Finance Committee on Oct. 18th, 2011

[The Chair, Conservative, James Rajotte]

Good morning, everyone. I'll call this meeting to order. This is the 16th meeting of the Standing Committee on Finance. We are continuing our pre-budget consultations for 2011.

We have two panels this morning. In our first panel we have seven organizations joining us here: the Canadian Construction Association, the Canadian Cooperative Association, the Canadian Healthcare Association, the Canadian Institute of Chartered Accountants, the Canadian Union of Public Employees, the Canadian Wireless Telecommunications Association, and the Hotel Association of Canada.

Thank you all for being with us. You'll each have a maximum of five minutes for an opening statement.

We'll begin with the Canadian Construction Association, please.

[Nadine Miller, Chair, Canadian Construction Association]

Thank you, Mr. Chair.

On behalf of the more than 17,000 members of the Canadian Construction Association, I want to thank you for providing us with this opportunity to appear before you today and share our views regarding the economy and our recommendations for this year's federal budget.

My name is Dee Miller and I'm chair of the Canadian Construction Association. In my outside world I am vice-president of JJM Construction, based in Delta, British Columbia. We're involved in road building, marine construction, and highway and bridge construction. I'm joined here today by our president from CCA, Michael Atkinson.

With ongoing global economic uncertainty, it's not surprising that construction remains the choice of governments around the world as the best investment for economic stimulus. In Canada, construction accounts for 7% of our nation's GDP and employs over 1.25 million Canadians. We are by far one of Canada's largest economic drivers, and our industry is projected to continue to grow throughout the decade.

A recent report commissioned by PricewaterhouseCoopers forecast that Canada's construction market will become the world's fifth largest over the course of this decade, in part due to strong global demand for Canadian energy and natural resource exports. In short, new infrastructure requirements to support the growing commercial needs of our economy as well as the long overdue renewal of our public infrastructure assets will become the primary driver of construction activity in Canada for the foreseeable future.

Given that infrastructure is critical to the functioning of our economy as it impacts not only productivity but ultimately business profitability, we believe new solutions will be required to help share the tremendous costs associated with the expansion and renewal demands of our nation's infrastructure. One solution to help lower the fiscal burden on governments will likely be public-private partnerships, which is something we have considerable experience at in British Columbia. However, this has drawn to Canada a large number of international firms that carry out much of their engineering and other back office functions in lower-cost countries. Furthermore, these firms often bring with them below market financing that makes it very difficult for Canadian firms to compete within our very own home market. While our industry does not support protectionism, we expect that the federal government, when tendering P3 projects, will ensure that a level playing field exists and that Canadian companies are not disadvantaged.

We're also very concerned about the capacity of cities to continue to fund their share of the infrastructure renewal burden. Since most cities do not have access to growth taxes, the annual transfers they receive from the federal government through the gas tax fund have become instrumental to their capacity to pay for infrastructure renewal. Making this transfer permanent, as outlined in the government's last budget, is an important first step, but unless this transfer is indexed, inflation will erode the effectiveness of this program over time. So our first recommendation is that the federal government index the current gas tax transfer fund to the cost of inflation.

Canada must also ensure that it has an adequate supply of labour. In construction, we expect a shortfall of 325,000 workers by 2019 due to retirements and increased demand for construction across Canada. In a best-case scenario, we expect colleges and other training facilities will help fill approximately half of our new labour requirements, still leaving a shortfall of 150,000 workers. Therefore, going forward, our industry will continue to rely on Canada's immigration system to help fill nearly half of our workforce requirements. However, with chronic processing backlogs within Citizenship and Immigration Canada, our pressing demand for foreign skilled workers will never be realized unless significant new resources are dedicated by Parliament to overcome this challenge. Therefore, CCA recommends that Parliament increase the annual budget to Citizenship and Immigration Canada, so as to permit the department to reduce, if not eliminate, the processing backlogs within the skilled foreign worker program.

Another area of concern for our members is red tape and the cost of regulatory compliance. We are pleased to see the government taking action on this issue, and we look forward to the outcome of the red tape commission's review. One example we used to illustrate our frustration with red tape to the commission is that of security clearances. When a contractor works on a military base for DND, it needs to obtain security clearances for firms and employees. If we decide to work at an airport, we have to go through this entire process again, which makes no sense, since CSIS and the RCMP are responsible for carrying out these reviews.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Nadine Miller]

CCA members believe Canada needs to streamline its regulatory systems. To this end, we recommend that the federal government engage with the provinces to undertake a broader review of federal government regulations, with a view to eliminating duplication and streamlining the regulatory compliance process.

Finally, we believe the federal government can play a significant role in improving economic productivity through the use of tax incentives designed to encourage Canadian industry to invest in the modernization of our businesses.

CCA strongly recommends that the government extend the application of the current accelerated capital cost allowance for machinery and equipment to diesel-powered mobile equipment and machinery as well as to heavy-duty off-road vehicle purchases.

Mr. Chair, this concludes my presentation. I hope you found it of interest and I look forward to answering any questions you might have.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Miller.

We'll now hear from Mr. Anderson, please.

[John Anderson, Director, Government Affairs and Public Policy, Canadian Co-operative Association]

I want to thank you very much for giving the Canadian Co-operative Association the chance to present to you today.

The 9,000 cooperatives and credit unions in Canada have over 18 million members and $376 billion in assets, and they employ over 150,000 people.

We are particularly pleased to be here this year because 2012 has been declared by the United Nations to be the International Year of Cooperatives. We want to thank the Government of Canada for its consistent support for this UN year. We will be launching the international year on November 29 at our parliamentary reception and across Canada on January 12 in 12 locations.

We are also happy to be presenting here this week because it is Co-op Week, an annual event aimed at recognizing the contribution of cooperatives. The theme of this year's Co-op Week is the same as the theme of the international year: “Cooperative Enterprises Build a Better World”.

In his Co-op Week message to CCA, Prime Minister Harper noted:

Co-operatives have helped many people and organizations find solutions to social and economic challenges in their communities, and this special week offers Canadians a chance to express their appreciation for the benefits that co-operatives provide.

Recently the cooperative model is back in the news. For example, in the U.S., in the recent health care debate, and in the U.K. around public policy, there is talk of how to use the co-op model on a wider and more effective basis.

During the recent years of economic downturn, co-ops generally did well around the world because they are community-owned, make profits that go back into communities, and have set reasonable levels of staff pay, including that for CEOs. Just two weeks ago, out of the top 100 employers featured in The Globe and Mail, three were cooperatives. In Saskatchewan, 11 of the top employers were cooperatives and mutuals.

Cooperatives generally last much longer than investor-owned businesses, as a 2008 Quebec government report and a new B.C. study have both shown. But they often need help in getting started.

This is why we are proposing three legacy budget projects for the international year. All of them are partnerships between the co-op sector and the federal government; thus, for moderate amounts of government funding or foregone taxes, substantial amounts of capital can be leveraged.

But it is not only capital that will be leveraged. One of the fundamental principles in the co-op sector is that of self-help; of communities and groups of people pulling themselves up with their own sweat equity. This is the working principle that built an oil refinery in Regina in the depths of the crisis of the 1930s, a federation of co-ops in Nunavut and the Northwest Territories in the 1960s, and more than 800 credit unions across Canada since 1900.

These three projects are backed by many prominent cooperative organizations, including the Credit Union Central of Canada, Desjardins, Co-operators General Insurance Company, and the Co-operative Housing Federation of Canada.

The first project is a federal cooperative investment plan based on Quebec's Régime d'investissement coopératif, which has existed since 1985. It would provide a federal tax credit for co-op members and employees who invest in producer—that is to say, agriculture, fishery, forestry—and employee-owned cooperatives. Such a plan at the federal level is estimated to cost between $17 million and $20 million per year and would produce $120 million per year of new investment across Canada. This is a plan that the Canadian Federation of Agriculture has consistently ranked as one of their top priorities.

The second project is a cooperative development fund, which would be co-funded by the federal government and the co-op sector, that would provide large and medium-sized capitalization loans to new and emerging cooperatives. This sector is requesting a one-time federal government contribution of $70 million, after which the fund would be self-sustaining. This federal contribution would leverage important contributions from the cooperative sector.

In 2008 the federal government commissioned PricewaterhouseCoopers to examine the model for this new fund, and they concluded that the potential impact of the fund is positive and will assist emerging and existing cooperatives to grow and expand.

These two projects were endorsed by the House of Commons finance committee in your December 2009 pre-budget report.

The third project, the last one, is a permanent and expanded federal cooperative development initiative. This is a program that provides grants and technical assistance to new and emerging cooperatives, and we hope can help also in providing solutions to business succession when new employee- and community-owned businesses can provide an alternative to the closure of family owned firms.

This program was started in 2003, renewed in 2009, and goes until March 2013. This program is managed by the two national cooperative organizations. Since 2009, 521 groups have applied for project funding, 140 projects have been funded in the last three years, and over 346 cooperatives have been created through another arm of the program. It has also helped to leverage additional resources from provincial governments and our own charitable fund.

In conclusion, I would say that cooperative enterprises can indeed help build a better Canada.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from Ms. Fralick from the Canadian Healthcare Association.

[Pamela Fralick, President and Chief Executive Officer, Canadian Healthcare Association]

Thank you, Mr. Chairman, for the opportunity to speak to the committee.

I am going to speak to you in English, but I am always ready to try to answer your questions in French.

I thought I would take a moment to make sure that everyone on the committee understands on whose behalf I am speaking today: the provincial and the territorial health associations and organizations across the country. This runs from the Newfoundland and Labrador Health Boards Association, through the Health Association of Nova Scotia, all the way across to the Health Employers Association of British Columbia, and also into the territories.

You may have heard of us many years ago as the Canadian Hospital Association, but we now cover the continuum of health, and thus our name reflects the broader mandate. We're currently celebrating our 80th year of work on behalf of Canadians.

Our board of directors is a bit different from many in the health world. It reflects the face of the public. Members have emerged from local hospital and health boards. They've risen to govern at the provincial level and they now come to speak at the national level with CHA. They are HR experts from the mining and forestry sectors, registrars of community colleges, superintendents of educational systems, and chartered accountants. They run insurance companies and real estate firms; they work in sales and retail. They are the public, they are the voters, and they have strong messages to deliver. Perhaps most importantly, they are responsible for the allocation and monitoring of billions of dollars of public funds.

You have asked us to help you deal with ongoing difficult financial times, and we get that. You've asked us to bring concrete, doable solutions. We get that as well. You've asked us to be as specific as possible and you've also asked us to limit our recommendations to three.

Well, we have more than three, but we're committed to respecting the committee's parameters and we're pleased to offer three concrete, doable recommendations, which I'll briefly review today, knowing that you have received the material in advance.

One additional comment that I would make before I do so is that CHA supports a very strong role for federal leadership in the health of the nation within our Canadian model, which confers the constitutional responsibility for health to the provinces and territories. We specifically require that this federal leadership help us move from a focus only on the illness system to one that truly addresses the need for a wellness system. We need to keep Canadians out of hospitals; we need to prevent their becoming ill and move them quickly from acute care to appropriate continuing care; and again, we need courageous federal leadership to do so.

That is a nice segue into the first recommendation.

The recommendation is to reduce health system costs over time and target funds from current resources—new ones, if we have them, but current resources—to population health initiatives. The Naylor report, with which you're probably familiar—and I can go into more detail, of course—recommends funding public health services in the amount of $1.1 billion per year and is a good starting point. The annual economic burden of direct and indirect costs of illness in Canada is estimated to be $188 billion. We need prevention. There is currently no earmarked funding for health promotion and disease or illness prevention activities under the Canada health transfer to date.

Recommendation number two is to leave needed dollars in the health system by modernizing and bringing equity to the current interpretation of rules concerning the GST-HST rebate eligibility criteria in the Excise Tax Act. This is a complicated issue, but we estimate that $300 million is being taken out of the health system. It's being given with one hand and taken away with the other, and we feel it needs to stay where it is initially given.

Our recommendation number three is to enhance the health sector. It's about EHR and EMR, folks. We need to get these moving. There are funds being made available to emerging health professionals only within the physicians', nursing, and pharmacists' professions. The rest of the workforce has never had this training. If we truly want to start taking advantage of the innovative processes and pieces that are coming forward, there are programs existing, we feel, that could be opened to these other health professionals to make them more amenable to the new technologies.

I will finish with a thank you for hearing me, and I look forward to questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Institute of Chartered Accountants.

[Gabe Hayos, Vice-President, Taxation, Canadian Institute of Chartered Accountants]

Good morning. My name is Gabe Hayos, and I'm vice-president of taxation with the Canadian Institute of Chartered Accountants.

On behalf of Canada's 78,000 chartered accountants, thank you for the opportunity to appear before this committee. In my remarks today, I will cover the CICA's views and priorities for the 2012 federal budget, highlighting measures we believe will support the nation's economic recovery by helping Canadians and Canadian business prosper.

Recommendations include simplifying taxes and easing the personal income tax burden, reducing red tape, enhancing Canada's tax incentives for innovation, enhancing financial literacy, encouraging retirement savings, and continued support for international credential recognition.

With respect to red tape reduction, an element of key importance to the CICA's view is that the federal government's administrative agencies should focus first on providing compliance assistance, rather than focusing principally and perhaps almost exclusively on regulatory enforcement. We believe that a positive attitude change towards compliance assistance, motivated by a supportive tone from the top being expressed by ministers and their deputies, will contribute meaningfully to red tape reduction and enhanced efficiency in government.

Canada's domestic tax system must be simplified to lessen the regulatory burden placed on Canadian business, and we recommend that the federal government establish a national consultation process to obtain input on tax simplification initiatives.

Measures that merit consideration include pursuing greater federal-provincial tax harmonization across all tax systems, adopting a loss transfer system of taxation for corporate groups, and extending personal income tax filing dates for those with income from trusts or partnerships.

The government's commitment to reducing the general corporate income tax rate to 15% by 2012 is important to our ongoing economic recovery and should be applauded. We also encourage the continued adoption of policies recommended by the Advisory Panel on Canada's System of International Taxation.

We believe that action should be taken to improve our scientific research and experimental development tax incentives and that tax credits should be made partially refundable for all businesses.

In order to stay competitive and attract and retain human capital, Canada must stay attuned to the personal income tax burden placed on Canadians. Canada's chartered accountants favour the use of broad-based tax reductions over targeted measures.

Over time, we encourage the government to increase the top two tax thresholds and the rates that apply to them, in order to bring them in line with those of our global competitors. Key to balancing this broader approach is the need to examine the appropriate mix of personal tax and consumption taxes. Canada relies on personal income taxes to a greater degree and on consumption taxes to a lesser degree than the OECD average. Adjusting the revenue mix would improve Canada's tax competitiveness. We recommend that the government consider changing the revenue mix to bring it closer to the OECD averages.

Reducing income tax on personal savings is crucial to helping Canadians prosper over the longer term. With this comes the need to enhance financial literacy to ensure Canadians have the financial skills to make the best choices on planning for their retirement. Our research shows a clear link among financial literacy, higher rates of savings, retirement preparedness, and financial planning. We urge the government to continue its commitment to financial literacy.

The CICA is working to support a national collaborative financial literacy strategy and will soon be launching a program to provide Canadians with the knowledge and confidence required to take control of their finances.

With respect to the retirement income system itself, we support the government's commitment to increasing contribution limits to tax free savings accounts. We believe reducing the income tax on personal savings will provide an incentive for savings and make the tax system more efficient, effective, and competitive. As an example, we recommend raising the RRSP maximum contribution limits and also taxing RRSP withdrawals according to the nature of the underlying income—that's capital gains, dividends, or interest—rather than all of it being taxed as ordinary income.

Finally, skilled professionals are vital for Canada's future, and the CA profession encourages the government's ongoing commitment to easing the transition of internationally trained professionals into the Canadian workforce. We support the development of streamlined bridging programs that help these professionals resolve any educational or experiential gap, so they can contribute their full potential as quickly as possible.

To conclude, we believe the nation's economic recovery can best be supported by enacting measures that help Canadians and Canadian business prosper.

Mr. Chairman, thank you for the opportunity of appearing before this committee. I would be pleased to respond to any questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now hear from the Canadian Union of Public Employees, please.

[Paul Moist, National President, Canadian Union of Public Employees]

Thank you very much, Mr. Chairman.

Good morning. CUPE is very privileged to represent just over 600,000 Canadians, people delivering front-line public services from coast to coast to coast. Our members don't just deliver these services; they depend on them as accessible, affordable, and quality features of our lives, and they're hit twice by restraint measures if they occur: they lose their jobs and they lose the services.

The average salary for a CUPE member is just under $40,000 a year. The value of public services in totality that each Canadian receives is worth about $17,000 a year. Three years after the financial crisis struck, we continue to be in very difficult economic times. We ask this question: are we any further ahead? Further recessions are imminent or arguably under way in the United States and Europe, thanks in large part to austerity measures, little progress on financial sector reform globally, more bank failures, particularly in Europe in the last week, and bailouts.

We still have in Canada officially 1.3 million Canadians out of work and many more who have given up looking for a job. We've had slow job growth and negative real wage growth since the recession hit three years ago. Household debt—and I know Mr. Carney has spoken to this committee about this—is at record levels: 150% of income. Public services are being cut and workers are being laid off while government maintains planned corporate tax cuts, which are adding $0.5 trillion in excess cash that, for the most part, corporations are hoarding and not investing at this point in time.

The sale of luxury goods going up and dependence on food banks rising speaks to rising inequality in our country. Supply-side economic policies of corporate tax cuts, deregulation, and cuts to public spending haven't worked. We have a demand-side problem, worsened by structural inequality. The International Monetary Fund, and recently the Conference Board of Canada, raised alarm about rising inequality hurting economic growth in Canada.

Warren Buffett and many others are calling for government to raise taxes on those with the best ability to pay. Alex Himelfarb, a former Clerk of the Privy Council, wrote in The Globe and Mail on the weekend about that very subject matter. No wonder people are fed up and increasingly taking to the streets around the world. We need job growth, and workers also need decent real wages and services. We don't need government policies interfering with free collective bargaining rights. That will make labour relations worse in our country. If workers don't have a voice and are constantly threatened by strong-arm measures favouring employers, they can't be expected to work productively.

Austerity measures and federal spending cuts announced in the last budget were a mistake. We need to sustain and expand services, jobs, and spending, which are historically low in terms of the share of our economy. Public infrastructure investment was instrumental in stimulating economic recovery three years ago. Funding for future years has been depleted. We need additional infrastructure investment, better planned, with a long-term commitment.

I'll close with our three general recommendations. First, we need to sustain and expand services, jobs, and spending, in particular cancelling damaging federal program spending and job cuts from the last budget and protecting current rates of increase for social and health transfers to our provinces.

Second, we need to promote investment in sustainable growth and job creation, in particular making a long-term federal commitment to investment in public infrastructure, particularly public transit, to the tune of $18 billion needed over the next five years. We could start with an additional cent from the federal gas tax, which would be worth about $400 million, provided to municipalities to devote to public transit.

Finally, Mr. Chairman, we need to implement fair tax reform both to improve the functioning of the economy and to generate revenues to pay for public services. Here are two examples: set aside planned corporate tax cuts, and implement fair taxes on the financial sector—a financial transactions tax or a financial activities tax could generate about $5 billion a year in Canada.

Thank you, Mr. Chairman. We look forward to any questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Wireless Telecommunications Association.

[Bernard Lord, President and Chief Executive Officer, Canadian Wireless Telecommunications Association]

Thank you very much, Mr. Chair.

Good morning to all of you. I'm pleased to be here this morning.

I have a good news story to tell this morning. It's about the wireless sector in Canada. It's a fast-growing sector. It creates thousands of jobs. It enables our communities and our families to be better connected, and it makes our communities safer as well.

The industry is enjoying tremendous growth. We are not here to ask you for money, but to tell you that things are going well and that certain steps can be taken to ensure that things keep going even better.

The wireless sector in Canada is a major driver of economic activity across all sectors of the economy, and it’s one of the few true enablers of success and growth in all other sectors of the economy.

Just to give you an example, traffic on Canada’s networks is growing exponentially. Some of our networks are growing at 5% per week. Now, most other sectors of the economy would be thrilled to have 5% growth in a year. But 5% growth a week means that the traffic on our networks will more than double; it will be 26 times more by 2015. This means there's an ongoing requirement to make massive investments in networks to make sure Canadians continue to enjoy the service they want.

We provided a submission to the committee. We also shared with you a slide deck. On one of those slides, slide 3, you can see the contribution of the wireless sector in Canada. You can see it's $41 billion a year.

This is a contribution of $41 billion to the Canadian economy, $17 billion of which is a direct contribution to the gross domestic product, $15 billion is in indirect flow-through and $9 billion is in consumer supplies.

And you can see how this compares to other sectors of the economy. But what we see and what's happening in the wireless world is something truly remarkable, and that is the combination of wireless telephony with broadband Internet to create the mobile broadband Internet. That's truly what Canadians want from coast to coast to coast, and that's what the wireless sector wants to deliver.

If you look at slide 4, and this is a very interesting slide, you will see it gives an indication of what's happening in the wireless sector. A smartphone will consume 24 times the bandwidth of a traditional feature phone. A laptop will consume over 500 times the bandwidth of a traditional feature phone. This is exponential growth. If you compare it to highways, for instance, it's as if we had a four-lane highway this year, and next year we'd have to have an eight-lane highway and a sixteen-lane highway the year after just to satisfy the traffic. The increase will be 26 times between now and 2015.

One of the roadblocks we face in Canada is high government spectrum licence fees. I refer you to slide 5. This compares the spectrum licence fees that are paid by the wireless sector to governments in all G-7 countries. You can see that Canada has the highest spectrum licence fees in the G-7. In fact, Canadian wireless carriers hold licences for less than 2% of all the licensed spectrum in Canada, yet they pay for over 50% of all spectrum licence fees in Canada.

If we had a regime comparable to that of the U.S., the wireless sector would pay $4 million in fees. In 2009, the wireless sector paid $130 million in fees. This is simply an obstacle to investment and an obstacle to growth in one of the fastest growing sectors of our economy.

If you look at slide 6, you will see the investments that have been made by this sector in recent years. While other sectors were struggling from 2007 to 2010, this sector of the economy made record investments in our networks around the country.

All this is to say, Mr. Chair, that we have three recommendations to make. The first is to introduce in 2012 a temporary accelerated capital cost allowance for broadband network-related assets and move it from 50% to 100%. The second is that the government set a timetable for bringing the administrative licence fees paid by Canadian wireless carriers in line with comparable fees paid by wireless carriers in other G-7 countries. The third is that Industry Canada eliminate outdated regulation and red tape on conditions of licence that impose an unnecessary regulatory overhead on both licences and the government.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll now hear from the Hotel Association of Canada.

[Tony Pollard, President, Hotel Association of Canada]

Thank you very much, Mr. Chairman.

Thank you for the invitation to appear here today.

Ladies and gentlemen, travel and tourism in Canada is a $74 billion industry. We employ about 594,000 people.

In the lodging sector, last year we generated in excess of about $16 billion. We employ 284,000 people across the country.

I like to say that every time I appear before the committee we're the good news sector, because we create jobs and generate a lot of money for the federal government. Last year $3.2 billion went to the feds, so we usually get a pretty good welcome when we come here.

But ladies and gentlemen, we have some issues before us that I want to briefly touch on. The first one is that I'd like to say we welcomed Minister Bernier's announcement of the federal tourism strategy a couple of weeks ago, particularly making various government departments accountable and also setting out a target of $100 billion of revenue for tourism by the year 2015. This is all good news.

But what is needed? What are the problems? Well, Canada right now is the fifteenth most popular destination in the world, and yet our brand is number one. About ten years ago we were the seventh most popular destination and we had a travel deficit of about $1 billion. Now it's up to about $14 billion. So obviously we have some issues. What we'd like to be able to do is get Canada back among the top ten destinations globally.

What would this do for us? It would bring in 5.7 million more people a year, it would create about 46,000 jobs annually—you're going to hear me keep on talking about jobs in a brief period—and it would generate another $1.5 billion in taxes.

But what is the problem that means we are not in the top ten? One of the biggest things is the aviation sector and why it is so expensive.

Let me tell you, one of the biggest problems we have right now is that 21% of Canadians leave this country to get onto a plane in places such as Bangor, Maine, or Buffalo or Bellingham, or whatever, right across the country. That represents about 2.5 million people, or 5 million people inbound return. That's far too high. We need to reduce the aviation cost structure.

The second thing is that we have a problem with visas. Let me give you Brazil as an example. Brazil's is the seventh largest economy in the world, soon to become the fifth largest. What happens if you're a Brazilian wanting to go to Canada, the States, or Australia?

Well, in Canada you go into the Canadian embassy, you surrender your passport, you surrender all the documentation, and hopefully within a week to three weeks you'll get your visa.

If you're going to the States and you go into an American embassy, you surrender your passport and you get a visa the same day.

If you're going to Australia, what do you do? You go online. You get your visa online immediately, the same way as when you purchase an airline ticket in Canada and the airlines ask where you are going in the States and what your passport number is, etc.

We need to speed it up. So visas are the second thing.

The third item is funding for the Canadian Tourism Commission. The Canadian Tourism Commission budget has gone from basically $100 million in 2001 to about $72 million today. That's a drop of about 27%, but in real dollars it's 40%.

We know that all budgets are being looked at right now across the board. In fact, we like the government doing that; we want the government to do it. Why? It's because they will then come to the realization that the value of support for promotion is something that's real and will create jobs and will benefit everybody right across the board.

I want to give you a quick example of what happens when you don't enhance your budget. The State of Michigan has a new Republican governor who was elected on the basis of cutting costs. He came in with a budget. He cut funding right across the board, in education, mental health, health promotion, correctional services. But what did he do in March of this year? Remember, this is a Republican governor in Michigan. He increased the budget, first by $10 million and then by $25 million, because he saw the value in it.

Ladies and gentlemen, we have an unemployment rate in Canada today of 1.7 million. We have 1.3 million Canadians looking for jobs. If you look at the StatsCan report, you will see that the sector that created the most jobs in the last quarter is the lodging industry and the service sector. We are a solution for the government in its economic recovery.

Ladies and gentlemen, thank you very much for the opportunity to be here today with you. I welcome any questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now begin members' questions, with Ms. Nash for a five-minute round, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thanks very much, Mr. Chair.

And thank you for all of those very interesting presentations.

I want to spend about an hour discussing your presentations with each of you, but I have five minutes.

Let me start on the issue of health care. I completely agree, and I think it's completely intuitive that to reduce our health care costs and be more effective for Canadians, we need to promote wellness and we need to be more preventive in our approach. I'd like to hear you give a couple more examples. I know something that has been raised with me, for example, is the issue of midwives—that if there were greater recognition of midwifery across the country, especially in first nations communities, we would reduce our health care costs tremendously and really promote well-being, especially amongst mothers and newborns.

Could you talk very briefly about the impact of some preventive measures and specifically address the midwives issue?

[Pamela Fralick]

Thank you very much.

I can't actually speak to the midwifery issue. It's not my area of expertise, but I know you have other witnesses coming forward in the coming days who will be able to respond to that question. I might, though, suggest that there are at least two areas I would highlight. They both fall under the determinants of health.

Again, in the history of our system we've focused on illness. We've focused on acute care. We all know now that it is not going to solve the problem.

You mentioned the aboriginal population. I would say that is a huge conundrum that we must address. It's not just about providing medical services. It is about good water and housing and employment. Mental health is the other issue that—

[Peggy Nash, NDP, Parkdale—High Park, ON]

Would you agree that investing in, for example, infrastructure to create potable water systems in first nations communities and investing in mental health services might in fact be an investment and produce savings later on, because we are preventing these kinds of problems?

[Pamela Fralick]

That's exactly what I'm saying. You've nicely highlighted that thought. The reason I mentioned the Naylor report by Dr. David Naylor after the SARS crisis—I have the executive summary here, and we can get you the link—was that it was really focusing on public health. It's about safe water, air, food, housing, and employment. They are the determinants of health. To get very concrete, he has recommendations in there as to how much money for what, etc. We could go on for hours, of course.

However, absolutely key to the health of this country are the determinants of health. This is not to exclude; we all want our doctors and hospitals there when we need them, with the greatest of respect, of course. It's about the future, and it is why I spoke to this need for courageous leadership, because we know that at a political level, you have a four-year window of opportunity, if you're lucky. This is not a short-term solution, but this is the solution.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Great. Thank you. We could have a long discussion about that.

Paul Moist, I'd like to ask you a question. We've raised many times in the House of Commons the issue of infrastructure investment. Again, this is another investment that saves money and helps our economy. Can you describe in your experience the situation of public-private partnerships, where they work and where they don't work, and any recommendations you might have on them?

[Paul Moist]

Through the chair, thank you.

Yesterday we presented to the transportation committee and spent a good deal of time talking about infrastructure. There's an appropriate role for the private sector in building Canada. But in the financing area and in the operation area, we're replete with examples of auditors general across Canada talking about deals that are not good. We're at historically low interest rate levels for government to borrow and invest. We work closely with the FCM and the Canadian Urban Transit Association, and we don't need any Metronet examples, such as we've had in the United Kingdom.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Can you describe what happened there?

[Paul Moist]

What happened in the United Kingdom was that the government was left to run the Metronet system after the private operator collapsed. The same things happened in heath care. We have examples from across Canada of the public being left at the gate when private companies fail, and Metronet is the largest failure in the world so far.