Finance Committee on Oct. 5th, 2009

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

In terms of funding, it's not clear. You're recommending that additional moneys be given. You say to “invest $2 million per year”. Is that an additional $2 million per year?

[Fred Farrell]

That $2 million is additional, because the program for digitization of archival materials for archives has been cancelled by the Department of Canadian Heritage. They've seen fit to go in new directions. Although those new directions will all depend on access to archival material, they don't see fit to provide a funding stream for archives to help them make that material accessible.

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

If your organizations take a hit of $2 million, how can they survive?

[Fred Farrell]

We'll survive the same the way as oftentimes in the past we've survived. We still bring in materials, although many institutions will slow down their rate of acquisition. We put those materials on the shelf and they sit there inaccessible for the next two or three decades, waiting for a time when the resources of the institution allow it to arrange and describe them and make them accessible.

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

Thank you.

I have a quick question for the Child Care Advocacy Association. Would your total amount for a pan-Canadian child care program be $5.9 billion?

[Jody Dallaire]

We realize that it's not something that is built overnight. We're calling for $1.5 billion immediately and asking that it be ramped up over the years so that by 2014 it would be at $6 billion per year.

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

That would be in line with what the Liberal Party had proposed, with the original program costing about $4 billion.

[Jody Dallaire]

It would be in line with that, but the challenge with what the Liberals had committed to was that there were insufficient accountability measures. We want to make sure those dollars are accountable so that when we arrive at 2014 we are actually seeing that fees have come down, that more spaces have been created, and that they are quality spaces.

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

Our understanding is that if we invest in this, whether it be $4 billion or $6 billion, we'd probably get a return of 125% to 150% on that money. You said six times the return. Is that possible?

[Jody Dallaire]

What Robert Fairholm has found is that for every dollar invested in child care programs, GDP is increased by $2.30. I'll leave the copy here for your reference.

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

Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

We'll go to Ms. Block, please.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

Thank you to each of you for being here today. I've really appreciated your presentations.

My questions this morning will be for the Canadian Council of Archives and then for FCM, if I get through them.

As you know, governments are continually called upon to do more and to add more programs. In fact, since 2006, our government has been investing more in arts and culture than any government in Canadian history. And not only are we spending more, but we are spending more efficiently, so I was interested in your third recommendation in terms of being exempt from the strategic program review. In terms of accountability, it is important to ensure that programs currently being funded continue to be relative and managed effectively.

Based on the submission you gave us today, you advised us that your organization is instrumental to the success of many other federal programs and initiatives, so it would seem to me that requiring a strategic program review process would be especially necessary for your organization to ensure that resources and efforts are being spent effectively.

I wonder if you could comment on that.

[Fred Farrell]

Yes, archives are at the heart of accountability. We are extremely positive on that. The difficulty is that when these sorts of strategic reviews are done, archives and similar groups are the entities from which the money is taken to give to other groups.

All of these things that we've spoken of here this morning are very important. But I believe it was $80 million for police recruitment, while the federal government spends zero dollars in the recruitment of archivists, and often across this country police departments turn to archives to help them solve their information problems.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

You also stated that budget cuts of the 1990s were devastating to the archives world. Would you like to explain that further?

[Fred Farrell]

The budget cuts of the 1990s reduced the amount of money available for archives to hire students and do other project work to make records accessible, so that present-day records that would have been accessible are not accessible. Also, as we go into the future, records that are critical for issues that are important to Canadians will not be accessible.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

Now, for the FCM, under recommendation 1, protecting “long-term infrastructure investments”, you state that the gas tax fund is “the only permanent and predictable funding program available to municipalities”.

Can you clarify this statement for me? As a former mayor, I believe municipalities have other revenues in order to do long-term planning and certainly help fund infrastructure projects. Could you explain that statement to me?

[Basil Stewart]

Thank you.

As I say, we're very pleased at the Federation of Canadian Municipalities, over this last period of time, to have this gas tax fund in place. Municipalities really depend on that. It can be budgeted for every year in regard to the number of dollars. One suggestion we made today is that it be indexed.

There are other programs that have been improved over the years. As I mentioned earlier, a lot of municipalities got involved in a number of the programs. The infrastructure programs have changed over the years, with different names on them, if you will, but this is one that the Federation of Canadian Municipalities really wants to keep in place. As well, for other programs, we would like to see a national transportation policy.

As our CEO mentioned, our main issue right now is to maintain the programs we have. We don't want to get back into the downloading of the nineties. We paid the price for that, as was mentioned, with our bridges, our roads, and our streets. We want to continue working with the government on the environment, rural Canada, and the north. Our economy needs strong communities and cities in order to survive and be strong.

A few months ago, we released a report on rural Canada. I think most of you MPs saw that and read it and saw how important it is for rural Canada to be strong as well.

Anyway, we're pleased with the gas tax fund. It is permanent. As for any of the other programs that we talked about, hopefully they'll get etched in stone in some way, shape, or form so that they'll be permanent programs. I know that on the new regulations for the waste-water systems, we made our presentation, and we would strongly like to see a funding mechanism put in place whereby this can be cost-shared, because a lot of municipalities cannot afford it.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Block.

I want to thank all of you for coming in this morning and for your presentations and your responses to all of our questions.

Colleagues, we will just suspend for a minute or two and bring the next panel forward.

Thank you very much for being with us here this morning.

[The Chair, Conservative, James Rajotte]

Colleagues, if I could ask you to find your seats, please, we do have very limited time and we have eight organizations presenting to us in the second panel.

We have the Prince Edward Island Road Builders and Heavy Construction Association; Association des Radios communautaires de l'Atlantique; the Atlantic Provinces Community College Consortium, the Native Council of Prince Edward Island; the Atlantic Policy Congress of First Nation Chiefs Secretariat; the Halifax Regional Municipality`Every Woman's Centre; and the MacKillop Centre for Social Justice.

If we could have each organization present up to five minutes, then we'll go to questions from members of all political parties.

Mr. Murphy, would you begin, please?

[Joseph Murphy, Manager, Prince Edward Island Road Builders and Heavy Construction Association]

Thank you.

My name is Joe Murphy. I'm manager of the P.E.I. Road Builders and Heavy Construction Association. With me is Rick Kennedy. He is president of our major member construction companies.

Thanks for the opportunity to present our brief, and welcome to P.E.I.

The Prince Edward Island Road Builders and Heavy Construction Association is in its 48th year of operation. The P.E.I. Road Builders and Heavy Construction Association's members account for a large amount of the federal, provincial, municipal, and private expenditure in the paving, grading, heavy construction, supply and service, and custom work that is performed on Prince Edward Island. Our members account for a large percentage of employers who employ both full-time and seasonal workers.

The current method of taxation on Prince Edward Island, the 5% refundable goods and services tax and the 10% non-refundable provincial sales tax, puts Island business at a distinct disadvantage when competing with businesses in provinces that have the 13% refundable harmonized sales tax in place. When federal Finance Minister Flaherty brought down this budget, he made special reference to the five provinces, including Prince Edward Island, that do not have a harmonized sales tax, and he said:

Provincial tax systems are outdated and inefficient and end up making business less competitive, reducing employment and lowering the standard of living for Canadians.

Our association agrees with Minister Flaherty's comments. However, the implementation of a harmonized sales tax system would mean a major loss of revenue for the Government of Prince Edward Island. Prince Edward Island Road Builders and Heavy Construction Association members emphatically support the recommendation that this committee advocate that the compensation offered to Prince Edward Island is commensurate to satisfy their revenue shortfall concerns and tax exemption considerations.

Background.

Our association is a non-profit association that represents approximately 100 companies carrying on business in P.E.I. Our industry is a major contributor to the economy of Prince Edward Island. Our industry maintains a large inventory of very expensive equipment. When road building companies purchase equipment at costs between $100,000 and $500,000 per unit, with only a 5% GST rebate, they are at a major disadvantage when out-of-province companies compete for Island work. Our sister Atlantic provinces implemented the HST system on April 1, 1997, which currently provides for a rebate of 13%, whereas businesses in P.E.I. can only claim a rebate of 5% of the GST component.

P.E.I. currently has a provincial retail sales tax with a 10% rate that applies to the GST-included price of the product or service. This effectively makes the rate 10.5%. This has been a source of irritation amongst the public and business. Harmonization would eliminate this practice.

Our concerns.

For businesses, the proposal to harmonize the provincial sales tax with the GST would be a major achievement. It would allow the recovery of sales taxes through input tax credits. Island businesses would be able to compete on a tax competitive basis with our maritime counterparts on projects. The current sales tax regime results in P.E.I. sales tax being hidden in the sales price of our products and services. The HST system would reduce the double tax reporting for business.

[The Chair, Conservative, James Rajotte]

You have about one minute, Mr. Murphy.

[Joseph Murphy]

Okay. I'll skip to consumers' concerns.

For consumers, there is major concern that items like home heating fuel, electricity, and most clothing and footwear, which are currently exempt from the PST, would become taxable under the HST. The provincial treasurer recently indicated that he would not harmonize unless consumers were protected from tax increases on those items. The committee should consider options that would be used to alleviate the issue.

In terms of the impact on provincial revenue, in 1996 the Atlantic provinces were in the process of harmonizing their provincial sales taxes. The amount of compensation that was being offered to P.E.I. by the federal government was approximately $60 million. The concern at that time was that it was insufficient to offset the shortfall to be experienced over the long run by the province.

It's important to note that at that time, provincial revenue from the PST was approximately $130 million. By comparison, the provincial sales tax revenue was budgeted at just over $200 million for this year, a 54% increase.

We urge the committee to strongly recommend that the compensation offered to P.E.I. is commensurate to satisfy their revenue shortfall concerns and current tax exemption considerations.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll go to Monsieur Théberge, please.

[Martin Théberge, President, Association des radios communautaires de l'Atlantique]

Thank you. Good day to the members of the committee.

My name is Martin Théberge. I am the Chair of the Board of Directors of Radio-Halifax-Métro, the Chair of the Board of Directors of the Association des radios communautaires de l'Atlantique and second Vice-Chair of ARCC. I've listed my titles, not to give you the impression that I am too busy, but rather to let you know that I do have some knowledge of this field.

Today, I will be giving you a summary of the brief that I have tabled. While my comments have to do mainly with Francophone community radio stations in Atlantic Canada, you will see that our recommendations affect all community radio stations across Canada.

The Association des radios communautaires de l'Atlantique, or ARCA, is the regional arm in Atlantic Canada of the Alliance of community radio stations of Canada. ARCA represents six different community radio stations in Nova Scotia, Newfoundland and Labrador and Prince Edward Island that broadcast to a total of twelve Francophone and Acadian communities. Francophone community radio stations outside of New Brunswick currently serve over 30,000 Francophones and a growing number of Francophiles and Anglophones. I say “currently“ because of these six stations serving twelve communities, some are still in the development stage and have not yet started broadcasting.

Not only do community radio stations provide information and entertainment, they also support the cultural development of the communities, artists and the arts and cultural agencies in the communities they serve. These stations also make a real contribution to job creation by giving many volunteers and students a place to learn about broadcast technologies and the industry.

As defined by the Canadian Radio-television and Telecommunications Commission, a community radio station is “owned and controlled by a not-for-profit organization. Membership, management and operation are provided by members of the community at large“. While many community members volunteer for community radio stations in the Atlantic region, the training, supervision and management of these human resources are the responsibility of station managers, who already have heavy workloads. Add to this administrative responsibilities, program animation, broadcasting, programming and sales, and so on and so forth.

Our community radio stations are active in all fields and in all sectors of activity in their communities. They have to make a tremendous effort to carry out their mandate and the role assigned to them by their respective communities, namely that of being an open and inclusive broadcast undertaking.

Unless a major investment is made in the Community Radio Fund of Canada or in community radio stations in Canada, we fear that the financial position of Francophone communities in the Atlantic region and of their community radio stations will deteriorate. This problem is due primarily to growing fatigue among employees and volunteers who work tirelessly to develop these organizations. We believe that in order to ensure the long-term survival of community radio stations in the Atlantic region and support their role and responsibilities, each of these stations needs minimum funding of $30,000 annually. This would allow them to maintain a permanent position in order to properly manage community radio stations and ensure that they are viable operations.

There is currently no government program designed to assist community radio stations across Canada. We recommend that the Government of Canada provide funding in the amount of $30,000 annually to each radio station through the Community Radio Fund of Canada to support the development of community radio stations across Canada.

Thank you.