Finance Committee on Sept. 28th, 2009

[The Chair, Conservative, James Rajotte]

You have about 30 seconds, Mr. Kemp.

[Al Kemp]

If I could guarantee that, I would probably trade places with you. There's no guarantee, but the market is always the market. We've seen a general reduction in rents in British Columbia over the last six to nine months. I think that will be borne out by the fall CMHC study. The market is such that there aren't as many people looking to rent. There aren't as many people able to pay higher rents. There is obviously a balance. A landlord must receive a return on investment and sufficient money to operate and maintain his or her buildings. I'm confident that if this were put in place, one of the results of a change in the capital gains taxes--and they're discriminatory taxes--would be more rental stock. As with any other portion of the market, supply and demand applies in our industry as well. If there's more rental stock available, generally speaking the cost of that rental stock will decrease.

[The Chair, Conservative, James Rajotte]

Thank you.

Next is the Liberal round. We don't have enough time for a full round, but we have about two minutes for Mr. Pacetti.

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

Thank you.

Ms. Jackson, there are a lot of rivers in this country, and I'm wondering how many rivers would need dredging money and what the total cost would be. We are a finance committee after all.

[Lois E. Jackson]

I know you are. Because the Fraser River comes through the mountain range and suddenly dives down to sea level, it carries this tremendous amount of silt that we were speaking about earlier. Of course it's very unusual geography. I'm not sure what happens in Saskatchewan, Manitoba, and some of the other areas. But I know it's of huge economic importance here with our fishing harbours.

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

Your presentation is fine. It just makes it tough for the finance committee to say specifically that x number of dollars should go to one specific river or place. But I appreciate it. It was a great presentation, so thank you.

[Lois E. Jackson]

Thank you, sir.

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

To Mayor Dahling, I appreciate that you require additional RCMP officers. If your village requires additional RCMP officers, I'm sure there are others. Do you have any idea of the need across the country, or just perhaps in the province of British Columbia?

[Corrine Dahling]

With any community that has a one-man station right now, they are taking those one-man stations and eliminating them because the mandate is for two-man stations.

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

Do you have any idea how many there would be?

[Corrine Dahling]

I don't know. I asked but they didn't get back to me.

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

Thank you.

Thank you, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

I want to thank all of our witnesses for being here today, for your submissions to the committee, and for your answers to our questions. We thank you very much for your participation.

We have a second panel right away, and we ask them to come forward. We'll suspend for a few minutes and then continue with our discussions.

Thank you.

[The Chair, Conservative, James Rajotte]

I'll call this second panel to order.

Again we have seven organizations with us here for this panel. We have the Prince Rupert Port Authority; TRIUMF; Port Metro Vancouver; as an individual, Mr. William Otway; the Surrey Board of Trade; the Belinda Stronach Foundation; and Vancouver Island University. Welcome to all of you.

I'll just reiterate what I told the last panel. We have a very limited amount of time. We have an hour and a half. So you will have a maximum of five minutes for your presentation. I will indicate one minute and then you can wrap up. Then we will go to questions from members.

We'll start with Mr. Krusel, please.

[Don Krusel, President and Chief Executive Officer, Prince Rupert Port Authority]

Thank you.

Good morning. My name is Don Krusel. I am the president and chief executive officer of the Prince Rupert Port Authority.

Firstly, we at the Port Authority want to recognize and congratulate the Government of Canada on the effectiveness of the targeted investments in the Asia-Pacific gateway and corridor initiative to strengthen Canada’s competitive position in international trade. Together these activities have established a strong and positive reputation for Canada's Asia-Pacific gateways. With the continued shift of economic activity and world trade toward the Asia-Pacific region, this national strategy of facilitating trade between Canada and Asia will continue in its overwhelming importance to the Canadian economy. The Port of Prince Rupert has benefited from these investments and has increased its international profile, and it owes a great deal of its success to the collaborative activities of the Asia-Pacific gateway and corridor initiative.

The $30 million investment by the Government of Canada in the Fairview container terminal in Prince Rupert has been a tremendous success and has created significant economic opportunity across western Canada. A picture is worth a thousand words in illustrating the phenomenal success of the new trade corridor gateway in Prince Rupert. The graph that has been handed out to you--and I hope all panel members have a copy--provides a startling picture of the dramatic increase in North American trade that has been achieved through the Port of Prince Rupert as a result of the Asia-Pacific gateway initiative investment in the container terminal in Prince Rupert. As the graph illustrates, during the first 30 years of existence and prior to the conversion to a container terminal in 2007, the Fairview terminal never handled more than 1.1 million tonnes of cargo in any given year. Last year, during its first full year as a new North American gateway container terminal, it handled 1.8 million tonnes, and this year it is expected to handle 2.5 million tonnes of cargo. That is a startling 127% increase over the previous best year and a 1,200% increase over just two years ago. When the new facility reaches capacity, expected within the next five years, an extra 4 million tonnes, or an increase of nearly 5,000%, will be flowing through that terminal.

These achievements have not gone unnoticed internationally and worldwide. Recent articles in the Journal of Commerce, a U.S.-based trade publication, have referenced comments from U.S. port officials about the success of Prince Rupert and the Asia-Pacific gateway. To quote the article:

[U.S.] port officials appear to be looking with envy at what has been done in Canada to lure North American importers to Prince Rupert. The [U.S.] West Coast port directors cited the effective effort of the Canadian federal, provincial and local governments, together with that country's Pacific ports and CN [Rail], to promote the Canadian gateway for trade with Asia.

The article goes on to describe how the U.S. west coast port authorities are lobbying their own federal government to provide the same level of economic and organizational support as is being provided here in Canada. While it is very flattering to be viewed as a role model for our U.S. counterparts, it is also a warning to us that we cannot be complacent and allow ourselves to lose any competitive advantage that we might have gained through the Asia-Pacific gateway and corridor initiative.

We believe that the Government of Canada's Asia-Pacific gateway and corridor initiative and measures for economic stimulus have been successful to date but can be more effective with continued support and future enhancements. I would like to highlight three for consideration by this committee: to provide new and additional funding for the Asia-Pacific; to provide greater access to federal economic stimulus; and to amend federal regulations to enhance the ability for federal ports to access venture capital.

However, I am not here today only to applaud past infrastructure investments made in the Prince Rupert gateway but to remind you that we are not yet finished building Canada's Pacific gateway. Thus we need continued support from the Government of Canada in completing this important task. The Port of Prince Rupert has a real and immediate opportunity to facilitate the development of new export capacities for bulk commodities targeting the Asia-Pacific region. In addition, the growing container traffic and terminal capacities are driving new opportunities for export and import logistics services such as container stuffing and reload, cold storage, transload, and short sea shipping opportunities.

In conclusion, we applaud the support and direct investment made by the Government of Canada, along with our partners in the Fairview container terminal. Together, we not only created a new gateway for trans-Pacific container trade but also have drawn the attention of the international shipping world and opened the door to a multitude of new investments and development opportunities.

Key to realizing the opportunity and unlocking the potential of the Prince Rupert gateway will be a strategic investment in infrastructure at the Port of Prince Rupert by the Government of Canada.

I thank you for your time and attention.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now go to TRIUMF, please.

[Dr. Nigel Lockyer, Director, TRIUMF]

Good morning. My name is Nigel Lockyer. I'm the director of TRIUMF.

TRIUMF is Canada's national laboratory for particle and nuclear physics. It was founded 40 years ago by three British Columbia universities and the University of Alberta. Today, it is 11 full-member universities and four associate universities, so it's represented by 15 universities across Canada, stretching from Nova Scotia all the way to Victoria.

Every five years, TRIUMF undergoes what's called an international peer review. This year's review was chaired by Dr. Rolf Heuer, the director general of CERN, which is the largest laboratory in the world. Members on the committee included directors from Asia, the United States, and Europe. The head of the European Science Foundation was on that committee, as was the CEO of the B.C. Cancer Agency and Canadian businessmen.

The report is complete. They gave us an A-plus, you might say, on our track record, and fully endorsed our plan for the next five years.

TRIUMF also initiated by itself an economic impact study. It shows that in the last 10 years there was $1 billion of economic activity associated with TRIUMF. Our next five-year plan proposes to double that, so that would be $1 billion of activity in five years.

TRIUMF is a little unusual in the sense that it's not only a world-class science facility but has demonstrated its ability to work with the private sector. Our major collaborator is MDS Nordion at the moment.

I don't have time to describe our whole program, nor do you want to learn about physics or nuclear physics, I assume, so I'll just talk briefly about the fastest growing part of the plan: nuclear medicine.

TRIUMF is engaged in nuclear medicine from soup to nuts. We design the accelerators, the cyclotrons that are used to make medical isotopes. Those cyclotrons are found around the world. They're found in Sloan-Kettering in New York and they're found in Korea. They're manufactured in Canada. That is a growing field and it's a growing business.

In order to use those isotopes, they're usually connected to molecules. The field that connects molecules to isotopes and designs molecules is called radiochemistry. We have a radiochemistry team that's growing. It collaborates with MDS Nordion, UBC, and General Electric, so it's an area where we see the future of the field in nuclear medicine going.

We do imaging. We're involved in the science associated with that, both clinical and science research, in British Columbia and across Canada.

The one area that I'll draw attention to that has been in the news a lot lately is the medical isotope crisis in Canada and around the world. TRIUMF has proposed a short-term, medium-term, and long-term solution.

The short-term solution, in collaboration with B.C. Cancer, Sherbrooke, Western Ontario, and Cross Cancer Institute in Edmonton, is to use the existing cyclotrons that are in the major medical centres. By changing the target from what you normally use to generate isotopes, you're able to make technetium-99 in sufficient quantities for those local medical centres. So that we see as something that can take place over the next two years—and it has been proposed to NSERC. That just relies on our know-how.

The medium-term solution is part of our five-year plan. It actually was part of it before the crisis came about. We are proposing to build a high-power, very small electron accelerator, which would fit probably across this table, that would allow us to produce molybdenum-99 in quantities sufficient for all Canadians.

It's not an expensive investment on the scale of reactors, so I believe the Government of Canada has a choice between reactors and accelerators. The solution we've proposed does not use highly enriched uranium; it uses natural uranium, where all reactors now will have to switch away from the way they're doing things.

Our long-term vision is that nuclear medicine, being a growing field that allows you to decipher cancer, whether a tumour that's growing or dying or whether there are estrogen receptors on it, and so on, is something that's going to take place. We propose an espresso-maker cyclotron, something small that fits on your desk and gives single-patient doses of medical isotopes, and which could be put in every hospital in the world. That's the end goal of nuclear medicine. It's really going to be everywhere.

I think the opportunities are fantastic, and we're very pleased to offer to you our proposal that we brought with us.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to Port Metro Vancouver, please.

[Robin Silvester, President and Chief Executive Officer, Port Metro Vancouver]

Good morning, committee members, and thank you very much for the opportunity to address the standing committee this morning.

My name is Robin Silvester. I'm the president and chief executive officer of Port Metro Vancouver. The Vancouver Fraser Port Authority, operating as Port Metro Vancouver, has submitted to the Standing Committee on Finance a federal pre-budget submission wherein we recommend that the Government of Canada undertake a new round of funding for the Asia-Pacific gateway and corridor initiative, specifically including the replacement of the New Westminster rail bridge and the replacement or upgrade of Fraser River training infrastructure.

The port recognizes and applauds the support of successive federal governments in the creation and expansion of the Asia-Pacific gateway and corridor initiative. The investments announced by the federal government have bettered our nation's west coast trade infrastructure to the benefit of all of Canada, which is fundamentally a trading nation. These improvements have demonstrated to customers and port users the Government of Canada's commitment to advancing significant trade-related activity in the Asia-Pacific gateway.

While much has been done to facilitate trade through the Asia-Pacific gateway, funds available for investment in this initiative have largely been committed. A number of investment priorities remain. We respectfully submit that the Government of Canada should consider further investment to position the Asia-Pacific gateway as truly competitive. Specifically, the two infrastructure projects I address today are key to the continued and future competitiveness of the gateway.

Port Metro Vancouver is Canada's largest and busiest port and the most diversified port facility in the whole of North America. Port Metro Vancouver's navigable jurisdiction stretches along 600 kilometres of coastline, and the Fraser River comprises nearly half of that jurisdiction.

In 2008, the cargo handled along the Fraser River accounted for 29% of Port Metro Vancouver's total tonnage, representing a very significant contribution to the port's overall economic impact in the region and to the related tax generation of taxes to all levels of government.

The New Westminster rail bridge represents an existing federal asset and a critical component of the gateway infrastructure. This single track swing-span bridge crosses the Fraser River between Surrey and New Westminster. In addition to approaching the end of its useful life, this 100-year-old structure also offers a mere 10-metre vertical clearance over the Fraser River, a major international shipping channel. Furthermore, the narrow distance between its vertical supports presents an ongoing challenge to river navigation, and columns have been damaged in the past after being struck by barges transiting in heavy currents.

The Government of Canada has recognized that rail access to and from Port Metro Vancouver is critical to the success of Canada's international trade initiatives. As a result, the Asia-Pacific gateway and corridor initiative identified three key rail corridors essential to the success of trade in the metro Vancouver region: the Roberts Bank rail corridor, the north shore trade area, and the south shore trade area.

The New Westminster rail bridge is a critical component of the north and south shore rail corridors, especially in conjunction with the increasing freight demand forecasted from higher cargo volumes through the gateway. At this time, the bridge is at or near sustainable capacity. The current users of this bridge include CN, Canadian Pacific, Burlington Northern Sante Fe, Southern Railway of British Columbia, VIA Rail, Amtrak, and the Rocky Mountaineer. Replacement of the New Westminster rail bridge with an improved crossing would represent a sound investment that would significantly contribute to the success of Canada's international trade initiatives. To date, no funding has been identified for the replacement of this crucial infrastructure.

Moving rapidly to the Fraser River training infrastructure, this is also an existing federal asset managed by the Canadian Coast Guard. These marine control structures channel direct current and control wave action, thereby maintaining water depths and reducing erosion. By stabilizing the course of the Fraser River, they in turn help to manage sediment suspension.

The training infrastructure serves three vital functions: the structures improve navigation; they reduce the requirement for maintenance dredging, which I believe links to a number of presentations you had earlier this morning; and they contribute to the commercial viability of the port's dredging program and thus the ongoing viability of the Fraser River as a trade corridor.

The structures also address issues relating to erosion and sediment deposits for lands adjacent to the river and contribute to flood control and safety.

There are 14 structures involved, some of which are more than 100 years old, and all are currently in varying conditions of disrepair. The replacement value of these marine structures is estimated at $150 million—and again, no funding has been identified for their replacement.

To conclude, Canada is a trading nation. Given the importance of trade to Canada's financial well-being, the magnitude and growth in Asia-Pacific trade, and the importance of diversifying and expanding Canada's trade with new markets, the Fraser River is critical to the economy and the communities along metro Vancouver.

Port Metro Vancouver recommends that the federal government undertake a new round of funding for the Asia-Pacific gateway and corridor initiative, including the replacement of the New Westminster rail bridge and the replacement or upgrade of Fraser River training infrastructure.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Silvester.

Mr. Otway, please.

[William Otway, As an Individual]

Thank you, Mr. Chairman and members of the committee. I appreciate the opportunity to appear before you today.

My name is William, or Bill, Otway. You have my background in the brief previously submitted.

I'd like to advise you, with pleasure, that the Shuswap regional association of the B.C. Wildlife Federation has voiced its support for the proposal I'm putting forward. We all believe that one of the very best investments our government could make with taxpayers' money is to invest in the revitalization of the Pacific salmonid enhancement program, or SEP. Such an investment would provide the opportunity for increased economic benefits and additional long-term sustainable employment for thousands of Canadians. Despite continuing efforts to restrict this operation, SEP has been a success. It contributes significantly to our salmon production and has provided a buffer for our fisheries in light of continuing decline in the production of wild salmon stocks. The program is responsible for something in the order of 40% of the economic benefits and jobs our fisheries produce. It has the potential, with some rational investment, to expand those benefits in a major way.

The public fishery in British Columbia plays a major role in the economic well-being of both B.C. and Canada. The wholesale value of the commercial public fishery in 2005 was $793 million and it contributed 5,700 jobs. At the same time, the recreational fishery generated $1.4 billion and 7,700 jobs to our economy. Simply put, the public fishery in British Columbia generates in excess of $2.1 billion annually and 13,500 jobs. There is no reason, given a rational revitalization plan for SEP, that these benefits cannot be doubled over time.

The committee is no doubt aware of the problems experienced here in B.C. this past year with our Skeena and Fraser sockeye. What the committee may not understand is that the failure of those salmon runs meant a minimum loss of $125 million to our economy and the associated jobs. Bringing SEP to full and expanded production could have compensated for some of those losses with production of other species and retained the lost economic benefits and jobs. A review of the 2007 report to the Minister of Fisheries and Oceans, entitled Salmon in Sight, will show that a planned revitalization of SEP also provides the opportunity to produce green power.

Our recommendations are as follows.

One, dedicate $200 million to the DFO Pacific region over the next six years to create an expanded and revitalized SEP program and to develop a salmon master plan.

Two, stipulate that the funds dedicated to this program will be under the control of the Pacific region of DFO and not the deputy minister or the Ottawa mandarins. Moreover, it must be stipulated that these earmarked funds cannot be hived off for any other use within DFO.

Three, require the establishment of an advisory body composed of representatives of all stakeholders to work with and advise DFO Pacific region on the best projects to undertake. This body would also review all science-proposed projects and make recommendations on their viability in achieving the goals of the expanded SEP.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Otway.

We'll go to Mr. Wilson.

[Eric Wilson, Chair, Taxation and Finance Team, Surrey Board of Trade]

Thank you, Mr. Chairman.

My name is Eric Wilson. I am the chair of the finance and taxation team for the Surrey Board of Trade. The Surrey Board of Trade is the second largest board of trade in British Columbia.

Thank you for allowing us to speak today.

Specifically we're asking the government to consider two areas of tax policy for revision and introduction. One concerns the availability of the small business deduction to companies that have taxable capital in excess of $10 million. The second is to consider the introduction of legislation allowing for consolidated corporate tax filings among companies under common control and ownership.

By way of background, subsection 125(5.1) of the Income Tax Act reduces the ability of a company to claim the small business deduction based solely on its taxable capital. It begins to erode once the capital exceeds $10 million, and it disappears entirely at $15 million. This has a significant impact on businesses that are capital intensive. For example, the Automobile Dealers Association has highlighted this many times.

Prior to 2004, the $10 million threshold also served as the level at which a company would incur what's referred to as a corporate capital tax, which is a static tax based solely on its capital structure. Once you incurred a $10 million limit, you paid a certain degree of tax on the excess. In 2004, that level, for purposes of the large corporations tax sections, was increased to $50 million, but the $10 million threshold for the erosion of the small business deduction did not change. We are requesting either that subsection 125(5.1) be repealed or that the $10 million threshold referenced therein be increased to $50 million to at least bring it into harmony with the level at which a company will incur large corporations tax.

With respect to allowing consolidated tax returns to companies under common ownership and control, it is very common for a business to have its individual units split into various subsidiary or sister corporations for purposes of liability, competitive insulation, succession, or variable compensation patterns. It's not unusual for one facet of a business to operate at a loss whereas another facet operates at a profit. An example might be a manufacturing business that also does its own distribution. The distribution end of a manufacturing business sometimes does incur losses. If for competitive or legal liability purposes this company chooses to maintain its business units in separate legal entities, it has to go through an enormous amount of professional expense, complexity, and, to a certain degree, uncertainty to access the losses of the distribution company with the manufacturing end.

We believe that Canada is one of the only countries in the G7 that does not allow consolidated corporate filings.

Within the package that was submitted prior to my appearance here, there is a discussion of various techniques and strategies that are embraced by the CRA in allowing consolidation of losses within a related group or a group under common control. But as I said earlier, it's unwieldy and unnecessarily expensive, and at the end of the day, the amount of tax revenue that would be realized by the government would functionally be unchanged in the event that consolidated filings were allowed.

In 1985 the Technical Committee on Business Taxation recommended that the federal government review the Department of Finance's 1985 discussion paper, “A Corporate Loss Transfer System in Canada”, which acknowledged there were problems with the current loss utilization techniques, specifically legal and accounting costs, administration and compliance costs, and uncertainty regarding the utilization of the tax planning techniques. It argued that a group reporting system would improve the equity and neutrality of the income tax systems as between economic entities; enhance the response of business to tax incentives provided by the federal government; and increase the freedom of managers of business organizations to structure business operations in the most desirable way from a business point of view, with less concern about adverse or uncertain tax consequences.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Wilson.

We'll go to Ms. Mohamed.

[Farah Mohamed, President, External, Non-Profit, Belinda Stronach Foundation]

Thank you very much, Mr. Chair, for the opportunity to present to the committee. My comments will focus on the first question the committee has put forward, which is in regard to the spending measures needed for prosperity and sustainability. Specifically, my presentation focuses on the fastest-growing population in Canada: aboriginal children. It also focuses on themes that this government has championed, among them economic development, strategic investment, and technology.

You've all received a copy of my presentation. What I'm going to discuss with you today is One Laptop Per Child. It's a program that is currently in 15 other countries, one million of them in operation, and it has yielded tremendous results. It's about education, empowerment, globalization, responsibility, and investing in a key resource, our children.

This iteration of One Laptop Per Child in Canada is unique. It focuses on aboriginal children. It has the support of organizations and individuals from the aboriginal community, among them Chief Atleo, Roberta Jamieson, Susan Aglukark, Clint Davis, the ITK, and several others. I point that out at the beginning because this is not a solution that has been made in central Ontario; it is in fact a solution that is being put together in collaboration with aboriginal leaders and individuals.

It's also a program that's built on partnership between the not-for-profit community, the private sector, and hopefully the government. It's a pilot project that I am speaking to you about today. We believe that if we can pilot this, this time next year, for our kids, about 5,000 of them in various parts of the country, we can in five years reach a population of 250,000 children between the ages of 6 and 12.

With respect to One Laptop Per Child, it was created in 2005 by a gentleman named Nicholas Negroponte. He's the founder of the MIT media lab. It's a low-cost, low-powered, connected laptop. In fact I have one with me, so you can see that it's actually proven, not something we're going to come up with in this pilot program. It's a tool to get aboriginal kids involved in their own education.

Briefly, the important part is what the laptop will have on it. This particular laptop will have on it a literacy program with aboriginal content. It will have on it a financial literacy program with a banking opportunity, so we're giving actual skills and practical skills to children. It will have at least 100 books, 50 of which will be from aboriginal authors for aboriginal children, and we're pleased to announce that Heather Reisman has agreed to give us the other 50 books. It will have connectivity to the Internet, an entrepreneurship program, a mentorship and leadership program, games to improve dexterity, self-esteem, and creativity, and we'll be doing that in partnership with CAMH, the Centre for Addiction and Mental Health.

We'll also be working with ParticipACTION to come up with a physical education program so that we're not creating a bunch of children sitting in front of computers but that they learn how to use technology for their physical health.

We're also working with the University of Waterloo so that as these programs are developed by the content experts, they are handed over to, as we call them, high-performing tech geeks at the University of Waterloo, who will then be coming up with the application. So we are striving to have an academic aspect to this.

I'm going to go through the deck very quickly. It's important to understand who will benefit from One Laptop Per Child. Obviously, our main population is aboriginal children 6 to 12 years of age, their parents, their communities, teachers, other family members, and we believe, with this investment, Canadians. We are talking about the fastest-growing population in Canada and a population that has demonstrated enormous results when given the opportunity.

As indicated on page 7, the accomplishments to date are taken from a number of evaluations in these 15 different countries, all at different stages, but we know that at the end of the day kids become more interested in their learning. There are lower dropout rates, increased school attendance, and higher literacy rates. They become more creative. Because of their access to the Internet, they explore areas of opportunity that they may not have otherwise explored. In fact, the programs that are on here are musical in nature. There are memory games. There are memory tools. There's a calculator on there. There's a journal on there. So what we've seen is that kids are becoming a bit more engaged in their education.

In reference to page 8, if I came to you with a program and didn't tell you that there were challenges and opportunities for those challenges, it would be a little bit of a misleading statement. We've identified three challenges and three ways to solve those challenges. One is breakage. The computer is built for kids, so the breakage rate is less than 1%. Regarding training, we really believe the best way to get these into the hands of aboriginal kids is to have aboriginal adolescents be the trainers of these programs, so that's built into this program. In terms of the cost, this is a very low-cost solution to literacy problems, self-esteem, and the engagement of children.

Built on this, on page 9 we talk about potential partnerships. For the pilot program, we're talking about $5 million over three years, shared between not-for-profit, profit, and the government. So that boils down to about $2.5 million for the government, and that would be $833,000 per year for three years. At the end of the day, we believe that after three years of this pilot program, and within five years, we could cover the entire population--obviously, with increased investment.

On page 10 I talk about why this is a useful investment for the Government of Canada. I won't go through all of this, but we look at it as a strategic investment. That's a very important part of this equation. Often not-for-profits come and ask for a bulk of money and tell us they'll try to do good things with it. This is an investment in a population that needs it, and it's built on a partnership.

After a pilot program this would be a cost of $250 per child. Currently I'm told we spend $215 per child on just language training in this country. At the end of the day, the bottom line of this program is that it's innovative, it's targeted, it's proven, and it's supported by aboriginal leaders and is cost-effective.

On page 12 you'll see the roll-out. The plan is to do the content to raise the funds and to have these computers in the hands of 5,000 children by this time next year.

Thank you very much.