Debates of March 26th, 1998
House of Commons Hansard #81 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.
- Government Response To Petitions
- Committees Of The House
- Private Members' Motions
- Committees Of The House
- Questions On The Order Paper
- Income Tax Amendments Act, 1997
- Asia Pacific Hall
- The Senate
- Technological Development
- Agricultural Sector
- Reform Party Of Canada
- British Columbia
- Hong Kong Veterans
- Reform Party Of Canada
- Reform Party Of Canada
- Member For Sherbrooke
- World Poverty
- Old Age Security
- Reform Party Of Canada
- Multilateral Agreement On Investment
- National Unity
- Aboriginal Affairs
- Millennium Scholarships
- Department Of Fisheries And Oceans
- Employment Insurance
- Young Offenders Act
- Millennium Bug
- Status Of Women
- Indian Affairs And Northern Development
- Endangered Species
- Employment Insurance
- Hepatitis C
- Western Economic Diversification
- Immigration Review Board
- Dredging Of St. Lawrence
- Hepatitis C
- Millennium Scholarship Fund
- Postal Outlets
- Presence In Gallery
- Business Of The House
- Points Of Order
- Income Tax Amendments Act, 1997
- Business Of The House
- Child Benefit
Peter Adams Peterborough, ON
Mr. Speaker, I have a petition from the citizens of Peterborough riding who are concerned about the price of prescription drugs. They point out that Bill C-91 gives brand name multinational drug companies 20 years protection from competition and up to two and a half extra years with the notice of compliance regulation.
The petitioners call upon parliament to immediately withdraw the notice of compliance regulation, introduce legislation to lower patent protection from the present 20 years and implement a national pharmacare program based on the recommendations of the Prime Minister's National Forum on Health.
Questions On The Order Paper
Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons
Mr. Speaker, Question No. 46 will be answered today. .[Text]
Questions On The Order Paper
Mark Assad Gatineau, QC
With respect to the Canadian International Development Agency's microcredit programs, ( a ) do these distribute their more than $1.7 million among the world's poorest families ( b ) if so, how was this figure calculated ( c ) how is this figure broken down by country and by financial middleman ( d ) how is it determined that the families who benefit are among the poorest and ( e ) how much did the government spend on microcredit in 1996-97 and 1997-98?
Questions On The Order Paper
Diane Marleau Minister for International Cooperation and Minister responsible for Francophonie
The Government of Canada recognizes the importance of microcredit as a mechanism to help people, and especially very poor women, find a pathway out of poverty and to achieve dignity and self-sufficiency. CIDA has long been active in microenterprise/microfinance, ME/MF, development, and early on, supported institutions which are now regarded as leaders and innovators in the field.
The Microcredit Summit held in Washington D.C. in February 1997 pledged participants to reach 100 million of the poorest families with credit by 2005. The hon. member mentions $1.7 million spent by CIDA in microcredit programs. We believe that this figure may have been taken from an article in La Presse by the hon. Minister for International Cooperation and Minister responsible for Francophonie in October 1997. The article actually refers to 1.7 million people, a calculation of the number of people CIDA as a bilateral donor would be expected to reach in the Microcredit Summit's campaign.
In fact, CIDA already would surpass this objective. But more importantly, as the minister's article also pointed out, the spirit of the summit lies not in detailed accounting, but in ensuring that we work together to create the structure, systems and viable institutions that can provide the services that are needed by people struggling to get out of poverty. CIDA, through membership in the Microcredit Summit, the Consultative Group to Assist the Poorest CGAP, and other networks, is actively engaged in improving the quality of its microfinance programming and its collaboration with partners.
We do, however, acknowledge that we have shortcomings in our information on the amounts and breakdown of our support in this field. CIDA is not alone in lacking precise information. The microfinance industry is young, and the donor community is still in the process of agreeing on common definitions on what we are measuring. It is important to emphasize that donors' support is not always just directed at microcredit. For example, CIDA supports savings co-operatives. We also support policy change to create an institutional and regulatory environment that allows microfinance institutions to work effectively, and that allows businesses of all sizes to prosper. We support integrated programs in which credit is just one part. Our experience tells us that microcredit can be an even more powerful tool if complementary policies and systems are in place: adequate health care, good basic education, roads and infrastructure.
CIDA supports about 100 projects addressing microfinance/microenterprises in developing countries in Africa, Asia and the Americas. Our support for microfinance has three principal routes: bilateral projects, partnerships with non-governmental organizations NGOs, and contributions to multilateral organizations. As part of our institutional action plan, we will be developing an inventory of projects for each bilateral branch. These will be made available to all interested parties when completed. We are working closely with CGAP, a microfinance facility based at the World Bank on standard definitions, in order to ensure that donors' reporting is reliable and comparable.
In the longer term, the information renewal process currently under way in the agency will help us to get more timely and detailed pictures of the agency's activities in this and other areas. We recognize that our efforts to strengthen the overall quality of programming in microfinance requires that we have better information, where our resources are being spent.
CIDA also has been active in learning how to reach the poorest of the poor, understand their needs, and recognize and respect cultural, ethnic and religious diversity when designing and delivering services. While there are frequent claims that microfinance reaches the poorest, the evidence available goes both ways. Indeed, there are practitioners who believe that in some contexts, the poor may benefit from microfinance, but the poorest would be better off if they did not take on the debt represented by microcredit, and instead were reached by other interventions. Canada is chairing the CGAP Working Group on Poverty Yardsticks and Measurement Tools, which is seeking to refine our methods for having microfinance reach the poorest of the poor. Achieving this is a major challenge for the industry as a whole. Even if we can do so, it will not be the answer to all our problems. The roots of poverty are far too entrenched and complex to be overcome by any single development technique or strategy. The poor need access to many other things, and we need to recognize which interventions can be most catalytic for poverty reduction in given circumstances.
In addition to the issues raised in this question there is another vital point that must be added: While the amount of resources going to microcredit is important, the issue of quantity must not obscure the more important concerns surrounding quality. This more than any other point is the key shortcoming to just using numbers to represent achievements in programming. On this, there are two further issues that need to be mentioned:
(a) Absorptive capacity. Many microfinance practitioners feel that there is limited ability of microfinance institutions in the developing world to absorb significant quantities of new finance. Therefore, while the Microcredit Summit is to be commended for bringing attention to microcredit to a wider audience, it must be emphasized that we need to be cautious about pressuring our partners to expand their activities. We see that one key strategic role for CIDA in the field of microfinance is to strengthen viable institutions which already exist, helping them on the road to further success. Our second role is to fund innovative activities in the hopes that the lessons learned will contribute to advancing the frontiers of this field.
(b) Best practices and industry standards. The microfinance industry has been focusing a great deal of attention in developing guidelines for both sustainability and outreach of microfinance institutions. CGAP, mentioned earlier, is a key mechanism for donor collaboration on best practices. Canada has played an active role on CGAP, whose primary goals are to strengthen the quality of programming in microfinance and to improve donor coordination. Most donors, including the World Bank, still need further efforts to bring their microfinance portfolios up to these standards. CIDA is actively pursuing this quality issue in our own programming.
Questions On The Order Paper
Peter Adams Peterborough, ON
Mr. Speaker, I ask that the remaining questions be allowed to stand.
Questions On The Order Paper
The Deputy Speaker
Is that agreed?
Questions On The Order Paper
Some hon. members
Income Tax Amendments Act, 1997
March 26th, 1998 / 10:40 a.m.
Marcel Massé for the Minister of Finance
moved that Bill C-28, an act to amend the Income Tax Act, the Income Tax Application Rules, the Bankruptcy and Insolvency Act, the Canada Pension Plan, the Children's Special Allowances Act, the Companies' Creditors Arrangement Act, the Cultural Property Export and Import Act, the Customs Act, the Customs Tariff, the Employment Insurance Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Conventions Interpretation Act, the Old Age Security Act, the Tax Court of Canada Act, the Tax Rebate Discounting Act, the Unemployment Insurance Act, the Western Grain Transition Payments Act and certain acts related to the Income Tax Act, be read the third time and passed.
Income Tax Amendments Act, 1997
Tony Valeri Parliamentary Secretary to Minister of Finance
Mr. Speaker, I am pleased to support third reading and approval of Bill C-28, legislation with important elements that speak to national vision, national values and national leadership.
The true measure of real leadership is where a government places its priorities. Certainly the priorities of the government are clear and concrete as demonstrated in the bill before us and in fact in the federal budget.
As the Minister of Finance said in his budget speech, our goals remain what they were when Canadians elected us in 1993: first, to build a country of opportunity, a country of jobs and growth where every Canadian has equal access to the avenues of success and, second, to safeguard and strengthen a compassionate society.
Since 1994 we have followed a consistent and solid plan centred on a balanced approach. In fact it is paying off today. With the 1998 budget, for the first time in almost 30 years the books will be balanced. Again in 1998-99 and 1999-2000, our two year fiscal planning period, we are on a clear course to reduce the debt as well.
It also means that we are now in a position where we can make key social investments that respond directly to the concerns of Canadians. Just as important, we can make these investments without jeopardizing our continued advance to a balanced budget.
Health and education are issues that affect every Canadian in every region. They reflect key national values. It is proper that as our federal financial situation improves, our government has given first place to investing in these vital activities. It is this type of investment that all Canadians can appreciate. This is the sort of support for federal-provincial partnership all Canadians should endorse.
The most significant part of today's legislation clearly is the measure to increase the cash floor of funding to the provinces under the Canada health and social transfer. Bill C-28 increases this guaranteed amount of federal cash funding for health care, post-secondary education and social assistance and services. It increases it from $11 billion to $12.5 billion a year through to the year 2002-03. It starts applying this higher cash floor one year earlier than originally slated.
This means that the provinces will receive an extra $7 billion in cold hard cash over six years. This is cash the provinces did not budget for. It is new money that the provinces can now include in their budgets and in their disbursements at the provincial level. That is by far the largest new spending commitment we have made since first coming to office.
It is important to remember that the cash portion of the CHST is only part of the total value of our federal support for provinces in the areas of health, education and social assistance. When tax points are included, the total funding to provinces provided under the CHST will exceed $25 billion. That will grow to over $28 billion in the years ahead.
Clearly the CHST measure represents by far the most financially substantive measure in this legislation. There are also other parts of this wide ranging bill that should be highlighted again.
A key theme of both our 1997 and 1998 budgets has been the critical importance to Canada's future and the future of Canadians themselves of enhancing skills and knowledge. Bill C-28 represents an important step in our journey to success in a new millennium. It follows through on our 1997 budget pledge to help and encourage Canadians to save for post-secondary education of their children. Under this legislation we are increasing the amount that Canadians can invest in a registered education savings plan from $2,000 to $4,000 a year for each student beneficiary.
As well Bill C-28 will allow someone who has contributed to an RESP but who then sees the intended student not go on to post-secondary education to transfer that income from the plan into an RRSP. This will reduce the risk and the disincentive previously facing parents. The problem was that the benefits of their RESP investment could be completely forfeited if their child chose not to pursue higher education. With Bill C-28 that investment in an RESP will continue to provide real value for families even if the child does not go on to post-secondary learning.
I would also like to remind the House that this legislation also takes important steps to encourage and support charitable giving by Canadians. In a global economy marked by rapid change and sometimes disturbing dislocation, Canada's charitable sector is a critical partner in meeting the needs of Canadians, especially the disadvantaged and those at risk.
Our government recognized the importance of giving charities the tools they need to accomplish their important work. This commitment reflects not only a social obligation but also economic common sense. Even though tax assistance for charitable giving entails a cost for governments, it is plainly a much lower cost than providing full support directly through public funds.
In each of the last three budgets the federal government has made it easier for Canadians to contribute to charities. These measures have been especially useful in encouraging donations from modest income donors for example by making a higher level of tax credit available for lower levels of giving.
Our 1997 budget proposed and this legislation will enact further measures to help all charities attract donations from modest income donors, notably by levelling the playing field between the crown and other kinds of charities. Bill C-28 increases the amount of donations for which charitable credit can generally be claimed to 75% of net income from the previous 50% mark. This 75% limit will apply equally to all charities, eliminating the previous advantage enjoyed by donations to the crown and crown foundations.
In addition to increasing gifts from modest income Canadians, it is important, as the charitable sector itself has made clear, to encourage larger gifts of capital from individuals and corporations.
Since Canada already has generous provisions for donations in cash, the most promising way to encourage new giving is to provide more generous treatment for gifts of appreciated capital property. This point is driven home by the fact that the U.S. tax system features significantly more generous incentives for gifts of capital assets than our own existing system. The result appears to be a much higher level of giving.
Accordingly, this legislation also reduces the income inclusion rate on capital gains arising from certain donations, such as stock shares and bonds, from 75% to 37.5%. This was an area where the existing law in Canada was much less generous than in the U.S. Now with Bill C-28, Canadian charities will enjoy an equal footing with those in the United States.
Both of these measures, those concerning the RESPs and charitable giving, touch on the tax system. There are certainly further elements of this legislation that also address tax matters with the general goal of improving clarity and fairness.
As I said at second reading, one of the foundations of a well-functioning economy is an effective, fair and transparent tax system, a system which allows companies and individuals to focus on the work of building and growing their companies or their personal endeavours through real value added, not through manipulation of the tax rules. This is why C-28 includes a range of technical tax measures which include the following.
The legislation includes rules relating to transfer pricing, rules that will ensure when goods are transferred between elements of a single multinational corporation the pricing involved is based on the principle of arm's length dealing. In other words, companies will not be able to avoid or manipulate taxes by setting a transfer price that is artificial or arbitrary.
There are also rules that restrict the transferability of business losses between affiliated persons, rules that apply when a corporation becomes or ceases to be exempt from income tax.
This legislation takes further action that stops bankrupt individuals from claiming a double deduction of personal tax credits, like the GST credit, in the year of bankruptcy.
Finally, this legislation includes a measure that ensures there will be no tax penalty for Canadians receiving disability benefits should the insurance company paying those benefits become insolvent, and an employer takes on the responsibility for those benefits.
I should again remind the House that these technical provisions of C-28 regarding taxation were certainly made public a long time ago through draft legislation and ways and means motions. As a result, they have been closely scrutinized by private sector experts. In fact some of the provisions respond directly to requests and suggestions from the private sector. That is why I am confident these sections of Bill C-28 carry the support and acceptance of the sectors involved and deserve the same support from this House.
To conclude, let me just briefly return to the subject of the Canada health and social transfer, the part of this legislation that touches most broadly on the public interest. It has been argued during the debate that Canada's provinces supposedly contributed an unfair share to the federal deficit reduction. The enrichment to the CHST has been described as only restoring some of the funds we had taken away to begin with.
Let us be clear. Reductions were made in transfers to provinces under the CHST when it took effect for 1996-97 but the action was not unfair and it was very necessary. The fact is that as we launched our deficit reduction strategy, a contribution from virtually all areas of federal spending was the only way to get Canada's financial house in order.
No objective observer can question what had to be done. The hard truth is provincial transfers represent about 20% of all our federal program spending. That is $1 out of every $5. There was simply no way we could meet our deficit without those reductions.
If we had not taken the tough action that we did, February's budget could easily have forced us to deliver further cuts in public spending rather than the historic announcement of balanced books. Because we did what had to be done when it had to be done, we have been able to help achieve the federal fiscal success that is beginning to pay real dividends, dividends of solid benefit to each province and all Canadian citizens.
The deficit cutting exercise was transparent. It was done in consultation with Canadians and provincial governments. We gave the provinces a full year's notice of our plans so they too had time to adjust their own priorities and programs.
The bottom line is clear. Through the hard work and shared commitment of a vast majority of Canadians, we have eliminated the deficit for the first time in more than a quarter century. We have put ourselves in a position where we can renew responsible realistic investments in key social areas.
We are making those investments with a clear and considered philosophy. That philosophy is that it is only proper that our hard earned fiscal dividend goes to where it does the most good, helping the most Canadians. Surely the Canada health and social transfer honours that criteria. Just as surely Bill C-28 deserves the support of each and every hon. member of this House.
Income Tax Amendments Act, 1997
Monte Solberg Medicine Hat, AB
Mr. Speaker, it is a pleasure to address Bill C-28, a bill which Reformers stand in opposition to. I will lay out a number of the reasons that we oppose this legislation.
This bill talks about taxes without talking about tax relief. In a country that has some of the highest taxes in the world, we need to have a bill that lowers our taxes. This bill talks about taxes without talking about tax simplification. As we approach the tax deadline, people preparing their taxes will come to understand how badly we need tax simplification.
This legislation leaves untouched clause 241, a clause we believe puts the finance minister in a conflict of interest position. We will say more about that later.
The legislation imposes a new round of taxes on municipalities and therefore ultimately on consumers themselves. We oppose it for that reason.
This legislation does nothing to prepare us for the impact of the Asian tsunami that will soon occur as a result of the meltdown in Asian markets.
We are concerned about this because it maintains the $6 billion in cuts to the Canada health and social transfer after the government specifically promised it would not cut transfers to the provinces.
This bill does nothing to lighten the load of ordinary Canadians who do so much to move the country forward yet get precious little in the form of any kind of award or acknowledgement from the government.
Those are the various and sundry reasons we oppose this legislation. I will speak to them in more detail shortly.
I draw attention to the language that has come from the government over the past several days since the budget presentation, in particular how government members speak about some of the things that are occurring in Canada. I hope we can uncover what is really going on.
They speak of the Canada Health and Social Transfer, but we find out that they did not cut as much as they said they were going to cut. They said they were going to cut $7.5 billion. Now they are only cutting $6 billion. They call that an increase. When they only slow down the growth of the rise in taxes in this country they call that tax relief. When they do not add to our already staggering high debt they call that debt reduction.
It is important to uncover and expose this because if these things are repeated often enough people may be deceived into believing that the country is moving forward in a meaningful way. We do not want to leave that false impression.
In 1993, in the leaders' debate, the current Prime Minister promised the leader of the Reform Party that he would not cut transfers to the provinces, but he did. He eviscerated health care and higher education in this country, cutting transfers by what amounts to about $6 billion. It is the largest cut to health care in the history of the country. I would argue that this government shut down more hospital beds than any provincial government in this country, probably more than all the provincial governments combined. We need to draw attention to that.
My friends across the way talk about the tax relief of $7 billion that was introduced in the budget. What they do not talk about are the huge increases in taxes that more than offset that $7 billion. A taxpayer earning about $50,000 would be in the top 10% in this country. The top 10% of taxpayers pay almost 50% of the taxes. People who earn $50,000 or more are in the top 10%. Accordingly, the taxpayer will save about $219 in 1999 because of the government's phase out of the 3% surtax. However, the same taxpayer will pay an extra $330 in CPP premiums in 2000, for a net increase of $111. That person's taxes will go up by $111. Let us not be deceived. My friends across the way can talk all they want about tax relief, but it simply is not so.
Jeff Rubin, the chief economist for Wood Gundy said that “for all the Budget's gestures at tax cuts, Canadians' tax bill next year will be some $6 billion higher as a result of the cumulative impact of the last five Liberal budgets”. Yet the minister continues to boast about reduced taxes. It is outrageous.
Finally, I will touch on the issue of debt reduction. We have heard members of the House talk about the government's plan for debt reduction. We oppose this on two separate grounds. They say that the debt to GDP ratio will go down even if not one cent is put toward the debt. In fact that is true, but what does debt to GDP ratio mean to an ordinary taxpaying Canadian? It means virtually nothing. The average family today pays $6,000 in taxes just to pay the interest on the debt. Allowing the debt to diminish as a percentage of the size of the economy will not impact that at all. They will still pay $6,000 a year in taxes just to pay the interest on the debt, so that does no good.
My opponents across the way will say they have a contingency fund of $3 billion which they will use to pay down the debt. Let us assume for a moment that the government does use the contingency fund to pay down the debt. We have a debt in this country of $583.2 billion. It would take 200 years to pay down the debt at that rate and that is only if they do use the contingency fund for that. We have already seen in this year's budget that they blew the contingency fund on new spending. Therefore there is no guarantee that we will ever see that contingency fund used for something as important as paying down the debt.
Why is it important to pay down the debt?
I will simply point out, first of all, that we pay in this country about $45 billion a year in interest payments toward servicing the debt. That is by far the largest cheque that the finance minister writes every year.
Unfortunately, a big chunk of that $45 billion in interest payments goes to bankers from around the world. It does not even stay in this country. It goes to foreign debt holders.
That cannot be good. We oppose that. We want to see more of that money remain in the country. Let us start to pay down the debt.
I think even more important right now is that when we have a debt which is this high we are extraordinarily vulnerable to not just international shocks, but also domestic ones.
The other day I had an analyst in my office from Wall Street. He came to Canada specifically because he goes to countries around the world to check out the financial situation and then he sells the information to people who invest, to brokerage houses and that sort of thing.
This man informed me that he was extraordinarily concerned about Canada's current situation. He pointed out that with a debt of $583 billion, with a current account deficit which will soon become a big deficit, and with a dollar that is very, very vulnerable, Canada is in a precarious position, especially with the pending Asian tsunami about to hit. Those were his words “the Asian tsunami”.
He left me with a document and I want to quote it. This is the forecast that he is giving to his clients. It reads:
Last week there was a batch of economic news from around the world highlighting that the Asian flu is impacting. Because they are much closer to the core Pac Rim turmoil, we are watching Japanese and Australian news particularly closely for early clues as to what will eventually show up here, admittedly with less force.
Due to the Asian crisis, Mitsubishi Motors tripled its forecasted loss.
Due to collapsing exports to Asia, Australian business confidence plunged to a 2 year low.
Due to the Asian crisis, Mexico's pricing power is under pressure.
Due to the Asian crisis, U.S. small business confidence has declined.
Italy's exports have declined at a 21% annual rate over the past three months.
China's production has declined at a 16% annual rate over the past three months.
U.S. pricing power declined further—
It goes on and, rather obviously, this country, as well as the world, is really not out of the woods. When we have a debt that is second only to that of Italy in terms of its size, we are very, very vulnerable.
We witnessed, when the Asian crisis first hit, a flight to quality. Where did all the money go that was seeking a safe haven from the turmoil in the world? It did not come to Canada. It went to the United States. There is a very good reason for that. The U.S. debt compared to GDP is about 40% less than ours and they are not as concerned about the situation in the U.S. That is a very good reason why Canada should start the process of paying down the debt.
As I mentioned at the outset there are a number of reasons why Reformers oppose Bill C-28.
I want to talk for a moment about something my friends in the Bloc are very interested in, an issue which they have pushed a lot, and that is, clause 241.
Clause 241 essentially is a clause in this legislation, which was initially sponsored by the finance minister, that would allow changes in the structure of shipping companies that hold assets offshore, which potentially could allow somebody like the finance minister who owns assets offshore, to benefit.
I believe this was done unintentionally. I do not, for a moment, believe that the finance minister or finance department officials were trying to pull a fast one. However, I believe that it raises questions and it should be addressed more seriously than the government has addressed it.
Even more important from my standpoint is that we have a finance minister who has been driven to shelter much of his income offshore because of the high level of taxes in this country. That is what is germane in this issue.
I do not begrudge it for a moment. I know my friends in the NDP were concerned about this matter the other day, but we would point out that it is perfectly legal, that everything the minister is doing is within the bounds of the law. It is not a problem that way.
However, we do think it sends a pretty important message about the kind of trouble this country is in when we have the finance minister of the country who has to shelter assets offshore because taxes in Canada are too high and, as I pointed out a minute ago, are going higher, the government's recent tax relief package notwithstanding. It simply did not come anywhere near to making up for all the tax increases that the government has brought in.
Now we are in a situation where people who have money to invest are sheltering income offshore. I think that really raises some important questions. We need to ask ourselves why we have arrived at a point in this country where people who live in this country have to take their assets offshore to shield the interest income from the high taxes we have in this country.
It does not just end with the finance minister. As I pointed out to colleagues, we have a number of members in this House who have had family members flee the country as economic refugees because they not only cannot find jobs here but, even if they do find a job here, the taxes are so much higher than in a similar job in another country. Many of us have seen friends go to the United States where it has taxes that are about one-third less than what we have in Canada.
I again point to the Nesbitt Burns report which showed that we have all kinds of professionals coming into this country, but for as many professionals that we have coming in we probably have three or four times as many leaving, in part because of the high taxes. I would say it is almost completely because of the high taxes.
I believe high taxes impact the ability not only of people to be able to afford a lifestyle that they would like to have, but also high taxes leave less opportunity and less jobs. Often people graduate from school and then end up having to leave Canada to go to another country where they can find work. Therefore, we have all kinds of professionals fleeing Canada.
Any of us who are from a small town can testify personally to how many doctors we have seen leave the country to go to the United States in particular. We see now in the Nesbitt Burns report that nurses are mentioned. It also deals with teachers. I think that is a new trend. I do not recall teachers having to leave the country before to find jobs and take advantage of the tax regime that the United States has. However, this seems to be the new trend that is happening now according to the Nesbitt Burns report. We also see it with engineers and computer scientists.
Not long ago I was talking to somebody who sits on the board of Waterloo University. They spoke to me very frankly about the newspaper article concerning one-third of the graduating class at Waterloo University being sopped up by Microsoft and going off to Seattle because that was where the opportunity was. This is a serious problem.
I do not believe the government has done anything in Bill C-28 or in any other legislation to seriously address what has become an extraordinarily serious problem.
I also want to talk about some of the smaller but very important provisions of Bill C-28. One thing that galls me is that the government is proposing to introduce new taxes on municipally owned subsidiaries, particularly utilities. We will have one level of government taxing another level of government, something that by tradition we do not do in this country.
Ultimately, I point out to my friends across the way who trumpet their new found belief in tax relief, this is going to be a tax on ordinary consumers. If people are barely making it today in their homes, wherever they live in the country, and they do not have anywhere to cut back, but all of a sudden they face an increase in their utility costs because this government is now going to start taxing those utilities, they have nowhere to take it from. If they have to pay for their natural gas or electricity it means it can only come out of the food budget. If someone is on a fixed income that is the only place it can come from.
My friends across the way, who have made a career and a history in this country of talking about their deep compassion for people, in effect are going to be punishing those people who are most vulnerable amongst us by imposing these new taxes on municipal utilities. There is a history behind this too. I point out that in the 1995 budget the government removed the PUITTA, the Public Utility Income Tax Transfer Act. It essentially provided a rebate to private utilities so they would be on a level playing field with public utilities. The government removed it. It cost the Government of Alberta approximately $250 million, impacting Alberta the most.
Now to level the playing field in a perverse way, I guess, it has decided to start taxing publicly owned utilities. That is ridiculous. Why not just leave it the way it was? The only reason for it obviously is to get more money out of taxpayer pockets. It is another sneaky backdoor tax increase. I object to it. I think it is wrong and I think this government has overstepped its bounds. It has stepped into territory that previously has been almost sacred. It has started to tax another level of government.
I want to talk for a moment about the reference in Bill C-28 to the government's alleged increase in transfers to the provinces. I will do that by referring first of all to a quote from the 1993 election campaign. It was actually the leaders debate and it occurred when the leader of the Reform Party asked the current Prime Minister a question: “What specifically is your commitment to the level of federal transfer payments for health care? Would you keep them at the current level?” The Prime Minister answered: “I said yesterday in replying to Mr. Bouchard that I promise they will not go down and I hope we will be able to increase them”.
Not only did the Liberals not increase them, not only did they not maintain them, they cut them by initially $7.5 billion. That is an absolute blatant breaking of a promise in the 1993 election campaign. A scant two years later they were cutting the heart out of health care.
My friends argue that in Bill C-28 we are actually increasing transfers to the provinces for health care. That is not so. All they are doing is not cutting as much as they said they would. They are still breaking the promise of the 1993 election campaign by $6 billion. What has been the consequence of that? For the first time I think in the history of the country we have seen Canadians' confidence shaken in their health care system like it has never been shaken before.
We have seen protests on the lawns of provincial legislatures. We have seen people threatening to strike, doctors leaving, nurses leaving. We have seen waiting lists skyrocket. Dr. Judith Kazimirski, past president of the Canadian Medical Association, appeared before the finance committee, where I sit as a member, and told us about how waiting lists had become longer and longer for things like prostrate cancer and breast cancer. When you are sitting on a waiting list awaiting surgery for prostrate cancer and breast cancer, I can guarantee you those illnesses do not stop doing what they do, ravaging the bodies of their victims, simply because the government cannot find a way to get them surgery or get them treatment. They continue to do their damage.
This government has blatantly broken its promise and it should pay a price for that. Please, I say to colleagues around the House and to people who are watching on television, do not accept for a moment that this government somehow cares about health care. It is the architect of the great slashing that has gone on. It is the Dr. Kavorkian of health care in this country.
Let us not accept for a moment what is asserted by colleagues across the way that Bill C-28 comes anywhere close to repairing the damage it has done to health care in this country.
I will conclude simply by urging colleagues to consider that there are many priorities Canadians have today. We are a country that has massive levels of debt, second only to Italy in the world for the debt we carry. It is somewhere close to 100% if we include the levels of debt that the provinces have accumulated, 100% of GDP. It is a staggering amount of money. As a result of that we have economic uncertainty. We have countries not wanting to invest here.
My friend from Peace River, the international trade critic for the Reform Party, pointed out the other day that Canada, for the first time ever, has had more money invested outside of the country than people have been investing in Canada. Canada is no longer the shining example, the great place to invest that it once was.
We point out that taxes in this country are just too high. They are staggering. Often in this place we have read letters into the record laying out the human tragedy of high taxes from people who cannot find any place from which to take money to pay the tax bill.
I remember reading a letter from a lady in Quesnel, Margaret Snell. Her son wanted to play baseball and have swimming lessons. She could not find the money because CPP tax hikes were coming along. This is a social tragedy. I urge my friends to remember that while the government is bringing in legislation like this there are huge issues that need to be addressed.
I point to the staggering levels of unemployment. I point to the dramatic jump in unemployment in British Columbia, a province which was first in growth not very long ago and has now fallen to 10th. While friends across in the Liberal Party were patting themselves on the back at the Liberal convention on the weekend talking about the wonderful job they have done with the economy they forgot about British Columbia which is suffering unbelievably these days.
Somehow, even though several cabinet ministers are from British Columbia, British Columbia is completely ignored and the very legitimate concerns of the people of British Columbia never do get addressed by the government even though members in the Reform Party raise them over and over again. We raised the issue of the fishery, for instance. It is just never dealt with. We see Americans vacuuming the sea. Again, the government does not deal with it. When it could be dealing with issues like that we see legislation like this.
There are a number of reasons why we oppose this legislation. I encourage members around the House to search their hearts and ask themselves if there is not a better approach to dealing with the problems of the country, an approach that would secure opportunity for Canadians by lowering taxes, by paying down debt, by providing essential services for people through government without building up a big government again. We do not need that.
I encourage friends to consider the message I have given today. I speak on behalf of many Canadians. I urge them to consider it and in doing so I hope they will be convinced they should not support Bill C-28.
Income Tax Amendments Act, 1997
Yvan Loubier Saint-Hyacinthe—Bagot, QC
Mr. Speaker, I am pleased to address Bill C-28 at third reading. This is a 464-page omnibus bill which includes various measures to implement the recent budget tabled by the Minister of Finance, along with some tax changes that were announced a few years ago, but died on the Order Paper before the federal election. This is why these provisions are included in the omnibus bill.
On February 23, the Minister of Finance had Bill C-28, of which he is the sponsor, introduced in the House of Commons. In addition to various amendments to our tax legislation, including the Income Tax Act as it applies to corporations and individuals, and to certain measures relating to the minister's recent budget, the bill includes about 14 lines, two small paragraphs, hidden somewhere in these 464 pages, that deal exclusively with international shipping.
As we all know, and as government members have told us again and again, the Minister of Finance is also a shipowner. He owns a fleet of ships abroad, and he is active in the international shipping sector. The minister owns a shipping holding company.
His holding corporation owns shares in companies that are actively involved in international shipping and that are based in Bermuda, Liberia and Barbados, among other countries.
These 14 lines in Bill C-28—which, again, is 464 pages long—are found in clause 241—formerly section 250 of the Income Tax Act and dealing with the tax provisions applying to international shipping companies—and seek to expand the scope of these provisions to corporations that are related to shipping holding companies.
The clause provides that, subject to certain conditions and structures, these international shipping companies will get preferential treatment from Revenue Canada. They will be sheltered from paying any taxes on profits, and now from any taxes on dividends received by the holding companies.
When we look at these 14 lines, the first thing that comes to mind—I repeat this for the benefit of those listening—is how can a finance minister, who is also a shipowner in the international shipping sector, sponsor a bill that could affect his personal interests? That is the first question that springs to mind.
Is he allowed to do that? Did the Minister of Finance act within his authority, in compliance with the government's code of ethics, introduced by the Prime Minister himself and passed in June 1994? Did he act within his authority in introducing a bill, clause 241 of which proposes tax changes that could be advantageous for his offshore shipping companies in Bermuda, Liberia and Barbados?
Answering the first question—because there will be a second—could hardly be easier: we will take a copy of the document called “Conflict of Interest and Post-Employment Code for Public Office Holders”. We will look at the provisions concerning the principles that should guide ministers, senior officials, and chairs of commissions and public and parapublic corporations.
We will take them one by one and try to see whether, in this case, the case of a bill containing these 14 lines, two little paragraphs about international shipping tucked away in a 464-page bill, the Minister of Finance did the right thing in sponsoring this bill.
On page 2 of the ministerial code of ethics, we read the following:
Every public office holder shall conform to the following principles:
This is followed by various headings. The first one is “Ethical Standards”. The passage in question reads as follows:
(1) Public office holders shall act with honesty and uphold the highest ethical standards so that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced.
I would like, if I may, to take a look at this first principle, which is very important. How, from the point of view of the government's integrity, objectivity and impartiality, are we to interpret the fact that, although we have been asking the government for a month and a half now to strike a special committee to look at the scope of clause 241 and the process whereby it was included in Bill C-28, the government has not explained the finance minister's apparent conflict of interest?
Why did the government refuse to reveal all each time we requested it to? At first, we were alone, but then we received the support of the Progressive Conservative Party, the Reform Party and the NDP.
With it systematically refusing to shed any light on this matter, how can we consider the government honest, objective and impartial with nothing to hide? It is already walking all over the first principle of the code of ethics.
The second principle involves public scrutiny. It provides that “Public office holders”—in this case the Minister of Finance—have an obligation to perform their official duties and arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law”.
With the minister sponsoring a bill that could apply to his private companies, how can we be expected to consider his action so far beyond reproach as to bear the closest public scrutiny when we know that this concerns only international shipping companies? It does not concern engineering firms, for example. It does not apply to oil exploration companies and it does not apply to just any economic sector. It applies only to the international shipping sector.
Not only that, but clause 241 applies particularly to the holdings of shipping companies operating abroad. The Minister of Finance has a holding of shipping companies operating abroad.
This second principle of the code of ethics talks of “bearing the closest public scrutiny”. This does not. The government's claim that this clause is not a tax amendment made to measure for the Minister of Finance does not bear the closest public scrutiny.
The third basic principle in the code of ethics concerns private interests. It states as follows:
Public office holders shall not have private interests, other than those permitted pursuant to this Code, that would be affected particularly or significantly by government actions in which they participate.
An examination of clause 241 of the bill sponsored by the Minister of Finance indicates that this principle of the conflict of interest code is being ridden roughshod over. The Minister of Finance is a legislator and therefore has definite influence over legislation concerning international shipping, the area in which he is involved. He can influence government activities for the benefit of his shipping companies, and this is what he has done with clause 241 of Bill C-28. Clause 241 will impact upon the financial performance of his companies.
This principle, adopted in June 1994 as part of the government's conflict of interest guidelines, has already gone by the board.
The final principle is public interest. It states the following:
On appointment to office, and thereafter, public office holders shall arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising—the conflict shall be resolved in favour of the public interest.
Not only do we believe that there is, at the very least, an apparent conflict of interest, which is serious according to the code, because it speaks not only of real or potential conflict of interest, but also of apparent conflict of interest. We are not the only ones to believe there is, at the very least, an apparent conflict of interest. Even the person responsible for ethics, Mr. Wilson, the governmental ethics adviser, ministerial even, one might say because, in our opinion, his evaluations are somewhat biased—he is paid by the people he has to defend—has appeared before the finance committee, has even prepared and submitted a report, and admits there could be an apparent conflict of interest.
He has said that, had he been consulted as ethics adviser, the bill would have been introduced differently than it was by the Minister of Finance. The Prime Minister, the Deputy Prime Minister, the Minister of Finance, all the government members, have told us “Go consult Mr. Wilson, and he will tell you there is no problem”. Yet even Mr. Wilson says “There was, at the very least, an apparent conflict of interest. The process was flawed and things ought not to have been done that way”. This has happened more than once, moreover.
The Prime Minister boasted that he had seen nothing two years ago. Sometimes the Prime Minister is really funny. He sometimes has a really funny way of reasoning.
Two years ago, a bill was introduced, which contained a provision similar to clause 241, but it eventually died on the Order Paper when the election was called. We did not notice it at the time, probably because nobody felt like reading through the 464 pages of an omnibus bill, but the second time around, we did.
The Prime Minister bragged about it on two separate occasions. First, he said there was no ambiguity because the bill was introduced by the Minister of Finance himself. Not only did he sponsor it, he introduced it. And, again the other day, the Prime Minister said they had done the same thing two years ago and “the opposition did not even notice it”. Great philosophy, great moral and political ethics.
So, coming back to the ethics counsellor, in his evidence before the Standing Committee on Finance, Mr. Wilson told us there was indeed an apparent conflict of interest. What happens when four out of the five principles supposed to govern the Conflict of Interest and Post-Employment Code for Public Office Holders are trampled on as I have just demonstrated? One must refer to page 16 of the code.
What does it say on page 16? It states that “Where a public office holder does not comply with Part II, the office holder is subject to such appropriate measures as may be determined by the Prime Minister, including, where applicable, discharge or termination of appointment”. None of this has ever happened.
We are not asking for the minister's resignation, at least not yet. But we are running out of patience. It is really hard to hold back. The government's refusal to shed light on these very important questions and the Prime Minister's hypocritical suggestion in the House that we should seek an answer from the Standing Committee on Finance, where we are being gagged, are starting to get to us.
We are asking the government to shed light on this matter. We have just demonstrated, by quoting directly from the code of conduct without any interpretation, that four out of five principles have been trampled by the finance minister's sponsoring of Bill C-28 and that clause 241 might give an unfair advantage to the shipping companies he owns.
Howard Wilson has recognized, at least once in writing, that there was a problem, an apparent conflict of interest. He may not have said it again, but as we have seen in the past, he is more of an elastic counsellor than an ethics counsellor. He gives a very broad and very flexible interpretation of the code of ethics when his boss, the Prime Minister, asks him to save the neck of one of his ministers.
There are precedents. We found a few. There are precedents where a public office holder, a finance minister or other public office holder, was forced to resign over a lesser matter than this, over situations that were less obvious and less worrisome from a conflict of interest point of view.
In 1985, a case was raised by the Prime Minister, then the member for Shawinigan, who was then in opposition. He asked the Prime Minister of the day, Mr. Mulroney, for the head of the Minister of Finance, Michael Wilson, who he said was in conflict of interest, one of his brothers-in-law having been awarded a $240,000 contract, something that was ultimately never proved.
He cited the example of an Ontario finance minister who, in the 1980s, had resigned immediately after revelations that he had allegedly relaxed the normal rules in granting a permit for a company owned by his family. And the minister had never seen this permit. He had never had anything to do with granting this permit.
But, as this finance minister, Darcy McKeough, had recognized, a finance minister's performance is subject to criteria of very high integrity—not just integrity, but very high integrity—because of the nature of his duties. He had therefore preferred to hand in his resignation immediately to avoid any further doubts about his government's and his own integrity.
I will describe the case again. It was something very simple and not serious in itself. A company owned by an Ontario Minister of Finance was issued a permit. The minister had never seen the file, nor was he the one to sign the permit. The Minister, not wishing to place anyone in his government in an awkward position, and not wishing any doubt to be cast on his integrity, immediately resigned.
There is a more recent case, this time in defence. Everyone will recall that the Minister of Defence was obliged to step down in March 1996, not because he was a bad minister—although at the time we felt he was and we were calling for his head—but because he had written to the Immigration and Refugee Board—
Income Tax Amendments Act, 1997
Some hon. members
Income Tax Amendments Act, 1997
Yvan Loubier Saint-Hyacinthe—Bagot, QC
Hearing the truth gets them riled up over there, but I will continue to tell the truth. I am too attached to my principles. It is their own business on the other side if they want to say any old thing, but I am going to tell the truth, whether they like it or not.
So, the former Minister of Defence wrote the chair of the Immigration and Refugee Board to get an immigration case fast-tracked. The case involved a Canadian citizen who was very ill and wanted her husband to be allowed to come here to look after her. Because of that,
For a humanitarian cause, the Minister of Defence of the time wrote in his capacity as an MP to the chair of the Immigration and Refugee Board in order to get the case of the unfortunate sick lady who wanted her husband here to take care of her speeded up. Because this action by an MP, especially by a government MP, that is trying to influence the decision of a quasi-judicial board, is unacceptable from an ethical standpoint, the Minister of Defence of the time resigned. And this was over a humanitarian case.
When we see all that and then we see the scope of the action taken by the Minister of Finance in creating for himself clause 241, which favours his offshore shipping companies, which favours his shipping holding companies and protects them from all claims by Revenue Canada, we say to ourselves “How come there is a double standard?”
How is it that, when the Prime Minister was in opposition, he cited a case that was far less serious than this one, and now there are no more problems? How could he accept the resignation of his Minister of National Defence in 1996 for having behaved in a humanitarian case contrary to the code of ethics? He would not consider any other course of action than to accept the resignation of the minister of defence.
Why is the Prime Minister now, in the more serious case before us, considering it reasonable for a Minister of Finance to table a bill with 14 lines hidden in 464 pages that could give an advantage to his shipping companies and that do favour offshore shipping companies.
There seems to be a bit of a problem. In fact it is a big problem when the government refuses to come clean and orders the chair of the Standing Committee on Finance to reject all requests for witnesses, specialists and ethics counsellors, other than the one paid by the government, who, in passing, is more of an elastic counsellor than an ethics counsellor, in our opinion. The problem is twofold and that becomes serious.
A second issue arose throughout all this, which was refuted, but not argued, by the Minister of Finance when he sputtered out the first day the Bloc Quebecois mentioned this rather interesting discovery about the provisions of clause 241. They objected that “The Minister of Finance's shipping companies will not benefit from the new provisions”.
In fact, three versions were given. In the first, the Minister of Finance said his companies would not be affected because they were Canadian. We wondered why he used that argument and why—with the code of ethics, he had no business discussing this bill or sponsoring it either, and then he goes before the cameras and says that he will analyze it. Already, the minister was violating the government's code of ethics. He was saying that it was a Canadian corporation, that we were totally mistaken, etc.
The vice-president of Canada Steamship Lines—the shipping company owned by the Minister of Finance—said “Maybe they apply to us, but we will not use these provisions. We do not intend to use these new clauses”. The mere fact they were saying they did not intend to use the provisions implied that they had the right to use them and that these provisions could apply to the Minister of Finance's shipping corporations.
Within a day, there was a reversal, a new version was different. And that was just the next day. First, the Minister of Finance said “These provisions do not apply to us, you do not get it at all”. Then the vice-president of Canada Steamship Lines said “We do not intend to use these provisions”, thus implying that the minister's companies could do so and that those provisions did indeed apply to them.
The third version was given to us by Len Farber. It was in reply to the second question which was “Could the minister benefit from the provisions that he is getting passed in the House, yes or no?” Len Farber appeared before the Standing Committee on Finance. At the finance minister's invitation, I met with Mr. Farber in my office the day after our revelations. Far from convincing us, Mr. Farber gave us more reasons to believe that there was indeed a problem.
I met with Mr. Farber in my office, and then he appeared at a finance committee meeting, which was a public meeting, a few days later. We asked him questions, we showed him a corporate organization chart and we told him “Look, we have companies with offices in Montreal, for example, with subsidiaries in various places that are actively involved in international shipping, that also have holdings, that own shares in shipping corporations directly involved in international shipping. Could the provisions of clause 241 of Bill C-28 apply to such corporations?” Mr. Farber did not say yes right away. He is a friend of the Minister of Finance and he is his principal adviser. It was the minister himself who had told us “Go talk to Farber, he will tell you what is going on. You do not understand anything”.
We realized that we understood everything. That was a good start. In the end, to the questions asked by the Bloc Quebecois, Mr. Farber simply responded that, yes, it could apply to businesses like those owned by the Minister of Finance.
From the outset, it was illogical to have an arrangement like clause 241 to attract foreign shipowners operating abroad in international shipping to open up offices in Canada, to offer them tax benefits, to provide them with tax savings, while our own Canadian companies operating elsewhere in competition with these foreign companies coming to set up operations in Canada cannot take advantage of the same arrangements. This is not logical. It takes a really twisted logic to tell us that these clauses did not apply to foreign companies operating in international shipping, but only to foreign companies which we wanted to attract into Canada.
If there are tax advantages to attract foreign shipbuilders, there must also be tax advantages to keep our shipbuilders here in Canada. Logic must come before anything else.
When we questioned Mr. Farber, logic won out. He indicated to us that, yes indeed, it would be possible, it would be necessary to look at the structure of Canadian businesses, where the decisions are made and so on.
The other part of the response came to us two days later. We were not expecting additional arguments for our thesis from the Parliamentary Secretary to the Minister of Finance, the hon. member for Stoney Creek. I will quote the hon. member for Stoney Creek if I may. He might gain something from listening to me this morning. With some of his revelations, he is adding to our arguments rather than defending his minister.
On March 23, two days ago, the member for Stoney Creek said as follows:
Around 1990 some foreign shippers, especially in Asia, wanted to open offices in Canada that would create jobs and economic activity.
These foreign shippers were concerned that the 1920s tax rule—we are talking about a tax saving for these companies—was not clear enough. To benefit from the rule a foreign shipper had to be a non-resident.
The Asian companies were concerned that if they opened Canadian offices they would fall under this definition and be found to be resident in Canada.
The clarifying rule was enacted in 1991. It gives foreign shipping companies the assurances that they are not resident in Canada provided their principal business is international shipping and that is where substantially all their revenue comes from.
He is talking about the old 1991 provision. What clause 241 does is not just exempt international shipping companies from taxes, but it also exempts international shipping companies holding shares in offshore shipping companies from paying taxes on dividends.
If everything the parliamentary secretary told us on March 23 is true, why would it not be true in the case of Canada Steamship Lines and Passage Holdings, the blind trust for the Minister of Finance's companies?
We are told that, in 1994, the Minister of Finance put all his assets in a blind trust. The company now managing these assets is Canada Trust, based in Montreal. Canada Trust—as for any offshore shipping company that has just opened offices here—contributes to the economy, creates jobs, and so on. Canada Trust manages shipping and holding companies owned by the Minister of Finance, including Canada Steamship Lines here in Canada and offshore holding companies in Liberia, Bermuda, Barbados, and so on.
What difference is there between the example given by the member for Stoney Creek, parliamentary secretary to the finance minister, and the situation of the finance minister's companies? There is none. Both have an office in Canada, operate in international shipping, have offshore holding companies, and enjoy tax exemptions. Now, their holding companies are going to enjoy exactly the same advantages because of clause 241.
The parliamentary secretary gave us a description of foreign businesses to attract here. The foreign businesses wanting to start up initially in Vancouver, for example, are exactly the same and have the same structure as the businesses and holdings of the Minister of Finance.
There is a problem with these provisions, with the process surrounding the introduction of the bill and with clause 241. There is definitely the appearance of a conflict of interest and I would even go so far as to say there is a real conflict of interest.
The attitude of the government adds to our doubts about its integrity and that of the Minister of Finance. The recent responses by the Prime Minister are very demagogic in this regard.
I asked him a question a couple of weeks ago about his intention to respond to the four opposition parties and requested he establish a special committee of inquiry on the Minister of Finance, on clause 241, on the appearance of a conflict of interest and on the entire process leading to the introduction of a bill. He answered saying, and I quote to be sure I have it right:
The hon. member attends sittings of the Standing Committee on Finance. I suggest he uses that venue to ask whatever questions he may have.
We can ask questions, but anyone with a modicum of intelligence needs someone to ask question to, someone to answer them. We can ask all the questions we like, but if there is no one to answer them we look rather stupid.
That is what is happening in the finance committee. The bill was introduced on February 23. A few days later, as the representative of the Bloc, I personally tabled four motions with the finance committee.
The first motion called for the government ethics counsellor to appear before the Standing Committee on Finance. The Liberal majority supported this motion as did the opposition parties. But when I asked that the Minister of Finance appear before the Standing Committee on Finance to provide explanations, it did not work. The Liberal majority systematically refused and voted against my motion. I got the support of the Progressive Conservative Party, the Reform Party and the New Democratic Party, but I did not get the support of the Liberal majority.
The result was the same when I tabled my third motion, asking that the committee invite members of the board of Canada Steamship Lines, which has been wholly owned by the Minister of Finance since 1988. The Liberal majority voted against the motion. Liberal members were under so much pressure from the Prime Minister's office that if they could have voted three times against the motion, they would have done so.
When I tabled the other motion, in which I asked that the directors of Passage Holdings Inc.—that is the directors of Canada Trust—appear before the Standing Committee on Finance, even behind closed doors, it was the same thing. The Liberal majority said “No way, we do not want to have witnesses shed light on this bill”. But I did get the support of the three opposition parties.
In order to test the democratic sense of the Liberal majority and their desire to shed light on such an apparent conflict of interest, I even tabled a general motion asking that the Standing Committee on Finance invite any witness who could shed light on Bill C-28 and on clause 241.
I was not asking for specific individuals, but for any witness. It could have been a senior official from Revenue Canada, from the Department of Finance, or someone from outside the public service. We voted against it. I had the support of the three other opposition parties, but the government members decided no witnesses would be heard in an attempt to shed light on Bill C-28 and clause 241.
When the Prime Minister stands up in the House and says “The hon. member sometimes attends sittings of the Standing Committee on Finance. I suggest he uses that venue to ask whatever questions he may have”, he is laughing at us. He is laughing at the people. The fact of the matter is that he does not want witnesses to be called. He does not want to get to the bottom of this apparent or real conflict of interest involving his finance minister.
He has the nerve to stand up in the House and tell us to go and ask any question we may have to the finance committee. But they do not want us to call any witnesses to answer our questions.
That is not all. We—and by “we” I mean the Bloc Quebecois, the Progressive Conservative Party, the Reform Party and the New Democratic Party—have sent the chair of the finance committee a joint letter asking that a special committee be struck. This letter was sent more than a month ago, with certified copies to the Prime Minister, the Minister of Finance, the Deputy Prime Minister and everyone who is anyone in government. We are still waiting for an answer.
A week and a half ago, I sent another letter to the Prime Minister, a letter directly addressed to him, asking that, as suggested by him on February 19, a special committee or a subcommittee of the finance committee be put in charge of shedding light on this matter of conflict or apparent conflict of interest involving the Minister of Finance, and that all the witnesses who could help clarify the matter be called. I am still waiting for an answer.
To me, it is pure hypocrisy to take such an approach, to object to our getting to the bottom of what I consider to be a very serious matter, which puts into question the finance minister's integrity and that of the Prime Minister as well.
Many aspects remain to be clarified in this whole matter. All sorts of contradictory statements were made after the Bloc Quebecois revealed the existence of a certain 14-line provision of Bill C-28 concerning international shipping companies, including the one owned by the Minister of Finance. Many conflicting statements were made by various people.
There has also been much confusion in the reactions of government representatives. One thing is certain, and that is that we are not satisfied with the answers we have been given as to the process, content and real impact of clause 241 because they are completely illogical.
The Minister of Finance and the government have friends all over the place, and the government awards contracts to companies of tax experts. Has anyone heard a tax expert from outside the government—not Len Farber, the finance minister's hatchet man, but an outside expert—say that there is no real or potential problem with clause 241, which amends section 250 of the Income Tax Act regarding international shipping? Has anyone heard a single tax expert express such an opinion since this saga first started?
We have been talking about it since February 23. Not a single tax expert has dared to put his credibility on the line publicly and say that the Minister of Finance was not in apparent or outright conflict of interest and that the structure of his companies was not such as to provide him with undue advantages or tax savings related to clause 241. Not one. This creates even more doubts.
I was waiting to raise this point, but when the Prime Minister himself or the Deputy Prime Minister jump to the defence of the Minister of Finance, a well known member of the government, on a particular matter, it seems to me we might have expected a tax expert somewhere, a friend of the Liberal Party, to come forward and state publicly that there is no problem. Why has this not happened? Because there is indeed a problem.
And it is not the only problem. This bill does not just apply to international shipping. The Minister of Finance has managed to alienate many people in other sectors of activity who would like to be in the same boat as he is, but who are unable to take advantage of the tax savings available to him for his own companies.
That having been said, I would like to move the following amendment at third reading, seconded by my colleague, the member for Châteauguay. I move:
That the motion be amended by deleting all the words after the word “That” and substituting the following:
“Bill C-28, Income Tax Amendments Act 1997, be not now read a third time but be referred back to the Standing Committee on Finance for the purpose of reconsidering Clause 241.”
If the Prime Minister asks his members to vote against this amendment, he will be contradicting himself, because he told us in the House that the Standing Committee on Finance would be able to shed light on the issue and answer our questions. That is what he told us. His handling of this amendment will tell us what kind of Prime Minister he is and whether he is as full of integrity as he claims to be.
Income Tax Amendments Act, 1997
Libby Davies Vancouver East, BC
Madam Speaker, I am very happy to have the opportunity today to speak on behalf of the NDP on third reading of Bill C-28. I will first comment on the format of the bill.
I am the NDP member on the human resources development committee. I recall that at one of the first meetings of the committee, a government representative attended and told us about the various provisions available on websites and government publications that were designed to make government more understandable to people.
Certainly as a new member of the House trying to wade through various bills and motions and understand the complexity of the issues before us, I certainly concurred with the government representative. I saw it as a positive step that the various government departments were interested and intent on trying to make government more understandable to ordinary Canadians.
Then along comes Bill C-28. Looking at the volume of this bill, more than 400 pages to be precise, there is no question that this bill and how it has been drafted takes us in exactly the opposite direction to what the government states is its goal in terms of making legislation more understandable to Canadians.
In actual fact, Bill C-28 is very technical legislation. It deals with income tax measures from the February 1997 budget and many technical amendments to a whole variety of acts, including the Income Tax Act as originally outlined in Bill C-69.
This needs to be said before we get into the substance of the bill. It has already been debated by some members that because of the format in which this bill came forward, its complexity and the technicalities it contains, it is ridiculous to expect that Parliament would deal with such a complex bill. I would suggest that the language in the bill and the way it is presented would be incomprehensible even to the most highly paid tax experts. They would certainly have difficulty in deciphering this bill.
The bill is simply anti-democratic because of its format and its language, but most important because of its content. It is wrong for a government to present legislation that is steeped in such isolating language and expect not only parliamentarians but ordinary Canadians to understand and to be informed about what the government is doing.
I wanted to make that comment at the beginning because as a new member of the House it is something I am interested in. It was curious to me that we have been told efforts are being made to make the language more understandable but this bill certainly takes us in a different direction.
I would like to focus some of my comments on Bill C-28 in terms of what it proposes or purports to do in increasing the Canada health and social transfer.
In Bill C-28 we are told that the Canada health and social transfer will be “increased” from $11 billion to $12.5 billion. This is not something new. In fact we heard the announcement not only by government members during the federal election campaign in May 1997 but also in the budget which came before the House for the next fiscal year.
It is very interesting that we are told repeatedly that Canadians can expect to see an increase in the Canada health and social transfer. The government is putting forward the message in that way, that it is an increase. The reality is that this is not an increase at all.
It is simply the government making a decision because of enormous public pressure from opposition parties, from provincial governments and most of all from Canadians who have told the government that they are suffering from the impact of massive cutbacks in the Canada health and social transfer. What has the government decided to do? Rather than provide an increase, it simply is not continuing with another round of cuts that it had previously announced. That in reality is what the so-called increase to the Canada health and social transfer is all about.
It is regrettable there are not any government members present in the House today to hear that because this is something which sorely touches every Canadian. We can look at the polls. Concerns have been expressed about the cutbacks in health care, in social services, in social assistance and in education. It is a very critical point to look at the main mechanism by which the federal government uses revenues from Canadian taxpayers and transfers them to provinces to build and create social programs in our country.
We in the NDP find it shocking and outrageous that the government would put forward this bill and include in it a supposed increase in the Canada health and social transfer when in actual fact it is not an increase at all. Indeed cash transfers to the provinces for health care, education and social assistance have not increased by one penny. That is the reality of what has happened.
I would like to continue on this point and refer to some material that has been prepared by the National Anti-Poverty Organization, NAPO. This group has done extensive research to assess and analyse the impact of the devastating cuts in the Canada health and social transfer, particularly on low income Canadians. This is very important, valuable work.
On one side of the House we hear from government members that we should not worry about what is going on, that in fact they are there to defend the interests of poor Canadians, that they are there to defend the interests of poor children. I can say that this organization, an independent anti-poverty advocacy organization, comes to a very different conclusion.
The organization released a report entitled “Government Expenditure Cuts to Health Care and Post-Secondary Education: Impacts on Low Income Canadians”. That report documents that cuts in government funding of social programs have not only led to increasing inequality in money income, but rapidly growing inequities in access to both health care and post-secondary education.
It is pointed out in the report that federal cash transfers to the provinces under the Canada health and social transfer for health care, post-secondary education and social assistance were cut. Here again is where we hear the real story. Not an increase as the government is telling us, but a cut from $18.2 billion to $12.5 billion over the past two fiscal years.
What is very interesting about the report is it goes on to analyse what this means in real per capita terms, that is taking into account the effects of population growth and inflation. If we look at it from that point of view, then the federal cash transfers for social programs fell by more than 40% between 1993 and 1997.
Initially this came about as a result of the freeze on spending under the Canada assistance plan and the established programs financing. Of course since 1996 that cut of more than 40% has come about because of the deep cuts that have been made to the Canada health and social transfer.
That is what has actually happened in this country. It is not what government members have told us and certainly is not what is contained in Bill C-28.
It is very important that we consider the real impact and consequences of these cuts. It has meant in Canada that there is growing inequality and there is increasing poverty. Since 1989 the tragic situation in Canada is that 538,000 more children now live in poverty. To read those statistics does not give a real sense of the tragedy involved in terms of young Canadians, poor Canadians and poor families. These people historically have relied upon federal programs, on the co-operation between federal and provincial governments on transfer payments, for example for social welfare. These things traditionally have had great meaning and value particularly for poor and low income Canadians.
Now that we are witnessing the deep cuts in the Canada health and social transfer, we can see that poverty in this country has actually grown. Indeed the number of low income persons in 1996 was 40% higher than it was in 1989. In 1996 is when the Canada health and social transfer began to kick in. These are real statistics and something that cannot be denied by the government.
The other consequence that is very evident to local communities is high unemployment that has resulted from the massive cutbacks by the federal government. Again, this bill before us today, Bill C-28, will do absolutely nothing to reverse that, nor will the recent federal budget that came before this House. The reality is there is very high continuing unemployment in Canada that is simply a national tragedy.
Those of us in the NDP believe that it is the first priority of the federal government to attack and deal with this issue of high unemployment and to bring in real programs and targets to reduce unemployment. We have heard a lot from the finance minister about his targets to cut the deficit. But where have the targets been to reduce unemployment? Where have the targets been to reduce poverty in this country? They simply do not exist. I think that is a crying shame and the government should be ashamed of its record on that score.
In my riding of Vancouver East, probably the lowest income urban community in Canada, which includes the downtown east side, the impact of these policies and the impact of the measures that are contained in Bill C-28 is very visible already. In looking through this bill I had to ask myself is there anything in this bill that would improve the lives of people in my riding, in particular unemployed people and single parents who are struggling below the poverty line, who cannot find access to child care, who cannot find adequate housing.
Having looked at Bill C-28 and trying to make sense even of what it contains because the language is so difficult to deal with I and others in my party have come to the conclusion that there is nothing in this bill that will improve the lives of ordinary Canadians.
Will it improve housing or are there any tax measures that will improve the situation for low income Canadians to find affordable housing which is a very basic human need, the provision and security of shelter? There is nothing that will deal with that.
Will this bill improve access to health care? Regrettably the answer to that question as well is no.
Recently in my riding I organized a number of round table discussions with young people. Some of them were street people. Some of them were service providers working with young people who are unemployed and having difficulty finding work or having difficulty accessing post-secondary education. These round table discussions were very informative for me as the local member because they really brought home to me the stark reality that is faced by young people in this country. What these young people said to me is they know they have a very bleak and dismal future and the prospect for them to find long term secure employment that is not part time, that is not low wage, was increasingly diminishing.
When I look at the impact of this bill on my local riding and when I hear from my constituents, in particular young people who are unemployed, they tell me they are very fearful about their lack of access to post-secondary education. That is even in a province like British Columbia where we have been very fortunate to have a provincial government that has shown leadership and has frozen tuition fees three years in a row in order to ensure that there is some measure of accessibility.
B.C. has led the way in that regard, but even so it is very difficult for young poor Canadians to get into a university, a community college or a technical school simply because the tuition fees are so incredibly high. We have to ask ourselves why are those tuition fees so high. It is because of $2.1 billion which has been cut from education in the Canada health and social transfer that will not be reversed in this bill before us today, despite the claims from the federal government that it is increasing the Canada health and social transfer.
My constituents who are trying to get into community college, university or technical school know what the reality is trying to go through the door, trying to get into those schools and realizing that tuition fees are too high. Even if they are successful in going through the entrance, what are they then faced with? The next barrier is a massive student debt.
The average student debt a few years ago was around $13,000. Today the average student debtload is $25,000. Why is that? We can relate it directly back to the federal government which has shirked its responsibility to provide adequate funding for post-secondary education.
In the last month we have heard a lot about the millennium fund and how this will answer all our problems and needs. As the millennium fund begins to unfold and as students, young people and Canadians begin to understand what the millennium fund is all about people will realize it will not even come close to compensating for the massive cuts we have faced in post-secondary education.
What the government chose to do was rather than increasing its support to public post-secondary education that could have been contained in Bill C-28, it provided a scholarship grant program through a private foundation that only begins in the year 2000. Students will still be facing very high tuition fees because universities and colleges are forced to raise tuition fees to compensate for the decreasing funds from the federal government.
The impact of the bill, the lack of funding and the cutbacks in the Canada health and social transfer are not just felt in my riding, they are felt right across the country. Even here in Ottawa there was a very interesting situation yesterday where students at Carleton University organized a vote on several key questions involving post-secondary education because they are so concerned with what is going on in their own educational environment.
To refer to the material they have distributed to students in that facility, they said that recent decisions by the provincial government give the board of governors and the management of Carleton University the power to raise tuition fees for undergraduate students up to 20% over the next two years and to deregulate tuition fees for graduate students.
The students say about the putting out of this material that they need to ask themselves who sets tuition rates and how. Ask the federal government which jettisoned national standards by ending direct funding for education in 1996 and it will say it is the provinces' responsibility. Ask provincial governments whose main response to decreased federal government was to make it easier for universities to raise tuition fees and they will refer you to the universities. Ask Carleton management and it blames both governments for cutting education funding. Who is telling the truth?
In a sense the responsibility for tuition fees has become offloaded to everybody and nobody. That is what students at Carleton University are facing as they put forward the questions in a vote that was held on the campus yesterday. The questions they posed to students at that facility are as follows. “Do you think the board of governors and the university management should freeze tuition for the next two academic years, 1998-99 and 1999-2000 at current levels, yes or no? Do you think Carleton should honour its obligations to tenured faculty and students when making decisions about closing programs, yes or no?”
The full results have not yet come out but I know from speaking to members at the university that they have had a very high vote and they expect a very high, resounding yes in answer to these questions.
In closing, this bill contains nothing of real measure to help Canadians.
Income Tax Amendments Act, 1997
René Laurin Joliette, QC
Madam Speaker, further to the remarks by my colleague from British Columbia, I note she has acknowledged that the millennium scholarships, among other things, will not, as she puts it, really serve the students in her province.
We in Quebec have noted the same thing. We are saying that education needs are not necessarily the ones targeted by the federal government and we think the Province of Quebec is in a better position to know what the real needs are, to establish its own priorities and to invest where the needs are the greatest.
I would like to ask my colleague from British Columbia if she does not think that education would be better served if it were administered provincially, if the Province of British Columbia had this money as compensation and could distribute it for educational purposes, invest it where it considered such investment a priority and where it would best serve students in need.
Does she consider the provinces are in a better position than the government to assess educational priorities? I would like her opinion on the matter.