
Mr. Tony Valeri: That is
essentially a dedicated tax.
Mr. Chris Lorenc: If you want to talk about
portions dedication, I guess that's right.
Mr. Tony Valeri: Does anyone else have a comment
on a dedicated tax?
The Chairman: Mr. Harris.
Mr. George Harris: Thank you, Mr. Chairman.
Generally speaking, we're not supportive of dedicated
taxes or with the thinking that a portion
of it will be dedicated. It gets quite complex and
envelopes get empty and all that.
What's critically important is to have a clear
vision of what one would want for the national
infrastructure. I think I heard another presenter say
there should be a strategic approach towards what we
want in terms of infrastructure, and then we should
look at how we go about funding it.
I think all of us are aware of horror stories about
some of the infrastructure, where you start wondering
why that incredibly complex, expensive piece of
infrastructure got built. Very often there was not a
vision, but there was a lot of lobbying, etc., and you
end up with something such as an
inappropriate kind of road, projecting growth
that was not reasonable, and so on.
So I think the key here
is to make sure there is discipline around what kind of
vision you have for national infrastructure, rather
than get into the complexity of trying to dedicate
taxes toward it.
Mr. Tony Valeri: That's true. Thank you.
The Chairman: Thank you, Mr. Valeri.
I want to thank the panel for.... Sorry, Mr. Motheral.
Did you want to make a comment?
Mr. Wayne Motheral: I just wanted to make one
comment on the dedication of taxes.
Speaking from the perspective of the Union of Manitoba
Municipalities, in conjunction with the Federation of
Canadian Municipalities, of course, I think the
transportation fund should be set up with a portion,
some sort of portion, of the fuel tax that is coming
out. Now, that may be a dedicated tax, but our
coalition's position is that we would like to see a
portion of those taxes.
I'd just like to make a small example of our
neighbouring state, North Dakota, which is what you'd
call a have-not state in the United States. Some
people in the southern States don't even know where it
is. They do have three four-lane highways going
through that particular state. If a regular county in
North Dakota wished to repair bridges on a county road,
it would be 80% federally funded. So they really have
an ongoing infrastructure program. That's just an
The Chairman: On behalf of the committee, I'd like
to express to you our sincerest gratitude for your
presentations. You have been an excellent and
interesting panel. You've certainly touched upon a
number of areas, from the human deficit, to
infrastructure, universities, research and development,
and that takes into consideration the development of a
competitive economy, which is really essential if we
want to generate the type of wealth that will allow us
to have the compassionate society we all strive to
Essentially, though, in the final analysis, I think as a
committee we share your ultimate goal, which I think is
that you want to improve the quality of life for the
people of Canada, whether it's through infrastructure,
research and development, or universities, or whether
it is through addressing some of the social needs you
so eloquently outlined. And that is exactly what drives
our agenda as a committee. We want to do what's right
for the people of Canada and we want to make the type
of recommendations that speak to the values you have
stated this afternoon.
So on behalf of the committee, once again, thank you.
This is the last session for today for committee
members. We will be back tomorrow at 9 a.m., and our
meetings will go on from 9 a.m. to 4 p.m., in the
same city, same time, and same location.
The meeting is adjourned.