Finance Committee on Sept. 26th, 2006

[Ian Rutherford]

Yes, and I would recommend the recommendations made by the Expert Panel on Commercialization. They're publicly available, and we endorse most of them.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Yes, I'm familiar with that.

Thank you.

C'est tout? Merci, monsieur le président.

[The Chair, Conservative, Brian Pallister]

On behalf of the committee, we sincerely thank you for the time you took to prepare your presentations and to be here today. It is greatly important, and we appreciate and thank you for it.

We will suspend now for a few moments to allow committee members to get a sandwich.

We ask the next panel to replace our guests here.

Thank you.

[The Chair, Conservative, Brian Pallister]

We'll continue with our deliberations. The Standing Committee on Finance is mandated by the House of Commons on an annual basis to consider and make reports about proposals regarding the budgetary policies of the government. This year's theme for our pre-budget consultations is Canada's place in a competitive world.

Welcome to our guests. We have asked you to prepare presentations that are five minutes maximum in duration. I'll emphasize that at this point so I won't have to emphasize it later. I will give you an indication that you have a minute or less remaining, if you choose to look for that visual cue. We'll encourage time for questions after your presentations, of course. Again, I thank you for the time you've taken to be with us today. The committee is looking forward to your presentations.

We will begin with a presentation from the Canadian Federation of Independent Business.

Welcome, Catherine Swift and Garth Whyte. Please proceed. This five minutes is yours.

[Catherine Swift, President and Chief Executive Officer, Canadian Federation of Independent Business]

Thank you very much, and thank you for the opportunity, once again, to present the views of 105,000 small and medium-sized businesses across Canada to this committee.

As you probably know, small firms represent about half of Canada's GDP, about 75% of net new job creation in any given year. Our economic success as a country over the past decade, in large part, has been as a result of the resilience and dynamism of the small business sector in the face of a lot of the economic shocks we've seen, such as 9/11, natural disasters, increasing global competition, a rapidly appreciating Canadian currency, and international political instability.

Indeed, during this turbulent time, Canada's small and medium-sized businesses have punched above their weight in terms of employment and wealth creation.

The difficulty currently is to maintain this remarkable economic performance in the face of ever-increasing competitive pressures. These pressures stem from a number of factors, including the rapid expansion of certain Asian economies, such as those of China and India. Growing small firms into larger firms, and improving productivity, are essential to building a more competitive Canada.

Throughout this report, the CFIB has made recommendations that we believe will better enable SMEs to grow and become more competitive, and ultimately position Canada as a highly desirable place to live, work and do business in an increasingly competitive world.

All too often, we see Canada's lag in productivity performance blamed on the dominance of small and medium-sized firms in our economy, suggesting that SMEs, for instance, don't undertake enough investment. We've done some recent research on these issues, which we're releasing here for the first time, and we've actually found to the contrary. More than 80% of small businesses were willing and eager to grow and invest in human and productive capital.

Findings of this research can be found in our larger brief in figures 5, 6, and 7, on pages 7 and 8.

In French, this is on pages 8 and 9.

We found actually that almost half of business owners want to expand their business and more than one in four want to diversify their business. Only about one-third want to maintain their current status, and about 10% were looking to close or sell their business or downsize.

We felt that since the number five seems to be very popular in Ottawa these days, we would group our recommendations into five major categories: tax measures, red tape and paper burden, recommendations to deal with growing labour shortages, changes to the EI regime, and measures to assist small business owners with succession planning.

Implementing our recommendations will spur even more activity from Canada's SMEs, because we know from past experience that they will use savings from tax and regulatory reductions to invest back into their businesses and their employees.

Our members' taxation priorities are a reduction in personal income taxes either by increasing the basic personal exemption or the various tax bracket thresholds, or by lowering rates or a combination of these two measures.

The CFIB also recommends that the government reduce fuel taxes, speed up the implementation dates of promised corporate tax cuts, increase the lifetime capital gains exemption, continue to reduce the federal debt and lower federal payroll taxes.

Yesterday's announcement on debt reduction was very positive and well received by small businesses because they well know that today's debt is tomorrow's taxes.

With respect to red tape and paper burden, there have been many kicks at this particular can over the last couple of decades, but precious little has actually been accomplished. We currently co-chair the advisory committee on paper burden reduction with Industry Canada, and CFIB is also a member of the Canada Revenue Agency's action task force. Both of these committees are focused on providing workable solutions to this issue, so government should listen, support, and adopt their recommendations. Commitment by ministers and senior officials is necessary for the kind of tangible success that has alluded past efforts of this type.

Another important initiative would be to implement Bill C-212, the cost-recovery bill. This received royal assent in 2004. The purpose of this bill was to bring more accountability into the so-called cost-recovery process in government, and its implementation is clearly long overdue.

Our small business members have been highlighting the growing shortage of qualified labour for about a decade now, and the fact that acute problems are emerging in some of the hottest economies in Canada--Alberta and B.C. are obvious examples--should not obscure the fact that there are issues everywhere in the country. We recommend that the scope of the apprenticeship job creation tax credit and apprenticeship grant be expanded, and that our immigration policies and the temporary worker form program better reflect the needs of today's marketplace.

We've also made a number of recommendations specifically regarding needed changes to the EI program, some of which are related to the problem of labour shortages, such as the reintroduction of the EI new hires program that was so successful in its previous incarnation a few years ago. Other recommendations include measures to improve fairness to employers in the system, such as a 50-50 split of premiums and refunds for over-contributions. In general, the EI system should not serve as a disincentive to employment, especially at a time when we're dealing with historically low unemployment rates.

[The Vice-Chair, Liberal, Massimo Pacetti]

Ms. Swift, could you wrap up, please?

[Catherine Swift]

The fifth major concern that SMEs have deals with business succession plans. Predictably, the demographic realities in the SME sector are identical to those in the general population, which means that we will no doubt be seeing a great deal of turnover in the next 10 years.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Ms. Swift.

The next group I have here is Research Canada: An Alliance for Health Discovery, Mr. Worton, five minutes, please.

[Dr. Ronald Worton, Chair, Research Canada: An Alliance for Health Discovery]

Thank you, Mr. Chair.

Good morning. My name is Ron Worton, and I'm chair of Research Canada: An Alliance for Health Discovery. I'm also the CEO and scientific director of the Ottawa Health Research Institute at the University of Ottawa.

It's a pleasure to be here to speak to you on the important role that health research plays in Canada.

Research Canada is a not-for-profit national voluntary organization whose mission is to help Canadians maintain and improve their health by ensuring that Canada is a world leader in health research. Our membership is drawn from all sectors dedicated to advancing health research, including the leading health research institutes, national health charities, hospitals, regional health authorities, universities, private industry, and others.

Research and development is a measure of a country's economic prosperity, and health research holds the key to improved health for all Canadians. The health research enterprise in Canada maintains and improves the health of our citizens through new products and services for better health care; keeps our publicly funded health care system affordable, efficient, and leading-edge; trains highly skilled individuals who in turn will directly contribute to the national economy in the future; and creates high-quality value-added employment opportunities, both directly and through the creation of spinoff companies, from the commercialization of research discoveries.

I want to amplify these points with just two examples, both taken from my own experience. The first example has to do with new products and services.

About ten years ago, one of the University of Ottawa researchers discovered that tiny bits of DNA would stimulate an immune response. Over the next five years she developed this into products that enhanced the response to vaccines. Our research institute worked with her to create Coley Pharmaceutical, with research labs and a staff of 40 researchers, on Terry Fox Drive in Kanata. The company has labs and offices in the U.S. and Germany and has major contracts with four drug companies to develop vaccine enhancers. These contracts are valued at over $900 million.

Research also saves money for the Canadian health care system. My second example deals with this.

An emergency room physician at Ottawa Hospital questioned why every person who limped into emergency with a swollen ankle was sent for an X-ray to see if it was broken. He developed a set of clinical tests to determine if the ankle really needed an X-ray. The Ottawa ankle rules are known all over the world now, posted on emergency room walls everywhere, in 39 languages. Following these rules and others that he developed--dealing with CT scan for head trauma, X-rays for back injury, and so on--eliminates 50% of all X-rays and CT scans in the country, saving tens of millions of dollars annually.

Further evidence that research can actually save money for the health care system is found in a working paper from the U.S. National Bureau of Economic Research, showing that for each additional $1 spent on new medicines, the estimated savings in hospitals is $4.44.

In addition to better health care and a stronger economy, health research in our universities and research institutes provides the training ground for Canada's next generation of researchers, in both academia and industry, a fact well recognized by the business community.

Finally, research to enhance our health care system contributes directly to our ability to attract and retain manufacturing and other jobs. One example is the recent decision by Toyota to build a second automotive plant in Ontario due to the quality of the workforce and the cost savings associated with our publicly funded health care system.

As we said in our brief to this committee, health research in Canada is strong. The investment by the federal government over the last six or seven years is paying off, with new infrastructure funded through the CFI and more highly skilled scientists attracted to Canada to occupy positions as Canada research chairs. The transformation of the Medical Research Council into the Canadian Institutes of Health Research was also a positive step, focusing research on health instead of illness.

Now is the time to take all of these gains from over the last seven years and develop a national plan, to ensure that the momentum is sustained as we move forward into the knowledge-based economy. Research Canada recognizes three critical elements to ensure this sustained growth.

The first element is additional funding for the Canadian Institutes of Health Research, to ensure that the CIHR is able to provide project funding for the expanded research community. In recent years its funding envelope has not been sufficient to keep up with all the new Canada research chairs and other recruits to the country who are occupying all of the new space created by CFI. We're out of balance, and this needs to be corrected.

The second recommendation is continued funding for the CFI to ensure we maintain our leading-edge infrastructure.

The third is specific tax incentives to encourage more private sector investment in research.

These three recommendations are spelled out clearly in our brief, and I won't repeat them here.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Worton.

From the Association canadienne des soins de santé, Ms. Sholzberg-Gray, for five minutes.

Thank you.

[Sharon Sholzberg-Gray, President and Chief Executive Officer, Canadian Healthcare Association]

On behalf of the Canadian Healthcare Association, I want to say that I am pleased to be here before the committee this morning.

The CHA is the federation of provincial and territorial hospital and health organizations across Canada. Our members represent the entire continuum of care, including acute, home, community, and long-term care. Representing over 900 hospitals and more than 4,700 health facilities, we bring a system-wide perspective—including the employer's point of view—to the discussion of how to secure Canada's place in a competitive world.

On the question posed by the committee of how to maintain the health of Canadians, the evidence is clear. All levels of government must continue to support a responsive, publicly funded health system, each according to its jurisdictional responsibilities and realities. Make no mistake, the federal government has a role to play. It must help to ensure access to a broad range of comparable health services for Canadians through appropriate funding linked to the Canada Health Act and pan-Canadian objectives.

In my remaining time, I would like to highlight six broad issues.

First, the health sector is an important contributor to the Canadian economy. Our publicly funded health system ensures the health of workers and provides a distinct competitive advantage to Canadian business. Look at the recent decision—and there are others—by General Motors to build the new Camaro in Oshawa. Lower employer health costs were a factor there. Health expenditures also create high-paying health sector jobs that in turn contribute to Canada's tax base

Second, health system expenditures are not spiralling out of control. In fact, the percentage of GDP expended on health services has remained relatively constant at approximately 9% to 10% over the last 15 years.

This brings us to the issue of the right balance of public and private funding. Three points, supported by statistics in our brief, are illustrative. Currently, approximately 70% of expenditures are publicly financed; 30% are private. Second, administrative costs are actually lower on the public side than on the private side. Also, inflation-adjusted private sector health spending has been growing more rapidly than public sector spending over the past 30 years, and this trend is accelerating.

The CHA does not regard private sector involvement as evil, but it is not a panacea to the challenges facing our health system. We support an evidence-based approach as to when and how private funding and delivery should occur. However, the private funding solution simply shifts a greater burden of health costs to the employers of this country and can harm our competitiveness, especially with the high dollar. As to private delivery, it depends on where and whether it's cost-effective and provides quality and accountability.

I should tell you that the American Hospital Association has expressed concern about private niche hospitals or clinics that achieve profit through cream-skimming or just doing the easy procedures and leaving patients who require complex care to full-service hospitals.

Turning now to wait times, this issue is complex and can be resolved only by using a multi-pronged approach. The solutions are included in our brief. Above all, we must look at not only the quantity of procedures but also quality and appropriateness. Should a wait times guarantee be included in the mix of strategies to reduce wait times, it would have to be carefully defined and travel adequately funded. It needs to be a safety valve, not an invitation to legal suits.

In the end—and we all know this—the real long-term solution to both wait times and managing public and private expenditures is to reduce demand by promoting wellness and managing chronic diseases. And we need to measure progress and performance in order to manage the future. For this I must signal the significant contribution of the Canadian Institute for Health Information in providing reliable data.

Looking beyond the issue of wait times, there is still unfinished business. One, substantial additional funding is needed for a comprehensive electronic health record. Two, home and community care for long-term or chronic populations, including support for family caregivers, needs to be addressed on a pan-Canadian basis. Three, increased support for the Canada social transfer as part of enhanced federal investments in the key determinants of health, such as education and social services, is needed. Four, we need a pan-Canadian health human resources strategy led by the federal government. Five, we've heard about research already. And six, we need to move quickly on a pharmaceutical program.

Detailed recommendations and amounts are in our brief. As well, we have some words on the fiscal imbalance issue, which I would ask you to review.

In conclusion, I'd like to say that a return to deficits is not an option, but this government does have the capacity to make the investments we recommend, and frankly, some other investments as well, but in the fiscally prudent manner that has become the hallmark of Canadian governments.

Thank you for your time. I look forward to answering questions.

[The Chair, Conservative, Brian Pallister]

Thank you for your presentation.

We continue with Mr. Richard Paton, president and CEO of the Canadian Chemical Producers Association.

Welcome. Five minutes is yours.

[Richard Paton, President and Chief Executive Officer, Canadian Chemical Producers Association]

Thank you very much, Mr. Chairman.

I thank the committee for the opportunity to share with you some of the challenges facing our $26 billion chemical industry, which is a significant part of the overall manufacturing sector in Canada, and to make a few suggestions for the upcoming federal budget.

We believe the committee's focus on competitiveness is the right priority at this time, so I compliment you on that. However, up until now our association and other manufacturing-based associations have been of the view that the federal government and some key provinces have not recognized the seriousness of the competitiveness challenges facing manufacturing. We're very pleased that the Standing Committee on Industry, Science and Technology is reviewing the manufacturing issue and we're looking forward to their recommendations.

I have a very simple message for you today. It is consistent with the presentation that the Canadian Manufacturers and Exporters Association made, as well as an earlier presentation by the Business Coalition for Tax Reform. The message is that manufacturing in Canada is in trouble. The loss of manufacturing, jobs, and investment will flow through our economy and have a tremendous impact on jobs, communities, and governments.

The question that governments face today--that your committee faces and that particularly a budget faces--is whether the federal government can and should do something about it that makes sense in terms of sound and effective policy. I will argue that the federal government does play a key role in shaping the business environment of manufacturing through a range of policies, including energy, environment regulation, and tax, some of which the Federation of Independent Business touched on as well. Right now the key area in which the federal government can help our industry and other manufacturing industries adapt and respond to global and domestic challenges is in the tax area related to capital investment.

What's the problem? When I spoke to this committee last year, I noted that the manufacturing floor of the world is shifting to China and probably India as well. I also pointed out that out of more than 100 petrochemical plants being built in the world right now, not one is being built in North America. That tells a story just by itself. These profound global changes are already showing up in the loss of 236,000 manufacturing jobs in Canada between 2000 and 2006, 196,000 of those in Ontario and Quebec. One would think that with that kind of job loss, governments would have figured out that there might be a problem here.

In the past two years, in our industry alone, we've had seven plants announce they're closing. The most recent was the Dow Canada announcement that they would be ceasing operations in Sarnia. These plant reductions involve real jobs in real communities.

What's causing this problem? To simplify it, there are two major categories of issues resulting in the manufacturing challenge. The first is changes in the world economy, with the emergence of China and India as major growth areas and with petrochemical investment in the Middle East based on cheap feedstock. These global changes are inevitable and profound.

Second, domestic cost and policy pressures are affecting the cost of doing business in Canada. In our industry we're seeing changes to our companies every day. As plants age and new investments need to be made, companies are making the hard decision between building a plant in Canada, where the costs are higher for energy, or making the investment closer to the huge and growing markets of Asia or the Middle East, where the cost of energy is cheap. They're also facing major new costs due to the high dollar and other energy costs. These factors, plus the cost of natural gas and the price of electricity, are the major reasons we've seen seven plants announce closures in the last two years.

What's the solution? We do a score card every year on the competitiveness of our industry vis-à-vis other locations. As all the members know, investment is a relative business; it's how well you can do compared to somebody else. If you look at that list in our brief, you'll notice some nice pluses on fiscal policy and monetary policy. There are even some improvements in corporate tax, but when you get to energy, energy supply, pricing, feedstocks, transportation, and manufacturing-based issues, there are a lot of negatives, and in fact we're declining in relative investment priority.

In the past decade we got some of these pluses because we made some significant improvements in the investment environment. Our strong macroeconomic fundamentals helped: balanced budgets, low interest rates, and the recent tax changes that will eliminate the capital tax and reduce the corporate tax rate to 19%, albeit very gradually. However, we have faced some significant new costs that definitely resulted in the loss of chemical plants and manufacturing jobs. These are energy costs, feedstock, and appreciation of our dollar. These costs make it harder and harder to justify investments.

What's the solution? We're not advocating subsidies to business. We're not advocating picking winners and losers, but we do think when you balance out all the costs and advantages and disadvantages of investment, you have to look at the tax structure.

Our suggestion is that to increase investment, turnover of capital stock, productivity, and agility, we should change the CCA tax rate to a two-year writeoff, which would accelerate investment, increase productivity, and allow our industries and companies to be able to adapt to these global challenges. Business working on innovation and tax structure will make for better investment, a stronger manufacturing sector, and help the country and the economy.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Paton.

We'll continue with the Canadian Association of Retired Teachers, Helen Biales.

[Helen Biales, Vice-President, Canadian Association of Retired Teachers]

Thank you.

On behalf of the Canadian Association of Retired Teachers, representing 125 members, the issues we address are not only retired teacher issues but senior issues as well. Our presentation will be done in English and French. I will be doing the English and my colleague will be doing the French, and we will answer the questions in the same way.

On the first page of our brief that we have submitted to you, we have our summary of recommendations. I am going to address the first one, which is the pension income splitting. The concept of pension income splitting is to allow spouses to split their pensions for income tax purposes in order to reduce the total amount of income taxes paid by both spouses. We have some scenarios listed there and the recommended approach.

We feel that pension splitting is consistent with a fiscal policy that is family based. The family is an important entity of Canadian society. Within it, there is much sharing of financial resources, tasks, and decision-making. According to family law, each spouse has rights on family assets and income.

There are precedents. Retirement pensions payable under the Canada and Quebec pension plans may be split for income tax purposes. A spouse may contribute to a spousal RRSP, which is a form of pension splitting, giving rise to reductions in a couple's total income taxes.

Pension splitting aims at improving the economic situation of seniors, ensuring them a better quality of life and maintaining their autonomy and independence. Recent changes to some fiscal rules have undermined the economic well-being of seniors: mandatory withdrawals from RRIFs, withdrawals of all outstanding RRSPs--which many of us contributed to under the old rules--by age 69 instead of 71, clawback of the old age security pension, etc.

Pension splitting would follow through section 15 of the Canadian Charter of Rights and Freedoms. The norm used to be that one of the spouses would be in the labour force while the other would stay home for child rearing and homemaking. Only one of the spouses was entitled to a pension. The individuals most affected by the present income tax system are senior women. Many women had chosen to be homemakers, while some have had to let go of jobs pursuant to discriminatory measures such as being forced to leave in case of pregnancy or marriage. When I started teaching, that was the norm. Thankfully, nowadays it is different. Women live longer than men, on average, and many will face difficult financial conditions resulting from those past practices.

Another group of people who I would like to point out really suffer from this kind of situation is armed forces personnel. In many cases, one spouse is in the services working and the other spouse moves from place to place and is either unable to gain any employment or, if they do gain employment, it is not at a good wage.

The cost is affordable. According to a recent study, allowing pension splitting to all senior couples would entail a reduction in government tax revenues that will be relatively modest in comparison to the current annual federal budget surpluses. It's not an escalating cost, because both spouses who are working now will receive pensions that are fairly close to the same, so there will be minimal difference.

Pension splitting is essentially a matter of fairness and equity for all taxpayers. The family, as opposed to the individual, should be the basis of the Canadian income tax system.

[Pierre Drouin, Executive Director, Canadian Association of Retired Teachers]

The recommendations on page 2 deal mainly with seniors. Recommendation 2 addresses tax measures that could be implemented to help seniors stay in their homes longer. Seniors want to live at home longer, and these tax measures could reduce the demand on the health care system. We are suggesting certain tax changes, including several to RRSPs and RRIFs.

There is currently no national organization that makes representations to government on the issues facing seniors. We are therefore proposing, in recommendations 3 and 4, that the government establish a consortium of seniors' organizations.

The idea would be to begin by holding a meeting to bring together representatives of seniors' organizations at the national and provincial levels to create a steering group that would speak on behalf of seniors.

We know that there is a very high demand for health care services. In recommendations 5, 6 and 7, although this is not really a tax measure that would be included in a budget, we propose that a provincial or federal committee deal with the whole issue of prescription drugs.

Thank you very much, sir.

[The Chair, Conservative, Brian Pallister]

Sir, you have a couple of seconds if you'd like to make a concluding statement.

C'est fini?

[Pierre Drouin]

Yes.

[The Chair, Conservative, Brian Pallister]

Merci, Monsieur.

We continue now with a representative from the University of Ottawa, Gilles Patry, president and vice-chancellor.

Welcome. You have five minutes.

[Gilles Patry, President and Vice-Chancellor, University of Ottawa]

Thank you, Mr. Chairman.

First of all, I'd like to thank you for the invitation to appear before the committee today. I'm pleased to be here on behalf of the University of Ottawa to talk to you about the role of universities in furthering the prosperity of Canada and Canadians.

To be successful, universities must pursue several missions at the same time: equipping individuals to work effectively in an increasingly complex and competitive world; developing more socially responsible citizens for local, national, and international communities; and acting as developers of advanced ideas and drivers of new applications, policies, and products that enhance governance, commerce, and culture. These are wide and important mandates that all universities must pursue in response to those we serve: the students, the parents, governments, businesses, non-profit organizations, and communities.

The University of Ottawa plays a unique role in Canada's development. Our location, both in the heart of the national capital and at the juncture of French and English Canada, our commitment to education in both official languages, our passion for knowledge and innovation, and our high-quality learning environment are defining characteristics. In fact, we often say that the University of Ottawa is a reflection, an observatory and a catalyst of the Canadian experience in all its complexity and diversity.

In the current knowledge-based economy, advanced research is critical to economic growth. Allow me to paraphrase my colleague, Chad Gaffield, newly appointed president of the Social Sciences and Humanities Research Council, when he said we live in complex and challenging times. Canada's future depends on our human assets: the students, researchers and collaborators whose critical insights are advancing knowledge in the social sciences and humanities. And I would add “in the sciences and in technology”.

In the face of an increasingly competitive international research environment, investments in this effort are crucial. The government recognized this leading to the last election, when it highlighted the essential need for increased promotion of basic and applied research to our economic well-being and how unacceptable it is that our national expenditures on research and development are below those of all G-8 countries. In fact, notwithstanding the important investments in recent years by the federal government in support of R and D, Canada continues to lag the OECD countries when it comes to the percentage of gross domestic expenditures in support of R and D.

To drive national efforts, it is important that the government lead the development of a clear, long-term, sustainable science and technology strategy for Canada in collaboration with all partners, including Canada's universities. In this regard, we encourage a strategy that takes an integrated view of the role universities play along with other partners, including government and businesses, and acknowledges the key areas of support for university-based research and development.

Those areas include ideas--funding of basic and applied research through our three granting councils; people--funding of researchers and graduate students, for example, through the Canada research chair program and the Canada graduate scholarship program; infrastructure--funding of state-of-the-art research facilities through the Canada Foundation for Innovation; and institutional support--maintenance of research infrastructure through the indirect costs program.

Universities are prepared to continue to play a central role in the creation of new knowledge and in facilitating the diffusion and adoption of new technologies which will push Canada forward economically.

At the University of Ottawa, this has meant increasing our overall research efforts across all disciplines and establishing key strategic areas of development and research, including health, e-society, Canada and the world, and molecular sciences. It has also meant becoming more efficient in moving ideas to market for the benefit of Canadians.

Mr. Chairman, earlier this month the University of Ottawa welcomed 34,000 students from every province and territory and more than 150 countries. They are pursuing their studies in over 300 programs across 10 faculties, and they do so with a research-intensive institution providing them with extensive academic and community engagement opportunities.

I would like to conclude by underlining three areas where particular attention is needed. The University of Ottawa is a member of the Consortium national de formation en santé, a federally-funded program for the training of health professionals (medical doctors, nurses, rehabilitation science specialists, etc.) in French minority settings. A network of 10 post-secondary institutions across Canada, the CNFS is a flagship program that is the pride of the Government of Canada, its sponsor Health Canada and its partner institutions.

The University of Ottawa—indeed all Canadian universities—is also attending to post-secondary educational needs for aboriginal Canadians. In addition to our programs in education and law, last year we worked closely with Health Canada in the development of a special program in medicine for aboriginal students. We invite the government to continue to work with universities and colleges in the development of a strategy to develop programs adapted to the needs of the aboriginal community.

[The Chair, Conservative, Brian Pallister]

Thank you, sir, for your presentation.

We continue now with the Canadian Chamber of Commerce. Nancy Hughes Anthony is here.

You have five minutes, Madam.

[Nancy Hughes Anthony, President and Chief Executive Officer, Canadian Chamber of Commerce]

Thank you very much, Mr. Chair, and thank you for the invitation to appear.

As you know, the Canadian Chamber of Commerce represents nearly 170,000 members of all sizes, representing all sectors and regions in the country.

The committee has chosen an extremely pertinent theme--Canada's place in a competitive world. Governments, and I would say past governments and current governments, have done a lot to improve the situation on fiscal and other fronts. That said, there's more to do, and we are falling behind many of our competitors and must take swift action. I'm particularly focused here on productivity.

Productivity, as you know, is not just some line on a business ledger. It means Canadians having good paying jobs, a high standard of living, and the kind of fiscal freedom that we need to afford the sorts of social programs that Canadians enjoy. But our productivity record has not been sterling. We are at about 74% of that of the U.S. and we've fallen to 17th place in the OECD ratings in productivity.

So what do we need to do? You have the chamber's brief in front of you. We have a series of recommendations in the tax area, and those are designed to improve the incentive for business and entrepreneurs to invest in Canada. They're also designed to focus on personal income tax as well as corporate income tax. Obviously, the mix of tax burden and regulatory burden is the magic ingredient that makes countries competitive, and on this, I think Canada has a lot to do. We're still concerned about the effect of tax rates on capital, in which area Canada is extremely high.

Also, as was mentioned by colleagues around this table, the regulatory environment is one area I would signal to the committee that needs improvement. I would also note that Canada's scientific research and experimental development program needs further enhancement. That is one I would draw to your attention in our brief because of the need to enhance R and D, as others have said around this table.

Second, the development of human capital is absolutely essential. In our opinion, investment in post-secondary education is an important asset. Attracting more immigrants with qualifications that we need and taking advantage of those qualifications is also a key element of the strategy.

Third, investing in high-quality infrastructure, particularly border infrastructure and communications networks, is very important for tracking foreign investment.

Just to wrap up, clearly, Mr. Chair, we need to create the fiscal room to make this all possible. That was one of the questions of the committee. That needs to be done by controlling program spending, making spending more efficient, and reducing our level of debt. I would certainly say that the chamber was very appreciative of the announcement yesterday of the amount of debt being paid down from the last fiscal year. That was a welcome announcement.

We also note that we would advocate a cap, a limit, on the growth of program spending of approximately the equivalent of anticipated population growth plus inflation, to a maximum of 3% a year, within which the government should control its spending. So once again, it's reducing the debt, controlling spending, smart taxation policies.

We hope that you will look at our brief. I'd be very happy to reply to any questions the committee members might have. Merci beaucoup.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation.

Thank you all for your fine presentations.

We move to questions now, and we'll begin with Mr. McKay for six minutes.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you again for your presentation.

I want to turn to Mr. Paton's presentation, particularly his appendix 1. Under the category of “Government”, most of the competitive comparisons are either positive or neutral, and most of the trends are in the right direction. So it seems to me that if government has kind of done its job, which speaks to what you get out of 13 years of good government....

[An hon. member]

You're not going to ask him to comment on that?