Debates of April 2nd, 2001

Budget Implementation Act, 1997

[Jane Stewart, Liberal, for the Minister of Finance]

moved that Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act, be read the second time and referred to a committee.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I am delighted to have the opportunity to speak today at second reading of Bill C-17.

The bill amends the Budget Implementation Act, 1997, by providing funding increases for the Canada foundation for innovation. It also contains amendments to the Financial Administration Act relating to the Canada Pension Plan Investment Board and the borrowing power of federal departments.

I will begin my remarks by discussing the additional funding for the Canada foundation for innovation. I had planned to talk about the history of the Canada foundation for innovation but I think members in the House are familiar with the story. With the bill, funding for the foundation will rise to $3.15 billion. That demonstrates the government's commitment to fostering a knowledge based economy and a climate of innovation.

I will move to the specific measures of the bill which pertain to the CFI and I will explain the funding provisions in detail.

The $500 million announced last October will be invested in two ways. First, $400 million will allow the foundation to contribute to the operating costs of new awards. Second, $100 million will help support the participation of Canadian researchers in leading edge international research projects and facilities that offer significant research benefits to Canada.

The recent announcement of an additional $750 million for the CFI will build on that funding by providing additional stability to universities as they plan their future research priorities. At the time of the announcement the finance minister said:

Giving the knowledge economy of the 21st century a preferred home in Canada will lead to higher incomes, better jobs and increased opportunities for all Canadians.

In addition to establishing the Canada foundation for innovation with a series of funding initiatives that now total $3.15 billion the government has implemented other funding initiatives for research over the past four years.

The initiatives include: one of the most generous R and D tax regimes in the world; increased funding to the granting councils, including the creation of the Canadian institutes for health research, to maximize the advantage Canada enjoys in medical research; funding of $900 million over five years for the Canada research chairs program which would establish 2,000 research chairs at Canadian universities; increased funding for the network of centres of excellence; funding of $300 million for Genome Canada; the sustainable development technology fund; and a Canadian foundation for climate and atmospheric sciences.

As announced in the Speech from the Throne in January, the government is committed to at least doubling its current federal investment in R and D by 2010.

The Speech from the Throne also specified that during its mandate the government intends to increase investment in granting councils, accelerate Canada's ability to commercialize research discoveries and turn them into new products and services, and pursue a global strategy for Canadian science and technology so that Canada can be at the forefront of collaborative international research.

Increased funding for the Canada foundation for innovation, CFI, is not the only component of the bill. Bill C-17 also contains amendments to the Financial Administration Act which I will now discuss briefly.

I should first explain that the financial administration of the Government of Canada, the establishment and maintenance of its accounts and the control of crown corporations all fall under the purview of the Financial Administration Act, the FAA.

In addition, the Financial Administration Act sets out the statutory framework under which the government can borrow money. The Minister of Finance needs authorization from parliament through borrowing authority acts before the government can borrow new money. Authority to refinance maturing debt is contained in the Financial Administration Act. The finance minister is also responsible for debt management under the Financial Administration Act.

The first FAA amendment in the bill concerns the Canada Pension Plan Investment Board. When the Canadian Wheat Board Act was amended in 1998, the Canada Pension Plan Investment Board was inadvertently deleted from subsection 85(1) of the Financial Administration Act.

The error meant that legally the Canada Pension Plan Investment Board was subject to various crown corporation control provisions under the FAA which put it in conflict with its own mandate. Clearly that was not intended. Bill C-17 rectifies the situation.

The Canada Pension Plan Investment Board will again be included in the list of crown corporations exempt from part X of the Financial Administration Act. The change will be retroactive to December 1998 to ensure that the Canada Pension Plan Investment Board has always operated within the laws of Canada.

The second amendment reinforces the authority of parliament over any borrowing by or on behalf of the crown. It also strengthens the role of the Minister of Finance in ensuring the appropriate management of government indebtedness.

The amendment provides for greater certainty that it is parliament that specifically authorizes borrowings made on behalf of Canada. Bill C-17 ensures that all borrowings, not just money but instruments like capital leases, are covered under section 43 of the Financial Administration Act and are subject to supervision by the Minister of Finance.

In closing I will summarize. The amendments to the Financial Administration Act are designed to improve the operation of the act.

The changes to the Budget Implementation Act, 1997, to provide additional funding to the Canada Foundation for Innovation and extend its activities are consistent with the government's commitment to at least doubling its current investment in R and D by 2010.

The Canada foundation for innovation is about looking forward. It is about education and investing in the future. In other words, it is making a down payment today for a much greater reward tomorrow. Let me quote the Minister of Finance when he spoke on October 18. He stated:

—success in the new economy will not be determined by technology alone, but by creating an environment of excellence in which Canadians can take advantage of their talents, their skills and their ideas.

The Canada foundation for innovation and its successes reflect the minister's sentiments. The CFI deserves this increased funding so that it can continue to promote research in Canada and inspire young Canadian researchers, thus contributing to the environment of excellence.

I am confident that hon. members from all sides of this House will agree that investing in education, research and innovation is the most significant investment Canadians can make to foster future success.

Clearly the government is on the right track. I encourage hon. members to give this legislation their full support.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I am pleased to rise on behalf of the official opposition in the debate on Bill C-17. I thank the parliamentary secretary for mercifully abbreviating his remarks.

I will say at the outset that the bill, as the parliamentary secretary has indicated, deals with amendments to two statutes. One deals with funding for the Canada foundation for innovation and the other deals with amendments to the Financial Administration Act, the FAA. Neither are related, but the government has decided to parcel them together in the one bill. Both elements of the bill are evidence of how the government approaches legislation in an inappropriate fashion.

Let me address the bill as it concerns the Canada foundation for innovation. It proposes to give statutory authority to an announcement already made by the Minister of Industry to increase funding to the CFI by some $750 million.

I think many of my colleagues will share this sentiment: I find it troublesome, to say the least, that parliament is constantly putting forth legislation to authorize spending that has already been announced as a fait accompli by the government, in this case by the Minister of Industry.

Rather than coming before the House of Commons to seek the authority of parliament before making public and political commitments, the government ignores the ancient prerogatives of parliament and abuses its executive authority. It makes announcements outside this place and then later comes along to say it needs parliament's approval. After 900 years of parliamentary struggle to give representatives of the House of Commons the power to scrutinize, reject or authorize the spending plans of the crown, this is what we are facing. This is just part of an endless pattern of the centralization of power, the abuse of power and the contempt of parliament, not just by this Liberal government, but its predecessor governments, that increasingly diminishes the prerogatives of this place to authorize spending.

The government might say that it knows for sure that it will get these things passed anyway. How does it know that? The last vote which I was at in this place the government lost. We cannot be certain that announcements made by the Minister of Industry will end up as authorized appropriations by this parliament. There is no certainty in that. To assume otherwise is to exercise a great degree of arrogance.

Also I found it troublesome that the Minister of Industry, that very thoughtful, reflective gentleman and that great contributor to public policy debate in this country, announced this. The Minister of Industry, that great friend of industry, through the Voisey's Bay debacle acted like the dictator of a banana republic by telling a private company that it could not, after having received all regulatory authorization, benefit from its private investment in a major capital investment in his own province. It is an embarrassment that he is the Minister of Industry.

When the minister stood up about a month ago and made this announcement of $750 million for the Canada foundation for innovation, he did so in a context that was completely without any reference in the federal so-called mini budget, the finance minister's political statement of last October and in lieu of a conventional spring budget. He announced nearly $1 billion in new public spending without any broader fiscal context.

We find this troublesome. The fact that he did so at the very end of the fiscal year, which ended this past week, is part of the pattern of spend it or lose budgeting, or March madness, of which this government is a brilliant practitioner. Departments know if they do not fully exhaust money which is on the table or which is available in a given fiscal year, it will be returned and will not be available to them to spend in future years.

The government tells us that this $750 million, and I look forward to questioning representatives of the ministry at committee on this point, will be spent over the duration of something like 10 years. I asked officials in a briefing whether the $750 million would be spent in 10 years. They said “No, something like 10 years”. What does that mean? It is nearly a billion dollars of tax money and the government is not even sure over what duration this will be rolled out.

One thing is for sure. The government wants to book it all in this current fiscal year as part of the well established practice, which has been much criticized by the auditor general, of trying to diminish the size of the surplus in any given fiscal year for political reasons. Then the government can turn around and tell taxpayers that it is sorry it cannot afford to give more real, meaningful tax relief because the surpluses are just not big enough. Year after year we hear this sad story, precisely because the surpluses have been overwhelmingly consumed by huge spending projects and the March madness represented by the announcement which found its way into the bill.

Major spending commitments ought to come before this place in a budget speech in parliament before they are announced by a hyperpolitical minister, like the minister responsible for industry. They ought to be authorized by this place in the context of an overall, long term fiscal plan.

Many private sector economists are agreeing with the official opposition in its assessment that the government's spending program is out of control. Its spending this year will be $35 billion higher than it was projected to be the year before last. That is discretionary spending. That does not include things like the increases for CHST. Spending is out of control.

We see that Canada is headed into choppy economic waters. Growth projections for the current calendar year have been on average cut in half from where they were when the minister's political statement came out in October. At that time he projected a 3.5% growth. We are now looking at an estimated growth of something like 1.5% to 2% this year. That will clearly have an impact on government revenues.

Many economists suggest that in the second quarter of the year, which we are now entering, there will actually be a flat, if not negative growth in Canada. We have a dollar which is teetering on the brink of a near record historic low, having lost 25% of its value under the tenure of the government. Our dollar is now declining against that famed currency, the Mexican peso. The government's reaction is “don't worry, be happy” and that it does not need to bring forward a budget, as is the convention in the House, this spring or even next fall. When the Prime Minister decides by fiat that he is going to deign to come before parliament with a budget he will do so and not before then, notwithstanding that the entire economic landscape has changed dramatically since this government's political statement in October.

Instead of coming before us with a framework to control spending in light of these new realities what does the government do? It presents piecemeal major new spending programs which have not been accounted for in the overall fiscal framework and which have no recognition of the new economic circumstances in which we find ourselves, through the nearly $750 million proposed in the budget.

While we have great consternation about the manner in which this is handled, the amount of spending and the lack of a budgetary authority for it, the official opposition does in principle support the policy objectives of the Canada foundation for innovation. We believe that Canada needs to greater investment in both the public and private sectors in research and development, particularly with respect to hard applied sciences. We have long been an advocate of this kind of policy.

It has been widely remarked that Canada's expenditures and investments in research and development are significantly lower than the average in the OECD and the G-7. This is something we need to correct. Toward that end the Canadian Alliance policy states:

We will appoint a Senior Advisor on Technology with private sector technology experience to report directly to the Prime Minister. We will bring the best ideas in business, government, and universities together to facilitate the transition to the new economy and position Canada as a global leader. We will increase support to Canada's research granting councils and appoint a chief scientist of Canada to co-ordinate science activities in all government departments and ensure that science, not politics, prevails.

We also committed further to that in our election platform an increase in funding for research and development to the various granting councils of some $500 million, an amount far exceeded by the bill before us today. While we believe it is important that both the public and private sectors invest more in R and D, we think that must happen within the context of fiscal responsibility. That means every dollar must be watched with great care.

Another concern that my colleague, the member for Calgary Southwest and critic for science and technology for the Alliance, raised was the manner in which these public moneys were allocated through granting councils, such as the CFI. He interrogated the Minister of Industry on this point at the industry committee, that the government had no clear and impartial framework for granting moneys out of foundations such as the CFI. Also, there was no clear certainty that grants would be done in a completely non-political way and strictly on their merits, as pointed out by the auditor general.

There is no proper reporting on the administration of the grants at research institutes and universities, nor does parliament get proper feed back on the results so we can see what bang taxpayers are getting for their buck.

These are all things that need to be changed. The government constantly comes before parliament or its committees with new ideas about spending on science, technology, research or development. There is a proposal now for major new funding for astronomy. There are various other projects on the table, all which have been dealt with in a piecemeal fashion.

We in the official opposition, and I think my colleague from Calgary Southwest will later speak to in this bill, believe there is a need for a broader framework for funding of science, technology, research and development rather than the kind of political piecemeal approach which we have before us in this bill.

Let me turn my attention to the second section of the bill with respect to the legislation affecting the Canada pension plan investment board and its adherence to the Financial Administration Act.

I find it quite humorous because there are two things that happen in the bill. First, clauses 4 and 5 of the bill clarify the borrowing authority that departments, crown corporations and agencies have. They clarify what we all know ought to be the case, and thought was the case, that parliament delegates to the Minister of Finance the authority to borrow certain sums and he has the delegated authority to authorize or reject borrowing requests from various departments, agencies, boards and commissions.

It turns out that due to typical legislative errors on the part of the government, there are a couple of departments that are not covered by this convention, or legal tradition, of delegated borrowing authority. The Department of National Defence, apparently, had obtained a legal opinion indicating that it had the power to borrow money on its own without any authorization from the Minister of Finance or authorization by parliament. The legal officials in the defence department and the justice and finance departments had a great brouhaha over the past year about whether or not defence department bureaucrats could borrow money without proper legal authorization by this parliament and the minister.

How could we have let that situation get out of control? It is quite conceivable that they could have gone out, done so and contravened a long standing convention of parliament, which is a restriction on the borrowing authority. Because of the government's incompetence and oversights it has taken years to finally come forward with this amendment to tighten up and clarify the delegation of the borrowing authority saying that bureaucrats cannot charge money on the public credit card and tell taxpayers to “pick up the bill, see you later”.

Today it could happen. After this bill it will not be able to but this has stood for far too long without correction on the part of the government.

Then we get to my favourite section of the bill, clause 6. It is really quite marvellous. The government House leader is so proud of his legislative prowess. The problem is that he so often brings bills before this place that are riddled with drafting errors. I spoke about this in debate on Bill C-22. We were making all sorts of corrections to legislation to correct mistakes made in drafting errors in bills brought before parliament by the government.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

They're legislative improvements.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

The House leader calls them legislative improvements. Sometimes they are euphemistically referred to as housekeeping amendments. It just sounds so pleasant.

The real ugly face of it is legislative incompetence on the part of the government. The House leader is the first, whenever the opposition drags out debate on a bill as we occasionally do, to raise the alarm about the cost to parliament and the value of debating time in this place.

We spend hours, days and weeks in every session debating bills such as this one, which are, in substance, corrections to legislative errors that the government made in the first place. If the government got these things right in the first place, we would not be spending scarce parliamentary time debating legislative errors such as those contained in Bill C-17.

Sometimes these errors are not just of a minor, technical or dilatory nature. Sometimes they are very serious and grave mistakes. The Canada Pension Plan Investment Board is a good example. In the immediate past parliament, the government introduced Bill C-2 in order to make some major changes to the Canada pension plan and to authorize and introduce the single largest tax increase in Canadian history. My colleagues will recall that massive tax grab that will cost tens of billions of dollars. They brought—

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I rise on a point of order. I did not want to interrupt my colleague on the other side, but I was just wondering about the relevance of what he is speaking about. I have been listening very carefully and I thought we were debating Bill C-17, which has to do with the Canada foundation for innovation and the Financial Administration Act.

[The Acting Speaker (Mr. Bélair)]

I am sure the hon. member for Calgary Southeast has listened to the comment and that he will tie his remarks to the bill.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I am doing precisely that. This is an indication that the parliamentary secretary does not even know what is in his own bill. I am talking about the Canada Pension Plan Investment Board, which is precisely what clause 6 of the bill refers to. No wonder the government makes legislative mistakes when the parliamentary secretary responsible for managing the debate on the bill does not even know what is in it. We see this time and again.

The parliamentary secretary wants to know what the relevance is. If he would listen maybe he would learn something.

With regard to Bill C-2, members of the official opposition raised grievous concerns about the $120 billion in equity, which belonged to Canadian taxpayers, that was taken from them through the CPP payroll tax. The amount will reach $120 billion in about the year 2015.

We raised grievous concerns about the potential for this or future governments to reach their politically motivated hands into that $120 billion pot of taxpayer money and to abuse the fund either by appointing patronage appointees to the Canada Pension Plan Investment Board or by directing its investment strategy by stripping cash out of it.

The government at the time said that we should not worry, that we should not be alarmist because there will be safeguards in place, that the bill will be exempted from the Financial Administration Act, and that the finance minister will not be able to muddy himself in the business of the Canada Pension Plan Investment Board.

Well, lo and behold, what happens? The parliamentary secretary tries to just skate over the issue very briefly hoping that no one would notice. When it comes to complex and technical legislation we often do not have the time or expertise to understand it, but the parliamentary secretary said that clause 6 in the bill would exempt the CPP Investment Board from part 10 of the Financial Administration Act, “to ensure retroactively that it always operates as it was intended.”

What does that mean? It means that there was a drafting error or a legislative mistake. I do not know if it was a mistake or if it was deliberate, but today the CPP Investment Board is covered under of part 10, subclause 85(1) of the Financial Administration Act, which means that the finance minister could today, through a ministerial order, strip cash out of the Canada pension plan fund. He could hire or fire officers who are employees of the CPP Investment Board. He could change their compensation. He could reject their business plan. The minister has all sorts of financial powers to intervene in the operation of the Canada Pension Plan Investment Board. This is precisely what we were concerned about when we debated Bill C-2.

That is the state of things today. The Liberals now say that it was a mistake. It has taken them four years to figure it out and finally correct it. That is four years too long.

The opposition will support the amendments. However we will bring forward one of our own that is similar to an amendment that we introduced at report stage of Bill C-2. The amendment would ensure that the operations of the Canada Pension Plan Investment Board are subject to scrutiny by the auditor general. My colleague, the chair of the public accounts committee and our treasury board critic, will be bringing an amendment forward to that effect.

This is another example of the government committing to spend money without proper parliamentary authorization. It is doing this without a budget at a time when spending is growing far too quickly and when we are headed into choppy economic waters. That is grounds enough upon which to oppose the bill. The government is also seizing the parliamentary agenda to correct serious mistakes which it has made.

It would be refreshing if the parliamentary secretary or his minister would stand in this place and take some responsibility for the mistakes which they and the department have made in allowing the minister to monkey around with the business of the CPP investment board, and in allowing bureaucrats and the defence department to borrow money without proper parliamentary authority.

The government is undermining the long and important tradition of ministerial accountability and responsibility. It feels that it can make these kinds of serious mistakes with impunity. The Canadian Alliance feels that it should be held accountable for these kinds of errors. There should be some sort of accountability when time after time it seizes the parliamentary calendar to correct serious mistakes of this nature.

I will make one additional very amusing point regarding clause 6 of the bill. The parliamentary secretary said that the clause would retroactively ensure that the bill always operates as intended. Is that not kind of Orwellian? The government made a retroactive amendment in the bill. George Orwell's 1984 talks about the ability of totalitarian governments to change history and facts that have already occurred.

[Jim Gouk, Canadian Alliance, Kootenay—Boundary—Okanagan, BC]

Kind of like a retroactive bill of sale.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Yes, it reminds me of that marvellous bill of sale in the Shawinigate affair. The government says it would never have made the mistake that it is now seeking to address because the change is retroactive.

What complete and utter nonsense. It is an insult to the legislative process to suggest that. If the finance minister wanted, he could interfere inappropriately in the activities of the Canada Pension Plan Investment Board because of its non-exemption from the Financial Administration Act. That would be completely within his legal purview. Changing this retroactively will not remove the mistake the government made. Again we see retroactive changes in legislation that in principle are somewhat offensive. The notion that the government can retroactively change history is contrary to logic and common sense.

For all these reasons the official opposition will oppose Bill C-17. I look forward to the debate and hearing from my colleagues as they outline ways by which we could increase financial accountability on the part of the government and invest more in research and development, but do so in a context that is fiscally responsible and mindful of the choppy economic waters into which we are headed.

[The Acting Speaker (Mr. Bélair)]

Before resuming debate it is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Cumberland—Colchester, Lumber industry; the hon. member for Sackville—Musquodoboit Valley—Eastern Shore, Multiculturalism.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, just to put everyone in context, today we are debating Bill C-17, an act to amend the Budget Implementation Act, 1997, and the Financial Administration Act.

This is the result of several announcements made by the government regarding, among others, the reinvestment of a further $750 million in the Canada foundation for innovation, in addition to the $500 million announced last October in the economic update.

In their eagerness to go to the polls, the Liberals brought down a minibudget, which turned out to be the real budget. Since there is no budget this year, this is how they are putting money into the Canada foundation for innovation.

I will talk mostly about this part of the bill and support for research in general, and less about the other measures contained in this bill, which amends several other acts to correct mistakes, as mentioned earlier, or add things that were missing or corrections that had to be made to the Financial Administration Act.

The federal government, after going through an era of major cutbacks—mainly in 1995, 1996 and 1997—has now started to reinvest in support for research. Granting councils and many other bodies were hit hard, and they had urgent needs. However, they had to wait and this had a negative impact on their ability to support research.

Similarly, cash transfers were drastically cut. As we know, transfer payments to the provinces were used to fund three different programs for health, education and social assistance. They were cost shared programs. However, the money was earmarked and we knew how much of the transfer payments went to social assistance, health and education.

Not wanting to be blamed for making $1 billion cuts in health care, $1.5 billion cuts in education and $800 cuts in welfare, the federal government decided to roll these three programs into one, which it called the Canada health and social transfer. Then it reduced the funding under this new transfer, letting the provinces decide exactly where to cut in those three areas.

The cuts were drastic. Transfer payments fell from about $17.5 billion to $18 billion to a low of $11.5 billion, which meant the provinces had to make cuts in health care and post-secondary education. Of course the latter includes a research component.

Now that the government has the financial means to do something, its first tendency is not to increase transfer payments. It did increase them slightly but mainly for health care. Everybody agrees that health care is important but the government invested very little money in post-secondary education. This is due to the fact that it chose a more visible way of investing in that area, a way which could be effective to a certain extent.

We are not disputing this but the government made this choice not for the sake of effectiveness but rather because it wanted more visibility than it would have had by simply putting more money in transfer payments so the provinces, including Quebec, could support research initiatives based on their own priorities.

We are not talking about petty cash. We are talking about substantial amounts. Of course the granting councils have seen their budgets increase. I could name each of them individually but this is not what we want to do today. However, these councils' regular core budgets are being increased.

It has been said that the government wants to double the research effort by 2010. A timetable has been established and the reinvestments are major. There is therefore a reinvestment aspect in the granting councils.

University research chairs have also been established. We are talking about several university chairs, with a lot of money. Funding for this program will be in the hundreds of millions of dollars over the next few years.

The third component is the Canada foundation for innovation also mentioned in the bill. The foundation will receive $750 million more than originally planned. It has already received more than $3 billion or has assets of over $3 billion. This is a lot of money.

Later on I will talk about some difficulties, some problems that are still unsolved. I will first talk about the first problem that we have with an organization such as the Canada foundation for innovation, without criticizing the people who work for the foundation. It is something governments tend to do, particularly the current government. The same thing happened with the millennium scholarship fund. The same is happening with the Canada foundation for innovation. The government is funding an external organization that does not have the same accountability toward parliament as the department itself.

For members of the opposition, and it should be the same for the government members, it is a bit frustrating to see such huge amounts of money being given to people who are not directly accountable. Of course they are accountable to parliamentary committees but they do not have to justify their decisions here every day.

When a minister is questioned on some contentious issue or a decision that is not in sync with the priorities of the government or of parliament, it is something that has to be dealt with outside the chamber. The minister says that it is an independent agency that carries out its duties as best it can and that the minister cannot always interfere in the operations of such agencies.

Things happen. Take, for instance, the Canada foundation for innovation. More so outside Quebec but even in several regions in Quebec, smaller universities are complaining because they do not have the same capacity as the bigger universities to get the funding and the projects they want.

We have a moral influence over the foundation. We can raise this problem and, in fact, we will do so tomorrow. The chair will be at the committee hearing and we will be able to consider the issue. Parliament put money into this foundation but not without adding some requirements as specific as the ones I just mentioned. That left us with no influence over these decisions and no influence over a minister who would have some say because the money would be spent by his department.

The corrective measures are way too slow and too complex and there is still the problem of accountability. We are talking about public funds. Taxpayer money is handed out to outsiders who have to abide by some rules, but are not subject to the same process as a minister who has to manage a department and account daily for his actions.

If this principle is that good, we will end up—and the process is well underway—handing over all government operations to outside agencies. What role will be left for parliament to play? We cannot support this, whether it is a lofty cause or not. We cannot let the government send money to an outside agency saying “Now you can manage this money as you see fit. We trust you”.

What I have left unsaid is that appointing board members is a way for the government to keep some degree of control. However, this process involves a very small group of people. Very often it involves the Prime Minister, since appointments are made by his office, or the minister himself in the best case scenario. Whatever the case may be, it still creates a situation where the minister and the Prime Minister can influence the board of directors or the senior officers of an organization.

Of course the foundation is sort of a more noble organization. The heads of the granting council are there to ensure a certain cohesion but the fact remains that it should not be independently managed. We have no problem with the department being accountable here. At any rate, when the time comes to make decisions of a more delicate nature, nobody can be sure that these people will have enough neutrality to resist pressure from those who appointed them. It is pressure at a very high level.

Pressure at another level, more appropriate pressure, namely pressure from the people and their elected representatives, is much more indirect and much more difficult to exert. That is the first problem.

For the second problem, taking the case of Quebec, which is in the process of developing a science policy, it is hard to set oneself targets, objectives and a work plan when one has control over only part of the tools. Obviously, there is also health research, but I will focus more on the education sector because this is generally where there is more investment in funding councils and the foundation. The same logic could apply to health, however.

These are matters that are essentially provincial but there is a significant portion still administered by Ottawa, or subject to made in Ottawa decisions or priorities, even if only on the amounts allocated. After that, the areas of focus need to be defined.

When the money is there, the complications of jurisdiction are not something that anyone needs. The government has stupendous financial means and uses that financial clout to become the government that plans future priorities. For many Canadians, this is fine with them. As for us in Quebec, the principal government of the people is the government of Quebec. While it does administer post-secondary education, it does not have all of the means to properly plan the development of its science policy.

Adjustments do need to be made. There is always some way of doing contortions in order to make ends meet. Our system of universities is highly efficient and so is our research. We have no complaints about the amount of funding our universities can manage to get together, for they are successful at getting the job done. They are very good. However, it becomes difficult to be consistent in this kind of situation.

These are the two main problems: accountability and the increasing inability of the provinces to influence the framing of a real scientific policy because Ottawa is using its accumulated surpluses—which came from cuts in transfers, from the EI fund, and so on—to play a planning role and to impose its own vision.

There is no doubt about that, as evidenced by the fact that the federal government is not reinvesting any significant amount of money in transfer payments for post-secondary education. It has reinvested some money in health care but very little in post-secondary education. New funding in this area is administered by the federal government or by an agency appointed by it, that is closer to it.

I cannot ignore one area of criticism that is beginning to emerge but it is constructive criticism. Now that we have said that we would prefer this not be an independent organization, the ideal situation would be to put the money back into transfer payments to the provinces so they can do that themselves, we know it will be very difficult to convince Liberal members to support us in that regard. The day will come when people will be able to settle this debate or to put more pressure so we can at least be more consistent in our actions, instead of having two governments acting separately. This will not always lead to bad results but very often it makes things more difficult. A lot of time is wasted in co-ordination.

Another thing the government must realize is that with all these investments in research chairs, the Canada foundation for innovation and granting councils, two very serious problems are emerging. Clearer directions will have to be given in the short term to correct a problem which, if we wait too long, will become even more serious and create a lot of difficulties, especially for small universities.

Let us be clear. There are not many big universities in Canada. The vast majorities of our universities are small. In Quebec, for example, the Université du Québec network is considered to be a small university by Canadian standards. We have the Université de Montréal, McGill University and maybe the Université Laval that might be called big universities.

Quite often smaller universities cannot rely on private foundations, unlike McGill University in Quebec, or on bequests left to them by some rich donors. Without such financial assistance, they have a hard time covering the indirect cost of the projects. The bigger universities have the same problem but at least they have more leeway than the smaller ones.

Since smaller universities do not have their own source revenues and cannot cut their education budget, because they do have classes to give and not only research to carry out—when they ask granting councils for a subsidy, indirect costs are incurred. From what people in the know tell me, on average, for every project, we have to add 40% for indirect costs.

Provincial programs in Quebec, for instance, pay for about a third of these indirect costs and the rest of the money has to come from elsewhere, by cutting something or making hard choices. Trying to get the money needed to do research can often penalize universities.

This applies to both the bigger universities and the smaller ones. I believe things are tougher for smaller universities because they have fewer tools and fewer choices when cuts have to be made and priorities need to be set. If we do not react quickly, the gap between the bigger universities and the smaller ones will only widen.

The other problem faced by smaller universities is that project approval is based on peer review, which is carried out by a network of peers, and they do not feel like they are really a part of the network. When these tools were brought in, they were not as ready as the big universities, which already had their waiting lists, their contact networks and so on, as well as a much stronger lobbying capacity. They feel they are at a disadvantage because of the initial commitments that were made.

This is even more true in other provinces where small universities have their own specialized areas. Some of them were successful in the first phases. We will have to remember that.

As with the chairs and all those tools, if we do not pay special attention to our small universities, they will have difficulty retaining their good researchers when the big universities or foreign universities from the States or elsewhere come to raid our researchers. This is an emerging problem that could become very serious.

Everybody recognizes that we have to make efforts to keep our researchers in the country and to make sure that our best minds are not exported but if this is true for Canada as a whole, it is also true for the small communities and for the small universities. I certainly hope the government will soon find ways to solve the problems of small universities as compared to bigger universities and of indirect research costs.

Would the best solution be to tell the provincial governments “Listen, we know that you already have formulas to compute payments. We will put money back into transfer payments so that you can better support indirect costs”? It would be one solution. There could also be automatic amounts. When the granting councils provide funding, they could immediately include with it an envelope to help with indirect costs, as do American granting councils.

There is one problem. There is a link missing in the whole research incentive operation. Considerable efforts are being made, admittedly, to increase research capacity. There is also a message that needs to be sent to the private sector. As elected officials, we have a duty and a responsibility to get that message across. Research efforts in any country must not be the sole responsibility of the government. The government must do its part but there is something a little disturbing in Canada.

I will take the case of Quebec. We have very good tax credits and many tools. The private sector has also come up with some of its own, although not as many as comparable countries. A way must be found to stimulate the spending culture, or investment in research, within private enterprises, because their ability to be competitive depends on it. It is not always solely the government's responsibility. Yes, the government must do its part. It must increase its contribution but private enterprise must not shirk its duty to conduct research and always look to the government for help.

The government will always have much of a monopoly on certain very specialized fields, even if there are economic spinoffs. This is clear because there are fewer private enterprises, or because their size does not allow them to conduct certain more fundamental research activities. Here again there must be a more direct dialogue with the private sector to ask it why it is not doing more research than it is at the present time.

Private enterprise is doing more, or trying to do more, but there is room for more to be done.

My other colleagues would perhaps like to address certain other aspects of the bill with which I am less familiar. I am more familiar with the Canadian foundation for innovation.

We will not be voting in favour of the bill for the reasons I have given. First, because allocating money to outside organizations puts them somewhat beyond the control of parliament, if not considerably beyond its control. Second, it is odious and has potential for considerable inconsistency for governments to be competing in the area of public support of research.

I cannot speak for all the provinces but I can speak of Quebec, with which I am familiar. Quebec has a science policy. Ottawa has and spends a lot of money. One does not get the impression that all this spending is necessarily aimed at efficiency alone. There is always a kind of war of visibility being waged by Ottawa and no one finds this healthy.

No one can fault reinvestment in research. That is something on which we will all agree. However, the primary motivation must be efficiency and nothing else. I have some doubts on the government's motivations in this area.

I am convinced that within these organizations, even within the government itself, there are some people whose main concern is efficiency, I am convinced that when the powers that be allocate money, the notion of visibility is foremost in their mind. It has been the case with every decision since 1995, by this government, which is slightly paranoid, thinking that people supported the yes side for this reason, because they had not noticed how effective the government was or because they had seen it as less effective than it really was. This is something we will debate again when the time comes.

With regard to the bill before us today, we will be voting against it for the reasons I mentioned earlier. I urge the government to pay attention to the problems emerging between small and big universities.

Small universities want to expand. They want to retain their scientists but indirect costs and possible raiding from other universities are a problem. And of course there is raiding from foreign universities, but we have no control over that. I am thinking about raiding on the part of our major universities if they are able to raise money faster than our smaller universities.

This is a very real problem for smaller universities. The university in Rouyn-Noranda is very effective, one of the most effective in Quebec in terms of getting funding for research. I know other universities are effective as well; also partnerships are formed.

There is something positive in all this funding issue, namely networks are being created more than ever before. Universities are forming partnerships and I am convinced they are possible in many areas, to find a niche. Universities are faced with similar situations. They can establish partnerships but they need the resources to do it and right now they do not have enough to pay indirect costs.

This is the message I wanted to send. Tomorrow, we will have the opportunity to repeat our message to the chair of the Canada foundation for innovation, who will be appearing before the committee, but for the time being we are saying to all the members of the House and to the government that we want more consistency. We also want smaller universities to have the same ability to grow as the bigger ones.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, I would like to say a few words in the debate on the bill before the House today. In a way it is an omnibus bill and it deals with a couple of radically different items.

The first one is the appropriation of considerable sums of money to the Canada foundation for innovation. In fact we would appropriate, if this bill passes in the House of Commons, $1.25 billion to that particular foundation. The other item deals with a small but important change to the Canada pension plan.

I notice a greater propensity now on the part of the government to introduce omnibus bills and I think it is wrong in principle. We are dealing with two fundamentally different items here, and it would be easier to vote intelligently on a bill like this if these items were separate.

We have just come through that with Bill C-8, the changes to the financial institutions legislation. There were massive changes in the bill, which was 900 pages thick and amended 1,400 pages of statutes. That makes it difficult for members of parliament to properly scrutinize bills.

That being said, in terms of the Canada pension legislation change here I would like to say a few words about the Canada Pension Plan Investment Board. They are important to put on the record. The investment board is an innovation of the Government of Canada, whereby a small portion of CPP deductions from employers and employees will be or are invested privately in the stock market. Overseeing that investment in the stock market and advising where to invest is of course the new investment board of the Canada pension plan. The board has 12 directors. If my memory serves me correctly there is one director per province, which makes nine, because the Quebec pension plan is a totally separate organization and institution, and three from the federal government. The chair of the board is named from among those 12 people. The Minister of Finance will seek advice from each of the provincial ministers of finance and then appoint the 12 members of the board.

What is missing here is a small move to democratize the board. The Canada pension plan is a plan which has ordinary Canadian workers' money in it, so I think that on the board there should be representatives of the working people themselves, from trade unions, from retirees, who can provide valuable advice regarding the investments of the board. When we are looking at the investment of workers' money this should be one of the amendments the government should accept, that is, to have on the board people who represent the workers and the trade unions themselves. That is only fair in terms of dealing with the workers' money. There should be representatives of the workers on the board. That is a fundamental principle of democracy and it is important in order to democratize that particular institution.

In terms of the Canada foundation for innovation, I think all parties in the House are in support of the concept or the principle that we need more money for research and development. If we look at the history of our country, we will see that we are one of the few industrialized countries in the world that does not put much of our GDP into research and development. We have a very small proportion of our GDP in research and development compared to the United States, Germany, France or many countries in western Europe. We have to move more in that direction in terms of money going into R and D. This is a bill that is going in the right direction in those terms.

The Canada foundation for innovation became law in the 35th parliament, which is two parliaments ago. If memory serves me correctly it became law in April 1997. I had a chance today to take a look at some of the expenditures of the foundation. I must add that this is not a foundation that utilizes only public money. There is also money from the private sector. I assume the universities and provinces all participate in the foundation.

I would like to take a few minutes to read into the record the kinds of projects the foundation is supporting. Up to March 31 of this year, 1,175 projects had been funded, for a total of $873 million. That is a considerable amount of money going into research and development, technology, research centres and so on, which I believe is very important.

I will round off these figures to the nearest million. In British Columbia, 134 projects were approved for $110 million. That represents about 14.2% of the total amount spent by the foundation. In Alberta, there have been 112 projects for $58.7 million, representing about 7.6% of the funding from the Canada foundation for innovation. In my province of Saskatchewan, there were 28 different projects for $20.4 million, which is around 2.6% of the total. In Manitoba, there were 57 projects for $16.3 million or 2.1% of the total.

So far, western Canada has received about 26.5% of the total amount being funded by the Canada innovation centre. That is roughly in accordance with our population, which I guess should be one of the criteria.

Ontario had 434 projects and $311.7 million for some 40.2% of the funding. The province of Quebec has had 315 projects and $230.7 million for 29.7% of the funding.

New Brunswick has had 26 projects and $5.2 million or 0.6% of the funding. Nova Scotia has had 47 projects for $15.8 million or 2% of the funding. Prince Edward Island has had two projects for $730,000, which is .09% or one one-hundredth, roughly, of the funding. Newfoundland has had 17 projects for $6 million, which is 0.7% of the funding. The total in Atlantic Canada is about 3.7% of the funding.

That is a bit of an update as to where the money has gone. It is fairly evenly distributed across the country with the exception of Atlantic Canada, which seems to be receiving less than its fair share if we divide on a population basis the funds from this particular program. The program of course is ongoing and I assume that these figures and balances would change over time.

I think this is a worthwhile project. A lot of money has gone into it. I think members of the House would support it.

We would want, of course, to have time to scrutinize some of these projects to see what their value is and whether the taxpayers are getting the bang for the buck, so to speak, from the hundreds of millions of dollars we are investing. That should be looked at by a parliamentary committee. It might be one of the projects the committee could undertake in the months and years that lie ahead.

When it comes to the Canada pension board, we should look at democratizing the board and bringing in some representatives who are working people to contribute to the agency. There should be representatives from the trade unions of the country. Perhaps there should be a representative of retirees on the board, who can offer advice from a retiree's point of view. In other words, the board must be democratized.

If we look at the composition of the board now and at the 12 members on that board, we see that almost all of them come from business backgrounds and would be acceptable to the business community or to the business half of that equation of who pays into the CPP legislation in the country. However, there are really very few who have a background that might be more relevant to the ordinary working people or trade unions or retirees across Canada. Let us make that change.

In terms of the foundation, I think this is a step in the right direction. It should improve our country's investment in research and development. The relevant committee of the House of Commons should look at some of these projects to make sure due diligence is done. After due diligence is done, the committee should determine whether or not we are getting the impact in terms of R and D, learning and innovation, jobs and skills, and added value to the Canadian economy that is the vision behind the bill before the House today and that was the vision of the bill in April 1997.

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, I listened with great interest, but to only part of the hon. member's speech, I regret to say, because I was called away.

The hon. member discussed the Canada foundation for innovation and its allocations and also, perhaps, the research chairs and the research funding now tied to them. It is very interesting that not only is the federal government providing, as it were, the salaries and that kind of thing for 2,000 researchers and professors across the whole country, but it is also providing research money to get them started, which I think is very important.

I think I have the same concern as my colleague from the NDP who was just speaking. I am concerned about the way in which a program like this—and I will come to the CFI in a moment—is impacting some regions and also some of the smaller institutions. I was very pleased when research moneys were attached to the chairs themselves, because very often a small institution receiving one or two or three of these chairs would find itself faced with additional expenditures simply to take on an extra employee.

However, with regard to the Canada foundation for innovation, I would like to ask my colleague a question. He is interested in the equity of the allocations. So am I.

The purpose of the Canada foundation for innovation is to provide research infrastructure moneys not only to large research institutions but to many others. There is one component of it which is quite different from the research chairs or the money coming from the research granting councils, that 10% which is available to community colleges across Canada.

This is something which is quite new. Normally we think of a distinction between the colleges which are extremely important in rural areas and in smaller communities and the universities with respect to research. I was pleased this time that particularly the applied research role, work which ranges from looking after senior citizens properly through to robotics, is being conducted in colleges.

I have a question for my colleague. What are his thoughts about the fact that the Canada foundation for innovation for the first time reaches our community colleges and is encouraging the sort of applied research they do?

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, the answer to that very difficult question is that I am certainly pleased part of the funding from the CFI is for community colleges. I believe he said 10%. I think that is the figure involved.

That is very important. Many community colleges are in the smaller cities, the rural parts of the country. My province of Saskatchewan has several community colleges. Many are located in the smaller towns and smaller cities in particular that would not have access to this kind of funding unless it were built into the act itself. I certainly agree with that.

One of the problems in our modern society is that there has been too much of a shift into bigger centres. I am not talking about our country only, but in terms of the modern world where bigger is better. The big institutions are there and one has to always go to the bigger cities to get better jobs and to have better opportunities.

With the new technology today it does not really matter where many of the plants and industries are established. With the Internet and technology, it can be done in a small town, in a rural area, in a big city or in a medium size city. They have access to the same technology. This reflects the reality that we have perhaps gone too far the other way in terms of all the money going into larger centres.

One reason I put those figures on the record in terms of the province by province breakdown was not to criticize the CFI by saying that there has been too much into certain regions and areas, but to put on the record that we as parliamentarians should be watching where the grants go. I should also like to see a rural-urban breakdown, not just a province by province breakdown. I should like to see how much of it goes into communities that have fewer than 50,000 people or fewer than 10,000 people, compared to the 8 or 10 big cities in the country.

It is a legitimate role for parliament to make sure we watch where the funds go and to make sure there is some kind of a balance in terms of the overall vision of the country, which is to provide equal access to opportunity. Whether someone lives in a place like Peterborough, Montreal, Vancouver, Kamsack, Saskatchewan, Pembroke or wherever, everyone needs to have equal opportunities within reason. I think that is one thing we should be watching as a parliament.

Once again perhaps the relevant committee of the House should take a look at these projects and do a study to see whether or not the money is going where the drafters of the legislation two parliaments ago intended it to go.

[Robert Thibault, Liberal, Minister of State (Atlantic Canada Opportunities Agency)]

Mr. Speaker, it is quite pertinent that the hon. member points out the distribution of the funds and the number of programs that were given in parts of the country.

I recognize, as he does, that the Atlantic participation has been underrepresented. It has been a little bit less than its population base would indicate. I let the member know that it is not lost on this side of the House.

That is why the Prime Minister announced last year the Atlantic investment partnership. Part of that is a $300 million program for innovation to help with some capacity building in Atlantic Canada so that our research institutes and our private sector are able to benefit or participate equally in the country or within programs like CFI.

The comments the hon. member made about Canada's role in the past and in the future on research and development are quite pertinent. If we want to fully participate in the new economy, I believe it is incumbent upon all of us to do our very best to make sure that our institutions and our country in general is taking full advantage of the opportunities out there, and research and development is how we will get there.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, maybe one of the reasons our standard of living in general has fallen in the last decade or so is that we have spent far too little in terms of research and scientific development.

We have fallen behind in many different areas. There are things we could have done better, things we would be natural at doing better. I am thinking of the whole agricultural sector because we are a great food producing nation. I am thinking of transportation and communications because of our geography. I am thinking of the mining resource industries because of all our resources. Maybe if we had spent more in the last 30 or 40 years in terms of R and D, it would have been of benefit to the country in terms of a better standard of living.

This is the kind of direction we should be going. Again, let us keep an eye on it so that we have a balance between rural and urban Canada in different regions of the country. Then everyone would be a part of the new and innovative society.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, it is with pleasure that I rise today to speak to Bill C-17 amendments to the Budget Implementation Act, 1997. The absurd nature of being in this place in the year 2001 debating retroactive changes to the budget of 1997 is self-evident. In any case, I will focus most of my comments on the Canadian foundation for innovation fund.

The government has consistently, particularly beginning in 1994-95, slashed transfers to the provinces to such an extent that it created a tremendous vacuum in funding for universities throughout the country. The provinces were simply not able to maintain adequate funding to our post-secondary universities and community colleges across the country.

As a result of the deficit that existed in the funding of post-secondary education we saw, for instance, the doubling of the average amount of student debt after a four year program in Canada. We saw tuition doubling not just in one province but across the country.

The Canadian foundation for innovation was introduced in 1977. The government has tried to make up with its federal granting programs some of the ground it eroded from beneath the provinces in the disabling effect of federal cuts to the transfers to the provinces, which created in many ways havoc across the country.

It is still my belief that in terms of education and health care spending the best decisions are typically made by the government closest to the people affected by those decisions. As such, provinces are in many ways much better suited to make long term and visionary decisions on behalf of the people they represent than the federal government, particularly in the areas of education and health care.

While the government has cut and slashed transfers to the provinces, which are in many ways the most appropriate vehicle for delivery of funding to our post-secondary education infrastructure, it has now tried through the foundation for innovation to make up for lost ground and to try to directly fund infrastructure investment focused on the areas of research.

The notion of government helping in investing in the research infrastructure that is so important for Canada's competitiveness in the new economy is not a bad one. I would argue that the investment being made by federal or provincial governments, preferably by provincial governments, is extremely important. There are some flaws, however, in the Canadian foundation for innovation model as applied over the last three years.

One benefit in a perverse way of debating amendments to the Budget Implementation Act, 1997, in the year 2000 is that we actually have the opportunity to be talking about some of the devils in the detail or the flaws in the implementation that are now more self-evident than they would have been in 1997.

In a realistic and applied sense, and not simply as a perceived issue, there is an anti-small university bias in the Canada foundation for innovation granting scheme. As a result smaller universities do not have the same level of access to these grants as some of the larger universities.

This is unfortunate because one of the cornerstones of Canadian post-secondary education infrastructure is the network of undergraduate program universities which perform a very important service to the future of Canada by providing a steady stream of enthusiastic graduates in science programs that may perhaps have graduated with a decision to pursue graduate or post-graduate studies.

In that way the undergraduate programs are performing a very important service to post-graduate institutions by providing an ongoing stream of students and young people with the enthusiasm to pursue post-graduate studies in many of those areas.

Representing a riding in Nova Scotia, and Nova Scotia being the cradle of higher education in Canada, there is a strong tradition in our province of providing some of the best post-secondary university experiences in the country.

There are some challenges. In my riding of Kings—Hants I am very proud to have Acadia University. Acadia University, like many of Canada's smaller universities, simply does not have the same access to the Canada foundation for innovation funding as some of the larger universities.

I have heard the arguments about a need to create levels of critical mass when it comes to research. Some of them are anachronistic. Critical mass can exist through a less parochial approach to research. Universities can co-operate to a greater extent and we should be working to encourage that. Certainly with the death of distance as a determinant in the cost of telecommunications, researchers can be connected via technology and do not necessarily have to be in the same classroom or the same lab, discussing and sharing their ideas.

We should be ensuring that the parochial approach to research which has existed in the past in the university environment is reduced somehow by working with the provinces to ensure and encourage a greater level of sharing of intellectual property between universities.

As a country we need to develop a better approach to commercialization of intellectual property at the university level and to technology transfer. In many ways American universities are much more successful at commercialization and tech transfer than we are in Canada.

As we try to achieve those two goals in that environment we should ensure that granting programs like the Canada foundation for innovation reflect the realities of the diversity of Canada's post-secondary university infrastructure and do not focus purely on some of the larger universities. It should try to address and invest in some of the smaller universities which are providing such an important contribution.

The other issue deals with matching funds. I believe 60% of the funds need to be matching funds. In provinces like Alberta or Ontario where there is a stronger fiscal position than there is in a province like Nova Scotia or Newfoundland, there is an inability on the part of the provinces to participate to the extent of the requirements of post-secondary institutions.

The matching fund issue is very serious and needs to be addressed more thoroughly. We would create a ghettoized post-secondary education granting system if we only contributed through matching fund schemes to universities in those provinces where the fiscal conditions permit an equal or greater investment by provinces and other entities within those provinces.

There has been a problem in the past where not enough foundation for innovation grants were making their way to Atlantic Canada. The government tried to address it last summer with the Atlantic innovation fund. That program was announced in the summer in a pre-election Hollywood-style announcement to try to enrapture Atlantic Canadians with the generosity and general kindness of the Liberal government. It did not work because most Atlantic Canadians saw through this shallow and feeble attempt to make up for past wrongs by a Liberal government that only found Atlantic Canada a few weeks before an election.

The Atlantic innovation fund has not even congealed to an extent that it can deliver any funding. Months later that fund, with its pot of money, is still sitting somewhere in Atlantic Canada with no notion as to how to deliver the money to the universities.

What is really bizarre is that while the government dilly-dallies and dithers with that fund to come up with a delivery mechanism with which to deliver the funding, the Canadian foundation for innovation is still in a position where it is providing money. Over the last several months it has provided an even more disproportionate level of funding to other parts of the country. Atlantic Canada is actually getting less because the notion is that the problem is solved, the Atlantic innovation fund is in place and the Canadian foundation for innovation does not have to be as vigilant now in Atlantic Canada.

That is simply not the case at all. There are also some concerns with ACOA acting in a role of a delivery vehicle for that funding. Concerns have been raised by people in the post-secondary environment and in the technology and high tech sectors. People in the economic development areas of Atlantic Canada have approached me directly to talk about this. They fear there is not enough understanding of technology in ACOA. They feel that ACOA can be an effective vehicle through which to develop a delivery mechanism for the Atlantic innovation fund but that it may not have the level of technical expertise necessary to develop a delivery mechanism for the Atlantic innovation fund. It therefore may not be able to achieve the ends that the government would like to see.

The fact is that if we are to be successful investment needs to take place in our post-secondary infrastructure. The devil is in the details. How are we to find the most appropriate way to ensure that the needs are met and that our competitiveness in this regard has improved?

There is a $3 billion deficit not just in research infrastructure but in general university infrastructure. It is a result of deferred maintenance among other issues and the government's callous disregard for education and health care funding. It let health care and education atrophy as it took its slash and burn approach to fiscal management and offloaded responsibilities to the provinces without considering what the end result would be. We will see a significant price paid over the long term for the loss in future competitiveness in these areas.

One of the fundamental flaws that needs to be addressed by the Canadian foundation for innovation would be the anti-small university bias which denies some of Canada's greatest educational facilities like Acadia University full and unfettered access to important funding opportunities.

The matching fund provision also needs to be addressed. It too discriminates against universities which happen to be in provinces that are less fiscally sound on a current basis. As a representative from Nova Scotia, the cradle of higher education in Canada, it is incumbent on me to defend the interests of my province in that regard.

Some of the macro issues are not addressed in Bill C-17. They deserve some level of debate and discussion when we are talking about amendments to the Budget Implementation Act, 1997.

Looking at Canada over the last 30 years and some of the changes that have taken place in terms of its competitiveness relative to other countries, our investment in post-secondary education can play a role in reversing what has been a very negative trend, particularly in terms of our competitiveness with the U.S.

However there are other issues too. In 1990 Canada had the fourth highest standard of living within the OECD. By 1999 we sank to seventh place with countries like Japan, Norway and Denmark overtaking us. In the last 15 years our real income per capita plummeted from 86% to 78% of the U.S. real income per capita. Ireland soared from 47% to 76%. Over a 10 year period Ireland increased its GDP per capita by 95%. In that same period Canada increased its GDP per capita by 5%. Our performance has been anemic.

We have seen a cyclical decline in the Canadian dollar over the last 30 years. This decline has become precipitous under the government. Over nine years of the Mulroney government the dollar lost one penny relative to the U.S. Since the Liberal government took power the dollar has declined by 12 cents. In 1990 as a Liberal leadership candidate the current finance minister said that if he were given the opportunity he would manage the dollar downward to about 78 cents. He did really well. He overshot his wildest expectations. The dollar is down to 63 cents.

The Prime Minister says that is just fine, that low dollars are good for tourism. The logical corollary of his argument is that if we reduce the dollar to zero we could be the greatest export nation in the world and be really successful. We all know how absurd and perverse is that logic or lack thereof.

There are things we have to do. In terms of government spending Canada's GDP represents about 40%. In the U.S it is 30%. Thirty years ago it was about the same, 30%. Our government's program spending has ballooned in Canada, but it has remained about the same in the U.S.

We have to reduce taxes. As a percentage of GDP, taxes in Canada are 10% higher than those in the U.S. We have to reduce our debt. I will propose one idea that over the next 30 years the government could address reversing some of these negative trends. If we were to reduce our debt in real terms over the next 25 years and apply the interest saved to reducing taxes, our economy would grow significantly both in real terms and as a percentage of GDP.

These are the types of forward thinking and visionary policy measures we do not expect from the members opposite but will see in the future under a different government.

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, I listened to the higher education part of the member's remarks with great interest, but I lost interest toward the end when he moved away from that.

I have great sympathy with his comment about his province being the cradle of higher education, and conceivably even of education in Canada. I understand exactly what he means. The role of the tiny yet high quality universities in the maritimes has been extraordinary. I am a great believer in cradle to grave education. I would ask the member, although it is not my main question: If he knows where the cradle of education is in Canada, in what region is the grave of education in Canada?

While I understood what he meant I became less sympathetic when he was talking about the role of the government in higher education. He did not mention the extraordinary increases in funding to granting councils, which provide money for research. For example, the old medical research council which funded most of the medical research has been changed. Its name has changed but, more significant, its budget having been increased for a number of years was doubled last year. The increases in the other councils were not that large but they were very large. He also did not mention the millennium scholarships or the Canada foundation for innovation, which has helped Acadia and other institutions with brand new money.

I would like to ask the member opposite about a couple of things which help small universities. One is the network of centres of excellence which has funded and refunded and is still being funded by the government for research across the country. What would his comments be on that?

I would also like to hear his comments on the point I made to the previous speaker that the Canada foundation for innovation extended some research moneys to community colleges, I know there are many of those in the maritime provinces.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, the member has an earned credibility on issues of higher education in this place. He has defended the interests of higher education quite consistently, if sometimes wearing partisan rose coloured glasses. He speaks from behind those specs today.

I was pleased to hear his empathy relative to the situation of smaller universities and those in Nova Scotia, specifically Acadia. There is a real and not just perceived anti-smaller university bias with CFI. I hope the hon. member's words of encouragement would indicate a pressure on that side of the House for changes in this regard with the CFI.

He and I differ on the effectiveness of the millennium scholarship programs. Only 5% of students seeking higher education have benefited from those programs. A more effective way to adequately fund higher education would be a full restoration of transfers to the provinces, transfers his government played a significant role in slashing and cutting in the mid-1990s.

Transfers will not reach 1995 levels until April 2002. A full and immediate restoration of transfers to 1995 levels would make a big difference in terms of allowing provinces to fund universities and post-secondary education. We often debate post-secondary education in this place but we do not talk about other areas of education. In general we need to invest more in education. The best way to do that is to restore transfers to the provinces.

One of the biggest casualties of the health care crisis has been education. The immediate focus has been on ameliorating the problems of the health care system because of the crisis mode it is in. However there has been a neglect of education issues in a general sense which will cost us dearly in the future. I am talking about primary and secondary education, not just post-secondary. The greatest societal return on investment would be in preschool, head start, early intervention and some of those areas.

In a general sense we agree that some of the issues relative to CFI as a delivery vehicle must be addressed. However we may disagree as to the degree of culpability his government has had in creating a crisis in education through its Draconian cuts to transfers in the mid-1990s.

[Sarkis Assadourian, Liberal, Brampton Centre, ON]

Mr. Speaker, the hon. member spoke about our dollar being low. However I am sure he knows our dollar is doing very well, thank you very much, compared to all currencies for the last few years.

Today I was following the debate in the U.S. on softwood lumber. A spokesman from the U.S. government complained that the Canadian dollar was very low and that exporters and manufacturers on the Canadian side were taking advantage of the low dollar and shipping goods to the U.S. at a cheaper price.

I wonder if the hon. member recognizes that. I hope he would not ask the government to artificially increase the value of our dollar to compete with the American dollar. I think he would agree that there is a benefit for our manufacturers and exporters when our currency is lower than that of the countries with which we compete, especially the U.S.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, the hon. member is quite right. Our dollar is doing well compared to the ruble. However there are other currencies that are probably equally important. Given that about 80% of our trade is with the U.S. and that we depend on American consumption and imports for our standard of living, the member would be better off to focus on how our dollar is doing relative to the U.S.

The fact is, under his government, the Liberal government, there has been a 12 cent drop in the dollar. That precipitous drop has represented a significant drop in the standard of living of Canadians. He was asking what we could do.

First, he said that I probably would agree with him that a low dollar is good for exports. I do not agree. That is a very short term approach. One cannot, in the long term, devalue one's wage and prosperity. That is a very flawed economic argument.

Canadian companies can do fairly well in exports in the short term. They can do so, not by investing in productivity or taking steps to be more productive in the long term but by simply enjoying the benefits of a lower dollar in the short term.

In two ways the low dollar has a perverse and negative impact on Canadian productivity over the long term. First, some of the productivity enhancement equipment, software or technology, comes from other countries, particularly the U.S. Canadian companies will not invest in productivity enhancement if they do not need to, and certainly not if the cost is elevated by a sinking Canadian dollar and a commensurately valuable U.S. dollar.

Second, because of the dollar Canadian companies do not need to make those kinds of investments. In the short term it makes it a little easier but in the long term it can have a very negative impact, which is what we are seeing. It becomes a self-fulfilling prophecy.

I would urge the member to revisit that notion. Upon further study he would see that we would be better off lowering debt and taxes, strengthening the dollar over the long term and not just blaming it on monetary policy. There is a fiscal responsibility that we in this place should address over the long term.

[Gurmant Grewal, Canadian Alliance, Surrey Central, BC]

Mr. Speaker, I rise on behalf of the people of Surrey Central to participate in the second reading debate on this bill. I will be sharing my time with the hon. member for St. Albert, and I am sure the House will look forward to his comments as well.

Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act, has two components. The first is to add additional funding of $750 million for the Canada foundation for innovation to the economic statement and budget update of October 18, 2000.

The second component involves amending the Financial Administration Act to clarify that parliament must provide explicit authority for any voting by or on behalf of the crown. I will deal with that later.

I will now turn to the first part of the bill, the Budget Implementation Act. The bill seeks to extend funding for the Canada foundation for innovation by $750 million to include operation and maintenance costs for research infrastructure. The bill also proposes to extend funding for the foundation to include the purchase access to international research facilities and research projects. The new funding will be spent over an undefined period of 10 years or more but will be booked in the current fiscal year.

The foundation's purpose is to combine government and private sector funding to enhance education and research infrastructure at post-secondary education institutions and research hospitals. The government stated that the foundation would be funded by an upfront investment of $800 million.

In 1997 funding of the Canada foundation for innovation was included in the deficit as if it were a liability at that time, even though the foundation did not exist by the end of the year. The foundation did not exist but the $800 million funding was included as a liability. This made the government depart from its own accounting policies, practices and principles for the third year in a row in contrast to the Public Sector Accounting and Auditing Board, PSAAB, guidelines. The auditor general called it inappropriate accounting and a parliamentary oversight.

The foundation is not obliged to report the results it achieves with $800 million, and parliament may consequently have difficulty obtaining the information it needs on expenditures.

I will quote from the Canadian Alliance policy. It states:

We will bring the best ideas in business, government and universities together to facilitate the transition to the new economy and position Canada as a global leader. We will also increase support to Canada's research granting councils, and appoint a Chief Scientist of Canada to coordinate science activities in all government departments and ensure that science, not politics, prevails.

Let me make it very clear that the Canadian Alliance supports research and development. We regret that the government has overseen and caused our economy to perform so poorly that it is now necessary for the federal government to step in and apply massive doses, hundreds of millions of dollars, to R and D.

The private sector is not encouraged to do R and D by the government because taxes are high. The government is not only arrogant but weak as well. It lacks vision and we cannot trust it. It is unclear what criteria the Liberals would use in granting decisions made by the foundation, which is to be administered by the Minister of Industry.

During the election campaign, the Canadian Alliance proposed an additional $500 million in R and D funding. We support increased funding for research and development. While we support the objectives of the Canada foundation for innovation, technical innovation would be more likely to happen in an environment of lower taxes and less regulation rather than increased bureaucratic spending with ill-defined funding criteria.

The second component involves amending the Financial Administration Act to clarify that parliament must provide explicit authority for any borrowing on behalf of the crown. The bill would also define regulations surrounding what is considered to be borrowing of money.

The bill would require the Minister of Finance to authorize money borrowing transactions. It would give the finance minister the power to authorize money borrowing transactions under any terms and conditions he considers appropriate.

Finally, the bill would amend an oversight in which the Canada Pension Plan Investment Board was removed from the list of crown corporations that are exempt from aspects of the Income Tax Act, reducing the possibility of ministerial intervention in the pension board.

The Canadian Alliance policy on financial administration states:

To ensure transparency, accuracy, and confidence in the government's finances, we will authorize the Auditor General to examine all federal government documents, including those from government agencies and crown corporations. The government will be required to report to the House within one year on how it has dealt with issues raised by the Auditor General. We will apply generally accepted accounting principles to government finances.

We will apply them not in the way that suits the government, but will use generally accepted accounting principles.

The bill would correct a legislative error made two years ago which opened the Canada Pension Plan Investment Board to interference by the finance minister in various areas such as cash stripping, appointments, and corporate business plan debt.

The government is again wasting parliamentary time with amendments to correct legislative mistakes it has made. The other day I was debating Bill C-4 and was surprised that the government had to amend its own bill six times. That is how poorly designed it was. The government has to recognize that it must draft bills carefully.

Time and again the official opposition finds that we are holding the flashlight for a weak Liberal government that lacks vision. The problem is that when the government passed the Canadian Wheat Board legislation, it took the CPP investment board out of the Financial Administration Act along with the wheat board.

The fact remains that rather than having excuses from the government, the minister responsible for legislation should be responsible for errors. There should be no mistakes because the minister should be carefully scrutinizing the work the government does.

In conclusion, we support the part of the legislation that corrects the government's mistake of two years ago. We support putting a stop to the finance minister's ability to intervene in the affairs of the pension board.

We have seen the government engage in cash stripping when it comes to the EI account. It stripped $30 billion from that account. We are pleased to put a stop to that.

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, I listened with great interest to my colleague's remarks. I was intrigued by them.

First we have to remember that the Canada foundation for innovation was not set up this year. We are discussing additional funding for it. It was set up three or more years ago. It was conceived at a time when the economy was nothing like as robust as it is now, when there was an even more serious problem about research and development in Canada. There was a serious brain drain. We were losing some of our best researchers. At the same time, Canadians who had gone overseas to be trained were simply not coming home and certainly foreign researchers were not considering coming to Canada to conduct their research.

A survey showed that it had nothing to do with salaries, which people often quote. It had to do with the fact the people here who were engaged in research projects either had old-fashioned laboratories or old-fashioned equipment or, in their relatively short productive research years, they simply did not have the research support they needed. It was the same thing with people overseas. People newly graduated from a foreign university could not come here and conduct their experiments because the infrastructure was simply not here.

So with regard to the hon. member's remarks, the purpose was to provide research infrastructure very quickly to attract these people back here and, by the way, to keep our best people here. Since then that has happened, but there is one other thing he mentioned. We have also changed the R and D tax environment because it was one of the factors the private sector kept telling us about. We now have one of the best, if not the best, research and development tax structures. The effects will be seen this year and in coming years.

We started the CFI and a whole raft of other investments, and we now have the best tax structure. I wonder if the member could comment on those things in light of my remarks.

[Gurmant Grewal, Canadian Alliance, Surrey Central, BC]

Mr. Speaker, I thank the hon. member for Peterborough for asking the question. The hon. member says this foundation was set up a few years ago. That is right. It was set up in 1997, and even when it did not practically exist yet, the government had $800 million shown as a liability and charged to its accounts. The auditor general was very critical about it, but that is another story.

The hon. member mentioned the serious brain drain problems then, but the brain drain problem still continues. Most of the engineering graduates and doctors and nurses leave the country. Last year alone 6,000 doctors and 14,000 nurses left Canada. The figures are very intriguing.

I understand that the hon. member appreciates investing in research and development. We support that intent as well. It is a noble idea. However, the hon. member's party came into power in 1993. It took four years for it to realize this investment. It set up the foundation in 1997. If his party was so interested, where was it for four years? This is too little, too late.

I would encourage the hon. member to put pressure on the government to revisit its priorities. It should set the right priorities and then allocate the money. Rather than distributing some hypothetical or other grants and contributions or favouring its friends, it should invest the money where it would be more productive.

Another point the hon. member mentioned is tax structure. He said the tax structure with respect to research and development in Canada is the best. I doubt that. Our taxes are so high with respect to G-7 and OPEC countries that we are lagging behind in using our taxation structure as a motivation for investors and as a motivation for R and D. I think the hon. member should look into that again. We are really lagging behind.