Finance Committee on Oct. 27th, 2010

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is the 41st meeting of the Standing Committee on Finance, and we are continuing our pre-budget consultations for 2010.

I want to welcome all of our guests this afternoon.

We have five organizations on the first panel. We have the Canadian Medical Association, Athabasca University, and Special Olympics Canada.

Then we'll hear from the representatives of the Confédération des syndicats nationaux.

We also have the Canadian Institute of Actuaries.

Witnesses will have five minutes to make their presentations.

Afterwards we will have questions from members.

I will indicate to you when you have one minute left in your opening presentation.

We'll start with the Canadian Medical Association.

[Jeffrey Turnbull, President, Canadian Medical Association]

Thank you, Mr. Chairman, for this opportunity to appear before you today.

The CMA brief contains seven recommendations to address pressing needs in the health care system.

Before I get to those, I'd like to highlight why, from my perspective, our health care system is in need of the federal government's attention.

Yesterday, at the Ottawa Hospital, where I am chief of staff, our occupancy was 100%. Thirty patients who came to the emergency department were admitted to the hospital, but we had beds for only four. There are ten people still waiting on gurneys in the emergency room. Six patients were admitted to wards, and they are receiving care in hallways. Three surgeries were cancelled, bringing our total cancellations this year to a staggering 480. While this was happening we had 158 patients waiting for a bed in a long-term care facility, where they would get better care at a fraction of the price.

That was yesterday. Today is even worse.

Equally, a few blocks from here, and in communities across this country, the health status of our poorest and most vulnerable populations is comparable to countries that have a fraction of our GDP, despite very significant investments in health.

This is just my perspective. Health care providers of all types experience the failings of our system on a daily basis. We as a country can do better, and Canadians deserve better value for their money. Canada's physicians are calling for transformative change to build a health care system based on the principles of accessibility, high quality, cost effectiveness, accountability, and sustainability.

Through new efficiencies, better integration, and sound stewardship, governments can reposition health care as an economic driver, an agent for productivity, and a competitive advantage for Canada in today's global marketplace. The health accord expires in March 2014, and we strongly urge the federal government to begin discussions now with the provinces and territories on how to transform our health care system so that it meets our patients' needs and is sustainable into the future. Canadians themselves also need to be part of this conversation.

To help position the system for this transformative change, the CMA brief identifies a number of issues that the federal government should address in the short term.

First, our system needs investments in health human resources to retain and recruit more doctors and nurses. Although we welcomed measures in the last budget to increase the number of residency positions, we urge the government to fulfill the balance of its election promise by further investing in residencies, and to invest in programs to repatriate Canadian-trained physicians living abroad.

Second, we need to bolster our public health infrastructure for electronic health records so we can provide better and more efficient quality care that responds more effectively to pandemics. We recommend increased investment to improve data collection and analysis between local public health authorities and primary care specialists, for local health emergency preparedness, and for the creation of a pan-Canadian strategy for responding to potential health crises.

Third, issues related to our aging population also call for action. As continuing care moves from hospitals into the home, the community, or long-term care facilities, the financial burden shifts from governments to individuals.

We recommend that the federal government study options for pre-funding long-term care, including private insurance, tax-deferred and tax-prepaid savings approaches, and contributions-based savings insurance, to help Canadians prepare for their future home care and long-term care needs.

As much of the burden of continuing care for seniors also falls on informal, unpaid caregivers—

[The Chair, Conservative, James Rajotte]

You have one minute.

[Jeffrey Turnbull]

—the CMA recommends that pilot studies be undertaken to explore tax credits and/or direct compensation for informal caregivers for their work, and to expand programs for informal caregivers who provide guaranteed access to respite services in emergency situations.

Finally, the government should increase RRSP limits and explore opportunities to provide pension vehicles for self-employed Canadians.

Mr. Chair, a fuller set of recommendations is contained in our report, Health Care Transformation in Canada: Change that Works. Care that Lasts. These include universal access to prescription drugs, greater use of health information technology, and the immediate construction of long-term care facilities.

We urge the committee to consider both our short-term recommendations and our longer-term vision for transforming Canada's health care system.

Thank you.

[The Chair, Conservative, James Rajotte]

Very well, thank you very much.

Next we'll have Athabasca University, please.

[Pamela Walsh, Vice-President, Advancement, Athabasca University]

Thank you for the opportunity to speak here today.

Athabasca University, AU, is Canada's open and online public university, with over 38,000 students from all provinces and territories, and in over 100 countries around the world. Key to the strategy outlined in Athabasca University's written submission to the committee is a recognition of the increasing economic importance of intangible capital investment in the knowledge-based global economy.

Creation, transfer, and dissemination of knowledge is the cornerstone of this digital economy. Technology-enhanced learning can help all individuals engage as full participants.

While the digital divide has been commonly described as an access to bandwidth issue, the new digital divide is more about the gaps in the technical and other skills necessary to participate fully in this economy. At an intermediate level, digital literacy includes the knowledge, skills, and awareness needed to use ICTs to improve private and public sector efficiency and productivity. At an advanced digital literacy level, what's included is the knowledge, skills, and awareness needed to develop ICT infrastructure, products, and services, and the creation of content for digital media.

It should not be surprising to us that an online learning environment is ideally suited to facilitate digital literacy. Online, including blended learning courses and programs, provides learners with the same skill set required for employment today and for early adoption of emergent technologies and applications in the future. Why? Because an online learning environment uses the same tools that are needed to increase workplace efficiency, collaboration, innovation, and productivity.

It has been stated that half of the productivity gap between Canada and the U.S. can be attributed to Canada's lower digital literacy. A national lifelong learning strategy should be considered and must include a strong digital literacy component to lay the groundwork and to provide the knowledge and skills necessary for innovation in the knowledge economy.

Government, K to 12, post-secondary, employers, professional associations, and community groups need to work together to increase the number of Canadians with the skills necessary for participation. These skills include the ability to think, work, and learn online both traditional literacy competencies and the processing, collaboration, and media literacy tools that collectively prepare people for technology adoption and integration in their lives.

E-learning can also play an important role in supporting new Canadians, many of whom need language training, professional upgrading, or workplace training. By way of a very specific example, Athabasca University, in partnership with the Royal Architectural Institute of Canada, will be very soon launching Canada's first online architectural program. This program will meet the needs of foreign-trained architects as well as new entrants to the profession. The program will be supported by online courses, and virtual tools such as a virtual studio will be part of the ICT infrastructure capital needs for this program.

I would like to mention another important component of our written submission, and that is the need for an increased focus on aboriginal learning opportunities. There is great potential for e-learning and blended learning in addressing community education, health and well-being, and employment goals, as well as digital literacy goals. Initiatives, though, must be collaboratively planned and implemented and should include a culturally appropriate e-learning readiness program.

E-learning allows individuals to access learning opportunities from their communities. Properly implemented, it has great potential for activities such as incubation of aboriginal business, support of governance initiatives, and increasing public awareness of health issues across the country.

With the support of the Alberta government, AU is currently working with its partners in aboriginal communities and other rural and remote communities on the implementation of a learning community initiative that utilizes e-learning.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Pamela Walsh]

Finally, I would like to discuss an issue of importance to Canada's current and future access to the digital economy. The copyright bill, Bill C-32, is positive in many respects, as it moves many current fair use practices, supported by the courts, into legislation. However, if this bill is passed as proposed, these rights can be taken away through the lock provisions within the bill. We encourage all members to look at this bill carefully as it relates to the future of digital access.

To finish, our submission asks members to consider: one, the need for increased investment in support of the digital economy; two, the potential of e-learning to support the digital economy; and three, the need for further consideration of changes to Bill C-32.

The university would welcome the opportunity to engage in further dialogue on any of these topics.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Next is Special Olympics Canada, please.

[Tom Wright, Chairman, Government Relations Committee, Board of Directors, Special Olympics Canada]

Thank you very much.

On behalf of Special Olympics Canada and more than 34,000 athletes across our country, it's a pleasure for me to be here in front of this committee.

On behalf of Ms. Judd Campbell, Mr. Miceli and all the members of the great Special Olympics family, thank you for agreeing to meet with us today.

It was only a month ago this week that Special Olympics athletes from across our country came to Ottawa for a Hill day to speak with members of Parliament, to speak with Senators, and to have the opportunity to introduce our athletes, our sport, and what we have been able to provide for Canadians with an intellectual disability across our country.

On behalf of Special Olympics Canada, our ask is really quite simple. We are looking for incremental funding of $800,000 every two years to take care of the travel and uniform requirements for our athletes to attend national games. We are looking for a level playing field with other national sport organizations and other national games that compete across our great country on an annual basis. The next two national games are in 2012 in St. Albert, Alberta, and in 2014 in Vancouver, British Columbia.

These games provide a pathway of excellence for our athletes across the country.

It's important for everybody in this room to understand what our mission is. Our mission at Special Olympics Canada is to enrich the lives of Canadians with an intellectual disability, through sport. We do that by providing year-round sports programming for athletes like Christina beside me, and other intellectually disabled Canadians of all stripes across the country.

A Special Olympics athlete is no different from any other athlete: they're motivated to participate because of their love for sport, the rewards of being part of a team, and the athletic competition that Special Olympics provides.

Sport is a vehicle for inclusion of our Special Olympics athletes. It provides them with fundamental motor skills, health and fitness levels, and confidence in critical social skills necessary to become active and meaningful members in our society.

I'm a volunteer with Special Olympics Canada, and people will often ask me, “What are Special Olympics? When are the next games?” I tell them that Special Olympics are every day. They happen in communities big and small, in sport clubs, in rural areas, in urban areas, all across our country, in all languages, and that's at the heart of what our sport is all about.

We recently had our 2010 national summer games in London. We had over 1,400 athletes, coaches, and trainers who came to the city to allow them to participate and represent not only the provinces but, ultimately, earn the right to represent their country. It's important to note that every one of our chapters, and we have chapters in all 10 provinces and two territories--we're about to open up our third territory, Nunavut, hopefully by the middle of next year--has the burden of having to fund participation in those games, travelling to those games. We'd like to take that on ourselves to free up funding and free up moneys to allow individual programs to be increased in the provinces, to allow for athlete recruitment, volunteer recruitment, and ultimately to allow for more programs to be developed.

In London we had an example of an athlete who earned the right to represent Canada at the next world games in Athens, Greece. That athlete is a remarkable example of what Special Olympics is able to provide.

I'd like to ask Christina Judd Campbell, a Special Olympics athlete, to tell her story.

[Christina Judd Campbell, As an Individual]

Hello. My name is Christina Judd Campbell. I am 23 years old. I read at the grade 4 level, and I do math at the grade 3 level. This is why I participate in Special Olympics.

With rhythmic gymnastics, I have found something that I enjoy. My successes at Special Olympics competitions have really changed my life. Once shy and withdrawn, I have found that Special Olympics has improved my confidence and self-esteem in all parts of my daily life.

The opportunity to compete at the national games and go to the world games motivates athletes like me to work hard and do our very best. We need the opportunity to show the world what we can do.

After recently being named to Team Canada, I am ready to do just that at the world games in Athens next year.

Thank you.

[Applause]

[Tom Wright]

Christina is an excellent example of what happens when we provide opportunities for Canadians with an intellectual disability.

I think it's important that this committee understand the enormity of our task. We have, in our sports programming, 34,000 athletes. We have 16,000 volunteer coaches and supporters. Those coaches are all volunteers and they're all trained.

Now, to put it into perspective, there's a population of over 700,000 Canadians with an intellectual disability, so as well as we're doing, we're addressing less than 5% of the population in terms of providing opportunities for athletes like Christina. That's the enormity of our task.

We're hoping that we can continue to work with the Canadian government. The government has been tremendously supportive of Special Olympics. On behalf of all of our athletes, I say thank you. But the enormity of our task is quite large, and that's why we're looking for incremental funding to take care of the team travel, so that we can take that back and give moneys back to the provinces so that they can do things--

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Wright.

[Tom Wright]

--in terms of expanding and enhancing community sport programs, offering more sport to more Canadians, and providing those opportunities for the 700,000 who are there.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Wright.

Christina, thank you very much for that. We've had, I think, three Olympians to the finance committee, but you're our first Special Olympics athlete. So welcome, and thank you for being here. We're truly honoured.

The next presentation will be that of the representatives of the Confédération des syndicats nationaux.

You have five minutes.

[Pierre Patry, Treasurer, Confédération des syndicats nationaux]

Thank you, Mr. Chairman.

It is my pleasure to present to the committee the point of view of the Confédération des syndicats nationaux, a union organization representing slightly more than 300,000 members.

The government is pleased to say that the recession is over and that the priority now is budget deficit reduction. However, the situation is not as simple as that. According to the most recent estimates of the Bank of Canada, economic growth slowed sharply in the third quarter of 2010 and will be slow in the medium term. The unemployment rate remains high and job creation anticipated between now and 2012 will not quickly return the unemployment rate to its pre-recession level.

The housing sector and household consumption spending will not be as dynamic as in recent years, particularly as a result of growing personal indebtedness. Net export growth is also jeopardized by current turbulence in the exchange markets. However, a number of development countries, the United States in particular, need to export in order to put the recession behind them and resume economic growth.

In these circumstances, it is the CSN's view that the government should continue to use all the levers at its disposal to support economic growth. Launching into a policy of fiscal austerity and deficit fighting when the recovery is so tenuous would be ill-advised, particularly since Canada still has appreciable fiscal leeway relative to the other developed countries. While most developed countries have understood that higher taxes will be necessary in order to put their public finances in order, Canada is artificially increasing its budget deficits by continuing to grant lower taxes to businesses. In CSN's view, in the present circumstances, the budget cuts granted to businesses are unlikely to result in renewed investment. On the other hand, public spending is still necessary in order to support economic activity.

The infrastructure programs under the government's recovery plan include deadlines. Work must be completed by those dates, failing which federal funding will not be accessible. Those deadlines are unrealistic and must be pushed back. First, the fact that negotiations between the federal and Quebec governments have dragged on puts Quebec's municipalities at a disadvantage. According to the president of the Quebec government's treasury board, a strict application of federal rules could deprive Quebec municipalities of approximately $200 million. Second, confirming those deadlines is having harmful effects. The construction sector, which is an asset from a municipal infrastructure standpoint, is currently so overheated that we are seeing labour and materials shortages, which are inflating project costs. The Canadian government must agree to the motion unanimously passed by Quebec's National Assembly on September 29 seeking postponement of the deadlines applicable to infrastructure programs.

Even though the agreement on federal health transfers to the provinces does not have to be negotiated until 2014, the parties are already beginning to stake out their positions. This summer, Canada's Minister of Finance informed us that, in view of the series of budget deficits Canada is facing, the provinces can no longer necessarily count on the generosity Canada has shown to date. The minister is wrong to suggest that the provinces should align growth in health spending with that of provincial GDP. Those two growth rates are absolutely unrelated, and there is no reason, except for purely accounting grounds, for them to be equal. CSN expects that, by 2014, the government will meet its commitments and not eliminate the anticipated budget deficits by cutting transfers to the provinces in respect of social programs, particularly health, but also postsecondary education.

The Canada Employment Insurance Financing Board intended to increase employee contributions to the employment insurance program by 15¢ in January 2011, but, once again, the Minister of Finance has suspended the powers of that so-called independent agency. On September 30, it announced that the increase in premiums would be limited instead to 5¢ per $100 of insurable earnings for 2011 and 10¢ for subsequent years until the employment insurance account is balanced. CSN would have preferred the premium rate to be increased by 15¢ and the board to be allowed to do its job. That would have permitted an improvement in the employment insurance program in the context of an economic recovery that looks as though it will be slower than anticipated. The federal government's decision cuts $1.2 billion to unemployed workers in 2011 and $600 million in subsequent years.

In addition, Canada's inadequate employment insurance program puts considerable additional pressure on the provinces' income security programs. The federal contribution to those programs was moreover cut in the 1990s in the wake of federal transfers reform. CSN believes it is urgently necessary to make changes to the employment insurance system to improve accessibility, increase benefit rates and abolish the qualifying period.

CSN deplores the fact that the federal government has decided to go ahead with the plan to establish a federal securities commission. This field has always been under provincial jurisdiction. The Canadian securities regulation system, although decentralized, is one of the best in the world, according to studies by the OECD and the IMF, outstripping the national regulatory agencies of the United States, United Kingdom and Australia.

The federal securities commission plan clearly jeopardizes Quebec's financial industry. In addition to destroying financial sector jobs, the establishment of a federal securities commission would strip Quebec of a major economic development lever.

In the wake of the shocks to the goods production industry as a result of the Canadian dollar's appreciation against the U.S. dollar, the sharp rise of the emerging countries, the economic problems of the United States and the predictable increase in energy prices, specific measures should be taken to preserve entire segments of the manufacturing and forest sectors.

The Government of Canada must assert its leadership and put in place an industrial policy worthy of that name. Paradoxically, the provincial governments, particularly that of Quebec, are more active than the federal government in assisting distressed sectors, which makes no sense in view of the provinces' reduced fiscal leeway.

The oil boom is largely responsible for the appreciation of the Canadian dollar relative to its U.S. counterpart, but the emerging countries' exit from the crisis, which has been more convincing than that of the developed countries, has resulted in upward pressure on the prices of commodities, including, quite obviously, oil. As a result, the Canadian dollar is approaching parity with the U.S. currency, which once again threatens manufacturing and forest exports.

[The Chair, Conservative, James Rajotte]

Okay, thank you, Mr. Patry.

[Pierre Patry]

Yes, I'll be finished in one minute.

According to a recent projection by the National Bank of Canada, if the Canadian dollar rises to US$1.02, the profit margins of five of the 19 Canadian manufacturing sectors will be reduced to zero, which will of course be disastrous for Quebec and Ontario.

In conclusion, CSN believes that economic recovery is far from guaranteed. There are still disturbing signs, and the war is not yet won in the most developed economies, particularly that of our neighbour to the south. Consequently, CSN believes that the federal government must pursue an interventionist strategy. Focusing entirely on fighting budget deficits, to the detriment of the economic recovery, would be a serious mistake that could have harmful effects in the short and medium terms.

Thank you, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Next we'll have the Canadian Institute of Actuaries.

[Micheline Dionne, President, Canadian Institute of Actuaries]

Good afternoon. I am Micheline Dionne, President of the Canadian Institute of Actuaries. With me is Marc-André Vinson, institute member and pension expert.

We appreciate being invited, and I look forward to an exchange that benefits all Canadians. Allow me to say a few words about who we are and the nature of our activities.

The institute establishes the rules and processes for Canada's actuaries, who apply their deep mathematical knowledge of finance, statistics and risk theory to help solve problems faced by pension plans, regulators, financial institutions, social programs and individuals.

Several of our ideas to improve the Canadian retirement saving system have been adopted, but they are not sufficient to create an environment conducive to saving, strengthening and expanding private pension plans.

This year, we surveyed retirees' and pre-retirees' understanding of the financial risks of retirement, personal choices and responsibility. Startling findings support the need for change. For example, among pre-retirees, 72% are concerned about maintaining a reasonable standard of living for the rest of their life; 62% are concerned about funding health care and nursing homes; 62% are concerned about depleting all their savings; and 20% believe they will never fully retire. In addition, while concerned and aware of the risks, few are taking concrete action to protect themselves financially for the future.

So what are the key issues?

The first issue is that Canadians should save more for retirement. The potential for significant retirement income gaps has increased. Corrective measures must be developed.

Second, Canadians need wider coverage. Less than a quarter of private sector workers belong to any type of pension plan.

Third, Canadians need more flexibility. Recorded life expectancy has been on the rise for at least 100 years, so the normal retirement age of 65 must be reviewed. For example, employer pension plans should be allowed to use a normal retirement age of over 65; legislation should not force employer pension plans to offer retirement at age 55; governments and employers should examine the appropriateness of generous early retirement benefits; the removal of disincentives to working past a fixed age should be strongly considered; and Canadians should be able to work part time or seasonally while collecting partial retirement benefits.

Fourth, Canadians need more education on retirement issues. Many working Canadians have no workplace pension, RRSP, or tax-free savings account, and do not own a home. Better financial education at an early age will help future generations avoid such circumstances. According to our survey, only half of retirees and pre-retirees seek financial advice. The institute supports the federal task force on financial literacy and has volunteered to assist it. Furthermore, plan sponsors should be encouraged to present useful information to members. More accessible independent advice would be beneficial. We support creating easily used tools for Canadians to understand the sources of retirement income.

Fifth, Canadians need defined benefit plans. They are excellent vehicles and their demise is not in Canadians' best interests. To encourage higher contributions, better funding, and security, government should introduce legislation allowing employers to set up 100% employer-funded pension security trusts separate from, but complementary to, regular defined benefit pension funds. The institute has proposed that these trusts be designed to work together with a risk-based target solvency margin and an increased maximum allowable surplus in a pension plan before employer contributions must stop. Reforms have helped, but in order to address the imbalance issue and to encourage stronger funding, the pension security trust concept must be implemented.

Sixth, pension plans need better risk management mechanisms. The financial crisis has highlighted the need for pension plans to establish funding policies incorporating risk management perspectives. We are committed to encouraging further research to develop methods that enhance risk management practices in pension plans.

Seventh, and last, the development of a principles-based approach to the supervision and monitoring of pension plans should be encouraged. This would remove significant obstacles to the maintenance and improvement of defined benefit plans and other plan designs. We would be pleased to assist in the development of regulations that would allow pension risks to be more evenly shared between sponsors and members.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for you presentation.

We'll start members' questions with an opening round by Mr. Szabo.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you.

I'd like to start with the Special Olympics. I'd like to thank Mr. Wright and Christina Judd Campbell for coming.

Christina, you bailed him out: you were terrific, you really were. I know that everybody around this table and anybody who's watching knows that not only are you trying to do your best, but you're out there as an ambassador on behalf of Canada as well.

Your activities and those of some 34,000 other athletes touch so many people's lives. I think about that and the fact that there are some 700,000 individuals in our country who have similar problems, and who are just so inspired by what you do.

My only question for you--maybe you can ask Mr. Wright to answer this--is why did you ask for only $800,000? I think it should $1 million.

[Tom Wright]

The quick answer is that we see this as phase one of other programs that we have.

We have a request in front of Sport Canada on an athlete assistance program, where we would be able to provide direct athlete assistance, as is similar to athletes who compete for Canada in the Paralympics and the Olympics. That's one program, which we've estimated will cost around $450,000.

There's a second one, which is about volunteer recruitment. Again, all of our coaches are volunteers, and there's a 3:1 ratio there. For every three athletes like Christina, we need to find a coach. We need to recruit them and we need to train them. That's another $250,000.

So if you add it all together, it's a little more than that, but we've come here with our original submission for $800,000, Mr. Szabo.

[Paul Szabo, Liberal, Mississauga South, ON]

Well, thank you. And you're also showing that you're being fiscally responsible at a time when we all should be thinking about these things.

Thank you, and I'm sure that you're getting this committee's support.

[Tom Wright]

Thank you very much, sir.