Bill C-253 (Historical)

An Act to amend the Income Tax Act (deductibility of RESP contributions)

This enactment amends the Income Tax Act to provide that contributions to a Registered Education Savings Plan are deductible from a taxpayer’s taxable income.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I take it, then, that all of you here would support C-253 to make RESPs tax deductible for all families in Canada?

[Jim Flaherty, Conservative, Minister of Finance]

Thank you, Chair.

I appreciate this opportunity to meet with you and the members of the committee to discuss Bill C-50, which as you know, is an act to implement certain provisions of the budget tabled in Parliament on February 26, 2008, which is the third budget of our government.

I am pleased to meet with you and the members of your committee today to discuss Bill C-50, an Act to implement certain provisions of the budget tabled in Parliament on February 26, 2008.

This year's budget builds on the decisive and timely action taken in the October 2007 economic statement to support the economy. The economic statement provided an additional $60 billion in broad-based tax relief for Canadians. Since coming to office, our government is providing nearly $200 billion in tax relief in this and the next five years.

Now, reducing our overall tax burden at the federal level is providing a terrific shot of adrenalin for the national economy. Actions taken by the government since 2006 are providing $21 billion in incremental tax relief to Canadians and Canadian businesses this year. This is significant and substantial economic stimulus, equivalent to 1.4% of Canada's GDP. We have been ahead of the curve, managing the economy prudently and responsibly.

I note for the committee that the IMF World Economic Outlook, released last week, praised the Canadian government for its pre-emptive and ongoing measures, and I quote from the report: “A package of tax cuts has provided a timely fiscal stimulus...” and “... the government's structural policy agenda should help increase competitiveness and productivity growth to underpin longer-term prospects”. So clearly our tax reductions have helped place Canada in a position of strength and allowed us to respond more effectively during this period of economic uncertainty.

This includes historic business tax reductions announced in the October economic statement that will give Canada the lowest statutory tax rate in the G7 by 2012. It will also give Canada the lowest overall tax rate on new business investment in the G7, a goal that we will reach by 2010.

Budget 2008 also builds on the government's record of strong fiscal management. By 2012-13, total debt reduction by the government since coming into office will be more than $50 billion—that's five zero.

Commitment to sound financial management and debt reduction is never easy, but we are committed to eliminating generational inequity. We will not leave our children and grandchildren with the burden of paying for the excessive spending of the past. This bill reflects that commitment.

Budget 2008 also builds on the government's record of strong fiscal management. By 2012-2013, total debt reduction by the government since coming into office will be more than $50 billion. Commitment to sound financial management and debt reduction is never easy, but we are committed to eliminating generational inequity. We will not leave our children and grandchildren with the burden of paying for the excessive spending of the past. This bill reflects that commitment.

Mr. Chairman, with the limited time available to me today, I will only focus on a few of the key provisions in this bill.

Before I do that, I would like to mention Bill C-253, which is the private member's bill that proposed changes to the registered education savings plan, a proposal that could cost the government more than $900 million annually. I note that this cost estimate is a conservative one, as we have recently seen other estimates, like the one by Don Drummond of TD Bank, that the cost could be in the vicinity of $2 billion annually. Bill C-253 is a fiscally irresponsible measure that risks putting the federal government into deficit. In a time of global economic uncertainty, this is a risk our government is not willing to take. I would also note that a vast array of stakeholders, including prominent student groups such as the Canadian Federation of Students, have come out against this legislation. That is why Bill C-50 also includes language to protect the government's fiscal plan from the effects of Bill C-253.

Let me stress, however, that this government is supporting post-secondary education in many ways that are fiscally responsible and effective. It is in this spirit that our government has taken action in the past two budgets to improve RESPs by expanding the program and making it more flexible and more available to students. Budget 2008 also builds on past action to help students pay for their education by committing $123 million over four years, starting in 2009-10, to streamline, modernize, and improve access to the Canada student loans program. Secondly, it supports students with a $350 million investment in 2009-10, rising to $430 million by 2012-13 in the new Canada student grant program. This new program will be easy to use, transparent, and broad-based, providing certainty and predictability for Canadian families and their children.

Let me now turn, Chair, to the main measures in budget 2008 that are incorporated in Bill C-50. As I noted, budget 2008 builds on the actions taken in the October economic statement in a number of significant ways. It helps Canadians save with a new tax-free savings account. It provides further assistance for Canada's manufacturing and processing sector. It supports small and medium-sized businesses by improving the scientific research and experimental development tax incentive program. These measures, which I will now address in some detail, are just a few of the actions we are taking to help improve Canada's productivity, employment, and prosperity.

On the tax-free savings account, Canadians now have more money in their pockets as a result of our tax reductions. This is money where individuals, families, workers, and seniors can spend, invest, or save. To help Canadians realize even greater benefits from saving, our government is creating a new tax-free savings account, or TFSA. Christened a tax policy gem by the C.D. Howe Institute, the TFSA represents the single most important personal savings vehicle since the introduction of the RRSP in 1957. It's the first account of its kind in Canadian history. It is a flexible, registered, general purpose account that will allow Canadians to watch their savings grow tax free.

This is how it works. First, Canadians can contribute up to $5,000 every year to a registered tax-free savings account, plus carry forward any unused room to future years. Secondly, the investment income, including capital gains earned in the plan, will be exempt from any tax, even when withdrawn. Thirdly, Canadians can withdraw from the account at any time without restriction. Better yet, there are no restrictions on what they can save for. And finally, the full amount of withdrawals may be recontributed to a tax-free savings account in the future, to ensure no loss in a person's total savings room.

To make it easier for lower- and modest-income Canadians to save, there will be no clawbacks by the federal government. Neither the income or capital gains earned in a tax-free savings account nor the withdrawals from it will affect eligibility for federal income-tested benefits such as the guaranteed income supplement.

I'll say a few words about the manufacturing sector. The Canadian economy remains strong, yet we are mindful of the challenges before us: global uncertainty, volatile markets, and the difficulties confronting some of our traditional industries such as forestry and manufacturing. In budget 2007 we brought in a $1.3 billion temporary accelerated capital cost allowance. This initiative allows manufacturing businesses to fully write off investments in machinery and equipment over a two-year period.

In budget 2008, we extended this initiative for three years, on a declining basis. This will provide the manufacturing and processing sector with an additional $1 billion in tax relief. Manufacturers asked for this extension, and we delivered.

Through the community development trust, the government is also investing $1 billion to support communities and workers affected by international economic volatility. We are now working with each province and territory to identify priority areas for action and to seek their public commitment to support communities, consistent with the objectives of the trust.

Through the community development trust, the government is also investing $1 billion to support communities and workers affected by international economic volatility.

We are now working with each province and territory to identify priority areas for action and to seek their public commitment to support communities, consistent with the objectives of the trust.

I note the Province of Ontario has been particularly appreciative of the trust and their share of this funding of over $350 million. Indeed, the Ontario government has recently outlined its plans to spend all this money in their provincial budget, including programs to provide up-to-date training for Ontario's unemployed workers who require skills upgrading.

Our government made a commitment in budget 2007 to help promote research and development. In budget 2007 and in its science and technology strategy mobilizing science and technology to Canada's advantage, the government committed to identifying opportunities for improving the scientific research and experimental development tax incentive program, including its administration.

Budget 2008 proposes to enhance the availability and accessibility of the financial support for R and D to small and medium-sized Canadian-controlled private corporations. Specifically, Bill C-50 proposes to, first of all, increase the expenditure limit for the enhanced scientific research and experimental development investment tax credit; and secondly, extend the enhanced scientific research and experimental development investment tax credit to medium-sized companies by phasing out access to the enhanced benefits over increased taxable capital and taxable income ranges.

This proposed action will help Canada stay at the forefront of R and D, which in turn will help Canada continue to be competitive.

Mr. Chairman, these and other initiatives in Bill C-50 clearly illustrate our government's commitment to deliver results. Budget 2008 reflects the stability and responsible leadership that Canada needs for these uncertain times. It builds on efforts we have taken since 2006 to reward Canadians for their hard work, improve standards of living, and fuel economic growth.

Budget 2008 reflects the stability and responsible leadership that Canada needs for these uncertain times. It builds on efforts we have taken since 2006 to reward Canadians for their hard work, improve standards of living, and fuel economic growth.

I now welcome any questions you may have about this bill. I am joined, of course, by officials from Finance Canada, who I'm sure will be of assistance to fully respond to your questions.

Budget Implementation Act, 2008

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I also want to thank my committee chair for his encouragement, especially since we are from different parties.

I am very pleased to rise today to speak about implementing the budget. By implementing the budget, we will skirt several major issues for all Quebeckers. The Bloc Québécois has been expressing specific demands since January. Those demands have been very clear, and we will see that not one of them has been met in this budget.

The budget implementation bill aims to put in place various measures that were announced when the federal budget was presented on February 26. This bill has 10 different sections that amend various Canadian laws. Part 1 amends the Income Tax Act in order to create tax-free savings accounts, increase the number of years an individual can contribute to a registered education savings plan, increase tax deductions for northern residents, increase the tax credit for medical expenses, modify the eligibility requirements for the registered disability savings plan (RDSP), extend the mineral exploration tax credit by one year, modify the rules surrounding tax credits for charitable donations, readjust the tax threshold for corporate dividends and put in place various legislative provisions to prevent implementation of the Liberal Bill C-253, which would allow RDSP contributions to be tax-free.

Parts 2 and 3 of the bill amend the excise tax legislation to adjust the tax on various tobacco products and make certain medical services GST-exempt. Part 4 dissolves the Canada Millennium Scholarship Foundation. Part 5 amends the Canada Student Financial Assistance Act and the Canada Student Loans Act to modify the system and increase the number of students who are eligible for assistance. Part 6 amends the Immigration and Refugee Protection Act to authorize the minister to give priority to certain applications and refuse others without having to provide justification to the applicants.

Part 7 creates the Canada Employment Insurance Financing Board. The board's mandate is to set the premium rate and manage a financial reserve. In other words, employment insurance will be managed independently and any surpluses will no longer be paid into the government's consolidated revenue account. Parts 8 and 9 authorize payments to be made out of the 2007-08 surplus to various organizations and programs. This part of the budget implementation bill includes the payments for carbon capture in Saskatchewan and the $400 million fund to recruit new police officers. Part 10 amends various acts.

I want to reiterate the Bloc's position. This may seem like a good budget, but it has next to nothing for Quebec and Quebeckers. Clearly, the Conservative members from Quebec have done nothing to defend Quebec's interests. Obviously, a member of a party that defends Alberta, cannot defend Quebec's interests at the same time. Members will see this as I go along, and I will come back to this point at the end.

Budget 2008 may seem like a good budget, but it does not comply with the demands the Bloc Québécois made public on January 23, 2008. First, it does not provide any direct, immediate assistance for the manufacturing and forestry industries, which are in crisis. Tens of thousands of jobs have now been lost in Quebec, and this government has done nothing and does not intend to do anything in this budget.

The budget does nothing to help the workers and communities hit by the crisis. It contains no measures to reimburse seniors who have been shortchanged by the guaranteed income supplement program. It continues to take a polluter-paid approach to the Alberta oil companies, rather than a polluter-pay approach, and it refuses to make a 180-degree turn on the environment. The budget makes no major investment in culture and does not undo the ideological cuts made by the Conservative government. It reiterates the government's intention of creating a single securities commission.

For all these reasons, the Bloc Québécois is against this bill and will vote against it.

Let us talk about the problem with immigration. The minister is giving herself discretionary power. Bill C-50 offers far too much discretionary power to the Minister of Citizenship and Immigration in determining who can and cannot enter Canada. The minister is arguing that we have to be able to clear the backlog as quickly as possible in order to give priority to those who could alleviate the labour shortage in Canada and Quebec. She will be able to determine which persons will have priority to enter Canada based on the individual's training or occupation. The Conservatives are saying that training and occupation can negatively affect a person's chance at entering Canada. If persons applying to enter Canada have the misfortune of not having the training or occupations in demand in Canada, they may have to wait much longer than other immigrants to obtain a visa to enter the country.

Although the Bloc Québécois supports the idea of reducing the backlog, it is opposed to replacing the existing transparent and objective immigration system. The government might say that we have to be fair. The goal of any good legislation is to prevent things from getting out of control. Bill C-50 gives far too much power to the Minister of Citizenship and Immigration. This can open the door to abuse because there is nothing to counterbalance the minister's discretionary powers.

The Bloc Québécois prefers an immigration system based on a system that is fair, transparent and equitable for everyone. By comparison, in order to accelerate the contract awarding process, would it be acceptable for a minister to have discretionary power to offer contracts and circumvent the call for tenders system for the simple reason that waiting times need to be shortened? The answer is self-evident.

The Bloc Québécois is also deeply concerned about the fact that the federal government would no longer be required to review applications for permanent residency, on humanitarian grounds, from foreign nationals applying from outside Canada. In the absence of a real refugee appeal division, the option of entering Canada on humanitarian grounds is often the only alternative available to refugees. This is proof that the Conservatives are insensitive to the suffering endured by some people in the world. We have a humanitarian obligation to at least consider their requests.

Rather than completely overhauling the system and getting rid of a transparent system, there are other ways for the government to speed up case processing. It could increase staffing in foreign countries, and it could speed up the appointment of commissioners to the Immigration and Refugee Board of Canada. Since coming to power, the Conservatives have slowed the commissioner appointment process down considerably. Delays in case processing in Canada are due primarily to staff shortages, to a shortage of commissioners. The Conservatives are partly to blame for this problem.

With Bill C-50, the Conservatives are trying to fix a problem that they themselves created. Since the Conservatives have formed the government, the selection committee has recommended some 60 qualified individuals to fill the vacant commissioner positions. When the Conservatives came to power, there were five vacancies at the IRB. Currently, there are just under 50 vacant commissioner positions out of 156.

There are two reasons for that gap. First, the Conservative government has been making fewer new appointments. Since coming to power in February 2006, the Conservatives have appointed just 27 commissioners. Moreover, they have renewed very few of the commissioners whose terms have expired. Since February 2006, only seven commissioners' appointments have been renewed.

I should explain that a commissioner's term lasts three years. What usually happens is that one-third of the commissioners are appointed every year to compensate for terms that expire that year. The problem is not a shortage of candidates. When the former chairperson of the commission, Jean-Guy Fleury, appeared before the Standing Committee on Citizenship and Immigration, he said that the minister had a list of 80 candidates when Mr. Fleury left his job on March 16, 2007. The government is taking its own sweet time appointing commissioners.

Because there are so many vacancies at the IRB, case processing is slowing down again. The waiting list is starting to get longer. At the end of 2006, there were 23,495 applications pending, an increase of 3,000 applications over the previous year at that time. In the past year, the average application processing time has increased from 11.7 months to 14.3 months. These delays have resulted in three major problems. The Government of Quebec has to pay for social services until refugee claimants get an answer.

Thus, the longer it takes to complete the process, the more it costs the Quebec government.

In the case of family reunification, it is the families that must pay while awaiting the decision. The family must meet the needs of its family members who are applying to stay in Canada. Thus, the longer it takes to complete the process, the more it costs the families.

Some refugee claimants are denied status based on a criminal record or shady past. Thus, the longer it takes to complete the process, the greater the risk of security problems.

Experts are accusing Stephen Harper's government of delaying the appointments because the candidates proposed so far do not share the Conservative Party ideology.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I thank the hon. member for York West for her extremely important and enlightening comments in her capacity as former minister of immigration and a very diligent member of Parliament on this file. She continues to remind us that it is extremely important for us to declare to Canadians why these changes are being made on the fly through a legislative piece that was brought back as a ways and means motion, a motion that I would suggest really is about covering the Conservative agenda with respect to important legislation.

Mr. Speaker, it is critical that you be in the chair today because I am on my feet not only because of this bill but because of what the bill is attempting to do.

The will of the House of Commons was expressed very clearly on March 5 of this year. This was after a ruling that you, Mr. Speaker, made some two years ago, but which was obviously lost on Conservative members, including the Minister of Finance. He assumed that once a bill was votable that it might have an impact with respect to lessening of tax that he should not consider this, not just once but in two separate budgets. He completely and utterly ignored and threw away prudent fiscal understanding of the implications of various bills which should have been routine and instead worked with several other people to try to suggest that my bill, Bill C-253, which would give a chance for families to save in a very real way, to save for post-secondary education, by making RESPs income tax deductible and completely forgot the principle of the importance of a decision made by the House.

The bill is nowhere near dead. As we know, the bill is before the other House and is now at second reading there. I hope it is given the equal consideration and time it takes to have an important piece of legislation passed.

It seems to me that when we are talking about the future of this country we may have differences of opinions as to how this country ought to be led and how it ought to be managed but the one thing we cannot disagree with are some of the imperatives.

Students face an incredible amount of debt. Over 50% of students right now face incredible crippling debts as they leave post-secondary education, long before they are able to pay any type of debt down. It is difficult enough for them to try to find a job.

In 10 years from now we know that the average cost of education, with four years in residence, will be $100,000. Given the average income of families, I do not see how it will be possible under the current regime to have a situation where so many people will not have access to the skills that come with higher education and the training that the global economy demands in order for Canada to remain competitive. It is a reality that we all as members of Parliament agree with.

I have spoken to several members of the Conservative Party who over the years supported this bill. Dare I say that they probably voted against the bill at the final reading, although the will of the House was expressed in much greater numbers, because they were jealous? They knew this was a policy that was good for the future of this country.

I have letter after letter and members of the House on all sides received letters from their constituents asking them time and time again to not kill the bill.

I am pleased to report that those rumours of the death of my bill, which were pronounced in some of the media and greatly exaggerated in some editorials, were only rumours. The same editorials also suggested, and I am hoping some of those editorialists are listening to this, that the bill was passed by stealth, that it required a royal recommendation. I will not benefit the author of several stories in one particular paper, but it was someone who actually thought that what had been done here by parliamentarians was tantamount to what happened in 1840, which is why Lord Durham had to be brought in.

There was no revolution here. There was instead a recognition and understanding that in a minority Parliament, in a setting where Canadians expect more from their parliamentarians, members of Parliament, backbench members of Parliament of all parties worked deliberatively, not for a day, not for a week, not for a month and not through gamesmanship, but over two years to ensure that a piece of legislation on RESP deductibility would in fact be put forward.

I am speaking today to the fact that the bill, far from being killed, is the subject of Bill C-50, which I will refer to as the killer-hunter bill proposed by the Minister of Finance.

The Minister of Finance's own riding of Whitby—Oshawa is one that I represented and I know that the Minister of Finance will know that this is so popular an issue if this is in fact going to be an election issue, which it could very well be. I know full well that it is something that I am prepared to take to the door of his riding, a riding I once represented. I can tell the House that anyone who has families, anyone who has children, anyone who wants to live the dream of this country will know that this legislation is not only timely it is supportable.

A decision made by this House of Commons, by these members of Parliament in the majority, is simply thrown away because someone has suggested that somehow it will put the country into fiscal danger.

Who put us there?

The Minister of Finance has an obligation, quite apart from his pathetic critique of the bill on RESP deductibility, which many of his members support, to explain to Canadians how it is that he took a $13.2 billion surplus and blew it away overnight.

The member from British Columbia is looking this way.

What happens if we have another forest fire in that region of the country or floods in Quebec? What if we have a national disaster of some proportion that will cost us several hundred million dollars?

When we see that amount of money that could potentially put the country at risk, we have put ourselves in a very precarious financial situation and we have not planned for the future.

We know that south of the border the federal reserve chair, Mr. Bernanke, is suggesting that we are teetering on a recession. There is no doubt that there are implications for my province and for provinces across the country. This government did not plan. It had no plan. It is extinguishing the hopes and aspirations of young people to get access to a better job, to pay the kind of taxes, to grow the kind of country and to recognize that with an aging population we need to get this right and we need to get it right now.

This bill is not the be all end all. The bill that I proposed on the RESP, which this bill, Bill C-50, proposes to kill at some point down the road, is in fact decidedly a bill that is designed to use the issue of confidence before anything that the government disagrees with.

Yes, the hon. members will probably ask us whether we will be supporting this or not. That is still a few months off, perhaps even a few weeks off, but the one thing that is clear is the idea with respect to the RESP bill is something that we cannot ignore.

I am glad to hear the NDP members cat howling in the corner but they supported this bill. They have stood, and I applaud them for doing that, to support this bill because of its importance. The Bloc also supported this bill.

They know full well that it is very important for the future of our country that students have the opportunity to get an education regardless of cost. We also have an opportunity to help the provinces, which will give students more money to invest in their futures and to go on to universities, colleges or apprenticeships.

We must not fail the next generation. Universities that want to increase their capacity for investing in infrastructure, human and physical, will not need to go cap in hand to the provinces and say that they want to raise tuition fees. There is a greater certainty now that this vehicle addresses what ordinary average families have been looking for.

In one fell swoop, with this particular legislation, the Minister of Finance and the House leader crafted a bill to try to kill this. We can talk about the gamesmanship today, but what we have is an attempt at vandalizing and compromising the future of this nation.

We have a higher obligation to serve the interests of our constituents and to help somehow, in some way, to build a stronger nation, a stronger nation where people can get access to the kind of opportunities that this generation, many of us, have been blessed with.

Previous members who have come here have always tried to build a better House and to find ways in which we can come together to find more creative means to ensuring Canada can meet the challenges of tomorrow.

I am saying this because if we were to sit down and talk to grandparents, parents and people in our communities who are struggling day in and day out to make ends meet, we would hear that there is a real and effective understanding of what they are trying to do, which is to achieve a better future for their children.

I would implore the Conservative Party, which has quietly said that it loves this bill, to actually take the time to consider what it has done. It has actually tried to reverse a position taken only a month ago by this Parliament which is widely popular with Canadians.

There will be critics either way but I would ask the Conservative Party to reconsider what it has done because I think it is in everyone's interest, partisanship aside, to ensure that good legislation, whether it is passed by backbenchers or passed by the government, does in fact have the ability to proceed.

I call on all members to work together cooperatively. This is for our future, for our children and for our Canada.

Ways and Means Motion No. 10--Speaker's Ruling

[The Speaker, Liberal, Peter Milliken]

I am now prepared to rule on the point of order raised by the hon. member for Pickering—Scarborough East on March 11 concerning the admissibility of the ways and means motion to implement certain provisions of the budget tabled in Parliament on February 26 and to enact provisions to preserve the fiscal plan set out in that budget for which the hon. Minister of Finance gave notice on that day.

I would like to thank the hon. member for Pickering—Scarborough East for initially bringing this matter to the attention of the House, as well as for his subsequent intervention, and I would also like to thank the hon. member for Markham—Unionville, the hon. government House leader, and the hon. House leader for the Bloc Québécois for their submissions.

The member for Pickering—Scarborough East, in raising the matter, claimed that Ways and Means Motion No. 10, standing on the order paper in the name of the Minister of Finance, seeks to have the House decide upon a matter which it had already voted on.

That vote took place on March 5, 2008, when Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions) was adopted at third reading. To this issue, the member for Markham—Unionville has added the contention that Ways and Means Motion No. 10, by including provisions related to Bill C-253, seeks to implement a measure that does not flow from the most recent budget, thus, he alleges, enlarging the usual parameters of budget implementation ways and means motions.

He further contended that this was a backdoor attempt to circumvent the rights of private members as provided for in the rules governing this category of business.

For the sake of clarity, I should state that sections 45 to 48 of Ways and Means Motion No. 10 are the subject of this point of order. They are conditional amendments that seek to amend or repeal the amendments to the Income Tax Act contained in Bill C-253 should the latter receive royal assent. The stated objective of these ways and means measures is, to quote the Minister of Finance at page 3971 of the Debates, “--to protect Canada's fiscal framework”.

The government House leader asserted that the broad scope of Ways and Means Motion No. 10, and the wide range of taxation and fiscal measures it seeks to implement are clear evidence that the motion is fundamentally a different matter than was Bill C-253, and therefore, that it should be allowed to proceed.

In support of his arguments a number of procedural authorities were cited, some of which I will return to later in this ruling.

Let me first deal with the argument that the inclusion of provisions regarding Bill C-253 in Ways and Means Motion No. 10 does not respect our conventions regarding the content of such motions.

The Chair wishes to remind the House that the budget speech and bills based on ways and means motions tabled at a later date are not necessarily linked. House of Commons Procedure and Practice states at page 748:

While a Budget is normally followed by the introduction of Ways and Means bills, such bills do not have to be preceded by a Budget presentation. Generally, taxation legislation can be introduced at any time during a session; the only prerequisite being prior concurrence in a Ways and Means motion.

At page 759, Marleau and Montpetit goes on to state:

The adoption of a Ways and Means motion stands as an order of the House either to bring in a bill or bills based on the provisions of that motion or to propose an amendment or amendments to a bill then before the House.

That text footnotes examples from 1971, 1973, and 1997. Furthermore, in the case before us, it must be noted that the title of Ways and Means Motion No. 10 states clearly that it not only implements certain provisions of the February 26, 2008 budget, but that it also aims to:

--enact provisions to preserve the fiscal plan set out in that budget.

On this point, namely the objection that the motion includes provisions that were not contained in the budget, the Chair must conclude that Ways and Means Motion No. 10 is not procedurally flawed.

Let us now turn to the argument that the decision of the House to adopt Bill C-253 at third reading must stand since the House cannot be asked to pronounce itself again in the same session on the same subject.

The Chair wishes to remind hon. members that while a part of Ways and Means Motion No. 10 touches on Bill C-253, the question that the House will actually be asked to vote on today, assuming it is called today, is not the same as the question it agreed to on March 5, 2008, when it adopted the bill at third reading.

In this regard the Chair has found a number of examples where a bill repeals sections of an act already amended by another bill adopted by the House in the same session.

For example, in the first session of the 38th Parliament, Bill C-18, An Act to amend the Telefilm Canada Act and another Act, and Bill C-43, An Act to implement certain provisions of the budget tabled in Parliament on February 23, 2005, both proposed to amend subsection 85(1) of the Financial Administration Act.

In addition, there are also examples of bills proceeding concurrently even though some of their provisions are dependent upon one another.

As mentioned by the government House leader, Mr. Speaker Lamoureux ruled on February 24, 1971, on such a situation at page 3712 of the Debates. He stated:

There is, therefore, in my view, nothing procedurally wrong in having before the House at the same time concurrent or related bills which might be in contradiction with one another either because of the terms of the proposed legislation itself or in relation to proposed amendments.

This is further supported by the 23rd edition of Erskine May at page 580, which affirms that:

There is no rule against the amendment or the repeal of an act of the same session.

Most compelling are the rulings of Mr. Speaker Fraser from June 8, 1988, and I refer to the Debates at pages 16252 to 16258, and on November 28, 1991, pages 5513 to 5514, both of which were quoted by the government House leader. These rulings clearly support the view that the progress of any bill flowing from Ways and Means Motion No. 10 rests with the House.

As Mr. Speaker Fraser put it on November 28, 1991:

The legislative process affords ample opportunity for amending proposed legislation during the detailed clause by clause study in committee and again at the report stage in the House.

Insofar as this process affects private members' business as a category of business or indeed the rights of individual members to propose initiatives, I must point out that it is not the Speaker but the House which ultimately decides such matters.

For the reasons stated above, the Chair finds that Ways and Means Motion No. 10, as tabled by the Minister of Finance, may proceed in its current form.

Once again, I would like to thank the hon. member for Pickering—Scarborough East for having raised this matter.

Ways and Means Motion No. 10

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, tempting as it is to address the other issues raised, I have only addressed the new ones. Tempting as it is to seek to appeal your earlier ruling on the admissibility of Bill C-253, I will resist the temptation to do that at this point, because that is of course not what the intention is of the ways and means motion.

The ways and means motion is quite clear. Its intention is very different. It is not indirect. It is very direct, contrary to what my friend said. It is a direct effort to repeal Bill C-253, something that is entirely proper for us to do in this fashion.

We respect the ruling that you have made, notwithstanding our submissions on the admissibility of Bill C-253 originally. This does not seek to question that. This simply seeks to launch an initiative properly through the ways and means motion and the budget implementation bill to repeal Bill C-253 because of its detrimental impact on the fiscal framework. The fact is that it is entirely contrary to the fiscal framework that this House adopted in the past, although very few members of that party participated in the vote on it.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I am pleased to rise once again on this very important point of order.

Despite the citations by the hon. House leader, I think it is fairly clear, Sir, that your decision to this House of Commons on November 1, 2006, declaring that Bill C-253 standing in my name was indeed receivable and was in fact in order, is something that this House relied on.

Mr. Speaker, you will know that I have followed the procedures of this House. Not only did this House dutifully vote on the bill at the second reading, but it also passed in committee. It also passed at report stage, concurrence and third reading. I am very concerned about the ability for the government to now challenge, by an indirect means, a decision made by this House.

There are two issues. One is an issue of concern to me as to what I would refer to, and you would be familiar with, as detrimental reliance. We rely on your decision and the Chair to make a decision that is in fact applicable in determining whether a private member's bill can indeed proceed.

I would submit that this bill has done just that. Unless the hon. House leader is actually suggesting a challenge to your ruling, I would suggest that you have no choice but to rule the position of the ways and means motion by the government House leader and by the Minister of Finance, who has clearly linked this to Bill C-253, as indeed out of order.

Mr. Speaker, if we do not have that reliance on your decisions carrying through, it says much about future decisions. The hon. House leader is in fact trying to create a precedent through the back door, knowing full well that once a bill in the same session has been treated in this House, it cannot be undone and it cannot be reconsidered.

Mr. Speaker, I would submit to you again that your ruling of November 1, 2006, in which you declared Bill C-253 a bill that was indeed in order, must stand. Indeed, debates on the bill have gone on in this House in which the hon. minister and members have participated, and several members from that side of the House and that party supported the bill in principle at second reading. It seems to me that if you have made a ruling you must stand by that ruling and therefore rule this rather nefarious attempt by the minister and the House leader as indeed out of order.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I rise in support of the official opposition finance critic. It seems to me that including in the ways and means notice tabled this week provisions directly or indirectly affecting Bill C-253 is politically abusive and unparliamentary.

It must be kept in mind that the intent of the ways and means notice is to implement the budget implementation bill tabled on February 26. The ways and means notice was tabled on March 11, but Bill C-253 was passed by this House between those two dates. Had the bill been passed after March 11, the Minister of Finance and the government would not have been in a position to include provisions that short-circuit the majority decision of this House. In my opinion, it is totally contrary to the rules to include in the ways and means notice any provisions relating to Bill C-253.

If the government is dissatisfied, it has other parliamentary methods at its disposal for reopening the debate. At this point in time, however, it would be totally abusive and unparliamentary to include in the ways and means notice provisions relating to Bill C-253. Moreover, the government has made no secret of the fact that the ways and means notice includes provisions to override Bill C-253. We do not want to hear that the ways and means notice contains some elements that are substantially different from Bill C-253, because the government has admitted publicly that it would use the ways and means notice to override the majority decision by this House.

As well, the figures presented by the leader of the government in the House of Commons are pretty well ridiculous. If they were on the up and up, I fail to understand why the Finance Department and the Minister of Finance did not raise them at the Standing Committee on Finance during examination of Bill C-253. I was there, and the department people were asked to give a figure for the cost of the measure proposed by the Liberal member who tabled Bill C-253, but no reply was ever forthcoming. That was last spring.

How can it be that, 365 days or so later, they have not been able to let all parliamentarians know that this measure would cost $900 million? I hold no faith in that figure. It cropped up once the House had passed the bill. It is also very clear that the bill has other processes to go through, in the Senate in particular, and will probably not affect the Minister of Finance's budgetary framework for the current year.

For all these reasons, it seems to me that we are faced here with a tactic that is unparliamentary and politically abusive. As my Liberal colleague has done, I would request that you find out of order all those sections which, directly or indirectly, with Bill C-253.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, I know they like to come and talk but not bother to vote. At least they could let other people talk sometimes. I will make the best effort to continue, notwithstanding the interruptions.

In terms of the question, the Minister of Finance has been clear that that intention reflected in the ways and means motion will also be carried forward in the budget implementation bill. The ways and means motion corresponds exactly to what will be in the budget implementation bill. It is not a question of dealing with the statutory measure through the ways and means motion. It is a question of dealing with it through the budget implementation bill and creating, through the ways and means motion, the authority to do that and proceed with that.

On the other questions that were raised yesterday, Mr. Speaker, you heard submissions from the member for Pickering—Scarborough East in which he argued that the government's ways and means motion tabled yesterday was out of order based on the rule of anticipation. He argued that the previous consideration of Bill C-253 made it impossible to now consider the ways and means motion.

Marleau and Montpetit observes at page 476:

The moving of a motion was formerly subject to the ancient “rule of anticipation” which is no longer strictly observed.

In fact, if we read on, they go on to observe that it is even stronger than that. The rule of anticipation is not just “no longer strictly observed” in the Canadian Parliament, it never really was. Also at page 476, they write:

While the rule of anticipation is part of the Standing Orders in the British House of Commons, it has never been so in the Canadian House of Commons.

I would repeat and underline, “it has never been so in the Canadian House of Commons”.

They go on to conclude:

Furthermore, references to attempts made to apply this British rule to Canadian practice are not very conclusive.

Simply put, the argument posed by the member for Pickering—Scarborough East might succeed were he in the British House of Commons but it cannot succeed under Canadian parliamentary practice. There is no barrier to considering a different item touching the same subject matter, and most certainly the budget bill and this Bill C-253 cannot be considered to be two bills similar in substance.

Beauchesne's Parliamentary Rules and Forms of the House of Commons of Canada clearly sorts out the Canadian rule at paragraph 655, found on page 198. It states as follows:

A bill is in order when substantially different from another bill on the same matter previously disposed of during the session.

That rule applies clearly to the situation at hand. The budget implementation bill is substantially different from another bill previously disposed of during the session, that being Bill C-253. In fact, the difference is so great that the government opposed Bill C-253. It is introducing and obviously supports the budget implementation bill.

Clearly, it is substantially different, not just in its breadth of subject matter but also in the substance of its effect.

The ways and means motion and budget bill are significantly broader than Bill C-253, applying to a wide range of taxation and fiscal measures. They are also substantially different in the impact they will have on the finances of the public treasury and the effect they will have on the narrow question of how RESPs operate.

In addition, and putting it another way, the ways and means motion in part is reversing a decision the House made with respect to Bill C-253. The precedence for proceeding this way is as follows. At page 496 of Marleau and Montpetit, it states:

The House may reopen discussion on an earlier decision...only if the intention is to revoke it;

Standing Order 18 basically says the same thing.

Beauchesne's Citation 592(1) states:

A resolution may be rescinded and an order of the House discharged, notwithstanding the rule that a question, being once made and carried in the affirmative or negative, cannot be questioned again....

Technically indeed, the rescinding of a vote is the matter of a new question; the form being to read the resolution of the House and to move that it be rescinded; and thus the same question which had been resolved in the affirmative is not again offered, although its effect is annulled.

There have been examples of orders being rescinded, revoked and discharged that could be found in Journals of May 7, 1898, page 269; August 1, 1942, page 708; November 22, 1944, page 923; November 24, 1944, page 927; and December 23, 1988, the House adopted an order revoking an order with respect to the sittings of the House which can be found at page 80 of the Journals of that day.

Therefore, repealing, rescinding and revoking a previous decision of the House is considered a different question.

Rule 655 of Beauchesne's can be seen to be definitive in determining that a ways and means motion and a budget bill based upon it are properly in order before the House. The roots of the rule in Beauchesne's, let us call it the Canadian rule, go back to just after Confederation.

A ruling of the Speaker on June 4, 1872, is exactly on point. The question the House was considering was an effort to legislate that one could not sit both in the House of Commons and in a provincial legislature at the same time, but two different efforts to do the same thing in a slightly different way were allowed to be considered in the same Parliament. This was found acceptable by the Speaker, who overruled an objection raised by the MP for Bothwell, who had argued, “that the principle involved in the bill is precisely the same one as the one voted on before”. More particular, he argued, “it proposes to deal with the same subject, and disqualify as candidates for election to the House of Commons the same class of persons”.

The Speaker found that was a “technical argument and that substantially the questions were different”.

As an aside, it is fascinating to read those Journals to see Sir John A. Macdonald's name listed among those voting in the majority at that time on that question in favour of the measure opposed by the Liberals of the day. It is also fascinating to see on the same day the vote on amendments from the Liberals seeking to ban any shareholder in the Canadian Pacific Railway from standing for Parliament, a discriminatory and unfair measure that the House wisely rejected that day.

However, returning to the main point, that ruling in 1872 is the anchor for the Canadian rule, different from the British, that a substantially different bill can deal with the same subject matter previously disposed of during the same session, which is exactly the case here.

The Canadian rule has been reaffirmed in many Speakers' rulings in the years that have followed. On February 24, 1971, Speaker Lamoureux restated the rule quite conclusively. He stated:

There is, therefore, in my view nothing procedurally wrong in having before the House at the same time concurrent or related bills which might be in contradiction with one another either because of the terms of the proposed legislation itself or in relation to the proposed amendments.

Related bills yet in contradiction with one another and, thus, substantially different, therefore, are entirely in order, just as is the case here.

In another decision on June 8, 1988, the Speaker reviewed all the relevant precedents and concluded as follows:

...I must declare that the practice of one bill amending another bill still before the House or not yet given Royal Assent is an acceptable one.

Again, this applies exactly here. Bill C-253 has not yet been given royal assent and the ways and means motion on budget bills seeking to affect it are acceptable under this rule.

The essence of the Canadian rule on those matters can be summarized by saying that the Speaker is never empowered to block such bills through a rule of anticipation. It is a question for the House of Commons to decide.

As Speaker Fraser ruled in 1992:

The Speaker of the Canadian House of Commons has not been given any specific authority over the form or content of omnibus bills.

Mr. Speaker, you are not empowered to do what the member for Pickering—Scarborough East is asking you to do by ruling on the content of the ways and means motion and the budget implementation bill. It is up to this House to pass judgment on the content of the motion and the bill.

I will re-emphasize once again that in a minority Parliament it is fully within the power of those members in opposition to pass that judgment contrary to the will of the government if they see fit to do so. They are seeking not to do so and seeking, instead, Mr. Speaker, to have you do that for them.

For the integrity of the government's fiscal plan, the government believes that if Bill C-253 becomes law, then it must be repealed in order to implement the provisions of the budget. We are talking about $900 million to $2 billion in lost revenues annually for the federal government and $450 million to $1 billion in lost revenues annually for provincial governments.

When the House adopted Bill C-253, it had not yet seen the detailed proposal that is contingent on repealing an earlier proposal. I see nothing procedurally wrong with the proceeding on the matter. One recent example is Bill C-27, the identity theft bill, which includes a coordinating amendment that would effectively replace the provisions of Bill C-299, a private member's bill currently before the Senate on identity theft, with the provisions in Bill C-27.

Ultimately, it is up to the House to decide. Speakers have consistently ruled that they do not have the authority to divide a bill and the question of the contents of a bill is best left as a matter for the House to decide.

Mr. Speaker, the final authority I would draw your attention to is the ruling of Speaker Fraser on November 28, 1991. It concluded, as well, that these issues are matters for the House to decide. The bill in question in 1991 was Bill C-35, an act to correct certain anomalies, inconsistencies, archaisms and errors in the Statutes of Canada. It proposed to amend, under certain conditions, a bill that was at second reading, a bill that had just received third reading, two other bills that were at third reading and two bills that were at committee.

The Speaker noted:

The legislative process affords ample opportunity for amending proposed legislation....

Speaker Fraser's observations in 1991 are a worthy guide to your role here, Mr. Speaker.

He concluded that:

It is the duty of this Chair to safeguard the rights of the Members and the House to make fully informed decisions on the matters before it....

He continued:

The legislative process offers ample opportunity....

Then he goes on to review the options and scenarios, such as amendments, refusal, approval, further study and more, but ultimately he concludes:

All of these avenues offer Members full remedy to this conditional approach to legislating should they object to it. That decision rests with the House.

I repeat that key conclusion: that decision rests with this House.

The authorities are clear. Beauchesne's states the Canadian rule authoritatively:

A bill is in order when substantially different from another bill on the same matter previously disposed of during the same session.

Yes, the ways and means motion and the budget implementation bill do, in small part, touch the same subject matter as Bill C-253, but they are substantially different: different in scope, different in breadth of issues, and different in the substance of what they seek to do on the limited subject matter that they do have in common.

That difference in substance renders the ways and means motion and budget bill in order and properly a question to be decided by this House, not, with the greatest of respect, by you, Mr. Speaker. It may not be the British way, but it is the Canadian way from the time of Sir John A. and the days when he represented the fine constituency of Kingston in this House, which you represent today.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I have a couple of points. First, I will respond briefly to the new arguments that have been raised by my friend for Markham—Unionville.

We need to be clear. The government is in no way precluded from putting in a ways and means motion for measures that do not require a ways and means motion. In fact, most budget ways and means motions have other measures in them. That is certainly the case.

The arguments that the member made with regard to budget implementation bills being narrowly circumscribed to matters that were only in the budget speech is clearly wrong.

Earlier this year we voted on a budget implementation bill which included all the provisions of the fall fiscal and economic update, a series of measures that were obviously not covered in the budget of 2007 and yet were included and, quite properly, approved by this House and, I might add, with the cooperation of the official opposition in its usual manner of abstaining on the question.

That is the fundamental nub of all these issues. These are matters that are properly decided by Parliament. They are not matters that need to be put to you, Mr. Speaker, to decide. They are properly decided by Parliament, particularly in a minority Parliament like this where we do know that all that party needs to do to have the success it is seeking is to simply vote on the matters before it.

From that perspective, I would simply put it to you, Mr. Speaker, that the arguments the member has made to you on that question do not have a basis. It is entirely appropriate and a well-established practice of this House to deal with a range of matters.

On the question of it being dealt with solely in the ways and means motion, the minister has been quite clear. The purpose of the ways and means motion is expressed clearly in its title, which addresses, as an adjunct in addition to the budget itself and implementing it, the question of preserving the fiscal framework, which is reflected in the budget.

The question of the private member's bill, Bill C-253, is that of undermining the fiscal framework, which is the essence of the budget that is created at the same time by potentially putting this country into deficit through funding, through spending or through a loss of revenues that is not contemplated in the budget. The purpose of it is of course--

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I rise on a point of order with respect to certain provisions that have been included in ways and means Motion No. 10, which the Minister of Finance tabled in the House yesterday.

Page 758 of House of Commons Procedure and Practice states:

The House must first adopt a Ways and Means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers.

The purpose of ways and means Motion No. 10 as indicated by its title is clear. It is:

... to implement certain provisions of the budget tabled in Parliament on February 26, 2008 and to enact provisions to preserve the fiscal plan set out in that budget.

However, included in this ways and means motion are provisions that would have the effect of cancelling the provision in a private member's bill, Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), adopted by the House at third reading on March 5, 2008.

Mr. Speaker, the purpose of my point of order is to object to those provisions in ways and means Motion No. 10 that relate to Bill C-253 for three reasons.

First, I believe that this creates a dangerous precedent and impedes on the rights of all private members, those who are not part of the executive, to exercise fully their rights as legislators.

Bill C-253 did not need to be preceded by a ways and means motion. House of Commons Procedure and Practice at page 898 states:

...private Members' bills which reduce taxes, reduce the incidence of a tax, or impose or increase an exemption from taxation are acceptable.

Ways and means motions are necessary for bills that impose a tax or other charge on the taxpayer. Bill C-253 does not do that.

However, the government is attempting to use the instrument of ways and means to basically kill a private member's bill that did not require a ways and means motion. If this is allowed to proceed, the government could in the future void any private member's initiative that it does not like, even though the bill has respected all the rules and practices of the House.

It is every member's right to bring forward legislation which reduces taxes, reduces the incidence of a tax, or imposes or increases an exemption from taxation. As these initiatives do not require a royal recommendation, they need not be preceded by a ways and means motion. Allowing the government through the process of ways of means to cancel or render totally void a private member's bill would be a severe impediment to the rights of every member of the House.

This brings me to my second point. For the reasons I have already stated, I would argue that ways and means Motion No. 10 goes beyond its purpose, which is to set the terms and conditions of the bill that will implement certain provisions of the budget tabled in Parliament on February 26, 2008. Its purpose is not to amend or cancel a private member's bill.

Finally, this attempt to reverse the decision of the House on Bill C-253 through the back door is offensive to the practices of the House in recent years with regard to the budget implementation bill. It has become the practice to include most of the measures contained in the annual budget presentation in one large omnibus bill. Successive Speakers have always expressed reluctance to expand the use of omnibus bills, but no exception has been taken to budget implementation bills under the strict understanding that these bills will be limited to matters that were put forward in the minister's budget presentation.

The issue of Bill C-253 arose well after the budget presentation and could not have been included in the budget presentation. Therefore, this does not belong in the budget implementation bill and if it is allowed to remain in this package, the door will be flung open to future abuses of this process.

In conclusion, Mr. Speaker, I would argue that you find sections 45 through, and including, 48 of Ways and Means Motion No. 10 to be out of order.

Notice of Motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I believe you will be well familiar with the fact that this approach is entirely in order. We are dealing with a different matter than Bill C-253 and the approach that is being adopted in this ways and means motion is entirely appropriate.

I invite my friend to actually take the time to review the ways and means motion so that he can gain a fuller appreciation of its approach. I would be happy to return to you, Mr. Speaker, with further submissions later on.

[Jim Flaherty, Conservative, Minister of Finance]

Mr. Speaker, pursuant to Standing Order 83(1) l wish to table a notice of ways and means motion to implement certain provisions of the budget tabled in Parliament on February 26, 2008, and to enact provisions to preserve the fiscal plan set out in that budget.

I am also providing notice today of our intention to include with this ways and means motion language to protect Canada's fiscal framework from the effects of Bill C-253 which would risk sending the federal government back into deficit.

I ask that an order of the day be designated for consideration of the motion.

The Budget

[Jim Flaherty, Conservative, Minister of Finance]

Mr. Speaker, Bill C-253 is nothing but a Liberal effort to amend the government's budget without triggering an election. Budget 2008 contained an enriched savings plan already, the tax-free savings account.

The Liberal bill is an American style legislative tactic designed to threaten our balanced budget and plunge Canada back into deficit. The budget implementation legislation will deal with this issue shortly.

The House resumed from February 28 consideration of Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), as reported with amendment from the committee, and of the motions in Group No. 1.

Income Tax Act

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, I am pleased to speak to Bill C-253, which amends the Income Tax Act with respect to registered education savings plan contributions. The Bloc Québécois firmly supports this bill. We believe that it will make education more accessible to more young people. This is especially true in Quebec, given the cost of education.

In Quebec, there are great distances between regions and between educational institutions. Given that these institutions are located in areas that are often very far from students' homes, it is important to improve access to education for a great many students in Quebec.

Obviously, higher education is expensive for families. Often, young families will take this into consideration when deciding whether or not to have another child, because they know that education is extremely costly. The more we improve funding for students and the easier we make it for them to take advantage of such a system, the more we will promote not only population growth, but access to education by students in Quebec.

This bill was referred to the Standing Committee on Finance, where members of the Bloc Québécois expressed several concerns about it. One concern stands out: this must not become a tax loophole. Rich families and people with very high incomes must not be allowed to use this tax deduction as a shelter. That would turn it into a regressive measure for middle-class families and middle-income earners.

The amendments proposed by the member for Pickering—Scarborough East seek to address this problem by setting a lifetime contribution limit, but they do not set a yearly limit.

My colleague from Jeanne-Le Ber, who proposed a subamendment to the Liberal member's proposal, gave an example that I will repeat to illustrate the potential downside of this proposal.

This is a concrete example based on the situation that would arise from the existing Liberal amendments. For example, a taxpayer earning $150,000 in a single year can contribute $50,000 to a registered education savings plan in that same year. The taxpayer would get a tax refund of $14,500. Then over the next five years, the taxpayer's child could withdraw up to $10,000 per year from the plan, tax-free. In the end, the government would be giving $14,500 to people with a lot of money to begin with, people who earn a lot.

That is the kind of situation the Standing Committee on Finance discussed, the kind of situation the Bloc Québécois does not want to see. My colleague from Jeanne-Le Ber moved a subamendment to the amendment proposed by the member for Pickering—Scarborough East because the Bloc Québécois supports the bill in general but is against creating a situation that takes advantage of middle-income individuals and families. My colleague's proposed amendment would set an annual deductible contribution limit of $5,000. If the subamendment is passed, the Bloc Québécois will support the bill as amended by the Liberal member.

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, Bill C-253 is an excessively costly and irresponsible modification to the registered education and savings plan. It would do little to support access to post-secondary education here in Canada.

Before discussing my concerns with this piece of legislation, I would like to provide a brief overview of the current RESP program and how it attempts to encourage savings with post-secondary education.

Currently, over $600 million annually is provided to tax and grant assistance to encourage RESP savings. This is done through numerous ways.

First, contributions attract a Canada education savings grant, or CESG, of up to $7,200 per beneficiary. Second, income in the plan accumulates tax-free, and grants and withdrawals are taxed in the hands of the students. This is usually when their incomes are low and as a result their tax bills are usually quite modest. Third, further additional support is provided for low income individuals through an enhanced CESG and a Canada learning bond. These measures cumulatively aim to provide a substantial incentive to save.

This Conservative government, in its past two budgets, has advanced measures to expand access to RESPs and has introduced additional flexibility for students. Budget 2007 raised the lifetime RESP contribution limit to $50,000. It eliminated annual contribution limits and raised the maximum amount of a CESG that can be received in a year to $500. The budget also provided part time students access to RESPs, recognizing the reality that many students, either by choice or by necessity, work while they learn.

Budget 2007 measures represented a significant but prudent revamping of the program and one that was greeted favourably. Maclean's called them “all smart, progressive ideas that are rightly applauded”, while the Victoria Times Colonist declared them “positive changes”.

Budget 2008 continued along the path with even further enhancements to increase the time limit over which individuals may contribute to an RESP and the time that the plan may remain open. The later change was especially important, as noted by taxation expert Jamie Golombek. He said:

With people staying in school longer, and with many post-secondary degrees—such as medical or law degrees—requiring years of study, the current RESP time limits were no longer sufficient.

Jointly, these measures will both enable families with more than one child and students pursuing an education over an extended period of time to have the ability to utilize RESPs.

The Conservative government's revamping of the RESP program represents a concrete demonstration of our commitment to improve post-secondary access through an improved and expanded RESP program.

I note that Bill C-253 was originally given first reading near the beginning of the 39th Parliament on May 4, 2006. At that time, I am sure that the hon. member of the Liberal Party could not have envisioned that this newly minted Conservative government would undertake such positive modifications to the RESP program in the budgets of both 2007 and 2008.

Nevertheless, we have taken action, and that action has and will have direct ramifications for the already exorbitant costs associated with the already flawed piece of legislation, namely Bill C-253. Moreover, Bill C-253 changes the system and would not improve the RESP program.

Further, neither of the amendments under debate today would take care of such concerns either. For instance, the amendments proposed by the member for Pickering—Scarborough East and the member for Jeanne-Le Ber would make contributions taxed in the hands of the contributor when withdrawn from the plan rather than being effectively tax-free, as is currently the case.

The most serious concern with Bill C-253 remains cost, which, when first proposed in 2006, was estimated to be a whopping $800 million annually, but has since mushroomed an additional $100 million to a massive $900 million annually.

The estimated massive $900 million cost can be broken down into two components. First, it represents an increased tax assistance on current contributions and would cost over $650 million annually. In other words, the measure proposes to spend about $650 million before generating a single dollar in additional RESP savings.

Second, an additional $250 million cost is expected from the contribution of the tax relief provided through the deduction. This is not an isolated instance of Liberal members introducing a proposal with no consideration of cost. Rather, it is part of a larger pattern of reckless and fiscally irresponsible proposals since the 2006 federal election. These have been brought forward by the Liberal Party and its many leaders. They are proposals that would immediately push Canada back into deficit and rack up a $62.5 billion and counting deficit, and push that onto our debt.

I ask the member for Pickering—Scarborough East how he plans to pay for Bill C-253? I personally believe the hon. member to be a good man and a good member of the House, but I am concerned that he might be proposing something that would inevitably cause Canadians to have their taxes raised.

I am wondering which programs he might propose that we otherwise would have to cut and if he is really prepared to see Canada go spiralling into a deficit to address this bill.

We ask these questions rhetorically, really, because we all know that Canadian taxpayers may eventually have to foot the bill for yet another instance where the Liberals have engaged in fiscal irresponsibility. Unlike such fiscal irresponsibility, our Conservative government acknowledges that we need to be prudent during global economic uncertainty. We cannot make such unrealistic proposals that would force Canada to go into a deficit situation.

Outside of the various serious concerns related to the cost of Bill C-253, there are still some technical flaws. The most obvious of them would be the pre-2006 contributions and how they would be withdrawn. In effect, under this bill, contributions that never received a tax deduction would be taxed when they are withdrawn. We cannot support this costly bill and we ask the House to defeat it.

At the same time, we ask for the House's support for the measures brought forward in budget 2008, a budget that builds on our record of investing in the best educated, most skilled, and most flexible labour force in the world.

Budget 2008 introduces a new consolidated Canada student grant program. All federal grants will be integrated into one program that will provide more effective support to more students for more years of study, thus assisting Canadian families who struggle with the cost of higher education.

The new Canada student grant program will be simple, transparent and broad-based, providing certainty and predictability for Canadian families. The reaction to budget 2008 has been overwhelmingly positive among students, leaders and universities.

The College Student Alliance said budget 2008, “--shows that the federal government is keeping an eye to the future and our future leaders of tomorrow--”; the Canadian Federation of Students added, “--the government has responded to a long standing call by students and their families--”; and the Association of Universities and Colleges of Canada declared, “We are pleased that the budget has announced important initiatives--”.

Budget 2008 represents prudent, responsible and effective action from this Conservative government while Bill C-253 represents $900 million in Liberal fiscal irresponsibility, the type of which we have come to expect from the Liberal Party and its current leader.

It is reckless Liberal spending that Canadian taxpayers cannot afford. At the end of the day taxpayers may be forced to foot the bill for this reckless Liberal spending and Liberal deficits. I hope not.

The House resumed from November 28 consideration of Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), as reported (with amendment) from the committee, and of the motions in Group No. 1.

Motions in Amendment

[Mario Silva, Liberal, Davenport, ON]

Mr. Speaker, I am pleased to add my comments to this very important debate on education and the tools that are required by families to make sure that their children have the financial requirements needed to receive a post-secondary education.

This bill, Bill C-253, that has been put forward by my hon. colleague from Pickering—Scarborough East is a very important piece of legislation. It is, I think, worthy of this House's attention. Also, we hope that we will have it go forward, both to committee and then to the Senate.

Bill C-253 is an act to amend the Income Tax Act respecting the deductibility of registered education savings plans, RESPs, contributions.

There is nothing more important than the future prosperity of Canada's youth and having a highly educated workforce. All of us in this House, on a number of occasions, have spoken of the importance of higher education and the importance of education for our young people. It is unfortunate that so many of our young people are getting themselves into debt.

I was looking at some statistics that I would like to share with this House. The average undergraduate tuition fee has almost doubled, from $2,023 in 1993-94, to $4,025 in 2003-04. An increase in tuition fees is partly responsible for an increase in student debt.

It is a terrible shame that in a country like Canada where we have incredible wealth and resources that so many young people are in debt.

I have always compared Canada as sort of in the middle between Europe and the U.S. Many of the western European countries have almost free education. It is not the case of course for all of them because some of them do have high fees for their education. However, overall Canada is the middle ground between the European system and the American system, which is very costly.

I was speaking to a colleague of mine at Oxford, where I am taking a masters degree in international law. She told me that tuition fees for her children would be about $200,000 at the end of four years. It is an incredible amount of money to pay for one child to go to school and if a person has four children, which she does, it is an enormous burden. She said she will be working until she dies in order to help her kids pay for the outrageous tuition fees.

We are not in that situation in Canada, and I thank God for that, but we are not quite like the European model, which has a very generous education system which allows their young people to attend higher levels of education.

We have to do more as a government, as a society, as legislators, to make sure that our young people are getting the tools, the resources they need, for higher education and to make sure that it is affordable higher education as well.

Because of the soaring costs of education, more Canadians are unable to attend institutions of higher learning and that is deeply concerning, especially in a society like ours which requires highly trained individuals to meet the demands of the labour force.

It is projected that by 2010 a four-year degree program could cost in excess of $100,000. That is certainly getting more closer to the American model and that is very worrisome because that American model is one that we do not want to emulate. It is extremely costly and it is a huge burden to families for their children's education. They have many burdens and obstacles in the U.S., from health care to education and many other issues.

We cherish our friendship with our American neighbours, but there are many things they can learn from us, and on this aspect they can certainly learn a great deal.

I commend my hon. colleague from Pickering--Scarborough East for putting forward this important and valuable private member's bill to hopefully address some of these concerns. We realize that it is impossible to have all these concerns and issues addressed. We also need our provincial partners assisting us.

All of us know that Canada is one of the few members of the Organization for Economic Cooperation and Development that does not have a federal minister of education. Most countries around the world, certainly most western democracies, have a federal minister of education.

We do not have a federal minister of education because that responsibility rests in provincial hands and that is, of course, a relic of our historical past, a relic of our Constitution, which put the issue of education strictly in provincial hands. We can have arguments about whether that was a good thing or a bad thing, but at that time it was needed to probably deal with issues both linguistic and religious.

In today's society one would wonder if there should not be some type of minister at the federal level, if not a minister of education than at least somebody who would have authority and responsibility for post-secondary education. We need some coordinated efforts. We need a minister who could, in fact, deal with provincial members and his or her counterparts to address the ever rising costs of tuition in this country.

All of us in the House are deeply concerned, but we need a coordinated effort. This legislation would be one piece of the pie, a tool we could say, that would go a long way toward addressing the concerns that we have. Clearly, it is not enough. A lot more has to be done.

Rising student debt is deeply troubling. I am the official opposition's critic for the Treasury Board and I do not know if it was a pleasure, or a burden, to look through the estimates. It was quite tedious work. Going through the estimates, I noticed that the government is spending huge sums of money, in fact millions of dollars, to go after students for not paying their loans. We realize that students have to pay their loans, but it seems a bit ludicrous to spend millions of dollars when the government has not ceded to students across this country.

The millennium scholarship fund was brought in by the previous Liberal government under the leadership of the Right Hon. Jean Chrétien. The prime minister at that time envisioned this as a great opportunity for many young people, especially those who are disadvantaged in our society, to receive this type of funding in order to assist them to attend post-secondary education.

Millions of dollars have gone into my riding of Davenport for students' post-secondary education through the millennium scholarship. I am very pleased that scholarship was put into place. I am hoping that the government will see the benefits of this scholarship program and renew it because it does need to be renewed.

Students across this country are calling for the government to renew this important fund that has helped thousands of students across this country to deal with some of the financial burden facing them in post-secondary education.

Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions) is an important piece of legislation that the House should support. I congratulate my hon. colleague from Pickering--Scarborough East for his efforts on behalf of students across this country. I hope this will pass so that future generations can benefit from this important piece of legislation.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to speak to this issue and support my colleague from Pickering—Scarborough East with whom I have served on the industry committee for a number of years. I applaud him for this bill. I personally support the bill.

It does not completely address the current post-secondary education affordability situation for our youth, but it is one tool that could be effective in allowing more contributions and better planning for families. That is important.

In the riding of Windsor West we have the St. Clair College of Applied Arts and Technology which has been very successful, not only in terms of training young people, but also in making sure they have the right tools to succeed in employment. We also have the University of Windsor which is well known for its law programs, as well as other different types of institutions which have been successful in the past years. However, successive governments have attacked young people far too much by downloading the cost of education onto the backs of young people. The recent budget was another example of that.

Until there is a real fix, Bill C-253 would at least provide an opportunity for people to plan to save in order to gain access to education. The New Democratic Party has been calling for an overhaul of the education system. That is important. This country has lagged behind the developed world and other G-8 nations in providing affordable education. In fact it is one of the biggest scandals that has happened.

Our youth are being fettered by the tax cuts and benefits that have been given to other people. Training has been put entirely on the backs of our youth. There are record tax cuts for the oil and gas industry and the banks. At the same time students are expected to pick up the full cost to get their training and degrees, which do not pay a wage at the end of the day and they have to pay off their loans. That is unacceptable.

Government members should be embarrassed and ashamed for their obstruction attempts on this bill. It has gone through several machinations at committee. I was a participant at one of those committee meetings and I saw that the government members were trying to do anything they could to unplug any type of benefit.

It is important to note that we are passing on a legacy of debt and a problem that relates to our overall productivity in our society. Students come out of university and college having worked hard, having done everything they could to get the grades necessary to be competitive. They made a choice about which institution they wanted to go to. They made a financial commitment and they come out of the post-secondary institution literally with mortgages that they have to pay off. It is unacceptable. On top of that, the current government and the past one let the creditors become predators. Students are paying high interest rates. It is unacceptable.

We can look toward other nations that have increased their productivity by lowering the cost of post-secondary education. That is one of the most effective things we could do to make sure we have a trained society.

We hear all the rhetoric from the current government and the previous government about a new emerging economy but they will not do anything to improve the accessibility to the necessary training. We need to help put the skills into the hands of our young citizens. They are the future providers of our country which continues to need the development to sustain our quality of life.

This bill is an opportunity to do something. It is important to note that besides the government's trying to stop this bill from going forward, the Conservatives were the ones who stole half a billion dollars from students in the student debt program which we negotiated with the Liberals in a former deal, because the Liberals never passed the legislation and procedures to get the half a billion dollars to the students. The Conservatives took that debt money, and they still owe $500 million to students across this country to lower their debt. The Conservatives took that from them.

Not only have the Conservatives not provided the proper programs or structure related to having affordable education and the payment of it after that, they actually took money away from students. They took it away from them and put it toward other priorities such as corporate tax cuts, or whatever those priorities might be, and at the same time we are witnessing our young people treading water in our education system.

What does it mean? From experience, I remember the first interview I had when I was first elected in 2002. I was asked what I would do with all the money I would be making as an MP. I said that the first thing my wife and I would do is pay off our student loans, and that is what happened. My wife and I had worked every single year. I had actually worked since age 9. We worked all the way through university. My wife has a couple of post-secondary degrees. However, we still had to borrow some money to get by and to afford our education.

That is the normal experience and that is what is happening right now. Students are misunderstood and the government does not even get it. Those people who actually have to pay for their education are working. They are working one and two jobs. They work not just during the summer, but during the year. They are learning and providing for themselves, and trying to reduce their debt burden for the future.

The Conservatives have instituted and helped provide the lightest coverage of the last 10 years of a system that has downloaded onto the backs of young people an awful burden with significant social consequences. As a result people come out of school with a larger debt load. It is okay for students to have to borrow, but not the government. They actually have to pay the interest on their debt.

People in my riding and across the country with this debt burden are paying the interest on their loans, which is being compounded. At the same time, they cannot buy a home. They cannot buy a new car. They cannot start the lifestyle they want at this point in time because they are paying off that debt. It is unnecessary.

We have a challenge in this day and age. There has been a lot of debate in the House of Commons over the last couple of years about pensions. I know right now that the people I serve in my community have a lot harder time getting a job with a pension.

When individuals begin their education, they have to go to school longer to get higher qualifications, which not only takes a longer period of time, but costs more money. These people are finishing later in life. They are delaying starting a family. They are delaying purchasing their first home and so forth, and they do not have the money to invest in their own retirement because they are paying off all that debt. The government is passing on that burden to them and it is doing it with no sense of accountability. That bothers me.

Here in this bill there is a modest attempt to deal with the situation, to provide some tools to those who can actually afford it and who will be successful for themselves and their families. That is why it should be supported.

I cannot understand for the life of me why the government does not understand that right now. It does not understand the value of education. It does not understand the value of having people come through an educational stream and not having a huge debt burden after that.

In the current economic situation, there is a good chance people will require more training. More people now go back to school for training, whether it be college or university, after they have a degree than ever before. They are picking up new skills. They are picking up new types of knowledge. That is important for our productivity and how we will be measured against our competitors across the globe.

We should be encouraging that. An educated civil society that is able to respond to the new economic challenges is an important feature, but it has to be coupled with being affordable to those individuals.

Instead, we have other priorities. Earlier this evening, the Conservatives talked about wanting to create a new bureaucracy for public-private partnerships. They will shovel $25 million into a new bureaucracy so they can sell off Canada as it currently exists, and future projects. It is done straight from ideology. They could reverse those resources and put them toward education. They could put them toward a whole series of other things. They are more concerned with those things. and that is troubling.

When we look at the OECD nations and what they are doing, they are being very successful at making sure that students and people in their society are receiving good training and good skills. They are well educated and they are productive. It is not just when they are young, but they can return to those institutions like mine, St. Clair College and the University of Windsor, and pick up additional competitive skills and get back out into the labour force and make Canada successful.

Why the government does not understand that it is a value-added commodity for our productivity that will allow us to compete is beyond me. The Conservatives would rather put the burden on the shoulders of a few people and expect them to get by. That is unacceptable.

I would encourage members to support the bill because once again, it is at least something to fight back with on this issue. Once again, we cannot allow the government to continually download this burden of debt on to individuals and their communities.

It is a cycle of failure to allow post-secondary education costs to continually escalate through the ceiling and, at the same time, not provide students with the resources to be successful.

[Gurbax Malhi, Liberal, Bramalea—Gore—Malton, ON]

Mr. Speaker, I am pleased to have the opportunity to support Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions). I would like to commend my hon. colleague from Pickering—Scarborough East for his efforts in promoting this bill and for his dedication to expanding access to post-secondary education in Canada.

This issue is of particular importance to the many young families in my riding of Bramalea—Gore—Malton. In these families I see much joy, laughter and hope, but at the same time I see parents who are concerned for the future. They worry that the rising cost of post-secondary education will hurt their children's ability to get the training they need to succeed in the increasingly competitive global economy.

Every parent wants what is best for their children. However, the day to day costs of running a household and raising a family all too often push to the back burner the task of planning for the future. The purpose of this legislation is to make payments into registered education savings plans tax deductible in order to give Canadians an increased incentive to invest their hard-earned money in their children's post-secondary education. By doing so, the process of education planning will be made easier for Canadian families.

The current trend of sharply rising tuition fees has made planning for education after high school more important than ever before. According to the most recent numbers from Statistics Canada, the average cost of tuition at Canadian universities rose by almost 400% between 1988 and 2007. Residence, textbooks and other fees are also going up, adding to the undue financial stress felt by post-secondary students and their families. The increase in fees over the past 20 years has been far beyond the rate of inflation and is part of a trend that seems likely to continue for the foreseeable future.

The Canadian Alliance of Student Associations estimates that a four year degree and associated fees will cost approximately $77,000 for students commencing their studies in 2010. By 2020, the same degree will cost over $130,000. Incredibly, these are only the estimated costs for undergraduate programs, not for professional and graduate degrees. Students who decide to pursue a career in medicine, dentistry or law can count on paying even more in order to obtain their qualifications.

Current government grant and scholarship programs only go part of the way toward helping students cover the extraordinary cost of education after high school. Although there are a number of federal and provincial programs intended to counteract the increasing cost of post-secondary education, not all students who need help qualify for government financial assistance. Many young people are unable to attend a post-secondary institution, not because they are unwilling or academically unable, but because they are essentially forgotten under the current student assistance regime.

Under the present student aid system, there exists a middle income gap. In this gap are families with incomes high enough that their children do not qualify for need based grants and loans but not high enough to pay for their children to attend university. The middle income gap is a considerable barrier to post-secondary education for many students and could be offset by encouraging increased investment in RESPs.

Even for those who qualify for financial assistance, loans can only be considered a stop-gap measure. While federal and provincial student loans help some families cope in the short term with the rising cost of education, this increased reliance on loans as a funding mechanism is leading to an alarming level of student debt.

Statistics Canada reports that between 1999 and 2005 the amount of student debt held by Canadians rose by 15.8%. In the same period, the overall amount of debt held by individuals and families in Canada increased by an astonishing 47.5%.

Shouldering such a large amount of debt is stressful not only for individual families but also for the economy as a whole. In a society with more debt than any that came before it, parents must be given the chance to plan for the future in order to avoid saddling students with tens of thousands of dollars of debt before they even enter the workforce. Enabling young people beginning their careers and starting families to embark on their adult lives with a lower amount of debt is a worthwhile goal, one this bill can help to achieve.

Of course, care must be taken so that RESPs do not become attractive to dishonest individuals looking for an easy tax shelter. Fortunately, even with the changes proposed in the bill, adequate regulations are in place to discourage individuals from abusing the RESP system.

Education assistance payments can only be paid out in the event that the beneficiary is enrolled in a qualified program at a post-secondary institution, is unable to enrol in a post-secondary program due to medical incapacitation, or is deceased. Furthermore, in the event that the beneficiary does not attend a post-secondary institution and the subscriber withdraws accumulated income payments, a 20% penalty is levied in addition to the usual tax payable on the income. Finally, although the monthly limit on contributions has been removed, the lifetime contribution limit of $50,000 ensures that RESPs are not attractive to individuals simply looking for a tax deferral vehicle.

This bill is not intended to completely solve the problem of access to post-secondary education. Continual efforts must also be made to expand need and merit based initiatives such as the millennium scholarship program, and to increase access to government student loans. But for families who would otherwise find it difficult to commit to minimum monthly RESP contributions, this bill would make it easier to invest in their children's future.

By raising the rate of participation in RESPs, more Canadians will be able to afford the education they need for the jobs of today and the future. Registered retirement savings plans use similar tax incentives to encourage Canadians to plan for life after work. It is time to give the same advantage to families planning their children's education.

Although the government seems determined to provide the wrong kind of tax incentives for Canada's future, I hope my colleagues across the floor will join me in supporting this legislation. We have before us an opportunity to empower ordinary families. By supporting this bill, Parliament can help Canadians secure a bright and prosperous future for their sons and daughters and for the country as a whole.

In my riding of Bramalea--Gore--Malton, there are many new immigrants who cannot afford to send their children to university. If we pass this bill, all people will be pleased and at least they will have an opportunity for their children to attend university in the future.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, my colleague has always spoken very positively about the need for education, the need for students in Canada to have access to good education and, in our discussions in the foreign affairs and international development committee, the need to incent young students coming from other parts of the world to get their education in Canada.

However, we have some very grave concerns with Bill C-253, which initially contemplated that the deduction would be limited to an RESP annual contribution limit of $5,000, indexed after 2006. However, budget 2007 eliminated the RESP annual contribution limit and raised the lifetime contribution limit to $50,000 from $42,000.

Amendments to the Income Tax Act to implement these changes were made in Bill C-52, which was assented to in June 2007, to which the hon. member has alluded.

These changes were extremely well received. Indeed , Peter Lewis, chair of the Registered Education Savings Plan Dealers Association of Canada, called the changes “a very positive leap forward for Canadian families”. He went on to say:

These improvements will benefit all Canadian families, and provide even greater incentive to invest in their children's college or university education. And that's good for everyone.

We sincerely commend [the] Finance Minister...for recognizing the value and importance of encouraging families to save for post-secondary education.

The proposed amendments adjust the bill to reflect the elimination of the RESP annual contribution limit. The effect of the proposed amendments would be to allow a taxpayer to claim a deduction for RESP contributions of up to $50,000. The amount of the deduction would be reduced by the total RESP contributions made by the taxpayer in previous years.

As we have stated in analysis provided previously, the behavioural impact is uncertain. If the RESP contributions were to increase by 20%, the total fiscal cost of Bill C-253 would be $765 million per year, including a CESG cost increase of $85 million per year.

The proposed amendments, if adopted, would not allow RESP contributors any more leeway in allowing up to an annual $50,000 deduction for their contributions.

While it is uncertain how much this would exactly increase total RESP contributions and the specific long term costs of Bill C-253, it is likely the proposed changes could again increase the cost of the deduction in the early years following implementation.

Therefore, we will not be supporting Bill C-253.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

moved:

Motion No. 1

That Bill C-253, in Clause 2, be amended by deleting lines 10 to 24 on page 1.

Motion No. 2

That Bill C-253, in Clause 2, be amended by replacing lines 8 and 9 on page 2 with the following:

“(b) the RESP lifetime limit minus the total of all contributions made by the taxpayer into a registered education savings plan in previous taxation years.”

Mr. Speaker, I am pleased to speak today. If I may, I will take the opportunity to congratulate you on what I believe is a very well deserved citation by all your colleagues in the House as the most honourable of our members. I realize that you have said you will be leaving at some stage, but clearly you are just coming into your own stride and I suggest that you may want to reconsider that position.

Bill C-253, now at report stage, is an act to amend the Income Tax Act in relation to the deductibility of RESP contributions by the contributor.

As colleagues know, I have proposed two amendments to this bill as a result of changes in the RESP regime created by the 2007 budget. People who are watching and in fact listening will know that there were changes made subsequent to changes in the RESP regime, as well as with respect to the last budget.

I will discuss these changes and the necessity of my amendments in a moment, but I note that registered education savings plans allow taxpayers to accumulate funds for their children to use toward the high costs often associated with obtaining post-secondary education.

Technically, an RESP is a contract between an individual, the subscriber, and a person or organization, the promoter. I should point out that the subscriber or the person acting for the subscriber generally makes contributions to an RESP, and the contributions, as we know, earn an income. The subscriber names one or more beneficiaries, one's child or children who are eventually going to attend post-secondary institutions, and agrees to make these contributions ultimately for them.

These contracts are then registered with the Canada Revenue Agency. From a tax perspective, which should be known, contributions made to an RESP are not deductible by the subscriber. Further, leftover funds in an RESP, after amounts are paid to a beneficiary, that are returned to the subscriber are not included in the subscriber's taxable income. Instead, contributions that are paid to a beneficiary of an RESP become taxable income of the beneficiary.

Before the 2007 budget, subscribers were limited in both the annual and the lifetime amounts they could contribute to an RESP. I should point out that after the 2007 budget implementation act, Bill C-52, was passed in the first session of this Parliament, the RESP annual limit was removed and only the RESP lifetime limit remained.

What that meant was the occasion to necessitate an amendment, and an amendment to Bill C-253 put forward by the House of Commons Standing Committee on Finance created a deduction for the subscriber, the contributor, for the taxable income for contributions made to an RESP.

This deduction, however, was limited to the RESP annual limit as defined in the former provisions of the Income Tax Act and prior to the passage of the budget in 2007.

Finally, Bill C-253 ensured that leftover funds in an RESP that are returned to the subscribers become taxable income of the subscribers themselves. The amendments I have proposed simply remove the proposed provisions in the bill that contain a reference to the RESP annual limit.

Bill C-253 nonetheless retains the tax deduction for contributions made to an RESP, but this annual deduction amount is now limited by the RESP lifetime limit, rather than the RESP annual limit.

That annual limit, for the benefit of all my colleagues here, will remain, and under the pre-RESP regime it was certainly there, at $50,000. A provision, paragraph 2(4)(2.01)(b), is also added for accounting purposes to ensure that contributions made in previous years are taken into account in determining the annual contribution deduction so that the RESP lifetime limit is not exceeded.

Members will know that in my last speech on Bill C-253 I made it abundantly clear that existing provisions of the Income Tax Act as concerns RESPs provide harsh penalties for anyone who tries to use an RESP as a tax shelter. Let us be clear on that. One cannot use this as an RESP shelter, much in the same way that the guidelines exist with respect to RRSPs.

While I will not rehash the details as I have only a limited amount of time, I must point out and will again repeat that should a beneficiary of an RESP, a child, not attend a post-secondary institution, in this case the funds accumulated in that RESP account are returned to the contributor and the moneys earned beyond the actual contributions made are indeed taxed. They are taxed significantly.

The tax rate, so everyone will know, would be 20% over and above the regular tax paid on the income. Like many other people, I feel that rate more than adequately deters anyone from using the RESP as some scheme or tax shelter. The lifetime limit of $50,000, in addition to the 20% penalty, further detracts from the usage of an RESP as a vehicle to avoid taxes.

I also mentioned in my previous remarks the soaring costs of post-secondary education in Canada. I did put a great deal of emphasis on that then and it clearly has not changed. By some estimates, there is now a cost of over $100,000 by the year 2010 for a four-year degree program.

That is a lot of money. I cannot see how families are going to be able to make ends meet without having some kind of opportunity, one that does not take away from the public treasury but in fact contributes to the development of our young by providing them access to post-secondary education in a way that uses the existing system but builds and improves on it.

There is also the issue of the fact the RESP is not being used by a majority of Canadian families to offset the rising cost of post-secondary education. I should point out, as all of this has been taking place in the past, that we have seen a number of examples where Canadians have not had the benefit or the opportunity of ensuring their positions and their ability to become more meaningful members of society in terms of adequate attention to education. It has not been made available, as we can certainly see by the fact that many have not had an opportunity to provide the savings.

While a large number of savings opportunities exist for parents and families, they are always, frankly, after-tax opportunities. Therefore, I am looking to Parliament to look much deeper, to use an existing system that I believe works for all Canadians. I believe we need a system so that Canada is able to meet the competitive edge, as so many are pointing out we will need to do in order to provide a continuous education and a reformed idea in terms of our education system. We need to allow young people and people throughout the course of their lives to make the kinds of transitions that I think are very much a necessity in terms of building a modern, adaptable and flexible society.

In the two minutes I have left, I would also like to point out that a few other areas have come to our attention very recently. One is with respect to the ability of many of our universities to continue to attract high calibre and state of the art types of equipment and technologies and to bring in professors and staff who will allow our young people to benefit at our universities and at any post-secondary level of education and to get the very best. To do that, I note, we are living in an increasingly competitive international market. It can hardly be blamed on our universities, colleges or polytechnical schools if they do not have the ability to bring in these people without higher tuition fees.

The reality is that post-secondary education is not accessible to a vast majority of our students. For a good many, it is a challenge that they will never be able to take on.

I was speaking earlier with a few members of this House who are concerned about this limit. With the amendments I am proposing here today, which affect the annual limit for contributions, I wanted to do everything I could. In the end, the clerks informed me that it would be impossible for me as a backbencher, through a private member's bill, to amend a budget that was adopted by a vast majority of members. Thus, I cannot repeal the legislation to change the limit, which is currently set at $50,000. However, the principle remains.

Access to higher education is limited to some 20% of students. That number should be 100%. This bill proposes ways to improve the system to ensure that people can contribute to their RESP. I look forward to hearing other members' comments.

Speaker's Ruling

[The Deputy Speaker, NDP, Bill Blaikie]

There is a ruling by the Chair relevant to Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions). There are two motions in amendment standing on the notice paper for the report stage of Bill C-253. Motions Nos. 1 and 2 will be grouped for debate and voted upon according to the voting pattern available at the Table. I will now propose Motions Nos. 1 and 2 to the House.

The House proceeded to the consideration of Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), as reported (with amendment) from the committee.

Finance

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Mr. Speaker, I have the obligation and the honour to present, in both official languages, the 18th report of the Standing Committee on Finance in relation to Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), with amendments.

As is my privilege, I would like to go on record as saying that I believe this is not the committee's best work. I believe that in hindsight many members of my committee will, on further consideration, regret the conclusions they draw within this report.

[The Chair, Conservative, Brian Pallister]

Committee members know I prefer that we start on time and not punish those who are here by making them wait, so let's get started. Welcome back to the fold.

Welcome to Mr. Tweed. It's nice to have you at committee, and Madam Davidson. Thank you both for being here.

Pursuant to the order of reference of Wednesday, November 8, 2006,

the committee will now proceed with the clause-by-clause study of BillC-253, An Act to amend the Income Tax Act (deductibility of RESP contributions).

(On clause 1)

Monsieur St-Cyr.

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Mr. Speaker, it is with mixed emotions, both honour and some regret, that I present today, in both official languages, two reports, the first being the 11th report of the Standing Committee on Finance in relation to Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions).

This report was made necessary by the need to delay the consideration of Bill C-253 and we are asking for an extension to do so because of all the urgent business, such as income trust discussions, that has been before the finance committee over the last number of weeks.

Mr. Speaker, I have the honour to present, in both official languages, the 12th report of the Standing Committee on Finance, relating to Bill C-305.

The report deals with the exemption from taxation, 50% of United States social security payments to Canadians residents. Again, this report was made necessary because of the ongoing incredible workload of the finance committee and the need for us to have an extension to deal with this until a later date.

[The Chair, Conservative, Brian Pallister]

Order.

Committee members, allow me to review quickly the work schedule for committee members and their staff.

First of all, in terms of orders of business for the coming week, next Tuesday, February 6, we will be dealing with a draft report on income trusts. I'm going to endeavour to get the room fifteen minutes earlier so that you can come in and read the draft prior to beginning discussion, just to expedite the process of dealing with the draft report.

Next Thursday, February 8, we have private members' bills. We have Bill C-294, Bill C-253, and Bill C-305 to deal with at that point in time.

Following that, very likely beginning on Tuesday, February 13, we will be dealing with Bill C-37, the Bank Act review, which should encompass a fair bit of the committee's time over the next while. I would suggest to you, committee members, that you forward names of witnesses to the clerk's office. Begin that process now and we'll give you some deadlines later on, but give some thought to Bill C-37, the Bank Act review, as soon as you wish.

At this juncture, Mr. McCallum, I believe you have a motion that you'd like to bring forward. I'd like for us to deal with it now if we could.

Income Tax Act

[The Acting Speaker, Conservative, Andrew Scheer]

It being 5:30 p.m., the House will proceed to the taking of the deferred division on the motion at second reading of Bill C-253 under private members' business.

Call in the members.

The House resumed from November 1 consideration of the motion that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions) be read the second time and referred to a committee.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, I am pleased to speak to Bill C-253, An Act to amend the Income Tax Act sponsored by my colleague, the hon. member for Pickering—Scarborough East. I am also pleased by the Speaker's announcement today that the bill can proceed in its present form in spite of previous concerns that it might have exceeded the jurisdiction of private members' business. The purpose of the bill is to allow contributions to registered education savings plans, RESPs, to be tax deductible similar to the way Canadians already deduct contributions to registered retirement savings plans, RRSPs.

I need to digress a little. Today has been a rather difficult day for Canadian investors. Contrary to what Conservatives told Canadians prior to the last election, the finance minister announced that he has decided to flip-flop on the income trust issue and slap a tax on the distribution. Within two hours of trading today Canadian investors lost $25 billion in retirement savings affecting virtually all sectors of the economy and unfortunately creating a sudden and bleak future for hundreds of thousands of pensioners.

That being said, I wish to return to the proposal brought forth in Bill C-253. I believe this proposed legislation warrants further consideration. I believe it is important to support this bill at second reading so that it can be referred to committee for an in-depth analysis. The reason is simple. We acknowledge that the cost of post-secondary education is becoming extremely expensive for average Canadian families, especially those with more than one child to educate.

Students are graduating with an excessive amount of debt and many say they simply cannot afford an education. This is a troubling situation especially since our future productivity is dependent on the next generation of students. Currently Canada has the highest participation rate in post-secondary education among the OECD countries, but that ranking is in severe jeopardy if the federal government does nothing to change the situation.

Bill C-253 would encourage more parents to participate in the registered education savings plan because they would see the fruits of this program at the end of every tax year. As we heard from my hon. colleague, only 27% of parents participate, so the bill would encourage more participation. This would be beneficial to Canada because we would have a more educated population and hence a more productive population.

In addition, the savings that are incurred from this tax deduction could be reinvested into an RESP in order to assist families with the goal of maximizing their annual RESP contribution. At present the maximum annual contribution is $4,000 a year with a lifetime limit of $42,000 per beneficiary. These investments grow tax free until a child needs money for tuition. While it is true that Bill C-253 would shift the tax burden from the parents to the child beneficiary, the annual income of a full time student is quite low and any tax liability would be offset by other tax credits while students are still in school.

Currently students emerge from universities with a huge debt. This bill would ensure that students emerged from their education with a much lower student debt. Consider that by 2010 a four year degree program could cost in excess of $100,000. It becomes quite clear that long term planning is required on the part of the students and parents, but also the federal government. This would ensure that post-secondary education does not become a luxury only those families with money can afford.

It is also quite clear that an RESP worth $42,000 would offset a significant portion of the cost of a proper education.

I note with interest that the author, the MP for Pickering—Scarborough East, has considered measures to prevent RESPs from abuse. Bill C-253 proposes severe tax penalties for those who would attempt to take advantage of an RESP's simple tax shelter without any serious regard for the potential beneficiary. In the event that a beneficiary has no intention of going to school, the accumulated income would be subject to a 20% tax on top of the regular tax normally payable on such investments. That I call accountability.

Roughly 50% of college and university graduates graduate with a debt. The average debt amounts to $20,000, making it very difficult for young people to get a headstart in life.

I ask for the support of all members in this House so that serious thought can be given to helping all Canadians access post-secondary education regardless of their economic circumstances.

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

Mr. Speaker, I am pleased to have the opportunity to join in this debate on Bill C-253, a private member's bill put forward by the member for Pickering—Scarborough East to adapt and change the RESP contribution program.

Unlike my colleagues from the Bloc and my colleague from the Conservative Party who has spoken, I am going to put on the record remarks of deep concern about this particular private member's bill. I am sure it will come as no surprise to the member for Pickering—Scarborough East that while we appreciate his work in this area, we feel that his efforts are misplaced and the focus of the bill is misplaced. Through this bill we will not necessarily accomplish what I believe he wants and what we all want, which is greater access to post-secondary education for our young people. That is clearly a burning desire from all of us.

We hear daily from constituents and from young people across this land how much they want to go to university or college to pursue their educational dreams and aspirations only to learn that the obstacles sometimes are so great as to prevent them from fulfilling those dreams. Here are the questions we have to ask today. Does this bill advance the public agenda in that regard? Does it make it easier for our young people to access post-secondary education? Do the costs outweigh the benefits or not?

That is why I rise today with deep concerns about this particular bill. We have just finished a whole series of pre-budget consultations. We heard from numerous groups involved in education, students, teachers, researchers and administrators. In each and every case the demand from the education community, and from families who are concerned about opportunities for their children, was for increased responsibility and roles on the part of the federal government in the post-secondary education system.

Each and every one of those representatives called upon the government to redress the serious problems that befell our system when the Liberals cut the heck out of education back in 1995 with their infamous federal budget. They basically set us back an entire decade with their regressive and extreme views in terms of dealing with the fiscal challenges of the day. We are still trying to recover from that period. It is not helpful to have another patchwork approach to a very serious systemic issue.

All we have had over the last decade is one band-aid after another. That has been the Liberal approach to education in this country. First the Liberals cut the heck out of the system, then they promised when they had a surplus, they would deal with it and put the money back. What did they do instead? They gave huge tax breaks to corporations and put all the surplus available against the debt. Nothing was done in terms of dealing with the systemic problems facing access to post-secondary education.

This bill is another band-aid on top of a band-aid. This is like trying to fix up a patch that is already on a system that is bleeding and hurting. This is not serving the country.

I do not need to tell the House how difficult it is these days for students to access university given the rising costs of tuition. The evidence is all around us.

Mr. Speaker, it would certainly help if you could bring some order to this chamber. It is very hard to hear oneself think when there is that kind of nattering going on in the Liberal benches.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I am pleased to rise and speak to a subject of ever-increasing concern here in Ottawa and in the eyes of the population. Post-secondary education, and particularly its accessibility, is a very topical issue.

The Bloc Québécois is in favour of the principle of this bill because it is an improvement over the current provisions of the Income Tax Act, which governs the registered education savings plan—RESP—program.

To summarize the bill briefly, a registered education savings plan is created from contributions out of after-tax income. Such contributions do not entitle contributors to a tax deduction, as is the case for contributions to a registered retirement savings plan or RRSP, but the investment income that is earned on the contributions accumulates in the RESP and is tax-free. The investment income is taxed only when it is withdrawn from the RESP. If the savings are withdrawn to finance the beneficiary’s post-secondary education, the investment income will end up in the hands of this beneficiary.

The problem is that not everyone can afford to make contributions to a registered education savings plan, since a substantial income is necessary in order to do so. People prefer to contribute to an RRSP rather than an RESP.

This bill, if passed, will make it possible for parents and families to benefit from a tax deduction, as they do with an RRSP.

Putting such a measure in place would come with a cost, of course, but it would foster the growth of our society and have an undeniably positive impact on its development.

Bill C-253 has numerous shortcomings. It nevertheless remains that it is an improvement as far as the RESP program is concerned.

During the first reading of this bill, my colleague from Jeanne-Le Ber identified the bill’s chief shortcomings in his speech. I would like to do a quick review of the RESP program and the advantages for society of passing such a bill.

Although the registered education savings plan program has been around for 30 years, the federal government has given it special attention of late. In 1998, the federal government created the Canada Education Savings Grant, the CESG. This is a grant of a maximum of 20% of the contribution made, which provides the beneficiary with an extra $400. This means that, when a parent or grandparent contributes $2000, $400 will be added to the RESP of a child under the age of 18.

Bill C-253 is a continuation of the improvements that began a few years ago. According to the statistics for 2002, the participation rate for the registered education savings plan was only 6% in Quebec; that is right, I said 6%, while it was about 10% in Ontario and in British Columbia.

At present, a large number of parents and grandparents do not contribute to a registered education savings plan because it does not constitute a deduction from an individual’s taxable income. In addition, some people do not have the financial resources to do so.

Therefore, people prefer to put their money into registered retirement savings plans. However, it is a good bet that more people would like to benefit from a RESP if there were an income tax deduction similar to the deduction for RRSPs.

What the bill seeks to do is to target an often-neglected group of taxpayers, who are already asked to make more than their share of sacrifices in our society. I am talking about the middle class; the class that includes the largest number of Canadian citizens. What this bill offers is greater accessibility to post-secondary education.

The education of our children and our grandchildren is often a cause for worry and concern not only for parents, but also for the expanded family, the grandparents, aunts and uncles. Many of them fear that they will not be able to pay the increasingly higher costs of post-secondary education. The introduction of an incentive for the contributor and the beneficiary represents an investment by the government in today’s young people and gives hope to a great many young parents, young families and grandparents.

On the other hand, if the beneficiary does not pursue post-secondary studies and no other beneficiary is designated, the contributor can receive the income from the investment under certain conditions. The funds could be transferred to a registered retirement savings plan without penalty, up to a maximum of $50,000 if the individual’s RRSP contribution ceiling allows. Otherwise, a 20% income tax deduction would be made on the withdrawal and the amount that could not be transferred to an RRSP would have to be added to the individual’s income for the year. We are talking here about only the accumulated investment income within a registered education savings plan because the capital is not subject to income tax.

It is certain that the adoption of such a bill could be very costly for taxpayers because, at present, those who contribute to a registered education savings plan are not able to deduct that contribution from their income. Therefore, those households with higher incomes will benefit even more from such a measure and low-income families will see little or no advantage. However, no program is perfect and Bill C-253 represents an excellent incentive to parents and families.

In summary, I would say that this bill would enable an individual making a contribution to an RESP to deduct that contribution from income, which is almost identical to the practice for an RRSP. In closing, I want to congratulate the member for his bill and thank him for his interest in the education of our children and our grandchildren.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

I am glad to hear that the member opposite agrees with me.

Budget 2006 discards the previous $3,000 partial exemption and proposes to make all scholarships and bursaries received by students enrolled in post-secondary studies completely exempt from tax.

Budget 2006 also proposes to improve access to student loans by reducing the parental contribution required for students from middle income families for the purpose of student loans. It is estimated that this change will enable 30,000 students to gain access to assistance and 25,000 to have access to increased loans.

The government will also provide a one-time payment of $1 billion into the post-secondary education infrastructure trust, providing that the 2005-06 surplus is in excess of $2 billion. The trust will support critical and urgent infrastructure and equipment in colleges and universities.

Budget 2006 also included funding for research and development and measures in support of apprenticeships and trades.

Let me turn to the assistance that is already provided for education saving. RESPs are given preferential tax treatment to help parents save for their children's post-secondary education. Up to $4,000 can be contributed to an RESP in a year for each beneficiary to a lifetime maximum of $42,000 per beneficiary. Funds invested in the plan grow tax free until they are withdrawn. Contributions are not deductible, but can be withdrawn tax free. Investment income earned in the plan is taxed in the hands of the students when withdrawn for post-secondary education. In short, the tax benefits in an RESP come from two sources: the deferral of the tax would be investment income and the fact that this income is taxed at a low rate because students generally pay little or no tax.

In addition to the tax preferences I just described, RESP savings qualify for the Canada education savings grant, or CESG, which makes saving in an RESP even more attractive. Under this program, which is aimed at encouraging saving for post-secondary education, the government provides a 20% grant on the first $2,000 in RESP savings for each beneficiary in a year.

To illustrate how this works, assume a parent contributes $2,000 to an RESP for his or her child, the contribution would earn $400 in CESG and the income on both the contribution and the CESG would grow tax free until the funds were withdrawn to cover the cost of the child attending college or university.

Further, because it is more difficult for low and middle income families to save for a child's post-secondary education, the Canada education savings grant provides a higher grant rate on the first $500 in contributions by these families. Depending on family income, the grant rate could be as high as 40%.

In addition, since 2004, the Canada learning bond kick-starts education savings for children born after 2003 and who are in families entitled to the national child benefit supplement. Up to $2,000 in total Canada learning bond grants could be paid in a child's RESP by age 16. These measures were adopted with our support.

In fact, the current RESP limit, saving $2,000 annually into a child's RESP, means that almost $75,000 could be available for that child's post-secondary education by age 18, and about $95,000 would be available if the parent contributed $4,000 annually until the $42,000 lifetime limit was reached.

The combination of the generous tax treatment of the RESP and the CESG that tops up private savings has provided powerful incentives for parents to save for their children's post-secondary education. At the of 2005, these plans held almost $18 billion in savings for future post-secondary education, seven times their value nine years ago.

Since 1998, $2.7 billion in Canada's education saving grants have provided for over 2.2 million children. Over $440 million in grants was paid into RESPs under the program in 2005. In addition, the tax deferral provided by RESPs represents about $130 million per year in forgone revenue for the Government of Canada and about half that amount to the provinces.

In total, the Government of Canada devotes over $570 million annually to tax relief and grants to help parents save for their children's post-secondary education. I believe nobody would dispute that the current RESP regime has been extremely successful at promoting savings for post-secondary education.

Let us consider the impact of the measures under Bill C-253.

First, the bill proposes to provide a deduction for contributions to RESPs made in 2006 and future tax years, with contributions withdrawn being taxed in the contributors hands rather than tax free as is currently the case.

Second, contribution limits would be raised to be the same as those applying for registered retirement savings plans, or RRSPs, that is 18% of the earned income up to $18,000 for 2006.

The bill is supposed to encourage parents to save more for their children's post-secondary education, but I suggest that the measure proposed in the bill would be ineffective and would be expensive.

For these reasons and many others, I am unable to support the bill and invite my colleagues to do the same.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, it is a privilege to engage in debate today with my fellow colleagues on Bill C-253, sponsored by the hon. member for Pickering—Scarborough East.

The bill proposes two major changes to registered education savings plans, or RESPs, that would affect contributions made in 2006 and future tax years.

We all agree that post-secondary education is important for the future of our children and for the future of this country. A well-educated workforce is a critical factor to improving Canada's productivity and raising our standard of living. In a knowledge based economy, our young people must have the skills to compete successfully in an increasingly sophisticated labour market.

More than half of the new jobs created today require post-secondary education. We can only expect education requirements to increase over time. We want our children to have access to post-secondary education and we want that education to be second to none.

The bill before the House today proposes an increase in support for post-secondary education by providing additional tax preferences for RESP savings. However, I believe this bill is not the best way to promote post-secondary education.

First, I will give a brief overview of the considerable support the Government of Canada provides for post-secondary education; second, I will explain the significant support that is already provided for education saving; and third, I will explain why measures proposed in the bill presented by the hon. member for Pickering—Scarborough East would not be cost effective ways to support post-secondary education.

The Government of Canada provides significant support for post-secondary education. In addition to transfers to the provinces, the Government of Canada provides over $5 billion annually in direct support to post-secondary education. Of this amount, $1.7 billion is provided to educational institutions for research to help ensure our brightest researchers stay in Canada and contribute to maintaining Canada's edge in innovation. Also, $1.8 billion is provided in grants, scholarships and loans to improve access to post-secondary education for low income students and rewarding those who attain academic excellence. We also provide $1.7 billion in tax relief to students and their families in recognition of the cost of post-secondary education through measures such as the tuition tax credit and the education tax credit.

This government's commitment to post-secondary education was evidenced in the 2006 budget presented in the House on May 2, 2006. The budget follows through on our platform commitments by proposing to create a textbook tax credit. The credit will be provided of $65 per month for full time study or $20 per month for part time study.

This government also recognizes that post-secondary students need to be supported in their hard work in the pursuit of academic excellence.

The House resumed from June 21 consideration of the motion that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), be read the second time and referred to a committee.

Bill C-253--Speaker's Ruling

[The Speaker, Liberal, Peter Milliken]

Order, please. I am now prepared to rule on the point of order raised by the hon. government House leader on June 21, 2006, in relation to the procedural issues relating to Bill C-253, an act to amend the Income Tax Act (deductibility of RESP contributions), standing in the name of the hon. member for Pickering—Scarborough East.

In his arguments, the hon. government House leader explained that clause 2 of the bill contained provisions which would effectively increase how taxable income was calculated and thus result in potentially more taxes being collected. Specifically, subclause 2(5) would make any refund of payments regarding contributions to RESPs considered as taxable income. Subclause 2(6) necessarily repealed a section of the Income Tax Act, which would have made such refunds excluded as taxable income.

Therefore, the hon. government House leaderargued that if Bill C-253 was creating a new tax burden, then it should not have been given first reading without the adoption of a ways and means motion, and the Speaker should discharge the order for second reading and remove the bill from the order paper.

House of Commons Procedure and Practice provides some information on the operation of taxation bills on pages 758 and 759:

The House must first adopt a Ways and Means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers…Legislative proposals which are not intended to raise money but rather reduce taxation need not to be preceded by a Ways and Means motion before being introduced in the House.

Furthermore, on page 898 it states:

With respect to the raising of revenue, a private member cannot introduce bills which impose taxes. The power to initiate taxation rests solely with the government and any legislation which seeks an increase in taxation must be preceded by a Ways and Means motion.

As I understand it, the current RESP regime requires the person contributing to the plan to make such contributions out of after tax income. If, subsequently, the amount in the plan is not to be used for funding post-secondary education as intended, the contributor may have the contributions refunded. This refund is not taxed as the original contribution was made from income on which tax had already been paid. Similarly, a student withdrawing money from an RESP is not required to report the contribution amount as income, but only the interest earned while the funds were invested in the plan.

Let us now turn to the proposal before the House. The summary of Bill C-253 states that the bill provides “that contributions to a Registered Education Savings Plan are deductible from a taxpayer's taxable income”.

The bill also provides that if, at a later time, contributions are taken out of the plan by the contributor, they are to included as taxable for that year. Not having been taxed initially, the contributions would cease to enjoy tax-exempt status at the time of withdrawal from the plan.

This proposal amounts to a tax deferral. Rather than making contributions out of after tax income, the contributor would be provided with a tax deduction at the time that the contribution is made. If, subsequently, the money is not used for educational purposes but is withdrawn from the plan, the funds would be reported as taxable income at that time.

I do not regard such a tax deferral as imposing any increased tax burden on the contributor. It is permissible for a private member's bill to introduce a tax exemption, or to propose a delay in the reporting of income. Therefore, I find that Bill C-253 is properly before the House.

Accordingly, in my view, debate may continue on the bill in its current form.

Income Tax Act

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

moved that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), be read the second time and referred to a committee.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

moved for leave to introduce Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions).

Mr. Speaker, I am pleased to introduce this bill which would amend the Income Tax Act to make contributions to an RESP deductible from the contributor's taxable income.

Students are facing some difficult concerns with rising tuitions, as well as the importance this spells for the future prosperity of our country in terms of a skilled and educated workforce. We certainly do not want post-secondary education to become the purview of only the wealthy.

The bill would provide a regulatory regime similar to the one governing registered retirement savings plans. It is hoped that the passage of this bill will assist more Canadian families to save for their children's post-secondary education. I look forward to the support of all members of the House.

(Motions deemed adopted, bill read the first time and printed)