Finance Committee on Dec. 6th, 2007

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

In terms of Atlantic Canadian universities, you mentioned that they tend to be--but not all of them--smaller liberal arts universities.

Congratulations, by the way, on the football team this year that almost won the Vanier Cup and that defeated Laval in the Utech Bowl. That just shows what smaller universities can do.

I wanted to ask you if there is a schism or any tension between the AAU, which, with you and your executive director, Peter Halpin, does a very good job representing Atlantic universities, and the AUCC when it comes to...?

We all agree that Canada needs more graduate scholarships and more graduate students. We're well behind other nations, including the United States. We need more graduate students, but are you concerned that we will see a concentration of funding in the larger universities--U of T, UBC--as we saw to some extent with the research dollars that went to the larger institutions as opposed to the smaller liberal arts universities?

[Dr. Colin Dodds]

Certainly there is some concern, and I appreciate the arguments put forward by U of T. I was at a dinner a couple of months ago at which the president of U of T made the same remark that they needed to concentrate research funding. I, in my closing remarks, also mentioned that we need some special assistance to build up research capacity.

I don't see the two as being mutually exclusive. I think we can have that research excellence across the board. At the same time, I think we have to recognize that in this area, in particular, in the social sciences—not just the R and D, but in the social sciences and humanities—we need to build research capacity. Therefore, in terms, for example, of the indirect costs of research, I think that is a good model. We might vary a little bit with AUCC with respect to that.

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

Okay.

The Canadian Federation for the Humanities and Social Sciences and SSHRC argue, in my view quite rightly, that they need more funding for the humanities and social sciences, and I think as a parliamentarian that's something I support considerably. I think in Atlantic Canada not a lot of people would know—Mr. Keddy, who's the Parliamentary Secretary to the Minister of ACOA, would know—how important the Atlantic Innovation Fund was. It was set up largely to compensate for the fact that in Atlantic Canada we don't have a lot of private venture capital, a lot of organizations that can partner with universities. That's been a pretty successful venture I think from the Government of Canada.

[Dr. Colin Dodds]

It certainly has been. We at St. Mary's have funding from that, actually. It's for a time-use study linked with HRM, which is the basis to develop how people get from A to B and what they do on a certain day. At the same time, then, that can produce policy action with respect to transportation. So that's one example of that.

We would argue, fundamentally, that research is important, but it's not just R and D. That is critical, yes, but there's a lot of other research in entrepreneurship and in policy-making that is very important. The creativity aspect--the arts, for example, and culture--again, is very important.

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

The federal government has to make a decision shortly on the Canada Millennium Scholarship Foundation. The Millennium Scholarship Foundation was set up in 1998 with an endowment to the federal government. There were some initial concerns with the millennium scholarship, i.e., clawback concerns and relationships with some provinces, including Nova Scotia, that have now been ironed out. It kicks out about $350 million a year for almost entirely needs-based grants for universities and colleges.

There are some who are not dead keen on that, such as the Canadian Federation of Students, but they would say that we need to have needs-based grants in any event. It seems to me that most organizations...certainly your students, who are represented by CASA, I think, at St. Mary's, and ANSSA, the Alliance of Nova Scotia Student Associations, did a paper that came out recommending strongly for the replenishment of the millennium scholarship. Do you have any views on that?

[Dr. Colin Dodds]

Certainly the funding that was provided has been absolutely critical. If you look at the figures for Atlantic Canada, a very significant share of that money has come in over the period of the foundation. In terms of the structure, of course, there was a sunset element to it, because it was a trust fund, as I understand it, paying out for capital and the interest on that. In terms of a go-forward basis, that level of funding is absolutely critical. A lot of it, as you mentioned, is needs-based. I feel the government should in fact increase needs-based funding for underrepresented groups. Whether you want to keep the same name, whether you want to keep the same structure, I'm not sure. But certainly the level of funding is critical.

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

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

Your time is gone.

We'll have to move to Thierry St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you very much for being here today.

My first questions are for Mr. Bradley.

You have made several recommendations, particularly on the accelerated rate of depreciation of electric equipment. Depreciation issues in general are taxation matters that are very often raised in this committee, mainly to recommend an accelerated rate. Generally, we try to take account of the objective useful life of the equipment. Sometimes, we will recommend an accelerated rate specifically to encourage investment in a given type of equipment. It is a useful step because it provides cash flow to companies and does not cost much to the government because it consists of deferring some taxes to allow corporations to accelerate some investment.

Your third recommendation relates to smart meters and advanced metering infrastructure for which you want the rate of depreciation to be raised from 8% to 45% which, I believe, is a huge difference. You say that this is required to stimulate energy conservation among consumers.

I would like you to explain how this type of equipment would really allow consumers to save energy.

[Francis Bradley]

Thank you very much for the question.

We have been asking about CCA rates for smart meters and for advanced metering infrastructure for a couple of years. And while on the surface it appears to be an incentive rate, the more I've looked at these specific issues, the more it's looking like a 45% rate is a lot more like the useful life of some of this equipment.

I spent last week with metering specialists from across the country to discuss a whole series of issues, and among them was how long these meters and this infrastructure are going to last. The responses I've been getting from the people in the field is that these are essentially computers. They're currently being treated like poles from the CCA rate perspective, but these are essentially IT devices and IT computers, which, depending on your particular computer, will last you a couple of years. But there are some portions on these devices that require upgrading even more frequently than that, software and the firmware sometimes as frequently as six months to one year. So while we are positioning this as an incentive rate, I think it also more accurately reflects the useful life of the equipment.

In terms of how these devices are important in the area of energy efficiency, one of the things many companies—and not just the companies themselves, but many people—would like to be able to do is to have time of use rates, variable rates on electricity depending on the demand curve. To do that, you need this sort of electronic infrastructure to send those signals back so that when the peak is particularly high, and therefore the power is more expensive, the customer can opt to economize during those periods of time and use the power when the price is lower.

So it acts as a peak shaver and a valley filler in terms of a demand curve. It gives the customer greater control over what they're paying, and then ultimately, as a result, it gives them the tools to be able to use their energy more efficiently and more wisely.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

All right.

If I understand correctly--in your brief, you talk about energy savings, not only about money--this is what allows to level electricity demand by moving demand from peak hours to other periods of the day.

Did I understand correctly the benefits of this equipment?

[Francis Bradley]

Yes, that's one very important thing and that reduces the overall cost to the system and the cost to the customer. When you're able to shave that peak and fill the valley, that's one piece. The second piece is because there's a greater interaction with the customer, the customer becomes more aware of the price, the customer becomes more aware of their consumption, and studies have shown there is a net reduction, a net energy efficiency, as a result of the installation of these sorts of devices.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I will move to another topic.

This is not in your brief but, in the past, there have been energy saving programs for individuals, for people wanting to improve the energy efficiency of their home, as well as for businesses. The program--the name of which escapes me-- has been cancelled by the present government and then reestablished under a new name and a new structure.

What is the opinion of your members on the ground about this program which has been in place for some time now? Is it as effective? Is it in demand? Does it have a real impact in terms of energy savings?

[Francis Bradley]

Regardless of what the government of the day opts to call its energy efficiency program--because we have seen some changes in that--the fact that those programs are in place is important. It's something we feel is significant for the customer and that the customer expects. We do a lot of research in terms of the customer's expectations, and they expect to be helped to use energy more efficiently. A lot of these programs target areas where assistance really is required when you're talking about pretty significant outlays of capital, so assistance being provided in those areas.

Everything we've seen over the years suggests all these energy efficiency programs have very significant net benefits to the customer and to the system overall.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. The time has gone.

We'll move to Mr. Keddy for seven minutes.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chair.

Welcome to our witnesses this morning.

I don't know what is the most challenging here, to try to deliver your message in five minutes or for us to try to ask you questions in seven minutes.

I will go first to Mr. Wilson.

Mr. Wilson, actually this week I met with John Paul and Chief Lawrence Paul from Millbrook, and the main issue we discussed was trying to utilize the talents of those 500 to 600 first nations children who are at university, in post-secondary education, in community college in Atlantic Canada, in Nova Scotia. I don't know if you could just briefly comment on the importance of that group to be the role model and the mentors for opening up the jobs and the marketplace to first nations. There is a huge workforce there that is desperately needed, especially in Atlantic Canada, and it has great potential to pay tremendous dividends to first nations.

[Daniel Wilson]

Thanks very much.

Your point is absolutely correct. There is a very large workforce available. It is, as a whole, increasingly better educated. There have been continual improvements in the area of education outcomes regardless of some limitations on spending.

The question you specifically asked has to do with the importance of the role modelling, the mentorship, and generally, one might say, the leadership this shows to others. What you have in terms of many of our communities is a lack of hope, a lack of direction, because of the undercutting of a way of life, and the fact that it has not yet found roots in pursuing a new way of life. What needs to happen for many of those communities is for new ways of life to be modelled to the young.

I can think of another Nova Scotian community, in Membertou, on Cape Breton, where in 1993 or perhaps 1994 they were about $1 million in debt. They were under third-party management because the debt exceeded 8%, which is the rule. They turned that around so that community is now producing a GNP of about $60 million a year. They did that through the leadership of the chief, through the leadership of certain members of their business community who were able to provide the direction, who were able to get people involved and generate the economies. All of those things were essential in terms of turning that situation around, and the same applies elsewhere. Millbrook is in the process of doing much the same thing, and the growth there has been quite impressive.

What we see around the country are areas of educational attainment, and activity afterward, and employment being pursued on almost a sectoral basis. The awakening that occurred in the seventies led to a number of lawyers being employed. There are a lot of people pushing for leadership in the business community, and they are learning how to do that better, and that is going to keep replicating.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I hesitate to cut you off because I know you have a message there, but I do have some more questions.

I will just go back to this one more time. I guess the challenge, the tip of the iceberg, or the thin edge of the wedge that's in the educational system now with that immediate group of students who are there is how to best utilize that talent.

Perhaps I could go very quickly to Dianne Swinemar with Feed Nova Scotia.

Without question, you face a tremendous challenge. I'm just trying to look at what the federal government has done in the last two years, in particular, in consecutive budgets that should help what you're doing. One is the child benefit for children under six, which goes directly to the family. It doesn't feed through another organization. The other one, which is something you talked about, and I will give you a chance to expound on that a little more, is the working income tax benefit. We increased that last year from $500 to $1,000, and those should show some immediate results on the ground, especially among the working poor.

[Dianne Swinemar]

We certainly do appreciate what the federal government has done to improve the lives of the families we're seeing. As well, the child tax credit, since that has been sorted out, has made an impact.

Regarding the working income tax benefit, the families are finding that while it certainly is bringing in extra income, it's still just not enough to keep them from having to use food banks. That certainly would be our ultimate goal. Our recommendation, as well as that of our national partner, the Canadian Association of Food Banks, would be that if there could be a gradual increase up to about $2,400 a month, that would be sufficient to assist the individuals and families so they would not have to use food banks.

We've looked at the cost of living in our province. In Halifax, for example, there's been a huge increase in the cost of living in the last 10 years, and in the cost of gasoline, so we need to make sure the families are getting adequate income so they're able to keep up with that increase in living.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Do I have more time?

[The Chair, Conservative, Rob Merrifield]

Yes, but go very quickly.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

For a member of Parliament, quick is not always easy.

[The Chair, Conservative, Rob Merrifield]

Actually, to get into a question and get an answer would probably be very difficult, so let's move on to Alexa.

[Alexa McDonough, NDP, Halifax, NS]

Thanks very much.

I'm very struck by the similarities in the presentations. I think that as the member of Parliament for Halifax, what I'm acutely aware of—and I know Mike Savage will agree—is that the Halifax metropolitan area has a thriving economy in which the prosperity is very evident, but what is also illustrated by your presentations, which are very accurate portrayals, is the fact that we have a growing gap between those who have and those who have not. Secondly, the poverty is actually deepening, particularly for people who have special challenges of one kind or another.

I want to just quickly start with Dan Wilson. I had an opportunity to attend a really marvellous kick-off of an economic development strategy by the Mi'kmaq first nation just a few weeks ago. The point was very clearly illustrated that we do have a good many new young graduates from various programs. Colin Dodds has spoken about the need to do more to support the Afro-Nova Scotian, the Mi'kmaq, the aboriginal Nova Scotian, and other special target groups, in terms of access to education and so on.

What was very clearly stated at that breakfast is that it appears the business community is at the table, the educational institutions are at the table, but the federal government is not. I'm wondering if you can speak specifically about that, in terms of what kinds of support the federal government needs to make in order to do exactly what Gerald Keddy has recognized as very important, and that is to take advantage of the newly educated, highly motivated young people to open up opportunities for first nations people in general.

[Daniel Wilson]

Sure. Thank you for the question.

We've spoken a great deal with educational institutions and with business in order to encourage that partnership. The national chief launched a corporate challenge, which has led to the signing of a number of MOUs with large corporations throughout Canada.

We're doing a lot of work with the educational institutions. Actually, we have begun conversations on this very topic with members of the Conservative caucus as well. We have yet to see a firm plan, a strategy for moving this forward, both in the short and the longer term.

In the short term, which I think I failed to respond to Mr. Keddy about, there is actually one area of education in which first nations are overrepresented, and that is skilled trades certificate and diplomas areas. In every other area of education we're underrepresented. So certainly the needs in those sectors of the economy can be met more quickly by first nations youth.

What we need are investments in the fundamental education programs that underlie that and in some of our skills development programs above that, in order to continue that growth in the medium and longer term.

The investment by the government, which was announced in the Speech from the Throne, with regard to the ASEP program, which is the aboriginal skills and employment partnership program, will mostly go to businesses in order to attract people.

The aboriginal human resources and skills development strategy, which expires in March 2009, is under examination at this very moment. So the importance of addressing what you're talking about for a medium- and longer-term strategy to continue the growth we are engaged in now is absolutely essential at that date.