Finance Committee on Oct. 20th, 2009

[The Chair, Conservative, James Rajotte]

I call the 52nd meeting of the Standing Committee on Finance to order. We have with us here today seven organizations for the first panel and a number of organizations for the second panel.

The finance committee is completing its pre-budget consultations across Canada. This is our eighth out of nine cities across the country. We finish in Toronto tomorrow or the next day.

We're very pleased to be here in Winnipeg today. This morning we have with us the Winnipeg Airports Authority Inc., the Association of Manitoba Municipalities, the University of Manitoba, the Rural Municipality of Alexander, the Social Planning Council of Winnipeg, the Canadian Nurses Association, and Genome Prairie.

I thank you all for being with us here this morning.

Each panel will be an hour and a half in length. We'll have each organization present their brief for up to five minutes in an opening statement in the order that I outlined. Then we'll proceed to questions from the members of the committee.

We'll start with the Winnipeg Airports Authority, please.

[Catherine Kloepfer, Senior Vice-President of Corporate Services and Chief Financial Officer, Winnipeg Airports Authority Inc.]

Good morning. Thank you for allowing us the opportunity this morning to elaborate on the position put forward in our submission.

The Winnipeg Airports Authority put forward two requests: the creation of foreign trade zones in Canada and the elimination or reduction in airport rents.

With respect to the first point, we would like to acknowledge the recent advancements of this cause by Minister Day on October 8, when he announced here in Winnipeg the creation of the task force to study the implementation of foreign trade zone-type programs. We would like to recommend that this task force, the federal bureaucrats, be supplemented with industry expertise with respect to value-added activities, such as adding a representative from the Canadian Manufacturers and Exporters Association. What Canada really needs is to be competitive with the other G20 countries with the implementation of true foreign trade zones.

With respect to the second point, the payment of rent by Canadian airports to the federal government directly impedes airports' ability to compete, not only globally but in particular with the United States. In Canada, airports are paying rent to an absentee landlord while the airports are required to raise funds in the capital markets to fund infrastructure improvements. In contrast, the United States federal government contributes to infrastructure improvements while at the same time the airports are allowed to raise funds through tax advantaged municipal bonds. This has led to higher costs in Canada for airlines, which in turn results in higher air fares for travellers. This has caused a tremendous leakage of passengers to airports located just across the border from Canada. In addition, the revenue-based calculation of this rent is based on a formula that does not follow Canadian generally accepted accounting principles, and as such increases the burden to the host community.

For background information, you've all received copies of the press release from Minister Day regarding the task force, as well as article 4 of the Canadian airport leases that shows the rent calculation and the associated definitions.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We will now go to the Association of Manitoba Municipalities please.

[Doug Dobrowolski, President, Association of Manitoba Municipalities]

Good morning, and thank you for letting us present today. We have a written submission, and there are three points I would like to highlight.

The first is on the innovation strategy to meet our infrastructure challenges. As we know, there is a $123 billion infrastructure deficit across Canada, and that's just to fix the existing infrastructure; it's not for new construction. In Manitoba it's $11 billion, which equates to about $10,000 per Manitoban.

We need to look at programs like the GST rebate, of which municipalities get 100%. We need to look at programs like the gas tax agreement, which is a really good program. It doesn't matter what size the municipality is; you have access to funds.

Building Canada is a great program, but unfortunately it's ad hoc and short term. It's not good for long-term planning and sustainable funding. We need these programs to help municipalities with long-term planning and funding and to give them some predictability when they're doing their budgets.

The prairie grain roads program was excellent and was taken up right across Canada. It was well-received, well-used, and a good use of money.

The one thing about this strategy is that it needs to involve the municipalities. Our association was not allowed to provide any input to the Building Canada fund. For other infrastructure programs we did have a seat at the table and were able to input and bring a municipal lens to the table to show what municipalities need. We were very disappointed this time around that municipalities were not allowed at the table and decisions were made at the federal and provincial levels.

The second point I'd like to make is to stop the offloading of responsibilities to municipalities. Right now municipalities are doing non-traditional municipal work like policing, health care, and housing—things that municipalities never had responsibility for. These things are now on our table, and that's preventing municipalities from doing what they normally do, like streets and all those other things. We need to stop this downloading.

There are always regulations and things coming down, but new money never comes with them. You expect municipalities to comply with these regulations, yet no money comes. The pile keeps getting higher and higher. Municipalities are now at the point where they're willing to turn water treatment plants back to the province because they can no longer pay for these requirements.

The third thing I would like to mention is that a rural champion is needed to stimulate the rural economy of Manitoba. We need someone at the cabinet table who has rural experience. We need someone who understands rural Canada, small-town Canada, small-town Manitoba. We need that person there for their input so that when these policies are being made in Ottawa they are looked at with a rural and municipal lens.

The rural champion should understand rural Canada. I think that's very important, because with all of these programs that come down, it seems there's no thought given to rural Canada. When these programs come down it's very hard for small municipalities, towns, and villages to figure them out, because the people who design these programs just don't understand rural life. A lot of these programs are very cumbersome. We need a streamlined process. So we feel that if we had a rural champion at the cabinet table it would make things a lot better.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the university, please.

[Dr. David Barnard, President and Vice-Chancellor, University of Manitoba]

Thank you very much.

On behalf of the university, I'd first like to thank you for the contributions the federal government has been making to a number of programs that have supported universities in recent years--the knowledge infrastructure program, the Vanier Canada scholarships, and the Canada excellence research chairs program, which I think is a very creative stimulus for research in this country. Universities, especially research-intensive universities, contribute to social, economic, and cultural growth in the country through their threefold mission of teaching, research, and public service, and we appreciate the support for those various things.

Our written submission focuses on three issues, and I'll touch on each of them briefly.

First is the need for continuing investment in the direct and indirect costs of research. The university system has consistently identified direct costs, indirect costs, infrastructure, and people as the components the federal government can help with and has indeed been helping with. But in the current circumstances, we think the balance needs to shift a little bit towards the direct and indirect costs of university-sponsored research, especially now in Canada, and especially with the stimulus that we expect to see in the United States as a result of a number of things that President Obama has said, and our expectations that this will increase the competition for seeking first-class researchers and trying to keep them in Canada. So we would like to see an increase in support to the three major research-granting councils and increased funding for the indirect costs of research.

The second issue we raised in our written brief was increased focus on aboriginal education. It's true in this province and in other parts of Canada that there need to be more aboriginal students in universities to be representative of their distribution in the overall population, and that more of those who come to universities need help to succeed in achieving the educational aspirations they have. The dropout rates in universities for aboriginal students are high because of the cultural adjustments that are necessary. Finally, those aboriginal students who do come confine their interest generally to a relatively small number of our programs. We have very few, for example, aboriginal people in math and science, and relatively more in nursing, education, and social work.

Our intention, as an institution working in collaboration with others in the city, is to try to address each of those three issues. I know that other universities across the country are doing so as well. We ask that you increase support for aboriginal education by investing in university programs and services that support aboriginal students.

The third thing we mentioned is specific to the University of Manitoba, and that's the establishment of the Canadian centre for excellence for grain crops. One of the things we've identified in our own strategic planning framework is focusing work on safe, secure, sustainable food and bioproducts, which matters locally for the economy here, of course, and matters nationally and globally in terms of supply and safety of food. This is a project that's been discussed at length with various government officials and departments, and we think it is an important component of the research infrastructure for the country. It will provide the opportunity for the academic, government, and industrial folks to work together, and we would ask you to include funding for the Canadian centre for grain crops in next year's budget.

Thank you for seeking our input.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the Social Planning Council of Winnipeg.

[Donald Benham, Senior Associate, Social Planning Council of Winnipeg]

Thank you very much, Mr. Chairperson, and welcome to all members of the committee.

We have submitted our written brief in advance, as the other organizations have.

Our three principal recommendations are, first, that immigration fees should be forgiven for recent newcomers to Canada. By “recent” we mean within the last five years. We are very fortunate in Winnipeg to have a large number of newcomers coming into the province. This is a result of both federal policies and much reinforced provincial policies. Many immigrants in the economic class and many refugees are coming to Winnipeg. But unlike in the past, when the experience was generally a positive one, when immigrants came in and began to earn income, we are now finding many, many recent immigrants—and thus their children—ending up in poverty. We are just about to release a report at the Social Planning Council of Winnipeg detailing this with Statistics Canada figures, mostly from the census.

In our brief we say that 31.9% of children in families in Manitoba with at least one parent as a recent immigrant—that is, within the last five years—fall below the after-tax low-income cut-off. The low-income cut-off, of course, is a statistical construct from StatsCan. It is not perfect, but as a measure of poverty it's not bad—and there is also a before-tax low-income cut-off. Now, if you look at that figure for Canada, it's actually even worse. Again, quoting from Statistics Canada, the Canadian figure shows that 35.9% of children of recent immigrants live in poverty, if one uses the after-tax low-income cut-off. Using the before-tax low-income cut-off, it's almost another 10%, at 44.2%.

These figures are not included in the brief, but because they give the national picture, I want to make sure we get them on the record. So the figures for Canada as a whole are worse than the figures for Manitoba, and these figures show that essentially one in three children of recent immigrants live in poverty.

Removing the newcomer fee is not a panacea. It's not a silver bullet or the end of all problems for newcomers to Canada, but it would remove this head tax, if you will. That's essentially what it is—we've reintroduced a head tax. It was cut in half fairly recently, but let's cut it to zero. Is it a significant source of income at $121 million? Of course, every penny counts when you're putting together the budget, but we think it's a measure that could easily be foregone. We think most Canadians aren't even aware there is this head tax. Most Canadians who are already here aren't paying it off. So we would say that a good investment in the future of these families, so they can do well in Canada, would be to remove this additional burden from them.

Our second recommendation is on employment insurance. I realize it's a bit controversial around the table as to what should happen to the employment insurance program, but we believe and know that the regional variations in this program were undertaken in good faith to recognize that some Canadians needed more help than others. Obviously, we believe that. We believe that given our diversity, both regionally and by income levels, we sometimes need to do that, but we don't think this particularly is the program where it should be done. So we would like to see a national 360-hour qualifying period of work for employment insurance. The honourable members are certainly aware of the number of Canadians who pay into the system, which is then not there for them when they want it. We say in our brief that they amount to 150,000 Canadians.

Am I out of time?

[The Chair, Conservative, James Rajotte]

You have one minute.

[Donald Benham]

One minute. Sorry, but as a part-time teacher I sometimes fill up three hours without even knowing it.

I've just checked the figures today and they remain about the same.

Next is the national child benefit supplement. Again, we believe this should be $5,200 per child per year. We believe that would really help a lot of families who are struggling. At the Social Planning Council, we put a lot of emphasis on child poverty and supporting families. Also, there are still some provinces that claw back the child benefit if the recipient is on welfare or social assistance. That practice has been ended in Manitoba, and we would like to see it end in all provinces. Obviously you could only recommend that to provincial governments, but we believe it should be changed.

Thank you very much, Mr. Chairperson.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the Canadian Nurses Association, please.

[Kaaren Neufeld, President, Canadian Nurses Association]

Good morning, and thank you so much.

My name is Kaaren Neufeld, and I am president of the Canadian Nurses Association. I represent registered nurses from across the country. Thank you for the opportunity to present nurses' solutions for maintaining the sustainability of Canada's health system, and that's helping to ensure that each one of us can contribute fully to a productive economy.

Our analysis of the health care system reveals that Canada urgently needs to invest in three priorities: a national pharmacare strategy, advancing health through nursing science and innovation, and a pan-Canadian health human resources institute.

Let me address our first priority, which is a national pharmacare strategy. For many Canadians, this year has been indeed a very difficult time. Thousands of Canadians have lost their jobs, and in losing their jobs, they've lost their insured drug benefits. Also, according to a Canadian Health Coalition report, 42% of Canadian workers do not have a drug plan. That's almost half of Canadian workers, who are just one illness away from a very serious financial hardship. The Canadian Cancer Society reports that the price tag of $65,000 is the average cost of treatment with newer cancer drugs, and we all know that exceeds the annual income of millions and millions of Canadian households.

CNA believes prescription treatment for serious illness must not cripple Canadians financially. What good is a universally accessible medical diagnosis if you cannot afford the treatment? Some Canadians who need expensive drug therapy are not only fighting for their lives, but they are fighting to put food on their table and to keep their home. Canada's first ministers agreed in 2004 that all Canadians must have access to catastrophic drug coverage. They also agreed that Canadians should have safe, effective, and accessible drug coverage. That was five years ago. Therefore, CNA recommends that the federal government fulfill their commitment to implement a national pharmaceutical strategy.

Our second priority is advancing health through nursing science and innovation. The government knows the importance of science and innovation, as it has identified this as a priority within Mobilizing Science and Technology to Canada's Advantage. Now more than ever, we find innovative, effective, fiscally responsible ways of improving the health of Canadians in the health care system that serves us all.

Registered nurses are the largest group of health care providers in this country. We are more than a quarter million strong. We have the strongest potential to bring about health system reform. By leading and applying research innovations, registered nurses contribute to improvement and innovations in health service delivery, better quality care, and reduced health care costs. What I should actually say is, we were making unprecedented contributions. The funding that made this research possible has ended, and despite our best efforts to keep up the momentum, our requests for new research dollars have gone unanswered. The nursing research fund expired in March of 2009, and renewal of this funding is urgently needed so that we can continue to innovate. I invite you to read our brief, which outlines concrete examples of where nursing research has led to significant cost savings, reduced wait times, and fewer adverse patient outcomes that lead to expensive hospital stays. Therefore, CNA recommends that the federal government invest $55 million over 10 years in nursing research.

Finally, our third priority that I would like to raise is the need for a pan-Canadian health human resources institute. Canada will be short almost 60,000 full-time equivalent registered nurses by 2022. All of us will be 13 years older by then, and more likely in need of the care that nurses provide, and the nurses will not be there to provide that care because we have not planned ahead. Our aging population will have growing health care needs. We need to build our capacity to respond to those basic needs, not to mention the stresses that sudden crises like flu pandemics cause to our system. Governments acknowledged this impending crisis in the 2004 health accord, when they committed to accelerate work on health human resources action plans and initiatives to ensure that we have enough of the appropriate mix of health professionals to meet our needs. The time has come for concerted action on this issue. CNA recommends that the federal government invest $10 million in an institute to promote and facilitate pan-Canadian health human resources planning.

So to recap, Canadian nurses are pressing for three priorities. We are calling for a national pharmacare strategy, advancing health through nursing science and innovation, and a pan-Canadian health human resources institute. The return on these investments can be calculated not only in terms of dollars and cents, but much more importantly on leveraging the effects of a healthy nation for our future prosperity.

Thank you for your attention.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will finish with Genome Prairie.

Dr. Naimark, please.

[Dr. Arnold Naimark, Chairman of the Board, University of Manitoba, Faculty of Medicine, Director of the Centre for the Advancement of Medicine, Genome Prairie]

Thank you very much.

I'm here representing Genome Prairie, which coordinates and oversees research and development projects that are led by researchers and developers based here in Manitoba and in Saskatchewan, but also includes collaborators throughout Canada and in several other countries.

I want to touch on five main topics that are covered in our brief submission.

The first is that revolutionary scientific and technological advances have given us the ability to determine the genetic makeup, what we call the genome, of plants and animals and to understand how that leads to the physical and biochemical characteristics of individual plants and animals. These discoveries have already led to huge social and economic benefits in human and animal health, in agriculture, forestry, fisheries, energy, and the environment. The pace of development in this area, and our practical application of results, is accelerating very rapidly, and competition to reap the benefits of these advances is intensifying. The first point is that if we want to share fully in those benefits, we need to do more, we need to do better, and we need to do them soon.

The second point is this. Until a decade ago, Canada was largely a bystander in the world of genomic sciences. With the advent of genome centres such as Genome Prairie and a variety of other initiatives, Canada is now a recognized player in genomics research, but we're not realizing our full potential in applying discovery to the development of products and services of social and economic value. We see the goal for policy-makers as twofold. We need to keep the genomics research engine adequately fueled, and we need to effectively link the output of that engine to industrial innovation and thereby to economic growth and social benefit. We have to pursue both of those goals together or we will achieve neither.

The strategies for successfully achieving that dual objective are pretty clear to us. They are, first of all, the need to create or reinforce incentives and also to remove or ameliorate barriers.

On the incentive front--it's my third point--we are fortunate in Canada. We do have some experience and policy tools already in place to build on. We're good at building networks and coordinating agencies that bring essential elements together to foster synergy among governments, academia, and industry. However, these networks and agencies need significantly more funding capacity to initiate and sustain internationally competitive, large-scale projects in genomics-based research, in development, and in commercialization, and to attract correspondingly enhanced investment and commitment by industry.

Fourth, on the element of creating incentives, certain not-for-profit organizations support activities focused directly on the critical challenge of taking discoveries out of the laboratory through the early stages of the development to commercialization. However, these organizations are disadvantaged by being excluded from government initiatives designed to foster research and development, such as Canada's program of scientific research and experimental development credits, so-called SR and ED credits. If refundable SR and ED credits were made available to these not-for-profit organizations, the bench-to-shelf phase—going from the bench to a prototype and to a product that can be marketed—will be significantly strengthened.

Fifth, when it comes to removing or ameliorating barriers, the list of challenges is long. It includes regulatory complexity, market barriers, and scarcity of venture capital. An example drawn from agriculture is the unwillingness of some producers and investors to pursue the potential to enhance certain crop varieties because of the high cost they face in navigating the complex and time-consuming regulatory process. We believe there are clear opportunities to simplify or streamline the regulatory process without in any way compromising quality or safety, so it becomes cost effective for producers and investors to develop new marketable products in these areas.

Let me conclude by saying that we at Genome Prairie are passionate about the mission of fostering the use of genomic tools to address regional, national, and global challenges related to energy shortage, climate change, environmental sustainability, and of course to build and sustain a competitive advantage for Canada in genomics-based industrial innovation in selected fields of agriculture, health, energy, and the environment.

To succeed, we and other similar organizations need responsive, evidence-based public policy backed by increased strategic government investment and the use of the convening power of government to force strong competitive intersectoral partnerships, that is, between academia, government, and industry.

Thank you for your attention.

[The Chair, Conservative, James Rajotte]

Thank you very much.

[Dr. Arnold Naimark]

By the way, I know you're starved for reading material, so we have the annual report of Genome Prairie. We've put it all in colour for you.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you very much for all your presentations.

We will now go to questions from members. We'll start with Mr. McKay, for seven minutes.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair.

Thank you, witnesses.

There are so many good presentations and so little time to talk to people. I'm going to focus on three.

The first question has to do with the presentation from the airport authority and your recommendation for a foreign trade zone. The issue, as I've always understood it, has been that you set up the zone and within that zone things get processed and moved around free of duty and import--things of that nature. The problem is for those who are outside of the zone. It creates its own level of distortions, because if you're processing something outside of the zone, you attract some form of tax, and if you're processing inside the zone, you don't. How are you going to ameliorate that almost inevitable inequity?

[Catherine Kloepfer]

I'm not sure that as the airport authority we can help with that particular issue, but I think from the experience seen around the world--I think there are 500 foreign trade zones around the world--it attracts a lot more investment than is lost. Enterprises that are already in those areas benefit as well from increased activities, and the community as a whole benefits. I think it depends on the specific industry that is located in or out of the zone.

I think this is something the task force needs to delve into a little deeper, because we haven't really had this type of zone in Canada yet. The committee has quite a broad range of different departmental input, from Finance to Customs, etc., so I think they can probably help to address that. That is why we were suggesting that you probably need someone from industry as part of the committee, because right now it's all different government departments.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes, I think you're right about that, but it also needs input from those who will not qualify to be inside the zone.

I thank you for that answer, but it does generate some concerns that I hope will be addressed.

The second question I have is to Mr. Benham, and that has to do with employment insurance reform. Obviously your second recommendation was part of the Liberal Party's presentation over the course of the summer. The government spent literally hundreds of thousands of dollars on a misinformation campaign, including saying that it was a $4 billion program rather than a $1 billion program and that these various zones were perfectly fine.

In Ottawa, if you are a waiter in the Parliamentary Restaurant and you're laid off during the summer, which most of them are, and you happen to live in Ottawa, you don't qualify for EI, but if you live in Gatineau, you do qualify. This is exactly the same person, exactly the same job. There's this whole huge distortion.

I'd be interested in your comments about the way in which the system currently works, particularly in Manitoba, where I'm assuming there is an overlay of a variety of zones that gives ridiculous distortions to various employee groups.

[Donald Benham]

Yes. Thank you very much for the question.

Of course, the example you're using of Ottawa and Gatineau, where you're on a provincial boundary and it's very easy to cross, doesn't exist for most people in Winnipeg. Even in rural Manitoba, very few people would cross into other provinces.

My principal concern here is that.... As I say, I think everybody can understand why Quebec got a different level than other provinces, and perhaps it made sense in terms of a chronic level of unemployment over a period of time. So I don't think there should be any attacks on anybody for having that system, but I think the time for that has ended, and it is time for a uniform employment insurance qualification across the country.

In my previous role as a journalist here in Winnipeg, I had an open-line program that went right across Manitoba, so we were talking to Manitobans from all parts of the province at that point. A woman came forward who had appealed her unemployment insurance case, her disqualification from employment insurance. The issue in that case was that these rules are unfair to anybody who is in and out of the economy, and that particularly affects women.

I think that's another issue I would put before members of the committee, that having these various rates across the country and setting them fairly high generally makes it difficult for people who are in and out of the economy. That would be some of the people we represent at the Social Planning Council--women, immigrants and newcomers, and people with lower levels of education--who have less of an attachment to the workforce.

Drawing on my experience, I'm also a public education coordinator at Winnipeg Harvest, which is a food bank in town that supplies 300 local food banks around Winnipeg and across Manitoba, and we are definitely noticing a real problem with people who have exhausted their employment insurance benefits.

[John McKay, Liberal, Scarborough—Guildwood, ON]

The government has ridiculed your idea to say that effectively all that's required will be nine weeks' worth of work and then you're on EI and it's a happy little thing.

Do you think that is going to happen with your proposal?

[Donald Benham]

Do I think the government will implement this proposal?

[John McKay, Liberal, Scarborough—Guildwood, ON]

No, I know they won't implement it--that's a given--but they've ridiculed your proposal from one end of the country to the other by saying that 360 hours, nine weeks, big deal, you're in; all you have to do is get nine weeks' worth of work and suddenly you're off to EI heaven.

[Donald Benham]

I think certainly for the people we see at Winnipeg Harvest, the people we represent at the Social Planning Council, who have more of a marginal attachment to the workforce, it is important that they be given every possible break, and I think that's what Canadians would like to see.

My concern is the people who pay into the system and then don't have it there for them when they need it, and there are a lot of people who come into that situation.