The data in the slide that you will receive raises questions about whether Canadians are receiving value for their health dollars.
Prior to announcing any health care funding, the federal government should work with the provinces to ensure that meaningful reform of the Canadian health care system is undertaken, in part guided by the more successful health care models in some European countries. To the extent changes are needed to the Canada Health Act to implement these reforms, the changes should be made.
Turning to the skills aspect of the question, it's very topical here in British Columbia, where we are facing a growing shortage of skilled workers. The board recommends that the federal and provincial governments introduce tax credits to encourage employer-provided training; take actions to ensure that the skills of immigrants are not underutilized; and phase out the seasonal component of the EI program, which roots Canadians in areas of high unemployment.
Turning to the second question, you asked, what federal tax and/or program spending measures should be implemented to ensure that our businesses are competitive?
As recently reported, Canada's tax rates on business investment are the eighth highest of 81 developed and developing nations. In the slide package that will be circulated, you will see that Canada's income taxes, as a percentage of GDP, are the highest of G7 nations. This is a concern because Canada has very high taxation levels in the areas that discourage working and investing, and therefore hurt the competitiveness of Canadian businesses. Canada should reduce taxes to encourage working and investing.
The third question you asked us to consider is what federal tax and/or spending measures should be implemented to ensure that our nation has the infrastructure required by its citizens and businesses.
If you take a look at slide 4 in the slide package, you will see data from the Federation of Canadian Municipalities and the Canadian Council of Professional Engineers from 2005 that outlines the infrastructure deficit in Canada. The infrastructure deficit was estimated at $60 billion; the annual growth of the deficit, $2 billion; the annual federal investments in infrastructure average $1.1 billion since 1993; the average useful life of infrastructure remaining, 20%; and the average age of 30% of our infrastructure, over 80 years.
You also asked us what actions the federal government should take to ensure the tax and/or spending measures needed for Canada to prosper can be made.
First, we must recognize the positive steps taken recently with the $13.2 billion in debt reduction and identifying the spending reductions of $2 billion over the next two years.
One of our significant concerns has been the sustained increase in the level of government spending. From 2000 to 2005, federal government program spending increased by almost 50%.
With global economic slowdown a real possibility, and with Canada's aging population, we are recommending a comprehensive program review with a reallocation target of 5% of annual federal spending. So that would be $9 billion reallocated. Why is this necessary? If you look at slide 6 of the presentation, you will see that over the next two years, before any announcements are made in this upcoming budget, federal spending is projected to rise by 6% annually. This is not sustainable.
Thank you for allowing us to present our views on behalf of the Vancouver Board of Trade.