Finance Committee on Oct. 17th, 2006

[Katherine Carleton]

I don't believe that I said it was seed money. I said that they've had money from the Canada Council all along.

[Garth Turner, Conservative, Halton, ON]

Okay. This is an organization that is commercially successful that is going to depend on government funding every year, year in and year out.

[Katherine Carleton]

That is correct.

[Garth Turner, Conservative, Halton, ON]

I rest my case.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Turner.

Thank you all. We appreciate the time you've taken to be with us. We do sincerely appreciate your participation in this process. We wish you well, and we wish the next panel would come up and replace this panel now. Thank you very much.

For the committee, we have a little housekeeping. We have a resolution to deal with, committee members, so the next panel will end about ten minutes earlier to allow for Mr. Paquette to bring his resolution forward.

We'll suspend for a moment now.

[The Chair, Conservative, Brian Pallister]

We will recommence.

Panel members, thank you for being here. We appreciate you taking the time to be with us. We appreciate also your submissions, which will be distributed and perused by our committee members.

You've been told to confine your remarks to five minutes, understandably, to allow time for questions. I'll indicate to you when you have one minute left, and then we'll unfortunately have to cut you off at five minutes.

I will also prepare you in advance that, because we have some committee business to attend to, we're going to have to cut off a few minutes earlier than was planned. We will be ceasing operation, from your perspective, at about 6:20.

Thank you for being here.

We'll commence with the Canadian Cancer Society representative, Kenneth Kyle, director. Welcome, and proceed.

[Kenneth Kyle, Director, Public Issues, Canadian Cancer Society]

Good evening.

In our submission to this committee last year, we pointed out that with the aging population a tsunami of cancer will hit us. Cancer will become the greatest single cause of premature death by the year 2010. Cancer in the workforce will more than double over the next 30 years, resulting in staggering losses of tax revenues and wage-based productivity. We therefore thank the members of this committee for support for the Canadian strategy for cancer control.

The federal government is committed to addressing the cancer challenge and has pledged to implement the Canadian strategy for cancer control as set out in the May 2006 federal budget with the full funding of $260 million over five years, so thank you.

There is more that Parliament can do to ensure the good health of Canadians and promote productivity and competitiveness in our economy. A case in point is tobacco control. Higher tobacco taxes are an important means of not only reducing smoking, especially among price-sensitive teenagers, but also raising revenue for government. The dramatic onset of price discounting by tobacco manufacturers in the last three years has resulted in a price decrease of about $10 to $20 per carton for more than 40% of the market.

A tobacco tax increase now would respond to these legally sold discount cigarettes to mitigate potential adverse impacts on smoking rates. There has not been a net increase in federal tobacco taxes since June 2002.

So the Canadian Cancer Society recommends that federal tobacco taxes be increased by $10 per carton of 200 cigarettes; that the government close the loophole allowing roll-your-own tobacco and tobacco sticks to be taxed at a lower rate than cigarettes; that any future decreases in GST be accompanied by the small upwards adjustment in tobacco taxes necessary to ensure there's no price decrease to consumers; that stronger contraband prevention measures be implemented; and that the Canadian government urge the U.S. government to shut down the illegal manufacturing operations on the U.S. side of the Akwesasne reserve, which the RCMP has estimated is the source of 90% of the contraband entering Canada.

We strongly oppose the cuts that have been made to Health Canada's tobacco control program. Health Canada's tobacco control budget is only about $48 million in the current fiscal year, down from what was to have been a $110-million-a-year program. Why on earth would cuts be made to a Health Canada program that is working? Why have there been cuts to the successive anti-smoking TV ads? This makes no sense.

We recommend that a mass media campaign resume on a priority basis. The CCS--that's us, the cancer society--is concerned about the recent elimination of the first nations and Inuit tobacco control strategy. The government says it intends to implement a replacement program, which we look forward to seeing.

Finally, I want to draw your attention to a research issue. A continued public investment in health research is important for a competitive advantage in today's global economy. Health charities contribute $150 million a year to health research. The federal indirect costs of research program, ICP, unfairly penalizes national health charities and the millions of Canadians who donate to them every year. Currently, the federal government provides approximately 24¢ towards the indirect costs of research for every dollar that is allocated by a federal granting council to a university or research hospital for the direct costs of research. In contrast, research funded by national health charities does not benefit from the ICP. We recommend that health charities be included in the federal indirect costs of research program.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, sir. We appreciate your presentation.

We continue now with the representative from the Prospectors and Developers Association of Canada, Patricia Dillon. Welcome.

[Patricia Dillon, President, Prospectors and Developers Association of Canada]

Thank you very much.

The Prospectors and Developers Association of Canada represents 6,000 members, including 5,300 individual and 700 corporate members. The majority of our corporate members are small and medium-sized enterprises—in our lingo, called junior exploration companies. Our members are engaged in the exploration and development of mineral resources here in Canada and abroad.

It is important for you to know that mining accounts for 4% of Canada's GDP, more than agriculture, forestry, fishing, and hunting combined. Since 1980, known cooper reserves have declined by 65%, and zinc reserves have decreased by 80%. Most exploration is carried out by juniors that are dependent on our capital markets for funding. Sustaining the mineral exploration industry in Canada offers great potential for the creation of wealth and prosperity for all Canadians, especially for those living in Canada's north and in other rural and remote regions of the country.

The mineral industry is the largest private sector employer, offering excellent employment and business development opportunities for our aboriginals and first nation peoples.

To replenish reserves is vital. It is vital that we invest in geoscience and continue to support exploration activities. Investment in geoscience is critical to successful exploration and the discovery of new mines. The north, which has the highest potential for new discoveries, has large tracts of land that have never been adequately mapped. Such activities would reaffirm Canada's sovereignty of the north. We are specifically asking for support for the cooperative geological mapping strategies program, which will trigger significant provincial and territorial investment.

In regard to support for exploration, we want to recognize the reinstatement of the super flow-through program to March 31, 2007, and ask that the program known as the mineral exploration tax credit be renewed for a three-year period. This will help the junior exploration sector compete for investor interest, keep exploration investment in Canada, and raise the potential for new mine discoveries in this country.

Finally, we ask for the recognition of community consultation and environmental baseline costs as eligible Canadian exploration expenses, so that these essential activities can be financed through flow-through funds.

Challenges or barriers to exploration investment in Canada include the lack of infrastructure, complex regulatory regimes, and the uncertainty of mineral title due to unresolved land claims.

A vibrant exploration industry will enhance the opportunity for discovery of new mineral resources that when developed will create new jobs, provide training and skill development opportunities for youth, generate revenues, and increase the local tax base to support communities.

Thank you for your attention.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation.

We continue now with the Canadian Association of Student Financial Aid Administrators. I believe Suzanne Brunette will be doing the presentation. Welcome, Suzanne.

[Suzanne Brunette, President, Student Awards Office, Canadian Association of Student Financial Aid Administrators]

CASFAA is the national professional association representing financial aid administrators at Canada's colleges and universities. We are responsible for the delivery of student financial aid programs, including the Canada student loans program. Because of our roles within our educational institutions, we are uniquely positioned to directly witness not only the success of the Canada student loans program, but also the gaps that seriously compromise the academic potential of our students.

The changes to the Canada student loans program in 2005 in the form of increased loan limits, a relaxation of parental contribution expectations, and a new grant program for low-income dependent students have enhanced the program and provided encouragement for many students and their families. We believe, however, that more needs to be done to improve access to post-secondary education and to encourage and support the successful completion of programs, particularly for low-income students and students who have traditionally been under-represented in post-secondary studies.

The recently implemented grant for low-income families is a building block for the academic success of many students who might not otherwise have undertaken post-secondary studies. This grant currently covers up to 50% of tuition for first-year students only. Many research studies have emphasized that grants targeted to low-income students are more effective in promoting access and success than are loans and that they greatly support retention and encourage the timely completion of studies. We therefore recommend that the Canada access grant be extended to students in subsequent years of their programs, up to a maximum of four years.

Government has spent increasingly on student assistance through fiscal measures introduced to the tax system, such as exemptions on awards, credits for tuition fees and books, an allowance for each month of enrolment, contributions through RESPs, and Canada education savings grants. These credits are distributed almost entirely without regard to financial need, disproportionately benefiting families with higher incomes. They do little to assist high-need students and under-represented groups, such as students from low-income families, students with disabilities, aboriginal students, adult learners, and students from rural areas, in entering our post-secondary system.

We believe that means-tested aid that is accessible through a simplified application process and that delivers funds at the time expenses are to be incurred represents the most effective use of taxpayer dollars. We would recommend that the government review its education-related tax credits and give serious consideration to redirecting a portion of the funding towards means-tested programs that support high-need and under-represented groups.

Since 2000, the Canada Millennium Scholarship Foundation has delivered more than $1.5 billion to students across Canada. The foundation provides $350 million per year in grants to high-need and low-income students. Many students from all jurisdictions have seen significant reductions in their debt load through grants delivered either as upfront funding that decreases the amount they are required to borrow or as direct paydowns on their student loan debts.

The foundation is scheduled to cease operation in 2010. The removal of the funds administered by the foundation from the aid system at large will be devastating to the many students who have benefited from this assistance. Further, the foundation has produced and continues to provide a wealth of vital research on student financial assistance in Canada.

We strongly encourage the government to continue the foundation's mandate beyond 2010. If the foundation's mandate is not renewed, we recommend that the federal government provide additional non-repayable assistance at the level currently being disbursed by the foundation, and that such funds reflect the needs of the various jurisdictions.

Under Canada student loan needs assessment calculations, parents and students are expected to contribute to the students' educational costs based on their respective incomes. The reality is that many parents are unable or unwilling to assist the students. We would recommend that students be permitted to seek alternative sources of income, such as work. So we would recommend an increase in the Canada student loan in-study work exemption to $100 per week from the current $50, that all institutional awards be exempted from the needs assessment, and that a federal work-study program for students be created.

We would also like to recommend that the weekly limit of $210 be increased and reviewed on a regular basis, at a minimum of every three years, and also that there be an increase in the weekly lifetime limits so that students in graduate and doctoral programs receive funding to complete their programs.

[The Chair, Conservative, Brian Pallister]

We'll continue now with the Queen's University representative, Karen Hitchcock. Welcome, madam, and proceed.

[Dr. Karen Hitchcock, Principal and Vice-Chancellor, Queen's University]

Thank you, Mr. Chairman, and good afternoon, everyone. I'm delighted to have this opportunity to participate in these pre-budget consultations.

In a recent speech at Queen's University, the Minister of Finance pointed to post-secondary education as being “one of the cornerstones of our success as a nation” and noted that there are real pressures to do more.

The need cited by the minister for predictable, long-term funding for post-secondary education flows directly from the central role universities play in developing the human resources and producing the new knowledge that are essential to Canada's competitiveness. Public universities have an obligation to ensure that their programs of education and research do indeed serve the public good. It's in this context that I'd like to focus my remarks today on two particular points from the brief I prepared for the committee: first, the need for new approaches to the commercialization of research; and second, ways universities can assist in addressing another national priority—research and training in public health.

Turning first to the commercialization of research, it is, as you know, about developing discoveries into potential new products and then helping support the companies that will bring these new products to market. This is a labour- and resource-intensive process, requiring support from universities, government, and the private sector.

Indeed, increased public investment is essential to ensure the creation of new knowledge, which is the basis for innovation. I therefore join my university colleagues in urging that enhanced support of the federal funding councils and the CFI be a priority for the 2007 budget.

More is required for effective commercialization. Last month the Council of Canadian Academies reported that while Canada is strong in academic research, there's an ongoing concern that these strengths are not translating into innovations that succeed in the marketplace.

Based on experience in a number of jurisdictions in the U.S., I feel that if we are to effectively manage the transition from research and discovery to successful innovation and commercial development, a new paradigm will be required. New government funding mechanisms need to be developed to help create the university-industry partnerships that undergird successful commercialization. Universities, with their industry partners, need to be involved in all stages of the innovation cycle from the creation of new knowledge through to the development and refinement of new products and to the support of the companies that will bring these new products to market.

This process will require multi-sector support and multi-sector collaboration. We therefore recommend that the federal government's 2007 budget commit to fund new mechanisms and incentives for university-industry partnerships, designed to increase the rate of commercialization by shortening the innovation cycle and more rapidly deploying new technologies.

In addition to their direct impact on our nation's economic growth through enhanced commercialization, universities also play a significant role in addressing major societal issues, contributing not only to the prosperity of the nation, but also to the quality of life of all Canadians.

My second point relates to the role universities can play in addressing one such national issue, that of public health. According to the report of the National Advisory Committee on SARS and Public Health, Canada's public health human resources are deficient. The committee, like other bodies, recommended the development of a national public health strategy to address this issue.

Queen's recognizes the need to act as a strategic resource to government in the area of public health. Resources of both colleges and universities need to be enhanced to educate professionals in the front line of response to major public health issues, and also to support research that will allow us to address such critical public health issues as pandemics and bioterrorism.

Toward this end, Queen's has convened a number of sister institutions to recommend a national, academic, public health strategy to ensure that universities, in partnership with the Public Health Agency of Canada, are prepared to address the nation's public health research and educational needs. To support Canada's public health infrastructure, we therefore recommend that the federal government's 2007 budget commit to providing the resources necessary to develop and implement a national academic public health strategy to address the needs of the public health system of Canada.

Mr. Chairman, that concludes my remarks. Thank you for your attention. I welcome any questions you may have.

[The Chair, Conservative, Brian Pallister]

Thank you very much, madam.

We continue now with the Conference of Defence Associations, and Richard Evraire. Welcome, sir.

[Lieutenant-General Richard Evraire, Chairman, Conference of Defence Associations]

Thank you, Mr. Chairman.

The Conference of Defence Associations is grateful for this opportunity to participate in these consultations.

Firstly, allow me to say that the Conference of Defence Associations is pleased with the manner in which the Government of Canada has responded to two of the priorities for funding which we identified in our April submission to Minister Flaherty. The provision of an additional $1.3 billion to improve the funding of ongoing operations in 2006-2007 is in line with our recommendations.

Similarly, the approval in principle for projects to deal with our immediate capital requirements and well-known deficiencies in strategic and tactical lift, is also in line with our recommendations.

Now that the most immediate requirements have been dealt with, the Conference of Defence Associations wishes to turn to the planning and funding of the future force, in the context of the continuing rust-out of critical capabilities due to aging of equipment.

As the tables in the formal statement put before you today indicate, only one of the five most important naval platforms is under half of its life expectancy, as measured by Treasury Board mandated service lives. Two are already beyond their Treasury Board service lives.

The army has only 4 of its 11 major platforms with over half their life expectancy left, and 3 are beyond the end of their service lives, though one of these will be replaced in the projects cited above.

The air force is in even worse shape—with all but one of their eight major platforms beyond the end of their service lives, though the projects cited above will replace three fleets.

Mr. Chairman, the Conference of Defence Associations believes that the publication of a comprehensive defence capability plan, which looks beyond the current five-year, 2006-11 budget window, and which is supported by a meaningful defence capability financial plan that includes financial allocations and growth, is absolutely critical to the rehabilitation and preservation of Canada's defence and security requirements.

To conclude, Mr. Chairman, the CDA estimates that the government needs to assign at least 1.3% of GDP to defence needs from 2011 to 2020 if it is to ensure that Canada is able to replace its major capabilities and has a viable future force with a three-ocean navy, a robust army, and a revitalized air force.

Again, Chairman, the CDA is grateful for this opportunity to appear before your committee.

Mr. Chairman, with your permission, I am now going to hand over to Colonel Brian MacDonald, an analyst with the Conference of Defence Associations, who will be able to answer your questions. Thank you.

Thank you very much.

[The Chair, Conservative, Brian Pallister]

I thank you, sir, for your presentation.

We continue, and we will conclude our presentations with the Alliance of Sector Councils, Wendy Swedlove, vice-chair. Welcome, and proceed.

[Wendy Swedlove, Vice-Chair, Alliance of Sector Councils]

Thank you, Mr. Chairman, and thank all for having us represent the Alliance of Sector Councils at this meeting.

I am speaking on behalf of 30 sector councils that come together in the alliance. I myself am actually president of the one sector council that looks after the tourism industry.

Sector councils were established in the late 1980s, and they were established to address labour market issues. They brought together the labour market partners from each sector: business, labour, education, and government. They were an innovative approach to addressing labour market issues at the time, and probably still are. They are partly supported by the federal government, but also partly supported by industry and by the other labour market partners.

The biggest labour market issue for sectors is the skills and labour shortage. This will affect Canada's competitiveness--no doubt. You've all heard the stories coming out of Alberta and British Columbia about the issues people are facing in the construction industry.

Just as a small anecdote, the Tim Hortons in the oil patch in northern Alberta is now paying $35 an hour. They're only working from ten until four, and that is because they cannot find enough staff. This is going to happen to all sectors very shortly, and over the next ten years it will get progressively worse.

Sector councils are in a unique position to be able to address that and other issues related to skills and competitiveness. They work with the under-represented groups to try to increase the labour pool in Canada. They work to more efficiently move people into the right sector and the right job, saving time and effort. They work to increase productivity, which will become a major issue for all of us very shortly. They do this by developing occupational standards and skill standards, by introducing credentials in areas where there are none, in developing workplace training materials, and helping employers to retain the workers they have.

This is one of the best tools we have at the national level to address competitiveness and productivity. We as sector councils would urge you to continue to have the federal government support us, in partnership with the other labour market partners.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We'll move to the first round of questioning with Mr. Savage. Six minutes, Mr. Savage.

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

Thank you, Mr. Chair.

Thanks to everybody for showing up today and for giving us some really good stuff. I wish I had a little bit longer, but I want to get into a couple of areas, just the small topics of health and education, and we have six minutes to do it.

Mr. Kyle, the Canadian Cancer Society does a lot of good stuff. I enjoyed your presentation. You spoke about tobacco. We have made some progress on tobacco. I spent a good chunk of my life with the Heart and Stroke Foundation as a volunteer, and health charities got it right when they came together and formed the health charities coalitions and round tables. But obesity is the new tobacco. That's what we hear, and there's a lot of truth to that.

You spoke about healthy choices and physical activity. One of the things we have to do in this process is make recommendations about how the government should go about improving the lives of Canadians. In the area of getting Canadians more active, certainly getting kids more active, but all Canadians more active, one of the big questions is, do you do it through the tax system or do you do it through direct investment in infrastructure?

We heard from the Chronic Disease Prevention Alliance yesterday along the lines of infrastructure. I think that's what you're saying here. Is that accurate?

[Kenneth Kyle]

Yes, we certainly support the CDPAC brief that was presented yesterday. We're part of CDPAC. We work closely with them. I think we have to look at all avenues, not only infrastructure, and we shouldn't disregard the tax system. Look how well it's worked in the area of tobacco. Some lessons have been learned there. Some things that have been done in tobacco control that have helped have been mass media campaigns. That's an area of federal jurisdiction. Can you imagine if we had mass media campaigns directed to some of these nutrition issues and the issues you've raised, like physical activity?

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

Yes, the government is going down a road of tax benefit for people who join the gym, for example. I think that's a good thing, but I'm not convinced it gets to the heart of the problem. If you believe the biggest social determinant of ill health is poverty and lack of resources, then we need to invest in infrastructure as a priority over taxes. Is that true of you, or am I just giving my own again?

[Kenneth Kyle]

I don't think there's one magic bullet. I think we have to look at all these sorts of things. In the coming years we'll see the infrastructure dealt with. We'll see more user-friendly neighbourhoods and so forth, bicycle paths and walking and we'll look at that. This is a huge issue that's going to take a number of years to resolve. We've got a lot of people working on it. A big conference is coming up next month to look at some of these issues. But we have to look at every single policy lever we can to address this issue. It's a huge problem among young people.

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

In the interest of moving on, the last thing I'll say is that I remember that ten years ago or so, when the Medical Research Council wasn't providing much money in terms of health research, the Heart and Stroke Foundation and I suspect cancer organizations were inundated with requests for research we couldn't fund. It's turned around a bit now with our massive investment in publicly funded research. In fact, the Heart and Stroke Foundation came to me last year and said, “Mike, you know what? With this indirect cost program....” And now we're looking to go to possibly 40%, as Madam President indicated, and I think that's right.

Health charities should be included. My question is, do you have any sense of what the cost would be to go to 24¢ on the dollar for health charities?

[Kenneth Kyle]

I don't have that with me, but I can get back to you, or I'll send it to the committee.

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

Thank you very much.

Ms. Brunette, everything you've written here is right, so we should adopt it unqualified.

Last year the caucus of the governing party, the Liberal Party, had recommended that Canada access grants go to four years. We put it in the economic update in the fall. It didn't pass. We put it in our program again, and I think it's the way to go. We have to make sure, because although university enrolments have not necessarily been declining, they have from low-income families, from aboriginal Canadians, from Canadians with disabilities, and we really have to get at that.

We've heard from the Millennium Scholarship Foundation and from CFS. They don't necessarily see eye to eye on these things, and it's been a source of some paper that's flown back and forth among the committee members. You recommend the millennium scholarship, but you see it directed more at low-income Canadians?