Finance Committee on Oct. 23rd, 2006

[The Chair, Conservative, Brian Pallister]

You only have time for a brief answer.

[Penelope Rowe]

I won't discuss what's occurred. I will discuss what I think needs to occur. We need to look at strategic investments in the sector. We need to understand how we can support the work of a multitude of organizations—not by committing a whole lot of money, but by spending the money more wisely. If we start getting more strategic in our undertakings, we can find ways of doing the work that needs to be done.

I'm always willing to accept that new governments want to find their own ways of doing things. I think we should learn from what we've done, learn from what we've lost, and move forward.

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

Thank you very much.

[The Chair, Conservative, Brian Pallister]

Ms. Ablonczy, five minutes to you.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Thank you, Mr. Chairman.

I thank all of you for your presentations.

We're very excited about being here. Most of us don't get here very often. We had a little technical difficulty getting here, so we're glad we made it.

I want to start with the board of trade.

Professor Martin, who is the dean of the Rotman School of Management at the University of Toronto, commented just today on the study by the World Economic Forum, which showed that since 1998 Canada has slipped in its global competitiveness rating from 6th to 11th. There is concern about our drifting down in these rankings.

I wonder if you could give the committee your perspective on how we can reverse that and thereby give our citizens a higher standard of living and more ability to afford some of the programs we're hearing about from other presenters.

[Ken Birmingham]

Certainly. We opened with a discussion about competitiveness and productivity. It is a big world out there, and there are lot of players who are coming on strong.

From our standpoint, a lot of issues about productivity, competitiveness, and the ability for small and mid-size businesses to create employment we see as being specifically tied to taxation. In some cases, the taxation levels are inhibitive. They stifle the ability of business to do more and to produce more. We look at creating a tax structure that incents businesses to hire more people and to produce more. We also look at the global economy as its marketplace, to look outside of St. John's, outside of Newfoundland, and outside of Canada as opportunities. We think a competitive tax structure, along with aid from the federal government on connecting businesses around the world, can certainly be beneficial.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I appreciate that.

I want also to ask Ms. Rowe a question. We appreciate the work of the volunteer sector so much. I know this is a huge contribution in many parts of the country. A lot of the time the volunteer sector fills gaps in the community that other government programs don't--whether it's federal, provincial or municipal.

I was interested in your desire to have links with the federal government, along with other levels of government. Since we're talking about the federal government, what do you see as being the contribution it could actually make in supporting the work of the volunteer sector, without getting in the way? Obviously inefficiencies in government programs are causing the demand for your services.

[Penelope Rowe]

I certainly never think that federal government funding is a problem. I don't think it gets in the way. I think what we've created, however, is this huge patchwork of how we relate to organizations. The ability of some organizations to acquire federal government funding is very different from that of other organizations.

I have tried in my presentation today to stay away from individual organizational support. I could spend 10 hours talking to you about details, but I think the important thing we need to understand is that we do not have any kind of framework whatsoever in this country for working government as a whole, sector as a whole, and that's where we need to do our work. We need to continue to fund the kinds of activities that individual organizations do.

I don't think government gets in the way. To assume that government gets in the way and therefore to reduce funding, or for government to say we're not going to fund you and you have to fly on your own is grossly unfair. In a community like Calgary, the ability of organizations to attract revenue and donations is very different from the ability of organizations in Atlantic Canada.

I will give you one example. Corporations contribute only 1% of the funding to the non-profit sector in Atlantic Canada, compared to 3% across the country. That 3% is still not very high, but it's a huge gap—that 1% to 3%. Because Atlantic Canada has less ability to get funding from provincial and municipal governments, we are more reliant on the federal government. Yet, we generate more of our own income in this part of the country than anywhere else in Canada.

We need to find ways to help organizations be entrepreneurial when that's appropriate and to deliver services that are fully funded by government when that's appropriate.

[The Chair, Conservative, Brian Pallister]

Thank you, Madam Ablonczy.

We move to Madam Wasylycia-Leis, for five minutes.

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

Thank you, Mr. Chairperson.

Thank you to all of you for being here.

I really appreciate what Penelope has just said in terms of this serious debate we're having on the priorities of government in a day and age when we aren't competitive internationally, and when we hear so much in the media that all we have to do is to lower taxes and cut spending and we'll be fine. I think we're now facing the consequences of that kind of mentality.

So I'd like to hear more from folks. Maybe I'll start with John Paul and ask if some of the recent cuts will have an impact on aboriginal people, and if we follow the board of trade suggestion for more tax cuts and more reductions in spending, will we have greater problems? How can you make the case for government here so that boards of trade will actually think about a more balanced approach?

[John Paul]

I think the big point in our context in particular, just in terms of adult smoking among our people in Atlantic Canada, is that it's at 64%. That is way higher than anywhere else in the country. Diabetes and those kinds of diseases, in most scenarios, take years and years to impact people, but I've seen cases where somebody gets diabetes in a community and two months later the person is dead. So the impacts are direct and the outcomes are quick.

In terms of the impact of the narrowing of the types of services provided, it just gets more and more people into negative outcomes in the communities. That's why our focus today is towards an economy and building an economy, so we can get out of that cycle and move from poverty to greater well-being in terms of our whole community and we can have a better outlook for the future.

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

Thank you.

Maybe I could ask a similar question to Michael and James, because what you're calling for—which I think is very important—is a greater investment in terms of health care in rural Canada and more focus on rural needs. From that perspective, it takes money and it takes priorities from the government.

How do you answer this whole tax cut mentality, and the cut government and the public sector mentality, in order to make your point of view?

[Dr. Michael Jong]

I certainly understand that we need money to address some of these issues. The important thing, though, is that if health care is not addressed in our rural communities.... Don't forget that those communities provide natural resources for the country. We need to address that.

We talk about rural depopulation. People are moving out because they cannot access health care, and industry is not willing to set up there. We need people; health care is a service industry that needs people, and it needs investment in training those people for those services. This can be done. We have examples across the country where it's done on a patchwork basis, and so we'd like to have a pan-Canadian approach to this, because we can learn from each other.

[Dr. James Rourke]

There is a myth that rural health care uses up a lot of the health care budget when in fact, on a per capita basis, rural health care is cheap, and it's cheap because people don't access health care. So we spend less per person in rural areas on health care than we do in urban areas, and we do need to look at an equitable distribution of the health care dollars that we do spend, and we do need to look at equitable ways to spend our education dollars as well. It's important to get more doctors out there to provide the support to the communities, so those communities can be productive, industry-creating ones.

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

If I have time for one more, Penelope, to get back to your point, we're hearing these days that the least government is the best government. I'm just wondering how we counter that and how we build along the lines you're talking about, in terms of partnerships that strengthen the social fabric of our country.

[The Chair, Conservative, Brian Pallister]

Penelope, I'm sorry, you have about 20 seconds.

[Penelope Rowe]

Well, let's talk about better money, not necessarily more money. I think we need to find ways of making our investments much more strategic in the non-profit sector. That's where you build the things that everybody else is talking about, where you build citizens' capacity for skills building, for learning, for literacy, for engagement. It's how we get young people engaged; it's very often their first connection with the world outside their own little lives.

[The Chair, Conservative, Brian Pallister]

So it's not necessarily that less government is better, but that smarter government might be better for everyone.

[Penelope Rowe]

I don't really have a problem with lots of government, but that's a personal view that I know many people around the table may not share.

[The Chair, Conservative, Brian Pallister]

Fair enough.

All right, we'll go with four-minute rounds. Mr. McKay.

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

Thank you, Chair.

I'll just focus on the Board of Trade folks. You give a bit of a sister kiss to the GST cut. You're not thrilled with the current one, and you certainly aren't going to be terribly excited about the future one.

I take it that in your view on the priority to be given to taxation cuts, you'd rank them in the order you give them here in your paper--namely, personal income tax, corporate income tax, elimination of surtaxes, and tax relief for small business. Those are your rankings. Is that fair?

[Ken Birmingham]

That is correct. If you look at personal taxation from a Newfoundland and Labradorian perspective, nobody knows about paying tax the way we know about paying tax. If it's a question of capacity and how much we can afford to give, we are more than definitely giving our fair share.

When we look at the tax structure nationally, on a provincial basis we look at Newfoundland and Labrador as most certainly being tapped out in terms of what it can contribute. So when we look at programs and the ability to contribute, the question is who's paying for this? The reality is that it's being paid for by the individuals and businesses.

It's very important to look at the tax structure of the personal tax and at what threshold Canadians are paying. If you compare ours with the U.S. model, for example, it's a very real issue, because reducing personal income taxes has a definite effect on disposable income, savings for retirement, savings for education. This trickles right throughout the whole economy. When we turn to capacity and who has it, if we look at the federal government and the surpluses that are run year after year, the question is, are you collecting on a level that's appropriate?

The GST cut is most definitely welcomed, as is any tax cut. GST is a consumption tax, and people arguably in some cases have the option whether to pay it or not. Everyone has to pay provincial personal and federal taxes.

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

I don't have a lot of time here. The point is that you're not going to get everything. If you're going to pick a cut, and first it's going to be personal income tax, second it's going to be the corporate tax, and third it's going to be.... The GST cut is just plain stupid, as far as the things your group is interested in are concerned and in terms of producing productivity.

Am I putting words in your mouth to say, don't do the second GST cut, but emphasize the PIT and CIT?

[Ken Birmingham]

Most definitely our preference would be to attack the personal and the corporate tax.

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

Thank you.

The second question has to do with your proposal to change transfers from a per capita basis to something else. You'd have to appreciate that possibly in Ontario and other provinces a switch from a per capita transfer to “something else”, in other words, enhanced transfers to smaller provinces, would not be—how shall I say this—well received, given that there's some argument to be put that provinces such as Alberta and Ontario kick a lot more into the can than they get back.