Finance Committee on Sept. 28th, 2006

[The Vice-Chair, Liberal, Massimo Pacetti]

Okay, that's fine. We didn't really have your presentation because it was submitted late, so we didn't have a chance to translate it. I just want to put that on the record.

Thanks again to all the witnesses for taking time out of your day. We're going to suspend and start again in two or three minutes.

[The Vice-Chair, Liberal, Massimo Pacetti]

Let us begin.

We are meeting pursuant to Standing Order 83.1, pre-budget consultations, 2006.

We have the Canadian Institutes of Health Research, Mr. Bernstein, for five minutes, please.

Thank you.

[Dr. Alan Bernstein, President, Canadian Institutes of Health Research]

Thank you for the opportunity to appear before you today.

Thank you for giving me the opportunity to speak today.

During my five minutes I would like to leave you with two key messages. First, if Canada is to build a globally competitive, productive economy, we need to build new partnerships: partnerships between government and the private sector, partnerships between academia and industry, and new partnerships between researchers and Canadians.

Second, if Canada is to reduce the escalating costs of health care and at the same time build a healthier, more productive society, I believe there is only one way to do this: through research and new partnerships between government and Canadians.

Let me give you an example of what I'm talking about.

Allow me to give you a few examples to illustrate what I am saying.

The first concerns building a globally competitive economy for the 21st century. CIHR has funded the research of Dr. Terry Snutch of the University of British Columbia for the past eleven years. Dr. Snutch is interested in how the electrical activity in our brain works. This is fundamental research that's long-term, but key, not just to understanding our brain but also to understanding Parkinson's disease.

Yesterday at the National Arts Centre we had a round table on mental health and the arts, which Diane Ablonczy attended, that included Parkinson's disease, chronic pain, and other neurological conditions.

But the work is so long-term, so fundamental, and so risky that industry would never fund such research. Dr. Snutch succeeded in identifying one of the first genes that acts as a gate or switch for the electrical activity of our brain. With that discovery, he set up a small spinoff company, called Neuromed, with a business plan to find new drugs that will alter the activity of this electrical gate.

The research that CIHR funded for the last eleven years was handed off to the private sector, which was prepared to invest between $5 million and $10 million in Neuromed.

But the story doesn't stop there. The research at Neuromed has gone so well that in June, Merck announced that it would invest close to half a billion dollars in Neuromed to develop new drugs for pain, Parkinson's disease, Alzheimer's disease, and other neurological conditions. That investment—the largest in Canadian biotech history—is an example of the partnership through CIHR between the federal government and industry.

Governments fund the long-term fundamental research that industry would never support. Then industry comes in and starts to fund the next steps of the project.

It is worth noting that according to the latest data from Statistics Canada, 19%—or $900 million a year—of all private sector R and D in Canada comes from the biotech sector. That percentage and dollar amount are larger than R and D in the auto sector and also in the aerospace sector. This is a win-win for Canada: jobs and the promise of new treatments against serious diseases.

Now I'll go to my second point.

I will now address my second point.

On this second point, which is lowering or stopping the escalation of health care costs, increasing productivity, and building new kinds of partnerships, let me give you two examples of what we are doing.

As noted in Senators Kirby and Keon's report on mental health, mental disability accounts for between 30% to 40% of disability claims in the workplace, translating into $33 billion lost in annual productivity in Canada. To address this issue, our Institute of Neurosciences, Mental Health and Addiction and its partners have created an initiative on mental health and the workplace. New health research teams from right across Canada are now working with workplace organizations to create a knowledge base and to develop policy and interventions to improve the quality of life and reduce mental health problems in the workplace.

Our partners in this initiative are not the usual partners for a research funder like the previous MRC. They include the Canadian Labour Congress, the Institut de recherche Robert-Sauvé en santé et sécurité au travail, and the Ontario Workplace Safety and Insurance Board--new initiatives, new types of research teams, new partners.

Here is another example. More than two million Canadians have diabetes. By the end of the decade, this number is expected to rise to three million. A person with diabetes incurs medical costs that are two to three times higher than that of a person without diabetes. Last week CIHR-funded researchers Drs. Hertzel Gerstein and Salim Yusuf from McMaster University announced that their international clinical trial found a drug that reduced the chances of getting diabetes by 60%. That result offers hope for new strategies for preventing or delaying the onset of diabetes and its devastating complications. This trial was funded by three drug companies in partnership with CIHR. In today's Globe and Mail there's an article on Type I diabetes, or Juvenile diabetes, and the pioneering work of James Shapiro and Ray Rajotte, again funded in partnership by CIHR, the Juvenile Diabetes Research Foundation, and industry.

To conclude, the examples l have given you are meant to illustrate what CIHR stands for: excellence. Only the top 20% to 25% of all grants that come to us can be funded. We're problem-based and strategic. We partner with the provinces. We partner with industry. We partner directly with Canadians. We partner internationally, which is a perfect example of a proper role for the federal government in building a more productive, healthier Canada.

Everything we know about knowledge-based economies, global competitiveness, productivity, and health tells us that investment in research, particularly health research, is one of the wisest, efficient, and most prudent investments any society can make.

Other countries recognize this too, from the United States to France, Germany, China, Japan, South Korea, and Australia. They're not standing still. Their investments in health research over the past five years and planned investments for the next years all equal or mostly surpass Canada's.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Bernstein.

The next group I have is the Canadian Bankers Association.

Mr. Vanneste, good morning. You have five minutes.

[Luc Vanneste, President, Financial Affairs Committee, Executive Vice-President and Chief Financial Officer, Bank of Nova Scotia , Canadian Bankers Association]

Good morning.

My name is Luc Vanneste. I'm the executive vice-president and chief financial officer of the Bank of Nova Scotia and the current chair of the CBA's financial affairs committee. I would like to thank the Standing Committee on Finance for providing the Canadian Bankers Association with the opportunity to appear today as part of the pre-budget consultation process.

We support the government's focus on competitiveness for the upcoming budget. Like the government, the CBA believes that additional steps need to be taken to ensure the competitiveness of Canadian citizens and businesses and the Canadian economy in our increasingly competitive world.

First, we would like to commend the government for its May 2006 budget and the positive tax measures. The elimination of the federal capital tax and the corporate surtax and the legislated schedule of reductions in corporate income tax rates demonstrate the government's commitment to establishing a more competitive business environment in Canada.

With respect to the 2007 budget, my brief comments here today underscore the themes outlined in our written submission. My main message is that Canada needs to continue to improve the competitiveness of its tax regime. Good is not good enough. Given the nature and relative size of Canadian markets, combined federal and provincial tax rates need to be comparable, if not lower, than other jurisdictions in order to be competitive.

Lower taxes stimulate economic growth by increasing investment, including employment and productivity, which will strengthen the country's tax base. A strong tax base and a strong economy will ensure a sustainable source of revenue to continue to finance those programs that are so important to Canadians.

We encourage the government to continue to make Canada a great country in which to do business. In this regard, we recommend the following five measures.

First, accelerate the legislated reductions in the federal corporate income tax rate from 21% to 19%, the elimination of the corporate surtax, and introduce further cuts to the federal corporate income tax rate.

Secondly, we recommend that the federal government show leadership by encouraging the provinces to eliminate all capital taxes.

Thirdly, we encourage the government to expedite treaty negotiations to eliminate withholding taxes on interest payments between Canada and the U.S. Eliminating withholding taxes would result in lower interest rates, greater access to borrowed funds, and a reduced cost of capital, improving the efficiency and liquidity of Canadian capital markets.

Fourthly, we recommend that the government proceed with effective corporate dividend tax reforms at the earliest opportunity so as to increase investment in shares of corporations and create a more level playing field in the tax treatment of income trusts and corporate dividend income.

Finally, we encourage the government to proceed with the proposed legislative reforms to the part VI capital tax and consider further adjustments to the part VI tax rate at an appropriate time.

In addition to our tax recommendations, we encourage the government to continue its work with the provinces and territories to create a common securities regulator, with a view to improving the investment environment and the strength of the Canadian economy.

We believe one of the best ways to increase Canada's competitiveness is to take further steps to improve the country's tax regime. The economic benefits of moving in this direction--in particular, strengthening the Canadian tax base--will provide the necessary foundation for a prosperous Canada for many years to come.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Vanneste.

The next group I have is l'Institut canadien des actuaires.

Mr. Hale, you have the floor.

[Michael Hale, Chair, Member Services Council, Canadian Institute of Actuaries]

Mr. Chairman and members of the committee, on behalf of the Canadian Institute of Actuaries, I would like to thank you for the opportunity of appearing and providing input into this year's pre-budget hearings. It's actually the first time we as an institute have done that.

My name is Michael Hale, and I'm chair of the institute's member services council. With me today is Claude Ferguson, chair of the institute's health care committee and to whom I'll probably refer most of your questions in the health care field.

Your committee invited feedback on a number of key questions. Our input is focused on two of them: first, what are the actions necessary to ensure that our citizens are healthy; and secondly, what should be done to ensure that the government is able to afford the spending measures needed to ensure that we can prosper in the world of the future?

Before speaking to our recommendations, I would like to provide some context to the work we undertake as actuaries. Actuaries are business professionals who are trained to analyze the financial consequences of risk. We use specialized mathematics and financial theory, in combination with analytical skills and business knowledge, to deal with uncertain future events. Much of our work involves the design and pricing of insurance, pension, health, and other benefit programs, and the modelling, measurement, and management of financial risk.

Canada's actuaries have a history of contributing to key public policy issues. For example, our analysis was instrumental in helping to put the Canada Pension Plan on the path to long-term financial stability.

We're here today to talk about making similar contributions in the area of medicare and post-retirement income security. Our expertise in assessing long-term defined benefit programs is applicable to both areas.

In its broadest form, medicare is essentially a public defined benefit plan under which specific health care benefits are promised to Canadians over their lifetime. Defined benefit pension plans similarly promise specific financial benefits to Canadians after their retirement. Both are under considerable pressure today.

Our medicare system faces serious challenges from both a long-term sustainability and an access perspective. Cost increases test the financial resources of individuals, employers, and governments, and access issues are top of mind with Canadians. Governments are working hard to address these daunting challenges, but we believe it is important that this work should be supported by analysis in two critical areas: the financial sustainability of our health care system and the financial implications of actions taken to address health care needs.

Actuaries currently carry out this type of analysis in the context of the Canada Pension Plan. We recommend that this model be adopted in the health care arena and that an office of the chief medicare actuary be created. Overall, this entity would be charged with the responsibility of reporting annually on the financial status of medicare in Canada. It would also provide more transparent means to assess policy options in the medicare programs.

Moving to the issue of pensions, the CIA has long believed that a healthy retirement income system should include both defined benefit and defined contribution pension plans. The future of one of these is at risk. Committee members have no doubt seen news reports that a growing number of companies are converting their defined benefit plans to defined contribution plans.

From a public policy perspective, this is unfortunate given that defined benefit plans have the advantage of providing some certainty as to the benefits that will be provided to plan members. A move to defined contribution plans creates more uncertainty for individuals and shifts much of the risk to plan members.

There are a number of issues that have contributed to this shift away from defined benefit pension plans. For example, court decisions and regulatory changes around surplus ownership have created unanticipated costs and uncertainties for pension plan sponsors. The decline in long-term interest rates and equity values has increased pension liabilities and led to solvency deficits for a number of plans. Tax rules that limit the buildup of surplus in pension plans have been a contributing factor.

To help ensure the future of defined benefit pension plans as a viable alternative for employers in Canada, the Canadian Institute of Actuaries advocates that pensions be moved firmly onto the national agenda. To facilitate this, we recommend that a mechanism be put in place that allows pension issues to be discussed at a national ministerial level.

A national forum should be created to bring forward initiatives such as new tax rules that permit the accumulation of appropriate levels of surplus, legislation clarifying the rights of plan sponsors and members to access surplus funds, and the harmonization of the regulation and supervision of pensions plans.

We hope this brief overview of the issues discussed in our submission and the recommendations we put forward will be helpful in your deliberations.

We appreciate the opportunity to provide input and would be pleased to answer any questions.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Hale.

The Road and Infrastructure Program of Canada, Mr. Morrison.

[Jeff Morrison, Executive Director, Road and Infrastructure Program of Canada (The)]

Thank you, Mr. Chairman, and thanks to the committee for inviting myself and TRIP here today.

The Road and Infrastructure Program of Canada, or TRIP Canada, is a federation of eleven provincial road building and heavy construction associations from across the country, representing over 2,000 member companies. The many things our members build include Canada's core and large strategic infrastructure.

Mr. Chair, I think it's only right to start off by acknowledging the great strides that the federal government has made over the past two years in infrastructure investment.

About this time last year, I sat before this committee urging the government to continue reinvesting in Canada's physical infrastructure, with a particular emphasis on and need for a national highway program.

In response, in Budget 2006, the government introduced a $2.4 billion highway and infrastructure fund and announced additional investments of $2.2 billion in the municipal rural infrastructure fund and $2 billion in the Canada strategic infrastructure fund.

Of course, this was on top of the $5 billion in gas tax revenues transferred to municipalities for municipal infrastructure that was announced by the previous government in Budget 2005.

These announcements, Mr. Chair, are very good news for Canadians, and I think the past two governments deserve kudos for these investments, particularly the highway program, which was long overdue.

In fact, Mr. Chair, on that particular announcement, we're already starting to see results. Three days ago, the Government of Manitoba announced that over the next two years their highway program will amount to $300 million, which is a record level of investment and clearly a result of new federal dollars.

However, these numbers are misleading. In general, the funds are spread out over five years and, consequently, the infrastructure networks risk deteriorating even more over the longer-term period. TRIP Canada is asking that these funds be disbursed more quickly, given the sample we have presented in our brief.

Further, in order to provide stability and guaranteed long-term funding to other levels of government, we are asking that a minimum funding threshold be established for each of the existing infrastructure programs.

In the same vein, the provinces, municipalities and our members have for many years asked the federal government for predictable long-term funding. Consequently, we are asking the federal government to ensure that infrastructure programs guarantee long-term funding to the other levels of government. It goes without saying that the provinces and the municipalities must also play a role in this area. They must be able to present long-term investment plans indicating how the money they receive from the federal government will be spent on infrastructure.

It is almost impossible for construction industries to plan for their labour needs and investment decisions for a given year, if they do not have a better idea of which infrastructure project the provinces and municipalities intend to invest in. If these companies could refer to longer-term plans, they would be in a better position to make enlightened business decisions.

The last item I wish to raise, Mr. Chair, is the issue of a commitment to the principle of non-preferential procurement. TRIP Canada strongly believes that all Canadians have the right to bid on infrastructure projects involving federal dollars. However, there have been some recent examples where orders of government have used infrastructure dollars to reward political allies.

As I think the chair of this committee knows very well, the best example was in a recent labour market agreement involving the Manitoba floodway project, where there was a clear union-friendly policy surrounding that project—which, I might add, was a project involving significant federal dollars.

Now let me be clear that our concern with these policies is not with unions or any other group. Our concern is that preferential procurement policies add significant costs to a project and are inherently unfair. So we are asking the federal government to include in its agreements with the provinces a clause guaranteeing that provinces will not use preferential procurement policies.

Mr. Chair, time is short today, so I'll conclude my remarks there.

I invite committee members to browse through our brief for other recommendations. TRIP Canada is confident that the recommendations contained in our brief build on the very commendable progress made by the federal government over the past two years.

Thank you, Mr. Chairman.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Morrison.

Ms. Aziz from the Canadian Federation of Students' national office.

[Amanda Aziz, Canadian Federation of Students - National Office]

Good morning. My name is Amanda, and I'm the national chairperson of the Canadian Federation of Students.

I want to start by thanking the committee for this opportunity to present to you on behalf of more than half a million students from over eighty student unions across the country.

I have only a few minutes today, so I'd like to focus my remarks on a few key areas. You all have a translated version of our brief, and naturally I will be happy to take questions on issues that I don't have time to address during the next few minutes.

Canadians have long seen post-secondary education as a vehicle for social opportunity. The expansion of access to Canadian universities and colleges was a direct result of substantial and sustained public investment beginning in the 1950s. Prior to the mid-1950s, access to education in Canada was defined almost exclusively by gender and income. That changed because the federal government made access to education a fiscal priority.

However, many Canadians can't help but feel that we're sliding backwards. Tuition fees and student debt are now at the highest they have ever been. Statistics Canada reports that students from families with incomes in the lowest quartile are half as likely to participate in university as those students from families with top quartile earnings.

Upfront financial barriers, especially tuition fees, have created a profound participation gap among Canadian families. If Canada is going to reduce economic inequalities among regions and individuals, as well as increase its competitiveness internationally, the Government of Canada must prioritize affordable post-secondary education. It must support those provinces with tuition fee freezes and encourage such initiatives nationwide with the necessary fiscal commitments.

We recommend that the federal government, in cooperation with the provinces, create a dedicated post-secondary cash transfer payment for the purpose of reducing tuition fees and improving equality at universities and colleges across Canada. This transfer formed part of the Conservative platform during the last federal election. However, there is no commitment to increasing funding.

We recommend that the federal government return spending levels at least to 1993 levels, in real dollars. By most estimates, transfers currently fall short of 1993 levels by at least 20%, on a per capita basis.

In addition, this transfer should be guided by legislation or other binding forms of agreement that would establish conditions for the transfers and commit the provinces to upholding principles similar to those of the Canada Health Act.

In 1998, the federal government made an important commitment to reducing student debt and improving access to post-secondary education when it introduced the Millennium Scholarship Foundation. With $2.5 billion, it should have gone a long way to achieving those goals, but regrettably, the arm's-length foundation model of student financial assistance has proven to be a total failure.

Most provinces, as many of the committee members may know, simply reduced their own financial commitments with Millennium Scholarship Foundation money, meaning that students were not better off. This fact alone is reason enough for us to not renew the foundation.

However, the foundation's organizational culture confirms that it must not receive another cent of public funding. Its administrative costs have increased over 500% in the last six years, and literally millions of dollars have been funnelled to the Educational Policy Institute, an American outfit run by two former employees of the foundation. Many of these contracts are being awarded without competition. In our opinion, the foundation is a case study of unaccountability and wasted Canadian taxpayers' dollars.

This morning you heard a Millennium Foundation official make a passionate case for student financial assistance in the form of grants. However, we urge you not to be fooled. Students need non-repayable grants; this is not the issue. The issue is how the Government of Canada administers grants, and the record is clear. The foundation has failed in doing so, and there is a more effective way.

Therefore, we recommend that the federal government wind down the Millennium Scholarship Foundation and fund a national system of needs-based grants. Systems are already in place through HRSD to administer grants through an accountable means, ensuring students actually get the assistance they need.

I had intended on using my last sixty seconds to talk about tax expenditures, but another issue has developed recently that warrants this committee's close attention. In the round of service cutbacks announced earlier this week, the Treasury Board saw fit to make a 50% cut in funding for the summer career placement program. Not only do students with no prior career experience desperately need this program to gain work experience in their field, but, more importantly, they need this program to pay the bills.

As I stated earlier, tuition fees are higher today than at any point in Canadian history, even when accounting for inflation. Cutting a summer employment program for students will guarantee that many of the students with the greatest financial need will have to take out more loans and go deeper into debt. So I hope this committee can reverse the Treasury Board's job reduction strategy.

In closing, I want to emphasize the importance of higher education in increasing the standard of living and the economic health of our country.

Again, I want to thank you for this opportunity, and I look forward to your questions and the discussions.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Ms. Aziz.

Mr. Mark Dale from the Canadian Association for Graduate Studies, you have five minutes, please.

[Mark Dale, Dean of Graduate Studies, University of Alberta, Canadian Association for Graduate Studies]

Thank you.

I am Mark Dale, the dean of the Faculty of Graduate Studies and Research at the University of Alberta, and the president of the Canadian Association for Graduate Studies, as mentioned.

Thank you for this opportunity.

It is broadly acknowledged that programs of higher education research are important to the future of this country. We have heard from our colleague from CIHR already today. What I would like to emphasize to this group is that the institutions offering graduate programs in this country exist in a very competitive environment. We compete in the funding of graduate students and their research, in providing the best quality of experience in those programs, and to attract the best young researchers from around the world to our programs.

So our recommendations, which you have in your brief, are: first, the creation of a dedicated post-secondary education transfer system to the provinces; and second, to maintain and increase levels of funding for the federal research granting councils.

In fact, in our colleague's presentation, he mentioned Dr. Shapiro and his research on diabetes. He did much of his groundbreaking research while he was a graduate student.

Third, we would like to suggest promoting mobility for our graduate students. This enhances their experience, and, as I said, we are in competition with other parts of the world. In Europe, for example, there is a well-established program for graduate student mobility; in fact, it is expected. It helps them build their career, build networks, and gain experience.

Fourth, we suggest creating funding to attract the best international students to graduate programs in Canada. That advantage is not only for international students but for our Canadian students here at home. It advantages our programs by bringing the best brains to them.

Our fifth recommendation is ample funding for Statistics Canada's survey of earned doctorates. The argument there is fairly simple and straightforward: the best statistics enable us to make the best decisions on our futures.

Thank you very much.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Dale.

We are going to do five-minute rounds. Before we begin, I'm going to give Mr. Paquette

two minutes to table his motion.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Chairman, I simply wanted to inform committee members that I am tabling a motion on expenses related to the mission in Afghanistan. You can read it. I do not want to enter into a debate on the subject, but I would like us to agree that the motion will be discussed at our first committee meeting once we come back from out west.

[The Vice-Chair, Liberal, Massimo Pacetti]

I will accept your motion. However, I will leave the final decision to the committee chairman, because I know that other meetings are already slotted for pre-budget consultations.

Okay. Let us restart with Mr. McCallum, and then Mr. Paquette and Mr. Del Mastro for five-minute rounds.

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

Thank you, Mr. Chair, and thank you to all the witnesses.

I'll let my academic background trump my banking background and focus on issues of innovation, access, and research. I am very proud of what I think is one of the major Chrétien or Martin legacies, in terms of a huge increase in funding for innovation, universities, research, students, etc.

I am disturbed that this government is not following through on that. I don't expect you to necessarily support it, but I think the facts bear it out. I do think it's a major issue.

I will begin with Dr. Bernstein. I agree with virtually everything you said, except the point about necessarily favouring even more health research over other kinds of research.

If we were back in government, I think we should continue with the Martin-Chrétien legacy of innovation and so on. But it seems to me that the next stage might be to do more in the area of commercialization. Academics have a tendency to focus on pure research, and that's great, but we also want to show benefits in a new economy by bringing those things to market.

My question to you is, how should we restructure, innovate, or create new programs to focus—if we do want to focus—in addition to what we've always done and have a new emphasis on commercialization?

[Dr. Alan Bernstein]

That's a very good question. It's a complicated area, as you know, Mr. McCallum.

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

Sorry, please answer in one minute at the most, because I have another question and I have only five minutes.

[Dr. Alan Bernstein]

Okay. I'll talk about what CIHR is doing in this area, to illustrate a point.

We have thought hard about what the challenges are to commercialization and what our role as a federal agency is in that area, and we started a number of programs designed to deal with huge gaps in the commercialization pipeline.

The first gap is between funding academic research and where, for example, venture capital is prepared to invest. It's called the valley of death. It's true in Canada and it's true worldwide. Venture capitalists have moved to the right in terms of when they're prepared to invest.

So we've started a new program called a proof of principle program, where we've taken research that we have funded, academic fundamental research, and we've said, we'll give you more dedicated funding to enhance the value of that discovery for further commercialization.

We've also started a son of proof of principle, or a son of POP, where we've said, we'll give you another round of funding if you come in with a private sector partner. We'll put a dollar in for every two or more dollars that the private sector partner puts in.

That's been a hugely successful new program, and I can give you lots of anecdotes and stories on this.

A second program goes back to your business background, Mr. McCallum. You need not just dollars in venture capital, you also need knowledgeable dollars, dollars that can say, this is a good risk, this is not a good risk, this is a good scientist to invest in, this is not a good scientist to invest in. We have a dearth of those sorts of people in this country.

So we started a new program called science to business. This is a partnership with Canada's business schools. What we've said is we want to take recent graduates from science, PhDs in science, who will want to pursue a career in business, whether it's venture capital or running an entrepreneurial company, etc., and we've said, we'll put you through an MBA program at a business school. Now the applicants here, to us, are not the students, they're the business schools.

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

Thank you. I'm afraid I have to cut you off. I'd like to talk to you privately about these things later, but I don't have much time and I have one other question.

The other thing that's really important to me, and I think to our party, is access. It's hard to distinguish between the diametrically opposed cases made about the foundation by our two recent witnesses. I'll ask a simple question to Ms. Aziz and, if there's time, to Messrs. Dale and Bernstein.

There's limited money. Let's suppose you had a choice of either a dedicated transfer to provinces or direct federal funding, not both. Bear in mind that federal governments have trouble getting provinces to do what we want them to do. So don't assume that the dedicated transfer would be watertight in terms of doing what you want to do or what we want to do in terms of scholarships or support for students, because provinces have their own ideas and we have limited control over them, as we see in health care and other areas.

Given that reality, which would you prefer, and if you prefer the federal funding, what kind of federal funding?

Can the millennium group be fixed? You say abolish them. Maybe they can be fixed.

[Amanda Aziz]

It's funny. I knew this question was going to be asked. On every finance committee I've ever appeared before there's always this question between funding or access, reduced fees. Sadly, I'm going to tell you that in fact there cannot be a choice between the two.

Federal funding is necessary to improve the quality of our institutions. At the same time, reducing those upfront barriers or providing grants and reducing upfront tuition fees is necessary to ensure that we have access. So there'd be really no point to have high-quality institutions that are inaccessible to most Canadians or low-quality--

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

I'm talking about direct federal funding for access.

[Amanda Aziz]

Sorry, direct federal funding for access or...?

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

For students, to help students have access, versus the transfers to provinces for the same purpose.