Finance Committee on Oct. 17th, 2006

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Tarr.

We'll move on now to questions from the members. Thank you all for your presentations.

We'll begin with Mr. McCallum, for six minutes. It's over to you, sir.

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

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

To begin with the subject of literacy, having spent six years in politics and 18 years teaching in a university I obviously appreciate the importance of education. When you add to that the China-India global competition and that we can't compete on low wages, we have no alternative but to compete with our brain power. When you put in, as well, your figure of 42% illiteracy, which I didn't know was so high—putting all of that together, it's obvious to me that it's not only socially mean-spirited but economically super-foolish to cut literacy at this time.

So I guess I have a double-barrelled question to you, and you could answer one or both, as you see fit. It seems so obvious. Do you have any explanation as to why the government would do this? Second, can you tell us in human terms what the implications of these cuts are in any of these provinces you've described?

[Margaret Eaton]

I'm afraid I can't speak for the government, although I appreciate their desire to reduce the debt. But we do feel it's “penny-wise and pound-foolish” to cut literacy programs at this time.

We know that jobs are in danger—the jobs of literacy tutors and the jobs of the staff of the coalitions. As I was running through all of the different provincial and territorial coalitions, you could hear all of the different programs that will actually be cut. We are still trying to calculate what the costs of all of this will be and figure it out, but we do know that some “on the ground” programs will not be delivered.

For ABC CANADA, we have real concerns about our Family Literacy Day. The provincial coalitions and territorial coalitions were responsible for sending out about 80% of our materials to groups in the field to use to promote Family Literacy Day, which encourages adults and children to come together to increase their literacy skills. We feel that the effects will just be devastating.

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

You mentioned $17.7 million. How important is that, in the total scheme of things, to what the government spends in total on literacy?

[Margaret Eaton]

The federal government in this fiscal year will spend about $40 million on literacy. The $17 million represents an amount that was cut, so $40 million is what is left over in this fiscal year.

But what's especially difficult is that the government has changed its priority so that it will only fund national organizations and will not fund provincial or local groups any further. Groups such as the Newfoundland coalition, which relies 100% on funding from the federal government, will probably disappear.

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

By my calculation, that's about a 30% cut; from $58 million, you're cutting off $18 million.

[Margaret Eaton]

Yes, thank you. Your numeracy is better than mine.

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

Oh, thank you. Hopefully I'm literate, too.

[Margaret Eaton]

Yes, I think you are.

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

Thank you very much.

For Mr. Golombek, I liked the thrust of what you're saying, in terms of finding ways to help low-income people save. My question would be this. It's my understanding that the participation rate of low-income people in schemes such as the registered education savings plan has not been high, and maybe it's because by definition low-income people have less money. How do you address that issue in your proposal to favour higher saving by lower-income Canadians?

[Jamie Golombek]

We think currently, if you read the literature that's out there—there was a certain study done a few years ago, even, by the C.D. Howe Institute on this exact issue of low-income Canadians trying to save for retirement—there really is no incentive right now for someone making, if I can generalize, under $25,000 or $30,000 a year to save at all, because the government will take care of them. Now, it won't do so at a very high level, but certainly they'll get things like a guaranteed income supplement or provincial Medicaid programs that we have across the provinces.

What we're recommending is that if we had some kind of incentive program—and we're not talking about a lot, but just an initiative—whereby, let's say, you could save $1,000 a year..... If someone—a family, let's say, making $30,000 to $35,000 a year—could save $1,000 and not risk, when they take the money out upon retirement, losing their government benefits, they'd still be able to get the government benefits they've been entitled to, which are currently acting as a disincentive to save.

We would say, on the one hand, that changing the policy to introduce either a new vehicle such as a tax prepaid savings plan from which withdrawals would not affect clawbacks, or exempting from the definition of “clawbacks” RRSP or RRIF withdrawals later on as retirement income, might act as an additional incentive—not to mention establishing a grant program similar to the RESPs, whereby the government might contribute 20% on a deferred basis into the plan.

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

What about the learning bond? Is that of any value to lower-income people?

[Jamie Golombek]

Again, the learning bond that was introduced in conjunction with the RESP has been administratively complex for us to set up. We finally just set it up this year in terms of our own administration at AIM Trimark, and it's too soon to tell whether there's been a large take-up on that. But it is administratively complex.

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

Thank you.

How much time do I have, Mr. Chair?

[The Chair, Conservative, Brian Pallister]

You have about a minute.

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

Okay, just time for housing.

Mr. Elliott, I certainly agree with the thrust of what you said. But it's also true that in one of the supplementary papers to the budget the government wanted to have a clearer definition of the roles of the federal government versus the provincial governments. Out of the three examples they gave, one specifically singled out was housing and homelessness as something purely provincial. So it looks as though the government is unlikely to support social housing, because it said pretty clearly that it is provincial and not federal.

What's your view of that position, and what would be the implications of following through with it?

[The Chair, Conservative, Brian Pallister]

You have a brief time to answer, sir, 20 seconds or so.

[Ken Elliott]

I think social housing is a national responsibility. We understand that housing is going to be delivered through the provinces, and that's fine. We have no problem with that. But we still feel that there is a very real role for the federal government to play in ensuring the moneys that go toward providing that housing are available and that guidelines are attached to those moneys to ensure that the people in need in this country are being served by these moneys.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir.

We must move on now to Monsieur Paquette.

Mr. Paquette.

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chairman. I'd like to thank you all for your presentations.

Mr. Cormier, I listened very closely to what you had t o say, particularly when you mentioned that according to one study, light and medium-duty commercial vehicles represent 12% of miles driven but generate up to 25% of all ground-level emissions in urban environments.

This situation is not about to get any better. You propose a solution that I find most interesting, namely a tax incentive for courier companies that purchase hybrid vehicles.

You maintain that one hybrid electric delivery van has as great an impact on emission reductions as 17 Toyota Prius automobiles.

Could you elaborate further on that statement? Are there any studies corroborating your claim that committee members could see?

[Al Cormier]

Mr. Chairman, I was referring to studies conducted in part in Canada, but more particularly in the United States and in England. There isn't much data available in Canada on transportation and emissions. This problem has been around for a number of years. Similar studies done in England and in the U.S. corroborate this claim and have produced measurable results.

[Pierre Paquette, Bloc, Joliette, QC]

I am not opposed to your suggestion of a tax credit. On the contrary, I see it as a step in the right direction. However, as far as delivery vehicles are concerned, we could be facing another kind of problem. According to a study conducted in 2001 by the federal Office of Energy Efficiency, delivery trucks operating in urban areas in Canada often carry 20.5% of their maximum load, which means that some trucks are far too large for the volume of goods delivered.

For starters, can you explain to me why companies use vehicles that are four times larger than they require, given the volume of goods delivered? Secondly, couldn't certain conditions be attached to this tax credit to ensure that the truck is a hybrid vehicle and that it also meets the industry's requirements?

[Al Cormier]

The industry recognizes that this has been a problem for a number of years. Vehicles are designed to operate during peak hours and have maximum load and engine capacity. Electric and hybrid technology allows us to have less engine power and to save on fuel. Several studies have shown that companies use different-size vehicles for different jobs. They are beginning to adjust their fleet of vehicles to suit their needs.

[Pierre Paquette, Bloc, Joliette, QC]

I assume these studies can be accessed on line. Could you forward the title of these studies to our clerk? This is an extremely interesting topic, in light of present-day concerns about smog and the effects of greenhouse gases on global warming.

I'm not sure if you'll be able to answer the following question, Mr. Tarr. Appendix B of your brief suggests that the government continue to move ahead with the social economy initiative. My colleague alluded to cuts to literacy programs. Over $39 million has also been cut from social economy programs. Contrary to what is written, Quebec lost $5 million. Clearly it had more funds committed to this initiative.

Can you describe a social economy enterprise to me?

[Mike Tarr]

The social economy initiative, basically, was to provide infrastructure funding for infrastructure and for seeding for a number of programs at the local community level, particularly focused on assisting people who are currently somewhat disadvantaged in the marketplace. It was for investments in small business and a variety of other things that people wish to do.

In my own province, for example, in my own riding, in my own area, we had joined with a local community futures organization and were ready to announce a micro-lending program that was aimed specifically at beginning entrepreneurs. At the last minute, of course, with the funding cuts, our partner was not able to contribute and we're now having to go back and rethink and remobilize. I think the initiative cuts have really caught a large number of people unaware. They were something of a surprise, and as a result there is some disorder right now in the whole social economy area.

My view, personally, is that moneys that were earmarked for things that actually had a practical application in terms of allowing people to become more independent financially was a good news story, not just for those people, but for the communities and for both levels, the provincial and federal governments. So we're hopeful, at this point, that after some review these funds will be brought back.