Bill C-22 (Historical)

Income Tax Amendments Act, 2000

An Act to amend the Income Tax Act, the Income Tax Application Rules, certain Acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another Act related to the Excise Tax Act

Technical Tax Amendments Act, 2012

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Mr. Speaker, before I begin, I want to say that I will be sharing my time with the hon. member for Montmorency—Charlevoix—Haute-Côte-Nord.

I am rising in this House today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. This bill affects many pieces of legislation.

We in the NDP believe that this bill will have a positive impact on revenues and will generally discourage tax avoidance. Frankly, a technical tax bill was overdue. I am pleased to see that Parts 2 and 3 of Bill C-48 deal with the taxation of Canadian multinational corporations with foreign affiliates. These changes reflect the proposals made in the budgets of 2007, December 2009, February 2010, August 2010 and August 2011, and I am pleased to see that they seek to ensure the integrity of the tax system and discourage tax avoidance.

The NDP is in favour of cracking down on tax evasion and tax avoidance. That is why my colleagues at the Standing Committee on Finance have been pushing the committee to complete its study on this.

As an aside, I want to thank our official opposition finance critics: the senior critic, the hon. member for Parkdale—High Park, and the deputy critic, the hon. member for Rimouski-Neigette—Témiscouata—Les Basques. Over the past few months, they have done tremendous work on finance bills, including the omnibus budget bills and the current omnibus tax bill. I thank them. Their work is much appreciated, and it helps us to better understand the bills that are being introduced.

I am also pleased to see that this bill makes changes in order to reduce tax evasion. What is more, it seems that the committee will continue its study on the matter this year.

It is quite something to think that it has been 11 years since a bill like this has been passed. Tax practitioners have said time and again that Canada is very far behind because this government has taken too long to legislate these technical changes.

In a report released in 2009, Auditor General Sheila Fraser noted that:

If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package.

We could also see that the Department of Finance Canada had at least 400 technical amendments that, unfortunately, had not been enacted. I believe it is crucial that this type of delay does not happen again.

I also agree with the Certified General Accountants Association of Canada, which, during prebudget consultations, proposed to the Standing Committee on Finance that Canada's tax system be modernized to make it simpler, more transparent and more efficient. The association also proposed that a technical tax bill be introduced and passed to deal with unlegislated tax proposals. Finally it suggested that a sunset provision be implemented to prevent further legislative backlogs.

It is also true that the complexity of tax legislation makes this task extremely difficult. Our seniors, our youth and those who do not consider French or English as their first language would obviously prefer a simpler system that is easier to understand. Being a responsible, honest Canadian should not be so complicated.

This huge bill makes things even more complex. We know that this government is a great believer in omnibus bills, as it has demonstrated over the past year with Bills C-38 and C-45. Luckily, this time, I can see that the bill proposes technical amendments to a small number of closely related laws and not laws in other areas. The other two bills, on the other hand, amended laws related to environmental protection, government accountability, immigration, employment insurance and so on.

I still find it ironic that this government is introducing a bill that is so long when it did not hesitate to denounce such a practice before.

During the debate on Bill C-22, Income Tax Amendments Act, 2000, in the 37th Parliament in 2001, my colleague from Calgary Southeast, who is now the Minister of Citizenship, Immigration and Multiculturalism, had this to say:

Let me say at the outset that the bill before us is a classic example of what has gone wrong with parliamentary oversight of legislation, particularly with respect to taxation. The bill before us has some 513 pages of technical amendments. I can say with a fair degree certainty that not a single member of this place, let alone the parliamentary secretary who just spoke or the minister he represents, has read or will read. It is a bill that exercises enormous power over the lives of Canadians through the Income Tax Act which in itself has coercive powers delegated to it by this parliament. The some 500 pages of amendments in the bill are amendments to a tax act which runs over 1,300 pages long.

I think the same observations apply to Bill C-48, especially since it is twice as long as Bill C-22.

I believe that Canadians deserve to be represented by parliamentarians who make sensible decisions when it comes to taxes and spending. Canadians want accountability, and rightly so.

When we see things like the Parliamentary Budget Officer having to take the government to court to get information about how tax dollars are being spent and what cuts are being made to the services Canadians need, I think the public is entitled to ask some questions and to admit that they have lost confidence in this government.

Out of respect for Canadians, a government should be accountable and transparent. Frankly, that should be the very least they can expect.

Since I was first elected, not a day goes by without someone from my riding of Alfred-Pellan contacting me to share their concerns about this government. They are worried about how transparent it is, and if you ask me, they are right to be worried.

In closing, I am thrilled that this bill has been introduced, even though it took a while, because it implements over a decade's worth of highly technical changes to Canada's tax system.

Before I finish, I want to reiterate that the people of Alfred-Pellan contact me often about the omnibus bills. I recently received letters from some of them that I would like to share in the House so that everyone can understand that the public does follow what is going on in Parliament and that it is important to listen to them.

I will quote some of my constituents from Alfred-Pellan. First, Mr. Nadeau said that the Conservative Party is running the country with its own members in mind, and Mr. Nadeau is against the massive bills introduced by the Conservatives. According to him, they are using these bills to try to push through all of their ideas en masse, and it is very sad to see these bills being introduced.

Mr. Prejent said that it is impossible, or at least very difficult, to meaningfully challenge a particular issue. It is becoming clear that this approach allows the government to pull a fast one on the opposition, and by extension the Canadian public.

To Mr. Prejent, I would say that the Canadian public is not affected by extension. This affects the Canadian public directly and the opposition by extension. We see these kinds of things every day.

One of my other constituents, Mr. Jetté, is not happy about these omnibus bills. He said that the Conservatives should talk with the opposition before bringing in such bills, and that it is arrogant and a bit too self-serving not to. He apologized for saying such things, but it is what it is.

I also heard from Mr. Bergeron, who said it was unbelievable that in 2012, the government forgets and fails to listen to the Canadian people.

People are not happy that such bills are being introduced, and I understand. I know how important these amendments can be, especially when things have dragged on and on with this government and also with the Liberals in the past. So it is important to deal with these issues, but we must be cautious. We must also ensure that these laws are useful to the public, because it is extremely complicated to make so many changes in one fell swoop. We must be cautious about the complexity of the law, especially when it comes to taxes.

I think that everyone, in all ridings, just wants to be able to properly fill out their tax returns. We need to give them the right tools. We must make their lives easier and make things as simple as possible.

As parliamentarians, we have a duty to ensure that Canadians trust their government and trust that it is transparent when it manages taxpayer money. Unfortunately that is not always the case with the current government. But I am happy to be part of a team that, in 2015, will show that it is possible to have a government that works fairly, efficiently and transparently.

Health Care Spending

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Mr. Speaker, I assure you I have no cell phone, and some members of my party fault me for that. You can see, however, that it might help us continue the debate.

I congratulate the hon. member from Halifax for her pertinent motion. I cannot resist pointing out, however, that since this is private members' business, we are in an extremely problematical situation. We have to remember that the government has made use of its majority to deeply undermine parliamentary democracy—this we know—by defeating a private member's bill that was deemed votable.

I plan to remind hon. members of this every time I rise, in support of a colleague who has made use of this vehicle in order to do our work as legislators, when it comes down to it.

Basically, we have no problem with the motion. I understand that there are four million Canadians who suffer to varying degrees from some form of arthritis.

Arthritis is a sneaky disease. One day, a person can be severely affected, and the next quite fine. People with this disease have no way of predicting what their condition will be next. There is one thing about arthritis that differentiates it from other things like diabetes or heart disease. There is a shortage of rheumatologists. This will hold true for the next few years. We are faced with the challenge of proper manpower planning in the health field.

As we know, this is National Nursing Week. I will therefore take this opportunity to thank them. I have met in my office with nurses and their official spokespersons. They have reminded me—perhaps something we have a tendency to lose sight of—that in the health system nurses perform 75% of billable services that are delivered by health professionals.

They deserve our recognition. Nurses play a vital and central role in our health system. They fulfill that role under difficult conditions, because all governments have slashed health budgets. As we have said and keep on saying: the federal government has cut $25 billion in transfer payments.

It is easy to imagine what that means. In Quebec alone, it means an annual shortfall of $2.5 billion in health care funding because of the federal government's cutbacks.

In a federal system, it is impossible to think that what one government does will not affect the other. The situation is even more iunbelievable in view of the absolutely huge surpluses.

Yes, it is true that a little must go to Radio-Canada. A little must go to a number of other crown corporations. However, we certainly have an obligation to ensure the provinces can assume their responsibilities.

Arthritis is a disease affecting four million Canadians of all ages, but particularly those who are getting older. It can reduce one's dexterity and mobility. It is without a doubt an extremely painful disease.

The member from Halifax spoke of arthritis and the fact that so many Canadians suffer from it to remind us of which principles should guide us, as legislators, in our approach to health care.

Through her motion, the member from Halifax is asking us, as parliamentarians, to recognize that each patient has the right to a timely diagnosis. I understand her point. In the case of arthritis, as for any other disease, it is easy to understand that early diagnosis is best.

The parliamentary secretary will agree with me, given that he is a former gastroenterologist—if I am not mistaken—which means he treated disorders of the colon and small intestine, basically of the entire digestive system.

The Parliamentary Secretary will agree that the earlier the diagnosis, the easier it is to take measures, find a cure or the appropriate medication.

This is what the member for Halifax is calling for, and we wholeheartedly support the first paragraph of her motion.

She also refers to medications. This is interesting, since, as health critic, I have read in numerous studies about the pressure that is being felt in the different components of the health care system.

Allow me to quote a figure. Together, the provinces and the federal government spent $56 billion last year. This is nothing to sneeze at. It is a considerably large share of our collective wealth.

In the next ten years, which is not very far off, we will need to invest between $80 and $90 billion in the health care system. Why? If in 2003, the Government of Quebec wants to provide the same services, without adding any new services, without acquiring any new medical technologies, it will have to allocate another 5% of its budget to health care. Imagine that. No government can maintain this rate of increased spending.

Which brings us to the motion moved by the memberffrom Halifax. We need to think about the cost of drugs. Right now, the largest expense, the single greatest factor contributing to increasing costs in our health care system is drug costs. We need to think about what we want to do about this.

For example, many new drugs are introduced. The Patented Medicine Prices Review Board was established by the Tories. We must acknowledge that they had the forethought to look in depth into the whole issue of intellectual property. If memory serves me well, it was Bill C-22, which then became Bill C-91.

Obviously a country such as Canada, like other countries around the world, needs an extremely active research sector in biotechnology.

At the same time, it must be recognized that about twenty new drugs are introduced every year. This creates pressure because our fellow citizens are informed. The Patented Medicine Prices Review Board has a mandate to look at whether the cost of drugs is higher than inflation. This is then averaged with the most developed countries, countries in the G-8. It is true that the drug costs in Canada are not higher than elsewhere but, at the same time, because many new drugs are introduced, consumers and patients press for access to them.

It has been established that drugs are the costliest for the health system in the two years following their introduction. For example, I have learned that big pharmaceutical companies, brand name companies, which do research, are lobbying members of parliament so that drugs can be advertised on television like in the United States.

I saw an advertisement for Viagra. You will tell me, Mr. Speaker, that Viagra is a dangling affair. However, if one lived in a society where most drugs were advertised, can one imagine the pressure on the system? We have to resist this lobby.

In conclusion, we support the New Democratic Party motion and we urge the government to restore transfer payments to their 1993-94 level, with indexation. If the provinces have the means, there can be more research on drugs. With more research and greater means, there can be more drugs covered, and that will contribute to the well-being of people with arthritis.

Public Safety Act, 2002

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

Madam Speaker, I thank the member for the excellent opportunity. I appreciate it.

I want to go back to some of the concerns about money laundering here in Canada. One report referred to the scheme as black peso money laundering. I will explain the system. I wrote down some points and I was hoping I would have time to talk about it.

This is part of what happens with terrorism and organized crime. Drug traffickers require pesos to pay for their lavish lifestyles in Colombia but most of their money is in United States dollars. They sell their United States dollars usually for 20% or 30% less than the exchange rate to Colombian based companies in exchange for local currency. The companies in turn buy commodities that are then sold in their stores. They have received the currency exchange. The companies have stocked their shelves with commodities and the laundering continues.

The black peso system is but one new cat and mouse game of money laundering that is played between criminals and law enforcement officials. It is next to impossible to enforce.

An investigative researcher claims that as a result of Bill C-22, criminals will become more violent and intimidating when trying to coerce individuals. This expert stated with regard to the Mafia:

Before C-22, you had guys taking big bags of money to a friendly corrupted bank manager, who would get a percentage for facilitating the transaction. But now the risk and the penalties are so great that fewer people will be willing to co-operate, so the criminals will either take control of some financial institutions or resort to strong arm tactics.

Furthermore, given that Bill C-22 requires any cash transactions of $10,000 or more be reported to the Financial Transactions and Reports Analysis Centre, there will be the introduction of what I previously mentioned as smurfing within Canada.This is the practice where the elderly fall prey within our country. It is going on right now.

I would suggest that Canada does not have the resources or the expertise to deal with the extent of the raising of dollars for terrorism or organized crime. There is a lack of resources in CSIS and the RCMP.

There is really no opposition to part 16 of Bill C-55 which amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow for greater sharing of information. However we do remain opposed to the bill because we believe it has inadequate measures to deal with the onslaught of terrorism that we see coming.

On the question that was posed by my colleague, I want to quickly say that we have no problems with some parts of the bill, parts that would help the RCMP and CSIS to locate and to enforce the measures that are already here in Canada. We want to see more dollars available for the RCMP.

The Canadian Security Intelligence Service has gone from 2,700 and some employees down to 2,100. Why has it downsized? Why are we losing so many individuals out of our intelligence gathering agency? It is because the government has shown a lack of commitment through the years. That lack of commitment is now causing our country and even other parts of the world to be at great risk.

The Senate reports and other reports suggest that there are 50 terrorist groups in Canada. The response from the government is it comes out with Bill C-55, a bill that does not answer the concerns of the RCMP and CSIS.

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

Madam Speaker, it is a pleasure to rise and participate in the debate on Bill C-55. As has already been mentioned, Bill C-55 amends 19 different acts of parliament and would enact or enforce an international treaty.

What are the goals of the legislation? We need to draw to the attention of Canadians and to the House that this is another one of those omnibus pieces of legislation. It is a mixture of good, bad and ugly. Some parts of Bill C-55 are good but it is mainly made up of the bad and ugly.

The legislation proposes to make air rage an offence and to strengthen security at restricted areas in airports. It would require transportation companies to provide information on the passengers who will be travelling on their modes of transportation. It would criminalize terrorist hoaxes. It would provide for more control over explosive and sensitive exports. It would provide the name of controlled access military zones and would implement the biological and toxin weapons convention.

In the opinion of the official opposition, it is inadequate legislation inasmuch as it would enact half measures and would undemocratically empower cabinet ministers without any regard to the checks and balances offered by parliamentary review and scrutiny.

Bill C-55, like its predecessor Bill C-42, retains government rule by executive orders, a method of ruling that the government finds comfortable. The only difference is that the new bill would require cabinet ministers to have their decisions reviewed by cabinet within 45 days as opposed to the 90 days that Bill C-42 proposed.

Within 15 days parliament would be informed, not consulted and not questioned, of the decision that would already have been made by cabinet or a minister. Effectively the provision negates parliamentary or judicial scrutiny, a necessary procedure to safeguarding civil liberties and the rights that Canadians enjoy.

These powers are indicative of the Liberal Party, a government that has little respect for openness and transparency.

We have already talked to some degree about the 1985 Emergencies Act. In my opinion, not necessarily the opinion of all here, the Emergencies Act lends sufficient means to combat terrorism while effectively balancing safety concerns with freedoms. It grants the government the power to declare emergencies and to take the steps it deems appropriate but only for a limited period of time, steps that are, I might add, subject to a full parliamentary review.

Despite the cosmetic changes, we remain opposed to these interim orders which, in the view of the opposition, is nothing more than a power grab.

The amendments in part 4 of Bill C-55 are a little different because this is omnibus legislation. Part 4 amends the criminal code by making hoaxes regarding terrorist activity an offence. This section is completely unnecessary inasmuch as it does absolutely nothing to deter terrorist activities or to enhance public safety, which is supposed to be the thrust of the legislation. Any hoax, whether it is in regard to a bomb threat, to organized criminal activity, to a terrorist activity that endangers or threatens public safety or heightens public anxiety or causes the public to be frightened or concerned about a hoax, should be deemed an offence and the criminal code should be amended to make sure that is covered.

In my opinion the criminal code amendment is more about political correctiveness than it is about criminal behaviour. We are talking about hoaxes. It is more about being politically correct. It is more about the government looking like it is doing something when in fact it is doing next to nothing to combat terrorism and thwart terrorist operatives from using this country as a staging ground for terrorism.

These particular amendments in the public safety act, 2002 do nothing to prevent terrorist attacks or to protect Canadians, which the government professes that the bill should do. This is particularly disturbing given the recent warnings of the head of the Canadian Security Intelligence Service, CSIS.

On Monday of this week, CSIS director, Ward Elcock, warned participants at a terrorism and technology conference in British Columbia that Osama bin Laden's al-Qaeda network has trained enough terrorists to pose a threat for years. He stated:

Given what we know about the number of individuals who have gone through bin Laden/al-Qaeda terrorist training camps, and the fact that many are now entrenched around the world, even though their capacity has been degraded or disrupted, it will take some time, perhaps years, to deal with those elements and assure ourselves that the threat has been defeated.

Mr. Elcock also warned:

Canada has moved beyond being used strictly for logistical or support activities by terrorist organizations and there is now a demonstrated willingness by certain groups to use Canada as a staging ground for terrorist attacks.

These are attacks that can be launched without detection or deterrence because of technological enhanced abilities.

The head of CSIS said that Canada must establish new partnerships with industry in order to come up with new technology that is going to help track terrorism and terrorist activity. The bill does little to accomplish that end.

This is also true with regard to money laundering, and the bill deals a bit with money laundering. An international forensic accountant stated that “as law enforcers get wise to money laundering, criminals are finding ever more ingenious ways to hide their dealings”.

In essence what these two experts are saying is that we must devise new ways and means to stay ahead of criminals, particularly organized criminals and those involved in criminal activity that are there to support terrorism.

For years Canada was considered one of the best places in the world to launder money because we have the largest unprotected border in the world, which makes it easy for dirty money to pass from the United States into Canada and vice versa. Because Canada was one of the last industrialized countries to establish adequate measures to combat money laundering, it is encouraged to a certain degree by those of terrorist affiliation.

According to the solicitor general, between $5 billion and $17 billion is laundered in Canada each year. The international monetary fund estimates that worldwide money laundering ranges from $590 billion to $1.5 trillion annually, or between 2% and 5% of the entire global gross domestic product, GDP.

Optimistically, the situation was to change somewhat in Canada after October 2000 when Bill C-22's regulations came into effect. However, Wayne Blackburn, a former superintendent of the RCMP's Ontario economic crime branch and proceeds of crime experts, said that as criminals figure out that the police can now generally follow money from a drug deal and freeze and seize it if it is in a financial institution, they have come up with another way to clean money up: by using it to purchase commodities.

Money laundering is a huge concern in Canada. Drug traffickers around the world launder money. They get American dollars and transfer them into companies. They exchange them for commodities. They change dollars to pesos so they can use the currency of the country that they are involved in.

Bill C-22 requires that any cash transactions of $10,000 or more be reported to financial institutions. However, terrorists and people involved in organized crime are using the elderly to bring in and despoit money into banks in Canada. It is called “smurfing” in Canada. They are using the elderly to depost dollars into their account, what we may call dirty money, and then they take the money out and put it into terrorist activities.

There is a problem. CSIS has lost so many analysts. CSIS has lost so many investigative reporters. The number 35 has been mentioned. The bill does not adequately deal with the concerns that CSIS and others have with regard to terrorism and it should go back.

Supply

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, I was very disappointed in Bill C-22, the money laundering act that has now since passed the Senate. I felt that the same rules that pertained to money laundering at casinos should be applied to charities. Therein there is the same requirement for scrutiny and disclosure and reporting of transfers of large sums from charities because huge sums can now be transferred.

On the point regarding bin Laden, I have before me a newspaper clipping of some years ago which tells the story of a member of a large charitable organization who was caught crossing the border from the United States into Canada with over $1 million in cash in his trunk and under the carpet of his car. There are many ways for organizations, be they charitable, legal or criminal, to move money around.

Message From The Senate

[The Deputy Speaker]

I have the honour to inform the House that when the House went up to the Senate chamber the Governor General was pleased to give, in Her Majesty's name, the royal assent to the following bills:

Bill C-12, an act to amend the Judges Act and to amend another act in consequence—Chapter No. 7.

Bill S-24, an act to implement an agreement between the Mohawks of Kanesatake and Her Majesty in right of Canada respecting governance of certain lands by the Mohawks of Kanesatake and to amend an act in consequence—Chapter No. 8.

Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions—Chapter No. 9.

Bill S-17, an act to amend the Patent Act—Chapter No. 10.

Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act—Chapter No. 11.

Bill S-16, an act to amend the Proceeds of Crime (Money Laundering) Act—Chapter No. 12.

Bill S-3, an act to amend the Motor Vehicle Transport Act, 1987 and to make consequential amendments to other acts—Chapter No. 13.

Bill S-11, an act to amend the Canada Business Corporations Act and the Canada Cooperatives Act and to amend other acts in consequence—Chapter No. 14.

Bill C-13, an act to amend the Excise Tax Act—Chapter No. 15.

Bill C-26, an act to amend the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act and the Income Tax Act in respect of tobacco—Chapter No. 16.

Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act—Chapter No. 17.

Bill C-3, an act to amend the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Public Participation Act—Chapter No. 18.

Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act—Chapter No. 19.

Bill C-28, an act to amend the Parliament of Canada Act, the Members of Parliament Retiring Allowances Act and the Salaries Act—Chapter No. 20.

Bill C-9, an act to amend the Canada Elections Act and the Electoral Boundaries Readjustment Act—Chapter No. 21.

Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts—Chapter No. 22.

Bill C-4, an act to establish a foundation to fund sustainable development technology—Chapter No. 23.

Bill C-29, an act for granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 2002—Chapter No. 24.

Bill S-25, an act to amend the Act of Incorporation of the Conference of Mennonites in Canada.

Bill S-27, an act to authorize The Imperial Life Assurance Company of Canada to apply to be continued as a company under the laws of the Province of Quebec.

Bill S-28, an act to authorize Certas Direct Insurance Company to apply to be continued as a company under the laws of the Province of Quebec.

Pursuant to order made on Wednesday, June 13, the House stands adjourned until Monday, September 17, at 11 a.m. pursuant to Standing Orders 28 and 24.

(The House adjourned at 5.26 p.m.)

Proceeds Of Crime (Money Laundering) Act

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, I commend the hon. member on her remarks. She obviously grasps the importance and the relevance of this issue at this time in Canada.

In response to concerns raised by the Senate banking committee and the important efforts and work it did in that regard, we see Bill S-16, an act to amend the Proceeds of Crime Act, coming forward to legislate in the areas of solicitor-client privilege, the disclosure of information and records retention.

I should indicate at the outset that I had intended to split my time with the hon. member for Kings—Hants. Subject to his arrival I may just carry on.

Money laundering, as we all know and are very aware, is the process by which criminals attempt to conceal profits earned from crime so that the money looks as if it came from very legitimate sources. It is literally an attempt to clean dirty cash. It is also an attempt to hide or cover up the illegal means and sources from which the money originated. Typically it involves vices such as extortion, prostitution, illegal gambling, drugs and other contraband. The particular legislation is aimed at attempting to track the origins of the money and to get at the source itself.

The legislation speaks of abilities to trace the origins of money because the origins themselves are those which are most often concealed and erased. If the money is successfully covered up, it can then be used to buy goods and services the way any other type of cash or exchange takes place.

It is estimated that somewhere between $5 billion and $17 billion in money from nefarious sources is laundered in Canada each year. I do not mean to put too fine a point on it but that sort of vague estimate indicates the size of the black market out there. It is very disturbing. Exact figures are very difficult to come by in that regard.

Obviously the black market is thriving in Canada. It is straight profit that is hidden from Revenue Canada and from government generally. The money is very often shifted between countries, financial institutions and investment brokerages without a paper trace that would allow law enforcement to get to the source or to get to the origins. The more complex and convoluted the trail, the more difficult to trace, eventually prosecute and bring to justice those involved in money laundering.

It is fair to say it is a world problem against which even the world's most powerful nations struggle. For example, Vladimir Putin, the Russian president, just last week held a conference on money laundering in St. Petersburg. He outlined efforts to crack down on the global illegal industry and the expansion of this industry in Russia. Russia is currently a member of the FATF's blacklist of nations because of its money laundering legislation, or lack thereof, which does not meet international standards.

We do not want this to happen in our country. That is why it is encouraging to all that the legislation is before us now. We must ensure our global partners and neighbours, not to mention our citizenry, that we are doing everything in our power to address and confront this problem.

Corruption is a growing problem in Canada and most countries recognize this point. They recognize the fact that it is very diverse and takes many forms just like legitimate industries. Any effort aimed at curtailing this type of underground economy and outsourcing of money from illegal means is where we should be focusing our attention. The magnitude and the reach of this problem are staggering.

Canada has come under heavy criticism in recent years as being an easy place for criminal organizations to launder their money. Our biggest ally, the United States, has sent signals which clearly indicate that we are leaving our neighbours to the south open and more vulnerable to criminal activity respecting money laundering because of a failing security system in our country. The lack of resources contributes to that. The lack of government support whether it be through funding or innovation indicates to members of our law enforcement community that in many instances their government is not behind them.

The response has been legislation such as Bill S-16, albeit late. Bill C-22 originally imposed new reporting and record keeping requirements and created financial transactions in the reports analysis centre of Canada to receive and analyse information. Bill C-22 was the predecessor for the legislation before us. It died on the order paper when the pre-emptive and very opportunistic election was called.

The banks would be required by law to adhere to a new reporting regime that would be put in place over the next year. It would help reorganize and report dubious transactions. It would present banks with the obligation to act upon information of which they might be in possession and report where there is a suspicion of organized crime activity. It is clearly there to try to unveil and unmask efforts by organized crime to use financial institutions such as our major banks and other financial institutions for illegal purposes. A failure to report would result in certain sanctions. Those sanctions include fines of up to $2 million and five years incarceration. Therefore, this reporting scheme does have some teeth.

Concerns have been expressed however about the privacy and the disclosure of certain information. Those were voiced by the privacy commissioner, the Canadian Bar Association and other groups.

The Senate banking committee looked at the bill in June of 2000 and felt that there were numerous flaws and areas where it could have been improved. The government at that time was unwilling to entertain amendments to the legislation because it was late in June and the House of Commons was going to recess. We know that at this time of year ironically we are facing a similar attitude on the part of government.

However, the Secretary of State for International Financial Institutions gave a written undertaking to the committee that certain changes would be made in a new bill to be introduced in the fall. Those changes formed the substance of Bill S-30, introduced in October of 2000. This bill was identical to the bill we see before us and it went beyond those changes agreed to in the letter from the secretary of state.

The Senate banking committee reported the bill with the observation that the government should have given consideration to other amendments that would further ensure that solicitor-client privilege was protected by adding the phrase law office in any clause where the term dwelling house appeared.

Second, the first annual review should be held after three years not after five years as was indicated in the original legislation. We find far too often that we are becoming very slack in our review process that was initially intended to ensure that the bill was living up to the breadth, width and intention.

Third and finally, it would require regulations under the act to be tabled before a committee of each House of parliament. Sadly, this bill does not include those further changes that were recommended by the committee.

The Law Society of Upper Canada has asked for the deference of the worst sections of this legislation. In many legal circles around the country court action against the federal government is not only being discussed but is being planned. This has happened time and time again. It is a given that with legislation such as this, and Bill C-24 is another bill, the lawyers are already writing the briefs, and the games will begin as soon as this law comes into being.

This bill will focus on the following legal aspects of this particular legislation. Solicitor-client privilege is one, which I mentioned previously. Where as Bill C-22 only dealt with instances where there was solicitor-client privilege involving legal counsel, Bill S-16 now clarifies that the officials of the Financial Transactions and Reports Analysis Centre may not examine or copy documents that might be subject to a claim of solicitor-client privilege where the document is in the hands of someone else until a reasonable opportunity has been made for that person to contact legal counsel. This responds to concerns raised by the Certified General Accountants Association of Canada.

It is very much akin to the situation we see with the information commissioner in Canada who would like to examine the Prime Minister's agenda books. He would hold that information in privacy and counsel and determine its relevance to the individuals who have requested disclosure. It follows a longstanding tradition that allows judges to determine relevance and admissibility of certain information. So we support that particular initiative.

Privacy under Bill S-16 will also allow individuals or the privacy commissioner to take the Financial Transactions and Reports Analysis Centre to court if they are denied access by the centre.

This legislation has come under some criticism in the banking committee because the bill creates onerous and very involved new responsibilities. In fact, Margaret Beare, one of Canada's leading experts on organized crime, recently stated that the new legislation requiring banks to report suspicious transactions was contradictory to some of the banks' principles, mainly that they would be making a profit and reacting to customers' wishes.

[Pierrette Venne, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I am pleased to have this opportunity to speak today on the third reading of Bill S-16, an act to amend the Proceeds of Crime (Money Laundering) Act.

On June 29, 2000, Bill C-22, or the Proceeds of Crime (Money Laundering) Act received royal assent. The purpose of this statute is to make it easier to prevent money laundering of the proceeds of crime by creating a financial transactions and reports analysis centre responsible for gathering, managing, analyzing and distributing reports of suspicious operations and any other pertinent information.

In fact, the inauguration of a mechanism for the reporting of suspicious transactions and major transborder capital transfers, as provided for in Bill C-22, was in response to the problems raised by the financial action group against money-laundering.

This would be a good opportunity to point out that the Bloc Quebecois had supported this government initiative, out of a concern to protect the Quebec population from the calamity represented by organized crime. Moreover, in order to make money laundering more inconvenient, the Bloc Quebecois were the ones behind the withdrawal of $1,000 bills and the requirement for banks and other financial institutions to report any suspicious financial transaction involving $10,000 or more in cash.

Before I go further, money laundering may be defined as follows. It is the process by which the proceeds of crime are converted into assets whose origins are difficult to trace. Despite all, we know that 70% of the money laundered in Canada is drug money. The remaining 30% comes from activities as varied as under the table gaming, tobacco and alcohol smuggling, fraud, counterfeiting and petty computer and telecommunications crime.

As we know, money is the sinews of war, and the one waged by the authorities against organized crime is no exception. Internationally, proceeds from crime entering the financial market represents hundreds of billions of dollars. So, considering that the prime motivator behind organized crime is lucre, and here I am speaking of huge sums quickly pocketed, the confiscation of such laundered proceeds hurts a lot more than the usual sanctions of fines and prison terms.

Legitimate or not, every business aims at making a net profit. By way of example, let us look at a business whose activities are on the up and up. Suppose that for some reason or other the business is taken to court and for purposes of discussion, let us imagine that at the end of the trial it is sentenced to pay a fine or to pay damages. Of course, the business will feel it but this comes with the territory.

The same holds true for organized crime. A jail sentence or a fine is among the inherent risks associated with criminal activities. However, by depriving an organization of its most profound motivation, we destroy the directly proportional relation that exists between the risks and the benefits. So, getting our hands on that organization's assets will weaken it from an economical and moral point of view. In other words, we must show that, indeed, crime does not pay.

Even though it does not at all change the substance of the Proceeds of Crime (Money Laundering) Act, Bill S-16 does address some issues raised during the hearings held on Bill C-22 by the Standing Senate Committee on Banking, Trade and Commerce. The four changes included in the bill should address the following issues.

How long will the Financial Transactions and Reports Analysis Centre of Canada keep the information that it collects? When and how will it dispose of the information that it will have gathered? What information can the centre transmit to law enforcement bodies? Will the federal court have the power to order the centre to transmit the file of an individual under the Privacy Act and the Access to Information Act? Finally, who is authorized to make a claim of solicitor-client privilege?

We must ask ourselves if Bill S-16 adequately addresses these concerns, and this is what we are going to do.

First, we can say that clause 1 responds satisfactorily to the first two questions raised before the standing Senate committee. This amendment sets out the circumstances justifying the maximum retention period of eight years for reports and all information.

This retention period shall be enforced when the centre forwards information either to law enforcement authorities or to the Canada Customs and Revenue Agency, the Canadian Security and Intelligence Service, the Department of Citizenship and Immigration, an agency in a foreign state or an international organization with a mandate similar to the centre's.

Moreover, the addition of paragraph ( e ) to section 54 of the Proceeds of Crime (Money Laundering) Act provides that each report received and all information received or collected shall be destroyed on the expiry of the applicable period. This paragraph therefore adds certain necessary clarifications regarding the duration of retention and the destruction of information.

Similarly, with the addition of the term identifying information in paragraph 55(7)( e ), the purpose of which is to clarify to what the information is similar, the second clause of Bill S-16 thus responds to the third question. The purpose of this amendment is to clarify that the identifying information in question is that found in paragraphs ( a ) to ( d ).

In our view, this clarification was not needed since paragraph 2(e) is interrelated to the previous ones. But since this is a catch-all paragraph, I guess someone felt the need to make this clarification which does not change anything to the original provision. If this amendment can clarify things for some people, great.

With respect to the fourth question, clause 3 of Bill S-16 was drafted because initially the federal court was not allowed to make an order for disclosure. In fact, such an order could only be made pursuant to subsection 60(4) of the Proceeds of Crime (Money Laundering) Act.

The amendment ensures that no provision in this legislation can prevent the federal court from ordering the director of the centre to disclose information under the Access to Information Act and the Privacy Act. It seems that it was always intended for the federal court to enjoy this authority, which will now be clearly stipulated in clause 3 of Bill S-16.

With this amendment, the Proceeds of Crime (Money Laundering) Act will now give the federal court some judicial control over the disclosure of information.

As for the fourth clause, as we mentioned at second reading, it certainly would have been possible to word it to make it easier to understand. Unfortunately, it was not, and we have to live with it.

In addition, following the explanations we were provided with at the Standing Committee on Finance, we believe that, even if this amendment answers our fifth question about who could invoke the solicitor-client privilege, it seems that it does not deal with the concerns that led to its drafting.

Before the Senate committee, accountants maintained that they have very high standards of confidentiality to meet, just like any lawyer. Consequently, they say that they should also be allowed to claim solicitor-client privilege. However, clause 4 of the bill responds only partially to this demand. An accountant or any other person, other than a lawyer, cannot personally claim solicitor-client privilege.

Indeed, the protection of documents in the possession of a person who is not a lawyer depends on the involvement of such a legal counsel in the matter under investigation. Therefore, the possibility of claiming solicitor-client privilege remains restricted to the lawyer.

How does this work in practical terms? First, the client gives a legal mandate to a lawyer. I must insist on the fact that the nature of the mandate is crucial because a lawyer who would act as business adviser could not claim solicitor-client privilege.

In fulfilling his or her mandate, the lawyer may work jointly with other professionals, such as an accountant for example. Having doubts regarding the legality of the activities conducted by the client, the authorities decide to investigate. The person authorized to conduct the search will not be able to examine the documents handed over to the accountant by the lawyer. Therefore, it is through the lawyer, the only person who can claim solicitor-client privilege, that the documents in the possession of the accountant will remain confidential.

In this context, it would be fair to think that, in order to enjoy absolute protection, money launderers will systematically go to a lawyer first, who will hand the documents over to the appropriate professionals.

Yet the situation is not as simple as it may appear. Even if the solicitor-client confidentiality required of the lawyer at this time provides considerable guarantees of confidentiality, this is not an absolute concept but one subject to a number of conditions and restrictions, which I will not list in the context of today's debate.

When an individual or organization involved in money laundering requires the services of any professional with a view to facilitating the perpetration of a crime, regardless of whether or not a lawyer was involved, the seized documents cannot be protected by solicitor-client privilege.

In short, this amendment adds nothing new to the present situation, in that it merely codifies existing principles which have long been in place under common law. The concept of solicitor-client privilege therefore remains exclusive to the performance of the duties of a lawyer.

This notion can, moreover, be extended to other persons when their services have been retained by a lawyer, in order to enable him or her to meet the obligations of his or her mandate as a lawyer.

Under these circumstances, one might say that the solicitor-client privilege is not a right transmittable to a third party. It is instead a real right involving transmitted documents which, as the bottom line, are the purview of the lawyer.

We believe that the law will meet the objective of this provision, that is to ensure that specialized professionals such as lawyers and accountants cannot act as accomplices to the money laundering mechanism.

As we have already stated, Bill S-16 ought to respond to five very specific questions raised before the Senate committee. Despite the fact that accountants do not really enjoy the same privileges of client confidentiality as lawyers, we still consider that Bill S-16 effectively addresses all these issues.

Obviously, as we supported the Proceeds of Crime (Money Laundering) Act and as the four clauses the present debate addresses are intended simply to clarify the intent of the provisions they amend, we will also vote in favour of Bill S-16.

However, we wish to point out to this House that we are supporting the government today for the same reasons we became involved in the introduction of new coercive measures.

We are satisfied these measures will enable the authorities to more effectively fight organized crime and therefore to ensure the safety of Quebecers.

In addition, it is unfortunate that the people of Quebec must once again put their faith in the goodwill of a federal government, which, more often than not, does what it likes when it comes to resolving problems that, despite their application to Quebec society specifically, fall under the jurisdiction of the federal government because of the distribution of jurisdictions, which gives it exclusive jurisdiction in matters of criminal law.

It is therefore appropriate to mention that this dependency will be eliminated with a sovereign Quebec.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I know that the Liberals are always delighted when I rise in debate as one of the first three speakers who, according to the rules, has 40 minutes available.

I did that in debate on Bill S-3, the transportation bill. I hope that my intervention there will actually result in a ball starting to roll that will change the laws of the country. I am hoping for changes to the laws right across the North American continent so that there will be uniformity, so that there will be understanding on what the rules are and so that in obeying them we will save lives. That is the objective.

Now we are speaking about money laundering and the role government has to play in order to prevent criminal activity on the part of members of our society who choose to engage in crime. The motivation of criminal activity is almost always that of earning money in an illicit fashion, so this money somehow has to be brought into the system without it being identifiable.

I know that a lot of people in the country have some concerns about the potential for some day having a cashless society. Actually I am one of them. It has one interesting feature if we stop to think about it. If instead of actually having cash in our wallets, all of us had computer cards that represented cash, it would of course be easy for people to transact business. It would really be equivalent. Instead of withdrawing four $20 bills from a bank machine in order to have $80 in cash, I could simply put my cash card into the machine and ask the machine to transfer $80 from my chequing account or whatever it is to the card. When I wanted to purchase something, instead of tendering $12.38 and then getting change I could simply give my card. The machine would subtract that from the balance on the card and I would walk away.

That could be done anonymously. It would be great. However, it could also be tracked and that in fact is one of the great objections that many Canadians have to that kind of scheme. There is genuine concern that if we ever get to that then the term big brother is watching would take on real meaning. It would mean that even if we stopped to buy a pop and chocolate bar there would be evidence that could be hauled out later. Most Canadians reject that kind of monitoring of our activities, so there are some problems with it. However, it could be legislated that such data could be used only in an investigation of criminal activity.

If we had such a scheme, just look at how difficult it would make it for people who engage in crime. They would somehow, either through a bank account or through a cash card, have to force other people to put money into their account in one form or another. It would be traceable and therefore it would be a lot easier to put a brake on a lot of criminal activity. I sometimes think it would be quite hilarious if someone walked into a bank with a gun, pointed it at the teller and demanded that $30,000 be transferred to an account. It would hardly be an anonymous transaction. A person would not get very far before officials were able to catch up with him and charge him with the appropriate crime.

That is not what we are talking about today. We are talking about some other means of tracking financial transactions that are related to the criminal industry. I have never heard of a criminal who demands payment by cheque when he or she does something illegal, because cheques are in fact traceable. It is called a paper trail.

About 10 years ago when the GST was brought in there was an awful lot of illegal activity, because in order to avoid the GST people said they would do renovations to houses or fix cars for a certain amount provided that they were paid cash and there was no paper trail. Then there was no GST and they did not have to declare it on their income tax. Basically, it was tax free money which meant they could do it for half the price.

I understand that sometimes they charged three-quarters of the price, so they basically split the earnings so to speak, but it was illegal. If Revenue Canada, as it was called at that time, found out about it, then appropriate actions were taken. However this was the lack of the paper trail.

How do we get a paper trail on criminal activity? Obviously these criminals will avoid the paper trail. Bill S-16 is actually the completion of Bill C-22, which was given assent in the previous parliament, if I am not mistaken. I do not know if hon. members will recall, but I believe that was the bill that eliminated the $1,000 bill. It is much more difficult for large amounts of money to be transacted if people literally have to have truckloads of $20 or at the most $100 bills to do the transaction.

That was also the bill that included some of the measures which we are talking about today. As the parliamentary secretary said now there are some refinements being made. I would like to say a few things about them.

First, how long can this information be retained? The bill is amending the new organization called the Financial Transactions and Reports Analysis Centre of Canada, commonly called FINTRAC. If financial organizations transact a large amount of money in cash they are required to report it. Those financial institutions, like banks or credit unions, will report their transactions to FINTRAC.

This raised a number of questions. As I said, how long can the centre retain this information? For example, if I went to my bank and deposit $50,000 in cash, and maybe $50,000 is not very much money to some members but it sure is to me and my friends, people might wonder how I got it. They might wonder if I got it through some illicit operation. However, that would never happen. In case someone else did something like that, the financial institution would report the cash deposit. If I reported it, FINTRAC would then have the obligation to look at it. If it was suspicious it would turn it over to the law enforcement agencies for investigation.

Let us say that I am investigated and there was nothing wrong. The institution would have his information. How long would the centre retain the information it collects? Bill S-16 deals with that. It says that the information reported to them cannot be kept more than five years. If it is transmitted onward to the law enforcement agencies, then the information can be keep for eight years but no longer, in which case that information must be deleted from all computer files and all paper files must be destroyed.

When and how will it dispose of that information? That is also in this particular bill, as I have just indicated. What information may the centre disclose to law enforcement authorities? That is another very important question because the original bill just said similar information and it was left undefined. Similar to what? One thing this bill does is to insert only one word in one of the clauses. It inserts the word identifying information. In other words, a certain amount of information such as name and address can be included. The information which it is entitled to keep and transmit must be identifying information in terms of the suspicion, or the details of the transaction itself or the identification of the individual. It cannot go on a wild goose chase.

Clause 3 of the bill deals with the jurisdiction of the courts. There is always a problem with this. If a government agency has the right to do something and I disagree with it, can I appeal? That was not clear in the original act. This clause in the bill will clarify this and allow courts to have jurisdiction over any disputes.

What happens if an agent from the centre feels that it is information which could lead to a criminal charge? Does he or she give it to the law enforcement agency without any accountability? The fact of the matter is we are dealing with people who may be innocent.

We want to do as much as we can to find evidence against those kinds of individuals, convict those who are guilty and bring them to justice. At the same time, however, we do know if many people are charged with certain activities of which they are not guilty. They should be able to defend themselves.

The issue of the courts is one thing. Another is that any information which is deemed eligible to be reported, cannot be reported without the person first being given the opportunity to contact a lawyer. One may wonder why, if it involves an accountant for example.

At the present time accountants do not have the solicitor-client privilege that pertains to the legal profession. That person could refuse to give information and decide to withhold it as being client privilege. The person now would not be required to give that information without first having the opportunity to contact a lawyer who could look at it, then on behalf of the client say it was client-professional privilege, and he could take it. This is a safeguard which should be included in order to protect those people who are innocent and, to a degree, protect the process so the person who is guilty cannot get off on the technicality that his or her rights were abused. That is a very important clause.

I thought it would be useful for members of the House and for anyone else who happens to be observing the debate today to know a little more detail about Bill S-16. It is a bill which strengthens the money laundering legislation in Canada so those people who are involved in criminal activity can be correctly identified and brought to justice. I support this bill.

Patent Act

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, for the sake of the House and those interested in the process and in patent law, I will go through some of the technical reasons the bill is before the House. It is a bill that our party is supporting, much to the surprise I suppose of many across the way. It is not often that we stand in this place and support a bill brought in by the government.

Following a recent World Trade Organization ruling, the bill was introduced to bring Canada's patent laws into conformity with our trade obligations. Under the bill, all patents would last 20 years beyond the date applications are filed. Currently patents filed prior to October 1, 1989, under the old act, expire 17 years after the date they were granted. We are talking about a three year extension of the Patent Act.

Bill S-17 would not apply to patents that have already lapsed so the arguments we have heard in the House regarding that do not apply. As well, in cases where the old rule provides a longer period of protection than the new rule, the old rule would still apply. This would happen in cases where more than three years have passed between the time a patent application was filed and the time it was granted.

Bill S-17 would repeal subsection 55.2(2) of the Patent Act which has allowed for stockpiling of a product prior to the expiry of the patent.

When we talk about patent protection, what are we talking about? We are talking about copyright laws that would apply, for example, to writers, other artists, inventors and so on. Patents give their holders time to benefit from their research and ideas and from the money they have spent in developing them. In other words, they give them time to profit from their work, in many cases good work.

In this case we are talking about patent drug laws. We are talking about sometimes hundreds of millions of dollars being invested by drug companies to develop new drugs to help combat disease and prevent death. They do that at great expense. By refusing to invest here until we modernized our patent laws, these companies were sending a signal to Canada that they would not build factories and research facilities here unless they had patent protection to prevent others from copying what they do.

Research communities in Montreal, Toronto, Vancouver and other parts of Canada, not just in big cities but in smaller areas, were being denied the benefits of that type of research and the jobs and prosperity it brings.

The opposition parties in 1987, the major opposition party at the time being of course the Liberal Party, raged against the legislation we brought in, Bill C-22, the first act we brought in to protect patents.

In 1992 we did the same thing again and made further changes to improve the intellectual property protection given to pharmaceutical companies while strengthening the powers of the Patented Medicine Prices Review Board Canada. The argument that the Liberal Party and the NDP waged at the time was that it would increase drug prices.

In a very basic sense, the Liberals asked us why we would provide drug companies with patent protection which would not allow generic companies to copy their products and which would outlaw copycat drugs for 20 years. They said that it would not help or enhance the health care system but that it would hurt and harm it. They said that it was the wrong thing to do.

The Liberals at the time, including the present Minister of Industry, who is now spearheading the bill through the House, argued that it would be wrong and railed against it. We have had many quotes in the House over the last number of days. Some of the quotes come from famous statements the present minister then made in committee and on the floor of the House railing against the very bill he now supports.

The truth is that what we did then, although some might disagree, and I know that even some government members disagree with the present bill, was the right thing. We created thousands of jobs in the pharmaceutical research industry in Canada. The evidence is there. Members opposite will tell us that the goal of the bill was exceeded in terms of jobs and investment in Canada.

We often talk about the brain drain, and there are a number of reasons for it. Obviously one of them is our tax regime. Unless we bring our tax regime in line with our partner to the south we will always have people leaving Canada to go where they will be rewarded for their work and not taxed to death. To a degree that argument is true, although there are other things that hold people in Canada simply because of our style of life. Considering the health care and other benefits we have in Canada, not everyone is attracted by high wages and low taxes.

We are losing a lot of top notch people to the south who go to work for pharmaceutical and research companies in the United States. The bill we introduced in 1987, Bill C-22 at the time, followed by Bill C-91 in 1992, completely stopped the transfer of talent from Canada to the United States. They worked.

The strengthening of the Patented Medicines Prices Review Board Canada also worked. As evidence of that, in the United States today there is a raging debate about drug prices and the high cost of patent medicines. Why are they so much higher in the United States than in Canada?

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I want to come back to the issue around the Conservative policy and also address the issue that the member for Pictou—Antigonish—Guysborough refuses to comment on. That is the very negative impact on health care in Canada today and the prices of drugs as a result of the Mulroney government's decision to dismantle what was then considered to be one of the best drug laws and best patent protection systems around, which ensured that not only were Canadian companies competitive internationally, but were able to provide reasonable access to Canadians.

The facts are very clear with regard to Bill C-22 and Bill C-91, that Mulroney government really jettisoned legislation that ensured competition between foreign and domestic drug companies, served most Canadians well. The only thing that has gone up since the Mulroney legislation is the prices and the profit margins for the big corporations.

Would the member account for that kind of failed policy and indicate whether he is now prepared to get with it and support us in opposing this bill?

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, I have listened with interest to much of the debate by previous members who have made a very compelling case and bring a great deal of passion to this particular debate. This is understandable when we are talking about drugs, whether they be generic or manufactured, in the first instance, from a pharmaceutical company. We know those drugs are often the lifesaving instrument for many individuals.

However, when we talk about consistency and the business elements of this issue, one has to agree that the WTO, although it has not set an arbitrary length of time, it has set 20 years for the life of a patent. Canada is presently not fitting within that guideline.

A ruling has given rise to Bill S-17, the legislation that is before us, and there is an effort on the part of the Canadian government and this parliament, through the legislation, to be consistent and in line with what the WTO has said.

When applied to drug development and production, the whole notion of intellectual property and property protection becomes a very divisive issue. It is an issue that in many ways pits certain sectors of this industry against one another. Patent protection and commercial opportunities for Canadians and Canadian pharmaceutical companies are on one side of the coin, while on the other side we hear and are certainly cognizant of the need for cost effective access to these new drugs and these technologies. Therefore there is no question that there is an element of competing interest here.

It is important to recognize that without a high degree of investment in research and development there would never be this particular dilemma that we have before us. Pharmaceutical companies do require an incentive just like any other business. It therefore stands to reason that they would want to be the beneficiaries of their efforts. They want the ability to profit from their toil and their labour in the same manner afforded other industries. This type of protection is such that it allows companies to receive that reward. In a global economy, it also encourages companies to come to Canada to avail themselves of that particular protection.

I speak with some personal knowledge. I have a colleague in the House from New Brunswick who has been the recipient of drugs aimed at the treatment of cancer. There are other very serious illnesses, such as AIDS, which these types of drugs are aimed specifically at. Some of these drugs can alleviate the symptoms or even put the disease in remission. The member from New Brunswick tells me that the environment created through this type of legislation allows companies to come to Canada. The rationale behind the original legislation in the 1990s was to allow pharmaceutical companies that come to Canada to be open to the same type of protection found in other countries.

Like many other pieces of legislation, this legislation has been put forward to ensure that Canadian companies can be competitive in the world market, not just in North America and not just with companies here but to see that there is a level of consistency and an invitation to companies to come here and allow them to have the patent protection that they would find in the United States, the United Kingdom or other countries.

The ruling handed down has significant implications. If Canada does not choose to follow the ruling or if it somehow lags behind, there are grave implications. This is the rationale behind encouraging companies to come here and do their research and development. To be the beneficiary of this, we need to have a parity with other countries.

Pharmaceutical companies that are doing research and development, the scientific background and the leg work that leads to the invention of drugs, which later become the subject of generic drugs, must to be encouraged to come to Canada. That is not to suggest that there are not occasions when generic drugs cannot play a significant role. However there is a level of patent benefit that should flow, whether it be for 10, 15 or 20 years.

The continuing argument of the Progressive Conservative Party has been that we need to be consistent. Canada has to be in line with what the WTO has said about the issue. We have to ensure that availability and access is achieved. Our efforts must be placed on lobbying in terms of making a case for access and availability of these very important drugs.

With respect to this issue and with respecting the credibility of where the government is coming from on this particular issue, there is some inconsistency that bears some mentioning.

The government took a very different stand during the initial debate in the 1990s and in particular in 1999 when the matter first came before parliament. It is fair to say that the Minister of Industry himself perhaps set a whole new standard for hypocrisy and probably raised the bar to a whole new level, such that it would make the most blatant hypocrite blush when looking at the record.

The inclusion of the current provisions in the bill were very similar and very consistent with the original position taken by the Progressive Conservatives in the 1980s. We have already heard other members mention this, but let me state what the Minister of Industry had to say initially about this particular issue. In Hansard on April 7, 1987, the current Minister of Industry said:

It is inconceivable to me that Parliament finds it necessary yet again to deal with yet another measure proposed by the Government because it is bound and chained by some ideological dictate which says this kind of Patent Act is necessary.

He went on to expound upon the evils of the direction that the government of day was headed in. He said:

The citizens will need more than generic drugs to recover from the festering wounds which are about to be inflicted on the exposed ankles of Canada's poorest citizens when the Minister sinks his teeth in, past the bone, into the marrow and sucks the life's blood out of Canada's poorest citizens with Bill C-22.

Bill C-22 was of course the forerunner to this.

Income Tax Amendments Act, 2000

[The Speaker]

The House will now proceed to the taking of the deferred recorded division of the motion at third reading stage of Bill C-22.

Business Of The House

[John Reynolds, Canadian Alliance, West Vancouver—Sunshine Coast, BC]

Mr. Speaker, I was just in discussions with the government House leader and my party has decided to withdraw its amendments to Bill C-22 and Bill C-17. I think if you were to seek consent you would find agreement for that.

We will be voting on the main motion to both those bills.

Tobacco Tax Amendments Act, 2001

[Philip Mayfield, Canadian Alliance, Cariboo—Chilcotin, BC]

Mr. Speaker, we are here today to debate Bill C-26. The bill has some good qualities and our party agrees with some aspects of the bill.

However, I would like to suggest that the government look to the Senate to study a bill that addresses the real problems of tobacco use, particularly with children. Bill S-15 has gone before committee and may soon come before this House. Although Bill C-26 has some good qualities, I believe the bill from the other place really would be more appropriate. It targets youth and suggests a model for accountability of the delivery of government services. I believe, despite our support for Bill C-26, that Bill S-15 deserves more careful scrutiny.

Earlier in the day we debated Bill C-22 and Bill C-17. We talked about the complexity of the imposition of taxes and the tax act. Taxes in this instance are also extremely complex with some 40 pages of legislation and another 50 pages of explanations. My goodness, why does it always have to be so difficult for people to understand the government's intentions?

One of the main difficulties in increasing taxes, particularly for constituents who have service stations and corner stores, and those who are rural merchants, are that their businesses have been so caught up in the economic decline of the country, particularly where I come from, that the loss of this income in tobacco sales is a real difficulty.

Should the bill go forward, I would suggest that there be a commensurate reduction of tax on other economic activities that are sensitive to price changes. A reduction of taxes in other areas for people who are hit with these increases would be appropriate.

While it may seem equitable to some that the big, bad tobacco industry take this on, taxes are not necessarily borne by those who have the responsibility to pay those taxes.

I do not think I need to lecture adults about cigarettes and all the associated health risks but I do want to talk about why I am supporting the bill even though there is much about it with which I disagree.

We all know the facts. What needs to be addressed in the bill is the central reason for this bill coming into existence. We can argue over the wording of the bill. Some may call it a tobacco recovery levy and some may call it a tax. What we cannot argue about is the fact that the tobacco companies target children. These are the smokers of the future who the tobacco industry will depend on for their future income and profits.

Young people are the most important target for smoking prevention activities. Since most smokers in Canada begin to smoke in their adolescence, a major challenge for smoking prevention is to counteract the influences of the tobacco companies. Tobacco use among young Canadians must be reduced.

What does the data say? What are the numbers? There are close to 6.7 million smokers in Canada. Smoking among adolescents aged 15 to 19 has risen from 21% to 29% over the past 10 years, and females make up a large percentage of this group.

Smoking accounts for about 30% of cancers in Canada and 80% of those who suffer from lung cancer are smokers. Cigarette related deaths account for 40,000 deaths in Canada every year. These facts speak for themselves. We must do everything possible to stop children from getting involved with this killing habit. The bill is one step in the right direction.

Some may argue that tobacco farmers would suffer enormous economic hardship. However during the 1980s the number of tobacco farmers declined by about 50%. These farmers began to grow other crops and have benefited from assistance programs. There are others in the retail end of smoking who suffer as well. There must be compensation for those who suffer. There must be an ability for them to continue on but smoking is evil. It is wrong for us to poison our young people and have them sacrifice their lives. This has to be the bottom line.

In 1991 consumers spent over $10.1 billion on tobacco products. Of that amount about $6.6 billion went to the federal, provincial and territorial governments. There is no denying that this is a substantial amount of money but it amounts to less than 2% of federal and provincial revenues. Considering that tobacco taxes make up less than 2% of the federal revenue, there is even more incentive to reduce the number of children who want to smoke.

I want to compare the 2% of federal revenue to the health care costs in our public health care system. With over 40,000 deaths directly related to tobacco, the strain on our overburdened health care system is enormous. Those suffering from lung cancer as a result of years of tobacco use costs billions of dollars in health care costs. By reducing the number of children smoking, we not only save their lives but we can help save billions of dollars in health care at the same time.

These are very important reasons to help stop tobacco use among our children. When people stop smoking completely, the country saves money. In 1993 the societal costs attributed to smoking were estimated to be $11 billion, which is far higher than the income from tobacco.

The Canadian Cancer Society surveyed thousands of smokers and over 85% indicated that they wanted to quit and that they only smoked because they were addicted and could not get out of the habit. In 1994 almost 75% of Canadian smokers reported having tried to quit at least once.

What is needed from the government is leadership on the issue. The Minister of Health has taken some small steps to address the crisis of smoking among youth but small steps in the past have not been enough. The government needs to put the health of young children ahead of partisan politics and show some determination. We all must recognize the enormous health risks of tobacco and the true costs of allowing this habit to continue.

Children are one of the most vulnerable groups in our society and that is why aspects of the bill are so important. The bill would create an educational fund.

Bill C-26 would put a levy on tobacco and put the health of children ahead of everything else. By reducing tobacco caused illnesses and death through prevention, we are helping society as a whole.

Some argue that non-smokers should impose their views on smokers. Perhaps there is some merit in that. However I am arguing for the vulnerable children. Adults are responsible for the protection of children from this kind of harmful activity. The government is the watchdog and the guardian over that which would harm our children. The societal costs of smoking are tremendous.

We cannot forget that children need our protection from harm. They are vulnerable and impressionable. This is why elements of the bill are worth examining. Children are the future and the reason I am supporting the bill. Let us give them a fighting chance.

Budget Implementation Act, 1997

[John Williams, Canadian Alliance, St. Albert, AB]

Mr. Speaker, as my hon. colleague from Calgary Southeast indicated, I will be speaking to certain aspects of the bill. One aspect on which I will focus is the Canada Pension Plan Investment Board and the fact that it is retroactively being exempted from large sections of the Financial Administration Act.

The Financial Administration Act is a very thick document that governs and dictates how the government manages its internal finances. A large number of agencies, boards and so on must conform to the Financial Administration Act to ensure their finances are handled appropriately. Why would they not be? However this clause would exempt the Canada Pension Plan Investment Board from the FAA.

Also it is backdated to December 31, 1998. I understand from the government it is the old housekeeping rule that somewhere along the line it was originally exempt from the Financial Administration Act. When somebody was doing some drafting of another piece of legislation they inadvertently omitted to keep the exemption there, but it slipped back in, that they were subject to it.

We know there is a fundamental principle that legislation cannot be backdated. It is never retroactive. Why is it in this case? If we go to some particular piece of legislation and read some fine arcane little rule, it says that where the government makes a mistake it can backdate it if it so desires. Do we live in a real democratic country or do we not? That is what it is coming to.

As I mentioned earlier, when we were discussing Bill C-22 and the $125 grant to all Canadians who qualified for the GST tax credit, I questioned the legality of the information being taken from the Income Tax Act. The act guarantees the confidentiality of income tax returns. The government dipped into it just so it could send out cheques for $125. The Income Tax Act does not give the government the legal authority to get the information.

Here again we are having legislation backdated a couple or three years just because somebody did not do their homework properly or inadvertently made a mistake. The net result is that the Liberals are imposing it in the House. They will use their majority. They will bring out the whip. They will lash people into submission, to say this is good stuff. In a democratic country it is not good stuff when they have to backdate legislation. It cannot be.

What is the government actually doing with the backdating of legislation? It is exempting the board from being examined by the Auditor General of Canada, the watchdog of Canadians. What is the AG being prevented from examining? He is being prevented from looking at the $40 billion or more of money Canadians have set aside for their retirement. It is being held in trust by the government and being managed by the particular board. The auditor general cannot, by virtue of the legislation, go in there to take a look and assure Canadians that all is well. The government does not want that. It does not want these kind of questions to be asked.

I say as a Canadian that the people in my riding of St. Albert, and I am sure I speak for all Canadians, would like to know that the pension plan is being managed properly, securely, safely, prudently and so on. They will never know that. They will never be allowed to ask that question because the auditor general will never be allowed to ask that question by virtue of clause 6 in Bill C-17. It is absolutely despicable. Therefore I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following therefor:

“Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act, be not now read a third time, but be referred back to the Standing Committee on Finance for the purpose of reconsidering clause 6 and to consider the desirability of hearing from the Auditor General relating to his concern about the Canada Pension Plan Investment Board”.

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

Mr. Speaker, I am pleased to rise at third reading of Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act.

There are two parts to the bill. I will emphasize the aspects related to the Budget Implementation Act, 1997. My colleague, the chair of the public accounts committee and chief critic for the treasury board, will address the amendments to the Financial Administration Act.

The bill seeks to increase funding for research and development through the Canada foundation for innovation by some $750 million over an undefined period of 10 years. This follows quite logically the remarks I just delivered on Bill C-22 when I discussed at length the irresponsible approach the government was taking to program spending.

I spoke about how in the fiscal year just ended program spending had grown by 7.1%, how the government had overspent its budgeted amount every fiscal year, and how for the next four years the government was estimated to average spending increases of about 5%. I expect it would be substantially more than that.

I also talked about the phenomenon known as March madness where ministers make spending announcements without proper authorization. I talked about how in April 2001, the last month of the fiscal year, we spent some $16 billion or 70% more than the average monthly amount.

This is of relevance to the bill before us. The government is proposing that we authorize an additional $750 million for the Canada foundation for innovation. Let me say at the outset that the official opposition, the Canadian Alliance, supports in principle an appropriate and responsible level of funding for research, development and innovation in academia which can be of economic value to the country. We believe government can play an appropriate role in that respect.

However such funding must be limited by the available resources. We are concerned that the $750 million funding envelope has no defined time period or parameters. It is not limited. The government says it may be spent over the next 10 years or so, or perhaps not. That is not a responsible approach. For a spending program like this the government has an obligation to come before us and detail where it expects to come up with the money and in which years and to book the money as spent in each of those fiscal years.

The auditor general has not only criticized the ongoing practice of March madness as inherently inefficient. He has repeatedly criticized the practice of booking future expenditures in one year as the government did with the famous millennium scholarship program and as it is doing now with the Canada foundation for innovation.

This accounting practice would not be accepted in the private sector. The government is ignoring its own rules and the recommendations of the auditor general in the way it is managing the moneys it seeks to authorize through the bill.

Another concern is that the government does not have a clear framework for financing science or research and development. We are dealing with major scientific and R and D projects on a case by case, piecemeal basis. My colleague from Calgary Southwest, our science and technology critic, has made and will continue to make important remarks on the subject. We need very clear criteria for the allocation of money for science, technology, research and development. Throwing the money into a big envelope and saying it will somehow be distributed on an equitable and meaningful basis is not good enough.

How do we adjudicate the relative economic and social value of a cyclotron project in British Columbia versus a nuclear research facility in Ontario versus a research program for astronomy? All these things come before us. Each has merits in and of itself but parliamentarians have no overall objective criteria by which to judge the value of competing R and D demands.

For that reason our party platform proposes that parliament appoint a chief scientist, a position which exists in many other national governments. Such a person would be the principal adviser to both the government and the legislature on scientific questions. He or she could help develop a clear framework to priorize the many competing demands related to R and D, science and technology. This would not require a large or expensive bureaucracy and it would be helpful to have such objective, external advice.

Those are our concerns regarding the first part of the bill. I will briefly outline our concerns regarding the amendments to the Financial Administration Act, concerns my colleague for St. Albert will elaborate further.

The clause seeks to clarify that parliament must provide explicit authority to departments, agencies, boards and commissions of the government in order to incur debt. That is very interesting.

I was briefed on the bill by officials from the Department of Finance who explained that the clause came about because of one of the government's innumerable legislative drafting errors. The error allows the Financial Administration Act to be interpreted in a way that permits departments and agencies to incur debt on their own authority without explicit authorization from parliament delegated to the Minister of Finance.

Over the past couple of years the Department of National Defence has been in a pitched quasi-legal battle with the Department of Finance over this question. The DND has sought independent borrowing authority not delegated by parliament which of course has the power of the purse.

We therefore support the aspect of the amendment regarding borrowing authority. However it begs the question: How can the government consistently bring forth legislation with such significant drafting errors which parliament must then spend valuable legislative time rectifying? That is a serious concern.

In bill after bill, as finance critic, I deal with all sorts of tax amendments which seek to amend errors in bills originally presented by the government. We must accept to a certain extent the bona fides of departmental officials and the government, the ministers who bring these bills to parliament, that they are technically correct. However too often they are not, as in this instance.

The amendment also deals with certain regulations surrounding the Canada Pension Plan Investment Board because of another drafting error. When the government made amendments to the Canadian Wheat Board Act it forgot to include the Canada Pension Plan Investment Board. The CPP investment board is therefore subject to intervention by the finance minister. He can go into the CPP investment fund and strip cash out of it, contrary to assurances given at the time of passage of Bill C-2 in the last parliament which created the CPP investment board.

However because of a drafting error the finance minister, contrary to every assurance granted us, can go into the Canada Pension Plan Investment Board and fire personnel, trash or write his own business plan, and strip cash out of the fund. This loophole needs to be plugged. It should never have occurred in the first place.

We will therefore be opposing the legislation. We will urge the government to take a much closer look at bills of this nature to ensure they do not create future problems which we must then go back and solve.

Income Tax Amendments Act, 2000

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

Mr. Speaker, I am pleased to rise in debate on Bill C-22. I spoke at the initial reading before the House. I would like to reiterate in closing the debate the opposition of the official opposition to the bill.

Often we are criticized of opposing for the sake of opposition. In fact I think we have a record of supporting about half of the government bills which are introduced, those which we think are sensible and lend incremental improvements to public policy. Bill C-22 falls far short of that standard in many respects.

It purports to legislate tax changes announced in the economic statement of last October. The economic statement, which was hurriedly put together by the finance minister on the behest of the Prime Minister immediately before an election, did not take into account the new economic circumstances in which we now find ourselves. At that time the finance minister was projecting a nominal GDP growth rate or real growth of 3.5%. It is now evident that given the downturn in which we now find ourselves, that economic growth for the current calendar year will be more like 2.5% or perhaps lower. It undoubtedly will have a substantial affect on the government's fiscal situation and the revenues available to it. It will also place an upward pressure on spending.

In the face of this new economic uncertainty in which we now find ourselves, the government has not responded at all. It has acted irresponsibly. The last full budget we had was in February, 2000. It now appears likely that there will not be a full budget presented to the House until February 2002. This would constitute the longest stretch of a budget not having been presented to parliament in the history of the Dominion.

At a time of economic uncertainty, when we see the United States continuing to go into possibly a technical recession, we see our third largest trading partner, Japan, in the midst of an economic and fiscal crisis. We see the possibility of Latin America veering off its economic course. Let us be objective and realistic about this, not pessimistic. Objectively there is the very real potential for more troubled economic times within the foreseeable future, yet we have no budget to take that into account.

The finance minister will apparently make one of his smoke and mirrors presentations with video charts and focused group language tested by his friends at Earnscliffe consulting at considerable taxpayer expense. He will that on Thursday. However it will not be a serious economic budget. It will not take into account the new circumstances. It certainly will not deal with the very serious corrosive problem of runaway Liberal spending which is now setting into the fiscal status of the federal government.

In the fiscal year just ended, 2000-01, it appears that the total program spending will have grown by about 7.1%. This is a huge increase at a time when inflation plus population is growing at a rate of just under 3%. In other words, spending under the government is growing more than twice as fast as the population and inflation. It is doubling the need for growth set by our economy, our inflation and our growth of the population. The projection for the foreseeable future is that spending growth will continue at a rate of at least 5%. We think it will likely be substantially higher than that given the track record of the government to date. This is simply not sustainable.

We had in the last fiscal year $11.1 billion in supplementary estimates above and beyond what was originally projected by the government a year ago in its main estimates. We had money which was been announced and not properly authorized or put through the estimates process in advance. We had the phenomenon known as March madness where the government spent as much as 70% more in the last month of the fiscal year than it did in any other month of the year. There was much as $16 billion in spending this past March.

The warning bells are ringing that spending is growing out of control. I can understand the political dynamic within which the Finance Minister must operate. I suspect he has tried his best to maintain the big spending old style Liberal habits of his colleagues and is simply losing that debate around the cabinet table in the caucus room now. The special interests in his caucus, the Minister of Canadian Heritage and the Minister of Industry and their big spending friends, continue to grapple for millions more taxpayer dollars. We see this in the fiscal bottom line.

The point is that every additional dollar in discretionary, unnecessary and wasteful spending that is committed by the government is a dollar taken away from perspective tax relief for working families to create new and better jobs. It is a dollar taken away from debt reduction to secure our long term economic future and pay down our still enormous national mortgage.

My colleagues opposite will say that the bill before us gives effect to tax changes and therefore there is still room for new spending. This ignores the economic reality in which we find ourselves. The reality is the bill purports to authorize $100 billion in tax reductions which is just complete nonsense.

When we clear away the smoke, the mirrors and the fudge it budgeting, when we take out the spending increase in the child tax benefit which is an entitlement program, it is a spending program not a tax cut, when we net out the $29 billion Canada pension plan premium increase, the largest single tax increase in Canadian history, an increase which has caused most Canadians so far in this calendar year to see their tax level go up after advertised tax cut and when the impact is taken out of de-indexing the tax system which is not a tax cut it is just a non-increase, we find that the real net tax cut over the ensuing five years is less than $50 billion.

Liberals do not increase taxes but all of a sudden they want to take credit for that as a tax cut. I am afraid it simply does not wash. If we tried that kind of accounting as a CFO at a company, we would end up making licence plates in a provincial institution. The net tax relief is half of what is advertised in the bill. That does very little to correct the significant disadvantage we continue to face vis-à-vis our major competitors and trading partners.

Canada continues today to have the highest personal income tax to GDP ratio in the G-7. In laymen terms that means we have the highest income taxes of any major country in the world; 14.1% of GDP. Even if we take the Finance Minister's bogus $100 billion figure and subtract that from our current tax burden, we still end up with Canada at a PIT to GDP ratio of 12.4%, the highest in the G-7.

It is substantially higher than that of the United States even today. Our major trading partner will be cutting taxes by at least $1.35 trillion U.S., not Canadian dollarettes, over the next 11 years, thus rendering the Canadian tax system even less competitive.

This would not be a problem if it did not have an effect on our standard of living, but it does and very substantially. Canada continues to see its rate of growth in labour productivity, an absolute key indicator of growth in our standard of living, at one-third the level of the United States.

I have raised this issue in the House during question period. The finance minister says our productivity is growing. Yes, it is, barely, by roughly 1.5% a year, while we see productivity gains in the United States of 4%. That means the U.S. is producing more and doing it more efficiently. It is creating more wealth which is shared by more people.

Why? It is not because Canadians are not hard working. They are hard working and well educated. It is because we penalize too many Canadians for working hard, taking risks and investing and saving. The very economic behaviours which create wealth and raise our standard of living are penalized by our punishing tax regime.

The government's bill would raise the basic personal exemption level to $8,000 under which a taxpayer would not pay taxes. The government claims this is a great act of progressivity. However it falls far short of what it ought to be doing to rescue low income Canadians forced on to the tax rolls by bracket creep. The government has benefited from this tax on inflation during the last eight years of its mandate. The government has put an additional 1.9 million low income people on to the tax rolls by way of bracket creep.

The Canadian Alliance proposes to raise the basic personal exemption to $10,000 and match it with a $10,000 spousal equivalent. We would no longer have second class citizens when it comes to the tax code. Stay at home parents would no longer be regarded as having less economic value than their income earning spouses. We would also have a $3,000 per child tax credit, which would mean that a family of four under our system would face zero taxes on their first $26,000 of income. That would remove at least 1.4 million low income Canadians from the tax rolls.

I find it galling to see Liberals pat themselves on the back about how progressive they are and how they favour the poor when in fact they oppose measures like this one, measures which would give real relief to the working poor and people on fixed incomes. That is another reason we oppose the bill.

We are not just penalizing people at the low end of the scale. Through the bill and in its economic statement of October the government would raise income thresholds at which people are taxed at higher levels at marginal rates. That is a baby step in the right direction but we are still miles from the threshold levels for marginal rates as set in the United States.

People do not enter the highest tax bracket in the United States until they earn over $250,000 U.S., or well over $350,000 Canadian, whereas one enters that bracket in Canada upon earning $100,000 Canadian. Bright young entrepreneurs who work hard, succeed and get ahead are penalized by the government the moment they break into six figures, but people in the United States earn three to four times that before being hit by the highest marginal rate.

I can feel my Liberal colleagues' soak the rich, politics of envy gene kicking in. They want to stand and say that the rich should pay their share. Successful Canadians do pay their share. The top 10% of income earners earn about one-third of the income in the country and pay about half the income taxes. The top 1% of income earners earn about 9% of the income and pay about 20% of taxes.

Those who create the most wealth and are successful pay a hugely disproportionate share of taxes. I am not necessarily arguing with that. However they would create more wealth, invest more, take more risks and ultimately create more jobs if we raised the income thresholds for the marginal rates substantially higher as is the case for many of our competitors.

The Canadian Alliance Party thinks the optimum tax policy is not to penalize people for working hard. We would adopt the generous exemptions I have outlined plus eventually a single rate which is progressive. We propose a rate of 17%. That would mean a family of four with $26,000 in income, given the generous credits we have proposed, would pay zero taxes. A family of four with $52,000 of income would pay 17% on only the taxable half of its income. It would pay an effective rate of 8.5%. A family of four with a multimillion dollar income would effectively pay 17%. My colleague from Toronto—Danforth who is the principal advocate of this idea knows full well that it is progressive.

We have serious concerns about the inability of the government to get tax policy right. Not only are we falling behind in terms of productivity growth. We are doing so in terms of competitiveness. We are not keeping up.

We are not keeping up on corporate taxes. According to a major study done by KPMG that appeared in the Economist last month, we have the highest corporate income taxes in the OECD at 42.1%. Our personal income tax burden, relatively speaking, is at least 21% higher than in the United States. In terms of competitiveness we are now ranked seventh by the World Economic Forum compared to the first place United States. Ireland, which is now in fifth place, has leap frogged over us. We have fallen behind in standard of living.

This is reflected in the value of our currency which is hovering at an all time low. Our currency has lost 25% of its value during the tenure of the Liberal government. It has a value of 65, 64 and sometimes 63 U.S. cents. That is an embarrassment and a reflection of the impoverishment of this nation under the policies of the Liberal government.

We oppose the bill and call upon the government to control spending. It must stop these crazy 7% annual increases in spending and allow it to remain constant. Spending must grow in relation to population and inflation growth so that we do not have net cuts in spending. We could let it grow at a gentle curve commensurate with the size of the country and the level of inflation.

Doing that during the five year period outlined in the finance minister's statement would mean an additional $58 billion for tax relief for working families, for job creation and for debt reduction to secure our long term future. That was the $58 billion missed opportunity of the finance minister's statement of last fall which he will reiterate on Thursday. It was a missed opportunity to create more wealth and pay down the huge national mortgage.

Often when we talk about the debt the finance minister jumps up and says we have reduced it. That is not true. The debt is about $60 billion higher today than when the finance minister took office in 1993. He has increased the debt. He has not paid it down. Public sector financial liabilities total about 106% of our gross domestic product. That is the third highest in the G-7 and the OECD.

The government says we can afford to increase spending by 5%, 6% or 7% a year and ignore the debt. However private sector economists have projected that we will be in a planning deficit by fiscal year 2004-05.

What does that mean? It means that in order to finance these reckless increases we will need to eat into the government's emergency reserves, the so-called prudence and contingency reserves. Those moneys are not supposed to be spent by reckless members of the Liberal cabinet. They are supposed to be set aside in case the economy shrinks.

The Liberals are already eating into the contingency reserve of 2004 based on very optimistic economic growth projections. If the economy turns down, the surplus that taxpayers have worked so hard to obtain will disappear and the promised tax relief will go down the sinkhole with it.

We are here today ringing alarm bells about the government's return to fiscal irresponsibility. We plead with it to look not just at the next two years but at four or five years down the road and what will happen if spending continues on its current trajectory. Therefore I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following therefor:

Bill C-22, an Act to amend the Income Tax Act, the Income Tax Application Rules, certain Acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another Act related to the Excise Tax Act, be not now read a third time but that it be read a third time this day six months hence.

[Roy H. Bailey, Canadian Alliance, Souris—Moose Mountain, SK]

Mr. Speaker, I welcome the opportunity to speak to Bill C-22. It is certainly a complex bill. Thousands of people in Canada, and a good many in my constituency, fall into the situation that I am about to describe in terms of exemptions and qualifications.

I refer to what happens to a young father who finds himself in a divorce situation. I draw the attention of the House to two such cases as they relate directly to the exemptions in the Income Tax Act. Dan and Valerie were married for 12 years. I do not know what led up to the divorce but they went through a divorce. The responsibility, and rightly so, is for Dan to support the children.

I will not accept for a moment, as is generally thought across Canada, that all these men are deadbeat dads. Dan agreed to pay his wife $1,000 a month for the upkeep of his children. At the end of the year that upkeep costs him $1,200 a month. Aside from the cost of the divorce and the loss of his house, he does not get to claim that $1,200 as an exemption. His wife does not have to claim it as income and receives a tax credit. That is wrong. No matter which way the cake is cut, it is wrong.

I have other examples on file. We do not know why suicides come about, but all these dads are not deadbeats. Many of them work overtime to make ends meet, only to have to pay more money. They are finding it more difficult to pay up each month. They want to carry on their responsibilities, but the situation is getting worse.

The last example I have on file is a shocker. John married a girl by the name of Janet and she had one child from her previous marriage. He accepted that child and together they had two more children. That union divorced and, believe it or not, Janet married her former husband. The oldest child from the former husband then went back to the original parents. John was ordered by the court to pay support for three children, even though the one child he assumed from the previous marriage was back with the original parents.

I could go on and on. All kinds of people have written to me from across Canada. In many cases there is no fight between the former wife and husband, but in many cases these young men simply cannot make it. What I am saying is that the monthly support payment should be an absolute deduction.

We seem to say at the present time that all divorces are the fault of the men. There is no question about that. One only has to look at the tax laws and the exemption entitlements. Hundreds of young men under 40 escape by running away, by taking on new names, and some by committing suicide. We sit here and allow it go on year in and year out. No one has the stamina and the courage to say that it is wrong. If members ever talk to some of these young people, they should talk to a man of 38 years of age who lost his professional job through no fault of his own. Watch the tears roll down his face because he cannot meet those obligations, and he was never credited for it as a tax deduction in all those years.

I say to the House and I say to all Canadians, it is time we faced up to this. It is time that we said no, that not everyone is a deadbeat dad. If we look at the statistics most of them are not.

I have dealt with many cases individually where men have had to suffer extreme hardships in order to meet the requirements of the courts. Then the income tax comes, they make a huge payment and have no deductions whatsoever. Their income tax is deducted at source because they are once again a single parent.

I wish that somehow the finance committee could sit down with the other departments involved in this to bring this atrocity to an end, to bring some fairness to the situation and to bring some fairness to what happens with a court ruling. Maybe they will. However if they do not, there will be more and more young men who will mysteriously disappear from the landscape and we will not know the reason for their deaths.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Mr. Speaker, you are not only a fairminded person but you have demonstrated a tremendous sense of humour. I respect and appreciate both qualities very much.

For the hon. member's benefit, I have marked the section in the act dealing with capital gains. It begins on page 263 and ends approximately at page 372. The section deals specifically with capital gains. Later on, when the act refers to taxes on inheritance, capital gains come up again. The capital gains section of the act is over 100 pages long and there is additional reference to capital gains later in the act. That is the Income Tax Act as we know it currently. Another 514 pages of amendments to the act have now been brought to our attention.

I refer to the parliamentary secretary's statement that there have been tremendous tax reductions over the last while. The Minister of Finance has indicated several times how significant and large the cuts have been. He says that they amount to around $100 billion.

However, when he makes that statement he does not tell us how many increases there were. We need to look at that, particularly in terms of payroll taxes. There has been a tremendous increase in the amount paid to CPP. That must be considered an increase in taxes. The $100 billion the minister refers to is not really the total amount. The net cut is considerably less than that.

The child benefit program is administered through tax benefits but it is really a spending program so it cannot be considered a tax cut. It is important that we recognize exactly what is going on.

I will make another point regarding the proposed statement the Minister of Finance will deliver on Thursday of this week, if the reports we have heard are correct. It will be very significant. The mini budget last fall indicated some of the things we have talked about here this morning. It looks like the new projection will tell us what to expect in terms of expenditures, revenues and the general state of the economy in Canada. The projection, at least at the moment, is that it will be for two years.

I refer the House to a statement made last week by the chief economist of the Toronto Dominion Bank, supported by a number of other economists, which suggested that two years is a misleading time period. Why? It is pretty clear to everyone that within the next two years we will still have a surplus and revenues will exceed expenditures. However, in the third year, because of programs that have been promised and programs that have begun, demands on the budget will create a deficit.

I would encourage the Minister of Finance not to fall into the trap of dealing only with the next two years, but rather that he give us a balanced position and say to Canadians that for the next two years we will have a surplus but in the third year, because of the things he plans to do, there will be a deficit. That would be an honest statement to make and I would encourage him to do that.

I will now come back to some of the specific provisions within the amendments of Bill C-22. I want to refer primarily to one section regarding capital gains tax, which I have referred to already. I will read one paragraph for the benefit of listeners. It is an amendment to the existing provisions for capital gains. I would like people to listen very carefully and see if they understand the paragraph. It reads:

(o) where an amount is designated under subsection 104(21) of the Act in respect of a beneficiary by a trust in respect of the net taxable capital gains of the trust for a taxation year of the trust and the trust does not elect under paragraph 104(21.4)(d) of the Act, as enacted by subsection 78(23), for the year, the deemed gains of the beneficiary referred to in subsection 104(21.4) of the Act, as enacted by subsection 78(23), are deemed to have been realized in each period in the year in a proportion that is equal to the same proportion that the net capital gains of the trust realized by the trust in that period is of all the net capital gains realized by the trust in the year,

(p) where in the course of administering the estate of a deceased taxpayer, a capital loss from a disposition of property by the legal representative of a deceased taxpayer is deemed under paragraph 164(6)(c) of the Act to be a capital loss of the deceased taxpayer from the disposition of property by the taxpayer in the taxpayer's last taxation year and not to be a capital loss of the estate, the capital loss is deemed to be from the disposition of a property by the taxpayer immediately before the taxpayer's death—

I would challenge all of our listeners to understand exactly what has happened here. It is very significant that we understand it.

Regarding the whole issue of capital gains, I would like to refer again to the Income Tax Act that exists at present. There is complex set of formulae in the act, not only the formula I have just read but a whole host of other ones.

Much of the amendment I just referred to in Bill C-22 has to do with the reduction of the capital gains tax from two-thirds to 50%. I do not think that is great. I think we should reduce capital gains tax considerably. I would like to see it reduced considerably below the present one, and the ideal, from my point of view, would be to eliminate capital gains tax entirely.

Why do I think that? First, it is critical that we have risk capital involved when providing capital for the establishment of enterprises to develop innovations, to apply new technology, new science and new understandings. People who risk their capital ought to be able to benefit from the profits that arise. In many instances these highly innovative projects, while they have the potential for tremendous gain, also have the potential for loss of a major part or all of the capital. We need to reward people who are prepared to risk their assets, their talents and their abilities so that they can be rewarded when they apply them.

[John Williams, Canadian Alliance, St. Albert, AB]

Mr. Speaker, as we know, the Minister of Finance has reduced income taxes by a few hundred pages and a few hundred million dollars. Perhaps it will help the hon. member with his private member's bill. By reducing the tax and burden on businesses, hopefully they will not go bankrupt so fast. That is the spinoff. All things considered there are benefits here and there are benefits there. However not everything is good in Bill C-22.

The Minister of Finance stood up last fall, a couple of days before the election, and brought down a budget to tell us the good news about all the tax breaks. We could not understand why he wanted to do that in October. When he first came to power he said he would send the finance committee right across the country for prebudget consultations.

It costs the House of Commons and taxpayers of Canada approximately $400,000 to send the finance committee across the country to hear from about 500 different people and institutions and so on to find out what they want in the budget. It is a great big process the Minister of Finance put in place so that every year in February he can stand in this place and say he has listened to Canadians and this is what the government will do.

However with the election in the offing, he decided not to worry about consulting Canadians and came out with a bunch of goodies to buy the votes of Canadians to win the election.

Members may recall that he introduced in that budget a payment of $125 to everyone who qualified for the GST tax rebate to reduce the cost of their heating fuel. There was no analysis. This was strictly an election goodie. Tens of thousands of payments at $125, the bulk of the money for a total cost of $1.3 billion, went to people who did not have a heating fuel bill to pay. A large percentage of the lower income people lived in rented accommodation. They lived in apartments. Did they pay heating fuel? No, the landlord did. Did he get a cheque for $125? No, but all his tenants did. There was no real benefit other than it was a great election goodie.

The Liberal Party went around the countryside. It gave all low income people a chance to reduce the cost of their heating fuel but it never said how. Money went to people in prison, in graveyards and to people who did not qualify for a variety of reasons. Many had never seen a heating fuel bill in their lives. Kids living with their parents got the heating fuel rebate but the parents who paid the bills did not get a penny. Then to top it all off, there was some questionable legality to it.

The $125 payment was a grant and fell under the definition of a grant. Grants had to be published. The name and address of everybody who received a grant from the Government of Canada was public knowledge and therefore should have been published. The information was derived from the Income Tax Act. Everybody who filled out a tax return and qualified for the GST tax rebate was on the list, and as we know tax returns are confidential. So the government was in a quandary. It came to the public accounts committee and asked for an exemption from publishing the names of people because the Income Tax Act said it should be private and rules covering grants said it should be public.

In my opinion, section 241 of the Income Tax Act, which guarantees and protects the privacy of income tax returns by Canadians, did not give the Minister of Finance the authority to get these names in order to pay the $125 to these people who qualified by virtue of being a recipient of the GST rebate. I did not think they qualified.

The issue came up at the public accounts committee. One Liberal member suggested a legal opinion was needed prior to giving them the authority. Another Liberal member did not think a legal opinion was needed, that they could hold their noses and pass it.

I have serious questions about the legality of paying $125 to those people just so the Liberal government could run around the countryside last October and say that it was giving people money to reduce their heating bills regardless of whether it was money wasted, which it was. It was perhaps illegal but no one seems to care. The Liberals won the election, so who cares?

We play by certain rules in Canada, and one is that the rule of law is sacrosanct. I am not a lawyer and we never got a legal opinion, but I have serious questions about the legality of that payment. By its own admission, the government was in a quandary. The Income Tax Act says that we must keep everything confidential but grants and contributions rules say that we must make things public. The fact that the government was in a quandary should tell us there was a serious problem.

There are other issues. We in the Canadian Alliance have long pointed out the disparity between two income families and one income families. One income families pay more tax than two income families that earn the same amount of money. The family that decides a spouse will stay home to raise the kids rather than pass them along to a babysitter does not get a tax deduction. Who better in the world to raise children than mothers?

We celebrated Mother's Day yesterday. Unfortunately, far too many parents must put their kids in daycare rather than stay at home because the tax act discriminates. It discriminates against families that want to keep a parent at home to raise kids. How can that be? Our most precious resource is children. We discriminate against parents who love their kids and want to raise them.

I am splitting my time with the member for Kelowna. I forgot to mention that.

The point is that we discriminate against families. Why do we tolerate that? I hope Canadians recognize this in the next election and are not dazzled by payments, tax breaks and so on, some of which are of questionable legality. Canadians should vote for a party which says that it will stop discriminating against parents who want to raise their own children. That must be a fundamental right.

It was a big day yesterday for millions of Canadians across the country who took time to recognize their mothers and the great contribution they have made to their well-being, their nurturing and their growing up. They took time to recognize the wiping of tears, the hugs and the commitment that mothers and parents have for their children. However, the government discriminates against families. We collectively in this place are being asked to vote on a tax bill that would continue the discrimination. Surely that must be addressed and redressed.

[Deepak Obhrai, Canadian Alliance, Calgary East, AB]

Madam Speaker, it is my pleasure to speak to Bill C-22. I take the opportunity to speak to the bill because I have a concern. I will not dwell on the logistics of the bill. I will leave it to my colleagues to talk about its other technical aspects.

I rise to speak to the bill because the government claims it has helped Canadians by reducing taxes and listening to Canadians. I see the former revenue minister sitting there. He created the big super agency and decided how it would work.

I will point out a direct example from my constituency of how the government and the minister's former agency have been picking the pockets of ordinary Canadians. A gentleman in my riding wrote me a letter and gave me permission to talk about it.

Eric is a senior citizen on the Canada pension plan. He is upset because the government is withdrawing money from his account without notifying him. The gentleman lives on CPP and the government is taking more than 10% off his pension. How does the government expect him to live if it takes more than 10% off his CPP?

Eric admits he owes the government money. However the government should have better mechanisms for collecting money from seniors and others who cannot afford to have their meagre benefits taken away by Revenue Canada. How does the government expect the gentleman to live after that?

This morning I rose in the House on an S. O. 31 to talk about a senior citizen who had taken $3,000 out of his retirement savings plan to buy a computer. It triggered penalties and an increase in his income tax. The poor senior citizen ended up losing interest. The gentleman took out $3,000 and ended up paying the government $168.

Is that how we treat senior citizens? Is that how we treat Canadians who work hard and save their money? When they try to reap the fruits of their labour the government, with policies that go from left to right and top to bottom, takes money away from them. It takes only a little here and there but cumulatively the individual loses. The gentleman ended up paying the government. Is that justice? It shows that the left hand of the government does not know what the right hand is doing. All Liberal members care about is how to take money from Canadians.

I have permission from another senior citizen to speak about his income tax return. This gentleman was mad.

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

Madam Speaker, it is with pleasure that I rise to speak on Bill C-22.

The amendments to the Income Tax Act come as a result of the February 2000 budget and also as a result of the October mini budget, or economic statement or whatever semantics one would utilize to describe that pre-election document of the Liberal Party of Canada.

The amendments to the Income Tax Act represent a collection of baby steps. Some are in the right direction. Some simply represent a further complication of an already far too complicated tax code. Most represent the triumph of politics over public policy.

If we look at the general direction of these tax measures, we will find there is no general direction. In fact most of them have resulted from a flimsily put together pre-election document. The document is referred to as the mini budget and reflects a mini vision of Canada.

These baby steps and tinkerings do not reflect what Canadians truly need in an overall and significant broad based tax reform. Tax reform can be used as a vehicle to create greater levels of economic growth and opportunity. Instead of making tax tinkering part of a pre-election policy, we should seize the tremendous opportunity we have now with the budget surpluses to bring taxes down, but use tax reform and tax reduction in lockstep.

Typically with tax reform we always create winners and losers. However, if we implement tax reform and tax reduction simultaneously in lockstep, we can ensure that there are no losers created by significant tax reform. All Canadians then would be winners as we create a more competitive and less distortionary Canadian economy which is poised and positioned for significant growth and opportunity, particularly in new economic endeavours.

We have seen in recent years our competitiveness with our trading partners suffer. We have seen other countries like Ireland leapfrog over Canada and seize opportunities to grow and prosper while Canada languishes. Ireland had a 92% growth in GDP per capita over a 10 year period. During the same 10 year period Canada had a 5% growth in its GDP per capita. This is pretty anemic when we consider the extraordinary growth in Ireland, a country once referred to as an economic basket case. Now it is referred to as an economic lion. Ireland did that by utilizing significant tax reform, particularly focused on a reduction of capital and corporate income taxes.

One of my hon. colleagues opposite constructively offered her views on this. I appreciate her views, as someone with a profound understanding from her family perspective of Ireland, and I agree with her. Ireland's commitment to education over the last 20 years to 30 years has strongly helped position Ireland. That being the case, Canada has by and large with its provincial and federal governments over time made significant commitments to education, so I would argue that that part of the equation has been done quite well.

We could improve our commitment to education, as could any country. It could be argued that Ireland could improve its commitment. The greatest difference between the two environments at this point is not in their commitment to education, it is their commitment to tax reform as a lever to create greater levels of economic growth and opportunity. That is the part we have to address, and I am certain she would agree with me on that front as well.

If we look at the government's record on economic issues since 1993 and how international confidence has been demonstrated in the government's record since 1993, there is no better gauge by which to judge the government than the performance of the Canadian dollar. We have seen under this government a loss in the Canadian dollar relative to the U.S. dollar of about 11 cents. The dollar reflects the shareholder value of Canada has seen a significant decline under the government. Under the previous government there was a one cent decline over a period of nine years. This government has achieved an 11 cent decline in a period of about eight years.

Every time our dollar goes down it is effectively a pay cut for every Canadian. We depend on the U.S. to such a significant amount as our trading partners. From a consumer perspective, given the degree to which Canadian consumers buy from U.S. companies, it significantly reduces over a period of time their disposable income.

It also has a very negative impact on productivity. Canadian companies in the short term do not necessarily see the need to make productivity enhancement a priority if they can hide under this low dollar policy of the government.

The low dollar also damages productivity in the long term. Companies that purchase productivity enhancing equipment or technological advancement software, et cetera from the U.S. are less inclined to do so if the dollar is low. As a result it becomes a self-perpetuating prophecy that in fact the low dollar creates in the long term lower levels of productivity by actually reducing incentives for companies to do the right thing and build their productive capacity in Canada.

In general, what is particularly disturbing about the state of the Canadian dollar is that the Bank of Canada has in recent years pursued a high dollar policy, yet Canadians are suffering as under this low dollar result. The Bank of Canada under its policies has targeted inflation rates in Canada of about a point lower than those which are considered acceptable by the federal reserve in the U.S. Despite this high dollar policy, we are getting this low dollar result. We have to carefully analyze and respond to the fiscal inadequacies of the fiscal framework in Canada.

The government describes having a balanced approach. The fact is a balanced approach is not the appropriate approach if we have significant inherent imbalances in the economic framework, and we do have some significant imbalances. Some are with taxation, not only in terms of overall levels of taxation but particular types of taxation which in and of themselves have the most negative impact on economic growth. Unfortunately, some of the taxes which are most politically palatable to reduce are ones that will probably have some of the smaller impacts on economic growth and opportunity. Some of the tax reductions which would spur the greatest level of economic growth are those that sometimes are less popular politically.

In the short term, and particularly after an election, the government should take some risks and tackle some of the major issues and addressing tax reform and the reduction of some of Canada's most productivity damaging taxes. I will speak about a couple of them.

One is our dependence on capital taxes in Canada. Capital taxes reduce investments and the incentives for Canadians and people outside of Canada to invest in the country. If we look at any study on productivity, there is a strong correlation between productivity and investment. If we tax capital and investment to the degree we do in Canada, that will have a significant negative impact on productivity enhancement.

The government has made some reduction in capital gains taxes. The government says that the effective rates of capital gains taxes are lower than in the U.S. That is not the case. We are still higher in Canada than in the U.S. However, the most important thing to recognize is the missed opportunity of the government to eliminate personal capital gains taxes. In this one instance we would be ahead of the U.S. in a very critical area of the economy, that of taxing capital gains and encouraging investment as opposed to discouraging investment innovation.

The government is losing this opportunity because of political reasons, the same reasons why the Liberal opposition fought vociferously against the GST. It was a case of politics then and it is a case of politics now. That is why it is not moving more aggressively to address capital taxes in Canada, specifically capital gains taxes.

I am focusing my comments today on tax reform, but we also need to see a greater commitment to debt reduction which in time would strengthen the Canadian dollar through fiscal policy.

In short, we are asking the Bank of Canada with one blunt instrument, the interest rate, to try to strengthen the Canadian dollar. We are ignoring in many cases the fiscal policy issues that could be addressed by the government, but it refuses to talk about the dollar. It also refuses to talk about some of the concrete measures it could take through fiscal policy to address the dollar.

We could also utilize tax reform in lockstep with equalization and other policies as part of our economic development strategy. I mentioned earlier the tremendous success that Ireland has enjoyed over the last 12 years. Some would say that comparing Ireland to Canada is not the best possible comparison because of the degree to which Ireland received EU transfers in order to allow it to invest so significantly in tax reduction. That argument is not necessarily a bad one. However if we want to look at the best possible comparison, we could compare Atlantic Canada today to Ireland 10 years ago.

Today we have a hodgepodge of economic development policies and agencies such as ACOA for Atlantic Canada. We also have our equalization policy which is the only constitutionally enshrined spending program of the government. I would suggest we should develop a tax policy in consideration of some of our economic development strategies.

In Atlantic Canada for example, the total budget for ACOA is a little more than the total amount of federal corporate taxes paid in Atlantic Canada. If we were to try to think in a more imaginative and visionary way about this, we could see the possibility exists with some assistance to eliminate federal corporate taxes in that region of the country to spur economic growth and opportunity. Quite possibly this could have a greater level of impact on economic growth than would result from the activities of ACOA.

I am not saying that ACOA has not had a positive impact in some areas. My personal belief is that in many ways it was probably a more appropriate instrument in the old economy than it is in the new economy. In the new economy tax measures have demonstrated far greater traction in achieving results in targeted areas than have direct investments by agencies such as ACOA.

We need to invest in infrastructure. If the Atlantic innovation fund focused on infrastructure, universities, technology transfer strategies and commercialization, those sort of initiatives could be very beneficial. I have great concerns about government agencies making direct investments in individual companies.

Another potential role for ACOA would be for it to take part, through the Atlantic innovation fund, in syndicated investment. Effectively the participation of ACOA would not be as an individual investor in a company, it would be part of a syndication of investors, the majority of which would be private sector investors.

That could help by reducing overall risk and encouraging private sector investment in particular geographic and sectoral areas, so that is a potential role. However, we need to get far more creative about how we encourage tax reform as a vehicle for economic growth. We must also consider other public policy priorities, such as economic development, and work more creatively in that regard.

On a technical issue, Bill C-22 would allow tax deferred rollover treatment for Canadians who hold shares of foreign corporations that have been subsidiaries to the parent shareholders. Some companies do not qualify because the bill would require distributing corporations to have their shares listed and actively traded on a stock exchange. That is inherently unfair. It is my understanding from the Parliamentary Secretary to the Minister of Finance that the issue will be addressed in future amendments and legislation. I would be supportive of that and would encourage the anomaly to be addressed.

In terms of general tax reform, the government would do well to dust off the Mintz report on corporate taxation and implement its recommendations without significant amendment. That would go a long way to improving competitiveness and reducing the distortionary nature of our tax code.

We must move aggressively not just to reduce taxes in totality but to reduce those which have the most negative impact on economic growth and opportunity. Jack Mintz, in his report to the Minister of Finance, went a long way toward doing that. However the report has collected a lot of dust and has not garnered the respect it deserves. The significant changes that should have followed the report never occurred.

To compare the way the current Liberal government deals with the erudite reports of great Canadians like Jack Mintz to the way the Mulroney government dealt with such reports, we need only look at the great report of Donald MacDonald on free trade.

Donald MacDonald had been a Liberal cabinet minister yet the Mulroney government recognized the inherent benefits of following the recommendations of the MacDonald commission. The Mulroney government pursued a controversial free trade policy, fought an election on it and did what was at the time relatively unpopular. In the 1988 election over half of Canadians voted against free trade yet the Mulroney government had the courage, vision, foresight and wisdom to pursue innovative policies and do what was right.

That is what I hope to see from the current government. I hope it has the courage, vision and foresight to pursue an aggressive policy of innovative tax reform and thereby create greater economic growth and opportunity for all Canadians.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I am pleased to address this important legislation, but I want to say from the outset that my party will oppose Bill C-22.

Why? Because of the lack of concrete measures that would serve the public interest, particularly low and middle income earners.

I want to discuss the tax cuts that were mentioned in the last federal budget and that will now become reality with Bill C-22. These tax cuts by the Minister of Finance are great for very high income earners.

If we look at measures such as lower tax rates or the new tax rate on capital gains, we realize that those who will benefit the most from the Minister of Finance's budget and tax cuts are the people who earn at least $250,000. The Minister of Finance targeted these people first and foremost. As of this year, this group will save about $19,000 in taxes.

Instead, we are shocked to see how minimal the tax cuts and savings for low and middle income families are.

Taking the example of a single parent with one dependent child and an income of $30,000, this person will have a tax saving of $750 and will continue to pay taxes. Is it normal for a single parent family, with a single wage-earner and one child to earn $30,000 and still pay some $1,545 in income tax, even after a tax cut? Is this normal for a family that has to live on $30,000? That is the cut-off figure for the poverty line, according to Statistics Canada.

Is it normal for the federal government to continue to impoverish this family still further, even with the tax cuts, by making it pay an average of $1,500 in federal income tax? No, it is not. A single parent with one child and an income of $30,000 ought not to be paying any federal income tax.

That is the way it is in Quebec. For some time now the Government of Quebec has been revising its tax categories. It has revised the marginal tax rates with the following result: a family of two adults and two children with an annual income of $47,000 will pay hardly any tax. How is it that a family with one child and one wage earner is still in the situation of having to pay more than $1,500 in tax?

I can already hear the Parliamentary Secretary to the Minister of Finance replying “That is wrong, it makes no sense”. I have news for him. It is wrong to say that it makes no sense. He should save his breath. People have just finished filing their income tax and they have it fresh in their memories that, once again this year, they have paid federal tax even though they are in the low income category.

When we look at the tax cuts for low and middle income families, we see that the tax savings this year, for example, will be no more than $300 or $350. That is for this year, because these tax cuts are being phased in between now and 2004; that is about the average.

But the high income earners get great breaks. As I mentioned earlier, on average, those earning $250,000 and up will save $19,000 this year. There is a double standard here. The government has also forgotten that it is low and middle income earners who have brought down the deficit since 1993, who have contributed to the huge surpluses, and we will come back to this later.

Middle income families are the federal government's cash cow. They are the source of most of the money collected in income taxes. The government should have been a bit more sensitive when it came to this category of revenue. These families should have been given a few more credits for having played such a major role in helping put the fiscal house in order.

It can never be said often enough that all the cuts made by this government since 1994, such as in the Canada social transfer for funding health, education and social assistance, have taken their toll on these families. These are the people really responsible for putting the fiscal house in order and generating surpluses. They are still doing it today. It must never be forgotten that every year the Liberals greedily help themselves to the surpluses accumulating in the EI fund because of the premiums paid by workers and employers.

It is not right that barely 40% of unemployed workers qualify for EI benefits. It is not right. The system is too restrictive. It excludes too many people who should normally have been entitled to EI benefits, since everyone pays into the plan now.

There is something wrong when these people are being hung to dry by the last budget, actually the last two budgets, and asked to help with fiscal consolidation through their contributions. The government does not have to worry any more.

Everything left in the employment insurance fund, once it has paid benefits to only 40% of the unemployed, the rest, that is 60%, goes into the consolidated revenue fund. It is added to general revenues, therefore contributing to fiscal consolidation and general surplus.

Why is it that these people could not benefit from true employment insurance reform; a real reform, not a “reformette”, a true reform of the employment insurance plan using most of the accumulated surplus to really help the unemployed instead of excluding 60% of them?

What we have instead is tax relief especially for millionaires, probably those who contribute the most to the Liberal Party coffers. We have unemployed workers who are excluded from the employment insurance plan. Low income single parent families with one child, making $30,000, are still paying $1,500 in federal income tax. It is despicable.

Is there a justice in this country? Are we eventually going to do something for these people or are we going to shamelessly forge ahead with the same budgetary policy we have being following so far?

As for social housing, why was there nothing in the past two budgets, that is, those of February and October 2000, the October mini budget geared to the election, of the Prime Minister in waiting. He has long been in waiting, but he is still hoping.

How is it they failed to consider social housing? It is an important issue that probably affects the single parent family, with one dependant and an income of $30,000 or less, which I cited as an example earlier.

How is it that this family is being put off once again? Why is not one cent provided for social housing? Is this a matter of no importance?

And yet, when we look at the statistics, the number of people spending over 50% of their income on housing has increased alarmingly, especially since the start of the 1990s.

At the moment, if we look at the statistics, there are 833,000 households—nearly a million households—that should be offered social housing, because they spend over 50% of their income on housing. That means that the other 50% is left for all the rest: food, electricity, telephone, clothing the children, child care and heating in winter.

When we think of the scandalous profits of the oil companies, which have raised prices significantly in the past two years, we could say there is collusion—let us not beat about the bush—in the oil industry.

They get together and raise prices at the same time. This is what the major oil companies do, and the government does nothing about it. Who is hit by the oil crisis, a crisis created by the big oil companies through collusion? Again, it is the poor, it is those who, after spending 50% of their income on rent, must spend part of the other 50% on heating.

Given such glaring needs, why did the federal government not think for one second of including new money for social housing in its budget?

If the government had continued to spend proportionally the same amount on social housing that it did before 1994, if it had maintained these expenditures since 1994, there would be 30,000 additional social housing units in Quebec alone. The government should have invested $3.5 billion in social housing since 1994, but it did not.

I cannot believe that, with surpluses coming out of his ears—even with the downturn—the Minister of Finance is not ashamed when he gets up in the morning and looks at himself in the mirror, because he did not show any consideration for the poor, who are not the main beneficiaries of his tax cuts and of all the measures implemented by the government since 1993.

I can hardly believe that. Why did he not also consider—after talking about it for so long—the possibility of transferring $500 million from the employment insurance fund to Quebec, to set up a true parental leave program?

Instead, they are putting the $6 billion surplus in their pockets to increase the surplus and to promote the image of the Prime Minister in waiting, that is the current Minister of Finance. Why have these people, who claim to be civilized, who claim to support social justice, not think of transferring, as provided under section 69 of the Employment Insurance Act, the $500 million that is required to set up a parental leave program in Quebec?

Because of this and because of them—and they are not in the least ashamed—the introduction of this plan has been put off until 2003. How is it that they are making young couples postpone having children? Are children not important to this government? Why will it not agree to transfer to Quebec the amount allowed under the Employment Insurance Act? Is it because Quebec is asking? Do they have it in for young families in Quebec?

It is sometimes hard to understand, to keep one's cool, in the face of such deceit, such an obstinate refusal, such incredible closed-mindedness, when by rights we should have had a parental leave plan in Quebec in 2001 or 2002, thus helping not just young parents working for businesses or the government, but also those who are self-employed.

Unlike the federal plan, the Quebec parental leave plan pays benefits to self-employed workers and takes the reality of the labour market into account. Not only are we still dealing with dinosaurs when it comes to a single currency, but also when it comes to parental leave. They are incapable of adapting to the labour market and keeping the public interest in mind.

Let us not forget that not only does federal parental leave not cover self-employed workers, but the eligibility criteria for this leave are the same as for employment insurance. This means that most people are excluded right off the bat. That is the situation right now. A little over 40% of unemployed workers qualify for EI benefits; if these are the same criteria used for the federal parental leave policy, quite a few people besides self-employed workers will not qualify.

In Quebec no one is excluded, not the self-employed, not the parents who wish to take advantage of our parental leave program. It is a far superior program. Because of the obstinate refusal of this government, however, young parents cannot take advantage of such a program.

How can it be that there has been no thought given, with billions of dollars in surplus again this year, to indexing the social transfers to the provinces, for health and education in particular? How can it be that, seeing what is going on in the hospitals, with the lack of funds and increasing demand, no thought is being given to putting more into transfer payments for health and education?

They say “But we must be prudent. The surplus is not all that big”. This is false. Contrary to the Minister of Finance's forecast in last year's budget, the surplus will not be $4 billion—insignificant, even taking into account the tax cuts in the October mini budget—but rather in excess of $17 billion, or four times his predicted figure. When it comes down to it, the Minister of Finance's sole plan was to use figures that have nothing in common with reality for petty political gain.

That is what he has done ever since he has been Minister of Finance. When there was a federal government deficit, he inflated the deficit figure, telling people “Look out, we need to be careful, because we do not have all the manoeuvrability we need, and the battle is far from over”.

He even told the members of his own party “We need to be careful”. But there is always a limit to prudence. We are all in favour of being careful, of having a contingency fund, but we are not in favour of lying to the population by not giving the real figures and by avoiding any debate on how to use the surplus.

When he forecasts a $4 billion surplus and that in reality the surplus is $17 billion, the $13 billion that was not forecast is used directly to pay down the debt. He avoids any debate and puts everything on the debt. There is no democratic debate, no transparency. This is hypocrisy, big time, and he wants us to swallow it.

I made a bet with a reporter. Did he know what the Finance Minister will say next week in his economic statement? He will say “There is no unanimity among economists; some say that things may go well, others that they may go wrong”. One of his former assistants, Mr. Drummond, who has been Assistant Deputy Minister of Finance and who is now the chief economist at the Toronto Dominion Bank, said “We have to be careful. We could come back to deficits in three years”, and he knows what he is talking about. Having been an assistant to the Minister of Finance for several years, Mr. Drummond cannot go wrong that easily and talk nonsense.

The Minister of Finance is setting the stage for next week by saying “Surpluses will not be as high next year. The economy is slowing down, we could go into a recession, find ourselves in the red. We may not necessarily be headed toward a deficit, but we still have to be careful. Since there is no unanimity among economists, I prefer to draw a line down the middle and say that surpluses will not be as high”. In other words, he is still going to tell us nonsense.

He is setting the stage. Some economists are optimistic. Yesterday, Thomas Wilson, a well known forecaster, forecast a surplus of $14 billion for the fiscal year ending March 31, 2001. He is a bit closer to reality. Our own figure is $17 billion. Even with last October's tax cuts and the new spending for Genome Canada, we still come up with $17 billion.

Next week, the Minister of Finance will tell us we have to be careful. That is a lie. It is hard to believe how much the public has been fooled since this man has become the Minister of Finance.

It is so much so that the economic statement exercise is losing its credibility, according to several analysts, particularly Mr. Piché, of La Presse , because the figures we are given are false. They are just not the right figures. We cannot rely on them to tell whether government management is good or bad. Does it follow certain priorities in its management, or does it take into account the interest of the population? There is no way for us to know, because we do not have the right figures. We have to find them for ourselves.

For the last fiscal year ending on March 31, we have a surplus of at least $17 billion. For each of the last five years, I have tried to lower the figures because of an economic downturn, but I cannot see the day when we will have a deficit.

The government could have done a lot of things with this money. It chose to side with the millionaires and not with the population. For all these reasons, we are going to vote against the bill.

[Ken Epp, Canadian Alliance, Elk Island, AB]

I am honoured to stand in the House today to speak to Bill C-22, an act to amend the Income Tax Act. Actually it was the Liberal Party election act. Members will recall that the finance minister announced most of the provisions that we are dealing with today just days before the election was called. Of course he had no idea that the election would be called four days later. After he did his economic update and announced these things in the House in October 2000, it came as a total surprise to him that lo and behold the Prime Minister announced an election.

I would like to begin by asking a simple rhetorical question. If there are policies that are necessary just before an election, how come those policies are not necessary between elections? Therein lies a very important question.

We have dealt with it over and over. We dealt with it not long ago when we were dealing with the equalization act. Suddenly it was necessary to lift the cap. It was done because there was an election coming. Believe it or not, the voters bought into it. A whole bunch of them in Atlantic Canada replaced sitting members with Liberal members because the Prime Minister said that the cap would be lifted.

When the legislation came in we dealt with it in the House. We did indeed lift the cap but for one year. We had some questions about the whole equalization process. We thought it should be revisited in order to look at it rationally because it was a very convoluted system. The opposition parties suggested that if it was good for an election year to lift the cap, it should be good policy to lift the cap in the long term. The government said no to that amendment.

All the Liberal members stood on command and voted against the amendment. That is a curiosity to me. If it is good economic policy we should be doing it, whether or not there is an election. If it is not good economic policy then we should be able to communicate to Canadian taxpayers why it cannot be done, and hopefully they would then trust that we would be fiscally responsible in managing their money properly. That is how we would gain their support.

Now we have Bill C-22, an act to amend the Income Tax Act. It goes on from there, but really it is a bill to enact the provisions of the Liberal fall election campaign in 2000. Our party is leaning toward supporting the direction the Liberals are going in. After many years, being a grassroots party and representing the wishes and sometimes the demands of Canadian voters and taxpayers, we brought to the House the wishes of Canadians on fiscal matters.

The Liberal government loves to tax and spend. It loves to take money out of the pockets of taxpayers and then roll it out during an election campaign so that hopefully it can stay in power, which is its overarching principle. Four days before the election was called the Liberals said that what the Canadian Alliance was saying was right on. The polls told them that. If they wanted to win the election, they had to do these things during the election period so that they could get re-elected.

The government introduced a number of measures, some of which are included in the bill. We are now debating what the government promised, just by coincidence, four days before the election was called.

I would like to say a little about those things. First I want to give very low marks to the Liberals but high marks to their communication department. They have spin doctors who work very well. They are able to communicate with straight faces to the Canadian people that there is a $100 billion tax cut. One billion dollars is an awful lot of money and $100 billion is massive. It boggles the mind.

I have sometimes used this example when I talk to students and we talk about the way in which governments spend money, and the way they tax and so on. Sometimes we also talk about the debt. When the Liberals came into power they inherited a debt of around $520 billion. They allowed it to grow to almost $580 billion.

We will be very fortunate if by the end of the government's mandate, say in the year 2004, although the Prime Minister will probably call an election in 2003, but certainly by the end of 2004, we will be back down to the debt level that we were in 1993 when it took power. However, the spin doctors are able to convince Canadians that the Liberals are excellent stewards of the public money. They are telling Canadians to trust them because they will manage our money properly, notwithstanding that the debt is much higher than it was when they took over.

I said that the magnitude is in the billions of dollars. I do not have the exact numbers before me because I was not planning on using this example. However, when I talk to students about $1 billion I ask them how long it would take them if they had to spend $1 million at a rate of $1 per second? Some of them guess a bit and then I tell them the answer. As I recall, if they started at midnight on January 1 it would take them until January 11 or 12 before the money would be gone, approximately 11.5 days to get rid of $1 million at $1 a second.

Then I ask them how long it would take them to spend $1 billion? Again, they guess and then I tell them the answer. I tell them that to spend $1 billion at the rate of $1 per second would take until September, 31 years later. That is how long it would take to get rid of $1 billion.

Here we have a government claiming through its spin doctors a tax cut of $100 billion. That is spin doctoring at its finest. The $100 billion includes a lot of money that it just decided not to take.

I will give another example. Let us say I decided to give my wife some money to spend on a house, which I know she would love, and told her that I was going to give her $20,000 more than I planned to give her. Under my breath I would mutter that I was planning on taking $18,000 away from her. She could say that $20,000 was great but the fact is it would only be $2,000 because it would include the $18,000 that I was going to take out of the housing fund.

This is what the government has done. It is claiming $100 billion in tax relief, but included in that is a whole lot of money that is represented by money that it could have taken but which it has now decided not to take.

For example, a couple of years ago the government announced that it was restoring indexation. There was no mention made of it being retroactive, so perpetually taxpayers were still suffering the removal of indexation on the tax rates over the last number of years because the government flattened the thing out. We were paying a whole lot more taxes because of bracket creep. When the government reintroduced it, it started from the present position and did not go back. Therefore, the errors of the previous years continue to be perpetuated.

One of the things the government is claiming is that due to indexation this is a tax cut. It is not a tax cut at all. The government said that it would take $10,000 from each taxpayer and now it is saying that it will only take $8,000. In that case, the government is calling this a $2,000 tax cut but it is still taking the $8,000. To call that a tax cut is inaccurate.

Furthermore, we have the child tax benefit. It is true that in the legislation the child tax benefit would be increased but that is not a tax cut. It is an expenditure. It is a case of the government thinking of a way to spend some money on behalf of families. In a way, I have some sympathy for that position but it cannot properly or legitimately call it a tax cut. That is spin doctoring and it is not acceptable in terms of the actual message that is being put out there.

The bottom line is that the actual tax cut is not $100 billion. It is actually closer to $50 billion and that is spread over five years.

We have a whole bunch of questions with respect to the bill but the government has decided to go ahead with it. We know its members will vote for it and it will happen. I will concede that families with children would get more money from the spending program and so for them it is an advantage. For families without children, such as in the case of my wife and I whose children are grown up and have left home, there would be no tax cut. It is a spin doctoring myth.

The bill also has implications in the area of tax rates. We talk about the single tax rate. The opposition and some of the other parties, and when I talk of opposition I mean the Liberals who are in opposition to us, totally misrepresented what a single tax rate does.

Our plan was to have one rate of tax at 17% and then subsequently we revised it so that it would apply only to $100,000 of taxable income. That still included all of the present deductions. None of them were to be taken away. However, instead of talking with Canadians and honestly debating its plan versus ours, the government has totally distorted what it said about our plan and then proceeded to knock it.

It is really an unfair thing. It is as if we have two car dealers and one dealer, trying to promote his product, says that the wheels fall off his competitor's cars as soon as they are driven 10,000 kilometres. It is not true but that is what he says would happen. He repeats it over and over again and then asks, with great passion, whether the customer wants to buy a car with wheels that fall off after being driven 10,000 kilometres. The customer says, no, and the car dealer suggests that the customer buy his car.

That is what those Liberals did. I almost used a bad adjective, but thankfully I caught myself. They took our plan, totally distorted what it did, developed animosity against that caricature of what we were proposing and asked Canadians to vote for them.

There are still thousands of Canadians who want to trust their governments. They want to trust their politicians. During an election campaign when these things are said Canadians think that if their trusted government leaders are saying something it must be right so they therefore believe them.

I will take a ten second diversion to say that the same distortions happened when the Minister of Citizenship and Immigration said what she said. That was a hurtful and total distortion for a person like myself whose family members have worked all around the world with people of all kinds of different backgrounds, helping them. To be labelled the way the immigration minister labelled us and then have Canadians say they would not vote for us because we were scary is hurtful and wrong.

If we want Canadians to trust us we have to start dealing openly and honestly with them. We have to tell them the truth and start debating the Liberal proposal versus ours. That unfortunately has not happened. I resent this.

I taught mathematics and computing for 31 years in my life prior to becoming a parliamentarian and when people misuse math I get just about as upset as I do when they describe me in pejorative terms. The government had Canadians persuaded, and this is one thing in the bill, that it would reduce the lower tax rate from 17% to 16%. It had the gall to go to Canadians, say it was reducing the rate to 16% and claim that was even better than the Canadian Alliance proposal.

However, it was worse than that. In every category, including that first category at the low rate, our tax plan would have given Canadian taxpayers a greater tax break. The reason was simple. Even though our rate was 17%, it was on less of taxpayers' income. We proposed, for example, that a two parent family with two kids would not pay any income tax on the first $26,000 of their earnings. The Liberals ignored that. They ignored the fact that we would increase the exemption. All they did was talk about the fact that they would reduce the lower rate to 16% from 17%.

I resent it when people trade on a misrepresentation of mathematical facts. This is what the government has done and this is what we would be passing with Bill C-22. If we pass the bill later today we would be approving the reduction of that rate to 16%. Canadians would get a smaller tax break than they would have had they voted for us because of the fact that the Liberals have a great deal of expertise in messaging, in telling people “this is what is” when in fact it is just the opposite.

In passing Bill C-22 the Liberals ought to send out a press release to say that while they would be reducing the income tax rates and going from three levels to four, while they would be decreasing the 17% rate to 16%, the 25% rate to 22%, the 29% rate to 26%, and retaining the 29% rate for everything over $100,000, there is something else. I would like that press release from the Liberal government to also say in bold letters at the bottom of the page “Please note that Canadians were hoodwinked into voting for a party that proposed this bill and got it pushed through the House and that it gives taxpayers a smaller tax break than, first, they deserve, and second, what the Canadian Alliance would have given them”. That is what the press release should say. I am expecting the Minister of Finance to put that on the bottom of the press release later today or next week when this bill is finally passed.

I am sure that will happen. I see the parliamentary secretary over there grinning from ear to ear, which of course shows compliance with my present request.

The fact of the matter is that a $100 billion tax cut is a $50 billion tax cut or even a little less if we look at how much the taxes are actually being cut. The rest is spin doctoring. The fact of the matter is that this would produce a tax cut smaller than the tax cut we would have provided.

There are some other provisions in the bill with which I happen to agree. There is a disability tax credit. There is also the issue of children. Families have big expenses when raising children. The government is going in the right direction here by making it slightly easier for families, but it does not come anywhere near recognizing the actual costs of raising children. We would have substantially increased the deduction for children. The government has not done that. The taxpayers would still pay taxes on the money and if they qualify they get a tax credit. Most people in the middle income bracket with two earners have the promise of a child benefit for which they are not eligible. Their taxes would stay the same. The government is not reducing the taxes yet is announcing with this bill that taxes would be reduced.

I regret that my time is up, Madam Speaker, but thank you for giving me the time to express my views on the bill. I will vote against the bill for the reasons I have articulated.

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

Mr. Speaker, I appreciate the opportunity to address the House at third reading of Bill C-22, the income tax amendments act, 2000.

The bill would implement key elements of the government's five year tax reduction plan, the largest tax relief package in Canada's history, and would legislate the technical amendments in Bill C-43 which died on the order paper last fall. Each measure in the bill is based on the principles of fairness and equity in the federal tax system to which we have been committed since 1993.

The most important component of the bill delivers measures announced in the 2000 budget and last October's economic statement to set out a multiyear plan for further tax reductions.

This plan, which provides $100 billion in tax relief by 2004-05, will reduce by an average of 21% the federal personal income tax paid by Canadians.

Families with children will receive an even larger tax cut of about 27% on average.

As of January 2001, tax rates on all income levels were reduced and the 5% deficit reduction surtax was eliminated. The low and middle income tax rates fell to 16% and 22% respectively. The top 29% rate was reduced to 26% on incomes between $61,000 and $100,000, which means the 29% rate applies only to income over $100,000. As all the economists and analysts have noted, the timing could not have been more perfect to bring in these tax cuts.

Increased support for families with children would be provided through the Canada child tax benefit. The maximum Canada child tax benefit for the first child would rise to $2,372 in July, well on the way to the five year goal of $2,500 by the year 2004.

For the second child the maximum Canada child tax benefit would increase to $2,308 in July 2004.

These amendments must be in effect by July 1, so that families can get this benefit within the set timeframe.

Other amendments to personal income tax are specifically designed to help those who need them most.

The bill would increase the amount on which the disability tax credit is based. It would expand the list of relatives to whom the disability tax credit can be transferred to make it consistent with medical expense tax credit rules and it would allow speech language pathologists to determine eligibility for the disability tax credit with respect to speech impairments.

In addition, the bill would increase the maximum child care expense deduction for children for whom the disability tax credit can be claimed and the amounts on which the caregiver and infirm dependant credits are based.

It would also include certain incremental costs under the medical expenses tax credit when a principal residence is built for people with mobility impairments.

Moreover, an amount of up to $3,000 in scholarships, fellowships and bursaries will be tax exempt, provided the student is eligible for the education tax credit. Self-employed workers can deduct from their income the share of the contributions to the Canada pension plan or to the Quebec pension plan paid by the employer for their own benefit.

Other personal income tax changes clarify the rules under which clergy can claim a deduction for their residence, allow Revenue Canada to release information about former registered charities under certain conditions and exempt municipalities from filing T4s for volunteers to whom they paid not more than $1,000.

Another element of the tax reduction plan would help make Canada's business income tax more internationally competitive. Corporate tax rates would drop to 21% from 28% for businesses in the highest tax sectors to make them more internationally competitive, beginning with a one point tax cut effective January 1, 2001.

By the year 2005 the combined federal-provincial tax rate would drop from the current average of 47% to 35%, five percentage points lower than the U.S. This would put our businesses on a more competitive level with other G-7 countries and serve to attract investment and create jobs.

The plan also provides a tax deferred capital gains rollover for investments in shares of certain small and medium size businesses, and a 50% reduction of the capital gains inclusion rate. Thus, the highest federal-provincial tax rate on capital gains will be lower than the same combined rate in the United States.

Increasing the employee stock option deduction from one-third to one-half means employees in Canada would be taxed more favourably on stock option benefits than employees in the United States. In addition, the bill would allow the deferral of tax on certain stock option benefits and an additional deduction for certain stock option shares donated to charity.

Bill C-22 would ensure a comparable tax system for Canadian banks and foreign bank branches operating here. It would strengthen the thin capitalization rules, phase out the special tax regime for non-resident owned investment corporations and introduce a temporary 15% investment tax credit for grassroots mineral exploration.

Technical amendments include extending the additional capital tax on life insurance corporations until the end of 2000 and clarifying the tax treatment of resource expenditures and the rules governing gifts of ecologically sensitive land.

There are three remaining measures I will touch on briefly before closing.

The first would introduce changes to the taxation of trusts and their beneficiaries, in particular property distributed from a Canadian trust to a non-resident beneficiary, mutual fund trusts, health and welfare trusts and those governed by RRSPs and RRIFs.

New antiavoidance measures will ensure that transfers to trusts cannot be used to unfairly reduce taxes.

The next measure would ensure that Canada retains the right to tax immigrants on gains that accrue during their stay in Canada. It would also clarify the effects of new taxpayer migration rules on rights to future income and allow returning former residents to unwind the tax effects of their departure regardless of how long they were non-resident.

To avoid international double taxation, former residents would be able to reduce Canadian tax payable on their pre-departure gains by certain foreign taxes paid on the same gains.

Another measure would make advertising expenses in periodicals with at least 80% original editorial content fully deductible and those in other periodicals 50% deductible regardless of ownership.

After July 1996 Canadian pension funds and other entities that own Canadian newspapers qualify as Canadian citizens under the ownership requirements of the Income Tax Act.

Before closing, I wish to mention that a number of amendments were made to this bill in committee. On behalf of the government, I wish to thank members of the Standing Committee on Finance for their detailed examination of this bill.

Improvements have been made to several provisions, including those affecting back to back loans, weak currency debts, foreign accrual property income, partnerships, mortgage investment corporations and segregated fund trusts, just to name a few.

Each of these amendments contributes to fairness in the tax system.

I remind the House that fiscal responsibility for government is fundamental and tax cuts are essential. At the same time we are committed to maintaining an effective, fair and technically valid tax system. Without a doubt this is the thrust of Bill C-22.

This bill will implement the key features of the five year tax reduction plan, which will lighten the tax burden on all taxpayers, strengthen support for families with children, and increase the competitiveness of the Canadian corporate tax system internationally.

I urge all my hon. colleagues to keep in mind that Canadian children need the Canada child tax benefit increases on July 1, a fact that makes speedy passage of the bill essential.

Proceeds Of Crime (Money Laundering) Act

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, I appreciate the opportunity to speak to the bill. This is a very important piece of legislation and I commend the previous speakers, including my colleague from the New Democratic Party. It is interesting to note that many members have picked up on the fact that those in the other place have served a very useful purpose in reviewing the legislation and improving upon the legislation, as is often their wont.

I should indicate at the outset that I will be splitting my time with the hon. member for Kings—Hants.

Bill S-16 essentially deals with a response to concerns that were raised by the Senate banking committee. Bill S-16 amends the Proceeds of Crime (Money Laundering) Act and particularly focuses on areas of solicitor-client privilege, the disclosure of information and records retention. This is, of course, information that is critical in tracing the origins and whereabouts of potential assets linked to criminal activity. The money laundering that takes place in Canada is of great concern to our citizenry and certainly to our law enforcement community.

Money laundering, as the Speaker would know, is a process by which criminals attempt to conceal profits earned from crime so that the money appears as if it comes from legitimate sources. When all traces of the money's criminal origins are erased, the money can safely be used to buy goods and services.

It is shocking to think that between $5 billion and $17 billion is laundered in Canada. Of course it is difficult to accurately assess just how much because the proper authorities are not able to determine this amount, but it is estimated to be in that range.

There were shortcomings in the original legislation which Bill S-16 attempts to correct. Money that is laundered is often shifted among countries, financial institutions and investments without a paper trail so that it cannot be traced back to its origins. With the advancing sophistication of technology, competent and sophisticated criminals are able to access and utilize these now boundless abilities to transfer money through cyberspace, leaving no tangible evidence as to its origins.

Obviously much of this money is obtained by very nefarious means such as fraud or intimidation. This is the type of money that is very often directly linked to criminal organizations in Canada and has been the focus of a number of pieces of legislation and the focus of considerable debate in recent months and years. Canada has come under heavy criticism in recent years for being a nation where criminal organizations are able quite easily to launder their proceeds of crime. For that reason and that reason alone, it is incumbent upon us as elected officials and as part of the federal legislative branch to respond. That is what this legislation is intended to do, to enhance the existing proceeds of crime legislation.

The response last spring came in the form of government Bill C-22, the Proceeds of Crime (Money Laundering) Act, which was passed. Bill C-22 imposed new reporting and record keeping requirements and created the Financial Transactions and Reports Analysis Centre of Canada to receive and analyze information so there would be a focal point, a centre in Canada where those working in this location would be specifically tasked to assist law enforcement communities in locating and tracing proceeds of crime.

Concerns were expressed at that time about the bill by the privacy commissioner, the Canadian Bar Association and other groups that appeared before a parliamentary committee. The Senate banking committee looked into the bill in June 2000 and, to be quite blunt, was not impressed. The committee felt that the legislation was considerably flawed and had a number of shortcomings which it had hoped to remedy. The government indicated at that time that it was unwilling to entertain amendments to the legislation because it was too late in June and the House of Commons had to deal with other bills and indicated that therefore the Senate might make changes in the future.

Coming forward from that point in June 2000, we know that the Secretary of State for International Financial Institutions did give a written undertaking to the committee that certain changes would be contemplated and would occur in a new bill to be introduced in the fall. Those changes formed the substance of Bill S-30 which was introduced in October. Bill S-30 is identical to Bill S-16 which is currently before us.

As the Speaker and Canadians well know, the entire process in October was pre-empted by the legacy lust of the Prime Minister in his decision to put this piece of legislation and other very useful pieces of legislation aside and toss them in the dustbin in order to seize his political advantage and call an election.

Beyond the changes that were agreed to in the letter from the secretary of state to the Senate banking committee, the bill was then reported with the observation that the government should consider other amendments. Those amendments would include, first, further insurance that solicitor-client privilege would be protected by adding the phrase law office in any place in clause 63 where the term dwelling house appears. This simply expanded the physical premises that would attach under the legislation.

Second, the government would hold the first review of the act after three years, not five years, with a five year review to be held after that. This is essentially an opportunity in the first instance to look at the fallout from this legislation at an earlier date and assess the implications after three years.

Finally, the government would require regulations under the act to be tabled before the committee in the House each year. The Progressive Conservative Party is very supportive of all attempts to bring about transparency, both for the public and for parliament, and to access information that is rightfully to be placed before Canadians.

This is important in the broader context of trying to rebuild lost confidence in the process and in this institution. It is clear that the bill does not include all the changes recommended by the committee, but it goes a long way to improving the legislation.

The bill will focus on the following legal issues. The first is solicitor-client privilege, which is an attempt by individuals to prevent private information they share with a solicitor from being made public or in any way disclosed. Bill C-22 only dealt with instances of solicitor-client privilege involving legal counsel.

Bill S-16 clarifies that officials of the Financial Transactions and Reports Analysis Centre of Canada may not examine or copy documents subject to solicitor-client privilege where the documents are, and this is the important part, in the hands of someone else until a reasonable opportunity has been made for the person to contact legal counsel. The bill would put in place a safeguard to allow an individual to speak to a lawyer before documents are seized.

This responds to concerns raised by the Certified General Accountants Association of Canada. Privacy is something we can never take lightly. We must always strive to ensure individuals are protected in their privacy rights and in their business transactions. However all that must be balanced with the recognition that there are those who rely upon nefarious means and complicated schemes to steal from others, rip people off and engage in blatant activities to take away a person's wealth.

To that end a balance is struck in the legislation. It contains safeguards and methods for review that allow for a weighing of evidence to determine whose interests are best being served.

Bill S-16 would allow individuals or the privacy commissioner to take the Financial Transactions and Reports Analysis Centre of Canada to court if they are denied access to their files. There is therefore a chance for judicial review if there is denial of access.

Next is disclosure of information. Bill S-16 narrows the range of information that may be disclosed by the Financial Transactions and Reports Analysis Centre of Canada to the Canada Customs and Revenue Agency, the police, and citizenship and immigration officials.

After listing the types of documents that could be disclosed Bill C-22 gave the centre broad power to disclose any information so designated. The amendment would replace that power with the power to disclose similar information relating to identification.

Finally, there is record retention. Records not disclosed by the centre are to be destroyed five years after they are received or collected. Those which have been disclosed are to be destroyed eight years after they are received or collected. These are further safeguards. It may be called fine tuning but it is important fine tuning nonetheless. The sober second thought of the Senate has been usefully exercised here.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am pleased to rise today to contribute to the debate on Bill S-16. The New Democratic Party supported Bill C-22 in the previous parliament, which was approved and received royal assent. We voiced a number of concerns as it went through committee stage and amendments. We are glad to see that some of those concerns are being addressed in Bill S-16.

Members of the NDP like other members of the House are extremely concerned about the impact of organized crime on our local communities and across the country. There is no question that it is something that is very sophisticated. It is very pervasive and has a huge impact on many people's lives.

Personally, as well as in terms of financial institutions and various businesses, we are all very familiar with cases that do come to public light. They give us a glimpse of the kind of operation that exists outside the law in terms of money laundering, the profits from organized crime and how they are dealt with.

For most people it is a fairly frightening glimpse when we look at a system that is so complex. As in previous legislation the attempts in this legislation to deal with that sophistication and to find the appropriate mechanisms to track where money is flowing, where the proceeds of organized crime are coming from, is very important.

The NDP put forward some concerns about the original bill. In any legislation there has to be a balance between a reasonable right and invasion of privacy. There must be an understanding that the power of the state is not absolute. When a new agency is created with far reaching powers we have to be very careful about how it is set up.

For example, before Bill C-22 was approved we and a number of witnesses who came forward to debate the bill expressed concerns about whether or not there was potential for charter of rights violations, that the guarantees of reasonable search and seizure appeared to be at risk.

We were also very concerned about the possible pressures there would be on consumers. Needless to say, there would probably be a significant cost in setting up any sort of regime to track and communicate suspicious transactions. I do not know if that has been spelled out, but it seems to me that it would be enormous in terms of what the responsibilities would be for financial institutions and how that would get passed on to law abiding consumers.

Members of the NDP were also very concerned about the fact that the bill did not address what is often referred to as white collar crimes or technology based crimes. Unfortunately this is a huge area that is booming. We are all very familiar that the growth of the Internet and computers in general, credit card fraud, telephone fraud, stock market manipulation and computer break-ins are all things that can be characterized as technology based crimes or white collar crimes. There is no question that there is a very serious element within that which is perpetrated by organized crime. It seems to us that the original bill did not and the legislation before us today does not adequately address the concerns that surely must be addressed in terms of technology based crimes.

In the debate today I heard a number of members talk about different elements of organized crime and the impact they have. The member for Esquimalt—Juan de Fuca spoke about the drug trade and its human impact. I will spend a couple of minutes speaking about that as well because it strikes me that there is a contradiction.

On the one hand, as we should, we go to great lengths to deal with a legal apparatus and the setting up of a new agency, FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, as it is called, and what a mouthful that is. We go to great lengths to set up a very elaborate system for tracking suspicious transactions, trying to trace what has happened and making sure that there is adequate reporting.

On the other side of that coin in terms of organized crime and the billions of dollars that are generated illegally through drug trafficking and drug use and the profits that are made, we do not pay enough attention to the human costs that are very clearly evident on our streets, in urban centres and even in smaller communities across Canada. I have only to look at my own riding of Vancouver East to see the devastation that happens in an environment where illegal drug activity is a huge underground economy.

I believe, and I certainly would echo the comments from the member for Esquimalt—Juan de Fuca, that we have to pay attention to that human side. We have to recognize that in some respects it is the illegality of those substances, heroin or crack cocaine or other substances, that drives this underground market and in effect criminalizes addicts when they are on the street with very few resources. We end up with a community where people are literally dying on the streets from overdoses.

It strikes me as a horrible irony that while on the one hand we can somehow relate to this issue from a legislative point of view by setting up this centre, on the other we cannot relate to this issue from a human point of view and take the actions that are necessary to actually reduce the harm of what is happening on our streets because of these illegal substances.

I would also add that we need a saner, more humane approach to drug use in Canada and we need to be seriously willing to reform Canada's drug laws, which have not been reformed for decades. We have had Senate hearings. We have had debates in the past where some of these issues have been debated very seriously, but not in recent times. If we took the time to do that I believe we would go a long way toward dealing with some of the causes of the devastation we see on our streets. We could in fact look at the issue of how organized crime is being driven by this very lucrative business of drug use.

We could look to the experience of what is happening in Europe, where the approach has been to medicalize drug use and addiction instead of criminalizing people. The approach has been to try to remove the harm from buying drugs on the street. Not only has there been a huge financial saving in health care costs and judicial costs, but lives have been saved as well.

I wanted to make that point because it seems to me that we are missing the boat unless we look at the total picture. We cannot just say that all this money is coming from organized crime and a lot of it is coming from drugs unless we are willing to examine Canada's drug policies and recognize that they need to be seriously reformed.

For example, even with marijuana we see the stories about grow operations in the papers all the time. In east Vancouver there are media reports of various grow busts taking place. We are talking about multimillion dollar operations. It seems to me that if we had the courage to examine our drug policy laws and to seriously look at reform of those laws we would be going a long way in terms of removing the incentive and the huge opening that exists for organized crime to become a part of the underground economy. That is a very important aspect of the debate.

In regard to the bill before us today, I did want to say that the NDP certainly supports the amendments that are contained in the bill as a result of the previous bill, Bill C-22. We support them in principle. Important questions were raised as a result of Bill C-22. It is notable that there has been a sort of second look based on the issues raised previously, for example, knowing how long this new centre would be able to retain the information it collects and whether there are issues in terms of the balance between the right to retain information or dispose of it.

Another question was about when and how that information would be disposed of. If an agency is created, for how long does it have a right to have that information and in which manner can it be disposed of? If information is to be disclosed to law enforcement authorities, how should that be done? Those issues needed to be more clearly spelled out and we certainly feel that the present legislation goes some distance to addressing those concerns put forward by witnesses and by different parties in the House.

In conclusion, at this time we in the NDP are pleased to continue our support in principle. We think it is an important bill. It has obviously had strong support within the House. It is always good to have a second look based on evidence from witnesses to make sure that the bill is fine tuned to address concerns put forward.

I hope as the debate continues that the government will pay attention to the concerns that are still being expressed. It seems to me that there is strong general support but some areas still need to be looked at.

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

Mr. Speaker, I welcome the opportunity to speak today at second reading of Bill S-16, an act to amend the Proceeds of Crime (Money Laundering) Act. This bill would improve upon its predecessor, Bill C-22, which received royal assent last June. That bill was needed for several reasons.

Allow me to take a moment to review some of the background to that bill.

As hon. members know, money laundering in recent years has become more and more of a problem in Canada. By definition, money laundering is the process by which dirty money from criminal activities is converted into assets that cannot be easily traced back to their illegal origins.

Today's open borders provide criminals with a daily opportunity to launder millions of dollars in illegal profits with the intention of making the profits look legitimate. These activities can undermine the reputation and integrity of financial institutions and distort the operation of financial markets if adequate measures are not in place to deter money laundering.

To illustrate the magnitude of the problem, it is estimated that between $5 billion and $17 billion in criminal proceeds are laundered through Canada each year. A significant portion of this laundered money is linked to profits from drug trafficking.

Money laundering became a crime in Canada back in 1989. Prior to Bill C-22 Canada had many of the building blocks of an anti money laundering program in place within the criminal code and the previous Proceeds of Crime (money laundering) Act. However the government realized that much more needed to be done to combat the problem.

On one hand, the government was being pressured by law enforcement agencies for better enforcement tools. At the same time, on the international front, Canada was subject to scrutiny because of perceived gaps in our anti money laundering arrangements.

In 1997 the 26 member financial action task force on money laundering, the FATF of which Canada is a founding member, found Canada to be lacking in certain key areas and strongly encouraged us to bring our anti money laundering regime in line with international standards.

As a result of pressure here and internationally, the government brought in Bill C-22 in the last parliament. That legislation strengthened the previous statute by adding measures to improve the detection, prevention and deterrence of money laundering in Canada. Bill C-22 contained three distinct components which enabled Canada to live up to its international commitments.

First, the bill provided for the mandatory reporting of suspicious financial transactions.

Second, the legislation required that large cross-border movements of cash or monetary instruments like travellers' cheques be reported to the Canada Customs and Revenue Agency.

Third, Bill C-22 provided for the establishment of the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, which came into being on July 5, 2000. An independent agency, FINTRAC is set out to receive and analyze reports and to pass on information to law enforcement authorities if it has reasonable grounds to suspect that information would be relevant to a money laundering investigation or prosecution.

I should also mention that there are safeguards in place to ensure that the collection, use and disclosure of information by FINTRAC are strictly controlled. These safeguards are supported by criminal penalties for any unauthorized use or disclosure of personal information under FINTRAC's control.

FINTRAC is also subject to the federal Privacy Act and its protections.

Bill C-22 was welcomed last year by members on all sides of the House for several reasons.

First, it responded to domestic law enforcement communities needs for additional means of fighting organized crime by more effectively targeting the proceeds of crime.

Second, it responded to Canada's need to meet its international responsibilities in the fight against money laundering. It did so while providing safeguards to protect individual privacy.

In spite of these accomplishments, several of our hon. colleagues in the other place believed the act could be strengthened even further and could benefit from additional amendments. The government agreed and the result is Bill S-16, the legislation before us today.

Let me take a moment and provide some background.

When Bill C-22 was studied by the standing Senate committee on banking, trade and commerce last spring, members of the committee indicated that while they supported the bill the legislation would benefit from amendments to certain provisions.

The Secretary of State for International Financial Institutions made a commitment at that time to clarify the act by including several of the changes requested by the committee. The result was Bill S-30 which was introduced last fall and subsequently died on the order paper when the election was called. It was reintroduced in this parliament as Bill S-16.

The amendments in this bill relate to four specific issues. The first deals with the process for claiming solicitor-client privilege during an audit by FINTRAC. The agency is authorized to conduct audits to ensure compliance with the act.

The current legislation contains provisions that apply when FINTRAC conducts a compliance audit of a law office. FINTRAC must provide a reasonable opportunity for a legal counsel to claim solicitor-client privilege on any document it possesses at the time of the audit.

The proposed measure in Bill S-16 pertains to documents in the possession of someone other than a lawyer. It requires that that person be given a reasonable opportunity to contact a lawyer so that the lawyer could make a claim of solicitor-client privilege.

Another measure would ensure that nothing in the act would prevent the federal court from ordering the director of FINTRAC to disclose certain information as required under the Access to Information Act or the Privacy Act.

The amendment would ensure that the recourse of individuals to the federal court would be fully respected. Indeed this was the intent of the original bill, Bill C-22.

The third amendment more precisely would define the kinds of information that could be disclosed to police and other authorities specified in the legislation. It would clarify that the regulations setting out this information could only cover similar identifying information regarding the client, the institution and the transactions involved.

Finally, Bill S-16 would ensure that all reports and information in FINTRAC's possession would be destroyed after specific periods. Information that has not been disclosed to police or other authorities must be destroyed by FINTRAC after five years. Information that has been disclosed must be destroyed after eight years.

Bill C-22 introduced sweeping changes to Canada's anti money laundering regime. First, it introduced new reporting requirements which would result in more reliable, timely and consistent reporting. Second, it introduced centralized reporting through FINTRAC which allowed much needed and much more sophisticated analysis.

Third, successful prosecutions that benefit from analysis by FINTRAC can lead to court ordered forfeiture of the proceeds of criminal activities.

Above all, these benefits would be achieved in a way that respects the privacy of individuals. The additional amendments contained in Bill S-16 would only serve to further strengthen and improve this statute.

Irrespective of party affiliation, I am confident that all hon. members will fully support the bill. I urge members to give the legislation quick and speedy passage so that we may proceed to other items on the government's legislative agenda.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I believe it is the first opportunity I have had to respond to the hon. member in that capacity. Let me begin by congratulating her on the position she holds.

This afternoon we will continue consideration of Bill S-11, followed by Bill S-16 respecting money laundering. As a matter of fact the debate on Bill S-11 may have collapsed just before question period. That means we will start with Bill S-16 respecting money laundering, followed by Bill C-14, the shipping legislation. Afterward, if there is any time left, we will resume debate on Bill C-10 regarding marine parks.

On Friday we will begin consideration of Bill C-22 respecting income tax amendments at report stage and third reading. We will then return to the list I have just described should we not have completed Bill C-14, Bill C-10 or Bill S-16, for that matter.

On Monday next, if necessary, we will resume consideration of Bill C-22, followed by Bill C-17, the innovation foundation bill, at third reading. We will then return to the list that I described a while ago.

On Tuesday it is my hope that we will be able to commence and hopefully complete the third reading of Bill C-26, the tobacco taxation bill, as well as the second reading of Bill C-15, the criminal code.

Next Wednesday it is my intention to call Bill C-7, the youth justice bill at report stage. We also hope to deal next week with Bill S-3 respecting motor vehicles, Bill C-11, the immigration legislation, if reported, and Bill C-24, organized crime. As well there has been some discussion among political parties and hopefully we can deal with Bill S-24 respecting the aboriginal community of Kanesatake at all stages in the House of Commons, provided that it has been reported to the House from the other place.

Patent Act

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

Mr. Speaker, it is with pleasure today that I rise to speak to this important legislation.

When applied to drug development and production, the whole notion of intellectual property protection becomes a very divisive issue that in many ways pits the right to patent protection and commercial opportunities for Canadians and Canadian pharmaceutical companies against the need for cost effective access to these technologies.

It is important to recognize that without investment in research and development there would never be a debate on how best to enable important pharmaceutical developments to reach people.

Whatever public policy we put forward regarding intellectual property, patent protection and commercialization, we must be careful not to reduce incentives to the point where we stifle the development of leading edge drugs and treatments that ultimately benefit all Canadians. At some point these technologies and pharmaceuticals become commodities and the generic industry plays a role in that as it occurs.

This piece of legislation, like so many others passed by the Liberals, identifies and in some ways exemplifies the hypocrisy that pervades the government. The government says the WTO ruling has no significant or sustained impact on drug costs. It says the impact of the ruling over the eight year horizon is equivalent to less than 1% of pharmaceutical sales in a single year. It says Canadians will continue to have access to affordable drugs at prices below those of the U.S.

These arguments sound eerily similar to those presented by the Conservative government in the early 1990s, arguments which were rejected by the opposition Liberals. The current Minister of Industry and self-promotion was the Liberal opposition's key spokesperson against using patent and intellectual property protection as a vehicle for promoting a more successful Canadian pharmaceutical industry and greater economic growth.

This is a 180° shift in the position of the Liberals. It is completely consistent with their inconsistency on free trade, the GST and others issues. I will quote the colourful language used at that time by the current Minister of Industry and self-promotion. In the early 1990s he said:

The citizens will need more than generic drugs to recover from the festering wounds which are about to be inflicted on the exposed ankles of Canada's poorest citizens when the Minister sinks his teeth in, past the bone, into the marrow and sucks the lifeblood out of Canada's poorest citizens with Bill C-22.

That was the statement of the then Liberal opposition member who is now the Minister of Industry and self-promotion. Was he referring to the minister at the time or to himself? Could he look into the future and see that he would become a minister and eagerly embrace the policies he vociferously opposed in opposition?

The Minister of Industry has stated on several occasions, and most recently at an economic conference in Davos, that he was wrong about the policies he espoused and opposed while in opposition and that the Conservative Party had been right. Perhaps through action he is now making the same admission.

It is in some ways annoying and upsetting for Conservatives to see Liberals embrace policies they had opposed in opposition and then take credit for the results. However we would prefer that they steal Conservative policies and take credit for the results than implement their own policies, which could in the long term have a far more negative impact on the country.

While it is important to point out their hypocrisy on these issues it is also important to credit them with extraordinary intellectual flexibility. They are at least intelligent enough to swallow themselves whole and recognize that some policies introduced by the previous government have made their lives a heck of a lot easier.

Woody Allen once said that 80% of life is just showing up. For seven years the government has done just that but for probably closer to 90%. For the Prime Minister it is probably 95%. I am not talking about golf; I am talking about governing.

We must walk a fine line. We must provide enough patent protection to allow the pharmaceutical industry and the emerging biotech industry to grow and prosper and develop new technologies which have such potential for the future of humankind. However we must also ensure that new medicines and pharmaceuticals reach the public in the most cost effective and timely way. It is a difficult balance to maintain.

Our current patent protection in Canada by and large strikes a reasonable balance. Our policy is not working badly and has created economic growth in the leading edge, knowledge based industries of pharmaceuticals and biotechnology. That being the case, we should be looking at ways to create a more effective balance between the two policy priorities.

The Economist magazine about three years ago published a study conducted in the U.K. about a policy which could balance the need for patent protection with the importance of getting pharmaceuticals into the hands of those who need them in the most cost effective way.

It involved an auctioning process whereby when pharmaceutical companies announced new drugs or medical treatments governments would have an opportunity to bid on them. Governments would of course pay a significant price for the privilege by recognizing the public good of making pharmaceuticals more widely available. They would then make them available to the generics in order to provide lower cost access to the consumer.

We should at least consider doing it that way or investigate the matter as part of the debate in order to balance patent protection and economic opportunities for pharmaceutical companies and biotech companies while making these new pharmaceuticals available more expeditiously to the public. We should be engaging in a debate that would find ways to bring these two divergent interests together in a more realistic way.

The other aspect we have to consider is the emergence of Canada's biotechnology sector. Around the world biotechnology is one of the key components of information technology within the knowledge based industries, which are becoming so important to our global competitiveness.

Canada has demonstrated some significant strengths on the biotech side which capitalizes on our post-secondary university infrastructure. In Nova Scotia we have 11 degree granting institutions. Those universities, which were at one point seen as a cost, are now in a knowledge based economy and seen as an asset.

If members looked at the symbiotic relationship between the small biotech companies and the big pharmaceutical companies, they would recognize that this is not simply an argument about big business and big pharmaceutical companies versus consumers. The notion that only the big pharmaceutical companies benefit from patent protection is a specious argument.

If we were to reduce patent protection and take an aggressive approach that would reduce the incentives for pharmaceutical companies to develop new drugs and treatments, we would be significantly hurting the biotech companies. They are, by and large, small companies and involve our post-secondary institutions across the country. We must be very careful not to do something from a political perspective that would have a negative impact on Canada's competitiveness in biotechnology.

We must also consider a second argument. How do we get new drugs or pharmaceuticals into the hands of Canadians faster? If we cannot ensure an environment within which those new technologies can be developed in the first place, the second discussion is a moot one. It would be a terrible step backward for the government to reduce, in any way, shape or form, the incentives we have in place to encourage the leading edge development of new pharmaceuticals and new advancements in biotechnology.

Some provinces have been more successful than others in terms of creating a critical mass of activities in these areas. This is one of the areas where significant growth can be achieved in the future both on the biotech side and in pharmaceuticals. We must focus on our medical schools and our undergraduate programs in terms of science and research.

I am pleased to see that the government has in fact recognized the error of its ways in the past. It has embraced and continues to support and foster Progressive Conservative policies with the introduction of this legislation.

I hope we will have an opportunity in the future to discuss some of the other alternatives that could balance more effectively the needs of consumers and patients. It is important to create a greater level of commercialization, intellectual property protection and opportunities in Canada.

The government has not been as creative as it might have been in studying more carefully some of the alternatives that are available in terms of moving forward in a more innovative way in that regard.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, this bill is very important to our party. We have indicated to the government that we do not intend to hold up this debate for much longer, and we appreciate the government's co-operation in this matter.

For us the bill and the issues that it raises with respect to trade agreements and drug pricing go to the heart of our objection to what has been going on in this country for the last 10 to 15 years. I guess it has been 14 years if we go back to 1987 when the first bill on changing the drug patent legislation in Canada first came before the House of Commons.

At that time it was a Progressive Conservative government under the leadership of Prime Minister Brian Mulroney. A bill was introduced to reduce and transform the way in which we had constituted our drug patent and drug pricing policies in this country. Until that point, we had a policy which had been established some decades before whereby generic drug manufacturers could bring onto the market generic imitations of new brand name drugs after only two years.

This was one of the reasons why we had one of the most envied health care systems in the world, not just in terms of quality but also in terms of being able to keep costs down. We did not have to pay these exorbitant brand name costs or at least we did not have to pay them for very long. We only had to pay them for two years, then after that our health care system could begin to use and doctors could begin to prescribe these new generic replacements. Of course the brand name drugs were still available and could still be used.

In 1987 we understood, and we still understand, as a prelude to the free trade agreement negotiations between Canada and the United States, the Conservative government at that time, in a very strange form of negotiation, made a big concession before it even got to the table by giving into the Americans on this particular issue. It was not just to the Americans. There were a great many French multinational drug companies and others that were involved. We were very much against this at the time. We were against it again in 1992, when Bill C-91 was brought in. I believe the bill in 1987 was Bill C-22.

We were against it then and today we are against Bill S-17 which is part of a sequence of bills that have progressively eliminated the ability of Canada to have its own independent drug patent and drug pricing policy. The fact that we could not and cannot maintain a system that worked so well for Canada, which was the result of a political decision taken in this country many years ago, is for us transparently what is wrong with the free trade agreement. The fact is the rights, privileges and profits of multinational drug companies come first. The rights, the privileges and the health of Canadians insofar as their need for access to cheaper drugs and collectively in terms of their need for a health care system that is less costly rather than more costly comes second.

Property is put before the public interest in such a blatant way that even the Liberals when they were in opposition could see this. Or did they? We have spent a fair bit of time and appropriately so pointing out that the Liberals have changed their position.

However I maintain that at another level it is not so much that they changed their position, it was the fact that they were insincere in their opposition to Bill C-22 and Bill C-91 in the first place, in the same way they were insincere in their opposition to the free trade agreement, with the possible exception of their leader at the time in 1988, Mr. Turner, who I have come to the opinion was sincere in his opposition to the free trade agreement. At the same time, he led a party that was full of people, some of whom later became Prime Minister and Minister of Finance, who were not opposed to the free trade agreement.

I believe now that they were not genuinely opposed to Bill C-22 and Bill C-91 at the time because they knew, as we know, that the Liberal Party ultimately would do the bidding of the big business community. There are few businesses in this country and internationally that are bigger than the multinational drug companies.

It is not just that they do the bidding of these companies, the problem is now the bidding and the interests of these multinational drug companies is enshrined in international trade agreements, like the World Trade Organization. Now these interests can be advanced without there being a political decision or without anybody having to take responsibility for it. Nowadays, all the drug companies have to do is invoke the WTO and no governing political party takes any responsibility for it.

The Liberals get up and say they have to respect our international obligations and that they have to respect the trade agreements that they have signed, never mind that, at least with respect to NAFTA and the WTO, it was the Liberals who signed Canada on to the NAFTA and the WTO. Why did they sign these agreements if they were sincere in their opposition back in 1987 and 1992? Only they can answer that, and we look forward some day to an honest reckoning of just what happened along the road to corporate Damascus on the part of the Liberals.

For us, although the bill implements a certain ruling of the WTO and is a smaller ruling than the larger ruling in the first place, it is all part and parcel of a trend in international and regional trade agreements that gives priority to the interests and the profits of big business, in this case large drug companies, over the interests of the Canadian people and of people all around the world.

Look at the struggle that was fortunately just won in South Africa where the drug companies invoked their patent rights to prevent the distribution of medicines that treated the disease of AIDS.

While I am at it, I asked a question in the House not so long ago. It had to do with emerging therapies and treatments related to gene therapies. I asked the Minister of Health what the government would do.

There are many people in the medical community who are worried that the same thing that has been done with drugs by the kinds of things we are debating today will be done with these gene therapies, and that some time in the future any time we use a particular gene therapy we will have to pay a royalty to some big drug company that invented that gene therapy in the first place. This will become another burden on our health care system. It will become another argument for privatization, more private sector money and more user fees.

However I asked the question of the Minister of Health, and for me this was very symbolic, because I thought it was a health issue. I thought that distributing cures, therapies and medicines is something over which the Minister of Health ought to have some kind of ultimate authority. Who rose in his place to answer my question or should I say who rose in his place to not answer my question? It was the Minister of Industry.

I am not surprised that I did not get an answer. I suppose I should not have been surprised that it was the Minister of Industry who got up and said that it was a very interesting question, blah, blah, blah. The fact that the government sees this as an industrial question really had already answered my question.

This is a new territory. It is fine if the Liberals wanted to say that perhaps drugs are history and maybe it should be dealt with by the WTO, but there is a whole new area that they must stand fast on, and that is to not allow these new gene therapies to be taken over by the philosophy that they are private or corporate property and should be distributed on the basis of what is in the best interests of the profit margins of the companies involved. They could take a stand there if they did not want to go back and rewrite their own history. They are not even willing to do that. They see it as an industrial matter rather than a health matter.

For all these reasons, we feel it is unfortunate that there seems to be this consensus in the House, a consensus of which we are not a part, and that this is something that is beyond criticism. It reflects the political monoculture that has developed in the House of Commons among the Bloc, the Alliance, the Conservatives and the Liberals, all part of a seamless apology for corporate interests, with only the NDP standing here in our place saying that there has to be another way to look at drugs, at health.

Is there no other way of looking at drugs and health that will not put corporate interest first and people second? We believe there is. We think we had that before the Conservatives and then the Liberals moved to destroy the generic drug regime that we had in place. We feel that we can have that again if we had governments around the world that were willing to stand up to corporate interest, instead of engaging in these acts of self-inflicted powerlessness by which they give up the power that they once had as governments to act in the public interest.

The governments give up their power to trade agreements. Then when these trade agreements kick in years later and impose certain conditions on them, they do not know what to do as they are just living up to their international obligations. They may be international obligations now, but they were political choices at one time that governments made and that the people had at one point but they no longer have.

We want a government that works for the day when those kinds of political choices return to parliament and the Canadian people so they can decide what kind of generic drug regime they want rather than leaving it in the hands of trade bureaucrats at the WTO who are lunching constantly with the drug manufacturers and not lunching with the people whose health care system will be drastically affected by their decisions.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I wholeheartedly agree with the member for Churchill and the member for Burnaby—Douglas.

Barely two weeks ago we were in Quebec City with 60,000, 70,000 or maybe even 80,000 people marching for democracy. They were trying to take down the wall and trying to be heard. I think it is important to note that the central issue underlying that process was about defending our democratic system. It was about defending the right of democratically elected parliaments, legislatures or even municipal governments, to uphold the public interest and to make decisions that benefit the public interest.

I take note of what happened in Quebec City because the opposition to the FTAA is directly related to the debate we are having in the House today on Bill S-17 and the drug patent law. We have probably the clearest example of the tail wagging the dog.

We have the Government of Canada rushing around to change its legislation to meet what? Is it something based on public debate and discourse in the country? No. It is something based on a World Trade Organization tribunal ruling.

There is the evidence of what we are up against in the country as a result of the capitulation by the government to international trade agreements that are literally, as my colleague from Churchill said, bleeding away not just people's ability to access prescription drugs in a reasonable and affordable way, but bleeding away our ability to make decisions about our country, decisions that affect how Canadians live, our quality of life and in whose interests we speak in the House.

I feel very strongly that I need to say loud and clear to Canadians that every single member of the New Democratic Party was in Quebec City marching for democracy and upholding the public interest, and we are in the House today to fight the bill. The NDP is the only party in parliament to do this, because we in our party understand that the bill is very wrong.

We have heard some of the history of the bill. It is not just something that has popped up out of the blue in the last few months. It goes back to 1987 and the glorious days of the Mulroney government, which started changing the laws to favour these massive pharmaceutical companies by changing the patent rules.

Let us be very clear about this. It is about creating legislation that favours the profit making interests of very large pharmaceutical companies at the expense of providing accessible, generic prescriptions and drugs to Canadians. This is now taking place on a global scale.

That happened in 1987. As has been so eloquently pointed out by my colleagues, it is very sad to see the hypocrisy that takes place. The mighty Liberals who took on the Mulroney government in 1987 and again in 1992 seemed to understand that those laws, Bill C-22 and Bill C-91 in those days, were a great threat to our public health care system and to Canadians' accessibility to affordable drugs.

Where are the Liberals on this issue now? They are not even neutral on the question. They have completely come around 360° and are now peddling the interests of those same pharmaceutical companies that 10 years ago they were speaking against. Then years ago they clearly outlined their concerns about this.

A few weeks ago before the summit of the Americas in Quebec City, I attended the foreign affairs committee meeting. The witnesses who came forward spoke directly to the issue of intellectual property rights, as they are called, and the so-called rights of these companies to restrict access to the generic versions of their drugs.

At that committee I heard a man speak. I forget his name. He was very smooth. He was the chief spokesperson for the pharmaceutical association. He had the gall to say that trade agreements like the FTAA and the orders that come from the WTO, which prompted this legislation, improve the quality of life for all people around the globe, that intellectual property rights and trade agreements actually improve quality of life.

I sat there thinking how far removed from the truth that was. If anyone needs evidence of that, we have only to look at what took place in South Africa, where 39 pharmaceutical companies were actually forced, through public pressure, to withdraw their claims against the South African government.

Millions of people who live in sub-Saharan Africa are dying of HIV and AIDS. Millions of people in Latin America or Central America and around the globe are desperately in need of essential medicines, not just in terms of HIV and AIDS but for things like TB or hepatitis C. These people understand that these trade agreements are not about improving the quality of life for ordinary people. They are not about improving the quality of life for poor people or people who are sick. This is about conferring greater concentrated power to those multinational corporations and the government is allowing to happen through the bill.

That is why we stand today in absolute opposition to what is taking place. I would like to point out to Canadians that the consequences of what would happen because of the bill are very dire indeed. What would the consequences be? Extending the patent from the current 17 years, which is bad enough, to 20 years, as well as prohibiting generic companies from stockpiling drugs, means that the most likely thing that would happen would undoubtedly be a dramatic increase in prescription and drug prices for Canadians. There is no question about that.

As this debate continues and the issue continues to unfold, we in the New Democratic Party have a very great resolve to work with other organizations, the labour movement, the Council of Canadians, environmental groups and seniors' groups, who understand what is really at stake here. We have a role to play in parliament in trying to defeat this kind of legislation, but we also have a role in working with a broader community and bringing pressure to bear.

Maybe one day we will get to the point where we have the kind of mobilization that took place in South Africa in defeating the multinational corporations who were seeking litigation to prevent people from accessing essential medicines. Maybe one day we will see that type of challenge in Canada. At the very least today, we have to stand in opposition to this legislation. We think it is bad legislation and is nothing more than conferring greater concentrations of power and profit to fewer multinational corporations.

Surely that cannot be in the public interest. I defy any member of the House to stand up and tell us how this can be characterized as being in the public interest. The evidence, going back to 1987 and 1992 and now to what has happened with the FTAA, tells us that the opposite is true, that this is a bad piece of legislation. It must be defeated, as must these international trade agreements that undermine the ability of our governments to make the very kinds of decisions that would ensure this legislation would not go ahead.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I have seen the actions of the new Minister of Industry in the House and know his historical background with regard to the issue. Yes, it is extremely pathetic. There is absolutely nothing worse than a politician who says one thing prior to an election, who says one thing while in opposition, and then does something else.

That kind of attitude and that lack of principles result in people having no faith in a democracy and a parliamentary system. For the sake of getting elected they mislead and try to pretend they are there to do what is best for Canadians. Then they get into government and tell Brian Mulroney that they are sorry, that he was right. I guess it must have been the two Brians. That must have been what did it. It is disappointing.

I want to reflect upon my colleague's comments when he mentioned Bill C-22 and Bill C-91. The difference between when those bills came up and this one came up is that the government is sneaking this one through the Senate, allowing next to no discussion nationwide on the issue. That is what is happening. Now it is in a panic state, will impose closure and do whatever because that is the way the government operates.

The issue is important to all Canadians, to seniors most definitely. Some of the most vulnerable people have been faced with huge increases in energy costs and a lack of government funding in numerous areas. It is extremely disheartening to see the government imposing an even greater expense on them. It is absolutely unacceptable.

I expect a good number of seniors to be around at the next election. They are a stalwart bunch and they will weather the storm under the government. I want them to remember, especially those seniors in Ontario, how the Liberal members voted on this bill.

[Svend Robinson, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I have listened with interest to the eloquent comments of my colleague from Churchill, who is also our spokesperson on industry and primarily responsible for this legislation.

The hon. member has reviewed the quite appalling history of the Liberal Party on this issue. I am one of those members who was actually in the House in 1987 when Bill C-22 was brought before it by the Conservative government of the day. I recall vividly Liberal MPs viciously and vigorously opposing the legislation. They said it was a sellout to multinational drug companies.

Committees Of The House

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I have the honour to present, in both official languages, the sixth report of the Standing Committee on Finance regarding its order of reference of Monday, April 23, 2001 in relation to Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act.

The committee has considered Bill C-22 and reports the bill with amendments.

Patent Act

[Loyola Hearn, Progressive Conservative, St. John's West, NL]

Mr. Speaker, it is my pleasure to say a few words on Bill S-17. It is an interesting day in the House as we see the debate unfold.

A lot of people across the country think that when one is in government one agrees with certain things but when the shoe is on the other foot one always objects to whatever government does. In a couple of cases here, that is not factual.

After listening to the debate from our friends in the NDP, I would say that it is quite clear that they stand where they always did on the issue. I will be making it quite clear that in my party we stand where we have always stood on the issue. In this case, we support the bill, as we did when the original bills were introduced by the Tory government and, as has been pointed out a number of times today, objected to strenuously by the then opposition party, which is now the governing party. It is amazing how the tide turns.

I did not think I would be supporting my friend and colleague, the minister of trade and industry. It is very difficult to do in light of several issues about which we thoroughly disagree. However, my party does support him on this issue because the bill itself was a Tory initiative.

I will explain to my friends from the NDP why we support it and I think by the time I am finished they will also perhaps agree with us and support the bill.

However, it is interesting to note that the government of today was against the original bills, Bill C-91 and Bill C-22, when they were introduced in 1987 and 1992. The more interesting parts of all of this are some of the comments made by those who are now government members. Some of the people who voted against those bills, by the way, were the present Deputy Prime Minister and present government House leader.

In 1992 during the debate on Bill C-22, the minister of industry and trade, who is sponsoring this bill, said “It is inconceivable to me that parliament finds it necessary yet again to deal with yet another measure proposed by the government because it is bound and chained to some ideological dictate which says this kind of patent act is necessary”.

I am sure he was reading from a prepared speech when he said that. However, at the time he was against the very bill which he is now proposing.

Here is another interesting quote from him, which leads into what I have to say. He said:

The citizens will need more than generic drugs to recover from the festering wounds which are about to be inflicted on the exposed ankles of Canada's poorest citizens when the Minister sinks his teeth in past the bone, into the marrow and sucks the life's blood out of Canada's poorest citizens with Bill C-22.

Those are strange and interesting words, which came from the present Minister of Industry.

People are allowed to change their minds. People see the light and become converted. The minister said today that he had been concerned about the increase in drug prices at the time, but they did not happen. He said indirectly that Prime Minister Mulroney had been right to bring in such a bill. Just a short while ago, as has been pointed out today, the minister said that Prime Minister Mulroney was right about free trade.

It will be interesting to see over the next while how many things the minister agrees with that he fought so hard against as a rat packer before his party became the government.

The NDP has expressed a concern, of which all of us are conscious, that the bill might lead to increased drug prices for people with major illnesses, many of whom cannot afford the drugs they need.

One of the most memorable occasions for me during the last campaign, and I am sure members on all sides of the House remember talking to people affected by the cost of drugs, was meeting a gentleman who had just been diagnosed with Alzheimers and whose wife was trying to cope with it. A drug had been prescribed to retard the advancement of the disease, a drug called Aricept I believe. The drug was not covered by medicare and the family had to pay the extremely high cost themselves. That meant other pleasures of life had to be sacrificed, including a little car that enabled them to get back and forth to the cabin. They had to sell the car to pay for the drugs. That is not the way it should be in Canada.

Can we blame pharmaceutical companies for that? The answer is no. We blame governments for that, because if an effective drug is brought on the market, tested and approved, the government should immediately sponsor it under medicare.

The NDP has expressed major concerns about drug companies getting rich and the impact of drug costs on poor people. However one important element has not been raised: Those who need drugs would not have them if somebody did not put the time, effort and money into their development.

Let us look at cancer. Very few of us in the House are not affected, directly or indirectly, by that dreaded disease. Will we ever find the cure for it? The answer is that we are hopeful. Will we find the cure for AIDS and other dreaded diseases worldwide? Luckily our country is not affected to the same degree as other countries but certainly we are affected by it. Will cures be found for dreaded diseases? They will be found in only one way: If somebody puts the dedicated research into coming up with a drug that will kill or retard the growth of the agents causing those diseases. That can only be done, as I said, by time, concentration and funding.

My colleagues to my right, ideologically to my left, are very supportive of the arts.

I would ask them about the art industry. What if a recording artist made a big hit which took a lot of time, involvement, practice and rehearsals? What would the hon. members think if other performers, who were not as dedicated or bright or could not put together that one great hit, knew it was coming on the market, copied it and pirated the copies around the country? How would it affect the person who put the time and dedication into developing the product?

Drugs are not unlike that. Our hope of combating the major illnesses that affect people across the country may lie in the hope that a pharmaceutical company will develop a cure.

We could say governments should be the ones doing that and pumping money into research. I certainly would not disagree. However, if governments were the ones responsible for doing research, I would question whether the work could be done. Government cannot be as efficient as the private sector. That has been proved over and over.

My concern lies with the people across the country who are faced every day with having to buy drugs. I point to the government opposite and say that should be its main concern. It has the mechanism to alleviate the costs shoved upon people for drugs to treat illnesses. In a lot of cases there are drug assistance programs to do just that. There are always those who fall between the cracks but a smart, sharp government could deal with such cases if it had any vision.

If the people who put their time, effort and money into developing the needed drugs are not given the freedom and protection to do so, they will not do it. They are not in the business of trying to make a breakthrough only to have it taken away from them. When another company immediately starts making generic drugs or starts to stockpile so it can wipe out the company that developed the original drug, that is not fair competition.

The fallout can be handled by government. We could have the best of both worlds if we had a government with brains and vision. Protection and help can be given to those who develop the drugs we need, but assistance can also be given to those who rely on them and cannot afford to pay for them.

It is interesting to see the government trying to solicit support for a bill it was once so much against. I know the NDP, even if it does not agree with us, is saying what it has always said. It has not changed its opinion because the stripe of government has changed.

We are saying the same thing we have said and the same thing the Bloc is saying. I agree totally with its last speaker. The Alliance is also saying that if we are to produce the drugs needed to combat the concerns the NDP talks about, freedom and protection must be given to companies that put the time and effort into developing the cures that are so badly needed.

The government, however, has switched back and forth, which shows that its concern is not for people or companies in Canada. Its concern is for itself. That has become more and more evident.

As we debate the bill further we will all have more to say on it. However we stand on the principles we announced when the original bills were brought in. We think this protection must be provided. Hopefully government will address the other side of the concern.

[Svend Robinson, NDP, Burnaby—Douglas, BC]

Mr. Speaker, certainly I appreciate the comments and the question of the hon. member for Winnipeg Centre, who has been in the forefront of the struggle in the House, and indeed in his previous life, for affordable, accessible drugs for Canadians.

I would not for a minute suggest that the flip-flop of the Liberals from their position in 1987 on Bill C-22 and from their position in 1992 on Bill C-91 had anything to do with the massive amount of money that they get every year from pharmaceutical drug companies as donations to the Liberal Party of Canada. Of course not. That has absolutely nothing to do with it. I know that the Bloc position has absolutely nothing to do with that either. J'en suis certain.

I do want to take advantage of the opportunity that has been afforded to me by the member for Winnipeg Centre to share with the House some of the statements that were made by the Minister of Industry, then a member from Newfoundland and Labrador. On November 16, 1992, the Minister of Industry spoke in the House, then in opposition of course, on Bill C-91.

He said we have lower health care costs in Canada on a per capita basis than they do in the United States largely because of our prescription drug program, which this government wants to do away with. What are we to conclude from that other than that the government wants to increase the cost of health care in Canada? It will do that at the expense of the taxpaying public and at the expense of the provincial governments because provincial governments in many cases will buy, through their drug plans, significant quantities of these same pharmaceutical drugs.

The Minister of Industry went on to read from a text that talked about the burden of changing patent legislation. He said “Extending the patent life of drugs is likely to cost consumers immediately and also add to the burden on the government health plans, which are already under economic pressure. Compared with hospital and doctors' bills, prescription drugs are a relatively small though rapidly growing expense”.

The member pointed out that even in the United States people were lauding Canada's generic drug system, saying “However, here in Canada the government wants to do away with it”.

I would note, and my colleague from Regina pointed this out a few minutes ago, that the cost of just this one amendment to Bill S-17 will be over $200 million to Canadian taxpayers, both through pharmaceutical drug plans and of course directly for those who are not covered.

Why is it that we are giving a $200 million gift to pharmaceutical drug companies in this country? There is absolutely no excuse whatsoever for that. For that reason as well, we as New Democrats strongly oppose this legislation.

[Svend Robinson, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I rise on behalf of members of the New Democratic Party to say that we are strongly opposed to this unfair and inequitable bill.

I was frankly very disappointed to hear members of the Bloc Quebecois, who claim to belong to a social democratic party, giving such amazing support to the demands of pharmaceutical companies.

Obviously, there is only one party in this parliament which is fighting for the poor, for ordinary people, who are saying that the big pharmaceutical companies do not need more handouts from their friends in government.

I see the Minister of Industry in the House today. We have had the privilege of serving together in the House since 1979. I am one of the few members of the House who was in the House with the minister in 1987 when he spoke with passion, eloquence and vigour in total opposition to Bill C-22. He called it a giveaway to the multinational pharmaceutical companies. He was absolutely right.

In one memorable quote he said that Bill C-22 would suck the life's blood out of Canada's poorer citizens. I recall it well. The minister was up on his hind legs speaking out and screaming out strongly for justice for Canada's poorer citizens. That was he and the Liberal Party.

Bill C-22 passed. Then in 1992 what did we have? We had another bill, Bill C-91, another Conservative bill and another giveaway to the pharmaceutical drug companies. What did the Minister of Industry have to say at that time? On behalf of his Liberal colleagues, along with the member for Dartmouth and many others, he denounced that legislation and bitterly complained it would lead to a massive increase in the price of pharmaceutical drugs in Canada. The minister was absolutely right.

When we look at the increases in the price of drugs in Canada, it is the fastest growing component of our health care system, far faster than the increase in the price of physician services. Indeed it is the biggest single component of our health care system, as my colleague for Winnipeg North Centre pointed out so strongly on a number of occasions.

Over the past 15 years I would point out that Canada's prescription drug bill has jumped by 344%. That is 15 years since the Minister of Industry warned Canadians about what would happen.

It is not as if these pharmaceutical drug companies are suffering.

The Bloc Quebecois is suggesting that the poor pharmaceutical companies must be defended. It is sad, such a pity, the poor pharmaceutical companies need defending by the Bloc Quebecois.

Let us look, for example, at the largest pharmaceutical company, GlaxoSmithKline, which made profits of some $11.9 billion in one year. It does not need the Bloc Quebecois to defend it. That is clear. Those who need defending are consumers.

It is the consumer, patients, the poor and provincial drug plans that need defence from the government and from their allies in all of the other opposition parties. What an unholy alliance the Liberal government, the Alliance, the Bloc Quebecois and the Conservatives. At least the Conservatives have been consistent. They have been consistently wrong but at least they have been consistent, not like the Minister of Industry who has done the most extraordinary flip-flops.

It was a sight to behold in Davos, Switzerland. I wish I could have been there to see the Minister of Industry speaking in Davos, Switzerland and saying “I fess up, I was wrong Brian”. Brian Mulroney was standing there as proud as punch as the Minister of Industry stood and said he was wrong, the Liberals were wrong and that he was right, NAFTA was a good thing.

A few weeks later he stood in front of the senate, that great bastion of democracy. That was another occasion when he said he had it all wrong back in 1987 on Bill C-22, that the Conservatives were right and the pharmaceutical industry was right. He was there to defend the interests of those poor, suffering pharmaceutical companies. Why? Because the WTO told him that they no choice.

What a shameful spectacle this is. Why should we ever believe anything the minister and the government have to say. I know the Speaker, a man of integrity and respect, will recall those debates because he was in the House. Indeed I dare say he participated in one or two of them. I am not going to pull out the speeches of the Speaker because I know that would be entirely unparliamentary. However it is certainly appropriate to remind the Minister of Industry of exactly what he said. We used to have the lowest priced pharmaceutical drugs in the world. Now, as we have seen, drug prices have risen dramatically.

As the minister indicated, the purpose of the legislation is to implement a WTO tribunal order. We were challenged by the European Union and the United States that our existing generous provisions for patent protection were not good enough.

Until this bill becomes law, the generic drug industry is at least allowed to stockpile and to get their drugs ready six months before the expiry of a patent so that when that patent expires consumers, Canadians who are sick, will be in a position to buy those generic drugs quickly. That is something the Minister of Industry supported long ago, but not anymore. Now they are saying no. Even that six month stockpiling opportunity is gone.

The minister is retroactively extending from 17 years to 20 years the patent protection. This is a retroactive gift to the pharmaceutical industry approved by the Bloc, the Alliance and the Conservatives. Why on earth would the government give this retroactive gift to the struggling pharmaceutical industry that just reported massive record profits? In another day the minister would have been the first on his feet condemning this largesse to an industry that has already been treated far too generously.

As New Democrats, we say that this is unacceptable. When we look at the history of this legislation, it is quite shocking to know that not that long ago under GATT there was no reference at all to intellectual property. In fact it was only after the Uruguay round of the General Agreement on Tariffs and Trade that intellectual property was protected in these so-called trade deals.

That is another reason why as New Democrats we are deeply concerned about the impact of the proposed FTAA, the free trade of the Americas agreement. We know what the Americans are pushing for even more protection. Let us be very clear, it is only the Americans in this hemisphere that are exporting that. It is only those big, multinational American pharmaceutical companies that benefit from this.

Is the Government of Canada and the Minister for International Trade standing up on behalf of Canadians and people throughout the hemisphere and saying to the Americans that there is something wrong with this picture and that they do not support extending the patent protection to 25 years from 20 years? No, there is not a word, not a peep. There is silence.

The trade department keeps telling us to go to its website to find out what Canada's position is. If we go to the website, under intellectual property rights is a summary of Canada's position. Where is the leadership? Is the government speaking out for consumers? Is it speaking out for the poor? This is what the department had to say on intellectual property rights.

To date, Canada has made no submissions to the Negotiating Group on (intellectual property rights). Any submission made by Canada will be made available on the website.

There is the leadership. The government has nothing to say. The Minister for International Trade has nothing to say about one of the most shameful abuses of power by pharmaceutical drug companies. That is their attempt to muscle the government of Brazil in this hemisphere into increasing dramatically the prices of drugs that are made available for people living with HIV and AIDS.

Recently there was a major victory in South Africa when under tremendous international pressure 39 pharmaceutical companies, which were suing the South African government under the WTO, were forced to withdraw that suit because it was obvious they were suffering from international shame. They were trying to tell the South African government and health ministry that they had no choice that, even in the face of a catastrophic epidemic of HIV-AIDS throughout sub-Saharan and South Africa, the interests of multinational drug companies had to come ahead of the interests of patients. Profits before patients.

In the case of South Africa, they were shamed into backtracking and with no thanks to the Government of Canada or the Liberal government. We called on them to show some leadership in a situation of absolute crisis.

There are 25 million people infected with the AIDS virus in sub-Saharan and Africa out of 34 million globally. The multinational pharmaceutical companies want to prevent them from having access to affordable drugs. That is absolutely shameful.

However we see the same thing in this hemisphere in Brazil. We know that in Brazil the government has shown some extraordinary leadership in making generic drugs available. It has had a very powerful and significant impact in reducing the incidence of HIV-AIDS. In 1994 the World Bank predicted that by the year 2000, Brazil would have 1.2 million AIDS carriers. Today there are less than half of that. There are about 540,000. There are still far too many. Thanks to the courage of the Brazilian government in taking on these multinational pharmaceutical companies, it was able to make a difference.

As New Democrats we do not want to see the intellectual property rights of pharmaceutical drug companies enshrined and enhanced in the FTAA. We want to see a new regime where people are put before profits and pharmaceutical drug companies are accountable to the people in the hemisphere and globally.

I am not speaking in any way on behalf of my party, but I often wonder why we believe that in an industry as fundamental to public health and security as the pharmaceutical industry should be driven on the basis of profit. We have a situation now in which only a tiny amount of money, something like $300 million globally, is being spent by the pharmaceutical drug industry in the struggle to find a vaccine. Why is that? Because if it finds a vaccine, it finds a cure and then shares in the pharmaceutical drug companies will not be worth as much money. There is something obscene about that.

We have a situation as well where researchers are working for this pharmaceutical drug company or that pharmaceutical drug company. They are all working in splendid isolation, not co-operating with one another and desperately trying to find what will make them more money.

I suggest that instead of accepting that the market is God when it comes to pharmaceutical drugs, it would make a lot more sense for us to say that this should be in the public domain, those who serve in the health care industry, those who research, those who try to find cures and the government. The public domain should be involved. Health care, and in particular the pharmaceutical industry, should be owned by the people not by those who seek to maximize global profits.

Once again, as New Democrats we do not accept this loss of democracy through the WTO, through the TRIPS agreement, the expansion of GATT and now the FTAA. More and more we are losing democracy in this country. More and more as elected representatives we are losing our ability to make decisions about what is in the best interests of the people who we represent. Bill S-17 is an other example of that.

As elected representatives, as members of parliament, why should we not be in a position to have a public policy debate in Canada about whether 17 years is good enough, or 20 years is good enough or whether compulsory licensing is acceptable as a means of ensuring that, as long as this is in the private sector, there is still an incentive to bring new drugs on the market? However not in a way that jeopardizes access to affordable drugs for Canadians.

That should be a decision we make. However, the Minister of Industry comes before the House and says, “Tough luck. Forget it. You no longer have an option”. As an elected government we no longer have an option. We have no choice because the WTO is forcing us to do this.

One reason why every member of the New Democratic caucus marched in the streets of Quebec City against that FTAA agenda was because we believe in democracy. The agenda of the FTAA, the WTO and GATT is an assault on that democracy. This bill is an example of that.

Instead of moving forward with this legislation, which we vigorously oppose as New Democrats, I call on the government to take a strong stand at the WTO and in the negotiations on the FTAA for affordable accessible drugs for people who are suffering from HIV-AIDS and other life-threatening diseases.

Recently, Médecins Sans Frontières called on the minister of trade not to bow to pressure from pharmaceutical drug companies to further strengthen drug patents. John Foster from the North-South Institute said “It's is absolutely tragic that the minister of trade has absolutely no position on this issue”, the issue of access to affordable pharmaceutical drugs in Brazil. He went on to say “although from prior positions we believe he goes along with United States, drug companies and those in favour of even firmer patent laws”.

We call on the government to stand up for democracy and affordable drugs. Not extend even further the patent protections that are afforded to pharmaceutical drug companies, but recognize that they have already done very well under this legislation. They say they need resources for development of new drugs, yet the reality is that these same drug manufacturers spend twice as much money on marketing their drugs, on pushing their drugs, as they do on research and development.

All hon. members have to do to see this is open the Medical Post or any other major medical journal. Our spokesperson on health has pointed out the absolutely obscene amounts of money that are spent by these companies in marketing drugs.

We also know that we are seeing more and more corporate influence in post-secondary education and universities. Recently a university professor who challenged some elements of the safety of Prozac had his offer of employment at a university in Ontario summarily withdrawn because one of the pharmaceutical companies that funds the university objected vigorously.

Corporate influence is very dangerous in post-secondary education. Corporate influence on this Liberal government is growing and is stronger than ever before.

Once again, we as New Democrats say no to Bill S-17 and yes to affordable drugs for all Canadians.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, let me begin by congratulating the opposition House leader on his appointment and to extend as well similar words of congratulation both to his seatmate, the new chief whip, and the other officials of his caucus.

This afternoon we will continue debate on the second reading of Bill C-6, the water export bill. I intend to seek adjournment of the debate after the speech from our colleague from the Bloc Quebecois on this matter.

If there is any time, we will commence the second reading of Bill C-25, the farm credit amendments bill. It would be my intention as well to adjourn the debate after the lead off speech from either the government minister or parliamentary secretary, as the case may be. We would then propose to move immediately to private members' business this afternoon.

Friday we will debate second reading of Bill C-26, the tobacco tax legislation.

On Monday we will return to Bill C-6, which will not be completed this afternoon. We will then continue with Bill C-25 for the same reason, and then, if necessary, to Bill C-26, the tobacco tax legislation, if we do not complete it tomorrow. If we have any time left, it will be spent on Bill C-10, the marine parks bill, as I previously indicated to my colleagues at the House leaders meeting earlier this week. In the afternoon we will debate Bill C-16, the charities bill. I wish to give notice pursuant to Standing Order 73(1) that the government will propose that this bill will be referred to committee before second reading. This should, in essence, take roughly the time between 3.00 p.m. and the adjournment later in the afternoon.

Tuesday shall be an allotted day. In the evening it is my intention to seek the usual co-operation to hold the second of the take note debates on the modernization of House rules. It would be pursuant to consultation with others. My intention is to see if we want to have this debate using the forum we used very successfully earlier this week, but, as I said, I intend to consult with other House leaders on that.

On Wednesday I would propose that we continue with any unfinished business from the previous days, adding thereto Bill S-16 which was introduced in the House earlier this day. Should we be ready to do so, and should time permit, I would then commence the report stage and third reading of Bill C-22, the income tax amendments bill.

Income Tax Act

[The Deputy Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion at the second reading stage of Bill C-22.

Income Tax Amendments Act, 2000

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

Madam Speaker, I rise on behalf of the constituents of Surrey Central to state our case in opposition to Bill C-22, the Liberal government's proposed changes to the Income Tax Act, the income tax application rules, the Canada pension plan, the Customs Act, the Excise Tax Act and many other acts.

Earlier this morning I spoke in opposition to the Liberal's proposed changes to Bill C-9, the Canada Elections Act. That act creates a two tier electoral system. Among other things, it discriminates against smaller political parties. The Liberals are eroding our democracy with that bill and we cannot support it.

Bill C-22 seeks to amend the Income Tax Act and statutes originally included in Bill C-43 and to put into place key aspects of the last two budgets. The bill has 31 amendments touching on a number of tax deductions and their definitions.

There are three main reasons the official opposition and my constituents oppose the bill. First, the bill fails to address the enormous complexity of the tax code. It adds further complexity to an already complex tax code.

Second, it undermines the family, particularly one income families.

Third, the tax cuts provided for in the bill fall far short of what the Canadian Alliance proposed and what the government must do to increase our nation's productivity, competitiveness and standard of living. I would like to elaborate on those three points beginning with the complexity of the bill.

The government should be moving toward simplifying and broadening the base of the tax code. Lowering the taxes of all Canadians would be easier and it would have a far more positive impact for everyone. If the tax code were simplified and if it had less exemptions, further clarification would not be necessary.

The bill adds to the enormous complexity of the Income Tax Act with its numerous amendments. Rather than simplifying the act as the Canadian Alliance would do, the Liberals continue to maintain a costly and complicated tax code.

Another reason for my opposition to the bill deals with measures in the bill that assist the tax position of families with some minimal tax reductions. Nothing is done to address the longstanding inequality between single income and dual income families. The bill increases the inequity by increasing the child care tax deduction which is only available to high income or dual income families.

The bill also erodes the legal position of marriage. By changing references of spouse to common law partner it is including same sex partners.

Even after the changes proposed in the bill, Canadians would continue to pay far too much in taxes. The mini budget claimed to cut taxes by $100.5 billion over five years. However here is the reality. It is a bit technical so I would like to go into a little detail.

From the $100.5 billion claim of gross tax relief we must subtract $3.2 billion over five years for social spending, chiefly the child care tax benefit. The child care tax benefit is a spending program delivered through the tax system. The increase in the tax benefit should not be confused with being a tax decrease as it is a spending increase. The figure above excludes indexation because indexation is accounted for separately.

We then have to subtract $29.5 billion over five years for increased CPP premium hikes. We then have to subtract $20.7 billion over five years for cancelled tax hikes, namely indexation. Indexing the personal income tax system is meant to hold the tax burden constant over time so it should not be counted as a tax reduction.

Therefore when we take into consideration all those deductions, the net tax relief is only $47.5 billion provided over five years, not immediately.

The reality of the Liberal Party's 2000 tax relief package is that it is less than half of what it claims it is and half of what the Canadian Alliance proposed during the election.

These are the realities when we do a little math and we go into detail. This is how the tax relief would work in contrast to the image of tax relief the Liberals are projecting through their propaganda. We are watching a smoke and mirrors show by the government with respect to the bill.

Bill C-22 is a 500 plus page bill. I will read it later on because it will take too long. The Liberals say the bill is concerned with administrative, technical and implementation measures. They say it implements about $100 billion in tax cuts over five years. As I demonstrated it does not. It is less than half of that amount.

The more people study the bill, the more problems they will find. The more people study the bill the more complexities it creates in the minds of Canadians. I will take the time to go over some of the points.

There are 31 amendments in the bill. One amendment is about non-resident film and video actors. It would apply a new 23% withholding tax on payment to non-resident film and video actors and their corporations, with an option to have the actors and corporations pay regular part 1 tax on the net earnings instead. This provision alone hurts my beautiful province of British Columbia where film making has become popular and is contributing to the economic well-being of my province.

Canada Citizenship and Immigration has also imposed restrictions on issuing visas to those who are trying to come to Canada to make films and make the best use of the beautiful British Columbia scenery and its facilities. This hurts B.C. Those people then go to other countries to make films. Why should they come to B.C. to make films? Many people are hoping the film industry will contribute to the prosperity of my province.

The bill deals with limited liability partnerships, replacement property rules, types of property to be considered, stop-loss loans and a capital tax. An additional capital tax would also be imposed on life insurance corporations. Foreign affiliate losses would determine the affiliate or accrual property income for a particular taxation year. It deals with a foreign affiliate held by a partnership with simultaneous control in a chain of corporations and the control of their stake. It deals with advertising expenses concerning periodicals and magazines between Canada and the United States. It also deals with trusts and the tax treatment or property distribution from a Canadian trust to a non-resident beneficiary. Further, it deals with mutual fund trusts, RRSPs and adjusted retirement income funds.

When we go into the detail of the bill, we will notice that there are more complexities, more anti-family type situations and many other things.

There is taxpayer migration which is the ability to tax the gains accrued by immigrants. It will affect the projection of the country's image with respect to future immigrants.

With reference to foreign branch banking, there would be a 15% investment tax credit for certain grassroots mineral exploration. There is the foreign exploration and development expenses and the value of foreign resource property owned. It would impose a 30% restriction for the annual deduction of new foreign exploration and development expense benefits.

There are many other points. Here is another one. There would be a foreign tax credit on oil and gas production sharing agreements. Another one is weak currency debt that limits the deductibility of interest expenses and adjusts foreign exchange gains and losses in respect of weak currency debt and associated hedging transactions.

There are many points in the bill which will further make the tax codes very complicated.

Since capitalization, it reduces the acceptable debt to equity ratio from 3:1 to 2:1 and it repeals the exemption for manufacturers for aircraft and aircraft components.

As far as CPP contributions on self-employed earnings, these amendments introduce a deduction from business income for one-half of CPP contributions on self-employed earnings with the other half of the contributions remaining eligible for the CPP tax credit.

Here is something regarding students and scholarships, fellowships and bursaries. The exemption would be increased by $3,500 for scholarships, fellowships and bursaries received by the taxpayer in connection with the taxpayer's enrolment in a program and in respect of the taxpayer claiming the education tax credit.

Here is another one for the education tax credit. It would double the monthly amounts the tax credit allows to full time and part time students based on $400 and $120 respectively.

It also affects the medical expense tax credit.

There is not one area that does not affect families, caregivers, infirm dependant tax credits, disability tax credits, child care expense deductions and so on. Therefore, I assume this bill will not only be affecting families but also those individuals and low income people.

The Canadian Mining Association supports some aspects of this bill. It supports the definition of mining property, yet it was not aware of the changes until the official opposition contacted it. The association was not consulted. It had to learn from us that the definition of mining property was being tinkered with by the government.

This is a government from behind closed doors. Surely if the government was sincere in its intention, it would have contacted stakeholders and various groups in Canada. It would have listened to Canadians. It should have understood that Canadians want the tax credits to be implemented sooner rather than up to 2005.

The bill guarantees that the basic personal exemptions will hit a minimum of $8,000 by the year 2004. The credits and relief provided in the bill are a step in the right direction, but they are baby steps nonetheless.

Efforts have been made to reduce the capital gains tax, deficit surtax, marginal rates, raise marginal income thresholds and tighten up various other rules surrounding deductions. The bill would increase and clarify the disability tax credit.

There are some good points and some bad points.

In conclusion, Canadian Alliance members would restore public confidence in the fairness of the Canadian tax system by reducing its complexity. We would restore indexation and move toward a simpler tax system built around a single rate of taxation to ensure lower taxes for all Canadians. We believe all Canadians above a minimum income level should share in the cost of the services provided by the government, which benefit all of us irrespective of income.

We hope the government will consider the amendments and what witnesses have said at the committee hearings on this bill. At this point the Canadian Alliance will not be supporting this bill.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure today to speak on Bill C-22. I find it intriguing, listening to the debate, the completely different psychologies of our side and that of the government.

I listened to some of the comments made about the tax structure. Our party is for a progressive tax structure, not a punitive tax structure which is what we have today.

Why do we have a system where the more one earns, the greater chunk is taken away? Our party has always fought for the ability of individuals to take care of themselves and for a fair tax structure that takes the same percentage from the amount people make as they grow older. Therefore the more one makes, the more one pays, but the more one pays is not a greater percentage of what one makes.

Also what is not as well known perhaps is that our party stands for radically and dramatically improving the health and welfare of the poorest and most impoverished people. How would we do that? Simply by raising the amount of money that people would have to make before they pay taxes. That is progressive, innovative and demonstrates ingenuity.

If the government truly wants to help those who are most in need, then it would look at our single tax rate, look at the way we have articulated it and understand very clearly that it strikes a balance between helping those who are most impoverished while enabling those who are innovators to have the tools to innovate.

There is one major complaint that I think all members in the House hear when they talk to small and medium sized businesses in their ridings. That is the government takes too much money from their pockets. They generate jobs, innovate and are the major engine of economic growth in our country.

They ask us why the government is not listening. There have been reports and committees at federal and provincial levels for years. Report after report says the same thing. Canadians want the ability to provide for themselves, to pay a fair share of tax but not a punitive share of tax. Businesses want to generate the funds to hire people, to do research and development and engage in the actions that build a strong economy which enables us to have strong social programs.

One of the mythologies that has always been connected to the right of the political spectrum is that the right does not care, the left does and that the right only cares for the rich, the left cares for the poor. This is completely nonsensical.

We have shown and demonstrated over the years that the budgets put out by the members of New Democratic Party have been abysmal and the arithmetic has not added up. Instead of helping the poorest people in our society, they would actually hurt them. What they would do is raise taxes up to such a level that the ability of the private sector to function would be constricted and restricted. This leads to brain drain, the exodus of businesses from Canada and the lack of ability for businesses to get on the cutting edge in their chosen field.

Some would say we need to raise taxes even more. If we look at the European models of Sweden, Norway, Switzerland and countries that have historically been the bastions of socialism, countries that have been looked upon from the socialist left, as being the nirvana of economic thought, they not only damaged and destroyed their social programs, they gutted the soul of their countries and severely compromised their economies. This has been proven in history.

I would encourage members of the NDP to listen very carefully and look at their history books. What they ought to do is come over to the Canadian Alliance, as should members from across the House, and listen to what we have fought for over a long period of time. Indeed, the former leader of the Reform Party was an individual who was at the forefront of this and deserves a great deal of credit for doing this.

One of the major reasons I joined the party in 1993 was out of a deep concern over the state of our social programs. I did not look at the NDP for that. I chose the Reform Party. Why? Because the Reform Party articulated constructive economic solutions to enable us to have a fairer and a lower tax rate which would give our private sector the ability to generate the funds to expand. It would also provide the moneys for our social programs.

A healthy economy and a healthy private sector means strong social programs. After all, the best social program any individual could ever have is a job. Whatever we can do to strike that balance between enabling our private sector to be strong, aggressive and competitive, as well as ensuring that we have tight, strong social programs that are targeted and fair, will create the right balance.

I believe the public who is watching and members from across party lines will understand very clearly that this is something we have striven for throughout our entire professional careers here.

We only need to look at the tax differential between ourselves and the United States to see what it has done. We heard about the brain drain. We heard about the exodus of companies. Perhaps what we have not heard about is a more subtle and perhaps more insidious problem in our society. That is what this has done to the soul of our country.

Punitive tax rates erode the deep, inherent desire that all of us have to strive to better ourselves. It destroys that edge of innovation that every country needs to be competitive in a global environment. Let us not forget that we are not only competing among ourselves, within provinces and between provinces, more important we are competing with other countries. As the barriers to trade come down, which is a good thing, we will have to find our niches and be more aggressive in how we capitalize on those.

I would also re-articulate the issue of a single tax rate, not a flat tax rate, but a single tax rate that lowers and simplifies the tax system while still allowing many of the deductions that we have enjoyed in the past.

I would also suggest, and this is a personal issue, that we lower the GST. The government has never looked at lowering it, although it promised to, or simplifying it. One of the major complaints we all hear about back home is that the GST is far too complex. The amount of money that goes into managing it chews up about one-third of all the moneys received from GST. That is not an efficient system.

Personally, I would implore the government to look at ways to simplify the GST, make it a single one time per year reporting, make it more comprehensive and lower the amount by 2%.

On the issue of payroll taxes, the EI moneys that companies pay are in many ways just another tax. The government has generated billions of surplus dollars from the EI fund that we have said time and time again must go back into the hands of the Canadian people and the companies that hire them.

EI, under the guise of being a social program, is actually a tax. Payroll taxes by and large are another form of tax. What we can do is ensure fair EI payments and restructure EI into a true insurance policy.

I will also speak about charitable donations. There is a theory that the higher the taxes, the greater the desire of individuals to donate in order to receive a tax benefit. The facts prove the opposite to be true. The United States has done some interesting studies to show that the more money people have after tax, the more they donate.

Between 1982 and 1989 the marginal top tax bracket in the United States dropped substantially. The amount of money people had in their pockets increased dramatically and there was a 29% increase in the amount of money people donated. That is a huge amount.

These days, when people have less and less money and non-governmental organizations have more and more responsibility to raise money, is it not fair and equitable that the government give them a chance to take care of themselves? Is it not fair that organizations like the Canadian Cancer Society, Juvenile Diabetes Foundation Canada and others have an opportunity to raise money from the public and that the public derive the benefit from that?

We cannot take money away from non-governmental organizations while denying them the ability to raise money. The government should look at what the U.S. did in terms of enabling people to increase their donations. Again, it is about more money at the end of the day in people's pockets.

Another thing the government can do is enable NGOs and the people who donate to them to derive the same tax benefit as a person who donates to a political party. Why do people who donate to the Liberal Party or the Alliance Party receive a higher tax benefit than if they donate to the Canadian Cancer Society?

We should ensure there is equitability, that a person who donates to an NGO receives the same tax benefit as someone who donates to a political party. I encourage the government to look at that. It is quite innovative work. People in Canada who rely on non-governmental and charitable organizations would benefit enormously from such a progressive move on the part of the government.

Another thing the government can do in an age of so much new wealth is enable people in the top tax bracket to create foundations. Foundations can be an enormous generator of funds for charitable and other non-governmental organizations. Why does the government not put provisions into the tax structure that enable people to create foundations which give them control and ownership and, I would argue, efficiency in ensuring those moneys get to people in need?

Another innovative program is energy tax incentives. The United States in its budget last year put through some innovative energy tax incentives aimed particularly at reducing greenhouse gas emissions. Many of those tax benefits rest on the ability of individuals to invest in other forms of non-fossil fuels and non-greenhouse gas producing energy sources that benefit both the environment and the individuals themselves.

I encourage the government to look at what the U.S. has done. Solar power, new ways of heating homes and hybrid cars that use non-fossil fuels would all provide our environment, individuals and the organizations producing them the tax incentives that would wean us away from fossil fuels.

Our demand for energy will increase substantially. We will need alternative fuel sources. Nuclear power is a clean source, but it has an obvious downside. Fossil fuels are limited. Since greenhouse gas emissions will only increase, we must look at alternative measures. We could learn from the U.S. energy tax incentives to greatly improve our environment at home.

On the education system I encourage the government to look at another proposal from our side, the income contingent loan repayment plan. Students today face increasing difficulty in finding the money to pay for their education.

I am a physician, but I could not have gone to medical school if costs had been what they are today. Tuition fees at my alma mater are now more than $12,000 per year. There is no way, given the socioeconomic conditions I grew up in, that my family could have afforded the fees. That is the situation students across the country are facing.

We are now seeing a very dangerous situation in which professional faculties are becoming the purview of the rich. A recent study looked at family incomes at various schools, and I will take the University of Western Ontario as an example. The study found that over the last four or five years the average family income went from $60,000 to more than $120,000 for students entering medical school at the University of Western Ontario. That pattern is borne out across the country and in other professional faculties like law and dentistry.

People in lower socioeconomic groups who want to enter professional faculties face an economic obstacle. Gaining access to professional faculties is no longer an issue of merit or competence. It is becoming an issue of how much money one's parents make. This is a critical issue that must be dealt with now. It is an matter of fundamental fairness for a country that prides itself on equality for all people regardless of socioeconomic condition.

The situation will only get worse. I encourage the Prime Minister to call together the ministers of education across the country to urgently look at the matter.

The shortage of professors and faculty members is also an issue now and will be one in the future. Across the country the dearth will become critical. It is so bad now that universities and post-secondary institutions have sent out a clarion call for help. We must find innovative ways to train and retain individuals who can teach and work in our post-secondary institutions. A professor cannot be trained overnight. It takes at least seven years.

I encourage the government to raise the issue at a first ministers conference as soon as possible. It will take years to deal with it, but it must be done for the sake of our youth and our economy. The economy is predicated on hiring and training good, competent individuals. If we cannot train people of excellence our economy will face a fate we do not want to contemplate.

Lastly I will address the issue of accountability. My colleagues have raised the issue time and time again. A backbench member of the Liberal government articulated a solution with which it is difficult to disagree. The individual quite intelligently raised, as have my colleagues, the fact that we do not know where our money has been spent.

We need to know the amount of money going in, where it is spent and what the output is. Whether we are talking about health care, agriculture or the environment, we need to measure this. There are ways it can be done.

Every ministry ought to be on a spreadsheet so that a deputy minister would know, if asked, where the money has gone, how it was spent and have a way of measuring the output. That is what we want and what the public wants. If we are to build an effective public service we must do that.

The government has been very clearly asked to do this by the Clerk of the Privy Council. He has asked for an urgent indepth look at our public service and how we can make it more efficient. The good people who work in our public service urgently need that as well. We must find ways of innovating and allowing members in the public service to put their incredible talents and intelligence to the best use.

I will again draw attention to something Mr. Gore did when he was vice-president. President Clinton asked Mr. Gore to rejuvenate the public sector. Mr. Gore did something I thought was quite innovative. He told public sector members they had carte blanche to do the right thing but with certain restrictions. He then gave them a card listing the restrictions.

We need to be able to unleash the power of our public service. We need to increase its efficiency and accountability. We need to streamline it so we have an efficient public service that works for the public good.

I know my time is up. I will close by saying that the bill, while it moves in the right direction, should have come out three years ago.

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Mr. Speaker, we were in the questions and comments phase of the discussion. I have largely concluded my comments so I would entertain any questions.

However, I did want to remind the government of the issue of brain drain and the further complications in the tax code that Bill C-22 presents. I will give the example to the House of my own family.

My brother-in-law lives in Louisiana. My sister lives in Atlanta. They are part of the brain drain. In the 19th century, the great exodus of Loyalists to Canada on the underground railway had a song they used to sing. It was called Follow the Drinking Ground . The chorus of the song is:

So long old master Don't come after me I'm heading north to Canada Where everybody's free

That was the chorus of the song they sang when they came to Canada because Canada was the place where everybody was free.

Since then it is astonishing how things have changed. The underground railway has turned into a highway heading south, by which the best and brightest leave the country. They leave this country for better opportunities.

My own sister is an example of that. She has a degree in communications in French from Simon Fraser University and she is in Louisiana helping Canadian firms that are trying to sell Canadian products in the French Bayou country. She is a Canadian earning her keep in the United States because this country does not treat her the way she thinks government really should treat its best and brightest.

The United States has a better environment for cultivating, sustaining and taking care of the best and brightest in their country. The Americans treat young people as a resource.

In this country we do not get that. The finance minister brags in the House of Commons day after day about the fact that we have a balanced budget, but he does not give credit to the people who balanced the budget: young people, entrepreneurs, the best and brightest, small business owners, families, the people who sacrifice, and people in the university departments like the small university I went to, the University of Northern British Columbia, which has a crisis in its entire financing structure because of the government.

We have a balanced budget for a whole host of reasons, like the hospitals that get shut down because of this government and like the overtaxation of small businesses. The government stands atop a dustbin of bad decisions. It stands atop the rubble of bad financial decisions and atop the shoulders of small businesses and says that because of the government and its decisions Canada has a balanced budget. Canada has a balanced budget because of nothing government has done. We have a balanced budget because of a whole host of reasons, which frankly the government does not control. The finance minister and the Prime Minister do not appoint Alan Greenspan. They do not decide the economic growth rates of the United States. They opposed free trade. They increased taxes. They increased the payroll taxes that kill jobs and the Canada pension plan. They are driving the best and brightest out of this country.

They talk and brag about balancing the budget and about bills like Bill C-22 that we are debating today, but Bill C-22 goes in the wrong direction. It further complicates the tax code. It makes it less likely that people, entrepreneurs and builders, will want to stay here because they see that this country will be something they want to be part of in 20 or 30 years. That is not good enough.

I would love to see the day when we go back to that chorus of the underground railway, where Canada is an enterprise state, where we can sing that chorus again and be proud of it. For the government members who just walked in, I will remind the House of what that chorus is:

So long old master Don't come after me I'm heading north to Canada Where everybody's free

We need economic freedom and political freedom. We do not have them, we deserve them, and if we do not, we are only sacrificing our future.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to answer what is undoubtedly the most thoughtful question asked thus far today.

This afternoon we will continue with Bill C-22, the Income Tax Act amendments proposed by the very excellent Minister of Finance. Then we will deal with Bill C-4, the sustainable development foundation legislation. Tomorrow we will do report stage and third reading, hopefully, of Bill C-12, the Judges Act.

On Monday, April 23, we shall call Bill C-13, the GST technical amendments. We will then follow this with the organized crime bill, introduced earlier today.

Tuesday, April 24, will be an allotted day at which time members could raise such issues as softwood lumber, as they perhaps should have last Tuesday when it was an opposition day and other less significant issues were raised.

On Wednesday, April 25, we will begin with third reading of Bill C-9, the Canada Elections Act legislation.

Income Tax Amendments Act, 2000

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Mr. Speaker, since the very beginning of time it has been a practice for citizens to pay tax to support the services they receive.

The Book of Genesis tells us that both Abraham and Jacob paid a tax of 10% on what they owned and this tax was called a tithe. Later the Council of Vienne which sat from 1311 to 1312 approved giving the money from the tithe collected over a six year period to the King of France to finance the crusades. The concept of a simple tax on revenue has been with us for a very long time, as has been the concept of directing tax money to fund the costs of a war.

It came as no great surprise when the federal government in 1917 introduced the Income War Tax Act as a temporary measure. The act was 10 pages long and used relatively simple language. The basic obligation to pay income tax was clearly stated in subsection 4(1) where it said:

There shall be assessed, levied and paid, upon the income during the preceding year of every person residing or ordinarily resident in Canada...the following taxes:

(a) four per centum upon all income exceeding fifteen hundred dollars in the case of unmarried persons and widows or widowers without dependent children, and exceeding three thousand dollars in the case of all other persons.

At that time university educations were a rarity and one certainly did not need a degree to figure out whether or not one owed taxes and, if so, exactly how much.

Today the tax act is a case study in bafflegab. It stands in violation of one of the most basic rights of Canadians: the right to know and understand the laws that affect them.

Canada, like most other Commonwealth countries, has specific legislation requiring the publication of our laws. The Publication of Statutes Act requires that our laws be printed and distributed to the public so that the public may know the law.

Just as our legal system has long held that ignorance of the law cannot be a defence, it requires that citizens be able to access the laws and therefore know exactly what they are. This includes the Income Tax Act.

When we think about it, every citizen should know their rights and obligations. That is a basic tenet of a proper running democracy. The Canadian Charter of Rights and Freedoms meets this standard.

On the Department of Justice website the charter prints on to seven neat pages and can be downloaded in seconds. It has clear, concise wording. For example, subsection 6(1) says:

Every citizen of Canada has the right to enter, remain in and leave Canada.

Canadians who have completed a grade three education will understand this sentence and, more important, will understand their rights and obligations.

By stark contrast the Income Tax Act is there as well. The Income Tax Act is also on the Department of Justice website. A warning lets would-be downloading taxpayers know that the act is a whopping 5.3 megabytes in size, relative to the seconds it takes to download the charter. One can only assume that this warning is so users can make room on their hard drive and/or prepare themselves for a lengthy wait by reading War and Peace or building a ship in a bottle.

When one finally receives the completed file one is also in for a very nasty surprise. Actually one is in for two surprises. The first surprise is that the act is not really written in either of our official languages. Turning to subsection 2(2), I will read the first paragraph which is written in both English and French:

In English it reads as follows: “The taxable income of a taxpayer for a taxation year is the taxpayer's income for the year plus the additions and minus the deductions permitted by Division C”.

I have chosen one of the more straightforward paragraphs. In order for taxpayers to answer the basic question “How much do I owe” or “combien dois-je au gouvernement”, Canadians who own mutual funds or who have invested in an RRSP need not only a profound knowledge of arcane English but a mind which is sufficiently powerful to follow the logistical gymnastics of the basic calculations. It is amazing how far we have regressed since 1917.

The version of the Income Tax Act which is on the Department of Justice website was last updated on August 31, 2000. That means that the web version does not reflect the changes to the act made by the October 18 pre-election mini budget. Even after wading through thousands of pages of linguistic fog, the taxpayer would still not have a clear answer to the question “How much do I owe?”

Fortunately the private sector is willing to help. The problem is that the tax act is so complicated that the books which try to explain it are nearly as thick as the act itself. Arthur Andersen's Preparing Your Tax Return is 1,264 pages with a 40 page index. Let us think about that. The index to the guide is four times the length of the original temporary Income War Tax Act. It is, however, the authoritative guide, the one that the Canada Customs and Revenue Agency uses to understand the act that it must administer.

The authors of this book accurately summarize the problems with the Income Tax Act in the book's foreword. They write:

Because of the complex nature of the Canadian Income Tax Act, the fact that relatively few of its provisions have been interpreted by the tax courts, and that some of its provisions have not even been interpreted by the CCRA, it has not been possible to provide answers to all of the questions which may arise.

The complexity of the tax act is such that an entire industry now exists to help Canadians navigate the minefield the act has become. Accountants, tax guides and online tax filing services multiply like yeast in a warm oven in an effort to help the average person answer that simple five word question: “How much do I owe?”

With the complexities of the tax code that Bill C-22 adds, just imagine if other government obligations were crafted with the same complications. For example, how many traffic deaths would result if the rules of the road were as complicated as the tax act?

How many Canadians would never travel abroad if a passport application form were nearly as difficult as a tax return? How many Canadians would watch Peter Mansbridge if he used taxspeak in his newscasts? How many Canadians would drink water from a public drinking fountain if the state could not affirm the cleanliness of that water in fewer than 120,000 words?

On top of the lunacy and the complexity of our tax code, I suspect that the fog the Canadians face in understanding their tax code is deliberate on the part of the Government of Canada. I think there is an agenda here, a hidden agenda.

The fact is the relief that average Canadians feel upon successfully filing their jungle gym tax returns probably acts to dull the rage taxpayers feel working eight weeks longer than their American friends to pay their federal taxes. Let us not forget that even as the finance minister postures and smiles in the House, American workers pay their tax bill on May 3 while it takes Canadians until June 30. Perhaps it is the relief of actually working for themselves on July 1 that puts so much of the glee into Canada Day celebrations.

The result of those taxes has driven the Canadian dollar into a downward spiral. It is now hovering between 63 cents and 64 cents. The tax cuts that President Bush is considering in the United States will both affect the value of our dollar and further widen the income gap between working class Canadians and their neighbours south of the border.

Government members continue to posture and smile around their mini budget's tax relief but it hardly gives them bragging rights. It is like the Trabant claiming to be the best built east German sedan. It may be true, but it is of little comfort in a world where other countries are doing much better.

It is of even less comfort when we realize that we are paying far more federal taxes today proportionately than our grandparents paid in 1917. In 1917, a family of two with a single income of $3,000 paid $120 in taxes. In today's money that is roughly $1,349 in taxes on income of $33,373.

In 1917 Canadians started paying taxes when they earned in today's dollars almost $16,800. Today individuals under the Liberal government start paying taxes when they earn less than $8,000. In other words the tax code has become more regressive: more Liberals, more regressive.

This year a Canadian family of two earning that same $33,000 will pay $3,422 in personal income tax after the finance minister's biggest tax cut in history. That means for every $3 in taxes in 1917 today's taxpayer will pay $7.61.

If we think back, in 1917 Canada was deeply involved in the great war. Hundreds of thousands of Canadian men were fighting in Europe. Canadians supported and subsidized 100% of their patriotic effort. Their existence was 100% subsidized through tax dollars. The government introduced the Income War Tax Act to finance the war and help those brave Canadians.

Today in times of unprecedented peace and stability the government needs more than twice as much tax revenue from the average person just to run the status quo, and it does not even run that very well or outside debt.

That is a scary thought and really demonstrates the need for genuine tax relief. Other countries have figured it out. The government has not but other countries have. Places such as Ireland have learned that cutting taxes means job growth, increased competitiveness and a higher standard of living. The Celtic tiger has outpaced Canada in both standard of living and competitiveness since 1989.

The government needs to do two things to convince my generation to stay in Canada and to lure other workers here. It needs to simplify the tax system and it needs to cut taxes overall.

Simplifying our tax system is needed because it lets people know directly how much they owe and because it focuses the debate not on the language of the act but on the amount paid in tax. In other words, how big is the government and how much do we have to ante up for it? That is a healthy debate for the country.

Once people get a clear avenue of calculating their real tax burden they will demand tax cuts with the same zeal they now demand for balanced budgets. When that day comes the government will have no choice but to limit its voracious appetite for tax dollars and offer meaningful tax relief. On the same day Canada's standard of living will rise and our international competitiveness will be boosted if the government shows this kind of leadership.

As a member of the most overtaxed and debt saddled generation in Canadian history, I will celebrate that day when it comes. In the meantime I will continue voting against and speaking against Liberal halfsteps and increased tax code complications such as we see embedded in the bill we are debating today.

[Deepak Obhrai, Canadian Alliance, Calgary East, AB]

Mr. Speaker, I am sure people will be surprised to see me get up for the third time within two hours. This is a unique happening in the House. I would like to remind people that this is happening because the governing party is refusing to debate these issues and is refusing to defend its bills. As such, the bills are going through more rapidly because only the opposition is pointing out what is wrong with the legislation. The government is refusing to defend itself.

It is a pleasure to rise on behalf of the constituents of Calgary East to speak today to Bill C-22, an act to amend the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act and the Modernization of Benefits and Obligations Act. This bill, like many dealing with the tax code, is an omnibus bill, meaning that it deals with a number of issues at once.

As mentioned in the title of this bill, acts included are the Income Tax Act, the Canada Pension Plan and the Excise Tax Act. While each of these acts deserves attention and has important consequences for Canadians, I would like to address my thoughts to how this act impacts on Canada's competitiveness.

I have been appointed chair of the advisory committee on globalization and competitiveness by the Leader of the Opposition. The mandate of this advisory committee is to advise and to get input from business leaders, academics, non-governmental organizations and Canadians from all across the country on the possibilities and pitfalls of globalization for Canada.

There are countless ideas about how to make Canada more competitive in a more interconnected world. These ideas need a voice in parliament and the public sector. It is hoped that the Canadian Alliance will be that voice.

For years the Liberal government has ignored the reality that Canada is losing valuable ground to our neighbours to the south and to our major international competitors. We know that the new U.S. administration won a mandate based on the promise of substantial tax relief and a targeted plan of debt reduction.

We know that income taxes are not the sole indicator of the tax divide between Canada and the U.S. Canadians face other taxes that push the total tax burden higher. The total tax burden includes sales taxes, payroll taxes and other levies by all levels of government, which create a Canadian tax burden that is up to one-third higher than that of the U.S. It is clear that if Canada does not follow U.S. tax reductions, the country will fall further behind.

Mexico, our NAFTA partner, also has vigorous plans to become a major centre for North American investment. Canada will face increasingly tough competition from Mexico in our plans to attract foreign investment. Mexico enjoys a unique position as a member of NAFTA. It is the only North American country that has a free trade agreement with the European Union as well as with Mercosur, the free trade bloc with Brazil, Argentina, Uruguay and Chile.

The challenges presented by Mexico and the U.S. are just two examples of why Canada cannot afford to continue making negative public policy decisions that impact our competitiveness.

When the current foreign affairs minister was the Minister of Industry, while he was curtailed because he was representing the government, he did at times manage to raise warning signs about our country's tax bracket and competitiveness.

A survey of the world's most competitive economies by the Swiss-based International Institute for Management Development has placed Canada at number 11, a drop of one place from last year. The institute praised Canada for its infrastructure, legal framework and human resources, but gave poor marks for its record in science and technology and for uncompetitive taxes. Just before speaking on this bill, I spoke on another bill in reference to welcoming the government's initiative in helping science and technology.

For years many of Canada's most successful companies and business people have argued that high taxation impacts Canada's ability to be competitive in a more interconnected world. High taxation discourages investment and innovation and it is a major cause of the brain drain. These issues have been pointed out time after time to the government.

John Cleghorn, former chairman and CEO of the Royal Bank, said that higher taxation has diverted savings into the government sector that would earn higher productivity returns for companies and societies at large in free markets. He went on to say that higher taxation also hits living standards more immediately by cutting off what is left in our pockets at the end of the day to spend on our families and ourselves.

Canadian business leaders and academics will agree that for Canada the challenge is to build a more innovative economy that is well positioned for competitive success in the new global market. To succeed, Canadian firms must take full advantage of the opportunities created by greater economic integration and increased cross border flows of goods, services, technology, ideas and knowledge.

The responsibility for building a more innovative and competitive economy falls primarily on Canadian managers and entrepreneurs. However, government has a role to play as well. Government can reduce taxes. It can ensure that Canadian students are some of the most highly educated in the world. It can provide the conditions necessary to make Canada the final destination of foreign direct investment from all regions of the world. The government can and must do all those things, but sadly the government does not.

The government claims in the bill that it has cut taxes by $100.5 billion over five years. This is what it is saying based on its list.

However, let us look at reality. The reality is that we must subtract $3.2 billion over five years for social spending. The child benefit is a spending program delivered through the tax system and it is an increase. It is not a tax decrease, it is a spending increase. However, the government says it is a tax decrease. It does not recognize that it is a tax increase. As well, indexation is accounted for separately.

Next we must subtract $29.5 billion over the five years for increased CPP premium hikes. We all know that CPP premiums have been increased, yet the government refuses to say that is part of its tax cuts and puts it separately. In reality, when we look at the competitiveness for everything, it is a burden. The burden comes out of the government's mismanagement of the CPP. I was part of the debate on CPP premiums. What is interesting is that when CPP was first introduced the government was saying the same thing that it is now saying after 20 years of CPP premium increases. Nothing has changed over that time.

As well, indexing personal income taxes is meant to hold the tax burden constant over time, so it should not be counted as a tax reduction.

Therefore, when we take out all these things, there is only $47.1 billion in net tax reduction provided over five years. Let me repeat that: it is only $47.1 billion over five years, not the $100.5 billion that the government is claiming. We can see innovative accounting here, with the government giving the illusion to Canadians that they are facing major tax relief over the next five years when in reality that is not happening.

I received a call from one constituent who was a little puzzled because he had heard about the government reducing taxes and he could not understand why his net take home pay had suddenly decreased. I asked him to take a closer look to see if his CPP premiums had increased. Sure enough, CPP had increased. That is why he is taking home a smaller cheque.

The government's current policy does not create the competitive environment that we need to position ourselves for taking advantage of the global economy. The Canadian Alliance has proposed further reductions in taxes, which would create an environment that businesses are looking for on behalf of Canadians in order to poise themselves to take advantage of the 21st century.

Budget Implementation Act, 1997

[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.

Income Tax Amendments Act, 2000

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, I wanted to point out that I raised this issue in the House during the 36th parliament, in our reply to the economic statement or mini-budget. Bill C-22 is the exact copy of this mini budget.

I am surprised that nothing has been changed. The government could have addressed certain problems or weaknesses in the economic statement that was made just before the election. Throughout the election campaign, the Liberal government boasted a lot, through its members and candidates, about the upcoming tax reductions. There would be something for everybody, they said, because they had put the nation's finances in good shape, and were making a surplus. They said they would help all those that had been affected by drastic cuts. The finance minister had room to manoeuvre with $147.9 billion, including the agreement on health signed with the provinces on September 11. We can safely guess that right now his room to manoeuvre is much bigger, but today our discussions centre on the $147.9 billion.

Tax cuts can be expected for 2004. I think that this is the time of year when everybody in Canada and in Quebec is checking their tax returns before submitting them to the Department of National Revenue. Few are lucky enough to be able to say “I have benefited this year of a real tax cut that has allowed me to put my finances in order”.

Here are some examples of what tax cuts will probably look like in 2004. A single parent family with an income of $30,000 and one dependent child would have a $550 tax cut and would still pay $1,545 a year. That is for a family with a $30,000 income.

With a $50,000 income, the same family would have a tax cut of $1,200 or twice that of the single parent family with a $30,000 income. With a $80,000 income, the same family would have a $2,300 tax cut or four times more than that of the family with a $30,000 income. With a $100,000 income, the tax cut would be $3,200, or 5.8 times more than that of the family with a $30,000 income. The tax reduction for Canadians earning $250,000 would be $6,500, 11 times higher than the tax reduction for a family earning $30,000.

For the more than four million women, that is 60% of women, earning less than $30,000, this statement is a slap in the face. A family with an income of $30,000 and one child should not pay any taxes.

The reduction of the capital gains inclusion rate means average gains of $11,600 for taxpayers earning $250,000 or more, compared to average gains of $320 for those earning between $80,000 and $150,000, 36 times less than the average gains for those earning $250,000. As members can see, these tax reductions are for the rich.

There is nothing in this bill for women, for young persons, and for single senior citizens, most of whom are women.

In your riding, Mr. Speaker, there are probably many single senior citizens. Unfortunately these are mostly women who are poor. Their pension income comes to about $12,000 a year. What can one do with $12,000 a year? It is a shame that the government did not think about these people.

Since our population is aging, there will be more and more single older women. These are women who have lost their husbands. We tend to forget widows. With huge surpluses and $147.9 billion to play around with, it is unacceptable that the government did not think about those single women.

There are no provisions for the basic financing of women groups working within organizations. They were completely forgotten. These women are often volunteers. They earn unacceptable salaries in those organizations. Their work is aimed at keeping the centres open in order to help and support single women, older women, women going through difficult times or facing problems of domestic violence. These women groups do their best to keep the centres open, and there is nothing in the budget to help them carry on their work.

There is nothing either for old workers, men and women, who lost their jobs. We had been vocal in the House, trying to convince the Minister of Finance to take into account people hit by plant closures. There will be others, because it is a given with globalization. There will be plant closures. New plants are opening, but there is also rationalization. Big companies are rationalizing.

In my riding, Celanese was the backbone of the economy in Drummondville. Some 50, 40 or 30 years ago, everyone in my riding knew someone who worked at Celanese. That company once had 6,000, 7,000 and 8,000 employees. It was really the cornerstone of the region's economic development. As the years went by, transformations took place, and the plant moved to Mexico last year.

There was a good proportion of middle-aged workers, between 50 and 60 years old, who were nearing retirement and who received early retirement benefits. These people were not eligible for employment insurance. They had to use money they received as separation pay. After a year, they had to rely on employment insurance and, later, on social assistance.

In the past, we had measures aimed at helping older former workers. Perhaps they were not the best measures, perhaps they had shortcomings, but at least these people could keep their pride because they did not have to rely on social assistance while waiting to receive their pension.

They were totally abandoned. These people who worked hard for 30 or 40 years in the same factory, for the same employer, were forced to retire because of globalization and the closing of factories. They were told “Go home now; you must rely on social assistance”. It is totally scandalous.

There is nothing for social housing either. There is nothing for international assistance. There is nothing for transfers for health and education. Now, I want to say a few words about indexation, because we know that even if funds were injected into health, costs were not taken into consideration. As the population ages, the cost of equipment, new technologies and drugs is skyrocketing, and we have to take this into account.

There is nothing for shipbuilding. The government has earmarked $1 billion to cover the increase in heating costs, but is sending each person a small cheque. We talked about it in the House. I met with single elderly people with incomes of $13,000 or $14,000 a year, who heat their home with oil, and have seen their heating bills double and nearly triple.

Someone who used to pay $400 for heating oil will have paid by the end of this winter between $800 and $1,000. This is outrageous when their yearly income is $13,000. The government issued cheques for $125 instead of keeping the money to target people who really needed it. The government took this initiative and sent cheques to help with heating expenses to everybody, including those who do not use heating oil. It does not make sense.

I have nothing against giving money to people who qualify for the GST rebate; I am happy for the people who received a $125 cheque. It was certainly welcome, especially during the holiday season. However, what did the government do for people such as single women who have only $13,000 a year to live on, whose heating expenses went up? It could have tried a bit harder.

It is similar to distributing goodies before an election is called, to make everybody happy; this creates a lot of visibility but solves nothing. People will get even deeper into poverty to avoid freezing this winter, as their heating bill doubles and nearly triples.

What does one do when one is poor and does not want to freeze? One goes without food or without heat and one literally freezes in order to be able to eat a little bit. This is unconscionable on the part of a government with a $147.9 billion surplus.

It has done a lot to pay down the debt. This is called fancy accounting. The finance minister has been very cautious. With the surplus he did not announce, he was able to reduce the debt. I have nothing against reducing the debt, but people who were put through the wringer and literally bled to death should come first.

A lot has been done for debt reduction and for millionaires. As a matter of fact, a family with one child and a $250,000 income will benefit from a tax reduction. However, a family with one child and a $30,000 income will not get much of a break. I would call that exploitation.

With these huge surpluses that made the Minister of Finance burst with pride, we were expecting him to give a break to those who were really instrumental in getting our fiscal house in order, those to whom we owe the fact that we have not had a deficit for four years, those who continue to be bled white by federal taxes, those thanks to whom the finance minister can be thrilled about having these surpluses right now.

We thought the main beneficiaries of these tax cuts would be low and middle income families, not very high income families that can benefit greatly from tax loopholes. With the help of a good tax expert, people earning $250,000 can save a lot of money.

The government has the audacity to say that surpluses will not exceed $6 billion this year, whereas close to $12 billion has already been accumulated in the coffers of the federal government. I know my figures are not correct because it is actually more than that.

The Minister of Finance could have done more for the disadvantaged, and for low and middle income taxpayers. I am talking about the workers who contribute to the EI fund as well as small and medium size businesses. They are the ones that end up paying for tax cuts for the rich.

I am also talking about the unemployed men and women who are not receiving any EI benefits because of the drastic cuts made and because of the tightening up of the eligibility criteria. The ones who are paying now for the tax cuts to the rich are rural families, and I think my colleague from Jonquière, who has responsibility for this issue, knows this well and will no doubt inform the House at some point about what is going on in the regions, young people, women and seniors.

We know why the government has presented this statement that has now evolved into Bill C-22. It was because the election was about to be called and they wanted to thumb their noses at the Canadian Alliance. What the Alliance was proposing at that time was a uniform rate, and the government wanted to win over the electorate. So, it adopted as its own the Alliance's uniform rate, which was universally denounced as favouring millionaires. It now has included it in its bill.

The $100 billion in surplus has come from the pockets of low and middle income taxpayers and, let me say again, from the unemployed, women, young people, sick people and the most disadvantaged members of our society. This is absolutely indecent.

We must not be too hasty with our rejoicing. Tax cuts are always welcome. Certainly, no one can be opposed to a tax cut. We must not be too quick to rejoice, however, because, as I have said, it will not show up in our tax returns this year. It will probably be in 2004.

The Minister of Finance could have had a budget this year, not a year and a half down the road, and let us have the benefit of these tax cuts this year. I mentioned earlier that, according to the information available, a single parent family with an income of $250,000 and over will benefit from a far greater relief to its tax burden, 40 times greater, than a family with one dependant and an income of $30,000.

Families with an income of $250,000 get a $20,000 net tax reduction, while those with an income of $35,000 and one dependent get a mere $500. These families should not pay any taxes. They do not in Quebec.

With all the money it has, the government still manages to go after these families. There are 1.5 million children living in poverty in Canada. Does that make any sense? Children are poor because women and families who are poor.

A family with a $35,000 income and one dependent is poor, but still must pay taxes. It will pay $1,425 in taxes. It will benefit from a $500 tax reduction, but not this year, only in 2004.

The minister kept saying, even in this House, that people with an income of $35,000 do not pay any taxes. He said it several times in the House. It is strange to hear him say that they do not pay any taxes and then announce that they will get $500 in tax reduction. Very strange indeed.

I would rather rely on the figures from our own research. People cannot be fooled that easily. The minister said repeatedly that those families do not pay any taxes and then announced that they would bet getting a $500 tax reduction. I truly believe those families are paying taxes.

We can also see in the budget that the government shamelessly keeps on accumulating surpluses, because, as was mentioned earlier, the tax reductions will take effect in only a year and a half. Meanwhile, the government keeps fiddling with the figures.

I can say that we were opposed to the statement and to the mini budget, and that we will not support this bill because it does not meet the needs of the Canadian and the Quebec society.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, there is no doubt that cleaning up the complexity of the tax act goes far beyond just going to a single rate or even to two rates.

It is interesting that under Bill C-22 the government proposes to go from three categories to four beginning next year. That is because it loves high taxes.

We must look at the complexities of the issue. Some formulas in the bill are illustrated very well, but others are really quite convoluted. The Income Tax Act is full of that. The question of what applies must also be addressed. The categorization of which tax bracket a person falls into is one question but it is a minor one. I will concede that.

With respect to the tax itself, we must recognize that when taxes are reduced there is a tremendous spinoff in the economy because the money is not destroyed. When taxes are reduced taxpayers do not throw that money into the fireplace. They use it to provide for their families and give the local economy a kick. I would much rather hire a guy to fix my leaky roof, which would give him a job and get my roof fixed, than send the money to Ottawa where it is spun in circles and nothing really happens with it.

I appreciate the question from the parliamentary secretary, although I did not have time to give him a full answer. He is certainly on the right track by asking if we should simplify the code. My answer is a resounding yes.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I am very pleased to speak in the debate. The Liberal government is getting slack. This morning we debated a bill which was over 900 pages in length. This little itty-bitty bill of 500 pages now seems like child's play in comparison. My party will have a look at it. We are debating it for the first time today, so the debate is on general principles. After this it will go to the finance committee where some of the details will be dealt with.

The whole study of taxation is intriguing in the academic sense. We have come to accept a level of taxation that is on the verge of being obscene.

I have told this story in the House before, and if any members recall it, my apologies, but it is very important. About three or four years ago I gave one of those one minute members' statements. I told the Speaker about a tragedy we had in our home. A guy came to the house. He backed his truck up to the door and proceeded to move everything out that we had accumulated over the years. He took half of our sofa set. He looked upstairs and saw four beds and he took two. He cut my beautiful old grandfather clock in half and took half of it and put it in the truck. I phoned the police before they took all the phones and asked them to get over to my place. I told them that we were being robbed. The police said that I should give them more details. I did and they said that they could not come and that they could not help. As a matter of fact the police did show up a little later and they insisted that I help the guy load.

This is an absurd story, but this is what happens every year to average Canadians. One half of our earnings are taken from us through the various levels of taxation from the federal, provincial and municipal governments. Tax freedom day in most provinces is around July 1, which says that half of our income is confiscated every year. If we do not help the guy who is owed and if we do not deliver the money that we have earned, we are held in contempt and can go to jail.

I do not want to characterize the levels of government as though they are crooks, yet I know I am right on the verge. I do not want to say that, so I will not. They are not really stealing our money because it is taxation. However it is still money I have earned that I cannot use for my family. I have very few needs. We can see that all I need is a square meal a day, or two, some basic clothing and basic shelter. Give me a bicycle to ride or preferably a motorcycle. My needs are simple and I simply want the best. I do not have many needs.

However I do have a great need to provide for my family. Fortunately my children are now grown up and on their own so things are a little easier. Now I only have a very expensive wife to provide for. When the children were younger I was teaching at a technical institute. All hon. members probably know this. I worked there for 27 years. We also made the decision that mother would be a full time mom. The children needed to have someone there when they came home from school to care for them and to show them that they were important.

In order to supplement our income, which even back then was not quite adequate to meet all our needs, including paying the mortgage, the utilities and everything, the decision was made that I would teach part time in the evenings. I taught a night class almost always two nights a week. This was way back and it dates me. Hon. members can tell by my grey hair that I am an old guy. I used to say that I worked Tuesday nights for Trudeau and Thursday nights for my family. It was a 50:50 deal.

Even though we are dealing with Bill C-22 to amend the Income Tax Act, the question that is not being addressed is the overall huge load of taxation which burdens our families and burdens individuals.

I have also indicated recently, and I will repeat this because I feel it is important, that my family and I not only pay our taxes but we also believe in charity. Due to the fact that we needed to look after our future, and as we have always felt insecure about the inadequate provisions of the government, namely the Canada pension plan, we have tried to put a bit of money into RRSPs. We ended up living on about 30% of my income as 70% of it was gone: 50% to taxation; 10% to charity, plus or minus a bit; and 10% to future savings, usually a little less because I could not afford that much. It was a struggle.

That is one of the reasons I became a member of parliament. In 1988, when the Reform Party was just starting, I picked up one of its brochures and all these things attracted me: the elected Senate, true democratic responsibility, and a justice system that would work on behalf of law-abiding citizens. However the one that really struck me was the belief that governments should live within their means so that we could reduce and not increase the debt. That was during the Conservative years when the debt was going up by $25 billion, $30 billion and peaking at $40 billion a year, just before they were finally turfed. That was one of the reasons they were turfed.

I was attracted to the principle that said we should have a balanced budget so that we would no longer increase the debt, the principle that we should start paying the debt down so that we could relieve ourselves of the necessity of interest payments and thereby have more money available to governments for programs that citizens value.

I guess the rest is history. We came here in huge numbers in 1993. When I first joined the Reform Party I did not anticipate that I would be transposed from my career at NAIT's teaching mathematics, computing and interesting things like that into trying to persuade a Liberal government to reduce taxes, balance the budget, hopefully pay down the debt and reduce interest payments.

However I stand here proudly this afternoon when I see what has happened in the last seven years. We have been the beneficiaries of a very robust economy in the United States which has a huge influence on our economy. That is undeniable. At the same time I believe it was our presence here which made it respectable to talk about fiscal prudence and to reduce the amount we were spending. The government was also able to exercise, with our help, a little discipline in not spending all the additional revenue that came rolling in that was beyond its expectations and certainly beyond its planning.

I like what happened in the year 2000. I am a little disappointed in the election. I wish we would have the Liberals in opposition. That would have been a lot more fun. One of the things which did happen just four days before the election was we had a mini-budget, the primary election document for the Liberals. That is what the bill is about.

I must give the Liberals a grudging commendation here. They sure do know how to run elections. I saw a cartoon of the Prime Minister right after the election. It showed the increase in the number of seats. He was reading a paper that said “Liberals re-elected with a resounding majority”. The Prime Minister, speaking to Canadian taxpayers, was saying that was the best $200 million of taxpayer money he ever spent.

We know that an election costs around $200 million. It is quite an expensive project. That is what it took to put the Liberals back into power. I am giving the Liberals a weak commendation in that their pre-election document showed they were ready to go the way we were saying Canadians were asking parliament to go, namely to exercise some fiscal responsibility and implement tax cuts.

If we look at the polling data right now and if we ask Canadians what they think is important, the number one issue is health care, and rightly so. Whenever we are ill and we need some help from the medical profession, we live in a country where we have come to accept that it will be available. It ought to be that way. I believe very solidly in our principle, which is also a principle of the Canada Health Act, that no one should be denied needed health care because of financial situation. I concur with that.

Canadians are saying that is the number one issue. The number two issue is either crime, punishment or the justice system. Down the line a bit comes tax cuts, as the member from the CCF said just a moment ago. He usually calls my party by the wrong name, so why can I not?

He said that tax cuts were actually quite low. That is because when Canadians are asked to priorize something they put these things in rank order. We make the mistake of drawing the conclusion, because tax cuts are maybe third, fourth or fifth on the list, that they are not important to Canadians.

If we look at the importance that Canadians place on those issues they would probably all be close to equal. If we asked how important health care was on a scale of one to ten, a person might say ten. When asked how important tax cuts are, they might say that is a nine. It is not as important so it ranks out that way, but it is still important to them. I hear that from many people who ask why they work like slaves from early morning until late at night and do not seem to get ahead.

Very frankly, even with these timid tax cuts that the Minister of Finance introduced in budget 2000—and of course most of the things in the mini budget from last fall have not yet been implemented—the actual reduction in the total deductions in the average person's paycheque is not huge, if it is there at all. As a matter of fact, with the new payments for Canada pension the bottom line for most families is about the same or sometimes even a little worse.

In broad generalities as I am leading up to my talk on Bill C-22 today, I really think we need to address very carefully the level of taxation in the country.

Second, I want to talk a little about the complexity of it. I talked a bit this morning on Bill C-8, the banking bill, but we have had other bills in the House that have to do with changing the taxation system or the revenue system, and sometimes we deal with government expenditures. I find it frankly astounding, and I hope I never lose my astonishment, that a week ago in one evening we sat here as members and in a matter of about 20 minutes approved the expenditure of some $15 billion or $16 billion. Those were the supplementary estimates just to get the government to the end of this fiscal year. The amount of money we approve here is amazing. I believe the responsibility we have as proper stewards of the money entrusted to us is of the utmost importance.

One of the things I want to see happen is a reduction in the complexity of our tax system. My goodness, I remember not long ago reading an interpretation bulletin on the GST which differentiated between buying cooked shrimp and cold, frozen shrimp. There is a different rate of GST applied to the two of them. In one case it was considered that because they were cooked they were a meal and therefore the GST applied. In the other case they were frozen, therefore they were groceries. GST is not charged on groceries. That is only one minute example.

Bill C-22 discusses proposals for amending the Income Tax Act as well as the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act. All of this is included and does not increase the simplicity of it. It increases the complexity of it.

Already I am led to believe that there are very few Canadians, even among our best tax lawyers, who know that code. As a matter of fact, any of our citizens who have had the occasion to go to one of the tribunals to get a ruling on a tax dispute are hoping for some reasonable hearing there because, depending on who one gets, one gets different interpretations.

One person in my riding told me that he phoned Revenue Canada to ask about a certain issue. He got an answer that he did not think was right, so he phoned again, got a different person and got a different answer. Then he thought, just a minute, there are two different answers here, so he went for two out of three because he still did not really know. He phoned again, hoping that he would get one of the other two answers, and lo and behold, there was a third answer. The complexity of it is a great frustration. The bill, among other things, increases that complexity.

During the election campaign the Alliance Party was proposing that we go to a single rate tax. That is not a flat tax. That is a misnomer we are often accused of. A single rate tax is simply the same kind of a tax system we have now with basic exemptions and other deductions, but instead of three rates as we had at that time, we said we would reduce them all to the same rate of 17%. I suppose we could have achieved the same result by simply saying that the amounts where these rates kick in are some high number and it would have probably been more saleable than the way it was presented.

The fact is that we are proposing deductions. We are proposing huge tax breaks for middle income and lower income families. The Liberals are crowing about the fact that people who are now making a family income of $20,000 a year are going to get a tax break of maybe 16% or 20% or whatever number it is that they use. Under our plan that reduction would be 100%. They would be removed from the tax roll completely.

Under our plan, a family of four, a mum, a dad and two kids, would pay zero tax on the first $26,000 of income and then a straight 17% on the remaining, whereas the Liberal government goes on and on with exemptions of maybe $15,000 or $16,000 and then 17% on everything after that, although they are proposing to reduce that to 16%. That, by the way, is also a bit of sleight of hand. If we just talk about the rate but apply it on more of the income the total tax bill is higher than if there were a 1% higher rate but a great deal more of the income exempt from tax.

In wrapping up, I would simply like to say that some of the measures in the bill go in the right direction. I am rather concerned about some of them. They go in the right direction but not far enough. In any case, there are some things in the bill that are woefully inadequate. I am looking forward very much to hearing about the bill in committee, not only from officials but also from witnesses who will come to our committee and give us their read on it. I am sure that in the finance committee we will have a great time analyzing the bill and reporting back to the House in due time.

[Guy St-Julien, Liberal, Abitibi—Baie-James—Nunavik, QC]

Mr. Speaker, I would not want to pass up this opportunity to speak to Bill C-22, the Income Tax Amendments Act, 2000, which was recently tabled.

We have examples from families in resource regions. I have here letters written in September and addressed to the Minister of Finance of Canada. Other letters were addressed to the Minister of Finance of Quebec.

I do not want to pit provinces against provinces, but as a result of the changes made by the Quebec government to its family policy in 1998, the amount of the Canada child tax benefit has been lowered.

Today I received a letter from Clémence Côté. Her husband, Louis Germain, works in the mining industry in Val-d'Or. She said “Today, my children are being penalized”. One must understand what it means when someone writes that her children are being penalized. She wrote “Today, my children are being penalized by the Canadian tax system. I have a large family; I have 10 children. Dear Minister, I would like to ask you for an exemption so that I may receive the full amount of the Canada child tax benefit regardless of our family income”.

The Canadian tax system does not make allowances for families with 10 children or some have 11 or 12.

Her husband, who makes a good living working in the mines, earns in excess of $60,000, $62,000 or $63,000, and does overtime in order to help finance his children's education. With 10 children, a mother has a lot of work at home.

This mine worker, Mr. Germain, does a lot of overtime because several of his children are in school and have been allowed to take up only one sport either at school or at the community level. Even if a child wanted to take up two or three sports, his parents could not afford to pay for it. The same is true of transportation for children who go to school in Val-d'Or. She pays the school board for their transportation and she still has to pay back her benefits.

What I found bizarre in all this is that several years ago, as a result of a 1999 letter from the Minister of National Revenue, they asked why the Canada child tax benefit had been changed in Quebec.

Provincial governments may enter into agreements with the Government of Canada to change the amount of the Canada child tax benefit that their residents will receive depending on the number or the age of children, or both.

Before July 1998, the method used to calculate the benefit was different for Alberta and Quebec compared to the other provinces and territories. These two provinces had chosen a calculation method based on the age of the child and his or her rank in the family.

This means that, before July 1998, Quebec residents were entitled to a base benefit of $869 for the first child, $1,000 for the second child, and $1,597 for the third child and each subsequent child. After making changes to its family policy, the government of Quebec advised the Minister of Finance of Canada that, starting in July 1998, the benefit paid to Quebec residents would no longer be based on the rank and age of the child.

Now the Canada child tax benefit is calculated the same way for Quebec residents as for residents of other provinces and territories, except Alberta. The base benefit is now $1,020 per child, regardless of his or her rank in the family, since the amount of the Canada child tax benefit to which a family is entitled has been reduced following a decision made by the government of Quebec.

Regardless of the two jurisdictions, we must realize that several families in Quebec have seven, eight, nine, ten, eleven, twelve or thirteen children. They have to repay the tax benefits when the husband's income is too high, because of overtime work especially.

That is the message I want to send. We have to find a way to help large families. Nowadays, families with five or six children are considered large families. For families with ten children, the Government of Canada should find way, through some kind of exemption, to help them out, especially in resource regions, but also in urban areas.

We all know how much it costs to look after children's education or to enrol them in a sport program. That is the message I want to send. We should take into account the number of children in all Canadian families. We count one, two, three, and then it seems that senior officials tell their ministers “We stop at three. Passed the third or fourth kid, it does not make any difference”.

On the contrary, it is important, which is why I want to send a message to the finance minister. We need to find a way to help out these large families.

I do not think members will find it surprising that I want to address another issue here today. A poll published on March 9, 2001, and I mention the year because some people might think it was carried out a number of years ago, show that four out of five Quebecers are in favour of a salary being paid to the stay at home parent. At least 82% of those surveyed said they strongly or somewhat agreed that a salary should be paid to the parent who stays at home to take care of the kids.

Why? There is another way about it. I have made several speeches on this issue in the House. I have tabled motions and petitions to have a salary paid to the parent, mother or father, who stays at home to raise children. This would actually help reduce poverty.

I saw an article written by a woman who lives in Montreal, which said “The important thing is to be at home with the children during their first three years of life”. Parents are given a one year parental leave. What should we pay a person who stays at home? Maybe we could, like Germany or other countries, provide a supplement of $250 a week in order to help the family or the person who stays at home with the children.

I would like to raise one final point. It is the issue of pensions, those paid to seniors living below the poverty line. Steps should be taken to increase their income upon reaching retirement age, especially after retiring. Members will recall that a few years ago, we had interest rates of 16%, 17% and 20%, and things were going pretty well. Today, retired seniors are relying on assets deposited in banks or invested mutual funds with a 2% or 3% rate of return.

This is why a majority of Canadians are in favour of pension reform.

The important thing is to raise pensions, to reform the pension system so that people, and particularly seniors, have a decent income. Some single seniors always receive the same amount. Sometimes, their cheque is increased by $1.04 for a three month period, as a cost of living adjustment. The pension system should be reformed and people should have a decent income.

That is why I mentioned these three cases. We often hear about them in my community. Long term solutions must be found.

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

Mr. Speaker, it is with pleasure that I rise today to speak on Bill C-22.

These amendments to the Income Tax Act represent a collection of baby steps, some of which are in the right direction. Some represent a significant further complication of an already far too complicated tax code. Most represent politics and the triumph of politics over public policy.

If we look at the general direction of these tax measures, we will find that there is no general direction to the these measures. In fact, they resulted from a flimsily put together pre-election document, sometimes referred to as a mini budget. It is referred to as a mini budget but I suggest it reflects the government's mini vision of Canada.

The fact is these baby steps, these tinkerings, these policies do not reflect what Canadians need and are particularly not what the tax code needs. We need a significant level of tax reform in Canada. Tax reform can be used as a vehicle for economic growth. Instead of making tax tinkering part of its pre-election policy, Canadians would be better served if the government was to utilize tax reform as a vehicle for long term economic growth. That would benefit all Canadians and improve our competitiveness globally. These tax measures do not do much to provide for greater long term competitiveness for the Canadian economy.

If we look at the government's record since the election in 1993 relative to international confidence in Canada's economy, the most damning reflection or gauge by which to judge the government is our falling dollar and the fact that under this government our dollar has lost over 11 cents of value. That is the dollar reflects the share value of Canada Inc. Under this government we have seen an 11 cent decline in our country's dollar.

Every time there is a loss in the value of the Canadian dollar in comparison to the U.S. that leads to a pay cut for every Canadian. We depend greatly on the goods and services we consume from our neighbours to the south. A loss in the dollar represents a direct loss in our standard of living and ultimately in our quality of life in Canada.

The tax policy and fiscal policy provide a very important key to providing long term strengthening of the dollar. The government refuses to discuss the falling Canadian dollar under the guise of deferring to the Governor of the Bank of Canada and his responsibility over monitoring policy. Fiscal policy levers in the long term are as important as monetary policy levers in providing long term strength to the Canadian dollar. The importance of fiscal policy, that is tax and debt policies and strategic spending policies to the long term strengthening of the Canadian economy, is where the government's record has been a less than impressive one.

Some of the types of tax reform measures that we would like to see and that would make a great deal of sense are those that address some of the most pernicious and uncompetitive natures of our Canadian tax burden. One is our capital gains tax.

Even after there was some tinkering in this economic statement and some reduction of capital gains taxes, we still have a higher tax burden in capital gains than the U.S. For the government to eliminate personal capital gains tax would cost the federal treasury about $4 billion a year. This would put us ahead of the U.S. in a very important area of taxation, particularly in areas of new economy, biotechnology and in some of these other areas that are emerging.

In terms of encouraging new economy venture investments, particularly during a time when market conditions are so turbulent and we need to try to provide whatever incentives we can to maintain early investors' interest in these areas, the elimination of personal capital gains tax would provide a great incentive for Canadians to invest and help continue to grow the economy.

It would be even more important now than it was a few months ago as we see the economic downturn that we are experiencing in Canada, in the U.S. and indeed globally at this point. It becomes even more important in some areas. I have referred in a specific sense to capital gains taxation. It is even more important now that we try, for once, to be ahead of the U.S. as opposed to constantly trying to keep up and in fact always being a couple of steps behind. That is one area where we would have liked to have seen a more dramatic and visionary step as opposed to the tinkering the government has done.

The fact is that most of these tax measures occur over a five year period. If hon. members look at the degree to which these tax reductions will impact Canadians in the short term, it is actually much less than what the government would like Canadians to believe, particularly when combined with the payroll tax hikes that became effective recently with the CPP payroll tax hikes. It is clear that the net tax benefit or the net benefit to Canadians in a take home pay context is minimal or in fact none if members again take into account payroll taxes.

Whatever way the government would like Canadians to view these measures, it will become painfully obvious to Canadian taxpayers when they are receiving their cheques and with their tax deductions that these measures have been half measures and have not really addressed the fundamental issues of high taxes in Canada. Canadians have the highest income taxes in the G-7 and the second highest corporate taxes in the OECD. Even after full implementation of these tax measures over a five year period, we would still end up having about the third highest corporate taxes in the OECD. That is assuming that none of the other countries reduce their tax burdens, and we already are aware that at least seven of them are entertaining and moving toward lower taxes.

Even as we see a slight narrowing of the gap between Canada and the U.S. in terms of tax burden in the short term, we see the U.S. now introducing the largest tax cut in its history. The tax cut is being negotiated currently and is making progress through congress. We are still behind. The mini budget introduced prior to the last election did not do much to get us caught up to the U.S. economy in the current context and yet we are now going to see, under President Bush, a leapfrogging further ahead. Again, Canada will be further behind.

A recent report from the Fraser Institute drew, in a convincing way, a direct linkage between Canada's low dollar and Canada's systemically high levels of taxation on all fronts. We have yet to see a firm commitment from the government, not just on tax reform as a vehicle for long term strengthening of the Canadian economy, but also for debt reduction. Debt reduction, when we have approximately four times the per capita debt of the U.S., should be a much higher priority than the government has made it.

In fact, many of these tax reduction measures are simply spending measures in the form of targeted tax cuts. Rewarding a particular kind of behaviour is nothing more than spending. It is another way to encourage people to do something that they may not do otherwise. People end up making decisions based on tax policy as opposed to what makes sense from a business policy, from an investment policy or from a personal perspective.

The fact is, this mini budget, this pre-election document, was far from what Canadians needed in the most turbulent February we have seen in the last seven years. In the last seven years there has not been a worse February for the government to avoid having a budget in than this last February, when the government ducked the issue and decided arbitrarily not to have a budget.

The fact is, Canadians, particularly with the difference in the economic conditions between the time when the mini budget was introduced and today, need a budget more than ever. Whether it is the decline in the global capital markets or the dramatic declines in the TSE, the NASDAQ and the New York stock exchange, Canadian investors and individual Canadians have seen their retirement savings diminish sharply in recent weeks. At the same time, they are seeing their standard of living decline because of a weakening dollar. There is a significant and reasonable concern among Canadians which should be addressed, not through an economic statement in the spring and not through a state of the union address which the finance minister has talked about providing, but through a full budget.

It is also offensive from a democratic accountability perspective, because this parliament, with its new members in some cases, has not actually been asked to approve a budget introduced after the last election. There are a number of new members of parliament in the House and government spending and government estimates ultimately should be accountable to this place, to parliament. For the government to determine that it is not important to engage parliamentarians in the approval of government spending and tax policy through the support of a ratification of a budget in the House is really and truly offensive.

There are a number of reasons why we have concerns with the government's policies, with its tax policies and general fiscal policies. However, these concerns are not just our concerns. These are concerns shared by many Canadians, particularly by some of Canada's top economists. We are seeing a unified front from Canada's economists relative to the lackadaisical approach of the government on specific tax policies. In the words of Terence Corcoran, a journalist, “If weak currency created growth, Canada would be a world leader”.

The Prime Minister once said that a weak dollar is actually good for tourism. I think this indicates his economic naiveté but also his genuine belief that a country can devalue its way to prosperity. The fact is, a weak dollar is no way to guarantee long term growth and an increase in the standard of living of a people. In fact, it is quite the contrary. If the Prime Minister's argument is correct, that somehow reducing the dollar can improve tourism, let us think about this. The logical corollary of his argument is that if we would reduce the dollar to zero ultimately we could become the largest exporting nation and the most successful exporting nation in the world. Of course we would be giving away our products.

The finance minister said in 1990, I believe at the time when he was running for the Liberal leadership the first time, that he would, if given the opportunity, manage the dollar's decline down to its natural level of about 78 cents to 80 cents. He has done so well that he has managed the dollar's decline down to the 63 cent range.

Canadians are asking a legitimate question. They want to know why the finance minister is not doing more to strengthen the intrinsic value of the Canadian dollar as opposed to accepting its decline. Is it that the Liberal government has accepted that currencies such as Canada's will in the long term be marginalized and that the best way to get rid of the independent Canadian dollar is to simply euthanize it, to let it wither on the vine and let it decline to such a level that Canadians will say, as they have already started to say, they would be better off with a common North American currency?

I do not believe we would be better off with a common North American currency. To give up our monetary policy levers would be a mistake. If we give up our floating currency with the U.S., there needs to be another operative mechanism to reflect things. For instance, the commodity crisis that occurred about two years ago in Asia would have manifested itself not in a reduced Canadian dollar at that point, but in higher levels of unemployment. Without the floating Canadian dollar, I would argue that the operative mechanism that would reflect differing levels of productivity or commodity price valuations would be unemployment rates. I am concerned about the notion of losing that very important tenet of economic sovereignty that is the independent monetary policy and the Canadian dollar.

Why would the government watch over the decline of the Canadian dollar and not defend it? If we in this place do not take steps to strengthen the Canadian dollar in the long term through more aggressive and innovative tax and debt reduction policies and more innovative tax reform packages, and if we do not deal with this in a more forward thinking and visionary way, we and certainly the government will have to accept the blame for the Canadian dollar withering on the vine.

At some point, and I am not sure when it will be, if we continue to see the cyclical decline of the Canadian dollar, Canadians are going to ask why we have an independent currency. I do not want to see us get to that stage and I am concerned that we are precariously close to that position right now.

With a government that has seen the Canadian dollar drop by over 11 cents under its seven year term, it is important to remind the government that under the previous Mulroney government the dollar lost only one cent during the same period of time. If the value of a country's currency reflects global investor confidence in that country, I would suggest that investors do not have a great deal of long term confidence in the government.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, there are days when no amount of effort moves things forward. This is only the third time I have tried to finish my speech. I hope that no other prerogatives of the House will prevent me from making it all the way to the end. I hope, Mr. Speaker, that you will show some understanding.

Before I was interrupted I was saying that when one puts 30% of one's income into accommodation one is viewed as needing assistance.

In view of such outrageous figures, which reveal that an additional almost 60% of homes in Canada spend over 50% of their income on accommodation, how is it the Minister of Finance did not give a moment's thought to spending a cent on social housing? It would have been easy to allocate $2 billion or $3 billion of the $135 billion expected surplus over the next five years. Why did he not think of that?

Why, on the other hand, did he think to turn to the millionaires, people who are not having a hard time, people who do not need $9,000 or $11,000 in savings this year? However, people earning less than $15,000 a year would certainly like to have had better housing for their family. No, this is not one of the Minister of Finance's priorities, not at all.

With the billions he has, how did he end up taking money out of the pockets of the unemployed, the disadvantaged and the sick, those who cannot benefit from proper transfers corresponding to the needs of the people in the health care sector? How did he end up picking the pockets of students, too, who could have used some of the manna going into the government coffers? Why did the Minister of Finance not think of putting money into these sectors? Why did he not give a moment's thought either to increasing Canada's contribution to international aid, which has shrunk since this heartless minister has been Minister of Finance?

How can this man continue to believe that the best way to fight poverty and unemployment is to continue to make off with the surplus in the employment insurance fund every year? How can he not have given a minute's thought to doing something for the 57% of people who are excluded, the people out of work who are not eligible for employment insurance? It is because he needs the dough, because he needs to make use of the surplus to offer tax cuts to those with annual incomes of $250,000 and up.

How can this man not have thought that it would be a good idea to raise the old age pension, particularly for older women living alone?

Barely 16 months ago, a National Council on Welfare report informed us that the situation of seniors who are on their own, particularly the women, is getting worse, and that additional funding was needed to help them and keep us from returning to the vicious circle we were in prior to 1960s. Back then, there was no safety net for these people. How can this man still want to make women and children the first ones that have to pay?

The Minister of Finance's reaction to that, when I said it the other day, was to laugh. I would love it if, at some point, the camera would catch his smile when we confront him with such evidence, when we tell him that women and children are paying for his negligence, when we tell him that his grabbing billions of dollars from the employment insurance surpluses, $38 billion since 1994, directly hits women and children first, and further marginalizes young people. He is still smiling. I would love it if the camera would catch him.

He also smiles when we tell him about elderly women living alone. There is nothing funny about the plight of elderly women living alone and getting increasingly poor.

Why did this man think of reducing taxes for millionaires before using money to help the poor and the homeless?

Recently, an alderman from Hull, whom I salute and congratulate for his work, told us that in the Outaouais region there are not only more and more homeless people who lose their jobs, who lose everything, but that entire families are also homeless. There are no shelters for these people.

Why did the Minister of Finance, who must know the Outaouais since he has been living here for several years, not to mention the fact that he is a member from Quebec, not think about using part of the billions that he is taking from the poor to build facilities to house these homeless families?

One sometimes wonders if the minister and his government have a heart. Mr. Speaker, you know what a heart is. You do. I am sure that you have one, but I sometimes have doubts about whether the Minister of Finance and the Prime Minister do.

When we see how priorities are set with regard to budget allocation and when we see the savage cuts in social programs, particularly income support programs, over the last few years, we cannot help but wonder if he has a heart. If he has one, he must have one since he appears to be alive and well, it is not in the right place, as my grandfather would have said.

If his heart were in the right place, with the means available to him today to really meet the needs of those in difficulty, of middle income families that have been bled white by taxes for almost two decades, he could have made the right decisions.

I urge him to go back to the drawing board and to make sure that these billions of dollars that will be coming are allocated in a way that will benefit the right people, low and middle income people, particularly families, as well as the unemployed. These people would benefit from a true reform of the EI plan, which now excludes 57% of the clientele it is supposed to serve. These funds should also be put toward full indexing of federal transfers for health, education and income security.

In the area of social housing, there are crying needs. Will our shouts be loud enough to make the finance minister understand that there are people in the street who are cold and hungry? Will we have to shout louder and louder to express the pain of those helpless people who cannot speak for themselves here, who cannot speak directly to this heartless government? How loud will we have to shout to express their pain?

There comes a time when we do not know anymore what data we should bring here, because we have the impression that the people opposite do not care. We can mention facts that speak for themselves, talk about the 25% increase in child poverty since they took office, the 60% increase in people who must spend more than 50% of their income for housing, we can tell them that 57% of the unemployed, mostly women, are excluded from EI benefits, the people across the way just do not care. What will it take to make them understand?

It should not be so difficult for the Minister of Finance to re-examine his forecasts. Incidentally, he will be making an economic statement in May. I hope he will have the decency to stop taking us for morons and come up with concrete numbers. Even if these numbers are a bit pessimistic due to the U.S. economic downturn, I hope he will not have the outrageous idea to try to pull the wool over our eyes once again. I hope he will not take us for what we are not and take Canadians for fools. At one point, one has to stop laughing at people.

Last week, he said that it was a good thing he made conservative forecasts in spite of the fact that the opposition blamed him for being cautious. However there is a difference between being cautious and hiding the facts. There is a difference between being cautious and accurately stating the facts. There is a difference between being cautious and being cynical when people say they need information.

The Minister of Finance has shown cynicism these past few years by forecasting surpluses that were half the real surpluses. I even remember one time when, within a six month period, the finance minister, who claims to be competent, open and transparent, was off by 130% in his surplus forecast for a four or four and a half month period. Who was he trying to kid? He said he was happy he erred on the side of caution. What caution? He was not the least bit cautious.

He has spent the surplus he has creamed off the EI fund, to the tune of $38 billion since 1994. He has put it towards debt reduction. He has used it to lower taxes to millionaires. Where is this so-called caution? Where is the EI cushion?

Suppose there is a downturn in the economy resulting in an increase in the number of unemployed, then we will need more money to help them. Where is the cushion to do that? It is gone. Where is the finance minister's caution? It has gone by the wayside.

I will give you the real numbers. Before the downturn in the U.S. economy, we were expecting a surplus of roughly $148 billion over the next five years. For once we were in agreement with the finance minister, and we will not start arguing about a few comas or decimal points. With this year's downturn, and we have also taken into account next year's downturn and a normal real growth of the GDP, the gross domestic product, we came up with a projected surplus of $136 billion at worst. This would mean a shortfall of about $12 billion over five years. A little over two billion a year is not that bad.

If the finance minister would only stop lowering the taxes for the rich and use the bulk of the surplus to lower the taxes for middle and low income earners, invest in social housing, correct the inequities and injustices of the employment insurance system, and index the health, education and income security transfers, there would be no problem. Every year he could even pay back some of the federal accumulated debt. He would be able to do that. He better not come up with numbers lower than this projected surplus.

If he does, we will travel across Quebec, and Canada if necessary, to let everybody know that the finance minister is taking everybody for a ride. People are not stupid. He should take his responsibilities.

Consequently, we will be voting against Bill C-22 because it does not serve the interests of the majority of taxpayers. When they talk about tax reductions, we must know to whom they are addressed. They are for the finance minister's friends. It is not you and me, it is not middle income families, it is not low income families. They will get almost nothing this year. It is the people who earn $250,000 and more who are benefiting from these cuts.

With regard to his tax reduction plan, the finance minister should go back, take a good look in the mirror and ask himself if he is proud of what he did. I am sure the mirror would tell him that he is not proud of himself. He will have a second thing to do: sit down at his desk, do his homework again and rethink the tax cuts, give them to low and middle income people and consider the unemployed. For once, he should have the heart to look at what he has done since the beginning of his mandate.

It would be a good idea if he started having more feelings, if he behaved a little more like a human being, if he developed a little of what is called social partnership. I do not know if he is aware of this concept. He talks about compassion, a more liberal and bourgeois value. However social partnership means partnering with people who live in poverty to try to bring them some relief. He is in a major position and he could bring some relief to these people.

I simply ask him to reconsider his past decisions, to do his homework over and to reflect on what I have told him: to help people, to bring them some relief, to demonstrate some social partnership and to show some heart. It seems to me that this is easy, that one does not need magic to do it.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to rise to speak to Bill C-22 implementing certain provisions of the latest budget of the Minister of Finance.

I can say right away that we will oppose this bill, because we have repeatedly criticized, not only during the course of the regular budget of March 2000, but also when the Minister of Finance tabled his mini budget in the fall, the fact that the huge tax resources at his disposal over the next five years were being badly used.

When we speak of huge tax resources, the situation has not changed, even with the prospect of a downturn in the States. We will return to this later. In the next five years, even taking into account a downturn in the economy in fiscal 2001-02 linked to that of the States, the Minister of Finance will have some $135 billion in surplus.

That is a lot of money, $135 billion. It is slightly down from what he anticipated last year in fact because of the American situation. Last year, the talk was of $147 billion or thereabouts. Now the figure cited is $135 billion. However, the possibility of making choices around these huge surpluses remains essentially the same.

The Minister of Finance is faced with a situation in which, through various unfair measures he created, on the backs of just about everyone, annual surpluses that will reach record levels in the next five years.

He has accumulated these surpluses and will continue to do so on the backs of the unemployed. He will take from the employment insurance fund between $5 billion and $6 billion annually to create his budget surplus. Five to six billion dollars a year will be taken from the contributions by employers and employees, contributions which have nothing to do with those of the federal government. The government has not contributed to this fund for a number of years, but still takes $5 billion to $6 billion annually from it. It is shameful.

In recent years, the Minister of Finance has taken $38 billion from the EI fund surplus. This money came from the pockets of employers, workers and mainly the unemployed. What must be kept in mind is that, if the surplus in the EI fund is accumulating as rapidly as it is, it is because of two things: first, employer and employee contributions are too high, and second, the majority of people who are out of work are excluded from the plan.

I remind hon. members that only 43% of people who end up unemployed are in fact eligible for employment insurance. Corrective measures by the government will remedy some of this, but only a tiny portion, not all of it. Despite the improvements made by the bill on employment insurance, most of those who are left out will continue to be.

Year in, year out, the Minister of Finance is going to continue to pocket at least $5 billion of the $6 billion EI fund surplus to add to his budget surplus and to look good, as well as to be able to give tax cuts to the richest members of Canadian society.

As well, we must not lose sight of the fact that the Minister of Finance created this surplus, and will continue to add to it, at the expense of the provinces.

For six years now, the Minister of Finance has cut transfer payments to the provinces for the funding of education, health and income security. This was money that the provinces did not have, year after year, to meet their citizens' needs.

The surplus is in Ottawa, while the needs are in the provinces. The health sector needs money, and the Minister of Finance had plenty. Last year the Minister of Finance did restore some funding, but year after year they are still some $2 billion short of what is required to cope with changing health costs, caused in large part by the aging of the population. Over the next five years, the shortfall in transfers will total $10 billion.

Given the greying of the population, we know there will be a natural increase of 3% in health requirements, in Quebec and elsewhere in Canada. This increase is solely because of the fact that the population is aging. The Minister of Finance has not taken this phenomenon into account and the surplus continues to accumulate in his coffers.

This year again, in spite of the downturn in the U.S. economy, the Minister of Finance will have a surplus of about $18 billion to $20 billion. It is easy to have such surpluses when one does nothing and makes the provinces do the work by cutting transfers, by not indexing in view of the urgent needs in health and education, and by shamelessly dipping into the employment insurance fund. It is easy to accumulate surpluses under these circumstances.

We believe that with the surpluses for this year and the four previous years, the Minister of Finance could do a lot more than what he intends to do under his five year plan. He is in a position to target groups that need help. The Minister of Finance intends to give major tax cut to those who earn $250,000 and up.

From this year on, those, and there are not too many of them, who earn in excess of $250,000 and others such as millionaires and billionaires will enjoy significant tax cuts. They will get about 70% of all the tax cuts planned by the Minister of Finance. If a person is earning $250,000 this year, he is lucky because he will get the largest tax cuts, because of the changes related to the partial inclusion of capital gains, because of tax cuts as such, or because of indexation. These people will get at least $9,000 to $11,000 in tax cuts.

However, a single parent with dependent children is not so lucky, because he or she will only get about $250 in tax cuts this year. Talk about equity and social justice.

Under our proposals, with the same tax resources the Minister of Finance has estimated for the next five years, we in the Bloc Quebecois would have taken measures to ensure that starting this year families earning $35,000 or less would not pay any taxes. Everyone else would have benefited from a 50% tax break. That is what I call being progressive. That is what I call dealing with the needs of the people, the real needs of the people.

The Minister of Finance could have diverted his resources to the majority of taxpayers, as we have done. Nine out of ten taxpayers would have benefited from a tax break under our proposals, not just 1% of all taxpayers, the richest taxpayers in Canada and partisans of the Liberal Party and our millionaire friend, the finance minister, but nine out of ten, that is 90% of taxpayers.

If we can come up with these proposals using the same basic figures as the Minister of Finance did, why has he not redirected his policies?

With the estimated tax resources for the next five years and despite the downturn in the U.S. economy, because we adjusted our estimates accordingly, the Minister of Finance could have used $5 billion of the $6 billion EI surplus every year to improve the system, raise the benefits and expand the system to include the 57% of the unemployed who do not currently qualify.

Seasonal workers, women and especially young workers who are particularly hard hit by the vicious employment insurance system could have benefited this year from decent EI benefits.

Why are we able to come up with a scenario whereby each year $5 billion stays in the EI fund to help young people, women and also families? We are talking about a good parental leave plan in Quebec City, not the useless kind of plan being proposed to us. With our forecasts with regard to surpluses, why are we able to do all these things? It is because we in the Bloc Quebecois believe that our first duty is to serve the most disadvantaged, those who belong to the middle income category, those into whose pockets the federal government has been dipping since it came into office in 1993.

Let is not forget that these nine taxpayers out of ten, to whom we wanted to give tax cuts considering the huge surpluses that will accumulate in the federal government's coffers, are the ones who pay the biggest share of taxes. Indeed, the federal government gets most of its tax revenues from families in the $25,000 to $80,000 a year income range.

With all these surpluses, the federal government is not thinking about those families. It is not thinking about those who have been taxed to death these last few years. It does not want to ensure that they benefit from these surpluses, but it wants to ensure that millionaires do. That is the kind of social justice practised by this government.

Let us not even talk about social housing any more. It is not a priority for this government, as evidenced by the fact that it has not invested a cent in this area since 1993. Yet, the needs are enormous. Since that year, the number of families spending more than 50% of their income on housing has almost doubled. If one spends 50% of one's income on housing, it means that there is only 50% left to buy food and clothing for one's self and one's children.

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

Mr. Speaker, not only was it not a point of order. It was completely inaccurate. Our platform included a policy for a single rate of tax.

I will make clear what I was saying. People are confused by competing claims about whether taxes have been cut. They can be the arbiters. They have very simple documentary evidence to adjudicate the test. It is called their paystub.

I invite everyone listening to or watching the debate to look at their paystubs and compare them to the paystubs for the same week or month last year. They will see that the supposed Liberal tax cut for this year was actually a tax increase. It is bogus.

When we combine the impact of Bill C-2 regarding Canada pension plan payroll taxes, which was passed during this fiscal year by the previous parliament and is the largest tax increase in Canadian history, with the myriad of other tax increases imposed by the government and the snail's pace at which its modest tax cuts will apply, Canadians at most income levels will find they are paying more than they did the year before.

If they are not, it is because of the foresight of provincial governments. Provincial taxes in Ontario and Alberta have gone down, thanks to the leadership of people like Mike Harris and Ralph Klein, but federal taxes have stayed the same or gone up.

The finance minister and his parliamentary secretary claim the bill includes $100 billion of tax relief. A nice round figure like that is like pricing something at $9.99 in a department store. The finance minister was told by campaign officials to get the number up because he needed a nice, big round number to talk about in the election. They decided it would be $100 billion. It is nothing of the sort.

The government claims $100.5 billion of gross tax relief in the bill and $3.2 billion of that is an increase in spending. The government has taken the Canada child tax benefit, which is an entitlement program and a spending program, and booked it as a tax cut. Once again the paragons of clean accounting in the government opposite are misleading Canadians.

Then there is the $29.5 billion by which the government increased the Canada pension plan payroll tax. The government, after enormous pressure from this party, from the Canadian Taxpayers Federation and from the Canadian people, finally decided to stop the insidious back door tax grab on inflation known as deindexation. Under deindexation people were bumped into higher tax brackets and paid more taxes. They did so because they were getting cost of living adjustments and not because of any real increase in income.

The Canadian Alliance objected to deindexation. Finally the government responded to our objection and stole our policy by agreeing to reindex the tax system, but not retroactively to 1986 when the Mulroney government deindexed the system.

Let me say parenthetically that the Liberal Party in the 1988 and 1993 elections ran against the Tory Party, and rightfully so, for having deindexed the tax system in 1986. However when it finally came to setting things right, did the Liberals give back the money that had been stripped out of people's wallets by taxes and inflation since 1986? No, sir. They reindexed. They did not give back the some $9 billion that people had lost to deindexation.

The Liberals say they will adjust tax brackets, exemptions and credits upward to account for the consumer price index so that they no longer impose a tax on inflation. That is good. However they count that as a tax cut. In other words, the government counts a non-increase as a cut. They tell Canadians they will not tax them on inflation and that Canadians should be grateful it will be counted as a tax cut. There are accountants in this place who would find that pretty specious. The government has declared $21 billion worth of specious, non-existent tax cuts which are merely non-increases.

When we add all that up, the real total net tax cut in the government's bill is $47 billion over five years. That is about half the tax relief proposed by the Canadian Alliance over five years based on comparable accounting. It is a fraction of the tax relief proposed by U.S. President Bush of $1.6 trillion to $2.3 trillion, depending on how we count it, over 10 years for a country with taxes that are already lower.

That would not be such a problem if Canada had its tax burden under control. However it does not. Revenues to the federal government last year were at their highest level in history. The government is bigger in terms of the money it hoovers out of people's wallets, purses and small business tills than any government in the history of the dominion. Personal income taxes in Canada consume a higher percentage of gross domestic product than in any other nation in the G-8. At 17.6% of GDP we have the highest personal income taxes.

According to a recent study by Price Waterhouse that was published in The Economist , Canada has the highest corporate income tax rates in the OECD, the Organization for Economic Co-operation and Development, the 23 principal industrialized countries in the world. Of those 23 countries, yes, we are number one when it comes to business tax rates.

When we look down the line, we see that none of this will change under the bill. When the tax cuts here have been fully implemented, and after the Bush tax changes have been implemented in the U.S., Canada will still have income taxes far higher than those of the United States and our other principal competitors. That is having an impact on our competitiveness and our standard of living. We know that.

We know that Canadians are working harder now than they ever have and are falling behind. We know we have an increase in the brain drain: the loss of talent and human capital to the United States and other jurisdictions, in large part because of the tax burden.

We know that Canada has fallen from second to 16th place in the OECD in terms of our standard of living over the past 15 years. We went from the second highest per capita GDP to the 16th, to the middle of the pack. Over the past 10 years, by comparison, Ireland leapfrogged over Canada in terms of its growth in per capita GDP, which is the best measure of increases in the standard of living, in large part because it provided huge tax incentives.

A member opposite said that it was because of something other than tax relief. My brother moved a company with 30 very well paying jobs to Dublin because of the tax cuts offered in Ireland and the huge advantage it offers over Canada.

This is not an agenda that would restore the competitiveness of the nation. It would continue to impose on Canadians an enormous burden of taxation into the future.

The bill would do a number of other things to which we object. First, there are a couple of elements which do step in the right direction. Reducing the inclusion rate on capital gains to 15% is something that should have happened a long time ago. We would like to see that inclusion rate go down to 33 1/3% so that we stop penalizing people who invest their whole lives in a business or in a property. This is a form of a death tax. We work hard our entire life, we invest in a business or property and we look forward to passing that on to the next generation. We, as individuals, may not take any benefit from it, but guess what? The moment we die, the Government of Canada comes in with deemed capital gains, which is really a form of estate tax or death tax, and grabs one-third of our lifetime earnings that were in that investment. That is wrong. We should not penalize people's lifetime investments. We should not diminish their abilities to pass on to the next generation their life's savings as we do through deemed capital gains.

There are a number of technical changes in the bill. One of the technical changes with which we have a great deal of trouble is the fact that the bill would continue the unfairness with which single income families with children are treated under the tax code.

The House will recall that this was a very hot issue at one point in the last parliament. The Secretary of State for International Financial Institutions, in response to a question I put to him about why the government discriminated against single income families with kids and why there was as much as an 80% tax penalty for those families versus their dual income counterparts, stood in his place and said that the government discriminated against single income families because they did not work as hard or have as many expenses as the double income families. That was pitting one kind of family against another.

As we said then and I say now, let me inform the secretary of state that moms and dads who stay home to raise small kids, to care for the elderly and the infirm, and to build families and homes, work just as hard, if not harder, as those of us in the paid workforce. They deserve and demand our respect and fairness in the tax code.

The current tax code's discrimination against those families must be eliminated and fairness must be brought in. The Canadian Alliance has proposed, among other things, equalizing the spousal or equivalent to spouse basic exemption with the basic personal exemption.

Under the bill we would have two classes of citizens: those who are primary income earners and their spouses. They have equal worth and that worth should be reflected in the tax code by a spousal exemption equal to the basic personal exemption. That would not done here. We would continue to penalize the stay at home parents.

We would raise that exemption from $8,000, which it will eventually get to pursuant to this bill after several years, to $10,000. That would lift hundreds of thousands of working families off the tax rolls so that instead of giving money to be misspent by the government they could invest it in their own priorities, their own children and their own homes.

We would bring in a child tax deduction. We would provide a deduction of $3,000 per child so that families with children would be able to keep more of what they earn to reflect the costs of raising kids.

What does the government do? Absolutely nothing of the sort. To the contrary, the bill before us raises the so-called child care expense deduction from $7,000 to $10,000. This is another piece of discrimination because only certain families would get to claim the child care expense deduction. Only those dual income families with receipted child care expenses could make use of it. Only 17% of tax filers could claim this deduction, and even a smaller fraction could claim it to the full amount.

If a mother with three children is the main income earner and the father decides to stay home until the kids are in school, the tax code says that the dad's work at home cannot be deducted. The tax code says that it has no value to society and therefore will not be recognized. However, if a parent decides instead to earn a second income and drops the kids off at a day care on the way to the second job, the federal government will give recognition for the third party costs of child care. The at home costs, the opportunity costs, the forgone income and the real financial costs of raising children at home are recognized nowhere.

It is intolerable that we should be increasing discrimination against single income parents. We will oppose the bill on that ground alone.

The bill includes an element which further erodes parliament's recognition of the unique and important role and status of the institution of marriage in our society and culture. It does so by bringing forward further amendments to change any reference from spouse to common law partner.

This is a change which was begun in a bill amending the Income Tax Act in the previous parliament, but in one of the many drafting errors to which I referred earlier the officials neglected to amend certain sections of the bill, saying that in various sections reference to spouse as part of the institution of marriage has been abolished for all intents and purposes from the Income Tax Act. It is an institution which in this and every other society I know of has been given certain privileges because it is the basis of the family, the basic institution of society.

We have said from time immemorial that the institution of marriage should be given certain preferences and privileges to protect the family. The bill would further erode the distinctiveness of that institution by saying common law partners, not spouses.

We as a parliament or as a country should not be ashamed of declaring that the spousal commitment in the covenant of marriage is a fundamental contractual relationship in the development of strong and healthy families and that they are necessary to having a strong and healthy society.

That is another reason we oppose the bill. It further undermines and weakens marriage as an institution.

There are a number of other provisions in the bill which the Alliance finds objectionable. It does include certain technical changes to which we do not object. Here is an interesting one: the foreign actors' tax credit. Most people may ask what that is all about. It turns out that we currently withhold 15% of the income of Hollywood actors who come to Canada to act in Hollywood movies. We then reserve the right to force them to file a tax return and tax them even more.

The Hollywood movie actors have been shedding crocodile tears about this unfair tax treatment by Canada. The same government which cannot find the fiscal room to help out single income families, has decided to give millionaire Hollywood movie actors a tax break in the bill. Lo and behold, Sylvester Stallone and Bruce Willis will be at the front of the line when it comes to tax relief from the government. Single income moms and dads can stay at home without fairness.

The government would do this by raising the withholding tax from 15% to 23%, a very modest increase, but then it says that the actors would not have to file returns beyond that. These are people making millions of dollars at the highest possible marginal rates.

My office staff called the movie producers, the Hollywood actors, the actors' guilds and so on to hear what they thought of this move by the government. They were in favour of this because it would be a big tax cut for the millionaire Hollywood movie stars. They said that if we did not make this change, they might not keep coming back to work in Canada. I find it very odd when I look at the priorities that the government has for tax relief.

We in the Alliance have talked about raising the basic exemption for individuals and spouses, or equivalent to spouses, to $10,000. We talked about introducing a $3,000 deduction per child. Let us just figure out what that means. If we had a Canadian Alliance government, it would mean that a family with two parents and three kids would pay no taxes on their first $29,000 of income. It would mean that a single mom could give her first child the equivalent to spouse deduction of $10,000, so that a single mom with two kids would have $23,000 tax free.

These measures would lift 1.4 million low income Canadians off the tax roles altogether, giving them a hand up so they could get ahead. It would stop penalizing them for earning that small incremental income to try to get ahead economically. The government does nothing in the bill to lift Canadians off the tax roles.

When our party came out with its bold and powerful proposal to eventually get to a 17% single income tax rate and lift 1.4 million low income people off the tax roles and to restore and create family tax fairness, the government said that it looked popular. It said that it was testing well in the polls so it had better try to outflank the opposition. What did it do? It came up with a new basic rate of 16% in the bill and thought that Canadians would be fooled by that because, after all, 16% is lower than 17%.

Yes, it is. However, for the people, for whom it matters, those at the lowest income levels, there are no increases in the basic exemptions and deductions. Those are far more generous. What the Liberals want is for a single mom working as a waitress to pay 16% of her paltry income. Our plan would say that a low income individual would pay no taxes at all because we want that individual to get ahead through higher deductions and exemptions at the bottom end of the tax system.

In closing, I encourage the government to think about the enormous complexity of the Income Tax Act and the destructive effect it has on our economy and our society. It should think of the tens of thousands of bright, young Canadians, whose educations we subsidize, who leave the country every year to pursue their economic opportunities elsewhere in large part because of diminished opportunities and our tax system.

I want them to think about the low income working families, the single moms and the seniors on fixed incomes who are forced to pay taxes today. I want them to join us in dreaming about creating a tax system which is simple, fair and low, which rewards risk taking, investment and productivity and which rewards the virtues upon which a prosperous society is built.

I want to invite them to join us in the opposition in proposing a tax system that lifts the low income people off the tax rolls, that puts the family first and restores fairness to the tax system and that stops the beggar thy neighbour, class warfare politics of envy approach, which informs the so-called progressive tax system that penalizes people who succeed, work hard and get ahead.

I invite them to do all of those things by opposing Bill C-22, a bill that once more adds yet another destructive layer on to the tax act which was first passed in this place in 1917. I hope they will join us in doing that and working together to create an economic environment of opportunity which rewards risk taking, saving, investment and hard work. That is what Canadians are asking for and that is what we are fighting for by opposing the bill.

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

Mr. Speaker, congratulations on your elevation to the Chair. I am pleased to rise to debate Bill C-22 which is, as the hon. Parliamentary Secretary to the Minister of Finance has indicated, a very substantive tax bill which appeared before this place in the form of a ways and means motion several days ago in the session. It seeks to give effect in part to tax changes proposed by the hon. Minister of Finance in his economic political statement here before the dissolution of parliament at the call of the election.

Let me say at the outset that the bill before us is a classic example of what has gone wrong with parliamentary oversight of legislation, particularly with respect to taxation. The bill before us has some 513 pages of technical amendments. I can say with a fair degree certainty that not a single member of this place, let alone the parliamentary secretary who just spoke or the minister he represents, has read or will read. It is a bill that exercises enormous power over the lives of Canadians through the Income Tax Act which in itself has coercive powers delegated to it by this parliament. The some 500 pages of amendments in the bill are amendments to a tax act which runs over 1,300 pages long.

Let me remind my hon. colleagues that in the House in 1917, before it burned down, this same parliament passed what was called the temporary Income War Tax Act. It ran all of seven pages. The government of the day of then Prime Minister Borden said that the bill was only necessary for a short period of time to finance the war effort during the great war and that we would be able to repeal it shortly thereafter. This was an income tax which applied only to very wealthy Canadians at the time, people who were in the top fraction of income earners. The vast majority of Canadians were unaffected by it. The politicians said that it was temporary and that would be repealed.

This does not look like a repeal bill to me. This looks like another 500 pages of amendments on top a 1,300 page statute of which I doubt a single person in this country understands the totality. There might be a tiny handful of tax experts in academia or in the Department of Finance who have even a vague grasp of the myriad complexity of the Income Tax Act which we are seeking to amend today. This is a testament to the enormous complexity of the tax code with which Canadians must grapple every day.

That act in 1917 was passed in good faith by parliamentarians and committed to the Canadians, who they were taking money from to finance the war effort, that it would be repealed. It was not. Not only was it not repealed, it was added to, broadened and expanded to bring more and eventually every single working Canadian into its ambit.

Today we end up with an enormous, complex web of tax laws which inhibit the wealth creating potential of this nation which diminishes our productivity. It drives down our competitiveness and undermines the standard of living of Canadian families who are working harder to get ahead but who are falling behind because of the tax act which the bill seeks to amend.

Let me say as a matter of principle on behalf of the official opposition, the Canadian Alliance, that we stand four-square against this huge complex and destructive system of penalizing work, investment, risk taking and wealth creation. These are the very virtues and habits upon which a prosperous and free nation is built. All of those things are undermined by taxation in general and this extraordinarily complex tax system that we have in this country.

A political philosopher once remarked that the power to tax is in fact the power to destroy. It is the power of government to use its monopoly on coercive force to reach out the hand of the state and to take from individuals, businesses and corporations the fruits of their labours. We can never underestimate just how destructive that power can be. We can never know how many small businesses or how many dreams have been vanquished because people were unable to realize their potential and dreams of starting up and operating a successful business because they were unable to keep enough of the fruits of their labours to keep their heads above water. That is what the bill represents.

I am sure the parliamentary secretary who just spoke perhaps does not reflect often on the first principles of taxation. It is important for us every now and then in this place to remember the enormous power that we wield through this taxing power. We do so somewhat recklessly. As I suggested, I am certain that not a single member of the House has now or will read the entire bill.

I tried to make my way through as much of it as I can. I consulted the experts in the finance department. I received the bill a couple of days ago and I am supposed to stand here on behalf of the official opposition, which has a quasi constitutional obligation to be the watchdog of the government particularly with respect to issues like this, and provide a thorough, detailed, thoughtful analysis and assessment of the bill, when these 500 pages of technical amendments were just delivered to us.

I know for certain that the finance minister not only has not read the bill, he is likely at best vaguely familiar with the impact of the amendments contained herein.

Even though the official opposition will vote against it for a number of reasons, this will undoubtedly go on to the finance committee which, I predict, will have fairly brief hearings because none of the members will be able to penetrate the impenetrable complexity of the Income Tax Act.

Well meaning and very bright officials from the Department of Finance will appear before the committee to explain and analyze, as best they can, the impact of the bill. The committee members, who were elected to represent the best interests of their constituents and to uphold any parliamentary oversight and scrutiny, will have to take the bureaucrats at their word and then the bill will come back to this place and be passed.

Members will not understand what they have passed because of the complexity of the act. That is a very serious concern, but it does not need to be that way. In a more functional democratic institution, the American congress for instance, both the upper and lower houses have ways and means committees with independent legislators and adequate staff resources. The staff of those committees have become experts on the complexities of tax legislation and are able to frame and craft bills of this nature with a real understanding of what they are doing. The U.S. congress has specific committees to deal with taxing power and taxing legislation.

As a result, congress and the people it represents have the benefit of real, serious, substantive democratic oversight and input into tax legislation. We only pretend to have such input in this place because of the dysfunctional nature of parliament and the complexity of the Income Tax Act.

How do I know that is the case? How can I prove that the consideration of tax legislation does not work in this parliament? It is very simple. This bill, and at least three other bills before the House right now, include amendments to tax legislation that seek to undo the drafting mistakes of previous bills passed by parliament. It is unacceptable that we waste the valuable time of parliament time after time by undoing mistakes made in the drafting of legislation. Those mistakes were not identified by members of parliament because they do not have the expertise, the time or the resources. What is the point of digging down into the depths of a bill if it will be passed anyway?

We do not have time to ensure at a meaningful level that the bureaucrats have it right. The minister does not do that. He receives draft legislation from bureaucrats, rubber stamps it and sends it to parliament. We ought not spend time correcting the errors that drafting officials and bureaucrats have made. If we had more serious parliamentary scrutiny, oversight and involvement in the development of tax legislation, and a tax code which made sense to ordinary taxpayers, we would not need to constantly revisit bills such as the one before us.

For those reasons my party stands four square for the reform and simplification of the tax code. I will quote from the Canadian Alliance policy declaration. It was not dreamed up by any one person. It was the result of a grassroots, bottom up democratic process. Our members agreed that:

We will restore public confidence in the fairness of the Canadian tax system by reducing its complexity. We will restore indexation and move towards a simpler tax system, built around—

This is a novel concept for a government which likes to play the politics of envy and class warfare. It continues:

—a single rate of taxation to ensure lower taxes for all Canadians. We believe that all Canadians above a minimum income level should share in the cost of the services provided by government, which benefit us all.

That is what we seek to do.

The hon. parliamentary secretary suggested the bill would give effect to what he called, disingenuously, the largest tax cut in Canadian history. That is absolutely bogus. He argues the bill would give effect to the political statement made by the finance minister in October.

Let me give credit where it is due. After seven years of advocacy in this place by the Reform caucus and then the Canadian Alliance that tax relief be our nation's highest economic priority, and after millions of Canadians demanded to see a little more of what they earn and said they were fed up with Liberal tax increases, the finance minister, days before an election, finally came forward with some modest tax cuts.

However they are not real tax cuts for real people. I challenge people to take the paystub test. People who watch the debate in this place see me and my colleagues stand to demand the finance minister cut taxes and they see him stand to say he has already done so. How are people to know which of us is telling the truth? I have a very simple test.

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

Mr. Speaker, I welcome the opportunity to present Bill C-22, the Income Tax Amendments Act, 2000 for second reading today.

While the bill amends several sections of the Income Tax Act, more important, it implements key elements of the government's five year tax reduction plan which was introduced last year.

Briefly, this plan will provide $100 billion in tax relief by 2004-05, thereby reducing the federal personal income tax paid by Canadians by 21% on average.

Families with children will receive an even larger tax cut—about 27% on average.

The bill also includes many additional measures, including technical amendments that were introduced in Bill C-43 last fall but which died on the order paper when the election was called.

Many of these amendments are relieving in nature. Some correct technical deficiencies in the act while others lighten the administration of the tax system. Whatever the changes, one thing is certain, each is based on the principles of fairness and equity in the federal tax system to which our government has been committed since coming to office in 1993.

Once we eliminated the deficit in 1997-98, we began to cut taxes for all Canadians. The bill before us today is the biggest step forward in our tax cutting efforts to date and is based on four key principles.

First, our approach to tax reduction must be fair starting with those who need relief most, middle and low income earners, and especially families with children.

Second, we will focus initially on personal income taxes since that is where we are most out of line.

Third, we will ensure that Canada has an internationally competitive business tax system.

Fourth, we will not finance tax relief with borrowed money because that means an inevitable return to higher taxes in the future.

For the government, fiscal responsibility is fundamental and tax cuts are essential. At the same time, it is essential that an effective, fair and technically valid tax system be maintained, which is the thrust of the legislation before us today.

I will now discuss the main measures in the bill beginning with some of the personal income tax changes.

In 1999 the government promised Canadians that it would set out a multi-year plan for further tax reductions. The 2000 budget delivered on that commitment by making the most important structural changes to the Canadian tax system in more than a decade with a special emphasis on the needs of families with children. The bill provides for tax rate reductions at all income levels as of January 1, 2001.

The low and middle income tax rates fall to 16% and 22% respectively. The top 29% rate is reduced to 26% on incomes between about $61,000 and $100,000, which means that the 29% rate applies only to income over $100,000.

While tax burdens will fall for all Canadians, the decline will be felt substantially by middle income earners. In addition, the bill would eliminate the 5% deficit reduction surtax as of January 1, 2001.

One component of the five year tax reduction plan must be in place by July 1 of this year because it benefits Canadian children. I am referring to the increased support for families with children through the Canada child tax benefit.

As hon. members know, the Canada child tax benefit is a key element of federal assistance to families. It is an income based benefit with two components: the Canada child tax benefit base benefit for low and middle income families and the national child benefit supplement for low income families.

The maximum Canada child tax benefit for the first child will rise to $2,372 in July 2001, well on the way to the five year goal of $2,500 by the year 2004.

For the second child, the maximum Canada child tax benefit will increase to $2,308 in July 2004. Together with increases announced in previous budgets, annual Canada child tax benefits will exceed $9 billion a year in the year 2004, of which low income families will receive about $6 billion and middle income families about $3 billion.

The bill contains other personal income tax changes that are specifically designed to help those who need it most.

For example, the amount on which the disability tax credit, the DTC, is based is increasing from $4,293 to $6,000 effective 2001. This tax relief will increase over time, as the DTC is fully indexed to inflation.

The list of relatives to whom the disability tax credit can be transferred has expanded to make it consistent with the medical expense tax credit rules. In addition, speech language pathologists will now be able to certify eligibility for the disability tax credit with respect to speech impairments.

Another measure increases the maximum annual amount that can be deducted for child care expenses to $10,000 from $7,000 for each eligible child for whom the disability tax credit can be claimed.

The amounts on which the caregiver tax credit and the infirm dependant credit are calculated are both going up to $3,500. With full indexation, this tax relief will continue to increase over time.

At present, individuals with certain mobility impairments may qualify under the medical expense tax credit for renovation costs that enable them to gain access to, or be mobile or functional within, their home. Bill C-22 includes reasonable incremental costs relating to the construction of a principal residence to help these individuals.

To provide additional assistance to students, the annual exemption for scholarships, fellowships and bursaries received in conjunction with programs for which the education tax credit may be claimed increases to $3,000, up from $500.

I also want to mention that self-employed individuals will now be able to deduct one-half of their Canada pension plan or Quebec pension plan contributions on self-employment income. The remaining one-half will continue to be eligible for a personal tax credit at the lowest tax rate. Without the bill they would be entitled only to the credit on both the employer and employee contributions, which would put them at a disadvantage vis-à-vis owner-operators who can deduct the employer share.

The technical amendments in this bill are too numerous to mention in the short time allotted to me in this debate. However, I would like to highlight a few of them before moving on to the business tax changes implemented in this bill.

On the personal tax side, some of the changes ensure that the rules under which clergy can claim a deduction for their residence are clarified. They also ensure that Revenue Canada can release information about a former registered charity as long as it relates to when the organization was a registered charity.

They ensure that municipalities do not have to file T4s for volunteers to whom they paid not more than $1,000. They also ensure that the exemption applicable to reasonable travel allowances to part time teachers be extended to teachers who do not have other jobs.

The five year tax reduction plan also goes a long way toward making Canada's business income tax system more internationally competitive. This is important because business tax rates have a significant impact on the level of business investment, employment, productivity, wages and incomes.

With this in mind, Bill C-22 includes significant corporate tax rate reductions. Corporate tax rates will drop to 21% from 28% for businesses in the highest taxed sectors, such as high technology services, to make them more internationally competitive. These reductions begin with a one-point cut effective January 1, 2001.

By 2005 the combined federal provincial tax rate, including both income and capital taxes, will drop from the current average of 47% to 35%. This would put our businesses on a more competitive level with other G-7 countries.

Two measures in the tax reduction plan involve capital gains. The first provides a tax deferred capital gains rollover for investments in shares of certain small and medium sized active business corporations. It includes increasing the $500,000 investment limit, originally announced in the 2000 budget, to $2 million as announced in the economic statement and increasing the size of small businesses eligible for the rollover from $10 million to include corporations with no more than $50 million in assets immediately after the investment.

The second measure reduces the capital gains inclusion rate to one-half. This would reduce the tough federal provincial tax rate on capital gains in Canada from an average of about 31% to about 23%, lower than the typical U.S. combined federal state top rate of about 25%. Both measures would improve access to capital for small businesses with high growth potential. High technology industries would particularly benefit.

Consistent with this change to the capital gains inclusion rate, the deduction for employee stock options would increase from one-third to one-half. As a result, employees in Canada would be taxed more favourably on their stock option benefits than employees in the U.S. The bill defers the taxation for certain stock option benefits and allows an additional deduction for certain stock option shares donated to charity.

Another measure that I want to discuss relates to branches of foreign banks operating in Canada.

These new rules stem from the 1999 amendments to the Bank Act, which allow foreign banks to establish specialized, commercially focused branches here. Previously, foreign banks could operate in Canada only through Canadian incorporated subsidiaries.

The tax system for the new foreign bank branches would now be comparable to that for Canadian banks. These new rules would give foreign banks a time limit window to move their operations from a Canadian subsidiary into a Canadian branch without undue tax consequences.

As with the personal tax measures, the business tax changes are too numerous to discuss individually during today's debate. I would like to summarize a few of them.

The bill, for example, provides a tax deferred rollover for shares received on certain foreign spinoffs. It strengthens thin capitalization rules. It phases out over a three year period the special income tax regime for non-resident owned investment corporations. It treats provincial deductions for scientific research that exceed the amount of the SR & ED expenditures as government assistance. It ensures appropriate treatment of foreign exploration and development expenses in computing foreign tax credits. It introduces a temporary 15% investment tax credit for grassroots mineral exploration and it amends the corporate divisive reorganization rules.

Other technical amendments ensure that Canadian corporations that hold shares of non-resident corporations through partnerships are not subject to double taxation. The additional capital tax on life insurance corporations is extended until the end of 2000. Shares of one foreign corporation can be exchanged on a tax deferred rollover basis for shares of another foreign corporation. The tax treatment of resource expenditures and the rules governing gifts of ecologically sensitive land are clarified. In a chain of corporations, a corporation is controlled by its immediate parent, even where the parent is itself controlled by a third corporation. Replacement property rules do not apply to shares of the capital stock of corporations, and a member of a limited liability partnership under provincial law is not automatically a limited partner under the Income Tax Act.

Those are some of the more technical changes incorporated into the bill. There are three remaining measures that I wish to discuss briefly before closing. The first involves changes to the rules governing the taxation of trusts and their beneficiaries.

Bill C-22 addresses the tax treatment of property distributed from a Canadian trust to a non-resident beneficiary. It also introduces measures dealing with the tax treatment of bare, protective and similar trusts, as well as mutual fund trusts, health and welfare trusts and trusts governed by RRSPs and RRIFs.

For example, the existing rules whereby an individual can roll over property to a trust for the exclusive benefit of a spouse or common law partner would be extended to alter ego trusts and joint spousal or common law partner trusts.

Several new anti-avoidance measures designed to ensure that transfers to trusts cannot be used to inappropriately reduce tax are also included in the bill. For example, there would be limits on the use of rollovers where trusts were used to avoid tax when a beneficiary emigrates. Also, income allocations to beneficiaries could not be used by trusts to circumvent the rules ensuring that spousal or common law partner trusts, alter ego trusts and joint spousal or common law partner trusts would not allocate income to others before the beneficiary, spouse or common law partner dies.

In addition, rollovers to a trust would be denied if the transfer was part of a series of transactions designed to defer capital gains through the use of a trust as an intermediary between a vendor and purchaser of property.

A final anti-avoidance measure would prevent certain pre-1972 trusts from using graduated income tax rates if they received property from a trust not subject to these rates, and the beneficial ownership of the property had not changed.

The second measure I wish to highlight involves the new taxpayer migration rules, which are also part of the government's ongoing commitment to greater fairness in the tax system.

Since 1972 Canada has had special tax rules that apply when people give up Canadian residence. The basic entitlement of those rules is a deemed disposition that treats the immigrant as having disposed of property immediately before leaving.

For many years, questions have persisted as to the exact scope of this deemed disposition on departure from Canada and its interaction with Canada's international tax treaties. Under Bill C-22, Canada retains the right to tax emigrants on gains that accrue during their stay in Canada.

The bill would also clarify the effect of the new rules on various kinds of rights to future income and would allow returning former residents to reverse the tax effects of their departure, regardless of how long they were a non-resident.

In addition, former residents would be able to reduce the Canadian tax payable on their pre-departure and distribution gains by certain foreign taxes paid on the same gains. This is part of Canada's commitment to avoiding international double taxation, a commitment that is reflected in our network of tax treaties as well.

Since 1999, in anticipation of these rules coming into effect, Canada has been negotiating its tax treaties to reinforce protection against double taxation when immigrants' pre-departure gains are taxed.

A final measure, deals with amendments to the Income Tax Act that relate to the June 3rd, 1999 agreement between Canada and the United States concerning foreign periodicals.

Since the 1960s the Income Tax Act has precluded the deduction of advertising expenses unless a newspaper or a periodical is at least 75% Canadian owned and has at least 60% original Canadian content.

As a result of the Canada-U.S. agreement, this rule no longer applies to advertisements and periodicals. Instead, advertising expenses and periodicals with at least 80% original editorial content would be fully deductible and advertising expenses and other periodicals would be 50% deductible regardless of ownership.

In addition, after July 1996, the meaning of Canadian citizen will include Canadian pension funds and other entities that own Canadian newspapers to ensure that they qualify as citizens under the ownership requirements of the Income Tax Act. For periodicals, this amendment applies from July 1996 to May 2000, after which time nationality of ownership is irrelevant.

In conclusion, while the bill is lengthy, very detailed and technical in nature, its components are all very important and deserve to be passed without delay. Most are relieving or clarifying measures and a few are housekeeping measures.

As I indicated earlier, each measure is designed with the principle of tax fairness in mind and there are many taxpayers out there who will benefit from these changes. The measure with the highest profile of course implements the key components of our government's five year tax reduction plan. In summary, that plan reduces the tax burden at the middle income level, increases support for families with children and makes Canada's business income tax system more internationally competitive. As I stated earlier, the five year tax reduction plan will provide $100 billion in cumulative tax relief by 2004-05.

I urge all hon. members of the House to give the bill quick and speedy passage and, most importantly, to keep in mind all the Canadian children who will benefit from the increases to the Canada Child Tax Benefit on July 1.

[Robert Thibault, Liberal, for the Minister of Finance]

moved that Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act, be read the second time and referred to a committee.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to make the weekly business statement and to indicate to the House that I intend to do my utmost to have order paper questions answered as rapidly as possible.

This afternoon we will resume debate on Bill C-12 respecting compensation for judges. We will then continue with Bill C-18, the equalization bill, which we started this morning. That will be followed, if there is time, with Bill C-17 respecting the innovation foundation.

On Friday we will consider report stage of Bill C-4 respecting the sustainable development foundation, and any time left will be used on second reading of Bill C-7, the youth justice bill.

In an effort to complete consideration of the youth justice bill, we will continue discussing that bill on Monday next.

Next Tuesday we will commence report stage of Bill C-8 respecting the financial institutions legislation. Should that be completed, we would then continue with Bill C-22, the income tax amendment. As previously announced and as adopted by the House, in the evening there will be a special take note debate on the summit of the Americas.

Next Wednesday, March 28, we will debate Bill C-2, the employment insurance amendments, at report stage and hopefully have third reading on next Thursday, March 29.

That is the agenda of the House for next week.

Income Tax Amendments Act, 2000

[Jim Peterson, Liberal, for the Minister of Finance]

moved for leave to introduce Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act.

(Motions deemed adopted, bill read the first time and printed)