Finance Committee on Sept. 28th, 2006

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

—the cupboard is bare.

So the question I have is—and I'm going to start with Mr. Dale, and then Amanda Aziz, and go down—do you think it makes the most economic sense to take whatever surplus you've got and put it all against the debt, even if there are no programs left to invest in, as Mr. Vanneste is suggesting? Is there another way to ensure that some of the needs you're talking about are met, so we're looking after not only the fiscal debt but also the infrastructure debt, the human debt, and the social debt?

So, Mr. Dale and Amanda Aziz, could you start?

[Mark Dale]

I'm not an economist, but I do believe in investing in the future.

[Rick Dykstra, Conservative, St. Catharines, ON]

Hear, hear!

[Mark Dale]

I think our young people, our young researchers, and our research and our graduate programs and our graduate students are the future, and I think we should invest in them somehow.

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

Thank you.

[Amanda Aziz]

I would reiterate what Mr. Dale says. We've certainly had a long-time policy of wanting an increase in investment from the federal government for post-secondary education; certainly we've had that for years, since the big cuts back in the mid-nineties. So to be short, we are obviously in favour of an increase in investment.

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

And, Mr. Morrison, specifically to you, we have in this country a $60 billion infrastructure debt. Shouldn't some of the surplus money go towards that debt, as well as the fiscal debt?

[Jeff Morrison]

Ms. Wasylycia-Leis, you asked if there was another way, and in fact there was another way in Budget 2006. In fact, it's a bit of a misperception that all of that surplus went to the debt. As you may recall, in Budget 2006 there were two announcements, first of all, that on the public transit infrastructure fund—which is not the name, but that's essentially what it was—$900 million would be applied to that fund if there were a $2 billion—

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

That's thanks to the NDP budget, don't forget.

[Jeff Morrison]

Fair enough.

It was contingent on a $2 billion surplus. Correct me if I'm wrong, but I believe there was an affordable housing infrastructure fund, again contingent on a $2 billion surplus. That, frankly, is not a bad way to do it, because it still ensures that you have fiscal solvency, yet at the same time it takes money from what would otherwise go to the debt and pays for some of the key priorities of Canadians, especially—

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

But that's like a drop in the bucket for the size of the infrastructure debt. So I guess I was wondering if you felt there should have been a better split on the $13 billion.

Let me save a question for Mr. Vanneste.

But Mr. Hale, did you want to answer this one at all?

[Michael Hale]

Well, I'm not an economist, so I don't know how best.... I think government is always balancing the needs of current programs and their costs and debt reduction. From a risk management perspective, though, my understanding is that the federal debt is around $600 billion. The debt is very short in term, and we're at a point now where interest rates are at historic lows. So if the surplus was $13 billion...let's make it simple and say it was $12 billion. We'd only need a 2% increase in interest rates flowing through the system to eliminate the budget surplus. I think it's always going to be a balancing act, and I don't think we can ignore some of the advantages of paying down the debt.

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

And I'm not suggesting that.

But what if we do such damage to the universities or to the health care system--and that's my question to you, from the perspective of the CIHR--that even when you've paid down the debt, there's not much left to invest? You've done yourselves a huge disservice.

[Dr. Alan Bernstein]

My answer would be to look at what's happening internationally. I've pointed out what other countries are doing, but let me just cite one example, the American competitiveness initiative. It's an initiative of President Bush's. In it they talk about a number of things, but they primarily stress the importance of investing in science, of reinvesting in the National Science Foundation, in the NIH, in graduate student training. How else will the United States compete with the Far East and with Europe?

So I think that's an interesting lesson, perhaps, as we go about looking at what governments have to do and the tough decisions to prioritize that.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Bernstein.

Thank you, Ms. Wasylycia-Leis.

Mr. Savage, Mr. St-Cyr, Ms. Ablonczy.

Mr. Savage.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Chair.

Ms. Aziz, does the federation have a position on what's happened with the C-48 moneys?

[Amanda Aziz]

Yes, absolutely. We were very disappointed to see that the money didn't come through in the 2006 budget with regard to the $1.5 billion committed to improving access at our institutions. Certainly we've raised that in previous contexts. I know there was new money put into infrastructure, certainly in the 2006 budget, which was welcome. There is obviously deferred maintenance at institutions across the country. But it's our position that the infrastructure funding, though welcome, does not uphold the spirit of the C-48 money, which was to improve access to post-secondary institutions.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Okay, because I think a lot of people were caught by surprise, not the least of which is Judy's boss, Mr. Layton, in the House of Commons last spring. I asked him about Bill C-48 and he said the $1.5 billion will go to students. Clearly that wasn't the case.

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

You didn't act on it. That left it to the Conservatives. What did you think was going to happen?

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Could we have some order, Mr. Chair, please?

As you know, we put $2.5 billion for direct student assistance in the economic update, which the NDP decided not to support. But we're not here for debate; we're here for questions.

I'm a big fan of the federation. As you probably know, I've travelled Canada. I've met with CFS students across the nation. I agree on most things. I've been “Boyko-ed” occasionally--which is similar to being ambushed--on some issues. I'm not sure I agree with you on ICLRs, income-contingent loans. We'll discuss that further. And I'm not sure about the millennium fund.

But I do want to get back to this issue. You have something in your brief titled “Helping Those Who Need Help the Least”, which I think was the title of the 2006 budget document when it was presented in the House--or it should have been. I want to ask you to go back to Mr. McCallum's question.

The federal transfers for post-secondary education have gone down, but the federal contribution to post-secondary has stayed the same at 25%. They're different mechanisms. If we go to a dedicated transfer, which I support, and if you put more money in to go back strictly on the transfer to, say, late 1980, early 1990 levels, how do you also give direct assistance to students? Is it not really a choice between direct assistance to students or giving it to the province in the hope that it might trickle down to students?

[Amanda Aziz]

Your question refers to the part of our brief that talks about tax credits for students, and I wouldn't dispute the fact that money in the system has stayed consistent, but it's being allocated in different ways--new programs and new means by which students are to gain assistance. Sadly, tax credits and a number of other programs haven't had the effect they were meant to have. In terms of assisting students, many students do not benefit from things like tax credits; many students do not benefit from interest relief. Statistics Canada came out with a study a couple of weeks ago that showed that half of those who are eligible aren't using interest relief.

But to get to your question with regard to a choice, it's not our position that we put all the money into federal transfers, that those go to the universities and we do nothing on the access side. There's a very easy way to provide access and assistance to students, and that's through upfront grants. So it's not your back-end measures like tax credits or interest relief; it's through reducing the upfront costs by regulating tuition fees--the easiest thing to regulate with regard to costs for students--and by providing low-income grants.

In the 2004 budget, a new low-income grant was introduced, which to us signalled that there was an acknowledgement that the Millennium Scholarship Foundation wasn't doing what it was supposed to do. That grant program can be expanded to help more low-income Canadians.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you very much. I agree with everything you've just said.

I want to move quickly to CIHR.

Dr. Bernstein, this is one of the singular successes in Canada in the last decade. Having been involved in a very minor way through my involvement in the Heart and Stroke Foundation with the old MRC, I could see how funding for research was really at very low levels in Canada. I love what the CIHR does in terms of leveraging funds; I love what it does in terms of expanding beyond basic biomedical and clinical...into population health studies to get at the incidence of chronic disease, social determinants. Renée Lyons and Judith Guernsey have funded things.

That brings me to the next aspect, which is the regional aspect. We've actually gone into regions of Canada and specifically looked at health needs. In Atlantic Canada they tend to be trying to get at the incidence of chronic disease.

I just want to make sure I understand what your ask is. In slide number 16, is this what you're asking for, funding of $740 million over three years starting in 2007-08? Is that your ask at the federal level?

[Dr. Alan Bernstein]

We have always had very ambitious plans. I think that is in line with international levels and what the country is capable of, and what we can return back to the country in terms of a good investment, yes.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Savage.

Monsieur St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you, Mr. Chairman.

My questions are for Ms. Aziz.

Several witnesses, including representatives from the education sector, some of whom are from Quebec, have come before the committee to ask for an increase in funding for a Canada education transfer. Most have argued for a return to 1995 levels, adjusted to take into consideration inflation and the increase in the student population. This would mean an increase in federal transfers of $4.9 million per year.

Would you support that figure?