Finance Committee on Oct. 25th, 2006

[The Chair, Conservative, Brian Pallister]

I would like to welcome the witnesses and committee members.

First, I must apologize for my French. I'm making an effort, but it's very hard for an old man like me. In fact, I started learning French three years ago.

The mandate of the House of Commons Standing Committee on Finance is to study the budget policy proposals presented to the federal government and to report on them. This year's theme is Canada's place in a competitive world.

We've asked you to limit your presentations to five minutes, knowing that that's not easy, but we're nevertheless going to stick to that limit. If you want to take a look over to me, I will give you a signal when you have one minute or less left. At the end of the five minutes, I'll ask you to conclude so that you can talk with the members and answer their questions.

The first member will be Mr. François Saillant, Coordinator of the Front d'action populaire en réaménagement urbain. Mr. Saillant, you have five minutes.

[François Saillant, Coordinator, Front d'action populaire en réaménagement urbain]

Good afternoon. I would like to introduce Nicolas Lefebvre Legault, Chairman of FRAPRU's board of directors, who works in Quebec City.

The name “Front d'action populaire en réaménagement urbain” probably doesn't mean much to people from outside Quebec. It's essentially a cross-Quebec association of groups that advocate housing rights. Approximately 120 organizations are members of FRAPRU across Quebec.

When we read the press release describing the theme that you've adopted as a committee, we were struck to see that it referred almost exclusively to economic competitiveness.

We want to add another dimension to the debate, one we think is no less important. And that is the question of compliance with the international commitments that Canada has made with regard to socio-economic rights. Unfortunately, a report published last May by the UN Committee on Economic, Social and Cultural Rights was highly critical of respect for rights in Canada, a country that, as the committee said, has the means to respect all rights. This committee made a series of recommendations, and we're still awaiting the Canadian government's comments on how it intends to comply with those recommendations.

I have submitted a copy of the report to you, which perhaps you've already seen. In it a series of recommendations is made on subjects such as transfers to the provinces respecting income security. These transfers have not increased since 1995, which has had an impact on the level of benefits across Canada. Recommendations were made on employment insurance and the problem of hunger and food insecurity, but also the subject of housing and homelessness, a question we will focus on more.

This past May, the UN committee repeated a recommendation it made in 1998 to all levels of government, that they consider housing and homelessness as a national emergency. In our view, the report that you prepare as a committee must be consistent with those UN recommendations, particularly those concerning housing. We think that should be done through concrete action. First, bigger investments must be made in social housing. The last budget confirmed investments of $800 million across Canada in what was called affordable housing. We heard the same figure of $800 million in the budget agreement between the Liberal Party and the New Democratic Party, and that was confirmed in the last budget. We are anxious to see the colour of that money. We've been hearing about it for a year and a half, and we haven't yet seen its colour. It was confirmed that the money would be paid on September 25, but we haven't yet seen it, at least in Quebec. However, we clearly can't be content with $800 million over a three-year period across Canada. In our view, the problems of housing and homelessness are important enough to warrant much larger investments. FRAPRU and other groups elsewhere in Canada believe that the federal government should increase its direct investment in social housing by $2 billion a year.

In our opinion, a portion of those amounts should come from the implementation of a bill introduced by the Bloc québécois, Bill C-285, if my memory serves me, which concerns the budget surpluses of the Canada Mortgage and Housing Corporation. We feel a portion of that surplus, which currently stands at $4.4 billion, should be used to assist a larger number of people who are homeless or living in substandard housing.

We're also making other demands, including one I won't dwell on because we support it, the Supporting Communities Partnership Initiative, the SCPI, that it be improved and that it continue so that groups that work with the homeless are not required to chase after these grants from year to year. Lastly, we want to draw your attention to the budget cuts that were recently announced and that, among other things, have an impact of $45 million on the Canada Mortgage and Housing Corporation.

In our view, if money is to be saved at CMHC, those savings must remain in the housing and be reinvested so that, among other things, the housing stock we have established is...

[The Chair, Conservative, Brian Pallister]

We'll now hear from Mr. Michel Pigeon, President of Laval University. Mr. Pigeon, you have five minutes.

[Michel Pigeon, President, Laval University]

Mr. Chair, Laval University has submitted a brief and recommendations. The text explains various matters. So I'm going to do a brief review. The first recommendation, you won't be surprised to hear, concerns transfers for postsecondary education. I believe the federal government contribution to postsecondary education should be restored to 1994 levels, as has been requested. That is fundamentally important for the future of Canada and the province of Quebec.

Furthermore, we have emphasized various points concerning research, in particular the reimbursement of indirect research costs. The fact that the federal government currently grants only 20% is an additional charge for the universities, which are already short of money.

In addition, as regards the granting agencies, I would say that, for the Canadian Federation for Innovation in particular, which has really helped put Canada on the map, some changes should be made, and I'll say more about that, if you wish. Currently we're seeking counterpart funds from the private sector, but that's not always possible, in certain areas of the humanities, for example.

You won't be surprised to learn that we are also concerned about the core budgets of the federal councils. The federal councils are extremely important to research in Canada. We must continue to increase the amounts that are allocated to them if we want research to continue developing in Canada.

But this research must also be useful, and that's why we also recommend that the federal government immediately re-establish, enhance and develop its programs to promote discoveries. If we want the work done at universities to be as useful as possible, we must support the promotion of research. For promising laboratory work to result in a wealth-creating business, there must obviously be a transfer. There is work for governments to do here. I believe it is the role of governments to support this transition.

The sixth point that I would like to raise concerns sports infrastructures. As you know, Laval University has a plan to expand its physical education and sports pavilion. This project has been submitted to the provincial government and to the City of Quebec, and it is well supported. Our suggestion is that there be a dedicated envelope for sports infrastructure projects in the 2007 budget.

There are a lot of sports infrastructure projects in Canada. There's a lot of talk about obesity and health problems these days. Sport is important, and, in my opinion, if the federal government allocated funding to sports infrastructures, that would facilitate work that may well be done in any case, but might take more time.

I would point out that Laval University's PEPS is the most used sports centre in all of Canada east of Montreal. It's a major centre where national competitions are held. This is a very good project that I could describe further, if you wish.

As regards students, we must increasingly help our students go international, open up to other cultures and travel abroad. Laval University is one of the first universities in Canada to establish a student mobility program. The federal government should support this initiative. Not enough students in Canada go away during their education and see what is being done elsewhere. Only one or two percent do so. I think this student mobility program is fundamentally important. Similarly, we must also be able to attract foreign students here. Thinking must be done on this, as Australia and England, in particular, have done.

I'll close by suggesting some reading to you. In The Chronicle of Higher Education, someone in the United States with whom you're no doubt familiar, Richard Florida, has written about the impact of universities on their environment. This is an extremely interesting article which shows how great an impact universities have on all of society. He boils all this down to what he calls the three Ts: technology, talent and tolerance. So the emphasis is placed on the more human and social part.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation, sir.

We'll now hear from Ms. Manon Théberge, Director General of the Boîte à science. Welcome.

[Manon Théberge, Director General, Boîte à science]

Thank you, Mr. Pallister.

The mission of the Boîte à science is to stimulate young people's interest in science and technology, and it has been doing that for 25 years. Since 2005, we've been developing the idea of creating a science centre in Quebec City. For people from outside Quebec, these are obvious things because they have one in their city. Quebec City is the only one of the top 20 cities in Canada that doesn't have a science centre.

In anticipation of the project's implementation, we did our homework. We met with 300 persons. We visited some 30 science centres, took part in discussion groups, conducted surveys and studies and prepared briefs. We have a business plan, which will be distributed to you shortly.

Our organization became a member of the Canadian Association of Science Centres, and it was then that we learned there was no Canadian strategy in the area. We are the last city to establish a science centre, and we see that everyone has done it in a piecemeal way, each in his own area. There was no strategy.

And yet science centres are the most useful tools for stimulating young people's interest in science and technology. There are 1,500 of them in the world, including 640 in Asia, where they are experiencing phenomenal growth, because political authorities have understood that grey matter is the raw material of potential prosperity in a community. If young people are interested in it, then they're able to have careers in the field. The centres are the roots of those careers. UNESCO even states that countries that do not make an effort to interest young people in science and technology become poorer. It doesn't say they could become poorer, but that they become poorer. That's a statement.

In our discussion groups here in Quebec City, we asked people to name us five science and technology businesses, five scientists and five patents, and the response rate was 0%. No one was able to name five, whereas we have 800 businesses that conduct research and development. That's not right. People must adopt this in order to dream it, so that children are inspired by it, so that they in turn can contribute to prosperity or even take a position on complex issues such as OGMs or various health problems such as SARS. We'd like people to be able to have an opinion.

The project we're proposing for Quebec would initially cost $30 million. In the world of science centres, this is not a very ambitious project, but it would make it possible to meet the need and to make a difference in the city. The operating budget would be $7 million a year. We ask the federal government to provide 50% of the public contribution to this project. The economic impact would be $43 million initially and $11 million a year thereafter.

We've done our homework. We have 23 prominent ambassadors who believe in the project, and we have the necessary expertise. This is an Economic Forum for the region. Three weeks ago, 160 leaders met at the Château Frontenac and said they believed in it and that they wanted one. So the private sector is mobilizing. We have a government that believes that prosperity depends on the ability of people and families. Lastly, we have an issue that is not a provincial jurisdiction, but that should be part of the Canadian strategy.

We are therefore relying on the federal government to enable the City of Quebec to have a science centre. Canada's other cities have one. The federal government's contribution will be 50% of the initial outlay, which would amount to approximately $18 million, and 50% of the public share over 10 years, which would be $20 million, for a total of $38 million over 10 years.

Thank you. I am available to answer your questions.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

The next witness will be Anne-Marie Jean, Executive Director of the Canadian Arts Coalition. Welcome. You have five minutes.

[Anne-Marie Jean, Executive Director, Canadian Arts Coalition]

Thank you. Good afternoon, everyone. I'm accompanied today by my coalition co-chair Micheline McKay, who I hope will be able to join me for the question period.

The Canadian Arts Coalition is the largest group of arts supporters, artists, arts executives and business leaders ever assembled from across the country. Arts and cultural organizations include opera, orchestras, visual arts, theatre, magazines, museums, writers and dance, among others.

I'd like to begin by recognizing the federal government's decision in the last budget to address the urgent need for arts investment by providing the Canada Council for the Arts with $50 million in new funding over the next two years. Provisions in the budget also exempt donations of publicly listed securities to public charities from capital gains tax. Both these measures are excellent first steps and are welcomed by the arts community. We'd like to thank the government and all parties for this clear demonstration of support.

What is so critically important for the arts community is the need for stable, predictable long-term funding. The $50 million is to be delivered through an increase of $20 million in the first year and $30 million in the second year. This $30 million increase must now be entered in the Council's permanent budget.

The Canadian Arts Coalition has one clear and focused recommendation to make to the committee and that is that the federal government invest in stable, long-term funding that, over time, increases the Canada Council's annual budget by $100 million.

There are two main reasons why stable public investment is so important. First, it allows arts organizations to formulate business plans. It provides the foundation and leadership to lever other funding from the private sector, municipalities, the provinces, patrons, foundations and others.

Second, it allows for the inherent risk of creating and showcasing new Canadian talent and enhancing established artists and organizations. The risk aspect is what leads to innovation, much the same way as it does in business or for researchers. We cannot overstate the importance of public investment which provides that first dollar through the door.

We understand that it can't be all about government support. Canada's business leaders are very supportive and invest in the arts, but they also recognize the importance of public investment. They also understand, along with many municipalities, that competitive cities include cultural and artistic opportunities as well as intellectual life.

The Canadian Council of Chief Executives says this:

Businesses increasingly recognize that the development of vibrant, creative communities has a direct impact on their competitiveness, in particular by helping them to attract, develop and motivate employees.

The Canadian Coalition for the Arts feels that the Canada Council for the Arts is the key public vehicle for supporting development and innovation in the arts. It is efficient, merit-driven and cost effective and ensures that public funds get to where they can do the most good for individual artists and arts organizations, in communities large and small, in rural and urban areas alike.

The Council's peer review process, which is defended by the Canada Council for the Arts, its eligibility criteria and the fact that it is independent of political influence make it best positioned to promote the rich and diverse talent base in Canada.

The Council is reviewed every year by the Auditor General and issues an annual report to Parliament. Its obligation to report and its transparency are therefore guaranteed. In addition, all grants are available on line for review.

When we consider the questions this committee has put before us, we believe that the arts and our creative economy have an important role to play in the economic health and prosperity of Canadian citizens and businesses. It is widely recognized that arts and culture play an important role in the quality of Canada's cultural and community life. Citizens and businesses will tell you that quality of life factors directly affect their decisions about where to live, where to work, and where to invest. When you have a vibrant community with a strong artistic footprint, it attracts talent, investment, business, and competition.

In terms of Canada's future prosperity, the education of our children and youth is a big consideration. With the decline of arts education in schools, there is already a greater demand for cultural activities in the community. Communities that can offer cultural, artistic, and recreational opportunities to kids and youth will enable them to learn discipline, good values, teamwork, and leadership. We know that youth involvement in arts programs is an important factor in producing healthy, well-rounded, and fully engaged citizens. This in turn creates safe and healthy communities.

Another of the committee's questions asked about securing Canada's competitive place in the world. Over the past fifty years, Canada has refashioned itself from the economy largely dependent on farming and the exploitation of natural resources to become a country that plays on the international stage with an economic record recognized among the world's leading G-7 economies.

[The Chair, Conservative, Brian Pallister]

Our next witness is Mr. Marcel Tremblay. Welcome, sir. He represents the Association des propriétaires de Québec Inc. You have the floor for five minutes.

[Dr. Marcel Tremblay, Association des propriétaires de Québec Inc.]

I am President of the Association des propriétaires de Québec, which has been in existence since 1933. It was founded in 1933, during the great crisis from 1929 to 1939.

Small- and medium-size businesses could, without subsidies, be created or consolidated by citizen patrons or parents. These parents have property frozen because of capital taxes. Their children are virtually forced into homelessness. It is not normal for a self-respecting society that believes in family, that believes in small towns, villages and citizens not to respect that principle.

That's why I am here as president. These people could sell their property without paying capital gains tax, with a guideline, of course. Jean Chrétien realized the sum of $100,000 in 1996. Stephen Harper and Paul Martin promised to do something about capital gains. It is time to look into this question.

I have here an article by Claude Castonguay, stating that the income taxes of the middle class and corporate income taxes, particularly the capital tax, should be reduced. My presence here is related to that. We have studied this question for a number of years, and a majority of ridings in eastern Quebec have proposed to take another look at capital gains. It is time that both those promises, that of Mr. Harper and that of Mr. Martin, were kept.

Mr. Chair, how much time do I have left?

[The Chair, Conservative, Brian Pallister]

About three minutes.

[Dr. Marcel Tremblay]

I'm going to read you an excerpt from the article by Claude Castonguay:

Prime Minister Harper has declared that there will be no solution to the problem of fiscal imbalance until there is a consensus among the provinces. He might as well have said he was indefinitely postponing a solution to the question. The provinces have differing views depending whether they have more than the average national wealth, like Ontario and Alberta, or less, like Quebec. The richer provinces, whose per capita spending is less than that of Quebec, don't accept the fact that the government takes into account the more costly choices of Quebeckers.

The need for a consensus among the provinces seems like a red herring because the issue, the importance and complexity of which is exaggerated, is far from insoluble. What is the exact nature of the problem? According to a recent study conducted jointly by the Mouvement Desjardins and Cirano, the fiscal imbalance is attributable to the federal government, whose tax revenues are too high relative to its responsibilities. Two options are available to the federal government to resolve the issue. It must either increase transfer payments to the provinces or cut direct and indirect taxes.

The transfer option means increasing federal spending in areas of provincial jurisdiction such as health, education and infrastructure. It requires that agreements be signed inevitably limiting the provinces' freedom of choice regarding their priorities. In addition, the negotiations that it inevitably requires, as is currently the case, cause needless tensions between the two orders of government.

Ottawa's second option, cutting direct and indirect taxes, does not require the provinces' consent or new agreements. It reduces the amount of begging by the provinces and dependence on the federal government. It leaves the provinces free to make choices based on their priorities. The provinces are entirely at liberty to occupy all or part of the tax room left by the federal government. Lastly, something very healthy, it makes the provinces accountable by requiring to set their tax levels based on spending levels.

In addition to its obvious advantages, the tax reduction option is much easier to implement. It avoids the lengthy negotiations and confrontation from which each party claims to emerge the winner. The Harper government went this route in cutting the GST by one percentage point, thus freeing up, according to 2005 data, tax room in the order of some $1.3 billion a year. It also made a commitment to make another 1% cut, thus vacating total tax room in the order of $2.6 billion a year for Quebec [...]

I knew Gilles Loiselle well at the time. He said that the GST was something that shouldn't be around for long.

[The Chair, Conservative, Brian Pallister]

The last witness will be Nathalie Brisseau from the Réseau Solidarité Itinérance du Québec. Welcome, Nathalie.

[Nathalie Brisseau, Coordinator, Réseau Solidarité Itinérance du Québec]

Good afternoon, ladies and gentlemen. The Réseau Solidarité Itinérance du Québec represents 11 Quebec regional consultation committees that work with homeless people and 200 Quebec organizations that work with individuals who are homeless or at risk of becoming homeless.

Like Mr. Saillant, I am here today to remind you of the urgent need to continue federal funding for homelessness initiatives through the SCPI program, the Supporting Communities Partner Initiative, which will end on March 31, 2007, in approximately 150 days. There is currently no certainty that this funding will continue beyond that date.

The Réseau Solidarité Itinérance du Québec asks that funding for this program be provided in the next budget, for the years to come, but also that an announcement be made and funding released before the next budget to avoid a major break in service to the homeless on March 31, 2007, and that $50 million be granted a year to Quebec, which is three times as much as was granted in Phases I and II of the SCPI program.

According to various sources, there are between 150,000 and 200,000 homeless persons in Canada. According to the 1996 census, 10 years ago, there were 10,266 in Montreal who had not had a fixed address for one year, and 3,589 in Quebec City. Since then, the phenomenon has been constantly growing, resulting in an increase in the use of all resources working with homeless persons.

It is true that, for us, this is a national emergency and priority, and that was part of the May 2006 recommendations of the UN Committee on Economic, Social and Cultural Rights.

Allow me to talk about this program, which will be coming to an end. The general purpose of the program has proven itself since 1999, even though homelessness investments remain below needs expressed by the communities. To date, the SCPI has been a crucial program in preventing and relieving homelessness, permitting a diverse range of action designed to improve the living conditions of homeless persons. By increasing human resources, street work, community support and psychosocial intervention with the homeless, by improving facilities and equipment and permitting the construction of housing units and an increase in the number of shelter beds, the SCPI has enabled many people to get off the street and many others to avoid the slide into the street.

Without the SCPI, the groups would have been unable to deal with the increased numbers of homeless individuals or the worsening of their problems that has been observed in recent years. This program, I recall, is crucial and essential to preventing and relieving homelessness. We think it must be maintained in its generalist form and must be made permanent in order to guarantee continued intervention and long-term solutions for individuals.

In closing, we ask the members of the Finance Committee to take action for the government to announce, before the next election, that the SCPI will be extended and enhanced and to continue its funding. We would like to recall that only a massive investment in homelessness, together with a change in social and housing policies, can significantly reduce homelessness. Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, madam.

Thanks to all the witnesses.

Mr. Pacetti, you have six minutes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

I want to thank all the organizations and witnesses. It's always interesting, but the members always have a problem because they only have a limited amount of time. We'll try to be brief.

I'd like to put a question to Ms. Jean from the Canadian Coalition for the Arts. You've requested $100 million. The former Minister of Canadian Heritage, Lisa Frulla, made an announcement 12 months ago. She announced a $100 million increase in the subsidy to the Canada Council, I believe, and another increase in a year or two. What happened to those amounts?

[Anne-Marie Jean]

That announcement was made before the election, and now there's a new government in place. We resumed our submissions after the election of this government. As I explained earlier, we obtained $50 million over two years: $20 million in the first year and $30 million in the second. Now we're asking for $100 million.

We think that other measures announced in the budget can contribute to funding of the arts in Canada and bring us roughly to the amount we got from the previous government.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you.

Ms. Brisseau and Mr. Saillant, what is the difference between your two organizations?

[François Saillant]

In broad terms, the Réseau Solidarité Itinérance du Québec represents the homeless, whereas we work more with people who are poorly housed, people who have housing, who aren't completely homeless, but who have major housing problems. It's easy shift from one to the other.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

My next question is for Ms. Brisseau.

We see here that Quebec works with municipal governments. I'm a member from Montreal. The statistics show that the number of homeless is declining. Is that correct?

Second, are any other cities in danger? Do the statistics show that there's an increase?

[Nathalie Brisseau]

To my knowledge, there has been no census across Quebec on the situation of homeless persons. A homeless person is considered to be a person who won't have a fixed address in the future, but that person also has related problems such as mental health or substance abuse problems. So the problem of homelessness is not just a housing problem.

The rate of use of the various services that are offered to homeless persons, whether it be housing, soup kitchens, drop-in centres or integration centres, has increased in recent years. For example, in Quebec City, shelters are filled year-round. These are centres that offer very short-term stays and stays of up to a few months, which proves that there are major problems.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What about affordable housing?

[Nathalie Brisseau]

In our view, an affordable dwelling isn't an average dwelling at $500 or $700 a month. The people we meet have incomes below those amounts and, if they're welfare or income security recipients, they have to...

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Where are the greatest needs? In the major urban centres or in the regions?

[Nathalie Brisseau]

The needs are highly diversified. They are a priority in the major urban centres, but we see that this is an emerging phenomenon in the regions. Municipalities like Sherbrooke and Saguenay support the SCPI program. This phenomenon is increasingly found in the regions. It's becoming more complex and diversified since we're seeing it in the regions.