Finance Committee on Oct. 16th, 2006

[The Chair, Conservative, Brian Pallister]

Order.

Witnesses, welcome, and thank you for being here.

Committee members, welcome back to the arduous and important task of preparing recommendations for this coming budget.

Witnesses, you've been gracious enough to submit briefs to us and to prepare short opening presentations. I would remind you that you'll be held to five minutes. I will give you an indication when you have one minute remaining--if you choose to look here--or less, all in an effort to make sure that the committee members get a chance to pepper you with questions.

We will commence with Barry Blake from ACTRA. Welcome, sir. Take it away.

[Barry Blake, National Councillor, ACTRA - National]

Thank you very much, Mr. Chair.

Good morning to you and to the honourable members of the committee.

My name is Barry Blake. I'm a working Canadian actor, inasmuch as that means anything these days, and I'm also here on behalf of ACTRA. I'm a national councillor of ACTRA, the Alliance of Canadian Cinema, Television and Radio Artists.

As a national organization, we represent some 21,000 performers working across the country in English-language recorded media. ACTRA appreciates the importance of these consultations, and we'd like to thank the committee for including us in the process. We believe it is vital to speak to you today about supporting Canadian culture.

In the nine recommendations we set out in this brief, ACTRA tackles the four questions asked by the Standing Committee on Finance in its report entitled Canada's Place in a Competitive World. We are asking the committee primarily to support the funding and federal taxation programs which are crucial for the Canadian cultural industry to remain competitive in our domestic market, as well as internationally.

We also ask that the committee support existing and new tax measures and personal tax exemptions that will benefit the skills and livelihoods of working artists and performers in Canada. I'd also like to note that the nine recommendations that ACTRA proposes in its written brief are achievable within current federal expenditures.

If English-speaking Canada is to have a rich and unique voice in media so heavily dominated by global interests, then Canadian culture must be encouraged. Since our time today is short, I'll focus on two recommendations in particular of our nine--namely, the importance of maintaining and enhancing programs and stable funding for Canadian film and television production through this government's commitment to the CTF, the Canadian Television Fund, and to the CBC.

Supporting our culture to see our stories told is not only a valid use of public funds but a good investment for Canada's economy. The Canadian film and television industry generates an annual $4.92 billion of production activity, employing over 134,000 Canadians, many of those as highly skilled professionals. According to the report on the Canadian film and television production industry, film and television works provide $2.27 billion in annual export value alone. This industry's annual growth rate from 1997 to 2002 was an average of 8.5%, compared with a 3.6% growth rate for the overall economy. Much of this growth would not be possible without funding from the federal government.

Ours is an industry that is markedly different from manufacturing and service industries. Each Canadian film or television production begins as a unique venture that must be developed and marketed as if it were a prototype. CTF funding plays an absolutely critical role in initiating this production. It is in effect seed money, and it is essential to the development of each film or television project. Stable, long-term funding for Telefilm and the Canadian Television Fund trigger substantial additional investment from the private sector. Without that incentive, most productions would never make it beyond the idea stage.

An artist's life in this country can be a struggle. We are independent contractors, small business persons, and not knowing where your next job is coming from is often made worse by wondering if projects will be supported financially at all.

Three years ago the Canadian production industry was thrown into turmoil when the government announced significant cuts to the CTF, which resulted in many quality shows being dropped or shelved. There was some relief when the fund was restored to its original level in subsequent federal budgets, but there remains a lingering concern that the CTF is vulnerable due to its temporary status.

Making the CTF permanent and increasing it to account for inflation would go a long way towards strengthening our industry. It would give artists an often elusive taste of stability and reassure Canadians that their government recognizes the importance of culture.

Drama production contributes significantly to local economies through job creation and spending throughout all of Canada. It's estimated that each dollar of government support leverages over six dollars in other types of funding. That is why we are asking the government to make a permanent commitment to contribute to the CTF in the next budget, to enhance the government's contribution to the CTF, and to include annual increases indexed to inflation.

ACTRA's written submission contains more on these and on other issues important to the growth of both the film and television industry and our cultural community. We would welcome your questions.

Thank you. Merci à tous.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Blake.

That was my first opportunity to direct an actor.

We will continue with Ken Delaney, who is here from the United Steelworkers. Welcome, Mr. Delaney. Five minutes to you.

[Ken Delaney, Research Department, United Steelworkers]

Thank you very much.

I would like to thank the committee for having us. We did submit a brief. We were a last-minute addition to the agenda, so unfortunately we didn't have time to have it translated. I apologize for that. We will get translated copies submitted later.

I represent the Steelworkers union. Our union represents over 280,000 members in Canada in a wide variety of industries, including forestry, steel, manufacturing, transportation, and a number of service sectors. We also have a wide-ranging interest in budgetary matters, including improvements to health care and improvements to post-secondary education, etc., but what I really want to focus on today is some of the problems we've been having in certain key industrial sectors and certain public policy fixes for those problems.

We believe that the key goal for a national economic policy should be creating an environment where there's a good job in a safe workplace for every Canadian, and we certainly acknowledge that productivity and international competitiveness in the current economic environment are keys to being able to achieve that goal. We believe the way to get there, in a manner that is best for society, is by investing in education and training, maintaining a strong infrastructure, investment in R and D, product and process innovation, and investment in new plant and equipment.

Right now, talking about competitiveness is frustrating for labour, because when we look at the numbers.... KPMG recently concluded, in a study done for Industry Canada, that Canada had the lowest business cost environment among G-7 nations. We have also observed in the past number of years that productivity has been increasing and wages have not. So we're not inclined to think that problems in our sectors have anything to do with labour costs being too high or for that matter the overall corporate tax rate being too high.

On the other hand, our record on research and development, training, investment in capital equipment, and process and product innovation seems to be kind of wanting. A recent World Economic Forum report on competitiveness ranks Canada 27th out of 58 countries in its ability to compete based on unique products or process. Also, our R and D spending is lower than Sweden, Finland, Japan, Korea, Germany, and many others, and when it comes to spending on capital equipment, Canadian spending on plant and equipment per worker is between 30% and 60% of what it is in the United States. And finally, the same World Economic Forum on competitiveness ranked us 17th in higher education and training.

From labour's perspective, we think that public policy should be focused on trying to improve these kinds of areas.

I want to briefly touch on the importance of manufacturing for the Canadian economy. Right now, manufacturing employs over two million Canadians. Manufacturing wages are on average about 28% higher than the Canadian average, and the Canadian Manufacturers and Exporters Association estimates that for every one dollar of manufacturing work, three dollars of economic activity in this country is created.

I don't want anybody here to have the impression that the manufacturing sector is an old smokestack, old economy. The sector is dynamic, and it does continue to change. Nearly 70% of what is manufactured in this country is exported now, up from only 25% years ago. But the sector is troubled. Nearly 200,000 manufacturing jobs have been lost in the last three or four years. The combination of a rising Canadian dollar, soaring energy costs, and competition from low-wage economies such as China have severely challenged the ability of Canadian businesses to compete. We see the boom in oil and other commodities in construction, but in manufacturing it's hurting.

The union doesn't believe that we should be complacent while we're watching this painful job loss. If we allow our manufacturing sector to decline, we will be weaker, and it's not as though a lot of new jobs are going to be created in the so-called new economy. Professional services and software companies are subject to the same kinds of global pressures that manufacturing is. All it takes to transfer intellectual property out of the country is one person with a laptop and an e-mail address, and if you just look at the number of jobs--

[The Chair, Conservative, Brian Pallister]

Thank you very much.

[Ken Delaney]

I'm at five?

[The Chair, Conservative, Brian Pallister]

Yes, your time has elapsed--well used, though.

[Ken Delaney]

Okay, thanks.

[The Chair, Conservative, Brian Pallister]

We'll go now to Andrew Van Iterson, who is here from the Green Budget Coalition. Welcome, Andrew. Please proceed.

[Andrew Van Iterson, Program Manager, Green Budget Coalition]

Thank you.

Good morning, everyone. Thank you very much for inviting us to speak with you this morning.

The Green Budget Coalition, as you likely know, includes twenty of Canada's leading conservation and environmental organizations, which collectively represent over 500,000 individual Canadians as members, supporters, and volunteers, from the hunters of Ducks Unlimited to the maybe more radical tree climbers of Greenpeace.

The Green Budget Coalition believes Canada's future prosperity depends on the effective integration of environmental, economic, and human health objectives, and advocates the internalization of social and environmental costs into market prices through revenue-neutral fiscal reform.

I have two focuses this morning--to highlight our five priority recommendations for the 2007 budget and to discuss our overriding long-term recommendations for Canadian fiscal policy. But before proceeding, I do want to thank the government and some of the opposition parties for the importance you've been putting on the environment in recent months, and we expect in the coming months. Thank you very much.

The five key recommendations we have prioritized as the foremost budgetary opportunities to advance environmental sustainability in Canada while stimulating economic growth and protecting Canadians' health were detailed to a greater level in the brief we submitted. They include the areas of renewable energy and energy efficiency; the Mackenzie Valley; strengthening the Species at Risk Act and the Canadian Environmental Protection Act; and levelling the playing field between the oil sands and other energy sources.

I want to highlight that a substantial investment in renewable energy and energy efficiency could accelerate growth in both the renewable energy and energy efficiency sectors, and that this is possibly the most effective way of cleaning Canada's air, protecting the health of Canadians, and meeting our climate change responsibilities. Energy efficiency measures and renewable energy sources will reduce air emissions, have water and land use benefits, improve energy security and local control, provide employment and economic opportunities in all parts of the country, and prepare businesses and consumers for the inevitable transition away from fossil fuels.

Three ideal opportunities in this area for the 2007 budget include increased renewable energy production incentives, additional transfers to provinces and municipalities for investments in energy efficiency and renewable energy, and continued support for building its retrofit program.

Looking further ahead, Canada's major conservation and environmental groups are unified in believing that our economy could nurture greater health and prosperity for ourselves, for our children, and for the environment if it better incorporated the value of our limited natural resources, of nature's capacity for waste absorption, and of the health impacts of pollution.

Øystein Dahle, the former Exxon vice-president for Norway and the North Sea, stated the following:

Socialism collapsed because it did not allow prices to tell the economic truth. Capitalism may collapse because it does not allow prices to tell the ecological truth.

Any economist will agree that two major weaknesses in economics are that neither the value of natural resources nor the value of nature's role in waste absorption are in any way effectively incorporated into prices. If our children and grandchildren had a chance to bid on the oil and natural gas we are burning up every day, they would likely pay much more for it.

On the tail ends, on waste, we have taken the absorptive capacity of air, water, and soil for granted for many centuries. We depend on it for everything we do, from breathing to driving our cars to running our businesses. But changes to our global climate as well as increases in sicknesses amongst our families and friends, such as skyrocketing levels of asthma, suggest that we have reached the levels at which we can no longer pollute with no consequence.

The Green Budget Coalition strongly recommends that we increase levies on activities that damage society, such as pollution and waste, and decrease levies simultaneously on activities that benefit society, such as jobs, employment, profits, savings, and the preservation of Canada's natural capital, which Canada's farmers do very effectively day after day.

This approach could be implemented through a mix of market-based instruments, such as taxes, fees, rebates, credits, and tradeable permits, and implemented in a revenue-neutral manner. These policies reward environmental leaders amongst businesses and citizens, penalize environmental laggards, stimulate environmental innovations with global export potential, and expedite the development of economies where economic success brings concurrent environmental and human health benefits.

We would also encourage the government to develop a means of measuring the degree to which the value of natural resources and the impact of pollution and waste are incorporated into the price of goods and services throughout the manufacturing cycle, and then strive for continuous improvement in this measure.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Van Iterson; your time has elapsed.

We will continue with Mr. Dan Brant, who is here as an individual. Welcome, Dan. Please proceed.

[Chief Daniel Brant, As an Individual]

Thank you, Mr. Chairman and honourable members of the Standing Committee on Finance.

Thank you very much for allowing me to speak here today. My name is Dan Brant, and I'm from the Tyendinaga Mohawk territory.

I've provided the clerk with some speaking notes that I would like to have tabled with the committee members at a later time, but I am referring to excerpts from my speaking notes in my opening statement here.

As a bit of background, for two years I was executive director of the National Indian Brotherhood in the early 1980s. I spent time on the Hill working for four different Ministers of Indian Affairs and the Department of Indian Affairs. More recent is my three years as the CEO of the Assembly of First Nations. Less known is my career as an aboriginal business person in the construction and management consulting fields. This has been topped off with three years as the CEO of a financial lending organization for aboriginal businesses.

It's with this experience that I would like to speak to you about the enormous untapped potential of aboriginal entrepreneurs.

Economic development policy remains fragmented and disjointed, without an overarching measurable objective and the means to measure it. Regardless of the reasons, policy-makers appear not to be working towards one common realistic goal for aboriginal economic development. An unfortunate byproduct of existing program management is that it is a science, and the emphasis by bureaucrats has been put on process rather than impact.

Existing methods of support and administrative processes have usurped flexibility and innovative thinking as a primary driver of economic development programming. There is real inattention to economic principles and sustainability in aboriginal economic development programming. Financial support for the growth of the aboriginal business sector should be seen and handled like an investment instead of a cost.

What can be done about these problems? For many reasons, aboriginal entrepreneurs are still not on a level playing field with other small business owners in the rest of the country. Measuring what I will call the gross reserve product and economic activity in all sectors for aboriginal people specifically would provide some concrete numbers on which to base programming targets and goals. It would be a strong coordinating mechanism, using the same approach as national income accounting. Aboriginal-specific data could enlighten and motivate the full range of aboriginal economic development initiatives, from labour force participation to sectoral development to business development. As a side benefit, I think it would also help dispel some myths common among the Canadian public at large about the contribution of aboriginal people to the Canadian economy.

Second, overhauling the success criteria for government programs aims to adjust the disproportionate emphasis on program administration over program outcomes in many government departments. There must be far less focus on how a program is administered and more focus on real program outcomes in terms of community benefit.

Third, aboriginal communities need more investment in terms of access to capital and economic activity.

Fourth, economic principles must be harnessed in the engagement of the private sector in aboriginal economic development. The aboriginal economy is ultimately a part of the wider Canadian economy, albeit a disadvantaged part, and aboriginal people and businesses can benefit immensely from the booming economic activity on its doorstep.

To harness the potential of the private sector to teach and employ aboriginal peoples, government could help by making it profitable to do so, by instituting appropriate incentives for the private sector to stimulate the aboriginal economy. For example, the film industry in Canada receives huge tax incentives. The private sector is a willing partner, but moral suasion is not enough.

Thank you very much.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We'll continue with the Purchasing Management Association of Canada, Robert Dye, president. Welcome, sir. Five minutes to you.

[Robert Dye, President, Purchasing Management Association of Canada]

Thank you, Mr. Chairman.

My message today is simple and hopefully clear. We believe one of the fundamental requirements for securing Canada's place in a competitive world is to ensure that our citizens have the right skills for success. In our submission the citizens we focus on are public servants.

In a recent speech at the Dalhousie University School of Public Administration, the Clerk of the Privy Council, Mr. Lynch, said the following:

Public service is about values, and it is about accomplishment. We must emphasize excellence, leadership and teamwork in everything we do. Canadians should expect nothing less than excellence in their public service, and we should accept nothing less from ourselves.

As well, the 2006 Report on Plans and Priorities for the Treasury Board of Canada, tabled in Parliament by the Honourable John Baird, states that Canadians:

...will expect that the government will address productivity and competitiveness challenges first by setting a standard of management excellence for itself--to lead the drive for excellence through its own actions.

Mr. Chairman, this is precisely what our submission is about. We do not, however, underestimate the enormity of the challenge. We know that the Government of Canada is the largest and most complex organization in Canada. It is responsible for the country's largest workforce, some 450,000 employees, and it purchases more goods and services than almost any other institution in Canada. Moreover, the policies and programs of the government have an enormous effect on the lives and prosperity of individual Canadians, on the development of the communities in which we live, and on the economic success of Canada in a highly competitive world. It is imperative, therefore, that the government of the day be well served by its employees and that those employees be equipped with the right skills to contribute to the future success of Canada.

There will always be significant challenges in managing an organization as large and as complex as the federal government, with employees and operations spread from coast to coast to coast and around the world. One way to meet these challenges is to ensure that sufficient funding is provided to offer the appropriate education, training, and accreditation to public servants. Educating, training, and certifying public servants can be effective tools in promoting and achieving sound, transparent, and accountable government that contributes to the social and economic development of our country.

Equipping public servants with the skill sets necessary to help them succeed, and in turn helping Canadians succeed, is only one part of the equation. We believe it is equally important that the values and ethics guiding public servants in the work they do be reinforced. Values and ethics should be taught, reinforced, and observed every day. This will help public servants perform their work in an appropriate environment and in addition serve to reinforce public faith in government.

We therefore believe that there is a direct link between the quality of public service and the social and economic success of Canada and of individual Canadians in a highly competitive world. As you consider your advice to the Minister of Finance for Budget 2007, we hope you will recommend that sufficient financial resources be available so that public servants receive the training and certification they require to ensure that Canadians receive the best service possible from their government, that the government receives value for the money it spends, and that a culture of accountability is cultivated in the Government of Canada.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Dye.

We'll conclude our presentations with the Canadian Federation for the Humanities and Social Sciences, Donald Fisher, president. Welcome, sir. Over to you.

[Dr. Donald Fisher, President, Canadian Federation for the Humanities and Social Sciences]

Thank you, Mr. Chair and members of the committee.

As president of the Canadian Federation for the Humanities and Social Sciences, I represent the largest single segment of Canada's research community--30,000 researchers, 71 universities, and 68 associations. Included in this group are researchers and students in commerce, economics, education, English, law, political science, and other disciplines as well.

I want to iterate my agreement with what other colleagues have said to you, that research is key to increasing Canada's productivity and making it a stronger, more competitive nation. Taking the message one step further, I urge you to rebalance the funding equation by providing strong support for research and education in the humanities and social sciences. This new government has a major opportunity to fund significant research and learning in these fields that will have a positive impact on the lives of our children and, I would say, our grandchildren as well.

I would briefly make the case that research in the humanities and social sciences contributes in three major ways. First, contrary to popular belief, graduates from arts programs get well-paying, long-term jobs. This is precisely because of their academic breadth and flexibility, which lets them switch jobs when times change. As the nature of the Canadian economy changes, so too do the needs of Canadian employers. Make no mistake, corporate boardrooms and legislatures across this country are full of graduates from the humanities and social sciences.

Second, without exception, the development of new technologies and products causes changes in human behaviour, social structures, and physical environments. Advances in human reproductive technologies, for instance, give us the tools to create life. But to use these tools with compassion, care, and caution, we must turn to research in law, ethics, sociology, history, religion, and of course other disciplines as well.

Third, humanities and social sciences research is valuable because it expands society's knowledge of people--what people have done in the past, where we are now as a society, and what we aspire to be in the future.

Canadian scholarship in these areas is internationally recognized and sought out. One example is South Africa. Canadian social scientists have been working with the new government since former Prime Minister Brian Mulroney agreed to help Nelson Mandela and his democratic movement two years before the ANC was elected. Sri Lanka, Iraq, and other countries have turned to Canada for expertise in such areas as constitution-building, multiculturalism, democracy, and peacekeeping.

Unlike some scientific discoveries that lead to patents, start-up companies, and market success, rarely does research in the humanities and social sciences lead to such concrete economic outcomes. What is the dollar value of helping emerging democracies build a constitution; of international diplomacy and peacekeeping activities; or of building a fair, just society that recognizes the contribution of all its peoples?

Northrop Frye once compared the humanities and social sciences to the air: it's all around us but invisible; the only time we notice it is when it's taken away.

I urge you not to cut off Canada's air supply. Recent cuts in such areas as the Law Commission of Canada, the Status of Women, and adult literacy will have a heavy impact on our society. Earlier cuts to the Commonwealth scholarships, the Fulbright program, and Canadian studies programs abroad ended what was a sound investment in assuring Canada's place in the world.

To conclude, in times of global social upheaval, it is even more important to find the courage to fund research whose product might not give an immediate and monetary return on investment but is certain to contribute to the greater understanding of society and our own humanity. In the long term, these investments will turn out to be the most important ones.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Fisher.

Thank you to all for your fine presentations.

We'll move to questions now, beginning with Mr. Savage. Seven minutes, sir.

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

Thank you, Mr. Chair.

Thank you to all of our guests for coming this morning to the first consultation of the week--good presentations.

I'd like to start with you, Mr. Fisher. It's nice to see you again--always a pleasure.

I certainly agree with your brief. I think funding for research is the key to productivity. I agree that social sciences and humanities have not fared as well out of the reinvestment in research that we've had in the last number of years. Of course, social sciences and humanities have less other avenues of funding from corporations or private foundations than do the traditional sciences.

You used the term “rebalance” in terms of the funding. Can you explain what you mean by that?

[Dr. Donald Fisher]

Yes indeed; thank you for the question.

If you look at the last ten years, you see that the federal government has made new investment in research and development, across the board, in excess of $11 billion. And if you analyze that, you see that the proportion for the humanities and social sciences has been between 10% and 12%.

When we're arguing for rebalance, we're saying that we don't think the level of investment should decrease. In fact, we think it should increase overall. The rebalancing would just mean that we would be bringing up the humanities and social sciences closer to the level of the other disciplines and fields.

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

So increase the funding overall to CIHR, to NSERC, and to SSHRC, but bring particularly the SSHRC balance up a little higher.

[Dr. Donald Fisher]

Somewhat up. I think it's really important for us to set targets. If we look internationally at R and D spending as a proportion of GDP, then Canada lags behind. Sweden is at the top of the OECD rankings. We are below the OECD average of 2.25%. I think we should be number one. We should be right there with Sweden.

So it's not just the natural sciences; it applies to health and to all of the disciplines across the academic community.

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

Okay.

I think you said that there are 30,000 researchers in Canada who qualify for SSHRC funding. Or is that what you said?

[Dr. Donald Fisher]

These are the full-time university academic researchers in the humanities and social sciences--and the fine arts as well, to some extent.

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

Out of a total of how many? What would be the total number of researchers, including those who would be funded from NSERC, for example?

[Dr. Donald Fisher]

You would double the total amount of academics in the country.