Finance committee  We're going to be putting out a paper shortly and you will find that it addresses a wide range of issues. I certainly wouldn't say the dollar is the only factor, but when you go from a 64¢ dollar to an 89¢ dollar, that's a pretty huge adjustment for companies to go through.

Finance committee  The limit on the length of a brief is what, ten pages? I was endeavouring to flag some important issues. I have several papers on productivity that we've produced, which I'd be happy to send to you. I absolutely agree that the exchange rate is by no means the only factor. I would argue, with respect to the productivity issue and sound use of funds, that investment in human capital is a big part of the piece, and public infrastructure—

Finance committee  Our unit labour costs in manufacturing have been actually declining, if memory serves me, over the last year or two. Productivity growth has been quite rapid in Canadian manufacturing. An increase in labour cost is absolutely not a factor in the current situation.

Finance committee  Yes.

Finance committee  I was only surprised by the size of the number. I think—

Finance committee  Well, just wait. With respect, I said I could only have answered the question of how a likely surplus should have been allocated in the advanced discussion. In my world, there would still have been this—

Finance committee  No, in my world there would still have been a surplus and it would have been paid down to the debt, because it would have been an unanticipated surplus.

Finance committee  I would argue as an economist that probably the exchange rate now is overvalued. I would agree it was previously undervalued. I think there was a tipping point reached when we hit the high seventies- and eighty-cent level, which by the way would equalize unit labour costs between Canada and the U.S.

Finance committee  Our unit labour costs have been falling.

Finance committee  Well, I guess it came to what we said in our advice to this committee in the fiscal year before that surplus was run. Our focus would have been on social investments. I think there are many areas of expenditure, including training, infrastructure investment, where there's a direct sort of link between that investment and long-term growth and productivity.

Finance committee  I guess I find it hard to answer the question when we're talking about a period of time. I mean, clearly, that means we have come through a period in the past when the rate of taxation was excessive relative to the current spending—

Finance committee  I think it's inferior to the alternative of increasing government expenditure.

Finance committee  My understanding--and actually I'm going to Newfoundland in a couple of weeks--is that Newfoundland is looking at some skill shortages now just because rates of mobility out of skilled work have been so high. If you go too far the other way, what you run into--and I'll send you the reference, a recent research study that was done for Human Resources and Social Development Canada--is the fact that study pointed to, that if all you're giving a worker as a benefit is 55% of maximum insurable earnings of $38,000 or $39,000 a year, basically it's a poverty-line benefit.

Finance committee  I can get back to you with a more detailed answer. I do know there were some estimates of those costs that were presented to the human resources committee.

Finance committee  I don't want to throw out a guess. It's difficult to estimate, because there's some sort of interaction between them. It depends on the unemployment rate as well, which is a variable. I'll get back to you with a number. It's not as big as you would think.