House of Commons Hansard #118 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was finance.

Topics

Financial Consumer Agency Of Canada Act
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4:35 p.m.

NDP

Pat Martin Winnipeg Centre, MB

Mr. Speaker, I thank the member for Trois-Rivières for an excellent speech. I can certainly be proud to associate myself with most of his comments, but there is one thing I would like to hear him speak further on.

The results from most surveys of small and medium size businesses show that 45% of them say that if it were not for the lack of venture capital they could expand their businesses and create more jobs. In other words, the banks are not providing the venture capital that Canadian businesses need to expand.

The hon. member spoke to us about the Desjardins and Caisses populaires as being one institution that may fill those needs.

Labour leaders with vision, like the great Louis Laberge in the province of Quebec, founded the solidarity fund in that province. In our province we have what we call the Crocus Fund which is a labour sponsored investment fund using union money to reinvest in the community.

Could the hon. member tell the House a bit more about men with vision like Louis Laberge who had the foresight to put in place labour sponsored investment funds that I believe fill the need so well for venture capital? Could the member explain that process in his province a little bit more?

Financial Consumer Agency Of Canada Act
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4:35 p.m.

Bloc

Yves Rocheleau Trois-Rivières, QC

Mr. Speaker, I thank my colleague for his question.

I hope I am not mistaken, but when I was the critic for industry, it seems to me there was a clear difference between the situation in Canada and in Quebec as far as venture capital is concerned.

With the mechanisms we have set up in Quebec, we do not have any problem with venture capital. We have enough risk capital to finance most projects, something that would not happen in Canada.

The creation of the solidarity fund, for example, may have widened the gap even more. Since the same kind of initiative has not been taken in English-speaking Canada, differences have become even more striking, because we already have Desjardins, which is a powerful co-operative movement, whereas the credit unions in Canada are far from being as important.

The solidarity fund alone is as big as everything similar that could be found in the rest of Canada.

The venture capital problem is not the same. I do not think it is a real problem in Quebec, but, as the hon. member said, it is apparently a problem in the rest of Canada for 45% of business people.

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4:40 p.m.

NDP

Dennis Gruending Saskatoon—Rosetown—Biggar, SK

Mr. Speaker, I also thank the member for Trois-Rivières for his incisive remarks.

There really are some similarities between places like Saskatchewan, where I am from, and many of the areas in Quebec. One similarity would be that there are many small towns in rural areas where if a bank closed down there would be a serious problem. Another similarity is that we share a strong credit union movement and it is very good that we have credit unions.

The member talked about bank closures in small communities, of which, as I have indicated, there are many in Quebec. Does he see anything effective in this legislation that would stop bank closures? We do not see it. I wonder if, from his reading of the bill, there is anything in the bill that would prevent the banks in any way or strongly hinder them from closing small branches at will.

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4:40 p.m.

Bloc

Yves Rocheleau Trois-Rivières, QC

No, Mr. Speaker. The reason this is one of the focuses of our criticism is that the bill provides only that the banks must give notice of a branch closure. In Quebec, if you lay off more then 10 employees, you must give notice. So there is nothing new under the sun.

In view of the need, the quasi essential role of the banks—we need banking services in our civilized society—under a sort of laissez-faire approach the banks manage this at their discretion. The situation is all the more unpleasant because this takes place in a context of huge profits, with staff being laid off all at once and services cut. So, if we put that all together, we come up with a rather unpleasant business.

We have a golden opportunity here to limit that, to make it more civilized. The law is made to civilize things a bit, but the government is missing the boat completely, because it says that the bank will simply have to give notice to those concerned, no doubt the Minister of Labour, in Quebec at least, when a branch with more than 10 employees not transferred elsewhere by the employer is involved.

So it is totally weak and rather hypocritical, because there is a problem. There are hundreds and hundreds of persons who have lost their jobs in the banking sector in Quebec, and the government is doing nothing to establish constraints to make the situation a little fairer.

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4:40 p.m.

Bloc

Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Mr. Speaker, I am pleased to rise today to speak to Bill C-38, which deals with the reform of the financial system.

For the benefit of our listeners, that means the reform of the whole banking network and the whole system of financial institutions in Canada. A review of the act takes place every 10 years or so. I have been a member of parliament for seven years, and the act is now being reviewed. This is probably the only time it will be while I am a member of parliament.

This legislation is very important as it governs every financial transaction, not only our small deposits at the bank, but also any transfer of funds across Canada.

Moreover this is happening at a time when globalization is changing all the mechanisms that govern how trade is conducted between various countries around the world, which will have an impact on the way financial services are structured.

Therefore, we must take a serious look at the whole thing and see if indeed the reorganization under way is interesting, satisfactory and good for the future of the financial system in Canada and more specifically in Quebec.

When reading Bill C-38 one notices that it gives the Minister of Finance total control over the future of Quebec banks. Moreover, it does not give any guarantee the minister will take into consideration the specific nature of Quebec's financial system.

A case in point, to which we will get back later on, is the way the bill deals with the possible acquisition of the National Bank of Canada, the type of ownership that might apply to this bank compared to other major banks in the rest of Canada.

It is the kind of double standard we in the Bloc Quebecois find totally unacceptable. It is also unacceptable to the Quebec government. The minister of finance of Quebec said so in a letter to the Minister of Finance of Canada, dated June 7, 2000, clearly stating that there are four main criteria to determine what constitutes public interest, and these are not included in the legislation. As far as I am concerned they should be.

The first criterion is the effect of change on present activities in these banks, including the services available. It must therefore be ensured that this bill has a proper administrative framework and is not merely dependent on the good will of the Minister of Finance.

The second effect is the effect the change will have on employment, both at head office and in the branches, including professional positions and those requiring specialized expertise. In other words, we do not want to see a change that would make banks into empty shells, which would for instance make the National Bank a kind of foreign entity in Quebec. At the end of the day, this would mean we would not longer have any control over the bank itself. There would just be an empty shell, and all the specialized jobs, all the jobs with particular, strategic importance, might disappear, particularly from head office, and end up elsewhere. Thus we would lose the control developed over the years.

The minister of finance of Quebec also wishes to see taken into account the effect of the change on the economy of Quebec and its technological development.

The entire banking sector is one that is heavily impacted by technological change, but it is also one with a domino effect on business. When, for example, there is a decision to lend money to businesses to enable them to conform to new technological requirements, in order to be in a competitive position, the lenders must be in place and prepared to take actions that reflect the particular context of Quebec. To that end, we feel it is important to follow up on the recommendation by the Quebec minister of finance.

The last characteristic, the last condition set by the Quebec minister of finance is the effect of change in the financial sector of Quebec and the role of Montreal as a financial centre, particularly as far as keeping final decision making centres in Montreal.

I believe these are four important criteria which the federal government must take into account and which are absent from this bill at the present time.

As I said at the start, this is an important bill. Changes will not be made overnight. Once passed, it will set the framework for financial institutions in Canada for many years to come. It seems important to me that Quebec's distinctiveness be taken into account and treated along the lines of the interests of Quebec as opposed to those of the Minister of Finance of Canada, which are very different.

I would also like to emphasize another point made by the minister of finance of Quebec, who wrote:

We think that the legislation should include mechanisms to ensure that measures are enforced to safeguard against the adverse effects of allowing an individual to hold more than 20% of the voting shares of a bank in aforementioned areas.

So, through its finance minister, the Quebec government clearly cautioned that major changes must be made to the legislation. The Bloc Quebecois is opposed to this bill and will eventually vote against it, if these amendments are not incorporated into the bill per se.

As we know, bills have been put forward, including one by the hon. member for Hochelaga—Maisonneuve, dealing with community reinvestment, inspired by a practice existing in the United States, whereby banks are required to have some sort of social mandate.

As the hon. member for Trois-Rivières was saying earlier, and this is true as well in all the regions of Quebec and probably all the regions of Canada, concentration in the banking system today has the following consequence: if there were no credit unions in several regions of Quebec, a local banking system would simply no longer exist. This is because, in the past, banking operations were based solely on economic and financial criteria, without any concern for the social implications of these operations.

I think we had an ideal opportunity to include in this bill some major elements of the bill on community reinvestment introduced by the hon. member for Hochelaga—Maisonneuve.

I think we could have taken a page from the American experience and applied it to the Canadian system. In a few years, we would have realized that, instead of seeing our regions abandoned by the banks, as we have seen in the last couple years, perhaps they would have come back to this market in accordance with the requirements of the act.

This bill is the result of major technical work. With this bill, some cleaning up is being done, but there are still major points that need to be corrected, and not enough is being done.

Indeed, the Bloc Quebecois considers that no concrete measures have been taken to give the poor greater access to financial services, as I was saying when I spoke about community investment.

The Minister of Finance has chosen to unilaterally decide the future of Quebec banks. Figures have come out lately and we have seen what is being done with the surpluses in Canada. Last year, the Minister of Finance announced a $3 billion surplus, which will actually reach $12 billion. This was well known from the beginning. But to avoid a debate on the way this surplus should be used, the budget forecasts were fudged.

With this new law, the Minister of Finance will have even greater powers, and I find this dangerous. For instance, the bill is full of expressions like “the Minister may, if he deems it necessary” or certain clauses could be applied “if the Minister so decides”. In other words, this bill can be made to say whatever the federal government and the Minister of Finance want, in terms of deciding on their own the future of Quebec's banks, among other things. This is unacceptable.

The main point is that, under the bill, in a bank like the National Bank, a single shareholder could, with the approval of the Minister of Finance, hold a 65% interest in the National Bank, the largest Quebec-based bank.

The Minister of Finance does not need to allow this kind of excessive control to give the National Bank the flexibility it requires to continue to prosper. Why would a situation where a shareholder owns 65% allow more flexibility than one where a shareholder owns 1%?

In the future, this could prove to be very dangerous. The Minister of Finance has not thought this through. Some legislative guarantees are needed to prevent any negative impact these new ownership rules might have on employment of professionals, consumer services, small businesses, decision making centres, and the role played by Montreal as an international financial centre.

It is not obvious that this bill will bring about healthier competition on the national market. But competition is more important for our future economic development than the creation of big banks to compete on the world market.

The Minister of Finance has decided to draft legislation benefiting the major banks. However, if that means sacrificing Quebec banks like the National Bank, which is the institution for small businesses in Quebec, he is surely aware that if he does not amend his law he will not have adequately met the needs of Quebecers or their desire to have a financial system that works for them, instead of the financial system.

Let us go back in time. Before 1960, Quebec had few experts who could see and understand the importance of all that. Since 1960, since people like Jacques Parizeau helped create the Caisse de dépôt et placement du Québec, since Quebec acquired such instruments as the Fonds de solidarité des travailleurs, and the Fonds d'actions de la CSN, many management tools have been developed. We are now aware of the power of money. We now know that we can get tools that would help us make the best possible decisions in the interests of Quebec.

The bill before us is something we are quite familiar with. There are in the House sovereignists who want Quebec to have at its disposal the best possible tools to build its future. The day Quebec becomes sovereign, we will inherit a lot of federal statutes during the transition period and this will be one of the most significant. We might as well pass good legislation that is in the interests of Quebec and would allow Quebecers to get down to business the day after the referendum is won, without having to correct too many mistakes made under the federal system.

This is why we carry out our duties in the House. We will criticize this bill and come up with some amendments so that we end up with a bill that is much more acceptable for Quebec and for the rest of Canada, one that would give us the tools we need.

I also want to take this opportunity, at second reading, to talk about consumer protection. The Minister of Finance remains quite vague on this issue. In my mind, what he says sounds more like wishful thinking than a strong political will.

It would be in everyone's interests for us to consider this bill in detail and bring forward appropriate amendments. This bill establishes the Financial Consumer Agency of Canada, the objective of which, according to the minister, is to protect consumers.

The Bloc Quebecois has long been recognized as a champion of people's rights. We have had important debates on these issues, including on the Privacy Act, where was shown that the federal government had passed legislation that would not meet its objectives and that would have to be reviewed before long to ensure proper management of personal information. We have seen the results of such a piece of legislation.

Internal management of information networks within the government is totally inadequate. I received at home some information from the Department of Human Resources Development. In its big brother database I am registered as working in the processing industry in Ontario. A lot of the information sent to me was false.

So I had to send it back to the government saying that the information was false and had to be corrected. But that information had been going around for years. It was used in studies, and we did not even know what kind of information the federal government had about us.

This same government that is unable to manage its information properly brought in Bill C-56, which became Bill C-6 regarding the protection of personal information, and it did not go nearly as far as Quebec went in its own legislation in that area.

That is why we have our doubts about the finance minister's desire to really protect consumers. The financial consumer agency will create numerous regulatory overlaps with measures already taken by Quebec in this area. In any event, it is a sector which comes under the jurisdiction of the provinces, of Quebec.

This same bill makes provision for a low-fee retail deposit account, which the Minister of Finance says will ensure those with low incomes accessibility to financial services.

No one knows exactly what this low-fee retail deposit account is, except for the minister. We have not been able to get a good definition of it. No one knows who would be entitled to such an account, except for the minister, and no one knows whether this account will be available everywhere, except for the minister. It would be nice if we knew a bit more.

This bill gives the minister considerable discretionary power. What is more, in a definition that is important for those with low incomes, we do not know exactly how it will be managed. Since the legislation is revised only once every ten years, it would have been good to have this spelled out off the bat.

Why is this not known? Because everything will be defined by regulation. For the moment, we must be satisfied with what the minister has told us since we are unable to get at the meat of it.

In conclusion, if the proposed legislation is to be acceptable to Quebec, it will need to contain important legislative guarantees not now present. The most flagrant example is what will become of the National Bank if the present wording of the bill is not changed. The minister is given far too much discretion, considering the guarantees he has given us in the past.

Quebec must not find itself at the mercy of Canada's finance minister. I think that major amendments should be moved and accepted by the Liberal majority, so that in the end we will have legislation on reform of the financial system that meets a number of conditions, both for Quebec and for Canada.

I suggest that members read what the president of the National Bank had to say. He thought it could be a bit higher than 20%—say even more than 40% or something like 49%—but this all has to be discussed.

As far as the 65% is concerned, I think that control of anything more than 50% of the National Bank, as provided for by this bill, is a bad thing. The bill will have to be amended within two, three or four years or it will put undue pressure on the finance minister.

The current finance minister will certainly not be around until the end of this century. Two, three, five or ten years from now, we may have another finance minister. Other Canadian governments will make other choices, and we might not necessarily be able to trust the finance minister fully.

I believe the current minister has already shown us that, as far as surplus management is concerned, we should not trust him. Nor can we assume that his successors will be any better. It is essential that Quebec's Banque Nationale be provided with legislative protection.

This is an important bill, legislation that will not be reviewed for several years. This bill proposes many significant changes. There are constructive ideas on the table. The government of Quebec gave us advice and warnings regarding the conditions required.

I hope that the federal government will act responsibly, that it will take the time to study these amendments, that it will agree with our arguments and that it will make some changes so that Canada's financial system will be well accepted by all sectors. It is important to be able to trust our financial system and, consequently, that this system reflect a consensus. We have not reached that consensus yet. Such a consensus would enable us to have the financial tools that would help us face globalization and the challenges that lie ahead of us.

It is important that we give these tools to every family and every person working in our regions.

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5 p.m.

Bloc

Francine Lalonde Mercier, QC

Mr. Speaker, I am pleased to speak to Bill C-38, a bill on the reform of financial institutions and banks.

This is a bill that has been talked about for a long time. Much has been written, much uproar has ensued. It has triggered much action and reaction, and one could say we are late in doing something, because globalization and the inevitable competition between major partners are among the challenges in the world context which is about to become ours, if it is not already.

On a number of occasions, the Bloc Quebecois has intervened in this regard. But here we are now faced with the bill as a fait accompli, and the government seems to be a rush to get it passed, so we are taking part in the debate.

I have not come with the bill in hand, since it is 900 pages long. It is not something everyone will read, but it is a bill that creates rights we find insufficient. We therefore wish to put on the record that, if the corrections we will be proposing at the report stage do not get through, we will be forced to vote against the bill. I do, however, wish to state right off that this bill contains a number of improvements with which we agree.

We note, for example, that the Minister of Finance has incorporated the recommendation made by Henri-Paul Rousseau that the financial institutions, insurance companies and various institutions be allowed to join together against foreign competition. He has added this to his bill, and we acknowledge that it was not in the original.

Let us now look at what is wrong, totally wrong, with this bill. First, I must say that, generally speaking, the powers given to the minister in the bill are way too broad and pervasive. Because of this discretionary power, there are still many provisions whose meaning remain unclear, since the minister may, on his own initiative, change what they appear to mean.

Generally speaking—and once again, the Bloc will propose amendments—we would like more clarity regarding the processes and also more specifics regarding certain concepts, such as the low-fee retail deposit accounts for the poor.

This issue of discretionary power is very important to us, especially since it will touch upon what is at the heart of our opposition, that is the transformation of the ownership rules for the National Bank, in Quebec.

Another aspect shocked us. The hon. members will understand that, having been my party's critic on Bill C-54 concerning the protection of personal information—which is, in fact, a provincial jurisdiction—I am extremely sensitive to the fact that this bill is again creating overlapping by directing how consumers should be protected. It is not that we do not want consumers to be protected when they deal with financial institutions, but we know that they are better protected by Quebec laws.

And there are many in this area. There are the Privacy Act, the Act respecting Insurance, the Act respecting Trust Companies, the Quebec Savings Banks Act and the Credit and Securities Act, to name a few. There is also the privacy bill, which is undergoing radical change in order to take into account the impact of electronic commerce. This is a very interesting bill.

Why oppose a bill supposedly intended to protect consumers? For an extraordinarily simple reason: because consumer protection legislation has to be simple and easy to understand and to enforce. It must be easy and simple for consumers to understand what their rights are and how they can ensure they will be upheld.

Quebec's privacy law is cited all over the world for its clarity, for the ease with which the citizens can win their case, and for its ongoing implementation in Quebec.

When a citizen has a problem and wonders “Under which act am I protected? What are my rights? Are these rights provided under the Credit and Securities Act or under the Privacy Act?”, there is a problem. This grey area, which could even make it possible to make a complaint under both acts, but also to miss deadlines at one point or another, is not a good way to protect consumers. The Bloc Quebecois will certainly follow this situation very closely.

I would be remiss if I did not talk about the whole issue of community investment. As my colleagues said before me, the hon. member for Hochelaga—Maisonneuve has conducted a remarkable campaign on the necessity for the banks to assume greater responsibilities in depressed communities and in isolated areas experiencing economic difficulties.

In fact, banks should systematically invest in communities, because they do benefit from regulatory protection. They should therefore agree to assume responsibility for the impacts of their activities on consumers, constituencies, regions, the environment and this, of course, in each of the provinces.

Our colleague argued that banks have an unfortunate tendency to avoid depressed communities and to prefer economically healthy areas. When they choose to stay in a depressed community because there are profits to be made, there is generally no correlation between the amounts of the deposits they take in and the amounts they give out in loans and cash advances.

Our colleague's system is based on American legislation passed in 1970, which completely changed the relationship between the banks and the citizens namely by forcing representatives of the citizens and of the banks to sit together and look at how they could help improve the situation of the most disadvantaged in the community.

We know that the first thing to do to help those persons is to allow them to open a bank account. That is the very first step. The bill provides for a low-fee deposit account.

However, since the application of this provision and its real content are not known, we say that until we know we are concerned, because I think everyone was made aware by the campaign, and at that time, not just by our colleague from Hochelaga—Maisonneuve, by the need to ensure that everyone can at least open a bank account.

All members know that this is far from being a sure thing and that the reasons given or not given have to do with income, length of employment, credit cards, which we can or cannot show, to prove our solvency.

It is an issue we consider very important, and we think that the bill would be vastly improved if it contained a provision that would permit something similar to what is done in the States—when the States has good things to offer, we should use them—that would permit dialogue as is the case with other businesses and other representatives of the public to ensure that these financial players help the poor.

The ombudsman is a step in the right direction, but it is far from enough. I note that up to now, the ombudsman has been appointed by the banks. When I sat on the Standing Committee on Industry, I heard the banks regularly defending their record on loans to SMBs. I myself bore witness to the fact that the ombudsman had good intentions, but lacked authority because he was appointed by the banks.

The points causing the greatest difficulty are extremely important for the Bloc Quebecois.

Since the majority of Quebec members are from the Bloc Quebecois, we can argue that we are talking on behalf of Quebec. We can question the change this bill makes to the ownership rule for the big banks. But where the ownership of the only big bank in Quebec, the National Bank, is concerned, we cannot support the change the Minister of Finance is proposing in this bill. We said so loud and clear and we will come back to this issue.

For the benefit of our fellow citizens watching the debate I would like to mention that up until now, the Bank Act provided for the splitting of the shares by prohibiting any single individual from owning more than 10% of the shares and having control over the banking industry, which could have been risky for businesses as well as for the economy and consumers.

Because of pressures exerted upon him and changes in the world economy, the minister has decided that a single shareholder can now own 20% as opposed to only 10% previously. You can rest assured that we will discuss and question this decision. That change affects the big Canadian banks only.

But why allow a single shareholder to own up to 65% of the shares of the only big bank in Quebec, the National Bank? When we think about all the risks this reform would involve, we do not understand.

Looking at history, we can see that Quebec has experienced serious problems over the years in exercising relative control over its economy. One of the main reasons for that, at the beginning of the century and before that, was the lack of capital. The popular phrase then was “French Canadian” or “controlled by French Canadians”.

According to historians, the collapse of Quebec-owned businesses after World War I was due to the fact that, because of the change and because of insufficient funding, all those businesses were bought by British or American capital.

Many economists—and I am thinking of the École des hautes études commerciales where so many economists and businessmen have received their training—began to understand that Quebec needed its own capital. Jacques Parizeau, distinguished professor at the École des hautes études commerciales, is among those who were taught by François-Albert Auger and others. So it is a good thing that we now have the National Bank and the Caisse de dépôt et placement, as well as the Fonds de solidarité and the Fonds d'actions, which came later.

We know that venture capital is now available in Quebec. The National Bank is one important element of this trilogy and we will not let it become vulnerable to foreign control, which could even lead to its dismantling. It could be taken over just to create competition. I will add that one extremely important characteristic of the National Bank is the fact that it caters to the needs of small and medium size businesses.

Of course other banks do get involved, but it is the small and medium size businesses' bank. We know to what extent they are part of the Quebec economy and its distinct nature. For this reason, we must protect the National Bank against being owned by one individual, which could result in a change in its original, main vocation, and worse yet in its being taken over by foreign interests.

We will fight tooth and nail to avoid this, and I believe Quebec and Quebecers will be behind us to oppose others who might favour interests other than those of the small and medium size businesses and their ability to access capital and use it through a bank such as the National Bank.

I could mention other elements of the legislation, but my colleagues and I wanted to stress the essential. The members of our party who sit on the Standing Committee on Finance will work very hard, as usual, but I wanted to say that they will have the strong support of all the members of the Bloc Quebecois and also, we are convinced, of Quebecers.

I might add that the Quebec government, through Mr. Landry, was very clear and suggested adding to the minister's discretionary criteria four other criteria that would be more definite and that would stress the link between the economic situation, employment and services. It is surprising that these criteria are not included in the basic criteria the finance minister is looking at in his bill.

Mr. Speaker, I thank you for your attention. It is always a help for us members of parliament, when we need to be convincing, to be able to address not the Chair, but the Speaker himself, who might even enjoy from time to time the fact that we are really addressing our remarks to him.

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September 20th, 2000 / 5:20 p.m.

Bloc

Yvan Bernier Bonaventure—Gaspé—Îles-De-La-Madeleine—Pabok, QC

Mr. Speaker, I notice that every time I rise in the House, you make an effort to remember the full name of my riding. I hope everyone will remember. You do so in French and your French is constantly improving.

After this bit of humour, I want to remind Quebecers who are listening to us—it is suppertime and some people like to play with the remote control—to make sure, before they eat their dessert, that they know what we are debating here today.

The bill before us will allow the federal Minister of Finance to decide the future of federally chartered banks in Quebec. What does this mean? My colleague, the hon. member for Mercier, explained it very well. The National Bank which, for most Quebecers, is the bank for small and medium size businesses, could come under foreign control. This means that its head office could be moved. These things could happen.

Those who are listening to us, in particular people in the Gaspe Peninsula, always want their member of parliament to come back home as often as possible, so as to keep informed of their problems. If, some day, I were to retire from the House and always stay away, how could I be aware of the needs of the constituents whom I represent? I realize that it is not quite the same thing for banks, but it is important to be close to one's customers. I am sure my colleague can comment further.

How could I, as a legislator, as the representative of the constituents of Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok, give a blank check—the expression is appropriate since we are talking about an act amending the Bank Act—to the Minister of Finance, when his bill is full of expressions such as “the Minister may, if he deems it necessary”?

He can do as he pleases, for Quebec and for the Gaspe. He can decide to do the right thing, but in six months we might suddenly have a different minister. Everyone is talking about elections. What would happen if there were someone else in the portfolio?

I do not want to ascribe bad intentions to the present minister, although sorely tempted, but if we change ministers, then what? If people want to make amendments, according to how they see things, and knowing their way of operating and how the electoral system works today, I would dearly love to see what contributions will end up being made to the campaign expenses of future ministers of finance. I will keep a list of them.

The banking system has influence. If we as legislators make the decision immediately, and leave as little as possible to the discretion of a Minister of Finance, which is I believe what the banks and small and medium business want, then we will be have some very clear rules to go by. I do not think that this bill as it stands is clear.

I will leave my colleague from Mercier to comment on this statement, but in my opinion it is not, at this time, worth the paper it is printed on.

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5:25 p.m.

Bloc

Francine Lalonde Mercier, QC

Mr. Speaker, as usual, the member for Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok has a way of putting things.

I think that we are going to hear this description again. No, we cannot give a blank cheque to the Minister of Finance when it comes to the future of the National Bank.

I repeat, the National Bank is the only Quebec-based bank. It is a mid-sized bank. It is smaller than the major Canadian banks. But it is Quebecers' major bank and it is the bank that finances small and medium size businesses.

I have been on the Standing Committee on Industry long enough to know that these businesses have tremendous difficulty getting financing from the other banks. The other banks prefer to make loans to the rich. The Bible warned us about this. We see it regularly.

So we must ensure that this bank remains in Quebec's hands, that it is not controlled by one person. Such a person could be from another country and could break it up and take it in a completely different direction, but he could also be a big industrialist who would want to change the rules of competition so that he would not have to make loans to small and medium size businesses that were not to his liking.

In no way can we agree to what this bill is proposing, for the economic health of Quebec, for the ability to retain control over the important part of the economy that these businesses represent, and we know that they are much more important in the economy in Quebec than anywhere else in North America.

Why does the minister not say that what is good for the National Bank would be good for Canadian banks? Why have departmental officials said that they are worried about control? If they are worried about control of the major Canadian banks if they increase the percentage of shares that may be held by one individual from 10% to 20%, it only makes sense to be even more worried about control if one person is allowed to hold 65% of the shares in the National Bank.

It is clearly unacceptable. We cannot even consider this proposal. It is ridiculous.

I say, like my colleague, that the Minister of Finance's intentions may be good. I saw a press release that said he wanted to help us. That kind of help we do not need. What we want is a rule that will guarantee us that control will remain in Quebec.

Financial Consumer Agency Of Canada Act
Government Orders

5:30 p.m.

The Acting Speaker (Mr. McClelland)

It being 5.30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

Income Tax Act
Private Members' Business

5:30 p.m.

Bloc

Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

moved that Bill C-211, an act to amend the Income Tax Act (travel expenses for a motor vehicle used by a forestry worker) be read the second time and sent to committee.

Mr. Speaker, the name of the bill is a bit unprepossessing, but I would like to summarize its intent.

Basically, it serves to allow forestry workers like those who work in my region—in the Basques, Saint-Jean-de-Dieu, Saint-Médard regions and throughout the Gaspé—who, in earning their living, have to go and work in Abitibi or on the North Shore and have to provide their own equipment, such as a pick-up, skidders, gasoline or a chain saw, to enjoy certain deductions.

The bill came out of a meeting with a forestry worker from Saint-Jean-de-Dieu and a meeting with several forestry workers, who work in this way.

The situation at the moment is that, with the partial deduction the law currently provides, they cannot make enough profit to make it worth their while working.

Right now, tax legislation discourages people from going to work elsewhere, and yet this is the only sort of job available. They would like a more appropriate tax deduction.

How can I say that the current legislation does not fully satisfy them? First, I wrote to the Minister of National Revenue on May 18, 1999 to ask for an interpretation of the law that allegedly permitted an appropriate tax rebate, a large enough tax credit to enable these people to get a tax deduction for travel costs. The law as it stands contains no such provision. The Minister of National Revenue confirmed this in his response to my letter of May 18.

I received a reply three months later and I wrote to the Minister of Finance on August 13, 1999, to tell him, since he is responsible for this issue, that a change to the act was absolutely necessary to allow these workers to have a decent income, to continue to work. Indeed, our tax laws must be an incentive to work, not a disincentive.

The Minister of Finance replied to me on September 30, 1999. Let me read two paragraphs from his letter:

In your letter, you ask if it is possible to consider these expenses as employment expenses, since there are some benefits related to working on a specific site or in a remote area that may be excluded from a worker's income, as long as they are reasonable.

The letter then explains that this somewhat changes taxation practices, but adds:

Even if the costs associated with transportation between a person's residence and place of work are not generally deductible, I submitted your concerns to the attention of my staff.

Today, I am very pleased that my bill can be debated in the House. This allows me to provide the Department of Finance with valid arguments to enable it to reach a conclusion.

On February 22, 2000, a few days before the budget, I asked the minister whether his staff had finally done the studies and reached a conclusion. Again, I got a reply from the Minister of Finance, but only in June 2000. That reply is still positive. The Minister of Finance says:

What constitutes a reasonable level of expenses for motor vehicles is a complex issue that requires a thorough study.

That thorough study sure is taking a long time.

The review of this issue and of other components of the tax system concerning motor vehicles is still going on. We will inform you of the results as soon as it is completed.

They have been looking at this proposal for a year and a half. I find it quite interesting that the Minister of finance has told me twice that this proposal has some merit and that it is worth exploring.

Indeed, on the basic principle that would give a tax deduction to workers who have to travel long distances to go to work and are forced to use their car, I think it is justifiable. This would help reduce unemployment in regions like ours and would promote economic activity.

When a forestry worker comes back to his family after two weeks on the job, he has a pay cheque, he can support his family, he can spend a little money to make sure that he has all the tools that he needs to go back to work. There is some economic activity there.

If the finance minister asks for detailed figures, he will find out that it is much better to help these people who have to drive far to go to work by giving them an appropriate tax deduction than to close the door on them, to entice them to stay at home, to push them into not going to work and becoming a burden on society, thus adding to the unemployment rate in a region that is already badly affected.

For all these good reasons, and because I think it would be worthwhile for these workers to persevere in pushing for this bill, I urge the government, the Liberal majority in this House, to consider passing this bill.

Recently we voted on a bill aimed at lightening the tax burden of mechanics, a bill introduced by the hon. member for Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans, which was put to a vote in this House as a private member's bill and has gone on to the next stage. It has somewhat the same objective: to provide a proper tax deduction for the tools all mechanics must supply for their job.

This one deals with forestry workers, and in this case it is not a box of tools but a truck and all the equipment required for work in the bush. The two bills have the same underlying principle. I would like to get the same open-minded attitude from the Liberal majority and from all members of this House.

I am also taking advantage of the fact that we are in the prebudget consultation phase. A letter has come from the member heading the standing finance committee indicating that there is a prebudget consultation exercise to be carried out this year again, in order to ensure that the people of Canada may receive the best possible services from their government and the encouragement to accomplish things and take their place within society.

This is a concrete example on which a quick decision could be reached on behalf of people who are very hard-working, who do not have easy lives, who do not get to go home every night, who often have to do what we call down our way “two week runs”. They work away from home and have to sleep in camps where conditions are not always ideal, they have to put up with difficult conditions. Sometimes they pretty well have to sleep in their trucks.

I believe they deserve respect and deserve to be protected from personal bankruptcy. When people buy a pickup truck that can easily cost $25,000 if they want something decent, they do not buy them for their cool looks but because they are needed for getting to work. This is what they need to do their job properly.

I think our forestry workers deserve the recognition of the House. There are all kinds of tax deductions. In the case of businesses being allowed a deduction for season tickets for hockey or other professional sports, the deduction can be justified because it helps maintain jobs. A similar deduction costing a lot less would allow forestry workers to earn a living, to feel the dignity of being workers, to travel to their place of work, not to make fabulous profits but to earn enough income to keep on working. I think the government should consider doing this for these workers.

It is not a very complicated bill. Basically, it requires only a little sense of fairness on the part of those who would pass it. If it needs a little polishing in committee, we will be listening to see if some changes can be made, but it is obvious that the current legislation does not allow these needs to be met.

We made all the necessary representations to the appropriate officials and we came up against the fact that, under the current legislation, they cannot grant an adequate and satisfactory tax deduction that really takes into account the need for pick-up trucks and related material.

The legislators must take their responsibilities. Our forestry workers deserve our attention.

Over the last few years, we saw that we wanted workers to have jobs. They would like to turn seasonal workers into machines and ship them all over Canada to work. These workers are often willing to drive 200, 300, 400 or 500 kilometres a week just to get to their workplace.

I believe they deserve our attention and this tax benefit. It would only be fair and respectful of the work they do. This would also be an opportunity for rural communities to get enough extra income.

It is all very well to say that rural communities must look to new technologies, but the fact remains that primary natural resources are one of the important components of the economy both in Quebec and Canada. We must ensure proper management of these components. Forest use must be maximized.

Forestry workers have developed an expertise in a given area. If they are not allowed to go to work far from their home and to make a decent living, their expertise will be lost altogether, they will exit the labour market and will not find work in other sectors, thus becoming a burden for society. This is unacceptable.

Therefore I call on the members of this House to consider my proposals. At the end of today's debate, I will have the opportunity to rise again. I hope I will be able to say that I have the agreement of everybody in the House in order to move toward tangible results.

I hope we will be able to say to the finance minister “You have studied the matter, you say that you have not yet completed your review, but the stakeholders and the members of this House want a practical solution, that is giving forestry workers in Canada a proper tax rebate”. I believe forestry workers deserve nothing less.

Income Tax Act
Private Members' Business

5:40 p.m.

Etobicoke North
Ontario

Liberal

Roy Cullen Parliamentary Secretary to Minister of Finance

Mr. Speaker, the number of private members' bills that are coming forward are very creative, imaginative and are keeping the Department of Finance, the Minister of Finance and his parliamentary secretary very busy.

I hope I am not the bad cop today.

I have some sympathy for the member's bill. Before I was elected in 1996, I worked for 20 years in the forestry sector. The workers in this sector are very professional. They are people with whom I have done a lot of work.

As I understand it, the intention of this private member's bill is to amend the Income Tax Act to permit, in certain circumstances, forestry workers to deduct for tax purposes motor vehicle expenses related to travel between their residences and places of work. Deductible costs would include not only the day to day out of pocket expenses required to operate the vehicle, such as gasoline, repairs and maintenance costs, insurance and licence fees, but also capital cost allowances. That is the depreciation on the original cost of the vehicle and interest costs associated with any loan taken out to acquire the vehicle.

This bill raises a number of issues that need to be examined carefully. In examining these issues, a number of policy principles must be considered.

One of the most important tax policy considerations is that of fairness. That is that the tax change be fair, not only to the taxpayers directly affected by the change, but also to all other Canadians.

A second important tax policy consideration is that of simplicity. Can taxpayers understand and comply with the tax change and can the proposed tax change be readily administered and enforced by the Canada Customs and Revenue Agency? Another consideration is how the proposed tax change impacts on the fiscal resources of the government.

This bill proposes to permit forestry workers to deduct employment income motor vehicle expenses related to travel between their residence and their place of work. Permitting such a deduction would represent a major departure from a well-established tax policy which has been in place for many years. The cost of driving to and from one's place of employment is considered to be personal driving. As such, costs associated with personal driving are considered to be personal and therefore not deductible.

Before I was first elected in 1996, I spent a number of years in the forestry sector. Even with that predisposition I cannot think of any rationale that would justify providing this benefit to forestry workers but not to workers in other sectors. I agree that forestry workers often have to work far from their home in relatively remote locations whether it is doing silviculture work, tree planting, thinning or spacing or whatever the case may be. However, forestry workers are not unique in this regard. Most employees have to commute to work and incur costs in doing so. Some employees may have to travel relatively long distances, like forestry workers, to remote work locations. However, it would be difficult to justify providing a tax deduction solely for forestry workers, as this private member's bill proposes, at the exclusion of other individuals.

In fact, the issue that this bill raises relates to the much broader issue of the deductibility of employment related expenditures more generally.

Most workers incur costs connected, in one way or another, to their employment. In addition to the cost of commuting to and from their work location, in the past, taxpayers and their representatives have sought tax relief for work related expenditures such as personal computers; professional journals; skills upgrading; business and construction safety clothing; and home office expenses.

Providing tax relief to employees in all of these situations would be a major shift in policy and would result in a significant fiscal cost.

As I mentioned, a second issue that must be carefully considered in examining this bill is that of simplicity. Can taxpayers understand and comply with the tax change and can the proposed tax change be readily administered and enforced by the Canada Customs and Revenue Agency?

We already have extensive provisions that permit the deduction of automobile expenses from business and employment income in certain circumstances and within certain limits. These rather extensive provisions are intended to ensure that all taxpayers are treated in a fair and consistent manner. However, taxpayers often express concern about the complexity of these provisions. This bill would only increase the number and length of the provisions devoted to automobiles by providing a unique tax benefit to forestry workers that other employees are not entitled to. By confining this benefit to forestry workers, the bill requires the crafting of a definition of forestry workers eligible for this tax benefit. However, developing an appropriate definition broad enough to include a variety of work situations yet narrow enough to focus the benefit to those taxpayers for which it is intended would be extremely difficult and could lead to increased uncertainty for taxpayers and increased administrative and enforcement concerns for the Canada Customs and Revenue Agency.

I agree that there is a need to reduce the tax burden of Canadians. However, providing focused tax relief to employees in specific sectors is not the way to go. Rather, as outlined by the government in its last three budgets, it is better to provide broad-based tax relief to all Canadians.

In the 2000 budget alone, the government proposed that federal personal income taxes be reduced by an average of at least 15% over the next five years. The proposed budget measures will ultimately benefit each and every Canadian taxpayer by retroactively restoring full indexation of the personal income tax system effective January 1, 2000.

In addition, the budget proposes to: first, reduce the middle income tax rate to 23% from 26%; second, increase the amount of income that Canadians can earn tax free to $8,000; three, raise the income amounts where middle and upper tax rates begin to apply to at least $35,000 and $70,000 respectively; and finally, eliminate the 5% deficit reduction surtax for people with incomes up to $85,000 effective July 2000 and completely phase it out over the following five years.

The budget also provided further support to Canadian families by the expansion of the Canada child tax benefit by $2.5 billion a year to more than $9 billion annually.

The personal income tax cuts proposed are even larger when combined with actions taken in the budgets of 1997, 1998 and 1999. The combined effect is that federal personal income taxes will be cut by an average of 22% over all, 26% for low and middle income Canadians and 30% for families with children by the year 2004-05.

It is important to note that the personal tax cuts outlined in the 2000 budget reflect the least, not the most, that the government will do and we will accelerate those tax measures, I am quite confident, in budget 2001.

I could not agree more that the forestry sector plays an important role in the Canadian economy. I have met and worked with many of these professionals. This sector contributes significantly to our gross domestic product and the large volume of exports contribute significantly to our balance of trade.

This industry provides work to many hard working Canadians. However, for the reasons I mentioned, I hope the members here would support the position I outlined. To create this provision for forestry workers alone, to restrict it and not allow it for other workers in other sectors and to create a precedent with respect to the deductibility of travel expenses from home to the workplace would create an unnecessary and costly precedent. I urge members to vote against the bill.

Income Tax Act
Private Members' Business

5:50 p.m.

Reform

Gary Lunn Saanich—Gulf Islands, BC

Mr. Speaker, I rise today to speak to the Bloc member's private member's bill, Bill C-211, on tax reductions for forestry workers.

First, I want to say that I fully support the issue that all workers in the country are crying out for tax deductions. There is absolutely no question with respect to that. I want to talk a bit about that.

Bill C-211 is specifically targeted at forestry workers who want another tax deduction. I want to focus on the larger picture which is the taxation levels in the country.

Today we watched the Prime Minister. Ironically, he announced a $12.3 billion surplus. To his credit, he did put it on the debt. However, I have some concerns. Only months ago that he was forecasting a $3 billion surplus. I question who is doing the accounting for the government. We have a 400% increase in the amount of the surplus and one has to question exactly how this happened. Is it happening because there will be election weeks or months away? We know we are within a six month election cycle and all of a sudden we have a $12 billion surplus. We saw this type of what I call bean counting in British Columbia where months before an election there was great surpluses and months after the election there were great deficits.

Income Tax Act
Private Members' Business

5:55 p.m.

Liberal

Hec Clouthier Renfrew—Nipissing—Pembroke, ON

That was the NDP.

Income Tax Act
Private Members' Business

5:55 p.m.

Reform

Gary Lunn Saanich—Gulf Islands, BC

That is exactly right, as the member yelled across to me. That was the NDP but again, we are seeing exactly the same scenario here.

We want to see how they arrive at these numbers. In the first quarter of this year alone the surplus reported by the Department of Finance was $11.4 billion. There is only one way that the government gets money and we all know that is from our back pockets. The government collects money from taxes. That is one source of revenue. Clearly we have to look at what has been going on.

The Canadian Alliance believes it is time for real tax cuts for working Canadians. They need these tax cuts. There is all kinds of evidence to substantiate this. We can look at the standard of living of Canadians. It has been dropping dramatically over the last 10 years. Today the worker's purchasing power is much less than it was 10 years ago. There are all kinds of reports and statistics to back that up.

We have to get taxes down. Since 1993, the Liberal government has raised taxes over 60 times. It claims it has deducted taxes. I challenge Liberals to to go to the working people in their ridings and ask them to pull out their paycheques from today and compare it to two years or four years ago. Working people have less money to take home. There is only one reason for that. The current government has raised and raised taxes. What are they left with?

The Department of Finance reported a $12 billion surplus. The government has put that on the debt but I am a little curious to see what kind of numbers we will get after the election. Maybe we can go back and look in Hansard when the government comes back.

Again, to back this up, our standard of living has gone down. Let me give a couple of quotes. This comes from the OECD: “One of the most important determinants of the standard of living is productivity which is a measure that attempts to capture the efficiency and productive inputs and technical progress”.

Income Tax Act
Private Members' Business

5:55 p.m.

Liberal

Roy Cullen Etobicoke North, ON

This has to do with forestry workers.