Bill C-28 (Historical)

Budget and Economic Statement Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007

Part 1 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. Specifically, the Excise Tax Act is amended to
(a) increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years beginning with expenses incurred on or after March 19, 2007;
(b) increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;
(c) increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and
(d) implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.
Part 2 amends the non-GST portion of the Excise Tax Act to implement measures announced in the March 19, 2007 Budget. Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.
Part 3 implements income tax measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. In particular, it
(a) introduces a new Working Income Tax Benefit;
(b) eliminates income tax on elementary and secondary school scholarships;
(c) eliminates capital gains tax on donations of publicly-listed securities to private foundations;
(d) enhances the child fitness tax credit;
(e) expands the scope of the public transit tax credit;
(f) increases the lifetime capital gains exemption to $750,000;
(g) increases the deductible percentage of meal expenses for long-haul truck drivers;
(h) provides tax relief in respect of the 2010 Winter Olympic and Paralympic Games;
(i) allows for phased-retirement options for pension plans;
(j) extends the mineral exploration tax credit;
(k) enhances tax benefits for donations of medicine to the developing world;
(l) streamlines the process for prescribed stock exchanges;
(m) introduces an investment tax credit for child care spaces;
(n) introduces a new withholding tax exemption with respect to certain cross-border interest payments;
(o) prevents double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative);
(p) eases tax remittance and filing requirements for small business;
(q) introduces a mechanism to accommodate functional currency reporting;
(r) provides certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax; and
(s) provides authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors on a timely basis.
Part 4 implements the disability savings measures proposed in the March 19, 2007 Budget. The measures are intended to support long-term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions. Part 4 contains amendments to the Income Tax Act to allow for the creation of registered disability savings plans. It also enacts the Canada Disability Savings Act. That Act provides for the payment of Canada Disability Savings Grants in relation to contributions made to those plans. The amount of grant is increased for persons of lower and middle income. It also provides for the payment of Canada Disability Savings Bonds in respect of persons of low income.
Part 5 implements measures that provide for payments to be made to provinces as a financial incentive for them to eliminate taxes on capital under certain circumstances.
Part 6 enacts the Bank for International Settlements (Immunity) Act.
Part 7 amends the Pension Benefits Standards Act, 1985 to permit phased retirement arrangements in federally regulated pension plans by allowing an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. These amendments are consistent with amendments to the Income Tax Regulations to permit phased retirement.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of Canada’s contribution to the Advance Market Commitment.
Part 9 amends the Canada Oil and Gas Operations Act to authorize the National Energy Board to regulate traffic, tolls and tariffs in relation to oil and gas pipelines regulated under that Act.
Part 10 amends the Farm Income Protection Act to allow financial institutions to hold contributions under a net income stabilization account program.
Part 11 amends the Federal-Provincial Fiscal Arrangements Act to provide for an additional fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador. This Part also specifies the time and manner in which the calculation of fiscal equalization payments will be made and it amends that Act’s regulation-making authority. In addition, this Part makes consequential amendments to other Acts.
Part 12 amends the Canada Education Savings Act to clarify the authority of the Minister of Human Resources and Social Development to collect, on behalf of the Canada Revenue Agency, any information that the Canada Revenue Agency requires for purposes of administering the registered education savings plan tax provisions.
Part 13 authorizes payments to be made out of the Consolidated Revenue Fund to an entity, designated by the Minister of Finance, to facilitate public-private partnership projects.
Part 14 implements tax measures proposed in the October 30, 2007 Economic Statement. With respect to income tax measures, it
(a) reduces the general corporate income tax rate;
(b) accelerates the tax reduction for small businesses;
(c) reduces the lowest personal income tax rate, which automatically reduces the rate used to calculate non-refundable tax credits and the alternative minimum tax; and
(d) increases the basic personal amount and the amount upon which the spouse or common-law partner and wholly dependent relative credits are calculated.
Part 14 also amends the Excise Tax Act to implement, effective January 1, 2008, the reduction in the goods and services tax (GST) and the federal component of the harmonized sales tax (HST) from 6% to 5%. That Act is amended to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the January 1, 2008, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after January 1, 2008, pursuant to a written agreement entered into on or before October 30, 2007. The Excise Act, 2001 is also amended to increase excise duties on tobacco products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is also amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of January 1, 2008.

Budget and Economic Statement Implementation Act, 2007

[Some hon. members]

Agreed.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I have had several opportunities to speak on past Conservative budgets and every time I speak on them, the same problem comes up, and that is the lack of vision displayed by this government.

We know it takes months to prepare a federal budget. It involves many hours of research and consultation. However, what good is a budget if it contains no vision for the country? What good is it if it does not set out a plan for Canada's economic security?

As we debate the implementation of the Conservatives' latest budget, I will like to discuss some of the most problematic areas of this document.

First, I would like to talk about Canada's economic prosperity and our ability to be competitive in the future. These subjects are important to me, as a member of Parliament, because I believe that without a strong economy and prosperous citizens, our country cannot and will not be able to continue to sustain its generous social programs.

As deputy chair of the Standing Committee on Finance, my role is to ensure that Canadians are constantly informed and that we are advancing progressive ideas in order for this government to keep the economic prosperity of our country growing.

These various economic proposals are developed in different ways. The Standing Committee on Finance provides me with one of these opportunities, as we meet with hundreds of business leaders, non-profit organizations, environmental groups, artists, industry stakeholders and many others.

Over the last two years, overwhelmingly experts from these non-partisan meetings have told us that Canada's next major economic challenge will be to improve our productivity. Some of the economic solutions that have been suggested are to allow manufacturers the ability to write off assets in accordance with their useful lives. Other suggestions are to make all research and development credits earned refundable. However, cutting income taxes is at the top of almost everyone's list: first, corporate and second, personal income taxes.

However, no one advocates cutting the GST. Our leader, the member for Saint-Laurent—Cartierville, has been clear on this position. He is not advocating increasing the GST. His preference is to cut income taxes and has been on the record since last year. The only people who think cutting the GST will improve our economic prosperity are the Prime Minister and his Minister of Finance.

One may ask whether the Liberal Party has any credibility when it talks about the GST. The world has changed since 1993. The economic challenges are no longer the same. The world is changing faster and faster with increased trade. Technology has evolved and has transformed the way we do business.

Goods and services are exchanged more quickly and more efficiently than before. Fifteen years ago, income taxes were the main source of revenue for a number of countries.

The idea was to tax people and company profits. If the companies had physical infrastructures, governments knew that it was unlikely these companies would relocate, so they hit them harder with an endless barrage of taxes. They did not matter. Consumption taxes such as the GST were viewed as a deterrent to spending, so countries stayed away from that form of taxation. They needed spending to grow their economies internally.

When the Liberals came to power in 1993, they inherited a deficit exceeding $40 billion. They faced a dilemma because the country needed the revenue from the GST and from personal and business income taxes. The Liberal government had to make tough decisions, and all Canadians had to make major sacrifices.

Once expenses were brought under control, the next step was tax reform. Would it not have been a popular and politically smart move to reduce the GST then? Perhaps, but that would not have been the best way to proceed, nor would it have been in the country's best interest.

Let us not forget that our dollar was weak then. So why would companies invest here? Even though they would have had opportunities to make a profit, they would have been taxed on those profits, and the competitive advantage would have been lost because of the weak dollar. That is why the finance minister at the time, the member for LaSalle—Émard, chose to reduce personal and business income tax instead of the GST.

Was that the right decision? The proof is in the pudding. Today, in 2007, Canada has enjoyed a decade of annual surpluses, high employment, has paid down over $75 billion in debt during that same period and has become the country with the lowest debt to GDP ratio in the G-8.

The government now needs a vision to attack the productivity agenda. Instead of formulating a solid plan to improve productivity, the Conservatives have spent most of their time in office bringing in legislation to make short term political gain, never looking beyond the next election.

For 12 years, the Liberal government helped set the vision for our economic prosperity.

What has the present Conservative government done in the last two years? Has it presented a vision of any type? Yes, it has supported a combative role in Afghanistan. It has increased spending, the bulk of which has gone to the military, and in two years the Conservative government has become the highest spending government in the history of Canada.

Economically, Canadians have seen no vision. The finance minister says that Canadians are overtaxed but in budget 2006 he increased personal income taxes at the lowest rate from 15% to 15.5%. During his economic update, the minister announced that he would lower the tax rate back to the original Liberal rate of 15% and he had the audacity to call it a tax cut.

With regard to this bill's corporate income tax cuts, they merely match the ones proposed by the Liberal government in 2005. These cuts have been advocated by our party's leader, the member of Parliament for Saint-Laurent—Cartierville during the last year.

Furthermore, last year, the Minister of Finance decided to tax income trusts despite his campaign promise not to do so. Because of this, Canadians lost between $25 billion and $30 billion overnight.

A lot of Canadians were affected by that broken promise, but many had no idea what was going on because most of the losses were in pension funds. Individuals can ask the people in charge of their pension funds or their brokers to explain the situation.

The energy and resource sectors are looking for ways to finance expansion. Just a few months ago, our weak dollar encouraged foreign investors to buy up Canadian income trusts at fire sale prices.

We can take the example set by Nordic countries where social spending in these countries has always been a priority and now income taxes are being lowered to continue to attract foreign investors.

[The Acting Speaker, Conservative, Andrew Scheer]

The hon. member will have two minutes left to conclude his remarks.

The House resumed from November 28 consideration of the motion that Bill C-28, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007, be read the second time and referred to a committee.

[Garth Turner, Liberal, Halton, ON]

Mr. Speaker, it is always a pleasure to be able to get up and remind Canadians of the economic performance of the Conservative government, and I am pleased to have a few minutes this morning to do just that.

I hope that Canadians and our media, and everybody who is watching the proceedings in the House today will not be too amazingly distracted by what happens in the ethics committee and Mr. Schreiber's testimony. There are a lot of things that affect individual Canadians in their everyday lives and we tend to lose sight of them sometimes around this place as we go for the headline grabbing sensational.

I am pleased to talk a bit about the economic reality for a lot of Canadian families. There are some issues that I know are very much on the minds of Canadians.

One of them of course is our high Canadian dollar. The Canadian dollar has gained about 28% in value in the course of a single year. That is very substantial. The shock to a lot of Canadian industries has been breathtaking because the acceleration in the value of the dollar has been far faster than those industries have been able to cope.

Why has the dollar gone up so quickly? There are a number of reasons. Obviously our dollar is considered to be a petro currency and because of the rise in oil prices that is one reason. Also, the American dollar has fallen in value against almost every currency in the world and Canada's is no exception. Our dollar has gone up relative to the American dollar going down.

We cannot do a lot about those things, but there are some factors here that are Canadian. The root and cause is found in the actions of the Conservative government. For example, the government has been spending more money than any previous Canadian government. In fact, the rate of increase in government spending is now about twice the rate of inflation.

Inflationary spending by government tends to have an impact on inflation, the CPI, and that tends to have an impact on the currency. It also affects fiscal monetary policy. We end up with a lot of money coming to Canada from around the world for a number of reasons and that has only accelerated our problem. Canada has a high dollar, a high interest rate, and high inflationary policy, and this is hurting Canadians.

What damage is being done? Retailers, the tourist industry, manufacturers, shippers, the resource sector, and automakers are very much on the front line of what is happening today. Plants are closing . Factories are going idle. Equipment has been unbolted from its cement pads in factories, crated up, and sent to China.

I was in an aerospace manufacturing facility in my riding the other day where hundreds of high qualified, high skilled jobs are in peril right now. People are contemplating selling much of the equipment in that plant and shipping it to China. I found out during my tour that there are more of these high quality, very expensive metallic fabricating machines sitting in crates in China ready to be installed in factories than there are existing now in all of Canada. That is a very disturbing situation.

In the past year, 350,000 Canadian workers in the manufacturing sector have lost their jobs. The finance committee has been spending a bit of time looking into this issue. We found out from experts at committee, a lot of them economists from unions and banks and industry, that this is just as they called it, the tip of the iceberg. They are expecting at least another 300,000 jobs to be lost in the next year.

If the Canadian dollar remains at parity or above the American dollar in value over the next two years, probably an equivalent number of jobs will be lost each year. That means two years from now the accumulated loss of manufacturing jobs could be close to one million. That is breathtaking.

This is an issue that goes to the fundamental economic management of the government because it is not managing this problem. The finance minister runs around the country and talks about the strong Canadian dollar. It is not strong. It is toxic. A lot of Canadians are seeing their jobs go as a result.

One example is in the Minister of Finance's own riding. He represents Whitby—Oshawa. One of the premier yacht building companies in Canada is in Whitby. It is called PDQ Yachts. It went bankrupt last month. The reason it went bankrupt is that it could not cope with a 28% rise in the value of the Canadian currency. Why? Because almost all of its sales are to the United States.

What company can take a 28% drop in the price of its product being shipped to its clients? Almost no company can do that. PDQ Yachts, in the Minister of Finance's own riding, went bankrupt. On December 13, the equipment in that plant is going to be sold at public auction. It is not good when we see companies deserting. It is a small company. It has only 100 employees. However, when we go a hundred by a hundred by a hundred in riding by riding by riding and in community after community in this country, suddenly we have a jobs crisis.

What are those workers supposed to do? They are highly skilled. How about their families? How about their mortgages? People who live in the Minister of Finance's riding, where houses are not cheap, spend $300,000 to $500,000 buying a home and have to finance it. They have mortgages to pay and their jobs are now gone. This goes to the very heart of the economic mismanagement by the government.

Second, after the high Canadian dollar and the way that has been mismanaged, we have an income tax situation that is very troublesome indeed. The government, in its first budget, raised income taxes. The basic income tax rate was raised in the first budget and then it was raised in the second budget. This is the same government that campaigned on taxes. I admit it, I was a Conservative candidate in the last election, and I did not go from door to door promising people that their income taxes would be increased. I was rather shocked when it happened, but it did nonetheless.

Canadians had two income tax increases. In its last economic statement in October, the government finally relented and brought taxes back down to where they were two years ago, but not only two years ago, $2 billion later, $2 billion from Canadian families in overtaxation, which we finally see ending. Thus, income tax is the second problem.

Third is family financial stress. Our families are under a lot of stress. In this place, we are insulated. We are surrounded by opulence and gold leaf on the ceiling and stained glass windows. We make $150,000 as members of Parliament. Ministers make another $70,000 more. We have lovely offices. We live in a bubble here in Ottawa.

We do not see the financial stress that is going on across our country, but families are under financial stress. They have seen higher income taxes. They have seen higher mortgage rates because the government has inflationary spending that has forced the Bank of Canada to raise interest rates over the past few months. They are seeing higher energy costs. It costs $1.04 for a litre of regular gasoline. Families have a hard time coping with all of that and now there are reduced employment prospects because of the devastation that has been wrought in the manufacturing sector by the Canadian dollar.

We have a high dollar, loss of jobs, higher taxes and family financial stress. That is four strikes against the government, but it does not end there. There is another thing the government has done that two million Canadians will never, ever forget. They are the two million Canadians who were income trust investors.

I would like to read for a moment from testimony given before the House of Commons finance committee this week. It was delivered by Margaret Lefebvre. She is executive director of the Canadian Association of Income Funds.

Here is what Margaret had to say to our committee: “This committee should be aware that the damaging consequences of the government's actions continue. Since October 31, 2006 there have been more than 42 transactions that involve the selling, merging or acquisition of income trusts with an enterprise value in excess of $31 billion. The majority of these transactions by dollar value involve foreign buyers of Canadian assets. Most have gone into the hands of private equity and pension funds and virtually all of these entities pay little or no tax”.

This is probably the greatest failing and I think the greatest symbol of the government's economic mismanagement: campaign on one thing and deliver another. Campaign and tell Canadians that it will never tax income trusts and turn around 10 months later and impose a 31% tax. The consequences of that, although unintended in large part, have been devastating, and two million investors will never forget.

I could go on for some time, but I see that my time is up. I would simply end by saying it is my conviction that our Minister of Finance is out of his depth. He has done many things on his watch that have hurt this economy. They have wounded it. More importantly, they have hurt Canadian families. For that, so many millions of them will not forget, and when they come to cast their ballots, and soon, I would say, the consequences will be obvious and painful for our friends across the way.

[Maurice Vellacott, Conservative, Saskatoon—Wanuskewin, SK]

Mr. Speaker, the member across the way talked a lot about promises in trying to harangue our members and actually members all around the House on the matter of keeping promises. However, let me ask him a direct question. Does the member intend to keep his promise to resign his seat and step away? Is that a pledge that he feels he should honour and follow through on for the members of his constituency?

[Garth Turner, Liberal, Halton, ON]

Mr. Speaker, that of course has nothing to do with the subject of what we are debating, but I am happy to answer. I did stand in this House on the day that I joined the federal Liberal caucus and say to the Prime Minister that I would resign my seat and that all he needed to do was give me a date on which we would have a byelection. The Prime Minister would not do that.

I also said I thought that would be incumbent upon, perhaps, the Minister of International Trade from Vancouver who was elected as a Liberal and ended up as a Conservative, and perhaps the member who is now an independent member from Mississauga—Streetsville but who was elected as a Liberal and sat as a Conservative. If we are going to have members who cross the floor resigning their seats, let us have them all resign their seats and have simultaneous byelections. Why not? That makes sense.

If the Prime Minister and the members opposite have the fortitude to call a byelection and determine a date, then absolutely we are all happy to do that.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I want to congratulate my colleague for his fine speech and ask him a question.

Any government in an era of surplus has the responsibility to plan an economy not for the next 5 years but for the next 50 years. At a time of surplus, we can invest in those strategic assets a country needs in order to ensure it can weather the storms that will inevitably come, including investments in education and access to education and investments in infrastructure and cities, those things that enable our economy to move forward and enable our private sector to be nimble and competitive internationally.

I would like to ask my colleague, because he was on the other side, whether he thinks the absence of this from the Conservative government, and also the fact that the Conservative government has grown the government by 14% in a year and a half, are symptoms of a larger problem and that the Prime Minister is turning our democracy into an autocracy and in fact a dictatorship?

[Garth Turner, Liberal, Halton, ON]

Mr. Speaker, my colleague's observation is well put.

I am very disappointed that this government, although it has been overtaxing Canadians to the tune of some $15 billion a year now, has not invested in any long term projects to date. A great example of that is the infrastructure deficit, which is happening right across our country. The lower or junior level of government now has to deal with the very serious situation of a fraying infrastructure, but what does the Minister of Finance tell the mayors of cities? Basically he tells them to stop whining, to get a life, to go home, to drop dead. That is what the Minister of Finance is saying to our municipalities and I think that is a very disgraceful way to go.

We have many serious structural problems. Physical infrastructure is one. Demographics is another. With a rapidly aging population, there will be real pressures on our social safety net and our health care system down the road. We are doing basically nothing to prepare for that.

While the government swims in a surplus of overtaxation, we have very serious problems yet to be addressed because right now, and we hear this every day from those guys, we have a government that is more interested in campaigning than it is in governing. That is a very serious deficit.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, I have been listening to this debate for a few minutes, and it feels as though I am at a Conservative caucus. There is a lot of buck-passing by both the Liberals and the Conservatives.

What are the Liberals trying to do today, with their talk of planning five years ahead for investments and the protection of jobs in the manufacturing and forestry sectors? If they had put that theory into practice, we would not be in this situation right now. Conservatives and Liberals are one and the same.

If they had listened to the public in the first place, to their hopes and needs, and to the main voice of the people, the Bloc Québécois, we would be in a different situation. Not to mention that a number of members would be in better shape since they would be wasting less energy debating things of the past.

Could the hon. member explain why, a year and 10 months ago—not that far back—the Liberals did not do what they are asking the Conservatives to do today?

[Garth Turner, Liberal, Halton, ON]

Mr. Speaker, a year and 10 months ago, let me tell my friend, the Canadian dollar was not 28% higher, as it is today, and the serious situation that has evolved with manufacturing and forestry did not exist. It is a little disingenuous of the member to ask that question.

What governments need to do is cope with situations and events that happen rapidly. They need to respond rapidly. That is where this government has failed. It can do a number of things in terms of economic and fiscal policy in order to mitigate the effects of the Canadian dollar. It can certainly encourage the Bank of Canada to respond as well.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, the bill before us now is very odd. The adoption of a budget is typically accompanied by a budget implementation bill. If the measures in the bill match those announced in the budget, those who voted in favour of the budget generally support the bill. That is the logic that parliamentarians apply—logic that the Bloc Québécois was prepared to apply.

However, the Conservatives made a truly partisan decision to combine completely different elements. On the one hand, we have the 2007 budget, which the Bloc Québécois supported and continues to support. On the other, we have some elements from the economic statement, which we did not support, and the Nova Scotia and Newfoundland and Labrador offshore oil agreements, which we also did not support because they are unfair to Quebec.

The Bloc Québécois will therefore vote against this bill because on the whole, it is not in the best interest of Quebeckers. The economic statement is the main reason we have taken this stance. The government made a unilateral decision to use $10 billion to pay off part of the debt. They made that decision without holding any debate on the subject and despite the fact that our people have serious, urgent needs, which I will list briefly.

First, the Bloc Québécois believes that $3 billion of this year's $11 billion surplus should be used to pay down the debt, not the whole $11 billion. The ratio of debt to Canada's gross domestic product has been improving steadily over the past 10 years. We have now reached a point where the government's desire to use the entire surplus to pay down the debt looks a lot like a homeowner's obsession with paying off the mortgage as quickly as possible. That same homeowner is ignoring the fact that the deck needs a coat of paint and is kind of unstable, and he is failing to ensure that his children or parents who live with him have enough income.The Bloc Québécois does not share the government's obsession with paying off the debt at any price and does not want this bill to go through.

The Bloc Québécois feels that, instead of using the full $11 billion to pay down the debt, the government should pay it down by $3 billion. This is a reasonable amount, and it would let Canada meet its goal of reducing the debt to GDP ratio to 25%. The remaining $8 billion could be spent on urgent issues such as the guaranteed income supplement for seniors.

In an affluent society like Canada, it is important to do justice to our seniors. We currently have an old age pension system that includes the basic pension and the guaranteed income supplement. This system is supposed to protect seniors against poverty. However, the total monthly benefit amount is still $100 below the poverty threshold.

Instead of using the full $11 billion surplus to pay down the debt, the federal government could at least start by paying the retroactive benefits it owes people who were entitled to the guaranteed income supplement but did not receive it because the system did not provide for automatic registration. When you come right down to it, the federal government took advantage of our seniors' lack of knowledge to pocket as much money as possible.

As a result, today some people are living below the poverty line. Last week, we heard the incredible but sadly true testimony of someone living below the poverty line. With retroactivity, this person, who is over 65, would receive $12,000. Since 2001, this person has been living on very little money. She was entitled to the guaranteed income supplement, but the current act does not allow more than 11 months of retroactive benefits.

Each one of us has had to deal at some point with the Canada Revenue Agency. When this agency reassesses tax returns to recover unpaid taxes, it can go back not only up to 11 months, but up to five years. That is why we would like the government to make fully retroactive payments to the people entitled to the guaranteed income supplement. This would cost an estimated $3 billion.

Then, $1.5 billion should be invested in the workers. Of that, $60 million would go towards a support program for older workers. That is not an astronomical sum, but it would allow many workers affected by the forestry and manufacturing crisis to bridge the gap until their retirement and to live with dignity until they receive their old age pension.

In addition to that, a reserve of $1.4 billion must be given to employment insurance.

As we know, for the past 15 years, the federal government has made a cash grab of $54 billion from the EI contributions paid by employers and employees. It has used this money for all kinds of expenditures, including the deficit. There has never been any return on investment for unemployed workers, for people who paid into the system and all those who were affected by the stricter criteria.

One would think that, with this year's $11 billion surplus, the government could make a one-time payment of $1.4 billion to a reserve, in order to improve the conditions of the employment insurance program.

Of that $11 billion surplus, $3 billion should go towards the debt, $3 billion should go to seniors, $1.5 billion should go to workers and $2 billion should be invested in the manufacturing economy. There is unanimous consent on this in Quebec, not only within the Government of Quebec, but also within the manufacturing associations, the Quebec federation of chambers of commerce and the forestry industry, which has been sending us congratulatory letters, telling us not to give up and that policy changes are definitely needed in the manufacturing sector.

The economic statement included some nice tax reductions for companies that are making profits. The problem is that those who are making profits, the oil companies for example, are going to pocket a lot of money. However, all the businesses that are not making as much profit, or almost none at all, will not benefit whatsoever from this uniform tax reduction. They would earn a lot more if refundable tax credits were offered. That would allow companies to draw the maximum benefit from the higher dollar.

If a manufacturing company had the means today to buy machinery to increase productivity, and it bought that machinery, that would be its way of having a competitive product. To do that they need money. Without profits, that is not possible. If it had a refundable tax credit for research and development, that would be possible.

I know that the government, especially the senior public service, is saying that it is too great an expense. But estimates have been made; people have studied this; it is a reasonable amount of money.

This year, thanks to the surplus, the government could allocate $1.5 billion to that end and $500 million to reinstate Technology Partnerships Canada. What is that? It is a program that encourages innovation in aerospace and a number of other sectors. For example, in La Pocatière, Premier Tech used that program to develop new products from sphagnum peat moss. This helped develop an industry that is carving out a place for itself in the Rivière-du-Loup area. It is a major driving force behind the economic development of that region. I want to give credit to the Liberals for creating that program, which I always defended. The Bloc Québécois defended it as well. The Conservatives abolished the program.

In today's economic conditions, with the higher dollar and global competition, this program is an investment for the federal government, not an expense. Reinstating this program for $500 million, out of an $11 billion surplus this year, would be one way of encouraging productivity. This would also allow money to be invested across Canada in companies that develop new products.

We have the means to allocate the reasonable sum of $2 billion to the manufacturing economy, and that money could come from this year's $11 billion surplus. We also have the means to put $3 billion toward the debt.

And what about the regions affected by the forestry crisis? During the election campaign in the riding of Roberval—Lac-Saint-Jean, I had the opportunity to see the serious impact of the forestry crisis on the regions. Last week, at the Standing Committee on Finance, the mayor of Hearst, in northern Ontario, told us the same thing. I also live in a region struggling to cope with the forestry crisis.

If we apply the $11 billion surplus to the debt, that will only decrease Canada's debt. Instead, we could establish a $1 billion fund for regional economic diversification. With that money, this year, right now, in the coming days and months, we could breathe life into our regional economies. We have the means to do it. This would not be borrowed money; it would come from the federal government's current surplus.

Finally, we could allocate $1 billion to the environment for the purchase, for example, energy saving appliances. That would improve our ratio of fuel oil versus electricity consumption, enabling us to move increasingly towards clean energies.

We see that there is a fundamental difference between the bill the government wishes to pass today and the 2007 budget that we supported. The latter resulted in a partial solution to the fiscal imbalance and we supported that bill. I believe that Quebeckers are pleased with that.

But with regard to the other part that has been included in the bill on the economic statement, it clearly is not in the interests of Quebeckers. This is significant enough for us to vote against this bill.

In addition, the bill now includes the agreement with Nova Scotia and Newfoundland and Labrador concerning offshore oil resources. For the Bloc Québécois, obviously, that aspect is neither relevant nor positive because it creates an unfair advantage in terms of equalization.

Let us briefly review the facts. With respect to the Atlantic accord, Newfoundland and Labrador’s oil resources, and the whole Nova Scotia question, it was rather difficult to follow the Conservative government. It had initially made a commitment that satisfied the Atlantic provinces. Then they refused to consider all of the revenue related to energy in the equalization formula. The bottom line is that there is now an agreement to try to put things back together and correct a blunder.

However, the final version creates more inequities and, for us, that is not appealing. The Bloc Québécois believes that this measure should not have been incorporated into the same bill that implements the 2007 budget because they are different matters.

The government has an opportunity to correct the situation, but the way it is presenting this bill is really unacceptable to Quebec. They cannot, on one hand, seek approval for the 2007 budget and, on the other hand, incorporate measures that are clearly contrary to the interests of the Government of Quebec.

In truth, one can ask the question whether, after Quebec had paid for the development of fossil fuel energy, the province should pay for its exploitation. That is out of the question. These grants and federal investments have cost Quebec dearly. They have, in part, amounted to more than $10 billion over the years. This agreement amounts to giving a bonus to the provinces that produce oil and making the provinces that produce hydroelectricity pay for it. That is turning the world upside down when there is an increasing demand for the development of clean energy. The federal government is doing the opposite with this measure.

There really is an almost unhealthy connection between the petroleum industry and the Conservative government. Most of Canada is paying the price, especially Quebec, which has developed hydroelectricity over the years without any support from the federal government.

Accordingly, the government will have to revise its position before we can vote in favour of this bill.

Why do I think the economic statement is so odd? It is now fall of 2007. Since February 2007, the federal government has been in possession of a unanimous report from the Standing Committee on Industry, Science and Technology entitled “Manufacturing: Moving Forward—Rising to the Challenge”, which clearly stated that we needed a quick action plan to help the manufacturing sector. The committee chair, the member for Edmonton—Leduc, had this to say in the foreword to the report:

While the rest of the Canadian economy is generally very robust, many industries within the manufacturing sector are struggling to remain competitive against the backdrop of a Canadian dollar that has risen in value by more than 40% in just four years in comparison to its American counterpart, rising and unpredictable energy costs, increasing global competition, particularly from China and India, and excessive and inefficiently designed regulations, to name but a few challenges.

Further on he said:

The Committee believes that the Government of Canada should make the preservation of a competitive Canadian manufacturing sector a national goal, and that given the gravity of the challenges facing the sector, the recommendations presented in this report should be implemented in a timely fashion.

If this report had been produced in October or the beginning of November 2007, it could be said that the government had not had enough time to prepare, and that it would do so for the next budget. However, this report was published in February 2007. There was time to prepare for the 2007 budget, and especially to prepare for the economic statement, to propose a real program to help the manufacturing sector. Yet it was not until yesterday at the Standing Committee on Finance that a motion was finally passed, with the support of the Liberals and the NDP, calling on the federal government to implement as soon as possible all the tax measures set out in the report.

What is really significant here is that the Conservative members did not vote. The motion was adopted unanimously because the Conservatives did not oppose it. These were the recommendations in a report that was adopted unanimously in February 2007 by all members of the committee, from all the parties. By their abstention yesterday, the Conservative members acknowledged that they really should have done something. What I want to say to them today is that they need to act now.

Insofar as the economic statement is concerned, it is amazing to see the attitude of the Minister of Finance, who is from Ontario and can see the devastating impact on job creation in his province. I remember the committee going to the Windsor area a year ago. The catastrophe could already be seen looming. We know now that the effects of the rise in the dollar this fall—not the rise three years ago but the one four months ago—will be felt a year from now. If the government does not act, another 150,000 or 200,000 jobs will be lost in addition to the 130,000 already lost since the Conservatives took power. There is a disaster out there, but the government just closes its eyes.

The approach they are taking is an ideological one. They want to reduce taxes across the board and let the market adjust on its own, but we know very well where that leads. It means that more and more industries in the energy sector will reap enormous profits while more and more industries in the manufacturing sector will be unable to keep pace with the competition. The tax recommendations in the report, on the other hand, were to give companies refundable tax credits, create a fund for them like Technology Partnerships Canada, for example, and in this way give them a chance to diversify the economy in our regions. These were very specific, practical recommendations that the government could have included in its economic statement but chose not to.

Our vote today against Bill C-28 is largely due to this inaction on the part of the federal government. I thought that with the change in the industry minister, the department might take a more pragmatic approach, but it is sticking to the same theoretical line.

It is always good for the Minister of Finance to go out and consult people. The newspapers tell us today that he is going to consult with the manufacturing industry in the Quebec City area. I hope that when he returns, he will have changed his tune and will take action as quickly as possible in accordance with the recommendation of the Standing Committee on Finance, which was adopted unanimously not only by the Bloc—it was our proposal—but also by the Liberals, the NDP, and the Conservative members, who told the government through their abstention that it should take action and implement these tax measures.

Decisions need to be made quickly. If we wait for the next budget, we will have lost several months in the fight that is going on at present. The Canadian dollar is at par with the American dollar. The crisis is not over just because the dollar has gone down from $1.05 to $1. The Minister of Finance's arguments on this point are simplistic. The dollar may be at par, but its value has gone up by more than 40% in the past few years. The manufacturing sector has adapted to this reality as best it can. It has adjusted its productivity as much as possible, but now the federal government needs to take action.

When the minister places responsibility in the provincial ministers' hands, he is not doing his job. It is his job to make sure that, in its industrial strategy, the federal government can take real action as quickly as possible to help companies. The Canadian system is a bit complicated; you always have to convince two governments of everything. It would be simpler if we had just one government instead of two. At least, that is what we have to do as long as we are still part of the Canadian system. We know what the Government of Quebec has done. People may criticize its actions, but at least it has an action plan and it has asked that the federal government give this issue priority.

For all these reasons, in order to send a clear message to the Conservative government, the Bloc Québécois will vote against Bill C-28. Obviously, we were in favour of the budget tabled last fall, and we continue to be. We believed that we had to support it, if only because of the issue of the fiscal imbalance. However, it is impossible to include in the same bill both the whole issue of the economic statement and the accord with Nova Scotia and Newfoundland and Labrador on offshore petroleum resources.

I believe that we represent exactly how Quebeckers are feeling. With our vote, we are sending a clear message to the government that it needs to go back to the drawing board, come up with an action plan for the manufacturing sector as soon as possible and waste no time in using the surplus for something other than just paying down the debt.

The time for putting everything on the debt is over. The federal government must use a portion of the surplus tax it takes each year to pay down the debt, but it must also use a significant portion to correct inequities and lend a hand where needed to go forward.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I listened closely to the contradictory message delivered by the member, with whom I sit on the finance committee. I was very attentive yesterday to his motion and was intrigued that he used the industry report as part of his presentation this morning.

He may have used, I would like to call selective memory, but probably a selective choice of words in the document from which he quoted. If he had read the document carefully, he would have seen that one of the important parts of that document was the foreword inserted by the chair of the industry committee. It states that on behalf of the committee, the recommendations presented in this report should be implemented in a timely fashion. He does not say abruptly, stupidly, without thought, without the necessary work in order to ensure that taxpayer money is spent wisely and that all companies in this country that would benefit from further tax reductions or proper investments from government could benefit from them.

While the member was quick to point out the aggressive nature upon which he acted yesterday, which I do not think was in a very thoughtful manner, he should have accepted the amendments moved by the Conservative members of the committee. We are in agreement with the report and take no issue with it, but we certainly will not move forward in a manner that either handcuffs industry and manufacturing in this country or handcuffs the financial aspect of the Minister of Finance's responsibility.

Therefore, I would ask the member to at least acknowledge that the implementation that the finance minister and the government included in the budget, which he supported, the accelerated capital cost allowance for manufacturing that has produced $1.8 billion of investment, of which the majority of the funds are used by manufacturing companies in Quebec, is a benefit to his province and this country.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I am going to give my colleague a very simple answer. On the question of accelerated capital cost allowance, if half of a recommendation in the report produced such a result; if half a recommendation had the effect we have seen, imagine what would have happened if the other 21 recommendations had been implemented. We would not be facing a manufacturing crisis today, or, if there were one, our businesses would be solidly equipped to face it.

Yesterday, in debate on this question, when the Conservatives wanted to replace the word “promptly”, I think they were not considering the fact that the industries in my riding, in Quebec and in Canada, and the entire manufacturing sector, have been crying for help for several months. Those industries would not think it was too soon if we adopted measures today, although they might think that we were already too late by a few months.

We received the report in February 2007 and the budget followed a month and a half later. The government implemented half of one measure. We understood at that time that it could not implement all of them. But eight or 10 months later—when the government’s economic statement was presented, or today—there was no longer any reason why the government could not move ahead. The only explanation I have been given by senior officials on the question of refundable tax credits is that they considered the cost to be too high.

We have been given figures by experts in this area, and the cost is not that high. Yesterday, the Bloc Québécois proposal alone, about using the surplus for this year instead of paying $11 billion toward the debt, could have injected $2 billion to help manufacturing firms. We could have implemented those measures quickly and we would not have a larger foreign debt. We would have avoided an even worse financial situation.

In my opinion, the position I stated yesterday was supported not only by the three opposition parties, but also by the Conservatives, because they did not vote. That is a very clear signal that they do not oppose our motion, because they know it would be publicly unacceptable. If the Conservatives had voted against our proposal, which says that it is urgent that tax measures be put in place regarding the entire question of the manufacturing sector, they would have paid the political price. They chose to take the middle of the road.

The Minister of Finance must now act promptly on the proposal by the Standing Committee on Finance, for the benefit of Quebec, Ontario and the entire manufacturing industry in Canada.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, I have many questions and many of them pertain to manufacturing. The hon. member will know that I am from London—Fanshawe where we have experienced a manufacturing crisis of our own. Three hundred thousand jobs have been lost across Canada and a significant number of them have been in London--Fanshawe.

Just last month Siemens announced that it would be closing. We have lost Beta Brands and Ford Talbotville is now on one shift, which has significantly reduced the economic advantages that we in the London area once rejoiced in.

To add insult to injury, the federal government is currently negotiating a Korean free trade deal. The reality is that while we import $1.7 billion in the automotive sector from Korea, we are only allowed to export $11 million, which adds to the difficulties we are undergoing.

A couple of weeks ago in this House the Bloc put forward a motion that indicated very clearly that the government should do something tangible in support of manufacturing jobs and jobs in the natural resources sector. The Conservatives voted against it and the Liberals sat on their hands.

I wonder if the member could respond to that inaction and that lack of concern from two sides of the House.