Finance Committee on Oct. 24th, 2006

[Susan Nasser, Executive Director, Nova Scotia Association of Social Workers]

Thank you. We are very happy for the opportunity to come here and present to you today.

The Nova Scotia Association of Social Workers is the professional association for 1,600 social workers in the province. We regulate and strengthen the profession, and we have a mandate to pursue social justice. Indeed, our code of ethics calls upon us to engage in social action. Social workers are well positioned to see the devastating impact of poverty on people and their lives. Our collective experience with front-line workers has reinforced our resolve to push for changes that would create a more just and equitable society.

This round of pre-budget consultations is entitled Canada's place in a competitive world, in recognition of our small open economy and our dependence on other countries for our economic health and prosperity. Using other countries as a reference point, we can postulate a different sort of competition, one to ensure that all citizens enjoy a standard of living that allows them to live with dignity, free from hunger and deprivation.

In this competition Canada is not a winner. In 2005 Canada ranked only 12th out of 17 OECD countries on the United Nations human poverty index. In the same year, in a global survey of child poverty rates, UNICEF ranked Canada 19th out of 26 industrialized countries. In May 2006, the United Nations Committee on Economic, Social and Cultural Rights lambasted Canada for failing to address several issues that have an impact on poverty. They mentioned inadequate social assistance rates and the negative impact of some workfare programs.

We believe that the top priority for all levels of government in Canada should be the elimination of poverty, and that the budget, as a policy document embodying our values as a society, should provide the means to this end. In the short run, efforts must be focused on alleviating the circumstances of poor and low-income people. In the long run, though, what we should be aspiring to is a society in which everyone has sufficient means to live a fulfilling life, not excluded from the mainstream and able to take advantage of all of the benefits of our prosperous nation.

Policies directed towards reducing and eventually eliminating poverty represent a solid investment in our future. The terms of reference for these consultations cite the goal of ensuring that our citizens are healthy. The Public Health Agency of Canada is supporting further exploration of the social determinants of health, recognizing the connections among such things as poverty, housing, education, and an individual's well-being.

Social programs should have top priority—overriding tax cuts, which disproportionally benefit those who already are well off. Governments sometimes talk about the need for a program to be sustainable. By that they mean that it can continue to be funded over the long term. Obviously, that is important, but sustainability has another side that we ought not to forget. Is the current level of poverty sustainable? Are increasing levels of homelessness sustainable? At what cost?

Until we acknowledge that our Canadian society cannot tolerate the inequity and injustice of poverty and we reach a collective decision to deploy our considerable national resources to address this issue in a meaningful way, our country will not prosper and the Standing Committee on Finance will be unable to fulfill its mandate. The opportunity to create a budget that embodies our Canadian values should be seized with enthusiasm and commitment.

These are our recommendations.

First of all, make poverty reduction a top priority in the next federal budget and make the elimination of poverty a priority in the longer term.

Second, develop a comprehensive poverty reduction strategy.

Third, assume a leadership role in implementing the poverty reduction strategy and poverty elimination strategy.

Fourth, set standards for programs using federal funds. Strengthen the national child benefit program.

Fifth, broaden eligibility for employment insurance. Invest in tax measures aimed at supporting the working poor.

Sixth, create a national disability income support program.

Seventh, invest in social housing.

Eighth, honour the commitments made by the previous government in regard to universally accessible, affordable, early childhood learning and care.

Ninth, increase support for post-secondary education.

Tenth, support initiatives already under way for the Public Health Agency of Canada to improve the health of Canadians through addressing the social determinants of health.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Ms. Nasser.

We'll continue and conclude our presentations with the New Brunswick Business Council. Don Dennison is here.

Welcome, Don. Over to you.

[Donald Dennison, Executive Director, New Brunswick Business Council]

Thank you very much, Mr. Chair.

I believe earlier you had indication that David Ganong, the president of Ganong Chocolates, would be presenting. David has just become past chairman of the New Brunswick Business Council, and he's been replaced by Gerry Pond. Gerry had some previous commitments and was unable to be here today, so it's my pleasure to share some thoughts with you.

We have circulated our brief well in advance, and I won't read it here. I'll simply go through some points that might help you understand what the business council is and why it wants to talk to you today about competitiveness.

The members of the business council are eighteen CEOs of some of the leading enterprises in New Brunswick, and you would recognize the names of companies like J.D. Irving and McCain Foods, Moosehead Breweries, Ganong, Armour Transport, and so on. As well, we have the presidents of the two largest universities, the University of Moncton and the University of New Brunswick.

The business council is, in a sense, more than a business council, and I think the closest parallel organization that's going to be appearing before you is probably the Toronto City Summit Alliance. I say it's parallel in the sense that the Toronto City Summit really represents an effort to bring together the various parts of the greater Toronto community, and the New Brunswick Business Council very much wants to be a catalyst in bringing together various voices in New Brunswick that have aspirations for the future of our province and our country.

The business council is keenly interested in competitiveness, as you might imagine, and I'm going to speak to you today principally about equalization. Of course, equalization is, we believe, a very fundamental tenet or a key building block in our Canadian competitiveness.

The business council sees equalization as a bridge. It is not an end in itself. The council's objective is not simply to see a robust equalization program. Rather it sees equalization as the bridge to a more prosperous future for New Brunswickers. That comes through investment in people and investment in education and training. Equalization is a fundamental tool to enable all provinces to be in the game of providing that necessary training and investment in people. The committee will be hearing from some that Canada has seen too much equalization, that we need to put more resources into more productive areas of the country.

The business council believes that placing limits on equalization is, in effect, a recipe for a two-tier Canada. All Canadians should have access to equal opportunity, and they need access to roughly equal services, particularly education and training. Because of equalization, a province like New Brunswick is able to spend about the same proportion of its budget on education and training as is Ontario. Some people in Ontario--and indeed I think the Premier of Ontario--would have you believe that there's something wrong with this picture. We think there's something right with this picture. Equalization does work. It is working. It has reduced the levels of disparity between provinces, and it should remain in place.

Canadians have always understood the need for a balance in economic activity across the country. If we fail to maintain that balance, there will be a hollowing out of what we have seen as a fairly good distribution of activity. We've seen a lot of narrowing, in terms of GDP income per capita, and if we don't maintain our support services across the country, there will be this hollowing out. The concern is not that we are against people moving to where economic opportunities are. What we don't want to see is that when circumstances change, there's no future for people who've left parts of the country to be able to go back there.

So it's important that your committee, which has undertaken these pre-budgetary consultations, understand that equalization is something that needs to be put on a solid footing, and avoid the tendency or the attractiveness of year-to-year tinkering with a formula. This is a core federal responsibility. In fact, if you look at the Constitution of Canada, there are many responsibilities assigned to federal and provincial governments, but the only obligation that the Constitution speaks of is the obligation to make payments for purposes of equalization. We hope the committee takes this responsibility very seriously indeed.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir, and thank you all for your presentations.

We'll move now to questions, and we'll begin with Mr. Savage. You have five minutes, sir.

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

Thank you, Chair, and thanks to all the panellists. There was some very good stuff.

Mr. Dennison, I'm not going to ask you questions. Your ten observations about equalization were very well laid out. I agree with just about everything you've put there. People haven't come and talked to us much about equalization, so I appreciate the contribution of the business council.

Gayle, when I talk to you, I feel as though I have to speak really quickly to get my question in, just to be on the same page. You mentioned Dostoevsky, who said, “The degree of civilization in a society can be judged by entering its prisons.” In the House last week, I referenced Mahatma Gandhi's comment: “A nation's greatness is measured by how it treats its weakest members.” I think that's particularly apropos.

One of the ways this committee can be effective is to make a recommendation to the Minister of Finance about how we can bridge the gap between the rich and the poor. My question to a number of you--Paul, Chris, and Susan--who work with some of the people in society who need a hand up and aren't able to maximize their full potential, is how best we can do that. The government has tinkered around with taxes. You mentioned the social determinants of health, Paul, poverty being the number one social determinant of health. The government has come forward with a plan to give a tax credit for kids, for example, to have sportsplex memberships and things like that.

Is that an effective way to do it, or do we need to invest directly in the infrastructure, whether it's human infrastructure or physical infrastructure? That's number one.

Second, Susan mentioned child care. Is the $1,200 a year an effective way to build child care?

So there are two things, and I'll start with Chris.

[Dr. Chris Ferns]

I think the concern we have in the university sector in Nova Scotia--I have outlined some other issues--is the underrepresentation of disadvantaged groups in the universities. I've been teaching for twenty years. I have only had one Mi'kmaq student in that whole time. The number of Afro-Nova Scotian students is tiny in comparison to their actual numbers. I think what we have to have is some kind of funding that will actually address those questions of access and actually allow people to participate in the education system and allow them to get out of that poverty trap.

[Gayle McIntyre]

I'll answer that question as briefly as I can, and I may rely on referring to one of the case samples we submitted. There are so many remedies, as we said. But which one is the most effective and the most cost-efficient?

I believe we have to look at the human infrastructure. To give an example, I'm a person with three university degrees, and I know there's a push that says that education is the sole way to deal with poverty. I'm here to say that that would be one of the options, but I'm also on disability, and I'm one of the poorest in Canada. So how does somebody who has three university degrees live in such a state of poverty? It has nothing to do with my lack of initiative. I did have a civil service job, and what happened was that a total sum of people who were not properly qualified in infrastructure made decisions that put me into permanent disability, disability being both physical, emotional, spiritual, and financial.

So I'm now dependent on a system that I used to work for. There's something very degrading when you have to take a moment out of your day to cry because you know how to improve your life, but the system and the people working in the system, the civil servants, are putting barriers up to stop you from getting to that place of maximum potential.

[Paul O'Hara]

Perhaps I could just add to what I've said already. What we're really missing is acknowledgement of the interdependence of us all in reducing poverty, and we need to get on with that.

So will $1,200 given to families deal with child care issues? Of course not.

If you look at what's happening in Nova Scotia, and particularly in Halifax, there's a national company coming in now and buying up all the apartment buildings. Where will poor people live when those rents go up? Because they're going up. It's happening. It's a fact. The private sector is not developing the housing. We're not targeted.

We don't work together in our inner city communities. There is no big plan. The community services department tells us specifically that what we're advocating for will save the city money, will save justice money, and will save somebody else money, but that, you know, if they put money into a project, there's no advantage to their department.

We need people to come together. Our premier won't meet with us to talk about this stuff. He refers us to community services. We need incentives from the federal government--their actions and their commitments and their engagement and participation--to have a poverty reduction strategy. We can do it. We have the know-how. The political will is not there.

[The Chair, Conservative, Brian Pallister]

Thank you.

Thank you, Mr. Savage.

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

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Thank you for these great presentations. I am pleasantly surprised that the issue of the fiscal imbalance was among the concerns mentioned, in particular by the business people. I admit that in Ottawa, we do not hear much talk about the problem of the fiscal imbalance when we collect testimony.

Mr. O'Hara is completely correct when he mentions that when the Canada Assistance Program was transformed into the Canada Social Transfer, the less prosperous provinces lost a great deal. In fact, the transfers are now established based on the percentage of the population and not on needs. For example, Quebec has around 35% of Canada's social assistance population, but Quebec only receives 22% of the transfer for social programs and post-secondary education.

Messrs. Dennison and O'Hara, I would like to submit an idea the Fraser Institute proposed last week. It suggested that the federal government should withdraw from transfers, leave this tax field to the provinces and redistribute only through the employment insurance program. This would leave equalization. The Institute suggested that the employment insurance program would sufficiently redistribute throughout Canada to ensure a certain equity between the provinces.

I wanted to know what you thought. Do you think that the employment insurance program redistributes sufficiently so that it could replace all other forms of transfers, such as the equalization or the transfers we currently have?

Mr. Dennison?

[Donald Dennison]

It is essential to distinguish between the different transfers. There are transfers between individuals, between governments and between regions. The transfer system that supports the provinces is essential in Canada. It must also be pointed out that it allows the provinces to offer an acceptable and reasonable level of service.

So we really have to distinguish here. A lot of people comment about transfers in the country and say, well, it's looked after through employment insurance. Well, it's not. This is a very different kind of program. What we're talking about here is simply assuring that each provincial government has roughly similar means to deliver an identical package of services. And it doesn't mean you're trying to equalize incomes between Albertans and Nova Scotians; it simply means that the governments have the resources to do the job the Constitution assigns. I think it's an important distinction. In Canada we tend to get focused on, or view, provinces as personalities and confuse the population of a province with their government.

All that equalization can do is simply allow the governments to have the resources to deliver services like education. And it's important to make that distinction because people who worry that the more well-off provinces are going to be, in a sense, hurt by an equalization program should know that it takes away nothing from any provincial government. It's a federal government program that enables those provinces whose revenues are below the national average to be brought up to the national average. So there's no reason to confuse this with the concern about wealth in parts of the country being equalized. It's not a case of equalizing wealth; it's a case of giving those provincial governments a capacity to offer services. I think it's something we have to remind ourselves.

There's no reason that the Government of British Columbia and the Government of Nova Scotia or the Government of Newfoundland should be richer or poorer. They're not people we're talking about; they're simply governments.

[Pierre Paquette, Bloc, Joliette, QC]

Ms. Nasser.

[Susan Nasser]

I would just like to add that in terms of employment insurance, we're seeing a really big increase in precarious employment—part-time jobs, term employment, and low-paying jobs—which certainly means that even people in business for themselves aren't eligible for employment insurance. So funds distributed through that mechanism are leaving out a lot of people, and the very people who are the most vulnerable, I think.

[The Chair, Conservative, Brian Pallister]

We continue now with Mr. Dykstra.

Five minutes, sir.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Mr. Chair.

To Mr. Dennison, over the weekend the Bloc Québécois announced that Quebec, not Halifax, should be the gateway to the Atlantic provinces. I just wanted to get your thoughts on whether you think it's a correct position from an economic perspective that Quebec should actually be the Atlantic gateway versus Halifax.

[Donald Dennison]

We have existing ports in Nova Scotia, in New Brunswick, in Quebec, and they all function as gateways. I don't think it's a question of saying one is the right one.

I suppose the emphasis that's been put on the Atlantic concept recently is simply an effort to parallel what's talked about in terms of a Pacific gateway. It's simply good economic sense to improve our infrastructure so that we can move goods more efficiently.

So I don't think it's a question of one or the other.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

Ms. Nasser, one of the things that happened in late December was that the National Anti-Poverty Organization undertook some research in terms of the distribution of various tax cuts. One thing they found was that lower-income families pay about 8% of the money collected from GST but only 0.5% of taxes, versus the richest 2% of the families, with incomes over $100,000, who pay 4% of all the GST and 10% of income taxes. This suggests that the GST cut is actually a much bigger and broader benefit to lower-income families than it is to higher-income families.

I just wondered if you could comment on that.

[Susan Nasser]

Since the GST is a proportion of what a thing actually costs, and the people who live in poverty have so much less available to begin with, any small-percentage cut doesn't amount to that much for them.

Again, I'm not an economist, and I can't make these economic arguments, but to me it doesn't seem to hold water; I just can't explain why.

[Rick Dykstra, Conservative, St. Catharines, ON]

You can't explain why. All right.

Chris, I have to ask you this. Universities aren't receiving enough money, and students are paying way too much for the cost of education. But at the same time, if I recall correctly from what you said, students are sitting on the floors of rooms. There aren't enough chairs to put their butts into seats.

There's a dichotomy here. We have more young people going to university now to get an education, and at the same time they're paying far too much for their education. Where is all that money going?

[Dr. Chris Ferns]

The problem we've seen over the passage of time is that the actual proportion of money funding the universities, paid for by the students, has been rising all that time.

[Rick Dykstra, Conservative, St. Catharines, ON]

Where is the money going?

[Dr. Chris Ferns]

Because the actual amount of money available has been declining, we have problems with infrastructure that are not being addressed.

[Rick Dykstra, Conservative, St. Catharines, ON]

This budget we invest in infrastructure for universities and colleges.

[Dr. Chris Ferns]

That's a welcome addition, but we've also seen a lot of money being directed towards education that does almost nothing to address the problems of core undergraduate education. For example, the more than $1 billion spent on the Canada research chairs program does nothing to address issues of infrastructure and does nothing to address the issues of overcrowded undergraduate classrooms.

So a lot of it, in our view, is being misdirected.

[Rick Dykstra, Conservative, St. Catharines, ON]

But if there is more money being paid by students--and I'm not trying to be antagonistic here, I'm just getting to the root of my question--then what's happening to that money? How is the federal government actually going to put more money into transfer payments to provinces while at the same time trying to identify that perhaps money isn't being spent wisely as it is? Maybe that's the root of the issue here.