Finance Committee on Sept. 29th, 2009

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to Success By 6.

[Ilene Fleming, Director, United Way of the Alberta Capital Region, Success By 6]

Thank you very much for the opportunity to present to the House of Commons Standing Committee on Finance as you deliberate on your budget for 2009.

Success By 6 is a community partnership whose mandate is to see that all Edmonton children from zero to six have the supports they need to ensure a lifetime of healthy growth and development. Success By 6 works under the direction of a council of partners, which engages a broad range of stakeholders to direct the work of Success By 6.

These stakeholders include representatives from a variety of institutions and include parents, service providers, and the health, education, and social services sectors, and we have representatives who provide funding in our community. The commonality of all of the people who sit on our council of partners is the interest of supporting all children to have what they need to have the best possible start.

We work to educate people on the importance of early childhood development in our lives and their ongoing health and well-being. We engage stakeholders as much as possible in being a part of creating an optimal environment for child development.

We know that children grow up in families, that families work in communities, and that the outcomes within those communities can be shaped with our investment, with your investment, of Canada's dollars.

We thank you for the opportunity to bring forward some recommendations on the difficult investment decisions that you're going to have to make with the limited resources that Canada has.

[Christopher Smith, Chair, United Way of the Alberta Capital Region, Success By 6]

In terms of recommendations, we have three.

The first recommendation relates to making maternity and parental leaves more accessible and better funded. In terms of the arguments in favour of parental leave policies, they present two rationales: first, that such policies are now a necessity, giving the increasing numbers of women who participate in the labour market; and second, that there are benefits, both health and well-being benefits, that flow from allowing new parents an opportunity to spend time with their children during those first years of life.

Unfortunately, based on the current policies, there are individuals, groups, and families who do not have access to maternity and parental leaves. If we summarize those groups, it's single, younger, and less-educated women who are much less likely to be eligible for maternity benefits than other groups. This primarily relates to the structure of the EI program, which means that, at present, seasonal workers and those women who are self-employed are ineligible for maternity benefits. Second, when we look at the length of the leave women take, primarily it's women in vulnerable circumstances, younger women, and those facing financial hardships who take shorter leave.

Our recommendation to you today, first, is that you extend the maternity and parental leave benefits program to include those working Canadians who do seasonal work or part-time work and those who are self-employed, and, secondly, that you look to enrich the value of the benefit to those lower-income families.

The second recommendation relates to income support for families and refers to some of the information that Mr. Kolkman presented. It remains a disturbing fact that children and their families continue to live in poverty in Canada. Child poverty has a high price that we all pay. Children who grow up in low-income families do less well in school, they earn lower incomes, and they have higher levels of use of social, health, and justice services.

One fiscal vehicle the federal government has to reduce child and family poverty is the Canada child tax benefit. We encourage you to enhance that child tax benefit to ensure it targets low- and modest-income families, and our recommendation is that you do that by eliminating the universal child tax benefit and the non-refundable child tax credit and flowing those moneys into an enhanced child tax benefit. As Mr. Kolkman points out, that would immediately elevate 50,000 families above the low-income level.

Finally, we commend the Government of Canada for your recent investments in infrastructure. Those investments in infrastructure need to be added to by investments in social infrastructure. There is a large body of evidence that supports the value of early childhood education and care as a vital social infrastructure that supports families and their children.

Public investments in early childhood education and care support the healthy development of children, they enable parents to participate in the labour force, and they create community jobs. We therefore recommend that the government re-establish the funding transfers outlined in the 2005 early learning and child care agreement.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now go to Mayor Mandel, please.

[Stephen Mandel, Mayor, City of Edmonton]

Welcome to Edmonton. I apologize for not speaking French.

My city's economic reality has changed a lot in a year. One year ago we were managing a boom. This year our economy has slowed significantly. Like you, we are streamlining our spending priorities while investing in major infrastructure, which has the dual purpose of building the city's infrastructure and supporting economic growth.

It is clear that when it comes to stimulating economic recovery, Ottawa understands that this is a city issue. It is also clear that when the government points to cities like Edmonton, money spent here quickly recycles into economic output.

All this means that our goals are aligned. We already know that we have common constituents, which means that the targets of our efforts are the same. What remains is to understand that the actual application of federal policies and programs needs to better reflect our common goals. This is a question of not just the size of allocation but of structure and delivery.

I want to go over two main themes, but first I'd like to talk about process.

Big-city mayors have long called for the federal government to take meaningful steps towards addressing the infrastructure deficit. I would be remiss if I did not acknowledge that the government response to this recession does focus on this very issue, and the commitments have been significant. Edmonton is the beneficiary of federal commitments; $25 million, as an example, is being spent in transit upgrades that were applied across our system to help make it more effective. These upgrades complement the successful south line extension, which was made possible by leveraging a gas tax transfer, which was already leveraged to finance a $700 million extension.

In addition, the $75 million announced by the federal government, plus matching provincial and municipal funds, will allow us to build the first leg of our NAIT line, in a project worth more than $200 million.

We appreciate the political and funding support we have received for these projects, as well as the efforts of our local representatives to align federal spending with city priorities, but the city has done their share too. We've invested close to $1.8 billion this year in infrastructure. We're committing debt financing for large-scale projects, such as LRT and new multi-purpose recreational facilities. We have earmarked an increase in tax of 2% a year to cover neighbourhood renewals. We have also introduced a new program, called Community Revitalization, that will allow us to pay for major rehabilitation.

I'm talking so quickly because my speech was longer than five minutes.

What we should notice, in all of these initiatives, is that they allow us to create long-term funding pools for financing purposes. Just as the city's budgeting has migrated support for this type of cash management, so too must federal funding. It must be delivered in a long-term, sustainable form under a program that allows for fast scale-up and easy flow-through. When the goal is to see a quick distribution of funds, the funding mechanism is of equal importance to the funding amount.

An increasing part of our infrastructure need is found in larger, system-wide investment that can only be addressed with long-term, stable financing, which in turn allows us to leverage funds and manage major projects. The best example of this is the gas tax. It is a tool that meets most urgently the needs we have, as cities, for long-term investment.

We accept that our goals are the same and the people we serve are the same. The missing component is certainty. Without it, our SLRT line expansion would not have been built. Under this program, we understand what we can expect. We know how to react to it and how to plan. We can balance between immediate small-scale needs and the need to tackle some of the bigger challenges. We allocate money accordingly. The accountability framework is similarly straightforward and transparent.

Further, under this program, certainty means that we do not compete with provincial priorities, nor do we apply for funds at the same pool as community stakeholders, many of whom not only compete with our funding but also come to us to ask for money to match the federal funding. Under the gas tax framework, cities are treated as a significant economic partner, not as a separate entity.

This brings me to the next major point I would like to address today, which is the need to better align federal goals and objectives with the on-the-ground realities in places like Edmonton.

Edmonton has received great political support on files. Our urban aboriginal file is an example. The minister has a very strong understanding of the reality that the issues of off-reserve migration have created in Edmonton. The desire to address this issue with new and unique partnerships allows us to better integrate members of our aboriginal community in our city.

But the reality is that gaps exist between objectives and procedures. Program alignment does not match political will. Thus, resources are not easily applied where they are most needed, as in the case of a city like Edmonton, which is becoming Canada's largest aboriginal community. Here, the real challenge for the government is not what is being spent--indeed, I cannot believe that sufficient resources are not available--but the urgent need to facilitate changes in the institutional and jurisdictional processes that prevent resources from being targeted where they are most needed.

Just as with the overall approach to funding, new and innovative approaches are needed to reflect the reality of the issues we face. Processes need to acknowledge that today's aboriginal communities exist in cities like Edmonton. Resources must follow the need or we'll all regret what could happen in the future. A new order must be found to allow us to better match our goals with what's really happening on the ground.

There's a common theme to what I've said today. Very quickly, it is that truly solving issues cannot be done when cities of the size and skill of Edmonton remain mere provincial stakeholders. As your partner, we need certainty and alignment to be built into our processes. We need to be able to break through barriers to become full partners who are going to solve problems and create opportunities alongside the federal and provincial partners. The key to our shared success will be in applying solutions to allow us to begin to overcome some of those challenges.

I speak to you today not simply about the need to apply money to our issues but about the much more urgent need to overcome the structural challenges that hinder our flexibility, our nimbleness, and ultimately our success.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mayor Mandel.

Thank you to all for your presentations.

We'll now go to questions from members. In the first round, each member will have seven minutes.

We'll start with Mr. McCallum, please.

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

Thank you, Mr. Chair.

Thank you to all the witnesses for being with us today. It's a pleasure for us to be in Edmonton.

I'd like to start with a brief comment on the social policy, principally related to Success By 6 and the Edmonton Social Planning Council. Then I'd like to focus a bit on infrastructure, drawing in both Vivian Manasc and the mayor.

On social policy and child support, we are entirely committed to early learning and child care. You say the 2005 program should be brought back. We haven't released our platform yet, but something like that will be there, you can be sure.

On child support, we certainly featured that in the last election platform. I can't tell you what's coming up, but I definitely agree that the non-refundable child tax credit is bad. It should be refundable. But I'm also concerned about affordability and the size of the deficit, and the proposal we have, of a $7.5-billion-a-year increase in spending, and 2014, is not on, from my point of view, given the fiscal conditions of the country.

On infrastructure, I really enjoyed the mayor's presentation. I think it's exactly the same point of view that I have and that the Liberal Party has. But I'd like to try to address both of you, because it seems to me that what the government's done is the worst of both worlds. It's a hodgepodge of things. It's not strategic. At the same time, the money doesn't get out.

I think we have two priorities. One is to be strategic and the other is to get the money out. I would have suggested that the infrastructure funding be broken into two components. One is through the gas tax mechanism. All the mayors have been pushing for that. We in the Liberal Party have been pushing for that throughout, because the money would have gotten out faster, the cities would have had control, and shovels would have been in the ground many months ago, instead of what we have today, when we find that only 12% of the projects are actually on the ground.

The second component of this, which relates to 2017--I really liked your cultural facilities point--should be longer-term and more strategic.

So one part of it would be quick and deal with the jobs issue and still be useful, because the cities would decide, and the second part would be longer-term. We can't be only concerned about pencil-ready; we have to be concerned about shovel-ready, at least for that first component.

First to you, Ms. Manasc. What do you think of what I've just said? Is it consistent with what you said?

[Vivian Manasc]

Thank you, Mr. McCallum.

I think in part it is consistent. Certainly the idea that investment in infrastructure needs to be both strategic and quick is important. But I also think, to the mayor's point, long-term certainty is important and long timelines are important.

I would also suggest that one of our concerns is that we as architects and engineers also be seen as being part of the jobs economy. We also have jobs. Employment in the world of architecture and engineering is more than 10% of the construction industry. The number of man-hours that are invested in design and construction are just as important in the design phase as in the construction phase.

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

Thank you. I do acknowledge that point. I think, though, that the fact of the reliability of the funding on a long-term basis could be achieved through expanded use of the gas tax mechanism.

I'd like to ask the mayor what he thinks of what I just said.

[Stephen Mandel]

There's no question that expansion of the gas tax facilitates cities in doing the kinds of things they want to do. It gives us long-term funding. I think it's a good direction. We don't make that policy. You guys make that policy. What we are pleased about, though, is that it is now permanent, which it wasn't before, so that allows us to plan for the long term.

The biggest concern of cities, from our point of view, is the need for long-term stable funding. That's always been the problem with the way cities are treated, no matter who is in government.

I don't want to pick political sides. That's not our job. We're supposed to be non-political at the municipal level. We just want to see long-term stable funding, which we can then allocate in a way that allows us to build the cities, which really are the engines of this country.

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

Let me ask you a non-political technical question.

[Voices]

Oh, oh!

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

Do you agree that if the FCM had had its way and if they had done what we in the Liberal Party had suggested and funded things through the gas tax mechanism, rather than one-third, one-third, and one-third, a whole lot more shovels would have been in the ground a long time ago and many more people would be employed as of this moment?

[Stephen Mandel]

To answer that question, FCM has always asked for the gas tax to be installed. It was installed and it has been made permanent. It would be a source of long-term funding, but no one has committed to increasing the amount of gas tax, that I know of, to go from a fuel tax to a gas tax. Whichever one it is, fuel or gas, it's the exact opposite of what we have in the province. We end up getting $100 million a year versus getting about 40%.

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

What I mean is a type of gas tax funding mechanism rather than the one-third, one-third, and one-third mechanism that the government has used. Would that not have resulted in faster job saving and creation?

[Stephen Mandel]

Absolutely. I would concur.

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

Thank you.

My last point is to Mr. Bulkowski.

I don't agree with everything you've said. I don't think for a moment that we're at any risk of German-style hyperinflation, but I do agree with you that we have to be concerned about deficits. I would remind you that it was in the mid-nineties that the Liberals were elected and inherited a $42 billion deficit from the Conservatives but balanced the books.

We went from 66% of GDP as the federal net debt in the mid-nineties to 30%, which was the best in the G7 by 2005 and--

[The Chair, Conservative, James Rajotte]

Your question, Mr. McCallum?

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

--then the Conservatives came in and the deficits ballooned, and we might have to eliminate it again. How do you react to that?

[The Chair, Conservative, James Rajotte]

Very briefly, sir.

[Dr. Peter Bulkowski]

Yes. First off, it wasn't the Liberals that drove to balanced financing. It was the Reform Party, sir. That's a key point.

I agree that we're not at the point of German hyperinflation yet.

As for the spending that is occurring, I agree that the different parties, Green, Liberal, Conservative, the Bloc, and the NDP, all have different ways of how they would be doing the spending, but every one of those parties wants more spending, not less. The deficits that we're going to run in the next year or year and a half are going to wipe out the penny-by-penny gains that we reduced the deficit by in the last 10 years--

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

Actually, the debt to GDP went from 66% to 30%.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McCallum. Unfortunately, you're over your time.

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

It's going to go up to 34%. That's not wiping it out.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McCallum, for those non-partisan questions.