Debates of April 26th, 1994

Pearson International Airport Agreements Act

[Art Hanger, Reform, Calgary Northeast, AB]

Mr. Speaker, I do not believe there was a question there. There was certainly a considerable amount of information passed through his five minute presentation.

Again, going back to the royal commission and looking at taxpayers' dollars, what is to be gained by striking a royal commission? In looking at previous royal commissions they have been very expensive in nature. Can this matter be handled in a much more efficient way than a royal commission and the expenditure of millions more?

I know that Mr. Nixon did a study on the matter and there were certain recommendations and I believe that we should be looking closely at those recommendations. If they indicate that there should no compensation then there should be no compensation. I am certainly much in favour of that.

Apart from that, I really do not have anything more to say in reference to the member's comments.

[Suzanne Tremblay, Bloc, Rimouski—Témiscouata, QC]

Mr. Speaker, I consider it a privilege to speak in this debate on Bill C-22. In the last election campaign, the leader of the Liberal Party of Canada travelled from coast to coast to promise a transparent government, among other things, to the Canadian people. Where is this government after six months in office?

I will quickly go over a few facts that, in my opinion, are revealing in this regard. As promised, the government cancelled the helicopter contract but we and the Canadian people still do not know how much this decision really cost.

Last December, when hardly anyone was paying any attention to what was happening in Ottawa, and while we were busy setting up our offices in Ottawa and in our respective ridings, the government announced an increase in unemployment insurance premiums. In its February 22 budget, the government tried to portray itself to Canadians as a generous and understanding government and a very good manager by announcing a premium reduction that will, however, only come into effect in 1995. This government does not want to let Canadians know that it has brought premiums back to where they were before it increased them.

In the Ginn Publishing affair, the government did not fool anyone who followed the case, and Canadians did not fall for the very strange and contradictory explanations given by the various ministers questioned on this subject.

The Official Opposition tried by every means available to shed light on the sale of a Canadian publishing house to an American giant. It was all in vain. All Liberal members and ministers continued to act in collusion, preferring silence to clear and unequivocal answers. They prefer to swim in neutral waters where only spoken words leave traces and where the Liberals feel tied by a verbal agreement apparently made by a minister from the previous government. According to a legal opinion given by the Department of Justice at the request of its client, the Department of Finance, this information is subject to solicitor-client privilege pursuant to section 23 of the Access to Information Act.

Given the lack of transparency of this government, it was impossible for the population to know for sure who was protected in this deal and who really benefited from it. This was followed by another troubling situation: serious allegations to the effect that the Museum of Nature was mismanaged. There was a general outcry from Canadian and international scientists, who asked the government to intervene before it was too late.

The Official Opposition pointed out, once again, before the Committee on Canadian Heritage that the population had the right to know whether or not the allegations were founded since the $18 or $20 million budget of this museum comes from taxpayers. Both Opposition parties demanded the right to let the committee hear witnesses so we could listen to both versions of the story. No such luck! The Liberals who are so proud of their transparency refused, once again, to let us shed light on this issue.

I will not pretend that I undertook an exhaustive review of this government's first six months in office. My purpose is rather to draw the public's attention to one constant in the few examples I have just given. The constant is this: every time the government could follow up on its promise of integrity and openness, it chooses subterfuges, even though, in the red book and in his speeches throughout the campaign, the Prime Minister said in various ways that openness was necessary if people were to regain confidence in government and in politicians.

Now let us take a closer look at Bill C-22, an act respecting certain agreements concerning the redevelopment and operation of terminals 1 and 2 at Lester B. Pearson International Airport. I will go right to the point and highlight briefly, in my own way, some of the events which began in April 1987.

First, the Conservative government agreed to entrust the building and operation of terminal 3 at Pearson Airport to a real estate company owned by Charles Bronfman. This first group of friends included Herb Metcalfe, a lobbyist for Claridge Properties Inc. and former organizer for Jean Chrétien; Leo Kolber, a Liberal senator who, as has been mentioned on many occasions, held a party at $1,000 per guest during the election campaign; Peter Coughlin, president of Claridge Properties Inc. and general manager of Pearson Development Corporation; Ray Hession, who was deputy minister of everything important in previous Liberal governments and has ties to Paxport Inc., as the Ottawa Citizen pointed out.

Later, Brian Mulroney's government went back on one of its decisions and in December 1992 decided to turn the redevelopment and operation of terminals 1 and 2 at Lester B. Pearson International Airport over to private enterprise. The deadlines were very short and only two firms could answer the government's call for tenders and bid: Claridge, for Charles Bronfman, and Paxport, for the Matthews group. Paxport Inc. was selected.

This time we find the Conservative government's real friends, including Don Matthews, president of Paxport Inc., who was president of Brian Mulroney's leadership campaign in 1983; he is a former president of the Conservative Party and chaired many fund-raising campaigns. His son-in-law, David Peterson, was Premier of Ontario. Mr. Chrétien asked Bob Nixon, a former Peterson Cabinet minister, to investigate, behind closed doors, the transaction that he promised to cancel on the very last day of his campaign.

Otto Jelinek, a former minister in the Conservative government, is a member of the board of directors of Paxport and president of an Asian subsidiary of the Matthews Group. Fred Doucet, a professional lobbyist and long-standing friend of Brian Mulroney, will be hired by Paxport; his name will also come up in the Ginn Publishing affair. As you can see, Mr. Speaker, it all holds together.

Bill Neville, another Paxport lobbyist, and a former chief of staff-a very interesting character, as you will see-of Joe Clark when he was Prime Minister, member of Brian Mulroney's inner circle and head of Ms. Campbell's transition team. He will have served all three of them; in his case, it was wall to wall.

Paxport Inc. was to demonstrate the financial viability of its proposal by February 15, 1993, but the government did not hold firm on this condition. Since its financial backing was not solid enough for this transaction to go through, Paxport will have to turn to their pal Charles Bronfman and ask him: "Come to our rescue, competitor dear. Let us merge and acquire a controlling interest in this highly profitable airport. This will allow us to add millions to our respective family trusts". As a result, T1 T2 Limited Partnership was established; it was the only way to go on with negotiations with the government. Furthermore, Cla-

ridge, the rival company, became a majority holder, with 66 per cent of the shares, while the company initially selected to implement this project found itself holding a mere 17 per cent of the shares of the new company, based on what it could afford.

To make this enterprise very profitable for its friends, the government undertook to divert passenger traffic to that airport and curb, if not stop, any airport development activity within 75 kilometres of the Lester B. Pearson Airport.

Since the government apparently had unlimited funds available given the possibility of making deficits, it dug out several other millions to complete this privatization which would allow the government's friends to get rich on the backs of the taxpayers. To sell privatization to key groups, the following compensations were offered: severance pay for Transport Canada employees, for a grand total of $5.5 million and this, in spite of the fact that all jobs had been protected for at least two years with Pearson Development Corporation.

Add to that a 15 per cent contribution toward the rent paid by Air Canada and foreign airlines using the facilities at Terminal 2.

Moreover, while the government had expressly committed itself to not finance the construction, repair or renovation of terminals 1 and 2, it secretly decided otherwise by agreeing to a 40 per cent carry over on rent, through a good clause in a contract which is about that thick. I saw it this morning and I was rather surprised. The money will be paid back later, with interest based on the Bank of Canada rate, plus 2.5 per cent.

The Lester B. Pearson Airport generates profits, and this could make it attractive for third parties. Yet, in a contract that thick, the Canadian government did not even include a clause to enable it to oppose such a transfer, so that the airport operations could fall in the hands of foreign interests and the government would not even be able to do anything about it.

There seems to be sufficient reasons to justify a public inquiry. Indeed, in the report which recommended cancelling the privatization of Pearson Airport, Mr. Nixon mentions that the role of lobbyists in this case went largely beyond what is normally acceptable, especially as regards the reassignment of several senior civil servants. The report also points out that to conclude a transaction of this scope during an election campaign flies in the face of democratic practice.

The first eight sections of the legislation cancel the transaction and prohibit any suit against the Government of Canada and its officials. Fine. The Liberal government had made a promise and, for the second time, it gets out of a written commitment involving several million dollars. First, it got out of the helicopter contract and now, through a piece of legislation, it is getting out of a hastily drafted contract regarding the Lester B. Pearson Airport.

How can this same government claim, as it has been doing for months now, that it was not able to get out of an oral commitment made by a minister of the previous government, while it gets out of the written agreement? This government is not fooling anybody, and the inquiry could reveal other things.

What is really behind the cancellation of this whole deal? Is it that too many Conservatives and not enough Liberals were benefitting from the transaction? Or, was there some fear that the scheme would eventually be discovered?

There is reason to be worried, and Canadians will come to know the contents of this bill. Just when they are being asked to tighten their belts and prepare for a review of their social security net, the government wants to enact legislation favouring those who let certain political parties come to power.

Pursuant to clause 9, there will be no compensation in connection with the coming into force of the Act. But, according to clause 10, compensation may be awarded if the Minister deems it appropriate. This is doctoring, Mr. Speaker! I was very happy to hear other members say that to leave all that power in the hands of the minister was dangerous, as some bleeding is occurring and God knows when it will stop.

Here is my conclusion: This government is hog-tied thanks to friends of the system who, year after year, continue to fill the campaign coffers of both the Liberal and the Conservative parties.

And I will remind hon. members that the Leader of the Opposition very clearly demonstrated this morning that the five largest Canadian banks split their donations fifty-fifty between both traditional parties, handing out almost half a million dollars, that is $250,000 to the Liberal Party and $250,000 to the Conservative Party.

These old political parties take into account the best interests of those who make it possible for them to take turns running the country, while ignoring the best interests of the public.

The time has more than come to put public finances on a healthy footing by introducing a bill concerning the financing of political parties, something similar to the legislation passed by the Quebec government.

In this case, we do not have any other choice but to set up a royal commission to clarify this very dismal and shameful instance of patronage.

This commission could, if necessary, recommend the amounts of money to be paid following the cancellation of the current contract. However, it is understood that this money could not be used to cover any potential profit T1 T2 Limited Partnership

could have made from Terminals 1 and 2 at Pearson Airport or to cover the fee paid for the purpose of lobbying a public office holder.

To put it plainly, that covers any fee paid to the lobbyists who made the government do their bidding by reminding them who in fact is responsible for their election.

Canadians are sick of this government's lack of openness. They are sick of these secret promises that cost a bundle to Canadian taxpayers.

Canadians have had enough of this government protecting its friends and paying back those who financially supported its election campaign. They have had enough of the promises made in the red book-which, when I was young, referred to the used cars listing-and which makes the government look good and projects an inaccurate picture of its true identity.

In short, Canadians are sick of promises that keep the wheel turning, that allow the rich to get richer, the poor to get poorer, and the traditional political parties to take turns at running the country and taking a slice of the pie.

Canadians have reached the threshold of tolerance and have lost confidence in a government which, in a very short period of time, has missed all the opportunities it was given to restore confidence and refused to show any openness.

On their behalf, I too call for a royal commission to get to the bottom of this shocking deal.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup, QC]

Mr. Speaker, I want to thank the hon. member sitting next to me for her clear demonstration. It was very instructive and we can see that her experience as a teacher is now useful when time comes to give very clear examples.

I really liked the comparison she made with Ginn Publishing. Whereas the Pearson Airport situation is the doing of the previous administration, the Ginn Publishing matter is the responsibility of this government but, in both cases, we see the same pattern of unclear behaviour which maintains the behind-the-scene influence of the lobbyists. I would like my colleague for Rimouski-Témiscouata to give us more details about the changes to the financing of political parties that would be needed to correct this situation.

In a sense, this reminds us a little of what may have happened in Quebec before 1976, particularly during the first two terms under Robert Bourassa, that is from 1970 to 1976, when questionable practices were common.

We had people somehow similar to those mentioned in the speech. In Quebec, Desrochers, for example, was maybe the type of person to do that kind of work.

Quebec managed to break free from such practices thanks in particular to the way Mr. René Lévesque revised the financing of political parties. I would like my colleague to clarify for us the ways to eliminate the questionable relationship between governments and lobbyists.

[Suzanne Tremblay, Bloc, Rimouski—Témiscouata, QC]

Mr. Speaker, I thank my colleague for his question and for giving me an opportunity to talk a little bit about political party financing.

It is, obviously, extremely important that the federal government address this question and make a fundamental change to prohibit all companies from making donations to political parties. The money to fund political parties must come from individuals and there must be a limit on contributions.

We have seen what has happened in the past. If we look at Mr. Desmarais' contribution in the Charlottetown referendum campaign, each of the eight members of his family, including a three-year-old girl, gave $3,000. His contribution could not exceed $24,000. That is a far cry from the $250,000 campaign contribution he could have made.

It is the same thing with Bombardier. These companies have to paint themselves red or blue. It would take too long to give a detailed answer to my colleague's question, but if we took away the right of companies to donate money to political parties, we would not have such a mess on our hands. If the legislation on lobbyists was reformed, we would know exactly how things work and we could get to the bottom of the matter.

The same applies to people who appear as witnesses before committees. We should adopt the American system where sworn testimony is the rule, otherwise the work of committees is pointless.

[Jack Ramsay, Reform, Crowfoot, AB]

Mr. Speaker, I think it is clear that when a government stops a deal like this the question is how can it do so without alienating very powerful people within Canada who are involved in the deal. It is obvious how the government has arranged to do that and that is through section 10. Section 10 is clear evidence that an agreement has been made. Not only that, in order to satisfy everyone that agreement has to be consummated in very short order.

Subsection (3) of section 10 states:

No agreement may be entered into under this section after one month after the coming into force of this Act.

All the payouts are going to occur one month after this act is passed.

The agreement that has been made, and it is obvious to me and everyone who has looked at this situation, is that the compensation package has been put forward by those people to the

government. It has been agreed upon and we are simply going through the motions. Because we are in a majority government situation, this is going to be passed. This is a fait accompli.

I would like to ask a question of the hon. member who spoke so eloquently about this situation. The Bloc is recommending a royal commission of inquiry. Does the member not feel it is time that the standing committees of the House were empowered to deal with these kinds of issues? Should they not have the power of subpoena and the power to bring witnesses before the standing committees to examine them? Should not the elected representatives be playing the role that the royal commissions of inquiry have in the past at enormous costs? Ought we not to be doing that job? I am asking the hon. member if she would agree with that. If she does, would she make that recommendation to her caucus?

[Suzanne Tremblay, Bloc, Rimouski—Témiscouata, QC]

Mr. Speaker, I thank my colleague for his very pertinent question and his very judicious comment. It is quite clear that one does not need a crystal ball or clairvoyant powers to see what is in clause 10 of the bill.

Thanks to clause 10, people will recover what they lost when their contract was cancelled. I agree totally with my colleague on that point.

Unfortunately, I do not believe in the work of committees. Based on my personal experience, I find these committees a sham. Unless we can have people subpoenaed and testify under oath, these committees are merely entertainment for most Liberal backbenchers, but are becoming quite a waste of time for us on this side.

[Maurice Bernier, Bloc, Mégantic—Compton—Stanstead, QC]

Mr. Speaker, let me first of all congratulate my colleague for her speech. What I retain from her remarks is the kind of relationship, the kind of scheming brought to light on this issue, between various successive governments.

Basically, my colleague for Rimouski has very eloquently demonstrated the relationships that the Liberal-Conservative contributors and the Conservative-Liberal contributors have had sometimes with the Conservative government and sometimes with the Liberal government. As we can see, it all boils down to the same thing. That is something to really think about. Our colleague for Crowfoot suggested that clause 10 in this bill hints that there is a deal somewhere, but that it obviously cannot be outlined in the legislation. What is stated in the bill is that the Minister may approve any agreement submitted to him within 35 days after the passing of this legislation.

I would like to hear my colleague further on that kind of deal and also on that kind of Liberal-Conservative or Conservative-Liberal buddy-buddy system, because of which we always find ourselves in that kind of situation. The people invited to a $1,000 or $3,000-a-plate dinner are not the kind of people the Prime Minister referred to as beer drinkers last week, but rather people arriving with their six-pack of champagne and generous contributions for the Liberal Party.

The only way we can resolve that problem is to pass a legislation on the funding of political parties and electoral campaigns. I like to remind people that since such a piece of legislation was passed in Quebec, no matter what government is in power in Quebec, there has been no instance of wrongdoing brought to light. How come? Because of the transparency of the funds contributed to the parties. I would like to hear my colleague speak on that.

[Suzanne Tremblay, Bloc, Rimouski—Témiscouata, QC]

Mr. Speaker, I will be very brief. Obviously a deal has been concluded, this is very clear in this legislation. This is the only thing transparent in this bill, there is a deal. Now it has been repeated during the whole campaign, Conservatives and Liberals are six of one and half a dozen of the other, they amount to the same thing. If we are able to rise today in this House and condemn this legislation, and denounce the scheming and the patronage, it is because our hands are clean.

[Some hon. members]

Hear, hear.

[The Acting Speaker (Mr. Kilger)]

It being 5.56 p.m., the House will now proceed to consideration of Private Members' Business as listed on today's Order Paper.

The House resumed from March 22 consideration of the motion.

Income Tax Act

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, it is a pity we have to move on to other things, because we were having a very interesting and lively debate. We will now proceed to something more technical dealing with child support payments, a subject which is rather important in itself.

This issue arises in a context of developments to which society must adjust. Broken families are more and more prevalent and, even though it may not be desirable, the government must adjust itself to these new circumstances.

The motion presented by the hon. member for Nepean reads as follows:

That, in the opinion of this House, the government should amend the Income Tax Act so that child support payments are no longer considered taxable income for their recipients.

This is a very interesting motion, but we should nonetheless consider both sides of its potential impact. Some of my colleagues have already mentioned that the Bloc would support this motion. That is what we will do.

But I would like to make a point. Under the current system, the parent who must make support payments-that is the father most of the time-can deduct those payments for income tax purposes. The mother who receives support payments must include them in her own taxable income.

The first goal, naturally, is to avoid double taxation and to tax the income in the hands of the recipient. Another consideration would be to allow the taxpayer with the lowest income to include the payments in his or her income in order to lower the tax amount. Those are commendable goals but they create in fact a deep feeling of injustice.

The one question that should be asked is: Who is the recipient of the support payments? They are paid to the mother and she must include them in her income. In fact, it is income that is used and should be used for the children, and, in most cases, it is used for the children. It is often insufficient, however, since it must take into account the ability to pay of the spouse or of the person who is making the alimony payments. And the person who receives the payments must pay income tax on it.

This creates a feeling of injustice because, in reality, the income should go to the child. Does the child have to pay or support income tax, finally? The child has no income, and this could be the problem. Should we really make this income taxable?

This may be where we should improve on the proposal. Insofar as the person receiving the alimony payments is not required to pay income tax or to declare these payments, we should make sure that, in establishing the amount of alimony, a judge is not influenced by a change in the tax system.

Take for example the case of a person receiving alimony of $6,000 a year or $500 a month; the person would receive a gross income of $500, and a net income of let us say $400, which would allow for $100 in income tax. We could be in a situation where a judge would take the new tax rules into account and say: "I will ask the spouse to pay only $400. He will pay tax only on $400 and the beneficiairy will receive the same amount as before".

We would then be in a neutral situation for the person collecting alimony. I do not think this is the purpose of the motion presented by the member for Nepean. I think that its objective is to ensure that the gross amount that is paid becomes a net amount, and that the spouse who is giving child support bears the tax burden, as if in fact that spouse was still part of the couple and should pay for children's expenses.

We could say: "Yes, but in fact, the simple thing to do would be not to tax either side". That is dangerous, because that would easily encourage a transfer of income from one spouse to the other, so that a good part of the income would become non-taxable. That is not really desirable. A part of the income must continue to be taxable.

The question we must ask ourselves is: Must the children support a part of that tax? For the government, taxing the spouse who is giving child support payments would have a stimulating effect on the income since that income is often higher that the one that gets the spouse who is receiving those payments. On the other side, that might encourage single-parent families. That should be examined.

There is also an aspect in this issue that should not be overlooked. A good part of the problems does not stem necessarily from the tax treatment, but often from the incapability for a spouse who is entitled to child support payments to actually get them.

We all know or are often told that an ex-husband or ex-wife may often have one or several unreported incomes. We all know that the underground economy is thriving and that a spouse can avoid paying alimony. In such cases, it is very difficult to do something about it and proceedings are long and expensive. We are looking at a group of people who do not take their responsibilities seriously. I am not saying everybody is like that. Despite the fact that their family is apart, many people remain very much concerned about the development of their children and take their responsibilities seriously.

In some cases, however, things are much more difficult. We should insist on the protection of ex-spouses, and in particular ex-wives because there are much more ex-wives who experience problems with alimony payments from their ex-husbands. I think these are issues that should not be dealt with separately. They should be integrated as a whole. In that sense, I think it is a good proposal but, as I said, we should take that into consideration.

After checking this afternoon, according to information we received, it would appear that judges tend to take the tax treatment into consideration before allowing an amount to an ex-spouse. That being said, if they do that now, chances are that they will continue to do that in the future and that they are going to take into account the amendments brought to the Income Tax Act.

We should clarify things so as to avoid an adverse impact from this measure. I understand that it is only a motion and that we want to set out a principle. I think that we all have to agree on that principle. Even the members from the Reform Party who said they were against the motion recognized that principle. They are not opposed to it. However, they said that they had

problems with the technicalities. That is possible, but that does not mean that there is no way to improve them.

The member from Nepean thoroughly researched her motion. She talked about the origin of the alimony, which began in the 1940s, and the way it operates for income tax purposes. She was perfectly right when she said that the context or the legislation never made any progress over the years. She talked about the principle of deduction/inclusion since it is possible to make a deduction on one hand, and on the other hand, to include the amount that has been deducted in the other income which is not correct and which, according to several people, seems quite unfair.

In that sense, I think that knowing that she has the support of this side of the House, she should now go one step further than what is proposed in her motion and talk to the minister of Revenue and the minister of Finance.

I am sure that the Department of Revenue reviewed the matter. When this was debated earlier in the House, someone mentioned that, in the United States, no distinction is made between the portion of the alimony used for the expenses that a woman must incur by the very fact that she has children, and the portion of the alimony used for the expenses directly linked to the children. There are two categories subject to different tax treatments. Perhaps this is an alternative worth considering, an interesting approach. One should also look at what is done elsewhere. There are certain things which are easy to do and which would allow a fairer system. This is the meaning of her proposal.

Finally, in introducing this motion, the member has been guided by deeply humane motives. We are going to support her proposal, but we must go one step further in the technical details so as to ensure that what we want to put forward will not have adverse effects.

[Bonnie Brown, Liberal, Oakville—Milton, ON]

Mr. Speaker, it is my pleasure to speak in support of the private member's motion put forward by my colleague from Nepean. Her initiative provides an opportunity for this new Parliament to address not just one issue but three recent phenomena which Canadians are not happy about.

The motion specifically addresses the taxation of child support payments, but more broadly asks us to examine the distribution of wealth in the country, the growth of child poverty and the cohesion between the values of Canadians and the policies of government.

First let us look at the distribution of wealth. If you put all the families in Canada together and then divide them into five equally sized groups, you see some interesting numbers. The 20 per cent at the top level of income receives 40 per cent of the income paid out. The lowest 20 per cent receives only a meagre 6 per cent of the income.

If we go further and combine the two lowest groups of 20 per cent and form a new group that represents 40 per cent of all Canadian families, we will find that this substantially sized group receives and lives on only 18 per cent of the total income. Compare this idea of the bottom 40 per cent living on 20 per cent of the income with the top 20 per cent living and spending 40 per cent of the income.

The remaining two groups in the middle receive 18 per cent and 24 per cent respectively, hovering close to the 20 per cent figure that the group represents.

I ask the House whether as representatives of Canadians we are satisfied with this situation? I know it is a large question but I think it is appropriate to ask it in the early stages of a new Parliament because today's debate is the first opportunity to begin to consider it and keep it in mind as we discuss tax reform and the 1995 and subsequent budgets.

Personally I am not satisfied with the fact that 20 per cent of our families struggle to exist on 6 per cent of income because I know that in those families live children who are not getting their fair share of the wealth of their country.

Second, let us look at this phenomenon of poverty of children in Canada. Statistics Canada reports that 1.2 million children under the age of 18 live in poverty. The effect of poverty on their health is particularly significant, given that poverty at the earliest stages of life has a lasting impact on health status that extends into adulthood.

This is further illustrated by the fact that the infant mortality rate of children in poor neighbourhoods is almost twice as high as that in rich neighbourhoods. In 1992, 900,000 children needed to use a food bank and about one in eight families were living in substandard housing.

I am not satisfied with these statistics either. They remind me of a situation in an emerging nation where a few live like kings and the many struggle to exist. They even bring to mind the word oligarchy where a powerful few are in control and are accepting of and tolerant of the sight of hungry children.

Canadians reject the idea that such a system is acceptable. Canadians question the appropriateness of obscene salaries for certain chief executive officers. In Maclean's magazine this week Allan Fotheringham in his column writes about a Canadian CEO who was paid $6.9 million last year and asks the question: ``Is anyone worth $6.9 million for one year's chores''?

Many Canadians are suffering, food banks are blooming but somehow there is enough spare change in the system to pay one person $6.9 million. This is offensive to Canadians who value fairness and dignity for all. It is offensive to a people committed to peace, order and good government.

This is the context in which we address the question of the taxation of child support payments. Today on breakup of a marriage one parent usually gets custody of the children and the other parent is ordered to make regular payments. The money received by the custodial parent is considered to be income and is taxed as such. The non-custodial parent is allowed to deduct the amount transferred over the course of a year from taxable income on the annual tax form.

I believe that from the outset this is unfair compared to the situation of intact or two-parent families who file income tax returns. In a two-parent family both parents spend money on their children's welfare all year but neither of them is able to add it all up and then subtract it from taxable income.

Today we are actually rewarding the non-custodial parent by providing a tax break not enjoyed either by single custodial parents nor by the two parents who stay together.

Why did we ever do this in the first place? It was thought that if income tax was paid by the custodial parent, usually the mother who was in a lower tax bracket, that less money would go to the government and there would be more for the children. This idea was obviously developed by people who had never been divorced and who thought that the concept of the original family including mutual support and nurturence continued beyond the date of the divorce.

It ignored several realities, the reality that divorce is adversarial and usually leaves in its wake revenge and bitterness, the reality that divorce requires the maintenance of two households with accompanying costs, and ignored the reality that the non-custodial parent embarks on a new lifestyle with new demands and unanticipated costs. It ignored the reality that the family which remains loses one adult worker to share housework, home maintenance and child care. It ignored the reality that the custodial parent inherits the work, the worry, the emotional and intellectual strain of maintaining a home and being on duty 24 hours a day for the children.

Our tax system rewards the parent who leaves and penalizes the parent who stays.

Some would say that amounts to be paid are the business of the courts and that judges and lawyers today are calculating all these facts when they gross up support payments. But some of these decisions are 10 to 15 years old and not only are the amounts paid totally inadequate but no gross up ever occurred in the original calculations.

Some would say then it is time to go back to court for a change of circumstance review. I would say those who give such advice have never been divorced either, or at least have never lived the life of a single parent. Single parents are usually poorer than their peers who are still married. They are often exhausted because of the burden they carry.

Picture a single mother of three teenagers who has been divorced for 10 years. Chances are she has already been back to court several times attempting to secure arrears owed to her, or perhaps she has registered with the provincial system designed to chase the non-custodial parent for arrears owing. Neither system has served her or her children well.

The result of these systems that do not work on the members of a single parent family is a feeling that they are less valuable to society, that they are marginalized in their struggle to survive. The temptation is to give up.

When poor single parents read in the paper that 61 per cent of single parent families live in poverty at an average of $9,000 per year below the poverty line it confirms to them the reality that they are living every day. It is not encouraging to them.

I and the other members of this new Parliament have inherited a country where over the last nine years the free market and government inaction were supposed to enhance the economic wellbeing of all but Canadians have come together to agree that that system did not deliver the results they were looking for.

They are expecting us to shake off the political paralysis and to shed the philosophy of inaction. They are asking us to unleash the political will for changes that will restore a sense of fairness to all Canadians.

Amending the Income Tax Act so that child support payments are no longer considered taxable income for the recipients is admittedly just one piece of a much larger puzzle but this motion before us tonight is the first chance we have had to demonstrate that we too are appalled by the statistics on the poverty endured by children in single parent families and that we are committed to restoring hope to those children.

Our support of this motion sends a message that we are not timid. We are not afraid to challenge the status quo. Rather it says that we who formed this government reflect the deep held values of Canadians and that we do have the political will to make the changes necessary to reinstate fairness as the hallmark of Canadian society.

[Eleni Bakopanos, Liberal, Saint-Denis, QC]

Mr. Speaker, I welcome this opportunity to support the motion presented by the hon. member for Nepean. The issue of support payments is a

very important one for many people, especially for women and children.

The current legislation discriminates against children born in poor families or families headed by single parents. This motion is needed to improve the circumstances of women and children. The legislation was passed 52 years ago and has changed very little since then, but society and the status of women have changed a great deal.

In the forties, the government introduced what was considered progressive legislation. In 1994, that is no longer true.

In 1942 when this policy was first developed the support payers, at that time mostly men, invariably earned more than their wives so that the tax brackets of the two parents were different. The husband would save more by his deduction than the wife would pay in tax and that net savings would conceivably be passed on to the child. In some cases of course this has happened, though to so few that it makes little difference. Three facts make support of this motion essential.

To begin with the reality of separation and divorce is rarely so easy, and I am sure we all know of cases where children have become pawns in parental disputes. Children who generally never have a say in such matters are left without a voice in their own future.

Change of the income tax code will not eliminate this problem but it will be a significant measure to combat it.

It is also true, that after a divorce, the husband's standard of living goes up while that of the wife and children goes down. Justice in this case is impossible under the prevailing legislation.

Second, since the reform of the tax code several years ago the number of tax brackets has been reduced to three. The likelihood of tax differential has dropped merely as a result of that factor alone.

Today, the likelihood that both parents are in the same tax bracket is far greater. It means giving a break to the non-custodial spouse and obliging the spouse who does to pay income tax. The system does not make sense, and when all is said and done, the money saved rarely goes to those who need it most, in other words, to the children.

Third, when one also considers that more and more women are part of the labour force than when this law was introduced, it becomes even clearer that the system has become a system of subtle discrimination against women. In other words, as women have entered the labour force their relative responsibilities regarding the family have stayed the same as witnessed by the fact that still very few men gain custody of children.

With the duel responsibilities of family and work single parent women suffer all the more because their child support is taxed back once again. This was never an intention of the original law.

Let us look at a typical situation of child support payments. Across Canada we have the problem of many so-called deadbeat dads who do not pay child support in full. If for example supporting a child would cost $10,000 per year, that income would naturally be taxed back. Often settlements will include that extra amount. Therefore the net amount would stay the same.

Unfortunately if the support is in partial default the parent with custody, and again I repeat almost always the mother, must pay tax on an amount already insufficient to support her child, whereas the defaulter would still get a tax credit on what he did pay.

If the defaulter paid half the amount, which is $5,000 in this case, the mother and the child would suffer from not having enough money and the obligation by law to pay for it while the man would receive a tax credit on the part he did pay with no penalty.

A law that allows this sort of shocking absurdity must be changed.

We often hear stories about how hard it is for single parent families to get support payments. They are often poor, and the government penalizes them even more.

I hope members of all parties will realize that this motion is not just a matter of amending the income tax, but of letting justice prevail, so that these people will have a better life than they do now.

I also want to say that the changes proposed by the hon. member for Nepean are entirely sensible and economically viable. Our social programs support many women who then have to spend money they do not have to pay taxes. Often poor women cannot work because it would be too expensive. Being on welfare undermines a person's hope and dignity.

The purpose of social programs is not to help divorced spouses. The current system is unnecessarily costly.

We have to remember some important facts about the broader issue of single parent families. Large portions of poor children come from mother supported single parent families. Single parent families most often live either just on the edge of or below the poverty line.

I think we should all recognize that to fail to change this law would result in some people-I remind all members that these are living, breathing children not just numbers out in space somewhere-not succeeding where a relatively minor measure, from our point of view, might help them to succeed in their endeavours.

However, if you look at the law it seems that we actually try to hurt our youth. Youth issues have always been important to me and I am sure to all my colleagues and I must oppose any measure which we know makes life even more difficult for the youth of Canada.

As my colleague pointed out when she introduced this motion, Canada seems to be unique among first world nations in that it taxes child support. The United Kingdom, the United States and Australia were all among the nations she cited then as being more progressive than Canada.

It is at this point that I wish to criticize the member for Calgary Centre who asserted in the House on March 22 that because child support would then become income exempted the government would receive less money and therefore damage the economic wellbeing of the country.

Once again the Reform Party is failing to take into account the long term. Not helping our children now might lead to greater family insecurity, welfare dependency and even crime, subjects I know all members are currently concerned about.

I must disagree with his analysis of the validity of this motion.

Can we truly say that the system is fair? No. Many experts agree that the legislation should be changed as soon as possible. This is not just a debate between men and women. Children are the ones who are affected most by separation or divorce, and in all cases, it is the children who suffer.

Can we tolerate the status quo, when measures taken by the government today discriminate against youth? We cannot, Mr. Speaker. Young people are our resource for the future. Our government has many programs that are very important, and I am glad to support them. However, what we give with one hand, we take back with the other. We will never achieve prosperity if we maintain measures that discriminate against young people who have not had all the opportunities to which they are entitled in a country as rich and strong as Canada.

Once again, I want to commend the hon. member for Nepean for presenting this votable motion. I hope that all members of this House will take note of this motion and support it without hesitation.

[Jan Brown, Reform, Calgary Southeast, AB]

Mr. Speaker, I am particularly pleased to rise and to speak to this motion this evening. It addresses an issue of importance to our nation and it is of importance to families, whether together or apart, and that is taking responsible action to ensure that our children are well provided for.

Having said that, I believe that the Income Tax Act should be revenue neutral when considering taxable income for families that remain intact and for those that separate. Presently it is not revenue neutral.

I want to make it crystal clear from the outset that I support this motion in principle. However, it does not go far enough. It is because of the manner by which it does not fulfil the principle that ultimately I cannot support it.

I will explain how the motion goes right and how it goes awry. In keeping with the practice established by my Reform colleagues in this House, I will propose constructive suggestions for making this motion more acceptable.

I commend my hon. colleague, the member for Nepean, for having identified a piece of legislation that is in absolute and desperate need of reform. She pointed out that the legislation was enacted during a time when women seldom worked outside of the home. The year was 1942 and for those post war times the legislation was developed in good faith.

However, the relevant section of the Income Tax Act has become severely outdated. It no longer properly reflects the contemporary reality of divorce. In particular, it fails to address the reality of the millions of Canadian women who work outside the home. Let me share a little of today's reality for those women whose spouses have left and who are raising children on their own.

Statistics Canada has indicated that a large and growing number of single parents, particularly women, suffer a decline in their standard of living in income relative to the parent who no longer lives with his or her children. We have heard that argument numerous times in this debate.

The Income Tax act provides for deductibility of child support payments by the payer and their inclusion into income by the recipient. If the payer had remained in the family unit, his or her ability to deduct child raising expenses would in most cases be reduced.

For example in 1993, the main income earner in a typical husband, wife and one child family would have received a child tax credit of $1,002 for a dependent child. That is if they lived in Alberta and the child was between seven and eleven years of age. If the family income was above a threshold level, then no child tax credit would be paid and the cost of raising the child would provide few, if any, tax deductions. If the parents separated in 1993 and the highest income earner supported the child only through fully tax deductible payments, $500 a month for example, he or she would obtain this significant tax deduction.

It is estimated that by allowing the deduction for the non-custodial parent and taxing the payment received by the custodial parent, generally the one with the lower income, it cost the government $235 million in tax revenue in 1992. With tougher laws enforcing more parents to pay child support it is expected this amount will grow. One can call that a moral hazard, if you will.

I agree with my colleague across the House that the Income Tax Act seems to treat the parent who leaves a relationship and who has fewer responsibilities for raising the children better than the parent, usually a woman, who remains with the children. Let me give an example of how this is the case. This example does not just come out of thin air. It reflects a number of real Canadian situations and actually comes out of my riding of Calgary Southeast.

This is the case of a married man and woman. He made $85,000 a year and she was a homemaker who received no income. This couple divorced and the woman received custody of the children. He continues to earn $85,000 a year and she now has a job that pays $17,000 a year. As part of the settlement he agreed to pay his former spouse $6,000 a year in support payments for his children.

What we need to look at is the $6,000 given as maintenance support. Under the present tax system, the recipient of the $6,000 pays income tax on this amount and the payer, the former husband in my example, receives a $6,000 tax credit. This system provides tax incentives for spouses who leave marriages and who do not raise the children.

A person who divorces, thanks to the existing legislation, receives a windfall for leaving the marriage. Certainly it is not the intent of the legislation to financially benefit a person for leaving family responsibilities behind.

The Income Tax Act as it now exists for reasons I have just mentioned contributes to a perception that there is little legislative support for families torn apart by divorce. This situation is intolerable. Ultimately it hurts the children.

The present system as I see it is flawed for two reasons. The first is allowing the ex-husband to claim a tax credit for his maintenance payments and the second is taxing the ex-wife for the amount she receives. Both of these problems show a failure of the government to encourage or recognize the importance of stabilizing the family unit and responding to the ongoing responsibilities of caring for the children involved.

The motion my colleague has proposed recognizes this inequity to be sure and attempts to redress it. However, I am concerned that her motion fails to be equitable. The pendulum may have been too far on the side of inequity, but the answer is not to swing it all the way in the other direction.

What is needed is some real compromise that will ensure ultimately an effective standard of financial support for the children who are affected and that will treat all affected parties fairly.

The motion allows the recipient, regardless of his or her income, to not have to claim the maintenance he or she receives. It is the lack of recognition of the income component received that is inequitable.

There should be a means test applied to the recipient in order to determine when and if he or she should pay any tax on the maintenance payment. This could be done quite simply. I suggest a recipient should pay no tax on maintenance payments up to $1,000 a month. Any maintenance payments over $1,000 a month should be included as taxable income by the recipient parent.

The changes I would like to see to this motion would in effect see no tax being paid on the amount that is paid in child support up to an acceptable limit by either the custodial parent or by the spouse providing the support. My suggestion is that the child support payment not be taxed as part of the income of the custodial parent unless that amount exceeds $1,000 a month. For example, if it was $1,200 a month, the $200 per month would be added to the income of the recipient and that portion would be taxed.

This may not result in loss of government revenue over all, but it is really too early to tell what the net effect may be. It is unclear at this point if there would indeed be a net tax loss through such an approach. In fact, in the long term it may ensure greater financial support for the children.

I spent quite a bit of time over the break developing this particular thesis. Perhaps it is not quite the same approach my colleagues on this side of the House have taken to this point. However I felt it was also very important to express my views on behalf of those constituents who have approached me for a very long time on this matter.

In conclusion given that the motion refers to changes in the Income Tax Act, I must mention the following. My colleague wishes to make the Income Tax Act more fair for all parties. A good place to begin is with a flat tax system. It could be the case that if such a flat tax were implemented then we would not have to be looking at yet more complicated changes to an already complicated tax system.

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

Mr. Speaker, I rise today to speak in support of Motion No. 14, introduced by my colleague, the hon. member for Nepean.

The motion urges the government to amend the Income Tax Act so that child support payments are no longer considered

taxable income for the recipients. This debate presents an opportunity for Parliament to correct a contentious longstanding problem with the Income Tax Act.

The provisions in the tax legislation which provide for tax deductible child support payments were brought into force in 1942. Canadian society has progressed a great deal since the 1940s, but unfortunately where the issue of child support is concerned the tax laws have lagged behind the new realities of today's society.

In Canada today there are nearly one million single parent families, or 20 per cent of all families with children. Eighty per cent of these one parent families are headed by women. Over half of these households live in poverty. Although they represent a small number of Canadian households, only 3 per cent, these single parent families headed by women bear 17 per cent of this country's total poverty burden.

The issue we are debating today involves more than changing legislation. The fundamental issue in this debate is justice for single parents, especially single mothers.

During this debate we must examine the intent of the current legislation and the effect it has on today's families. Because 98 per cent of child support recipients are women, it is fair to say that the present child support provisions in the Income Tax Act have a detrimental effect upon women and children of single parent families.

The tax treatment of child support payments actually decreases the ability of single parent women to support their children after separation and divorce. It creates even greater disparities between custodial and non-custodial households. The income of support payers is roughly double that of recipients and their dependants.

It is a fact that after divorce women and their children tend to suffer a decline in their standard of living while the man's tends to rise. With 57 per cent of single parent families headed by women living below the poverty line, the Income Tax Act must be changed to reflect the realities faced by single parent families in the 1990s. By changing the legislation the government would be helping to foster a healthy environment for children of single parent families.

The finance department views the tax deduction provided to child support payers as an incentive to make support payments. However, the Canadian Advisory Council on the Status of Women has stated that studies show child support payment default rates as high as 85 per cent.

Furthermore the finance department feels that the current deduction also encourages higher support payments. Since taxable income is shifted from the payer who is presumed to be in a relatively high tax bracket, to the recipient who is presumed to be in a lower tax bracket, there results an overall tax saving which will lead to greater resources and therefore increased support payments. In reality this is rarely the case.

When the original legislation was written 52 years ago the assumption was that the custodial parent, the mother, had less income than the payer, the father. Today this assumption is no longer always valid. Even though women comprise a large part of today's workforce wage disparity still exists, yet this is not reflected in the current taxation structure.

The only way a single parent mother can benefit from the current legislation is if she happens to be in a low income tax bracket. Fortunately, Canadians have been working toward more equal treatment of women in the workforce and equal pay for equal work. The current tax situation impedes this progress for single parent working mothers by chipping away at their income and thus increasing their burden.

Studies by the Canadian Advisory Council on the Status of Women have shown that in 49 per cent of situations the child support payer's tax saving did not exceed the recipient's tax obligation which resulted in no overall tax benefit. In 20 per cent of these cases the child support provisions in the Income Tax Act actually decreased the resources available for child support.

The Income Tax Act needs to be amended so that it reflects current realities and provides support where the support is needed most, with the custodial parent. In one parent families, the non-custodial parent is given a tax incentive even though the parental responsibilities remain.

When a divorce occurs neither parent's responsibility toward their children changes. Child support payments should therefore not be considered taxable income of the custodial parent, but merely a continuation of the responsibility of the non-custodial parent for the care and maintenance of the children involved.

I have touched upon some of the points surrounding this issue but I would like to come back to my central theme which is justice. Most one parent families are headed by women. The majority of these households live below the poverty line and bear a disproportionate amount of this country's total poverty burden. The current Income Tax Act only contributes to this unfortunate problem.

Clearly this is not justice. We have an opportunity to take a step toward fairness for women and for single parent families. It is my sincere wish that this motion be adopted by the House and embraced by the government in the form of amendments to the Income Tax Act.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, what we are discussing today is a 1942 tax law which defines the regulations for child support payments following a divorce settlement. I am

pleased to join the debate because I believe that a wise society should strive to give its children the best possible start in life.

Canadians were appalled when in 1993 the United Nations committee on social, economic and cultural rights blasted Canada for the fact that half of all single mothers and their children live below the poverty line. In conclusion the report stated that Canada has not outlined any new or planned measures to remedy the situation.

The question we are debating today is whether the tax laws should be altered in the interest of fairness where child support payments are concerned. As our system stands presently, payers of child support are given a tax break, whereas recipients of child support, the mothers who have the custody of the children, are required to treat those payments as taxable income.

I ask the public, my colleagues and the bureaucrats who defend this 1942 regulation to clarify in their own minds whether it is the principles of the income tax system or whether it is the rights of children that must be defended?

Fifty-two years ago when the policy was developed there were 10 tax brackets for Canadian citizens. The parent paying support was usually in a higher tax bracket than the recipient parent. As a result it was determined that providing the donor with a tax break while taxing the recipient in a lower tax bracket would reduce the total amount of taxes paid on this sum.

At the same time these bureaucrats reasoned that allowing the non-custodial parent to deduct payments from their taxable income would provide an incentive to maintain regular payments. While this is convincing in theory, it fails miserably in practice.

The speakers today have waxed eloquent on the outdated basis of the child support taxation policy. In 1942 it was likely that by giving the non-custodial parent at tax break and taxing the custodial parent more money would end up benefiting the children. Today it is much more likely that both parents fall into the same tax bracket.

We must decide, given the 1990s setting, which parent will benefit from this subsidy. I believe that the mother who is in 98 per cent of instances the recipient of child support should not have to pay taxes on her child support payments.

Although it is true that women still on average earn less than men, they are much more likely than before to be in the same tax bracket as their former spouse. As pay equity legislation takes root we hope women will reach parity with men's wages in this country. Therefore a child support system which assumes that women make less than men is anachronistic and must be revised.

The revisions we seek are those that will divert moneys from the tax system to the children. In Nova Scotia one in five children lives below the poverty line. These proposed changes would be one small step to help those children.

One alternative that has been proposed and that is currently before the courts offers that income be considered the child's income and be taxed accordingly. Another option is for the parents of the children to negotiate among themselves the tax break they generally receive to ensure this is channelled toward the children's expenses.

Discussion of the intricacies of the tax system or tax reform should not sway us from the larger issues at play here. A report by Ellen Zweibel and Richard Shillington for the Policy Research Centre on Children, Youth and Families stated that the basic pre-tax child support amount being awarded is stunningly low.

Our government will prove its commitment to youth by following through with the promises in the red book.

Apprenticeship programs will ease the transition from school to work. We are establishing a youth services corps and we are restoring full funding to the national literacy program. But we must start earlier. We must invest all available resources in our children during their formative years.

A House of Commons resolution in 1989 to abolish child poverty by the year 2000 was adopted by the entire Parliament. We must recommit ourselves to this challenge and redouble our efforts.

In 1991 more than 1.2 million Canadian children were living in poverty. I was involved for five year in the metro food bank society in the Halifax-Dartmouth area and I know that sustainable and systematic changes are needed.

In 1992 an estimated 900,000 children were fed by one of the 436 food banks across this country and these numbers are growing. As a matter of fact in 1980 there were no food banks in Canada and now we have more than 400 food banks. That is astounding and appalling.

To reverse this frightening trend we must make the required changes to the Income Tax Act so that children are not financially devastated by their parent's divorce or separation. We must ensure that fathers, and in 98 per cent of cases it is the father who is the payer, keep up with their child support payments.

Some insight into the breakdown of the whole system can be derived from statistics from the legal world. In Nova Scotia the family court system administered maintenance payments for about 13,000 families. In 1990-91 that court issued 7,000 summonses to individuals who had failed to pay court ordered

support. These are not meaningless numbers. For each summons there is a story of hardship.

I mentioned earlier that the tax break for non-custodial parents was meant as an incentive-some incentive. Fifty-two years later child support dodgers are rampant in our society. We have made some inroads in this area. There is legislation in every province to garnishee wages from defaulters. That is not enough. A lot of work is needed to standardize child support levels and enforcement mechanisms across this country.

Loopholes abound in our system of taxation with no clear rationale for who benefits and who does not. Commons sense tells us and groups that have coalesced around this issue insist that women despite gross-up payments should not be paying tax on child support payments. Adopting this resolution as the shared opinion of this House is a positive step, one that makes sense.

[Eugène Bellemare, Liberal, Carleton—Gloucester, ON]

Mr. Speaker, I wish to congratulate the hon. Member for Nepean for introducing a bill to amend the Income Tax Act.

Her amendment deals mainly with regulations dating back to 1942, that are 52 years ago, at a time when child support payments were paid to the mother, who generally had custody of the children. It allowed the father to deduct support payments from his taxable income.

As you know, the Divorce Act is administered by the provinces and the amount of child support is determined by provincial court judges.

We also know that, compared to 1942, the number of divorces is very high. This is regrettable, but this is a fact of life in our society.

I have a report from the federal-provincial-territorial family law committee that suggests that if tax implications are to be taken into account there are number of issues to be considered. There is no guidance in the Divorce Act nor provincial or territorial legislation as to how the calculations should be made or how the benefit of the deduction should be shared between the parties.

Reference is made to a Divorce Act evaluation from May 1990 from the Department of Justice that stated: "It is important to consider this issue in the context in which it actually occurs, namely that two-thirds of Canadian women and children live in poverty following divorce".

I am going to take the liberty to read parts of a letter I received from a constituent of mine after getting permission from this person to read extracts. Mrs. Jackie Cloutier wrote to me regarding the taxation of child support. She is proud to give me permission to read these extracts from her letter: "Taxing child support in the hand of the already impoverished parent is wrong. Many women like myself lose up to two-thirds of their child support to income tax. We do not live in fancy homes or drive fancy cars. We do not take lavish vacations. We cannot afford to plan for retirement. We struggle every day to make ends meet, most often living from pay cheque to pay cheque and regularly running out of money at the end of the month. Every year in April we are faced with this unnecessary debt to Revenue Canada".

She concludes, and I jumped some parts of her letter: "The report released by the United Nations on the status of women and children in Canada clearly stated that we are living in poverty. Please take the necessary steps to change this law now. Don't let another year go by where women and children suffer needlessly at the hands of the tax system".

Therefore, I am pleased to support the initiative of my colleague from Nepean and to ask the federal government that it change the Income Tax Act to exempt child support payments from taxation.

[The Acting Speaker (Mr. Kilger)]

The time provided for the consideration of Private Members' Business has now expired.

Pursuant to Standing Order 93, the order is dropped to the bottom of the order of precedence on the Order Paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Jim Jordan, Liberal, Leeds—Grenville, ON]

Mr. Speaker, it is a pleasure to participate in the adjournment proceedings tonight in accordance with Standing Order 37(3) on the subject of ethanol.

The ethanol gasoline mixture to replace regular gasoline has been highly successful in western Canada and for many years highly successful in the United States. The proposed ratio of mix here in Canada is 90 per cent gasoline and 10 per cent ethanol, that is a 90 per cent non-renewable source of energy and a 10 per cent renewable source of energy.

This fuel mix has been available in western Ontario and is now becoming available in eastern Ontario. There is talk of a plant, and hopefully it will materialize, in my own riding of Leeds-Grenville. The manufacture of ethanol started with a group of farmers, about 135 farmers, who got together and each threw in $2,500. I think it shows commitment.

We can talk about the advantages of using ethanol mixed with gas and we can do it from various viewpoints, but a former colleague of mine, the hon. Ralph Ferguson, was a pioneer of blended fuel in this House in the last Parliament. I became interested in blended fuel from listening to the hon. Ralph Ferguson, the former Minister of Agriculture, because he spoke on it many times. I think maybe we could name it Fergie's fuel because whenever you got talking to Fergie he would want to promote the idea of ethanol. He really believed in it as a source of energy for Canadians.

Because of the time restraints I have to summarize a bit. The biggest winner in the blended fuel business is the environment. There is no question about that. The exhaust from a car using blended mix will contain 30 per cent less carbon monoxide and 6 to 10 per cent less carbon dioxide. The manufacture of ethanol from grains, primarily corn but it can be other grains, makes a great market for corn farmers and for farmers in general.

One gets about 10 litres of ethanol from a bushel of corn. The byproduct, once the starch is removed from the corn to make the ethanol, is an excellent source of feed for beef and dairy cattle. The ethanol is manufactured from a renewable resource, so there is a real plus for everybody. That is not the case with fossil fuels.

What prompted my original question to the Minister of Finance is the cost of production. That is the problem. If we applied the federal excise tax to ethanol and put the provincial excise tax on ethanol, the product would be just out of the question. It would be too costly. People would not buy because of the price. Nobody would choose it as an alternative fuel.

We would miss the manufacturing of it, the sale of it and everything that is associated with it but most important, we would miss the environmental advantages of this friendly product. The assurance I got from the Minister of Finance was okay as far as it went, that the government would not impose an excise tax on ethanol.

Governments come and governments go and these people are looking for a little more assurance than that. What the ethanol industry wanted was assurance similar to the one that Ontario gave the industry not too long ago. The Government of Ontario announced that if a future provincial government wanted to reimpose the provincial excise tax on ethanol, the manufacturers would be compensated. The ethanol industry is asking for that kind of assurance from the federal government.

[David Walker, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, it gives me great pleasure to participate in this discussion of an issue important to many members of the House.

Hon. members are no doubt aware that the 8.5-cent per litre excise tax exemption for the ethanol portion of gasoline fuels was introduced in the 1992 budget to provide "a level playing field in the taxation of alternative fuels". Prior to 1992, federal excise taxes on motor vehicle fuels did not apply to propane, natural gas or pure methanol or ethanol used as motor vehicle fuels. However the excise tax was imposed on all gasoline fuels, including ethanol and methanol blends.

The exemption from the excise tax for the ethanol and methanol portion of blended fuels was introduced to ensure that all alternative fuels were subject to the same federal excise tax treatment during a period of technological and marketing development of these fuels.

I should note that the excise tax exemption is limited to gasoline blended fuels that use ethanol and methanol made from renewable feed stocks such as corn, grain and wood. Ethanol fuels derived from biomass offer a number of environmental benefits that generate, for instance, lower levels of carbon monoxide than in the case of gasoline.

The excise tax exemption for gasoline-ethanol blends continues to be entirely consistent with the government's current policies on the tax treatment of alternative fuels. Therefore, I would like to assure members that the ethanol and methanol that are produced from biomass and used in gasoline-type fuels will remain exempt from the 8.5 cent per litre excise tax during the course of this government's current mandate.

By encouraging the blending and marketing of ethanol-gasoline blends, this commitment should be of significant assistance to Canadian ethanol producers. It should also benefit the agricultural sector by providing additional domestic markets for grain and corn, as well as the potential for new markets for wood and agricultural waste products.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, on April 14 last, I put a question to the Minister of Human Resources Development concerning his youth action plan.

Instead of answering my question about the jurisdictional conflicts arising from his action plan, the Minister of Human Resources Development merely criticized the fact that I was denouncing his action plan. This is rather odd, since I thought it

was the duty of an opposition member to criticize the government's actions and that this was not the least bit unusual. This is what I was told. Yet, there was the minister criticizing me.

I felt an even greater duty to criticize the plan since it represented another intrusion into an area of provincial jurisdiction, namely education. Let me show you what I mean.

First, let me read the title of the action plan. I have no problem with the first part of the title, "Youth Employment". This is, admittedly, an area of shared jurisdiction.

The second part of the title reads as follows: "And Learning Strategy". Can this title make it any clearer that education is involved? May I remind hon. members that education is an area of exclusive provincial jurisdiction. Yet, there was the Minister of Human Resources Development announcing on April 15 last a strategy which is one more example of federal intrusion in the field of education.

Let us begin by examining the first measure, Youth Service Canada. The first stream identified as a priority area for projects is community development and learning, to quote the action plan, "in the area of education". No effort whatsoever is made to hide the fact.

A second Youth Service Canada component which pertains to education is the education voucher. Following a period of service lasting nine months, participants receive a bonus of $2,000 in the form of an education voucher.

The second measure is the Youth Internship Program. This is a new title designed to avoid any reference to apprenticeship programs. We now speak of youth interns. What does the action plan have to say about youth interns? In the second paragraph, it says that "the federal government is acting to implement new entry level training models". Further on, on page 6, third paragraph: "The standardization of existing training plans will ensure that programs are based on common standards and thus have applicability across Canada."

I will skim over the Summer Employment Program which poses no problems as far as jurisdiction goes, as well as the increases in student loans, although I would like to mention here that among students, notably those in Quebec, 16 per cent are unable to repay their student loans and are forced to seek protection under the bankruptcy legislation. And what is the minister doing? Well, he is increasing the level of indebtedness of students.

On page 11 under Learning Initiatives, mention is made of setting national training goals, of updating existing training measurement tools, of putting multimedia resources and computers in place in schools, of facilitating the dissemination of information on key learning issues and, finally, of maintaining the stay in school program. All of these are education-related initiatives.

Following the unveiling of this program, three provinces decided not to attend the federal-provincial meeting scheduled for the following Monday. That very same day, the Liberal Party and the Parti Quebecois joined forces in the Quebec National Assembly to unanimously pass a motion calling upon the federal government not only to refrain from any further intrusion in, but also to withdraw from the field of manpower training.

Finally, last Friday, the Conseil permanent de la jeunesse , a paragovernmental agency in Quebec, held a press conference to denounce as well federal intrusion in the area of manpower training. I would have liked to put my question to the minister, but I see that his parliamentary secretary is not present. I hope that someone is on hand to speak on his behalf. Normally, we should get an answer to our question.

When will the federal government withdraw from this field-

[Patrick Gagnon, Liberal, Parliamentary Secretary to Solicitor General]

Mr. Speaker, the federal government, like the Government of Quebec, is committed to investing in Canada's youth, especially by providing our young people with the knowledge and skills needed for the jobs of tomorrow.

In so doing, the federal government does not intend to question provincial jurisdiction over education. It is the government's intention to help young people in this country through programs that complement, and I do mean complement, those that the provinces offer.

In fact there have been ongoing discussions with all the provinces on all four components of the youth employment and learning strategy.

The federal government's role is more that of a presenter. The provinces will take part in implementing pilot training projects for young people. These projects will be based on current provincial programs and will respect provincial priorities.

We will also encourage the provinces to establish, adjust or propose mechanisms in addition to the three which already exist in the youth training program, namely sectoral initiatives, work-study co-op program and project-oriented training.

With regard to internship in Quebec, we have received very positive feedback from the province and the provincial education ministers on youth internship programs.

Our government wishes to harmonize its training initiatives for young people with those of Quebec and other provinces. We will pursue productive and effective discussions with the provinces to find the best ways to help all young people wherever they live in Canada.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup, QC]

Mr. Speaker, on March 24, 1994, I questioned the Minister of Transport on the rationalization of VIA Rail operations. The minister gave me the following answer:

If there is no dramatic improvement in VIA Rail's ability to provide service within the budgets allocated by the federal government, then some major changes will certainly be made.

I urge the minister to consider the November 1989 report of the federal Liberal task force on VIA Rail, whose members included over 15 Liberal members now sitting in this House and which made recommendations on what VIA Rail should do and on what could be done to make it profitable and efficient. One of the conclusions was this: "We must however show foresight by immediately introducing a program of expenditures-they were not talking about cutbacks or rationalization-of investments aimed at upgrading the whole VIA Rail network".

This report signed by more than 20 federal Liberal members shows how they felt about all this. The Minister of Transport would be well advised to consider it and perhaps to make it his policy to ensure that VIA Rail becomes profitable and efficient in the future, so that we in Eastern Quebec can stop working desperately to keep our rail service, as we have been doing for at least 10 years.

I urge the federal government to assume its responsibilities in this area before dealing with education and other issues. It is always advisable to look at the consequences of our actions to see if we did the right thing. I am thinking in particular of the hon. member for Bonaventure-Îles-de-la-Madeleine who has a major responsibility in this area because rail service in his region is cast in doubt year after year. The whole line that goes as far as the Maritimes is also called into question year after year.

One would think that, when federal parties go from being in opposition to forming the government, their vocabulary suddenly changes and they start defending regional underdevelopment, when we could turn rail line development into an important tool to provide our regions with the basic transport infrastructure needed for the development of small and medium-sized businesses in our communities, thus contributing to local growth, instead of always being on the defensive and only seeing the little cuts that can be made here and there.

What I found rather surprising is that when the Liberal Party of Canada was in opposition, their recommendations were, for example, to improve the equipment and infrastructure; to upgrade and introduce high-speed trains-they settled for low speed instead; to revive track-guided buses; to make fares and schedules more flexible; to involve the public.

In this sense, we think it is important to impose a moratorium on the elimination of rail service in Eastern Canada, as was done in Western Canada. Especially since we know that, in a 1989 report written in the last Parliament when it was in opposition, the government advocated involving the public in the future of VIA Rail. I would ask the current government why it does not honour the commitments it made when it was in opposition. We are not talking about independent members but about an official report of the national Liberal caucus, several members of which are now ministers who should make appropriate representations to the Cabinet.

I hope the hon. member for Bonaventure-Îles-de-la-Madeleine will convince his government to stand firm and honour the commitments it made in the report of the national Liberal caucus.

[Joe Fontana, Liberal, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, I am pleased to reply to the comments made by the hon. member for Kamouraska-Rivière-du-Loup. It is always important to put one's comments in perspective. The Minister of Transport did not hide the fact that the government has no other money to give to VIA Rail.

The future of VIA Rail will depend on the availability of financial resources both from the government and from passenger revenues and will be affected in large part by the outcome of the current labour negotiations that are under consideration now. After these negotiations VIA will present its plans to the government at the appropriate time and we will deal with them then.

The government supports VIA's current efforts to maximize efficiencies of its operations before a decision is taken on the long term future of the corporation. For my friend's information, VIA has made fantastic gains in the past three years in terms of efficiencies in its operations, in terms of manpower, in terms of locomotives, in terms of equipment. They have made great gains but more can be done.

Clearly there can be no immediate service changes. VIA must present a proposal to the government. I repeat there can be no cuts without the government's approval.

It is very important that the Canadian people and goods be moved efficiently throughout the country. Canadians want to see a workable, affordable transportation system. It would be premature to speculate on service changes, aside from the fact that VIA will operate a network which Canadians can afford.

In addition, the member spoke about the Liberal task force. I was one of the co-authors of that task force, as many of my colleagues know. We will take some of those task force recommendations into account as the minister and the government take a look at the options available. We will also look at ways of modernizing the VIA network. We will look at those recommendations, as I said.

More important, the member should understand that. He talked about whether the government should intrude in areas of provincial jurisdiction. This is one place where in fact the federal government would work with the provinces, as it has in Ontario. We would welcome co-operation with the Quebec government, municipalities, the private sector, community groups, all to come and play and be part of the solution so that we can maintain a viable national VIA network across the country.