Proceedings of the Standing Senate Committee on
National Finance
Issue 8 - Evidence, May 4, 2004
OTTAWA, Tuesday, May 4, 2004
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the Main Estimates for the fiscal year ending March 31, 2005.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: Welcome. Today we resume our study of the federal equalization program. As honourable senators are aware, we have heard from several academic experts in this field, as well as representatives of three provinces: Newfoundland and Labrador, Prince Edward Island, and Saskatchewan. Today we have the great pleasure of welcoming from the Government of Manitoba: the Honourable Greg Selinger, Minister of Finance, Chair of the Treasury Board, Minister Charged with the Administration of Crown Corporation's Public Review and Accountability Act, Minister Responsible for French Language Services, Minister Responsible for the Civil Service and, last but not least, MLA for St. Boniface.
Mr. Selinger, as befits a New Democratic member, has a Ph.D. from the London School of Economics, a master's in Public Administration from Queen's University and a Bachelor of Social Work from the University of Manitoba. The minister is no stranger to this committee. Mr. Ronald Neumann, who accompanies the minister, has been Director of Intergovernmental Finance for Manitoba for the past 20 years.
It is entirely possible that Mr. Neumann is one of those rare people, to whom we referred the other night, who understands the equalization formula. The minister has provided us with a brief.
[Translation]
I am happy to see that this document is drafted in the country's two official languages — my most sincere thanks.
[English]
The brief is before you, senators, and the minister intends to speak to it rather than to read it, after which I will open the floor to questions and comments from members of the committee.
Welcome back, minister, please proceed.
The Honourable Gregory F. Selinger, Minister of Finance, Government of Manitoba: Thank you for the opportunity to be here and I thank you for your patience. We were scheduled to be with you earlier but we had a matter of budget and debate in the legislature first.
In 2002, the Senate committee was, in our view, absolutely correct in its recommendations that equity required a ten-province standard for equalization, and that a ten-province standard was indeed affordable on behalf of the federal government. It is our opinion that equalization is the glue that holds the federation together, providing more equitable rights and opportunities wherever they may reside.
The Conference Board of Canada has documented the fiscal imbalance between the two orders of government. There are large and growing surpluses at the federal level and a cumulative string of deficits, which are putting many of the provinces at risk. Our biggest challenge across the country is to maintain our first-rate public health care system without jeopardizing our ability to finance education, other social services, and programs for the environment and infrastructure, all of which fall, for the most part, within provincial jurisdiction.
The conference board also suggests that Canadians pay enough taxes to maintain these programs but that revenue needs to be redistributed through federal transfers to the provinces. Imbalance needs to be corrected through improved sharing of the growing costs of health care and a strengthened equalization program with a ten-province standard and full revenue inclusion.
Equalization has fallen into a crisis. Last year payments fell $4.7 billion below the federal budgeted amounts. Over 2002-03 through 2004-05, payments are projected to be almost $10 billion below the levels projected in the 2003 federal budget. The principal cause of the inadequacy of the formula is the use of the five-province standard, which was brought into place in 1987 and which excludes much of the resource revenue in Canada. Another reason is the exclusion, since 1999, of 50 per cent of the user charges, which are a substitute for taxation.
Relative to the economy, equalization payments will only be a little more than one-half of what they were 15 years ago. They will amount to 0.72 per cent of the GDP versus 1.34 per cent in 1988-89. The first principal of the program relates to equity. However, equity plays a role in ensuring economic efficiency by creating a more level playing field in which citizens in all regions of Canada can use their regions' natural economic advantages to create incomes and wealth, thereby increasing the productivity of Canada as a whole. A recent study of the long-term effects of equalization by Professor Wilson at the University of Alberta concludes that the efficiency gains from the equalization program are very high — much higher than when viewed over the short term.
With a level playing field, personal and business decisions are based on real, economic and quality-of-life factors rather than on the basis of net fiscal benefits deriving from unequal fiscal capacity in the regions. Differences in fiscal capacity arise because oil and gas revenues and other factors are unevenly distributed across the country and are, in the case of natural resources, under provincial jurisdiction. The equalization program narrows these differences.
While Manitoba has successfully countered out migration in recent years, several recipient provinces are seeing their populations in decline. This trend is unhealthy for all of Canada. In Manitoba, we recognize that we experience stronger economic growth when we retain more people.
Equity and efficiency require a strengthened equalization program. This requires that all provincial revenues be equalized. Some proposals from commentators suggest that resource revenues should be excluded in whole or in part from the equalization formula. This would create a two-tier system of equalization favouring those with non-renewable energy resources. It is unacceptable given the constitutional raison d'être for the program.
Proposals to exclude major portions of resource revenues would seriously damage the program and could create an untenable situation in which some recipient provinces have far greater fiscal capacity than others and, in a few instances, could have a fiscal capacity after equalization that would exceed that of Ontario, a non-recipient province. Surely that would be a perverse outcome — to have the recipient provinces with greater per capita income than the non-recipient provinces such as Ontario.
The federal government has provided an inadequate response to the crisis in equalization. The renewal package now before Parliament would return only $1.5 billion over five years of $10 billion short-fall of the current and immediate past years. The federal government package fails to implement the ten-province standard to provide full inclusion of user fees and other revenues and to implement desired changes such as the use of market value assessment calculations with respect to the property tax base, without delay and undue phasing-in provisions.
In conclusion, all provincial and territorial premiers have supported strengthening the program, and Manitoba joins in the call from others that this program be strengthened, with the other federal transfer programs to correct the fiscal imbalance in Canada; to sustain health care without jeopardizing other programs; to provide equitable rights of citizenship for all Canadians; and to create greater and even more economic growth throughout Canada.
Senator Stratton: The real question is on ten-year averaging. I think all provinces would like that — particularly Saskatchewan, which has suffered from a five-year averaging over the years. The real issue is health care. As I understand it, when provincial finance ministers get together regularly, there first and foremost discussion is on health care. It is 42 per cent of the province's budget, which is fairly substantial, and is growing.
Throwing money at the problem is not the solution, obviously, but it would appear that in the short term, more money is required. If we go to the ten-province averaging, how is this going to impact health care, and what are the provinces doing to substantially change health care to not only control costs, but to look at the dollar requirements over the next five or 10 years? Obviously, you have had to look at this and I am asking a question to which you would already have the answer. I think health care is the fundamental issue that will not go away in any province for a substantial length of time.
Perhaps you could elaborate on what effect the ten-province averaging would have on this, and what the provinces are doing to control the costs of health care.
Mr. Selinger: Senator Stratton, you are right; health care consumes somewhat in excess of 40 per cent of most provincial budgets now. Some are actually over 45 per cent, creeping up to 50 per cent. It is growing at about 7.2 per cent a year on average. In most cases, it is growing in excess of the economic growth in most provinces. The phenomenon is resulting in a crowding-out effect, where more resources are dedicated to health care at the expense of other departments that might actually do things that kept people healthy — for example, environmental remediation, recreation programs, infrastructure programs, education, which has a high correlation with healthy lifestyles. That is a big challenge.
What would the ten-province standard do to address the health care question? I think if we understand that about 80 per cent of everything we spend in health care is on salaries for physicians, nurses, other specialties within health care, technicians and the many people that provide services in that system, we could be more competitive on the salary front. If the provinces with which you are competing for talent can outbid you, you have no choice but to meet that challenge to get a certain specialist, for example, to reside in your city or province. You have to match that. Likewise, you have to match spending on technology to retain those professionals. If you cannot match it through purchasing power, which is what equalization is all about — the ability to have comparable levels of service at roughly comparable levels of taxation — then you have to take from other areas of your budget to maintain those services that are so highly valued by the citizens of our country.
The ten-province standard would allow us a greater ability to compete for the talent and technology we need to modernize the health care system and to provide the services people want.
You made the other point that some people perceive health care as somewhat of a bottomless pit, that there is an enormous demand for resources that usually exceeds the supply that any government can make available. On that level, there has to be cooperation on the reform agenda for health care. We have to all work together on how we improve the delivery of services.
Taking one step back from that, there is the notion of how government works with its citizens. At the end of the day, there will be a responsibility factor that we all have to take at our individual and community and family level for our own health outcomes. We have set up, for example, a Minister of Healthy Living portfolio in our province. We have to encourage a different lifestyle among as many people as possible in the province so that they can maintain themselves in a healthy state — whether it is young children not getting enough physical fitness, or whether it is the baby boomers moving to retirement and maintaining themselves in a healthy and independent fashion as long as possible.
There are many things government can do, without doing it for you. They can do it with you as citizens. We are moving down that road right now. We have a Minister of Healthy Living. We are setting up a legislative task force to go across the province to promote healthier lifestyles in the north, in the rural areas, in the cities, et cetera. That is a start towards answering your question.
Senator Stratton: Is 80 per cent of the health care budget in salaries?
Mr. Selinger: As a rule of thumb, yes.
Senator Stratton: That is rough, but nevertheless, 80 per cent. If you look at that 80 per cent, that is a pretty tough number to control. It is there and will remain there. It is not substantially going to change.
The primary argument across the country is waiting time. We are still faced with the old story — patients in the hallways. How long does it take to get an MRI? How long does it take to get this or that? That is a universal problem across the country. Last week, for example, it was published that if you have a heart problem and you need that addressed, the waiting times across the country, I think, were shortest in Alberta, and surprisingly, longest in Ontario; it went up to 26 days or 23 days, something like that range. Manitoba was 11 days, as I recall. We are still being faced with that crunch.
All politics is local; how is this ten-province averaging going to help that fundamental problem that exists that Canadians would like answered?
Mr. Selinger: When I talk to other ministers of finance, for example, from the Atlantic provinces, they make the argument that, in most cases, their equalization payments are at least double what they get for the Canada Health and Social Transfer, CHST. The CHST was not intended just for health care; it was intended for health, post-secondary education, and social services. If the equalization is more than double the CHST, and 40 to 50 per cent of their budgets are for health care, you can see that equalization is essential to supporting the health care system on a sustainable basis.
The issue of waiting times speaks to the issue of how to measure outcomes of effectiveness and efficiency in our health care system. It is a proxy for the federal government saying, ``if we are going to give you more money for health care or anything, including equalization, we would like to see some results for it.'' Everyone understands that.
When we make a substantial commitment to health care, we ask our regional health authorities and our delivery mechanisms, what results we will get in return for making an extraordinary effort in financing their demands? We are seeing substantial improvements. In our province, we had a major task force on cardiac care. We decided to reorganize the system from a two-site model to a one-site model that could deliver better outcomes for people. On waiting times for orthopaedic surgery, for example, we have one of the highest rates and lowest waiting times in the country for knee replacement. You would think that is a minor thing, but there are a tremendous number of people looking for new knees as they head into their 70s and 80s.
In Manitoba, we are not uncomfortable with the idea of having benchmarks for service efficiency and effectiveness. We do not mind being accountable for the investments we make in health care to show results, whether it is cancer treatment waiting times, orthopaedics, cardiac care or the issue of how long you stay in a hallway. We have reduced hallway stays by over 80 per cent in our first five years. There are still people in hallways, but dramatically fewer.
We have a Web site where, every single day, you can see how many people are in the hallways. You can see the waiting list for certain types of services. First, we have made the information public and accessible and put it on Web sites. Then, we have become accountable for it, not only in the legislature but also in our communities for how we are delivering services.
That is the only way you can do it. You have to get the information out there and start a public debate about it. You will always get the critique — oppositions do a good job of holding your feet to the fire on whether you are delivering the service — but if you have the statistics, you can show whether there have been real improvements or not and move beyond the rhetoric to the facts. It is always hard to do in politics, but you have to get there.
Senator Stratton: I know some individuals that are volunteers in the emergency ward system in Manitoba. It is chaos at times. It is overstressed. The staff is overstressed. This is hearsay evidence, but nevertheless it is from people who are there dealing with the issues and problems. That issue does not seem to be being dealt with.
You can quote the statistics on reducing hallway times, but if you go into an emergency ward in a hospital in Manitoba, and particularly in Winnipeg on a weekend, it is absolute chaos. That, again, is hearsay. You can deny that taking place, but nevertheless that is perception. You talk to the staff in those places and you hear that they are at their limit and beyond their limit.
How is this ten-province averaging going to help that situation?
Mr. Selinger: To make the reforms in the health care system, you have to have sufficient resources to do it. It speaks to that. However, you are right. If the only health access point on a weekend is an emergency ward, they will be clogged up. We must have other alternatives available for people when they have a health care need. We have an urgent care centre at Misericordia Hospital that diverts many people from emergency wards to less critical services.
We have opened up what we call access centres. The challenge in opening up these facilities is that people must be available to work non-traditional hours. These services cannot be offered only between nine and five; they have to be available weekends and evenings. They also have to be multiple services, including psychology, social work, nursing, medicine, et cetera. People must be aware that these services are available during non-traditional house so that the only alternative is not the emergency ward.
We all have to move that way in terms of primary health care and alternative resources for people. People must be available to staff these centres, therefore you must offer a compensation package that keeps them in your jurisdiction. That speaks directly to the issue of equalization formula and CHST funding.
Senator Stratton: We can hope that will happen. Despite the Misericordia Hospital being opened for that purpose, it still is a real problem. It is the view expressed to me by volunteers in that sector.
Senator Ringuette: I am looking at your presentation. On page two you state that during the last fiscal year they fell an ``unprecedented $4.7 billion below the budget track.'' What do you mean by that?
Mr. Selinger: In the 2003 budget, they had a projection for what equalization would pay out to the provinces. As a result of the slowdown in the Ontario economy, they recalculated the formula and adjusted the payment schedule downwards by $4.688 billion. The existing five-province standard was readjusted due to the economic data flowing in from Ontario, which is 50 per cent of the formula.
At the same time, the federal surplus continued to grow beyond what they had projected. We are making the point that it was not necessary to adjust the formula downward. We could have actually improved it — as recommended by your committee — to a ten-province standard provided additional resources through the equalization program, and still it would have cost less than what was projected in their 2003 budget.
Senator Ringuette: The formula is fixed, but the input to the 33 different items used in the formula will vary from one year to another depending on what happens in Ontario or other parts of the country. The formula does not change. It is the fiscal situation that happens in one province and another. You do not adjust the formula downwards or upwards. That is my understanding.
Mr. Selinger: I will ask Mr. Neumann to comment.
Mr. Ron Neumann, Director, Intergovernmental Affairs, Department of Finance, Government of Manitoba: You are right it is a fixed formula. We have been saying that the five-province standard has been inadequate for a long time and that it relates too much to the Government of Ontario. A ten-province standard would be far more equitable and stable over the long run. This is a bit of a contradiction to common belief. People think that a ten-province standard would be more volatile, but our research has shown that over the last 17 years a ten-province standard would be more stable and would provide a more steady flow of equalization.
We had a situation whereby the federal government expected to pay out for 2003-04, more than $13 billion. It paid out only $8.7 in fiscal arrangements. A large part of the reason for that reduction from budget was that we have a five- province standard. Therefore, when Ontario experienced difficult economic circumstances, the equalization entitlements of all the rest of the equalization recipient provinces suffered.
If we had had a ten-province standard, we would have less equalization, but it would have been a far less sharp drop in 2003-04 and in 2004-05.
Senator Ringuette: Earlier you were talking about the health care situation. You can extrapolate figures in regard to equalization and the difference between a 5- and a ten-province standard. Does your calculation include the fact that in the last two years, there has been an outflow of federal funds, particularly to health care, which is the main priority of citizens? That amount is in the vicinity of $38 billion.
How would you have managed not to have had your portion out of all those billions of dollars dedicated to health care in comparison to a ten-province, more stabilized equalization system?
Mr. Selinger: The $38 billion was over a seven-year period. We provide a table in our budget this year. About half of the additional health care funding has been one-time funding and about half has been ongoing. In discussion of both equalization and health care, the issue is sustainability and predictability.
One-time money solves an immediate problem, but it sets you up for a crisis the minute it runs out. I will give you a practical example that we experienced in our budget this year. The federal government wisely put money into their budget for immunization programs. It was one-time money, booked off at the year-end and described to us as being available for the next three years. We were under pressure. We wanted to do more immunization, but you cannot do an immunization program for one, two or three years. Once you start an immunization program you have to keep it going. You cannot be selective about which cohort groups you immunize. Once you start it, you are in for the long haul.
It is enormously frustrating for the ministers of health and finance to know that the program is necessary, that they only have money for one, two or three years and that the minute they get into the program, it has to continue. That drives us crazy. The federal government has made a good announcement. It is a desirable public policy objective, but the money is not long term. We are saying that health care funding and equalization funding must be predictable and sustainable. It should not be going up and down like a yoyo with year-end bookings. That leaves the provinces holding the bag for programs that all Canadians want. I feel strongly about that because it really is unfair to the provinces to create those expectations and not be there in the long haul.
Senator Ringuette: In respect of these immunization programs, what would be the provincial percentage and the federal percentage of delivery over a three-year period?
Mr. Selinger: We will use all the federal money. We have taken it into our budget this year to balance the budget. We will pay for it in perpetuity after that.
Senator Ringuette: I am asking about the next three years of the program. You have raised this particular program as a discussion item. Over the next three years, what percentage of your provincial budget will you invest in it? Is it 100 per cent paid by the federal government? Is it 80 per cent? Is it 50 per cent?
Mr. Selinger: We put into our budget the money that we got this year. It was year-end money from the federal government. We took it into our budget and booked it as year-end money, as per our auditor general's requirements. It will pay for the program for the next three years. After that, we will pay 100 per cent of it.
Senator Ringuette: For the next three years, this program will be financed by the federal government within your province. That is what you are saying?
Mr. Selinger: You could describe it that way. I am being generous in my interpretation of that for the point of discussion.
We could argue that the money was available to us for only one year and, after that, we are responsible for it. To be generous at this level, the program costs about $6 million per year. We received $14 million. It will provide 2.5 years' of resources. We book it all this year and it is 100 per cent our responsibility on a go-forward basis.
Senator Ringuette: It is my understanding that given how strongly you feel about this issue, you will raise it at the federal-provincial discussions on health care that will take place this summer.
Mr. Selinger: I am sure it will be there.
Senator Ringuette: In respect of equalization, in you conclusion you say, ``a ten-province standard should not be compromised through the partial exclusion of resource revenues, which would create a two-tier equalization program.'' Earlier in your argument, you suggested that should we go to a ten-province standard including the non-renewable resource revenues, Manitoba and my native province of New Brunswick would be the losers, over the long term. We would receive less per capita than the current five-province standard provides.
Mr. Selinger: That is correct.
Senator Ringuette: Are you advocating that we receive less?
Mr. Selinger: No. This goes back to your earlier question. It is a mistake to pull the non-renewable revenues or resources question out of the equalization formula because it narrows the base. It is the same problem we have with Ontario being 50 per cent of the base on a five-province standard.
Generally, a formula is more stable when more sources of revenue are included and when the average that you have for calculating the outcome is broader. If Ontario is less than 50 per cent of the formula and they have an economic downturn, then there is less impact on the other provinces. If the formula includes a broader base, including non- renewable revenues, there is less volatility, as my colleague Mr. Neumann has indicated.
A myth exists that including natural resource revenues such as oil and gas from Alberta would create spikes and valleys in the formula. It is true that oil and gas prices go up and down, although recent experience would suggest they are only going in one direction for the most part. The point is that over the 17 years that we examined it, when the resource revenues are included, there is less volatility than if they were excluded.
If we want a formula that provides sustainability for comparable levels of service at comparable levels of taxation, a broader base, including resource revenues, will generate a more stable formula and a more sustainable outcome for Canadians.
Mr. Neumann: There was a small misunderstanding. If you exclude the resource revenue, as some proposals suggested — Mr. Courchene promoted one — then even under a five-province standard, New Brunswick and Manitoba would receive less.
Under a ten-province standard, all provinces would receive more. However, if you exclude resource revenue as you move to a ten-province standard, for most provinces without large natural resources — Manitoba, New Brunswick, Prince Edward Island and Quebec — the benefit of moving to a ten-province standard without including resource revenues would be minimal. You need to move to a ten-province standard with full resource revenue inclusion to have a positive difference.
Senator Banks: I want to pursue Senator Ringuette's line of questioning. I know it is difficult to plan. In a microcosmic way, any of us in business know how difficult it is to plan when you do not have a certainty of revenue or a smaller band within which your revenue fluctuates. We know how nice it would be to predict revenue and have certainty and stability.
However, rising tides raise and/or lower all boats. Would you please address that comment? The equalization program, as Senator Ringuette said, will do just that. I am worried about taking a snapshot of something and deciding to fix it to accommodate one area. However, when oil and gas revenues are gone — which is now a foreseeable possibility — in some respects, the tide will ebb. There is no guarantee and there is no long-term stability. Is it safe to make an adjustment based on a relatively short period of time? Might we not work to the detriment of the philosophical approach, which has been in place since the 1950s to do this?
Mr. Selinger: I think not. My argument is that if we have a broad base of revenues upon which we average for equalization and, for example, oil and gas revenues decline or evaporate, then the province that loses under that scenario would gain by having the robust formula available to it as well as to every other province.
Senator Banks: Who would make up that difference?
Mr. Selinger: The money would only be available if it was truly available to the federal government. If it declined, it is a question of how much. If it declined then, of course, each province would have to take less. The point is that we have a situation now in which it is declining dramatically and the federal government has more. That rather misses the point.
There is a shift in terms of who has the surpluses. At the same time, there is a growing disparity between the provinces outside the formula and those inside the formula. If the formula were more inclusive, then every province would benefit by it. Even Alberta, before it hit oil and gas, was a recipient of equalization in its early days.
Senator Banks: That was until 1964.
Mr. Selinger: Right. Every smart province tries to diversify its economic base so it is not wholly dependent on natural resources for its source of economic growth in the future. That is a wise decision that all provinces are making. They always look for ways to build on their competitive advantages, strengthen and diversify their economic base so that they do not require transfer payments. I often use the analogy that it is a bit like a professional sports league in that every team that does not do well in that particular year, gets preference in the draft so that they will be competitive in the future. We want a system of equalization that allows everybody to be competitive in the future, regardless of their circumstances in any given year or two-year period or three-year period.
What are the best sports leagues in the world? They are the ones with the good draft system, some form of revenue sharing and, in some cases, some upper limits on expenses. In our case, the upper limits might be some national desire to manage our health care system more effectively, the revenue sharing speaks to equalization and the draft ensures we have equal opportunities for all Canadians to go wherever they want to build their futures.
Senator Banks: What do you think of the representative tax system, RTS? I ask that because in some circumstances Manitoba and some other provinces do not impose the tax or collect it. That shows up in the list of taxes that the equalization system says you could have in revenue, if you did it.
Mr. Selinger: You are talking about health premiums.
Senator Banks: No. I am talking about the representative tax system — the way in which equalization is calculated. Are you happy with the RTS?
Mr. Selinger: We think it is the best model upon which to build the equalization program because it is actually the model that shows the real potential for generating revenue.
Senator Banks: That is regardless ever whether you do it.
Mr. Selinger: That is right. It still counts in the formula.
Senator Day: How do you see the process by which we develop the next five and 10 years unfold over the next while? We have just extended the existing program and payments for one year. We have been told, with respect to health care, that some time this summer all of the provinces and the federal government will get together in a padded room and they will lock the doors, and they will stay in there until they come out the other end with a deal. How do you see equalization being developed?
Mr. Selinger: I am not sure the model of locking a bunch of people in a room and then coming out with something that nobody understands and does not have durability attached to it is the way to go in the future. When Professor Lazar was here, he talked about a more open process, perhaps extended over a slightly longer period of time for six months to a year, so there was more of an ability to have a public debate about these things and understand. I think there is some merit to that.
Since 2000, we have seen a couple of times when the premiers have gotten together. To be blunt, the provinces are so desperate for the cash to sustain their health care systems, they are prepared to cut a deal. Then they find, about a year or two out, that it is not sustainable again in spite of their best efforts to manage the system.
We need to take more time and, perhaps, talk about some of the sacred cows we have to talk about and how we will cope with those issues if we really want our health care system to be sustainable and the country to provide equal opportunity and services across all the regions. We need more dialogue about that, which is why we come to the Senate, for example, to carry on this discussion.
In their budget, the federal government said that is it; this is how it will be done. We did not have a lot of dialogue — not even among the finance minister — about it. We did take our opportunities there, and the federal government made some adjustments on the margin to accommodate certain questions in specific provinces. Mr. Goodale was new to the portfolio, and he made his best efforts to do that. However, I think the feeling among all the provinces was that when you are locking it down for another five years, it is not an adequate opportunity to have a full debate about what you want to do for the next five years.
As it is the only one in the Constitution, we think it requires greater reflection and perhaps a little more public debate before we lock it down for another five years.
Senator Day: We agree with that. We hope our deliberations and the second report on this issue that will help in that debate.
We all wonder why the equalization program has become so complex. Perhaps you have just hit on it when you say that a few little changes have been made on the margin of the program for certain vocal objections by certain provinces. Is that the reason that we have so many special rules? Is it not possible to go back and try to make it simple — for example, look at all the provinces, all the revenues and then work out the formula as to how much we can share?
Mr. Selinger: We would support that position — all provinces, all revenues. It is a pretty simple formula — and full inclusion of all revenues including the user fees, which are a growing source of revenue for most provinces. That basic message would create greater equity.
Senator Day: Please explain the logic for keeping part of 50 per cent of user fees out of the formula and tuition fees and some of that revenue? Who would make the argument that it should be done this way?
Mr. Neumann: The federal government officials have made the argument that user fees are similar to private sector transactions, and that purchasing water from your municipality is no different if it is run privately or publicly. Therefore, the user fees related to that do not create what they call ``net fiscal benefits,'' differences among provinces, and that they are akin to private sector programs and should be excluded.
The provinces, of course, see it very differently: they believe these are public programs, that there is a sharing among the community in the costs of it and that the user fees are a way of sharing the costs. They do not often reflect the full price of the product and so on.
In this debate, the federal officials suggest that all user fees be excluded and the provincial officials say they should be included. Certainly, the ones included now are at 50 per cent. This is a host of user fees that are not included at all in the formula. I am thinking about things like tuition fees and fees that are charged for personal care homes for pharmacare and so on. All of these are income-tested and, to me, they should be included because they really are income-tested. There is a different capacity among the provinces to raise money for these particular services, depending on the incomes of the citizens of the province.
I would like to, first, see all user fees included at 100 per cent, and the list that is there now broadened to include these other income-tested user fees.
Senator Day: Can we talk about natural resources for a short while? It seems to be one of the areas that have caused a lot of problems. The natural resource revenue from Alberta has been excluded because it is so much greater and you have the five-province plan. On the other side, there are special rules for natural resources in other provinces — there is deemed revenue received from Crown leases and so forth.
All kinds of special rules have been developed. Are these rules being developed because the federal government has the money and the receiving provinces would like to have the money so they are agreeing — perhaps reluctantly — to whatever the federal government is suggesting in order to get some revenue here?
Mr. Selinger: The simple answer is that the five-province standard was done to narrow the financial exposure of the federal government to the equalization program. I think it was as simple as that. At a time when they were trying to address other significant problems, including their own deficit, this was just one mechanism to reduce their exposure.
The result of that has been a growing disparity among the regions and that has created inefficiency, which is why I mentioned the article by Professor Wilson. You are getting people making decisions on where they want to locate based on net fiscal benefits as opposed to the fundamentals of where they should be locating their business or themselves personally. Alberta, for example, is a magnet for young people.
I will give an example. Before we had SUFA, the Social Union Framework Agreement, I have a good friend who moved to Alberta. He wanted to move his father, who had Alzheimer's, there but could not get his father admitted to a facility in Alberta. Manitoba is providing the health care for his father, who has Alzheimer's, but the young person who is earning the good income is living in Alberta and paying taxes there. There is an inequality there. Some provinces are looking after the elderly, while others are attracting the young because they have natural resources and certain kinds of opportunities that are not available in other provinces.
If we have an equalization system, that individual will make a decision where he wants to be based on the inherent merits of those particular provinces, and the kind of career opportunities he wants and personal decisions he wants to make vis-à-vis his family. SUFA addressed that, in part, by saying you cannot discriminate against people depending on where they come from; transportability or portability is a key part of our Constitution. However, that is a problem.
You cannot have the Atlantic provinces looking after all the elderly while all the young people are in the Toronto's, Vancouver's, Alberta's, et cetera, without some formula to redress that imbalance. We are seeing population decline in a province like Newfoundland, even though they have good offshore oil and gas revenues. There has to be an opportunity structure there that makes it attractive for young people to be there and build their futures there. This should be the case in every province in the country. We are only healthier if we all do that. There is no advantage to everybody being in two or three places and all the rest providing the care services in this country.
Senator Day: You indicated we have to stop this up and down from the provinces' point of view — the receiving provinces again in relation to equalization. You indicated that you would like to have some steady, predictable revenue for planning purposes. You also suggested that a significant portion of equalization is going to health care. Now, could you not achieve more of the even predictability if you negotiated a better deal with respect to health care, because that goes to everybody and it is predictable over a long period of time? Would that not be better than trying to get some of your mental health care costs through equalization?
Mr. Selinger: The health care transfer payments have been shifting more and more toward an equal per capita payment. It does not address the issue that Senator Stratton raised. If Alberta gets the same amount per capita as Manitoba, the gap between the two provinces as they compete for professionals remains large. It could actually exacerbate the situation.
The equalization formula acts as a balance wheel in the federation. If a province's own source revenues go down, equalization offsets that and allows it to retain a certain amount of stability in providing roughly the same levels of service at roughly the same levels of taxation. In the system that we have, the equalization formula is an automatic stabilizer.
I will give another example. A few years ago, some of you might recall, we had a federal accounting error. We had been attributed revenue that we properly should not have had because of the way it was calculated by the federal government. The Minister of National Revenue told me that he had deducted $168 million from our last quarter and wanted to discuss how to solve the problem. I was obviously very eager to solve the problem because I was facing a $700-million liability facing me.
Our argument was that if they were taking that income tax away because of their error, then the equalization program should automatically cut in to offset that. Originally, the federal government was not interested in doing that. After we pulled out a precedent under Mike Wilson who had a similar problem 10 years earlier, I was able to convince the then Minister of Finance, Mr. Paul Martin, that that precedent should apply to the situation. Ultimately, that ruled the day. We got the equalization offset. We gained back about 70 per cent of what we lost through the equalization program. That certainly dulled the effects of losing that revenue, which we ought not to have had in the first place because an error was made.
At the same time, we had to make a choice. We are the only province in the country that shares our personal income tax and corporate income taxes with municipalities as a way of providing them with more fiscal capacity. We had to decide whether we would deduct that error out of their revenues of the past 10 years. We decided we would not do that because it would destabilize the municipalities. We ate that problem in order to stabilize their revenues and to solve the problem with the federal government.
The federal formula for equalization should not put big hits on the provinces even if the formula demands it. The formula should be renegotiated to provide greater stability and predictability so that we can all have roughly equal services at roughly equal levels of taxation. That is a fairer way to go. We follow that advice in the way we treat our municipalities.
Senator Day: I would like you to think a bit outside the normal parameters. I think it was Saskatchewan that suggested that all natural resources should be put in a separate category. Whatever revenues are generated from natural resources would be considered in a separate formula. Any royalties that might be generated in that regard would be shared in a program separate from the normal equalization. The federal government would not be involved other than maybe administering it. Is that something that could possibly work?
Mr. Selinger: Personally, I have not studied it, but I think we need a federal government. I think that formula would take the federal government out of the role of being a redistributive mechanism. Provinces might begin resenting one another if they have to share their resource revenues directly. I do not think that would be helpful; it would be quite divisive. After all, we have a federal government to equalize and to make it fair for everybody to participate and have equal rights of citizenship in this country.
That is not a helpful suggestion. It would once again diminish the legitimacy of the federal government. If we are to keep the federation strong, the federal government has to have a visible, understandable role in creating equal rights of citizenship across this country.
On that point, one reason for the federal government's resistance to equalization is that it does not feel it receives sufficient credit for the contribution made under the program. We need to address that. We are at a stage where the provinces cannot take the money and complain about something else the next day.
In Manitoba, we are saying if there will be more money for health care, we are prepared to be accountable for how we spend it and the results we get for it. With equalization, credit is due. It should be offered and generously given.
Senator Day: You would not object to more accountability so that if the funds are provided for education that they be used for education?
Mr. Selinger: We cannot ask for accountability from the institutions inside our province and not want to be accountable as a government.
The problem is that some provinces do not want to be accountable to the federal government; they want to be accountable to their citizens. The net result is the same. If we are accountable to our citizens, we are also accountable to each other as other levels of government. No government can deny the necessity to be accountable to their citizens for how they allocate resources and the results they are getting from them through their various delivery mechanisms. If we look at it that way, we will all be better off.
Senator Doody: Mr. Minister, I gather you feel that all revenues should be included in the formula?
Mr. Selinger: Yes.
Senator Doody: Does that include all resource revenues?
Mr. Selinger: Yes.
Senator Doody: There should be no allowance for depreciation. The offshore oil revenues from Hibernia, offshore Newfoundland, will disappear in 20 years. In the meantime, 80 per cent of the value of that asset has been lost to the province through equalization deductions.
You suggest we put in a flat program of all revenues. There would be no compensation for the provinces that are collecting rent, as it were, from offshore or underground resources. Would you not consider some sort of a compensating factor for these provinces?
Mr. Selinger: I understand the point you are making. If somebody feels they are getting 100 per cent tax-back on something because they have more offshore revenues or own-source revenues, they can feel that they are in a viscious cycle. If they generate more own-source revenues, they lose 100 per cent of it. In the case of Saskatchewan, some research has shown that they lose more than 100 per cent. That would certainly cause some resentment. It is an unfair situation for that particular province.
However, I accept the point you are making. No one wants to be in a position where they end up worse of through their own efforts to develop their resources.
Senator Doody: If this trends continues — where they receive no benefit from their own resources in actual cash — the provinces will start debating whether it is worth their while to take these resources out of the ground.
Mr. Selinger: You make a valid point. It is the same thing in the Northwest Territories which can argue that they are currently paying more to the federal government than they are receiving as a result of the the tremendous expansion of their diamond industry. All resources in the Northwest Territories are still under federal jurisdiction.
It does cause a lot of frustration when in spite of your best efforts, you are treading water or technically worse off.
Senator Doody: The frustrating thing is that the provinces only can advise on these programs. This is a completely federal funded program under federal statutes.
Mr. Selinger: Yes.
Senator Doody: It is not only a matter of justice but also a matter of great frustration I would suspect.
I am also curious about the 10-province standard. How much better off would Manitoba have been if the 10- province standard had been in effect rather than the five-province standard?
Mr. Selinger: Had the 10-province standard been in effect, we think it would have generated about another $300 million in our province annually — about 3 per cent or 4 per cent more.
Senator Spivak: Who shares your views among the provinces? Given that this has been put aside for a while, in what forum will there be a meaningful attempt to look at solving the situation?
I am always amazed at the debate regarding federal and province jurisdiction. If this is to be equal services for equal taxes, it is the equality among the citizens that counts. It should surely not matter whether the oil is in Newfoundland or Alberta. The rest of Canadians should share in it. I know that this is a heretical opinion, but that is the way it should be if we are to be a country.
It seems to me this issue can never be resolved if the provinces that are resource-rich and do not want to change are pitted against these provinces who are have-not provinces. How do you view this?
Mr. Selinger: To be fair to the premiers and the provinces, they have all agreed that the 10-province standard is a desirable objective. They signed on to that in Victoria, B.C., when Mike Harris was the Premier of Ontario. In principle, they are all comfortable with that. Of course there is some carping behind the scenes. When they came to the table as leaders of their respective jurisdictions, they agreed that a ten-province standard was a desirable objective for the equalization program. That included Ralph Klein from Alberta and Mike Harris from Ontario. I thought that was a significant break through.
The Province of Prince Edward Island for many years made the point that the first time we had negotiations on the CHST was to address health care. There was an understanding in 2000 that the next round would address the equalization issue. We have never quite got there. The former Minister of Finance for Prince Edward Island, who recently retired, would make the point brutally in every meeting we had: We had to deal on health care to get improvements, but we had not addressed the equalization issue in terms of improving the standard. The premiers and Prime Minister will have to come to some conclusion on this together when they meet.
Senator Day's point was important. I do not know that we can do this over a weekend the next time around. If we are talking about a long-term solution, we might have to take a little more time to arrive at it.
Senator Spivak: Are you saying there is agreement on the ten-province standard but there is not agreement on resource revenue?
Mr. Selinger: I think there is a comfort level with having inclusion. Alberta makes the point there is a lot of volatility and that even though they are flush now, there could be dark days. They certainly have had dark days in the past when oil and gas prices dropped dramatically. However, our empirical research shows that over the long haul, say a period of 15 to 20 years, including resource revenues creates less overall volatility than the present formula.
Senator Spivak: Do you sense a willingness to engage in this issue among the parties in this country? Obviously an election is not a time to address serious issues, as Kim Campbell famously said. Are there policy positions established in this area?
Mr. Selinger: I am not sure how openly declared they have been yet. I have discussed this with various minister of finance from the Atlantic provinces — most of which are Conservative now — and they tell me that the new federal Conservative leader is open to a better formula for equalization. I do not know if that has been declared publicly, but that has apparently been declared in partisan political meetings as we run up to the election.
Senator Spivak: There will not be a firewall around Alberta?
Mr. Selinger: I do not think so. Once you get into a leadership role in a federal party you have to start thinking about the entire country. When you start doing that, your views might moderate.
The Chairman: Minister, we are in a pretty bad way when, on vital issues, the federal government and the provinces cannot even agree on a definition of the problem. They cannot even agree on the facts.
Take the question of the ``fiscal imbalance.'' The phrase was used first by Mr. Seguin. Before he returned to politics and became a cabinet minister with the Charest government, he headed a royal commission for the Landry government. He looked at the prospective revenue growth in the federal government, prospective revenue growth in the provincial governments, and the prospective expenditure growths at each level of government. He concluded that federal revenues would considerably outstrip federal spending obligations over the next number of years and that provincial expenditures would greatly outstrip provincial revenues over the same years. This was leading to a series of healthy federal surpluses and unhealthy provincial deficits.
The federal government, upon hearing this, immediately labelled it a myth. The then-minister of intergovernmental affairs, Mr. Dion, said it was a myth. His defence was that no one could tell what programs the federal government might want to get into in future years. He said that one cannot base a policy on these projections; it is a myth and we should forget about it. I have certainly heard nothing to let me conclude that the present government under Mr. Martin has any different view of the existence of this federal-provincial imbalance, this fiscal imbalance.
Take health care, about which there has been some discussion at this table. I have seen provincial communications programs that allege that the federal government is contributing only 14 per cent, I think, of health care costs. The federal government can produce statistics showing that it is paying 40-odd per cent of the cost. You or I could argue any position, but it does not advance the debate one bit. This whole discussion is unreal.
I wonder if the federal and provincial governments should not take, if not a ``neutral'' look, a joint look at this whole question of federal-provincial fiscal relations. We had something of the kind before you were born — almost before I was born — with Rowell-Sirois, many years ago. During the Pearson years, a tax structure committee, comprising ministers of finance from the provinces and the federal government and several other federal ministers undertook to look at the likely spending responsibilities and the likely revenue at both levels of government. A House of Commons committee, under Herb Breau in the 1980s did something of the same kind.
Equalization is part of a larger problem. Others have had a go at it. I wonder whether it is not time to have another go at it in a general way. I do not think this dialogue — if that is what it is — is making any headway at all in terms of public understanding, let alone fair public policy.
Mr. Selinger: You make an important point, Senator Murray. We get a fair amount of heat and not necessarily a lot of light when people are feeling desperate to finance their programs. Those perspectives get reduced to 20-second commercials on national television programs. That does not add much to the debate.
In some other countries they have commissions that look at equalization and make recommendations that are hard to ignore. Australia and India do that. I know that Professor Lazar has made some representation made on that. That mechanism would be available to us.
The provinces, with the leadership of Quebec, have brought in the Council of the Federation model to try to add more of a research base to the discussion on fiscal relationships as well as other relationships. We support that because we think it is only to the good to have a better informed argument, even if the argument is still on behalf of the provinces.
We need to elevate the level of discussion. We need to make it more research based. We need to take it out of the blame game of ``it is your fault'' and move it to a higher level. As I said earlier — I apologize for the sports analogy — a successful league has some mechanisms that allow the league to balance itself and remain competitive with respect to each other. Some of those mechanisms have to move beyond the partisan interests of the owners of the teams. They have to move beyond that to make the league competitive.
We have to move beyond the partisan perspectives of any one level of government or political party and find a way to have the basic rules of fiscal relationships to the advantage of all of us. These rules should be fair, transparent, open and reasonably considered as they get renewed. They will always have to be renewed. There is no one perfect formula. It is an ongoing process. How can we make that process more thoughtful and reflective? Rowell-Sirois was a groundbreaking study at the time. After that, the provinces ceded all their tax room to the federal government for the Second World War. Some of it was ceded back through various agreements to fund the social programs we generated after the Second World War. In the 1970s and 1980s, the federal government started withdrawing from those 50-50 commitments and others because of their pressures to balance their budget with slower economic growth. Then, we saw dramatic disengagement in the 1990s.
In this new millennium, the health of the nation is better in fiscal terms. Economically, we have avoided some of the most serious recessions in the world in the last decade or so. This is a good opportunity to recast the fiscal framework upon which the country moves forward. Some mechanism outside of the daily hurly-burly of politics and election cycles would be a helpful mechanism —
Senator Spivak: — such as a Senate committee.
Mr. Selinger: That is not a bad place to start the discussion because are you not facing any imminent election deadlines so you can take more time to think about things. Some mechanism that brings all the parties together outside of the electoral cycle and puts some long-term thought into it would be helpful for the country.
We continue to develop mechanisms that are non-political, in a sense, such that there is an ethics commissioner, an ombudsman and an Auditor General. All of these people are professionals and not necessarily elected. The politicians can play a constructive role if they are in the right forum to do that. I would not exclude the politicians.
The Chairman: I think that the tax structure set up during the Pearson years was effective. The Herb Breau committee of the Commons in the 1980s did a good job. You alluded to one of the serious problems, and it is not simply election cycles. The federal of provincial ministers of finance, feeling the heat of the day and looking at the deadline of a budget and all the other pressures, and the provincial or federal first minister will try to solve their short- term problem as quickly as possible. In the case of the provincial premiers, on the eve of a federal election in 2000, they met, were offered a deal by Mr. Chrétien and, rather than hold out for something longer term, they took the money and ran. That is why I think a longer-term approach on principles and priorities will be needed in the whole area of federal-provincial fiscal relations
Most people following the debate cannot understand it. I cannot understand it.
Senator Stratton: We have had a good discussion on health care. I should like to discuss natural resources. The have-not provinces such as Newfoundland and Nova Scotia now have offshore, which, to a large extent, is being clawed back. What would you propose to allow them to become closer to balance as far as a have-not province is concerned? That question will be on the table long-term and needs to be answered.
Mr. Selinger: The simplest answer is the point that Senator Day made. You need a simple, understandable formula that moves everyone up and is renewed on a regular basis.
Perhaps we should think about having equalization within a certain band of our GDP going forward. For example, I gave evidence earlier that it used to be 1.34 per cent of the GDP and it dropped to 0.72 per cent. What if we said that we want equalization to be permanently 1.2 per cent to 1.5 per cent of the GDP and that we would renew the formula every five years, for example, to ensure that it makes that kind of contribution to the economy? That would be a benchmark against which we would be creative and innovative in how to adapt the formula to address issues such as natural resources, hydro development and an innovation economy. All of these things continue to change in the so- called global context. However, we become confused.
We claim that the money has been reduced and the federal government claims that the provinces' cash has gone up. Nobody talks about what percentage of the GDP it is. Then, you get into the tax points discussion, which leaves all rolling their eyes. I am asking Mr. Neumann how I can explain that to the public.
If we could develop some benchmarks, it would help. We have started this in respect of foreign aid. We have said that we need a certain commitment by Canada to foreign aid.
The Chairman: What about national defence? Where do you stop, though?
Mr. Selinger: If the transfer allows equity in terms of opportunities and if there were some band that we decided the formula should provide, within the GDP or whatever other measure you wish to use, would provide us with something against which we could measure whether we are moving in the right direction. It is a thought.
Mr. Neumann: I do not think that the equalization formula can do everything for you. The equalization formula under the Constitution is set up such that you can provide reasonably comparable services at reasonably comparable levels of taxation. That should be the guiding principle all the time. It works in terms of both equity and economic efficiency for the country to do that.
Section 36.(1) in the Constitution Act, 1982, speaks to the reduction of regional economic disparities. The federal government certainly had a role in promoting the development of Newfoundland's offshore resources. Sometimes commentators say that the equalization program inhibits provinces from exploiting their economic potential, but I have never seen any evidence of that. Voisey's Bay used to be the big example that everyone would mention. They would say that Newfoundland was not exploiting Voisey's Bay as fast as it should have been. I always said that we should wait; that they would do a deal that would be better than if the equalization program had not been in place. They are not sitting with the same gun to their heads to strike a deal before equalization came about.
Eventually it happened. Newfoundland has struck a good deal in Voisey's Bay. I have never seen a province turn down the jobs, the economic activity and the revenues from exploitation of natural resources just so it could receive equalization payments. I have never seen that.
Mr. Selinger: To build on that point, look at the factors that influence a company making a location decision. They look at the quality of life that they are moving their people to — the schools, the services, the taxation levels, the housing prices, and recreational leisure opportunities. They then make a decision based on a business case plus whether they can attract the talent to do that.
If we did not have the equalization program, there would be many more losers than winners in respect of business decisions. I think Mr. Neumann's point is very important. With the two parts of the equalization program we can still do creative arrangements to address natural resource development or hydro development or any other form of development, whether it is a federal-provincial economic development agreement, for, Winnipeg, or for Toronto's harbour front or for offshore natural resources. Those creative agreements on a bilateral basis can still be done and can still produce good results.
Senator Stratton: The future forecast for surpluses in the federal government is tight this fiscal year and the next fiscal year. I am sure you have looked at the forecast down the road where a projected forecast for surpluses grows substantially. Have you looked at that?
The forecasts in surplus for 2005-06 are as substantial as $9 billion to $10 billion. Provided they do not blow the money in silly ways as they have been known to do at the at the end of the fiscal year, if they focused on the fact that there were fundamental problems in this country, such as health care and infrastructure, and stuck to their guns with respect to that, those narrow issues could addressed. Could that be accomplished? I am sure you have looked at this.
Mr. Selinger: The Conference Board of Canada confirms the point you have just made. We think the federal government does not have to put itself at risk of going back into deficit in order to address some of these fundamental questions on the resource side. Then we all have to work together on how we manage these essential services in a way that gives good value for the money. Both of those things can be done within our present fiscal realities. I think the evidence is growing and demonstrating that every day.
Senator Banks: We should forget retiring the long-term debt, is that right?
Senator Stratton: No, no, no. You can get the debt, the GDP ratio from where it is now down to 25 per cent in 10 years by doing nothing. Allow the growth in the economy to bring it down to 25 per cent. It is taking that $37-billion servicing charge every year and reducing that down. That is the magic.
Senator Banks: You do that by paying down the principal. I want to ask the witness a question. You and I will discuss that later.
Senator Stratton: Thank you.
Senator Banks: Within that band of GDP that you were talking about, minister, I have to confess I am one of those oddities from Alberta: I believe in strong central government, which is a rare thing. Do you actually believe — if I were being argumentative, I would say, do you actually expect us to believe — that if that were established that everyone would be happy with that for a long time and people would not be at the gates saying, this is not enough, we need more?
Mr. Selinger: There is no question that, in a federation, everyone is always banging the cup for their needs — be they municipalities or school divisions or provincial governments — and they always look to the level of government just above them to satisfy their concerns. I do not think there is any doubt about that. That is why I suggested that we not only have to improve the formula, we also have to improve the recognition and the role of the federal government in being a participant in that. That requires some discipline on the part of politicians, which is hard to come by when they are looking to score political points. Many politicians are, by definition, entrepreneurial in the way they approach their task. They look for the edge that will give them a competitive advantage vis-à-vis their competition. That is part of the pluralist model in which we function. It is exacerbated by a federal system where you have three tiers of government all competing, in some respects, for the attention of the citizens in terms of where they allocate their resources.
No, it will not solve all those problems, but it will narrow the terms of debate and allow us to focus on outcomes and reduce perpetual complaints about the lack of resources and the fiscal imbalance. You want to try to move the discussion to something that generates positive outcomes for the citizens. The more you can move it in that direction, the better off we are as a country.
Senator Banks: Agreeing to such a band is getting awfully close to a dedicated tax idea, is it not?
Mr. Selinger: I was not going that far. I was simply saying it is a benchmark against which we can measure whether the program is doing the job it was intended to do. I was trying to get out of the debate about whether the money is going up or down or sideways or forward, and get some objective measure of whether the program is adequate to the task that it needs to serve.
Senator Doody: I was struck when the minister was listing the assets that attract a business to an investment — quality of life, schools, et cetera. I was thinking of Voisey's Bay, and I was trying to get them both reconciled. It seems to me that the ore in the ground was a contributing factor. Thank you.
Mr. Selinger: I would say that natural resources would be the primary factor. However, our economy is 72 per cent services now. The world is moving more and more toward a service economy.
Senator Doody: When the nickel and oil runs out, ours will be too.
The Chairman: Manitoba's position is very well thought through, and has been very well stated at this committee. I thank you, minister and Mr. Neumann, for sharing your views with us. It is an extremely important subject. You have been very helpful to us.
The committee adjourned.