Finance Committee on Sept. 28th, 2009

[The Chair, Conservative, James Rajotte]

I call to order the 43rd meeting of the Standing Committee on Finance. It's wonderful to be here in lovely Vancouver. This is the first of our nine city stops for pre-budget meetings. We have with us today in Vancouver 30 witnesses, so we have a very full agenda. We're also doing a site visit to the Port of Vancouver today.

I want to welcome all colleagues to Vancouver.

We have sessions of an hour and a half and we have seven witness groups per session, so it's a very busy time. In the first session we have with us, first, the Corporation of Delta; second, First Call: B.C. Child and Youth Advocacy Coalition; third, the Ladner Sediment Group; fourth, the Rental Owners and Managers Society of British Columbia; fifth, the Public Service Alliance of Canada; sixth, the Village of Tahsis; and seventh, the Sport Matters Group.

We'll ask for an opening statement of up to five minutes from each group in the order I've presented.

We'll start with Ms. Jackson, please.

You can begin your submission.

[Lois E. Jackson, Mayor, Corporation of Delta]

Good morning, Mr. Chairman.

Bonjour, mesdames et monsieurs. Bienvenus à Vancouver. Thank you so much for being here with us.

Ladies and gentlemen, I am simply going to paraphrase some of our brief. It is a long brief, but I hope everyone has an opportunity to read it.

I will begin with our recommendation that the federal government reinstate local navigation channel dredging funding in the federal budget in order to provide adequate long-term funding for a local navigation channel dredging program in the Fraser River.

I believe, Mr. Chairman, you have all received a map that shows the Fraser River as it comes down through the metropolitan Vancouver area. I have it behind me as well. We will leave that for people to look at, at their leisure.

The Fraser River is the largest river in British Columbia, some 1,400 kilometres long. It actually drains one-quarter of the area of the province. As a result, there are deposits of 32 million cubic metres of sediment, and 10% of that is deposited in the lower Fraser region.

We used to have 20 feet of water in our harbour and along our side channels. That was at low tide. Today we have two to three feet of water at low tide. We're having a very difficult time trying to resolve this issue. Without continued dredging, the key deep-sea shipping and navigational channels will be too shallow for commercial and domestic vessels to safely access our ports.

Mr. Chair, ladies and gentlemen, for more than 100 years river maintenance has been the responsibility of, and in fact funded by, the federal government--namely, Public Works and Transport Canada. They maintained the deep-sea fishing and shipping channels and the domestic and local channels for the fishing industry, tugs, barges, commerce, and pleasure craft. They all use these channels.

In 1990 Transport Canada diverted water from the side channels in order to increase the heavier flow into the main channel to continue to flush the main channel. As a result, the side channels were silted in to a very large extent, and this continues.

We have had 10 years of accumulation, in the amount of about 1.2 million cubic metres, which needs to be removed in order to save our side channels. We need your help. There is no longer scheduled dredging to maintain the Fraser River channels. Port Metro Vancouver dredges the main channel only. Port Metro Vancouver has completed studies that indicate that to restore the channel to pre-1998 conditions it will cost $5 million, plus $500,000 annually to sustain it on a long-term basis.

Port Metro Vancouver has given my colleagues from Ladner $125,000. This is the Ladner harbour sediment study, which is to give them other tools in order to look at dredging to reduce the buildup of silt. They are high and dry in their homes along the channels most of the time.

You will hear from them later, Mr. Chairman.

We have been declared by Fisheries as a core harbour. Of the 1,170 small harbours, 750 are core harbours along the coast, and we are one of them. We do have very large economic impacts, as you can see from the notes we've given you.

Once again, just to recap, we recommend that the federal government reinstate funding for local navigation channel dredging into the federal budget in order to provide adequate long-term funding for a local navigation channel dredging program in the Fraser River. You can see the affected areas in purple on your map.

Thank you very much, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Jackson.

I'm advised that First Call is in the room.

Is Ms. Julie Norton or Ms. Adrienne Montani here? Would they like to present? Perhaps we can bring them to table.

We'll move on to the Ladner Sediment Group, please, for your presentation.

[John Roscoe, Chairperson, Ladner Sediment Group]

Bonjour, monsieur le président and members of the committee.

Welcome to Canada's lotus land.

My name is John Roscoe, and I am the chair of Ladner Sediment Group.

Thank you for this opportunity to speak before you today.

I would like to introduce to you our spokesperson, Mr. Chris Scurr. Chris is a business owner in our local community and operates Delta's Ladner Cruise and Travel Centre. He is the president of the Floating Home Association, Pacific Region, representing over 500 residents along our waterfront. He is a director of the Ladner Business Association. He is also chair of a focus group for redefining our Ladner Harbour business area. Chris is also a director of the Delta Chamber of Commerce and a director and founding member of Delta's Roberts Bank Lifeboat Society. Chris has lived along the river for 15 years on a float home on our local channels. Chris is also the spokesperson for the Ladner Sediment Group.

On that note, I would like to turn this presentation over to Chris.

[Chris Scurr, Spokesperson, Ladner Sediment Group]

Thank you, John.

Good morning, ladies and gentlemen.

Mr. Chairman, thank you for this opportunity to speak today. I'm going to read directly from the submission, so please bear with the notes that you already have. Hopefully, you'll have a chance to read them.

Over the past five years, the issue of secondary channel dredging has become a significant local issue and, given the senior government's responsibilities on the Fraser River, as with the St. Lawrence River, it is also an issue of national significance. This matter has been discussed with the local port authority and representatives from several departments in your government. This brief provides information on the background to the issue and on some recent activities and then identifies the support needed to make progress in addressing the concerns.

Here's a little bit of history. The Fraser River in B.C. travels, as Mayor Jackson said, through almost three-quarters of the length of British Columbia and is a very unique river. One aspect of the river is that it runs through a major clay-bank area in the central interior of B.C., where it picks up a tremendous amount of fine clay and silt. This silt has been deposited in this delta by the Fraser River for thousands of years, and of course continues to be deposited.

The lower reach of the main channel of the river is used for heavy ocean freighter traffic that plies the river as far as New Westminster. This area of the river needs to be constantly dredged to maintain shipping depth of water for ocean freighters.

Up to approximately 1998, the management of the lower reaches of the Fraser River was under the jurisdiction of the federal government, under the Department of Public Works and later the Department of Transport. They were the shepherds of this lower area of the Fraser River, and along with maintaining the main channel for ocean traffic, they also maintained the secondary channels for fishing vessels, tugs, and barges, and general traffic for both commercial and pleasure craft.

Through the years, as river managers, they have trained the river by placing diversions at critical locations to divert more water into the main channel at the expense of the secondary channels. The result of this increased flow in the main channel was less silt settling out in this area, which resulted in less dredging needing to be done in the main channel and a subsequent savings of millions of dollars annually.

The secondary channels are now showing the results of this water diversion training. With less flow coming through these secondary channels, they are silting up dramatically, with alarming reductions in the water depths for navigation. Where there were 20 feet of water at low tide, there are now, in many areas, only two to three feet.

The result is that the channels are becoming a hazard to navigation. Water lease-lot owners are experiencing their floating homes and vessels tied to docks going aground at low tide, at times causing damage to the structures. Commercial and residential boat owners' safety is at risk when accessing the area when there is insufficient water to navigate to their docks. And there are substantial private expenditures to keep their floating structures floating, not sitting in the mud.

The need for this type of program has never been more urgent, nor has the call to action.

The port authorities in the Vancouver area were amalgamated in early 2008 to form a new authority, Port Metro Vancouver. They have been charged with maintaining the water depths in the lower Fraser River; however, their main concern is the ocean freighter traffic in the main channel.

Port Metro Vancouver hosted a community meeting in the area last summer to discuss dredging with the stakeholders of the Ladner secondary channels. They encouraged us to form a working group--

[The Chair, Conservative, James Rajotte]

Unfortunately, Mr. Scurr, we're well over time here. Can you wrap up very briefly?

[Chris Scurr]

Okay. What we'd like to ask the finance committee to please bring to government is this: we badly need your help. This is getting to be a very serious and dangerous situation. I can't stress that enough. We're looking for approximately $5 million for a one-time project to clear about half a million cubic feet of mud out of our channels to keep the channels sustainable and usable. We'd like that to be done as soon as possible, please.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Kemp now, please.

[Al Kemp, Chief Executive Officer, Rental Owners and Managers Society of British Columbia]

Good morning. Thank you for this opportunity.

My name is Al Kemp. I'm the chief executive officer of the Rental Owners and Managers Society of B.C. I'm also a past president and director of the Canadian Federation of Apartment Associations.

There is a critical dual need in British Columbia—indeed throughout Canada today—to increase rental stock and to make rental housing more affordable. Our industry, the industry that provides homes for one in three Canadians, is not looking for preferential treatment, and we're not looking for money. Perhaps that's a refreshing change from what you will hear as you go across the country. What we are looking for is simply the extension of equitable tax policies that are currently available to businesses and consumers in other industries.

To meet this dual need to increase rental stock and to make rental housing more affordable, we propose three changes to tax policies that should be incorporated into the 2010 federal budget: one, make capital gains taxes equitable with other industries; two, zero-rate the operation of rental housing for the GST and HST; and three, zero-rate the construction of rental properties for GST and HST.

While it might appear on the surface that each of these changes would be of great benefit to the owners of rental properties, in fact they would benefit renters through increased rental housing availability and affordability. I'm sure everybody would agree that those are highly significant goals, both economically and socially. Most renters are in the low- to middle-income categories, where a rent increase of only a few dollars can have a significant effect on their budget, their disposable income, and their quality of life.

In 1972 the then-federal government enacted a tax regime that continues to this day to have a negative and discriminatory impact on the residential rental industry. From 1972 to 1998, rental housing construction in Canada fell by 90%, from 50,000 units per year to only 5,000. In the succeeding decade, that level has not changed significantly.

Our industry is essentially penalized for any attempts to increase rental stock through the sale of current properties and reinvestment in new development. Because our industry is defined as a passive business, capital taxation policies that discriminate against reinvestment in rental property, as compared to any other type of property, include, but are not limited to, payment of 100% of capital gains tax on disposal of property, recapture of 100% of capital cost allowances on disposal, the inability to defer recapture of CCAs, and the unavailability to our industry of a preferential tax rate on the first $400,000 of income.

Note that all of the above represent immediate payment of taxes by our industry as opposed to deferment of taxes by virtually every other industry. We're not asking for tax exemption.

With the application of these policies for nearly 40 years, a vicious circle has resulted. The policies have created a shortage of rental stock. This has led to illusory capital gains, which has led to a disincentive to sell and reinvest, which in turn has led to a shortage of rental stock. Only the federal government can break this circle by changing its discriminatory tax policies.

Removing this discrimination will put billions of private dollars to work, certainly a need in these economic times. Owners will sell and reinvest, not only adding critically needed rental housing but also increasing income and sales tax revenues from the many sectors involved in multi-unit construction, ranging from architects to appraisers, equipment renters to realtors.

Turning to sales taxes, GST and HST have had and will continue to have a counterproductive effect on our industry that directly impacts rental rates. Food and shelter are essential necessities of life. In Canada food is not taxed; shelter is, indirectly.

The current 5% GST is estimated to add about $150 to $200 per year to a typical renter's shelter costs. With the advent of HST in British Columbia, that number increases to between $300 and $500 per year.

Groceries are zero-rated for GST and HST. Rental housing should be zero-rated through input tax credits identical to the provisions for suppliers of food. This would result in a minor reduction of tax revenues but have a major impact on housing affordability for renters in the lower- and middle-income brackets.

With respect to construction, it's difficult to quantify the cost to construct an apartment building today, because federal tax policies have rendered such construction economically unattractive for decades. But if we compare the average cost to construct a 900-square-foot condominium unit and a wood frame building, which would be a typical apartment building, HST would add about $12,500 to the average $250,000 to construct such a unit. That would translate into about $750 of additional rent if that unit were to be rented.

Again, recognizing that food and shelter are both necessities of life, HST should not apply to the construction of multi-unit residential housing.

In conclusion, by implementing the above recommendations, the federal government and Parliament will provide the necessary leadership to achieve a profound positive effect on the supply of rental housing and its cost to renters. This is critically needed in these difficult economic times. New rental stock will be created and upward pressure on rents will decrease. These benefits are highly desirable for the government, for stakeholders, and for 10 million Canadian households.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Kemp.

We'll go to Ms. Sinclair, please.

[Kay Sinclair, Regional Executive Vice-President, British Columbia, Public Service Alliance of Canada]

Good morning, committee chair and members.

Bonjour tout le monde.

I'm the B.C. vice-president of the Public Service Alliance of Canada. The PSAC represents most workers in federal government departments, agencies, and crown corporations. There are approximately 165,000 PSAC members across Canada, 15,000 of which are in B.C.

I'm going to speak about the importance of a national child care program. The PSAC doesn't represent child care workers, but we think child care should be one of the top priorities of the federal government. Mainly, I'm going to read from my exciting presentation.

A significant federal commitment to develop a national child care system similar to the one currently in operation in Quebec, a universal non-profit child care system available to all children whether their mothers are employed outside the home or work full time in the home, will provide immediate economic benefits and will assist in Canada's recovery from the current economic slowdown.

Beyond the jobs that can immediately be created by employment in child care facilities, child care provides support to parents across the labour force. Many families are now facing tenuous employment, layoffs, or difficult transitions to new jobs and the associated challenge to their financial resources. Accessible and affordable child care services are critical for parents to maintain their labour force attachment and/or obtain necessary skill development to deal with employment transitions.

The early learning and child care sector is labour-intensive and involves local expenditures, so spending in this sector has a high multiplier effect. Canadian research calculates that every dollar of child care spending produces a ripple effect of $1.58 in the local economy. Many U.S. studies have produced similar figures.

In terms of long-term gain, investing in the early years is, first and foremost, about investing in children's physical, social, emotional, and intellectual well-being, ensuring that Canada is competitive with other modern economies now and in the future.

Child care yields high economic and social returns. Depending upon how and where the research is done, studies show returns from $2 to $17 for every dollar spent. These returns are derived from improved school performance, reduced need for remediation in the school years, and reduction of anti-social behaviour, all resulting in mothers' labour force participation and adult productivity later.

Child care helps keep families, and women in particular, out of poverty. With access to good child care, female lone parents, most of whom are unable to pay child care user fees, are better able to seek further education, train for work, get decent jobs, and accept promotions. Two-parent families also have a chance to improve economic stability and income, particularly in times of insecure employment and stagnating wages.

In Quebec, where universal child care is available to all families, there has been a 50% drop in the rate of children living in poverty, in stark contrast to the rest of Canada, where, despite an all-party resolution in the House of Commons--in 1989, I believe--to eliminate child poverty by 2000, the national child poverty rate remains at about 10%, which is a disgrace in a wealthy country like Canada.

Child care supports women's workforce participation, education, and training. Child care is a key support for women already in the workforce and for those who want to enter it. Since Quebec's child care reform began, twice the number of married women entered the workforce than did so in the rest of Canada, providing Quebec with a substantial return in income and payroll taxes.

Child care builds local economies, since we know that a lot of these child care dollars go directly to the economy. Child care would also help us address the diminishing labour force. We've seen that in Quebec with their child care program, which is very affordable and universal and has resulted in more women being able to enter the workforce. Also, the Quebec birth rate has increased.

In terms of what we're asking for, we would ask that the federal budget include new federal transfer payments to provinces and territories specifically to provide access to quality affordable child care services based on the Quebec model, and that these payments also be made conditional, with measurable targets, to ensure that there is a system of quality, affordable, inclusive, and universal child care services in the provinces and territories.

The cost of a national child care program will be offset by reduced expenditures on unemployment benefits, poverty reduction programs, health care, education, and policing costs.

The current system....

Is my time up?

[The Chair, Conservative, James Rajotte]

Pretty much, but maybe you could just wrap up.

[Kay Sinclair]

I'll wrap up.

Tax breaks and subsidies don't provide spaces for shift workers for toddlers' before- and after-school care. We actually need a concerted, accessible, and affordable program to build the spaces, which would provide some construction jobs for men, but more importantly, I would say, would provide jobs for women in this economic recovery period and going forward.

Again, we think a national child care program is essential to the social and economic well-being of families and communities and also essential to women's equality in terms of women's full participation in this society.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the Village of Tahsis, please.

[Corrine Dahling, Mayor, Village of Tahsis]

Bonjour.

I am the mayor of Tahsis. Councillor Schooner is with me. Tahsis is located on the north end of Vancouver Island and is very beautiful. Come visit us.

I'm going to be speaking to you about RCMP funding and about a little bit of the history as well.

First, we would like to thank you for this opportunity to present to you, the Standing Committee on Finance. We would respectfully request that the committee consider our recommendation as part of the budget preparation process, as this affects not only our rural village of Tahsis but all small communities across Canada.

In January 2005 the funding for 215 additional RCMP officers was added by the British Columbia government. Of those 215 officers, 80 were targeted for rural communities and general policing across British Columbia. It was the biggest investment in the RCMP by the provincial government in over 20 years.

In June 2006 the RCMP made it mandatory for two officers to respond to calls whenever there is a threat of violence. Also, what the RCMP call “hubbing” began to take place: closing small, two-person outposts and redeploying staff to bolster other detachments.

Also in June of 2006, RCMP Deputy Commissioner Bill Sweeney stated in an interview with the CBC that any changes involving increased funding would require consultation with territorial and provincial governments, which pay 70% of the cost of RCMP services in small rural communities and remote areas. “All jurisdictions where we are involved in rural policing will encounter challenges around the provisions of backup,” he said.

He also stated:

It could very well be that there will be negotiations with territories and provinces with respect to increased resources. We can't ignore the fact that some jurisdictions will be affected more than others.

This year the RCMP are removing all police officers from communities of less than 5,000 that have a single member stationed in them. Increased funding is desperately required to facilitate RCMP to protect citizens residing in rural communities. Since it is unsafe to have one-member stations, the required need is for two-member stations.

The federal service plan states that the Ministry of Public Safety and Solicitor General works to maintain and enhance public safety in every community across the province. It is not possible for this service to be implemented if the funding is not available for the RCMP to implement it. Therefore, the Village of Tahsis respectfully requests that the Standing Committee on Finance add additional funding to the RCMP budget and that the funding be targeted for increased policing in rural communities.

Once again, the Village of Tahsis thanks you for this opportunity to present our recommendations.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mayor Dahling.

We'll now go to Mr. Bird, please.

[Ian Bird, Senior Leader, Sport Matters Group]

Thank you, Mr. Chairman.

I'm not going to speak to the brief. You have the brief, so you've seen what's there. I'll just highlight a few key points.

I'm with the Sport Matters Group. We've been in front of the committee for the past nine years, but typically on Parliament Hill. It particularly pleases me to be here in Vancouver, given that this is the Olympic and Paralympic city. It's a place that leads the country in sport participation and sport volunteering, so I think it's appropriate that we're here today providing some remarks. I would add that it's also my home. I live in Chelsea, on the Quebec side, and work in Ottawa, but I spent about 15 years training here with Canada's national field hockey team and went on to compete for our country in two Olympic Games.

Not long ago, I think Thérèse Brisson, from the other hockey--ice hockey--was in front of you in Ottawa. You would have heard quite an animated presentation about the importance of supporting sport, so I won't repeat Madame Brisson's remarks. But I will pick up on them in our recommendations.

I would also add, just before I move to the policy recommendations, a thank you to the committee. In the last two years I think this committee has provided sage advice to the Minister of Finance, and in both cases action has resulted. There has been increased investment in the Own the Podium program, and those watching our Olympic and Paralympic results from this past winter will know that Canada now leads the world. In the Beijing games you'll see a best-ever finish at 13th place. So support for that budget provision is leading to real results.

The second thing is that the infrastructure stimulus measures that were introduced in the most recent budget are also having a profound effect. It's been 40 years since the centennial year, when we renewed our infrastructure in communities. We're talking about the memorial rinks, the centennial pools, and such. We now estimate through our policy analysis that there will be over $3 billion of new capital invested by federal, provincial, and territorial governments, along with community partners--a number of the municipalities that are here today and a number of local community not-for-profit and charitable groups. So thank you to the committee for the support of those recommendations.

Now we need to look at three things--a three-legged stool--for the coming decade. First we need to bridge the gap in our national sport program. It requires a $22 million investment because of the economic downturn. Canada's corporate sector is not able to participate at the level we anticipated, given the downturn, and we are respectfully asking the government to help us bridge that gap. It's an interim measure that will help us get past the impact of the recession in 2010-11. The details of what the $22 million will be put toward and will achieve for the country are itemized in the brief, as they are in the Canadian Olympic Committee's brief and the Own the Podium brief itself.

The other two legs of the stool relate to the Income Tax Act. The fiscal policy of the Income Tax Act is something that's rarely looked at to support the sport or social policy that the Government of Canada, Sport Canada, spends its time on. There are two simple changes to the Income Tax Act that would greatly enhance community and individual participation in sport.

First is to modernize the act so that amateur community sport becomes charitable. For example, Mr. Dechert, a minor hockey team in Erindale that seeks to have a fundraiser and issue charitable receipts is not able to do so. It's somewhat incongruent with the fact that a local arts group can do that. So modernizing the act and making amateur sport at the community level charitable will help communities help one another to increase sport participation and all the benefits that come from that.

The second change to the Income Tax Act is to amend the children's fitness tax credit so it is fully refundable. It's currently a non-refundable tax credit. There's a group of Canadians who are just below the taxpaying line who are not benefiting from that credit. As you can imagine, this is when we need to support those families so they can receive the benefits and take the steps to register their children in soccer, hockey, skating, or swimming programs, and such.

So we suggest a three-legged stool, the first priority being a $22 million stimulus investment, and then two changes to the Income Tax Act to make amateur sport charitable and the children's fitness tax credit fully refundable.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We're now going to go back to First Call: B.C. Child and Youth Advocacy Coalition. You have up to five minutes for an opening statement, and then we'll go to questions from members.

[Adrienne Montani, Provincial Co-ordinator, First Call: B.C. Child and Youth Advocacy Coalition]

Thank you very much.

I'm Adrienne Montani with First Call: B.C. Child and Youth Advocacy Coalition. With me is Julie Norton, our chairperson.

I want to thank you for the opportunity to speak with you today. I'll explain our name first. First Call means that we think children and youth should have first call on society's resources. It's very simple, because they have the right to it and because they're our future, of course.

In our brief that we submitted earlier, we said that children are the best investment for a sustainable future. It's not just a nice slogan, but actually very true and is backed up by stacks of research. We have made commitments to children that we're not honouring. I refer here to the all-party pledge in 1989 to end child poverty in this country by the year 2000. We obviously missed that deadline. We also signed the UN Convention on the Rights of the Child shortly thereafter, but there are lots of children's rights we have not upheld.

Based on these commitments we've made and have not completely fulfilled, and on the research that we stand upon on the issues of child development and the harm that poverty does to children, we have an over-arching message to you that children are our most sustainable resource and that we should be investing in them in this next budget—and certainly in a recessionary time.

In our written submission you'll see two major recommendations. We've tried to lump them together. The best thing this budget could do would be to make a strong investment in early childhood development. That would be the first thing. Our second recommendation would be to reverse the growing trend in income inequality in this country. Both would accomplish something in improving children's health and well-being. They are social determinants of health that we need to pay attention to if we want to improve outcomes for children in this country.

Canada's current claims of investing heavily in early childhood development are challenged by the actual data and the results we are achieving. We are regularly lambasted in the international research by the OECD, UNICEF, and Save the Children. In repeated international comparative rankings with other developed countries, we rank at the bottom in our investment in early childhood development and our support for young children and families.

Here in B.C. we have research that shows that about one-third of the children arriving at kindergarten are vulnerable in terms of one or more developmental indexes, meaning they're vulnerable to poor outcomes as they grow up.

Meanwhile, the research evidence is extremely strong—and some of it was cited earlier—on the importance of early brain development and the extremely high economic and social return on investment in early childhood development.

The largest chunk of funds the current government puts toward early childhood development is for the universal child care benefit, which we would argue is a fine income transfer for low-income families. It's fine to give low-income families money, but this benefit does absolutely nothing to increase the number of child care spaces in this country or to increase their quality or accessibility. So we think this needs to be re-examined. Call it an income transfer, but don't call it a child care benefit, because that's not the way it works.

So based on this information, and in line with some of the previous speakers, we are suggesting that we make a substantial and significant investment in increased transfer payments to provinces and territories to create a system of child care that actually increases spaces and the accessibility and affordability of child care, very much like the Quebec system. We need federal transfers to do that. This is important not only for children's development, but also for women's equality and women's attachment to the workforce—and even their ability to go back to school so they can become more employable. In this country, only about 17% of children under 12 have access to child care space. So it's impeding our economy in that way.

The budget should also enhance the current federal investments in programs with good track records, such as CAPC, the community action program for children; the Canada prenatal nutrition program; and aboriginal head start. If you remember Kellie Leitch's report, she recommended that 25% of aboriginal children be given access within five years. We think that's an abysmally low target; it should be 100% of aboriginal children who have access to that.

Our second overarching recommendation is to look at the growth of income inequality in this country. The recent Conference Board of Canada report card says that poverty is the chief challenge facing this country. We have an abysmally high poverty rate, and it has not gone down very much since 1989.

In our brief last year we called for a comprehensive legislated commitment, with timelines and targets, for a poverty reduction plan in this country. We call for it again this year.

But this year we particularly want to draw your attention to income inequality and how it needs to change. Families are working as hard as they can. They are working extra hours to make up the difference in their stagnating wages. Most of the tax cuts made and those kinds of changes have benefited those who already have the most and are doing very well. Those in the middle class and the lower income bracket are working harder. So you have women working two jobs, single parents working two jobs, having no time for their children, just to keep up.

The policy levers that we'd ask you to look at or recommend to government are to increase the child tax benefit; increase eligibility for EI benefits, especially for women, because they're way underrepresented, so increase access to EI and the level of benefits; look at youth-at-risk employment programs and continue to invest in those; increase social housing investments to restore some of that federal funding; make post-secondary education accessible in this country to those with financial barriers; and again, invest heavily in early childhood development.

I want to sum up by saying tax cuts don't help low-income families very much, because that shrinks our government capacity to care for each other. That's really important, and we've lost that capacity.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Montani.

We'll go to questions now from members.

Mr. McCallum, you have seven minutes, please.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

Welcome to all of you, and thank you all very much for joining us this morning.

Having spent four happy years teaching economics at Simon Fraser University, admittedly some years ago, I'm always pleased to get the opportunity to return here and see friends, relatives, and in-laws, although I don't think we'll have much time today.

Anyway, I'm delighted to be here. Thank you for joining us. I have just a few questions.

Ms. Jackson, can you give us a little bit of history? Try to be brief, please, because I want to ask many people....

[Lois E. Jackson]

Yes, I will.

[John McCallum, Liberal, Markham—Unionville, ON]

You talk about reinstating dredging in the Fraser River. Does that mean it used to happen regularly and they took it away?

[Lois E. Jackson]

That's correct.

For a hundred years the side channels were dredged. Originally, I believe, it was through the federal government, then it went to Fisheries, and then it went to others--ports, etc. Ten years ago, that was concluded. So for 10 years we have had no federal assistance in terms of the side channels being dredged to keep the silts at bay, with huge economic impacts--huge economic and people impacts for those living on the river.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

Mr. Kemp, I thought you made a very strong case for the rental sector on the subject of the HST. I'll leave it to my Conservative colleagues to react to your comments on their tax, but I'd just like to say how much I agree that you make a strong case on the capital gains issue.

I remember last year, and even the year before, getting a similar submission about how there would be a very strong case for allowing deferral if an owner of a rental property sells to buy a new rental property. It seems to me that makes a lot of sense. I remember one point coming out of the earlier submissions was that the people who would gain are not principally very high-income people. A lot of the owners of smallish rental properties are middle-income, ordinary kinds of folk. Is that also your opinion?