Debates of Feb. 28th, 2008

Financial Statement of Minister of Finance

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I do not think so. I just want to say that as New Democrats we did not actually have enough votes to prop up his government, and others voted against it. I just wanted to make sure that the record was clear on that.

[The Acting Speaker, Conservative, Royal Galipeau]

As I had feared, the hon. member for Windsor West had a point of debate and not a point of order.

It being 5:15 p.m., it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the amendment to the amendment now before the House.

The question is on the amendment to the amendment. Is it the pleasure of the House to adopt the amendment to the amendment?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Conservative, Royal Galipeau]

All those in favour will please say yea.

[Some hon. members]

Yea.

[The Acting speaker, Mr. Royal Galipeau]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker, Conservative, Royal Galipeau]

In my opinion, the nays have it.

And five or more members having risen:

Call in the members.

(The House divided on the amendment to the amendment, which was negatived on the following division:)

Vote #43

The Budget

[The Speaker, Liberal, Peter Milliken]

I declare the amendment to the amendment lost.

It being 5:50 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from November 28 consideration of Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), as reported (with amendment) from the committee, and of the motions in Group No. 1.

Income Tax Act

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, Bill C-253 is an excessively costly and irresponsible modification to the registered education and savings plan. It would do little to support access to post-secondary education here in Canada.

Before discussing my concerns with this piece of legislation, I would like to provide a brief overview of the current RESP program and how it attempts to encourage savings with post-secondary education.

Currently, over $600 million annually is provided to tax and grant assistance to encourage RESP savings. This is done through numerous ways.

First, contributions attract a Canada education savings grant, or CESG, of up to $7,200 per beneficiary. Second, income in the plan accumulates tax-free, and grants and withdrawals are taxed in the hands of the students. This is usually when their incomes are low and as a result their tax bills are usually quite modest. Third, further additional support is provided for low income individuals through an enhanced CESG and a Canada learning bond. These measures cumulatively aim to provide a substantial incentive to save.

This Conservative government, in its past two budgets, has advanced measures to expand access to RESPs and has introduced additional flexibility for students. Budget 2007 raised the lifetime RESP contribution limit to $50,000. It eliminated annual contribution limits and raised the maximum amount of a CESG that can be received in a year to $500. The budget also provided part time students access to RESPs, recognizing the reality that many students, either by choice or by necessity, work while they learn.

Budget 2007 measures represented a significant but prudent revamping of the program and one that was greeted favourably. Maclean's called them “all smart, progressive ideas that are rightly applauded”, while the Victoria Times Colonist declared them “positive changes”.

Budget 2008 continued along the path with even further enhancements to increase the time limit over which individuals may contribute to an RESP and the time that the plan may remain open. The later change was especially important, as noted by taxation expert Jamie Golombek. He said:

With people staying in school longer, and with many post-secondary degrees—such as medical or law degrees—requiring years of study, the current RESP time limits were no longer sufficient.

Jointly, these measures will both enable families with more than one child and students pursuing an education over an extended period of time to have the ability to utilize RESPs.

The Conservative government's revamping of the RESP program represents a concrete demonstration of our commitment to improve post-secondary access through an improved and expanded RESP program.

I note that Bill C-253 was originally given first reading near the beginning of the 39th Parliament on May 4, 2006. At that time, I am sure that the hon. member of the Liberal Party could not have envisioned that this newly minted Conservative government would undertake such positive modifications to the RESP program in the budgets of both 2007 and 2008.

Nevertheless, we have taken action, and that action has and will have direct ramifications for the already exorbitant costs associated with the already flawed piece of legislation, namely Bill C-253. Moreover, Bill C-253 changes the system and would not improve the RESP program.

Further, neither of the amendments under debate today would take care of such concerns either. For instance, the amendments proposed by the member for Pickering—Scarborough East and the member for Jeanne-Le Ber would make contributions taxed in the hands of the contributor when withdrawn from the plan rather than being effectively tax-free, as is currently the case.

The most serious concern with Bill C-253 remains cost, which, when first proposed in 2006, was estimated to be a whopping $800 million annually, but has since mushroomed an additional $100 million to a massive $900 million annually.

The estimated massive $900 million cost can be broken down into two components. First, it represents an increased tax assistance on current contributions and would cost over $650 million annually. In other words, the measure proposes to spend about $650 million before generating a single dollar in additional RESP savings.

Second, an additional $250 million cost is expected from the contribution of the tax relief provided through the deduction. This is not an isolated instance of Liberal members introducing a proposal with no consideration of cost. Rather, it is part of a larger pattern of reckless and fiscally irresponsible proposals since the 2006 federal election. These have been brought forward by the Liberal Party and its many leaders. They are proposals that would immediately push Canada back into deficit and rack up a $62.5 billion and counting deficit, and push that onto our debt.

I ask the member for Pickering—Scarborough East how he plans to pay for Bill C-253? I personally believe the hon. member to be a good man and a good member of the House, but I am concerned that he might be proposing something that would inevitably cause Canadians to have their taxes raised.

I am wondering which programs he might propose that we otherwise would have to cut and if he is really prepared to see Canada go spiralling into a deficit to address this bill.

We ask these questions rhetorically, really, because we all know that Canadian taxpayers may eventually have to foot the bill for yet another instance where the Liberals have engaged in fiscal irresponsibility. Unlike such fiscal irresponsibility, our Conservative government acknowledges that we need to be prudent during global economic uncertainty. We cannot make such unrealistic proposals that would force Canada to go into a deficit situation.

Outside of the various serious concerns related to the cost of Bill C-253, there are still some technical flaws. The most obvious of them would be the pre-2006 contributions and how they would be withdrawn. In effect, under this bill, contributions that never received a tax deduction would be taxed when they are withdrawn. We cannot support this costly bill and we ask the House to defeat it.

At the same time, we ask for the House's support for the measures brought forward in budget 2008, a budget that builds on our record of investing in the best educated, most skilled, and most flexible labour force in the world.

Budget 2008 introduces a new consolidated Canada student grant program. All federal grants will be integrated into one program that will provide more effective support to more students for more years of study, thus assisting Canadian families who struggle with the cost of higher education.

The new Canada student grant program will be simple, transparent and broad-based, providing certainty and predictability for Canadian families. The reaction to budget 2008 has been overwhelmingly positive among students, leaders and universities.

The College Student Alliance said budget 2008, “--shows that the federal government is keeping an eye to the future and our future leaders of tomorrow--”; the Canadian Federation of Students added, “--the government has responded to a long standing call by students and their families--”; and the Association of Universities and Colleges of Canada declared, “We are pleased that the budget has announced important initiatives--”.

Budget 2008 represents prudent, responsible and effective action from this Conservative government while Bill C-253 represents $900 million in Liberal fiscal irresponsibility, the type of which we have come to expect from the Liberal Party and its current leader.

It is reckless Liberal spending that Canadian taxpayers cannot afford. At the end of the day taxpayers may be forced to foot the bill for this reckless Liberal spending and Liberal deficits. I hope not.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, I am pleased to speak to Bill C-253, which amends the Income Tax Act with respect to registered education savings plan contributions. The Bloc Québécois firmly supports this bill. We believe that it will make education more accessible to more young people. This is especially true in Quebec, given the cost of education.

In Quebec, there are great distances between regions and between educational institutions. Given that these institutions are located in areas that are often very far from students' homes, it is important to improve access to education for a great many students in Quebec.

Obviously, higher education is expensive for families. Often, young families will take this into consideration when deciding whether or not to have another child, because they know that education is extremely costly. The more we improve funding for students and the easier we make it for them to take advantage of such a system, the more we will promote not only population growth, but access to education by students in Quebec.

This bill was referred to the Standing Committee on Finance, where members of the Bloc Québécois expressed several concerns about it. One concern stands out: this must not become a tax loophole. Rich families and people with very high incomes must not be allowed to use this tax deduction as a shelter. That would turn it into a regressive measure for middle-class families and middle-income earners.

The amendments proposed by the member for Pickering—Scarborough East seek to address this problem by setting a lifetime contribution limit, but they do not set a yearly limit.

My colleague from Jeanne-Le Ber, who proposed a subamendment to the Liberal member's proposal, gave an example that I will repeat to illustrate the potential downside of this proposal.

This is a concrete example based on the situation that would arise from the existing Liberal amendments. For example, a taxpayer earning $150,000 in a single year can contribute $50,000 to a registered education savings plan in that same year. The taxpayer would get a tax refund of $14,500. Then over the next five years, the taxpayer's child could withdraw up to $10,000 per year from the plan, tax-free. In the end, the government would be giving $14,500 to people with a lot of money to begin with, people who earn a lot.

That is the kind of situation the Standing Committee on Finance discussed, the kind of situation the Bloc Québécois does not want to see. My colleague from Jeanne-Le Ber moved a subamendment to the amendment proposed by the member for Pickering—Scarborough East because the Bloc Québécois supports the bill in general but is against creating a situation that takes advantage of middle-income individuals and families. My colleague's proposed amendment would set an annual deductible contribution limit of $5,000. If the subamendment is passed, the Bloc Québécois will support the bill as amended by the Liberal member.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, the state of post-secondary education in this country is really deplorable.

If we look at the need for our society to adapt to a rapidly changing world, the need to help shape a 21st century economy, and the need for young people to get additional skills, training and development so they can succeed in life and fully contribute to our society and our economy, we see a post-secondary education system that governments are failing.

We are finding students who are saddled with more and more debt. There are young people starting out in life mortgaged to the hilt and paying off their education.

Other countries have chosen a different path. They have chosen the path of encouraging their young people to get as much education as possible and to gain as many skills as possible. They understand that when the potential of young people is unleashed and they are given help to prepare in the best way possible for the future by being given as much education as possible, a huge potential is created for society. That country is then investing in the future of society and the future of the economy.

Many European countries, and Ireland is one example, have decided that this is a part of their strategy for the future in terms of revitalizing their economy. It is to increase the percentage of young people who can get access to post-secondary education.

We know that student access to post-secondary education is really dependent on the affordability. For many working and middle class families, the prospect of starting out life with a massive debt is simply untenable.

Recently at the industry committee I heard from the head of the Canadian Dental Association, who described how dental students are facing tuition fees of $50,000 a year. Dentists are starting out in their careers with an absolutely massive debt at a time when they need to make investments in equipment and machinery. He also said that Canada is graduating fewer dentists today than we were 30 years ago.

That is just one example of the narrowness of our focus on post-secondary education. Simply transferring money to universities is not good enough. What we need to do is actually bring down tuition fees so that post-secondary education is affordable to as many students as possible. We know that with tuition fees as high as they are, and rising, fewer middle class students, especially working class students, are going to get access to post-secondary education.

The focus on RESPs as a strategy for enhancing affordability is really problematic because it advantages disproportionately the wealthiest members in our society, who will be able to have full access to the RESP system, especially if it is a taxable credit. In the first year, it will take about a half a billion dollars. This will of course escalate and increasingly skew the ability of those who are the wealthiest to get access to these kinds of savings.

We in the NDP believes that the best way to use these tax dollars is not to give them back to those who are the wealthiest and the most able to invest in their children's education as it is, but to reduce the cost of tuition fees so that there is broad access for all students. We believe that the grant portion ought to be far more broadly available so that we are not sinking students deeper into debt.

Having said that, I certainly know that many families across the country will be saying that they have gone beyond frustration with governments when it comes to post-secondary education. Governments have failed students by not making education affordable. Increasingly, rather than seeing a collective solution whereby governments invest in post-secondary education and make it affordable for all students, parents are thinking that this is an individual responsibility and that they have to save in accounts for their children, starting off when they are born, to be able to afford to send them on to university.

Again, I do want to say that for parents who are facing job loss or any kind of major economic challenges in life, it is extremely difficult for them to save this kind of money for their children's education. However, for parents who do manage to save for their children's education, those parents certainly would be in support of a tax credit as is proposed here.

It is a difficult issue for Canadians to grapple with. Certainly our party preference is that we create an education system that is affordable for everyone and that we invest in a massive way in post-secondary education so our youth are equipped to deal with a rapidly changing and globally competitive economy and are trained with the best skills possible.

However, I do understand the needs of families who are so strapped but do manage to put a bit of money away. They would appreciate a tax credit for that. I think it is a shame that parents are put in this situation whereby the government abandons the most efficient, effective way of the greatest number of students being able to attend university, including those who have the marks to succeed but do not come from a family wealthy enough to save for their education. I think it is a shame that we pit those families against the families who have the money to be able to save for their children's education.

If we are to look to the future and the need for students across this country to get an education, I would like to think that they are looking at a future in which our government does everything possible to encourage students to go to university and makes tuition fees as affordable as possible so young people do not say that university is simply not an option for them.

As for middle class families who have the money and the resources to put funds away year after year, they are the folks who will be able to benefit from all kinds of different tax shelters and all different kinds of savings accounts, so of course they would rather have the tax credit for the RESP. I am sure there are families in my riding who will say they have been saving since their children were born, they have put money away and it would certainly benefit them to get the tax credit for it. I appreciate their concern. I appreciate their desire to have a tax shelter.

However, I say again that it is a poor way to design an overall education policy. I believe that overall it fails the students of Canada. I believe it fails what we could be for the future. It is a very different path from that of so many other successful economies around the world. I think we could take a page from the books of a number of other countries. Ireland stands out, as I have said before. It really is too bad that the previous government and the current government have not seen fit to make post-secondary education the priority that it needs to be.

My time is almost up. I just want to say that I was at the University of Ottawa last night speaking to a number of students and the number one issue students raised with me was the issue of student debt. I believe it urgently needs to be addressed by this government. It is not addressed in the budget that has been put before this House. I believe it is long overdue that collectively as members of Parliament we decide to take on this issue and finally make some progress.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I am pleased to have the opportunity to speak to and support the bill put forward by my colleague from Pickering—Scarborough East.

This is a bill that addresses a specific need that Canadian students as well as Canadian families have in trying to get the most out of their children and to maximize the human resource potential not only of individual students but of Canada as a whole.

This probably has been my number one issue since I have been elected. It is my belief that the number one public policy issue facing Canada domestically is how we harness the human resource capacity of all Canadians from all segments of society. It is very important that we do this. A number of solutions need to be employed. This is one instrument that can be used to ensure that Canadians have a better chance of reaching their human potential, so it is very important.

Why is it important? Canada is a very well educated nation. We do very well in the world. We have a history of educating our people. Canada has been a fortunate nation overall, but in the last few years other countries have started to invest very heavily in education.

The OECD nations and of course the emerging nations of China and India, many nations that used to send a lot of students to Canada, are now starting to invest in their own universities much more and those students are being educated at home.

I believe it is the federal government's role and responsibility to take a leadership position in assisting students to get an education. Our federal Liberal government did that. It is just not right to say that post-secondary education was not a priority for the Liberal government. After we cleaned up the economic mess we inherited in 1993, our government invested very heavily.

The Millennium Scholarship Foundation, which met its untimely demise two days ago, was a hugely important measure for helping students, particularly in a needs-based system, get an education. The Canada learning bond was another measure one as was the reform of Canada student loans. There were a number of those things.

Because we often hear about the cuts to the CHST of the 1990s, it is very important to understand in fact that in the Conservatives' first budget of 2006 they specifically had an analysis which showed that the federal government contribution to post-secondary education had stayed constant over the decade. Yes, there had been reductions in transfers, but other initiatives had made up for those cuts. People can say they do not like the fact that it did not go directly to the province in the form of a transfer, but the fact is that the money went for education.

Let us talk about research. Ten years ago, we could not pick up a Globe and Mail or the Halifax Chronicle-Herald without a story about the brain drain. The federal Liberal government of the late 1990s and the early 2000s addressed that, pouring $13 billion into research. It was not because it was a politically sexy issue. Frankly, it was not, but it has turned the brain drain around to the point that Canadian researchers and other researchers are coming to Canada to do work now. That is very important. We made huge investments.

As MPs we get to travel. When I get to go around Canada to talk to students, I also look at the difference that research money has made for Canada. We have the synchrotron in Saskatoon and the new Life Sciences Centre at UBC. Last week I had a chance to go Victoria to look at the NEPTUNE and VENUS projects. This is work being done under the oceans. I had a chance to see how important that is for the future environment of the Earth. This stuff is very important.

We made huge strides, going from near the bottom of the G-7 to the very top of the G-7 in public investments in research. However, now the other nations have caught up and we have lost that momentum in the first two years of this government. So what are the needs and how does this bill fit in? I want to address that.

In my view, the number one need for students is to make sure that those who are under-represented in our universities, community colleges and polytechnics get there. That means needs-based grants. There is no question in my mind that we need this. The millennium scholarships were doing that.

I am prepared to wait and see what the government does with its new Canada student grants system. My concern is that it has reduced the amount of grants that go to the students most in need, but it also allows more students to apply, so they will be middle income students. We will have to wait and see what happens on that. The government generally has treaded water when it comes to assisting students, with the $80 tax credit being the sort of poster boy of tax foolishness to try to assist students.

The bill is a much more effective measure. I think all members of Parliament hear from their constituents. People come to our office and tell us that they do the best they can to get their kids through university. When the people themselves went to university, the tuition was $1,170. Acadia now is $8,000 and Dalhousie is $6,500 a year, first year arts and science. These parents are asking for a vehicle, something they can use. They want a chance to make it more affordable for their families. I think people would look at this and say “hallelujah”.

The RESP has been a good vehicle. The problem is there is no taxable benefit for people paying when they have an income. Students get it when they do not have to pay taxes generally anyway, so this reverses that process. It makes post-secondary education less of a dream and more of a reality. It gives students and their families a chance to say that they have something that makes a significant difference to them, and they will use it.

I believe the biggest need and the biggest gap in our universities is among aboriginal Canadians, low income families and persons with disabilities. We need to directly invest in this to ensure those people have an opportunity to get post-secondary education.

However, it makes no sense to me to oppose a measure for a whole bunch of families who are struggling, who are working, who are doing everything they can to pay the bills and try to put a little away for their children's education. This makes it more attractive, more approachable, more affordable and makes it a realistic goal for families. It makes post-secondary education a possibility for some of those people who would not have it.

I applaud my colleague from Pickering—Scarborough East. I think an awful lot of families will wake up some day, if this is implemented, and say that they can now do it what they could not do before.

I am pleased to support the bill. I encourage all members of the House to do likewise.

[The Acting Speaker, Conservative, Royal Galipeau]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker, Conservative, Royal Galipeau]

The question is on Motion No. 1. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Conservative, Royal Galipeau]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker, Conservative, Royal Galipeau]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker, Conservative, Royal Galipeau]

In my opinion the yeas have it.

And five or more members having risen:

The recorded division on Motion No. 1 stands deferred.

The next question is on the amendment to Motion No. 2. Is it the pleasure of the House to adopt the amendment?

[Some hon. members]

Agreed.

No.