Finance Committee on Oct. 4th, 2006

[The Chair, Conservative, Brian Pallister]

Ladies and gentlemen, I invite our witnesses to take their seats and to avoid contact at all times with the committee members.

[Voices]

Oh, oh!

[The Chair, Conservative, Brian Pallister]

Get comfortable, committee members, and good morning. Here we go again, and it's going to be good.

We're looking forward to your presentations this morning.

As you know, we are the Standing Committee on Finance. We've been charged with the responsibility of receiving input and preparing a report to the finance minister for the upcoming budget.

We have asked you to keep your presentations to five minutes, and I will hold you to that. I will give you an indication when you have one minute or less remaining. Of course, it's to leave time for the exchange and sharing of views and questions after that.

We will begin this morning with a representative from the Canadian Booksellers Association, Steve Budnarchuk.

Welcome, Steve. You have five minutes.

[Steve Budnarchuk, Canadian Booksellers Association]

Mr. Pallister and distinguished members of the finance committee, good morning.

My name is Steve Budnarchuk, and I am the president of the Canadian Booksellers Association, also known as the CBA. I'm also here before the committee as a long-time member of the organization and as the owner and operator of Audrey's Books, in Edmonton, a local bookstore.

The Canadian Booksellers Association is a national trade organization representing close to 1,000 bookstores from coast to coast. Active members include general trade, campus, chain, specialty, used, and antiquarian booksellers.

As the committee decides how to allocate the next federal budget, we ask that you consider the important role that Canadian booksellers play within the scope of local communities and for Canada's economic health as a whole.

Before I begin, I would like each of you to reflect on your role as a parent, a teacher, a writer, or perhaps the owner of a business and evaluate how influential reading and culture has been for your personal development and for the development of your community.

Books inform, educate, entertain, and, most importantly, tell the world about Canada. We believe the existence of Canadian bookstores is vital to a country's growth and is therefore a direct link to making Canada a more competitive force in the global economy.

However, it is important for you to be aware that the industry currently faces many challenges, some of which threaten the vitality of Canadian bookstores as we speak. If Canada is to play an important role in this economy, it must first of all be able to support the many small businesses within its borders.

Specifically, there are two aspects with which the CBA seeks help from the federal government. One is the removal of GST on books, and the other is continued funding for the book publishing industry development program.

To ensure Canadians have the skills and knowledge that can be used for their own benefit and the benefit of their employers and communities, CBA requests that books be taken off the list of items taxable by GST.

Since a high level of literacy is an integral part of a prosperous society, CBA believes that by eliminating the GST on books, books will become more accessible to more Canadians, contributing to an improved literacy rate that can only result in a more informed, innovative, and productive workforce. Moreover, the removal of GST on books will be most beneficial for students who are already struggling to pay for their education. A 2003 Statistics Canada survey informs us that 40% of Canadian adults do not possess the literacy skills needed for everyday life. For a developed country like ours, this is surely totally unacceptable.

Furthermore, since reading is vital to our economy and our culture, we believe books should not be treated as objects of consumption. CBA believes eliminating the GST will bring attention, focus, and support to the bookstores in our communities.

We would like to remind you that prior to the introduction of the GST, no tax was collected on the sale of books anywhere in the country.

An impressive coalition of sixteen national and regional associations with an interest in literacy, reading, and education are all in agreement that the GST should be removed from books, and I have a list of that for you, if you like.

We applaud the recent GST cut of 1%; however, more needs to be done.

Secondly, to ensure that booksellers remain competitive, CBA recommends that the federal government recognize their importance and continue funding the book publishing industry development program.

This program and its components, such as the supply chain initiative and aid to publishers, are vital in ensuring that all members of the cultural chain achieve and reach their full potential. Becoming more efficient through the adoption of technology, marketing, professional development, data collection, and research are all important aspects of bookselling and publishing.

Most importantly, it is critical that you appreciate the cultural significance of this program, since downstream from publishers are independent booksellers that must remain viable if Canadian-authored works are to find space on the bookshelves of the nation.

Booksellers are conduits for the transmission of Canadian culture. They provide benefits that can be captured in the bottom line, such as recommending good books, hosting reading events, and partnering with other related community organizations.

According to the Department of Canadian Heritage, 70% of Canadians are interested in reading books by Canadian authors. Canadian bookstores reach this audience and satisfy this need, as independent bookstores, according to the Literary Press Group of Canada, order a higher percentage and a wider diversity of Canadian literary titles.

A higher number of diverse bookstores in a community is an indicator of its innovation and creativity. It is also a signal that it can attract the best and the brightest to the community, thus further contributing to the economic and cultural well-being. It is frequently true that new arrivals to a community seek out cultural anchors like the neighbourhood bookstore first of all.

We strongly believe that the removal of GST on all books and the continued funding of the book industry development program will ensure that Canadian citizens and businesses will remain competitive in this ever-changing economy.

Thanks very much.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Budnarchuk.

Next is Sam Shaw, who's with the Alberta Association of Colleges and Technical Institutes.

Welcome, Mr. Shaw.

[Sam Shaw, President, Northern Alberta Institute of Technology, Alberta Association of Colleges and Technical Institutes]

Thank you so much.

Again, welcome to Ottaw...no, sorry, Fort McMurray.

It's a pleasure to be here to represent our 17 public colleges and technical institutes.

I'm going to ask Doug MacRae to give a very brief overview of our association, and then I'll continue on.

[Doug MacRae, Executive Director, Alberta Association of Colleges and Technical Institutes]

Thank you.

Our apologies for being a little late; WestJet had some problems.

Thank you for the invitation and for the opportunity to welcome you to Alberta. Of course, some of your MPs are from here, so that's fine, but on behalf of the college and technical institute system, we'd like to welcome you.

Our system, as Sam indicated, represents all of the public colleges and technical institutes in the province of Alberta. There are 17 institutions. We serve over 140,000 credit students annually and an additional 250,000 non-credit students. This represents more than 54% of the credit students registered in our institutions. And that's all students; in other words, there are more students in our institutions than there are in universities, which might be of interest to your group.

Our system provides a wide range of programming primarily focused on preparing people for employment. Sam will talk about the skills shortage in a few minutes. We have a wide range of programs and the most comprehensive institutions in Canada, as far as the provincial system. We have apprentice training, which Sam will also talk about. We have career programs, usually one- and two-year, which lead directly to employment. We have a university transfer where, for example, at Keyano College here in Fort McMurray, you can take the first year or two and then transfer to a university. Our community colleges and institutes also offer applied degrees and academic upgrading. Recently legislative change has allowed our institutions to offer baccalaureate degrees.

We have a focus, as I've indicated, on the skills shortage. That's why we wanted to talk to you today. We recognize this as not only an Alberta problem but a national problem that we are here to address. That leads naturally into the first area we want to talk about, which is the skills shortage.

Sam.

[Sam Shaw]

Thank you, Doug.

If you look at the price of oil today, at $58 a barrel, twelve years ago you would have thought it had reached a high. So don't be dismayed by the price of oil or the price of gas. A lot of the projects here in Fort McMurray, and I'm hoping you get to visit them, are fifteen and twenty years in terms of their timeframe, and the skills shortage is a number one priority both here in the province and in Canada.

One of the things we would like to see the federal government do is look at education and training of Canadians. It must be a funding priority at all levels in government, including the federal government. Investment in colleges and technical institutes provides a very quick return, as qualified, skilled graduates are able to enter the workforce as soon as two years after enrolment. In terms of apprenticeship, you must be already working to take advantage of that.

Our institutions educate and train the knowledgeable and efficient workers of Alberta, achieving a 94.4% employment rate among graduates. AACTI has been working with business and industry to ensure that we do have some strategies around looking at the skills shortage, and looking as well at designating applied research and innovation in terms of some of the issues we face.

On investment in innovation and capacity, again, we have been underrepresented in terms of federal funding for research. I urge the federal government to invest in colleges and technical institutes in terms of applied research.

In terms of the opportunities, they are vast; I would mention the word “sea” in terms of applied research and commercialization. Again, I think colleges and technical institutes are well positioned for that.

Certainly the return on investment in colleges and technical institutes is quite high. From our studies, it's 16.4%. In fact, for every graduate and their future earnings, for every dollar invested there will be $3.76 as a return. In terms of saving on health and criminal justice and so forth, we've estimated that here in the province alone it's $56.3 million.

Again, we would urge you to continue the good work you've done in terms of apprenticeship but also in terms of the infrastructure fund you've established.

In summary, we would like to suggest that you make that strategic investment in colleges and technical institutes to talk about the skills shortage, to talk about applied research, and certainly to invest in the future of Canada.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, gentlemen.

We'll continue now with the Regional Municipality of Wood Buffalo.

Melissa Blake, welcome. You have five minutes.

[Melissa Blake, Mayor, Regional Municipality of Wood Buffalo]

Thank you very much, and welcome to each of you to our fine region. We're thrilled to have you here and to have this opportunity to present.

To get right into it, my name is Melissa Blake, and I am the mayor of the Regional Municipality of Wood Buffalo, which is the largest municipality in Canada. We stretch from an hour south of here to Fort Chipewyan, which is the oldest settlement in Alberta. It's a very vast area. But our history is a little bit of what I want to fill you in on. Certainly it started with our first nations people, our aboriginal people, repairing canoes with the oil sands way back in history.

Through evolution and technology improvements, we've seen periods of increased economic activity. We've seen, essentially, booms and busts, expansion and recession, and lately what we're seeing is cognizance that within the municipal boundaries of that vast area that I referred to is contained the energy security for Canada and for North America. It has been an incredible transformation.

Just to highlight some of the resources that are available to us in this region, what we have on world reserve records is 177 billion barrels, which is only behind Saudi Arabia for quantity, but our known reserves that are ultimately recoverable with today's technology are close to 311 billion barrels of oil. In fact, if we look at new and emerging technologies down the road, that absolutely skyrockets to 1.7 trillion barrels. So you can see where the order of magnitude comes in and the importance for Canada.

We did create what was called the “business case” last year. It incorporated industry projections. It incorporated stakeholder concerns that were involved in that. Where that business case originated, back in 2002, they had created scenarios for population growth and investment. What we have actually experienced in that timeframe was $37 billion invested in oil sands. In fact, what we project in a conservative $30-per-barrel oil scenario is another $56.6 billion. As you know, at more than $58 per barrel, which we have seen in recent times, that's very likely to have us, in a fifteen-year period, seeing $100 billion in investment.

When we look at the benefits that flow from that, what it does is generate jobs, 240,000 of them across Canada by 2008. We estimate that about 60% of those, or 144,000, are in Alberta. So 100,000 other jobs are created across Canada from oil sands development, and we expect those numbers to continue into the future.

Essentially, when we're looking at that kind of growth, there are challenges that come to the community in relation to the population increasing, but when you consider it, I think you realize that the funds we need to increase our capacity have pushed us and our municipality to our limits. The Municipal Government Act in Alberta enables one and a half times debt servicing against your municipal revenues. We've increased that to two times now, with provincial authority, and in fact what we're carrying is debt that's three times higher than Calgary and Edmonton.

Before I identify some of the highlights from the action plan that I have and then move on to thoughts on how you might be able to help us, in fact some of the things we've undertaken up to this point have included a multi-stakeholder inquiry into the cumulative effects of the oil sands expansion through the Alberta Energy and Utilities Board. As well, we are looking for industrial agreements with all of our oil sands expansion proponents. We have looked for crown lands for development released to the municipality at no or nominal cost; one-time infrastructure grants for our unique circumstances; special infrastructure funds; modification of existing funding formulas; and an innovative tax strategy, something we've implemented to rebalance residential and non-residential taxation. Legislative tax class changes to the Alberta Municipal Government Act is another request we've made. We want a comprehensive socio-economic review of the impacts from all future oil sands developments through what we call our resource development review committee, and delivery of affordable housing in the region through an entity we created, called Wood Buffalo Housing and Development Corporation.

The reason I highlight these measures that we've taken is because the community right now is at a point where we don't have enough resources to proceed and continue. So in our appeal to you, and to virtually every other party that can make a difference, I would like to make the following recommendations.

The first thing is, when we look at opportunity, a regional tripartite development agreement, which would incorporate potential funding from three levels of government--the municipality, and federal and provincial governments.

We also think immediate special grant funding from both our federal and provincial governments to help bring our existing infrastructure and services to the same standards as other Alberta municipalities is a potential.

We also request the federal government's cooperation in creating and maintaining a system to analyze and monitor the cumulative socio-economic impacts of oil sands development, including verification of predictions and support for regular public communications.

And then finally, as another opportunity we would request the federal government's ongoing support and engagement in a bilateral intergovernmental relations program based on common interests, outcomes, and opportunities that flow from the oil sands development.

It's an awful lot to digest, and I'm certainly willing to answer any questions you have, but essentially we feel it's a very strategic investment for Canada.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Ms. Blake.

We continue with Fitness Industry Canada, David Hardy, president.

Welcome, sir. It's over to you.

[David Hardy, President, Fitness Industry Canada]

Good morning. Thank you.

Mr. Chair, members of the committee, the Fitness Industry Council of Canada is a not-for-profit trade organization representing 2,000 fitness facilities across Canada with two million members. Our primary objective is to represent and promote the commercial fitness industry in pursuit of a more physically active and healthy country. I believe you too share this objective. I know that some of you have played rugby, and we have a Basketball Hall of Famer here today.

One of our primary objectives, and the reason we're here today, is to advocate for an important and positive change that will encourage Canadians to get active. We're asking the committee to provide to Canadians who are active and who thereby reduce the burden on our health care system a tax deduction or tax credit for the activity they're involved in. We believe such a measure would respond to the number one question your report will address, which is: what specific tax and/or program spending measures should be implemented in the upcoming budget to ensure that Canadians are healthy, have the right skills, etc., for their own health and for the benefit of their employers?

We applaud the Government of Canada for introducing the children's fitness tax credit. We agree that the earlier Canadians begin to participate in fitness activities the more likely they will be to continue throughout their life. Mr. Chair, your committee will make recommendations to the new government of Canada on how to be more competitive in the global economy.

An increasingly important factor in our potential success is the productivity and health of our workforce. If Canada is to be a world leader, increasing workplace productivity will be a vital element contributing to its success. We hope and expect any future government action to benefit all Canadians, regardless of age, who participate in physical activity such as women's soccer, men's hockey, basketball, or people who work out at municipally funded recreation facilities. Such a measure will lead to a more active society and in turn reduce the cost associated with fighting obesity and other illnesses while increasing productivity in the workplace.

We are leading this campaign on behalf of all physically active Canadians. Although we represent two million Canadians who exercise at our member clubs, we have the organizational ability and desire to move this campaign forward on behalf of all Canadians.

During the month of September, more than one million printed postcards were delivered to 2,000 fitness clubs across Canada. These will be delivered directly to the Minister of Finance. We also have an online component, in which postcards will be sent to the Right Hon. Stephen Harper, to the Minister of Finance, the Hon. Jim Flaherty, and to local members of Parliament.

Why should a tax deduction for gym memberships or other physical activity be introduced? I have a number of reasons in my presentation, but I'll give you the top three: number one, it will encourage more Canadians to get active, get healthier, and be more productive in the workplace; number two, a third of adult Canadians are at risk of a disability, disease, and other premature death as a result of being obese, and this program will help reduce those numbers; and number three, the total cost of obesity in 1997 was 2.4% of total health care expenditures. This program will help reduce those numbers.

We know that obesity will become the number one killer in Canada in the next twenty years. It's well-documented that a regular routine of strength and cardio training, combined with good nutrition, can prevent or significantly reduce the risk of developing many diseases. According to the World Health Organization, regular physical activity will reduce the risk of dying prematurely from heart disease or stroke, which are responsible for one-third of all deaths; it will reduce the risk of heart disease or colon cancer by up to 50%; it will reduce the risk of type 2 diabetes by 50%; it will also help prevent hypertension, osteoporosis, and lower back pain; it will help reduce stress and anxiety; it will help reduce behaviours that are risky, such as tobacco, alcohol, and substance abuse; it will help control weight and lower the risk of becoming obese by up to 50%; it will help maintain healthy bones, muscles, and joints; and it will help in the management of painful conditions such as back pain and knee pain.

Mr. Chair, based on its own words, we believe the government agrees with the intent and objective of this initiative, and we want to let them know our members agree as well. The children's fitness tax credit is a step in the right direction for Canadians, but we believe more can be done by extending this to all Canadians regardless of age.

The government should encourage this behaviour with a tax credit for all Canadians, young or not so young, who are making an effort to take care of their health and in so doing are reducing costs and increasing Canada's productivity in the workplace.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Hardy.

We'll continue with Bernie Blais, who is the Northern Lights Health Region's chief executive officer.

Welcome, sir. For five minutes, it's over to you.

[Bernie Blais, Chief Executive Officer, Northern Lights Health Region]

Thank you, Mr. Chairman.

Good morning. I want to welcome you all to Fort McMurray.

Before I start, I just want to give you an understanding of our region. Our region is not just Fort McMurray. We also have the west side, where there are no natural linkages or roads; there are no airlines taking us to the other side, so all our travel and organization has to be done through Edmonton and up. It's quite a complex region in some ways.

I'm very pleased to present a summary of our challenges this morning, and I hope to find out what your standing committee can do for us here in Fort McMurray. The comments I will be making are critical to the sustainability of our health system in the Northern Lights Health Region.

The cumulative effects of the oil sands development, the rapid population growth, the lack of investment in ramping up our human resources capacity--and if you think it takes a long time to develop technicians, you know how long it takes to develop health professionals, doctors and other professionals--infrastructure, funding, and the high cost of housing has outstripped our ability to deliver effective health care services to our region.

Using a population base of 80,000 from the current census--and that's not including the camp population or the shadow population that exists in our region, the invisible population that everybody says doesn't live here--will reflect the seriousness of our challenges in the health system. About $53 billion worth of projects have been identified in our community over the next four years; that would be the equivalent of $662 billion worth of capital projects if we did it on a per capita basis in Edmonton or Calgary. So we need to be worried in the health region. If we took Ottawa, it would probably be the equivalent of $800 billion worth of initiatives on a population of that size. This is how we see the world in the health system. We are very concerned about our ability to sustain what we're currently doing.

It goes without saying that some of the greatest challenges we've ever had are here today. Are we in a crisis? Yes, we are, definitely.

Human resources: We don't have enough people, physicians, nurses, health professionals. We don't have enough capacity in infrastructure. We have 102 acute-care beds today to deliver all of what we're being asked to do. If this situation existed anywhere else in Canada it would be dealt with right away. Yet we are left on our own to try to solve the major challenges as a result of the continuing growth pressures.

Funding: We're currently running a major deficit as well, and we're legislated not to run deficits, so we have tremendous pressures. The housing costs are a major deterrent; they're a recruitment and retention killer for us. The winning conditions we need to retain our people are simply not here; they don't exist in the health system. Why would you work here when you can make the same salary, the same benefits, anywhere else? Physicians, nurses, and other health staff make exactly the same salary no matter where they live in Alberta. So, again, that's a challenge for us.

Investment in infrastructure in such places as Fort McMurray is essential if one of the economic engines of Canada is to be sustained. All of Canada benefits greatly from oil sands development except the people who live here in Fort McMurray, people like those at the Northern Lights Health Region. They are entitled to receive reasonable access to primary health care and acute care.

We are losing ground. We have a 41% physician vacancy rate, a 20% staff vacancy rate, and it's growing. We've just lost another six physicians in the last few months, so it's probably much higher than that.

The lack of infrastructure investment is exacerbating the issue. We just don't have the capacity to continue to provide what we're being expected to.

Very little has been done so far, and we don't think our voices are being heard as well as they should be.

What can the government do for us at Northern Lights? It must invest in infrastructure; it needs to create incentives to develop health professionals in the north or rural communities like ours, and along with the provincial government, it needs to provide incentives like a northern allowance. I was a deputy minister of health and social services in Nunavut, so I know how important those things are: tax incentives or housing subsidies to help overcome the major barriers to retention and recruitment.

We also need you to look at trying to invest in a sustainable health human resources strategy. When you look at the number of people who are retiring...150,000 nurses are leaving the profession, and there aren't 150,000 nurses to relieve the pressure.

The problems in the north and in rural communities of Canada, especially in Fort McMurray because of the growth, are more serious and need to be addressed. We're looking to you to help us with our human resources and infrastructure capacity.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Blais, and thank you all for your presentations.

We'll move to exchange and questions now. We'll begin with Michael Savage. Seven minutes to you, sir.

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

Thank you, Chair, and thank you all for your presentations.

I must say, it's a pleasure to be here in Fort McMurray. I'm from Nova Scotia, and I understand I'm not the only Nova Scotian in Fort McMurray at this present point in time. Just in the few hours that I've been awake, I've met people from Nova Scotia and also from Newfoundland at the Smitty's down the way.

Let me ask you my questions perhaps in the order in which you appeared.

For the booksellers, Mr. Budnarchuk, it's nice to see you again. I met you in Ottawa. You mentioned taking the GST off books, or reducing it on books. Alberta does not have a sales consumption tax of its own, correct?

[Steve Budnarchuk]

That's correct.

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

Is there any indication that books sell better here than they do in Saskatchewan or British Columbia because of the non-existence of that tax?

[Steve Budnarchuk]

That's a good question, except that books aren't taxable anywhere, and there hasn't been any way to measure any change in sales based on the change in tax regime. I'm not sure exactly the root of your question. The only addition has been federal tax. There's never been a provincial tax on books, so the impact has been presumably uniform across the country.

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

When the GST was harmonized in the maritime provinces--that's the Atlantic provinces, originally, except P.E.I.--there was a lot of discussion about what would be included and what wouldn't. Books were on the list not to be included for GST, correct?

[Steve Budnarchuk]

That's right, and that has remained the case.

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

Has that had an impact on selling books, do you think, versus the rest of the country?

[Steve Budnarchuk]

Well, I can tell you about the reverse situation. In those provinces where HST is in effect, briefly, books with additional components, textbooks particularly, on campuses of Nova Scotia, New Brunswick, and Newfoundland, books that carried a CD-ROM component or an online access code for additional information but that were primarily books, were briefly subject to the full HST. They were deemed temporarily to be non-books, and that certainly had a chilling effect on sales in those provinces, and some surprise additional expenses for students who weren't expecting those costs. Fortunately, those provinces have also taken the lead in changing the definition of that kind of book now, and the HST has been removed from those books.

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

I certainly agree with you. I think we need to do everything we can to encourage the sale of books, and also the production of books by Canadian writers.

On a somewhat partisan note, which you very seldom see in our committee, my father was the Premier of Nova Scotia and he was the prime mover of ensuring that books not be taxed, so I think that was a good move.

To continue on the non-partisan side, you mentioned the GST and that you applaud the reduction of GST. Do you think this is the best way, to reduce the federal revenue on GST by one point, or do you think it might have been better to focus it on books, heating oil, specific areas of high need?

[Steve Budnarchuk]

Strictly from my point of view, of course, it would make more sense to eliminate the GST on books. I think about the impact on literacy. This kind of a tax seems to be counterintuitive, when you consider that a tax on reading is a tax on literacy. The illiteracy rate in this country costs us a tremendous amount in terms of the costs of social services and for our economy as a whole. I think we might end up with considerable savings in expenses if we could dramatically increase our literacy rates in this country. If the reduction of GST might contribute, that would be--