Finance Committee on Oct. 6th, 2006

[The Chair, Conservative, Brian Pallister]

That's good. We'll certainly have questions after your presentation. Well done. Thank you very much, Ms. Ohlson.

We'll continue with Paul Cenerini from the Lourdéon Wellness Centre. Welcome, Paul. Please proceed.

[Paul Cenerini, Lourdéon Wellness Centre]

Good morning. Mr. Chairman, I would like to thank you and the members of the committee for this opportunity to be here today.

My name is Paul Cenerini. I am the chair of the Steering Committee of the Lourdéon Wellness Centre in Notre Dame de Lourdes.

[The Chair, Conservative, Brian Pallister]

We're on translation. Forgive the interruption.

[Paul Cenerini]

I see. Mr. Chairman, does this interruption count in the two and a half minutes? May I continue?

[The Chair, Conservative, Brian Pallister]

Please do.

[Paul Cenerini]

Very well.

Canada's new government will focus on five key priorities for Canadians, the fifth being to deliver the health care Canadians need.

Your committee is interested in proposals that will ensure Canada's place in a competitive world, starting firstly with actions which will ensure that our citizens are in good health.

How will this goal be reached? We are confronted with two choices: increased spending in the present system based mostly on acute care or long-term investments directed towards prevention.

I'm happy to be here today to make you aware of a Primary Health Care project in Notre Dame de Lourdes, a project which comes within the framework of this second choice.

Our project closely follows Health Canada recommendations, and was initiated with the help of a grant from the Primary Health Care Transition Fund.

This community centre will provide access to a wide range of services, including health promotion, sickness and injury prevention, and management of chronic illness; it will offer primary and social health care in both official languages, French and English. In addition, we will form partnerships with other francophone communities in the province to provide services to the francophone population in the area.

We have adopted a pragmatic approach, which consists in sharing services with the regions of Saint-Claude and Saint-Jean-Baptiste by using a travelling health team, a service delivery model on which Manitoba's Central Regional Health Authority is working together with the Manitoba Centre Issue Table.

The construction of a community health centre in Notre Dame de Lourdes will be the corner stone for supporting health services delivery in French in our region.

A primary health care initiative can only be achieved through a federal-provincial-community partnership. Coming in at a cost of $3.1 million, and work is now well under way, our project is no exception to this rule. Our community has covered half the cost of the project, and the province, through the Manitoba Central Regional Health Authority has contributed $500,000. Private foundations have also pledged money. Only the federal government is left to pledge its contribution to fulfil its obligation towards its linguistic minority.

In conclusion, I would urge your committee to seriously consider renewing the financing of the Primary Health Care Transition Fund. But, I would especially like you to find a mechanism of one sort or another so that a financial investment could be made in community projects such as ours. It is only by enhancing the overall health of our community that we will be able to reduce the fiscal burden on our health care systems.

Thank you for listening.

[The Chair, Conservative, Brian Pallister]

Thank you.

We do force you to give a lot of material in a short time, and we appreciate that you're able to do that.

We'll continue now with the Social Planning Council of Winnipeg. Sid Frankel, welcome.

[Dr. Sid Frankel, Member, Board of Directors, Social Planning Council of Winnipeg]

Thank you.

My apologies for being late; I had a flat tire along the way, and I got a little more exercise this morning than expected.

Canada's rank in the competitive global economy has been slipping over time. According to the World Economic Forum, Canada ranked 16th in 2006 on the global competitive index, down from 13th in 2005. The World Economic Forum, hardly known as a left-leaning group, has argued that heavy investment in education, infrastructure, and a broad range of social services is responsible for the strong international economic performance of the Nordic countries. Finland, Denmark, Sweden, and Norway are always near the top of the index, exchanging who is leader.

Canada's level of economic competitiveness depends on its investment in developing human capital through education, training, and skills development. The recent federal announcement of cuts, worth approximately $1 billion to many programs and services that support the formation of social and human capital, are, we feel, a step in the wrong direction. The cuts run counter to Canada's economic goals--and social goals, I might add. Our submission is that these cuts should be restored in the next budget.

A highly literate population is a necessity for a sound and growing economy. The adult literacy and life skills survey found a significant wage return for high skill levels. Another study found that upgrading the skills of Canada's least-educated workforce would lead to increases in the GDP and labour productivity. The study also found that increasing skills among those at the lowest level in the distribution would have more positive impacts than increasing skills at the higher levels.

Therefore, the $17.7 million in cuts to literacy programs should be restored. Our argument is not necessarily that they be restored to exactly the same programs, but if there are problems in particular programs, that is no rationale for removing the funding.

The opportunity for working-age adults to gain and develop new skills, including literacy and numeracy, is essential in today's labour market. According to Scott, OECD findings confirm that countries that have invested more heavily in education and worker training have achieved higher rates of job creation and economic growth.

One can anticipate that the combined loss of $73 million for training, upgrading, and employment and work opportunities for youth, aboriginal youth, unskilled, and low-skilled workers will have a strong negative impact on Canada's ability to meet demands for skilled labour and to compete in a global marketplace.

The voluntary and non-profit sector is a key part of Canada's social and human capital architecture, and a major ingredient of economic competitiveness. The economic contribution of the non-profit sector is larger than many major industries in Canada. It amounted to 6.8% of gross domestic product in 1999.

The sector is obviously very reliant on volunteers. The announced cuts to the Canadian Volunteerism Initiative and the Canadian Policy Research Network, which does major research to support the sector, will greatly impact on the capacity of the sector as a whole to contribute to Canada's economic performance.

Canada ranks high internationally in terms of health status and health care, but I don't have to tell anyone that there are great inequities among the Canadian population. Ensuring the health of aboriginal people through such preventive strategies as the first nations and Inuit tobacco control strategy offers long-term benefits by reducing the demand for costly acute health care and by increasing the capacity of aboriginal people to join the labour force and fill labour shortages.

There are many barriers in the labour market to the entry of particular groups whose labour is going to be more and more needed. These include women, lone parents, aboriginal people, new Canadians, and Canadians with disabilities.

The Court Challenges Program of Canada, the Law Commission of Canada, and Status of Women Canada—

[The Chair, Conservative, Brian Pallister]

Your time has elapsed.

[Dr. Sid Frankel]

Thank you.

[The Chair, Conservative, Brian Pallister]

We'll go over now to Gay Pagan from the Manitoba Government and General Employees Union. Welcome, Gay, and proceed.

[Gay Pagan, Organizer, Manitoba Government and General Employees Union]

Thank you very much for the time today.

The federal government has recently taken important steps towards acknowledging the importance of child care in Canada. The Canadian government's contribution of $1,200 to families with children under the age of six is an admirable and important first step. However, much more is required in this area to ensure that Canada remains a competitive industrialized nation.

Many children beyond the age of six require day care. For example, I am a single parent and can't find any after-school programs in my area. These children and families do not receive any form of government assistance. However, any capital funding without an ongoing operating fund will not work and will not be sustainable. Tax incentives won't guarantee that new day care spaces will meet community priorities.

In order for Canadians to continue to contribute to the development of a competitive society, we need to ensure that we develop as flexible a workforce as possible, especially as the workforce continues to change. A not-for-profit universal child care system is essential to providing the support required to assist in this endeavour.

A universal child care program would enable individuals to take the necessary training required to upgrade their skills and re-enter Canada's workforce, thereby enhancing the country's economic and competitive position. This would also ensure that fewer people end up applying for various forms of social assistance, which might already be required, if they unable to get sufficiently well-paying jobs.

The early years in a child's life have been demonstrated to be crucial to intellectual and psychological development. Therefore, it is of the utmost importance that children receiving child care be supervised by qualified trained professionals of the highest order. An early childhood educator who is paid a competitive salary will be best able to ensure that our children receive the quality of care they deserve, and this is most important in the formative stages of their life.

In order to attract and retain such quality individuals in the child care workforce, the federal government ought to take a lead role in ensuring that spaces exist in post-secondary educational institutions. Financial investment in the education system, in addition to well-paying jobs after graduation, will pay greater dividends to the Canadian economy when skilled, educated people continue to flow into the workforce.

In summary, we would strongly recommend that the federal government take the following steps: create a publicly funded not-for-profit child care system; provide Canada-wide universal access to any such program; and most importantly, train and pay sufficiently the child care workers who are a key component of any such system.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation.

We'll continue with Ken Bicknell, the vice-president of ENSIS Growth Fund Inc. Welcome, sir. Proceed.

[O. Ken Bicknell, Vice-President, ENSIS Growth Fund Inc.]

Thank you, sir.

Mr. Chairman, committee members, thank you.

I am Ken Bicknell, as mentioned. I'm also here as a committee member of the Association of Labour Sponsored Investment Funds, and I'm proud to be a Manitoban since birth.

I'd like to ask you to change your thought process from the very important child care and wellness issues we've heard about, which are interesting to me--I'm a father of four, as well--but I'd like you to think about capital requirements for growth-focused small- and medium-sized enterprises. I'd specifically like to speak to three topics: the importance of retail venture capital in economies such as Manitoba's, the current market conditions affecting liquidity, and recommendations to restore the flow of venture capital.

When we look at provinces like Manitoba, it's very important to have retail venture capital. Statistics on venture capital in Canada suggest that significant amounts of venture capital come from foreign and institutional sources. These statistics do not hold when we look specifically at a province such as Manitoba.

Analysis indicates that the primary source of venture capital in Manitoba is in fact retail venture capital. As evidence, Thompson Macdonald reported that Manitoba received about one-half of 1% of $886 million invested in the first half of this year; this equates to about $4.4 million. Our own fund, ENSIS Growth Fund, in fact invested $4.3 million during that same period. In Manitoba, venture capital is only retail venture capital.

An equally troubling determination from the same statistic is that Manitoba is significantly underserved with regard to this type of capital. Manitoba represents approximately 3% of national GDP, and as such should attract similar percentage weightings of flows of capital to support that economic activity. Interestingly, at one-half of 1% of venture capital, we're severely underserved.

What are some of the market conditions that affect this? Manitoba's a small market with regard to institution and foreign players--they will not come here--so it's reliant upon our local economy. The retail venture capital marketplace, as you've heard from my colleagues in other centres, has been under stress because of alternative, more attractive tax-enhanced products such as oil and gas flow-throughs. The demise of our local competitor, the Crocus Investment Fund, has had an impact on inflows, and our industry's returns based on other inputs like the tech sector meltdown.

Market research supports our observations. Interestingly, 4% of Manitobans have participated in the LSIF asset class, though 32% of Manitobans indicated in a Probe Research study we funded that they would invest in retail venture capital under the right circumstances. In support of lower-risk venture capital, 45% agreed that it's a good idea to loan money rather than invest in equity. The Crocus story continues to be a drag, with 31% of Manitobans suggesting they're less likely to invest in retail venture capital than they were two years ago.

We also undertook to study the Investment Dealers Association investment advisers, and to find out their interest in our asset class. They indicated that Manitoba's significant move to increase the annual investment limit by individuals to $12,000 was significant, but without the incremental additional federal government share of the 30% tax credit, there was not enough risk mitigation with only a 15% tax credit. Their lack of interest was, again, due in part to the availability of oil and gas flow-through LPs that provide a 44% tax enhancement, a two-year hold period, and no limits on investment.

Again, when I look at this and we ask what should be done or what could be done, we are looking to make three significant recommendations: reduce the hold period on LSIFs to five years, as the B.C. provincial VCC program has done, and it's been very successful at raising capital; increase the annual investment limits, as my colleagues have proposed, to at least the RRSP limit so that we can attract the investment advisory community, so that we can attract higher net worth individuals who will not look at a $5,000 investment; and remove the restrictions on retail venture capital in providing subordinate debt investments, which significantly lower the risk while they are still venture capital investments.

As a new initiative, we would propose the creation of professionally managed technology and life science-focused investment funds that accrue the same attributes, investment limits, tax benefits, and hold periods as oil and gas flow-through LPs.

With the above-noted market-driven changes, we believe that retail venture capital could again regain liquidity and support the investment community.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation.

We continue with the Manitoba Hotel Association, and our host, by the way, committee, at this facility, Leo Ledohowski. Thank you for your hospitality.

[Leo Ledohowski, President and Chief Executive Officer, Canad Inns]

Thank you very much. Thank you for providing me with the opportunity to speak before your committee.

My name is Leo Ledohowski, and as its chair I represent the Manitoba Hotel Association. It's an association that started in 1927, and out of 327 hotels in this province we represent about 90% of them. We're a not-for-profit that's dedicated to improving the hospitality and tourist industry.

My full-time job is as president and CEO of Canad Inns. We have about 2,100 employees. That puts us up in the same cluster as Great-West Life, Investors Syndicate, and Inco. We're probably in the top four or five private employers in the province of Manitoba. Last year we had 7.5 million customers go through places such as this.

We have, speaking in my role as chairman and from my position in my company, a vested interest in the tourism and hospitality business. In Manitoba, at last count—and these numbers change—about 65,000 people are employed in the hospitality industry, with a contribution to the provincial gross national product of roughly $1.3 billion. My numbers may be a bit dated; I think they're higher than that now.

We are in general very pleased with what we're seeing coming out of Ottawa, in the sense that lowering your spending while retaining essential services is, I think, important.

We have a bone to pick, if that's the right term. You recently removed the GST credit for foreign travellers, and that creates a bit of a problem for our industry. I'm sure there's a lot more to it than just recouping the $75 million. Our challenge to you people, rather than screaming at you, is—at least from my point of view—how do we use these resources to create a better environment for our industry? Perhaps the $75 million it was costing was not as good as some better use of the resources. My understanding from what I'm reading and seeing from Ottawa is that this seems to be the approach, and I'm hoping that's the case.

In Manitoba, export tourism is 40%, local is 60%—that is, from within the province it's that amount. My challenge to you is to use that $75 million in a constructive way to make the industry even better, not necessarily spending more money, but taking the money that's already being spent and spending it more effectively.

I have some points outlining where I think we can make some very interesting and quick changes. The first one is in lineups at the border. In the case of export tourism, it really frustrates me when I fly back to Ottawa, coming from Boston or someplace—and that's a transit point—to come off and find there are two airplanes, there are 400 people, and there's one customs clerk. It's two hours in the lineup. She's a very friendly customs clerk, she's beautiful, and she handled herself with poise and dignity, but one is not enough. Somehow, I didn't think it was a surprise that there were 400 of us coming in. I think there are airline schedules, and people should know.

Coming across from North Dakota, where we're expanding into the United States, the lineups are really quite harsh sometimes. Included within them are not only the tourists from Manitoba who are coming back, but the American tourists coming forward. Solving some of this is something that could be done quickly.

I applaud the efforts being made, which have been somewhat successful, so that we don't all have to have passports and Americans don't have to have passports to come in and out. I think that's a great step.

Another easy one to do, I think, involves the exemption levels for goods and services. That amount has been flat at whatever it is—$250 for 72 hours, or something—and I think some of those things are detriments. They really don't generate a whole pile of revenue, and they just annoy people and stop traffic. With free trade now, our prices are not that different, so there's not too much we're getting out of it.

To talk about efficiency, at our firm we're very dedicated to community—pay equity, and items such as this. However, to get into pay equity specifically, we've just spent probably a thousand hours, if not more, of time to go through the requirements of the federal bureaucracy for pay equity. I think sometimes the rules just impede. There was an energy program that we just bowed out of because it took simply too much time.

Another positive that I think we should focus on is that the highways are very important for us. I think maintaining the highways for the transportation of tourism is very important. Tourism is a world-class mover in the sense of employment, and I think we should do whatever we can to help it.

The final comment I have--and I know time is short--is that our industry, like every other industry, is short of skilled labour, and we applaud anything that will help in the provision of skilled labour. It fits in with the previous panel. It's very important for the expansion of our industry.

I thank you very much, and I think I kept it within the time.

[The Chair, Conservative, Brian Pallister]

You did very well. Thank you very much for the good presentation.

Now we'll move to the Canadian Mental Health Association, Central Region, and welcome Don Boddy, who is the president.

[Don Boddy, President, CMHA - Central, Canadian Mental Health Association - Central (Manitoba) Region]

I thank you for this opportunity. I see it as an honour. As a citizen of Portage and on behalf of the board and staff of CMHA Central Region, I welcome you here to Portage la Prairie.

I also want to say that I don't sit here alone; I sit here with the Manitoba division and the national division, so together our voices are echoing throughout the country.

The story goes that NFL coach Vince Lombardi always began his season the same way. He would walk into the dressing room of his players, men who had played football all their lives, and say, “Gentlemen, this is a football.”

What I present to you today is so fundamental to Canada that it's the same kind of message, and there's not a hope of Canada going forward without this issue being dealt with. I say to you today, ladies and gentlemen, that a pan-Canadian mental health strategy is the football.

In the CMHA Central document we submitted to you, we made four recommendations. I just want to focus in on one: the need for a pan-Canadian mental health strategy. I'm not going to spend any time trying to describe it, because Senator Michael Kirby, in his report Out of the Shadows at Last: Transforming Mental Health, Mental Illness and Addiction Services in Canada, has articulated the values and directions better than I can. I just wanted to suggest the need for one. It is a shame to us that Canada is the only G8 country without a national mental health strategy.

Also, the need for a strategy grows when you think about the numbers. A diagnosis of mental illness is going to be given to one in five Canadians, or 20% of us, during our lives. That means that around this table here, three to five of us are going to experience it. Nearly every Canadian is going to be affected by it. That means the rest of us, who do not have a mental illness, are going to be affected by it. Just think about that for a second.

More important than any sense of wanting to keep up with the Joneses or just reciting statistics is the importance of hearing the voices. I want to quote from Kim, who said before the Kirby commission:

Broken. Lonely. Hopeless. Ashamed. Rejected. Isolated. Afraid. Unsupported. Lost. Anxious. Disbelieved. Overwhelmed. Embarrassed. Dark. Pained. Desperate. Fading. I'm a 31-year-old Canadian woman who's been fighting the disease of Depression since my late teenage years. The words above are words that come to my mind when I think of what it's like to live as a Canadian in Canada with Mental Illness. It's pretty sad when you sit around wishing you had any (literally ANY) other disease other than a Mental Illness.

Jan, a mom from right here in central Manitoba, when speaking of her daughter's suicide, said:

In some ways I feel it's better that she took her life, because the road to recovery is hell, and I don't think she would have made it in this system.

Can you hear the voices? This is only two of the millions of Canadians who are struggling and calling out in the wilderness for a pan-Canadian mental health strategy.

There are two significant questions you must be asking. The first one is what the first step is.

Ladies and gentlemen, the good news is that the genesis of the first step has already happened: an agreement in principle of a Canadian mental health commission. The primary goal of this commission is to articulate the strategies; we simply ask that you enable to commission to do its job by giving it a proper mandate and by funding it appropriately.

The second question is how much all this will cost. According to Senator Kirby's report, the cost of the commission would be $17 million per year. This amount is less than one-tenth of one per cent of the $30 billion cost of mental illness to the Canadian economy per year. It's less than one-tenth of one per cent of mental illness in Canada.

Ladies and gentlemen of the committee, my message today is so essential to Canada it can no longer be ignored. Like Coach Lombardi, I stand before you with football in hand, calling for something fundamental to Canada: taking care of each other.

In closing, Mr. Pallister, I ask that you accept this football as a gift from us at CMHA Central, and I ask that as you guys are making decisions about the budget, you bring it out and play with it a bit, and you remember the need for a pan-Canadian mental health strategy.

Honoured members of the committee, this is a football. Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Boddy.

We'll start five-minute rounds immediately with Mr. Pacetti. Take it away.

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

Is it five minutes? I thought I was getting seven.

Anyway, thank you to all the presenters. It was very interesting. It's a dilemma or a challenge that we face; we're going to have to try to focus on a few issues.

Mr. Bicknell, just mainly for education, what is retail venture capital? Are you saying it's all that is available here in Manitoba?

[O. Ken Bicknell]

Retail venture capital is venture capital that is raised through the retail financial planning system, through IDA brokers or MFDA brokers, typically into labour-sponsored investment funds.

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

Is it a competitor of the labour-sponsored funds, or is it—

[O. Ken Bicknell]

No, it is venture capital that is raised from what is called the retail investor. That is an average Canadian making an RRSP investment or doing financial planning for retirement.

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

I don't have your brief, but you listed four or five recommendations. Some of them were interesting. Some of them I didn't write down because you were talking too quickly. Basically, even if any of those recommendations is going to be recommended by us, is it going to help here in Manitoba? The population is so small. It's not as though the investment community is going to get any larger. Would it actually help?

[O. Ken Bicknell]

It will expand the market available to us. Very clearly, we've attracted 4% of the RRSP-aged population into the asset class historically. If we look at what the IDA, which is the stock brokerage community, is telling us, their high net worth clients and their firms are blocking them from making positions in our funds. The firms themselves take an onerous commission split on a small ticket of $5,000, so the rep is getting no reward for undertaking the trade, no income.

With regard to the investor, who could be a higher net worth individual for whom a $5,000 position in their portfolio is a rounding error, that individual would not take a position in our fund but would look at a larger position as something that's realistic.