Jim Peterson

[Supply, March 20th, 1996]

Madam Speaker, first of all, I wish to thank the hon. members for Capilano-Howe Sound and Calgary Centre, who worked very hard with the finance committee in preparing the report on the future of the GST.

We worked very closely together. We travelled across Canada and they really supported our position that the amendments suggested by the committee were valid.

In part of the process we went through we looked at 20 different alternatives to the GST. It would do us well to recall very briefly those tax alternatives we looked at. At the time everybody on the committee, Reform, Bloc and Liberals said that we had to replace that tax. We could not just abolish it because we needed the revenue. So what tax alternatives did we look at? There were probably five different categories.

The first category of tax replacement was that maybe the tax could be abolished without replacing it and three scenarios under that category were looked at.

The first was that maybe the stimulus to the economy from getting rid of the tax would be so enormous that the economy would prosper simply by eliminating the tax. If that worked, why not eliminate more? It was the old supply side, trickle down Reaganomics that does not work. It was rejected unanimously by the committee.

The second alternative was to reduce government expenditures. However, to reduce expenditures by $17 billion in one year would have been too much for even this economy to swallow. We have made tough cuts and have been able to reduce program spending over a four year period by about $14 billion. That would have been even more dramatic and it would have had a terrible effect on the growth of the economy at that time.

The third alternative was to cut transfer payments to the provinces. At that time the transfers in cash were about equal to the net take on the GST. However, look at the implications that would have had on spending programs in the provinces. Look at the implications that it would have had for the programs that members on all sides of the House have asked us to support as a federal national government.

The next category of replacement was income tax alternatives to the GST. We had five of those: a personal income surtax, an exchanging of tax bases with the provinces, a flat tax, an additional flat tax add-on to the personal income tax, and a corporate income tax increase.

In essence, abolishing the GST and putting it all into personal income tax would have meant a 21 per cent increase in federal

personal income tax, which would be unthinkable when the top marginal rate in Ontario is 54 per cent.

There are many who said it could be done with corporate taxes. That would have meant an increase of more than 150 per cent in corporate taxes in that year.

Those are eight of the alternatives at which we looked.

The third category of replacement was revenue taxes. The first of these was a turnover tax. A tax of 1 per cent to 2 per cent could be imposed on every financial transaction, every business transaction, every sale which took place. The trouble is that it had been tried for many years in Europe. Although the rate is low, it cascades. Every time a transfer of goods or services takes place within a corporation it would be added on. It would not take account of efficiencies. That is why every European country which has used it rejected the turnover tax.

Then there was the payroll tax. It would take about a 3.5 per cent payroll tax to replace the GST. Some people advocated it. It would have been simple but who would have been paying it? Only the workers. Only the people who are already taxed by way of payroll levies and income tax. It would not have hit those who were retired. It would not have hit those who were living off enormous incomes which were not earned. It would not have been fair. It would have been a killer of jobs. We had to reject it.

The fourth category involved miscellaneous proposals for replacing the GST. We looked at a wealth transfer tax. We looked at green taxes. We looked at taxing gambling and lottery winnings. However, even if we could get the maximum out of those three different taxes, in their total they would not have accounted for more than about one-fifth of the GST. A lot of these were taxes which had been rejected in the past for very valid reasons.

The fifth category of replacement taxes which was looked at were the consumption based taxes. Six alternatives to the GST were looked at.

The first was the manufacturers' sales tax. Parliaments had unanimously rejected that in the past. It only applied to about 70,000 taxpayers. There were hundreds of thousands of exceptions to it. It was a very narrow base and it hurt manufacturing. It made manufacturers non-competitive.

A wholesale tax was looked at. It would have had somewhat the same impact, although not as bad as the manufacturers' sales tax. However it still had many anti-competitive aspects to it.

Next we looked at going to a straight federal retail tax, a single stage tax. But when we examined all of the provincial retail sales taxes which are single stage, a lot of testimony was given about how unfair these taxes were and how non-competitive they made businesses. Businesses ended up paying all sorts of retail sales taxes when they should not have.

Also there were certificates of exemption so that if a farmer wanted to buy a hammer to fix his barn he did not have to pay the sales tax on it. Many of these sales slipped through the net and businesses were being unfairly penalized. No one suggested that we go to the retail sales tax.

The next one was an addition method value added tax. This is where we started to look at the value added tax concept.

The 18th alternative that we looked at was a theoretical proposition, but only the academics have ever supported it, no one ever said it could work in practice and we rejected it.

The nineteenth alternative was one that had considerable merit potential. It was the business transfer tax. This would have been a value added tax that could have possibly worked in an ideal world where you did not have a federal state but a unitary state, only one level of government, where all governments could come on board at the same time, where you tax all the same base but you had a real problem accounting for imports and exports which are fundamental to our economy.

Universally tax experts, the business groups, the small business groups, the big business groups, the chambers rejected the business transfer tax which had previously looked as if it could have been the panacea.

The next alternative was to keep the GST the way it is. We could not because it imposes such a burden on small business and all Canadian taxpayers because they are supporting 10 different taxes at the retail level which is totally unfair. We could not support it even in terms of big business.

The system in Canada is the only system in the world where there is more than one tax at the retail level. Canada has 10 different taxes. Any party that stands in this House and argues that this is good for consumers, good for business, good for jobs, good for our competitiveness is absolutely insane.

We concluded that this system would not work. The only thing that could work was a national value added tax where the federal GST is eliminated, the nine provincial retail sales taxes are eliminated and they are replaced with one national value added tax under one administration.

This has such benefits for consumers, for ease of compliance by small businesses, for doing business across this country, for making every business, small and large, competitive. This is why we have supported this proposition. This is why we look forward to seeing it come in.

It is why I wish to move an amendment to the amendment put forward by the Reform Party. The motion reads: "That in the opinion of this House the GST be killed, scrapped, abolished".

I ask that the period be removed out after that and include the following words "and be replaced with a system that generates equivalent revenues, is fairer to consumers and small business, minimizes disruption to small business and promotes federal-provincial fiscal co-operation and harmonization".

[Supply, March 19th, 1996]

Mr. Speaker, I thank the hon. member for Prince George-Bulkley Valley for his question.

The GST is not the single greatest cause of the underground economy. The GST is 7 per cent. A much higher tax is the personal income tax which is 54 per cent in Ontario.

If people were going into the underground economy to avoid taxes otherwise payable, they would have a 54 per incentive to do it in the personal income tax system, which I happen to think is at the ceiling of what can be charged and should come down as opposed to a 7 per cent tax incentive to do it on the GST.

When this tax is harmonized with various provinces, when compliance with the tax has been made more simple for small business, when the tax is included in pricing so it is fairer to consumers, it will be an even better tax. I know the member will support those provisions because they will cut down the cost of public administration, help small businesses and help consumers. It will be in the interests of all of us.

The member asked if I am not interested in finding ways, whether they come from the Bloc or not, of increasing taxes. We are interested in finding fair ways to ensure that the tax burden is shared. We want to get rid of the underground economy. It is not fair to those who are paying their taxes that there are some people who might be abusing the system and not paying their fair share. This is one of the big areas on which we want to clamp down. The minister mentioned ways in his budget and there will be other measures coming forward in the future.

We want to end abuses that take place through the use of offshore companies just as Bloc members suggest. However, they have come up with a whole new system: offshore profits must be taxed at full Canadian rates. We would be the only country in the world that was doing this. What would happen to Canadian based multinationals? What jobs would flow out? Are they going to do this for Quebec based companies in their next budget? They would be insane to and they will not do it. I will make that prediction.

If some companies are abusing the system, such as using unfair transfer pricing or not having fair market value attributed to goods and services, then we will come down on those companies, be they Canadian or foreign owned, like a ton of bricks. That is our promise.

[Supply, March 19th, 1996]

Mr. Speaker, whenever a Canadian corporation sells services or goods to a foreign affiliate, whether in a tax haven or elsewhere, the sale must be done at arm's length. Under Canadian regulations, the price cannot be artificially fixed to avoid paying taxes. Should a company attempt to do that, we would have grounds to go after it and we would also have the support of tax authorities in the other jurisdiction, because of our tax convention with that country. Indeed, we have signed such treaties precisely to try to solve problems like that.

The hon. member said that those selected by the minister to sit on that special technical committee are friends of the Liberal Party. I happen to know a few of these people and some have never voted for the Liberals. But I can also tell you that they will never vote for the separatists either. I personally have a great deal of respect for the professionalism, the expertise and the experience of those selected to sit on that committee. These people can help us because they are real experts.

We need this kind of advice to have a competitive system and to promote job creation in Canada.

[Supply, March 19th, 1996]

Mr. Speaker, I listened with great interest to the remarks made by the hon. member for La Prairie, who says that the technical committee was established by the minister to review Canada's business taxation system and to ensure that this system is competitive world-wide. He said that the committee would not be valid since no parliamentarians will sit on it. But he forgets that, normally, in our system, any bill stemming from such reviews goes before Parliament first, then to the finance committee and then back again before Parliament. There will be ample opportunity for us, as parliamentarians, to discuss, to assess the bill and to question witnesses and the bill's sponsors. Our task, as parliamentarians, consists in dealing with the findings of reviews.

By asking some of Canada's leading experts to examine our business taxation system, we will not only get to know our system but also those of other countries with which we are currently competing for investments.

We must make sure that our taxation system is competitive, because in today's economy it is imperative to attract investments. We must retain in Canada those investments we have at present and, as we know, there are other countries where incentives and tax preferences are offered to attract investment, and thereby jobs.

The official opposition is trying to give the impression that the government has favoured the rich, has favoured corporations and has done nothing to deal with the taxation of them. Let me spend a few moments going over some of the measures we have taken in the three budgets which have been brought down by our government since taking office.

In 1994 we eliminated the $100,000 capital gains exemption. We reduced to 50 per cent the deduction for business meals and entertainment. We dealt with certain tax shelter schemes using convertible debt. We required that financial institutions recognize accrued gains. We eliminated the special 30 per cent investment tax credit. We modified the basis on which insurance companies could claim reserves. We tightened the rules applicable to foreign affiliates and increased the reporting requirements. We have tightened the rules on the forgiveness of debt. We have increased the refundable tax on dividends received from a private corporation. We have cleaned up some of the abuses dealing with research and development. We have increased the tax on large corporations by 12.5 per cent. We have increased the corporate surtax by 33 per cent.

We have introduced a 12 per cent capital tax surcharge on banks and other deposit taking institutions. We have dealt with family trusts. We have announced reporting requirements for all foreign investments made by Canadian residents that are $100,000 or over.

We have announced rules getting rid of tax deferrals which use private corporations as the vehicle. We have extended the taxation of non-residents on their gains with respect to Canadian capital property. We have dealt with premature recognition of tax losses.

We have dealt with some of the overly generous provisions related to labour sponsored venture capital funds. We have extended the temporary capital tax on deposit taking institutions. We are clarifying and tightening the rules on the resource allowance but we have made sure the accelerated capital cost allowance can now go to other projects, including the tar sands. We have also announced many new measures to deal with the underground economy.

This is not the record of a government that is stand pat, that is in the backpocket of any group of Canadian taxpayers or that is not prepared at any moment to examine the tax system in terms of its fairness and its equity.

I want to deal very briefly with some of the ideas put forward by the official opposition in terms of what it is suggesting we should do from a fiscal point of view.

The Bloc Quebecois said on page 90 of its dissenting report to the prebudget report handed down by the finance committee on January 17: "The finance committee ought to have put forward many more specific recommendations for fighting the deficit. The Liberal MPs on the finance committee have chosen instead budgetary imprudence".

This is the opposition party which said: "You cannot cut payments to the provinces. You cannot cut spending on social programs. You cannot cut spending on payments to seniors". How was it recommending that we exercise even greater budgetary prudence? How was it recommending that we cut the deficit even further?

Let me use that party's exact words. It said: "We must eliminate those fiscal inequities that favour large corporations and high income taxpayers". The official opposition wants to impose more taxes on large corporations and high income tax payers. Well, I just went through a list of about 25 changes we have made in the past three budgets which affect those very groups.

What do Bloc members want in addition to those we have suggested? Let us look at their precise words. They suggested two ways it could be done. One, we must deal with all tax agreements signed with countries viewed as tax havens. They are ignoring the fact that the government has already undertaken measures dealing with the taxation of foreign affiliates and dealing with reporting requirements. What does the Bloc view as a tax haven? Any jurisdiction which does not impose taxes higher than Canada.

The hon. member for La Prairie commented that many of the countries we have signed tax treaties with levy much lower taxes than Canada does. It is obvious.

They do recognize that our rate of taxation in Canada is much higher than in many other parts of the world, including European countries and the United States, and not just in known tax havens, such as Barbados, the Turks and Caicos islands, Bermuda.

They do not recognize that we already have a system which does impose taxes on the income from these various countries.

If a Canadian invests through an offshore company in passive investments, all the income under the foreign accrual property income rules, FAPI, is taxed every year to the Canadian whether it is brought back to Canada or not. Full Canadian rates apply.

Do they oppose that system? They will say no, which is good. They want the income that comes from a tax haven even while it accrues to be taxed at full Canadian rates. Since they do not disagree with the rule that applies to individuals and corporations with passive investments in these countries, they must be suggesting the active business income earned in a tax haven must be taxed as it is earned and not as it is remitted to Canada.

We have a system with a global aspect of multi corporations. Some of those taxes are not paid because the income is deemed by the rules of Canada, the United States, Europe and every other major taxing jurisdiction as having actually arisen in that foreign tax jurisdiction, be it Bermuda, Switzerland, the Netherlands or the United States.

Are they saying that if the active business income earned by a foreign affiliate, by a foreign subsidiary of a Canadian company in the United States, is not taxed at rates up to the Canadian rate that it should be taxed at the Canadian rate? Suppose a foreign affiliate in Tennessee is taxed at only 30 per cent while the Canadian tax rate is 50 per cent. Are they saying the tax rate there should be brought up to the full 50 per cent Canadian rate on all of those profits even if they are not remitted to Canada? Obviously they are because to them-

-a tax haven is a country where the rate of taxation is lower than ours, in Canada.

Certainly they would say if it is earned in Bermuda we should be taxing it at the full Canadian rate of 50 per cent, even if there is an active business operation, actual employees and actual business transactions carried on there.

No other country in the world imposes taxation on that basis. They are saying that no matter what happens any Canadian company on its profits earned anywhere in the world must pay taxes at the full Canadian rate even if the profits are not remitted here.

We happen to have a totally different system at work in the world. It is a system where the host country, the country where the work is actually carried out, where the people are employed, where the business activities take place, is given the primary responsibility for international taxation, and this is right. If an American subsidiary carries on business in Canada its profits are taxed at the full Canadian rates, not at the American rates. This is the system we have chosen to enter into.

Why do we have tax treaties with most of these countries? There are two reasons. The first is to eliminate double taxation. In other words, if it is taxed abroad, in the country where the business activity is carried out, it will not be taxed in Canada. The second is to ensure that taxes are paid.

A major part of these treaties is to enforce the taxes that are justifiably owing by any of the two treaty partners. It is for the enforcement of taxation and the exchange of information among the taxing authorities in those two jurisdictions to see that this takes place.

I have a challenge for the Bloc Quebecois. A provincial budget should be brought down in Quebec in the next few months. Will their provincial colleagues tax every multinational corporation based in Canada at the Canadian rate of taxation instead of those rates imposed by the applicable foreign countries with which Canada does business?

Will the Parti Quebecois members in their next budget respect their colleagues here in the House of Commons and adopt the exact international tax provisions they are proposing to us? Will they impose that same type of tax regime on multinational drug companies in Quebec? Is that their intention?

Let us get real. I wish they understood the type of regime they are dealing with rather than only partially understanding it and saying: "Liberals, you cannot cut any transfers to the provinces. You cannot cut spending on any social programs but you have to be even more fiscally prudent than you are. In other words, you have to get the tax revenue up and you get it first of all from ending these so-called relationships that involve corporations doing business in other countries in the world that have a lower tax rate than Canada imposes".

Are they not more interested in the jobs and the investments that come from having a tax system which is internationally competitive because we are in a global economy?

I will bet their colleagues in the next budget in Quebec are more concerned about jobs, international competitiveness and having a fair tax system so that corporations pay their fair share but in a way that is multinationally, internationally competitive.

That is what this committee of experts established by the Minister of Finance is setting out to do. It is to look at whether there are impediments in a corporate tax system that preclude foreigners from establishing in Canada, creating more jobs in Canada, or that preclude us from having our fair share of international tax revenue. Dealing with these tax treaty systems was the one way, the one pot of gold to be tapped by the Bloc Quebecois members.

The second was they said there are certain corporations in Canada which pay no taxes but we will impose some type of minimum tax. If you have suffered tax losses in previous years you should not be able to carry them back in order to eliminate the taxes that might otherwise be payable by a corporation. They said: "There must be a true minimum tax on corporate profits. This minimum tax is not aimed at increasing the fiscal burden on business; it is aimed solely at those profitable businesses which manage to pay not a single cent in taxes".

A study was done by the NDP government in Ontario, carried out by the fair tax commission. It looked at the tax returns of corporations in 1989. It found that 23,000 Ontario corporations reported profits but paid no income tax. The commission tried to look into the reasons for this. Fifty per cent of the untaxed profits came from intercorporate dividends, i.e. one Canadian company owned by another Canadian company. The one company may be taxed on it but it then pays the dividends to another company. Are those profits to be taxed again?

Do we want double taxation of corporate profits? I put that to the official opposition and to the Parti Quebecois for its next budget. Is that what is intended, intercorporate profits by way of dividends taxed twice?

Eleven per cent of these untaxed profits came from loss carry overs. Are Bloc members suggesting that if a corporation makes a million dollars this year but loses a million dollars next year it should not be able to average those out?

In Canada we can carry corporation tax losses over for about 10 years. Maybe it is too generous. In the United States they can do it for 15 years. This is one of the provisions that should be looked at by this technical committee being established by the minister.

Thirteen per cent of the untaxed profits were due to capital cost allowances. Does this mean we should not allow businesses to write off the costs of acquiring new robots, new computers, new equipment, new machinery and new buildings? Is this what they are saying? Are they saying capital cost allowances are too generous?

[Immigration, March 14th, 1996]

Mr. Speaker, Konrads Kalejs is alleged to have participated in the deaths of 27,800 Jews. He was deported by the United States in 1988 and since 1994 has entered Canada twice and has been here most of the time. Finally last September his deportation trial was set for February but has now been put off until May.

Willowdale residents led by Rhonda Greenberg, the Canadian Jewish Congress led by Bernie Farber and many others have condemned our handling of this matter.

I ask the minister of immigration: Why the unconscionable delay in dealing with the continuing presence in Canada of this alleged Nazi war criminal? Surely we could do better.

[Petitions, December 14th, 1995]

Mr. Speaker, I have a petition signed by many citizens of Ontario asking Canada to use its good influence to ask the Sri Lankan government to abandon the military option and instead go to political negotiating with the LTTE as equal partners and to intervene immediately to have Manickavasagam Suresh released from prison.

Thank you very much, hon. members.

[Finance, December 14th, 1995]

Mr. Speaker, I rise on a point of order. A petition has just come into my hands and I would like to ask for unanimous consent to table it quickly.

[Committees Of The House, December 14th, 1995]

Mr. Speaker, I have the honour to present, in both official languages, the 23rd report of the finance committee. This report deals with Bill C-100.

I congratulate the minister responsible for financial institutions who implemented a process of consultation with industry, with consumers and with all members of Parliament. These groups through the finance committee came together and crafted in partnership this bill.

I also thank staff members of the House of Commons who worked so assiduously with our committee and who have been such an asset to us. I thank all members of Parliament on the finance committee who worked so diligently with us and wish them all a happy holiday season.

[Bank Act, November 24th, 1995]

Never, Mr. Speaker, will we give the provinces power over our monetary system.

The Bank of Canada's powers are based on its responsibilities for guaranteeing large value transfers, to create a safer, more responsible system for all Canadians, including Quebecers. Why

decentralize? Destroy what? Our monetary system, the Bank of Canada system? That would be stupid, and the hon. memberknows it.

Why, during the referendum campaign, did they ask for the right to use the Canadian dollar? Were they afraid of using another monetary system? Of course they were. Why did they spend so much money to support the Canadian dollar when the markets were almost predicting Quebec's separation? They were afraid. That is why the Bank of Canada must be able to control and guarantee transfers as provided for in Bill C-100.

I will not get into a debate on the other powers that could be devolved to the provinces. There is certainly a great deal of overlap and duplication in powers. Our Prime Minister said that it would be better to work together with all the provinces to better serve Canadians in reducing spending, red tape and duplication.

As far as manpower is concerned, almost a year ago, the minister wrote the Quebec government in an attempt to negotiate something in the sector mentioned by the hon. member. He never received an answer. This shows the hypocrisy of the Bloc in this House. They want to get powers, money and independence without contributing to the debate affecting all Canadians. They will continue to do so, but we will not be fooled. Even without the Bloc's co-operation, we will continue to build with all the other members of this House a more effective, more profitable, more generous, more prosperous country. And we will do so in spite of the separatists.

[Bank Act, November 24th, 1995]

Mr. Speaker, in this debate concerning Bill C-100, once again we see the separatists grabbing at an opportunity to attack a Canadian bill, not because it is a poor one, but simply because it is one that would be good for Canada. In other words, if a bill is good for Canada, they are going to attack it.

What they have told us today is that Bill C-100 is an encroachment into provincial jurisdiction, in other words one more intrusion by the federal government. But that is not true in the least. What is it? This is not a bill aimed at regulating co-operatives in Quebec or elsewhere in Canada. It is a bill that will reaffirm the vital role played by the Bank of Canada in protecting all Canadians and all Canadian institutions against systemic risks that may originate anywhere in the world.

We have witnessed the collapse of Barings Bank, which could have caused many problems in our country. What we are proposing in this bill is to give the Bank of Canada the power to guarantee transactions between financial institutions, either in Canada or elsewhere.

This means that if a Canadian banking institution or even a credit union had received a cheque, say for $100 million drawn on Barings Bank and had deposited that cheque, but Barings Bank had gone bankrupt before the cheque cleared, while in the meantime, counting on the $100 million, the institution had paid some of its debts, that institution would have sustained a heavy loss.

What we need to do from the time a cheque is received by a Canadian institution, is to be sure that it can be counted on. But they do not want this. Why do they not want a system which would entitle all Canadian institutions to certainty when financial transactions are concerned?

The fact that the Bloc members are complaining about an intrusion in their constitutional domain is typical of what they will do with every bill we see in this House that is for the good of all Canadians, including Quebecers. They are going to try to find some way to knock it down so that they can say that Canada does not work. Their agenda is not the better working of Canada, it is the destruction of this very country. Canadians are not going to be fooled; Quebecers are not going to be fooled.

Let us get down to some of the essences of Bill C-100. Part of the genesis of it was the failure of Confederation Life which shook all Canadians. We had not expected it; a great financial institution went down.

The insurance industry put in place an institution called CompCorp where it contributes funds to protect the policyholders when there is a failure of an insurance institution. The government was concerned that perhaps there was not enough federal regulation in terms of CompCorp, that maybe some of the interests which we needed to have on the table, acting for all Canadians, were not going to be there.

The minister proposed a new type of institution using the insurance companies but also having a greater federal presence. The insurance industry came back to us and said it did not like our federal proposal, but it recognized that there were some improvements it had to make in the way CompCorp was run. The industry said it would make the changes in order to respect the needs of all Canadians.

This was a remarkable process. The minister put out a challenge and the industry responded on its own. The government is not involved in yet another program that could cost it funds, but the industry has assumed this responsibility in a way that will even strengthen the protection available to policyholders.

I commend the industry for coming up with this solution. It is the way we have to work. It was the spirit in which all of the measures in Bill C-100 were addressed.

One of the other issues which came before the committee was addressed by my colleague from the Reform Party. His party will not be supporting the bill because it believes we should not have Canadian deposit insurance which covers every last cent owed to a depositor up to $60,000. Reformers want a system of co-insurance so that if someone deposits funds in a financial institution which is regulated by the federal government, the depositor cannot be guaranteed 100 cents on the dollar to the first $60,000 he or she deposited.

There is a rationale for what the Reform members say and it does have some merit. The merit is that if I as an individual am responsible for part of the risk on that $60,000, I will be more prudent in selecting the institution in which I deposit my funds. I will investigate whether it is credit worthy. I will look around with due diligence before I make that deposit.

In theory that makes a lot of sense but in practice I wonder whether it would really work for the vast majority of Canadians. How many of them have the opportunity to investigate on their own whether a financial institution is really solvent, whether it is really solid, whether it is going to pay back their deposit within five years if it is a term deposit for that amount of time?

Can we really look five years down the road if we are making a term deposit, even if we have access to all of those financial documents? I am not really sure it is reasonable to expect everyone who deposits in a bank or a financial institution to do that, and most people do have deposits. Is it reasonable to expect all Canadians to undertake this with due diligence? Even if they do undertake it, is it reasonable to expect that they can look five years down the road when their deposit is to mature?

I like the idea of Canadians taking a greater role in looking at their returns and not just going for the highest return. If somebody is paying more than the going rate, perhaps there is a reason for it. Perhaps they are desperate for the funds and they will take them at any price. I suspect that what we have to do as a federal government is make sure through our federal institutions that the deposit taking institutions are solvent. Through the Superintendent of Insurance and other federal agencies we have undertaken that greater role of making sure those institutions to which we have given the privilege of taking deposits will hopefully be safe in the future.

This is why I believe it is important in order to protect the vast majority of individual Canadians that we continue to maintain the full level of deposit insurance. This does not mean we cannot look at this issue in the future and perhaps look at other ways in which we can achieve the same results.

I want to go back to the process by which we looked at Bill C-100 and how it evolved. It can serve as an example for other federal legislation.

The Secretary of State for Financial Institutions put out a white paper last spring. He gave the industry about three months to respond to it. The industry studied it and came back with its considerations. The minister took those considerations into mind when he introduced the bill which came down last spring.

The finance committee sat in the month of August and heard testimony on the bill. The committee did not wait for the House to give it this reference. The bill has not even achieved second reading yet. It had just been tabled in June but we thought it important to get feedback from the industry again.

The finance committee held two very intensive days of hearings here in August. About 15 recommendations for modifications to the bill were made. The industry was very enthusiastic that we had accepted what it had proposed for CompCorp which was the major issue, to try to protect policyholders of our insurance companies in the future.

The industry came back with some concrete and constructive suggestions as to how Bill C-100 could be improved. We have noted those suggestions. The vast majority of the recommendations made at the hearings were very constructive.

We are now at the stage that even before the bill has been officially given to the committee by the House, we are looking at the recommendations made by industry. We are having discussions with officials, and we are continuing discussions with members of the industry. I am sure by the time the bill sees the light of day again it will have a number of constructive amendments attached to it. The amendments will not be arrived at through confrontation nor by saying: "Here it is; take it or leave it". It will be through the constructive, co-operative efforts of those of us here in Ottawa, of

the officials who are knowledgeable and of those from the industry who are concerned with achieving a proper legislative result.

I commend the minister for this approach. I commend the industry for the very constructive role it has taken. There is only one sour note we have seen in this whole bill.

It was when the committee sat during the month of August. The separatists tried to attack the bill on the grounds that it was a federal intrusion in a provincial jurisdiction. That was not the case at all. It would have been ultra vires for the federal government to do so.

What we did was give the Bank of Canada the power to provide better protection for all Canadian institutions, including the caisses in Quebec and all the co-ops and banks, against major risks, the systemic risks in the financial system as a whole.

The separatists themselves asked to keep the Canadian dollar. So would they prefer to ignore a better way to protect financial institutions and the dollar? Even if Quebec were an independent country, it would be necessary to protect the large value transfer system and prevent systemic risks.

However, they do not want it now and never will. We all know that the Bloc strategy, the separatist strategy is to attack us every time we do something good for all Canadians.