Finance Committee on Oct. 24th, 2006

[The Chair, Conservative, Brian Pallister]

We will commence--or I should more accurately say we should recommence.

The finance committee has been hearing submissions from across Canada for the past number of weeks. I want to commend my committee members for their dedication to this task, but I can tell you, I believe we are more stimulated and interested in the presentations now than we were at the outset. It has been a wonderful education, and we thank you for being part of that process of educating us on your point of view. We look forward to your presentations, and I thank you.

We are going to begin with five-minute presentations, but before we do that, I want to give you a little coaching here. I will give you an indication when you have one minute or less remaining, if you care to make some eye contact with me, and then we will unceremoniously cut you off at five minutes to allow all of us to participate in this process. I prepare you for that in advance. Thank you.

Now, from the Consortium of Women's Organizations of Nova Scotia, Stella Lord is here. Welcome to you. You have five minutes. Take it away.

[Stella Lord, Co-Chair, Canadian Research Institute for the Advancement of Women, Consortium of Women's Organizations of Nova Scotia]

Thank you very much.

First of all, I'd like to draw your attention to a letter I would like to have written into the record, from the Sisters of St. Martha in Antigonish, who also support our brief. As you'll see, the brief has been presented by a number of women's organizations in Nova Scotia.

We thank the committee for the opportunity to bring forward concerns and recommendations that speak to the importance of ensuring that strong social programs are recognized and essential for the social and economic development and well-being of Canada and of everyone who lives here.

The organizations that comprise our coalition have been working together to bring attention to the need to proactively address the widening gap in income between the rich and the poor, the weakening and dismantling of Canada's social programs, and the ongoing exclusion of many sectors of society from full participation in it.

We believe the federal government has a strong role to play in creating both social and economic policies that acknowledge the right of all to a decent standard of living and advance inclusion and full participation, regardless of where they live, the economic situation of their province or territory, or their personal social and economic situation.

As organizations that work with women, we understand that poverty and exclusion are linked and that they are the result of an economic agenda that is narrowly focused and does not take into account that the economic health of a country and its people is interdependent with social well-being. We also understand that there are high economic and social costs to poverty and exclusion, and that poverty and exclusion are gendered.

This means that poverty affects women more profoundly than men. In Canada, one in every seven women lives in poverty, and regardless how poverty is measured, women are disproportionately likely to live in poverty. This is most clear in the case of single mothers, where the likelihood of poverty is particularly high.

Because women live in the deepest and most persistent poverty, the measure of the effectiveness of any step the federal government takes to address it must be the impact the programs and policies have on the poorest of women.

If there is the political will to do so, we believe that poverty and the risk of poverty can be reduced, if not eliminated. Historically, the federal government has played an important role in developing programs that alleviate or prevent poverty. Without the federal government we wouldn't have housing programs and we wouldn't have had the Canada Assistance Plan. Many provinces would not have been able to provide welfare and other services.

But it appears that the federal government is now stepping back from the crucial role it has played historically in ensuring adequate and equitable social programs and services across Canada. This has been particularly evident with the elimination of the Canada Assistance Plan and the implementation of block funding through CHST in 1995, the cancellation of the federal-provincial child care agreements earlier this year, and the more recent cuts to programs in the last month or so that directly affect the health and well-being of women and communities.

Key problems that have emerged in the wake of these cuts and that have been identified by our coalition and other women's groups are: the deterioration of social programs; the absence of any coherent or consistent provision of basic social programs across jurisdictions; the failure of governments to establish mechanisms to ensure that programs comply with human rights, including women's rights to equality; the development of workfare; intensification of the discourse on provincial sovereignty; and an increasing lack of transparency in government decision-making.

Since my time is nearly up and I can't say what else I wanted to say, I draw your attention to our recommendations...which relate to the CST and equalization to the have-not provinces; strategies to ensure basic rights and standards for income assistance; increase the national child benefit to $4,900, the amount recommended by the Campaign 2000; more funding for affordable housing; labour force development agreements in each of the provinces; rethink the current child care initiative and go back to the old plan, or even something better; income tax reform that really benefits low-income Canadians; full funding for the status of women program; a reinstatement of the funding for the court challenges program; restore the funding to the groups and organizations that were cut recently, such as literacy programs, CAP sites, aboriginal smoking prevention programs, and so on, which disproportionately affect low-income Canadians.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Ms. Lord.

We'll move on now to Jim Gourlay, who is here with Magazines Canada. Welcome, sir. Five minutes to you.

[Jim Gourlay, Affiliated Member, Magazines Canada]

Thank you, Mr. Chairman.

Members of the committee, my name is Mr. Jim Gourlay. I'm chair of the Atlantic Magazines Association, which is an affiliate of Magazines Canada. With me is Mark Jamison, who is the chief executive officer of Magazines Canada.

To the extent that this should be considered a brief to you, on behalf of the magazine industry nationally, Magazines Canada is a national non-profit association, representing Canadian consumer magazines all across Canada. About 90% of Canadian magazines have paid circulation in both official languages. Member magazines span a wide range of topics, including business, news, politics, sports, arts and culture, leisure, lifestyles, and the environment, among others.

In our brief you will have read several recommendations for the Canadian magazine industry. However, this afternoon we would like to focus our comments on an urgent situation we are facing with respect to the publications assistance program, PAP, as it is known.

The consumer magazine industry is bracing for a major change that will have a dramatic impact on how magazine distribution and the access Canadians have to Canadian content magazines proceeds in the future. The issue is this: Canada Post has announced its intention to withdraw its $15-million financial contribution to the publication assistance program within the next five months, I believe.

The price tag of this decision is a $15-million gap that will cause an immediate 31% increase in postage costs for the average magazine. This comes on the heels of staggering year-after-year postage rate hikes and means that distribution costs will soar even higher. The situation will simply not be viable for many publishers. I will tell you that postal costs have increased about 100%. They have doubled in the last eight years, and we're looking at 31% on top of that.

The effects of Canada Post's decision are many. It could mean cutting back on the amount of editorial and Canadian content pages that can be produced. It could mean fewer jobs and assignments for Canada's writers, creators, illustrators, and photographers. The fact that some magazines will not survive could mean that there will be fewer Canadian magazines in the marketplace and less choice for readers.

This will also drastically alter the way magazines are delivered to Canadians, because Canada Post may no longer be an affordable option. The industry is forced into considering alternative delivery methods, and this could mean prohibitive distribution costs, especially in rural areas like Atlantic Canada, to the extent that Canadians living outside major urban centres will not have the same access as other Canadians to affordable Canadian magazines.

Canada Post's withdrawal from PAP effectively puts an end to a century-long distribution partnership and to a highly successful subscription-based delivery model that has evolved because of federal government magazine policy.

What we are asking you today is that the finance committee recommend that Canada Post's financial contribution to the publications assistance program be maintained, until a proper review and evaluation of Canada's magazine policy. In our view, Canada's highly successful magazine policy should first be reviewed and evaluated before such crippling cuts are allowed, with five months' notice.

Carving out space for a Canadian voice has always been a challenge in this country, for two reasons: first, the country's geography, with a relatively small population spread across a huge land mass, makes magazine distribution more difficult and more costly than in many other countries; and second, culturally competing with the enormous size and influence of the United States entertainment industry is daunting.

Indiscriminate cuts do not take into consideration how to best serve Canadian readers. Canada's magazine policy needs to consider how we can best ensure that rural Canadians and others are able to access Canadian information, perspectives, and stories at affordable rates. It needs to consider the importance of Canada's smart jobs--our writers, designers, editors, and illustrators. It needs to take into account the health of Canadian culture and all the small to medium-sized businesses that publish more than two-thirds of our diverse and rich collection of magazines.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Gourlay.

We'll continue with Mr. Robert McKelvie, who is here on behalf of the Canadian Restaurant and Foodservices Association.

Welcome. You have five minutes, sir.

[Robert McKelvie, Chairman, Canadian Restaurant and Foodservices Association]

Thank you, Mr. Chairman.

I'd like to begin by thanking you for the opportunity today to raise the concerns of our $51 billion industry in Canada.

There are two substantive issues I'd like to raise here in the brief time I have available. The first is the GST and the second is labour shortage.

The one-point cut to the GST earlier this year was applauded by our industry from coast to coast. After more than 15 years, the GST remains a sore point for our industry. It is discriminatory and unfair, adding tax to our ready-to-eat meals while leaving ready-to-heat meals tax-free. I would encourage this committee to recommend that government move as quickly as possible to reduce this tax to 5%.

The other pressing issue is labour shortage. For members in western Canada, this is already a crisis. For the balance of the country, it is a growing problem. There's no getting around or wishing away the two realities that confront our industry: first, the country's birth rate has fallen precipitously in the last three decades, seriously constraining growth in the labour market; second, we're on the verge of the biggest exodus from the labour market in the country's history--the baby boomers are starting to retire.

When you look at these two factors, you can only conclude that these challenges ahead are daunting. The Conference Board of Canada projects there will be a shortfall of more than 950,000 workers in Canada by 2020 unless we do something to increase the available labour pool.

All industries will suffer from the labour shortage, but the outlook for the food service industry is particularly daunting. Our industry is skewed toward youth, and in fact the available workforce will be older. Food service today relies on young people for its workers. In fact, 44% of food service workers--more than 440,000 employees--are between the ages of 15 and 24, but projections suggest that by the year 2025 the population of that group, the 15-to-24-year-olds, will actually decline by 330,000.

In order to meet this challenge, we in the industry need to strengthen our recruitment and our retention activities. We will have to access older workers and look for new pools of talent to entice the industry, but we can't overcome the demographic reality confronting the Canadian labour market.

We need dramatic changes in public policy, including modernization of the immigration point system so that it recognizes the diverse needs of Canada's labour market; greater flexibility and easier access for temporary foreign workers; the working holiday program and the provincial nominee program; elimination of the clawbacks in our federal retirement benefits programs, which punish retirees for supplementing their incomes; and incentives for labour mobility within Canada, encouraging the unemployed to move from areas of high unemployment to areas of high demand.

We also recommend that government take a serious look at lowering the tax burden on low-income Canadians, thus encouraging them to enter the workforce. There are a number of ways government can lower the tax burden on Canadian workers, including lowering the bottom tax rate or raising the basic personal exemption, and adding a yearly basic exemption of $3,000 into the Employment Insurance program, as we already have in the Canada pension plan.

A yearly basic exemption in the EI program has been recommended twice in the past by this committee and twice by the human resources committee. The YBE would put more money into the pockets of working Canadians and provide targeted payroll tax relief to labour-intensive industries.

In summary, Mr. Chairman, the labour shortage is already a crisis in western Canada, and it will be the biggest single issue we face in the years to come. I believe that you and your committee should recommend to the Minister of Finance that he move as quickly as possible to address the labour shortage, so that we will be able to compete tomorrow.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McKelvie.

We'll continue with Jan Westcott, who is here on behalf of Spirits Canada. Welcome.

[Jan Westcott, President and Chief Executive Officer, Spirits Canada / Association of Canadian Distillers]

Thank you, Mr. Chairman and committee members.

The beverage alcohol market in Canada could well be the poster boy for the theme of this year's pre-budget consultations, Canada's place in a competitive world—a poster boy, that is, of what not to do to create a dynamic and a competitive market.

This is the spirits industry's first appearance before the committee in many years. We have not joined the legions of business interests who have extended their hands for the ever-greater, taxpayer-funded handouts and subsidies. We believe instead in the virtues of a level playing field and competition. Competence should decide relative winners and losers in a free market, not tax policy.

We indicated in our formal brief to the committee that a glass of wine, a bottle of beer, and a spirit cocktail each contains an equivalent level of alcohol. Yet the Government of Canada imposes a federal excise duty of 9¢ on a glass of wine, 11¢ on a bottle of beer, and 20¢ on a spirits cocktail. In essence, the glass of wine is afforded a 56% subsidy and beer a 47% subsidy when compared with the duty rate imposed on spirits. In other words, the federal excise duty on spirits is approximately twice the rate imposed on competing beer and wine producers.

This huge variance in relative fiscal federal burdens under the excise duty structure, including directly competing and substitutable beverage alcohol products, is the economic equivalent of a direct subsidy. This is a subsidy with the same familiar negative economic consequences, including the misallocation of resources, lowered productivity, slower growth, and a less dynamic consumer marketplace. In fact, if the federal Department of Finance had mailed out $927 million in cash to the beer and wine industries, the effect would have been the same.

Surely there are more appropriate uses of federal taxpayer money than to distort the beverage alcohol market in this manner. Of course, the problems and inequities within the beverage alcohol market in Canada aren't confined to the federal government. A number of provincial governments have even more egregious behaviours and policies.

But the federal government has a leadership role to play, and instead of being part of the solution it is actually part of the problem. Since federal excise duties are the first level of tax applied within the value chain, any discrimination is magnified by compounding taxes on taxes before reaching its ultimate end point, the Canadian adult consumer.

October 17, 2006 is an inauspicious date in the history of Canada. On that day, the House of Commons approved a ways and means motion that implemented, retroactive to July 1 this year, even further subsidies to certain wine and beer companies, thereby increasing excise duty marketplace distortions. In respect of beer, the new excise amendments provide sliding-scale relief on the first 7.5 million litres of beer packaged annually in Canada. While the additional excise duty relief for beer was originally tabled in the spring budget as a small-brewer assistant measure, and was intended to benefit only those brewers whose annual production was less than 30 million litres, this already exceedingly high cap has been eliminated and the additional assistance is now available to every brewer in Canada regardless of size or circumstances. Coincidentally, October 17 this year was also the date that Sapporo Brewery of Japan, a $4.3 billion conglomerate, formally assumed control of Sleeman Breweries.

The same ways and means motion also exempts from any excise duty all wine made from Canadian grapes and fruits. So instead of paying the already low 9¢-per-glass excise duty, a vintner can reduce that to zero if the wine is made from Canadian-sourced agricultural products. From an economic and even political perspective, we have to ask why Canadian spirits manufacturers and our farm suppliers are not given the same opportunity to avoid excise duties on our own products, most of which are made from 100% Canadian-sourced cereal grains.

The spirits industry's signature product is Canadian whiskey. Canadian whiskey brands like Crown Royal, Canadian Club, Wisers, and Schenley are iconic symbols of Canada exported around the world, yet they are severely disadvantaged in their own home market by their own federal government.

As members will be aware, there have been no beer or wine retail price reductions as a result of the excise duty relief in effect as of July 1. This won't surprise members, since this was the evidence provided to the committee by the beer and wine industries themselves. Additional excise duty relief would be pocketed by suppliers and at least in part reinvested in the marketplace to compete—to compete, that is, against spirit suppliers and grow their market shares at our expense. Lower excise duties for beer and wine provide those segments with higher gross margins, which are used to compete in the markets.

Spirit suppliers are constrained from fully competing here and abroad for our fair share of the market by artificially low prices in our home markets. If Canada wants a competitive beverage market and a prosperous beverage alcohol industry, fundamental reform of federal excise duties is urgently required.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation, sir.

We'll now move on to the Nova Scotia Home Builders Association, Suzanne Bona.

[Suzanne Bona, Representative, Nova Scotia Home Builders' Association]

Good afternoon, Mr. Chair.

Thank you for the opportunity to speak to this committee.

The Nova Scotia Home Builders' Association is the provincial arm of the Canadian Home Builders' Association and represents the residential construction industry, including builders, renovators, developers, trade contractors, and the like.

My name is Suzanne Bona, and I am the past president of the province's largest home builders' association, local Central Nova, and the Nova Scotia representative for the national Canadian Home Builders' urban council. I am also president of one of Nova Scotia's largest home building companies, Scotian Homes.

With me today are Paul Pettipas, chief executive officer of the Nova Scotia Home Builders Association, and Sherry Grant, communications director.

The topics I will discuss today include infrastructure costs, downloading and affordability, GST reduction and indexation, skilled labour shortages, and the underground economy.

The first point I will look at is on the affordability and infrastructure costs. Currently, there is no mechanism in place for provinces and municipalities to be accountable for the federal moneys they receive. Are we certain that the federal money for the infrastructure is being spent in the areas where it should be? Is it being diverted into other areas, thereby forcing municipalities to download additional costs, fees, and charges on to builders and developers, which ultimately means the homeowner will be the one paying in the end?

For example, in Halifax the municipality is looking at increasing sewer redevelopment fees from 30¢ to 80¢ per square foot. This means that for homes similar to what our association recently built for Habitat for Humanity, the cost will have gone from $547 to an incredible $1,459. This alone will put the idea of home ownership out of reach for some families in Nova Scotia.

It is our recommendation that the federal government create a system whereby infrastructure money provided to the provinces be accounted for to ensure the well-being of Canadians.

When it comes to the affordability of homes, I will draw your attention to the numbers provided by CMHC on the average new single houses in Halifax from 1998 to 2007. The cost of new homes has risen from $156,000 in 1998 to a forecasted $328,000 for 2007.

This may not seem significant in comparison to the cost of houses in the western part of Canada. When you compare the average household income for a family in the Halifax area, however, you will see why this increase is having such a dramatic effect on the affordability of new homes.

Based on estimates from CMHC market analysis, looking at annual growth and aggregate personal incomes to all households, the average income per household is $71,000. The average for owner-based households is $89,000, with the average for renter-based households standing at $44,000.

This type of income, coupled with the price of new houses, creates a challenge for families in Nova Scotia. In saying this, it is not only new home buyers who are affected by this. The resale markets are also often on par with new homes in regards to pricing.

This leads to my second point, on the GST reduction and indexation.

The 1% reduction of GST from 7% to 6% was well applauded and a positive step. We look forward to another 1% GST reduction.

In addition to the GST reduction, I would be remiss not to bring to the forefront the topic of indexation. With the introduction of the GST, it was the government's commitment for the GST rebate to be indexed on a sliding scale between $350,000 and $400,000. However, this has yet to occur.

As you can see from the drastic increases in housing prices in Nova Scotia alone, there will be a major problem over the next few years. It is already a huge problem in larger urban centres such as Vancouver, where 97.6% of the houses, almost all, are priced higher than $350,000, therefore putting the GST rebate out of reach for homeowners.

The third point I would like to touch on is skilled labour shortages. This is an issue that we are faced with across the country and in many industries, as was already heard here today. In particular, the residential construction industry is facing a critical shortage, and we are continuing looking at ways to overcome this challenge. In particular, the immigration policies need to be taken into consideration to help manage the issue in the short term.

Our recommendation is to redevelop the point system to allow temporary skilled trades people into the country, which would be a recommendation in the short term.

In addition to this, the Canadian Home Builders' Association has developed and presented a human resources development action plan, which calls for the federal government to take a leadership role in the development and delivery of training through Canada's existing training and education system. It's important to move forward with this initiative to ensure the sustainability of the residential construction industry.

Finally, our fourth point concerns the underground economy. This accounts for a huge portion of the residential construction industry and severely impacts all Canadians. The existing contract payment reporting system that was introduced is not effective, and it is not doing what it was intended to do.

[The Chair, Conservative, Brian Pallister]

Suzanne, we're going to have to allow the underground economy topic to be discussed in the question period. I invite you to include it in your response to any of the questions, regardless of what the question might be.

We'll continue now with Alex Arseneau, who is here on behalf of the New Brunswick Non-Profit Housing Association. Welcome to you, sir. You have five minutes.

[Alex Arseneau, Executive Director, New Brunswick Non-Profit Housing Association]

Thank you very much.

I'm here on a two-tiered mission, and I bet this will surprise you, but I'm here to thank the present government for what it did recently for affordable housing. I mean the $1.4 billion that was recently transferred to the PTs by way of trust. In New Brunswick, we are looking at close to $25 million, until March 2009, that we can spend on affordable housing. The only thing we can hope for in New Brunswick is that our new provincial government can get off the mark and work with us and spend that money before 2009, but spend it in the best possible manner. We think, if we're smart, we will add around 1,000 affordable housing units in New Brunswick, so that's the good part.

You might want to say to me, “What the hell are you doing here, then, today?” Well, I have another side. I think that the federal government should make affordable housing the foundation or the cornerstone of its social policy framework.

In the invitation that you sent us here, you asked us to tell you what the budget should have in it to ensure that our citizens are healthy, have the right skills, are motivated, and will do better for themselves and for their communities and their society. How can you be healthy, number one, if you can't afford to eat because your housing takes up 50%, 60%, 70%, 80% of your total income? Okay? So don't put money in health first. Put money in housing, because it ain't going to help. You're putting on a band-aid, but you're not fixing the wound.

It's the same thing for motivating people to educate themselves, for parents to motivate their kids to do something. When you are poor, and you can't even afford to feed your kids, and you got to take them to the food back or the soup kitchen, how are going to be motivated to motivate your kids for the future? So there again, put the money where it would do the most good. If you have a safe and secure and affordable place to live, then these other things will come. You will be healthier. You will be more motivated. You will want to work. You will want to contribute. So that's that one.

My suggestion is, if you say to me that affordable housing is okay till March 2009, so shut up, I will ask you why you don't, in the 2007 budget, put a fair chunk of money aside, and in the 2008 budget do the same thing. When the end of this program comes in 2009, you will have another big chunk of money. It will not hurt as much, and then you'll be ready to continue to establish affordable housing as the cornerstone of your social policy programs.

We are concerned about some other programs, though, that we hear through the grapevine might terminate in March 2007. The RRAP program, the rehabilitation program for low-income housing, is a heck of a good program. It's been there a long time. It's created an industry within itself. It makes the stock more viable for the future. I can't believe for one minute that this government is going to cancel the RRAP program. One thing that you've got to tell us now, or tell us in early November is that you won't cancel it, because it's creating a heck of a mess in the industry.

The same thing goes for SCIPI, Supporting Communities Partnership Initiative. I'm part of SCIPI. It did a heck of a lot of good. It is doing a heck of a lot of good in the communities. It involves a lot of people who care and who volunteer, and it helps the people who need them. The reason we need SCIPI is that we don't have enough affordable housing. So unless we get enough of that, we're going to continue to need SCIPI, but there, again, tell us now, early in November, that SCIPI isn't going to be shut down come next March, because I know it's creating a heck of a lot of havoc in our areas.

There are other things. We're hear you're going to sell off CMHC. Please don't do it. It's served Canadians for 60 years. I don't believe that's going to happen anyway, but I'm saying use the funds that CMHC is bringing in; turn them around and put them into affordable housing, and then you won't have to have that in your budget.

I could go on, but thank you.

[The Chair, Conservative, Brian Pallister]

You've done a very good job with the five minutes allocated, sir. Thank you.

We'll continue with the Greater Halifax Partnership. Fred Morley, senior vice-president, is here.

Welcome, sir. Over to you.

[Fred Morley, Senior Vice-President and Chief Economist, Greater Halifax Partnership]

Thank you, Mr. Chair.

I want to tell you today about one of Canada's greatest success stories. I want to tell you about Halifax.

In the last ten years Halifax has completely turned around its economy, and that's due to a unique partnership between the private sector and our business community here in Halifax. We now have our sights set on bigger goals.

In the last year, we have completed a cultural plan, an immigration strategy, a regional plan, and HRM's--Halifax's--first ever economic plan. That plan will build on the public-private partnership that has grown our community over the last ten years. This economic strategy is a plan to keep our kids, grow our community, be competitive, and build the best community in the world. A strong Halifax is good for Nova Scotia, and a strong Halifax is good for Canada.

Our economic strategy is all about people. It's about investing in creativity. It's about the world getting to know us here in Halifax a little better. It's about having confidence in ourselves and in doing so, building new partnerships. It's about having the best business climate in Canada.

We have an economic vision. We have a plan. We know exactly where we're going. We know exactly what we need to get there. We also know that the federal government will be a key partner with us in growing that future. So let me give you a few examples.

This strategy recognizes that communities have to invest in a social and cultural infrastructure that enhances quality of life. In this respect, Canada's bid to host the 2014 Commonwealth Games represents the best chance in two or three generations to fast-track this kind of investment in our community. We need this investment to attract and hold young people who will help us build the future. We are pleased that the federal government is a committed partner to these games.

Second, our partnership of business and government knows that we have to pay more attention to the largest employer in our community, and that's the Canadian military. They put hundreds of millions of dollars into our economy every single year, and they're going to grow, and we want them to grow here. So the business community, along with local government partners, is working to develop and enhance the value proposition and the business case for defence expansion here in HRM.

The third example is the Halifax gateway, which represents an important economic opportunity, not just for Nova Scotia, but for all of Canada. The Halifax Gateway Council is a partnership of public sector agencies and private sector organizations. This group has identified clear priorities for growing the Halifax gateway. Halifax represents a real alternative for Asian cargo coming to Canada. We are already handling Asian cargo coming through Suez. There is about the same distance between Halifax and Hong Kong as between Vancouver and Hong Kong. So Asian cargo flowing through the port is already building our business activity. Businesses have already discovered this route into Canada. Halifax is already an option for the business community moving Asian cargo into this country. It's time for the Government of Canada to follow business and move to a two-ocean gateway policy.

Finally, let me talk about our business climate. We have a lot of work to do here in Nova Scotia to meet our goal of having the best business climate in the country. Current discussions on fiscal transfers will have a big impact on that business climate and on our competitiveness.

For example, a simple measure like removing resource rents from the equalization formula could cost Nova Scotia a quarter of a billion dollars a year. That cost would have to be absorbed through local taxes or through a reduction in services. So any cuts or changes to federal transfers would undermine our competitiveness. I urge the government to be fair and balanced in these negotiations.

Thank you for the opportunity.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

We'll conclude our presentations now with Jody Dallaire, who is here on behalf of the New Brunswick Child Care Coalition.

Welcome. You have five minutes.

[Jody Dallaire, Coordinator, New Brunswick Child Care Coalition]

Thank you, Mr. Chairman.

The New Brunswick Childcare Coalition is happy to appear before the Standing Committee on Finance .

The Coalition is a nonprofit membership-based organization that includes individuals and organizations from across the province. We promote high quality, accessible, nonprofit childcare services provided by trained and well-paid staff for all children and parents in the province who want or need them. We are affiliated to the Childcare Advocacy Association of Canada, a national organization.

In order for Canada to prosper in the world today and in the future, it is necessary that we invest in our full potential. It is especially critical that we offer adequate support to ensure that children acquire the foundations for lifelong health, learning, and skill development.

As is already recognized in most other developed countries, quality child care programs help build these foundations and also help support ongoing learning, skill development, and labour force attachment for the parents. Public investments that improve access to quality child care services are affordable because these benefits significantly outweigh the costs involved.

As the Standing Committee on Finance conducts prebudget consultations clearly focused on Canada's place in a competitive world, we want to offer the following recommendations: the government should invest in quality childcare services providing support to children, families and communities, as well as to the economy, which will improve the global competitiveness of Canada.

However, the benefits of childcare will only be realized through a focused public investment strategy that ensures families' access to quality services. To build the childcare system that New Brunswickers and Canadians want and need, the New Brunswick Childcare Coalition calls on the federal government to restore and increase sustained, long-term federal funding to the provinces and territories. Federal transfers must be specifically dedicated to improving and expanding childcare services, based on provincial and territorial plans to advance quality, universal access and affordability.

Quality child care enhances the skill set and talent level of the Canadian labour force immediately and in the future. It offers parents, especially mothers, the opportunity to increase their labour force attachment and upgrade their skills while helping their young children get a healthy start, develop social skills, and build a foundation for lifelong learning.

These developmental benefits translate into greater contributions back to the community and reduce the chances that children will require targeted supports later in life. Social development and skill acquisition benefits not only citizens but also their employers. Canada's advantage in a competitive world is its people, and child care is a vital part of human capital and labour force development.

It is not surprising that the Bank of Canada's governor, David Dodge, the Vancouver Board of Trade, and a recent survey of executives in Canada's largest companies all have identified the economic importance of public investment in early learning and child care. It also helps to explain why the most comprehensive studies done show that the benefits of quality universal child care systems outweigh the cost by a factor of two to one, not including the additional benefits to children who are at risk.

The federal government is terminating the bilateral agreements that provided dedicated funding for provinces and territories to improve their child care services and replacing these funds with two piecemeal approaches: a taxable family allowance and a fiscal incentive for child care capital costs.

Though these approaches are intended to offer market-based efficiencies, years of experience and research indicate that they will not deliver the child care services we need because they are not tied to community-based strategies and therefore unlikely to respond to community-wide needs; will not create a national child care system, yet they hinder the provinces and territories in creating their own systems; and lack clear accountability for public funds. For example, what responsibility will the capital incentives recipients have to ensure access to new spaces by children with disabilities and lower-income families?

I'm going to go directly to my recommendations.

[The Chair, Conservative, Brian Pallister]

No, that will be later. Thank you for your presentation.

We must conclude the presentations now, but we will continue this discussion with questions from committee members.

We'll commence with Mr. Savage.

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

Thank you, Mr. Chair.

Being the local boy here doesn't give me any more time, so I'm going to move very quickly.

I could ask you all questions. I'm going to start with Fred, and then go to Suzanne, and then to Rob McKelvie. Rob has, by the way, for when you guys are back here the next time, the best fish and chips in town at a place called “McKelvies” down the road, with real malt vinegar.

Fred, you talked about the economy in Halifax, and it's done very well. One of the factors that hasn't contributed much is the declining federal presence. We were hit hard by program review some ten years ago, and while other parts of Canada--certainly Ottawa--have rebuilt their federal presence in terms of human resources, we haven't. Could you comment on that?

[Fred Morley]

Yes, that's absolutely correct. We lost about 6,000 federal government jobs, mostly defence jobs, in the early to middle 1990s. And while the rest of the country has built that back in more recent years, Halifax has not.

We recognize the role that we've traditionally played in Halifax, as the headquarters of the navy and a centre of logistics for many of our international operations, and the business community is working with us to put forward a value proposition to win back some of that business, to win back some of those jobs that we lost. So that's where we're going with that particular opportunity.

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

Have we been hurt more than any of the other top 10 or 15 cities in Canada? It's my understanding that Halifax has actually had a larger net loss than any other major community.

[Fred Morley]

Yes, Nova Scotia and Halifax has had the largest per capita loss of federal government jobs over the last ten years of any place in the country.

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

Okay, thanks, Fred.

Suzanne, I should congratulate the Nova Scotia home builders, who have been very active with Habitat for Humanity. They had an opening of three new houses recently, and the home builders really stepped up to the plate on that one. I think all Nova Scotians are appreciative of that.

The new single detached house price in Halifax, as you mentioned, has gone from $156,000 in 1998 to $328,000 now. Does that include taxes and fees to the municipality? Is that included in the price?

[Suzanne Bona]

With a recent study by CMHC on what is called the capital cost contribution and download fees for municipalities, 20% of our cost of housing in Halifax, HRM, is due to those capital cost contributions. While we recognize that there needs to be a certain amount to new development, what we're asking is that the playing field be levelled. Recently the municipality has gone after dollars to have infrastructure bettered, but we're seeing that the charges keep being downloaded to our industry.

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

You're saying that 20% of that cost is sort of fees and taxes going largely to the municipality.

[Suzanne Bona]

That's right.