Finance Committee on Oct. 17th, 2006

[The Chair, Conservative, Brian Pallister]

You have seven seconds, Mr. Shapcott. Go ahead.

[Michael Shapcott]

Not in the last decade, but if you go back 20 years, yes. In fact, we're asking to go back to the future, if you like, to go back to the 1970s and 1980s, when this represented about 1% of the federal budget, and it was in fact the amount of money the government was spending. And it was producing about 500,000 good-quality affordable homes across the country.

[The Chair, Conservative, Brian Pallister]

Nice try, sir.

And we'll move on to Madam Wasylycia-Leis now, for seven minutes.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you, Mr. Chairperson.

Let me ask this to Carol and Martin-Eric, and anyone else who wants to comment on John Williamson's statement that these $1 billion cuts were necessary and that there wasn't a cut to programs, just to special interest groups and programs that either were redundant or for which money hadn't been spent. You've commented on the social economy initiative. What do you say to John Williamson?

[Carol Hunter]

I think I would just say that we need a broad-based approach to our economy. We need a mixed economy with investors and with taxpayers and with individual citizens also contributing to how they build their businesses. And I would argue that competitiveness also requires an inclusive approach that engages citizens, including marginalized citizens, from many different areas to really develop the skills through cooperatives. One example I like to give is that co-ops are really human resource training grounds.

The leaders of the Nunavik government right now got their first set of consensus-building skills, skills to make decisions, by working in their local co-ops. We need a range of approaches to building our economy, really a mixed economy. And I think cooperatives are that fourth leg of the stool.

[Martin-Éric Tremblay]

If I may add to Carol's comments, I strongly believe that a cooperative is there to make profits and to give a return to stakeholders or shareholders. The difference between a cooperative and a for-profit company is much more than.... The return goes back to the community, which is different from when you have a for-profit company. So if we can have a little advantage as a cooperative to do business in Canada, it's investing in our community, and it's investing in everybody in Canada, and making sure that the money is going to stay inside Canada, much more than anywhere else.

So yes, we might have needed some cuts in income tax, but it has to stay in the Canadian market.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Katherine, do you have any response to John Williamson?

[Katherine Carleton]

I studied the list of cuts that were announced ten days ago with a certain sense of interest combined with a growing sense of mystification. The list of things that were cut, in some senses, seemed to make sense. They were ideologically consistent. I could see where the government was coming from, and I could say okay, I understand.

I'm still trying to figure out a few of the cuts that were proposed, and I'm hoping that as time goes on the wisdom behind them will become clearer to me. One of them is certainly the proposed cut to the public diplomacy budget of $11.8 million. The other of course was the cuts to the small museums assistance program through the museums assistance program. In that case, I was not really able to see where there had been money wasted. I had understood that the government's own committee had made recommendations to review and enhance that program, and yet the announcement came.

I suppose what I'm saying is that I'm watching and waiting to see what comes next. I'm deeply concerned and deeply interested.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

Michael, but for the grace of God, I suppose, there went you and the housing money.

SCPI dollars were cut; housing and homelessness projects were on the list for a cutback, but the community protested, and they're back on. Would you consider funding for such projects to be wasteful and to be counterproductive to a competitive society?

[Michael Shapcott]

There's been a lot of review, both by government and by community organizations, and the verdict right across the board is that the programs have been extremely successful. They provide two purposes. One purpose is to try to assist homeless people in being a little bit more comfortable and to assist them to live from one day to the next. The second is to assist them in the transition from homelessness to housed. On both those scores, the federal homelessness program has been a success.

The criticisms I've heard of the federal homelessness program are twofold. The first is that it's due to expire, and agencies and services are very concerned about that; the second is that there's not enough money. Only 61 communities across the country have access to the money. In fact about 10 communities get most of the money, when in fact it's a national problem.

The verdict is very clear; the consensus is very clear that it's a good program and deserves support.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thanks.

John, I really should give you a fair shake at answering this issue.

Do you not accept the fact that there should be...? I mean, we all agree there's probably some fat to be trimmed somewhere in government, but shouldn't we be selective in our approach? Wouldn't you agree that a program that might help someone gain the ability to read and write so that they can function in the workplace would be a useful investment that has dividends for society?

[John Williamson]

If it's actually going to help people read and write, sure, but there was a story, I believe out of Winnipeg, about one group that had its funding cut. It didn't actually train people or help them learn how to read and write, but it produced a newsletter--and I don't see how producing a newsletter actually helps people who can't read--and it lobbied for more money. It didn't actually deliver any programs.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Let me interject because we dealt with this matter this morning. That organization you're talking about is Literacy Partners. People would call that number and then that one person on the phone would link up the person with the appropriate program, whether it was in a school system, a workplace, or a community organization, so that the person would get the help they needed. Isn't that important?

[John Williamson]

How many calls did they receive? I saw at one point that it was one a day or one a week. It was something absurd--

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

No, I think that--

[John Williamson]

--for the value-for-money proposition here. I think that's what we're talking about here. We can pick and choose and, as you said, there is fat to be cut, and I thought the government made a reasonable attempt to begin to trim some of that fat.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Fair enough, but wouldn't you apply the same analysis, the same thought, to taxes for corporations? Even Don Drummond has said that the taxes going to corporations in the name of productivity have not actually produced the results that were intended and therefore ought to be assessed on the basis of effectiveness. Shouldn't we do the same thing, instead of the broad-blanket corporate tax cut?

[The Chair, Conservative, Brian Pallister]

Thank you, madam. Unfortunately, the time has--

[John Williamson]

I can answer that quickly.

[The Chair, Conservative, Brian Pallister]

No, no, you can't. The time is up, although you might want to work your answer to Madam Wasylycia-Leis into a response to my question, if you like. I just have one.

We spend a lot of hours on this process, as you know, and we appreciate your involvement in it, obviously. We spend an inordinately large amount of time on discussions about expenditure, whether it's reduction of expenses or increases in them--it's mostly proposals for increased expenditure, as you can appreciate--but we spend precious little on the revenue side.

Mr. Williamson, we have--according to the Auditor General, and backed up by Statistics Canada--an epidemic in this country of money moving offshore. It is millions and billions of dollars. One of the recent estimates from StatsCan is $400 billion in foreign direct investment by Canadian firms, with 25% of that in Barbados alone. We are losing billions of dollars in tax revenue every year. According to the Mintz report on business taxation of almost a decade ago, if Mr. Mintz's numbers are remotely correct, we could fund every one of the proposals that we've heard out of a small levy on the money that moves offshore to foreign jurisdictions and is not taxed here. In fact, we allow tax deductibility on money borrowed here to be invested in other jurisdictions. I want to know if your organization is concerned about that, because I haven't heard a word on it in the last month. I am concerned about it.

[John Williamson]

What's interesting is that it's not just Barbados, it's also the United States and it's Ireland as well. Some rather advanced western democracies are the recipients of this capital flight from Canada.

When you talk about a tax on the capital, I'm not sure if you're suggesting a Tobin tax or something like that. Certainly if it's on foreign exchange, then I certainly hope not. But if you're talking about putting in competitive rates of taxation so that investors decide to keep their money in this country, that is something that should be supported.

And to answer the question on where we should not be helping corporations, if you want to look at one budget to cut, it's the corporate welfare budget. In the past, the NDP in particular has also applauded getting rid of funding for large corporations. Why are we funding large profit corporations like Bombardier—well, it's not so profitable these days—or Research in Motion or General Electric? It's far better to bring down taxes on all companies in order to give them an equal chance to compete here for investor dollars, as opposed to trying to pick winners and losers. If you keep tax rates high, money is still going to continue to flow overseas, and we find those that we end up subsidizing in the end are not really achieving very good results economically.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

Madam Hunter, you wanted to respond.

[Carol Hunter]

I would like to make the point that with cooperatives, that's precisely the value. Money cannot move out of the country. An enormous amount of money gets returned to the economy, so the money recirculates in the local economies. In Manitoba alone, through the federated co-op system, $200 million is returned to those local communities. To me, that is a very strong investment by recirculating the money in our economies.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We'll move to Mr. Savage now.

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

Thank you, Chair, and my thanks to all the panellists.

First of all, I'd like to go to Ms. Hunter and Monsieur Tremblay.

I want to go back to the social economy. I don't think the social economy is something that's widely understood in the country. When these cuts came down, they caused a lot of questions. I've asked questions about the cuts for the social economy in Atlantic Canada. They were going to be delivered through ACOA, the regional development agency. In fact, we were told by the government that these aren't cuts. This is money that never actually really existed, because it never actually flowed in Atlantic Canada. But this was money that was allocated in previous budgets, correct?