EVIDENCE Standing Committee on Finance NUMBER 053 2nd SESSION 40th PARLIAMENT Wednesday, October 21, 2009 Le mercredi octobre Standing Committee on Finance CANADA [Recorded by Electronic Apparatus] EVIDENCE October 21, 2009 Committee Edited Evidence * Table of Contents * Number 053 (Official Version) Official Report * Table of Contents * Number 053 (Official Version) Témoignages * Table des matières * Numéro 053 (Version officielle) 53 21 10 2009 2009/10/21 09:30:00 House of Commons Comité permanent des finances Standing Committee on Finance FINA Chair Mr. James Rajotte 40 2 (0935) [ English ] The Chair (Mr.

James Rajotte (Edmonton—Leduc, CPC)) : I declare the 53rd meeting of the Standing Committee on Finance in order. It's wonderful to be here in Toronto. We have two days here. We have a total of eight panels over the next two days. This is our final city on our nine-day tour across Canada for pre-budget consultations. In the first panel this morning, for an hour and a half, we have six organizations with us.

I'll read their names in order of their presentations to the committee: the College Student Alliance, the Canadian Dance Assembly, the Residential and Civil Construction Alliance of Ontario, the Employer Coalition for Advanced Skills, Colleges Ontario, and the Professional Association of Canadian Theatres. Thanks to all of you for being with us here this morning. You each have up to five minutes for an opening statement and then we will go to questions from members of all parties on the committee. We'll start with the College Student Alliance, please. Mr.

Tyler Charlebois (Director of Advocacy, College Student Alliance) : Good morning. Thank you for this opportunity to share with you the thoughts, concerns, and recommendations of Ontario's college and college/university students. I am Tyler Charlebois and I am the director of advocacy for the College Student Alliance, which is an advocacy and services organization representing over 120,000 full-time college and college/university students across the province. “Canada Rebranded: Stronger Investments for Greater Returns” is our submission to your pre-budget consultations.

It focuses on three recommendations to lead Canada into the new economy. The first recommendation is that the Government of Canada, in partnership with the provinces and territories, must develop a national education and training strategy. The second recommendation is that the Government of Canada assist in alleviating the increasing burden of debt that learners are assuming. The Canada student loans program loan repayment policy should be changed to encompass interest relief and debt reduction components.

The third recommendation is that the Government of Canada should establish a separate research envelope for colleges to expand their applied research, commercialization, and innovation capabilities. For today's presentation, I'm going to focus only on what we feel is the utmost important issue moving forward. As Canada, North America, and other countries around the globe face economic uncertainty, the CSA is urging the federal government to focus on rebuilding and retraining Canadians for the new economy.

If Canada is to rebuild and sustain future prosperity, we must ensure that all Canadians, new and old, have access to an affordable, high-quality post-secondary education and training system. An educated and skilled citizenry will revive Canada’s struggling economy and place the country back on the road to recovery and competitiveness. The benefits to both the individual and the taxpayer are worth Canada’s increased investment in higher learning. The taxpayer return on investment is some 15.9% for every dollar spent on Canadian colleges and institutes.

With more than $123.3 billion in income being contributed to the Canadian economy annually by colleges, polytechnics, institutes, and their graduates, this is roughly 8% of a typical year’s economic growth in Canada. To that end, the College Student Alliance is calling for the federal government, in partnership with the provinces and territories, to develop a national education and training strategy. For over the past decade and a half, Canada and Canadians in all provinces have seen an underfunding of our post-secondary education system.

This underfunding has resulted in reduced quality and a downloading of costs onto students and their families. A country as vast and diverse as Canada must be a leader in today's knowledge-based economy. We must be at the forefront of innovation, commercialization, and integration. We must work together to build a strategy that is clear and concise so that all Canadians understand that Canada is a place to live and learn. A national strategy must look to increase our ability to collect and report data.

Currently, Canada is ranked last amongst OECD countries in terms of data collection for quality measurement in PSE. Our lack of data is not only hurting our ability to compare ourselves to other countries, but also is hindering our ability to make sound decisions based on fact rather than pure assumption or speculation. A national strategy must work to recognize all prior learning and pathways, with a focus on expanding pan-Canadian mobility for learners.

Learners must be able to move between the system sectors and provincial and territorial boundaries without increased cost or duplication of their prior learning. A national strategy must provide our provinces and territories with the appropriate funding: a dedicated transfer to provinces and territories of about $4 billion annually to restore Canada's investment in higher learning.

Within the framework of a national strategy and transfer, the responsibility would be placed on each provincial and territorial government to construct agreements with the post-secondary education institutions within their jurisdictions to ensure adequate funding to expand access, to increase affordability, and for accountability not only to the learner but also to all Canadians.

Our vision is for a Canada in which all citizens have an opportunity to build on their natural talents and abilities through post-secondary education and training in a system that is adequately supported by both provincial and federal governments and allows learners to move across the country to gain new skills and experiences. Students are united in this call for Canada to develop a national education and training strategy. The time is now. Thank you for your time this morning. The Chair : Thank you very much for your presentation. We'll now go to the Canadian Dance Assembly, please. Ms.

Shannon Litzenberger (Executive Director, Canadian Dance Assembly) : Thank you. My name is Shannon Litzenberger and I'm a contemporary dance artist and the executive director of the Canadian Dance Assembly. We're the national association representing Canada's professional dance sector, and we're also a founding member of the Performing Arts Alliance and a member of the Canadian Arts Coalition. In the economic action plan, the arts and culture sector was identified as a key sector—along with forestry, agriculture, the auto sector, and others—recognized as playing a significant role in stimulating the economy.

The arts and culture sector contributes $46 billion directly to Canada's GDP and generates approximately $25 billion in taxes for all levels of government, which is more than three times higher than the $7.9 billion that is invested at all levels. Despite economic challenges faced by all sectors at this moment, the cultural sector remains a growth market with substantive potential for further expansion. As the face of Canada's population evolves, so too does the richness and diversity of our cultural expression.

The cultural work force has grown by over 30% in the last decade and now represents 7.1% of Canada's total employment. Cultural workers are typically self-employed, have relatively low earnings, are highly educated, and are exceptionally talented. Indeed, cultural workers are leading Canada into the new credo of knowledge-based economy.

While the cultural sector plays a critical role in Canada's economic, social, and creative vitality, the Government of Canada also plays a critical role in ensuring that artists and arts organizations can create, produce, and disseminate their work for the benefit of all Canadians. On behalf of my colleagues in dance and in the performing arts, I'd like to congratulate the government for recognizing this role and putting into action several investment measures that have assisted a number of dance and arts organizations to remain vital during the economic downturn.

Today there are three recommendations I wish to make that I believe will significantly improve the impact and effectiveness of overall federal investment in the arts. These recommendations are modest given our economic climate and represent about one-twentieth of 1% of federal spending, or less than $5 per Canadian. The first is to increase investment to the Canada Council for the Arts to $300 million over three years. The work of artists and arts organizations contributes immensely to the economic, social, and creative vitality of communities in every riding.

In 2008-09, the Canada Council invested $158 million in more than 4,400 artists and arts organizations whose work reached communities across the country. The impact of the council's work is unmatched. It fuels the market with excellent artistic products by supporting artists and arts organizations in the creation, production, and dissemination of meaningful and engaging work.

New investment will enable it to give attention to critical priorities, including increasing artistic activity across regions, nurturing new generations of artists and arts organizations, and responding to the explosion of new forms of practice that have emerged from an evolving Canadian social and multicultural identity over the past two decades. Furthermore, increased investment will ensure that as our economy recovers, the arts remain a public good available not only to the rich but to all Canadians regardless of their socio-economic status.

The second recommendation is connecting Canada's outstanding cultural product to local and global markets by investing $25 million in a new market access and development fund. Today Canadians seek better access to exhibitions and productions from across the country and expect to see them at home in their own galleries, museums, theatres, and concert halls. With Canada's relatively small population base spread across vast territory, arts organizations require support to reach beyond their local markets, making their work accessible to markets from coast to coast to coast.

The new market access and development fund will ensure that Canadian communities of all backgrounds will have the opportunities to participate in and benefit from the broadest possible range of artistic experiences. Equally, Canada's cultural product is in high demand around the globe, a testament to the exceptional talent of Canadian artists. For many dance and arts organizations, international export is a vital component of a sound business strategy that ensures investment made in the creation and production of Canadian works will leverage revenue returns through business development in foreign markets.

My last recommendation is increasing the tax credit to 39% on gifts between $200 and $10,000 to stimulate the flow of charitable gifts from middle-income Canadians. In the performing arts sector, the economic slowdown has resulted in lost revenues from diminished corporate investments and endowments. A full 53% of Canadians report that they would give more to charitable causes if a better tax credit were in place.

(0940) The Government of Canada has already taken steps towards supporting a continuum of arts and cultural activities that includes the creation and production of art, public access to Canada’s artistic products, organizational health and sustainability, the development and preservation of physical infrastructure, and arts training. Together with existing investments, targeting arts spending in these three recommended areas will maximize the social and economic impact of public contributions to the arts and culture sector for the benefit of all Canadians.

Canadian artists and arts organizations are playing an important role in Canadian society. They contribute significantly to Canada’s economic recovery. We are eager to do more in partnership with the Government of Canada. Thank you. The Chair : Thank you for your presentation. We'll now go to the Residential and Civil Construction Alliance of Ontario. Mr. Andy Manahan (Executive Director, Residential and Civil Construction Alliance of Ontario) : Thank you, Mr. Chair. My name is Andy Manahan. I'm executive director with the RCCAO. Our group has been in existence for only four years.

We are made up of both contractor associations and construction unions. We come to the table speaking on behalf of both labour and management, which I think lends credence to our comments. You have my presentation that I provided in August, so I just want to provide some context. When we were all facing the prospects of a turning economy last year, we were pleased that many governments, not just in Canada but in the western world, were looking at infrastructure as a way to simulate the economy.

Our labour-management alliance decided to come together in mid-January for a round table on providing advice on infrastructure stimulus funding to federal and provincial governments. We came out with a joint statement. The partnership approach requires working together in difficult times. We recognized that we wanted to invest in the future. Our industry said that we were able and ready to meet the demand. Certainly there were some questions at the provincial government level about the capacity to deal with the major stimulus money that were going to be provided.

We recognized, however, that there had been some under-investment over the decades. This isn't a partisan comment in any way. For the past or 30 years, we have not kept up with the level of spending, based on a percentage of GDP, that occurred in the 1950s, the 1960s, and the 1970s. This is a way for us to build confidence through infrastructure and investment, build sustainable communities, do things in a more innovative way, and have some lasting impacts. That was in January. At the end of that session, our group thought that they should have another session to monitor the impact of the infrastructure funding.

We had that meeting on October 8. The group thought that there must be a coordinated strategy. A lot of the projects are very good, but because of the process, the applications and so forth, a lot of contractor members have not seen tendered documents coming out from municipalities. We understand that there has to be due diligence so that funds are spent properly but in our mind, the so-called exit strategy that was talked about in the summer is the wrong approach. We would like to look at a long-term, predictable source of funding.

We recognize that this is a bit of an anomaly in light of the increase in investment, but we need to look at life-cycle costing of assets together with a long-term and predictable flow of funding. In the brief I submitted in August, the first recommendation was to base future infrastructure funding programs on a more rigorous priority setting and to set in place clear programs for sustainable long-term funding of infrastructure.

The second recommendation I put forward in the brief flows from that in that we recommended that an infrastructure simulation platform be developed and supported financially by the federal government. Our organization has looked at what other jurisdictions have done, from Singapore to Finland and even the United States. We believe there is a more objective way of dealing with infrastructure funding. We recognize that under the current program there were constraints applied with respect to deadlines. This meant that some of the projects were not of a high priority.

The municipality said that it would not put forward projects that could not be finished by March 2011. It's not a great criticism, but what we're trying to say is that we should look to the future and build a program that's a bit better. I had a conference call yesterday with the co-chairs of the National Round Table on Sustainable Infrastructure. We think this would be the appropriate body to house this infrastructure simulation platform. We'd certainly like to have more dialogue with various agencies about that. Recommendation three calls for streamlining the environmental assessment approvals process.

There has been a lot of work in accelerating applications, but to plan long-term predictable funding, we need to ensure that there is certainty and predictability in the approval process. We were most heartened that there had been some discussion between the federal government and the Province of Ontario with respect to minimizing duplication in these processes. I understand that this matter has been the subject of a court challenge, but we'd like to see some more action on that front. Thank you.

(0945) The Chair : Thank you very much for your presentation. We're now going to Mr. Charette and Ms. Fralick. Mr. Paul Charette (Chairman, Bird Construction, Employers' Coalition for Advanced Skills) : Thank you, and good morning to the panel. My name is Paul Charette. I'm the current chair of Bird Construction Income Fund, the immediate past chair of the Canadian Construction Association, and the chair of the Employers' Coalition for Advanced Skills. Before I ask Pamela to outline our concerns, let me just say that we're here today representing a very large association.

We represent over industry association leaders concerned with respect to the current state of our community colleges and technical institutions. Our coalition came together in to request leadership from the federal government in rebuilding our aging community colleges and institutions across Canada because of our growing concern over the declining state of these important facilities from which our respective industries draw their labour force. With that brief introduction, I'd like now to turn it over to Pamela. Actually, I apologize that I forgot to introduce Pamela.

Pamela Fralick is the president and CEO of the Canadian Healthcare Association. We'll be sharing our time this morning.

(0950) Ms. Pamela Fralick (President and Chief Executive Officer, Canadian Healthcare Association, Employers' Coalition for Advanced Skills) : Thanks very much, Paul, and monsieur le président et membres du comité . As Paul indicated, our coalition is very concerned about this growing shortage of skilled workers in Canada and the challenge this presents for all of our industries in the years ahead.

While the shortage may seem counterintuitive in a recession, the problem is not a new one, and it's only projected to increase as much of our existing labour force approaches retirement age—many of us around these tables, perhaps, in the next few years. From a health sector perspective, these shortages are more than theoretical. While I am part.... I'm sorry. Was that an aspersion? I didn't mean.... Voices: Oh, oh! Ms. Pamela Fralick: I'm including myself. I'm not talking about political retirements. I'm completely non-partisan. Do I get my seconds back?

I am part of a larger coalition but have been asked to speak specifically to some of the health sector issues. I'd like to bring to your attention today five pieces of information, five data points. The first is that in the average age of individuals in health occupations was 41.9 years. That's almost two and a half years older than the average age of the general Canadian workforce. One example: in the profession of nursing—I know you'll hear from some of them later on—approximately 38% of the nursing workforce is over 50 years of age and very close to retirement.

The third point, and this should be of particular interest to a finance committee, is that in just over one million people across Canada, or one in ten employed Canadians, worked in the health system/industry. This represents 6% of the total Canadian workforce and indicates that it is one of the major employment industries in Canada. It's not just a cost centre. Fourth point: in Canada spent $160 billion on health care. We all know about that. It is estimated that between 60¢ and 80¢ of every health care dollar in Canada is spent on health human resources.

In other words, of the $160 billion, $96 to $128 billion went towards health human resources. We really cannot afford to ignore this sector or assume that it's done and checked off our list. The fifth point: Canada is not alone in having a shortage of health service providers. The World Health Organization estimates that worldwide there is a shortage of more than four million health care providers and there needs to be a 70% increase in the world's health workforce to address current and projected shortages. In other words, we can't rely on other markets; we can't look elsewhere. We must have homegrown solutions.

What does all of this mean? I have some data. I've shared with you some facts, but there is a huge challenge in truly understanding how to move forward. Today I'm wearing the hat representing community colleges and technical institutions. In these areas in particular there is a dearth of information. One example is in a profession I've worked with closely: physiotherapy. We did a survey a few years ago and discovered that training can range from two weeks to two years. It's not competency based; there are no standards.

We can't even come up with all of the data in an aggregate pan-Canadian level to determine where we go in terms of planning for the future. So governments and health system stakeholders really do need to work to build the capacity to adequately anticipate and accommodate changes in the health system. But, Mr. Chairman and committee members, the skilled worker shortage is not limited to the health sector. Indeed, in almost every sector of the economy, skilled worker shortages are beginning to have a significant impact on the competitiveness and productivity of the Canadian economy.

From manufacturing to construction, forestry to mining, aerospace to hospitality, skilled workers are the lifeblood of these sectors and integral to our future economic successes. While immigration is part of the solution—I've already referred to that—it is not a panacea, as new immigrants rely on Canada's community colleges for upscaling and retraining. Unless we significantly increase domestic training capacity, Canadian businesses will continue to struggle in the decades ahead. I hope that's not the full five minutes. The Chair : You have one minute left. Ms.

Pamela Fralick : We'd like to bring solutions to you, and my colleague will do that. Mr. Paul Charette : Thank you. I'm going to have to speak quickly, then. Before I get to our recommendations, I want to underscore Pamela's point about the pervasiveness of the skilled trades shortage across the economy. In the construction

section alone, a skilled work shortage of 316,000 workers is anticipated by 2017, and that's up from 250,000 last year. When you consider that the overall workforce today is 1.1 million, that means we will need to replace over 30% of our workforce in the next eight years. I think I'm getting down to the last minute, so I'm going to skip right to my recommendations. The coalition is very concerned about the declining state of Canadian community colleges and technical institutions. Our industries rely heavily on these facilities.

Our recommendations are that we extend the current federal knowledge infrastructure program for an additional five years, at a funding level of $1 billion annually, and abandon the current 70-30 university/college funding apportionment formula in favour of a more equitable distribution; and to increase federal research funding by 5% to support applied research, product development, and research commercialization at colleges and institutes.

The leadership that the federal government showed in the budget helped kick-start a number of overdue modernization projects at campuses across this country, but much more needs to be done. In 2008, the Association of Canadian Community Colleges reported an estimated $7.4 billion investment required in investment. I'd like to finish on a personal note, if I can, in seconds. I'm a college grad from 42 years ago. If it had not been for the vision of the federal government in the 1960s in creating the capacity, and for a caring community, I wouldn't be sitting here in front of you today.

I think it's very important for us to provide the same opportunity for many Canadians across Canada. With that, I will close. Thank you.

(0955) The Chair : Thank you very much. We'll go next to Colleges Ontario. Ms. Linda Franklin (President and Chief Executive Officer, Colleges Ontario) : Thank you very much, Mr. Chair. I'm Linda Franklin, and with me is Bill Summers, the vice-president of research and policy. I should start by saying we agree entirely with everything Tyler and Paul and Pamela have said, so we really have nine recommendations for you today. We're not going to cover some of what they've done because they've done it better than we could, but we certainly agree with their points.

I'm happy to have the chance today to talk to you about the leading role our colleges have in bringing about economic recovery. In looking at coming out of the recession and building a stronger, more productive economy it's really important, and we think it's right, that the federal government has focused on post-secondary education and the training people need in the new economy. And they're not alone. In the U.S., Barack Obama has just sent out $12 billion to stimulate activity at community colleges over the next 10 years.

The Canadian community college movement is out in the world, in places like Africa and Asia, building community college systems there to try to mirror what we're already doing here. That's really important, and the stimulus investment, as Paul said, was terribly helpful for us. We got out of the gate fast and we started spending money quickly because of the huge backlog of need we had in the community college system. We need new capacity because we are looking at an enrolment tsunami. Students are coming to the colleges in greater and greater numbers.

We are overwhelmed by the numbers, and that makes sense in a recession because students see colleges as places to come to get job opportunities. We've always been a leader in post-secondary education, but the world is trying to catch up. Seventy per cent of people in post-secondary education right now are in developing countries, not in Canada or in the United States, so it's critical that we keep moving forward.

For us to be competitive in the new economy, we need greater numbers of students being prepared for the jobs of the 21st century and we need companies that are more innovative and are more able to create those jobs. We have three recommendations for you today: first, as Paul and Pamela mentioned, focusing on expanded applied research; second, investing $500 million over five years to let us update our instructional equipment to industry standards, so students are training on the best of what's out there; and third, reforming employment insurance eligibility to include retraining, which is critical going forward.

To add some context to this, we agree the government has shown tremendous leadership in this area, and making the college and community innovation program permanent was a key factor in that leadership. This is a great investment, but many small and mid-size enterprises continue to struggle and face barriers conducting research in commercialization, and colleges are uniquely positioned to help solve that problem. If we can, the result will be more businesses becoming sustained innovators, which will lead to sustained job growth.

It will improve the knowledge and training that students get, and colleges can work with small and mid-sized companies on innovative projects to get their ideas to market much faster. We would propose an increased investment of 5%, because total federal research funding in Canada right now sits at about $2.9 billion. That investment of $145 million to college-based applied research directed at projects in small and mid-sized companies in particular would go a long way to solving this problem. Let me turn your attention now to the $500 million investment in equipment.

Recent funding constraints mean that colleges have been unable to keep up with the renewal of equipment across a wide range of college programs. Students in mechanical, manufacturing, chemical, and environmental engineering technology programs need to learn, as they all do, on the most up-to-date specialized equipment. That's particularly critical because we're finding that as our businesses are struggling, particularly in this recession, they are less and less able to take workers who aren't skilled and train them for the first few months of their employment.

They need workers to hit the ground running, and if we're going to do that, the colleges need the most up-to-date equipment possible to train them for that. Finally, we recommend that the employment insurance eligibility be reformed so that more Ontarians can access EI support programs, including retraining. We've certainly seen this in Ontario. Students are flocking into Ontario colleges from situations where they're laid off, and the first grads are finding employment in sectors where they will be permanently employed.

But those who do qualify for EI in Ontario receive fewer benefits than their counterparts in other provinces, although they pay the same amount in premiums when they are working. If more unemployed workers in Ontario were able to access EI, more could take advantage of federal and provincial retraining programs and they'd be better prepared for the jobs of tomorrow.

(1000) We also think EI reform needs to allow recipients to attend academic upgrading and literacy programs. At the end of the day, we're finding students coming to colleges who've been laid off, who are in their forties and fifties, a lot of them lacking basic reading and math skills, and some have never worked on a computer before. Clearly, you can't succeed in post-secondary education unless those supports are there. Those are our recommendations, Mr. Chair.

We think investing in Canada's workers will really make a difference in economic recovery, and doing it through an investment in colleges will mean that we will come out of the last downturn in the economy better prepared to be a productive, fast-moving, innovative economy. Thanks very much. The Chair : Thank you very much for your presentation. We'll now go to the Professional Association of Canadian Theatres. Ms. Lucy White (Executive Director, Professional Association of Canadian Theatres) : Good morning. My name is Lucy White. I'm the executive director of the Professional Association of Canadian Theatres.

Thank you for inviting PACT to speak to you today. We represent professional not-for-profit and for-profit companies located across the country and working in numerous theatrical traditions from many cultures and languages. Although our membership is widely diverse, we share the belief that the arts have intrinsic value to Canadian citizens and our society.

We share this belief in the value of the arts to Canadians with the Minister of Finance , who said in January that, “Day to day, Canadians experience the essence of this rich and diverse country through the imagery and worlds of its artists.” In PACT's brief to this committee, which you have all seen, we made three recommendations. In the interest of time, I'll be focusing only on the first two. First, PACT recommends that the government increase the base budget of the Canada Council for the Arts by $120 million over three years.

Second, we recommend that the government invest in a $25 million market access and innovation program to help Canadian cultural products reach domestic and global marketplaces. As the basis of Canada's economy shifts towards a knowledge-based foundation, the economy of tomorrow, all fields of endeavour that, like the arts, can tap into imagination, creativity, and innovation, will--again like the arts--generate a high return on investment and create prosperity for Canadians. For example, the federal government invests $3.4 billion in arts and culture annually.

In return, 609,000 jobs are created, $5 billion in cultural exports are generated, and $25 billion in tax revenues are returned to all levels of government. In the last decade, the arts and culture workforce grew by 31%, as compared to 20% for the workforce overall. In short, the arts and culture sector is a significant economic sector that is poised to contribute to Canada's economic recovery across the country.

Government has wisely invested in the development and production of arts through its arm's-length agency, the Canada Council for the Arts, and in bolstered its support for the council by adding $30 million to the base budget. That was the first and very welcome significant increase for the Canada Council in many years. Increasing the base budget of the council will ensure access to the arts for all Canadians.

It will allow the council to support newer, younger, and more diverse arts organizations, especially those located in smaller cities and communities across the country, and to address demand for an increasingly diverse range of artistic works. It will allow arts organizations to minimize the impact of inflation on pricing and maintain affordable access for all Canadians. Such an increase now to the council's base budget would raise the curtain on a new era of sustainable growth essential to the creative economy.

Our second recommendation is that the government invest in a $25 million access and innovation program. While the growth in arts organizations across the country has been extraordinary, many rural and remote communities don't have local theatre, dance, or music companies and must rely on touring companies to visit. In alone, Canadian theatres on tour played to more than one million audience members worldwide. Canadian arts organizations are committed to providing Canadian arts experience and engaging Canadian audiences, no matter where they reside, from Gaspé to fly-in communities in the Yukon.

A new market access and innovation fund would invest in small and medium-sized organizations to help them penetrate existing domestic markets more fully and to explore and expand into new markets across the country. Worldwide, Canadian art is in great demand, and the opportunity to showcase Canadian talent opens up foreign markets to sales of Canadian arts and cultural products and bolsters Canada's profile across the globe. Increasing the export of cultural products will also boost tourism in Canada by providing the foreign tourist market with exciting reasons to visit Canada.

Recently the government has been focused on short-term funding to stimulate the economy, and the arts and culture sector has benefited from stimulus spending, for which we are thankful. As government turns its attention to economic recovery, the arts and culture sector asks to be recognized as an economic sector poised to contribute to deficit reduction and economic recovery. As my colleague said, a permanent new investment of $145 million in the arts, which is about one-twentieth of 1% of federal spending, would generate a significant and sustained return on investment for Canadians.

I want to close by reading to you two statements. In this committee made the following recommendation to government: “That the federal government increase funds allocated to the arts and cultural sector. In particular...funding for the Canada Council for the Arts should reach $300 million over two years.” In June 2009, Parliament agreed, saying that “In the opinion of the House, the government should give direct assistance to artists by increasing the annual budget of the Canada Council for the Arts to $300 million.”

(1005) The performing arts are a collaborative practice, and it is in this spirit of collaboration that we ask government to respect the will of Parliament and respond in the upcoming budget to the specific recommendations made by the arts community and by you and your colleagues. Thank you. The Chair : Thank you for your presentation. I want to thank all of you for your presentations. We will now go to questions from members of the committee, and we'll start with Mr. McKay for seven minutes. Hon. John McKay (Scarborough—Guildwood, Lib.) : Thank you. Thank you all for your presentations.

They were quite interesting; maybe we'll run out of time quite quickly. I wanted first of all to deal with the dance and theatre folks and your recommendation with respect to the increase in the tax credit for charitable giving, given that your industry appears to be dependent more on charitable giving than government funding. You want to go from 29% to 39%, but you don't say anything about the initial 15%. Do you want to change that as well? The other question I had on that issue is this. Can you come to any compelling good reason as to why a political tax credit is far superior to a charitable tax credit?

I can't, but I'd like to know if they can. Ms. Shannon Litzenberger : The rationale behind this recommendation is to acknowledge the fact that the majority of arts organizations are small to mid-sized organizations. This tax credit was formerly 29%. We're asking for a 10% increase for a range of donations between $200 and $10,000. It's trying to address the typical kinds of giving from individuals that go to small and mid-sized arts organizations, which represent over 80% of the sector. There's a specific target in that way. Hon. John McKay : Have you costed that? Ms. Shannon Litzenberger : No.

This recommendation also is part of a recommendation that came from an organization called Imagine Canada, which represents all charities across the social sector. It's not so specific to the arts; it's something that could have a much more significant impact. Hon. John McKay : Right, you couldn't isolate just for the arts; you would in effect improve religious giving and other charitable enterprises. It has always struck me as a huge anomaly that a $100 donation to a political party gets a very generous tax credit but $100 to a dance company gets not quite so much.

I'm going to have to keep on moving; I have two questions here. The second question has to do with the commercialization of research as mentioned by three of the witnesses here. I think the number was $2.7 billion in research or something of that nature. What is not clear to me is whether the college community gets all of that money.

(1010) Ms. Linda Franklin : We get virtually none of that money right now. Hon. John McKay : That's what I thought. You're asking for a $145 million increase of money that you don't get. Ms. Linda Franklin : We'd like the whole pot increased by 5% and we'd like all of that 5%. Hon. John McKay : How does it divide out? How does that $2.7 billion, whatever, divide out among the various groups? Mr. Paul Charette : It's actually $2.9 million of federal funding for research innovation across Canada. Colleges get less than 1% of it. Hon. John McKay : [ Inaudible—Editor ]...the vast majority.

Shouldn't your ask be a more equitable division between you and the universities? Mr. Paul Charette : We don't want to be putting ourselves against the universities. Obviously the research being done at the university level is vitally important to our economy. What we're asking for is some additional funding, 5% of that $2.9 billion, to be allocated in addition to the current financing to the college systems across Canada so the colleges can do applied research to help our industries. Hon. John McKay : I buy the argument that the colleges actually do applied research probably better than the universities.

I buy the argument that our industries, for whatever reason, don't do their own applied research. If they're not going to do it, somebody has to do it; and if it's not you, it's got to be somebody else. It seems to be the structure of the thing. Ann Buller is the president of Centennial College in my riding, and she's beaten me over the head on this issue. I'm a convert. Mr. Paul Charette : I think I'd like to address the industry. Of the applied research being done at the colleges today, a great portion of it is being funded by industry in order to get their programs reviewed by the colleges.

I know, for example, that at Red River College in Manitoba they did a tremendous amount of research with Manitoba Hydro to build a LEED platinum building in the downtown core of Winnipeg. Most of that research was done at the CARSI facility at Red River College. Industry does a huge amount of funding. Hon. John McKay : There are free-standing labs there, there are pools for experimentation, there's cheap labour with the students, and everything works for an SME. So I buy that argument. Unfortunately, I'm moving on. Mr. Manahan, you have an interesting point about Highway and P3.

The in this community is an absurdity, because we charge people to drive on the 407. I have a choice between the and the 407. Where am I going to drive? I'm going to drive on the 401. So we load up the free road and empty the other road. I'm keen to know how you would address that issue, because in one of your paragraphs here you start to hint at how that could be addressed. Mr. Andy Manahan : I'm not going to name the corporate interest, but there is an outfit in Toronto that's looking at satellite-based technology that could be used for the entire road network.

I've been having some discussions with this group, because we're interested in a dialogue towards funding for infrastructure, not that we're for any one particular technology or anything like that. This particular group recognizes that for many of you around the table, it would be political suicide to introduce road pricing. Their strategy right now is to have some testing done with parking pricing in limited areas in the GTA. Hon. John McKay : What's parking pricing? Mr. Andy Manahan : There's an academic in Los Angeles that says there are people who spend too much time driving around the block.

So if you have a satellite GPS-based system in your car, you park where you're allowed to park. You don't have to run out at the end of a meeting, just five minutes late, and get a ticket for $30 or $40. Parking pricing is one thing. There's distance-based insurance pricing, and then once the public becomes comfortable with that, certainly they'll become very comfortable with the 407. Then I think we need to get into road pricing, because congestion, certainly in the urban areas across Canada, is becoming unwieldy. Hon. John McKay : That's interesting. Thank you. The Chair : We're going to go to Mr.

Laforest. (1015) [ Translation ] Mr. Jean-Yves Laforest (Saint-Maurice—Champlain, BQ) : Thank you, Mr. Chair. Good morning to all the witnesses. First of all, I have a question for Ms. Litzenberger or Ms. White. In your recommendations, you both asked for the tax credit to be increased to 39% from its present 29%. On the first $200 of charitable gifts, it is 15%. This is clearly a major source of funding for the arts, as Mr. McKay said. Have you costed it out?

Would it not be preferable, a better source of income for the arts, to instead ask for an increase in the credit on the first portion, say, an increase from 15% to 25% on the first $200? Would that not be of greater benefit to the arts? Would it not get more people participating? [ English ] Ms. Shannon Litzenberger : Isn't it really a question of stimulating the kind of private giving that we're interested in? We want to encourage individuals to give at a more substantial level. I think that's the motivation behind looking at the tax credit between the $200 and $10,000 levels.

Certainly we wouldn't be opposed to looking at an increase of the first $200 from 15% to 25%, but I think it's also acknowledging where the majority of giving comes from, which donors are most significantly contributing to the bottom line for arts organizations. Just to give a bit of context, in the arts, typically the way our budgets look, on average 50% of income is earned, 25% comes from public funding, and the other 25% comes from private giving. For most organizations, that private giving is in that $200 to $10,000 range for most donors. [ Translation ] Mr. Jean-Yves Laforest : Thank you. Mr.

Manahan, one of your recommendations dealt with building. In your first recommendation, you say that infrastructure programs like the present one do not take sufficient account of the priorities established in collaboration or in conjunction with those in the field. You mentioned the development of an infrastructure simulation platform that would focus, maybe even correct, the consultation and prioritization process. What would a platform like that look like? It is more of a theoretical concept, as I understand it. [ English ] Mr. Andy Manahan : Yes, that's correct.

It would be more mathematically based in terms of the modelling that is done. The group we've been talking to over the last few months has actually done some H1N1 modelling for the federal government, so a lot of it has to do with risk management. But essentially it's a way for loading the appropriate data onto a platform, let's call it. And whether there's a disagreement as to one infrastructure project or another, as long as there's agreement on the data that are being used, we think that there would be a more objective way to determine what would be the priority infrastructure project.

I'm not the modeller so I probably can't explain it as well as the person I've been speaking to, but it is a much more objective-based way to do things. [ Translation ] Mr. Jean-Yves Laforest : You said first that there has not been enough consultation or that there is a problem with prioritizing projects that should have been funded. Is it your impression that there are projects where money has been wasted? Are there infrastructure projects that are not really necessary, when it comes right down to it, while there is a really pressing need for others that will not get done? [ English ] Mr.

Andy Manahan : Thank you for the question. I'm not going to comment on any specific projects per se, although anecdotally our groups do hear that a number of projects that are released are perhaps not viewed as the best. They were viewed as more expedient in the sense that this is what could be done within a certain deadline. Take, for example, the MetroLinx regional transportation plan. That particular plan has been funded, to date, $9.5 billion by the province. I believe there has been some funding for non-RTP projects by the federal government; for example, the Spadina subway station.

But those are long-term projects that require many years of public consultation, engineering design, removal of utilities, and construction phases before you even get to completion. We've been talking about the Spadina subway, for example, for seven or eight years. It's been through two EA processes. So we're concerned that if all of the stimulus money goes out the door, there'll be little money left over for those types of priority projects. (1020) [ Translation ] Mr. Jean-Yves Laforest : Thank you. Mr. Charette or Ms. Fralick, you are very concerned about the shortage of skilled workers in the coming years.

But do you see any room for optimism? Are there areas where there is no shortage? [ English ] Mr. Paul Charette : To answer that question bluntly, I think the skilled worker shortage across Canada is pervasive across most industries. There are sector councils that consult with most industries. Our construction sector council has been putting out reports for the last five or ten years. This problem isn't new. It's not going away.

We have college capacity problems; we have an integration program that doesn't help a lot of our industries to bring immigrants into Canada with the necessary skill sets; and we're having, frankly, a drop in fertility rate, which is exacerbating the problem even more. This problem is not going away. [ Translation ] Mr. Jean-Yves Laforest : I think that you misunderstood my question; I want to know the opposite. You tell me that there is a serious shortage in the steel industry, but is there a sector where we can say that we have enough workers? [ English ] The Chair : A very brief response, please. Mr.

Paul Charette : I don't know of industries that have a surplus of workers. We represent over national associations, and not many of those associations have surpluses. Otherwise we wouldn't be here today. The Chair : Thank you. Merci, monsieur Laforest. We'll go to Mr. Menzies, please. Mr. Ted Menzies (Macleod, CPC) : Thank you, Mr. Chair. Thank you very much to all of our witnesses today. I don't think that it will come as any surprise to you that we would remind you that our stimulus measures were targeted, and “temporary” is the operative word.

I'm quite glad that some of your suggestions here today are strategies rather than just asking for money, because we have a real challenge here of what we can realistically recommend to the finance minister to put in next year's budget. So the strategy suggestions are very helpful here. First of all, to Mr. Charlebois, you referred to a national education and training strategy in your presentation, and you also referred to mobility. My sense is that we still have a struggle with mobility. I know we've gone through it in our own family, moving from one province to the other with our kids.

Is the mobility issue an integral part of that strategy? Mr. Tyler Charlebois : Yes, in terms of a national strategy, what we're looking for in terms of the mobility issue is for people who are training and getting education in other provinces to be able to move to another province and have that education recognized. We have a major challenge in certain pockets of the provinces in the country where that's not happening. Ontario, for example, doesn't actually have a system of credit transfer to go from college to university, or from university to university, to permit that prior learning to be recognized.

We're losing many Ontarians and Canadians to other countries, such as the U.S. I have colleagues who graduated last year who are in Australia studying-- Mr. Ted Menzies : Australia's quite aggressive, isn't it? Mr. Tyler Charlebois : If you move to Australia, I don't know if you're going to come back. Their climate is simply really good-- Voices: Oh, oh! Mr. Tyler Charlebois: --compared to many climates in Canada. Mr. Ted Menzies : He's got a point. Mr.

Tyler Charlebois : The mobility aspect is really key to a national strategy to make sure we are looking at education and training as a system, and looking at it as a country rather than as pockets of provinces and territories. Mr. Ted Menzies : There's competition, and there always will be competition among education facilities, whether they are primary or secondary. Is that a positive or a negative? We want our institutions to compete and be the best they can be, but are we...? Mr. Tyler Charlebois : Should we be competing against each other, or should we be competing against other jurisdictions?

That's the problem: we're losing our competitive advantage by competing just with ourselves for our small pool of population.

(1025) Mr. Ted Menzies : Are we competing enough internationally to bring international students here? Mr. Tyler Charlebois : I think we're falling behind in those terms, and as you've seen from the skill shortage, we need to bring more. We need to do more to attract international students and international immigrants here to Canada. I think that having a strategy that encompasses mobility of learning would go a long way to help. Mr. Ted Menzies : Good, but then that runs counter to what Ms. Fralick and Mr. Charette are saying in terms of our not having enough spaces for the students we have now.

Your comments are very troubling, and I think we can all see this in our ridings, where health care students just aren't being trained. Is it that we're lacking bodies to fill the spaces, or lacking spaces for the bodies? Ms. Pamela Fralick: Yes. Mr. Ted Menzies: Yes to both? Voices: Oh, oh! Ms. Pamela Fralick : There are two aspects to the question.

One is that generally, in almost every health profession, we have lineups of people trying to get in, but we don't have the spots in the institutions, we don't have the educators to teach, and we don't have the clinical placements to provide the on-the-ground training they need. On top of that, when you look at the international realm, there's the whole issue of ethical recruitment. Canada has been known to.... I'm sure you've heard the statistics: the largest number of South African trained physicians outside of South Africa is in Saskatchewan. We have to be very careful-- Mr.

Ted Menzies : We have quite a few in Alberta. Ms. Pamela Fralick : Well, you don't win the cake, but that's exactly my point. It's why I made the comment that in terms of health, we can't rely on the external world. First of all, the United States has been the greatest consumer of Canadian-trained health professionals. If we think it's going to get any better with President Obama's move to bring health care to million new individuals, it's just going to exacerbate. There aren't enough health professionals to go around, and that's why I included the information from the World Health Organization.

I think we have to do more to be self-sustaining at a domestic level, and not just for health, but for all the industries we're talking about. Mr. Ted Menzies : As an Albertan, I'm very troubled by some of the policies we're taking in Alberta to limit entrance into health care. Ms. Pamela Fralick : We can talk offline about that, if you'd like. Mr. Ted Menzies : Maybe we'd better not. I shouldn't even be on the record as saying that, but I'm concerned for our constituents, because we have future concerns, and to-- Ms. Pamela Fralick : Can I make one comment?

I do believe that our colleges and other institutions are part of the solution to the issue you raise, in that if we coordinate our work around practising in scope and getting the right health provider in the right place, we don't need the highly educated health professionals to be doing all the functions. We need to have the right number at the right level, and it's at the community college level that we get a lot of our rehab assistants for occupational therapy, physical therapy, med lab, rad tech, etc. If we can focus on coordinating that activity....

We've done a fair bit on the university-educated health professionals, but not nearly as much in a coordinated way on the ground with our community colleges. If we get the right people trained to standards, get the right competency base, and have them do the things we need them to do, it takes the pressure off physicians and nurses and allows them to do other things. Mr. Ted Menzies : I want just a quick comment from Mr. Charette. Has the $2,000 apprenticeship grant program been helpful, or has that pushed more people into apprenticeship? Are we overloading the system? Mr.

Paul Charette : I think it has definitely been helpful, yes. It's a good program. We have problems with apprenticeship training across Canada. Industry needs to step up and do more, and we are working on that. Mr. Ted Menzies : That's a good point. Thank you. The Chair : Thank you, Mr. Menzies. We're going to go to Mr. McCallum. Hon. John McCallum (Markham—Unionville, Lib.) : Thank you, Mr. Chair. Thank you, also, to all the witnesses for being here today. My first question would be for Mr. Manahan.

When you call for infrastructure funding to be on a more rigorous priority-setting basis, it kind of implies that the current system is shotgunned all over the map, with which I agree. My first question is whether you would be in favour of having part of the infrastructure program funded by a gas tax type of mechanism through which the funds can flow directly to municipalities.

(1030) Mr. Andy Manahan : Yes, I would be, to a certain degree. Or it could be a similar formula. My one cautionary remark about using any one particular formula, such as the gas tax, is that what we're seeing in the United States--and I think it's going to happen in Canada--is that consumption of fuel is trending downwards because of more fuel-efficient vehicles. There will be more electric vehicles, hybrids, and the like, so there will have to be some sort of replacement for the gas tax portion over the next 10 years. But certainly that would be a much more predictable model for delivering those sorts of funds.

Hon. John McCallum : Thank you very much. My next question is about colleges, and a few people here might have comments. I'm from a university background, so I'm strongly in favour of funding university research. But like John, I have a college in my riding, a very good one, Seneca College, and I'm highly sympathetic to their cause. I guess I have the impression that traditionally in Canada colleges have received short shrift from the federal government. They have not been treated seriously. To solve that problem, maybe it would be helpful to have a better understanding of why.

I certainly support what you're saying, but I'm wondering why it is that colleges have had little funding or little expression of interest from the federal government over the years. Is it because they seem to be more creatures of the provinces than universities? Is it a status thing--universities get more attention because they seem to have higher status? Would one of you, or perhaps both of you, like to comment on that? Ms. Linda Franklin : I could take a first crack at it. I think there are a lot of things in play.

One of them, frankly, is that most policy-makers in government are university graduates, so they don't come to the table with an understanding of colleges. In fact, it's something that the president of Seneca has been fighting for a long time. There's an actual prohibition on the federal government hiring college graduates. So we have a stigma, I think, among policy-makers, both in the civil service and oftentimes in the political realm. I think, too, that people are stuck in a view of the college system that is very old, which is that these are vocational training institutions.

Today, when you look at colleges, we do everything from literacy and skills upgrading through to degrees, diplomas, certificates, and post-graduate work. We train university graduates who need training and skills. I'm not sure that the message has been communicated as effectively as it probably should have been about the range of things we do. Hon. John McCallum : Thank you. Mr. Paul Charette : If I can just add to that, my understanding is that the college system was created in the fifties by the vision of the federal government providing 75% of the capital funding for colleges.

Since that time, the federal government has done virtually nothing, except in the January 27, 2009, budget. They created what was called the CCIP program. It's very much needed and very much overdue, but it really only touches the tip of the iceberg. The problem with the colleges, I believe, is that as my colleague has mentioned, there's a stigma attached to them. But colleges have changed dramatically. They've become way more technical. And I guess the real issue is that there are a greater number of university graduates in key positions who have not seen the college system in the right light.

I believe we have to change that. There is a report out that says that we will need six college grads for every one university grad in our coming years, and if we don't address the capacity issue, we're not going to get them. Hon. John McCallum : Thank you. That's good. The Chair : Thank you, Mr. McCallum. We'll go to Mr. Dechert, please. Mr. Bob Dechert (Mississauga—Erindale, CPC) : Thank you, Mr. Chair. Thank you, ladies and gentlemen, for your presentations this morning. They're very instructive. I have a question for Ms. Franklin and Ms. Fralick and perhaps Mr. Charette and Mr. Charlebois.

You've all made good arguments for increasing funding to research in colleges. By the way, I want to say that I'm very pleased that the government has supported a new campus for Sheridan College in Mississauga this year. It's something that's long overdue for Mississauga. A voice: And it's not even in his riding. Mr. Bob Dechert: It's not in my riding. It's in Mississauga East. But the point is that it's going to do a lot of good for the people of Mississauga and Peel region by giving them the skills they need to compete in the future. You've all asked for an increase in research funding.

We know that we live in a world of limited resources. Recently I was in China and visited a number of universities there. I saw how the Government of China is concentrating its research funding in certain areas of research so that they can become world leaders in specific areas. I'd like to hear, from each of you, your views on whether the Government of Canada should have a national strategy on concentrating these research dollars in specific areas of research. Or should we simply leave it to the college and university sector to decide if they want to support research in every area under the sun?

I'll start with Ms. Franklin.

(1035) Ms. Linda Franklin : I'd suggest that a specific area of focus for us is probably small and mid-sized enterprises, as opposed to IT or biotechnology. The reason for that, frankly, is that it's the sector that's received very little attention in this area. We had a pilot project in the Ontario colleges where we had colleges that started an applied research network focused on small and mid-sized enterprises, and boy, did it ever get a big bang for its buck. I mean, the amount of success stories out of that small three-year pilot project from folks who started new companies and advanced new ideas....

Some of them started with one person working in a basement and now have a few hundred employees. I think it tells you that if you could focus some resources around applied research, particularly for small and mid-sized companies as an area of focus, you would see a tremendous uptake and a lot of economic activity. If we're looking at focus, that would be my proposal. Mr. Bob Dechert : That's interesting. Thank you very much. Ms. Fralick or Mr. Charette, do you have a comment? Mr. Paul Charette : I would second that. I think there's a tremendous amount of collaboration between the colleges and industry.

I think we need a focused approach in that area, leaving it up to the colleges to determine the great projects to research, but with industry in collaboration. I think industry will come to the table if there is a starting point. Mr. Bob Dechert : So you would suggest some kind of formula whereby the government says it will contribute funding, along with a private sector partner, up to a certain amount, perhaps with matching funding or something like that. Mr. Paul Charette : I think that's a starting point. Mr. Bob Dechert : Ms. Fralick, did you have a comment? Ms. Pamela Fralick : I'll just add one thought.

I do support what my colleagues have said on the tremendous benefit of focused funding that sometimes produces magical results, but I'm also a true supporter of not directing so much, of letting it emerge. That's where we do get some magic as well. It has a balance between those two. Certainly in health research there are examples where government has set policy directives, identified areas where we want research, and put funding in there, and it has produced tremendously. But it is sometimes the random research that can really lead us as a nation and produce innovative things. Mr.

Bob Dechert : You don't want to close off any area of research-- Ms. Pamela Fralick : Exactly. Mr. Bob Dechert : --but on the other hand, do we have to focus? We're a relatively small country in the world. Maybe we could hear from Mr. Charlebois, if he has a comment. Mr. Tyler Charlebois : I would echo the comments that have been made by my colleagues around the table. But as I focused on in my presentation, I think we do need to look at this and stop doing one-off deals and segmenting our dollars into certain areas. We have to look at it as a strategy, at where we are going and at where Canada wants to go.

Maybe there are specific pools and specific areas that we need to focus on, but we do need to make sure that we have a national strategy, not only in education but on the research side. As you've said, other countries are doing that. They are doing it as a country rather than leaving it up to different segments of their population to do it. Mr. Bob Dechert : So you think we should focus on a few areas of research. Mr. Tyler Charlebois : I think we need to focus, but we also need a strategy. That strategy can't be just that focus area; we need to have that strategy in place. Mr. Bob Dechert : Am I out of time?

The Chair : You have five seconds left. Mr. Bob Dechert : Is there time for one more comment? The Chair : Yes, very briefly. Mr. Paul Charette : Very briefly, I think a strategy is absolutely what's needed, and a strategy that differentiates from the universities. It's what you don't do for the colleges now. For example, no college research chairs are supported by the federal government. That's a travesty. If you don't have leadership, how do you have research? I think you need to look at that. The Chair : Thank you. We're going to go to Mr. McKay. Hon. John McKay : Thank you, Chair. My first question is to Ms.

Fralick, and it has to do with—how should I say?—the insanity of the health care system. The doctors, for better or for worse, are the gatekeepers, but the gatekeepers don't seem to be overly enthusiastic about ceding jurisdiction anywhere. So you have a doctor writing a prescription for a patient. The doctor has taken maybe one or two courses in pharmacology and he's telling the person who has taken four years of it the appropriate prescription for this patient.

You have doctors telling a patient whether they need physio or OT, and the physio or OT can't go outside the doctor's prescription, even though the physio or OT has studied the subject matter for four years and probably knows times what the doctor knows. The difficulty for us as policy-makers is that in some respects the health care business hasn't got its act together. We just keep bandaiding and bandaiding with more and more money, and it becomes less and less effective. I'd be interested in your thoughts on how the health care professions are going to fix themselves.

(1040) Ms. Pamela Fralick : Those are difficult waters to tread, because there are professional bodies to speak on behalf of those professions. Hon. John McKay : I know, but the professional bodies are a bit of a mess. Ms. Pamela Fralick : First, I believe that the leadership of the professions is on the right track. We've spent five, six, seven years and $780 million of taxpayers' money developing a new approach to primary health care. It actually does remove the physician from being the gatekeeper and allows Canadians to access health care from the providers that they need to see.

The leadership has signed on to that, literally signed on in a charter, and is doing what they can to get it down to the troops. It's a culture change. Hon. John McKay : So why am I being lobbied by physios? Ms. Pamela Fralick : I was going to speak to the physiotherapy example but broaden it a bit. One of the true barriers to that direct access is the insurers. The services you're talking about are privately funded. They're not part of the publicly funded system, and many of them still require you to see a physician before you see them. Why do they do that? There is no evidence to support the practice.

They do it because they believe it's cost containment. They may believe it's a deterrent. I suspect they put that in place with the best of intentions. I feel it's a barrier and it costs our health system. If there's one thing that I could have tackled when I was in that role, one thing I would take on from the Canadian Healthcare Association perspective, it is that piece. It needs to be addressed. Hon. John McKay : I appreciate that I've opened up a huge can of worms here. Ms. Pamela Fralick : Yes, but I wanted to give you a sense of optimism.

We do have a pan-Canadian health human resource strategy in this country. Actually, we have five, and I have them in a file, but one comes from the federal government. A question I would put to you is: where is it right now and who is coordinating it? Even Africa has a health human resource observatory that will coordinate activities in a non-partisan way. We don't have that. There has been a lot of resistance to the concept, despite the papers that have been written describing what it might look like. Many officials have been surveyed on it. So I think there's a lack of coordination. That's the third piece.

If we could get the players together, we could have a more powerful impact on changing the very issue you raise Hon. John McKay : Thank you. Mr. Manahan, at one point in another life I was the P3 coordinator— Mr. Andy Manahan : I recall. Hon. John McKay : —for the federal government. It has gone through various mutations. To give credit to the government, which I don't often do, they've actually moved it towards an actual free-standing office. That free-standing office, as I recollect, about a year ago was opened to great fanfare. I haven't heard from it since.

Can you give me an update on what's going on in the P3 office? Mr. Andy Manahan : I was in Ottawa in mid-August for the Association of Municipalities of Ontario's meeting and I used that opportunity to meet with the P3 president, John McBride. They are still staffing, so it was a little slower than we had hoped for. One of the concepts we talked to him about was the $50 million threshold that Minister Flaherty put in place. We think that's appropriate for AFP/P3-type projects, but it's difficult when you're talking about, say, bridges.

We talked about bundling certain infrastructure projects, like bridges, so that the federal government could get more involved with the P3 model. Hon. John McKay : Thank you. The Chair : We'll go to Mr. Wallace, please. Mr. Mike Wallace (Burlington, CPC) : Thank you, Mr. Chair, and I want to thank our guests who are here this morning. I'll try to be fairly quick, because I want to ask a few questions and I only have five minutes. I'll ask the theatre folks. On the piece that I hadn't seen before...I've seen the $125 million before from other arts organizations in regard to the Canada Council piece.

I think it's a little excessive for this coming year, to be perfectly honest with you, asking for a 50% increase of $40 million a year. But on the other piece that you asked for, who would manage the new marketing piece that you had in there, the market access development fund? Who would you expect to manage that?

(1045) Ms. Lucy White : We haven't decided among ourselves where the ideal place for such a fund would be. There are certainly a lot of advantages to placing that kind of activity within the Canada Council, which already has a great deal of expertise and knows the client base. Another alternative would be to place it in the Department of Canadian Heritage. They also know the client base. They have a different approach. I think there are pros and cons with both, and we'd be very happy to work on the program development and make sure it fits the needs of both the community and the program. Mr.

Mike Wallace : This is a new program that doesn't exist at present, is that correct? Ms. Lucy White : That's correct. Mr. Mike Wallace : Thank you for that. I'm going to ask Pamela a question directly, based on what you just said. We had the Canadian Nurses Association in front of us yesterday, and they were talking about a pan-Canadian health services organization. My take-away from them was that we needed to develop one and get it started. But you're saying in your file you actually have a plan or a strategy but you need a group to actually implement it. Is that correct? Ms.

Pamela Fralick : To maybe clarify it, what we have...and I know the folks; we work very closely with the Canadian Nurses Association and the Canadian Medical Association. There is a pan-Canadian health human resource framework that has been bought into. It's developed by an FPT, so federal, provincial...everyone's bought into it. So the framework is there and strategy, the outline of what needs to be done, including a lot of issues around education that we're talking about today.

What we don't have, however, is what we call an observatory, a health human resource observatory, which is a concept that comes from the World Health Organization. There is a European observatory; there is one in Africa and a couple of other places. So it's coordinating all the pieces, because that's not happening. Mr. Mike Wallace : Okay. I'm not sure I got that message from that-- Ms. Pamela Fralick : My apologies. Mr. Mike Wallace : No, that's okay, but I'll check my notes, because I didn't keep theirs. On the infrastructure issue, I want to ask you this point-blank.

We're running a deficit that we're not that excited about, but the world is doing it and we're doing it also. There are one-time expenses. Your vision from what I've heard today is more of a longer-term piece that would require one of two things. We either tax more to raise the money to have a longer-term program or we reduce expenditures elsewhere and move them over to infrastructure. Does your organization have a position on either one of those items? Mr. Andy Manahan : There is a third way that I refer to in terms of the transportation modelling, and that's user pay. So that is indirectly another tax. Mr.

Mike Wallace : But you talk about political suicide also in the same breath. Some hon. members: Oh, oh! Mr. Andy Manahan : Let me give you an example. This glass of water here probably costs about 1.5¢, and that's paid through water rates. If you increase water rates by 10% as they're doing--actually, it's 9%--every year in Toronto, people really don't blink about that. So there are other things-- Mr. Mike Wallace : Just so you know, I was on the municipal council in Halton, and we'd been paying the true costs of water and so on for many years.

We were probably a little bit ahead of the curve with municipalities on the piece. So I was interested in what your position was. My second question to you is this. I've heard from my friend in Peel quite a bit about the sustainable development round table. Let's say we fund it. I need to fund something that's going to have deliverables, and what do you see the round table's deliverables being? Mr. Andy Manahan : There are a number of things. My understanding is that their mandate is to look at things like life cycle costing. So it's not just a case of making infrastructure investments, but it's a package.

My friend here, Paul, with Bird Construction, many years ago used to talk about how it's not always the low bid that's going to get you the value for your money. Mr. Mike Wallace : Governments work on cash accounting. Mr. Andy Manahan : Yes. Mr. Mike Wallace : So it's money out the door, and we don't have the ability to write it off over time. Mr. Andy Manahan : Again, I would use the leverage of the P3 model. Mr. Mike Wallace : Okay. Mr. Paul Charette : If I could add, I think the P3 modelling is fabulous. P3 Canada has done a great job in collaboration with the provinces.

It may be mortgaging your future because there are availability payments that go on for 30 years, but at least we can get infrastructure built today. It's not a matter of whether we can afford it. Can we afford not to do it? That is the big issue. P3 is one of the delivery methods.

(1050) Mr. Mike Wallace : Thank you very much. Thank you, Mr. Chair. The Chair : Thank you, Mr. Wallace. As chair, I'm going to take the next spot. There are three issues I want to address. First, with respect to the recommendations for a market access and development fund or a market access and innovation program, it's a very similar recommendation, obviously, but the wording around them is a little different in terms of the justification in that one seems to be fully focused domestically, connecting with Canadians, and some of the other seems to be in terms of promoting artists abroad.

Is there a component in terms of promoting Canadian artists abroad in this, or is it simply on connecting Canadian artists in Canada to Canadians? Both of you can address that quickly, please. Ms. Shannon Litzenberger : Yes, absolutely. There is both a domestic and an international focus in this fund. As you know, there was some reduction in funds that support international export in the performing arts, so we are looking at re-imagining how we can better address the distribution of performing arts products both domestically and internationally. The Chair : Thank you. Is that the same answer for you, Ms. White?

Ms. Lucy White : For many arts organizations, there needs to be a balance of both. If you are in Vancouver, for example, a tour might encompass both visits in the United States and visits in northern B.C. To have a fund that could address that reality would be very helpful. The Chair : Thanks for mentioning the fringe festival, which is a real source of pride in Edmonton. I'm a fan of the Stratford festival as well. I was hero for a day when I did the marquee announcement for the fringe festival, and then when the folk festival didn't get money from the same program, I was not quite the same hero.

Going forward, is it better advice to the government to simply fund through the Canada Council for the Arts, rather than set up separate festival program funding? Ms. Lucy White : There are certainly advantages to government to let the Canada Council do what it does best. The Chair : Thank you. I thought you would say that. I guess I wanted to hear that. The second issue is about colleges doing more research. I have a friend who used to work in politics, and then, as he tells me, he got into an honest living. He went to NAIT, which you now very well, obviously, in northern Alberta, in Edmonton.

He took construction engineering. He actually works for Bird Construction and is a very proud employee of yours. But I think what he and perhaps others would argue is that NAIT now has such a demand that, in fact, they're turning students away who want access to teachers, who want to address one of our fundamental challenges, which is the shortage of skilled labour in Canada. I take your point about applied research. Colleges obviously do that well, and we should direct some funding there.

But there is a caution I would give about getting colleges too far away from their bread and butter, which is what they do very, very well—that is, training skilled labour for the shortage we're going to have. So how do we ensure that we're not turning away students? The concern from some at the university level, especially in the liberal arts, is that we focused a lot of money on research at the expense of teaching. Could you address that briefly? Mr. Paul Charette : I'll address it quickly and then let Linda respond.

In the college system, there's a balance between trades and the technology division, and we need to have that balance. It's not just about the trades. In fact, that's why we carefully worded our coalition. It's about skilled workers being properly trained, and that's not just in the trades. So there's already that balance. The Chair : Yes. I'm talking about skilled workers. Mr. Paul Charette : We need to have graduates coming out of the college system who know how to research and innovate problems.

If we don't do that, we're doing a great disservice to our industry; they're not coming out, as graduates, as well prepared as they should. Ms. Linda Franklin : I think there are a couple of things to say about that. First, you're absolutely right that, at the end of the day, the colleges' core mandate is teaching, and that will never change. But we do have a lot of professors now who frankly have a real interest in the applied research side. So in part, to keep really high in professors, you need to keep them invested in things they are interested in as well.

I think the real value at the college level is that we engage students in applied research, and not just at the very highest levels or the very latest stage of their education but right through their education. So I would argue that there's a really interesting marriage between training and education on the one side and the ability to engage in research activity as a student that is probably a more powerful combination.

(1055) The Chair : Okay. I'm just running short on time. I thank you for that question. I wanted to turn to Mr. Manahan. I found your presentation very interesting. I think you're absolutely right about the challenge related to multi-governmental jurisdictional infrastructure, which is a longer discussion. In terms of the 407, I'm from Alberta, so perhaps I'm a little naive on that. I don't have any scars from the debate, and to me, when I ride on the 407, it seems to work very well. I would just add that.

Perhaps just a brief comment: in terms of the technology, are we actually able to replicate this across the country; and if so, would you only have it on certain types of infrastructure across the country? Mr. Andy Manahan : On the technology, I'm not an expert, but I did talk to this group I mentioned to you earlier, and they have done some testing in urban canyon environments, and sometimes GPS bounces off the building walls. So there are some difficulties, but from my understanding they're getting to the point where it's quite accurate.

I think, really, where we have to focus road pricing—and this is probably a 10-year plan—should be in the urban areas. It's not just Toronto's issue, it's almost every urban area. The Chair : Thank you. We do have a few minutes for Mr. McKay. Final round. Hon. John McKay : Just for clarification for those not from the GTA, the issue is not whether the works well or whether it doesn't work well. It does work well, and if you have $15 in your jeans you're perfectly fine.

But it drives people who don't care about $15 to the and leaves everybody else driving on the 401, when there should be some more equitable distribution on the two roads. Anyway, that's not the question I wanted to ask. The issue is with respect to P3--and Mr. Wallace was getting into the core of the issue--if the Government of Canada is going to participate in infrastructure funding. It's reasonable to assume that for the next several budget cycles the government is broke, but one way or another, they're going to have to deal with that reality.

There's not going to be too much money available unless you get some innovation with respect to financing. P3s are an obvious way to get innovation. The core question is--and Mr. Wallace hit on it--the issue that the government, when it expenses everything, it's cash, as opposed to life cycle financing. As part of your discussions, have you had any discussions with the folks at P3 as to whether that accounting methodology with respect to the government's contribution to P3 could be changed from cash to life cycle? Mr.

Andy Manahan : We didn't get specifically into that, but I mentioned earlier that we talked about bundling of bridges, and what we looked at was, in the U.S., the state of Missouri. They had put out an RFP to rehabilitate over of their bridges. That didn't go so well because I think there was an underpricing. In any case, the concept of shifting from cash accounting to the government paying over a longer period of time, I think, is embedded in that concept. Hon. John McKay : Thank you. The Chair : Thank you. I want to thank all of you for being with us here this morning. It was a very interesting discussion.

Thank you for your presentations and your responses to our questions. We have another panel right away, so we'll suspend for a minute or two and say goodbye, and then we'll bring the next panel forward. Thank you so much for being here.

(1105) The Chair : I know everyone is having very interesting discussions, but if I may ask members and witnesses to find their seats, we will begin the second panel of our pre-budget consultations here in Toronto. We have for the next hour-and-a-half panel a number of organizations. We have with us the Ontario Coalition for Social Justice, the National Council of Welfare, the Canadian Institute of Actuaries, the Wellesley Institute, the Canadian Association of Physicists, the Association of International Automobile Manufacturers of Canada, the Canadian Association of Income Funds, and Hoffmann-La Roche Limited.

So we have a lot of organizations here for the next hour and a half. Let me ask each of you to present, for no more than five minutes, an opening statement, going in the order we outlined. Then we will have questions from members of the committee. We will start with Mr. Argue, please. Mr. John Argue (Coordinator, Ontario Coalition for Social Justice) : Thanks very much, Mr. Rajotte. I guess we're going in alphabetical order. I appreciate starting off. An hon. member: Don't “argue” about it. Some hon. members: Oh, oh! Mr.

John Argue: I am sure there will be no argument with our views at all, because we have such logical, persuasive views. We look forward to convincing the committee and thereby improving the economy of the province, along with the other people who are here. The Coalition for Social Justice is a coalition of groups around Ontario, of both labour unions on one hand and community groups. We are interested in advocating social justice in the province but really have been concentrating on poverty, for obvious reasons, in the last number of years, just because of the way low income affects so many people.

This is particularly relevant for this pre-budget hearing because of the economic crisis. I would side with Jim Stanford, thinking of the CBC panel the other day when he was debating with Mark Mullins and...I forget who the investment person was. The two of them were saying that the economic prospects are looking very positive now in Canada, and Jim was saying, wait a minute, there are a lot of factors that are problems because of the huge number of unemployed.

This is why we picked the three areas that we have picked Probably the most general statement that the Ontario Coalition for Social Justice would argue is that we would hope the federal government would adopt a national poverty reduction strategy. We haven't said so directly; we chose instead to concentrate on three particular issues. I'm confident that advocacy for a national poverty reduction strategy will come up in your hearings, but I think the three areas we have identified are key areas that really affect many of the people with whom we deal directly.

Concerning EI, we quote various unions with which we are in association, mainly because of the dreadful effects on union members throughout Ontario—we are Ontario-focused—of the economic crisis and huge job losses, generally in the north of Ontario with mills shutting down and forestry workers having a hell of a problem, but with auto workers, obviously, in Windsor and other union members in manufacturing plants throughout southern Ontario, whether in Cornwall, Hamilton, St. Catharines, or wherever you go.

People who were regarded for years and years as having union jobs that were well paid are suddenly facing the prospect of low income or poverty. It is a devastating prospect for the individuals involved and for the communities in which they are placed. We advocate as strongly as we can that the CLC recommendations with which we finished the

section on EI.... They have a number of recommendations about increasing the period of time during which EI would be paid—which the government has addressed, to a slight extent anyway, by extending the five weeks for a period of time—but then increasing eligibility for EI so that a greater number of people will be eligible for EI than is currently the case. I think of the situation years ago. I'm old enough to think of accusations that people in various parts of the country would take advantage of EI because of seasonal work—work for a little bit and then get payment.

What the country is facing now, and what your budget subcommittee is facing, is a much more serious economic difficulty, in which EI is really needed for people directly as a result of the economic difficulties we're facing and because of job loss. The second general area is the temporary worker program. There we have contact primarily with the United Food and Commercial Workers as well as with the centres they operate in five different places in Ontario where migrant workers or temporary foreign workers are assisted. They do excellent work.

The difficulty they are having is that here we are, inviting foreign— I have one minute? Okay, I'll deal with it quickly. I was going to talk about housing, but Michael Shapcott is here, so I don't even have to say a word. The experts will speak directly.

(1110) The migrant workers and the temporary foreign workers are facing huge difficulties in not having their rights recognized in the context of the work they actually do. The UFCW and the community centres that UFCW operates are of great help to those people. The federal government really must take a role—through the budget, I think—in investing in greater employment standards and helping those people become like Canadian workers. If Canada is benefiting from the work they do, I think it's only reasonable and correct that we extend the rights that the workers usually have in Canada. Why don't I just stop there?

Thank you. The Chair : Thank you very much for your presentation. We'll now go to the National Council of Welfare. Mr. Mark Chamberlain (Member, National Council of Welfare) : Thank you. I'm Mark Chamberlain. Thank you for this opportunity. You have, hopefully, in front of you a full brief that was provided along with an additional document called The Poverty Profile ; it's bulletin one. I'm going to refer to it a little during the presentation. It shows graphically that we are at a pivotal point in Canada. If we follow the traditional course, we face an agonizing, slow recovery for many Canadians.

Others will not recover or were disadvantaged even in good times. You'll note on page a graph. You'll see that during the last two recessions poverty continued to climb after the recession was declared over, and you'll see how many more years it took for poverty rates to come back down. On page 3, you'll see that in the last recession, even when the unemployment situation improved, poverty rates did not. That is the story of many working-age Canadians and their children. Now, if you turn to page 5, you'll see an entirely different story.

This is where you see a dramatic decline in poverty that reflects policies that help protect seniors from poverty and the effects of the recession. In the current recession, both good and bad jobs are disappearing, and EI is not as available as it used to be. Welfare benefits have eroded, in some cases to staggeringly low levels. With severe asset limits and hundreds of rules that can sabotage any rebound to get ahead, or any personal resiliency, it is hard to imagine a program having more work disincentives built in than social assistance has; there is nothing more difficult.

Poverty and insecurity are costing us a lot, and this is not a recipe for future prosperity in Canada. On the positive side, some provinces as well as cities have adopted strategic, coordinated approaches to solving poverty. Hamilton is one of those. It is where I live and have been working with the poverty round table. There are both good results and inspiring practices being generated at municipal and provincial/territorial levels of government. But they cannot do it alone. I'm a businessman. In fact, I'm an engineer and a businessman. I grew a business that Mike Wallace would know very well.

It does about a quarter of a billion dollars' worth of business today. It has high-tech employees in Burlington. I'm also a National Council of Welfare member. We come from all walks of life as a council. We all look at the 40-plus years of constructing a tangled safety net and are confounded at its paltry results. If you look again at the graphs on page and 3, going up and down and landing where we started is simply not progress. We celebrated our 40th year this year as a council and we're disgusted. We have not made progress as a country, as a province, as a municipality.

Canada as a whole must make wiser investments to solve poverty and get better, larger, more permanent returns. The federal government has a unique capacity—and not just unique capacity, but responsibility—to help make that happen. Poverty has many dimensions. It's not always about money, but that is a dimension in which the federal government plays its most significant role. We say that it's not always just about money, but it's always about money.

Through EI, pensions, guaranteed income for seniors, and child and other tax benefits, the federal government has the capacity and the mechanisms in place to provide individuals and families with income security and stability. Those types of policies can operate as poverty preventer, safety net, and springboard to opportunity. Government policy across Canada does a relatively good job for seniors, as page of the bulletin shows, but it can and must do far better for children, youth, and working-age adults—all those individuals who are our future workers, our future skilled workers.

The federal government can do its part effectively by, as a first point, restoring and improving employment insurance to safeguard the livelihoods and the assets of workers and their families during the recession and beyond. Build on child benefits, employment supplements, GST credits and other potentially refundable credits, including disability and caregiver credits, that deliver the greatest benefits to those who are most economically disadvantaged.

These benefits can provide more adequate and stable income; cushion periods of financial difficulty; and prevent, to the greatest extent possible, recourse to social assistance. As one woman put it to us, “welfare” really means “farewell”—to hopes, dreams, even your life. All tax and investment measures proposed to the committee should meet this test of reducing inequalities and providing proportionately more benefits to disadvantaged Canadians than to those who have more money, privilege, ability to pay tax, and options.

Support provincial, territorial, municipal, and aboriginal governments in their efforts to solve poverty and work with them, in consultation with Canadians, towards a pan-Canadian strategy to solve poverty.

(1115) And fourth, be a leader in ensuring that our actions as a country match our values as a country. We've got to stop allowing our economics to drive our values and start having our values drive our economics. We speak of deficits. The greatest deficit we have today is our social deficit. Thank you. The Chair : Okay, thank you very much for your presentation. We'll now have the Canadian Institute of Actuaries. Mr. Robert Howard (President, Canadian Institute of Actuaries) : Good morning. My name is Bob Howard, and I am president of the Canadian Institute of Actuaries.

We appreciate being invited to this meeting, and I look forward to an exchange that benefits all Canadians. The Canadian pension system, especially defined benefit, has been challenged for many years, and recent events have forcefully brought home issues that need long-term remedies.

It's time to bring together decision-makers at a national pension summit to reach conclusions on a road map and timetable to increase the coverage of private sector defined benefit pension plans, to improve the environment for defined contribution pension plans, to foster sound innovation in post-retirement income security, and to implement intergovernmental harmonization of pension legislation and regulation for the benefit of all Canadians. On August 6, the premiers indicated their agreement by calling on the federal government to host a national summit on retirement income.

We've yet to hear a reply from the government on this important item, and we urge the finance minister to act. The Canadian Institute of Actuaries would be pleased to assist with this summit in any appropriate way. The institute has met with many members around this table regarding pension reforms proposed in our Prescription for Canada's Ailing Pension System . The dire circumstances that the pension system faced when we released that report in persist, and the economic crisis has made things even worse. Canadians are not saving enough for retirement.

Canadians need defined benefit pension plans, and these plans need to be saved and revitalized. Claude Lamoureux, special adviser on pensions to the institute, has said that if the trend continues “the only Canadians covered by DB plans will be politicians, government employees...”. Imagine how taxpayers will feel about supporting these plans through their taxes when their own workplace offers either a less effective plan or none at all.

We have, in our earlier report, said that legislation should be put in place to remove disincentives to employers starting up or maintaining defined benefit pension plans, which would improve benefit security. This legislation would include three important interrelated changes for pensions plans. First, permit the use of a 100% employer-funded pension security trust. This is a side fund, independent from but complementary to the regular defined benefit pension fund. It is a practical solution to the surplus asymmetry issue.

Employers gain because they can contribute more than the absolute minimum, knowing that if a surplus arises in the future it can be recovered. Pensioners and employees gain because higher employer contributions will make their benefits more secure. Second, require each defined benefit pension plan to establish a target solvency margin. A target solvency margin would recognize the volatility of pension plans and their assets and help establish a risk-based approach to planned funding contributions.

At present, when times are good, employers stop contributing when the plan becomes 100% funded, so when the inevitable downswing occurs, the plan goes into a deficit and members' pensions are at risk. Under our proposal, the funding target would be higher than 100%, so the risk of a deficit would be reduced. Employers would be more willing to accept additional funding through the pension security trust as it remains under their control. The institute would be pleased to work with regulators to develop guidance on the required levels of target solvency margins.

Third, increase the maximum allowable surplus in a pension plan to the greater of two times the target solvency margin or 25% of the going concern liabilities. Had these proposals been in place prior to the recent crisis, pension funds would have been less threatened and some relief measures may not have been necessary, and the risk of members' pensions being cut back would have been reduced. The task now is to put in place long-term measures that will, over time, improve and safeguard the retirement incomes of all Canadians.

(1120) Mr. Chairman, this ends my formal statement. I look forward to answering questions from the committee. The Chair : Thank you very much. We'll now go to the Wellesley Institute, please. Mr. Michael Shapcott (Director, Affordable Housing and Social Innovation, Wellesley Institute) : Thank you very much, Mr. Chair. My name is Michael Shapcott. I'm the director of affordable housing and social innovation at the Wellesley Institute. With me is my colleague Nimira Lalani, who is a research associate. The Wellesley Institute is an independent research and policy institute dedicated to advancing urban health.

In our written submission we made several specific recommendations in terms of the next federal budget. Today we want to focus on affordable housing and community innovation. Mr. Chair, even before the current recession, hundreds of thousands of Canadians were experiencing homelessness and millions more were precariously housed. Our research shows that the toxic combination of insecure housing and inadequate incomes is causing increased illness and premature death.

Just recently we prepared a paper for the federal government's consultation on housing and homelessness in which we totalled up federal government spending on housing and homelessness. We found that the federal government is actually spending a substantial amount of money. In fact, the figures from the federal government show that it'll spend $17.5 billion this year on housing-related expenditures. That doesn't include the $64 billion that's been committed to the banks through the insured mortgage purchase program.

The problem isn't the level of spending, it's the fact that only a small fraction of those dollars are going to reach the households with the most urgent need. I'll give you two examples. The federal government estimates that the home renovation tax credit will cost about $2 billion this year. Yet most of the 3.2 million households—and that's about nine million women, men, and children—who are living in substandard housing, according to Statistics Canada, won't be able to qualify for the home renovation tax credit.

What's offered to them is another federal program called the residential rehabilitation assistance program, which is funded at $128 million annually--$128 million...$2 billion. What $128 million buys is assistance for about 20,000 homes a year for ownership and rental homes. If you do the math--20,000 homes, with 3.2 million households in need of repair--it'll take about 160 years at the current level of spending to meet the repair needs of those households. Another issue we are concerned about is new supply.

We continue to have new households that need new affordable housing, yet we're not generating enough new households. Only about 15% of the $3.5 billion the federal government spends on affordable housing will be devoted to new supply. Members of the committee will remember that about two weeks ago you voted on Bill C-304 , which is

an act to ensure adequate accessible and affordable housing. That bill passed second reading and is going to another committee for review. We believe that Canada urgently needs a comprehensive national housing plan, and we commend that legislation. However, in the meantime we'd like to urge this committee to make a recommendation for a substantial down payment towards a national housing plan.

In particular, we want to offer three recommendations: first, an additional $700 million for new affordable housing supply; second, double the funding for the homeless partnering strategies with an additional $135 million; third, $128 million to double funding for the residential rehabilitation assistance program. I know there's a concern in recommending new spending at this time. I want to say that it doesn't necessarily mean that you have to commit new revenues.

The federal government should be starting to re-profile some of its existing housing investments to make sure it goes to the households that need it the most. In addition, we want to recommend to this committee that the federal government should be reinvesting the estimated $1.353 billion surplus from Canada Mortgage and Housing Corporation this year. Some of that can be reinvested in affordable housing and homelessness initiatives.

(1125) Mrs. Nimira Lalani (Research Associate, Wellesley Institute) : The recession is not only making an already bad affordable housing crisis worse, but it is also delivering a critical blow to Canada's non-profit sector. The non-profit sector is a vital web of health, education, housing, community services, recreation, culture, and faith groups that enriches our communities and makes a major contribution to our economy, contributing five times more to Canada's GDP than auto manufacturing.

As the recession deepens, community-based health, housing, and social services are being asked to deliver critically important services with reduced grants and donations. Our partners throughout Canada tell us that hundreds, perhaps even thousands, of organizations will collapse under the fiscal and service pressures of the recession. Governments in Britain and the United States, to name just two, recognize that the community sector is vital to the health of a nation and its communities.

Canada's federal government is lagging far behind, and the community sector is suffering from a lack of effective partnership at the federal level. Two days ago, a newspaper column by Microsoft CEO Steve Ballmer had this headline: “Investing in innovation will fuel Canada's economic growth”. That's true in the private sector and it's also true in the community sector. Just as Canada needs a comprehensive national housing plan that engages all the actors, the federal government also needs a comprehensive community innovation plan.

We can learn a great deal from the successes and failures overseas, as we build a made-in-Canada plan. In the meantime, the next federal budget should include a substantial investment in community innovation, including $150 million for a national social innovation fund for social purpose ventures; $50 million for a national community innovation fund for non-profit enterprises; and $15 million for a new national health equity fund to invest in innovative community-based, multi-sectoral demonstration projects. Thank you.

(1130) The Chair : Thank you very much for your presentation. We will now go to the Canadian Association of Physicists, please. [ Translation ] Professor Robert Mann (President, Canadian Association of Physicists) : Good morning. My name is Robert Mann and I am the president of the Canadian Association of Physicists. [ English ] With me is my colleague Dominic Ryan, who is the president of the Canadian Institute for Neutron Scattering. The CAP represents physicists across the broad spectrum of physics: pure and applied, industrial, government laboratory, and academic physics in universities.

In our brief we present three recommendations: one is an increase for funding in basic research via NSERC's discovery grants program; the second is for a design study of the Canadian Neutron Beam Centre, which I will let my colleague Dominic Ryan speak to; and the third is for new funding for major infrastructure. To speak to the first recommendation, we contend that basic research has been squeezed in recent budgets. We are very grateful and appreciative of money that has come in for science. There has been money for the Canadian Light Source in Saskatchewan.

There has been money for the Canada Foundation for Innovation. In my own city of Waterloo there has been money for the Institute for Quantum Computing. As a physics community, we are very grateful for all of this. However, if you are able to look at the graph I supplied in the written material I gave, targeted research in the budgetary trends will go up 62%, but basic research, the pure curiosity-driven research, is going to be down by 3.5%.

Basic research, we argue, is essential for society not only because of its intrinsic value--part of being human is in fact understanding and discovering new things--but also because of its importance for the marketplace, in that it keeps the marketplace alive with new ideas and prevents society from being locked into particular technological options. Lasers, for example, arose out of curiosity about how light and matter worked. Today we see them used everywhere, from grocery store scanners to entertainment devices such as CDs and DVD players to medical applications in eye surgery.

All of this came about because people were curious about the interaction between light and matter. Curiosity about how electrons move through materials gave rise to semiconductors, which are essential for computing as we have it today. A NSERC study indicated that $3.5 billion in revenue from spinoff companies emerges from NSERC's $1 billion budget. That's a 3.5:1 rate of return, so homegrown curiosity-driven research does indeed generate spinoff companies. It stimulates local industry to do more research and it educates the next generation of students.

These students, who are graduate students and include post-doctoral fellows, are best thought of as apprentices. They are not only learning; they are also contributing to the Canadian economy through their process of getting advanced masters and doctoral degrees in the sciences. We have argued for a 10% increase in this funding. That increase would be $40 million per year. With that, in recommendation three, we've argued for the need for new money for infrastructure.

We need this money because we have to maintain and leverage the maximum benefit from the essential investments that the Canada Foundation for Innovation, NSERC, and other groups indirectly--the Institute for Quantum Computing, CLS, and so on--have made. If we don't keep up money for infrastructure, then the discovery-based money will not achieve its maximum value. This infrastructure money pays for lab equipment, for facilities, and so on. We estimate the total there to be $96 million. Dominic, would you like to continue?

Professor Dominic Ryan (President, Canadian Institute for Neutron Scattering, Canadian Association of Physicists) : Australia built their reactor between the time we first started asking for a new reactor and now, and theirs is operating and we still don't have a replacement. The NRU is down again; it has a leak. It has precipitated yet another isotope crisis, and these are warnings that we need to deal with the problem. It's a very compressive reactor. It has done a lot of important work. It has been a leading facility in Canada. It has dominated the isotope production business around the world.

We've been producing about 80% of the available molybdenum 99, and it's been a critical resource, but now it needs to be replaced. The construction of a new multi-purpose reactor, one that will provide medical isotopes, enable cutting-edge materials in engineering research, and provide a solid knowledge-based foundation for the development of the next generation power reactors, is a national issue that transcends the mandates of individual departments or agencies. It relates to science, industry, health, energy, environment, international relations, and education.

And only a multi-purpose research reactor will fully support the variety of missions that are currently carried out at NRU. Generation IV nuclear reactor designs, which allow us to use all the energy available in uranium, will allow us to take what is now a 60-year energy reserve in Saskatchewan and turn it into a multi-thousand-year energy reserve if we use it efficiently in generation IV designs. Nuclear medicine underpins all modern health care.

I'll bet every person in this room knows at least one person who has benefited directly from medical isotopes produced in NRU, whether to treat thyroid problems, heart problems, or cancer. Not having the supply is a problem. Industrial research, neutron beam research, and so on are all extremely important; they're in my brief. It's an expensive project: $800 million to $1 billion. It would generate all that activity in Canada. The construction happens here, the design happens here to support the industries in Canada.

(1135) The Chair : Thank you very much, Mr. Ryan. I know it's a very big topic for a short time, but I know you will get questions on it. We will now go to the Association of International Automobile Manufacturers of Canada. Mr. David Adams (President, Association of International Automobile Manufacturers of Canada) : Thank you very much, Mr. Chair and committee members. As you know, the AIAMC is the national trade association that represents the Canadian interests of international automobile manufacturers that manufacture, distribute, and market vehicles in Canada.

As you're all aware, this year has witnessed tumultuous change in the automotive sales and production industries in North America, which has been exacerbated by the global recession. Automotive sales are currently down by 3.5% through the third quarter, which is an improvement compared to the second quarter, in which they were down 18.3%, and the first quarter, in which they were down 21.8%.

For comparison's sake, sales in the U.S. were down 27% through the third quarter, despite the infusion of a $2.88 billion “cash for clunkers” program, which was responsible for just over 690,000 vehicle sales in the U.S. over the July and August period in which the program was operational. The U.S. bankruptcies of both GM and Chrysler, combined with the recession, severely impacted vehicle production in Canada, which is down almost 40% from last year through the end of September.

The production contraction has not affected all companies equally, however, with the production at Toyota and Honda contracting 1.3% and 37.3% respectively, according to automotive news production data, through the end of September. These two manufacturers have a higher percentage of their production sold to Canadians and produce the two top vehicles that were purchased by consumers in the U.S. under their “cash for clunkers” program.

That said, with the recent resurgence of the Canadian dollar, the Canadian automotive market is more susceptible than at any time in the last year to a resurgence of cross-border purchases from the U.S. To encourage Canadians to continue to purchase Canadian vehicles from Canadian dealers, who are still struggling to secure appropriate credit and financing lines, we reiterate the recommendations from our August pre-budget submission as a means of bringing greater parity to Canada and U.S. vehicle pricing.

Our first recommendation was to reduce the finished vehicle tariff on imported passenger vehicles from 6.1% to 2.5% on an applied basis, which is consistent with the tariff on imported passenger vehicles into the United States. This tariff reduction would provide the opportunity for manufacturers to pass on savings of $900 to the consumer, assuming a $25,000 value for duty.

Tariff reductions would also assist all manufacturers, not just our own members, in meeting the pending fuel economy regulations, as North American production facilities cannot be converted to the production of new fuel-efficient vehicles in the short term. The second recommendation we made was to eliminate the green levy excise tax that has been applied on vehicles, with the exception of pickup trucks, that have a combined fuel consumption rating of more than 13.0 litres per kilometres, which was introduced in the federal budget.

While the eco-auto rebate component of the vehicle efficiency initiative introduced in that budget was eliminated at the end of 2008, the green levy continues as an excise tax applied to the vehicle manufacturers. While our members are strong proponents of fuel-efficient vehicles, on a matter of principle it is incongruent that the government would retain one component of the vehicle efficiency initiative while cancelling the incentive component that encourages consumers to make more fuel-efficient choices when purchasing vehicles.

The third recommendation we made was to eliminate the $100 excise tax on air conditioning, which has been in place since the 1970s. When the tax was implemented, at the time very few vehicles had air conditioning and it essentially represented a luxury tax. Currently the vast majority of vehicles sold in Canada are equipped with air conditioners, so it now represents a tax grab. I'll leave it at that and wait for your questions. Thank you very much, Mr. Chairman.

(1140) The Chair : Thank you very much, Mr. Adams. We'll now go to the Canadian Association of Income Funds. Mr. Peter Carayiannis (Director, Legal and Government Relations, Canadian Association of Income Funds) : Thank you, Mr. Chair. My name is Peter Carayiannis and I'm the director of legal and government relations with the Canadian Association of Income Funds. On behalf of the association's members, I thank the Minister of Finance, this committee, and its members for undertaking the important and significant work of a cross-country consultation in advance of the budget.

Our association made a key request to the finance committee in on the question of providing a legal framework for the conversion of income trusts to corporations without suffering any additional negative consequences. Our request in was endorsed by the finance committee in its final report, and I would note at this time that the request was directly in line and entirely consistent with all statements made by the Minister of Finance on the subject of conversion of income trusts to corporations.

The government released draft legislation in this regard in July and, in a notice of ways and means motion tabled in November 2008, proposed legislation to facilitate the conversions to corporate form along with certain other rules, both tightening and relieving the provisions surrounding such conversions. This motion, however, died on the order paper when Parliament was prorogued last year.

However, in considering that motion, which died last year on the order paper, the association is cognizant of the fact that the legislative proposal, as it was tabled and which we have now twice reviewed over the past two years, makes it clear that the relieving provisions are strictly temporary in nature, given that the tax-deferred treatment on conversion terminates at the end of 2012. This deadline was never discussed or raised as an issue by the Minister of Finance in any public statements concerning the issue.

In establishing the deadline of December 31, 2012, with the result of requiring income trusts to convert to corporations or lose the tax-free rollover, the government is putting income trusts at a further disadvantage, and it is a d