EVIDENCE

Standing Committee on Finance NUMBER 043 2nd SESSION 40th PARLIAMENT Monday, September 28, 2009 Le lundi 28 septembre 2009 Standing Committee on Finance CANADA [Recorded by Electronic Apparatus] EVIDENCE September 28, 2009 Committee Edited Evidence * Table of Contents * Number 043 (Official Version) Official Report * Table of Contents * Number 043 (Official Version) Témoignages * Table des matières * Numéro 043 (Version officielle) 43 28 09 2009 2009/09/28 08:00:00 House of Commons Comité permanent des finances Standing Committee on Finance FINA Chair Mr. James Rajotte 40 2

(0800) [ English ] The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)) : I call to order the 43rd meeting of the Standing Committee on Finance. It's wonderful to be here in lovely Vancouver. This is the first of our nine city stops for pre-budget meetings. We have with us today in Vancouver 30 witnesses, so we have a very full agenda. We're also doing a site visit to the Port of Vancouver today. I want to welcome all colleagues to Vancouver. We have sessions of an hour and a half and we have seven witness groups per session, so it's a very busy time.

In the first session we have with us, first, the Corporation of Delta; second, First Call: B.C. Child and Youth Advocacy Coalition; third, the Ladner Sediment Group; fourth, the Rental Owners and Managers Society of British Columbia; fifth, the Public Service Alliance of Canada; sixth, the Village of Tahsis; and seventh, the Sport Matters Group. We'll ask for an opening statement of up to five minutes from each group in the order I've presented. We'll start with Ms. Jackson, please. You can begin your submission. Mrs. Lois E. Jackson (Mayor, Corporation of Delta) : Good morning, Mr. Chairman.

Bonjour, mesdames et monsieurs. Bienvenus à Vancouver. Thank you so much for being here with us. Ladies and gentlemen, I am simply going to paraphrase some of our brief. It is a long brief, but I hope everyone has an opportunity to read it. I will begin with our recommendation that the federal government reinstate local navigation channel dredging funding in the federal budget in order to provide adequate long-term funding for a local navigation channel dredging program in the Fraser River. I believe, Mr.

Chairman, you have all received a map that shows the Fraser River as it comes down through the metropolitan Vancouver area. I have it behind me as well. We will leave that for people to look at, at their leisure. The Fraser River is the largest river in British Columbia, some 1,400 kilometres long. It actually drains one-quarter of the area of the province. As a result, there are deposits of 32 million cubic metres of sediment, and 10% of that is deposited in the lower Fraser region. We used to have 20 feet of water in our harbour and along our side channels. That was at low tide.

Today we have two to three feet of water at low tide. We're having a very difficult time trying to resolve this issue. Without continued dredging, the key deep-sea shipping and navigational channels will be too shallow for commercial and domestic vessels to safely access our ports. Mr. Chair, ladies and gentlemen, for more than 100 years river maintenance has been the responsibility of, and in fact funded by, the federal government--namely, Public Works and Transport Canada.

They maintained the deep-sea fishing and shipping channels and the domestic and local channels for the fishing industry, tugs, barges, commerce, and pleasure craft. They all use these channels. In 1990 Transport Canada diverted water from the side channels in order to increase the heavier flow into the main channel to continue to flush the main channel. As a result, the side channels were silted in to a very large extent, and this continues. We have had 10 years of accumulation, in the amount of about 1.2 million cubic metres, which needs to be removed in order to save our side channels. We need your help.

There is no longer scheduled dredging to maintain the Fraser River channels. Port Metro Vancouver dredges the main channel only. Port Metro Vancouver has completed studies that indicate that to restore the channel to pre-1998 conditions it will cost $5 million, plus $500,000 annually to sustain it on a long-term basis. Port Metro Vancouver has given my colleagues from Ladner $125,000. This is the Ladner harbour sediment study, which is to give them other tools in order to look at dredging to reduce the buildup of silt. They are high and dry in their homes along the channels most of the time.

You will hear from them later, Mr. Chairman. We have been declared by Fisheries as a core harbour. Of the 1,170 small harbours, 750 are core harbours along the coast, and we are one of them. We do have very large economic impacts, as you can see from the notes we've given you.

(0805) Once again, just to recap, we recommend that the federal government reinstate funding for local navigation channel dredging into the federal budget in order to provide adequate long-term funding for a local navigation channel dredging program in the Fraser River. You can see the affected areas in purple on your map. Thank you very much, Mr. Chairman. The Chair : Thank you very much, Ms. Jackson. I'm advised that First Call is in the room. Is Ms. Julie Norton or Ms. Adrienne Montani here? Would they like to present? Perhaps we can bring them to table.

We'll move on to the Ladner Sediment Group, please, for your presentation. Mr. John Roscoe (Chairperson, Ladner Sediment Group) : Bonjour, monsieur le président and members of the committee. [ Translation ] Welcome to Canada's lotus land. My name is John Roscoe, and I am the chair of Ladner Sediment Group. [ English ] Thank you for this opportunity to speak before you today. I would like to introduce to you our spokesperson, Mr. Chris Scurr. Chris is a business owner in our local community and operates Delta's Ladner Cruise and Travel Centre.

He is the president of the Floating Home Association, Pacific Region, representing over 500 residents along our waterfront. He is a director of the Ladner Business Association. He is also chair of a focus group for redefining our Ladner Harbour business area. Chris is also a director of the Delta Chamber of Commerce and a director and founding member of Delta's Roberts Bank Lifeboat Society. Chris has lived along the river for 15 years on a float home on our local channels. Chris is also the spokesperson for the Ladner Sediment Group. On that note, I would like to turn this presentation over to Chris. Mr.

Chris Scurr (Spokesperson, Ladner Sediment Group) : Thank you, John. Good morning, ladies and gentlemen. Mr. Chairman, thank you for this opportunity to speak today. I'm going to read directly from the submission, so please bear with the notes that you already have. Hopefully, you'll have a chance to read them. Over the past five years, the issue of secondary channel dredging has become a significant local issue and, given the senior government's responsibilities on the Fraser River, as with the St. Lawrence River, it is also an issue of national significance.

This matter has been discussed with the local port authority and representatives from several departments in your government. This brief provides information on the background to the issue and on some recent activities and then identifies the support needed to make progress in addressing the concerns. Here's a little bit of history. The Fraser River in B.C. travels, as Mayor Jackson said, through almost three-quarters of the length of British Columbia and is a very unique river.

One aspect of the river is that it runs through a major clay-bank area in the central interior of B.C., where it picks up a tremendous amount of fine clay and silt. This silt has been deposited in this delta by the Fraser River for thousands of years, and of course continues to be deposited. The lower reach of the main channel of the river is used for heavy ocean freighter traffic that plies the river as far as New Westminster. This area of the river needs to be constantly dredged to maintain shipping depth of water for ocean freighters.

Up to approximately 1998, the management of the lower reaches of the Fraser River was under the jurisdiction of the federal government, under the Department of Public Works and later the Department of Transport. They were the shepherds of this lower area of the Fraser River, and along with maintaining the main channel for ocean traffic, they also maintained the secondary channels for fishing vessels, tugs, and barges, and general traffic for both commercial and pleasure craft.

Through the years, as river managers, they have trained the river by placing diversions at critical locations to divert more water into the main channel at the expense of the secondary channels. The result of this increased flow in the main channel was less silt settling out in this area, which resulted in less dredging needing to be done in the main channel and a subsequent savings of millions of dollars annually. The secondary channels are now showing the results of this water diversion training.

With less flow coming through these secondary channels, they are silting up dramatically, with alarming reductions in the water depths for navigation. Where there were 20 feet of water at low tide, there are now, in many areas, only two to three feet. The result is that the channels are becoming a hazard to navigation. Water lease-lot owners are experiencing their floating homes and vessels tied to docks going aground at low tide, at times causing damage to the structures. Commercial and residential boat owners' safety is at risk when accessing the area when there is insufficient water to navigate to their docks.

And there are substantial private expenditures to keep their floating structures floating, not sitting in the mud. The need for this type of program has never been more urgent, nor has the call to action. The port authorities in the Vancouver area were amalgamated in early 2008 to form a new authority, Port Metro Vancouver. They have been charged with maintaining the water depths in the lower Fraser River; however, their main concern is the ocean freighter traffic in the main channel.

Port Metro Vancouver hosted a community meeting in the area last summer to discuss dredging with the stakeholders of the Ladner secondary channels. They encouraged us to form a working group--

(0810) The Chair : Unfortunately, Mr. Scurr, we're well over time here. Can you wrap up very briefly? Mr. Chris Scurr : Okay. What we'd like to ask the finance committee to please bring to government is this: we badly need your help. This is getting to be a very serious and dangerous situation. I can't stress that enough. We're looking for approximately $5 million for a one-time project to clear about half a million cubic feet of mud out of our channels to keep the channels sustainable and usable. We'd like that to be done as soon as possible, please. Thank you. The Chair : Thank you. We'll go to Mr.

Kemp now, please. Mr. Al Kemp (Chief Executive Officer, Rental Owners and Managers Society of British Columbia) : Good morning. Thank you for this opportunity. My name is Al Kemp. I'm the chief executive officer of the Rental Owners and Managers Society of B.C. I'm also a past president and director of the Canadian Federation of Apartment Associations. There is a critical dual need in British Columbia—indeed throughout Canada today—to increase rental stock and to make rental housing more affordable.

Our industry, the industry that provides homes for one in three Canadians, is not looking for preferential treatment, and we're not looking for money. Perhaps that's a refreshing change from what you will hear as you go across the country. What we are looking for is simply the extension of equitable tax policies that are currently available to businesses and consumers in other industries.

To meet this dual need to increase rental stock and to make rental housing more affordable, we propose three changes to tax policies that should be incorporated into the 2010 federal budget: one, make capital gains taxes equitable with other industries; two, zero-rate the operation of rental housing for the GST and HST; and three, zero-rate the construction of rental properties for GST and HST.

While it might appear on the surface that each of these changes would be of great benefit to the owners of rental properties, in fact they would benefit renters through increased rental housing availability and affordability. I'm sure everybody would agree that those are highly significant goals, both economically and socially. Most renters are in the low- to middle-income categories, where a rent increase of only a few dollars can have a significant effect on their budget, their disposable income, and their quality of life.

In 1972 the then-federal government enacted a tax regime that continues to this day to have a negative and discriminatory impact on the residential rental industry. From 1972 to 1998, rental housing construction in Canada fell by 90%, from 50,000 units per year to only 5,000. In the succeeding decade, that level has not changed significantly. Our industry is essentially penalized for any attempts to increase rental stock through the sale of current properties and reinvestment in new development.

Because our industry is defined as a passive business, capital taxation policies that discriminate against reinvestment in rental property, as compared to any other type of property, include, but are not limited to, payment of 100% of capital gains tax on disposal of property, recapture of 100% of capital cost allowances on disposal, the inability to defer recapture of CCAs, and the unavailability to our industry of a preferential tax rate on the first $400,000 of income.

Note that all of the above represent immediate payment of taxes by our industry as opposed to deferment of taxes by virtually every other industry. We're not asking for tax exemption. With the application of these policies for nearly 40 years, a vicious circle has resulted. The policies have created a shortage of rental stock. This has led to illusory capital gains, which has led to a disincentive to sell and reinvest, which in turn has led to a shortage of rental stock. Only the federal government can break this circle by changing its discriminatory tax policies.

Removing this discrimination will put billions of private dollars to work, certainly a need in these economic times. Owners will sell and reinvest, not only adding critically needed rental housing but also increasing income and sales tax revenues from the many sectors involved in multi-unit construction, ranging from architects to appraisers, equipment renters to realtors. Turning to sales taxes, GST and HST have had and will continue to have a counterproductive effect on our industry that directly impacts rental rates. Food and shelter are essential necessities of life.

In Canada food is not taxed; shelter is, indirectly. The current 5% GST is estimated to add about $150 to $200 per year to a typical renter's shelter costs. With the advent of HST in British Columbia, that number increases to between $300 and $500 per year. Groceries are zero-rated for GST and HST. Rental housing should be zero-rated through input tax credits identical to the provisions for suppliers of food. This would result in a minor reduction of tax revenues but have a major impact on housing affordability for renters in the lower- and middle-income brackets.

With respect to construction, it's difficult to quantify the cost to construct an apartment building today, because federal tax policies have rendered such construction economically unattractive for decades. But if we compare the average cost to construct a 900-square-foot condominium unit and a wood frame building, which would be a typical apartment building, HST would add about $12,500 to the average $250,000 to construct such a unit. That would translate into about $750 of additional rent if that unit were to be rented.

(0815) Again, recognizing that food and shelter are both necessities of life, HST should not apply to the construction of multi-unit residential housing. In conclusion, by implementing the above recommendations, the federal government and Parliament will provide the necessary leadership to achieve a profound positive effect on the supply of rental housing and its cost to renters. This is critically needed in these difficult economic times. New rental stock will be created and upward pressure on rents will decrease.

These benefits are highly desirable for the government, for stakeholders, and for 10 million Canadian households. Thank you. The Chair : Thank you very much, Mr. Kemp. We'll go to Ms. Sinclair, please. Ms. Kay Sinclair (Regional Executive Vice-President, British Columbia, Public Service Alliance of Canada) : Good morning, committee chair and members. Bonjour tout le monde . I'm the B.C. vice-president of the Public Service Alliance of Canada. The PSAC represents most workers in federal government departments, agencies, and crown corporations.

There are approximately 165,000 PSAC members across Canada, 15,000 of which are in B.C. I'm going to speak about the importance of a national child care program. The PSAC doesn't represent child care workers, but we think child care should be one of the top priorities of the federal government. Mainly, I'm going to read from my exciting presentation.

A significant federal commitment to develop a national child care system similar to the one currently in operation in Quebec, a universal non-profit child care system available to all children whether their mothers are employed outside the home or work full time in the home, will provide immediate economic benefits and will assist in Canada's recovery from the current economic slowdown. Beyond the jobs that can immediately be created by employment in child care facilities, child care provides support to parents across the labour force.

Many families are now facing tenuous employment, layoffs, or difficult transitions to new jobs and the associated challenge to their financial resources. Accessible and affordable child care services are critical for parents to maintain their labour force attachment and/or obtain necessary skill development to deal with employment transitions. The early learning and child care sector is labour-intensive and involves local expenditures, so spending in this sector has a high multiplier effect.

Canadian research calculates that every dollar of child care spending produces a ripple effect of $1.58 in the local economy. Many U.S. studies have produced similar figures. In terms of long-term gain, investing in the early years is, first and foremost, about investing in children's physical, social, emotional, and intellectual well-being, ensuring that Canada is competitive with other modern economies now and in the future. Child care yields high economic and social returns. Depending upon how and where the research is done, studies show returns from $2 to $17 for every dollar spent.

These returns are derived from improved school performance, reduced need for remediation in the school years, and reduction of anti-social behaviour, all resulting in mothers' labour force participation and adult productivity later. Child care helps keep families, and women in particular, out of poverty. With access to good child care, female lone parents, most of whom are unable to pay child care user fees, are better able to seek further education, train for work, get decent jobs, and accept promotions.

Two-parent families also have a chance to improve economic stability and income, particularly in times of insecure employment and stagnating wages. In Quebec, where universal child care is available to all families, there has been a 50% drop in the rate of children living in poverty, in stark contrast to the rest of Canada, where, despite an all-party resolution in the House of Commons--in 1989, I believe--to eliminate child poverty by 2000, the national child poverty rate remains at about 10%, which is a disgrace in a wealthy country like Canada.

Child care supports women's workforce participation, education, and training. Child care is a key support for women already in the workforce and for those who want to enter it. Since Quebec's child care reform began, twice the number of married women entered the workforce than did so in the rest of Canada, providing Quebec with a substantial return in income and payroll taxes. Child care builds local economies, since we know that a lot of these child care dollars go directly to the economy. Child care would also help us address the diminishing labour force.

We've seen that in Quebec with their child care program, which is very affordable and universal and has resulted in more women being able to enter the workforce. Also, the Quebec birth rate has increased.

In terms of what we're asking for, we would ask that the federal budget include new federal transfer payments to provinces and territories specifically to provide access to quality affordable child care services based on the Quebec model, and that these payments also be made conditional, with measurable targets, to ensure that there is a system of quality, affordable, inclusive, and universal child care services in the provinces and territories.

(0820) The cost of a national child care program will be offset by reduced expenditures on unemployment benefits, poverty reduction programs, health care, education, and policing costs. The current system.... Is my time up? The Chair : Pretty much, but maybe you could just wrap up. Ms. Kay Sinclair : I'll wrap up. Tax breaks and subsidies don't provide spaces for shift workers for toddlers' before- and after-school care.

We actually need a concerted, accessible, and affordable program to build the spaces, which would provide some construction jobs for men, but more importantly, I would say, would provide jobs for women in this economic recovery period and going forward. Again, we think a national child care program is essential to the social and economic well-being of families and communities and also essential to women's equality in terms of women's full participation in this society. Thank you.

(0825) The Chair : Thank you very much for your presentation. We'll now go to the Village of Tahsis, please. Mrs. Corrine Dahling (Mayor, Village of Tahsis) : Bonjour . I am the mayor of Tahsis. Councillor Schooner is with me. Tahsis is located on the north end of Vancouver Island and is very beautiful. Come visit us. I'm going to be speaking to you about RCMP funding and about a little bit of the history as well. First, we would like to thank you for this opportunity to present to you, the Standing Committee on Finance.

We would respectfully request that the committee consider our recommendation as part of the budget preparation process, as this affects not only our rural village of Tahsis but all small communities across Canada. In January 2005 the funding for 215 additional RCMP officers was added by the British Columbia government. Of those 215 officers, 80 were targeted for rural communities and general policing across British Columbia. It was the biggest investment in the RCMP by the provincial government in over 20 years.

In June 2006 the RCMP made it mandatory for two officers to respond to calls whenever there is a threat of violence. Also, what the RCMP call “hubbing” began to take place: closing small, two-person outposts and redeploying staff to bolster other detachments.

Also in June of 2006, RCMP Deputy Commissioner Bill Sweeney stated in an interview with the CBC that any changes involving increased funding would require consultation with territorial and provincial governments, which pay 70% of the cost of RCMP services in small rural communities and remote areas. “All jurisdictions where we are involved in rural policing will encounter challenges around the provisions of backup,” he said. He also stated: It could very well be that there will be negotiations with territories and provinces with respect to increased resources.

We can't ignore the fact that some jurisdictions will be affected more than others. This year the RCMP are removing all police officers from communities of less than 5,000 that have a single member stationed in them. Increased funding is desperately required to facilitate RCMP to protect citizens residing in rural communities. Since it is unsafe to have one-member stations, the required need is for two-member stations. The federal service plan states that the Ministry of Public Safety and Solicitor General works to maintain and enhance public safety in every community across the province.

It is not possible for this service to be implemented if the funding is not available for the RCMP to implement it. Therefore, the Village of Tahsis respectfully requests that the Standing Committee on Finance add additional funding to the RCMP budget and that the funding be targeted for increased policing in rural communities. Once again, the Village of Tahsis thanks you for this opportunity to present our recommendations. The Chair : Thank you very much, Mayor Dahling. We'll now go to Mr. Bird, please. Mr. Ian Bird (Senior Leader, Sport Matters Group) : Thank you, Mr. Chairman.

I'm not going to speak to the brief. You have the brief, so you've seen what's there. I'll just highlight a few key points. I'm with the Sport Matters Group. We've been in front of the committee for the past nine years, but typically on Parliament Hill. It particularly pleases me to be here in Vancouver, given that this is the Olympic and Paralympic city. It's a place that leads the country in sport participation and sport volunteering, so I think it's appropriate that we're here today providing some remarks. I would add that it's also my home.

I live in Chelsea, on the Quebec side, and work in Ottawa, but I spent about 15 years training here with Canada's national field hockey team and went on to compete for our country in two Olympic Games. Not long ago, I think Thérèse Brisson, from the other hockey--ice hockey--was in front of you in Ottawa. You would have heard quite an animated presentation about the importance of supporting sport, so I won't repeat Madame Brisson's remarks. But I will pick up on them in our recommendations. I would also add, just before I move to the policy recommendations, a thank you to the committee.

In the last two years I think this committee has provided sage advice to the Minister of Finance , and in both cases action has resulted. There has been increased investment in the Own the Podium program, and those watching our Olympic and Paralympic results from this past winter will know that Canada now leads the world. In the Beijing games you'll see a best-ever finish at 13th place. So support for that budget provision is leading to real results. The second thing is that the infrastructure stimulus measures that were introduced in the most recent budget are also having a profound effect.

It's been 40 years since the centennial year, when we renewed our infrastructure in communities. We're talking about the memorial rinks, the centennial pools, and such. We now estimate through our policy analysis that there will be over $3 billion of new capital invested by federal, provincial, and territorial governments, along with community partners--a number of the municipalities that are here today and a number of local community not-for-profit and charitable groups. So thank you to the committee for the support of those recommendations.

Now we need to look at three things--a three-legged stool--for the coming decade. First we need to bridge the gap in our national sport program. It requires a $22 million investment because of the economic downturn. Canada's corporate sector is not able to participate at the level we anticipated, given the downturn, and we are respectfully asking the government to help us bridge that gap. It's an interim measure that will help us get past the impact of the recession in 2010-11.

The details of what the $22 million will be put toward and will achieve for the country are itemized in the brief, as they are in the Canadian Olympic Committee's brief and the Own the Podium brief itself. The other two legs of the stool relate to the Income Tax Act. The fiscal policy of the Income Tax Act is something that's rarely looked at to support the sport or social policy that the Government of Canada, Sport Canada, spends its time on. There are two simple changes to the Income Tax Act that would greatly enhance community and individual participation in sport.

First is to modernize the act so that amateur community sport becomes charitable. For example, Mr. Dechert , a minor hockey team in Erindale that seeks to have a fundraiser and issue charitable receipts is not able to do so. It's somewhat incongruent with the fact that a local arts group can do that. So modernizing the act and making amateur sport at the community level charitable will help communities help one another to increase sport participation and all the benefits that come from that. The second change to the Income Tax Act is to amend the children's fitness tax credit so it is fully refundable.

It's currently a non-refundable tax credit. There's a group of Canadians who are just below the taxpaying line who are not benefiting from that credit. As you can imagine, this is when we need to support those families so they can receive the benefits and take the steps to register their children in soccer, hockey, skating, or swimming programs, and such.

(0830) So we suggest a three-legged stool, the first priority being a $22 million stimulus investment, and then two changes to the Income Tax Act to make amateur sport charitable and the children's fitness tax credit fully refundable. Thank you. The Chair : Thank you for your presentation. We're now going to go back to First Call: B.C. Child and Youth Advocacy Coalition. You have up to five minutes for an opening statement, and then we'll go to questions from members. Mrs. Adrienne Montani (Provincial Co-ordinator, First Call: B.C. Child and Youth Advocacy Coalition) : Thank you very much.

I'm Adrienne Montani with First Call: B.C. Child and Youth Advocacy Coalition. With me is Julie Norton, our chairperson. I want to thank you for the opportunity to speak with you today. I'll explain our name first. First Call means that we think children and youth should have first call on society's resources. It's very simple, because they have the right to it and because they're our future, of course. In our brief that we submitted earlier, we said that children are the best investment for a sustainable future. It's not just a nice slogan, but actually very true and is backed up by stacks of research.

We have made commitments to children that we're not honouring. I refer here to the all-party pledge in 1989 to end child poverty in this country by the year 2000. We obviously missed that deadline. We also signed the UN Convention on the Rights of the Child shortly thereafter, but there are lots of children's rights we have not upheld.

Based on these commitments we've made and have not completely fulfilled, and on the research that we stand upon on the issues of child development and the harm that poverty does to children, we have an over-arching message to you that children are our most sustainable resource and that we should be investing in them in this next budget—and certainly in a recessionary time. In our written submission you'll see two major recommendations. We've tried to lump them together. The best thing this budget could do would be to make a strong investment in early childhood development. That would be the first thing.

Our second recommendation would be to reverse the growing trend in income inequality in this country. Both would accomplish something in improving children's health and well-being. They are social determinants of health that we need to pay attention to if we want to improve outcomes for children in this country. Canada's current claims of investing heavily in early childhood development are challenged by the actual data and the results we are achieving. We are regularly lambasted in the international research by the OECD, UNICEF, and Save the Children.

In repeated international comparative rankings with other developed countries, we rank at the bottom in our investment in early childhood development and our support for young children and families. Here in B.C. we have research that shows that about one-third of the children arriving at kindergarten are vulnerable in terms of one or more developmental indexes, meaning they're vulnerable to poor outcomes as they grow up.

Meanwhile, the research evidence is extremely strong—and some of it was cited earlier—on the importance of early brain development and the extremely high economic and social return on investment in early childhood development. The largest chunk of funds the current government puts toward early childhood development is for the universal child care benefit, which we would argue is a fine income transfer for low-income families.

It's fine to give low-income families money, but this benefit does absolutely nothing to increase the number of child care spaces in this country or to increase their quality or accessibility. So we think this needs to be re-examined. Call it an income transfer, but don't call it a child care benefit, because that's not the way it works.

So based on this information, and in line with some of the previous speakers, we are suggesting that we make a substantial and significant investment in increased transfer payments to provinces and territories to create a system of child care that actually increases spaces and the accessibility and affordability of child care, very much like the Quebec system. We need federal transfers to do that. This is important not only for children's development, but also for women's equality and women's attachment to the workforce—and even their ability to go back to school so they can become more employable.

In this country, only about 17% of children under 12 have access to child care space. So it's impeding our economy in that way. The budget should also enhance the current federal investments in programs with good track records, such as CAPC, the community action program for children; the Canada prenatal nutrition program; and aboriginal head start. If you remember Kellie Leitch's report, she recommended that 25% of aboriginal children be given access within five years. We think that's an abysmally low target; it should be 100% of aboriginal children who have access to that.

Our second overarching recommendation is to look at the growth of income inequality in this country. The recent Conference Board of Canada report card says that poverty is the chief challenge facing this country. We have an abysmally high poverty rate, and it has not gone down very much since 1989.

(0835) In our brief last year we called for a comprehensive legislated commitment, with timelines and targets, for a poverty reduction plan in this country. We call for it again this year. But this year we particularly want to draw your attention to income inequality and how it needs to change. Families are working as hard as they can. They are working extra hours to make up the difference in their stagnating wages. Most of the tax cuts made and those kinds of changes have benefited those who already have the most and are doing very well. Those in the middle class and the lower income bracket are working harder.

So you have women working two jobs, single parents working two jobs, having no time for their children, just to keep up.

The policy levers that we'd ask you to look at or recommend to government are to increase the child tax benefit; increase eligibility for EI benefits, especially for women, because they're way underrepresented, so increase access to EI and the level of benefits; look at youth-at-risk employment programs and continue to invest in those; increase social housing investments to restore some of that federal funding; make post-secondary education accessible in this country to those with financial barriers; and again, invest heavily in early childhood development.

I want to sum up by saying tax cuts don't help low-income families very much, because that shrinks our government capacity to care for each other. That's really important, and we've lost that capacity.

(0840) The Chair : Thank you, Ms. Montani. We'll go to questions now from members. Mr. McCallum, you have seven minutes, please. Hon. John McCallum (Markham—Unionville, Lib.) : Thank you, Mr. Chair. Welcome to all of you, and thank you all very much for joining us this morning. Having spent four happy years teaching economics at Simon Fraser University, admittedly some years ago, I'm always pleased to get the opportunity to return here and see friends, relatives, and in-laws, although I don't think we'll have much time today. Anyway, I'm delighted to be here. Thank you for joining us. I have just a few questions.

Ms. Jackson, can you give us a little bit of history? Try to be brief, please, because I want to ask many people.... Mrs. Lois E. Jackson : Yes, I will. Hon. John McCallum : You talk about reinstating dredging in the Fraser River. Does that mean it used to happen regularly and they took it away? Mrs. Lois E. Jackson : That's correct. For a hundred years the side channels were dredged. Originally, I believe, it was through the federal government, then it went to Fisheries, and then it went to others--ports, etc. Ten years ago, that was concluded.

So for 10 years we have had no federal assistance in terms of the side channels being dredged to keep the silts at bay, with huge economic impacts--huge economic and people impacts for those living on the river. Hon. John McCallum : Thank you very much. Mr. Kemp, I thought you made a very strong case for the rental sector on the subject of the HST. I'll leave it to my Conservative colleagues to react to your comments on their tax, but I'd just like to say how much I agree that you make a strong case on the capital gains issue.

I remember last year, and even the year before, getting a similar submission about how there would be a very strong case for allowing deferral if an owner of a rental property sells to buy a new rental property. It seems to me that makes a lot of sense. I remember one point coming out of the earlier submissions was that the people who would gain are not principally very high-income people. A lot of the owners of smallish rental properties are middle-income, ordinary kinds of folk. Is that also your opinion? Mr. Al Kemp : That's definitely true.

We have about 2,100 members throughout British Columbia, and about 75% of them hold fewer than five units. Those are often fourplexes, duplexes, and so on. The large 57-storey buildings that you see house the majority of renters, they provide the majority of rental units, but they certainly are not owned by the majority of landlords. In simple terms, in response to Mr. McCallum's question, about 75% of landlords have small buildings. Hon. John McCallum : Thank you. I'd now like to turn to Ian Bird. I totally agree with you that when you get a fitness tax credit, it should be refundable.

Not every Canadian knows what that means. If you get a tax credit and it's not refundable, it means that if your income is not high enough to pay tax, you don't get any benefit. In other words, the lower-income people, who need it more than anybody, get nothing unless it's refundable. So I totally agree with that point. On the $22 million, this is programming that will lapse. Can you tell us briefly what would be the consequence of not doing that $22 million?

(0845) Mr. Ian Bird : Yes. The current program would be reduced by 35%, Mr. McCallum. These are existing resources that will lapse. There are three different buckets assigned in three different budgets. We're asking the government to extend those investments in the coming year. Hon. John McCallum : What sorts of things do they pay for? Mr. Ian Bird : It's our national sport program. You'll have read about Own the Podium, which supports our athletes and our coaches in their preparation for their activities on the international stage. Hon.

John McCallum : So it's really just continuing what we've been doing at the existing levels. Mr. Ian Bird : That's correct. Hon. John McCallum : Okay. I think I'm running out of time here. I'll just say to Ms. Montani and Ms. Sinclair that I don't think I have time to ask you questions, but we are on the record as a party that is absolutely committed to early child care. The Chair : You have over two minutes, Mr. McCallum. Hon. John McCallum : I have two minutes? Well, then, maybe I will ask you a question, Ms. Sinclair or Ms. Montani, either one of you.

In the previous election we were committed to a national system of early learning and child care; we will be in the next election as well, whenever it will be. The alternative before us seems to be this $100 a month. We would retain that, but what do you think of that kind of approach as an alternative to the kind of thing that we want to do, which is national early learning and child care? Mrs. Adrienne Montani : Are you directing the question to me? Hon. John McCallum : To either of you. Mrs. Adrienne Montani : Okay.

We would argue that when we look at child poverty statistics, it looks like the UCCB transfer is having some impact. As an anti-poverty measure, that's fine; just don't call it a universal child care benefit, because people are spending it on anything but child care, in some cases. It's certainly not enough to buy or create more spaces or lower the costs of child care for families, so it's really not accomplishing its stated objective. As to a revived family benefit or income transfer for families with children, we always welcome that. Ms.

Kay Sinclair : With regard to the $100 a month, I believe it has a cost to the government of $2.5 billion, which is a significant cost. I agree with Adrienne that it does nothing to build you a child care system, to create spaces for toddlers of shift workers or for any number of needs within a child care system that should exist. I would suggest that it should be converted, and those funds, those significant funds, should be transferred over to a national child care system and go toward transfer payments, with conditions attached, to provinces and territories. Hon.

John McCallum : Actually, our position is closer to what Ms. Montani said. We think the program is fine, but it shouldn't be masqueraded as what it isn't, and that's child care. We would retain it and also work on the universal child care program. Thank you very much. The Chair : Thank you, Mr. McCallum. We'll go to Monsieur Laforest. [ Translation ] Mr. Jean-Yves Laforest (Saint-Maurice—Champlain, BQ) : Thank you, Mr. Chair. Good morning to all the witnesses. It is a pleasure to be here with you in Vancouver. I want to start with a question for Ms. Sinclair. You gave a great presentation, very interesting.

A representative of the Public Service Alliance of Canada, you stressed the importance of childcare. You also pointed out the economic and tax advantages of a universal program. And you talked about the advantages for children, but not as much as I would have liked, seeing as that is perhaps the biggest advantage. Obviously, when we invest in services for children, it opens up a lot of possibilities for families where parents may not have been able to work.

But it is still very important for children themselves in terms of socializing and acquiring skills, not to question, of course, the ability of parents to help their children learn better. The fact that daycare centres are well structured is extremely important. Do you have any studies on the importance of daycare to children as it relates to learning? (0850) [ English ] Ms. Kay Sinclair : Merci . A universal affordable child care system is basic to women's equality in Canada or in any society. Women, as we know, are the main caregivers for children and other members of the family.

We also know that lack of child care is a barrier to women either entering the workforce or having full-time employment, or entering the workforce and being able to have full-time employment if they so choose. I do think that child care should be universal whether one is working outside of the home or not or working for pay. I think it should be available to children of women who work in the community or who work and don't receive any pay. I think that would increase women's' participation in economic, social employment, and political spheres in Canada. I'll just say one last thing.

You well know as committee members in the House of Commons that less than 25% of the MPs are women. I would suggest to you that child and family care would be a major factor in that statistic, which is a shameful one. [ Translation ] Mr. Jean-Yves Laforest : Ms. Montani, I listened to both you and Ms. Sinclair. I think that your presentations and your requests for the Department of Finance are along the same lines, to a certain extent. In addition, both of you cited the example of Quebec's universal childcare program. Quebec made its decision without necessarily waiting to have the federal transfer payments.

You are not the first to refer to Quebec's example. It has allowed more women to join the workforce and more children to receive adequate services early on, especially in terms of development. As a member of my party, the Bloc Québécois, I completely agree with what you are asking for. But we believe that if the federal government agrees to make transfer payments, Quebec should also get some given that it has already made commitments. I am very glad to know that we made this decision and that, as a result, we are being touted as an example by many.

A lot of people are saying that Quebec made the right decision, as much for women and children as for the job market. I would also add for the economy. In this respect, that testimony was along the same lines as yours. The way I see it, it is extremely important that all politicians be very familiar with this issue. I was listening to Ms. Dahling earlier, talking about her small municipality, which has a pretty serious crime problem. I think that the measures you are proposing have to do with prevention.

Of course, in the very short term, they do not involve the police fighting crime, but when we invest in this area, we invest in prevention. Do you agree, Ms. Dahling? [ English ] The Chair : Ms. Dahling, there's about a minute left. Mrs. Corrine Dahling : Thank you. We live in a very small community. Most of these communities have less than 5,000 people and don't usually have very many children, but if we did have universal day care, it would also help with the policing issues. The Chair : Ms. Montani. Mrs. Adrienne Montani : I just wanted to also thank Quebec. We use the Quebec example a lot.

We also thank you for your legislated anti-poverty act that you've passed. (0855) [ Translation ] The Chair : You have 30 seconds left. Mr. Jean-Yves Laforest : I am not trying to say that it is a one-size-fits-all solution. But when it comes to small municipalities with less than 5,000 inhabitants such as Tahsis, I do not think they struggle with crime as much in Quebec, for a variety of reasons. It is due, in part, to this system, which, in rural communities, takes care of children and allows women to work a lot more. [ English ] The Chair : Thank you, Mr. Laforest. We'll go to Mr. Cannan.

You have seven minutes. Mr. Ron Cannan (Kelowna—Lake Country, CPC) : Thank you, Mr. Chair. Thank you to our guests. As the member of Parliament for Kelowna—Lake Country in British Columbia, it's great to be here and to have your voices heard in our province. It is good to see Mayor Jackson again. We had a chance to meet with metro Vancouver mayors last year, and it was very good to hear the news, with Premier Campbell and our federal government, in partnership with the infrastructure money, having that money flowing.

It is very timely seeing as the Union of British Columbia Municipalities conference is taking place in Vancouver this week. I note the fact that it is very timely and very important to get those dollars flowing for infrastructure projects throughout the province. Specifically with regard to your concerns with flood protection and dredging, Mayor Jackson, I just want to know if metro Vancouver has taken a position for the whole Fraser, or are you just looking specifically today on behalf of the Ladner area? Mrs. Lois E.

Jackson : If I could be so bold, sir, as chair of the metro Vancouver board, we oversee about 2.5 million people in the lower mainland. As you can see from the map—and it goes only a little north of Pitt Meadows—this entire area is subject to flooding. As the silt continues to come down every year, you can appreciate that we have a diking system that is very formidable in this entire area.

The diking system that was put in place with the help of the provincial government some 15 to 20 years ago with the Fraser River flood control program could be in jeopardy in some areas, because if you have a dike that is at this level and the bottom of the river used to be at this level and it continues to rise with the silt, at some point in time you can actually see the bottom of the river surpassing the height geodetically of your diking system.

It is a very important point to be made, particularly when last year and the year before the mighty Fraser was very close to overspilling its banks, and that would be an absolute disaster for the entire lower mainland. We believe in prevention, but as you know, local government only receives 8¢ of every tax dollar collected in this country. The federal government gets, I believe, 48¢ and the province gets 42¢.

The local government cannot, nor can the metro government, take on the responsibility solely on the back of the property tax, where so many people, obviously, are looking after all of the functions, from policing, to engineering, to parks and recreation, and all of those facilities that are needed at the lower government. So we are turning to the federal government in order to continue on with metro Vancouver's major problem in terms of the silting up. As you can see, the lines go right off the page. We're going right up, basically, to the town of Hope, through Kent and Harrison and so on.

Chilliwack is another area very vulnerable to siltation. I'm sorry I'm giving such a long answer, but it certainly is a question and a problem for the entire lower Fraser. Mr. Ron Cannan : I think it's very important to clarify that. I spent nine years in local government and a couple of years in the Union of British Columbia Municipalities, so I am well aware of when this downloading was passed from the federal government to the local government.

I have discussed this challenge with my colleagues, specifically the MP in Delta, John Cummins, and how some of the port authorities have said they're not responsible for some of this dredging. A couple of years ago, when there was a real crisis with flood protection, we put tens of millions of dollars into dredging. Is that correct? Mrs. Lois E. Jackson : Yes. I believe that was the main channel.

(0900) Mr. Ron Cannan : We continue to work with local governments and the ports, but is part of the problem that the ports are saying it's not their responsibility? Mrs. Lois E. Jackson : Yes, that is what we feel. With all due respect to the new port authority for metro Vancouver, I think they feel that their focus is the navigational deep-sea shipping channel, but the side channels that have been traditionally cared for by the other port authorities are not being tended to. It really has to be focused on.

If it's the port authority in terms of long-term, sustainable funding to keep all the channels clear, certainly we would welcome that. If it comes from the federal budget, we would welcome that. As you can see in our notes, there was also a comparative made in terms of the St. Lawrence Seaway, which doesn't need to be dredged from the bottom, but the icebreaker situation during the winter is a very good example of another Canadian city that has to have access to the waters, the navigational areas, the side channels, for major economic regions, and transportation of goods, services, and people.

As you can see in our notes once again, there is set aside an annual budget of $6.9 million through the federal government, for which we thank them. However, 80% of that is diverted to the St. Lawrence Seaway, which leaves a very small portion to be used in other areas of the country. We're looking at the west coast in a similar fashion as needing some major help, and being able to identify the $5 million to remove the silt at this point, but the ongoing, sustainable funding is very critical to us. Again, I apologize for my long answer. Mr. Ron Cannan : Thank you.

I know some of those announcements last Thursday will help some of the communities along the way, and we'll continue to work with you. With regard to Ms. Sinclair and the Public Service Alliance of Canada-- The Chair : You have about 20 seconds. Mr. Ron Cannan : --I just want to thank you for your work. I've worked with Dr. Clyde Hertzman, and I'm very familiar with the aspect of the importance of investing in children, as a grandfather of a two-and-a-half-year-old, and the malleability of the brain. So I appreciate your efforts there, and we continue to work with that.

The HST was actually introduced by Paul Martin and the Liberals. We're using the same formula for the provinces that adopt the HST throughout the country. I just want to make sure the record states the fact that we don't have any say about the threshold. I've worked with the Canadian Home Builders Association in our province, and I am hoping the province will listen to them. They met recently and continue to-- The Chair : I'll leave that as a statement. Thank you, Mr. Cannan. We'll go to Mr. Julian for seven minutes, please. Mr. Peter Julian (Burnaby—New Westminster, NDP) : Thank you very much, Chair.

I welcome members of Parliament here to the lower mainland. These consultations are so important that we actually have two members of Parliament here, myself and Mr. Davies. He's just there temporarily. An hon. member: There's a new coalition in Ottawa. Mr. Peter Julian: So, Mr. Chair, through you, I'd like to ask for unanimous consent, for the hearings held today, that I split my time with Mr. Davies. The Chair : Does Mr. Julian have unanimous consent? Some hon. members: Agreed. The Chair: Okay. Mr. Peter Julian : Thank you very much, Mr. Chair.

Given that we're in a friendly environment, I'll just take the opportunity to give a friendly reminder to Mr. McCallum that he actually voted for the provisions of the HST that the Conservatives have brought forward and have caused, I think it's fair to say, a lot of concern in British Columbia. Here it's known as the Liberal-Conservative HST. I'd like to start with you, Mr. Kemp, on the issue of the HST. Most indications have shown about a $500 penalty. This is a tax shift, so big business gets tax cuts, but the ordinary British Columbian will end up paying about $500 in additional taxes through this HST.

You're suggesting today that, for the average rental unit, it would drive up the cost of construction of that unit by about $12,500. You refer to project viability in terms of increasing the annual rent required by $750 or more. Just to be clear on that, you're suggesting that the average rent would go up for new units for renters by about $750. Is that correct? Mr. Al Kemp : It's correct in theory. In practice, it's not, because British Columbia also has rent controls and it would not be possible to pass that through. I didn't raise that issue at all, because it's a provincial issue.

We face a double restriction on our industry, where the government is increasing taxes—HST being a prime example in British Columbia—and the same government says you can't increase your prices. We're literally a unique industry in that respect, in that the landlord must find a way of absorbing the additional costs because he can't increase rents by more than 3.2% in 2010.

(0905) Mr. Peter Julian : So what you're suggesting is that those new rental units just will not be built. Mr. Al Kemp : Well, new rental units will not be built primarily because of the federal tax policies that essentially say—I'm off my notes now—that if you want to build an apartment building, you must be stupid. Mr. Peter Julian : Okay. Thank you for that. I'll move on, because I only have three minutes. Ms. Montani and Ms. Sinclair, you were very eloquent on the issue of child poverty. We've seen over the last 20 years figures even more shocking than those you've cited, Ms. Montani.

Most families have actually seen a reduction in real income, ranging from 5% to 15%. So most Canadian families--about two-thirds of Canadian families--are earning less now than they were 20 years ago; appalling but true. You're suggesting that for an investment of $5 billion per year we could achieve a reduction of nearly 40% in the after-tax child poverty rate? Mrs. Adrienne Montani : Yes, $5 billion per year would give us a child care system, and that would.... Are you talking about the Canada child tax benefit increase? Mr. Peter Julian: Yes. Mrs. Adrienne Montani: Then absolutely.

It has already reduced child poverty. I don't have the statistic in my head, but it is measurable. If we increase that, it will definitely lower the child poverty rate in this country. Mr. Peter Julian : Dramatically. Mrs. Adrienne Montani : Very dramatically. It's a very direct way to do it. Mrs. Julie Norton (Provincial Chair, First Call: B.C. Child and Youth Advocacy Coalition) : I would add, too, that there's a multiplier effect in terms of the economic aspect. I think this was mentioned by Ms. Sinclair.

When you pay those kinds of wages, all the research shows that when funding goes primarily to women--they're the ones who work in the child care sector, for the most part--they tend to spend their income on their families and in local environments. That money stays in a community. So when the federal government is talking about stimulus packages, this would be a huge economic stimulus and would have a great economic impact. Quite frankly, most of the other stimulus projects are going to able-bodied white men.

A lot of women are not going to ever see that except coming through the door in somebody else's paycheque. Women are 50% of the citizens of Canada, give or take a few percentages. We deserve access to that. And children, who do not vote, need to be taken seriously around stimulus and around care. Mr. Peter Julian : Thank you for that. I have a final question before I turn things over to Mr. Davies. The Chair : You have about two minutes. Mr. Peter Julian : Ms. Jackson, has the City of Delta done an economic impact study or a community impact study on the fact that we're not dredging? Mrs. Lois E.

Jackson : I don't have the figures at hand, sir. We have undertaken to “clean up”, as we'll call it, the Ladner harbour, our fishing harbour, this past year. It has been very expensive. We did undertake to take out the old barges, take out the sunken vessels, and take out any hazardous materials that have gone to the bottom of the harbour. I think, however, that's about as far as local government can really go. We toyed with the idea of looking for some funding from the government under the grants program, but we cannot continue to sustain that from a local government level. We simply don't have the dollars.

Incidentally, I really do want to thank the federal government on behalf of all the local governments in Canada that have received infrastructure funds. It is a huge boost to all of us. In particular, I want to thank those who made it happen. Mr. Peter Julian : I'm going to pass things over to Mr. Davies. The Chair : You have about one minute, Mr. Davies. Mr. Don Davies (Vancouver Kingsway, NDP) : It takes me one minute to clear my throat, Mr. Chairman. Welcome to Vancouver. I think I'm the only MP here from Vancouver, so I want to thank all of you for taking the time to come and talk to us.

I'll have to be brief. To Mayor Dahling, you say in your brief that the public safety ministry policy is to “maintain and enhance public safety in every community across the province”, but that it is “not possible for this service plan to be implemented if the funding is not available for the RCMP to implement it”. You point out that the RCMP are “removing all police officers from communities of less than 5,000 that have a single member stationed in them”, and you say that funding is “desperately required to facilitate RCMP to protect citizens”.

Can you maybe enlighten us on what specifically you think will be the consequences in your community if this policy of removing RCMP officers is implemented?

(0910) Mrs. Corrine Dahling : Our community is an hour and a half away from the closest RCMP station if they take that away. We also have another community that we can get to by boat where they've done this already. Their crime rate has gone way up. We're afraid that because there's nothing there, businesses will end up paying higher insurance costs, since people will know that it's an hour and a half before the RCMP will be able to get to them. We have drug issues that will become bigger. Those are the things we worry about.

I know that some small communities are closer to bigger cities, but ours is an hour and a half away by a dirt road--it also has to do with conditions as to how they get there. The Chair : Thank you. Thank you, Mr. Davies and Mr. Julian. We'll go to Mr. Pacetti, please, for a five-minute round. Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.) : Thank you, Mr. Chair. I thank the witnesses for appearing. It's always fun to be out here in the west listening to different points of view. It's a struggle for us because we have various briefs and issues that we have to discuss and our time is limited.

Please bear with us. And we try not to be partisan, but it's in our blood. Having said that, Ms. Montani, in your brief you talk more about child development than you talk about child care. This government seems to be hard-headed in terms of understanding what early childhood development means and what child care provides to families. They've decided that $100 a month for parents with children under six is the answer and solution to all. They don't seem to understand that there's anything else. In your brief you talk about early childhood development and you put a different spin on it.

Can you perhaps put in simpler terms what we need early childhood development for so that we don't necessarily have to call it child care? Is there a difference? Mrs. Adrienne Montani : On early childhood development, young children require quality learning environments, care environments, and they are the same when you're young because early childhood education is in fact play-based if it's done well. Mr. Massimo Pacetti : What age would that start at? Mrs. Adrienne Montani : That would start at age three, but child care should be available early. There's infant child care so that families can work.

If we can expand maternity and paternity leave, it would also be beneficial. Mr. Massimo Pacetti : You could get it at home, correct? Mrs. Adrienne Montani : Child care at home is one way to do it. There are many different models. Mr. Massimo Pacetti : When the parents are not home and there's nobody at home to supervise them, it would be nice if they had access to child care. Mrs. Adrienne Montani : Access to quality care, because often kids are left with a neighbour. If we don't have regulated quality child care spaces, what happens is that people leave their children with neighbours or they leave them at home.

They need to work. We hear stories of people leaving food on heating vents to warm up because they're working their second shift in the hospital. Mr. Massimo Pacetti : You're not the only one who's heard those stories. I don't mean to cut you off, but I only have five minutes. Mrs. Adrienne Montani : Yes, but it's very important. Mr. Massimo Pacetti : I want to talk about sports and children. Mr. Bird, your association has done a lot of work. I'm not sure who you represent in global terms, but I'm interested in terms of the sporting environment.

There are never enough sporting facilities no matter where you go, whether it's the regions or big government centres. There's always a problem with not enough parks or not enough skating rinks. There's a lot of money being spent, especially in Quebec now with the Quebec government providing money for sporting facilities as well. There just doesn't seem to be enough. The problem is at the grassroots. Sports are becoming more exclusive instead of inclusive. I'm finding that if your child is not a super elite athlete by the age of 8 or 9--and I'm going through that with my kids right now--then there's no future.

When we need the kids to participate at the ages of 14, 15, 16, there's nowhere for them to go. I understand that we have to promote Olympic athletes and we want to promote excellence. What's your take on that? I'm seeing a contradictory thing going on in society today.

Mr. Ian Bird : My first take is that I have an eight-year-old playing in the Pontiac, so we'll be down to Montreal at some point and take you on. There are really three things that drive community participation. One is the capital requirement, and in 2005 numbers there is a $15 billion infrastructure deficit in the country. We know that over the next 18 months, if fully implemented, there'll be $3 billion addressed. What you're experiencing is the $12 billion gap. The second determinant is the quality of the sport experience.

There's significant work...led by leaders from Quebec and British Columbia, called the Canadian Sport for Life model. This is now three or four years under way. It's full purpose, adopted by federal-provincial-territorial governments, is to shift the sports system from an exclusive model to an inclusive model. That's the driver. This needs to be implemented. The third thing is community capacity, and we've brought two ideas forward here today. One is to modernize the Income Tax Act so that amateur community sport is indeed charitable. This will help--

(0915) Mr. Massimo Pacetti : I understand amateur sport, and I don't think we have an argument. The problem is what I've seen in minor league hockey. I'm a coach in minor league hockey and minor league soccer, and if the kids are not playing elite the parents don't take the initiative. The big clubs find a way to raise money, but the less-skilled teams have a very difficult time. If you don't have an energetic coach or manager who takes the initiative, or one or two parents--it doesn't take a whole team--there seems to be a problem. Mr.

Ian Bird : This is exactly why the Canadian Sport for Life model needs to be implemented, and hence the need for the investment. Mr. Massimo Pacetti : Thank you. Thank you, Mr. Chairman. The Chair : Thank you, Mr. Pacetti. We'll go to Monsieur Laforest. [ Translation ] Mr. Jean-Yves Laforest : Thank you, Mr. Chair. Mr. Bird, you are suggesting that amateur sport be considered a charitable activity. I would like to hear what you consider amateur sport. Are we talking all amateur sport or just competitive amateur sport?

I think that if an amateur sport is administered by an organization, that sport can be played by anyone, for example, a five-year-old boy learning to skate. Is your definition as broad as mine? [ English ] Mr. Ian Bird : The short answer is yes. There are some 34,000 community-based amateur sport organizations offering the full range of recreational programs for children and youth. They are currently not-for-profit organizations and are not covered by the charitable provisions of the Income Tax Act. [ Translation ] Mr. Jean-Yves Laforest : Your suggestion is interesting.

But we have talked a lot about poverty among youth and young families, so I wonder if such a measure might favour a certain elite group rather than allow more disadvantaged children to play sports. It makes me wonder. [ English ] Mr. Ian Bird : It's quite the opposite. Three or four years ago the Blair government modernized their charitable act and included environmental organizations, amateur sport organizations, and arts organizations. Arts are already included here in Canada.

Their purpose in doing that was to create exactly the opportunities you describe so that community-minded individuals could donate to local not-for-profit sport clubs and associations and support the full inclusion of young people in their sport programs. So the driving force is to increase the inclusion and accessibility of sport in our communities, not just because sport is a good thing--I think it provides certain outlets for young people--but because it helps to generate the related social and economic benefits that people fully appreciate in their communities. [ Translation ] Mr.

Jean-Yves Laforest : Thank you. I would like to give some time to my colleague, Mr. Julian. Mr. Peter Julian : You are very kind, Mr. Laforest. [ English ] I have two quick questions to follow up with Ms. Sinclair. You're very eloquent on the child care issue. We have about $120 billion in corporate tax cuts that have been basically shovelled off the back of a truck. How much do you estimate it would cost to put in place fully funded child care across the country? Do you believe that should be a priority rather than the corporate tax cuts? Ms. Kay Sinclair : I don't generally agree with tax cuts.

I don't think they help build our society. I think you could have a good system with perhaps $4 billion to $6 billion over the next four to five years--I don't know; maybe it would be less than that. Let me defer to Adrienne on that.

(0920) The Chair : There's about one minute left. Mrs. Adrienne Montani : I'm not a really good numbers person, but I think about a $3 billion investment annually is what we're looking for to build a universal child care system. Mr. Peter Julian : So that's $3 billion plus $5 billion for the Canadian child tax credit benefit. You're essentially talking about $8 billion to lift a lot of families out of poverty and put a lot of kids in much better quality-of-life situations, as opposed to $120 billion in corporate tax cuts over a number of years. Mrs.

Adrienne Montani : And it will pay off in the long term; eventually a bunch of other costs will fall off the table. [ Translation ] Mr. Jean-Yves Laforest : And it creates jobs. Mr. Peter Julian : It also creates jobs, as Mr. Laforest just pointed out. [ English ] My last question is a quick question for Mr. Bird. I have a lot of lower-income families in my particular riding. What would be the cost of making the children's fitness tax credit fully refundable? What would be the cost of doing that and making it accessible to low-income families? Mr.

Ian Bird : We don't yet have access to the numbers related to the current implementation of the tax credit, but there has been some analysis and it's a very modest cost. It would cost less than $15 million to include that group in the program. The Chair : Thank you. Merci . We go to Mr. Kramp for a five-minute round. Mr. Daryl Kramp (Prince Edward—Hastings, CPC) : Thank you, Mr. Chair, and welcome to all. I'm certainly glad you are here and giving us this opportunity. I'll maybe just try to slip around as quickly as I can to cover a number of topics. Mr.

Bird, I'd like you to know that I do appreciate your thoughts on allowing willing individuals to donate through more effective use of our tax system. I still believe in some of those old analogies of keeping your kids in sports and out of the courts. It's just an opportunity to recognize that in a lot of cases, dollars spent on social applications in some particular place is money well invested, and it's certainly a heck of a lot less costly than dealing with the results afterwards. Many years ago I was a police officer dealing with the narcotics trade, so I well recognize just how important prevention is.

So thank you very, very kindly for those thoughts. Slipping over to the dredging issue, could I have a bit more clarity from Mr. Scurr or others who would like to participate? To what depth is it necessary to take the side channel to be acceptable at low tide? Mr. Chris Scurr : The 1998 levels, sir, were 20 feet at low tide. In most areas today it's two to three feet. Does that answer your question? Mr. Daryl Kramp : It does. Once again, if continuous funding were not available, but a one-time shot, how long would this last? Mr.

Chris Scurr : At the rate the silt is coming into our channels, and because this is a managed river and has diverted flow, to keep the main channels scoured, I would say it would probably be five years maximum before we're back to almost the same situation. Mr. Daryl Kramp : The reason I asked, of course, is that I think we all recognize that we are taking on significant debt right now to stimulate our economy and to try to get that sense of balance, but it's a fool's game to believe this can go on.

We all recognize there will have to be a serious reduction so that we don't end up with long-term structural deficits. That's why I want to try to ensure that we don't commit funding that is not going to give a long-term result without some long-term commitment to it. We just have to find a balance, because we're handling your dollars; that's the point. Mr. Chris Scurr : Absolutely. You're quite right, and what we are proposing, sir, is a maintenance program after the initial dredge is done to maintain the.... May I just quickly say there's a study being deployed by Hay & Company.

It's a hydrological study to model the channels, which are now managed by the federal government, to see which situations would produce less siltation in the channels in the future. We are looking at that initially, and once the science is done we'll have results that give us indications as to the required direction of future dredge operations. However, we are recommending that about $500,000 per year be devoted to the secondary channels after the initial dredge.

(0925) Mr. Daryl Kramp : Okay, thank you. We're moving on to some others. Let me just thank all of the presenters on the dredging issue for having done your homework and giving us specific numbers to factor into our deliberations with specific goals and results. We do appreciate the homework done on that. Mr. Kemp, I'm a little confused with regard to the dollars available and the various means of saving costs for particular developers, be they small or large. I'd maybe just like more clarity.

How could you ensure this would translate back into tenant savings and not just end up in the pockets of a few developers and/or people who simply wish to be able to pocket those dollars at the expense of all the people who do need the little income? Do you have any thoughts as to how you would try to ensure there would be a medium of fair delivery there? The Chair : You have about 30 seconds, Mr. Kemp. Mr. Al Kemp : If I could guarantee that, I would probably trade places with you. There's no guarantee, but the market is always the market.

We've seen a general reduction in rents in British Columbia over the last six to nine months. I think that will be borne out by the fall CMHC study. The market is such that there aren't as many people looking to rent. There aren't as many people able to pay higher rents. There is obviously a balance. A landlord must receive a return on investment and sufficient money to operate and maintain his or her buildings. I'm confident that if this were put in place, one of the results of a change in the capital gains taxes--and they're discriminatory taxes--would be more rental stock.

As with any other portion of the market, supply and demand applies in our industry as well. If there's more rental stock available, generally speaking the cost of that rental stock will decrease. The Chair : Thank you. Next is the Liberal round. We don't have enough time for a full round, but we have about two minutes for Mr. Pacetti. Mr. Massimo Pacetti : Thank you. Ms. Jackson, there are a lot of rivers in this country, and I'm wondering how many rivers would need dredging money and what the total cost would be. We are a finance committee after all. Mrs. Lois E. Jackson : I know you are.

Because the Fraser River comes through the mountain range and suddenly dives down to sea level, it carries this tremendous amount of silt that we were speaking about earlier. Of course it's very unusual geography. I'm not sure what happens in Saskatchewan, Manitoba, and some of the other areas. But I know it's of huge economic importance here with our fishing harbours. Mr. Massimo Pacetti : Your presentation is fine. It just makes it tough for the finance committee to say specifically that x number of dollars should go to one specific river or place. But I appreciate it. It was a great presentation, so thank you.

Mrs. Lois E. Jackson : Thank you, sir. Mr. Massimo Pacetti : To Mayor Dahling, I appreciate that you require additional RCMP officers. If your village requires additional RCMP officers, I'm sure there are others. Do you have any idea of the need across the country, or just perhaps in the province of British Columbia? Mrs. Corrine Dahling : With any community that has a one-man station right now, they are taking those one-man stations and eliminating them because the mandate is for two-man stations. Mr. Massimo Pacetti : Do you have any idea how many there would be? Mrs. Corrine Dahling : I don't know.

I asked but they didn't get back to me. Mr. Massimo Pacetti : Thank you. Thank you, Mr. Chairman. The Chair : Thank you, Mr. Pacetti. I want to thank all of our witnesses for being here today, for your submissions to the committee, and for your answers to our questions. We thank you very much for your participation. We have a second panel right away, and we ask them to come forward. We'll suspend for a few minutes and then continue with our discussions. Thank you.

(0935) The Chair : I'll call this second panel to order. Again we have seven organizations with us here for this panel. We have the Prince Rupert Port Authority; TRIUMF; Port Metro Vancouver; as an individual, Mr. William Otway; the Surrey Board of Trade; the Belinda Stronach Foundation; and Vancouver Island University. Welcome to all of you. I'll just reiterate what I told the last panel. We have a very limited amount of time. We have an hour and a half. So you will have a maximum of five minutes for your presentation. I will indicate one minute and then you can wrap up.

Then we will go to questions from members. We'll start with Mr. Krusel, please. Mr. Don Krusel (President and Chief Executive Officer, Prince Rupert Port Authority) : Thank you. Good morning. My name is Don Krusel. I am the president and chief executive officer of the Prince Rupert Port Authority. Firstly, we at the Port Authority want to recognize and congratulate the Government of Canada on the effectiveness of the targeted investments in the Asia-Pacific gateway and corridor initiative to strengthen Canada’s competitive position in international trade.

Together these activities have established a strong and positive reputation for Canada's Asia-Pacific gateways. With the continued shift of economic activity and world trade toward the Asia-Pacific region, this national strategy of facilitating trade between Canada and Asia will continue in its overwhelming importance to the Canadian economy. The Port of Prince Rupert has benefited from these investments and has increased its international profile, and it owes a great deal of its success to the collaborative activities of the Asia-Pacific gateway and corridor initiative.

The $30 million investment by the Government of Canada in the Fairview container terminal in Prince Rupert has been a tremendous success and has created significant economic opportunity across western Canada. A picture is worth a thousand words in illustrating the phenomenal success of the new trade corridor gateway in Prince Rupert.

The graph that has been handed out to you--and I hope all panel members have a copy--provides a startling picture of the dramatic increase in North American trade that has been achieved through the Port of Prince Rupert as a result of the Asia-Pacific gateway initiative investment in the container terminal in Prince Rupert. As the graph illustrates, during the first 30 years of existence and prior to the conversion to a container terminal in 2007, the Fairview terminal never handled more than 1.1 million tonnes of cargo in any given year.

Last year, during its first full year as a new North American gateway container terminal, it handled 1.8 million tonnes, and this year it is expected to handle 2.5 million tonnes of cargo. That is a startling 127% increase over the previous best year and a 1,200% increase over just two years ago. When the new facility reaches capacity, expected within the next five years, an extra 4 million tonnes, or an increase of nearly 5,000%, will be flowing through that terminal. These achievements have not gone unnoticed internationally and worldwide.

Recent articles in the Journal of Commerce , a U.S.-based trade publication, have referenced comments from U.S. port officials about the success of Prince Rupert and the Asia-Pacific gateway. To quote the article: [U.S.] port officials appear to be looking with envy at what has been done in Canada to lure North American importers to Prince Rupert. The [U.S.] West Coast port directors cited the effective effort of the Canadian federal, provincial and local governments, together with that country's Pacific ports and CN [Rail], to promote the Canadian gateway for trade with Asia. The

article goes on to describe how the U.S. west coast port authorities are lobbying their own federal government to provide the same level of economic and organizational support as is being provided here in Canada. While it is very flattering to be viewed as a role model for our U.S. counterparts, it is also a warning to us that we cannot be complacent and allow ourselves to lose any competitive advantage that we might have gained through the Asia-Pacific gateway and corridor initiative.

We believe that the Government of Canada's Asia-Pacific gateway and corridor initiative and measures for economic stimulus have been successful to date but can be more effective with continued support and future enhancements. I would like to highlight three for consideration by this committee: to provide new and additional funding for the Asia-Pacific; to provide greater access to federal economic stimulus; and to amend federal regulations to enhance the ability for federal ports to access venture capital.

However, I am not here today only to applaud past infrastructure investments made in the Prince Rupert gateway but to remind you that we are not yet finished building Canada's Pacific gateway. Thus we need continued support from the Government of Canada in completing this important task. The Port of Prince Rupert has a real and immediate opportunity to facilitate the development of new export capacities for bulk commodities targeting the Asia-Pacific region.

In addition, the growing container traffic and terminal capacities are driving new opportunities for export and import logistics services such as container stuffing and reload, cold storage, transload, and short sea shipping opportunities.

(0940) In conclusion, we applaud the support and direct investment made by the Government of Canada, along with our partners in the Fairview container terminal. Together, we not only created a new gateway for trans-Pacific container trade but also have drawn the attention of the international shipping world and opened the door to a multitude of new investments and development opportunities. Key to realizing the opportunity and unlocking the potential of the Prince Rupert gateway will be a strategic investment in infrastructure at the Port of Prince Rupert by the Government of Canada.

I thank you for your time and attention. The Chair : Thank you very much. We'll now go to TRIUMF, please. Dr. Nigel Lockyer (Director, TRIUMF) : Good morning. My name is Nigel Lockyer. I'm the director of TRIUMF. TRIUMF is Canada's national laboratory for particle and nuclear physics. It was founded 40 years ago by three British Columbia universities and the University of Alberta. Today, it is 11 full-member universities and four associate universities, so it's represented by 15 universities across Canada, stretching from Nova Scotia all the way to Victoria.

Every five years, TRIUMF undergoes what's called an international peer review. This year's review was chaired by Dr. Rolf Heuer, the director general of CERN, which is the largest laboratory in the world. Members on the committee included directors from Asia, the United States, and Europe. The head of the European Science Foundation was on that committee, as was the CEO of the B.C. Cancer Agency and Canadian businessmen. The report is complete. They gave us an A-plus, you might say, on our track record, and fully endorsed our plan for the next five years. TRIUMF also initiated by itself an economic impact study.

It shows that in the last 10 years there was $1 billion of economic activity associated with TRIUMF. Our next five-year plan proposes to double that, so that would be $1 billion of activity in five years. TRIUMF is a little unusual in the sense that it's not only a world-class science facility but has demonstrated its ability to work with the private sector. Our major collaborator is MDS Nordion at the moment. I don't have time to describe our whole program, nor do you want to learn about physics or nuclear physics, I assume, so I'll just talk briefly about the fastest growing part of the plan: nuclear medicine.

TRIUMF is engaged in nuclear medicine from soup to nuts. We design the accelerators, the cyclotrons that are used to make medical isotopes. Those cyclotrons are found around the world. They're found in Sloan-Kettering in New York and they're found in Korea. They're manufactured in Canada. That is a growing field and it's a growing business. In order to use those isotopes, they're usually connected to molecules. The field that connects molecules to isotopes and designs molecules is called radiochemistry. We have a radiochemistry team that's growing.

It collaborates with MDS Nordion, UBC, and General Electric, so it's an area where we see the future of the field in nuclear medicine going. We do imaging. We're involved in the science associated with that, both clinical and science research, in British Columbia and across Canada. The one area that I'll draw attention to that has been in the news a lot lately is the medical isotope crisis in Canada and around the world. TRIUMF has proposed a short-term, medium-term, and long-term solution. The short-term solution, in collaboration with B.C.

Cancer, Sherbrooke, Western Ontario, and Cross Cancer Institute in Edmonton, is to use the existing cyclotrons that are in the major medical centres. By changing the target from what you normally use to generate isotopes, you're able to make technetium-99 in sufficient quantities for those local medical centres. So that we see as something that can take place over the next two years—and it has been proposed to NSERC. That just relies on our know-how. The medium-term solution is part of our five-year plan. It actually was part of it before the crisis came about.

We are proposing to build a high-power, very small electron accelerator, which would fit probably across this table, that would allow us to produce molybdenum-99 in quantities sufficient for all Canadians. It's not an expensive investment on the scale of reactors, so I believe the Government of Canada has a choice between reactors and accelerators. The solution we've proposed does not use highly enriched uranium; it uses natural uranium, where all reactors now will have to switch away from the way they're doing things.

(0945) Our long-term vision is that nuclear medicine, being a growing field that allows you to decipher cancer, whether a tumour that's growing or dying or whether there are estrogen receptors on it, and so on, is something that's going to take place. We propose an espresso-maker cyclotron, something small that fits on your desk and gives single-patient doses of medical isotopes, and which could be put in every hospital in the world. That's the end goal of nuclear medicine. It's really going to be everywhere.

I think the opportunities are fantastic, and we're very pleased to offer to you our proposal that we brought with us. The Chair : Thank you very much for your presentation. We'll now go to Port Metro Vancouver, please. Mr. Robin Silvester (President and Chief Executive Officer, Port Metro Vancouver) : Good morning, committee members, and thank you very much for the opportunity to address the standing committee this morning. My name is Robin Silvester. I'm the president and chief executive officer of Port Metro Vancouver.

The Vancouver Fraser Port Authority, operating as Port Metro Vancouver, has submitted to the Standing Committee on Finance a federal pre-budget submission wherein we recommend that the Government of Canada undertake a new round of funding for the Asia-Pacific gateway and corridor initiative, specifically including the replacement of the New Westminster rail bridge and the replacement or upgrade of Fraser River training infrastructure. The port recognizes and applauds the support of successive federal governments in the creation and expansion of the Asia-Pacific gateway and corridor initiative.

The investments announced by the federal government have bettered our nation's west coast trade infrastructure to the benefit of all of Canada, which is fundamentally a trading nation. These improvements have demonstrated to customers and port users the Government of Canada's commitment to advancing significant trade-related activity in the Asia-Pacific gateway. While much has been done to facilitate trade through the Asia-Pacific gateway, funds available for investment in this initiative have largely been committed. A number of investment priorities remain.

We respectfully submit that the Government of Canada should consider further investment to position the Asia-Pacific gateway as truly competitive. Specifically, the two infrastructure projects I address today are key to the continued and future competitiveness of the gateway. Port Metro Vancouver is Canada's largest and busiest port and the most diversified port facility in the whole of North America. Port Metro Vancouver's navigable jurisdiction stretches along 600 kilometres of coastline, and the Fraser River comprises nearly half of that jurisdiction.

In 2008, the cargo handled along the Fraser River accounted for 29% of Port Metro Vancouver's total tonnage, representing a very significant contribution to the port's overall economic impact in the region and to the related tax generation of taxes to all levels of government. The New Westminster rail bridge represents an existing federal asset and a critical component of the gateway infrastructure. This single track swing-span bridge crosses the Fraser River between Surrey and New Westminster.

In addition to approaching the end of its useful life, this 100-year-old structure also offers a mere 10-metre vertical clearance over the Fraser River, a major international shipping channel. Furthermore, the narrow distance between its vertical supports presents an ongoing challenge to river navigation, and columns have been damaged in the past after being struck by barges transiting in heavy currents. The Government of Canada has recognized that rail access to and from Port Metro Vancouver is critical to the success of Canada's international trade initiatives.

As a result, the Asia-Pacific gateway and corridor initiative identified three key rail corridors essential to the success of trade in the metro Vancouver region: the Roberts Bank rail corridor, the north shore trade area, and the south shore trade area. The New Westminster rail bridge is a critical component of the north and south shore rail corridors, especially in conjunction with the increasing freight demand forecasted from higher cargo volumes through the gateway. At this time, the bridge is at or near sustainable capacity.

The current users of this bridge include CN, Canadian Pacific, Burlington Northern Sante Fe, Southern Railway of British Columbia, VIA Rail, Amtrak, and the Rocky Mountaineer. Replacement of the New Westminster rail bridge with an improved crossing would represent a sound investment that would significantly contribute to the success of Canada's international trade initiatives. To date, no funding has been identified for the replacement of this crucial infrastructure. Moving rapidly to the Fraser River training infrastructure, this is also an existing federal asset managed by the Canadian Coast Guard.

These marine control structures channel direct current and control wave action, thereby maintaining water depths and reducing erosion. By stabilizing the course of the Fraser River, they in turn help to manage sediment suspension. The training infrastructure serves three vital functions: the structures improve navigation; they reduce the requirement for maintenance dredging, which I believe links to a number of presentations you had earlier this morning; and they contribute to the commercial viability of the port's dredging program and thus the ongoing viability of the Fraser River as a trade corridor.

The structures also address issues relating to erosion and sediment deposits for lands adjacent to the river and contribute to flood control and safety. There are 14 structures involved, some of which are more than 100 years old, and all are currently in varying conditions of disrepair. The replacement value of these marine structures is estimated at $150 million—and again, no funding has been identified for their replacement. To conclude, Canada is a trading nation.

Given the importance of trade to Canada's financial well-being, the magnitude and growth in Asia-Pacific trade, and the importance of diversifying and expanding Canada's trade with new markets, the Fraser River is critical to the economy and the communities along metro Vancouver.

(0950) Port Metro Vancouver recommends that the federal government undertake a new round of funding for the Asia-Pacific gateway and corridor initiative, including the replacement of the New Westminster rail bridge and the replacement or upgrade of Fraser River training infrastructure. Thank you. The Chair : Thank you very much, Mr. Silvester. Mr. Otway, please. Mr. William Otway (As an Individual) : Thank you, Mr. Chairman and members of the committee. I appreciate the opportunity to appear before you today. My name is William, or Bill, Otway. You have my background in the brief previously submitted.

I'd like to advise you, with pleasure, that the Shuswap regional association of the B.C. Wildlife Federation has voiced its support for the proposal I'm putting forward. We all believe that one of the very best investments our government could make with taxpayers' money is to invest in the revitalization of the Pacific salmonid enhancement program, or SEP. Such an investment would provide the opportunity for increased economic benefits and additional long-term sustainable employment for thousands of Canadians. Despite continuing efforts to restrict this operation, SEP has been a success.

It contributes significantly to our salmon production and has provided a buffer for our fisheries in light of continuing decline in the production of wild salmon stocks. The program is responsible for something in the order of 40% of the economic benefits and jobs our fisheries produce. It has the potential, with some rational investment, to expand those benefits in a major way. The public fishery in British Columbia plays a major role in the economic well-being of both B.C. and Canada. The wholesale value of the commercial public fishery in 2005 was $793 million and it contributed 5,700 jobs.

At the same time, the recreational fishery generated $1.4 billion and 7,700 jobs to our economy. Simply put, the public fishery in British Columbia generates in excess of $2.1 billion annually and 13,500 jobs. There is no reason, given a rational revitalization plan for SEP, that these benefits cannot be doubled over time. The committee is no doubt aware of the problems experienced here in B.C. this past year with our Skeena and Fraser sockeye. What the committee may not understand is that the failure of those salmon runs meant a minimum loss of $125 million to our economy and the associated jobs.

Bringing SEP to full and expanded production could have compensated for some of those losses with production of other species and retained the lost economic benefits and jobs. A review of the 2007 report to the Minister of Fisheries and Oceans, entitled Salmon in Sight , will show that a planned revitalization of SEP also provides the opportunity to produce green power. Our recommendations are as follows. One, dedicate $200 million to the DFO Pacific region over the next six years to create an expanded and revitalized SEP program and to develop a salmon master plan.

Two, stipulate that the funds dedicated to this program will be under the control of the Pacific region of DFO and not the deputy minister or the Ottawa mandarins. Moreover, it must be stipulated that these earmarked funds cannot be hived off for any other use within DFO. Three, require the establishment of an advisory body composed of representatives of all stakeholders to work with and advise DFO Pacific region on the best projects to undertake. This body would also review all science-proposed projects and make recommendations on their viability in achieving the goals of the expanded SEP. Thank you.

(0955) The Chair : Thank you very much, Mr. Otway. We'll go to Mr. Wilson. Mr. Eric Wilson (Chair, Taxation and Finance Team, Surrey Board of Trade) : Thank you, Mr. Chairman. My name is Eric Wilson. I am the chair of the finance and taxation team for the Surrey Board of Trade. The Surrey Board of Trade is the second largest board of trade in British Columbia. Thank you for allowing us to speak today. Specifically we're asking the government to consider two areas of tax policy for revision and introduction.

One concerns the availability of the small business deduction to companies that have taxable capital in excess of $10 million. The second is to consider the introduction of legislation allowing for consolidated corporate tax filings among companies under common control and ownership. By way of background, subsection 125(5.1) of the Income Tax Act reduces the ability of a company to claim the small business deduction based solely on its taxable capital. It begins to erode once the capital exceeds $10 million, and it disappears entirely at $15 million.

This has a significant impact on businesses that are capital intensive. For example, the Automobile Dealers Association has highlighted this many times. Prior to 2004, the $10 million threshold also served as the level at which a company would incur what's referred to as a corporate capital tax, which is a static tax based solely on its capital structure. Once you incurred a $10 million limit, you paid a certain degree of tax on the excess.

In 2004, that level, for purposes of the large corporations tax sections, was increased to $50 million, but the $10 million threshold for the erosion of the small business deduction did not change. We are requesting either that subsection 125(5.1) be repealed or that the $10 million threshold referenced therein be increased to $50 million to at least bring it into harmony with the level at which a company will incur large corporations tax.

With respect to allowing consolidated tax returns to companies under common ownership and control, it is very common for a business to have its individual units split into various subsidiary or sister corporations for purposes of liability, competitive insulation, succession, or variable compensation patterns. It's not unusual for one facet of a business to operate at a loss

whereas another facet operates at a profit. An example might be a manufacturing business that also does its own distribution. The distribution end of a manufacturing business sometimes does incur losses. If for competitive or legal liability purposes this company chooses to maintain its business units in separate legal entities, it has to go through an enormous amount of professional expense, complexity, and, to a certain degree, uncertainty to access the losses of the distribution company with the manufacturing end.

We believe that Canada is one of the only countries in the G7 that does not allow consolidated corporate filings. Within the package that was submitted prior to my appearance here, there is a discussion of various techniques and strategies that are embraced by the CRA in allowing consolidation of losses within a related group or a group under common control. But as I said earlier, it's unwieldy and unnecessarily expensive, and at the end of the day, the amount of tax revenue that would be realized by the government would functionally be unchanged in the event that consolidated filings were allowed.

In 1985 the Technical Committee on Business Taxation recommended that the federal government review the Department of Finance's 1985 discussion paper, “A Corporate Loss Transfer System in Canada”, which acknowledged there were problems with the current loss utilization techniques, specifically legal and accounting costs, administration and compliance costs, and uncertainty regarding the utilization of the tax planning techniques.

It argued that a group reporting system would improve the equity and neutrality of the income tax systems as between economic entities; enhance the response of business to tax incentives provided by the federal government; and increase the freedom of managers of business organizations to structure business operations in the most desirable way from a business point of view, with less concern about adverse or uncertain tax consequences. Thank you.

(1000) The Chair : Thank you very much, Mr. Wilson. We'll go to Ms. Mohamed. Mrs. Farah Mohamed (President, External, Non-Profit, Belinda Stronach Foundation) : Thank you very much, Mr. Chair, for the opportunity to present to the committee. My comments will focus on the first question the committee has put forward, which is in regard to the spending measures needed for prosperity and sustainability. Specifically, my presentation focuses on the fastest-growing population in Canada: aboriginal children.

It also focuses on themes that this government has championed, among them economic development, strategic investment, and technology. You've all received a copy of my presentation. What I'm going to discuss with you today is One Laptop Per Child. It's a program that is currently in 15 other countries, one million of them in operation, and it has yielded tremendous results. It's about education, empowerment, globalization, responsibility, and investing in a key resource, our children. This iteration of One Laptop Per Child in Canada is unique. It focuses on aboriginal children.

It has the support of organizations and individuals from the aboriginal community, among them Chief Atleo, Roberta Jamieson, Susan Aglukark, Clint Davis, the ITK, and several others. I point that out at the beginning because this is not a solution that has been made in central Ontario; it is in fact a solution that is being put together in collaboration with aboriginal leaders and individuals. It's also a program that's built on partnership between the not-for-profit community, the private sector, and hopefully the government. It's a pilot project that I am speaking to you about today.

We believe that if we can pilot this, this time next year, for our kids, about 5,000 of them in various parts of the country, we can in five years reach a population of 250,000 children between the ages of 6 and 12. With respect to One Laptop Per Child, it was created in 2005 by a gentleman named Nicholas Negroponte. He's the founder of the MIT media lab. It's a low-cost, low-powered, connected laptop. In fact I have one with me, so you can see that it's actually proven, not something we're going to come up with in this pilot program. It's a tool to get aboriginal kids involved in their own education.

Briefly, the important

part is what the laptop will have on it. This particular laptop will have on it a literacy program with aboriginal content. It will have on it a financial literacy program with a banking opportunity, so we're giving actual skills and practical skills to children. It will have at least 100 books, 50 of which will be from aboriginal authors for aboriginal children, and we're pleased to announce that Heather Reisman has agreed to give us the other 50 books.

It will have connectivity to the Internet, an entrepreneurship program, a mentorship and leadership program, games to improve dexterity, self-esteem, and creativity, and we'll be doing that in partnership with CAMH, the Centre for Addiction and Mental Health. We'll also be working with ParticipACTION to come up with a physical education program so that we're not creating a bunch of children sitting in front of computers but that they learn how to use technology for their physical health.

We're also working with the University of Waterloo so that as these programs are developed by the content experts, they are handed over to, as we call them, high-performing tech geeks at the University of Waterloo, who will then be coming up with the application. So we are striving to have an academic aspect to this. I'm going to go through the deck very quickly. It's important to understand who will benefit from One Laptop Per Child.

Obviously, our main population is aboriginal children 6 to 12 years of age, their parents, their communities, teachers, other family members, and we believe, with this investment, Canadians. We are talking about the fastest-growing population in Canada and a population that has demonstrated enormous results when given the opportunity. As indicated on page 7, the accomplishments to date are taken from a number of evaluations in these 15 different countries, all at different stages, but we know that at the end of the day kids become more interested in their learning.

There are lower dropout rates, increased school attendance, and higher literacy rates. They become more creative. Because of their access to the Internet, they explore areas of opportunity that they may not have otherwise explored. In fact, the programs that are on here are musical in nature. There are memory games. There are memory tools. There's a calculator on there. There's a journal on there. So what we've seen is that kids are becoming a bit more engaged in their education.

In reference to page 8, if I came to you with a program and didn't tell you that there were challenges and opportunities for those challenges, it would be a little bit of a misleading statement. We've identified three challenges and three ways to solve those challenges. One is breakage. The computer is built for kids, so the breakage rate is less than 1%. Regarding training, we really believe the best way to get these into the hands of aboriginal kids is to have aboriginal adolescents be the trainers of these programs, so that's built into this program.

In terms of the cost, this is a very low-cost solution to literacy problems, self-esteem, and the engagement of children. Built on this, on page 9 we talk about potential partnerships. For the pilot program, we're talking about $5 million over three years, shared between not-for-profit, profit, and the government. So that boils down to about $2.5 million for the government, and that would be $833,000 per year for three years. At the end of the day, we believe that after three years of this pilot program, and within five years, we could cover the entire population--obviously, with increased investment.

(1005) On page 10 I talk about why this is a useful investment for the Government of Canada. I won't go through all of this, but we look at it as a strategic investment. That's a very important part of this equation. Often not-for-profits come and ask for a bulk of money and tell us they'll try to do good things with it. This is an investment in a population that needs it, and it's built on a partnership. After a pilot program this would be a cost of $250 per child. Currently I'm told we spend $215 per child on just language training in this country.

At the end of the day, the bottom line of this program is that it's innovative, it's targeted, it's proven, and it's supported by aboriginal leaders and is cost-effective. On page 12 you'll see the roll-out. The plan is to do the content to raise the funds and to have these computers in the hands of 5,000 children by this time next year. Thank you very much. The Chair : Thank you very much, Ms. Mohamed. You may want to actually pass around the laptop to members, if you want them to get a sense of it. I don't know how many of them have actually seen it. We'll now go to Mr. Nilson from Vancouver Island University.

Mr. Ralph Nilson (President and Vice-Chancellor, Vancouver Island University) : Thank you very much for the opportunity to address the standing committee. I bring regrets from our chancellor, Chief Shawn Atleo, who is unable to be with us today. We had hoped he could be, but it's not possible. I'd also like to thank the Government of Canada for the knowledge infrastructure funds that we and other institutions across the country have received. As an example, one of the projects that we've invested in is a new facility that we're building on our Duncan campus.

When you look at the issues we have in our brief, one of the keys is that 18% of the population at that particular campus is aboriginal; we are serving the Cowichan bands and various other communities on that part of the island. Just so you have a bit of an understanding, Vancouver Island University is a new university. We are one of the institutions in British Columbia that was a university college, and in September last year we became a full university. Prior to that we had 73 years of history in the mid-island, and for 20 years we were giving out university degrees.

So it's not new that we're granting university degrees, as we've been doing it for 20 years. We take very, very serious responsibility for our role in mid-Vancouver Island in economic and social development within the communities we serve. So it's a very, very important part of what we do. The issues we're addressing in our submission concern the changing economy. When we look at the resource-based economy on Vancouver Island and up and down the coast, there's been some critical change. We know the forest industry has changed dramatically.

We know, indeed, that fishing and harvesting protein from the sea has changed dramatically. We know there are a variety of changes at hand that impact directly on both provincial and federal jurisdictions. As those resource-based industries change, they displace a lot of people. We're a regional institution that provides support for people in that transition. We are an open-access institution, and it's very important that we address the opportunities for people to come in and address that change in their lives. We're also very strongly focused on capacity building in first nations communities.

We have 51 first nations communities on Vancouver Island. We serve communities up and down the coast and provide support for them. We have the largest head count of aboriginal students of any university in British Columbia. Even though we're about one-eighth the size of UBC, our head count of first nations students is dramatically larger. It's because we provide an environment for them to excel and to be successful. It is a very important issue for us. The third piece we're very involved in as a coastal institution is looking at ocean management, particularly as it relates to harvesting protein from the sea.

Our real strength is in shellfish research, but we have a strong partnership with DFO and look at all of the challenges that exist in harvesting protein from the sea and how we, as a regional institution, can provide supports to help guide that dialogue in a way that moves it forward, rather than some of the challenges that I know exist with the political pitfalls that arise when dealing with provincial and federal jurisdictions. As a regional institution with a strong relationship with DFO, I think we have a part to play and a place to work. So our recommendations are threefold.

The first one is looking at first nations funding for post-secondary education. We know there's a real need there; we know there's a real challenge there. We think we can provide and develop the kinds of models that are going to be successful for first nations in building capacity in their communities, and that's done through small regional institutions that are close to home communities and provide the kind of cultural support that's necessary. This is a model that we can work with other institutions across the country. It's not just something that's going to focus on Vancouver Island.

We also recognize that regional universities, especially when located in resource-based communities where industries are changing, are a place of innovation. We are a place of change that can provide the kinds of supports that will help the economy and help us understand what the next economic drivers are going to be in those communities, especially at the regional and rural levels. We have a role to play.

The third one is the opportunity to engage with DFO in a way that allows us to look at and address this evolving issue on the coast of harvesting protein from the sea and the whole responsibility we have in ocean management as it relates to that. I think we have a role to play in having a dialogue and in providing direction and leadership. Thank you very much.

(1010) The Chair : Thank you very much. We thank all of you for your presentations. We'll now go to questions from members, starting with Mr. McCallum for seven minutes. Hon. John McCallum : Thank you, Mr. Chair, and thank you all for joining us this morning. I'd like to focus on two themes that I think are critical for the jobs of tomorrow, which some of you have advanced, where I think you'll find a big difference between our view and the government's view. One of these areas is the role of research and innovation in science in creating the jobs of tomorrow.

The second one is the importance of the Pacific gateway and trade with China; we can't put all of our eggs in one basket, and we really think Canada's destiny lies increasingly with Asia. Some of you have touched on that. If I may begin with the first theme, this is principally for Mr. Lockyer and Mr. Nilson, I think. We believe that to create the jobs of tomorrow, government has to be heavily involved in science, in research, in innovation, because many of the jobs lost today will not come back. It's true that with new ideas and innovation in science and research, Canada must work to create these future jobs.

On the government side, they've actually cut funding for science and research-granting councils, so there you see a pretty stark contrast. To Mr. Lockyer, you're seeking quite a lot of money, approximately $300 million. So I have two questions. Have you, other than coming here today, had conversations with the industry department, and what are the prospects for that? Second, in terms of the isotope crisis, you described a short-, a medium-, and a long-term plan. Have you been in discussion with government on that? What kind of reaction have you had to that plan?

(1015) Dr. Nigel Lockyer : The answer is that we have met with a number of people in Industry Canada. We met with Minister Clement to discuss our proposal. We met with senior civil servants in NRCan to discuss the isotope proposal. So there is interest in what we're doing. I think, as I said, we presented it as a choice that you can invest in reactors. But first of all, let me say that I think we should be in the business of medical isotopes. Canada has a long history here and is recognized around the world as being engaged in this type of activity. It's not only business, but also research and health care.

It has many facets. Hon. John McCallum : Do you think there's a moral dimension as well, if we just walk away from it at a time when there's a supply deficiency? Dr. Nigel Lockyer : Well, I've interpreted the government's position as saying that we are not going to subsidize isotopes for the rest of the world. I would like them to say that we are going to worry about isotopes in Canada, and that's what we're trying to address. There are two aspects to that. One is that we've offered a solution that provides moly-99 and other isotopes for Canadians.

It's also a business at the same time; we build and sell accelerators in Canada, and we see it as a growing business. So that's what we've offered them. Hon. John McCallum : Thank you. Mr. Nilson, I've spent twice as much time as a university professor in economics as I have in politics, and I've been struck by the importance of regional universities to their communities. The little “UQs” in Quebec, for example, are central to the future of their communities.

So if we're going to have policies that favour new activities and jobs in regions and not just in the big cities, then I think your proposal is really important.

I really subscribe to your first recommendation, where you call for “The creation of a funding program by the Federal Government that supports core operating funding for research centres at regional universities, where the economic and social benefits of the applied research can be clearly demonstrated.” For example, in places like Chicoutimi, I notice that the universities are central to their future, and often the outlook for traditional jobs in those areas is not very good. I guess my question to you is, are you guys banding together in some way to have a united front?

I know the big universities such as the University of Toronto and McGill try to hog all of the money, saying they're excellent and you're not. I've been there. Are the smaller universities based in the regions trying to act in a concerted fashion in this area? If not, I think it would