Jim Peterson

[Finance, December 11th, 1996]

Mr. Speaker, I am certainly in your hands. Please, just tell me when my time has expired.

The very fundamental difference between the Liberal Party and the Reform Party is that we believe equalization is fundamental to the maintenance of the partnership that exists among all provinces, the federal government and Canadians no matter where they live.

We also have a fundamental disagreement on how we should treat health care. Part of the Reform platform is that it will allow provinces to opt out of the Canada Health Act, that private billing can be done and a two-tier medical system. Now, all of a sudden it said that it is going to pour $4 billion a year more into medical care. This will be done through increasing transfers to the provinces. However, there will be no strings attached. How does Reform intend to do it?

We have fundamental differences and but we are fighting toward a lot of the common goals.

[Finance, December 11th, 1996]

Mr. Speaker, I think all members of the House are pleased that the leader of the third party has joined in the debate, a debate which is very important. As he has quite correctly pointed out, it involves an incredible number of choices that as legislators, as representatives of the people, we have to make on behalf of Canadians from every region of the country.

It is constructive that Reform members have made the effort to put before Canadians an alternative budget, an alternative strategy, that they have thought it out, that they have put numbers to it, that they are offering that type of alternative. Just as our debate on the prebudget report is the subject of extensive debate throughout the country, I welcome that he has put forward their alternative budget as a serious element of debate.

I commend the third party for doing this. It is a departure from the traditional role that opposition parties have played. Traditionally opposition parties have simply criticized. They have nit-picked, they have gone after the chinks that they saw or thought that Canadians might perceive to exist in the other party's platform. The Reform Party has dared to be creative. I commend it for the

approach that it has taken. I know it has done that with a great deal of sincerity and a great deal of thought.

We have had on the finance committee through the excellent leadership of the Reform Party and its members very constructive debates from coast to coast throughout this country on many of the very important issues we face. I think members from all parties have been influenced by this exchange of philosophies and exchange of means of getting to a new end. All of us realize that we have to go beyond where we are today.

The Reform Party did a marvellous job over the past three years in pointing out the incredible problems that we face in Canada because for the 20 previous years governments of both stripes spent way beyond the means of Canadians and put us behind the eight ball. We are so far in the hole that our biggest expenditure today is $50 billion on interest, which is two and a half times what we spend on our next biggest expenditure, seniors' pensions.

I do not denigrate the approach which Reformers have taken but I do put forward with a certain amount of enthusiasm the approach taken by the Minister of Finance under the leadership of the Prime Minister. There are not too many people who five years ago would have thought that it was going to be the Liberal Party that had to come to grips with the deficit and the debt.

We took an approach which has reduced the deficit from 6 per cent of GDP when we took office down to 5 per cent, 4 per cent, 3 per cent and it will be below 3 per cent of our gross domestic product and heading for zero, be it in the year 1998-99 or the year that the leader of the third party would like to see it hit zero, 1999-2000.

We are not going to be far off from what the leader wants in terms of that objective if we continue to surpass the deficit objectives the way we have. We agree probably with the Reform Party that government does not have a role of intervening in every aspect of Canadian life even though we might like to or feel that we have an obligation to help. We can no longer afford this. This has been demonstrated by the fact that incredible cuts have had to be made in budgets. There is a difference between our parties and the approach that we have taken.

First, our cuts have been gradual, not the draconian cuts that were called for by the other party. This has allowed provincial and municipal governments to adjust. It has enabled Canadians to adjust over a period of time to the tough, harsh realities. This is not a disagreement on what had to be done, but it is the timing and giving Canadians the opportunity to adapt.

Second, I think our vision of what the country is about is slightly different, perhaps vastly different. For example, none of our budgets cut equalization payments which we feel are so critical to maintaining that confederation, that community of provinces, that community of neighbours, a country which is sharing and cares about every region.

This has been built on our history. It has been built on the fact that at the time of Confederation, Nova Scotia was the richest province. Before the big oil discoveries in the 1940s, Alberta was really a have not province.

[Finance, December 9th, 1996]

Mr. Speaker, I will be happy to talk to the hon. member from Calgary afterward and respond to his concerns. I am always delighted to hear from him.

Look at what we have already done in terms of payroll taxes even though we have a lower level of payroll taxes than the United States. Since we have been in office, we have taken six major reductions in those payroll taxes.

We reduced the statutory formula which would have taken us from $3 to $3.30 and we held it at $3. We reduced the rate from $3 to $2.95 in 1996. Just recently the minister announced that it was going from $2.95 to $2.90. Every time we reduce it a nickel, it costs us $350 million. We reduced the maximum insurable earnings from $875 to $750, again for monstrous savings. In December 1995 we gave premium relief for small businesses and we extended that again last year. The sum of these six reductions has been to reduce payroll taxes by some $4 billion since we have come to office.

We recognize there is a surplus building in terms of employment insurance. We recognized that but we said that because of our priorities in order to be competitive we do not have to further reduce the payroll taxes or the corporate taxes because when we combine them they are already lower than those in the United States.

Where we have really high levels is in terms of our personal income taxes. We heard from the scientific community and the high tech community how these high levels of taxes in Canada are hurting us. We have heard, and the finance critic for the Reform Party has mentioned this many times, that Canadians with an income over $50,000 constitute 10 per cent of tax filers but they pay 50 per cent of the taxes. We also heard that a single wage earner earning $6,500 is also on the tax rolls.

Our priority as a committee was to say that because our personal income taxes are out of line, in the future when we might be able to afford cuts, which we cannot afford today and we did not

recommend them for today, our priority for tax cuts would be in terms of personal income taxes. What did we recommend in our majority report? Apart from targeting the six priority areas I mentioned, we called for minor tax reductions.

Again this year as last year we called for income averaging for people whose income fluctuates significantly from year to year and they suffer a tax penalty, people such as artists and writers. We have called for extending the deduction for medical and dental benefits to those who are self-employed. We called for abolishing the tax on jewellery, the 10 per cent excise tax and we looked at some other measures such as ones dealing with heritage property and the high cost of mechanics tools for those who are required to purchase them before they can get a job in a garage.

We called for tax increases as we did last year in terms of tobacco. We want those taxes on tobacco products to go up just as quickly and as often as circumstances relating to smuggling will permit. We know it is a deterrent to the iniquities of smoking. We have called for a tax on lotteries, a 15 per cent withholding tax on winnings from government run lotteries of anything over $600, as we did last year. We have also asked that the government consider a few other measures.

We recognize that big businesses are not going to be the job creators of the future in Canada. Job creation will largely fall on our small and medium size enterprises. We are still concerned about the role of our financial institutions in providing financing for small business start-up, equity and operating capital. We are pleased to note that this year, due largely to blandishments from the Minister of Finance and from the industry committee, the banks have taken very seriously their role of providing funding to small businesses. I compliment the banks on the number of steps they have taken in this area.

We have seen a tremendous blossoming of the labour sponsored venture capital fund. There is now $3 billion available to help small businesses get started, to expand and create jobs. We urge those who cannot get money from traditional lenders to take a look at this fund.

We are pleased that the business development bank has extra capital of $350 million. We were pleased that a group we recognized last year, the Calmeadow foundation, under the leadership of Martin Connell has increased its efforts to lend money to the small entrepreneur. We call it micro lending. It is for the person who needs $3,000 or $5,000 to get into a business. We commend these efforts and the steps taken in concert with our financial institutions to try to institutionalize this type of initiative, to take it beyond just the simple efforts of Calmeadow. This means co-operation with the banks.

Our finance committee recognized in its report on financial institutions which was tabled in this House in October, that it would be very helpful to consumers and small and medium size businesses if we increased competition. We have asked that Canada's doors be opened wide to foreign lending institutions, that the administrative barriers be removed. This will help meet the future needs of our small businesses.

We have also said that one of the biggest bangs for the buck we can get is through encouraging foreign direct investment in Canada. We recommended this last year and the government has taken steps. I understand there are now about 15 individuals working directly on this.

Studies done by KPMG Peat Marwick Thorne and others have shown that cities right across Canada have a competitive edge over American cities as places for new foreign direct investment. We have to get this message out to the big companies and investors right around the world. We recommend expanding these efforts to attract direct foreign investment in Canada which would create jobs here. We have such an incredible product to sell.

We heard from many Canadians, not just those in the voluntary and charitable sectors, who are making a tremendous difference in the lives of Canadians. There is one person in particular who came before us, Mr. Charles Pielsticker from Toronto.

A couple of years ago Mr. Pielsticker realized that business was not getting involved with our educational institutions so he formed the Learning Partnership which is funded basically by business contributions. It is doing many things, for example taking kids to work for a day, which involves hundreds of thousands of kids and their parents; and having volunteers work with teachers in public schools to help them teach science. This type of thing is all done on a voluntary basis.

A woman who is doing the same type of thing also appeared before us. It is another voluntary organization which teaches science to teachers to make it particularly interesting for their students. Again, it was another volunteer driven organization. We commend these people for the type of leadership they are giving us.

We heard considerable cries for Canada to increase the payments for transfers to the provinces. This came from the official opposition. Part of the cutbacks we have had to do unfortunately fell in the areas of post-secondary education, health care and helping those who are on welfare. Like everything, they had to be cut or we would not have got to our targets.

It was our finance committee having listened to Canadians a year and a half ago said that we cannot cut all the cash transfers, we have to have a minimum cash base in order that we can as a federal government ensure the five principles of the Canada Health Act are adhered to. We saw how the Minister for Human Resources Development went across the country talking to his provincial counterparts to try to get agreement on the principles that underlie

the CHST to the provinces, the transfers for health care, welfare and post-secondary education.

As Judith Maxwell who appeared before our committee said, we can no longer impose these federal standards unilaterally. We have to work in dialogue and in co-operation with the provinces. This is what she called the management of our interdependence. We encourage the government in its efforts to do this. This is so important, particularly in terms of the Canada Health Act because we all know that health is critical to Canadians but good health is also good for our economic future.

Tax harmonization was an incredible theme we heard going right back to the summer when we met with people working with the task force headed by Dr. Jack Mintz. He was appointed by the minister to look at our business taxation to see if it was competitive.

We heard in testimony before us how one corporation with four affiliates had to file 1,100 pages of tax returns. This is insane. Why should we have provincial and federal income tax, capital taxes, sales taxes, excise taxes and different payroll deductions, different administrations, different tax laws and different enforcement officers going in?

Canadians said: "We are only 30 million, we cannot afford it as taxpayers. We cannot afford it as companies that have to comply. Get your act together. You are politicians. You can agree on similar harmonized laws in all these areas. We expect you to. We expect nothing less of you. We do not want these petty jurisdictional turf wars". This is why we want a national securities commission. Why do we need 11 or 13 different jurisdictions dealing with securities in this country?

We heard from Canada's cultural industries. Our cultural industries employ one million Canadians. They contribute $30 billion to our gross domestic product. One of the wonderful things about people who are artists, performers or whatever, is that they do not need high paying jobs. They have found ways to cope and to supplement their income. To create a new job in the arts costs only $20,000. But these are the people who give us a raison d'etre for being Canadian. They are the ones that give us the heart and soul of what we are. We cannot do without our culture.

We encourage the government to look at a number of the measures we have suggested. In particular, we feel that the recommendation for vastly enhanced tax incentives for charitable donations are the ones which will impact very directly on the cultural industries and will give them the multi-year stable funding they need in order to plan for the future.

In closing, I would like to thank all members of the committee from all parties who worked so co-operatively. I thank the incredible staff of the House of Commons who arranged the meetings, the researchers, the person who advises on the text, Mr. David Abbott, people in our offices who worked with us.

Mostly I would like to thank Canadians. The last three to four years have not been easy. We have had to cut back in order to restore fiscal health and to protect the programs and the way of life which we consider to be so important. It is Canadians who have had their programs cut and have been the ones who have suffered. They have borne with us and shown a fortitude, an acceptance and a generosity of spirit toward their fellow Canadians and toward one another in sharing the burden we have imposed.

We must not detract from the overall goal of keeping on a sound monetary and fiscal track so the deficit targets are met and surpassed. In the meantime, because we have exceeded those targets to such a great extent, we believe it is good for the economic future but it is fundamental that we make some strategic investments at this time. These investments will introduce greater fairness into the system and are critical for a vigorous economic future. I am talking about investments in disadvantaged children and those with disabilities, in literacy, in students, in research and development and charitable and voluntary sectors.

I thank members for their indulgence and I look forward to the debate.

[Finance, December 9th, 1996]

At zero salary, contributing their knowledge, their time and their efforts to help their fellow Canadians.

At the government level we have had to cut back because of economic necessity. We are now calling on the government to increase the tax incentives available for charitable donations in order to help these voluntary organizations and charitable agencies. They impact so vigorously on the lives of each one of us.

We have looked at a number of proposals. We have 10 recommendations. Some are designed to help the major foundations and our major institutions in health and the arts get some endowment funding, but they also apply right down to the United Way and the smaller charities; enhanced tax incentives which we believe will not be costly but will help to mobilize the funds to enable the voluntary and charitable sectors to do those thing which government no longer can do.

Having discussed these six priorities, children in poverty, the disabled, literacy, students, research and development and the charitable and voluntary sectors, let me go back to talk a little about our tax levels in general. There were many people who came before us and told us that we had to reduce their payroll taxes and income taxes.

Since 1980 Canada's overall level of taxation in relation to the size of our economy has gone up about 20 per cent, whereas in the United States it has remained fairly constant. Overall now we are about in the middle of the G-7 countries in spending, with 35.4 per cent of our GDP coming from taxes. In the United States, however, this figure is 27.6 per cent, 30 per cent lower than in Canada. This is the group we have to compete with because 80 per cent of our trade and investment is with the Americans.

When we look at the individual taxes, in Canada our personal income tax rates are 13.4 per cent of GDP whereas in the United States they are 9.8 per cent. We are significantly higher in terms of personal taxes. In terms of corporate taxes, our level is just the same, 2.5 per cent of GDP. In terms of payroll taxes, we are actually below where the Americans are. We are at 6.1 per cent of GDP and they are at 7 per cent.

With respect to the necessity for being competitive in terms of job creation, our corporate taxes are comparable to those in the United States in terms of overall levels and our payroll taxes are actually lower. This is one of the reasons we cannot conclude at this time that we actually need a cut in payroll taxes in order to be competitive. What we have done-

[Finance, December 9th, 1996]

Mr. Speaker, I am very pleased to have this opportunity to speak on the basis of our report. I intend to speak on a number of things. First, I will look at Canada's economic record over the last three years. Second, I will look at some of the difficulties we faced as a finance committee in making the difficult decisions needed to make our recommendations for the next budget. I will then go through some of the decisions we did take and then conclude.

Looking back over the last three years, the financial record of the government and the Minister of Finance is truly remarkable. When we took office, Canada's debt was at $500 billion. Combined with the provincial debts of $188 billion, every single Canadian, man, woman and child, owed $24,000.

When we took office the deficit was $42 billion. In his three budgets, the Minister of Finance has taken us from that $42 billion, or 6 per cent of our gross domestic product, down to a figure well below 3 per cent of our gross domestic product. In his economic statement to the House of Commons, the finance minister said that by the year 1998-99, the deficit will be down to 1 per cent of gross domestic product or $9 billion.

When this figure is achieved it will no longer be necessary for the government to borrow from the markets to fund its annual deficit. This will mean that the deficit will be balanced in the eyes of every other country in the world because they go on the basis of financial requirements as opposed to the national accounts that we have pursued.

Part of this has been achieved through low interest rates. Because of the minister's fiscal responsibility, Canada has been able to lower its interest rates 20 times since March 1995. Interest rates have come down by five full percentage points. It started off two and a half percentage points higher than the Americans on the short end. It is now two and a quarter points lower for short term bonds and debt instruments. We are also equal to or less than the Americans going out to 10-year bonds.

Foreign borrowing requirements, which were the highest of the G-7 when we took office, are now being brought under control. This means that a degree of economic sovereignty has been reintroduced into the fiscal process. International financial markets will dictate to us less and less in terms of what Canada can and cannot do. This is so important in giving us the options for the future to set our economic agenda.

Over this period of time economic growth has increased. The Bank of Canada now recognizes that next year the economic growth rate will be 4 per cent or greater. This will be the fastest rate of economic growth of any of the G-7 countries.

In spite of all of this good news, one of the very difficult and agonizing facts of life is that unemployment is still very high at 10 per cent. If members from every side of the House could have one wish, I am sure it would be to see that every Canadian who wants a good job has a good job.

What is our record in spite of this very sobering fact about unemployment? Over the past three years, Canada has created 644,000 net new jobs. This is not to be scoffed at. This is at the same time that the federal and provincial governments have been going through incredible downsizing and unfortunately having to lay off public servants.

When we look at the record of 644,000 new jobs, what has happened in other countries in the world? Those 644,000 new jobs created in Canada is 87,000 jobs more than the four European members of the G-7, more than Germany, England, France and Italy combined over the same period of time.

The growth in jobs in the United States has been about comparable to that of Canada. We still have a huge gap. Therefore the finance committee of the House of Commons asked Professor Andrew Sharpe to come before us because of the work he had done in putting together a number of research papers and economic thinkers in this area.

He explained to us that the Canada-U.S. unemployment gap can be explained as follows. Seventeen per cent of it is definitional because United States does not count passive job seekers. Eight per cent of it is because the U.S. has about four times as many people incarcerated in jails and prisons. Naturally, these are going to be the people with the lower educational levels and the ones who would not likely fit as readily into the job market. That accounts for 25 per cent.

Fifty per cent of it is because of the cyclical weakness in the Canadian economy and the output gap we have vis-à-vis the United States. The remaining 25 per cent, he explained, was largely due to structural differences, namely higher benefits for the unemployed and second, different immigration policies.

We do not take any consolation from this because we realize that what we have to do is get more and more Canadians back to work. This has to be our major priority and preoccupation.

How can we best do this? We are seeing how the low interest rates are now creating incredible benefits for Canadians. We are seeing how the decrease in interest rates have resulted in a saving to a homeowner on a $100,000 mortgage of $3,600 a year.

We have seen how this decrease in interest has resulted in a decrease in the cost to a person buying a car on time of $525 a year. That is a $15,000 car. This decline in interest rates has resulted in savings to a business person who is borrowing $1 million a year of $34,000.

It is critical to the economic progress, to the increase in the growth rate and to job creation to maintain a course of monetary and fiscal policy that will ensure low interest rates. Nothing can do more to help create jobs in the future.

Over this period of time we have been in office, the Minister of Finance has had a record of achievement unparalleled in my generation not only in terms of the things I have talked about but in meeting his deficit targets and reintroducing a sense of credibility into the office of the Minister of Finance.

In the past, deficit targets had not been met. They never were. They were done on a five year rolling target basis where governments typically put off the difficult decisions until the fourth and fifth years. On the other hand, our minister has stuck to the two year rolling targets and in every year has not only met his deficit target but has surpassed it. His last deficit target of some $32 billion for 1995-96 he surpassed by more than $4 billion.

We in the Finance committee had to deal with the issue of what we do now that we are in a surplus position vis-a-vis our deficit targets. We had three alternatives. One was to use these surpluses to further reduce the deficit and eventually perhaps start to pay down our enormous and growing debt load.

The second one which many people called for was to introduce at this time a major tax cut. We had many suggestions as to what the tax cut should be.

A third option, urged on us by many, was to increase expenditure programs. One big item where we were called upon to increase expenditures, including by the official opposition, was in transfer payments to provinces.

We wrestled with all the options that were open to us and we felt that on balance we have come up with an approach which is balanced. We must above all else continue to finish the job of meeting and surpassing our deficit targets. But because we do have a little room to manoeuvre and subject to an update of economic circumstances before the next budget, we have suggested targeting six different areas. Those selected target areas were selected based on our Canada wide consultations, listening to Canadians and hearing their priorities, and also as members of Parliament listening to what we have heard in our constituencies and from our own colleagues.

The six areas we have chosen to target for action in the forthcoming budget, all within the context of finishing the jobs we have started, are the following.

First, children and poverty. We have suggested that the working income supplement might be increased in order to target the children of the working poor. Families that are among the working poor, as we heard before our committee, often have benefits of $3,000 a year less than those who are on social welfare. This creates the welfare wall, a disincentive for those on social welfare benefits to go into the workplace.

Second, we have targeted Canadians with disabilities. Over the past number of years, decades, the benefits going to those with a disability have eroded mainly because of the lack of indexation.

A wonderful job was done by the hon. member for Fredericton-York-Sunbury and his task force in identifying the increased cost that people who have a disability suffer simply because of that disability, increased costs which can prevent them from becoming active members of Canada's economy. We have called for modest measures to help recognize the added costs of those with disabilities.

Third is the area of literacy. We were shocked to learn in our deliberations that 42 per cent of Canadians do not possess the literacy skills necessary to deal with basic reading material such as newspapers. Even more shocking, only 22 per cent of Canadians have the highest literacy skills which are required in the new knowledge based economy of the future.

We owe a great deal of credit to Senator Joyce Fairbairn who established the Secretariat for Literacy which mobilizes thousands upon thousands every year to deal with this issue of literacy. We have called for substantial increases in its small budget which is only $22.3 million.

Fourth, we have asked that consideration be given to helping students who are bearing highly increased costs to get their own education. We have suggested three income tax measures which could help recognize the increased costs of tuition and attending a post-secondary institution.

Fifth, one of the great reasons that we have this huge unemployment gap with the United States is, as Dr. Andrew Sharpe pointed out, the problem of our output. It is basically a question of productivity. Since the 1980s Canadian productivity has not gone up and this is the major reason for our high unemployment.

One of the reasons we have not had this increase in productivity is that Canada does not fare well by international standards when it comes to our level of research and development. We feel it is important to target research and development and science and technology at this time. We have called for three different measures.

The first is to renew the program which funds the Networks of Centres of Excellence. According to George Connell, who appeared before us, this program for the Networks of Centres of Excellence is the most effective instrument yet discovered for capturing the benefits of academic research for the advantage of the Canadian economy; universities and businesses collaborating on a nationwide basis to apply our basic research and get it commercialized.

Second, we have called for increases to Canada's three granting councils. These are the Medical Research Council, the humanities council and the NSERC, the engineering council and science and council. They grant moneys to post-secondary graduate students in our universities to help them do their research on a post-doctrine basis. It is one of the most effective programs we have for ensuring that we have highly educated people here in Canada who do stay here to do their graduate work and hopefully afterward.

Third, we have called for a new type of infrastructure program.

Infrastructure one was good. Six billion dollars was mobilized in the three levels of government to replace wasting infrastructure at the municipal level. This was a concrete and mortar type of program. We of course cannot afford that type at this time.

We have said we should have a new type of infrastructure investment in our future going into our research and development facilities of our universities, hospitals and other research institutions. The Government of Canada would put up one-third and another one-third could come from the other levels of government or the private sector. This is the type of infrastructure that would

create short term jobs during the building, yes, but even more important, it would give rise to an expanded base for R and D in Canada and the creation of those long term jobs which conduce to our productivity and our economic future.

The sixth area where we have asked the government to target in the next budget is the voluntary and charitable sectors. We have had enormous cutbacks over the past three years. We realize that many Canadians have seen their programs diminished. Many Canadians have suffered as a result of that. We take no joy in that.

However, at the same time, we have seen a renewed commitment by the voluntary sector to help make this a better and stronger country. Over six million Canadians every year volunteer their time and efforts to help their fellow Canadians. This amounts to about a billion hours of contribution in terms of work. That is the equivalent of 617,000 full time workers or 5 per cent of all jobs in Canada.

[Committees Of The House, December 5th, 1996]

Madam Speaker, I have the honour to present, in both official languages, the fifth report of the Standing Committee on Finance.

The report is entitled "The 1997 Budget and Beyond: Finish the Job". I would very much like to thank members from all parties who worked so diligently and with such-

All members showed great co-operation in producing this report.

I would also like to thank out staff from the House of Commons and all others who worked with us in such a professional and diligent way.

[Committees Of The House, October 31st, 1996]

Mr. Speaker, I rise on a point of order. I believe if you ask, you will receive unanimous consent so that the finance committee might table its fourth report. This involves the examination of the legislation affecting Canada's financial institutions.

In tabling this report, I would like to thank, first of all, the employees of the House of Commons, particularly our clerks, who have done such a fantastic job of getting this ready in such record time. They had very little time.

I also want to thank all Mps, committee members and particularly, from the official opposition, the hon. member for Saint-Hyacinthe-Bagot. I did not give him much time to reply to the majority report, but his co-operation was greatly appreciated.

[Hillowe'En Iii, October 29th, 1996]

Mr. Speaker, the attention of the House is riveted today on a momentous event, a history making occasion and an occurrence that will affect every member. I am referring of course to the third annual confectionery caucus Hillowe'en party.

One hundred and forty members participated in Hillowe'en II last year. Hillowe'en III will be even bigger.

Canada's value added confectionery manufacturers will display their products and will help raise awareness about this century old Canadian industry's contribution to our economy. Members, their staff and their children can come together in this non-partisan gathering in the best tradition of the Hill.

As a member of the confectionery caucus, I am proud to be associated with an industry that supports the employment of over 7,000 Canadians and generates over $1.6 billion in factory sales.

I invite all members, their staff and children to join the confectionery caucus and the CMAC tonight in Room 200, West Block from 5.30 to 7.30 for great glorious gobs of goodies.

[Supply, September 26th, 1996]

Mr. Speaker, the hon. member is alleging that we were trying to cover things up. The official opposition, the Bloc Quebecois, was asked whether it had any witnesses to bring forward. We said we will deal with any of these issues. We wanted it fully dealt with in the finance committee, just as the Bloc had asked us to deal with it fully in the finance committee. We contacted it a number of times and it said "no, we have no more witnesses".

How could we be the ones who are trying to cover up things when we opened it up to discussion of any sort? We called the witnesses asked for by the Bloc, the Reform and the auditor general. We asked them: "Do you want to have any more hearings or can we get to the report stage on this issue?" That is not a cover-up. Would they please quit making innuendoes and allegations which have no foundation whatsoever.

[Supply, September 26th, 1996]

Mr. Speaker, there are a number of points which have been brought up by the hon. member.

First, he said we are saying there was no flight of capital, that through the committee process we were involved in a flight of capital. What took place was under a former government. The majority side on the committee said there was a flight of capital but we must stop it. We are the ones who are saying this is not right and we have recommended the changes to the law.

I find it passing strange that the hon. member, the chief financial critic for the Bloc, would say the experts who were called before our committee have no credibility whatsoever. In the same breath he said the Liberal majority attacked the message bearer, the auditor general.

Let me be very clear. It was not an attack. It was a mild rebuke. We criticized the way the auditor general released the information which led to speculation as to who the taxpayer was and according to the experts before us could put a chill on the entire ruling process.

We accepted the rulings. All the experts said that the ruling given by Revenue Canada had been proper in the circumstances. A fundamental aspect of our report was that we accepted his criticism of a system that allowed that money to escape and we recommended the loopholes be plugged.

I find it passing strange that his only attack on our report was that we attacked the auditor general. We said exactly what I have just said.

The member, as did all members, had the opportunity to bring other experts before our committee to deal with the precise complex and ambiguous tax provisions in question. Why does he attack them? If he did not like them he could have brought others. He had that opportunity. So for him to say we were attacking the messenger is fundamentally how he is attacking our report. He said he did not like the message and that these experts who came before us were not able to give us proper advice.

To say that, he is attacking the basis on which some of the biggest and finest auditing companies and legal firms in this country act. Their opinions have to be right. Their opinions are relied upon by shareholders, taxpayers, by others, by the people who buy shares in public companies. Their integrity and their wisdom are critical to this process.

For him to attack the messengers the way he said we were, which is a total mistake, a misinterpretation of the situation, is to me totally inconsistent. I wish he would stick to the issues and I wish he would join us in urging the government to plug these loopholes as quickly as possible.