Finance Committee on Oct. 17th, 2006

[John McKay, Liberal, Scarborough—Guildwood, ON]

Arguably, it might also give a competitive advantage, in the same fashion that universal medicare gives Canada a competitive advantage, particularly immediately, vis-à-vis the United States.

In the time remaining I want to ask Mr. Shapcott a couple of questions. I appreciate Mr. Shapcott's regular appearances before this committee and his passion and his advocacy.

In my particular riding, the SCPI monies have been greatly appreciated. At one point we had something on the order of 1,300 homeless people in the riding, housed in rather expensive and inadequate fashion. I'm pleased to say that has been diminished substantially.

Chair, how many...?

[The Chair, Conservative, Brian Pallister]

Ten minutes, Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

If you look at the budget you'll see an allocation of something in the order of $800 million. It will be my colleagues' argument that they've taken care of affordable housing and homelessness, neglecting to mention that Bill C-48 obligates them to do that. That's the law of the land at the present time as long as there's a surplus. Then of course there's the announcement of $1.4 billion, and I assume the $800 million is part of that amount.

So the argument of the government is, “We've taken care of this problem; we've given you a huge amount of money.” Yet your presentation says, “I'm worried about the sunsetting of SCPI. I'm worried about the sunsetting of RAP.” You have specific recommendations on $67 million in new money for homelessness, and $114 million for rehabilitation, energy conservation, and things of that nature.

So really, Mr. Shapcott, what should you be worried about? Aren't you confident that this government will come through with its obligations to you?

[Michael Shapcott]

The best way to understand it is to get some handle on the scale of the national dimension of the problem. According to the government's own estimates, about 1.5 million Canadian households--that's not individuals but households--are in what's called “poor housing need”. That is to say they're living in sub-standard, inadequate housing. They can't afford to pay their mortgage costs or their rents, so they're one step away from being homeless. Although the numbers are very difficult to verify, perhaps 250,000 to 300,000 Canadians will experience homelessness over the course of a year. So the numbers are quite staggering.

The housing dollars from Bill C-48 from 2005, much of which is now finally being allocated, will make an important difference because it's the single biggest chunk of money we've seen for new affordable housing in more than a decade. So we're grateful for that. But set against the scale of the need, it's simply a down payment on an urgent national problem.

Again I'd just say to the members of the committee, go anywhere in Canada, not just big cities but small towns, remote rural areas, and the boom province of Alberta, and you'll see how serious housing and homelessness really is.

[The Chair, Conservative, Brian Pallister]

We will continue with Mr. Paquette. You have seven minutes.

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chairman.

Ms. Hunter, following the answer on the social economy you gave to Mr. McKay, I would like to add a clarification. As you said at the end of your intervention, the money for the social economy had already been largely committed in Quebec. After all, $5 million, which were to be spent on a project with native friendship centres, will not be available for the Chantier de l’économie sociale in Quebec anymore. Nevertheless, $28.5 million had already been committed, and this amount was not included in the $39 million which the Conservative government decided to cut. Quebec got the short end of the stick. Quite simply, Quebec was more advanced in this area, and the Chantier de l’économie sociale, which is celebrating its 10^th anniversary this year, was able, as soon as the former government announced the funding, to use the funding.

I would like to stay on the subject of Conservative cuts, and my question is for you, Ms. Carleton. With regard to orchestras you recommended that the committee keep in mind the role played by cultural diplomacy when the right projects, which reach the right audiences, are exported abroad. I noted—and my friend and colleague Maka Kotto asked a question in the House on this very issue today—that the amount of $11,878,000 was cut from funding to open public diplomacy, if I can put it that way.

First, I would like you to tell us what the effect of these cuts was on our open diplomacy, that is, cultural events, conferences, travelling theatre productions and our orchestras when they travel abroad.

Second, how can the committee convince the Conservative government to reinstate the funding and, perhaps, even increase it?

[Katherine Carleton]

What I understand about the cuts to public diplomacy funding that were announced ten days ago or thereabouts--the $11.8 million in public diplomacy funding that is gone--is that a portion of that will indeed, as best we can tell, have an impact on tours that have already been planned, budgeted, and contracted for.

A number of our member groups that have been putting plans in place for many years, as they need to in order to incorporate touring into their schedule of activities and to build the depth of relationship necessary with international presenters to gain their confidence, are in a very difficult position right now. They have been told by Foreign Affairs and International Trade Canada that all the requests are currently on hold until the department knows the impact the cuts will have on cultural touring funding.

These are tours that are actually coming up as early as this spring. The potential impact on Canada's reputation, on relationships that have taken many years to develop.... We have always seen these as an important pillar of Canada's international public diplomacy. This is in fact a very difficult situation. I can't say that it's not difficult, and there's an enormous amount of concern out there.

[Pierre Paquette, Bloc, Joliette, QC]

You said that this could have an impact on Canada's image abroad. Who is being affected? Will some sectors be more affected than others? Perhaps some groups have less access than others to traditional commercial channels for promoting artists and Canadian and Quebec cultural productions? Are there any specific sectors that will be in a particularly vulnerable position?

[Katherine Carleton]

First of all, the Province of Quebec is foresighted enough to have its own budget to help support international touring. However, they have long understood that there is investment by the province, which is keen to have a public standing internationally, and also investment by the federal government.

My understanding at this point is that there are two groups with which I'm very familiar whose touring plans are on hold. One is the Tafelmusik Baroque Orchestra. They have concerts coming up in the United States this spring that are presently on hold. They cannot afford not to have the funding; they will lose too much money. We also know that the Montreal Symphony Orchestra, under the leadership of their new music director, Kent Nagano, has made a number of approaches towards international touring to restore that orchestra to its proper place on the world scene, and my understanding is that they too are in a very difficult situation.

Finally, the Vancouver Symphony Orchestra has been invited to perform at the Olympics in 2008 in Beijing. We all want to be in China. We understand that there are ways of developing relationships in China that transcend merely having the cheapest goods and that the development of that kind of relationship is terrifically important. To see Canada as a sophisticated country with a strong arts community is a key part of that, in my view.

[Pierre Paquette, Bloc, Joliette, QC]

If I have a few seconds remaining, I would like to get a clarification.

Mr. Shapcott, in your first recommendation, you refer to programs for increasing the funding available to fight homelessness. You did not make specific mention of the Supporting Communities' Partnership Initiative, also known as the SCPI. Were you in fact referring to this program, which is due to end in March 2007 and which everybody wants to see extended, given that it has proven its worth, or were you referring to something else?

[Michael Shapcott]

Yes, I am referring to the SCPI program. In our communications with officials in the minister's office and in the Prime Minister's office, we've been told that they don't like that name because it was inherited from a previous government. So we've said that they can change the name of the program if they like, but to put more money in. We don't care what the program is called; it's important to fund the services. So we've started to call it the federal homelessness program, but it is SCPI.

[The Chair, Conservative, Brian Pallister]

Merci.

To continue, we'll go to Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Wonderful, thank you, Mr. Chair.

I wanted to start with John Williamson.

Mr. Williamson, I think you made a couple of very astute recommendations for the panel. I hope everybody was paying attention, because I think what you were speaking about comes back to exactly what the charge is of this panel, which is Canada's place in a competitive world and trying to make our overall economy more competitive.

I had a couple of specific questions. You mentioned tax reduction, spending restraint, EI premium reductions, and debt relief or debt payment by the federal government.

We announced a number of spending restraints a couple of weeks ago in areas where we felt taxpayers weren't getting value and where it wasn't efficient or effective spending. What was the Canadian Taxpayers Federation's feeling about that?

[John Williamson]

That it was a wise review, broadly. Two interesting things happened that day. One, for the first time in nine years, I believe, program spending was actually down one year over the other. That hadn't happened since the years when the federal government was fighting the deficit. It was a welcome change to see that by holding some year-end spending and focusing on priority areas, that was in fact possible. And lo and behold, the sky did not fall.

There were two areas. The finance minister and the Treasury Board president announced $1 billion in reductions, cuts, over the two years, and as well another $1 billion in efficiency savings. Again, broadly speaking, those reductions are in line with the priorities of most Canadians.

Services weren't cut. What we saw was funding that either hadn't been spent, was redundant, or went to special interest groups. And that, I think, is one area that the government has to tackle, the funding of special interest groups, the groups out there who are working either to oppose the government's agenda or, frankly, to support it. Taxpayers have no business funding those kinds of organizations, regardless of their political orientation.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you--and I agree with you.

In addition, we talk a lot about corporate taxes and about how those are perhaps impeding investment into the Canadian economy. We've set out a timetable to reduce corporate taxes to 19% and put an end to corporate surtaxes.

Do you believe these measures are going to be viewed positively internationally? Are they going to help us build a stronger economy?

[John Williamson]

I think so, yes. I thought the 2006 budget largely accomplished what not only the current government but even the previous government wanted to do to bring down the corporate tax bite in this country. I think schedule 1 is responsible, and I think it received bipartisan support.

The challenge going ahead, though, is on the marginal tax rate that individuals face. That's really where our organization is focusing for the 2007 budget. It's those broad-based income tax cuts--again, not just on the low end but on the high end as well--to bring down the marginal rates that discourage people from coming to this country, or else they're contributing to the brain drain.

[Dean Del Mastro, Conservative, Peterborough, ON]

You were encouraged by the comments of the finance minister yesterday?

[John Williamson]

Oh, very much, yes. I think once he has gone out on that plank, it will be very difficult for him to come back off it.

[Dean Del Mastro, Conservative, Peterborough, ON]

He's not coming back off it, sir.

[John Williamson]

I think the more clarity on this issue, the better.

[Dean Del Mastro, Conservative, Peterborough, ON]

Okay, thank you.

To Mr. Johnston from Precarn, you spoke about a competitive advantage focus. You'd like to see Canada continue to work on where we found competitive advantages in research and so forth, and continued investment in university research, which I also support.

You say here, in point two, “Make sure the tax regime is working.” I think that's really key. You talk about this valley of death that occurs, but really, I become very weary about looking at investing large amounts of government funds into what will ultimately become corporate profits. If you set the proper environment, I think private investors will build the bridge you're looking for.

Do you think that's a reasonable approach, to actually create the environment where investors, rather than taxpayers, will put the money there?

[Paul Johnston]

The answer we promote is that there needs to be a broad-based approach. As I mentioned, the SR and ED tax system to promote research and development in industry is among the best in the world. There could be arguments in terms of its evaluation of its effectiveness, in terms of levering more industrial research, but in our view, yes, that kind of environment--the regulatory environment, intellectual property environment--all should be kept world-class and world-competitive.

At the same time, in terms of the valley of death, especially for small Canadian companies who have a new technological idea, in order for them to grow into a large Canadian company, then at some stages, particularly in that valley of death, they may need leveraged support. We're not talking about subsidizing that company across the valley. What we're talking about is providing enough of a lever—and it is a financial lever—to allow them to make their own investment, to bring in their own investment, in research and development so that the return on investment they see on the one side of the valley is actually fulfilled when they get to the other side.

It's only by having a broad-based approach to these kinds of incentives that you actually then create the wealth, the commercial wealth, in the economy that generates revenues for the government.

[Dean Del Mastro, Conservative, Peterborough, ON]

All right. We'll see what we can do about being your staff and shield as you walk through the valley of the shadow of death.

[A voice]

That's a bit much.

[Dean Del Mastro, Conservative, Peterborough, ON]

Sorry, guys. I couldn't resist.

Mr. Shapcott, you've basically called for $2.5 billion in increased spending into homelessness, I suppose. That's a huge amount of money. Certainly $1.4 billion was committed from budget 2006. This would represent a significant increase. I'm not suggesting that the money couldn't be spent or that there isn't a need for it.

In the last more than a decade, for example, has that much money been spent? Has it even been contemplated?