House of Commons Hansard #223 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was federal.

Topics

Government Response To Petitions
Routine Proceedings

10 a.m.

Elgin—Middlesex—London
Ontario

Liberal

Gar Knutson Parliamentary Secretary to Prime Minister

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to three petitions.

Interparliamentary Delegations
Routine Proceedings

10 a.m.

Reform

Art Hanger Calgary Northeast, AB

Mr. Speaker, pursuant to Standing Order 34(1), I have the honour to present to the House, in both official languages, the ninth report of the Canadian NATO Parliamentary Association which represented Canada at the meeting of the standing committee and the Secretaries of the National Delegations of the NATO Parliamentary Assembly held in Dresden, Germany, March 26 to 28, 1999.

Committees Of The House
Routine Proceedings

10 a.m.

Liberal

Maurizio Bevilacqua Vaughan—King—Aurora, ON

Mr. Speaker, I have the honour to present, in both official languages, the 17th report of the Standing Committee on Finance.

In accordance with its order of reference of Tuesday, April 20, 1999, your committee has considered Bill C-72, an act to amend the Income Tax Act to implement measures that are consequential on changes to the Canada-U.S. Tax Convention, 1980, and to amend the Income Tax Conventions Interpretation Act, the Old Age Security Act, the War Veterans Allowance Act and certain acts related to the Income Tax Act, and agreed on Wednesday, May 5, 1999 to report it with amendments.

Family Farm Cost Of Production Protection Act
Routine Proceedings

10:05 a.m.

NDP

Lorne Nystrom Qu'Appelle, SK

moved for leave to introduce Bill C-510, an act to provide cost of production protection for the family farm.

Mr. Speaker, by means of a very short introduction, this is a bill to provide to the agricultural producers of our country income that is reflected in their cost of production. It is to be calculated on a three year basis. It covers most commodities in the country. It is something that farmers have been calling for, for a long time. It ties the cost production formula into what income they get when they sell their commodities, be it grain in the fall or livestock at certain times of the year.

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

Petitions
Routine Proceedings

10:05 a.m.

Reform

Darrel Stinson Okanagan—Shuswap, BC

Mr. Speaker, I rise today to table two petitions.

The first petition is from people of my riding of Okanagan—Shuswap asking for a moratorium on negotiations of a multilateral agreement on investment, or MAI, until the Canadian public has been fully informed and consulted.

Petitions
Routine Proceedings

10:05 a.m.

Reform

Darrel Stinson Okanagan—Shuswap, BC

Mr. Speaker, the second petition confirms the importance of heterosexual marriage as a foundation of the family, which in turn is the foundation of Canadian society.

Petitions
Routine Proceedings

10:05 a.m.

Liberal

Raymond Lavigne Verdun—Saint-Henri, QC

Mr. Speaker, I am tabling today, in both official languages, a petition signed by my constituents and calling upon the government to pass an immediate moratorium on the cosmetic use of chemical pesticides.

Petitions
Routine Proceedings

10:05 a.m.

NDP

Lorne Nystrom Qu'Appelle, SK

Mr. Speaker, I have the honour today to table a petition signed by 104 Canadian residents, mainly from the city of Moose Jaw, but also from the city of Regina.

What these people are calling for is that the Senate of Canada be abolished. The reason they are asking for that is because the Senate costs the Canadian taxpayers some $50 million a year. They say that it is undemocratic and unaccountable. They also say that it is not elected and it is therefore not proper to have a Senate as part of our modern democracy.

On behalf of these 104 citizens, reflecting 104 senators, I table a petition to abolish the Senate.

Petitions
Routine Proceedings

10:05 a.m.

Liberal

Guy St-Julien Abitibi, QC

Mr. Speaker, pursuant to Standing Order 36, I am tabling a petition from the Inuit community of Umiujaq, in Nunavik.

The petitioners state that, at the present time, there are 16 to 20 people in three bedroom dwellings. The Inuit find the housing conditions in Nunavik extremely distressing. They consider the situation totally intolerable. It contributes to the high incidence of tuberculosis, infectious diseases and social problems.

The federal government must assume its obligations under the James Bay and Northern Quebec agreement as far as housing in Nunavik is concerned.

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

Elgin—Middlesex—London
Ontario

Liberal

Gar Knutson Parliamentary Secretary to Prime Minister

Mr. Speaker, I ask that all questions be allowed to stand.

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

The Deputy Speaker

Is that agreed?

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

Some hon. members

Agreed.

Budget Implementation Act, 1999
Government Orders

10:05 a.m.

Saint-Laurent—Cartierville
Québec

Liberal

Stéphane Dion for the Minister of Finance

moved that Bill C-71, an act to implement certain provisions of the budget tabled in parliament on February 16, 1999, be read the third time and passed.

Budget Implementation Act, 1999
Government Orders

10:05 a.m.

Stoney Creek
Ontario

Liberal

Tony Valeri Parliamentary Secretary to Minister of Finance

Mr. Speaker, I certainly appreciate the opportunity to speak at third reading of Bill C-71.

Along with strengthening health care, increasing the Canada child tax benefit and assisting below and modest income Canadians, Bill C-71 also covers a range of other measures such as debt management, income tax administration, first nations taxation and public service pensions, among other things.

While wide ranging, I would say, and I am sure hon. members would agree, that all these measures are connected. They fall within the sphere of the government's ongoing commitment to an effective, efficient and fiscally responsible government.

I would like to briefly summarize some of the bill's highlights. Bill C-71 provides for the transfer announced in the 1999 budget of an additional $11.5 billion in health care funding to the provinces under the Canada health and social transfer.

It is also important to note that this increase will be distributed equally for every Canadian in every province. By eliminating the per capita disparities in the distribution of the CHST, all provinces by 2001-02 will receive identical per capita entitlements, thereby providing equal support for health and other social services to all Canadians.

The provinces will receive $8 billion of the $11.5 billion through the CHST over four years beginning April 1, 2000. The additional $3.5 billion will be paid in the form of an immediate one time supplement to the CHST from funds available this fiscal year. The provinces can decide for themselves how much they will draw down each and every year over the next three years.

The purpose of the immediate one time supplement of $3.5 billion is to respond directly to the concerns that Canadians had from coast to coast to coast about the lack of emergency services that they were able to access, as well as the long waiting lists. The $3.5 billion will be in the hands of the provinces to immediately draw down as they see fit in order to meet the needs of their particular constituents.

When the funding increase reaches $2.5 billion in 2001-02, direct federal cash support under the CHST will be $15 billion a year. The health component then of the CHST will be as high as it was before the expenditure restraint in the mid-1990s.

The next measure in Bill C-71 deals with two components of the Canada child tax benefit: the base benefit and the national child benefit supplement. Both are changed in the 1999 budget. Bill C-71 sets out the design of the 1998 budget commitment to provide an additional $850 million increase in the national child benefit supplement payments to low income families. The maximum national child benefit supplement benefit level is being increased by $350 in two stages: $180 in July 1999 and $170 in July 2000. The net income level at which the national child benefit supplement is fully phased out is also being increased to $27,750 in July 1999 and $29,590 in July 2000.

These changes mean that a family with two children earning $20,000 will receive an increased benefit of $700 for a total of $3,750 per year. As well, a $300 million enrichment of the base benefit in July 2000 will increase benefits for modest and middle income families by $184 per family. It will also be accomplished by means of an increase to the $29,590 in the net income threshold of these benefits.

The bill also addresses assistance for children in another area by ensuring that the full amount of the single supplement of the GST credit will go to single parents earning under $25,921. Unfortunately some very low income families with children may not have been receiving the full GST credit supplement. This bill addresses this problem by increasing the GST credit benefits for low income single parents to complement the national child benefit by providing these parents with the full $105 amount of the single supplement.

The bill also addresses first nations taxation issues. The 1999 budget confirmed the government's willingness to continue discussions about taxation matters with first nations and to implement arrangements with first nations members.

Bill C-71 gives the B.C. Sliammon first nation authority to add a value added tax on all tobacco products and fuels sold on reserves. B.C.'s Westbank first nation, which already taxes tobacco products and alcoholic beverages, will now be able to charge a 7% GST style tax on its on reserve sales of fuel. In addition, the Yukon First Nation Self-Government Act will be amended to give effect to the GST rebate provisions which were added to their self-government agreements last year.

There are also measures involving the administration of taxation. A service agreement signed last October between Revenue Canada and Nova Scotia allows for a limited release of taxpayer information to Nova Scotia Workers Compensation Board. The bill also allows for co-operation in audits. Certainly this exchange of information helps ensure amounts owed are indeed paid.

Members will be pleased to note that before exchanging any information the federal government will ensure that the workers compensation board fully adheres to the current confidentiality safeguards that apply to the sharing of information with agencies outside Revenue Canada.

Another part of Bill C-71 deals with good financial management. Hon. members are aware that the government is committed to managing its debt cost as effectively as possible. This bill amends the Financial Administration Act to enhance the effectiveness of debt and risk management.

The amendments, many of which are technical, confirm some existing practices. They clarify the authority governing the government's borrowing and distribution of its debt and modernize the government's fiscal and risk management powers. The bill also spells out the government's standing authority under the FAA to ensure that maturing debt can only be refinanced within a given fiscal year, a practice the government has followed for years.

New borrowing authority to finance a deficit would be obtained as in the past through a borrowing authority bill. It is important to ensure that all members understand that the amendments to the FAA are in no way compromising the authority that is required to finance a deficit. In fact, that authority would be obtained as in the past through a borrowing authority bill.

Other measures guarantee that parliament will receive information annually on the government's debt management programs and plans which speaks to the transparency and openness of the management of our debt.

As I mentioned at the beginning of my speech, some of the other measures of Bill C-71 have to do with amending the basic pension formula in the public service, Canadian forces and RCMP superannuation acts which calculate benefits on a five year rather than the current six year average salary. That is an improvement to the existing plan.

Also included in the bill are provisions for amending the Patent Act to clarify the Minister of Health's authority to pay the provinces moneys collected by the Patented Medicine Prices Review Board from excessive pricing of products by patented manufacturers.

Also included in the bill is a measure clarifying the scope of federal loan guarantees under the Agricultural Marketing Programs Act to financial institutions that fund advance payments to our agricultural producers.

Finally, the bill also includes a measure that will provide the Minister of Finance with the authority to undertake financial operations necessary to meet Canada's commitments under the European Bank for Reconstruction and Development Act.

The 1999 budget omnibus bill establishes important foundation blocks for the future in terms of new funding for our public health care system. It benefits children and families in need and implements measures that improve the operations of government, all while sustaining our commitment to financial discipline.

Generally and overall it is important to note the 1999 budget extends the government's plan to build a strong economy and a secure society. It is an approach that we as a government have consistently followed, an approach which is designed to advance living standards of Canadians. It is a strategy that we have applied through each of the government's six budgets to date. We essentially take action on three fronts: maintaining sound economic and financial management; investing in key economic and social priorities; and providing tax relief and improving tax fairness.

First, certainly strong economic growth and reduced debt burden better enable the government to provide tax relief and make key investments. The 1999 budget again confirms that the era of deficit financing is over. We will continue to deliver balanced budgets or better.

Second, our investments in health care and research and innovation and other key areas improve Canadians' ability to work and their quality of life.

The third pillar of our strategy tax relief is very clear. In essence the 1999 budget delivers tax reductions of $16.5 billion with the 1998 budget collectively. When we include the reduction in unemployment insurance that number escalates to $17.3 billion.

It is important to note that our approach will be one of balance and it will remain balanced. We have demonstrated a three front strategy over the last number of budgets. We will continue with that approach. The government has eliminated the deficit faster than anyone expected. We have seen the results of our financial management in low inflation, low interest rates, the increase in job creation and the ongoing economic activity.

It is important to note as well that the work of the government in this area is still not complete. We still must continue to provide improvements to the quality of life and the standard of living of Canadians. We need to continue to provide tax relief. We need to continue to provide opportunities for Canadians to work and enjoy the quality of life they are accustomed to in this great country.

It is clear that many benefits will result from Bill C-71. I urge my hon. colleagues to pass this legislation without delay.

Budget Implementation Act, 1999
Government Orders

10:20 a.m.

Reform

Monte Solberg Medicine Hat, AB

Mr. Speaker, it is a pleasure to rise and debate Bill C-71.

This bill is part of what the government introduced in the budget in February. It gives us a good indication of where the government's head is at when it comes to some of the big issues that confront the country today in terms of the economy and those sorts of things.

I want to talk a bit about one of the big current debates in the country. In fact it is a debate that the government helped initiate, mainly the industry minister. It has to do with the issue of productivity. Most people who follow this issue closely would acknowledge that improving the productivity of the nation is critical if we are going to give Canadians an improved standard of living, something that we have enjoyed almost every generation since Confederation.

The question I pose to the government is does this budget really improve the nation's productivity? Does it take a step in the right direction in terms of making the country more productive? Does it at least help us reach our potential when it comes to being more productive?

On close analysis this bill does not come anywhere near doing that. I do not think it makes Canada more productive. I do not think it helps us improve our standard of living. I do not think it helps us improve our health care anywhere near the degree that Canadians are expecting.

At the finance committee discussions are being held on the issue of productivity. Yesterday we had several people before the committee, some economists, some from banks, insurance companies and the conference board. There were people representing particular interests such as the education sector, the biotech sector, the high tech sector, and so on.

All have acknowledged that we have to improve our productivity if we want to improve our standard of living. We are far behind our major trading partner, the United States, in terms of our productivity. There is some debate as to whether or not that gap is getting worse, but everyone acknowledges that for the last 10 years we have been substantially behind the United States. The consensus yesterday was that the gap would be about 20% behind. When we have a gap that big, it means that our standard of living is also that much further behind that of the United States.

Some people ask why compare ourselves to the United States, the Americans are bad and that kind of thing. It is important to look back and remember that Canada used to have a standard of living that was actually superior to that of the United States. We had a standard of living where we were their economic betters.

It is wrong for us to settle to be the poor cousins of the United States. We deserve to have a standard of living that is as good or better than theirs. It is something that my parents grew up with and people became accustomed to over a long period of time. Sadly we seem to have fallen behind the Americans now and I think it is time to reclaim our rightful place as their economic equals at the very least, if not their betters.

The question is how do we improve our productivity? How do we get to become a more productive nation? This is something we put to the experts who were assembled around the table. While there was not necessarily a consensus on what we should do, there was some agreement on what the key factors are for improving productivity.

Among them is a good education system. In Canada people would have to acknowledge that we do have a good education system but certainly it could be improved. It is also a fact that we spend more on education than almost any other country in the world. We do put a lot of money into it. I do not think it necessarily needs more money but it probably could be improved in various ways, shapes and forms. It is important to point out that most of that responsibility falls on the provinces because education belongs to them according to the Constitution.

There was some agreement that we have to put money into infrastructure in Canada. That makes sense to me. Of course most of that responsibility does fall on the provincial governments, even though it is interesting to note that the federal government does take about $3.8 billion a year from consumers through gas taxes and fuel taxes of various kinds. Most people would say it would make sense to put that back into highways and that kind of thing, but the federal government only puts a few hundred million dollars of that $3.8 billion back into highways. The government is probably not doing the job it could be doing to improve infrastructure in Canada.

It is interesting that over the last generation or so the size of government grew dramatically and money did not go into one of the most important things for improving our overall productivity which is infrastructure. It went into all kinds of soft programs, such as social programs, which are well and fine but they do not necessarily improve our productivity as a nation, something the government claims to be very concerned about.

One of the things that improves productivity, and I know there is a consensus on this, is a country that does not burden the people who create the wealth with all kinds of rules and regulations. There has been some progress made in that way over the last many years.

We have entered into free trade agreements which have helped improve the flow of goods and services between Canada and the United States and Canada and other countries, as we now trade freely with several countries, more or less. There are always trade disputes but basically that was one of the other factors which improves our ability to trade.

Sadly we still have all kinds of internal trade barriers in Canada between provinces. Although the federal government promised it would deal with this, and this was something the industry minister said he would address a long time ago, frankly the federal government has done very little to improve the state of trade within Canada. We still have many internal trade barriers.

We also have a tremendous amount of regulation in Canada. I remember one day phoning the Library of Parliament. When I asked them to tell me how many federal regulations are on the books in Canada today, they basically laughed at me. Every year we produce hundreds of regulations. It makes it extraordinarily difficult for business people to do what they do best which is produce wealth, prosperity and jobs for people when they have to sit down and fill out forms and obey regulations that someone produced 50 years ago that in many cases probably are not applicable any more. Sadly we still have to contend with that. This government has not done a good job of eliminating burdensome regulation.

There are probably other factors as well that I have not mentioned.

Finally we come to an issue that the Reform Party has pushed for as well as other people who are very concerned with the state of the Canadian economy, which is simply that we have an extraordinarily high tax burden in Canada today, and that does hurt our productivity. It hurts it in a number of ways. This was an issue that was debated a bit yesterday as well.

First, when we have taxes that are as high as they are in Canada it causes many people, who in many cases are very skilled and have great talents, to go elsewhere to pursue their careers. We see this all the time.

People on the government side are saying there really is not a brain drain, that it is not a problem because we are bringing in as many people as we are losing and they are highly educated people. I do not buy that for a second. Yesterday we had all kinds of people appear before us. They told us they were in the high tech field and that they know what is happening. They said they are losing people from their companies who go to the United States because there are more jobs, they pay better, they tax them more lightly and they can purchase more with the money they earn because their dollar is more valuable.

We hear that over and over again. We hear it from companies like Nortel. I would argue that Nortel is the leading company in Canada. It employs 76,000 people, many of whom are in Canada. It is a real world leader in all kinds of high tech areas. It is involved in things like telephone switching, and now the Internet. It is doing wonderful things. It employs tens of thousands of people who are given a chance to have wonderful careers with wonderful salaries. Officials of Nortel are now saying to the government that it must start to cut taxes because if it does not they ultimately may have to follow all those employees they have lost to the United States.

It is not often that a leader of business will stand in front of the government and say that its policies are wrong. It takes policies that are so wrong-headed that they are having a real material affect on the bottom line of those companies. For obvious reasons these companies do not want to alienate government.

It speaks volumes when a company like Nortel speaks up. However, it is not just Nortel. My goodness, we had Mr. Desmarais speaking out. He has very close connections with the Prime Minister. We had Mr. Pattison speaking out. These are captains of industry in Canada who are saying “If you continue to tax us this heavily we are going to have to seek opportunities elsewhere in the world and we will no longer be able to continue with the same level of investment in Canada that we have in the past”.

This is not me speaking. In many cases it is people who have close ties with the government who are speaking out, saying “This must come to an end because we are driving some of our best and brightest out of Canada”. That is the first point I want to make.

We also heard yesterday from someone who is involved in the biotech field. That gentleman told us that it is not just a question of salaries, but because there is so much more economic activity going on in the United States and its economy is booming, it is able to offer this gentleman, a brilliant scientist, a geneticist, an extraordinarily interesting job. That is what motivates a lot of these people. It is not just the money, it is the jobs as well. He had been offered an opportunity to head up a $15 million research project in the United States. He did not tell us whether he was seriously considering it, but the very fact that companies are coming to Canada and making these offers to some of our people should concern us.

There is another reason that has to do with high taxes which is causing people to go to the United States. When there are lower taxes, as there are in the United States, there is more economic activity because there is more money in people's pockets. There is more wealth being created. They are able to provide more money for all of these wonderful research projects.

I recall recently an article in the Globe and Mail that talked about a biotech firm in Quebec that was simply unable to attract senior researchers to the company because they were going instead to the United States.

We recently had people from the universities appear before the committee who said that their problem was not that they could not find people, it was that they had lost their senior people to the United States. It is usually the United States, but not exclusively. They were having to fill those positions with very junior people. Then the cycle continues. Once those people get some experience, many of them head off to the United States.

This is an extraordinarily serious problem and it obviously impacts our productivity. When we lose all of these highly skilled people it means they are not producing wealth and jobs for Canadians. That ultimately means, of course, that our standard of living falls. As I pointed out earlier, in Canada we are accustomed to seeing our standard of living actually double every generation, but that is not happening now. Our standard of living is much lower than it used to be relative to our major trading partner, the United States. We have fallen far behind. There is a consensus on that.

In fact, I must point out that even the Minister of Industry has made an issue of this. He has suggested that our standard of living has fallen below that of Mississippi, Alabama and Georgia. He gave a speech on this in February.