Human Resources Committee on Nov. 21st, 2006

[Tony Martin, NDP, Sault Ste. Marie, ON]

Thank you very much.

I don't need to remind people, I think, that it was my motion that asked for this discussion. I was hoping that it would happen earlier. My intention was to make sure that everybody, particularly the new government, understood the exciting possibility that existed in the social economy, and the potential it had to be a real partner going forward.

Now we're in a situation where the funding has been cut, and I guess I'm having a hard time understanding that. The $39 million cut was referred to as “non-core programming”. Yet it got the go-ahead in Quebec, just not in Ontario--particularly northern Ontario, where I come from--and not in the rest of Canada. How that decision might have been made....

I was disappointed when I discovered this morning that in fact the assistant deputy minister, Ms. Scotti, wasn't able to come. I'm wondering if the clerk or somebody else could tell me why that happened and how that happened. This is an important initiative, reflected, I think, by the questions from the Liberals and the Bloc. We need some answers here.

Obviously the member who is here from that ministry doesn't have the financial information with her. I thought she made an excellent case, actually, for the social economy. I have seen some of these same arguments in information I have gleaned through freedom of information, in notes that were made for the minister when she became the minister, on the potential and the exciting possibilities for the social economy. Anybody would be convinced, I thought, that it should go ahead.

In my own riding, we have a ski hill that's in trouble. It would have made a great co-op. With some money, with some of that patient capital, perhaps it could have been as successful as Mount Adstock in Quebec, which did the same thing. As well, some farmers out in our area are struggling because of the BSE and the way that farming is evolving. They could have used some of this money too.

I guess when you look at what's happening internationally, as Ms. Mennie and others have said, where the social economy is in fact one of the major engines out there, in Europe particularly, it boggles the mind. It's a pragmatic response to economic and social challenges presented by globalization forces that are coming at us, with assets and enterprises used to generate both social and economic benefits and the engines of the social economy being credit unions, co-operatives, and social enterprises.

There have been studies done in Canada as well, one in particular by Ted Jackson of Carleton University, who spoke to the very real benefits of going down this road.

I guess what I'm hoping for today is to get some answers on why the cuts were made in the first place, what analysis was done, and what vehicle was used to determine that these were non-core programs. If Ms. Mennie has an answer to that, perhaps I would let her try first.

Again, why were these cuts made, and what was the analysis used to determine that they were non-core, given the very glowing definition of SEI from you and your ministry this morning? And why the rest of Canada, as opposed to Quebec?

[Johanne Mennie]

I'm not in a position to answer questions related to expenditure review or to the process that was undertaken to do that, particularly for this initiative.

These initiatives were not the responsibility of our department. It would therefore be inappropriate for me to comment on this issue.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Let me try another angle with some of the others who are here.

In fact, I would like to have a further discussion in camera about why Ms. Scotti isn't here this morning. I think it was really important that she or somebody of her calibre in the ministry show up here.

With regard to the Quebec money, when the election happened what agreements were signed already, before the cuts were made?

[Sylvain Savage]

I can answer that question.

In Quebec, before the election was called, we had already signed 20 agreements related to the capacity-building initiative. I'd like to point out that the initiative is worth $4.5 million. Twenty other agreements were then being assessed. Since that time, we completed those assessments and now have 34 agreements. Aside from that, there were 49 projects developed under regular programming as of April 2004. These are projects which we would not have collaborated on in the past, but because of the promotional work we had done within the area of the social economy we had built some bridges there.

We pulled together 49 projects and are still signing agreements to that effect. The most recent project is quite interesting. It was designed in the Gaspé. It is for a foundation whose purpose is to retain young people in the regions. This project addresses the youth exodus problem and should allow for the creation of 60 jobs for young people willing to return to the Gaspé. It is a recent initiative, it dates back to the summer, and we have invested $3 million in it.

We are currently working on setting up the Fiducie du Chantier de l'économie sociale with the Chantier de l'économie sociale and other partners. The work should be completed at a later date.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Could I ask maybe Nancy and Carol to talk a bit about what their understanding was and what the difference was in what happened in Quebec and why it was so easy to just drop Ontario, for example, or western Canada?

[The Chair, Conservative, Dean Allison]

Just give a quick response. We're almost out of time.

[Nancy Neamtan]

Okay.

Shortly after the election we met with Minister Blackburn, who was very receptive and very open and understood, I think, very well what the social economy is. I must give credit where credit is due. I think he played a major role with the civil servants in maintaining the initiative, and we really appreciate it.

[The Chair, Conservative, Dean Allison]

Thank you. That's all the time we have, Mr. Martin. We'll have to come back the next time around.

This is the last one of the first round.

Ms. Mennie, thank you very much for being out this morning.

Mr. Brown, you have seven minutes.

[Patrick Brown, Conservative, Barrie, ON]

Thank you, Mr. Allison.

I appreciate the very kind question by Mr. Martin about our minister's performance.

I'll move on to a paper written by Alan Painter of the Policy Research Initiative and ask each of the non-government representatives to comment.

Mr. Painter wrote a paper on the role of the government in supporting the social economy, and I just want to read a portion and get your comment:

For governments to support social enterprises...they must at some point come up with the tax revenue to pay for the support, thereby imposing an economic cost on Canadians. Moreover, if governments provide funding directly to organizations, the strength of the relationship between the suppliers of goods and services and the preferences of consumers is weakened, since consumers no longer vote with their dollars. Finally, if government funding is available, a considerable amount of time will likely be spent seeking the funding, and this is also costly to society, which loses what would otherwise be accomplished with this time.

So while there are benefits associated with governments supporting social economy enterprises, there are also costs. Could you comment on those costs and that balance?

[Carol Hunter]

I'd be pleased to go first.

Personally, I would argue that the author, Alan Painter, is portraying support for the social economy as an expenditure, not as an investment. On the investment side, with the government supporting.... In terms of the government devolving many of the services to community groups, community groups are actually helping the government achieve its policy agendas, so it is an investment rather than an expenditure.

So I think it's the paradigm from which you approach the argument that is very important.

[The Chair, Conservative, Dean Allison]

Mr. LePage, do you have some comments?

[David LePage]

I think it's very true, as Ms. Hunter has said, that the return on investment has to be looked at. Every opportunity has costs attached to it. But what is the return on the investment? So for the investment the federal government makes in supporting the social economy, the returns in terms of employment, supporting the non-profit sector, services, and environmental impact are much greater than the investment.

So I think Ms. Hunter is correct, and I think the federal government has to use a return on investment model that measures both the economic and the social impact of the investment.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. LePage.

Mrs. Neamtan.

[Nancy Neamtan]

I would say first that we've had studies that have shown that the return on investment.... For example, there's a network of non-profit enterprises that hires handicapped people; over 3,000 handicapped people are working, fully contributing, and paying taxes. Pierre Fortin, a very well-known Quebec economist, has shown that the money given to these enterprises basically compensates for the loss of productivity linked to the handicapped, and that the cost of these people, who no other enterprise would be willing to hire and who would otherwise be on welfare, is much higher than the contribution to the social enterprises that are out on the market creating all kinds of employment and increasing the gross national product of Canada.

So there are these kinds of studies. If you go to the Harvard Business School or look at their website, you'll see that social enterprise is one of the models that is being looked at very, very closely as something that's in major development within the United States, and in other countries as well.

So, again, I agree with the others. It's a very good investment for government.

[Patrick Brown, Conservative, Barrie, ON]

A second question would be a general one for everyone. Would you agree that when a new government is elected there is an expectation that the government will look at new priorities and look at streamlining the priorities of its predecessor government, focusing on the priorities in which they promised to invest? For example, we've heard from the NDP that they would change the textbook tax credit if elected. That's fair, because whatever government is elected, they should have the prerogative to focus on priorities and streamline, just as the Liberals did when they were elected in 1993 and cut funding to granting councils by $77 million and to the research council by $76 million. That was their prerogative, because they were elected in 1993.

Would it be fair to say there was an expectation within your organizations that there would be a focus on priorities by the new government and that we could expect some changes when a new government was elected?

[The Chair, Conservative, Dean Allison]

Nobody wants that question.

Why don't we start with Ms. Hunter.

[Carol Hunter]

Thank you.

I think that's a very good question. And I do appreciate that the Conservative government needs to look at its own programs. I would like to applaud the government for rolling out the initiative in Quebec and to the research components.

I also appreciate that the social economy has not been a concept well understood outside of Quebec and that the government and the different departments—Johanne Mennie's shop—need to understand what that means. But as we've heard from Ms. Mennie, tremendous research has been done to demonstrate now that the social economy is an investment, that it works, and that it's in multiple sectors and multiple countries. So given that the research has gone forward, I would suggest that the government now has an opportunity to show leadership and to build on the evidence from Ms. Mennie's shop by reversing the decision to roll up the social economy. I also appreciate there was a need to better understand it and perhaps to better brand it as a Conservative initiative.

But I would applaud Ms. Mennie's shop, because we now have solid empirical evidence that it works.

[The Chair, Conservative, Dean Allison]

Do you have some comments?

[Nancy Neamtan]

I agree with what was said. We went through the same thing in Quebec, where there was a certain perception that this was a partisan issue. There have been changes in government, including in municipal governments that have been supporting the social economy.

I would say this is a good opportunity for us to be able to explain to the new Conservative government that this is good for government, even from the perspective of saying we want less government; this is communities taking in hand some of the social and economic issues that normally and traditionally people like myself perhaps would be asking government to do. It's a question of individual and collective responsibility, so in many ways I think this is a very profitable kind of investment for all governments, and I hope that through these hearings and further discussions you will be able to understand how we can contribute to your attaining your objectives.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Neamtan.

Mr. LePage, just a quick comment, as we're almost out of time for this round.

[David LePage]

I think it's very important to look at this as a non-partisan opportunity, and to look at examples. I would mention that last week in the United Kingdom, their government rolled out a social enterprise plan that is very effective and very comprehensive. That would be a great example for all parties to look at.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. LePage.

We're going to move now to the second round.

Five minutes, Mr. D'Amours.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Thank you, Mr. Chairman.

First off, I'd like to make a comment. I feel that it is offensive for the department to call people to appear before us who do not do so. A woman from the Community Development and Partnerships Directorate at the Department of Human Resources and Social Development has left. So, there's no one left from the department. I find that really deplorable and shameful, because we have questions to put to them, and no one is there to answer.

Second, I understand that the conservatives are saying that they are not in favour of supporting the social economy. However, I disagree with their position. The fact that there is a new government does not mean everything has to be changed. In my opinion, the social economy is a very important thing.

Mr. Savage, I'd like to know your opinion. I only want a yes or no answer from you. Is the social economy a good thing?

[Sylvain Savage]

Yes.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

If so, why are we cutting 30 % of its budget?

And I would go even further. I understand that you found that some people had done good work, but there is a fact we have to contend with: 30 % less next year.

My question is for Ms. Hunter and Mr. LePage.

We may find that it is good for a region, however, how come ACOA is not here to speak to these cuts? Why is it that FedNor isn't either? Why isn't Western Diversification Canada not here either to discuss the cutbacks that it is facing?

In our regions and in my region, New Brunswick, in the Atlantic provinces, we were hit by these cuts. If departmental representatives are not here before us today, it is because the government actually tried to avoid having certain questions asked.

My question is for all three of you, Ms. Hunter, Ms. Neamtan and Mr. LePage. Were you consulted before the announcement was made that $40 million would be cut? Forty million dollars out of $132 million is exactly 30 % of the budget.

First off, were you consulted? Second, did the government fulfill its obligations throughout this country from coast to coast to coast, by carrying out such cutbacks?