Finance Committee on Oct. 24th, 2006

[William Maes]

In our case, a lot of the research grants are for research purposes, and if you start diverting those for expenses, such as the normal expenses a university encounters—for example, heat, light, administration, and so forth—these would really reduce the effectiveness of those grants.

At the moment, the universities are subsidizing those research grants in many ways, by taking money from other areas, be it teaching or other places where we would enjoy seeing it.

So it is important. We are at a disadvantage to our competitors in the U.K. and the United States, where we see moneys in the 40% to 70% range, depending on whether it's a public or private institution, and on accounting practices.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

That's very helpful. Thank you.

Mr. Busing, you talked about the need for increasing the research, but I particularly want to talk to you about the infrastructure and faculty costs, and particularly for medical practitioners. How much do you reckon we need to increase spaces for doctors' and nurses' training right now or in the next couple of years in order to meet up with the demand? How far behind are we on the curve? Has your research shown that?

[Dr. Nick Busing]

My research, perhaps not, but I can give you a suggestion that if you look at a number of the curves--and I alluded to them--if you look at the retirement curve for physicians, if you look at the numbers of nurses who go to another discipline, who we currently need, we're talking in terms of physicians at least a minimum of moving from our current enrolment of 2,300 per year to 3,000 per year. That is not taking into account international medical graduates, and we are taking more and more of them into the system. I'm not on the nursing side of things, but I can tell you that we're talking about ten of thousands of nurses that we are short, not the thousands that we're talking about with physicians.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Are you aware of any plan to move ahead on this?

[Dr. Nick Busing]

We are in the midst of a rapid expansion in medical schools. As you may know, we were at a low point after some cuts in the early 1990s of about 1,500-plus medical school positions; we now have 2,300. We do have some plans to increase the campuses in all of the provinces and take in numbers. We're not targeting yet 3,000 positions; we're not even targeting 2,500. So in percentage terms, we still have a long way to go.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Okay, that's helpful.

Mr. Pye, you had some really practical suggestions. I was interested in your suggestion of a tax-exempt productivity bonus. We have seen where productivity bonuses, or bonuses for good work, or whatever, have been given in the public sector, but they're just kind of routinely given. They don't seem to be tied to a merit criterion. How can you make sure that such a bonus would actually be tied by employers to productivity rather than just kind of being an extra perk that benefits employers because there's a tax relief component to it?

[Riley Pye]

I think one of the things that happens in the private sector versus what may happen in other sectors is that companies certainly are going to be very careful before they hand out any extra money to employees that they don't have to. If there is to be extra incentive-based compensation that's brought to play, obviously we're going to want to ensure that we get some sort of benefit before we put that on the table.

We've been experimenting with a number of productivity measures and production bonuses over the years. The issue we have is that when we hand those out, the impact is definitely muted. It certainly doesn't have quite the same impact when you give somebody a $200 bonus for the month and their cheque is only for $100. It loses some of the impact.

In the private sector, though, there's a natural incentive there, on our own, to act properly to make sure that we don't hand out money frivolously, and we certainly wouldn't. I think all companies would tie it to some sort of hard and fast criterion.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

It's just an issue that I raise here.

Thank you, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

Thank you.

We'll continue with my favourite Manitoba MP on this committee, Madam Wasylycia-Leis.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I'm his only Manitoba colleague here, and NDP.

Thank you very much, Mr. Chairperson.

I'm going to start by thanking you all. Those were great briefs, and too little time to do it all.

I'm going to start with William Maes. Concerning your focus on research and e-learning and the emphasis you've put on developing a knowledge-based economy, we've just been dealing with a number of cutbacks that seem to detract from movement in this direction, significant cuts in literacy, huge cuts in research that provides for alternative policy work. How do you jibe the two? Don't we have to go back to square one and at least make sure that Canadians have access to basic literacy and numeracy in order to access the knowledge-based economy?

[William Maes]

That's a very good question.

It's difficult. I guess we have to provide the opportunities for people, and that's what we are trying to do through promoting e-learning. Certainly the rudiments have to be there. People have to know how to read and utilize what we offer. But on the other hand, the offering should be there when they're ready, if that's the case. So that's the area we're trying to fill by encouraging the government to promote the e-learning initiatives.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Let me go to Carolyn with a similar question.

You talked about poverty. We've been here for a couple of days now. We've heard from a number of groups about the serious impact that cuts in literacy, women's programs, the social economy, and volunteer initiative will have on our ability to combat poverty. Have you any evidence along those lines, or anything to add? What advice would you have in terms of those kinds of cutbacks?

[Carolyn Earle]

Well, I would think they're not wise. Recently I attended a session speaking about the cutbacks in literacy, and people had concerns that their chances to improve their situations would be severely limited with changes to funding for literacy and numeracy.

People give good-news stories about how they were able to make positive changes for themselves and for their children. That's very significant, because these cutbacks are affecting not only one generation, but will also be affecting children as well.

We were talking about literacy, and people were concerned about the loss of the CAP sites and the ability to have the e-learning.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

I am going to go to Nick Busing. There were also significant cuts announced in the area of health care and health research as part of this $1 billion cut. Just this past week we have also learned that the government has decided to actually extend patent protection for another group of brand-name products and brand-name drug firms, which is going to add significantly to the health care costs.

How, in fact, do we move forward with an affordable, quality health care system in the face of this kind of onslaught and assault on our health care system?

[Dr. Nick Busing]

How we move forward is a rather challenging and broad question, and I'm sure there's lots of wisdom around the room.

Health research is what I'm talking to you about today. To be honest with you, I want to emphasize that it's a key component of moving forward in that manner. In fact, it is a key component in addressing some of the issues I've heard brought here to the table, issues such as poverty and so on. If you look at CIHR, CIHR has a research strategy that is much broader than what you may think of in terms of the traditional biomedical strategy. There is research in other pillars.

I would argue that from the research point of view, we've built the infrastructure, as I've indicated, and we have the researchers, but unless we provide the operating grants, we won't be able to deliver; we won't be able to deliver across the board. I realize it's not an easy one- to two-year vision, but unless we do that research now, that's what will impact us 10 and 20 years down the road for the health of the country. I would urge you to see it in that manner.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We'll continue now with the second round and four minutes for John McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

First, Mr. Busing, I certainly am a strong supporter of medical and all other research. I think we've done very well over the last several years, but I've heard it said that a number of the high-powered medical researchers who've come to Canada from elsewhere are at risk of going back home because the funding to sustain them hasn't been forthcoming or guaranteed for the future, the reason being that the budget didn't have that much money last time around.

Is this a concern? Is my information right? Is there a state of some urgency out there?

[Dr. Nick Busing]

In our view, there is clearly some urgency. Of the acceptable grants put before CIHR for funding, less than 25% were funded; that, to us, is a significant mark.

My association is currently doing an assessment of what we describe as scientists at risk. They are both PhD scientists and physician scientists who are at risk across the country. We estimate there are several thousand of them; they are people who rely on grants and on other kinds of support. If that doesn't flow, many of those people are in jeopardy, because they have no other funding to fall back on.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Ferguson, I guess in sports as in public transit and as in other things, we can debate whether it's better to spend taxpayers' money building things such as sports facilities or public transit or giving money to students, or whether it's better to have tax breaks, whether for sports activities, for students, or for transit users.

If you had a choice between one or the other to encourage sports in this province, which one of these two vehicles would you consider more important?

[Jamie Ferguson]

I think it's a very comprehensive thing, just as it is in other areas, to develop sport. If I were stranded on an island and could only have one and not the other, I guess the answer would be that funding for programs would be the key, because that's what you can then offer for access. Programs can be so varied that they can address all different socio-economic levels. That's the key

But you have to preface this by saying that unless everybody wants to have the program in their living room, we also need facilities, places where we can offer them. But the facilities can be adaptable.

[John McCallum, Liberal, Markham—Unionville, ON]

Thanks.

I have one last question for Mr. Pye.

I, like my colleague Diane Ablonczy, am interested in your productivity proposal. My concern is that if any company could get $2,500 tax-free as part of the salary, then there'd be an incentive between the worker and the company to make sure you use that tax-free component.

You say it's documented and verifiable. I like the idea, but I don't see how it's doable without everybody simply taking advantage of that effective tax reduction.

[Riley Pye]

I can only speak to our company's experience, where we certainly spend a great deal of time documenting and putting out these programs. Most of the programs we have in place are in areas where we have organized labour. All of these agreements we have in place are outside of the labour agreements. Anything that's inside the labour agreement simply doesn't count and is not eligible towards this.

So anything we have with regard to incentives is outside of and over and above labour agreements.

Typically the issues you have in collective bargaining are more around employees looking for something that is more tax-effective, such as enhanced health care benefits or enhanced pension benefits. Things that put pure dollars in their pockets sometimes are less meaningful, if they're going to be taxed at high marginal rates.

I can speak to ours. We certainly have very documented, methodical programs, with very specific measures and very specific caps. There's no question that it would have to be the variable pay that's at risk. In that way, the $2,500 cap is not simply $2,500 that can be split up.

I think most labour groups are not going to want to put any of their compensation at risk; they're going to want to have it firm. I don't think you're going to see the types of abuse that maybe you could if it weren't at risk.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

Monsieur Paquette.

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chairman.

My question is for the Canadian Association of Research Libraries. You're calling for a change in the GST applied to electronic documents.

From what I understand, the full GST is reimbursed on the purchase of traditional books but only half or none is reimbursed on the purchase of electronic documents.

Could you explain why that is?

[William Maes]

Currently, the way it stands especially for magazines and journals, if they contain less than 5% advertising there is a full GST rebate, and of course it's true for books, where there is typically no advertising. For electronic journals, however, there is no rebate. It doesn't matter whether they contain advertising or not. It's exactly the same text and product, except that it's delivered in a different format—electronic, as opposed to print. The current taxation rules don't cover this new format, if you like, even though in any terms there's no difference.