Finance Committee on Oct. 16th, 2006

[Valerie Bell, President, Canadian Health Food Association]

Thank you.

The Canadian Health Food Association is a national not-for-profit association. We represent over 80% of the natural products industry. Our members include retailers, manufacturers, suppliers, importers, and distributors involved within the industry. Our products are wide-ranging and include vitamins, minerals, herbal products, homeopathics, traditional medicines, and natural and organic products. These all help lay the foundation for good nutrition and ongoing health and well-being in the Canadian population.

Our vision for our industry is to be the primary destination for Canadians seeking optimal health and quality of life. Our industry is a $3.5 billion industry, with over 70% of the sales coming from natural health products and supplements. Our industry employs about 25,000 Canadians across the supply chain and has become a significant contributor to the economy. The industry has more than doubled in the last five years, and nearly 80% of the products are actually manufactured by Canadian manufacturers. We have approximately 10,000 retail establishments across the country offering these products.

Consumer knowledge and acceptance of our products is continuing to grow, and self-care among Canadians has increased to over three-quarters of the Canadian public. In the last year, 44% of Canadians indicated that they have practised more self-care using our products than they had in previous years, and 52% of them said they would continue to increase this in the future.

In January 2004 new regulations were introduced to ensure the safety, efficacy, and quality of our products sold in Canada, including the licensing of all manufacturers, importers, packagers, and labellers, as well as applications for every individual product. Complete labelling information must now be available on all products, including a full ingredient disclosure, the range of active ingredients, warnings, etc.

Canada's world leadership in this area, in recognizing and regulating natural health products, occurs just as scientific research is also confirming the role of these products in achieving health benefits and the resulting cost savings to health care. A growing body of evidence internationally continues to demonstrate that increased use of natural health products can improve and achieve a magnitude of savings for the health care system in this country measured in the billions of dollars.

Natural health products usage can also help to significantly reduce wait times by more than 50% by keeping people healthy and out of hospitals. A recent study has demonstrated that a simple, cost-effective prenatal multiple vitamin taken daily by women of child-bearing age can drastically reduce the range of birth defects that affect one in every seventeen babies across this country. That multivitamin reduces those birth defects by over 50% in every instance.

Other research has demonstrated $6 billion in savings in cardiovascular disease treatment with the use of omega-3 fatty acids, flax seed, and folic acid, and another $3.2 billion from the use of a plant sterol that can decrease the risk of heart disease by over 20%. In the United States, two recent studies have shown that there is over $16.2 billion in savings from the health care system with calcium and folic acid.

We are asking for the following: that natural health products be a medically deductible expense, like their pharmaceutical cousins; that the GST be removed from natural health products to stimulate greater self-care; and that the natural health products directorate have adequate and sustained funding to properly evaluate and enforce the regulations. We'd also like additional research dollars and incentives available to companies active in this sector to support ongoing research in this area.

That's all I'll say at this point. Thank you.

[The Chair, Conservative, Brian Pallister]

Okay, thank you very much, Mrs. Bell.

We continue now with a representative from the Association of Canadian Publishers, Mr. Jack Wayne. Welcome, sir.

[Jack Wayne, President, Canadian Scholars' Press Inc., Association of Canadian Publishers]

Thank you very much, Mr. Chair.

Our subject today is not the physical health but the cultural health of our great country. I think we've got the solution to better jobs. Reading books, we know, leads to better jobs, higher income, and a more productive economy. So while the pills are being taken, we also suggest at least one book a month to keep our cultural life active.

We would like to thank the Government of Canada and the Minister of Finance for their continuing support of our industry--these programs were begun and rationalized under the Mulroney government of the 1980s, and there have been excellent results in terms of both the cultural output and the financial output of our industry. We have created 6,000 highly skilled jobs directly in the industry, not to speak of the great uptick in knowledge and capacity that readers of our books have experienced.

We supply direct employment to 16,000 writers in the country. There are writers and publishers in every province and in most communities. The publishing industry is the most cost-effective and competitive of all the cultural industries. As a bonus, in addition to all of this, it's an industry that pays for itself. The taxes collected from the publishing industry and the spinoff activities from the cultural industries in terms of the freelancers we use, the printers we employ, the designers, the typesetters--all of this creates a ripple effect that we calculate leads to over $1 billion across Canada in employment and in economic activity.

So we come before the committee, not asking for more support, but we are asking for the program that's in place and has been in place for several decades to be continued. We're facing a number of challenges, but the main issue for us now that the dollar is so robust is that we can't outsource Canadian culture. We have to buy Canadian culture with the big Canadian loonie right here in Canada, and if we're unable to do that--and we do that with some modest support from the Government of Canada--all the books Canadians read will be determined by choices made by editors in New York, or Frankfurt, or London, or Paris. What we're asking for is continuation of programs that leave Canadian publishers, the Canadian-owned sector of the market, with a level playing field.

We are an association of entrepreneurs. We're independent. We tend to be small and medium-sized businesses. We want to publish, as we do now, 85% of Canadian authors, but we would like to do it in a very fair way.

That's enough for me. Thanks.

[The Chair, Conservative, Brian Pallister]

You have an additional minute if you'd like.

[Jack Wayne]

No. I'm out of breath.

[The Chair, Conservative, Brian Pallister]

Okay. Thank you, Mr. Wayne. I'm sure you'll get questions later.

We continue with the Horse Racing Tax Alliance of Canada, Michael Van Every, chair. Welcome, sir, and over to you.

[Michael Van Every, Chair, Horse Racing Tax Alliance of Canada]

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

I am Michael Van Every. I'm delighted to be here today speaking for the almost 40,000 part-time horse owners and breeders and the close to 100,000 trainers, drivers, jockeys, exercise riders, grooms, hot walkers, blacksmiths, feed and equipment suppliers, racetrack workers, and others who earn their livelihood from this industry.

Some of these work at one of the country's racetracks, while many others are employed at the breeding farms throughout rural Canada. I want to make it clear that I am not representing the few ultra-rich horse owners whose full-time racing operations are not subject to the provisions of section 31 of the Income Tax Act. As you may know, section 31 restricts the deduction of losses incurred by part-time owners and breeders to an amount of $8,750 per year. Today's owners and breeders are middle-class income earners looking to combine their interest in horses with a business investment.

While we are middle-class people, horse breeding and racing remains an expensive investment. The average price of a thoroughbred horse sold this past year to Canadian owners averaged $14,500, plus the additional costs of board, feed, training, and care for the animals. Start-up costs in this industry are significant; profits can't realistically be expected for several years. Horse racing and breeding is a major contributor to the Canadian economy. On an annual basis, the value to the economy is $2.8 billion in sales, $2.3 billion in value added to the country's GDP, $1.8 billion in wages and salaries, $890 million in tax revenue to all levels of government, and 140,000 jobs. We employ twice the number of people as Canada's airlines, petroleum refineries, and investment companies.

Why am I here today? We are seeking to introduce a fair income tax arrangement for horse owners and breeders. The horse-racing industry in Canada cannot compete fairly with other Canadian sport and entertainment industries, or with the U.S. racing industry. Horse racing is not viewed as an attractive business investment because the Income Tax Act imposes on this industry antiquated and severe restrictions related to the deductibility of losses.

We need to keep horse racing and breeding competitive. Losses from every other part-time business in Canada, except horse racing, breeding, or farming, are deductible against other income generated by the taxpayer. Racehorse owners and breeders should be able to deduct losses on their operations against other income sources the same as in any other industry. This sector should be permitted to attract interested investors on a level playing field with other industries. Unlike other businesses and organized sport clubs, such as the mining sector and hockey franchises, Canadian racehorse owners and breeders are subject to these special tax rules. These unique tax rules severely restrict the deductability of losses against other sources of income, limiting investment and threatening the industry's financial future. The current anti-competitive tax regime is putting horse breeders in serious trouble because they cannot afford to breed quality stock. This has created the conditions for major declines in the horse-racing industry.

Here are some facts. There are now 48 racetracks in Canada, down 35%, from 63 tracks, in 1950. The number of races held annually in Canada has declined 38% in 15 years. Owners of standard-bred horses have decreased by 40% over 20 years. The number of registered thoroughbred horses born in Canada this past year fell by 47% from 20 years ago. Most of the horses winning the major Canadian stakes events are American or European. Why? Because they can afford to invest in their stock. These declines have a negative impact on our overall economy because expenditures in horse racing fuel secondary industries such as transportation, travel, tourism, insurance, and construction. It is also worth noting that racehorse owners and breeders in the U.S. are able to deduct their entire losses against other income.

We believe that the removal of horse racing and breeding from the restrictive provisions of section 31 of the Income Tax Act will create an additional 15,000 jobs, add $260 million in wages and salaries, increase taxes for all levels of government by over $135 million annually, and generate capital investment of more than $200 million.

Looking at the facts, it is clear that the best way to rejuvenate Canada's horse racing industry is to remove horse racing and breeding from the provisions of section 31 of the Income Tax Act, which is hindering investment and resulting in a competitive disadvantage for Canada's horse racing industry.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Van Every.

We'll continue now with the Canadian Housing and Renewal Association. Sharon Chisholm is here. Welcome. You have five minutes.

[Sharon Chisholm, Executive Director, Canadian Housing and Renewal Association]

Thank you very much.

Thank you, Mr. Chair and honourable members. I'm pleased to be here with you.

I want to first of all introduce my colleague, Steve Pomeroy, who is president of Focus Consultants and also heads up the production of our magazine, Canadian Housing.

It's no secret that the lack of affordable housing is a major issue in this country. We hear daily about homelessness, about the walks among the homeless to count them, and about the devastating effects on families of not being able to plan their futures, get their kids the kinds of services they need, into schools where they can learn, and be in neighbourhoods that will provide them with support.

In Vancouver, for example, there's been an over 200% increase in street homelessness between 2002 and 2006. In Calgary it's been the same, at a 238% increase in street homelessness between 2004 and 2006. Over two years we've seen this increase, and this is not in people who are sheltered, but this is in people who are living on the streets. This is done by doing a street count one day a year.

We have a major issue to deal with. This government has recently invested $1.4 billion into affordable housing in the form of trusts, which I congratulate you for. I think that's phenomenal and well needed, but we have to ask how well this money is going to be spent and if it's sufficient for the kinds of challenges we face. When I talk about challenges, I'm not only looking at homelessness, I'm also talking about challenges in bringing workers to where the jobs are, reducing health care costs, building safer cities, building more security, and attracting the right kind of talent so that we can create good jobs in this country. There are all kinds of challenges we have, which this government ought to be, and I know is, concerned about, that can be addressed in some way through investing in affordable housing.

I think when you invest in affordable housing you should look at what those outcomes are going to be and you should find a way of measuring those outcomes. And I would argue that for the recent dollars invested that will go to the provinces, the accountability isn't as strong as it could be. I was very pleased to see that the government wants to make sure that money goes to just new housing. I think it's an improvement over the prior program, where that didn't have to be the case.

There is a desire and a recognition that we need more units of housing created. But if this government is really interested in attracting immigrants, attracting jobs, and building more secure cities, you might want to look at other outcomes that you can get with that investment and make sure you're getting what you ought to be getting. I think there are ways of doing that.

Housing investment has declined over the years. We're now down to producing about 6,000 units of housing a year versus 25,000 that we produced up until the end of the 1980s. At that time we also had, as you know, the private sector more involved, and there were years when up to 80,000 units of rental housing were being produced. Now, year in, year out, it's under 10,000. So it's no wonder we have major problems.

But I think the federal interest in housing goes well beyond providing shelter. It includes things like immigration, reductions in greenhouse gas emissions, health, early childhood learning opportunities, reductions in the use of correctional centres, security, and also a very strong economic case. In many countries housing policies in 2006 are far more robust than they were in 2000, but Canada has actually worked towards a decline in housing investment and housing policy. The national government hasn't even declared that it has a strategy or what its real interests in housing are, which go well beyond the social policy concerns that provinces and territories have, and I think it can do that.

Other countries have invested because with globalization came these incredible growths in revenue and income. You saw that in Canada, which was fabulous, but that also came with growth in inequality, with income concentrations in many of our cities. We're starting to see that and understand the kind of problem it creates around investment, around homelessness, and a whole host of issues. I think Canada as a country and you as a federal government can't completely wash your hands of housing because you will be giving away one of the greatest tools you have for effecting changes in cities. I think you must look at these other outcomes you can achieve.

I have very little time. We have sunsetting programs that have to be renewed. We support the renewal of the SCPI program--I know you're well aware of it--as well as the RRAP program.

One final point I'll make is around legacy savings.

I have talked to various members about this. We are beginning to see that, with existing social housing, mortgages are being paid down and savings are being created.

The previous Conservative government under Mulroney, when Wilson was finance minister, told us that any savings we could have had could be reinvested in social housing. Savings were made in social housing, and we haven't been able to reinvest those savings. I would like to see this government go back to that kind of commitment.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you for your presentation.

We move to the Insurance Bureau of Canada, with Mark Yakabuski.

[Mark Yakabuski, Vice-President, Government Relations, Ottawa and General Manager, Insurance Bureau of Canada]

Thank you, Mr. Chairman.

My name is Mark Yakabuski.

I am very pleased to have this opportunity today to speak on behalf of the Insurance Bureau of Canada, or IBC. This is the national association representing home, automobile and business insurance companies across Canada. As an industry, it accounts for some $35 billion in premiums and indirectly generates more than 100 000 jobs across Canada.

Mr. Chairman, I want to talk to you about three very important things today.

First, I want to say what a pleasure it is to have the committee out in such full force today. I appreciate the time accorded to these sorts of things.

I want to talk about the importance of injury prevention in Canada, of having a competitive tax regime for Canadians, and of ensuring we invest enough dollars in this country's basic infrastructure.

First and foremost, on injury prevention, preventable injuries in this country—the injuries we have on our highways, in our homes, at work, and in leisure activities—cost the Canadian economy today, at very conservative estimates, $15 billion a year in lost productivity and additional health care costs.

At the Insurance Bureau of Canada, we have been advocating for some period of time that Canada should take a lead, but we should look at programs that have been active in Great Britain and in the Scandinavian countries. They have invested much more in raising public awareness about injury prevention. If you look at their statistics with respect to injury prevention, they do very well.

We know how costly health care is in this country and what a challenge it will be to meet the demographic challenge our health care system will face in the years ahead. We need to find other ways to economize in our health care system. One of the most favourable ways would be to invest modestly in injury prevention, because literally billions of dollars can be saved by having fewer injuries on our roads, at work, at play, and in our homes.

In our detailed presentation today I have a program suggesting that the Government of Canada take a lead on investing very modestly some $50 million over a five-year period that could make a substantial difference, believe it or not.

The second thing I want to talk about is the importance of a competitive tax regime. Our companies are able to provide automobile, home, and business insurance to Canadians because people from around the world think Canada is a good place to invest. Over the last three or four years, as we improved the insurance system in Canada, literally billions of new dollars were invested. So we can provide insurance to small businesses and households in this country at a competitive rate that otherwise would be jeopardized if those investment dollars were not coming to Canada.

In its last budget the government announced the very favourable reduction of the capital tax by 2006 and further income tax reductions later on in this decade. I simply want to underline the importance of absolutely ensuring that from an international perspective Canada remains a competitive tax regime. We know that the combined federal and provincial tax rates in Canada are some of the highest in the OECD, and that will continue to be a challenge for this Parliament.

I want to recommend that every effort be done to ensure that Canada remains competitive, because that competitiveness translates directly, for example, in our sector, to affordable and available insurance for Canadians.

The last thing I want to leave with you is the importance of investing in basic infrastructure. I commend the government for having set aside a very significant sum of money for infrastructure agreements between Canada and the provinces in its last budget. Historically those infrastructure agreements focused on what I sometimes call the sexy infrastructure projects. Those are the projects we all take note of, such as investment in highways, which we certainly agree with. But all too often they are not investments in basic infrastructure, such as sewage and water treatment facilities across Canada.

Every municipality in this country can tell you, Mr. Chairman, that we are severely underinvesting in basic sewage systems and water technologies in Canada. If we do not increase our investments in these basic infrastructures, the quality of life we prize in this country is going to be threatened.

I would recommend that you act on this plan as quickly as possible.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We continue with Donald Warden, who is here on behalf of the Canadian Association of Fire Chiefs.

Welcome, sir.

[Chief Donald Warden, Fire Chief, Wasaga Beach, Canadian Association of Fire Chiefs]

Thank you, Mr. Chair.

I am Fire Chief Don Warden. In addition to chairing the government relations committee of the Canadian Association of Fire Chiefs, I'm also the fire chief of Wasaga Beach, Ontario.

Our submission reflects the views of fire chiefs who participated in our pre-budget survey. Collectively they protect the lives and property of over 13 million Canadians. They are located throughout Canada in communities of all sizes, both urban and rural.

The title of our submission is “The Dangers of Delay”. Those words emphasize the unnecessary danger in which the government places Canadians when it does not forcefully address emergency response issues that are within its power to mitigate.

I will briefly discuss four such subjects during the balance of my allotted time.

First, we recommend that the forthcoming budget provide volunteer firefighters with a personal income tax credit for working to protect their communities. Recruiting and retaining volunteer firefighting personnel is becoming increasingly difficult. This tax credit would provide some financial recognition for the important and dangerous work undertaken by these individuals.

During the previous Parliament, this committee killed Bill C-273, which would have provided an element of financial recognition for the contribution made by the volunteer fire service. In doing so, the committee stated that it was generally supportive of the bill, feeling that “those who provide volunteer emergency services should be recognized by the federal government through the tax system”.

The committee then posed ten questions that it wanted answered prior to further consideration of this matter. The CAFC prepared a reply and filed it with the finance minister in advance of last May's budget. Last week our responses to those questions were sent to all members of this committee for advance consideration.

It is difficult for us to imagine why the committee would permit further delay. Accordingly, we again urge you to recommend tax relief for volunteer firefighter personnel whom you have gone on the record as generally supporting.

Second is our position on automatic sprinkler systems. Fires double in size for every minute they are left unattended. That knowledge led 95% of our pre-budget survey respondents to state that the federal government has an obligation to ensure citizens are protected by automatic sprinkler systems in residences and elsewhere.

A recent Toronto fire saw two fatalities. The Toronto fire chief informed media that in his opinion these deaths could have been avoided if the residences had proper sprinklers.

The CAFC has long urged that the tax system be amended to reflect the importance of encouraging and even requiring the installation of automatic sprinkler systems. Delays by the federal government in acting on our recommendation translate directly into danger for Canadians.

Third, I wish to draw your attention to the federal joint emergency preparedness program, JEPP, which is intended to encourage and support cooperation among federal, provincial, and territorial governments in working towards a national capability to meet emergencies of all types within a reasonable uniform standard of emergency response. This purpose is totally consistent with the statements that appeared earlier this year on restoring fiscal balance in Canada.

Our submission urges the standing committee to embrace the principles that all Canadians deserve basic fire protection services and to ensure adequate federal funding to support this principle. JEPP is the ideal vehicle for this purpose, but funding needs to be increased and a mechanism put in place to ensure it remains responsive to escalating equipment costs for the fire service in the future.

Finally, our brief asks for the support of the standing committee for the creation of an office of the national fire adviser within Public Safety and Emergency Preparedness Canada. At present, no voice exists within the Government of Canada to represent the concerns of the fire service. The CAFC believes that the national fire adviser would fill what we regard as a dangerous void.

Time restrictions preclude me from discussing the detailed role of the national fire adviser during these remarks. However, I would ask you to spend a few moments reading the section of our brief on this subject, beginning on page 4. A comprehensive position paper on this subject is in the hands of PSEPC. I have a copy of it with me today and would be happy to leave it behind if it would be helpful to the committee.

I appreciate your kind attention to our concerns and look forward to discussing them further with you.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, Chief Warden.

If you would leave that paper behind, we'll arrange to have it translated and forwarded to each of the committee members. We appreciate that.

[Chief Donald Warden]

Thank you very much.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

We'll continue with Sarah Smith, who is with us today representing the Dystonia Medical Research Foundation Canada.

Please proceed.

[Sarah Smith, National Director, Dystonia Medical Research Foundation Canada]

Thank you, Mr. Chair, for the opportunity to speak today.

Canadians with dystonia are with me as witnesses.

Dystonia affects everyone from all walks of life, ethnicities, and ages. It can affect a single body part or multiple sites throughout the body, causing painful involuntary spasms and muscle contractions.

The key stumbling blocks to helping Canadians are lack of awareness and lack of funding for dystonia research. For example, dystonia is six times more common than ALS; however, the Canadian Institutes of Health Research directed $2.4 million for ALS research and only $334,000 for dystonia in 2005. Research progress is being made with the $334,000 the federal government directed to CIHR last year.

We believe that Canadians need to know that in terms of the number of Canadians affected by dystonia, dystonia is falling behind. Indications are that over 50,000 Canadians are affected by this disease.

Groundbreaking discoveries have been made. The DYT1 gene has been identified for early onset generalized dystonia, and as a result of that discovery a protein associated with the DYT1 gene called torsinA has been discovered as well. A new technology is being applied to torsinA, and it has been seen to turn the mutated gene on and off in animal models. This holds great promise for humans with dystonia.

We can't stop now. There is an urgency to continued funding. We request that the federal government direct increased research dollars for dystonia to the Canadian Institutes of Health Research.

Thank you very much for your time and consideration.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation.

Thank you all for your presentations.

We'll move to questions now. We'll begin with Mr. McCallum for seven minutes.

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

Thank you, Mr. Chair.

Thank you all for your presentations.

I'd like to begin with Sharon Chisholm. I certainly agree with you on the subject of housing. I would mention, though, that in one of the budget documents in the last budget, there was talk about a clearer definition of federal and provincial responsibilities. Housing was specifically mentioned as an area that ought to be provincial. There is some suggestion that the government doesn't really want to be in housing. They didn't say that specifically, but there certainly is that implication.

What is your view regarding that? In some theoretical sense, is that correct that it should be a provincial responsibility? What would be the consequences of implementing that view, as opposed to having a federal role, as we have had for some years now?

[Sharon Chisholm]

It isn't new that the provinces have been responsible for delivering housing programs. That's been going on now for a number of years. It used to be that the federal government and the provinces had partnerships and they would both contribute. Now the delivery and the management of the existing housing is at the provincial level.

What I'm arguing is that there is a federal interest in housing and that if you let go of this powerful instrument, which can affect changes in a whole number of different areas, including shelter, you're not looking at the macroeconomic consequences of doing that.

I think it's a powerful instrument. I think the provinces ought to be involved. Cities obviously want to have a role in housing. Communities have been doing a lot in Canada, and they could probably do more in terms of delivering really effective housing. But the federal government also has a strong interest that has to be maintained.

There are no simple answers. I think the federal government would cut off its nose to spite itself if it just gave over the whole portfolio to provinces, because it would lose the ability to do a whole number of other things that are incredibly important in a competitive state.

I would argue that you have to have a provincial-federal partnership that enables you to do that. Alberta might say, for example, that they want all its housing this year to be built in Calgary because that's where the shortages are, and the federal government might say it wants to make sure that housing builds safer cities, provides housing for immigrants, and continues to makes cities more competitive. So both interests can be met but with a continuing partnership from all quarters.

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

I would think as well that if one wants to have some degree of equal access across the country, then differences in budgetary situations in different provinces, and also attitudes, would constitute a case for some federal involvement.

Do you accept that view?

[Sharon Chisholm]

Absolutely. You don't see the provinces rushing out to make investments from their own dollars. The investments in housing made by the provinces in the last ten years--since I started--have really been the federal government providing the incentive to get the provinces to move. It hasn't happened without that.

There were only two provinces prior to that point that maintained any kind of housing presence, and those were B.C. and Quebec. The rest of them were really not doing anything about housing.

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

Thank you.

Now to change the subject a little, to Valerie Bell and this natural health products directorate, I've come across this beast in a different incarnation, not for natural products but for some cosmetic companies I happen to have in my riding. To my understanding, and I'd like to ask you if this is true, there's a huge and growing backlog. So it takes ever-increasing time to get products approved, whether they're natural products or cosmetics. Certainly for the companies I know about, this is a major issue.

Is that your understanding of the situation?

[Valerie Bell]

Yes, it is. Currently there are over 15,000 products going through the application process. Only 2,000 of those have been approved in the last three years. There's a total of 55,000 products to go through the system on natural health products alone, and we are certainly in a backlog situation and are trying hard to work with them to resolve it.

But one of the issues with the natural health products directorate is that it is operating on Governor General's warrants, and has been doing so for at least the last two to three years. Last week it actually took its research budget and transferred it over to operating dollars in order to meet its ongoing budget needs. We feel it is critical that this department be adequately resourced in order for our country to be competitive, both nationally and internationally. We are falling behind significantly on the innovation side in particular.

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

I certainly agree. In my riding there are jobs and income being lost because of this backlog.

So you think the solution is simply a matter of putting more money in, or do you think there are deeper problems?