Evidence of meeting #80 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
A video is available from Parliament.
5:30 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Watkins.
We'll hear now from Mr. Sanger, please.
October 22nd, 2012 / 5:30 p.m.
Toby Sanger Senior Economist, Canadian Union of Public Employees
Thank you. My name is Toby Sanger. I'm an economist for CUPE.
CUPE represents more than 600,000 members who work on the front lines to deliver quality public services in thousands of communities all across Canada.
The average annual salary for CUPE members is about $40,000, close to the Canadian average. The average pension, for those who have it, is about $17,000. It's hardly gold-plated.
Public services are important for our members, not just because they take pride in providing them but also because they depend on quality public services for their quality of life.
Unfortunately, we are now in a situation in which federal and provincial governments claim that we need to cut public services, lay off workers, and reduce wages and benefits for fiscal and economic reasons. We know this isn't true.
Canada's economy is growing much more slowly than it should. GDP is expected to grow at barely 2% this year and in the next four years. This is half the rate of previous recoveries. Job growth is expected to remain slow and unemployment to remain high.
None of this is necessary.
Austerity measures are slowing down the economy and increasing unemployment around the world. Even the IMF and the OECD are now telling governments to slow down on spending cuts because of the damaging economic impacts.
Canada is in an increasingly fragile economic situation for two reasons.
Unlike other countries, we haven't had a housing price correction. A housing price bust could easily drag our economy back into recession. Canada avoided a deep housing bust like that of the U.S. thanks in part to our publicly run mortgage insurer, CMHC. Privatizing the CMHC, as the finance minister is allegedly planning, would be folly.
The other major threat arises if the United States proceeds with deep spending cuts and goes off a fiscal cliff early next year. This would cause another recession in the United States and likely one in Canada as well.
Canadian corporations have more than half a trillion dollars in dead money that they aren't investing. With public spending cuts and slow wage and job growth, the demand isn't there. It's simple economics, and no amount of urging by the finance minister will change that.
High rates of inequality helped cause the financial crisis and are holding back the recovery. It's not just us saying this anymore; it's the IMF, the OECD, and even the Conference Board.
Then how can we achieve sustained economic growth? It's not that complicated. We need to increase public investment and create jobs.
The federal government needs to maintain and expand public services and launch a major public investment program to create jobs, increase long-term productivity, stimulate economic growth, and address social and environmental goals.
The budget must include a program of long-term funding for public infrastructure with the provinces and municipalities in order to meet existing and emerging needs. Incentives and requirements to engage in public-private partnerships should be eliminated, as these just increase costs for future taxpayers and generations.
The budget should also include investments in affordable housing, public transit, and affordable child care, and should include a national energy retrofit program.
Public service cuts in recent budgets have led to damaging human and economic costs, reducing services for Canadians, and they are fiscally unnecessary. As the Parliamentary Budget Officer recently reported, the federal government is now in a $25 billion structural surplus. We could also raise another $25 billion through some fair tax measures.
We also need to support wage and income growth. Canadian workers and families are in an increasingly precarious financial situation. Household debt ratios are at record levels because wages haven't kept pace with the cost of living.
Measures in the last budget requiring EI claimants to accept lower and lower-paid jobs, allowing businesses to import and exploit thousands of temporary foreign workers at lower wages, and requiring seniors to work longer to receive—
5:35 p.m.
Senior Economist, Canadian Union of Public Employees
—old age security pensions will suppress wage growth while allowing corporate profits and CEO compensation to keep on rising.
The EI system needs to be improved by increasing benefit levels. CPP and OAS need to be strengthened, not weakened. Doubling CPP benefits on a fully funded basis could provide all Canadians with decent and secure retirement incomes.
To address the skills gaps, we need to invest more in training and education, particularly in national workplace training programs and in education for aboriginal Canadians, and ensure decent work opportunities for women, racialized workers, and disabled Canadians.
We need to diversify our economy to become less dependent on exports of barely processed resources by providing support for manufacturing and for development of key value-added industry sectors, as my friend here has talked about, so that Canadians have the opportunity to work in decent jobs close to home.
Instead of trade deals that sacrifice the rights of Canadians to foreign investors, we need fair trade deals that support strategic value-added industries and support higher wage growth with improved labour and social standards, in Canada and around the world.
5:35 p.m.
Senior Economist, Canadian Union of Public Employees
Canada is a country of enormous potential and wealth in our land, our communities, and our people. There's no reason that we can't all share in growing prosperity.
5:35 p.m.
Conservative
The Chair Conservative James Rajotte
Okay, thank you. I'm trying to keep the time fair so that I can have members' questions.
Go ahead, Ms. Goldstein, please.
5:35 p.m.
Dr. Rose Goldstein Vice-Principal, Research and International Relations, McGill University
Thank you, Mr. Chair, and thank you to the standing committee for the opportunity to present to you.
My name is Rosie Goldstein. I'm the vice-principal for research and international relations at McGill University.
Canada's universities are strong contributors to the science, technology, and innovation agenda of our country. The top 15 research-intensive universities, also known as the U15, win the majority of competitively allocated Tri-Council funding awards. In 2010-11, this amounted to a total of 74% of funding, or $1.4 billion.
In 2009, these universities graduated approximately 55% of master's students in Canada and 75% of all Ph.D.s.
Our universities also have an enormous impact on the economic well-being of this country. A 2010 SECOR study estimated the economic impact of McGill alone on the Quebec economy to be $5.2 billion, and this has grown since that time
Over the past several years, the Government of Canada has recognized and supported research and talent through investment in numerous seminal programs. While this support has been welcome, there are additional steps we can take to ensure that our universities are able to continue to contribute to our society.
In particular, we would ask you to consider support to research, infrastructure, and international partnerships. I will take each one of those topics in turn.
On the research side, Canada's three federal granting agencies—the Canadian Institutes of Health Research, the Natural Sciences and Engineering Research Council of Canada, and the Social Sciences and Humanities Research Council of Canada—as well as funding organizations such as Genome Canada and the indirect costs program, provide the foundational funding critical to supporting Canadian research.
This funding allows students and researchers to explore a great variety of issues, such as treating memory loss in Alzheimer's patients, studying how baby boomer managers and corporate leaders are crafting their pathways in firms and businesses, and exploring the links between living conditions in childhood and the effects on DNA that persist into middle age and beyond.
Support for the three granting agencies has been variable over the last couple of years. Last year's budget announced reductions to the agencies over two years—that is, for 2012 and 2013. Budget 2012 also announced reinvestments in the three councils' research programs that offset the 2012 budget reductions; however, for 2013 the councils are facing $37 million in cuts.
We would ask for renewed, stable, and predictable support for these funding agencies, which are so critical to Canada's ability to address pressing health and social questions.
On the infrastructure subject, in spite of recent investments by the federal government, McGill is confronted with an enormous infrastructure challenge caused by the disproportionate costs of deferred maintenance of its buildings.
More than 30% of McGill's buildings were constructed before 1940. The last study, which dates back to 2007, estimates McGill's deferred maintenance deficit to be $648 million. We expect that amount will be revised to more than $1 billion when the next Quebec-mandated study on deferred maintenance is conducted in 2015. McGill's two historic campuses are therefore in serious need of sustained investment.
Support for research infrastructure through the Canada Foundation for Innovation, or CFI, is essential for universities. Similarly, the 2009 knowledge infrastructure program, or KIP, provided much-needed support for our infrastructure, and a second round of this program would be very appreciated and welcomed by the university community, as would a more long-term infrastructure program.
Finally, I want to talk about international partnerships and their importance.
McGill is one of Canada's most international universities. More than 20% of McGill's students are international, almost 8,000 students in all. In the last decade, McGill attracted more than 1,100 outstanding new professors, almost 70% of whom were recruited from outside Canada. More than 150 of these recruited from outside Canada are what we call “repatriated Canadian stars” who had been recruited away from Canada in the earlier decade.
We have an opportunity to capitalize on these international connections, but this requires key investments in internationalization, such as supporting study abroad programs for Canadian students, providing seed funding to support international research collaborations, and funding bilateral or multinational research initiatives. These efforts would allow undergraduate and graduate students to gain the international experience and learning that is necessary today in our global society.
We could also build international and intersectoral partnerships, allowing us to strengthen not only the links between Canadian and international universities but also between Canadian universities and businesses abroad.
5:40 p.m.
Vice-Principal, Research and International Relations, McGill University
In closing, we ask the committee to consider renewed and growing support for direct and indirect costs of research through the federal granting agencies; continued support for CFI, and additional mechanisms for funding knowledge infrastructure, such as another round of the knowledge infrastructure program; and funding for international partnerships through support for student and faculty mobility, seed funding for collaborations, and funding for multinational initiatives.
Thank you.
5:40 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much for your presentation.
We'll begin members' questions.
Mr. Caron, you have the floor.
5:40 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you very much, Mr. Chairman.
I will begin with you, Mr. Watkins. No, perhaps I'll begin with Mr. Scholten, to give you time to prepare.
Mr. Scholten, you mentioned the issues concerning credit card merchant fees. You stated that they are among the highest in the world.
Could you make a comparison between the actual costs for businesses in Canada and for those in countries that have economies similar to ours?
5:40 p.m.
President, Canadian Convenience Stores Association
From what we understand the rates to be across the world, the United States pays the highest rates anywhere in the world. Canada is a close second, and other countries have lesser rates. The information that we have on our industry at $36,000 per year per site is very high. Unfortunately, we don't have comparative numbers for retail anywhere else in the world, so I'm afraid I can't give you that information.
5:40 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Do you have any comparative figures? We are talking about the retail sector here, is that right?
5:40 p.m.
President, Canadian Convenience Stores Association
From what we understand, in the United States the rates are about 0.25% higher than in Canada, and below Canada it would fall somewhere in the range of about 0.50% to 0.25% as well, going up.
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
What do you attribute that difference to?
5:45 p.m.
President, Canadian Convenience Stores Association
Actually, I can't answer that. I don't know.
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Mr. Watkins, I liked your presentation. This is an issue that interested me when I was my party's industry critic.
However, there is one component that you did not touch on concerning economic development. In fact, we probably touch on it indirectly when we talk about productivity. It concerns infrastructure, particularly in the manufacturing industry, including steel, among others.
I think you would agree with me that you are in direct competition with emerging countries. We are talking about China, India, Brazil and several countries with whom we have to compete. However, as far as infrastructure is concerned, my sense is that we are currently lagging behind some emerging countries. These countries seem to invest massively whereas, comparatively speaking, our investments are rather tentative.
Could you comment on the Canadian infrastructure situation, particularly for the manufacturing industry with regard to exports or general production, compared with the countries that we are competing with, whether they are emerging markets or industrialized?
5:45 p.m.
President, Canadian Steel Producers Association
I apologize I wasn't ready a bit earlier. That's a multi-part question, really. I'll try briefly to address each of the components.
First of all, with the respect to the importance of high-quality infrastructure, there's no question that's important to Canadian manufacturing because it can also improve logistics flows. This reduces shipping times and enables a just-in-time economy. We have certainly paid attention to studies that have tried to demonstrate where those gaps are, the magnitude of those being economic studies. There was a report released earlier this year by the Federation of Canadian Municipalities about the importance of infrastructure investments. Of course, infrastructure investment is very important to us as an industry because it consumes a lot of steel.
With respect to emerging markets and their infrastructure investments, again they have certainly invested heavily. Of course, part of that is they're investing for the first time in a lot of that infrastructure. In our country, we have a well-established infrastructure system, granted repair and improvement are necessary, but it's a little bit of apples and oranges on that score in terms of relative magnitudes.
Third, do we have to compete with those countries for selling, whether it's rebar, whether it's structural steel, whatever it may be? Absolutely; we have to compete with them every single day in our market, and we do so. That is why I also emphasized in my remarks that we're quite prepared to compete on a fair market basis and in accordance with market-based trading principles. What we can't compete with are dumped and subsidized imports coming in from other countries.
5:45 p.m.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair.
Mr. Scholten, you had a number in terms of the cost of contraband tobacco. Where did you say that number came from?
5:45 p.m.
President, Canadian Convenience Stores Association
The Minister of National Revenue has advised us of the number of lost tax dollars at state of the industry addresses that we've had, so in 2010 Minister Blackburn gave us that number.
5:45 p.m.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
I recognize it's a significant problem, but I wondered where that reference came from, so if you have that and you could table it with the committee or send it to the clerk later, it would be appreciated.
Our government introduced a code of conduct, and I know it was very well received, and of course we just recently expanded it to include mobile payments. First of all, is that having some good effect for your industry, and are there enhancements to the code of conduct that you might recommend?
5:45 p.m.
President, Canadian Convenience Stores Association
We believe the code of conduct did have some very positive effects. The concern we have is that it's done little to impact the high rates of credit cards. The practices that we've seen the credit card companies continue to operate under, such as bundling of services and imposing contracts that aren't negotiable, whether you're a small independent or a large chain, have resulted in very high rates that we have very little ability to negotiate.
5:50 p.m.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you.
I have a topic of conversation that's probably much too long for the few minutes I have remaining. I have to make a quick comment in terms of child care. Also as a mother of three children who lived in a rural community, I know providing choices for parents is very important. The other thing I think it's important to recognize, and I didn't realize this until more recently, is that the provincial government provides significant subsidy and support for the children of our low-income parents to go to licensed, quality day care. I was quite amazed at how significant the support was in that area.
I'd really like to shift, because that's perhaps a much larger conversation than we could have right now. I appreciated your comments about challenges for nurses and the role of the federal government, and I perceive that we've done a number of things, including the forgiveness of student loans for rural nurses and doctors. Has that been helpful? Have you as an organization had any feedback on that?