EVIDENCE

Standing Committee on Finance NUMBER 054 2nd SESSION 40th PARLIAMENT Thursday, October 22, 2009 Le jeudi 22 octobre 2009 Standing Committee on Finance CANADA [Recorded by Electronic Apparatus] EVIDENCE October 22, 2009 Committee Edited Evidence * Table of Contents * Number 054 (Official Version) Official Report * Table of Contents * Number 054 (Official Version) Témoignages * Table des matières * Numéro 054 (Version officielle) 54 22 10 2009 2009/10/22 09:30:00 House of Commons Comité permanent des finances Standing Committee on Finance FINA Chair Mr. James Rajotte 40 2

(0930) [ English ] The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)) : I declare the 54th meeting of the Standing Committee on Finance in order. This is our second day in Toronto, the ninth city in our cross-Canada pre-budget consultations. We're very pleased to be here in Toronto. We have four panels today, with an hour and a half for each panel. We'll be hearing about 60 witnesses in two days here.

I'll list the organizations we have with us here this morning in order of presentation to the committee: the Canadian Health Food Association, McMaster University, the Greater Kitchener Waterloo Chamber of Commerce, the Canadian Media Guild, Mr. Chris Smith as an individual, the Canadian Federation of Students Ontario, the Alliance for Equality of Blind Canadians, and GrowthWorks Capital Ltd. I welcome all of you and thank you for being here this morning. We'll start with the Canadian Health Food Association.

Each of you has five minutes as an organization for an opening statement, and then we'll have questions from members. Ms. Penelope Marrett (President and Chief Executive Officer, Operations, Canadian Health Food Association) : Bonjour and thank you very much, Mr. Chair. I thank the members of the committee for inviting the Canadian Health Food Association here today. [ Translation ] My name is Penelope Marrett and I am President and Chief Executive Officer of the Canadian Health Food Association.

The Canadian Health Food Association, CHFA, is Canada's main national commercial association for natural and organic products. It represents more than 1,100 businesses, including growers, retailers, manufacturers, importers, distributors, consultants and health care providers. Serving Canadians from sea to sea, CHFA has faith in a world in which natural and organic products are an integral part of health and well-being. [ English ] In 2004 the natural health products regulations came into force.

Natural health products include vitamins and minerals, herbal remedies, homeopathic medicines, traditional medicines such as traditional Chinese medicines, probiotics, and other products like amino acids and essential fatty acids. This sector is valued at $2.5 billion a year, a significant contributor to the Canadian economy. The regulatory requirements to license some 50,000 products and over 800 domestic sites have led to serious challenges in the marketplace, including decreased product innovation, inability to advertise, and consumer confusion.

Furthermore, the current backlog of product licence applications is creating additional challenges to the industry, thereby creating consumer concerns and the inability to obtain necessary international trade certificates for export purposes. We applaud the government for providing additional funds in the 2008 federal budget to the natural health products directorate for its regulatory responsibilities. However, it will be important for these funds to continue to flow over the long term and to be used in a manner that will enable a fair, predictable, and consistent regulatory environment.

We are very concerned with the increasing pressure on the directorate to deal with the more than 41,000 applications it has received since 2004. Up to 50% of these applications have been refused or withdrawn, and just over 16,000 have been approved. That's taken five years. Further, changing and increasingly rigid policy

interpretations continue to frustrate applications, which is not within the spirit of the 1998 report from the Standing Committee on Health, “Natural Health Products: A New Vision”. According to a recent Health Canada survey, approximately three-quarters of Canadians—that is, 24 million Canadians—regularly take natural health products. As the demand continues to grow for these types of products, we believe the government needs to take specific steps to address industry and consumer needs and concerns.

As an industry dedicated to the health and well-being of Canadians, we want to ensure that Canadians can continue to rely on safe, effective, natural health products. However, this can only been realized if the directorate has a clear direction on how to move forward and the support of the department and stakeholders and is provided with the necessary resources and expertise. On June 30, 2009, the organic products regulations came into force. Our members have expressed concerns about potential issues with the implementation of the regulations, including the importation of organic products.

Canada imports approximately 60% to 70% of organic products throughout the year in order to supply Canadians. Canadians want to have access and choice. This government must ensure Canadians are able to continue to enjoy access and choice in a fair and predictable manner. An increasing number of Canadians continue to purchase organic products. The Canadian organic sector is valued at $1 billion a year and growing at a rate of approximately 20%. Smart regulations are key to fostering competitiveness and a sound economy for all Canadians.

It is predicted that consumer demand for natural health products and organics will continue to grow as more Canadians, in their quest to achieve optimal health and well-being, discover the health benefits associated with these products. Permanent funding, such as A-based funding, is required to ensure appropriate expertise and resources for both the natural health products directorate and the Canada organic office.

The government must ensure a fair, predictable, and consistent regulatory environment for natural health and organic products in Canada to enable Canadians to continue to have access and choice to a wide variety of safe, high-quality, natural, and organic products, which they demand. We must work together to ensure that this industry is able to continue to thrive and grow in Canada. Thank you for your time today and for the opportunity to present to the committee on behalf of natural products and organics industries. I'll be happy to answer any questions.

(0935) The Chair : Thank you very much for your presentation. We'll now go to McMaster University. Mr. George, please go ahead. Dr. Peter George (President and Vice-Chancellor, McMaster University) : Thank you, Mr. Rajotte, and thank you for the invitation to be with you this morning to share our views on the strategic role that Canada's universities can play in facilitating commerce and enabling wealth creation for Canadians. McMaster endorses the presentations you will hear from the Council of Ontario Universities and the Association of Universities and Colleges of Canada.

We urge you to support their priorities. In our McMaster brief, we take a narrower focus that will directly impact on the prosperity agenda. Economic prosperity is driven by increased competitiveness, which in turn is driven by an increase in productivity enabled by innovation. It draws increasingly on intellectual resources found in universities among our researchers and our graduates. Indeed, our universities are called upon to become more entrepreneurial in their dealings with industry, particularly the knowledge-intensive sectors.

McMaster University, located in Hamilton, Ontario, is one of Canada's most research-intensive universities, with an annual research income of more than $350 million. McMaster, like other research-intensive universities, has a particular opportunity and responsibility to engage in economic and social development in our communities. At McMaster, our traditional mandate of education, research, and service is enhanced by our focused development of university-industry partnerships, spinoff companies, and knowledge transfer, supported by a full range of incubator and technology transfer facilities.

Our city and surrounding region have felt the impact of this economic downturn deeply. For Hamilton, the expectations of our university and the McMaster Innovation Park to be a catalyst for economic revitalization and renewal are huge. McMaster is committed to doing its part. Ensuring this happens effectively and efficiently will require strategic investments from the federal government, building on the past successes with Advantage Canada and the science and technology strategy.

McMaster's vice-president of research and international affairs, Mo Elbestawi, will share with you our thoughts on some specific steps we recommend for your consideration. [ Translation ] Dr. Mo Elbestawi (Vice-President, Research and International Affairs, McMaster University) : Thank you, Peter. Thanks as well to committee members for their attention and interest in our research activities.

The wealth and economic prosperity generated by university research are a mandatory reality for Canada, if it wants to remain competitive. [ English ] How we do this depends on our ability to turn our research into successful commercial opportunities and to strengthen existing companies. Five years ago we began developing the McMaster Innovation Park. Today the first building is at capacity, and the addition of CANMET-MTL will create one of the most dynamic materials research clusters in the country.

Plans for an automotive research centre and a life sciences complex are under way, but infrastructure funds are needed to complete the development. The McMaster Innovation Park is a turning point for our community, and the one-time federal investment of $10 million to match the provincial investment will accelerate the development of the park and create economic prosperity for the region. Start-up companies have profound effects on regional economies. A critical component is the need for space. Canada already has some strong, innovative initiatives through federal subsidies and tax incentive programs.

We need to develop model mechanisms for global companies to expand and invest in Canada to take full advantage of these programs. To further this effort, a federal investment of $15 million over five years will allow Canadian universities to increase their capacity to develop and promote programs that will result in significant university spinoff companies. Canadian universities need to market their research to industry to capture its true economic value. (0940) [ Translation ] The universities must also support current businesses through an industry engagement process.

Businesses need to be informed of the capacity and faculty that are unique to Canadian universities. [ English ] Canada's world-class research universities are now producing a high level of patents, licensing agreements, industrial research, and spinoff companies. To capitalize on this activity, a federal investment of $25 million over five years is required to guarantee that our research output is moved quickly and efficiently from our laboratories and marketed globally while creating industry engagement opportunities for our universities.

Thank you for your time and your continued investment in Canada's research community. The Chair : Thank you both very much for your presentation. We'll now go to Mr. Sinclair. Mr. Art Sinclair (Vice-President, Greater Kitchener Waterloo Chamber of Commerce) : Thank you very much, Chair Rajotte, for allowing us to address the committee for this year's pre-budget consultations. My name is Art Sinclair. I am vice-president of the Greater Kitchener Waterloo Chamber of Commerce.

Our organization appreciates the opportunity to provide perspectives on the national economy and, most importantly, on the federal government's role in managing the current recovery. Our chamber, sir, has over 1,700 members, representing all sectors of our local economy. The membership includes small, medium, and large employers who provide 70,000 jobs in one of Canada's most progressive and diverse regions.

As Minister Flaherty noted in last January's budget speech, industrialized nations of the world were taking and are continuing with unprecedented action to inject money into their economies in response to the global recession. The magnitude of this crisis necessitated swift action to mitigate the severity of the downturn, restore confidence, and promote recovery. A three-year $46-billion fiscal stimulus package was subsequently introduced in the 2009 budget. The Waterloo region has benefited from some major investments in local post-secondary sectors through the knowledge infrastructure program.

Conestoga College will receive federal and provincial funding totalling $72 million for increasing their educational capacity in advanced manufacturing and construction trades, renewable energy, and health care. Our chamber has been a strong advocate for increased government funding in skills and workforce development across all sectors of the regional economy. Increasing the ability of local post-secondary institutions to meet future employer demands is critical for competing in global markets.

We therefore recommend that the federal government continue with ongoing efforts to implement all announced stimulus measures to ensure continued economic growth and productivity. With respect to fiscal measures for the next federal budget, we, like many business organizations across Canada, have been concerned with deficits at all levels of government. Rising debt and the accompanying interest payments severely constrain flexibility and will reduce the ability to address ongoing national competitiveness issues.

In July of this year, CIBC Economics indicated that while federal budgets will be in deficit over the next few years, Canadians likely won't be saddled with the massive debt and interest costs that plagued the nation nearly two decades ago. While stimulus spending and other demands have placed us in a tenuous situation, our fiscal standing, according to CIBC chief economist Avery Shenfeld, is not at risk; therefore, a cautious approach moving forward is critical for maintaining this position of stability.

Our second recommendation is that, in order to restore confidence for the future, Canadians must be presented with a viable strategy for balancing the books and avoiding structural deficits. Two days ago, on October 20, TD Economics released a report indicating that a fairly uniform national and global shift towards fiscal restraint is looming in the near future. According to report authors Don Drummond and Derek Burleton, current governments are likely working with less freedom than during the mid-1990s.

Two forces in particular potentially limiting fiscal flexibility will be the likelihood of an historically slow rate of trend growth across the country and age-related spending challenges, or significant funding required for the health care system. The October 20 TD report indicates that in order to return the aggregate budget balance to zero by fiscal 2015-16, which is still fairly unambitious, program spending growth should be held to 2%.

Our chamber, consistent with the recommendation from the Canadian Chamber of Commerce in their submission to this committee earlier this fall, calls on the federal government to contain annual increases in program spending to 2% to 3%, in line with growth in inflation plus population, commencing in 2012-13 when more solid economic conditions emerge. In conclusion, preserving public trust and the sustainability of public finances are essential for recovery. Policies must be implemented that promote employment, encourage entrepreneurship, enhance productivity, and strengthen long-term national competitiveness.

While we address the current challenges and the economic realities of 2009, we must also focus on initiatives for long-term prosperity. Thank you.

(0945) The Chair : Thank you very much. We'll now go to Ms. Lareau, please. Ms. Lise Lareau (President, Canadian Media Guild) : Thank you to the committee for having us here today. I am Lise Lareau, the president of the Canadian Media Guild, which represents about 6,000 people at various media employers across the country. Most of my members work at CBC/Radio-Canada, and that's what I'm here to talk to you about today.

I'm here to tell you things you won't hear anywhere else, the view from the front lines of the CBC, a company that has had to bend, scrape, and make serious compromises to get along on a shrinking parliamentary appropriation. In real terms, as you may or may not know, the CBC gets $400 million less than it did in 1990. I chalk this up to simple negligence, sometimes benign, sometimes not so benign on the part of Parliament, depending on the year. I'm here to say that I know Canadians value their public broadcaster. They like it, they want it, and they need it.

In a Pollara survey in May, 74% of Canadians thought the annual funding to the CBC should be increased. So if you want to be in line with what Canadians think and you want the CBC to be able to do quality work on behalf of you and all citizens, you need to change the way it's funded and how much it's funded. That's why we ask you to take the lead from your colleagues on another parliamentary committee, the heritage committee.

As you know, last year it recommended that there be a seven-year memorandum of understanding or contract between the Government of Canada and CBC/Radio-Canada, setting out their respective responsibilities. Funding should be assigned to the same period, the committee reported, and indexed to the cost of living—basic stuff that we think should be endorsed here and, ultimately, in the budget. Obviously this would give the CBC an ability to plan ahead, something it hasn't had in years and years. Most importantly, this would give the CBC an independence from the partisan cut and thrust of the government of the day.

So we echo this heritage committee recommendation. We also echo the heritage committee recommendation that CBC's core funding be increased by about $7 per Canadian per year to about $40 per person per year. This too was recommended by the all-party committee, with the Conservatives on the committee objecting only in that they said they could not support a specific amount until the memorandum of agreement was finalized. In the document we're circulating today, you'll see a chart indicating that the CBC is one of the least-funded public broadcasters in the entire industrialized world. It's shameful, really.

Even at $40, even if the heritage committee recommendations were adopted, that would still bring it to only about half the average of all the industrialized countries in the world. The committee noted some of the reasons for the recommended funding increase: new media initiatives, which we all know about; the transition to digital; and properly funded local news, valued more than ever now that the private sector has opted out of a few cities, so that it can expand to serve newly populated areas such as Barrie in Ontario, Red Deer and Lethbridge in Alberta, and Kelowna and Nanaimo in B.C.

These are areas that the CBC has not been able to properly serve because they grew and expanded after it laid down its primary infrastructure, and it needs to do so. Finally, I believe it's imperative that the CBC be removed from the government's strategic review process immediately. Why? The threat of losing yet another $50 million has already had an impact on how the CBC dealt with this year's $171-million shortfall. Secondly, the media industry in this country, as you well know, is going through very rough times.

It's one of the hardest-hit industries in the country, a story you don't hear very much about because the media doesn't cover its own disasters, ironically. This is not the time to cut the public broadcaster further. Most importantly, one could strongly argue that the strategic review process itself, which is done under cabinet confidentiality, raises further questions about the real independence of the public broadcaster from the government of the day. This is not healthy for the CBC or the government.

(0950) I leave you with the following thoughts. The CBC is a place in crisis, a crisis of identity. It's funny; the management-union relationship is solid and better than ever, but there is a malaise that we believe is shared by management and those of us on the front lines. No one at the CBC knows where the future lies with all of this funding uncertainty. The chronic underfunding, the fact that there's no long-term contract with the government of the people--it feels like the place is drifting away. We know that people generally like the services the CBC provides.

They know it's the only place to find Canadian programming in prime-time TV, thoughtful radio, and programs in eight aboriginal languages in the north. From our members, we know it's the only place where there's sustained news content in communities under 300,000 people, for example. It's a leader in online programming. We know these things. We also know that with the effect of all the cuts, we're watching a pull towards the CBC being a commercial broadcaster, with a public subsidy that's shrinking all the time. We know this because the CBC has had to move that way to survive.

We know it isn't why we started working at the CBC, and it isn't what audiences expect or deserve. Instead, the government needs to understand and embrace the idea that solid information is a public service. It's one that's more, and not less, necessary now because there are fewer sources of news content now because of media company convergence and fewer places airing made-in-Canada TV shows. In short, the CBC needs you and your attention in this vital time in the history of the media in this country. It needs the seven-year deal, the $40-per-capita funding, and an end to the strategic review process.

I thank you for your attention and I look forward to answering your questions. The Chair : Thank you very much. We'll now go to Mr. Smith please. Mr. Chris Smith (As an Individual) : Good morning. My name is Chris Smith. I own a small business in Uxbridge, Ontario. I may be out of my element here. I'm clearly not as prepared as everybody else, but after discussions with my MP and a consultation with the Minister of Revenue's office, I was asked to present this idea. It's a very simple idea and I won't take much of your time. It's clear that among small and mid-sized business, we have had a rough year.

We're not looking for bailouts or handouts, just for an environment that will promote success and job creation. The idea is simply this: for every employee that a small or mid-sized company adds to the current employee payroll, the employer will retain the employer source deductions. It's a wash for the government, as you're taking somebody out of the safety net and putting them into the workforce. It's easily implemented, as the Receiver General already has that information; it's in their database and is easily measured. I'd be happy to answer any questions and to create a dialogue on this.

That's about all I have to say. Thank you very much. The Chair : Thank you, Mr. Smith. We'll now go to the Canadian Federation of Students for Ontario. Ms. Shelley Melanson (Chairperson, Canadian Federation of Students (Ontario)) : Good morning, committee members. I hope everyone is doing well. My name is Shelley Melanson. I am the chairperson for the Canadian Federation of Students in Ontario. The federation represents more than 300,000 college and university students at 38 student unions across the province.

We are the Ontario affiliate for the Canadian Federation of Students, Canada's national student lobby organization. Before I start, I think it is important to highlight the student context that surrounds this year's budget deliberations for the federal finance committee. Data released this week from Statistics Canada, just two days ago, indicates that Ontario has surpassed Nova Scotia in having the highest undergraduate tuition fees in Canada, an honour that we have actually held at the graduate level for a few years now.

National student debt surpassed $13 billion this past January, and this number doesn't include personal lines of credit, credit cards, or provincially held debt, which in Ontario surpassed an additional $2 billion last year. On top of this bleak picture, student unemployment reached record high levels this past summer, over 21% on average. The government has demonstrated its commitment to helping students, with the introduction of a new Canada student grants program.

Despite these tough economic times, and perhaps because of them, we believe post-secondary education should become one of the government's fundamental priorities. In our submission, the Canadian Federation of Students in Ontario has highlighted three key priorities. Students also illustrated our priorities this past week in Ottawa, where over 50 student representatives from across the country presented Canada's education action plan to nearly 200 parliamentarians during an intensive lobby week that we have been participating in.

First, students are calling for the introduction of a federal post-secondary education act, modelled after Canada's health act, and a dedicated cash transfer for post-secondary education. We believe it is essential for establishing national standards for quality and affordability and ensuring that the federal government is committed to making education accessible across the country. We estimate that this will cost $1.2 billion and will go a long way towards equalizing the quality and cost of post-secondary education from province to province. We also believe such

an act would provide greater accountability and transparency for federal moneys allocated to the provinces for funding post-secondary education. Let's face it, when the federal government commits taxpayers' dollars to an important national priority, it has the right to ensure that the subsidy is being used to meet benchmarks for quality and access. Our second recommendation is for the government to convert money dedicated to tuition fees and education tax credits into needs-based grants.

The current system of providing tax credits does very little for students, who need money at the time of paying their tuition fees. Instead, tax credits are disbursed in May, nine months after students and their families have had to pay their first semester tuition fees. We believe that by converting the money that is indicated for tax credits to upfront grants, students will benefit from this government program, because the money will be there to open the door to educational opportunities. This is, of course, a cost-neutral recommendation that could benefit all students greatly.

Finally, we are calling for the number of Canadian graduate scholarships available to master's and doctoral students to be doubled, and for increases to the scholarships to be tied to future increases in enrolment growth. As part of Canada's strategy to become a knowledge-based economy and a leader of innovation, Canadian universities have aggressively expanded graduate studies, but funding has not kept pace with enrolment.

We estimate that, for $125 million, graduate student funding could meet the needs of new students who have entered graduate school and ensure that we have enough funding to be able to undertake the quality research that this country needs to compete in a knowledge-based economy. I have brought copies of our written submission and our latest policy document. I've also translated copies of our submission for those who would like them. Thank you so much for your time.

I hope that we can work together to build Canada's knowledge potential to transform our economy by ensuring our place as world leaders in post-secondary education. I have with me here today our federation's government relations coordinator, Joel Duff, and we both look forward to your questions. Thank you so much for your time.

(0955) The Chair : Thank you very much for your presentation. We're now going to hear from Mr. Rae, please. Mr. John Rae (First Vice-President, National Board of Directors, Alliance for Equality of Blind Canadians) : Good morning, Mr. Chair. Mr. Chairman and members of the committee, my name is John Rae. I'm the first vice-president of the Alliance for Equality of Blind Canadians, a national not-for-profit organization of Canadians who are blind, deaf-blind, or partially sighted. On this occasion, I want to frame my comments a bit differently. I don't like to do things the same way each time.

I don't want you all to get bored with what I might be here to tell you. Today I want to frame my comments in the context of the pandemic and the poor, a contrast in government response. Think about it. Today Canadians are concerned about the possible swine flu pandemic. Government officials are doing something about it. They are concerned. They are acting. A vaccine has just been approved, and plans are being developed to make it available to Canadians.

Will we, as persons with disabilities, have the same access to that remedy, or will we be expected to sit on the sidelines and wait our turn, as is often the case? Well, that's a question for a different time and place. When we think about the poor, however, the situation is quite different. Years ago Parliament passed a resolution to eradicate child poverty in Canada. We're still a long way away from achieving that goal. Report upon report has talked about the plight of the poor, and Canada's disabled population is among the poorest and most unemployed in our country.

Report upon report has talked about the benefits--psychologically, socially, economically, and in all other aspects--of doing something concrete to deal with the chronic poverty that continues to plague far too many Canadians. This is why the AEBC has called upon the government to develop a national economic strategy for persons who are blind in this country. You notice I used the term national “economic” strategy and not national “employment” strategy. We do that purposely. Here are some of the major aspects of that economic strategy.

Number one is government will, the kind of will that seems to be present in fighting the pandemic, the kind of will that we've never seen when it comes to dealing with persons with disabilities. We believe the Prime Minister should call upon business, labour, and community leaders, put them in a room, and lock them there until they come up with a new deal. He should keep them there until emerging smoke shows that they are ready with that new deal.

Second, we believe the Government of Canada needs to embark upon a national outreach strategy, just as it is doing in the area of racial minorities, to increase our representation within the federal public service. Third, in the area of income there is a chronic need to put more money into the pockets of Canada's poor. The current disability tax credit does assist some disabled Canadians who work, but it's misnamed. It's not really a credit but a deduction. We believe the DTC should be revamped and become a true tax credit that would go to all disabled Canadians who qualify.

Fourth, in its last budget the government earmarked a fair bit of money for infrastructure programs. Here was an opportunity lost. Why did those programs not include a provision that earmarked some of those funds to assist in making transportation systems more accessible, retrofitting some old buildings at some of Canada's colleges and universities, and doing things of that sort? In closing I will note that way back in 1981, the federal government released the landmark Obstacles report, and the International Year of Disabled Persons was conducted under the theme of full participation and equality.

That wasn't yesterday. That wasn't last year. That was 1981. Old guys like me remember that year. We remember that theme. We thought it was very forward-looking at the time. It is high time that the Government of Canada showed some leadership and brought us into the mainstream. We are tired of sitting on the sidelines. We want to be part of Canada's mainstream. Thank you.

(1000) The Chair : Thank you very much for your presentation. We will now hear from GrowthWorks Capital Ltd., from Mr. Levi. Mr. Daniel Levi (President and Chief Executive Officer, GrowthWorks Capital Ltd.) : Thank you very much, Mr. Chair. I'm just going to highlight my statement because you already have it in your hands. I'll just add a few things. I want to thank you very much for inviting me back. Some of you probably won't remember this, but I was here two years ago, talking about the need for venture capital and the crisis we're facing.

I'm pleased to tell you that two years later, we are now 30% lower in the amount of venture capital available in the country, and the crisis is very significant right across the country. We have, on average, two to three venture capital groups having available capital to invest in each of the provinces across the country, with the exception of Quebec. So it is a very desperate time, in particular for start-up technology companies and life sciences companies. We're an organization that operates right across the country. We're in seven of ten provinces.

The only province we don't operate in that has retail venture capital is the province of Quebec, which is, I think everyone knows, very well served by the two funds there. I'll get to the recommendations in just a couple of minutes. The key for most of the folks in this room, quite honestly, is that the government has made some very strong forward movement in the amount of money that's been spent in basic research and development. Over $13 billion has been spent in the last 10 years in research and development. The key to that is to capture that and to commercialize it.

Most of the universities are getting to the point now where they are able to figure out which companies have the opportunity for commercialization, but there is no venture capital available for them. On a per capita basis, the United States has more than 45% venture capital compared to Canada. And the United States is our major competitor. Many companies leave this country to find venture capital in the United States because there is so much more capital available.

We have been very active, as an organization, going to the U.S. and trying to bring that venture capital to Canada as well, but as most of you know, that line between Canada and the United States is more than just a line on the map. Most American venture capitalists would prefer their companies move to the United States where they understand all the laws and the regulations. It's only because of strong venture capital groups in Canada that we're able to attract venture capital to the country and maintain those companies here.

Otherwise the U.S. venture capitalists would move the companies south, and that's a key issue for us. Venture capital supply has fallen, as you can see. From 2001 it dropped from $4.5 billion a year down to $1.4 billion, and in this province it's now dropped to less than $300 million. So it's a very serious issue here. It's interesting, because one of the things we do very successfully, as a retail venture group, is that we are able, through government incentives through the tax credits, to raise money from the public. That incentive is approximately 30%, and I'll talk a little bit more about that in a minute.

That incentive is about 50% less than what you would get if you invested in oil and gas or in mining in this country because the incentive there is a full 40% to 44% tax savings for individuals who invest in oil and gas and in mining, depending on which province you're in. My suggestion to you is that we seriously consider the need to give our technology industries and our life sciences industries and our alternative energy industries the same incentive. We're not even asking for that, but I think it's time we gave them the same incentive that we give our oil and gas sectors and our mining sector in this country.

Since 1985 there has been almost no adjustment to this program at the federal level. Tax credits that were maxed at the federal level at $750 per $5,000 investment, and the maximum RSP contribution, which has now gone to $21,000 in comparison to ours, have remained unchanged at $5,000 since the beginning of the program. So in 1984, when the program began, we had a $5,000 cap and 30 years later we have the same cap.

(1005) My recommendation to the committee is really just to match what the provinces have been doing now over the last few years. In British Columbia, the cap is now $13,000. Saskatchewan has increased its tax credit from 15% to 20%. Manitoba has increased its size from $5,000 to $12,000. Nova Scotia, New Brunswick, and Newfoundland and Labrador all increased their tax credit and the amount available for investment. And Quebec has gone as high as 25% for one of the funds in that province. This is a program that's been proven to work.

It's a program that, with matching funding already in place from provinces, will allow us to raise up to $1 billion more at a cost of only $100 million per year for the next three years across the country. Thank you. The Chair : Thank you very much. I thank all of you for your presentations. We will now go to questions from members, and we'll start with Mr. McCallum. Hon. John McCallum (Markham—Unionville, Lib.) : Thank you, Mr. Chair. Thank you to all of you for being with us this morning.

I think I'll start with post-secondary education, beginning with students and then universities, partly because I've spent twice as many years working for a university as I have in politics. I have some understanding and sympathy for the case. Beginning with the students, I certainly agree that more student aid is desperately needed, partly because the unemployment rate for young people is at record high, so it's harder to get a job, and the parents of students may be financially more pressed than normal because of the financial crisis.

I certainly agree that gimmicky things like the textbook tax credit should be replaced with core grants to students. My only question though—and I'd ask Peter George to answer this question too—is about your proposal for a post-secondary act and the transfer of $1.2 billion or whatever the number is. I have a little bit of a concern over that--one, because it gets into all sorts of jurisdictional issues, notably with Quebec, and two, because money is fungible. If you give an extra $1.2 billion to the provinces dedicated to post-secondary, there's nothing to stop them reducing the amounts they contribute.

So I'm not sure it's all that effective, and I'm not sure that it wouldn't be better to use that same amount of money to put it directly into the pockets of students. The money would then flow to the students rather than flowing to provincial governments. Once it flows to provincial governments, it's kind of like a black hole. You don't know where it will end up. Ms. Melanson, what would you say to that?

(1010) Ms. Shelley Melanson : I certainly appreciate the concern of money essentially going missing once it gets to the provinces or somewhere into a government coffer. But I actually think that having a dedicated transfer payment is one of the ways of alleviating that, because what we have now is essentially a series of transfer payments that have been coupled together.

It makes it far more difficult for students on our lobbying end—I can speak on behalf of the representatives for the provincial component—to actually go to the provincial government and say, “Well, this is how much money is being specifically allocated for post-secondary education”. We feel that with a dedicated transfer payment, it's a way of being able to touch base. If we see that $1.2 billion being allocated, well, we know that's exactly what we need to be going after. But you're also attaching a requirement, when you have

an act in place, to determine how that money should be allocated and what it should be used for, which is giving direction. And I think that in consultation with the provinces.... I've heard the comments before about the difficulty associated with negotiating with a variety of different provinces. But I do believe there is a will on behalf of the provinces to have investment in education, certainly in Ontario. I think it's important to recognize that when we're talking about students today, we're not talking about 18- and 19-year-olds who are graduating from high school.

We're talking about the upwards of 200,000 people in this province who have lost their jobs, many of whom are in the manufacturing industry, who do not have the skills to be able to access the vast majority—more than two-thirds—of new listed jobs that require some form of post-secondary education. So I think investing into education and increasing the amount of money is a political priority for provincial governments but also, quite frankly, for citizens in Canada, because they need that access. Hon. John McCallum : Thank you. This question is to Peter George.

If you had the choice between a dedicated transfer of so much money to the provinces and the money being constrained to go to post-secondary education versus the same amount of money going directly into the pockets of students, which would you think would be better? Dr. Peter George : Well, Mr. McCallum, I believe it's really important to get student aid right, and I think putting the money directly into the hands of students is an effective way to promote efficiency in the student aid program.

On the other question, there is a consummate need for us to get more resources from all levels of government directly into the universities to enhance the quality agenda. I think you put your finger on a major concern—that is, that federal transfers, while appealing, may not ultimately find their way into the hands to which they were intended by the federal government. I regard that as a major concern. It's something we have been working on for a number of years, as you know.

My own view is that higher education, especially as it's linked to the economy and to the future prosperity of our country, is too important to be left for the federal government to have a limited role, as it is to research and student assistance. I believe it's very important to have a national post-secondary educational priority, for the federal government to have a strong voice in helping provinces set national standards and national priorities.

(1015) Hon. John McCallum : Okay. Can I ask you something else, though? Mr. Joel Duff (Organiser, Canadian Federation of Students (Ontario)) : We don't agree on much, by the way, but...[ Inaudible--Editor ] Hon. John McCallum : Well, I'm not sure you'll agree on my next question. One problem with transferring money, dedicated money, to provinces is that the money may not end up with the universities, as you just said.

But a problem of putting lots of money into the pockets of students--let's say we had a program to give every student $2,000 extra to pay for the fees, or you pick the number--is that universities might take the opportunity to raise their fees by that amount. So if we try to get money to students, universities may just take that money away by raising their fees by a similar amount. What would you say to that, Peter George? Dr.

Peter George : Well, that is one way in which the federal government can, in effect, provide a transfer direct to the institutions that need the resources, but I would be foolhardy if I were to say that McMaster would raise its fees by exactly the amount of any additional federal transfer to students. I do think there is room for a national discussion on this, and my discussions with students have generally been of the form that student aid, especially for those most in need, is priority one.

Second, the issue of tuition increase is muted if students see corresponding increases in resources coming from levels of government and individual donors to ensure that not just access but also the quality agenda is attended to and that the students are making the investment through their own fees in a high-quality education that will provide them with future returns on that investment. The Chair : Thank you, Mr. McCallum. Monsieur Laforest. [ Translation ] Mr. Jean-Yves Laforest (Saint-Maurice—Champlain, BQ) : First, I would like to say hello to the witnesses. My question is for Mr. George or Mr. Elbestawi.

You say that McMaster University is a pioneer in research designed to market products developed through applied research. I must say, first of all, that I find it extremely interesting that a university is taking this kind of approach, but I wonder what the role of the private sector is. What kind of balance should there be between private sector investment in this kind of research or marketing and that of government? Is it a matter of marketing, and thus of products that private businesses will put on the market in order to make profits? Is there a policy in that area at McMaster University? [ English ] Dr.

Peter George : If we may, both of us will respond to this question. In terms of the bigger picture, a couple of years ago we had a group develop a report on commercialization at the university, because we see that one of the major challenges is promoting a commercial culture within the university that sees the importance of taking applied research, those next steps to the innovation process and technology transfer process, to helping to create wealth.

So at the university level, while we've had a lot of interaction with the private sector, we still see the need to promote a greater sense of cultural attachment to university prioritization of commercialization as a value of the university and its activities. We've put in place a number of instruments to help further that, and Mo will address those. Dr. Mo Elbestawi : Our position at McMaster is that universities don't do commerce, but they facilitate commerce. That means our job is to create a culture and systems that allow students and faculty members who would like to commercialize to move in this direction.

In doing that we create a system that will really maximize the potential of the university. The role of the private sector in some areas of research is obviously quite important. In our university in some areas like manufacturing and engineering, for example, approximately 35% of the total funding comes from industry. So industry plays an important role and it's a good role. It's something we encourage significantly. (1020) [ Translation ] Mr. Jean-Yves Laforest : Perfect, thank you. I have a second question for Mr. Sinclair from the Kitchener Waterloo Chamber of Commerce.

You recommend, second, that the government present a viable plan to avoid structural deficits. In the past 15 years, a number of your members, who are employers, have contributed to the employment insurance fund, and the government has used the employment insurance fund to reduce the deficit. Without going in too much detail or making too many proposals, do you believe your members are still in favour of this kind of situation? They may not have been at the outset; they weren't asked. [ English ] Mr.

Art Sinclair : In response to our recommendation for a plan to eliminate the deficit, we're a Chamber of Commerce, so we have a wide variety of members from universities, municipalities, the public sector, and the private sector. But those in the private sector are very concerned about the deficit and the impact it has on their operations. All businesses over the last year have had to take measures to restrain their spending and exercise extreme discretion in how they allocate their resources, so we'd like to see the same from government.

On the EI fund, our biggest concern as the Chamber of Commerce--and the Canadian Chamber of Commerce has expressed this concern as well a number of times--is the balance between employer premiums and employee premiums. We've made a number of submissions in the past calling on the government to seriously examine and address the issue of employer premiums under the EI program to ensure that we have a competitive structure there and don't get into a situation where we have huge surpluses. [ Translation ] Mr. Jean-Yves Laforest : That's good.

You're telling us that's your concern and you say you would like a better balance between employer and employee contributions. I imagine, even though you didn't say it, that you would also like the employment insurance fund to really be used for employment insurance, not deficit insurance. [ English ] Mr. Art Sinclair : Yes, we would like to see the employment insurance plan operate like many private sector insurance plans. [ Translation ] Mr. Jean-Yves Laforest : That's good; thank you. [ English ] The Chair : Merci, Monsieur Laforest. We'll go to Mr. Menzies, please. Mr.

Ted Menzies (Macleod, CPC) : Thank you, Mr. Chair. Thank you to our presenters. For those of you who haven't presented to a committee meeting and pre-budget consultation before, take no offence if we don't ask questions of everyone. It's not that we don't listen and hear your presentations. It's just that we don't have enough time to ask questions of everybody. So we do appreciate the input, and it is all recorded. I don't know if the chair has explained that. We do take all of the presentations into account and we do appreciate them.

Having said that, we're with a very interesting challenge this year in trying to wind down.... I was glad to hear Mr. Sinclair reaffirm that fact, that our spending was short term and that we're in a deficit position and that we need to find a way to control spending. In that context, that's what we need to take forward as recommendations. That's not to discredit any of your suggestions at all, and please don't take it that way. To Mr. George from McMaster University, commercialization is so critical. I think you have probably already answered that question, so I won't ask about that.

But competing in areas of expertise has always been a bit of a challenge for me. We hear from all sides how important it is to provide an education to our children so they can become the leaders of the future and drive our economy. Universities continue to compete for expertise and areas of expertise. I'm sure you've dealt with this, that universities are looking for money to compete against each other. Is there a way to focus specialization so that we can focus the valuable taxpayers' dollars we have? I hope I'm explaining this properly.

(1025) Dr. Peter George : I think it's perfectly clear. Generally speaking, I think we're very good in Canada at doing research and producing intellectual property. The weakness is on the commercialization side and that's why we've chosen to address it. In terms of specialization or focus, rather than simply duplicating efforts, we do two things at McMaster, which in some sense, I think, represent efforts that may not be ubiquitous, but are at least central to many of the major research universities. First, we have a very strong commitment to setting priorities within the university.

We can't do everything at the level we aspire to do it. If excellence is important to us, we must focus, and we have six areas of strategic research priority that inform all of our investment decisions on the research agenda. Mo has mentioned one, materials and manufacturing. We are the leading Canadian university in this area. Another one would be applied radiation sciences. We have a nuclear reactor on campus. We have received KIP money to expand the nuclear research building and activities, and so forth. So we take the focus-setting or priority-setting very seriously.

Second, we have developed a number of collaborative initiatives with other universities. Because Art is here, the one I will mention is our work with the University of Waterloo. We have a couple of major things under way right now. One is a proposal called Green Art, for collaborative research with private sector partners in the greening of the automobile sector, with a view to enhancing productivity and making the sector more competitive internationally, so the Canadian auto industry will remain a state-of-art, leading edge, competitive industry. That's but one example, but we have a number of those.

So I think it's a matter of focus within the institution and setting priorities and also picking areas of collaboration with other institutions that build centres of excellence. Mr. Ted Menzies : The money that we invest in research chairs, is that money well spent? Is that the right way to do it? Dr. Peter George : The money is extremely well spent, in our view. We have almost 70 Canada research chairs.

Those chairs, plus the new chairs in international research excellence and the commercialization of research, are extremely effective in helping us support our areas of focus and in attracting to Canada scholars of international distinction, who help build Canada's reputation for excellence, and will contribute ultimately to the commercialization agenda. It's money well spent in a program that needs to be renewed when it expires. The Chair : Okay. There are a couple of minutes left-- Mr. Joel Duff: Could I respond to that? The Chair: Yes, of course. Please do. Mr.

Joel Duff : As the Canadian Federation of Students, we represent about 70,000 graduate students in the country, including exchange students. On the issue of the Canada research chairs, we think it's obviously excellent to develop these chair positions, because you don't just get the chair; you also get the infrastructure that goes with it. Usually an office goes with it, and it provides a centre for research in a particular area. I just want to highlight an issue that we're concerned about in Canada's colleges and universities, and that's the incredibly increasing reliance on contract faculty.

What we have on the one hand is the situation of the Canada research chairs, who are super-elite all-star researchers. What we have on the other hand are institutions at which students by and large go through an undergraduate degree without ever developing a relationship with a full-time tenured professor. This reliance on contract faculty is a huge problem on a lot of campuses, whether the students are current doctoral students or recent graduates.

Doctoral students and former doctoral students teaching at McMaster are traveling to Wilfrid Laurier and to Guelph, cobbling together a career by teaching classes on all these different campuses and not doing any research. They live in their cars, and their cars are pretty much their offices. It doesn't create the kind of quality we need across the board. While we like things like the Canada research chairs, which create excellence, we also need to elevate the faculty-to-student ratios, and we need to make sure that there's more tenure-track faculty on campuses across the country.

(1030) The Chair : Thank you. Mr. Rae, you would like to comment? Please comment very briefly. Mr. Menzies is out of time, unfortunately. Mr. John Rae : The greening of the auto sector is an issue for us. The new hybrid automobiles are too quiet for blind persons to hear. They are dangerous, so Canada needs to follow what's going on. Legislation is now before the U.S. Congress to fix that problem, and Canada needs to regulate these new automobiles. The Chair : Okay. Thank you. We'll go to Mr. Pacetti. Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.) : Thank you, Mr. Chair.

Thank you to the witnesses for appearing. It's always interesting when we have witnesses from different spectrums and with different points of view. We're not going to have enough time to get to everybody, as Mr. Menzies was saying, but we'll try our utmost. I have a question for the Canadian Health Food Association. Ms. Marrett, you talked about applications being refused or withdrawn. Maybe I missed it, but I don't think you stated why these applications were withdrawn or refused. Is it because of process, lack of funding, or...? I didn't see that anywhere. Ms.

Penelope Marrett : The majority of the application refusals were not based on safety. They were based on the evidence that was provided. We've been told by Health Canada that they are aware that sometimes they are asking for information that is not available. It makes you wonder why they are asking for the information then. We have been told that parts of the standards of evidence-- Mr. Massimo Pacetti : Well, I'm hoping it's for the safety of Canadians. Ms. Penelope Marrett : No. They have told us that 99.5% of the application refusals are not based on safety at all. The safety is confirmed.

From what we understand, some of it is information that they know is not available, but they continue to ask for it. If it is not available, why are we being asked for it as an industry, particularly if they know if it's not available? The other part of the standards of evidence that we are being asked for is double-blind clinical studies. For small and medium-sized businesses that are providing innovative products that Canadians use, it's very difficult, because they don't have the funding to do double-blind clinical studies. Mr. Massimo Pacetti : What would your solution be?

I'm just trying to understand the reason for coming to the finance committee instead of maybe going to the health committee. Ms. Penelope Marrett : We're doing both, in actual fact. If Health Canada is the regulator, they must be provided with permanent funding to be a proper regulator so that they're as fair and predictable-- Mr. Massimo Pacetti : That's what I'm looking for. Ms. Penelope Marrett : That's what we talked about at the end. That's what I said at the end: it is not fair and predictable at all. Mr. Massimo Pacetti : No, but it's not...so they don't have the adequate funding. Ms.

Penelope Marrett : No, not at all. Mr. Massimo Pacetti : What would you recommend in terms of a dollar amount? Ms. Penelope Marrett : In the 2008 budget, the federal government provided $33 million over two years. That ends March 31, 2010. The transition to the regulations will be over by then, and we don't know what's going to happen. We can't afford to have a regulator trying to cobble together from the branch moneys that are available here and there, because that does not— Mr. Massimo Pacetti : Okay; we only have limited time. You state that there were 15,000 applications approved over a five-year period.

To me that seems like a lot, but I'm not sure what the numbers are. Ms. Penelope Marrett : Out of 41,000 applications? That's— Mr. Massimo Pacetti : That's why I can't say it's good or not in terms of percentages. It's probably not good, but I'm not sure. To me, it seems like it's a lack of funding.

(1035) Ms. Penelope Marrett : It's definitely partly a lack of funding, but it's also part— Mr. Massimo Pacetti : Can you get us a dollar amount and just send it over to the clerk? Ms. Penelope Marrett : Okay. Done. Mr. Massimo Pacetti : I'd appreciate that. To Ms. Lareau from the Canadian Media Guild, I don't have a problem with CBC, and I like your idea of maybe signing a seven-year contract, but I still have a problem with how we would be able to have accountability of that money. I think you said it should not be under peer review or under an expense review. I'm not sure; I have a problem with that.

If you have nothing to hide or if there are no problems with the services you're providing, you should be more than happy to undergo that review. That's where I'm a little hesitant. I'd like your comments on that. Ms. Lise Lareau : Let me make this perfectly clear. The heritage committee, actually, are the ones recommending that there be a memorandum of understanding, which is a contract between the government and the CBC, that would last for a seven-year period. That would be where your accountability is. All of it would be built into it. I will say to Mr.

Menzies' comments earlier that I understand you can't hear everybody and talk to everybody and question everybody, and that everything costs money. The seven-year memorandum of understanding is one of the few things being represented to you today that doesn't cost a cent. It's about predictability, similar to what we heard earlier; it's about being able to plan and being able to run a big broadcaster. That's what the seven-year memorandum of understanding would give the CBC, so that it wouldn't be subject to tenuous, extremely tenuous— Mr.

Massimo Pacetti : Could I, because my time is up, get you to comment on the graph you provided us for per capita funding for corporate broadcasters? Canada seems to be quite low. Ms. Lise Lareau : It's very low. Mr. Massimo Pacetti : Given that we're such a small country, how are you even able to— Ms. Lise Lareau : This is per capita, so it has nothing to do with size of country. This is per capita. Mr. Massimo Pacetti : That's what I'm saying. In terms of population, how are you able to even provide a service, compared to what— Ms. Lise Lareau : Don't forget, I'm speaking on behalf of the employees.

How does the CBC do this? Mr. Massimo Pacetti : Yes. Ms. Lise Lareau : It's unbelievably difficult. It's done with a lot of dedication on the part of employees. It's staggering what the CBC does with such a small amount of money, for what broadcasting takes. Mr. Massimo Pacetti : Is there an advertising component that is not-- Ms. Lise Lareau : Yes, there is an advertising component. Mr. Massimo Pacetti : That's what makes up the...? Ms. Lise Lareau : That's what makes up the difference. That's what has enabled the CBC to run. But it's also, at the same time, a double-edged sword to have advertising.

It makes it more commercial. It makes ratings the imperative. It creates a different landscape of choices when you start relying on advertising. That isn't what the public broadcaster is here to be. Mr. Massimo Pacetti : Thank you. The Chair : We'll go now to Mr. Dechert, please. Mr. Bob Dechert (Mississauga—Erindale, CPC) : Thank you, Mr. Chair. Thank you for your presentations. We really do appreciate your taking the time to make these very instructive presentations and provide us with your views and comments. I'd like to start with Mr. Irwin of GrowthWorks Capital.

Having previously been in the business of helping companies obtain venture capital and other forms of capital to commercialize their technology, I know how difficult it can be, especially in Canada. I'm sure part of it, as you pointed out, is that our resource funding market is so large here, and that a lot of our institutional and other capital goes there. I take your point about the maximum investment for RVCs not having been increased since 1985.

First of all, can you give us some comments on perhaps some successful RVC investments that have happened in Canada over the last few years, so that we get a sense of how important this is to Canadian businesses? Secondly, what is your view on the appetite for these kinds of investments in the current marketplace, given what's gone on in the markets in the last year or so? Thirdly, what is the U.S. government doing to encourage and enhance venture capital investments? You mentioned that the venture capital market per capita is so much larger in the U.S.

Maybe you could give us a sense of what, if anything, the U.S. government is doing to encourage it. Mr. Daniel Levi : Let me start off with a brief example that you will all know well. The current war that you see between the cable companies and the telephone companies is because cable is capable of putting telephones over cable systems. You are all aware of that. The technology that allows them to do that was created by a company in Vancouver about eight or nine years ago, and it was sold to the company that has 90% of the desktop boxes.

In other words, all cable companies use this chip, from a company called Broadcom in the United States. It's that Canadian technology that allows all the cable companies in North America to compete. When we started, there were six employees. There are currently more than 200 employees working for that company. Today it is one of the centres of excellence for Broadcom in the development of the technologies they use to allow what is called Voice over Internet Protocol. That would be one company as an example.

The money we earned—that the government earned—on capital gains taxes from that one investment was more than the entire amount of money that was put into the program in British Columbia up to that time. So it is a big win for everyone, the employees as well as the government, in terms of rates of return. Your second question was on appetite. Really, you are right in saying that the appetite of Canadians has been a bit depressed over the last number of years. Part of the reason for that is due to the change in the way investment advisers get paid.

Ten years ago, investment advisers were paid equally whether they put in a small ticket or a large ticket. As you can see from our brief, what has happened is that large, bank-owned institutions in the investment advisory area are trying to get people to move away from small transactions. They are discounting the amount the investment adviser will be paid, and therefore the investment adviser looks toward other investments.

One of the things we're suggesting is that we need to reinvigorate the interest of investment advisers, because financially they are penalized within their organizations for selling this product. We need a bit of a kick-start for individuals, and that's why we're recommending that you match what the provinces have done and take it up to about a 40% credit. Then, as historically we have seen with the federal government before, as the funds start to come in and you see people reinvigorated, you can start to reduce the credit from 40% to maybe 35%.

(1040) Mr. Bob Dechert : You believe the cost to the government would be about $100 million over three years? Mr. Daniel Levi : Yes, because we expect we would raise about $300 million more each year for the next three years. Mr. Bob Dechert : Is the U.S. government doing anything to encourage investors in this market? Mr. Daniel Levi : The U.S. government has a number of programs. Most of them are defence-related, so there is a kind of hidden agenda that occurs down there, in terms of research and development, that is very helpful. Mr. Bob Dechert : Thanks very much.

I'd like to ask a question of the Canadian Federation of Students and maybe get Professor George's comment on it as well. This has to do with your comment that we should eliminate education tax credits. My concern is what that does to part-time students. We're trying to encourage older workers to upgrade their skills in the new economy. Have you done any study of the impact this proposal would have on part-time students? Mr. Joel Duff : I'll take that and I'll try to be quick. The fact of the matter is that part-time students are currently ineligible for Canada student loans.

They don't get the interest-free loans that full-time students get, and they are ineligible for the grant system that the government has now created—the grant system that we think is good but that could be improved by including part-time students. These are measures that better address and target part-time students. Mr. Bob Dechert : Would they qualify, if it's means tested, though, as you're suggesting? Mr. Joel Duff : There are different ways to provide assistance, but of course the biggest barrier to all students, full- or part-time, is the up-front cost.

The point Shelley was making was that providing back-end tax credits doesn't really provide access to a program, because you have to come up with the money up front. The idea is that simply taking that money and putting it up front—i.e., reducing the cost of the program—is, if the goal is to ensure that everybody has universal access, the best way to deliver. Mr. Bob Dechert : Just quickly, Professor George, what are your comments on that? The Chair : I'm sorry; we are way over time, so in the next round we'll have to do that. We'll go back to Mr. McCallum, please. Hon. John McCallum : I have a question for Mr.

Sinclair. As I imagine you know, in the government's latest budget document there are proposed substantial increases in employment insurance premiums, starting in 2011. These increases have a significant effect in terms of bringing the deficit down. Calculations by an economist, Dale Orr, suggest that the additional EI premiums will cost a two-earner family $1,200 and will cost a small firm employing 10 people an additional $9,000. I think those are large increases, and when employment may still be quite fragile, they could be damaging to the recovery of jobs. There's a trade-off.

I think we all believe EI should be balanced over the cycle, but this is a relatively short cycle. Achieving balance over a small number of years is giving rise to these very large EI premium hikes. The alternative would be to define the cycle as a few more years and have more moderate EI premium hikes. Are you, as a Chamber of Commerce person, satisfied with these large EI premium hikes, or would you rather see it done more gradually?

(1045) Mr. Art Sinclair : I would suggest it should probably be done more gradually. Again, we're at a very difficult point right now, in that we don't really know what the numbers are going to look like in the immediate term. For example, based on a recommendation from the Canadian Chamber of Commerce, I was suggesting that spending growth will be at 2% to 3% by 2012-13. Just this past Tuesday, Don Drummond and Derek Burleton, from TD Bank Economics suggested it would take until 2015-16 to reach that level, so there's still a lot of uncertainty right now.

However, with respect to your original question on EI premiums, yes, I think we would like to see the growth in premiums take place over a longer period of time. Hopefully over that period of time we'll have some economic stability and in fact will be able to address the deficit and the debt more appropriately over that time. Hon. John McCallum : Thank you. Mr. Rae, my understanding is that the current disability tax credit is not refundable, in the sense that if you have relatively low income and pay no tax, you get no benefit. Is that correct? Mr.

John Rae : That's correct, sir, so the people who most need it don't benefit from it. That's why we're suggesting it become a real refundable tax credit. Hon. John McCallum : I certainly agree with that 100%. As you said, disabled people are often people with low incomes, and you want the benefit to reach the lowest-income people most. This one doesn't. I agree with you that this is something that should be changed. The Chair : You've got two minutes, Mr. McCallum. Hon. John McCallum : Mr.

Levi, I certainly agree that a lot of the old jobs aren't coming back and that the new jobs depend on new ideas and creativity and commercialization and venture capital. With regard to the dramatic drop from 2001 to 2008, was a big part of that drop in the latest year and related to the crisis, or was it a steady decline? Mr. Daniel Levi : The dramatic drop actually occurred in 2001, 2002, and 2003 in terms of hard dollars. In other words, we dropped from $4.5 billion to probably $2 billion over about a three-year period, but the drop continues to occur.

In the U.S., what we saw was a dramatic drop in 2001, 2002, and 2003, but then, starting in 2004, it started to come back again, and they actually achieved almost the same amount of venture capital in terms of fundraising as they had in 1997 and 1998. It became a very healthy market. In Canada, what we saw was a consistent decline in the venture capital market, and that is what we have seen since. Hon. John McCallum : Then it wasn't related to the current economic crisis. Mr. Daniel Levi : No. Hon. John McCallum : What were the main causes, then? Mr. Daniel Levi : Well, there were a variety of reasons for it.

The first one was obviously the bubble bursting in 2001 in terms of the high-tech community. The second one was that the rates of return in particular institutions, pension funds, and others that had invested were not that good. There's a bit of a herd mentality there, so they always leave when times are bad, when they actually should be investing. There was a severe decline in interest from pension funds.

The third one was that the Province of Ontario decided that it was going to phase out this program for retail investment, and that had an impact right across the country, with the exception of Saskatchewan and Quebec, where the program remains very strong. Hon. John McCallum : My understanding is that U.S. pension funds invest quite heavily in this area and Canadian pension funds don't. Is this an innate Canadian conservatism at work, or is there some other reason why...? Mr. Daniel Levi : You have struck the chord right there.

The difficulty in Canada is that there is not a culture of risk, and certainly there is no culture of risk in the pension funds in Canada, below the largest seven or eight pools that exist. Most pension funds in Canada are too small to be able to bear the kind of risk and the research that's inevitably required for them to make investments. There's no fund of fund advisers in Canada of any significance, and so our large portion of funds that are in small pension funds simply do not invest.

(1050) Hon. John McCallum : What about the larger ones, such as CPP or Teachers'? Mr. Daniel Levi : The CPP and Teachers and others are investing, but in a very limited amount compared with what they were investing in the late nineties and 2000-01. Hon. John McCallum : Thank you. The Chair : Thank you, Mr. McCallum. Mr. Wallace, please. Mr. Mike Wallace (Burlington, CPC) : Thank you, Mr. Chair. I want to welcome our guests and thank them for coming this morning. I'm going to start with President George, whom I've known for a few years now. For those who don't know him, Mr.

George will be leaving his post as president at McMaster. He's done a great job of elevating “Mac” and the quality of education there; he has done a really good job. I tease the president a little bit about his ability to be a lobbyist/advocate for his school, but I use him also, when he's not around, as an example of somebody who does a really great job while doing it. So I appreciate your coming today. I do have one question for you, though. We've heard from student associations, but I'm going to ask you this question.

There is a perception--I want to know whether it's just a perception or reality--that the transfer that goes through the social transfer that is for education doesn't go to education. Is that actually true or not? Dr. Peter George : Yes, I.... Thank you. I will be looking for a job after July 1. Voices: Oh, oh! Mr. Mike Wallace : Do you want to handle constituency problems? Dr. Peter George : This is a complicated issue, but let me say that I believe it's true. That's why so much of the focus on the part of AUCC and COU and the research-intensive universities, the G13, has been on the indirect costs of research.

When we receive research grants, which only provide for the direct costs of research, the indirect costs must come from within the universities' operating budgets. That imposes a tax, if you like, on the funds originally intended for the educational mission of the university. So I do believe the point is well taken. If we could get funding for the full cost of research, it would help us immeasurably to address the quality-of-education issues that many of the student groups and colleagues of mine and I myself continue to address. There is an implicit tax there. Mr. Mike Wallace : Okay, I appreciate that. Mr.

Smith, I have a question for you. I don't think you're out of your element. You're coming here with an idea for us, and we're looking for new ideas. I have first a request and then a question for you. My request is that you put it in writing and send it to us. You don't have to do this right away, but send it to the clerk. The clerk will tell you how to get it to us.

I just want to be clear, based on your view of your position that, if you take somebody off the unemployment roll—they're actually collecting EI, or are they on welfare?—you would be able to keep, as a business, the business portion of the deductions you have to pay per employee. Do you have a length of time for that? Mr. Chris Smith : Yes. It would be an incentive. It's strictly the employer's portion; it wouldn't be EI or anything like that, because that obviously needs to be used for other issues. It would strictly be the employer's portion of the source deductions. Mr.

Mike Wallace : Give me some examples of source deductions. How much money is it we're talking about? Mr. Chris Smith : We're talking about, say, probably $500 on a $3,000 payroll or something like that. If you're paying something like $3,000, you're looking at about $500. Yes, it would be clawed back—basically scaled back—over a three-year period. All it's doing is allowing people to re-enter the workforce. Mr. Mike Wallace : Right. And it's not somebody who has left one job and gone to another, but somebody you would be taking on to— Mr.

Chris Smith : No; that is why it would be key on the additional employees on your payroll. That's why it's easy to measure: the Receiver General has that information. They know how many employees I have today, and they'll know how many I have tomorrow. If I just replace somebody, that's not an additional employee. Mr. Mike Wallace : Right. Here is a question for the student association. We've seen the federal student association representing Manitoba, Ontario, the national group, with basically the same sort of concept; just a little bit different.

On the issue of the silo that would be created specifically for post-secondary education, you used examples of the other transfers we make; the health transfer, for example. Are you aware of the strings that are attached to the health transfer now? If you could tell me what they are, I would be happy to hear them.

(1055) Mr. Joel Duff : Yes. We want strings. We think there should be strings. Look, the Stats Can report that came out two days ago that looked at tuition fees across the country shows that in Ontario, students are paying about $6,000 on average, and students in Newfoundland or Quebec are paying less than $3,000. Just by accident of birth, there's an inequality of access across the country. If you want to go to law at the University of Toronto, it's $21,000. At McGill University in Quebec, for a Quebec student, it's just over $3,000. Would anybody say that McGill is a second-rate law school? I don't think so.

It's about priorities, but it's about having our federal government play a role in establishing national standards for fairness, for equality of access across the country. There are other quality benchmarks as well. I think Mr. George would be happy--as would Ms. Patterson, who has just joined us--to see some benchmarks for quality. But we would like to make sure that the money the federal government sends to the provinces for post-secondary education gets used in the way that it's supposed to. Mr.

Mike Wallace : I think my point is that if you look at the health transfer, the actual strings attached by the federal government are fairly weak, really. The money goes to the provinces; they deliver health care. They have to meet the five criteria of the Canada Health Act, but other than that there's not a whole lot. That's why you would be slightly different, if we had a bunch of strings on a transfer. The Chair : We'll leave that as a comment. Mr. Mike Wallace : It was just a comment, yes. Thank you. The Chair : We'll go to Mr. Pacetti again. Mr. Massimo Pacetti : Mr.

Smith, again, going over your proposal, in your brief you talk about “reducing the source deductions”. Would that mean CPP, EI, and deductions at source? Mr. Chris Smith : Well, not EI, as we said, but only because I believe it has its own purpose. Mr. Massimo Pacetti : So does CPP. Mr. Chris Smith : Well, yes, and not CPP; it would be basically the income tax portion of it. Mr. Massimo Pacetti : Then what would you do? Would you just hire an additional employee and then decide not to remit his source deductions? Mr. Chris Smith : It would be administered however the Receiver General decided to administer it.

In essence, it would either be rebated or just not remitted, but it would be recorded, certainly. Mr. Massimo Pacetti : That's the problem right there. You have to find a way to make it.... In the past, there were programs where, at the end of the year, when you filed your T4, you were eligible to get a portion of your EI premiums that you had paid...more than the year before. That was the true test. There could be some type of program in that fashion. I'm from Quebec. The federal government has outsourced its employment training. If you were to hire an employee, you could go to see Emploi Québec.

They'll give you a grant, if you're eligible, for hiring new people. That would be better structured. I'm wondering; is there not that type of facility in Ontario? Mr. Chris Smith : There are currently some programs that you need to apply for, need to register for. I don't think it's effective right now, because most people cannot be bothered, or it simply doesn't apply to them,

whereas if it's right across the board for everybody, then it's a simple matter of every additional employee. Mr. Massimo Pacetti : I understand. The only problem I see is the abuse whereby people just won't submit their deductions at source. At the end of the year you're caught, because you haven't submitted your deductions at source. Mr. Chris Smith : I suppose that could happen. Mr. Massimo Pacetti : Thank you. Just quickly to the people from McMaster, either Mr. George or Mr. Elbestawi, you're asking for money for investment in new innovation. I think Mr.

Menzies stated that there seems to be universities competing against universities. Université de Montréal has put tons of money into our university. I'm just wondering, why should the Government of Canada give $10 million—I think it's $10 million—for innovative products? Why not ask for a loan and let the fact that it's going to generate income force you to generate that income, turn it into a commercialization—the universities seems to be weak in that aspect—and force you to have a return on investment, if you are going to come up with some innovative product? I would like you to comment on that. Dr.

Peter George : Well, I think it's a strategic investment in the prosperity agenda for the federal government. Second, when we acquired our property for the McMaster Innovation Park, 37 acres of a former industrial site, we received a $10 million grant from the Province of Ontario and a $5 million grant from the City of Hamilton in support of that project, but we acquired it too late to participate in the federal program to support research and innovation parks. We are asking for a federal grant for much-needed infrastructure investment to match the provincial grant of $10 million that we received a few years ago.

We did have this as one of the priorities on our knowledge infrastructure program list, but since the province had already contributed its $10 million, it didn't, I think, qualify for the joint nature of the program. We think it's a good investment for the federal government, particularly given the economic circumstances in which Hamilton finds itself and the great expectations of the city and of our community for the future activity on the innovation park as a catalyst of economic revitalization of our area.

(1100) Mr. Massimo Pacetti : If you're not able to get it as a grant, would you not be interested in requesting it as a loan? Dr. Peter George : We'd be quite happy with a loan on reasonable terms--especially if, in the end, it was converted into a grant. Voices: Oh, oh! Mr. Massimo Pacetti : Thank you, Mr. Chairman. The Chair : I think you're ready for a career in politics, Mr. George. I want to clarify a couple of issues or ask a couple of questions. One question is for the Canadian Media Guild.

The proposal of a seven-year memorandum of understanding is an interesting idea, and I think there is some merit to it. The one challenge for us as parliamentarians, though, is with CBC's accountability to Canadians themselves, and I'll give you an example. When CBC Radio changed their programming with respect to reducing the amount of classical music, I got a lot of phone calls and e-mails from a lot of Canadians in my area who said they were big fans of CBC Radio, they loved it the way it was, and they didn't like the change. I said, “I'm a parliamentarian.

I don't determine programming, so talk directly to CBC.” Their response to me was that they had, and that they hadn't got much of a response. This memorandum of understanding between the government and the CBC is a good idea, but how do you ensure that Canadians themselves have some input or get some response from CBC directly?

Ms. Lise Lareau : Your answer was right, in that the government isn't here to.... Nobody would propose that the government tell the CBC what to do and how to program. The CBC does, in my view, a mixed job about responsiveness to the audience, but that's not a function of its funding. In terms of accountability, there are two kinds of accountability it needs to have. One is accountability to the government, and I believe it can be done through a memorandum of understanding. In this case the CBC says they will do X, Y, and Z, and that you will pay them x , y , and z dollars for seven years.

Then they know where they're coming from, and you know what you're getting. That's the relationship between the CBC and the government. It makes perfect sense. They get predictability. Now, in terms of the CBC and its audience, in that document you can tell them to beef up their responsiveness to their audience and to make sure their board of directors is functioning in that regard. The board of directors is supposed to be the link between the audience and the CBC.

If that's an important issue for the government that is providing this contract, it can say to the CBC that this is important: if you're going to engage in a contract with us-- The Chair : You mean within the memorandum. Ms. Lise Lareau : --this is it. On the whole topic of Radio 2, people field a lot of complaints about a lot of stuff, whether it's The National , Radio 2, program X, or program Y, on whatever platform. This issue about funding your public broadcaster and my public broadcaster and Canadians' public broadcaster is much bigger than program X or program Y. It really is.

You have to-- The Chair : No, I'm using that as an example. Ms. Lise Lareau : I know, I know, but I really urge people--because I've been around for awhile on this--not to weigh in to-- The Chair : These are people who strongly support the CBC; they're big fans of the CBC; they like what's being done. They just want to have some more direct contact. Ms. Lise Lareau : There are mechanisms for that. There are annual meetings with the public. There's all of that. But I really do think that for the CBC to do this, it has to be part of the memorandum of understanding, if it's an important consideration.

(1105) The Chair : Thank you. I want to follow up with Mr. George with respect to research. The AUCC has said to focus really on funding for granting councils and indirect costs of research. Your submission is more focused on commercialization, and I appreciate that angle. But if you look at research, it seems to me, we fund infrastructures through CFI and through the KIP program in the stimulus package, human resources through granting councils and the Canada research chairs. Then there's the whole commercialization aspect. At the University of Alberta, we have TEC Edmonton.

But it seems as though the more you fund research, the more you need to fund research. You fund research and you have a Canada research chair. For example, U of A is trying to bring someone up from California. You bring that person up, then you have to create the infrastructure around them. Then more people come to the university, who then need more CIHR grants and other granting programs. Then they attract more people, who then need more facilities, and then need more funding for commercialization. I guess the concern is that it's a sort of never-ending ask. And are we always underfunding one area?

The concern now seems to be that we're underfunding the human resource side. But if funding is given to the granting councils, next year are the G13 going to come to the finance committee saying, now you're underfunding on the infrastructure side? And so you have to address that angle. Then two years from now it will be human resources. How do we find the right proportion among these different areas in a longer, stable program? Dr.

Peter George : I think it's a really important question, and I think we've made great progress in recent years with the research agenda, with funding on both the infrastructure and equipment side and on the human resources side: the CRC side, the Vanier scholarships, and so forth. And with the direct funds and the commitment to an indirect cost program, the pieces of the package are there.

I think we'll have to be mindful of what international comparators say in these areas, and it is true by international comparators, as recent studies commissioned by AUCC and the G13 have shown, that we are still underfunding, in relative, comparative terms, the full cost of research. That said, I am quite comfortable with even more emphasis on outcomes measures, especially in those programs that are aimed at the applied and innovation and commercialization end of the research spectrum. The question of time horizons is extremely important.

We must continue to fund basic research, because it is the wellspring of applied research and commercializable technologies and processes. We can apply outcomes measures more directly to the commercializable end of the process than we can to the basic end of the process, where peer review remains the classic comparator of quality internationally.

But the outcomes measures and the vehicles for delivering on commercialization—through innovation and research parks, through tech transfer offices, through the co-location of venture capital companies with innovation and research parks, as we have done at McMaster—I think are the way forward. The Chair : Thank you. I appreciate that. I want to thank you all for coming in this morning. I know it's a short time for a lot of big ideas and good discussion, but thank you all for your presentations. We will suspend for a couple of minutes and bring the second panel forward. Again, thank you all for your time.

(1115) The Chair : We will start with our second panel this morning, on our second day here in Toronto of our pre-budget consultations across the country. Welcome to all of you. Thank you for being with us here this morning. We have with us a number of organizations. I'll read the list in order of their presentation to the committee. We have, first of all, the Investment Industry Association of Canada; we have Mr.

Andrew Frew, as an individual; we have the Council of Ontario Universities; the Ontario College of Art and Design; we have the City of Toronto with us here this morning; the Centre for Image-Guided Innovation and Therapeutic Intervention; the National Angel Capital Organization; and the Direct Sellers Association of Canada. We have five minutes for each of you for your opening statement. Then we'll have questions from members, from all parties of the committee. We'll start with Mr. Russell, please. Mr. Ian Russell (President and Chief Executive Officer, Investment Industry Association of Canada) : Thank you, Mr.

Chair. I appreciate this opportunity to appear before the House of Commons Standing Committee on Finance to participate in this pre-budget consultation. Our association represents over 200 members firms, investment dealers that employ over 40,000 Canadians from coast to coast. Our members account for most of the financing and trading activity in Canadian capital markets. Of our more than 200 member firms, just slightly fewer than that number are in fact quite small, with less than $50 million in capital each. They're located in offices right across the country, serving institutional and retail clients.

Our industry really provides four functions: it provides financial advice to retail clients; it facilitates secondary market transactions in equity and debt markets; it advises corporate clients on capital raising and restructuring; and it underwrites debt and equity securities for government and corporations. Our core function is to channel savings from Canadians to productive investment. Looking at the current environment, the financial crisis with its aftermath points to two things that are relevant to our submission.

One is that it devastated the savings of individual Canadians, and the second is that it has increased the financing difficulties for small and mid-sized companies right across the country. For the past year the economy has contracted, which is a reflection of the consequences of the global meltdown last year, and the outlook for Canada is a mixed one. On the positive side, a solid recovery in the developing world augurs well for commodity markets, and Canada will benefit. On the other hand, a very slow recovery in the U.S. and a strengthening dollar obviously dampen the growth prospects for us here in Canada.

In the context of that financial crisis, we support the federal government's response to the crisis. We feel that it acted quickly, it acted judiciously, and it came forward with what we felt was the right mix of fiscal policy to address the crisis. I think the way the Canadian economy has withstood the crisis is testament to that.

The benefits that we have reflect steps taken by both governments, quite frankly: a very strong fiscal position in Canada that really began in the mid-1990s and continued through to date; secondly, a very competitive corporate tax regime that was put in place several years ago; and thirdly, the very solid position in which our financial institutions find ourselves. But now more than ever before we feel the federal government should encourage productive risk-taking and enterprise by a strategic and careful reduction in the capital gains tax rates.

We feel that a reduction in the capital gains tax rates, particularly on common equity shares, would spur business and job creation, enhance productivity, and promote overall wealth creation. The proposed expenditure and the impact on the federal budget of the lower capital gains tax rate we're proposing would be significantly mitigated if the reductions were restricted to common equity shares, particularly those of small public companies that are ineligible for the lower corporate rates, ineligible for the R and D tax credits, and ineligible for the $750,000 lifetime capital gains exemption.

We feel this would really be a boost to stimulating risk-taking in the capital markets and investment in small enterprise and would facilitate capital-raising activities for small and mid-sized companies. There has been a very significant fall-off in financing by small public companies. This would also create a more level playing field between small public and private companies. Another initiative we've been looking for and are urging is for the government to confirm a longer-term commitment to the credit facilities put in place just before the crisis, which have worked very well.

They are not needed right now, but circumstances could change. Finally, on the retirement front we recommend adjustments to the tax-assisted retirement savings programs to address the difficulties that older Canadians close to retirement face. We feel these measures would complement the structural solutions, which will have a longer-term impact, that will probably come forward with the task force that will report at year end.

(1120) In closing, I would just speak of our economic success, which turns on our ability to compete in global markets. We recognize the challenges faced by the government to promote growth and preserve a strong fiscal position and we recognize the limited maneuverability of finances, but we're convinced that tax policy can be engineered creatively to limit strains on the fiscal position and encourage investment growth. Thank you, Mr. Chair. The Chair : Thank you, Mr. Russell. We'll go to Mr. Frew now, please. Mr. Andrew Frew (As an Individual) : Heaven help the family that depends on a farmer for support.

Heaven help the nation that doesn't have that farmer to support it. Mr. Chairperson and committee members, my name is Andrew Frew, and I'm here as an individual. I'm a hog producer. I farm with family in Durham region. We raise 325 sows, farrow to finish. I have six family members who rely on our farm as their sole income. This document refers to a Rod de Wolde, who helped me put this together. Through my not understanding the process, I didn't properly have him entered to help me today, but he is documented here for all the work he has helped with.

He is a genetics breeder, supplying breeding stock to other hog producers. He also relies on the hog industry as his sole source of income. The crisis in the hog industry is well documented. I'll highlight just a few things: the rising Canadian dollar, increasing feed prices, country-of-origin labelling, economic downturn, and finally the H1N1 virus. These problems existed long before the current recession and are no fault of the producers. We believe the industry is at a tipping point. There are many secondary industries that rely on the hog industry.

If our industry fails, these industries will fail also, and this will have a greater effect on the overall economy. We compete in global markets in the hog industry. There are safety net programs within the government, but they have become ineffective because of this perfect storm that has hit us. As grassroots producers, we believe strongly that the industry needs an ad hoc rescue payment. We understand there are trade issues surrounding this, but we think we've figured a way around them. We think “no” is simply not an acceptable answer. We have developed a 2008-09 Canadian hog sustainability supplement program.

This program could benefit all producers across the country. I'll give an example of how our proposed program would work. Eligible gross sales of hogs on any farm could be used in this calculation. The reference here for the 2008 payment year would be 2007-08. We have come up with a formula that uses the average eligible gross sales multiplied by the factor that we've derived. Our calculations are based on a farrow-to-finish operation. The expected cost of this program for the 2008 program year is $875 million.

Using a 60%-40% federal-provincial split, as is normal, $525 million would be federal and $350 million would be provincial. We came up with the factor using OMAFRA data that was in the appendices—which may have been taken out, because we didn't translate them to French. We apologize for that. The information was in our document, but it may not be in all of your copies now. We took OMAFRA's information for the cost of raising a hog, divided by the value the hog was sold for, to come up with this factor. In 2007 the factor was 1.2, and in 2008 it was 1.3. The average of those years would be 1.25.

That would be the additional value the hog producer needs to make up losses. Given a sample calculation of a farmer who sells 2,000 hogs a year, using his eligible gross hog sales for 2007-08 times our 1.25 factor for that production year, that producer would be eligible for just short of $64,000.

The benefits of a program like this include: it is not a “per hog” payment; the factor is based on industry averages; the calculation is a two-year rolling average; it does not promote production, because it's after the fact; the calculation numbers should be available from AgriStability; it is simple to calculate; and the payment does not pay producers for commodities other than hogs that they may have produced in that reference year. We carried through for a 2009 program using the same information, and in the same scenario, the overall cost would be around $1 billion to the hog industry. In

summary, in May 2009 the Canadian Pork Council, CPC, presented a request to Minister Ritz for an ad hoc hog payment of $30 a hog. That request was denied, our understanding is, because of trade implications.

(1125) In the appendix, there is a backgrounder from CPC. It says the Canadian pork sector contributes significantly to the Canadian economy, 70,000 jobs. Nearly two out of three hogs born in Canada are exported: $500,000 worth of live hogs, $2.7 billion worth of exported pork products. These exports create 42,000 jobs within our economy, $7.7 billion in economic data, and a total of $2.1 billion in wages and salary. These jobs and benefits are at risk. We cannot afford to lose the hog sector in Canada. Thank you. The Chair : Thank you very much for your presentation. We will now go to Ms. Patterson. Ms.

Bonnie Patterson (Interim President, Council of Ontario Universities) : Good morning, Mr. Chair, and distinguished committee members. On behalf of the Council of Ontario Universities, thank you for this opportunity to present this morning. Approximately 42% of all students studying in universities in Canada are in Ontario. These 21 institutions provide a diversity of experiences in academic programs and research opportunities that they provide. Universities are true community partners.

They contribute to economic, social, and cultural development that have impact locally, provincially, nationally, and internationally. Whether it is creating new ideas or applying them, universities represent an enormous capacity to solve problems that society faces today and in the future. In a previous written submission to your committee, the Council of Ontario Universities asked the federal government to invest in three important areas in budget 2010: research, the recruitment of international students, and supports for our aboriginal learners.

Investment in all three areas is critical to individuals whose lives will be directly changed by your decisions, but also to communities, our province and country. I'll focus the remainder of my remarks on just one of these priority areas, and that is research. Put simply: research matters. It matters because it impacts individual lives. It helps us in a global context to see the world from different perspectives, and it awakens individual potential for problem solving and creativity.

It matters because it leads to new products, processes, treatments, and services that make a difference for many individuals in society. It matters because knowledge, new and old, is essential to our economic future. It supports a diversified and robust economy based on innovation led by the brightest of minds. The reality of competition in a knowledge-based global economy is that the advantage goes to countries that are innovative, productive, and technologically savvy. In other words, it goes to those that invest heavily in the skills of their citizens.

Canada needs people with advanced skills and entrepreneurial spirit. Universities are primary providers of this talent, and they support the acquisition of leading-edge skills in areas of specialized knowledge needed to drive the economy. Through educational programs and numerous partnerships, universities help Canada's talent pool explore their creativity and imagination, inspiring the possibility of innovation in all aspects of their lives. Second, in a knowledge-based economy what matters is the ability to acquire knowledge but also to apply it.

Canadian researchers must be able to apply their cutting-edge knowledge to tackle the toughest challenges facing Canadian industry today. Centres of excellence and research, universities, play an essential role in the innovation system, and their faculty and students ensure that the innovation pipeline is continually fed. Let me quickly share a few examples to illustrate the impact of recommendations this committee has made to invest directly in university-based research.

Researchers at Queen's University are developing a novel technique for improving the reliability and performance of solar water heaters that can cut heating costs by 50%. The systems are now being installed across North America, and more recently they were installed at Toronto's Hospital for Sick Children. At York University, a public-private partnership involving companies such as IBM and numerous SMEs are establishing a new consortium to develop the next generation of medical device technologies. The York region is currently home to nearly 50% of Canadian medical device technologies.

As a result of collaborations between Lakehead University and Genesis Genomics, early cancer detection products are under development in Thunder Bay. Genesis Genomics is one of Canada's top ten biotech companies. There are many other examples of different types that illustrate successful social and economic outcomes of research that is under way in virtually every university in this province. Many initiatives are developed through successful public and private sector partnerships. We know that the committee's work is particularly difficult in this current fiscal climate.

We also acknowledge the large number of voices competing for scarce resources. The federal government has played a leading role in investing in research and innovation, and we are thankful for those investments. The knowledge infrastructure program is the most recent example. But now is not the time to lose the momentum created by those investments. We need to put them to work and increase the return on investment in the future. We need those investments to compete globally.

(1130) Through a significant investment in the three research-granting councils at the federal level—the Natural Sciences and Engineering Research Council, the Social Sciences and Humanities Research Council, and the Canadian Institutes of Health Research—researchers will be able to perform more and better research, move the continuum from fundamental to applied, collaborate with greater speed with industry partners, train more graduates and post-doctoral fellows in the global talent race, and make productive use of the infrastructure investments made recently and over the last decade.

This investment will contribute to a prosperous Canada. Thank you for providing the opportunity to speak with you today. I would be pleased to answer your questions. The Chair : Thank you very much. We will now go to the Ontario College of Art and Design. Ms. Diamond. Dr. Sara Diamond (President, Ontario College of Art and Design) : Thank you very much for the opportunity to address the House of Commons Standing Committee on Finance. The Ontario College of Art and Design is a specialized university, a member of AUCC and the COU. I want to speak about three issues that OCAD addresses in our written submission.

The first is design strategy. Design creates innovative processes, systems, and products and is the fundamental engine to drive intellectual property in Canada. Countries with a high innovation and competitiveness ranking invest in design at all points in the supply chain. Product design and development, a Canadian manufacturing perspective , identifies design as the critical element in achieving better productivity, and, according to Industry Canada, firms identify design as being of value in affecting time to market, new products' success rates, and the percentage of revenue from new products.

Design drives innovation throughout the digital industries, gaming, mobile applications, and so on, and design transfers research from the bench to commercial product. Design redirects business capacity to new products and markets and bridges cultures to create universal or individualized products. Canada needs a design strategy, one that will promote Canadian design, invest in design education, and target design research to the granting councils and CECR initiatives in commercialized network development.

We need to create capacity in IRAP to support design innovation and the redesign of business processes and encourage partnerships with Canadian design firms. Second is our physical and virtual infrastructure. Through public-private partnerships, we need to greatly enhance Canada's broadband capacity, continue to strengthen our country's mobile Internet, and support the super-computing networks that are fundamental to Canada's research and commercialization and post-secondary competitiveness.

A digital strategy for Canada can enable such partnerships and strengthen the delivery of e-learning, provide access to democratic engagement for all Canadians, and bring Canadian businesses online, supporting the success of Canada's digital industries, a highly competitive sector. OCAD has created a proposal for a digital future centre with a request to the federal government for $12 million toward this unique national beacon.

We are happy to say that the province has supported us both through its training and colleges and university sector and research and innovation, and we encourage the federal government to do so. Next is aboriginal post-secondary education. All significant studies of aboriginal post-secondary education note the importance of developing programs that will engage aboriginal youth while building the capacity and knowledge of these communities in their own right.

Within the larger Canadian context, new generations of aboriginal artists, designers, architects, and media producers and the application of their skills to other domains such as health care will create significant transformative economies and economic benefits for these communities while contributing to Canadian and international cultures. Despite the well-documented importance of culture to aboriginal well-being, creativity, and economic capacity, there is very limited availability of programs dedicated to aboriginal visual culture, art, design, and commercialization of art and design in this country.

Hence we encourage the federal government to expand university educational opportunities for aboriginal Canadians by increasing financial support to students of aboriginal descent and investing directly in innovative university programs such as OCAD's aboriginal visual culture programs that provide access to aboriginal undergraduate and graduate students. There is a link between these three points. Investing in aboriginal learning, linking an effective broadband strategy to all regions of Canada, and understanding the critical role of design in fact will help Canada to be truly competitive. Thank you very much.

(1135) The Chair : Thank you very much, Ms. Diamond. We will now go to Ms. Carroll from the City of Toronto. Mrs. Shelley Carroll (City Councillor and Chair of the Budget Committee, City of Toronto) : Thank you, Mr. Chair and members of the committee. It's a privilege to be here today to represent the City of Toronto and to share with you the views of Mayor David Miller and city council. On October 5, FCM presented recommendations to you in P.E.I. The City of Toronto supports those views.

Mayor David Miller is also an active member of the Big City Mayors' Caucus, and he strongly supports the recommendations in its 2006 report entitled “Our Cities, Our Future”. We've provided it for you today. Since 2006, BCMC has requested that the federal government create a national transit strategy, realign roles and responsibilities with appropriate resources, and share revenues that grow with the economies of the cities. As you know, the economic security of Canada is inextricably linked to the economic strength and stability of its cities.

The success of local and regional economies positions Canada within an international marketplace. You'll hear throughout my presentation that all orders of Canadian governments must continue to work together to ensure that the country remains prosperous and provides a high quality of life. In particular, during these difficult economic times we must work together to provide Canadians with needed programs and services. The recession in Toronto has hit very hard. The unemployment rate is up, with more people relying on EI.

There are more people in vulnerable housing situations, and more families are without child care that would enable them to participate in the labour market. When the recession first hit, the City of Toronto quickly responded with an action plan to support the most vulnerable and to secure and create jobs. Now all governments are playing their part to boost the economy by investing in infrastructure. Today the City of Toronto wants to thank the federal government for its commitment to improving Toronto's public infrastructure through its Building Canada plan and the economic action plan.

Together we are addressing the negative effects of the recession and making a positive impact on the economy with leveraged stimulus spending. We see three key areas where we could continue to work together to prepare Canada to lead in the new economy. First is investing in our people and public infrastructure. We look to the federal government to help Torontonians with meaningful employment, obtaining the skills they require for the knowledge economy to come, and having equal access to income support programs such as EI until they gain access to the labour market.

Affordable housing and support for families to raise their children while working full time are essential programs that will help Canada remain competitive at this time. With this in mind, we recommend that the federal government enhance the employment insurance program to ensure equal access, create a national housing strategy with predictable and long-term funding for affordable housing and homelessness services, create that national transit strategy, and provide permanent support for early learning and child care systems. The second key area we see is support for the green economy.

The City of Toronto will begin implementing a sustainable energy strategy to help meet our greenhouse gas reduction targets, which includes a component to help accelerate the retrofit of buildings, transportation systems, and energy infrastructure throughout our city. We estimate that 14.2 permanent jobs can be created for every $1 million spent on energy conservation, renewables, and the modernization of our energy distribution network.

Federal support is needed for the green economy in areas such as labour market development and support programs for green building development and renewable energy sectors; building retrofits, such as support for multi-residential retrofit; and job creation initiatives, like the mayor's tower renewal program. Support is needed here to drive broad environmental, social, economic, and cultural change by improving Toronto's concrete apartment towers and the lands that surround them. It's a very innovative program, and we've provided materials on that.

Under the green economy we also support an investment in the agricultural sector. A third key area is a federal policy focus on entrepreneurship, self-employment, and small and medium enterprises. We think you know the statistics. This is a growing trend, and we need infrastructure and training support so this can be a key area of employment growth in the nation, particularly in Toronto.

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summary, I will reinforce for FCM and BCMC, and I think I speak for all of the GTA based on our votes, that a key component we need coming out of the recession is that one thing you have been asked for, for a very long time—all parties, because it's not about parties. It's about populations and turning points in cities. Revenues that grow with the economy allow us to get on with the growth as we come out of the recession, and your commitment will be to work on your deficits. Thank you. The Chair : Thank you very much, Ms. Carroll.

We will now go to the Centre for Image-Guided Innovation and Therapeutic Intervention. Dr. Peter Kim (Lead, Centre for Image-Guided Innovation and Therapeutic Intervention) : Thank you, Mr. Chair and members of the committee. Thank you for having us today. More than 10,000 times this year, a mother in Canada will learn that her child has a birth defect. Those with severe abnormalities often die or remain disabled for life. Fortunately, many of these defects can now be treated successfully. As a pediatric surgeon, I have seen how surgical techniques have evolved and advanced over the past 20 years.

However, children's surgery has its own challenges. Operating on children, with their tiny spaces and highly sensitive organs, presents its own unique set of challenges. These giant machines and tools developed for adults just aren't equipped to work effectively. From my own experience and talking to my colleagues from all across Canada and the world, it has become clear that we're not reaching the limits of what can be done with traditional surgery. And it's increasingly becoming an issue with respect to access to appropriate care. This is where the CIGITI comes in.

CIGITI stands for Centre for Image-Guided Innovation and Therapeutic Intervention. We're a multidisciplinary group of surgeons, engineers, scientists, and software developers from all over Canada, working together to develop and market new medical technologies while creating new knowledge. CIGITI is based at Sick Kids hospital in downtown Toronto. Today I want to specifically talk about a project that we have focused on for the past three years. It's called Kidsarm. Kidsarm combines minimally invasive surgery with imaging technologies and medical robotics.

Think of Kidsarm as pediatric surgery's answer to the space shuttle's Canadarm. It's nimble and can handle the smallest patients to the largest with precision and safety. The technology gives us clear, real-time images of a child's internal organs. The surgeon needs only to make a small incision and then he or she can quickly navigate to the region of treatment, avoiding blood vessels and critical structures before quickly performing the necessary procedure. The potential is enormous. Consider a birth defect such as a large tumour called sacrococcygeal teratoma,