Finance Committee on Oct. 26th, 2006

[Jay Heller]

Yes.

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

I assume that would be venture capital that can move anywhere in the world?

[Jay Heller]

What I was speaking to on that point is that U.S. institutions, primarily big pension funds and endowments, that would like to invest in venture capital firms managed locally in Canada run into technical problems with the Income Tax Act. I think other folks have spoken to the committee about this, but it has to do with how limited liability corporations are treated under section 116 of the Canada-U.S. tax treaty. There are a host of technical problems that inhibit those large pools of capital from being invested in local Canadian-managed venture capital firms. I would certainly encourage this committee to look at that.

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

All right. That's what I wanted clarification on.

Ms. Ablett, as a mother and a grandmother, I have to say I have some real questions about this universal child care system that you talked about. I have seen a lot of different permutations and combinations, my own and many others.

I read something very interesting on Monday in the Globe and Mail, which was that the Swedish trade minister—I don't know if you saw this—two weeks ago had to resign because it was found that she had an undeclared nanny. The story gets more interesting because just last week the Swedish culture minister resigned also because she had an undeclared nanny. Then it came out in the same article that the Norwegian Prime Minister has recently disclosed that he didn't pay the necessary taxes on child care arrangements that he made fifteen years ago. It struck me that here are countries with fully developed, universal, state-run child care systems, which are supposed to be the benchmark for the whole world, and yet you have their leaders choosing alternative kinds of child care. It just seems to me that there is more and more evidence that you can't have a one-size-fits-all system, because it doesn't work.

What do you make of these kinds of examples?

[Elizabeth Ablett]

One of the great benefits of a national universal child care system is that it is non-compulsory. You can choose to participate, and it's not a matter of--

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

Well, just let me answer up to there, because as I understand it, the estimate we've had in committee is that it would cost $11 billion a year to set up this system. That, I assume, is the best-case scenario, meaning if we do what some are talking about and give better wages to child care workers and do other expansion, it's going to cost a lot more than that. If it costs that much more, it becomes compulsory in the sense that the tax burden is such that everybody has to work and use it in order to make it function. Isn't that the truth?

[Elizabeth Ablett]

I wouldn't necessarily agree with that. You're implying that everyone would have to use it. Requiring someone to go into a regulated system is not something we would ever advocate. It's just providing options for the majority of Canadians who, one, want this system, and two, would benefit from some elements of it, whether it is part-time or full-time or whether it's offering parenting supports and family supports. It's absolutely not the whole story.

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

I understand what you're trying to say, but I just think it's going to be pretty tough, when you have that costly a system, for people to pay for other alternatives. I think you need to think about that.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Madam Ablonczy.

Thank you too, Elizabeth.

We'll conclude with Judy Wasylycia-Leis.

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

Thank you, Mr. Chairperson.

It would be useful for Elizabeth to comment on the fact that we aren't talking about a homogenous, uniform system. The whole purpose of the federal money was to help establish a system across the country in which the diversity of this nation could be actually considered—I will use Manitoba as an example—a system in which everything from night day care to rural day care to at-home child care to special needs day care was part of this division.

In response to Dean Del Mastro, this money wasn't just to go into boxes and institutions of child care. It was to go into a system including support for child care workers so that the workers, who are largely women, are not always at the bottom of the income scale. You should comment on that.

While I have the floor, I'll just ask Michael to comment on two things. The first was Dean's comments about focus groups; I don't think you were talking about that. The second was this notion of the diversity of our panels, which is something we are trying to do, in the hopes that it is better. It doesn't really get at the issue of dialogue between groups. Does it reflect citizens across the land?

Could we hear from first Elizabeth and then Michael?

[Elizabeth Ablett]

Thank you, Judy, for that.

You're absolutely right, and I concur that the system that was planned and the system that we advocate for certainly is not one where everyone is put into a one-size-fits-all box, where we all must behave the same way and we're all expected to have the same values, or interest, or capacities, or circumstances. This system we advocate for, a universal system, seeks to work with communities to address their local issues, whether they're in rural areas or urban areas. Particularly in the city of Toronto, we're dealing with many different language groups and communities of different socio-economic interests. Just supplying a cheque for someone to choose without providing the services it can help to build in those communities is a real shame.

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

Thanks.

Michael.

[Michael Polanyi]

Deliberative dialogue is different from focus groups. In the brief I gave, there were examples of dialogues that really are an exchange. One of the striking things about these dialogues and the evaluations is that people come in thinking they can't find anything to agree with, with other people. But when they have a chance to listen to other people's life experiences and think about common values, they do find some common ground.

[The Chair, Conservative, Brian Pallister]

Thank you very much for that, Michael.

Thank you all very much for being here today. We appreciate your time, we appreciate the ideas you've expressed and the policies you've recommended to us, and we appreciate the values they emanate from.

Thank you very much for being here today. We will suspend now for a few moments to allow the next panel to come forward and replace this panel.

All the best. Thank you.

[The Chair, Conservative, Brian Pallister]

We will recommence.

I welcome our witnesses this afternoon.

I invite those who have conversations not pertaining to these deliberations to take them elsewhere.

We are the finance committee. We are charged with the onerous responsibility of making recommendations to the finance minister on the upcoming budget.

We very much appreciate your time today.

I can tell you that if you get a sense of a little celebratory mood here, it's at least in part due to the fact that we've been doing this for five solid weeks.

I also want to compliment my colleagues on the committee for their dedication to the task.

We have communicated with you. I know a couple of you are splitting time, but the rest of you will be given five minutes. I will give you an indication that you have one minute remaining, and I will then rather abruptly be put in the position of having to cut you off at five minutes. Of course, this is because we want to allow time after your presentations for an exchange with committee members, and I know you'll welcome that.

Thank you again for being here.

We'll commence with the Ontario Municipal Social Services Association, Rick Williams. Welcome, sir. Five minutes to you.

[Col Rick Williams, President, Ontario Municipal Social Services Association]

Thank you.

Good morning. My name is Rick Williams and I'm here as president of the Ontario Municipal Social Services Association, or OMSSA. I'm also the community services commissioner for the district of Muskoka.

OMSSA is the collective voice of social and community services staff at the municipal level in Ontario, and our mandate is to make positive progressive change happen in the areas of early learning and care, homelessness and housing, and social assistance. For Canadian citizens to be productive and contributing members of the economy, OMSSA believes the federal government must increase investments in social infrastructure. We ask you to note the following issues of concern to us.

First, governments must recognize that access to affordable housing is critical to the economic and social vitality of communities across our nation. Poor housing imposes enormous and far-reaching costs, impacting on health, public safety, education, and participation in jobs. For instance, research and experience shows that the greater the incidence of housing inadequacy, instability, and unaffordability, the greater the use of emergency health and social services. Furthermore, children in stable, adequate housing have much better school outcomes.

OMSSA was pleased to see the federal government pledged to increase the supply of affordable housing in the 2006 budget. However, we believe more can be done. For example, the supporting communities partnership initiative, or SCPI, has been successful in increasing the availability and access to a range of services and facilities, which support various homelessness initiatives. However, funding for this initiative ends next year. Should SCPI or a similar type of funding not exist throughout 2007 and beyond, many homeless prevention projects will have to cease. The current SCPI program is restricted to urban centres. Homelessness exists mostly in cities but has its roots in all communities.

OMSSA's second concern deals with economic security. A healthy, thriving society needs all its members to participate fully. For Canada to be a competitive global force, it must alleviate the unnecessary costs associated with poverty, such as health and justice expenses, loss of human capital, and the diminished productive capacity of those living in poverty. Therefore, the federal government must work with all concerned parties, provinces, and municipalities to address the following issues.

First is to broaden the eligibility requirement for EI benefits. At present, only 38% of the unemployed have access to EI, whereas several years ago close to 76% of Canada's unemployed were eligible. Also, the federal government needs to help create a coherent national approach to providing adequate social assistance rates and improved and expanded employment supports. A potential model for this now exists within a recent report called MISWAA. In addition, we ask that the federal government provide funding for training and development, including special supports to disabled and multi-barriered recipients, to encourage participation in community activities and long-term capacity building.

Finally, OMSSA believes the link between investing in high-quality early learning and care and building healthy, successful communities is clear: high-quality early learning and care isn't just taking care of children's physical needs and it's not babysitting; it's supporting children to achieve their optimal development in learning, and starting them on the solid paths of social, physical, and intellectual development. A recent study by Dr. Lawrence Schweinhardt showed that adults who received high-quality early learning and education grow up to show economic and social gains and have less interaction with the criminal justice system. Consequently, OMSSA requests that the $250 million this government has earmarked for additional development of child care spaces be allocated to the regulated system, planned and delivered in cooperation with all concerned governments. Since the government's announcement that the 2005 federal-provincial early learning and care agreement would be terminated in 2007, stakeholders have been facing serious challenges in sustaining the important early learning and care programs that are already in place, many in our rural and most vulnerable communities.

To summarize, OMSSA encourages the Government of Canada to address the following: one, play a lead role in homelessness prevention and work with concerned governments on this issue, including an extension or redevelopment of the SCPI program; two, continue the phased expansion of affordable housing initiatives in collaboration with the province and municipalities; three, create a coherent national approach to provide adequate social assistance rates and improved and expanded employment supports and training; and four, play a stronger role in creating a national early learning and care policy framework to benefit all children and families, including the annualization of the $250 million pledged to the development of new spaces.

Societies that succeed and thrive are the ones that understand how important it is that every member of the community have the opportunity to contribute meaningfully. These are the societies that see the value of investing in social infrastructure. These are the societies that believe investing in people makes sense.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Williams.

We'll move on now to Mr. Dave Toycen. Dave Toycen is here with World Vision Canada. Welcome, sir. Over to you.

[Dave Toycen, President and Chief Executive Officer, World Vision Canada]

Great. Thank you.

My name is Dave Toycen and I'm president of World Vision Canada. World Vision is the largest relief, development, and advocacy organization in Canada. I am speaking really on behalf of our more than 400,000 supporters who give regularly financially to support our work. We work in more than 90 countries.

My mother always told me I should say thank you first, so I want to do that. You'll note in our submission that there is a thank you section, and I want to particularly note the fact that we're really grateful for the change in the credit regarding stock gifts to charities. That's been a wonderful thing, and we appreciate that.

I want to concentrate in my little time this morning on increasing Canadian development assistance and making sure there's a legislated mandate to made it accountable. I guess the question is what it will take for Canada to do its fair share. When will we reach the 0.7% target? Every minute we delay, another 20 children die of hunger and hunger-related diseases. Last year, all political parties unanimously voted in favour of calling for a plan to increase Canada's aid budget to the international target of 0.7%.

We have tens of thousands of Canadians who have demonstrated their support for increased aid and the other goals that would make poverty history. The concern for the poor overseas, I really believe, is at the highest we've ever seen it. We have more than—as I said earlier—400,000 supporters who vote regularly with their financial giving. They see this as a priority. Of the G-8 countries, only Canada, Japan, and the U.S. have failed to make a commitment to 0.7%.

We have a huge surplus. In fact, yesterday's paper talked about a $6 billion surplus. We have numerous NGOs who can leverage our government aid to have an even greater impact. What will it take? Expert after expert says that we have the resources to end world poverty and that all we lack is the political will. Every side of the House has shown support for Bill C-293. It ensures that poverty eradication gets the attention it deserves. Frankly, as our government and parliamentary representatives, it's really up to you. It's about leadership and doing the right thing for those who have the least in our world.

I'd like to speak very personally. I came to this country from the United States via Australia 18 years ago. Ten years ago, I became a Canadian, a proud Canadian. As an adult, I made a free choice to join this country because I believe in what Canada stands for. Yes, I have employment and a comfortable place to live, but my choice was more about the spirit of Canada and its character. A common perception is that Canadians care about others, even those who appear to offer very little in return.

In my work I travel frequently to developing countries. When the people there discover I'm a Canadian, there is both a respect and an affection for what we stand for. It's not just about money; it's about who we are. That identity has been shaped by the investment Canada has made in people overseas who often have nowhere else to turn. This budget needs to support and respect these values.

Recently I met an elderly grandmother whose children had died of AIDS. She is the caregiver for two beautiful little granddaughters in Tanzania. Pauline is blind in one eye. She has leprosy. All that's left on her hands are a thumb and one finger. All her toes are gone, yet somehow she walks to a market every day and begs for enough money to care for her granddaughters. Her house is falling apart. She lives hand-to-mouth, yet amazingly she is a radiant person, and she refuses to give up. But because of underfunding, her granddaughters will not go to school. In fact, their very lives are under threat. Right now there are 12 million children orphaned by AIDS, and unless we do more, the number is going to reach 15 million by 2010.

Finally, I just want to share one more story. This is about how the choices we make in our country, and you as a government make, can make a difference. Down the road from Paulina is a couple named Elisha and Magdalena. I first met them 18 months ago. They were farmers living in a simple mud hut. Both were HIV positive. Magdalena was lying on a mat under a tree. Her husband was emaciated. The children were traumatized watching their parents die before their eyes. Six months later I returned and asked to see them. I was surprised that the staff said yes. Walking to them, I got one of the surprises of my life. They came walking around the corner, a picture of health. Why? They'd gotten anti-retroviral drugs and they'd been on them for a year. Now there are two fewer dead parents and we don't have two orphaned children.

The drugs were provided by the global AIDS fund, which Canada supports, and we arranged for the testing. It's a miracle. There are two parents now alive.

The world is watching and waiting for Canada's role, and I'm simply asking, what will it take for Canada to do its fair share to end poverty? It means increasing our aid by 18% annually, committing to a plan of 0.7%, and simply recommending this legislated mandate to hold us accountable to make poverty our priority.

Thank you very much.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation, Dave.

We'll continue with Tanya Gulliver, who is here on behalf of the Toronto Disaster Relief Committee.

Welcome.

[Tanya Gulliver, Coordinator, Toronto Disaster Relief Committee]

Thank you for the opportunity to appear today. Sharing my time will be Rainer Driemeyer, who is a member of our steering committee.

The Toronto Disaster Relief Committee is a group of social policy, health care, and housing experts; academics; business people; community workers; social workers; AIDS activists; anti-poverty activists; people with homelessness experience; and members of the faith community. We provide advocacy on housing and homelessness issues.

We declare homelessness as a national disaster and demand that Canada end homelessness by implementing a fully funded national housing program through the 1% solution. There are approximately 300,000 Canadians homeless every year, including 65,000 youth and 10,000 children, and 1.8 million people lack adequate shelter.

In 1998 we called for federal emergency relief money to provide disaster relief for communities struggling with increasing homeless populations. That call led to the introduction of SCPI, the supporting communities partnership initiative, part of the national homelessness initiative.

The national homelessness secretariat reported that in the first 4.5 years of the program, more than 9,000 beds in transitional housing were created, 725 homeless shelters received funding, 49 federal properties were made available for the creation of new homes, and 3,600 services were funded. This money is desperately needed across the country and makes up our first recommendation of $202 million for homelessness funding, $67 million of which would be new.

The federal homelessness program is to expire in March 2007. Many services will have to shut down earlier if there's no commitment to renew and extend this funding. TDRC urges the government not to wait for the next federal budget for this item, but to act now to renew and expand homeless funding. Additionally, we are recommending that the current funding be increased by 50% from the 2006 fiscal year to allow for additional funding in communities across the country, many of which receive no funding presently.

It's important that Canada redeem itself not just on the world stage but here at home. This is a national emergency, a national disaster. From the end of World War II until 1993, our national housing program built 650,000 units of affordable housing and two million Canadians were housed; now we build a fraction of that amount.

TDRC has called for the implementation of the 1% solution, $2 billion per year from the federal government and an additional $2 billion from the provincial and territorial governments. This funding, divided between supply and affordability, would support 20,000 or more new homes annually, which would go a long way toward preventing some of the crises we see on our streets. The Calgary Drop-In and Rehab Centre, for example, which has a capacity of 11,000, is turning away 125 people a night, and that is expected to double to more than 300.

In the 2006 budget, $466 million for new housing was allocated for each of the next three years, so the net new dollars required to meet the target of the 1% solution in 2007-08 is slightly more than $1.5 billion.

Another program due to expire at the end of the 2006 fiscal year is the federal residential rehabilitation assistance program, better known as RRAP. This program assists homeowners and landlords to bring aging buildings up to standard and to make the necessary upgrades to heating and other systems to promote conservation and cut utility bills. RRAP has also been used by creative developers to build affordable housing. Last year the former federal government proposed a $100 million annual increase in rehab funding specifically dedicated to energy conservation, but this initiative has been cancelled.

Our third recommendation, therefore, is that the federal housing renovation funding be increased by 50% over planned 2006 fiscal year spending, and that $150 million be added to assist low-income homeowners and tenants with energy conservation. The net new spending would be $114 million.

It's been almost eight years since the big city mayors' caucus of the Federation of Canadian Municipalities declared homelessness to be a national disaster. In that time the situation has only become worse. This month Toronto's homeless memorial will register the name of the 500th homeless person who has lived and died on the streets of Toronto.

Now I'm going to turn it over to Dri.

[Rainer Driemeyer, Steering Committee Member, Toronto Disaster Relief Committee]

All right. To put it very simply, politicians like to make promises. They make promises that make them feel all warm and fuzzy inside. Unfortunately, those promises do not keep anybody warm. It's time for the politicians to quit making promises; it's time to sign the cheque.

Come across--save somebody's life.

[The Chair, Conservative, Brian Pallister]

Thank you, sir, and thank you, Ms. Gulliver, for your presentation as well.

We continue now with Cecil Bradley, vice-president of the Toronto Board of Trade. Welcome, sir.

[Cecil Bradley, Vice-President, Policy, Toronto Board of Trade]

Thank you, and I'd like to thank the committee for this opportunity. I'd like to start off as my colleague down the table did, with a note of thanks. We'd like to favourably comment on the recent announcement by the federal and the Ontario governments to cooperate on integrating and harmonizing corporate tax collection in Ontario. It's going to save businesses a lot of red tape, it's going to simplify the system, and it's all going to be done without any net loss in tax revenue to either government. So it sure looks like a win-win-win to us, and evidence of smarter taxation and better government. I'd like to be on record in commending the governments for making that move.

We think that in the upcoming budget the federal government has an additional opportunity to encourage economic growth and success in Toronto. We've outlined in our submission actions that we believe will benefit the Toronto economy, and we think that by boosting the Toronto economy, the benefit will be felt across Canada.

Canada's competitiveness is dependent on large cities as the prime creators of jobs, opportunity, and economic activity. One example is that the nation's nine largest cities, home to about 50% of Canada's population, were home to 65% of the net new jobs created between 1996 and 2002--an example, we think, of cities punching above their weight in economic terms.

Cities are also the major source of federal tax revenue. In 2002, the federal government realized a $20.6 billion surplus with the nine largest cities while recording an $11.6 billion deficit with the rest of the country. The lion's share of those revenues comes from Toronto. Since 2000, Toronto taxpayers have contributed an average of some $20 billion a year to the federal government. With per capita federal revenues from Toronto rising faster than the city's GDP and per capita spending on behalf of Torontonians falling further behind the national average, the economic engine of Canada is being slowly starved of fuel.

To its credit, the government has recognized that fiscal imbalances do have a municipal dimension, and our submission calls on the federal government to make good on its commitment so that all levels of government in Canada have the resources they need to provide the services they are obliged to offer. Put bluntly, cities need a larger share of the fiscal pie. We're looking to the federal government to ensure that happens.

Whether through increased federal investment or decreased federal taxation, Toronto and its business community need additional resources to address some of the largest impediments to competitiveness—traffic congestion and taxation.

On traffic congestion, a recent Transport Canada study put the cost to the greater Toronto area at $1.8 billion a year. We think that's a conservative estimate. A recent survey of CEOs in Toronto identified traffic and transit issues as their top concern. A strong majority of business leaders agree with transportation experts that increased investment in public transit is key to addressing the city's competitiveness and economic development challenges.

The federal government has in recent years taken significant steps to increase its support for public transit. Whether that's been through gas tax revenue sharing or through infrastructure funding, the picture is improving. However, even with these initiatives, the federal government addresses only a small portion of the need and plays a smaller role in urban transit than its resources would allow or national policy interests require. Canada remains the only G-8 country without a nationally funded urban transit program.

On taxation, the government should continue its effort to reduce corporate taxes in order to help the business community in Toronto and across the nation to be more competitive. We have made progress, but more needs to be done. Our brief has recommendations on how that could happen.

From the Toronto perspective, we believe including municipalities in intergovernmental financial negotiations, reducing the tax burden on the business community in order to encourage investment, and increasing its own investment in public transit would address the fiscal imbalance in the most productive ways possible.

Our written submission goes into considerable detail on the rationale for and the expected positive results of these steps, along with a renewed call for commitment to the development of the next generation of skilled workers in Canada. I commend the submission to the committee for its review and thank you for your time and attention.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Bradley.

We'll continue with the Toronto District School Board. Bruce Davis is here.

Bruce, welcome. Over to you.

[Bruce Davis, School Trustee, Ward 3 Etobicoke-Lakeshore, Toronto District School Board]

Thank you very much.

I'm Bruce Davis with the Toronto District School Board.

I'm going to apologize in advance for being cranky and for being a little testy this morning. We were up into the wee hours of the morning to cut $84 million from our school budget, so we could balance the budget.

I'm here because we pay $10 million a year in GST, and that makes no sense at all. I'm asking the committee to recommend to the Minister of Finance that the excise tax be amended to rebate 100% of the GST to school boards across Canada. As you probably know, because I've written to many of you and spoken with many of you, we pay GST on heat, light, utilities, pencils, software, computers, and construction. If we build a new school in Toronto, we pay $350,000 in GST. If you build a new prison in Toronto, you pay nothing. This makes no sense at all.

Across Canada, school boards pay $195 million a year. This is an area of exclusive provincial jurisdiction that the federal government is taxing. This makes no sense at all. In 2004, the former Liberal government rebated GST for municipalities. They went part of the way. They didn't do it for school boards.

Let's look. We have cities and school boards side by side. If you're a child who commutes to school in a yellow bus, that bus pays GST. If you're an adult who commutes in a TTC bus, that bus doesn't pay GST on its gas and its operating costs.

Swimming pools. The Toronto District School Board owns and operates 85 swimming pools. We own or operate more swimming pools than anyone in North America. It's a legacy of the way we used to fund programs in the old city. You have a city swimming pool that pays no GST on heat, light, utilities, chlorine, and we have a school board swimming pool that pays GST. We get some rebate, but the net at the end of the day—remember, for us, at the end of the day after rebates, we still pay $10 million a year.

Sports equipment. If you are on a high school team and you buy sports sweaters, you pay GST. If it happens to be a parks and recreation program, you don't pay GST.

There are dozens of excellent public policy rationales for why we should get rid of this. It's a tax on a tax; it's a tax on a provincial area of jurisdiction, poor neighbourhoods. When you look at horizontal equity issues, schools in poor neighbourhoods and rich neighbourhoods pay the same GST in those neighbourhoods. There is no Canada child tax benefit equivalent for school boards.

That's why I'm a little testy this morning. I'm a little cranky.

The opportunity is this. Which party wants to take credit for funnelling money back to our children? We all have this opportunity. Which one of you wants to be the one to say, “What a brilliant idea”? I've had thirty members of Parliament across the country support this concept, some of whom are here today. From coast to coast, caucus to caucus, from Mr. Doyle in Newfoundland to Mr. Epp in Alberta, your colleagues are supporting this. I need you to recommend to the Minister of Finance that he rebate 100% of the GST payable to school boards.

I'm happy to answer any questions.

As you may know, we have a website, www.donttaxourschools.ca, and we have some promotional information, if you need more information. We list all the members of Parliament who are coming on board. It's a little bit out of date, but we're listing, so there are lots of opportunities to spread your name, if you support the campaign.

Thank you very much, Mr. Chairman.